Malcolm Theobald - Vice President of Investor Relations Andrew Gould - Chairman of the Board, Chief Executive Officer Simon Ayat - Chief Financial Officer, Executive Vice President, Treasurer Analysts : Bill Herbert - Simmons & Co. Ole Slorer - Morgan Stanley Michael LaMotte - J.P. Morgan Kurt Hallead - RBC Capital Markets James Crandell - Lehman Brothers Geoff B. Kieburtz - Citigroup Ken Sill - Credit Suisse Alan Laws - Merrill Lynch Mike Urban - Deutsche Bank Brad Handler - Wachovia Securities Kevin Simpson - Miller Tabak Pierre Conner - Capital One Rob MacKenzie - FBR Dan Pickering - Pickering EnergyPartners Michael LaMotte - JP Morgan

Welcome to the Schlumberger earnings conference call. (OperatorInstructions) I would now like to turn the conference over to our host, VicePresident of Investor Relations, Mr. Malcolm Theobald. Please go ahead.

Thank you, Julie. Welcome to today’s third quarter 2007 conference call. Beforewe begin today’s call, I’d like to review the logistics and agenda. Some of theinformation in today’s call may include forward-looking statements, as well asnon-GAAP financial measures. A detailed disclaimer and other importantinformation are included in the FAQ document, which is available on our website or upon request. For today’s agenda, Simon Ayat, Chief Financial Officer, will begin withcommentary on the financial results; then Andrew Gould, our Chairman and ChiefExecutive Officer, will provide an overview of the third quarter activity andoutlook. Finally, we’ll take questions from the audience. Now Simon Ayat will discuss the financials.

Thank you, Malcolm. Ladies and gentleman, good morning and thank you forparticipating in this conference call. Third quarter net income was $1.09 pershare, up $0.07 sequentially, and $0.28 above the same quarter of last year.Oil field services generated $1.5 billion in pre-tax operating income; flat withthe second quarter but declined in margin terms by 108 basis points to 29.4%. By area, the highlights were as follows: North America pre-tax margindeclined 427 basis points sequentially, to 26.9%, due to weather-relateddisruption in the Gulf of Mexico, the continued erosion of pressure pumpingstimulation pricing on land in the U.S., and a reduction of explorationactivity in the Alaska, partly compensated by a rebound in Canada after thesecond quarter spring break-up. Latin America pre-tax margin increased 10 basispoints sequentially to 23.7%, reflecting the improved margins in the Mexicoand Central America, and Peru,Colombia, Ecuadorgeomarkets. The improvement in the Mexicoand Central America geomarket was a result of thecontinued ramp up of new IPM projects that more than offset the projectsstart-up costs. For ECA -- the Europe, CIS, Africaarea -- the pre-tax margin improved 50 basis points sequentially to 29.2% with Russiaexperiencing a seasonally high offshore Sakhalin,and on land in Eastern Siberia, and a strong performancein the North Africa geomarket. This was partly offset by project delays inthe Caspian and Nigeria,and Libya wheremargins came under pressure. Middle East/Asia pre-tax margin increased 38 basis points sequentially, to35.7% on improvement in China,Japan, Korea,Australia and New Zealand, Papua New Guinea and Indonesiageomarkets, with continued exploration activity, while margins in the Middle East geomarkets remained steady. WesternGeco’s pre-tax income was$306 million, with a sequential margin improvement of 611 basis points, to38.6%. Marine margins improved with the introduction of the seventh Q vessel,higher utilization following the seasonal transit and dry docks in the previousquarter, and better prices. Dataprocessing also improved as a result of increased activity associated with themarine operations. This was partly offset by slower multi-client sales, mainlyin North America. Now, turning to Schlumberger as a whole; the effective tax rate was 20.8%,1.5 percentage points lower than last quarter, mainly due to the lowerproportion of pre-tax earnings in North America for both OFS and WesternGeco. Four quarter ETR is expected to be slightly higher than the current quarterlevel, and will continue to be impacted by the geographic mix of earnings. Theearnings for the quarter included $32 million of expenses related tostock-based compensation, as compared to $34 million in the previous quarter.We expect this expense for the full year 2007 to be approximately $135 million,a $21 million increase over 2006. As of September 30, net debt was $1.7 billion, significant liquidity events duringthe quarter included $293 million for a stock buy-back program; CapEx,including multi-client, of $790 million; and funding of the U.S.pension by an additional $150 million. CapEx, excluding $72 million of multi-client surveys capitalized, was $718million for the quarter and is expected to reach approximately $3 billion forthe year 2007. During the quarter, we bought back 3.1 million shares for $293 million, atan average price of $93.62. This brings the total share buyback under the 40million share repurchase program announced in April, 2006 to 24.1 millionshares for $1.6 billion at an average price of $66.93 per share. Now I turn the conference over to Andrew.

