UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

For the fiscal year ended December 31, 20082009

OR

For the transition period from            to            

Commission File Number 1-4601

Schlumberger N.V. (Schlumberger Limited)

(Exact name of registrant as specified in its charter)

Registrant’s telephone number in the United States, including area code, is:

(713) 513-2000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YESx  NO^¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES^¨  NOx

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YESx  NO^¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. YESx  NO^¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.^¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x  Accelerated filer^¨   Non-accelerated filer^¨   Smaller reporting company^¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES^¨  NOx

As of June 30, 2008,2009, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $125.2$64.7 billion.

As of January 31, 2009,2010, the number of shares of common stock outstanding was 1,195,989,819.1,196,589,089.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following document have been incorporated herein by reference into Part III of this Form 10-K to the extent described therein: Definitive Proxy Statementthe definitive proxy statement relating to Schlumberger’s 20092010 Annual General Meeting of Stockholders (“2010 Proxy Statement”).

SCHLUMBERGER LIMITED

Table of Contents

Form 10-K

Part 1, Item 1 

PART I

Item 1.    Business.

All references in this report to “Registrant”, “Company”, “Schlumberger”,“Registrant,” “Company,” “Schlumberger,” “we” or “our” are to Schlumberger Limited and its consolidated subsidiaries.

Founded in 1926, Schlumberger is the world’s leading supplier of technology, integrated project management and information solutions to customers working in the international oil and gas industry worldwide.exploration and production industry. Having invented wireline logging as a technique for obtaining downhole data in oil and gas wells, the company today provides the industry’s widest range of products and services from exploration through production. As of December 31, 2008,2009, the Company employed approximately 87,00077,000 people of over 140 nationalities operating in approximately 80 countries. Schlumberger has principal executive offices in Paris, Houston and The Hague, and consists of two business segments – Schlumberger Oilfield Services and WesternGeco. Schlumberger Oilfield Services provides the industry’s widest range of products and services from exploration to production, while WesternGeco is the world’s most technologically advanced surface seismic acquisition and processing company.

Schlumberger Oilfield Servicesis operates in each of the world’s leading provider of technology, integrated project management and information solutions to the international oil and gas exploration and production industry. Schlumberger Oilfield Services managesmajor oilfield service markets, managing its business through its GeoMarket* regions, which are grouped into four geographic areas: North America, Latin America, Europe/CIS/Africa and Middle East & Asia. The GeoMarket structure offers customers a single point of contact at the local level for field operations and brings together geographically focused teams to meet local needs and deliver customized solutions.

Schlumberger invented wireline logging as a technique for obtaining downhole data in oil and gas wells. Today, Within this business structure, Schlumberger Oilfield Services operates in eachproducts and services are developed by a number of the major oilfield service markets, providingtechnology-based product lines, or Technologies, to capitalize on technical synergies. These products and services that cover the entire life cycle of the reservoir. These services,reservoir and correspond to a number of markets in which Schlumberger Oilfield Services holds a number of market leading positions, are organized into a number of technology-based product and service lines, or Technologies, to capitalize on technical synergies and introduce innovative solutions within the GeoMarket regions.positions. The Technologies are also responsible for overseeing operational processes, resource allocation, personnel, and quality, health, safety and environmental matters in the GeoMarket.GeoMarkets.

The Technologies are:

Part 1, Item 1 

Supporting the Technologies are 2022 research and engineering centers. Through this organization, Schlumberger is committed to advanced technology programs that enhance oilfield efficiency, lower finding and producing costs, improve productivity, maximize reserve recovery and increase asset value while accomplishing these goals in a safe and environmentally sound manner.

Schlumberger Oilfield Services also offers customers its services through a business model known as Integrated Project Management (IPM). IPM combines the required productsservices and servicesproducts of the Schlumberger Technologies with drilling rig management expertise and project management skills to provide a complete solution to well construction and production improvement. IPM projects are typically of multi-year duration and include start-up costs and significant third-party components that cover services that Schlumberger does not provide directly. Some projects may be fixed price in nature and may contain penalties for non-performance.

Schlumberger Oilfield Services uses its own personnel to market its productsservices and services.products. The customer base, business risks and opportunities for growth are essentially uniform across all services. There is a sharing of manufacturing and engineering facilities as well as research centers, and the labor force is interchangeable. Technological innovation, quality of service, and price differentiation are the principal methods of competition, which varies geographically with respect to the different services offered. While there are numerous competitors, both large and small, Schlumberger believes that it is an industry leader in providing wireline logging, well testing, measurement-while-drilling, logging-while-drilling and directional-drilling services, as well as fully computerized logging and geoscience software and computing services. A large proportion of Schlumberger offerings are non-rig related; consequently, revenue does not necessarily correlate to rig count fluctuations.

Schlumberger is a 40% owner in M-I SWACO – a joint venture with Smith International, Inc. – which offers the drilling and completion fluids used to stabilize subsurface rock strata during the drilling process and minimize formation damage during completion and workover operations.

WesternGeco, the world’s most technologically advanced surface seismic company, provides comprehensive reservoir imaging, monitoring and development services with the most extensive seismic crews and data processing centers in the industry as well as a leading multiclient seismic library. Services range from 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. WesternGeco benefits from full access to the Schlumberger research, development and technology organization and shares similar business risks, opportunities for growth, principal methods of competition and means of marketing as Schlumberger Oilfield Services. Seismic solutions include proprietary Q* technology for enhanced reservoir description, characterization and monitoring throughout the life of the field—field – from exploration through enhanced recovery. Other WesternGeco solutions include development of controlled-source electromagnetic and magneto-telluric surveys and their integration with seismic data.

Positioned for meeting a full range of customer needs in land, marine and shallow-water transition-zone services, WesternGeco offers a wide scope of technologies and services:

Part 1, Item 1 

Part 1, Item 1 

Acquisitions

Information about acquisitions made by Schlumberger appears in Note 4 of theConsolidated Financial Statements.

GENERAL

Research Centers

Research to support the engineering and development efforts of Schlumberger activities is principally conducted at Cambridge, Massachusetts, United States; Cambridge, England; Stavanger, Norway; Moscow, Russia; and Dhahran, Saudi Arabia.

Patents

While Schlumberger seeks and holds numerous patents covering various products and processes, no particular patent or group of patents is considered material to Schlumberger’s business.

Seasonality

Although weather and natural phenomena can temporarily affect delivery of oilfield services, the widespread geographic location of such services precludes the overall business from being characterized as seasonal.

Customers and Backlog of Orders

No single customer exceeded 10% of consolidated revenue. Oilfield Services has no significant backlog due to the nature of its business. The WesternGeco backlog, which is based on signed contracts with customers, was $1.0 billion at December 31, 2008 was $1.82009 ($1.8 billion (2007: $1.2 billion), of which an estimated $1.3 billion is expected to be realized in 2009.

Government Contracts

No material portion of Schlumberger’s business is subject to renegotiation of profits or termination of contracts by the United States or other governments.at December 31, 2008).

Employees

As of December 31, 2008,2009, Schlumberger had approximately 87,00077,000 employees.

Part 1, Item 1, 1A

Financial Information

Financial information by business segment for the years ended December 31, 2009, 2008 2007 and 20062007 is provided in Note 18 of theConsolidated Financial Statements.

Available Information

The Schlumberger Internet website can be found atiswww.slb.com. Schlumberger uses it’s Investor Relations website,www.slb.com/ir, as a channel for routine distribution of important information, including news releases, analyst presentations, and financial information. Schlumberger makes available free of charge on or through its InternetInvestor Relations website atwww.slb.com/ir access to its Annual ReportReports on Form 10-K, Quarterly Reports

Part 1, Item 1, 1A

on Form 10-Q, Current Reports on Form 8-K, its proxy statementstatements and Forms 3, 4 and 5 filed on behalf of directors and executive officers, and amendments to each of those reports, as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”). Alternatively, you may access these reports at the SEC’s Internet website atwww.sec.gov.

Schlumberger’s corporate governance materials, including Board Committee Charters, Corporate Governance Guidelines and Code of Ethics, may also be found atwww.slb.com/ir. From time to time, corporate governance materials on our website may be updated to comply with rules issued by the SEC and the New York Stock Exchange (“NYSE”) or as desirable to promote the effective governance of Schlumberger. In addition, amendments to the Code of Ethics and any grant of a waiver from a provision of the Code of Ethics requiring disclosure under applicable SEC or NYSE rules will be disclosed on our website.

