Malcolm Theobald – Vice President Investor Relations Andrew F. Gould – Chairman & Chief Executive Officer Simon Ayat – Chief Financial Officer & Executive Vice President

Kurt Hallead - RBC Capital Markets Ole Slorer - Morgan Stanley Bill Herbert - Simmons & Co. Dan Pickering - Pickering Energy Partners Michael LaMotte - J.P. Morgan Charles Minervino – Goldman Sachs Alan Laws – Merrill Lynch Jim Crandell – Lehman Brothers Michael Urban – Deutsche Bank Geoff Kieburtz – Weeden & Co., LP David Anderson – UBS Securities Robin Shoemaker – Citigroup Kevin Simpson – Miller Tabak & Co. Robert MacKenzie – Friedman, Billings, Ramsey Pierre Conner – Capital One

Welcome to the Schlumberger earnings conference call. (Operator Instructions) I would now like to turn the conference over to our host, Malcolm Theobald, Vice President of Investor Relations.

Welcome to today’s second quarter 2008 results conference call for Schlumberger Limited. Before we begin I’d like to review the logistics and format of the call. Some of the information in today’s call may include forward-looking statements as well as non-GAAP financial measures. A detailed disclaimer and other important information are included in the FAQ document which is available on our web site or upon request. And now for the call participants and format. Today’s call is being hosted from Paris where I am joined by both Andrew Gould, Chairman and Chief Executive Officer, and also Simon Ayat, our Chief Financial Officer. Prior to Andrew’s overview of the second quarter and his comments on the outlook, Simon will first review the quarter’s financial results. And now I’ll turn the call over to Simon.