Thank you, Simon. Good morning, everybody. Growth in the third quarter wasdriven by international activity across a number of geomarkets in Latin America and in Russia,as well as by activity in China/Japan/Korea, Indonesiaand the Gulf in the Middle Eastern/Asia area. In North America, activity increased in Canada,but this was offset by weaker pricing for pressure pumping on land in the U.S.,and by a sharp revenue drop in the Gulf of Mexico, dueto the departure of several rigs to overseas locations, and a loss ofapproximately 15 operating days due to weather. Among our technology, growth was strongest at WesternGeco as the segmentrecovered from dry docks and vessel transits in the second quarter. Marineacquisition revenue for the quarter reached an all-time record, as pricing firmedand advanced Q technology acquisition techniques continued to be deployed. Inother technologies, growth was led by robust IPM activity and by demand for wirelineand drilling and measurements services, particularly in overseas markets. Looking at the areas in more detail, within North Americasequential revenue in the Canadageomarket rebounded on a higher rig count, led by demand for well services and wirelinetechnologies, following the seasonal spring break up. However, this was morethan offset by slowdowns in the U.S. Gulf Coast, as operators adoptedprecautionary measures during the hurricane season, with the approach ofvarious weather systems; and by capacity-driven pricing erosion in pressurepumping stimulation services in all three U.S.land geomarkets. Lower exploration activity and seasonal maintenance in Alaskaalso contributed to this reduction. In Latin America, sequential revenue growth wasprimarily driven by a continuing ramp-up in integrated project managementactivity; although the higher rig count, together with stronger demand fordrilling and measurements, artificial lift systems; and Schlumberger’sInformation Solutions Technologies in the Peru/Colombia/Ecuador geomarket, alsocontributed to growth. In Europe, CIS and Africa,sequential growth was driven by a strong performance in Russia.This resulted from a number of positive factors that included seasonally highactivity on land and offshore in East Russia; increaseddemand for IPM services and artificial lift products in South Russia;higher demand for drilling and measurements technologies in North Russia; as well as the impact of the consolidation of Tyumenpromgeofizika. Elsewhere in the area, increased demand for new technology, drilling andmeasurement services in North Africa, higher artificiallift product sales in continental Europe, and higherwireline activity in West and Southern Africa also droveresults. Overall sequential growth, however, was tempered by project slowdownsin Nigeria andin the Caspian. Within the Middle East and Asia,sequential growth resulted from higher activity in the China/Japan/Korea, Indonesia,Australia/Papua/New Guinea, India,Brunei/Malaysia/Philippines and Gulf geomarkets. This was partially offset bylower activity in Qatarand the Thailand/Vietnam geomarket. Advanced technology uptake continues as demand for new wireline technologieswas driven by the need for more accurate formation evaluation. New wirelinescanner deployments included high-pressure, high-temperature applications inthe U.S. Gulf of Mexico used for thin bed and laminated sand analysis in the U.S.and West Africa, and for evaluation of additionalnatural gas production in Mexico.Worldwide Scanner jobs have now exceeded 1,500 with more than 300 tools activethroughout the geomarket organization. Drilling and measurement scope services also continued their worldwideexpansion, with PeriScope imaging while drilling jobs in China, and TeleScopehigh-speed telemetry in combination with StethoScope formation pressure welldrilling technology on operations in Qatar, Brunei and the U.S. Gulf of Mexico. The shift towards more complex operations was highlighted during the quarterby a number of technical successes. Deeper reservoirs with consequent higherpressures and higher temperatures were logged with advanced high technologyservices, while new contracts were signed for deepwater projects in severalregions. IPM strengthened as the new Mexican projects ramped up. Current projectspassed important milestones and geographic expansion increased in growingmarkets in newer regions. Among the more active projects, IPM operationsincreased in geomarkets in the Europe, CIS and Africa;while the contribution made by the well construction business in Latin Americangenerally continued to grow. Turning now to WesternGeco, marine acquisition revenues increased throughhigher vessel utilization, following the seasonal transits and scheduled drydock inspections seen in the prior quarter. In addition the seventh Q vessel, theWestern Spirit which was launched in Q2, was fully active. Strong demand formarine seismic also led to improved pricing for both conventional and Q marinesurveys. Among the other WesternGeco products lines, data processing increased,driven primarily by higher sales in Europe, North America and Asia, while land activityremained flat and multi-client declined. In the immediate future, while there will be some recovery from the lowactivity levels in the Gulf of Mexico, natural gas activity in both Canada andthe U.S. is likely to stabilize as production remains relatively strong and gasstorage approaches winter at comfortable levels. As a result, pressure pumping pricing deterioration will continue. Thissituation, however, does not change our view that North American natural gassupply will require sustained activity to combat production decline, andadvanced technology to increase production rates from poorer qualityreservoirs. Overseas, growth will continue at varying rates between regions, due to theeffects of winter weather and project delays in certain countries. Global demand for oil remains strong, while non-OPEC production continues todisappoint. Production decline rates in mature areas and continuing projectdelays will inhibit non-OPEC supply increases; while personnel and equipmentshortages will restrict the industry’s ability to respond. Within this context, we see continuing demand for oil field services,products and services that help our customers sustain their current production,while adding reserves through new exploration. I will now hand the call back to Malcolm.