Any stockholder wishing to receive, without charge, a copy of any of theSchlumberger’s SEC filings or corporate governance materials should write to the Secretary, Schlumberger Limited, 5599 San Felipe, 17^th Floor, Houston, Texas 77056, USA.

Schlumberger has filed the required certifications under Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 to this Report. In 2008, Schlumberger submitted to the NYSE the CEO certification required by Section 303A.12(a) of the NYSE’s Listed Company Manual.Form 10-K.

The information on our website or any other website is not incorporated by reference in this Report and should not be considered part of this Report or any other filing Schlumberger makes with the SEC.

Item 1A.    Risk Factors.

The following discussion of risk factors contains “forward-looking statements,” asstatements” which are discussed immediately following Item 7A.7A of this Report.Form 10-K. These risk factors may be important to understanding any statement in this ReportForm 10-K or elsewhere. The following information should be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the consolidated financial statements and related notes included in this Report.Form 10-K.

We urge you to carefully consider the risks described below, as well as in other reports and materials that we file with the SEC and the other information included or incorporated by reference in this Report.Form 10-K. If any of the risks described below or elsewhere in this ReportForm 10-K were to materialize, our business, financial condition, results of operations, cash flows or prospects could be materially adversely affected. In such case, the trading price of our common stock could decline and you could lose allpart or partall of your investment. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our businessfinancial condition, results of operations and operations.cash flows.

Demand for the majority of our services is substantially dependent on the levels of expenditures by the oil and gas industry. Current global economic conditions have resulted in a significantOur customers’ capital expenditures may decline in oil2010 and gas prices. Ifbeyond if current global economic conditions and the availability of credit worsencontinue or continue for an extended period, thisworsen. This could reduce our customers’ levels of expenditures and have a significantmaterial adverse effect on our revenuefinancial condition, results of operations and operating results.cash flows.

Part 1, Item 1A 

The current global credit and economic environmentdownturn has reduced worldwide demand for energyoil and natural gas and resulted in significantly lower crude oil and natural gas prices. A substantialprices compared to their record highs in July 2008. It is difficult to predict how long the global economic downturn will continue, or extendedto what extent this will continue to affect us. The significant decline in oil and natural gas prices can reducereduced many of our customers’ activities and their spending on our services and products.products in 2009; this reduction in our customers’ activities and spending could continue through 2010 and beyond. Demand for the majority of our services depends substantially depends on the level of expenditures by the oil and gas industry for the exploration, development and production of crude oil and natural gas reserves. These expenditures are sensitive to oil and natural gas prices and generally dependent on the industry’s view of future economic growth and the resulting impact on demand for oil and gas prices. As thenatural gas. The worldwide deterioration in the financial and credit markets, has deepenedwhich began in recent months,the second half of 2008, resulted in diminished demand for oil and gas has reduced dramatically and significantly lower oil and natural gas prices have fallen sharply, causing someprices. This caused many of our customers to start to reduce or delay their oil and gas exploration and production spending. This has started to reducespending in 2009, which consequently reduced the demand for our services, and has begun to exertexerted downward pressure on the prices that we charge.of our services and products. If the economic conditions continue to deterioratedownturn

Part 1, Item 1A

continues for a prolonged period or do not improve,if there is little or no economic growth, it couldwill likely result in further reductions of exploration and production expenditures by our customers, causing further declines in the demand for, and prices of, our services and products. This could result in a significantmaterial adverse effect on our operating results. Furthermore, it is difficult to predict how long the economic downturn will continue, to what extent it will worsen,financial condition, results of operations and to what extent this will continue to affect us.cash flows.

The reduction in cash flows being experienced by our customers resulting from declines in commodity prices, together with the reduced availability of credit and increased costs of borrowing, due to the tightening of the credit markets, could have significant adverse effects on the financial condition of some of our customers. This could result in project modifications, delays or cancellations, general business disruptions, and delay in, or nonpayment of, amounts that are owed to us, which could have a significantmaterial adverse effect on our results of operations and cash flows. Additionally, our suppliers could be negatively impacted by current global economic conditions. If certain of our suppliers were to experience significant cash flow issues or become insolvent as a result of such conditions, it could result in a reduction or interruption in supplies or a significant increase in the price of supplies, and adversely impact our results of operations and cash flows.

The prices for oil and natural gas are subject to a variety of additional factors, including:

A significant portion of our revenue is derived from our non-United States operations, which exposes us to risks inherent in doing business in each of the approximately 80 countries in which we operate.

Our non-United States operations accounted for approximately 78%84% of our consolidated revenue in 2009, 78% in 2008 and 76% in 2007 and 73% in 2006.2007. Operations in countries other than the United States are subject to various risks, including:

Part 1, Item 1A 

Part 1, Item 1A

In addition, we are subject to risks associated with our operations in countries, including Iran, Syria, Sudan and Cuba, which are subject to trade and economic sanctions or other restrictions imposed by the United States or other governments or organizations. United States law enforcement authorities are currently conducting a grand jury investigation and an associated regulatory inquiry related to our operations in certain of these countries.

If any of the risks described above materialize, or if any governmental investigation results in criminal or civil penalties or other remedial measures, it could reduce our earnings and our cash available for operations.

We are also subject to risks related to investment in our common stock in connection with certain US state divestment or investment limitation legislation applicable to companies with operations in these countries, and similar actions by some private investors, which could adversely affect the market forprice of our common stock.

Environmental compliance costs and liabilities could reduce our earnings and cash available for operations.

We are subject to increasingly stringent laws and regulations relating to importation and use of hazardous materials, radioactive materials and explosives, environmental protection, including laws and regulations governing air emissions, water discharges and waste management. We incur, and expect to continue to incur, capital and operating costs to comply with environmental laws and regulations. The technical requirements of these laws and regulations are becoming increasingly complex, stringent and expensive complex and stringent.to implement. These laws may provide for “strict liability” for damages to natural resources or threats to public health and safety. Strict liability can render a party liable for damages without regard to negligence or fault on the part of the party. Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances.

We use and generate hazardous substances and wastes in our operations. In addition, many of our current and former properties are, or have been, used for industrial purposes. Accordingly, we could become subject to potentially material liabilities relating to the investigation and cleanup of contaminated properties, and to claims alleging personal injury or property damage as the result of exposures to, or releases of, hazardous substances. In addition, stricter enforcement of existing laws and regulations, new laws and regulations, the discovery of previously unknown contamination or the imposition of new or increased requirements could require us to incur costs or become the basis of new or increased liabilities that could reduce our earnings and our cash available for operations. We believe we are currently in substantial compliance with environmental laws and regulations.

We could be subject to substantial liability claims, which would adversely affect our financial condition, results of operations and financial condition.cash flows.

Certain equipment used in the delivery of oilfield services, such as directional drilling equipment, perforating systems, subsea completion equipment, radioactive materials and explosives and well completion

Part 1, Item 1A 

systems, are used in hostile environments, such as exploration, development and production applications. An accident or a failure of a product could cause personal injury, loss of life, damage to property, equipment or the environment, and suspension of operations. Our insurance may not adequately protect us against liability for some kinds of events, including events involving pollution, or against losses resulting from business interruption. Moreover, in the future we may not be able to maintain insurance at levels of risk coverage or policy limits that we deem adequate. Substantial claims made under our policies could cause our premiums to increase. Any future damages caused by our products that are not covered by insurance, or are in excess of policy limits or are subject to substantial deductibles, could reduceadversely affect our earningsfinancial condition, results of operations and our cash available for operations.flows.

Part 1, Item 1A

If we are unable to maintain technology leadership in the form of services and products, this could adversely affect any competitive advantage we hold.

If we are unable to develop and produce competitive technology or deliver themit to our clients in the form of services and products in a timely and cost-competitive manner in the various markets we serve, it could materially reduceadversely affect our operating revenuefinancial condition, results of operations and net income.cash flows.

Limitations on our ability to protect our intellectual property rights, including our trade secrets, could cause a loss in revenue and any competitive advantage we hold.

Some of our products or services, and the processes we use to produce or provide them, have been granted United States patent protection, have patent applications pending or are trade secrets. Our business may be adversely affected if our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our technology, our patent applications are denied, or our trade secrets are not adequately protected. Our competitors may be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets.

