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governmental policies and subsidies;
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the costs of exploring for, producing and delivering oil and gas;
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technological advances affecting energy consumption; and
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weather conditions.
The oil and gas industry has historically experienced periodic downturns, which have been characterized by
diminished demand for oilfield services and downward pressure on the prices we charge. A significant downturn in the
oil and gas industry could result in a reduction in demand for oilfield services and could adversely affect our financial
condition, results of operations and cash flows.
A significant portion of our revenue is derived from our non-United States operations, which exposes us to risks
inherent in doing business in each of the approximately 85 countries in which we operate.
Our non-United States operations accounted for approximately 72% of our consolidated revenue in 2012, 71% in 2011
and 78% in 2010. Operations in countries other than the United States are subject to various risks, including:
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political and economic conditions in certain areas;
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exposure to possible expropriation of our assets or other governmental actions;
Š
social unrest, acts of terrorism, war or other armed conflict;
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confiscatory taxation or other adverse tax policies;
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deprivation of contract rights;
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trade restrictions or embargoes imposed by the United States or other countries;
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restrictions under the United States Foreign Corrupt Practices Act or similar legislation in other countries;
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restrictions on the repatriation of income or capital;
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currency exchange controls;
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inflation; and
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currency exchange rate fluctuations and devaluations.
In addition, we are subject to risks associated with our operations in countries, including Iran, Syria, North Sudan
and Cuba, that are subject to trade and economic sanctions or other restrictions imposed by the United States or other
governments or organizations. United States law enforcement authorities are currently conducting a grand jury
investigation and an associated regulatory inquiry related to our operations in certain of these countries. Additionally,
in 2009 prior to being acquired by Schlumberger, Smith International, Inc. received an administrative subpoena with
respect to its historical business practices in certain countries that are subject to United States trade and economic
sanctions. If any of the risks described above materialize, or if any governmental investigation results in criminal or
civil penalties or other remedial measures, it could reduce our earnings and our cash available for operations.
We are also subject to risks related to investment in our common stock in connection with certain US state
divestment or investment limitation legislation applicable to companies with operations in these countries, and similar
actions by some private investors, which could adversely affect the market price of our common stock.
During 2012, certain non-U.S. subsidiaries of Schlumberger provided oilfield services to the National Iranian Oil
Company and certain of its affiliates (“NIOC”). Schlumberger has not bid on any new contracts relating to Iran’s
petroleum production since March 2009. Schlumberger’s full-year 2012 revenue attributable to this activity was $418
million, which resulted in net income of $208 million in its consolidated financial statements. Schlumberger intends to
discontinue such activity in Iran in 2013 and is currently winding down its operations there. In this regard, during the
fourth quarter of 2012, Schlumberger recorded revenue relating to this activity in Iran of $92 million and net income of
$48 million in its consolidated financial statements. This activity included obtaining services from and engaging in other
dealings with the government of Iran that are incidental to operating in Iran, and the expenses of which are reflected in
the net income disclosed above. These services and other dealings consisted of paying taxes, duties, license fees and other
typical governmental charges, along with payments for utilities, transportation, hotel accommodations, facility rentals,
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