Second quarter income from continuing operations was $1.16 per share up $0.10 sequentially and $0.14 above the same quarter of last year. Oilfield services second quarter revenue grew 8% sequentially reflecting strong growth in all geographical areas despite the impact of Canada’s spring break-up on North America. Outside of North America oilfield services revenue grew 11% sequentially. Oil technologies grew sequentially with IPM completions, this year’s testing SIS, and drilling and measurement are showing double-digit growth rates while WesternGeco was essentially fast for the first quarter. Oilfield services generated $1.7 billion in pre-tax operating income up $202 million from the first quarter with margins improving by 129 basis points to 28.1%. Outside North America operation margins improved by 218 basis points to 29.4%. By area, oilfield services highlights were as follows with comments on a sequential basis. North America pre-tax margin declined 167 basis points to 23.9% with improvements in the US land GecoMarkets which witnessed strong well services and one-line activities and in the US Gulf Coast which saw increased demand of high margin blending in measurements technologies were more than offset by the impact of the spring break-up in Canada. Without the impact of Canada, North America margins improved sequentially despite the continued increase in cost of operations. Latin America pre-tax margin rebounded by 296 basis points to 23% primarily due to increased demand for high margin technologies offshore in Mexico/Central America together with a more favorable activity mix in Brazil. In addition lower IPM project start-up costs on land in Mexico/Central America also contributed to this improvement. For ECA, the Europe/CIS/Africa area the pre-tax margin improved 181 basis points to 28.2%. The North Sea experienced a record quarter with high margin drilling and measurement technology is gaining from higher drilling activity and one-line benefitting from the drilling of high-pressure high-temperature wells. In addition the rebound of East Russia following the slowdown in the winter and the more favorable activity mix in West and South Africa GeoMarkets also contributed to this improvement. This performance was partially offset by operational delays in the Nigeria and Gulf of Guinea GeoMarkets. Middle East Asia pre-tax margin increased by 148 basis points to 36.3% most notably due to an increased demand for high margin wire line, drilling and measurement, and well services technologies in the China/Japan/Korea, Brunei/Malaysia/Philippines, and Gulf GeoMarkets. This performance was also driven by a more favorable activity mix for exploration driven services in Australia and Thailand/Vietnam. However, these increases were partially offset by a slowdown in India and Qatar. WesternGeco pre-tax income was $196 million and a margin of 29.2% well in line with the previous quarter as improvements in land and data processing performance were partially offset by the impact of the market/client sales mix in North America. Now turning to Schlumberger as a whole, the effective tax rate was 20.9% which was higher than last quarter due to the geographic mix of earnings in WesternGeco as well as the positive impact in the prior quarter of the favorable resolution of tax examination in a number of countries. The ETR is expected to be in the low 20s for the total year. The earnings for the quarter included $41 million of expenses relating to stock-based compensation and costs. Net debt was $2 billion at the end of the quarter. Significant liquidity events during the quarter included $555 million for a stock buy-back program, $1 billion of cap ex including $107 million of multi client surveys kept alive. During the quarter we bought back 5.45 million shares for $555 million at an average price of $101.90 per share. And now I turn the conference over to Andrew. Andrew F. Gould : The strong sequential growth seen in the second quarter throughout the Eastern Hemisphere led to the improved performance in all areas except North America where the effects of strong growth in the lower 48 states and the US Gulf of Mexico was more than offset by a prolonged spring break-up in Canada. Growth was helped by increased drilling efficiency in the North Sea, improved performance and lower mobilization costs on IPM projects in Mexico and Russia, and a favorable expiration mix particularly in the North Sea, Eastern Siberia, and Southeast Asia. The quarter also saw increased demand for well placement technologies and rigless work as operators strived to increase production from existing fields. Looking at the areas in more detail, the Lewis Land GeoMarkets in North America reported strong revenue increases driven by a robust demand for well services and wire line technologies in addition to a rebound in activity following the end of the seasonal winter weather restrictions. Offshore the US Gulf Coast also registered strong growth through demand for drilling and measurement services and a surge in completion product sales. These increases were largely offset by the seasonal slowdown in Canada. In Latin America sequential revenue growth was strong across the area led by Mexico/Central America GeoMarket due to the ramp up of IPM projects as well as the higher offshore activity. Peru/Colombia/Ecuador saw significant improvements due to the higher demand for wire line and drilling and measurements technologies together with increased gain share of an IPM activity in Colombia while the Venezuela/Trinidad and Tobago GeoMarkets benefitted from strong demand for well services and wire line technologies. In the Brazil GeoMarket growth was driven by higher expiration activity and increased SIS product sales. The Argentina/Bolivia/Chile GeoMarket improved on strong demand for well services and wire line technologies; however, growth was partially offset by operational delays in Argentina. Sequential revenue growth in Europe/CIS/Africa was driven primarily by demand for all technologies across the North Seas GeoMarket particularly by drilling and measurement and high-pressure high-temperature wire line services. Strong activity for all technologies in West and Southern Africa together with increased demand for expiration related activities in East Russia also contributed to growth. In the Middle East Asia area sequential revenue growth was led by the Arabian GeoMarket with high demand for well services and testing services technologies together with increased completion system product sales. The China/Japan/Korea GeoMarket experienced a robust rebound in activity following the winter slowdown in the first quarter while Australia/Papua New Guinea grew on increased offshore expiration activity that resulted in strong demand for wire line and drilling and measurement services. Growth was also recorded from expiration related wire line services in the Thailand/Vietnam and from wire line and well services technologies and SIS product sales in the Gulf GeoMarket. Well service technologies and artificial lift products were particularly strong in Indonesia. Activity declines in India and Qatar partially offset these positive factors. Oilfield services bidding activity during the quarter was strong particularly for drilling and measurements, wire line and testing services. This led to a number of significant contract awards particularly in the area of drilling services where advances in rotary-steerable systems and well placement technologies coupled with increased reliability are critical to operators in today’s environment of very high-spread costs for offshore rigs. Our WesternGeco sequential revenue is essentially flat but increases in multi client sales and data processing were offset by the seasonal drop in marine activity. Significant increases were recorded in the backlog for land operations while marine contract bidding activity remained robust. Newly awarded activity included a contract in Indonesia for the proprietary WesternGeco coil shooting as a [azimuthal] acquisition technique that uses a single Q-marine vessel to acquire [azimuthal] data thus significantly increasing operational efficiency. Also a contract in Kuwait for the largest Q-land acquisition and processing contract ever won that is expected to last for two years. Turning now to other events, we made a number of acquisitions during the quarter that increased our capabilities or added specific technologies to our portfolio. In Canada shareholders of Saxon Drilling voted to accept the Schlumberger offer made jointly with First Reserve Capital to acquire the company. Schlumberger has enjoyed a long association with Saxon which has included operating joint ventures in Mexico and Colombia that deliver drilling services to support integrative project management activities. Also in Canada we acquired the business of Extreme Engineering Limited a leading supplier of unmanned MWD systems to land markets in the US and Canada. This acquisition will help facilitate the rapid uptake of rotary-steerable systems technology in these highly cost-sensitive drilling environments. Other technology acquisitions included integrated expiration systems, a Germany-based technology leader in petroleum systems modeling, Staag Imaging a Houston-based provider of leading edge imaging technologies for seismic data processing. Both these acquisitions add further strength to our seismic offering in an expiration market where we expect to see more and more demand for technology integration. At the beginning of the year we predicted a more complex growth pattern for 2008. Notably we were uncertain of the evolution of North American natural gas activity and the extent to which delays in the completion of new built offshore rigs would affect growth. We anticipated solid increases in the Eastern Hemisphere land rig count. But at half year the uncertainty around the direction of natural gas drilling in North America has been removed and extremely high commodity prices have led operators to increase their budgets overseas. We anticipate that approximately 35 new offshore rigs will enter the fleet in the remaining half of the year. The overseas land rig count has evolved much as we predicted. It appears that customers are responding vigorously to the current commodity price levels. Inflationary pressures particularly for certain commodity supplies and some categories of personnel are increasing worldwide but particularly in North America where the rapid ramp up in activity is exaggerating the trend. Improved pricing will be key to further investment in some markets. In the longer term we remain convinced that absence in deep worldwide recession leading to a steep in demand, higher levels of investment will have to be sustained to bring some equilibrium to the market. We therefore reiterate our stronger for longer view of the current cycle of expiration and production spending. It is significant that during the quarter an additional 28 new offshore rigs were reported ordered from shipyards with delivery dates out to 2012 increasing the total on order to more than 180. I will now hand the call back to Malcolm.

