Schlumberger’s $450 million 3.00% Notes due 2013. Under the terms of this swap, Schlumberger receives interest at a

fixed rate of 3.0% annually and will pay interest quarterly at a floating rate of three-month LIBOR plus a spread of

0.765%. This interest rate swap is designated as a fair value hedge of the underlying debt. This derivative instrument is

marked to market with gains and losses recognized currently in income to offset the respective losses and gains

recognized on changes in the fair value of the hedged debt. This results in no net gain or loss being recognized in the

.

The second swap was for a notional amount of $600 million in order to hedge a portion of the changes in fair value of

Schlumberger’s $650 million 6.50% Notes due 2012. Under the terms of this swap agreement, Schlumberger received

interest at a fixed rate of 6.50% semi-annually and paid interest semi-annually at a floating rate of one-month LIBOR plus

a spread of 4.84%. During the third and fourth quarters of 2010, Schlumberger repurchased all of the outstanding

$650 million 6.50% Notes due 2012. Accordingly, this interest rate swap, which had previously been designated as a fair

value hedge of the underlying debt, was settled during the fourth quarter and resulted in Schlumberger receiving

proceeds of approximately $10 million.

At December 31, 2010, Schlumberger had fixed rate debt aggregating approximately $4.9 billion and variable rate debt

aggregating approximately $3.2 billion, after taking into account the effects of the interest rate swaps.

The fair values of outstanding derivative instruments are summarized as follows:

Derivative designated as hedges:

Foreign exchange contracts

$14

Foreign exchange contracts

216

Interest rate swaps

–

$230

Derivative not designated as hedges:

Commodity contracts

$1

Foreign exchange contracts

11

Foreign exchange contracts

28

$40

$270

Derivative designated as hedges:

Foreign exchange contracts

$15

Foreign exchange contracts

51

Interest rate swaps

–

$66

Derivative not designated as hedges:

Commodity contracts

$–

$3

Foreign exchange contracts

–

Foreign exchange contracts

–

25

$28

$94

The fair value of all outstanding derivatives is determined using a model with inputs that are observable in the market

or can be derived from or corroborated by observable data.

56

Part II, Item 8

SEO Version