Thank you, Andrew. We will now open the call for questions.

Your first question comes from James Crandell – Lehman Brothers. James Crandell – Lehman Brothers: Andrew, I would like to start with a question about your favorite business, U.S.land stimulation. How much do you think your prices, on average, are down to-date?How much further do you think they go; and what sort of annualized rate do youthink that U.S.stimulation capacity is growing at currently?

I will take that question in three parts. So far I think pricingdeterioration is still single-digit compared to last year. I think it willaccelerate slightly in Q4. Where the bottom is I really don’t know, becausewhat we have is a situation very different from 2001, in that the bottom is going tobe created by additional capacity and not by a drop in the rig count. Because Iused the word stabilized quite consciously, in that we think at the currentlevel of storage, with the current production profile, rig count is likely toremain flat or go up or down a little bit, but basically not change very much. So what is going to change the pricing profile is the additional capacity. I’m not quite sure where we stand in theadditional horsepower that was coming on. But, you know, when we looked at it afew months ago, it was certainly an increment in the high teens, if not more. James Crandell – Lehman Brothers: Could you elaborate on your statement of project delays in certain countries?You mentioned Nigeriaand Caspian in your comments. Are there any more areas, and what is the magnitudeand timing of these delays as you see it now?

I think that in the case of Caspian, it’s unknown. I think in the case ofother countries, it’s really just a question of logistical difficultiesbecoming more and more complex and therefore perhaps the rate of growth thatpeople have been expecting from certain countries, while the growth will bethere, it’s not going to be quite as fast as they imagine. James Crandell – Lehman Brothers: In particular the two areas that I mentioned, Nigeriaand Caspian, or would other areas fall into that as well?

I think there are other areas as well but those are the two that well, inthe case of Nigeria,logistical difficulties make it difficult to see the rate of growthaccelerating at this point in time.

Your next question comes from Michael LaMotte – JP Morgan. Michael LaMotte – JP Morgan: I’d like to follow up on the comment that Libyacame under pressure. Can you talk about what specifically happened in thequarter and then maybe provide some outlook on North Africain general?

I think that Libyais suffering from what the previous FedChairman called irrational exuberance. In other words, I think, for example, ifyou take the number of wireline trucks in Libya,it has probably been multiplied by four in the last year. For the logistical difficulties that I was just mentioning with Jim, the rigcount is not followed, so you have huge overcapacity limited to that country atthe moment; but which means that everyone’s margins are under pressure. Michael LaMotte – JP Morgan: How does that all shake out as we go into ’08?

I think it depends on the rate at which the Libyan activity increases; but Libyais a country where logistics are difficult, so I don’t think the rig count isgoing to increase as fast as perhaps people have projected. I think it’ll take longer in ’08 to sort itout. Michael LaMotte – JP Morgan: Andrew, as you look into ’08, what would you say are the greatest challengesthat Schlumberger and the industry face? You’ve mentioned logistics a few timesnow.

I think the constraints on logistics -- and it’s really an end of ’08problem -- but the idea that the industry is going to ramp up 146 offshore rigsin a period of 18 months without a considerable loss in drilling efficiency isquite difficult for me to imagine. So, I actually think ’08 is a year when wewill continue to have very strong growth in traditional land markets but offshoregrowth is going to be limited by the number of new rigs coming on to the marketin the first three quarters. But logistical and crane difficulties, for allsorts of things, are getting more difficult, in my opinion at the moment,rather than less difficult.

Your next question comes from Bill Herbert – Simmons. Bill Herbert – Simmons: Multi-client sales off, down quarter on quarter and I think down year over yearas well. What’s going on in multi-client in the Gulf of Mexico?Do we think we’re amply supplied for the time being, or is this just atemporary period of stagnation?

: Bill Herbert – Simmons: Secondly, with respect to the contraction in North American margins, about430 bips, what percentage of that was driven by the Gulf of Mexico?

A very high percentage. Bill Herbert – Simmons: A very high percentage.

Because you understand that these stand downs, you can’t reduce cost in anyway because they’re for two or three days each time. Bill Herbert – Simmons: I understand that. That’s mostly, I would imagine, a transitory affair andyou should recover some -- if not most of that -- into the fourth quarter?

In the Gulf, yes.

Your next question comes from Kurt Hallead – RBC Capital Markets. Kurt Hallead – RBC Capital Markets: The question I have for you is your comment here about personnel andequipment shortages impacting the industry’s ability to respond. I’m assumingyou’re talking about the oil industry’s ability to respond to grow production.I’m curious about the equipment shortages. Is that a situation where theservice industry may be short on equipment and therefore may have the abilityto really start to push pricing up at this time?