We will now open the call for questions.

(Operator Instructions) Our first question comes from Kurt Hallead - RBC Capital Markets. Kurt Hallead - RBC Capital Markets: Andrew, how much conviction do you have in North America beyond year end given the rapid increase in production and do you think you’ll be able to book some net pricing gains across all your product lines before the end of the year? Andrew F. Gould : I actually haven’t even tried to make myself a full conviction on 2009. I think it’s too early. I think that there is some pricing power going forward in the stock market and I think that how much pricing power we have in the big contract cycle towards the end of the year is going to depend on the view of 2009. But I think it’s a bit early for me to; I would be dishonest if I said I thought I knew what was going to happen in 2009 yet. Kurt Hallead - RBC Capital Markets: On the international you state in your comments that you’re seeing a ramp in international E&P spend, so would you be comfortable with international revenue growth in the mid 20s for 2009? Andrew F. Gould : I have no reason to believe that it won’t be above 20% but don’t try and tie me down further than that. Kurt Hallead - RBC Capital Markets: In terms of the geographics from higher to lower, how do you think the geographic markets will rank in growth? Andrew F. Gould : Well I think in 2008 Latin America will be the star and 2009 actually I think it’s going to be very much influenced by the arrival of a lot of the offshore rigs which is North Seas, West Africa, Gulf of Mexico and to some extent Brazil. And on land I actually think that Russia will be very strong again.

Our next question comes from Ole Slorer - Morgan Stanley. Ole Slorer - Morgan Stanley: Cap ex at the beginning of the year you highlighted at that point in time was 13% and we felt at the time the conference call was made that it was low. Now you’re going up to 29% year-over-year which seems to say very confident tone for how you see your business. Could you talk a little bit about exactly what product line, what regions that you have grown more confident on to have this type of a cap ex increase relative to the beginning of the year? Andrew F. Gould : I would say the beginning of the year cap ex was very much orientated to how we saw the evolution of the offshore rig fleet. But what is coming in supplemental now is probably the big increases in land activity that we had not foreseen, and actually it’s being affected by some of the contract wins we’ve had. Ole Slorer - Morgan Stanley: Anything there on the product line? More exploration? More development? Andrew F. Gould : I think the bulk of our cap ex is the four big ones, so it’s wire line, drill and measurements, testing, and well services. Ole Slorer - Morgan Stanley: Are we seeing the biggest price increases in anything to do with metals whether it’s [inaudible] TG or drill pipe? I would imagine that other form of products like completion or rental tools or anything to do with the metal in the well work could be getting some pricing. How do you see those segments of the market now? Andrew F. Gould : I mean you have to remember that in most of our tools we’re using specialty alloys. We’re not using - the steels are they type one uses in drill pipe or casing. So the price increases in specialty alloys are horrible. Look at chrome 25 and stuff like that, the price has doubled. But there’s not an availability issue. So there is a cost issue but not an availability issue in the alloys that we use mostly. Ole Slorer - Morgan Stanley: So you have the ability to raise prices to compensate for this? Andrew F. Gould : So far it’s too early to say definitively that it’s okay but it’s going quite well.

Our next question comes from Bill Herbert - Simmons & Co. Bill Herbert - Simmons & Co.: Andrew, I need a little bit of perspective here and speaking boldly about international margins, they were nicely improved this quarter. But going forward, reconcile the tension for me between on the one hand increasing drilling and technological intensity and rising offshore content with an environment in which is still fairly competitive on these bigger projects and some of these projects are being won, not necessarily from you, with sort of seemingly start pricing and bids, and also cost inflation seems to be relatively be unabated. So given all those elements, where do margins go from here internationally? Andrew F. Gould : I think if people want to maintain or increase their international margins, they’re going to have to pay attention to inflation particularly in any sort of project that requires a great deal of third party supplies. In a technology sense of projects, big offshore drilling or stuff like that, I think that the operators spread cost of rigs is so huge compared to the marginal increase in pricing that we need that it’s not a big issue. Reliability is becoming more important every day. So I don’t think that people will win very large offshore drilling projects on price necessarily. Bill Herbert - Simmons & Co.: So specifically, do you expect international margins to continue improving? Andrew F. Gould : I said at the beginning of the year that it will be lumpy. So in a quarter where we have really good exploration activity and really strong drilling activity like this quarter, there’s no doubt that margins can increase. In a quarter where you have seasonal weather in the North Sea or China shuts down for the winter, then you probably have margin decline. So I don’t think there’s going to be a constant linear increase over quarters but on an annual basis provided the exploration holds up, I don’t see why we shouldn’t still have some room to run. Bill Herbert - Simmons & Co.: The follow up here with regard to North American pressure pumping, I was wondering as to how successful you were in the second quarter and how successful you are on a leading edge basis with respect to getting fuel surcharges implemented and cost inflation as it relates to fuel addressed? Andrew F. Gould : For fuel surcharges we are more than reasonably successful. Bill Herbert - Simmons & Co.: North American margins came down relatively sharply quarter-on-quarter largely due to Canada. Andrew F. Gould : No, no. As Simon said at the beginning of his thing, North American GeoMarket margins increased in every GeoMarket except Canada but the effect of the long break-up was such that that nullified the effect of the global North America level.