We may be subject to litigation if another party claims that we have infringed upon its intellectual property rights.

The tools, techniques, methodologies, programs and components we use to provide our services may infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs and may distract management from running our core business. Royalty payments under licenses from third parties, if available, would increase our costs. If a license were not available we might not be able to continue providing a particular service or product, or service, which would reducecould adversely affect our operating revenue.financial condition, results of operations and cash flows. Additionally, developing non-infringing technologies would increase our costs.

Failure to obtain and retain skilled technical personnel could impede our operations.

We require highly skilled personnel to operate and provide technical services and support for our business. Competition for the personnel required for our businesses intensifies as activity increases. In periods of high utilization it may become more difficult to find and retain qualified individuals. This could increase our costs or have other adverse effects on our operations.

Severe weather conditions may affect our operations.

Our business may be materially affected by severe weather conditions in areas where we operate. This may entail the evacuation of personnel and stoppage of services. In addition, if particularly severe weather affects platforms or structures, this may result in a suspension of activities until the platforms or structures have been repaired. Any of these events may have a material adverse effect oncould adversely affect our operating revenue.financial condition, results of operations and cash flows.

Part 1, Item 1B, 2, 3, 4 

Item 1B.    Unresolved Staff Comments.

None.

Item 2.    Properties.

Schlumberger owns or leases manufacturing facilities, administrative offices, service centers, research centers, data processing centers, sales offices and warehouses throughout the world. No significant lease is scheduled to terminate in the near future, and Schlumberger believeswe believe comparable space is readily obtainable should any lease expire without renewal. Schlumberger believes itsWe believe our properties are generally well maintained and adequate for their intended use.

Outside the United States the principal owned or leased facilities of Oilfield Services are located in Beijing, China; Clamart and Abbeville, France; Fuchinobe, Japan; Oslo, Norway; Singapore; Abingdon, Cambridge and Stonehouse, United Kingdom; and Novosibirsk, Russia.

Within the United States, the principal owned or leased facilities of Oilfield Services are located in Boston, Massachusetts; Houston, Rosharon, and Sugar Land, Texas; and Lawrence, Kansas.

The principal owned or leased facilities of WesternGeco are located in Bergen and Oslo, Norway; Gatwick, United Kingdom; Houston, Texas, United States; and Mumbai, India.

Item 3.    Legal Proceedings.

The information with respect to this Item 3 is set forth in Note 17 of theConsolidated Financial Statements.

Item 4.    Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of Schlumberger’s security holders during the fourth quarter of the fiscal year covered by this Report.Form 10-K.

Part 1, Item 4 

Executive Officers of Schlumberger

Information with respect toThe following table sets forth, as of January 31, 2010, the names and ages of the executive officers of Schlumberger, including all offices and their ages as of February 11, 2009 is set forth below. The positions forheld by each executive officer have been held for at least the past five years, except where stated.years.

Part II, Item 5 

PART II

As of January 31, 2009,2010, there were 1,195,989,8191,196,589,089 shares of common stock of Schlumberger outstanding, exclusive of 138,222,345137,623,075 shares held in treasury, and approximately 19,48321,151 stockholders of record. The principal United States market for Schlumberger’s common stock is the NYSE, where it is traded under the symbol “SLB”.

Schlumberger’s common stock is also traded on the Euronext Paris, Euronext Amsterdam, London and SIX Swiss stock exchanges.

Common Stock, Market Prices and Dividends Declared per Share

Quarterly high and low prices for SchlumbergerSchlumberger’s common stock as reported by the NYSE (composite transactions), together with dividends declared per share in each quarter of 20082009 and 2007,2008, were:

There are no legal restrictions on the payment of dividends or ownership or voting of such shares, except as to shares held as treasury stock. Under current legislation, stockholders are not subject to any Netherlands Antilles withholding or other Netherlands Antilles taxes attributable to the ownership of such shares.

The following graph compares the yearly percentage change in the cumulative total stockholder return on Schlumberger common stock, assuming reinvestment of dividends on the last day of the month of payment into common stock of Schlumberger, with the cumulative total return on the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the cumulative total return on both the Philadelphia Oil Service Index (OSX) and the Value Line’sLine Oilfield Services Industry GroupIndex over the preceding five-year period ending on December 31, 2008.2009. Schlumberger is using the Philadelphia Oil Service Index (OSX) to replace the Value Line Oilfield Services Industry Index used in prior years. Schlumberger determined that the new index includes a greater concentration of our most direct competitors. The stockholder return set forth below is not necessarily indicative of future performance. The following graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Schlumberger specifically incorporates it by reference into such filing.

Part II, Item 5 

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG

AMONG SCHLUMBERGER LIMITED,COMMON STOCK, THE S&P 500 INDEX, THE

PHILADELPHIA OIL SERVICE INDEX (OSX) AND THE VALUE LINE’S LINE

OILFIELD SERVICES INDUSTRY INDEX

Assumes $100 invested on December 31, 20032004 in Schlumberger Limitedcommon stock, in the S&P 500 Index, in the Philadelphia Oil Service Index (OSX), and in the Value Line’sLine Oilfield Services Industry Index. Reflects reinvestment of dividends on the last day of the month of payment and annual reweighting of the Industry Peer Index portfolio.payment.

Part II, Item 5 

Share Repurchases

On April 17, 2008, the Schlumberger Board of Directors of Schlumberger approved an $8 billion share repurchase program for shares of Schlumberger common stock, to be acquired in the open market before December 31, 2011.

The following table sets forth information on Schlumberger’s common stock repurchase program activity for the three months ended December 31, 2008.2009 was as follows:

In connection with the exercise of stock options under Schlumberger’s incentive compensation plans, Schlumberger routinely receives shares of its common stock from optionholders in consideration of the exercise price of the stock options. Schlumberger does not view these transactions as implicating therequiring disclosure required under this Item. TheItem 5 as the number of shares of Schlumberger common stock received from optionholders is immaterial.not material.

Unregistered Sales of Equity Securities

During the quarter ended December 31, 2008, Schlumberger issued 286,400 shares of its common stock upon conversion by holders of $11 million aggregate principal amount of its 2.125% Series B Convertible Debentures due June 1, 2023. Such shares were issued in transactions exempt from registration under Section 3(a)(9) of the Securities Act of 1933, as amended.None.

Part II, Item 6 

Item 6.    Selected Financial Data.

The following selected consolidated financial data should be read in conjunction with both “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data,” both contained inof this Report:Form 10-K:

Part II, Item 6 

Part II, Item 7 

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions and resources. Such forward-looking statements should be read in conjunction with our disclosures under “Item 1A. Risk Factors” of this Report.

Executive Overview

As 2009 progressed, oil prices recovered gradually from levels under $40 per barrel at the beginning of the year to over $70 per barrel by year-end. The large drop in oil demand in 2009 that resulted from the global economic recession, together with increased production capacity in spite of significant delays in new development projects, led to spare oil production capacity reaching its highest level in nearly two decades. However, the decisions by the Organization of Petroleum Exporting Countries (OPEC) at the end of 2008 progressed, early optimismto cut production, the adherence of continuingthe majority of OPEC countries to production quotas, and the improving economic outlook contributed to rising prices with stabilization at current levels. During 2009, the demand forecasts of the major energy organizations evolved with economic projections falling to a low of nearly 83 million barrels of oil per day (BOPD) in May, then increasing gradually by 1.5 million BOPD toward the end of the year. The final forecast figure of 84.4 million BOPD represented the second consecutive year-on-year drop in oil demand for the first time in 25 years. For 2010, economic projections for world real GDP growth are converging towards a median estimate of 3%, but with a significant level of uncertainty. A large gap exists between GDP growth rates of Organization for Economic Cooperation and Development (OECD) and non-OECD countries – particularly in China and in other developing Asian economies. Overall OECD country demand will remain at its lowest level in over a decade, but this will be compensated by growth in China, South East Asia and the Middle East. From a supply standpoint, the level of uncertainty in oil demand and natural gas exploration and production activity was dampened by growing evidence of weakening economic conditions that began to significantly weigh upon the energy markets in early October. While such weakening did not prevent oil prices from ramping up steeplyled E&P customers to $147-per-barrelcut investment in July,2009 – particularly in projects with the velocity of the subsequent reversal to under $40-per-barrel byhighest production costs – but forecasts published at the end of the year was supported by economic reports and forecasts that confirmed the majority of the OECD (Organization for Economic Co-operation and Development) countries to beindicated a likely rise in recession by the end of the third quarter. Consequently, global oil demand forecasts for 2008 dropped from quarter to quarter and it became apparent that moderating oil demand growthinvestment in the non-OECD economies would no longer be sufficient to offset a continuing three-year demand decline within the OECD countries. As a result, 2008 saw the first global oil demand decrease in 25 years. In the fourth quarter OPEC elected to cut production by a total of 3.7 million barrels per day to remove supply and support prices, however, the time taken for these cuts to be felt in the market, and for the resultant increased spare capacity to be reabsorbed by future growth, was large enough for E&P customers to cut investment. This translated to lower demand and weaker prices for oilfield services in an increasing number of areas late in the fourth quarter.2010.