I don’t think you should take my comment as relating purely to whatSchlumberger does. I think you should take it as relating to the whole chain;in other words, the capacity to build platforms, surface equipment, flow lines,everything else that you need to complete a project. Actually, as I justmentioned to the previous question, the story of when we get more offshorerigs. So, I don’t think you should take that comment as being limited purely towhat Schlumberger does; it’s across the whole spectrum of what the industryneeds to do a development project. Kurt Hallead – RBC Capital Markets: In the context of that question, is this kind of like a funnel effect whereyou get a lot of projects and oil companies trying to get a lot of things done,and they’re limited by that equipment? Does that give the oil service industry inaggregate the ability to get better pricing?

Overall, across time, yes. I think that the oil companies will be cautiousnot to allow excessive inflation to be built in by all bidding for the sameresources at the same time. So, if you like, it supports what I’ve told youbefore, that we think the growth period will go on for longer; but it may getspread out. Kurt Hallead – RBC Capital Markets: You referenced a couple of issues that we should be cognizant of in terms ofproject delays and some of these rig issues and so on. Does this alter yourgrowth rate viewpoint, where you had a high teens revenue better than that earningsgrowth rate through the end of the decade?

If you exclude North America, no. Actually, what Iwanted to get across as well is that Russiais now so large for us that the seasonal effect of winter weather in Russiawill have an effect on Q4; particularly as Q3 is the highest quarter becausethat’s when Sakhalin is really in full swing. I wantedto just get across that we have another weather effect that perhaps peoplehaven’t looked at before. Kurt Hallead – RBC Capital Markets: But you especially continue to be confident in the international growthrates being at or above that high teens rate in North America,is really the question?

North America is the question.

Your next question comes from Ole Slorer – Morgan Stanley. Ole Slorer– Morgan Stanley: You mentioned that pressure pumping deterioration and the margins in North America were down quite a bit sequentially in the quarter. Couldyou give us some idea of where contract pricing for the industry now, for morecommoditized- type services are, relative to the sort of pricing that wasrealized in the third quarter?

If I can just, perhaps point out, Ole, as I said in reply to the previousquestion, that the biggest effect on margins in the Q3 in North America was the lack of operating days in the Gulf of Mexico due to precautionary evacuations, not from land. There wasa deterioration on land but it was not the major part of it. In terms of thepricing of services, other than pressure pumping, we have not so far seen a noticeableeffect. Ole Slorer– Morgan Stanley: But my question was, where is pricing right now in pressure pumping relativeto the pricing that was realized in the third quarter?

Well, we’re only 17 days into the fourth quarter and I don’t know, is theanswer to that. Ole Slorer– Morgan Stanley: I’m not asking for the fourth quarter, but where they stand now.

I said in answer to a previous question that we felt that it would continueto deteriorate and perhaps be at a slightly higher rate in the fourth quarterthan the third. Ole Slorer– Morgan Stanley: You mentioned production declines in the metro areas. Could you be a littlebit more specific in terms of at what level you think non-OPEC productiondeclines, how you highlighted this a year ago and there was a very bearish oilmarket sentiment that you said that non-OPEC was way too optimistic and allthat. You reiterated it now, it has sortof played out. Can you help us a littlebit with how to think about what decline curves are? We are hearing anythingfrom 8% to 15%?

I’ve never given a public answer to this question, and I’m not going to. I use a figure that was used by one of ourmajor customers a few years ago, which was 8%. Now whether that’s acceleratingor not overall I think is an open question. What I do think is that a lot ofthe forecasting agencies are still using decline rates that are inferior tothat, which is what leads to the confusion. Ole Slorer– Morgan Stanley: One final question. Seismic capacity is there lots under construction there,particularly out of the Norwegian companies? When do you think that astandardized 3-D seismic contract pricing will peak? Are we one or two or threeor four years away from that?

Well it is certainly not in 2008, and after that I really don’t know, Ole.It depends. Every one of these boats so far has been three to six months lateand as you know, we have azimuthal shooting growing at the same time which usesmore boats, and exploration spend. It’s certainly not in 2008; but at whatpoint beyond that, I don’t know at this stage. Ole Slorer– Morgan Stanley: Electromagnetic; are you commercial now? Can you give us one final bit ofupdate on that a little bit for me?

Well, we are certainly commercial on magnetotellurics and yes, we arecommercial on CSEM as well.

Your next question comes from Geoff Kieburtz - Citigroup. Geoff Kieburtz – Citigroup: WesternGeco margins were very robust. Are they sustainable?

Well, if you exclude the seasonal effects of vessel transits in marine, theyare sustainable and in multi-client, yes, I think they’re sustainable. So theanswer overall is yes. There may be quarterly fluctuations, Geoff; but overall,yes. Geoff Kieburtz – Citigroup: So if we look at what might be an ’07 average margin for WesternGeco, youthink that that’s sustainable on a coupleyears out at least until maybe the effect of the --

I think so. Geoff Kieburtz – Citigroup: Just to clarify, your prior comment on the multi-year growth in the highteens, you’ve modified that to exclude North Americanow?