Our next question comes from Dan Pickering - Pickering Energy Partners. Dan Pickering - Pickering Energy Partners: Andrew, I just want to make sure I understand your commentary around the international operators. You said a vigorous response. That combined with kind of the 20+%, I think you had been talking about high teens international growth rates. It does sound like internationally clearly has picked up within the last two-three-four months. Andrew F. Gould : I was surprised, as I think we all were, by the strength of the rebound coming out of the winter so part of that was just the normal huge pick up in drilling efficiencies in the North Sea, stuff like that, but part of it was a real effort to where people could increase activity particularly on land where as you know it’s much easier to increase activity than offshore. But we were surprised by the strength of the rebound. Dan Pickering - Pickering Energy Partners: Could you generally comment, your joint venture partner in MI is now in the directional drilling business, Smith Klein WHQ. How does that affect your thinking about the MI joint venture going forward and what are the mechanics associated with that JV? Andrew F. Gould : I’m not quite sure what you mean by the mechanics Dan, but MI is and I hope will remain a very strong partner. There will be competitive situations which will be quite difficult to manage but they’re not very common and I don’t’ see any reason why we shouldn’t continue to enjoy a good material relationship with MI.

Our next question comes from Michael LaMotte - J.P. Morgan. Michael LaMotte - J.P. Morgan: First, Andrew I was struck by the comment in the press release concerning the continental resources with the shale job. I was wondering, you’ve talked in the past about the technological evolution within the North American pumping business and it feels like reading that comment here in press releases or seeing press releases from operators talking about an 11 or 12 stage frac, etc. that there’s perhaps more of a technological revolution going on in that business. Can you talk about the pace of sort of technology uptake and what that could mean for margins just beyond pure pricing? Andrew F. Gould : Actually Mike I think that like any new play, operators will not pay for technology until they understand what it can do for them and now we’re getting to the stage in shale gas where a combination of horizontal wells and stage fracturing together with this capacity that we have to monitor fracs in real time. And it’s very different. If you monitor it and then just give the result to the customer afterwards, it’s what we call internally a “so what service.” “You told me what you did but you can’t do anything about it.” If you do it in real time, it allows you to start to look at modifying the engineering of the frac as you’re performing it which is really quite important. So I think there’s no common, not just Schlumberger by the way but the leading players in pressure pumping are now getting to the stage where there is some differentiation in what they can do. And to a certain extent in a tight market that will reflect well in pricing. In a very slow market it will allow them to maintain pricing. But there’s absolutely no doubt that the technology of contact, reservoir contact or contact with well bore is improving fairly dramatically at the moment. Michael LaMotte - J.P. Morgan: How would you characterize the uptake today versus what you might have thought 12 months ago? Andrew F. Gould : It suddenly accelerated. I mean, 12 months ago we were experimenting with a lot of this stuff but it’s now I think accelerating. I think our issue is going to be providing it. Michael LaMotte - J.P. Morgan: Second question, a lot of discussion on mix internationally, obviously a shift towards exploration helpful. Are you seeing a discernible difference in the oil/natural gas mix on the exploration side given the tightness in the global gas market? Andrew F. Gould : Regionally yes. In other words there is a lot of gas exploration in the Middle East for example. Globally I would say it’s still reasonably balanced between oil and gas. What we are seeing more and more is that as you point out, the shortage of worldwide gas means that people are starting to look at unconventional sources of natural gas overseas which is something we thought would come much later. You must have seen some of these deals in Australia where operators are going after coal-bed methane for example even to feed [LNG] sometimes. So this is really very different. Michael LaMotte - J.P. Morgan: Pretty massive. And if I understand it correctly, the revenue process for rigs and process for rigs in international gas is even greater than the difference in North America. Andrew F. Gould : In the big [LNG] projects, that’s undoubtedly the gas. The point being that most of the development have penalties attached to late delivery of the gas and therefore execution of the development projects is key.