The natural gas markets presentedbehaved differently from oil markets in 2009. The combination of the drop in gas demand that resulted from reduced industrial activity; the rise in production of unconventional gas resources in North America; and the commissioning of a similar picture. While activity was initially maintainednumber of new large LNG (Liquefied Natural Gas) exporting facilities around the world contributed to an over-supplied market with consequent pressure on spot gas prices. On a per-British Thermal Unit basis, the ratio of oil to Henry Hub gas prices increased to its highest level in the first part oflast four decades, threatening the year, the developing recessionlinkage mechanisms in the latter part of 2008 led to lower industrial demand in the developed economies although commercial and residential demand was maintained. In North America,future long-term supply increased by 6% in 2008 largely as a result of industry deployment of advanced drilling, production and completion technologies leading to higher gas production and consequently greater storage levels in spite of lower Canadian imports and decreased LNG (Liquified Natural Gas) supplies. Consequently, more LNG has become available for other international importers and, as a result, the majority of the developed economies are well supplied for their needs.contracts. Within the United States, the world’s largest natural gas market, this translatedand despite some fuel switching in power generation from coal to reduced gas exploration and production investment with lower demand for oilfield services and consequent pressure on service pricing in a number of areas by the fourth quarter as the market price ofCanadian gas imports, natural gas fell. In international markets however, increasing demand forstorage levels have been significantly above the five-year range consistently since April 2009. Consequently, natural gas wellhead prices have reached their lowest levels since 2002. This has translated into the largest sustained drop in gas-related drilling and service activity since the 2001-2002 period. Nevertheless, the technological success associated with production from unconventional gas reservoirs in the developing economies ledUnited States is leading to sustained drillingan increasing level of interest in similar formations outside North America, particularly in Europe, which could lead to an expansion in activity with drilling rigs previously deployed on oil exploration and development moving towhen natural gas activity in some regions.prices rebound.

Within this volatile market, Schlumberger Oilfield Services full-year revenue in 2009 declined 16% versus 2008, grew by 20% versus 2007, with demand strongestfalling to $20.52 billion. Lower natural gas prices and unfavorable market fundamentals led to a 37% decline in international markets. Year-on-year growth rates reached 28%North America revenue, primarily in Latin America, 24% inthe US Land and Canada GeoMarkets. Europe/CIS/Africa 18%revenue fell 13% mainly due to the weakening of local currencies against the US dollar and reduced activity in the Russia, North Sea, West & South Africa and Caspian GeoMarkets as well as at Framo Engineering. This decline however was partially offset by increased activity in the North Africa GeoMarket. Middle East & Asia and 11% in North America. All Technologies experienced double-digit growth, most notably in Well Services, Drilling & Measurements and Wireline. These results mask, however, a rapid reversal that occurred laterevenue dropped 9% primarily due to decreases in the year in response to the worsening economic climate,East Asia, East Mediterranean, Arabian and after three quarters of overall growth, revenues in the fourth quarter declined sequentially through weakening local currencies and reduced customer spending, in addition to seasonal factors.

A variety of new Schlumberger products and services contributed to growth in 2008. These included further penetration of Scanner Family* advanced wireline logging services and Scope* imaging-while-drilling technologies into new markets as customers sought to increase their understanding of complex reservoirs. Growth through measurement integration also extended into the production domain with offerings suchAustralia/Papua New Guinea GeoMarkets. Latin America revenue was only marginally lower than last year as the StimMAP* LIVE real-time fracture monitoring service that combinesimpact of the measurement capabilityweakening of Wireline with the pressure pumping expertise of Well Services to track the progress of fracture stimulation in real time

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local currencies against the US dollar and much lower activity in Venezuela/Trinidad & Tobago and Peru/ Colombia/Ecuador was nearly offset by stronger activity in Mexico/Central America and Brazil. Weakening of local currencies against the US dollar reduced 2009 revenue by approximately 4%. Across the Areas, all of the Technologies recorded revenue declines except Testing Services. IPM recorded revenue growth compared to be able to control2008.

While customers spent less on new technology in 2009 versus the operationprevious year, a number of recently introduced Schlumberger services made further market progress. PowerDrive* family rotary-steerable drilling systems extended their market reach, entering new markets in the North and Latin America. Scanner Family* services for maximum effect. Other new production-related services includedadvanced formation evaluation saw success in Mexico and Canada, and Well Services recorded market penetration in Saudi Arabia, Abu Dhabi and Malaysia with the range of ACTive* real-time coiled-tubing services that combineimprove operating efficiency and well performance through the innovative use of fiber-optic cable to convey downhole information to the surface.

Investment in Oilfield Services infrastructure continued throughout the year. Significant events included the opening of a new reservoir completions manufacturing center in Damman, Saudi Arabia. Representing an investment of $25 million, the center houses a team of design and manufacturing engineers specialized in the production of downhole sensor packagereservoir completions equipment. The center also provides a collaborative environment in which joint oil company and Schlumberger teams can develop and manufacture completions solutions for application across Saudi Arabia and the Middle East. In Brazil, we announced the signing of a joint cooperation agreement with the Universidade Federal do Rio de Janeiro to build a fiber-optic communications system to monitor coiled-tubing-enabled operationskey international research center on the university’s campus. This new center will focus on research and development activities in real time.

Acquisitions in 2008 also served to increase Schlumberger capabilities or added specificthe deepwater subsalt environment, with emphasis on the development of geosciences software for the exploration and production sector; new technologies to meet reservoir challenges in subsalt environments; and the portfolio.creation of a geophysical processing and interpretation Center of Excellence covering time-lapse seismic and combined electromagnetic and seismic measurements.

A number of technology agreements and acquisitions were completed during the year to enable future product development or improve geographical reach. In Canada,May, Schlumberger acquired Techsia SA, a supplier of petrophysical software based in Montpellier, France. Techsia will become the Schlumberger Petrophysics Software Center of Excellence for the development of state-of-the-art solutions for the oil and gas exploration and production industry. In September, Schlumberger and First Reserve CorporationNational Oilwell Varco announced the creation of a joint venture to provide high-speed drill string telemetry systems to improve the efficiency and safety of oil and gas operations. The venture is expected to accelerate development and delivery of intelligent drilling solutions through the expanded use of the IntelliServ^® Broadband Network, a patented technology that provides high resolution data in real time to and from the bottom of oil and gas wells as they are being drilled. In November, Schlumberger acquired Saxon EnergyLonkar Services Inc.,– a land drilling contractorcompany providing slickline, cased-hole wireline and surface well testing services in Western Canada and Northern USA. Also in November Schlumberger signed a global cooperation agreement with majorTechnip to jointly develop subsea integrity and surveillance solutions for the flexible pipes used in deep offshore oil and gas production. This agreement will initially focus on surveillance systems activities for new and challenging flexible pipe applications such as those required in the deepwater subsalt environment in Brazil.

Full-year 2009 revenue of WesternGeco was, at $2.12 billion, 25% lower than 2008. Revenue decreased across all product lines, with the largest declines seen in Marine and Multiclient activity. Marine revenue fell on lower activity combined with reduced pricing as a result of weak market conditions. Multiclient revenue decreased primarily in North and South America. Schlumberger had already enjoyed a long association with Saxon, including operation of joint ventures in Mexico and Colombia for the supply of drilling services that support integrated project management activities. Also in Canada, Schlumberger acquired the business of Extreme Engineering Limited, a leading supplier of unmanned measurement-while-drilling systemsAmerica, as customers continued to land markets in the United States and Canada. Other technology acquisitions included Integrated Exploration Systems, a Germany-based technology leader in petroleum systems modeling, and Staag Imaging, a Houston-based provider of leading-edge depth imaging technologies for seismic data processing.