Well, I said through the end of the decade. What I’m saying is that we won’tget a high teen growth rate in North America in 2008.Everywhere else, we probably will not be that far from it; but in North America we’re not going to get it. Now what happens through theend of the decade, I can’t speculate yeton North America specifically. The rest of the world,I’m perfectly confident. Geoff Kieburtz – Citigroup: If I’m not mistaken, your previous comment about high teens growth throughthe end of the decade --

Did cover everything, yes. Geoff Kieburtz – Citigroup: Did cover everything. Are you kind of backing away from that a little bitnow?

I’m saying I have an uncertainty on North America, butnot from the rest. Geoff Kieburtz – Citigroup: On North America, we saw basically a pretty bigdecline; I understand the Gulf of Mexico impact.Overall, do you think that the North American EBIT contribution in ’08 is goingto be above, below or in line with the ’07 contribution?

Well, I don’t think I’m ready to answer that yet Geoff. Obviously, if thereis a big pricing impact on land, then it will have an effect. Geoff Kieburtz – Citigroup: So a decline is a possibility?

It’s not excluded, no.

Your next question comes from Ken Sill – Credit Suisse. Ken Sill – Credit Suisse: I wanted to follow up on that last one and make sure I’m hearing what you’resaying, which is; you said in your early comments that you see North America isgoing to need more activity over time to maintain production?

Yes. Ken Sill – Credit Suisse: But you don’t know what’s going to happen in ’08?

No. I have indicated that our feeling is that in ’08 on land, given thecurrent position of gas, a stable or slightly fluctuating up or down rig count isprobably our most likely scenario. In those circumstances, the additionalcapacity in pressure pumping will undoubtedly having a pricing effect,mitigated somewhat by the need for more technology to produce better frompoorer quality reservoirs. Ken Sill – Credit Suisse: But long term, you still see growth in revenues in North America?

On land? Ken Sill – Credit Suisse: Or just North America, yes.

Yes. Ken Sill – Credit Suisse: To follow up on a previous question, somebody had asked how much do youthink pressure pumping demand is growing ex the rig count in North America?

That’s a difficult question to answer because there are two types ofpressure pumping. There is the basic, which is probably not growing any moreand then there is the staged stimulation of horizontal wells that is probablystill growing quite fast. So the indicator should be the number of horizontalwells that are being drilled for gas, as opposed to straight vertical wells, orhorizontal wells with staged completions. Ken Sill – Credit Suisse: Is that something the commodity guys can do or not?

Not necessarily, no. Ken Sill – Credit Suisse: On the Gulf of Mexico, how much of a decline isrelated to what appears to be a long-term decline in shallow water activity andrigs moving versus deepwater? How much do you expect to see rebounding here inQ4?

Well, I don’t think that the shelf has a huge effect either way for us. Weshould at least recover the operating days we lost, which was 15 roughly, inthe deepwater. Ken Sill – Credit Suisse: So that was really just a deepwater issue from the rig advance?

For us, yes. Ken Sill – Credit Suisse: One final question. Your long-term contracts have generally been two tothree years, so is there another year of margin improvement related to oldcontracts rolling to higher prices coming in ’08? Or will it be more --

I would remind you it’s only one-third of the contracts that will roll, soI’m not prepared to speculate on that at this point in time. We’re not faralong enough in our planning cycle for me to see. But generally, I don’t seeany reason that there would be any material deterioration in overseas margins.

Your next question comes from Alan Laws – Merrill Lynch. Alan Laws - Merrill Lynch: When you look at the growth in Latin America and the rig reduction in theGulf of Mexico in the US, is the Latin America market heading toward becoming amore important region overall globally for you? You’re the biggest in that area.

Well, we are the biggest but I certainly think that there is an awful lot ofgrowth potential left in Latin America, yes. Alan Laws - Merrill Lynch: When you talk about the improvementsthere, is it mostly on straight demand or is it mix of services? Are they sortof joining the technology revolution, if you will?

Well, like everybody else, what they have to do is getting more complex; soyes, they are more and more interested in technology. Alan Laws - Merrill Lynch: From the technology adoption standpoint, the vehicle to do that, is thatmostly through IPM for you?

No, I would say Latin America is equally some verysophisticated customers, and IPM. Alan Laws - Merrill Lynch: If you looked out further, can you see this region moving towards the samemargin as the other international regions over time?

Well, it will always have the effect of the huge body of IPM contracts andthe third-party passthrough revenue that we have to recognize; which is atlower margin than our own services. Alan Laws - Merrill Lynch: The last thing is more of a longer-term growth question here. You remain prettycomfortable with the longer-term growth outlook. When you look out beyond ‘08, howmuch of the growth in the business going to be dependent on the delivery of thenew rigs?

Well obviously the size of the increase in the offshore rig count is a veryimportant factor in our growth beyond ’08, particularly as it migrates todeeper water and more and more complex reservoirs. Alan Laws - Merrill Lynch: When you look at your growth rate out that far, and if there was anopportunity for these to slide to the right, so to speak, does that affect yourgrowth outlook or does it make you feel less comfortable with your growthoutlook?