Our next question is from Charles Minervino – Goldman Sachs. Charles Minervino – Goldman Sachs: I just wanted to talk a little bit about in your comments in the press release and your comments this morning you talked about rig list work a number of time and I was just wondering if you could give us a percentage of your total revenue is rig list and how those margins kind of stack up a little just to the overall business. Andrew F. Gould : What I don’t know is the honest answer today because it varies very much by country by country and area by area. When we have campaigns of rig list work the margins, they’re really very good because we normally get to control the execution which means we can be extremely efficient in the use of our resources. So, we mentioned for example one or two contracts in the press release where we have 300 wells to do. If we control the logistics on that the margins are very good. Charles Minervino – Goldman Sachs: Then I guess in Latin America on margins typically, and it looks like you’re getting closer to those peak levels you reached in 2007, is it safe to say that the startup costs in Mexico are pretty much behind the company at this point? And, could you see margins potentially go higher in Latin America as those Mexico costs are completely wound out? Andrew F. Gould : Actually, I think the margins in Latin America were obviously, less the startup costs now, will be driven by the drilling performance. We still have room to improve there so to the extent that we improve margins would improve. But, I would also say that in Latin America there is the same shift as everywhere else towards more drilling, particularly of expiration wells and therefore the actual revenue mix is going to improve, not just IPM.

Our next question comes from Alan Laws – Merrill Lynch. Alan Laws – Merrill Lynch: A question on the directional drilling side, direction drilling continues to be a freestyle product line for a number of years here globally and you’ve recently made a small penny in directional acquisition. Could you comment on maybe how tight the directional drilling market is today? And, more specifically, maybe how you see the North American market for directional services in the context I guess of higher directional rig count and then a rising rig count? Andrew F. Gould : Well, I think that if you watch the rate of growth in the horizontal rig count in the US competitive oil directional rig count, for all sorts of different reasons, be they geological reasons or be they infrastructure reasons, there’s no doubt that directional drilling will go on increasing. But, directional drilling in North America has to be provided at a cost that is effective otherwise it’s not going to grow the way it should be. So, our purchase of Extreme Engineering brings us a service where we can use NWD without manning it probably by monitoring it from a centralized drilling center. So, we still think it has, in the land market both in the US and overseas, a long way to run. Alan Laws – Merrill Lynch: When you look at that as a growth driver, how are you assessing that for Schlumberger? Are you looking at is as more investing in maybe the lower end directional tools? Or, is this an acquisition [inaudible]. Andrew F. Gould : No, we could have built one ourselves but the fact is that Extreme Engineering is the company that was originally funded by Shell with technology from Shell and the decision of having it available through buying the company rather than developing our own became clearly obvious because of the rate of growth in the market. Alan Laws – Merrill Lynch: Last question will be on the bit side, you talked about wanting back in the bits business. Can you talk a little bit about, no pun intended there, about strategic thinking behind this and what aspects of the product line that are most important to you? Andrew F. Gould : Well, access to bit technology because of the interface between bit technology and the BHA and the steering capability. So, yeah we need access to bit technology, you don’t necessarily need to own a bit company. Alan Laws – Merrill Lynch: So when you’re planning to address this desire is it more through joint venture or technology sharing? Andrew F. Gould : Well, we actually do own a small bit company where we can build our own prototype and we would probably like to have the manufacturing of those prototypes under license with one of the existing bit companies.

Our next question comes from Jim Crandell – Lehman Brothers. Jim Crandell – Lehman Brothers: Andrew, would you expect your seismic results in the second half to comfortably exceed those of the second half of 2007? Andrew F. Gould : I would expect them to comfortably exceed the first half of 2008 and yes, we think they would comfortably exceed the first second half of 2007. Jim Crandell – Lehman Brothers: Then I just have two questions about two specific contracts. You mentioned that people will not win these big offshore contracts on price. I wanted you to comment on Intec’s big win down on the Petrobras work down in Brazil, what you make of that? And then secondly, I wanted to ask you about Chicontepec area in Mexico, Weatherford obviously bidding less on APG-1 and APGI-2 than you bid on Chicontepec-3 and whether you think you’ll have to bring your prices down on future Chicontepec work? Andrew F. Gould : Well, I don’t like commenting on competition’s pricing policy Jim. I don’t think Intec is a good competitor. I don’t think that their Brazil win was on price. And, Chicontepec you know, all I can say is that the big companies bid roughly the same price and somebody bid very low and I wish them the best of luck in execution. Jim Crandell – Lehman Brothers: But, would you think that would impact your prices that you would have to work for Pemex in the future? Andrew F. Gould : It depends on how well they execute. Jim Crandell – Lehman Brothers: So if they execute well and they continue, you would think that Pemex would come to you and expect you to lower your price. Andrew F. Gould : Then, in future bidding rounds prices would definitely go lower, yes.