The performance of WesternGeco, where full-year 2008reduce discretionary spending. Land revenue fell by 4% versus 2007, was limited by a combination ofon lower Multiclient sales, reduced Landcrew utilization, while Data Processing revenue decreased reflecting lower activity primarily in Europe/Africa and cost inflation that affected Marine operations. Among these factors, Multiclient sales were particularly weak with the sharp decrease reported in the first quarter not being reversed later in the year as a clear indication of customers restricting discretionary spending for seismic data. Contract awards remained strong, however, and WesternGeco reported a record backlog of $1.8 billion atNorth America.

Towards the end of the year, up $700 million fromWesternGeco announced the enddeployment of the third quarter.

In spite of this weaker-than-expected performance, WesternGeco made significant progressnext-generation UniQ* integrated point-receiver land seismic acquisition and processing system in Kuwait for the introduction ofKuwait Oil Company. The new technology during the year. These included a new proprietary full-azimuth marine acquisition technique, known as coil shooting, that leverages the signal fidelitysystem, designed for greater operational efficiency and streamer-steering capability of Q* technologyflexibility, offers up to provide resolution in sub-salt applications where wide-azimuth techniques mobilize too many resources. Coil shooting provides the same quality survey but uses only one vessel to do so. In other new technology developments, the UniQ* latest-generation land acquisition system was unveiled. This substantially increases the number of acquisition channels available and in combination with proprietary vibrator source technology delivers a sharper image and wider coverage.

The sharp drop in oil and gas prices in the latter part of 2008 that resulted in lower activity, higher inventories, and the belief that demand will erode further in 2009 as a result of the economic slowdown, has led to rapid and substantial reductions in exploration and production expenditure. At current prices most of the new categories of hydrocarbon resources such as heavy oil, tar sands, coal-to-liquids, or gas-to-liquids are not economic to develop. In addition, it will take time for inflation to be removed from the E&P supply chain to bring finding and development costs more in line with lower oil and gas prices.

Schlumberger therefore expects 2009 activity to weaken across the board, with the most significant declines occurring in North American gas drilling, Russian oil production enhancement, and in mature offshore basins. Exploration offshore will also be somewhat curtailed but commitments already planned are likely to be honored. Seismic expenditures, particularly for multiclient data, are likely to decrease from the levels of 2008. Furthermore, pricing erosion will compound these effects on revenue. In this market we are taking the necessary actions early in 2009 to adjust our operating cost base while preserving our long-term commitments to technology development, key skill sets and service and product quality.

The most important indicator of a future recovery in oilfield services activity will be a stabilization and recovery in the demand for oil. The recent years of increased exploration and production spending, however, have not been sufficient to substantially improve the supply situation. The age of the production base, accelerating decline rates and the smaller size of recently developed fields will mean that any prolonged reduction in investment will lead to a strong rebound in activity in the future.four times

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the capability of existing Q-Land* systems and is currently acquiring data from 53,000 live point-receiver channels in conjunction with the WesternGeco DX-80* Desert Explorer with MD Sweep* technology introduced the previous year.

The outlook for 2010 remains largely dependent on the prospects for the general economy. At the end of the third quarter of 2009, we indicated that we were encouraged that signs were emerging that demand for oil and gas would begin to increase. Consensus forecasts now predict that oil demand in 2010 will increase, particularly in the developing world, for the first time since 2007.

As a result we feel that oil prices are likely to be sustained at current levels and that as our customers’ confidence grows, their exploration and production budgets will increase. We feel that considerable leverage to increase investment exists in offshore markets, in Russia, as well as in certain emerging investment opportunities such as Iraq. These events will be dependent on continued increases in economic growth in the second half of the year beyond the current government stimulus packages.

For natural gas activity we remain a great deal more cautious. Despite signs of some recovery in industrial demand as well as the recent cold weather, we consider that markets remain generally oversupplied. Increased LNG flows together with further capacity being added in 2010, as well as the general uncertainty over the decline rates of unconventional gas production, have the potential to limit the current increase in the North American gas drilling rig count.

We anticipate that 2010 will be a better year for multiclient seismic, and for activity in land seismic particularly in Middle East and North Africa. While Marine activity is expected to be reasonably robust, pricing improvements will be limited due to continued new capacity additions.

Longer term we remain confident that considerably increased spending will be necessary to maintain sufficient reserves and production of hydrocarbons to meet the world’s needs. Our technology portfolio and worldwide infrastructure mean we are strongly positioned to capture growth opportunities as our customers begin to increase their investment.

The following discussion and analysis of results of operations should be read in conjunction with theConsolidated Financial Statements.

Fourth Quarter 2009 Results

Pretax operating income represents the business segments’ income before taxes and minority interest. Pretaxnoncontrolling interests. The pretax operating income excludes such items as corporate expenses and interest income and interest expense amortization of certain intangibles, interest, stock-based compensation costs andnot allocated to the Charges and Creditssegments as well as the charges described in detail in Note 3 to theConsolidated Financial Statements as these items are not allocated, interest on postretirement medical benefits and stock-based compensation costs.

Fourth-quarter revenue was $5.74 billion versus $5.43 billion in the third quarter of 2009. Income from continuing operations attributable to Schlumberger was $817 million – an increase of 4% sequentially.

Oilfield Services fourth-quarter revenue of $5.17 billion was up 4% compared to the segments.third quarter of 2009. Sequential pretax segment operating income of $1.01 billion was down 3%.

WesternGeco fourth-quarter revenue of $549 million was up 19% sequentially. Fourth-quarter pretax segment operating income of $115 million was up 89% compared to the third quarter of 2009.

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Oilfield Services

Fourth-quarter revenue of $5.17 billion increased 4% sequentially, with all Areas, except Europe/CIS/Africa, contributing to the improvement. Sequential growth was driven by increased deepwater and exploration-related activity leading to demand for Wireline, Testing Services and Drilling & Measurements technologies, while growth was also recorded on land in North America, primarily from increased Well Services activity. In addition, seasonal year-end strength was seen in software and product sales in a number of GeoMarkets – in particular for SIS software and Artificial Lift products. These increases, however, were partially offset by lower activity in Russia and in the Mexico/Central America GeoMarket.

Fourth-quarter pretax operating income of $1.01 billion was down 3% sequentially. Pretax operating margin decreased 157 basis points (bps) sequentially to 19.5% primarily due to lower activity coupled with a less favorable revenue mix in Russia and in the Mexico/Central America GeoMarket. Pricing concessions made earlier in the year also contributed to the sequential decrease in margins.

Fourth Quarter 2008 ResultsNorth America

Fourth-quarter revenue of $6.26$873 million was 6% higher sequentially. Pretax operating income of $18.0 million was down 35% sequentially.

Sequentially, US Land GeoMarket revenue grew on increased drilling activity, the impact of which was partially diluted by lower pricing for Well Services technologies. US Gulf of Mexico GeoMarket revenue was up marginally as improved shelf activity and the beginning of a build-up in deepwater activity were hampered by downtime associated with Hurricane Ida as well as by some pricing pressure. Canada revenue was flat while Alaska GeoMarket revenue fell sequentially due to a slowdown in activity resulting from operator budget constraints.

Pretax operating margin decreased 129 bps sequentially to 2.1% as the increased activity in the US Land and Gulf of Mexico GeoMarkets was insufficient to offset the impact of a less favorable revenue mix in Canada and lower activity in the Alaska GeoMarket.

Latin America

Fourth-quarter revenue of $1.13 billion increased 5% sequentially. Pretax operating income of $178 million was down 9% sequentially.

Sequentially, Peru/Colombia/Ecuador GeoMarket revenue grew primarily on greater demand for Drilling & Measurements, Wireline and Testing Services technologies resulting from increased drilling activity. Higher SIS software and Artificial Lift product sales also contributed to this growth. Brazil revenue was higher due to increased offshore exploration activity as well as to SIS software and Completions product sales. Venezuela/Trinidad & Tobago GeoMarket recorded growth mainly from Integrated Project Management (IPM) activity while Argentina/Bolivia/Chile revenue was higher due to increased activity and SIS product sales. These increases were partially offset by a decrease in Mexico/Central America revenue as a result of reduced activity.