No, because we have always considered that there would be an element ofslippage in the delivery of offshore rigs and therefore we've taken that intoaccount in our thinking. I am sometimes worried that The Street hasn't. Alan Laws - Merrill Lynch: It's this thing you were talking about earlier about taking longer, but thedemand is still there, it just takes longer to materialize.

Your next question comes from Mike Urban – Deutsche Bank. Mike Urban - Deutsche Bank: How much impact have you seen from stimulation equipment moving out of North America and into the Russian market?

The real impact of that was when Canadawent down, and the Canadian companies moved fairly aggressively into Russia.I would say that was half one phenomenon of this year and since then, things havepretty much stabilized. I was in Russialast weekend. We still see frac fleets arriving in ones or twos but they'renothing that the market can't cope with. There's not the influx that there wasin the first half of this year. Mike Urban - Deutsche Bank: Demand is again outstripping the supply?

I would say it is pretty balanced at the moment. Mike Urban - Deutsche Bank: The Canadian market obviously recovered a bit seasonally. Would you expectmuch more than what we've seen right now, again given the gas fundamentals in North America and also the potential impact of tax and royalty changesin Alberta?

I think it's a very difficult call to make, and I don't think until we startto see a significant production decline we're likely to see a significant changein spending levels. I would imagine that this Q1 will be better than the lastQ1, but it's not going to be like 2006. Mike Urban - Deutsche Bank: So you may go positive on a year-over-year basis, simply because it's notgetting any worse rather than getting better?

Yes. It's getting better. I really don't know what the effect of thisroyalty thing is going to be.

Your next question comes from Brad Handler - Wachovia. Brad Handler - Wachovia Securities: Could you please just update us in terms of IPM orders and backlog? You gaveus some statistics last quarter; I was just hoping you could give it for 3Q.

It hasn't substantially changed since the end of the last quarter in termsof a solid backlog. In terms of enquiries and ongoing negotiations I would sayit has increased and it's shifted considerably away from Latin America. It's far more in Europe, CIS and Africaat the moment than in Latin America. But there's not asignificant shift in the overall backlog this quarter. Brad Handler - Wachovia Securities: I guess it was at $4.8 billion as of 2Q and it's more or less there, you'resaying? There was some offset relative to the revenue.

Yes. Brad Handler - Wachovia Securities: Could share your thoughts on the Mexican market? We've heard a lot aboutsome very large tenders which are potentially up and coming in '07, and yetthere are still budget constraints that you think drift into '08. Your thoughtson that please?

Well, I think there are still a considerable number of large tenders thatwill come out in 2007. I haven't personally heard of any budget constraints,but I can't claim to be up to date to the minute. There certainly are one ortwo or three very large tenders that are still likely to happen. Brad Handler - Wachovia Securities: In '07, you think?

In '07, yes. Brad Handler - Wachovia Securities: Can you share your comments related to that in terms of interest? ObviouslyChicontepec is a key area but are there some others on land which are also afocus for you?

I really don't want to go into that. But yes, we are still interested inexpanding in Mexico.

We'll go to the line of Kevin Simpson – Miller Tabak. Kevin Simpson - Miller Tabak: Andrew, two questions, maybe more quarterly oriented than you might want toget. The first would be that normally your Europe/Africa region sequentiallygoes higher in the fourth quarter, but your suggestion that Russiais big enough now that the seasonal influence made you mention fourth quarterspecifically. I am just wondering if we should expect 4Q comps for that region notto go up as they normally have done in 4Q?

Well as you know, that region really has two markets that are highlydependent on seasonality. One is the East and Central Russiawhere there will undoubtedly be a winter effect because people just shut down.The other is the North Sea, which is extremely weatherdependent, and the North Sea I really can't call, becauseI think people will go on drilling if the weather allows them too. So overall, I think that the weight of Russia-- and the North Sea by the way -- in the total ofEurope/Africa is likely to perhaps moderate the effect you are talking about inthe past, Kevin. It increased in Q4 over Q3. Kevin Simpson - Miller Tabak: I just wanted to go into one quick follow up on multi-client. I would havethought with the strength of the lease sale that you would've seen strongermulti-client sales for third quarter as people got prepared for it. So I wasjust wondering how that all played out and it sounds like you sound prettycomfortable that you're going to get actually a fourth quarter rebound there.

Yes, well don't forget that the lease sales concern different parts of theGulf, and we think that the upcoming lease sale in October is probably moreprospective for a lot of multi-client than the one that was in Q3. So, yes,we're pretty confident.

Your next question comes from Pierre Conner – Capital One. Pierre Conner - Capital One: My question is a direct follow on to that on the multi-client side. I wonderedwhat your perspective of future multi-client sales would be, given the contextof available multi-client wide-azimuth and E-Octopus data. Do you feel therecould be a move toward some of this other data that would impact currentlibrary sales?