Our next question comes from Michael Urban – Deutsche Bank. Michael Urban – Deutsche Bank: A couple of regional questions, the first one is on Russia, you’ve had some favorable and some improvement in the upstream tax regime there. How quickly do you think that will translate in to [taxtivity] improvements in Russia? Andrew F. Gould : A little bit at the end of this year but much more next year. Michael Urban – Deutsche Bank: So an 09 event for them? Andrew F. Gould : Yes. Michael Urban – Deutsche Bank: Second one is in Saudi where you had spoken about activity levels in Saudi kind of leveling off here over the next year, 18 months or so. Given the rapid increase in the oil price we’ve seen and some of the comments out of the Saudi themselves in terms of potentially once again taking up their capacity has your view on that changed at all? Andrew F. Gould : Not for oil, for gas yes. In other words, the Saudis I think will probably undertake some major gas development programs inside the kingdom. But, not for oil. Michael Urban – Deutsche Bank: So oil kind of leveling off, gas rising so on average and in the aggregate I guess and continued increases in activity on Saudi? Andrew F. Gould : Yes.

Our next question comes from Geoff Kieburtz – Weeden & Co., LP. Geoff Kieburtz – Weeden & Co., LP: I want to come back because I’m trying to connect the dots Andrew in terms of the big increase in the cap ex. You talked in the press release about the strong bidding activity but it seems like that comment was tied to offshore and you said in the press release that the international land business is developing as expected but then in some of the other responses to questions it seemed like it was the international land that was driving the big increase in cap ex. So, can you help us understand that a little bit? Andrew F. Gould : Well, I was answering the question in function of what Ole asked us on how we planned our cap ex for 2008. And, actually 2008 we plan the actual cap ex pretty much but we expected land to respond, we didn’t expect the US to respond and therefore globally on land we need more cap ex. Geoff Kieburtz – Weeden & Co., LP: Is the international land also stronger than you had expected? Andrew F. Gould : In some places, yes. Okay, no, generally yes Geoff, generally yes. It’s not dramatically stronger expect in the US. But, generally it’s a bit stronger than we probably originally anticipated. Geoff Kieburtz – Weeden & Co., LP: The size of the cap ex increase would suggest that you have confidence in that continuing in to 09 I’m inferring? Andrew F. Gould : And, as I mentioned, we have had some contract wins which means we’ve had to revise some of the numbers for offshore as well. Geoff Kieburtz – Weeden & Co., LP: Second question, you said that the development of unconventional resources internationally was progressing more quickly than you expected. Does that raise the prospect of frac capacity issues immerging internationally over the next year or two? Andrew F. Gould : I think we’ve known for some time that the growth in the frac market overseas is going to be much stronger than people would have imagined two or three years ago. So, I’m not sure whether that produces a capacity crunch or not because it depends so much on North America. Geoff Kieburtz – Weeden & Co., LP: The nature of the capacity required for the international projects in terms of the equipment, the technology type, is it similar to what’s used in North America? Andrew F. Gould : Except you don’t have the same logistics therefore you need a lot more support than you do in North America.

Our next question is from Douglas Becker – Banc of America. Douglas Becker – Banc of America: Andrew, I just wanted to touch base on third party revenues for IPM. The first quarter release talked about third party accounting for about 35% of IPM revenues during full year 2008. The first half has been running somewhere between 33% and 34% implying a big pickup in the second half of the year. Is that still the case or has something changed there? Andrew F. Gould : I’m going to ask Simon to answer that if that’s okay. Simon Ayat : I mean it depends on the area, overall what you’ve seen is its 34%. This is the current level of third party revenue IPM. As we go forward and the projects ramp up is increasing we will see an increase in the third party. For example, in Mexico obviously it is more than 34%. But, as you see the project ramp up increasing in the future we’re going to see this percentage slightly increasing but not significantly. Douglas Becker – Banc of America: So it sounds like the 45% for full year 2008 is a little high? Simon Ayat : It could be high because we are increasing IPM revenue in other places where the third party is less significant than what we have in the Mexico market. Douglas Becker – Banc of America: And just based on previous commentary it suggests that even with third party revenue increasing in Latin America, specifically Mexico, that margins can still be expanding? Simon Ayat : Two elements in Latin America increased the margin this quarter was the less startup as Andrew mentioned and as we mature in to projects, also as Andrew mentioned, and the efficiency increases, the margins increase.