Pretax operating margin decreased 254 bps sequentially to 15.8% primarily as the result of the reduced activity and a less favorable revenue mix in the Mexico/Central America GeoMarket, which was only partly offset by the impact of increased activity and software and product sales in the rest of the Area.

Europe/CIS/Africa

Fourth-quarter revenue of $1.78 billion was 2%flat sequentially. Pretax operating income of $385 million was down 9% sequentially.

Sequentially, Nigeria & Gulf of Guinea GeoMarket revenue grew as the result of strong Testing Services product sales and an increase in exploration activity that led to greater demand for Wireline services. In the West & South Africa GeoMarket revenue increased on high demand for Drilling & Measurements services. The

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North Sea GeoMarket also recorded growth from increased Well Services stimulation activity while Libya GeoMarket revenue increased on higher deepwater Testing Services and Wireline exploration activity. These increases, however, were partially offset by lower revenue in Russia as a result of client budgetary constraints which mainly affected IPM activity. Revenue was also lower in the North Africa GeoMarket on reduced Testing Services product sales and in the Caspian GeoMarket on the completion of drilling campaigns.

Pretax operating margin decreased 208 bps sequentially butto 21.6% largely as the result of the lower activity in Russia.

Middle East & Asia

Fourth-quarter revenue of $1.31 billion increased 7% sequentially. Pretax operating income of $426 million was 15%9% higher year-on-year. sequentially.

Sequentially, revenue growth was driven by an increase in deepwater and exploration-related activity that led to strong demand for Wireline services. Seasonal year-end SIS software and Artificial Lift product sales also contributed to the increase in revenue.

Pretax operating margin improved 66 bps sequentially to 32.4% primarily as the result of the more favorable mix of deepwater and exploration-related activity in addition to year-end SIS software sales.

WesternGeco

Fourth-quarter revenue of $549 million increased 19% sequentially. Pretax operating income of $115 million increased 89% sequentially.

Sequential revenue growth was led by Multiclient which recorded strong year-end sales of wide-azimuth surveys in the US Gulf of Mexico. Land revenue also grew due to increased activity in the Middle East and North Africa. These increases, however, were partially offset by a significant decrease in Marine as the result of weaker pricing, project start-up delays and vessel transits.

Pretax operating margin improved 776 bps sequentially to 20.9% primarily as a result of the high Multiclient sales that were partially offset by the impact of the lower pricing and project delays in Marine.

Full-Year 2009 Results

Oilfield Services

Full-year 2009 revenue of $20.52 billion declined 16% versus 2008. Lower natural gas prices and unfavorable market fundamentals resulted in a 37% decline in North America revenue, primarily in the US Land and Canada GeoMarkets. Europe/CIS/Africa revenue declined primarilydecreased 13% mainly due to athe weakening of the local currencies against the US dollar and fromreduced activity in the Russia, North Sea, West & South Africa and Caspian GeoMarkets as well as in Framo, which was partially offset by increased activity in the North Africa GeoMarket. Middle East & Asia revenue also fell by 9% primarily due to decreases in the East Asia, East Mediterranean, Arabian and Australia/Papua New Guinea GeoMarkets. Latin America revenue was only marginally lower than last year as the impact of the weakening of local currencies against the US dollar and

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much lower activity in Russia as the result of reduced customer spending and seasonal slowdowns. In Latin America, revenue fell due to weaker local currencies and lower activity in the Venezuela/Trinidad & Tobago and Peru/Colombia/Ecuador were nearly offset by stronger activity in Mexico/Central America GeoMarkets. Middle East & Asia declined on lower activity in the Australia/Papua New Guinea/New Zealand and Qatar GeoMarkets. These decreases, however, were partially offset by an increase in North America as the resultBrazil. Weakening of strong activity inlocal currencies against the US Gulf of Mexico and US land West GeoMarkets. Local currency changesdollar reduced Oilfield Services fourth-quarter2009 revenue by approximately 3%4%. Across the Areas, all of the Technologies recorded revenue declines except Testing Services. IPM recorded revenue growth compared to the same period last year.

Fourth-quarter pretax operating income of $1.60 billion was 6% lower sequentially but 4% higher year-on-year. Sequentially,Full-year 2009 pretax operating margin decreased from 26.7%5.7 percentage points to 25.6% primarily as a result of reduced activity levels21.1%, on the significant drop in the Europe/CIS/Africa, Latin America and Middle East & Asia Areas, partially offset by the improvement in overall activity and a more favorable revenue mixpricing pressure experienced across all the Areas, but most notably in North America.

North America

Revenue of $1.56$3.71 billion increased 4% sequentiallywas 37% lower than last year with reductions across the entire Area. The decreases were highest in US Land and 17% year-on-year. Pretax operating income of $346 million increased 9% sequentially and 2% year-on-year.

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Sequentially, the US Gulf of Mexico GeoMarket activity recovered from the slowdown experienced during the hurricane season of the third quarter and realized further growth onCanada, where lower natural gas prices resulted in a higher ultra deep-water rig count that led to strong demand for Wireline, Well Testing and Well Services technologies. The US land West GeoMarket revenue increased on strong demand for Well Services and Drilling & Measurements services and Artificial Lift products while the Alaska GeoMarket experienced a seasonal increasesteep drop in activity that resulted in robust demand for Well Services and Drilling & Measurements technologies. SIS experienced growth from strong year-end software and hardware sales. These increases were partially offset by decreased revenue in the US land Central and North GeoMarketsconsequent pressure on reducing rig count that accelerated at quarter end.pricing. Canada GeoMarket revenue was also lower primarily as the result of the weakening of the Canadian dollar against the US dollar.

Pretax operating margin improved sequentially from 21.1% to 22.3% mainly as a result of stronger activity levels and increased high-margin services Revenue in the US Gulf of Mexico US land WestGeoMarket was severely impacted by weaker shelf drilling activity and Alaska GeoMarkets. These increases were partially offset bystrong pricing pressurepressure.

Pretax operating margin fell 17.3 percentage points to 5.8% due to the significant decline in activity levels across the US land Central and North GeoMarkets.Area, combined with the severe pricing erosion.

Latin America

Revenue of $1.11$4.22 billion was 3%marginally lower sequentially but increased 18% year-on-year. Pretax operating income of $200 million decreased 13% sequentially and 4% year-on-year.

Sequentially, revenue in the Venezuela/Trinidad & Tobago GeoMarket declined as a result of lower demand for Wireline and Well Services technologies and Completions products, while the Mexico/Central America GeoMarket experienced lower activity in Integrated Project Management (IPM) projects. These decreases were partially offset by higher offshore exploration-related activity in the Brazil GeoMarket that ledcompared to robust demand for Wireline, Well Testing and Drilling & Measurements services, while activity in the Peru/Colombia/Ecuador GeoMarket increased due to strong demand for Artificial Lift and SIS products. Area revenue was also reduced by approximately 4% due to the2008. The weakening of local currencies against the US dollar.dollar reduced 2009 revenue by approximately 3%. In addition, Venezuela/Trinidad & Tobago revenue fell due to significantly reduced customer spending while Peru/Colombia/Ecuador revenue was lower due to reduced gain share in IPM projects. These decreases were mostly offset by higher IPM activity in Mexico/Central America and increased offshore activity in Brazil.

Pretax operating margin declined sequentially from 20.1%decreased 245 bps to 18.0% from lower17.8% primarily as the result of the sharp activity and a less favorable revenue mixdecline in the Venezuela/Trinidad & Tobago GeoMarket, reducedand the lower gain share from IPM projects in the Peru/Colombia/Ecuador GeoMarket, and cost inflation and a less favorable revenue mix in the Mexico/Central America GeoMarket.Ecuador.

Europe/CIS/Africa

Revenue of $2.05$7.15 billion decreased 5% sequentially but increased 16% year-on-year. Pretax operating income of $533 million decreased 15% sequentially but was 8% higher year-on-year.