What other data are you talking about, Pierre?I'm not quite sure what you mean. Do you mean are the E-Octopus sales indecline? Pierre Conner - Capital One: No, from the standpoint of available multi-client wide-azimuth data, willcustomers tend to move to that or wait for wide-azimuth data and therefore notbe accessing the current library of non-wide-azimuth data?

I'm not sure there are enough wide-azimuth multi-client out there to reallyaffect libraries yet. It may come, but not yet. Pierre Conner - Capital One: That's fair. Related to E-Octopus, can you remind us of how much impact isthere in the current quarter in WesternGeco from the earlier phases, 1 through3? The fourth and fifth phases don't get kicked off until first quarter.

No. I'm very comfortable in saying I don't know, Pierre,I'm afraid. Pierre Conner - Capital One: Switching gears on a follow up then back to pressure pumping. You mentionedabout a single-digit still decline in pricing and I'm wondering if you coulddissect that a little more, Andrew, relative to more sophisticated technologyand more commodity types.

Not really. I think it's in more uncertain geographical regions than others,which is a reflection of how you see the U.S.land rig count move in different areas. I don't think that where pressurepumping is being used in conjunction with staged completions that we've seenany pricing decline at all. But that's still a fairly small portion of theoverall market. Pierre Conner - Capital One: In the past you have given us a specific impact due to delays from stormstandbys and wondered if you've done that calculation on an EPS basis? I knowyou told us the majority of the North American margin compression was due tothat, but have you run through that specifically?

No, it's 15 days so you can assume it's more than $0.01. Pierre Conner - Capital One: I'm assuming also as per what you described in the supplemental is that mostof the tax delta -- essentially all of the tax delta -- was due to geographicmix change?

Yes.

Your next question comes from Rob MacKenzie – FBR. Rob MacKenzie - FBR: Andrew, my question is for you. You mentioned the first two StageFRAC jobsoutside of the U.S.in this market; one in the Mexico/Central America market and one in Saudi Arabia. Can you give us a feel for how muchpotential there is for expansion of StageFRAC in these and other markets andwhat the timing might be on that?

There's huge potential. We've done jobs in West Africaas well. It's really a question of the normal cycle of time it takes to spreada technology overseas which, as you know, is quite long. But there is a hugepotential overseas. Rob MacKenzie - FBR: Separately, also in the FRAC, you did a job with Flex Stem in the North Sea. Is this something that you are seeking to potentially replaceFRAC vessels with to reduce cost structure, or is this more of a niche product?If you could help us get a feel of how many more you might be building, theultimate size, same thing with the question on timing as well?

Well, I know we are looking to applying that idea in other theatres. I wouldsay it's more a solution to deal with the marginal demand. In other words,where you cannot afford a whole vessel or the market cannot support the wholevessel, and where the marine operating conditions allow you to use that sort ofpackage you can deal with the marginal demand much easier than a full-fledgedsteam vessel. Rob MacKenzie - FBR: How would you characterize the opportunities for that around the world?

I would rather not in public, if you don't mind.

Your next question comes from Dan Pickering – Pickering Energy Partners. Dan Pickering - PickeringEnergy Partners: Andrew, I'd like to come back to the international markets for a second. Youtalked about Libyawhere capacity additions have changed the market dynamic a little bit.

No, not a little bit, Dan; completely. Dan Pickering - PickeringEnergy Partners: Okay, completely. I'm trying to extrapolate across the internationalmarkets. Do you see general overcapacity in any of your product lines?

No. This is a very particular case where the opening of Libyaled everyone to believe there would be, I think, an immediate bonanza, sopeople shipped in equipment at a rate far faster than the increase in rig countwas taking place. Dan Pickering - PickeringEnergy Partners: So just to be clear, we shouldn't be thinking there are too many LWD toolsin the market, or too many wirelines in the market?

No, no. And in fact, I would exclude LWD from this argument even on Libya. Dan Pickering - PickeringEnergy Partners: Then back to North America a little bit. You'vetalked a lot about pumping. I was confused by one of your answers. It soundedlike you said the pricing impact in pumping had not yet had a margin impact.Was that correct?

What I said was that in the drop in our margins in Q3 in North America, the effect of the hurricane stoppages or the precautionarystoppages in the Gulf was by far the largest part of our margin decline. Dan Pickering - PickeringEnergy Partners: As it relates to the pumping business, can you talk to us and strategicallyhelp us understand, are you a market share defender in North America?Are you taking capacity out? How do you fight your way through a market withtoo much capacity?

I think you should assume that everybody is a market share defender at themoment.

Your next question comes from Michael LaMotte – JP Morgan. Michael LaMotte - JP Morgan: First on the buy back, Andrew, I have to say given the swoon that the stockshad in August I was a little surprised that you didn't buy back more. Is thereany thought or comment there?

No. At these levels, they are on a very regular program, Michael. Michael LaMotte - JP Morgan: So more programmatic than opportunistic?

Yes. Maybe we missed a tactical opportunity, but we didn't see the run up. Michael LaMotte - JP Morgan: Secondly on currency, currency issues have come up in the past and we'vetalked about the business being dollar neutral and revenues and costs beingvery much dollar linked. The question I have is more to cost of livingadjustments for ex-pats that are being paid in dollars. Is there any risk wecould see some real inflation in wages next year for those kinds ofadjustments?

I think you have to take into account there are two types of ex-pats. Sothere are ex-pats who rotate. An example would be WesternGeco crews or testingcrews who actually live in a country where they pay their bills in euros orpounds or whatever it happens to be, and we have always based our salaries indollars. For those people, over the last two years, we have already been makingcost-of-living adjustments to take account of the devaluation of the dollar. Then you have our permanently assigned expatriate personnel who live in thecountries where they work and who are paid in dollars and remunerated on a basesalary and on a cost-of-living coefficient -- all in dollars -- and thatpopulation, if there continues to be a serious decline in the dollar, we willhave to address it, yes. Yes, that will cause a little cost inflation. Michael LaMotte - JP Morgan: Can you give a sense in terms of the mix of employee base?

Not off the top of my head, Michael, no, but the vast majority are in dollarterms.

Your next question comes from Geoff Kieburtz - Citigroup. Geoff Kieburtz - Citigroup: You mentioned, Andrew, that you had always factored in some delays in termsof rig deliveries in your rig outlook. Can you give us some idea of averagedelay versus the stated delivery dates that you've been using?

Actually that's not the one I worry about. I think the operating efficiencyof a rig in its first year with a new crew, new out of the shipyard, is vastlyinferior to an existing offshore rig that has a well-honed crew and has beendrilling wells for years. So it's not so much the delay from the shipyard asthe actual drilling efficiency in the first year or two of operations. Geoff Kieburtz - Citigroup: Would you be using like a 50% factor or like an 80% factor?

I don't think we're that scientific about it, but it would be a prettysubstantial factor, Geoff, yes. Geoff Kieburtz - Citigroup: The second one was in your comments about Europe/CIS/Africaand the greater size of the weather and seasonal dependent markets. All otherthings being equal, will the potential declines in the fourth quarter causemargins to vary significantly? I mean, there's a mix effect kind of implied inyour comment.

Significantly, no. Very, yes. But not the sort of thing you've seen with theGulf of Mexico stoppages if that is what you are thinking, Geoff. Geoff Kieburtz - Citigroup: So it would be negative but not very large.

No. If you take Sakhalin as it's a seasonal shutdown,we can adjust cost accordingly. Geoff Kieburtz - Citigroup: So you can anticipate, right?

It's when you get a stoppage where a stoppage is unforeseen or brief thatyou cannot adjust cost that you get the accelerated market effect. Geoff Kieburtz - Citigroup: I guess what I was asking perhaps was whether those more seasonal of marketstypically carry higher margins than the average for the region or lowermarkets?

That would probably be a fair statement.

Your final question comes from Jim Crandell – Lehman Brothers. Jim Crandell - Lehman Brothers: Andrew, our data is showing that non-North American CapEx on E&P thisyear will be up close to 25% in '07. Assuming that you believe it, do youbelieve that '08 growth over '07 can be as strong as '07 versus '06?

The announced CapEx numbers? Geoff Kieburtz - Citigroup: I am just saying that based on our survey and then adjustments to our surveysince it's come out is showing growth of close to 25% in '07. I'm asking youwhether you believe that or not, I guess, do you think that '08 versus '07 willmatch that, exceed it, fall short of that, in terms of a global growth rateoutside of North America?

I actually suspect that it will at least match. Now what is the inflationcontent in that 25% in '07, I don't know how you measure that. What it will bein '08, I don't know either, but I would not be at all surprised if the rawnumbers match or exceed. Geoff Kieburtz - Citigroup: What do you see as the regions that could grow faster than 25%?

I think Latin America and parts of the Far East and Russia. Geoff Kieburtz - Citigroup: You have your three major competitors internationally all in various stagesof building up their IPM or bundled services capability. They've all ramped upCapEx. They've all ramped up infrastructure spending. They have a lot of newtools and services entering into the market. In markets that you've dominated technically or because you just have verystrong shares historically, what kind of issues does this create forSchlumberger? Do you still believe that technically speaking you're as farahead of the competition as you've ever been and doesn't really create anysignificant challenges?

Obviously having more capacity on the ground creates more challenges. Justbecause people have put equipment there doesn't mean that they can operateefficiently. There is obviously more threat than there used to be. Do we feelmassively under threat? Not at all.

We'll turn it back to Mr. Theobald. Please go ahead.

On behalf of the Schlumberger management team I would like to thank you forparticipating in today's call. Julie will now provide the closing comments.

Ladies and gentlemen, this conference will be available for replay after 2:15 pm today through midnight, November 18, 2007. You may access the AT&T teleconference replay systemat anytime by dialing 1.800.475.6701 and entering the access code 886387.International participants dial 320.365.3844. That does conclude our conferencefor today.