Our next question is from David Anderson – UBS Securities. David Anderson – UBS Securities: Also kind of an IPM related question here, how big do you think the IPM market is from your standpoint on an annual revenue basis? In other words, what is your annual revenue opportunity that you are going after and how do you expect to see this evolve over the next several years? Andrew F. Gould : David, we don’t look at it on that basis, we look at it on a project basis so we don’t pre-calculate a revenue target that we’re aiming for. We actually keep a portfolio of projects that we’re going after and normally apart from Mexico where the market is mature, the sales cycle is two to three years. So, actually, I don’t even want to disclose a number because it will only encourage my friends in other places. Talking about my friends, I have to issue an apology to my friends at Baker. Apparently I said Intec is not a good competitor when I was answering a question on Brazil. I of course meant that Intec is a good competitor which is why I don’t think they want it on press. David Anderson – UBS Securities: I guess one other question I have for you there is you mentioned some time ago you had about $5 billion in IPM backlog, do you care to tells us out there what the number is now? Simon Ayat : It hasn’t changed very much. David Anderson – UBS Securities: Then you also mentioned on Russia you were much more confident on the activity increasing in Russia next year. Is that because of IPM work coming through or do you see something else out there? Simon Ayat : It’s Russia going forward will be a mixture of IPM and service contracts. David Anderson – UBS Securities: So do you have confidence that the government is going to be lowering the taxes to a point that’s going to spur more activity? Simon Ayat : Yes. David Anderson – UBS Securities: I guess on a different related topic, on new build. If you see the deep water new build, deep level water well runs around $100 million or so in total costs how much work of that is potentially Schlumberger? Simon Ayat : Well potentially it’s our four big product lines, so it’s oil lines, well services, drilling and measurements and testing. Please don’t ask me for a number because a huge amount depends on whether that well is dry or if it has a find. The actual scope of the revenue could change by a factor of two or three in function of whether or not the will finds anything or doesn’t find anything. David Anderson – UBS Securities: When you were talking about your cap ex before, I assume a big chunk of that is going to building out rotary steerable in anticipation of this new drilling and measurements. Simon Ayat : I think actually there is another in drilling and measurements and that is that with rig’s spread cost at 1.2 double a day rate, so $1.2 million a day, people don’t fish for stock tools very much, they just cement them in and sidetrack which means that the build out of cap ex has to be adjusted for that. David Anderson – UBS Securities: My last question, just on rotary steerable, when you talked about your cap ex before, I assume a big chunk of your cap ex is going to building out rotary steerable based on the new build surge. Can you quantify it? Can you quantify for us how much capacity is expected to increase year-over-year in rotary steerable? Simon Ayat : We’d rather not. I’m sorry, I’d rather no.

Our next question comes from Robin Shoemaker – Citigroup. Robin Shoemaker – Citigroup: Andrew, just on this – you’ve mentioned several times on the call the number of offshore rigs being delivered in the next few years, how far along are we either on the 35 rigs delivered this year or the 180 in terms of allocating contracts for oil field services on those new rigs and kind of what’s your strategy to maximize your presence on each of those new rigs? Andrew F. Gould : First I would like to point out that the 35 this year are very much loaded on Q4. It may actually slip some in to 09. So, if the equipment has to be bolted down, so cementing units or pumps or some of the testing spread, then the contracts will tend to get allocated, or at least the contracts for the equipment at the time of the build. For oil line drilling and measurements and testing services, I would say that probably about half the contracted rigs have already awarded those contracts. And, the reason they’ve awarded them is very often because they’re operator contracts particularly for exploration rigs that are going to move from country to country. If they tend to be in very mature fields of operation like a North Sea or Gulf of Mexico, they may come under existing contract or they will get bid much closer to the time. Robin Shoemaker – Citigroup: If we compare the business, how are you doing on the new builds compared to the existing fleet of the offshore rigs and your market share and various product lines? Do you believe that on the new rigs your market share is same, or better, or worse? Simon Ayat : Andrew F. Gould : So far I think it’s the same and we’ll see where it goes going forward.

Our next question is from Kevin Simpson – Miller Tabak & Co. Kevin Simpson – Miller Tabak & Co.: A couple of questions, one I guess just some clarification on Russia. Andrew, could you quantify year-on-year revenue growth in Russia relative to end margins, relative to change, relative to the rest of the broader segment? I guess I was expecting slower Russia. Andrew F. Gould : I think in the first half of the year it probably exceed the average of the rest of continental Europe, Europe Africa unit. But, don’t forget that we still have the effect of an acquisition in the first half of the year so it will probably slow a bit in the second half of the year relative to the first half of the year. But, through the effect of the acquisition not through the effect of lack of activity. Kevin Simpson – Miller Tabak & Co.: We’ve been hearing some pain from some of the smaller competitors in the frac business there. Did you feel the same? Andrew F. Gould : The frac business has been tough particularly in the south for the first half of the year. There was over capacity. Kevin Simpson – Miller Tabak & Co.: Did that bring Russia’s margins down for you overall? Andrew F. Gould : Not overall, no. Kevin Simpson – Miller Tabak & Co.: Then just quickly I wanted to switch to North America. You were reluctant to reach out on an 09 forecast that Kurt was fishing for. Your customers all seem to be raising budgets, raising capital, you know pretty positive outlooks for 09 so is the reluctance just a function of the volatility in the market and the risk of gas prices? Or, it’s just too early to make a call? Andrew F. Gould : It’s just too early. I’ve been reputed to making too early calls on North America so I thought this time I would wait a bit Kevin. I don’t know. If you like, it’s more a function of what Kurt said which is the very substantial increases in production we’re seeing and then you know you have to take in to account the summer, the weather and all the rest of it and how much is the current oil prices affecting gas consumption. The fact is that [inaudible] is going to the states, there are so many factors in it now that it is quite difficult to make a longer term call. Kevin Simpson – Miller Tabak & Co.: In terms of allocating capital then you don’t really have to make a decision yet? Andrew F. Gould : No, we’ve got our cycle down to a level where we can make the allocation much later.