Sequentially, Area revenue was 5%13% lower than last year largely due to the weakening of local currencies against the US dollar, particularlywhich reduced revenue by approximately 7%. In addition, revenue was negatively impacted by reduced customer spending that resulted in significantly lower activity and pricing erosion in Russia and the North Sea. Revenue in the North Sea, Continental EuropeWest & South Africa and Russia. Additionally, Russia experienced significant reductionsCaspian GeoMarkets and in Framo was also negatively impacted by lower activity from lower customer spending and the seasonal slowdown in Sakhalin. Lower Framo revenue also contributed to the decline.levels. These decreases were partially offset by significantly increased activitya revenue increase in the LibyaNorth Africa GeoMarket fromdue to strong demand for Artificial Lift products and for Drilling & Measurements, Well Testing and Wireline services, as well as in the Continental Europe GeoMarket from higher demand for Wireline and Drilling & Measurements technologies.Services product sales.

Pretax operating margin decreased sequentially from 29.0%margins declined 357 bps to 26.1% primarily due to23.9% on a combination of the overall lower activity and a less favorable revenue mix inheavy pricing pressure across the North Sea and Nigeria & Gulf of Guinea GeoMarkets and Russia. The decrease in Framo revenue also contributed to this result.Area.

Middle East & Asia

Revenue of $1.47$5.23 billion was 2%9% below 2008. Revenue was down across much of the Middle East, especially in the East Mediterranean and Arabian GeoMarkets, due to reduced demand for Drilling & Measurements, Wireline and Testing Services technologies. Revenue in Asia also fell, primarily due to a decrease in offshore exploration activity, which was most significant in the East Asia and Australia/Papua New Guinea GeoMarkets, resulting in lower sequentially but 9% higher year-on-year. demand for Testing Services and Wireline technologies as well as Completion Systems products.

Pretax operating income of $491 millionmargin decreased 7% sequentially but increased 4% year-on-year.

Sequentially, Area revenue declined mainly268 bps to 32.4% primarily as a result of weather-related effects in the Australia/Papua New Guinea/New Zealandlower overall activity and China/Japan/Korea GeoMarkets, lower activity in Qatar, a less favorable activityrevenue mix across the Area.

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mixWesternGeco

Full-year revenue of $2.12 billion was 25% lower than 2008. Revenue decreased across all product lines, with the largest declines experienced in Brunei/Malaysia/PhilippinesMarine and Multiclient. Marine revenue declined due to lower activity combined with reduced customer spendingpricing as the result of weak market conditions. Multiclient revenue decreased primarily in the China/Japan/KoreaNorth America, as customers continued to reduce discretionary spending. Land revenue fell on lower crew utilization, while Data Processing revenue was down reflecting lower activity primarily in Europe/Africa and Arabian GeoMarkets. These declines primarily affected demand for Wireline, Drilling & Measurements and Well Services technologies, but were partially offset by the positive impact of retroactive price adjustments for a Wireline contract in addition to growth in the Gulf GeoMarket for Artificial Lift products and Well Services and Drilling & Measurements technologies.North America.

Pretax operating margin declined sequentially from 35.5%decreased 14.1 percentage points to 33.5%15.4% primarily due to the overall lower level ofweaker Marine activity in the Areaand pricing as well as a less favorable revenue mix in the Arabian and India GeoMarkets.lower Multiclient sales.

Revenue backlog was $1.0 billion at December 31, 2009, compared to $1.8 billion at December 31, 2008.

Total YearFull-Year 2008 Results

Oilfield Services

Full-year 2008 revenue of $24.28 billion increased 20% versus 2007 driven by Area growth of 28% in Latin America, 24% in Europe/CIS/Africa, 18% in Middle East & Asia and 11% in North America.

All Technologies experienced double-digit growth, most notably in Well Services, Drilling & Measurements and Wireline.

Pretax operating income of $6.50 billion in 2008 was 9% higher than 2007. However, pretax operating margin declined 256 basis points (bps)bps to 26.8% primarily due to reduced pricing for well stimulation services in the US land GeoMarkets, a higher mix of low-margin third-party managed services in the Mexico/Central America GeoMarket and cost inflation across all Areas.

North America

Revenue of $5.91 billion grew 11% versus 2007. Growth was led by the US land West GeoMarket mostly due to increased gas shale activity that resulted in robust demand for Well Services and Drilling & Measurements technologies and by the US land Central GeoMarket on higher rig activity and strong Artificial Lift product sales. The Canada GeoMarket revenue was higher from demand for Well Services and Drilling & Measurements technologies while the US Gulf of Mexico GeoMarket grew on increased deepwater activity the resulted in strong demand for Drilling & Measurements and Wireline services in addition to Completion Systems products.

Pretax operating margin decreased 557 bps to 23.2% primarily as the result of lower pricing for well stimulation services in the US land GeoMarkets and cost inflation across the Area.

Latin America

Revenue of $4.23 billion was 28% higher than 2007 on double-digit growth across all GeoMarkets. The Mexico/Central America GeoMarket increased on significantly higher IPM activity while the Peru/Colombia/Ecuador GeoMarket also experienced increased IPM activity in addition to robust demand for Wireline services and for Artificial Lift products and SIS products.software. The Brazil GeoMarket grew on higher offshore activity that resulted in stronger demand for Well Testing, Wireline and Well Services technologies. The Venezuela/Trinidad and Tobago GeoMarket experienced increased demand for Wireline, Drilling & Measurements and Well Services activities.

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Pretax operating margin of 20.3% declined 262 bps versus 2007 as a result of an increased mix of low-margin third-party managed services in the Mexico/Central America GeoMarket and cost inflation across the Area.

Europe/CIS/Africa

Revenue of $8.18 billion increased 24% versus the same period last year. Growth was led by Russia which experienced strong demand for Wireline, Well Services and Drilling & Measurements technologies. The West & South Africa, North Sea and Caspian GeoMarkets grew on increased exploration-related services as well as strong demand for Well Services technologies. The Continental Europe GeoMarket was higher due to strong drilling-related activities and demand for SIS products.offerings. The consolidation of Framo also contributed to the increase.

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Pretax operating margin decreased 112 bps to 27.4% primarily as a result of reduced pricing in the Libya GeoMarket and a less favorable revenue mix in the Nigeria & Gulf of Guinea GeoMarket and Russia. The consolidation of Framo also reduced total Area margin.

Middle East & Asia

Revenue of $5.72 billion was 18% higher than the prior year. All GeoMarkets experienced growth, most notably in the Arabian, Australia/Papua New Guinea/New Zealand, Gulf, and East Mediterranean GeoMarkets. Among the Technologies, growth was strongest in Wireline, Drilling & Measurements, Well Services and Well Testing.

Pretax operating margin was nearly flat at 35.0% as the positive impact of the higher overall activity level was offset by cost inflation.

Total Year 2007 Results

Full-year 2007 revenue of $20.31 billion increased 21% versus 2006, led by Area growths of 31% in both the Middle East & Asia, and in Europe/CIS/Africa and 29% in Latin America, while North America remained essentially flat. Pretax operating income of $5.96 billion in 2007 was 28% higher than 2006.

Pretax operating margins of 29.3% improved 164 bps in 2007 versus 2006. Higher activity and expansion of higher-margin new technology deployment across Europe/CIS/Africa, Middle East & Asia and Latin America Areas were the principal contributors to this performance. In North America, pricing erosion in pressure-pumping well-stimulation activities moderated year-on-year margin growth within the Area.

Among the GeoMarkets, the greatest increases in revenue were recorded in the North Sea, followed by Mexico/Central America, Arabian, West & South Africa, and Venezuela/Trinidad & Tobago.

Significant demand was seen for all Technologies led by Drilling & Measurements, Wireline, Well Testing, and Completions Systems as customers continued to improve exploration and production performance in the search for new hydrocarbon reserves and in the need to increase production and boost recovery from existing fields.

North America

Revenue of $5.34 billion increased marginally over 2006 primarily due to higher demand for Drilling & Measurements, Well Testing and Wireline activities in the US Land Central, US Land North and the US Gulf Coast GeoMarkets. However, this performance was offset by pricing erosion in well stimulation activities across the Area.

Activity across US Land continued to grow driven by the increase in rig count and higher service intensity in unconventional natural gas reservoirs. However, weakness in natural gas prices and excess well stimulation related pressure pumping capacity led to a year-on-year decline in pricing in stimulation related activities. The US Gulf Coast GeoMarket continued to grow driven by demand for exploration related activities.

In Canada year-on-year revenue declined sharply due to operator slowdown driven by weakness in natural gas prices and uncertainty over the fiscal regime.

Pretax operating margin declined by 167 bps to 28.8% primarily due to lower pricing in well stimulation related activities across the Area together with lower activity in Canada.