Our next question comes from Robert MacKenzie – Friedman, Billings, Ramsey. Robert MacKenzie – Friedman, Billings, Ramsey: Andrew, I wanted to step back and address the stimulation of the Shell reservoirs more from a mechanical standpoint and try and get some idea. One of the things I’ve heard about that is being done recently is what someone called zipper frac to me whereby you offset the placement of the fracs in the adjacent well bore so that you can create an oblique stress field. How much do you think that has potential to raise productivity something like the [barneck]? Is that something that can help take the fraction from 3 million to 5 million a day along with other advancements. Andrew F. Gould : I have to tell you, I just don’t know. What I will tell you is that in producing Shell gas reservoirs fewer mechanics is fundamental. In some ways it is more fundamental than petro physics. You know, I am sure that there are lots of ideas going around about how you could alter stress fields in such a way as to release the gas but the fact is one of our top scientists spent some time looking at this recently and said one of the biggest issues with Shell gas is that nobody actually knows what the production mechanism is. So, you may well be right, I don’t know. What I do know is that there still is a lot of work to be done on how these production mechanisms actually work. Robert MacKenzie – Friedman, Billings, Ramsey: A follow up, I was wondering if you could share with us what you do know on how the shale oil production mechanism works say in the Bakken Shale. That’s still kind of a mystery to me. I was wondering if you could just kind of shed some light on that. Simon Ayat : The shale oil in the Bakken? I don’t know. I am aware of the different technologies that some of the majors are working on for the production of shale oil but I honestly haven’t had a discussion of this in the context of the Bakken. But, what I will do is get Malcolm to find out and give you a call, okay.

Our next question is from Pierre Conner – Capital One. Pierre Conner – Capital One: Andrew, you’ve addressed the capital changes on oil field services and I wondered if you could speak a little bit on reconciling your change in outlook on cap ex for WesternGeco both related to the construction on Eastern Echo vessels and also the change on the expected cap ex from multi client? What’s sort of driving that? Andrew F. Gould : So, there is no underlying change in our philosophy on the construction of the vessels. We have one vessel that is delayed about four months which was suppose to come around about now but is not coming until the end of the year. But, the Eastern Echo vessels seem to be pretty much on schedule and therefore there is no change in the level of cap ex. Multi client, we have seen in the last quarter some improvement on pre-funding levels therefore – Pierre Conner – Capital One: Less cap ex. Andrew F. Gould : I think we’ve increased slightly our budget but really it’s marginal. So, I would say that compared to what we showed you at the end of the first quarter, there’s really no substantial change. Pierre Conner – Capital One: Now, you mentioned that marine bidding was robust, can we read through there that there’s still pricing power? Andrew F. Gould : In certain segments of the marine market there’s still pricing power, yes. Pierre Conner – Capital One: My follow up is again to try again sort of Kevin and Kurt on North America. But, I’m assuming that when you roll in North America that’s inclusive, your conviction improvement is inclusive of Canada as well, is that correct? Andrew F. Gould : Yes. Pierre Conner – Capital One: And maybe a different way to ask would be, do you know of a commodity price level? Rather, we all have many variables in front of us, weather, summer, etc. but, what is this increase from your customer perspective due to the price increase, not just new developments? Andrew F. Gould : You mean our price increases? Pierre Conner – Capital One: No, I’m sorry, the commodity price increase? Andrew F. Gould : I think at current levels it’s just fine. I mean there is some guarantee of future activity to the extent to which our customers have hedged their forward production. I certainly think that production drops in Canada will mean that it will be a very healthy Canada through the rest of this year and the first quarter of next year. I’m just not prepared to take a definitive position on the whole of North America land for next year yet. I just don’t feel comfortable doing it, sorry.

Our final question comes from Alan Laws – Merrill Lynch. Alan Laws – Merrill Lynch: I just had a quick high level follow up question on growth. When you look at what is the most important trends for Schlumberger over the next few years, if you looked at rise of exploration or expansion of the offshore recount, or the increasing well complexity or architecture, or then just straight out IPM, what would be the number one driver? Andrew F. Gould : Well I actually think there are probably two drivers. I’m thinking three to five years now, okay? The first driver has to be the extent to which there is a real effort to renew the reserve base and therefore exploration which will largely be either offshore or in harsh environments. But, as I mentioned in answer to I think it was Michael’s question earlier, the current gas situation is such that a lot of gas exploration that was not planned two or three years ago is going to happen. So, the first is exploration. The second is, and I said this before and I’ll say it again, is that the secret to stemming decline curves is number one you have to drill and number two you have to increase the amount of reservoir contact. So, the service intensity around stemming the decline curve would have to increase fairly dramatically if people are serious about it. And actually, I think that’s a little bit what we saw in Q2 with the extremely high commodity price. Malcolm Theobald : On behalf of the Schlumberger management team, I would like to thank you for participating in today’s call. Julie will now provide the closing comments.

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