Latin America

Revenue of $3.30 billion in 2007 increased 29% over 2006, led by a surge in IPM-related activity in Mexico following the budget-related slowdowns in the previous year, followed by the growth in exploration-related activities in the Peru/Columbia/Ecuador and Latin America South GeoMarkets. The Venezuela/Trinidad & Tobago GeoMarket also grew with higher rig count-driven activity in addition to finalization of the contracts related to drilling barges.

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The Mexico/Central America GeoMarket recorded robust growth with the start of several integrated projects. Peru/Columbia/Ecuador and Latin America South witnessed strong growth in exploration-related activities. Demand was strong for all Technologies led by IPM, followed by Drilling & Measurements, Wireline and Well Testing services.

Pretax operating margin increased strongly by 358 bps to reach 22.9%. This increase resulted mainly from a favorable activity mix and improved pricing.

Europe/CIS/Africa

Revenue of $6.60 billion in 2007 increased 31% over 2006 with the highest growth recorded in the North Sea, West & South Africa and North Africa GeoMarkets.

Strong revenue increases were recorded in the North Sea, West & South Africa and North Africa driven by the expansion of exploration-related activities. GeoMarkets in Russia continued to grow strongly due to a combination of organic growth and the completion of the acquisition of Tyumenpromgeofizika during the second quarter of the year.

Pretax operating margins increased by 301 bps to reach 28.6%. This performance was due to a combination of increased activity, improved pricing and accelerated new technology deployment across most GeoMarkets partially offset by a pricing decline in well stimulation activities in the East Russia and subdued activity in Nigeria.

Middle East & Asia

Revenue of $4.87 billion in 2007 increased 31% over 2006 with the largest increases recorded in the Arabian GeoMarket, followed by East Mediterranean, Australia/Papua New Guinea, Qatar, Gulf and India.

The Australia/Papua New Guinea GeoMarket recorded the highest growth rate in the Area driven by higher exploration related activity. Growth in East Mediterranean, Qatar, Gulf and India resulted from higher exploration and development activity while the Arabian GeoMarket continued to grow, albeit at a lower rate than the previous year, as new rig additions slowed down in Saudi Arabia.

Pretax operating margin increased by 296 bps to an impressive 35.1%. This performance was driven by continued increase in activity and pricing increases together with deployment of higher-margin Wireline and Drilling & Measurements new technologies.

WesternGeco

Fourth Quarter 2008 Results

Fourth-quarter revenue of $599 million decreased 33% sequentially and 25% year-on-year. Pretax operating income of $88 million was 75% lower sequentially and 68% lower year-on-year.

Sequentially, Marine revenue decreased significantly due to seasonal vessel transits, dry docks and project startups. Multiclient revenue was also down markedly as customers reduced discretionary spending. Land revenue, however, increased due to higher utilization and the start of new projects in Latin America and Africa while Data Processing recorded modest growth.

Pretax operating margin decreased sequentially from 39.8% to 14.7% due to lower Marine vessel utilization, higher transits and the slowdown in Multiclient sales, the effects of which were only partially offset by the higher Land crew utilization.

Total Year 2008 Results

Full-year 2008 revenue of $2.84 billion was 4% lower than 2007. Multiclient revenue was down 18%, primarily as the result of significantly lower client discretionary spending in the fourth quarter of 2008, while Land

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decreased 15% on lower crew utilization. These decreases were partially offset by a 4% revenue increaseincreases in Marine, as a result of additional vessel capacity and higher pricing, and a 19% increase in Data Processing, which experienced a growth in activity in all geographic areas.

Pretax operating margin of 29.5% decreased 634 basis pointsbps due to significantly lower Multiclient sales, reduced Land activity and cost inflation that affected Marine operations.

Revenue backlog was $1.8 billion at the end ofDecember 31, 2008, compared to $1.2 billion at the end of 2007, of which an estimated $1.3 billion is expected to be realized in 2009.

Total Year 2007 Results

Full-year 2007 revenue of $2.96 billion increased 20% versus 2006. Pretax operating income of $1.06 billion in 2007 was 31% higher than 2006. Pretax operating margin reached 35.8% – an increase of 299 bps in 2007 versus 2006 – demonstrating continued high vessel utilization, pricing increases in Marine and accelerating demand for exploration-driven seismic services. Q-Technology revenue reached $1.14 billion, representing 38% of 2007 full-year revenue.

Marine revenue grew 17% due mainly to strong activity in Asia, Middle East, India, Europe and North America as operators continued to focus on new exploration horizons. High vessel utilization, continued adoption of Q-Technology and improved pricing contributed to this performance. Multiclient revenue increased 30% driven by higher sales in North America as the demand for E-Dog and E-Cat surveys remained strong during the first half of the year augmented by strong demand for E-Octopus surveys during the second half. Data Processing revenue increased 26%, reflecting higher acquisition volumes, higher levels of Q processing, and higher activity in India, Asia, North Africa, Europe and the Caspian. Land revenue increased 6% with the continued adoption of Q-Land* technology in Africa and in the Middle East.

During the second quarter of 2007, the seventh Q-Technology equipped vessel – the Western Spirit – was launched.

Revenue backlog was $1.2 billion at the end of 2007 compared to $1.1 billion at the end of 2006.December 31, 2007.

Interest and Other Income

Interest and other income consisted of the following:

Interest Income

The average return on investments decreased to 1.4% in 2009 from 3.5% in 2008 and the weighted average investment balance of $4.5 billion in 2009 increased $1.1 billion compared to 2008.

The average return on investments decreased to 3.5% in 2008 from 5.2% in 2007 and the weighted average investment balance of $3.4 billion in 2008 increased $286 million compared to 2007.

The average return on investments increased to 5.2% in 2007 from 4.5% in 2006 and the weighted average investment balance of $3.1 billion in 2007 increased $531 million compared to 2006.

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Equity in Net Earnings of Affiliated Companies

The equity in net earnings of affiliated companies primarily represents Schlumberger’s share of the results of its 40% interest in the M-I SWACO drilling fluids joint venture with Smith International, Inc.

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Schlumberger’s equity income from this joint venture was $131 million in 2009, $210 million in 2008 and $178 million in 2007. The decrease in equity income relating to this joint venture from 2008 to 2009 was attributable to a significant decline in M-I SWACO activity levels, primarily in its United States and Europe/Africa regions, as well as increased pricing pressures.

Interest Expense

Interest expense of $221 million in 2009 decreased by $26 million compared to 2008 due to a decline in the weighted average borrowing rates, from 4.5% to 3.9%. The weighted average debt balance of $5.6 billion in 2009 increased $148 million compared to 2008.

Interest expense of $247 million in 2008 decreased by $27$28 million compared to 2007 due to a decline in the weighted average borrowing rates, from 5.0% to 4.5%. The weighted average debt balance of $5.5 billion in 2008 was essentially flat compared to 2007.

Interest expense of $275 million in 2007 increased by $40 million compared to 2006. The weighted average borrowing rates of 5.0% in 2007 increased from 4.6% in 2006. The weighted average debt balance of $5.5 billion in 2007 increased by $420 million compared to 2006, primarily due to the funding, in the second quarter of 2006, of the WesternGeco transaction described in Note 4 to theConsolidated Financial Statements.

Other

Gross margin was 30.2%23.4%, 30.2% and 33.5% in 2009, 2008 and 31.4%2007, respectively.

The decline in gross margin in 2009 compared to 2008 2007was primarily attributable to lower activity coupled with the impact of a significant reduction in pricing across all of Oilfield Services, most notably in North America and 2006, respectively.Europe/CIS/Africa. Weaker Marine activity and pricing and reduced Multiclient sales in WesternGeco also contributed to the margin decline.

The decline in gross margin percentage in 2008, compared to 2007, was primarily attributable to the following factors: reduced pricing for well stimulation services in the US Land GeoMarkets, a higher mix of low-margin third-party managed services in the Mexico/Central America GeoMarket, significantly lower Multiclient sales in WesternGeco and the impact of cost inflation across all Areas within Oilfield Services as well as the Marine operations of WesternGeco.

The increase in gross margin percentage in 2007, compared to 2006, was primarily due to increased pricing, stronger demand for higher-margin technologies, and operating efficiency improvements.

As a percentage of Revenue, Research & engineering, Marketing and General & administrative expenses, as a percentage ofRevenue, were as follows: