telecommunications services, newspaper advertisements, recreational and fitness memberships, and the purchase of
routine office and similar supplies from entities associated with the government of Iran. Collections of amounts owed
to Schlumberger were received in part by depository accounts held by two non-U.S. subsidiaries of Schlumberger at a
branch of Bank Saderat Iran (“Saderat”), and in part by a depositary account held by one of such non-U.S. subsidiaries
at Bank Tejarat (“Tejarat”) in Tehran. The accounts at Saderat are maintained solely for the deposit by NIOC of
amounts owed to non-U.S. subsidiaries of Schlumberger. The account at Tejarat is maintained also for payment of
expenses in connection with operating in Iran, such as payroll expenses, rental payments and taxes. In addition, NIOC
maintains bank accounts at Bank Melli Iran (“Melli”) through which it made payments to a non-U.S. subsidiary of
Schlumberger for services provided in Iran under letters of credit issued by Melli. Schlumberger maintains no bank
accounts at Melli. Schlumberger will discontinue its dealings with Melli, Saderat and Tejarat following the receipt of all
amounts owed to Schlumberger for services in Iran.
Environmental compliance costs and liabilities could reduce our earnings and cash available for operations.
We are subject to increasingly stringent laws and regulations relating to importation and use of hazardous materials,
radioactive materials and explosives and to environmental protection, including laws and regulations governing air
emissions, water discharges and waste management. We incur, and expect to continue to incur, capital and operating
costs to comply with environmental laws and regulations. The technical requirements of these laws and regulations are
becoming increasingly complex, stringent and expensive to implement. These laws may provide for “strict liability” for
remediation costs, damages to natural resources or threats to public health and safety. Strict liability can render a
party liable for damages without regard to negligence or fault on the part of the party. Some environmental laws
provide for joint and several strict liability for remediation of spills and releases of hazardous substances.
We use and generate hazardous substances and wastes in our operations. In addition, many of our current and
former properties are, or have been, used for industrial purposes. Accordingly, we could become subject to material
liabilities relating to the investigation and cleanup of potentially contaminated properties, and to claims alleging
personal injury or property damage as the result of exposures to, or releases of, hazardous substances. In addition,
stricter enforcement of existing laws and regulations, new laws and regulations, the discovery of previously unknown
contamination or the imposition of new or increased requirements could require us to incur costs or become the basis
of new or increased liabilities that could reduce our earnings and our cash available for operations. We believe we are
currently in substantial compliance with environmental laws and regulations.
We could be subject to substantial liability claims, which could adversely affect our financial condition, results
of operations and cash flows.
The technical complexities of our operations are such that we are exposed to a wide range of significant health,
safety and environmental risks. Our offerings involve production-related activities, radioactive materials, explosives
and other equipment and services that are deployed in challenging exploration, development and production
environments. An accident involving these services or equipment, or a failure of a product, could cause personal injury,
loss of life, damage to or destruction of property, equipment or the environment, or suspension of operations. Our
insurance may not protect us against liability for some kinds of events, including events involving pollution, or against
losses resulting from business interruption. Moreover, we may not be able to maintain insurance at levels of risk
coverage or policy limits that we deem adequate. Any damages caused by our services or products that are not covered
by insurance, or are in excess of policy limits or are subject to substantial deductibles, could adversely affect our
financial condition, results of operations and cash flows.
Demand for our products and services could be reduced by changes in governmental regulations or in the law.
Some international, national and state governments and agencies are currently evaluating and promulgating
climate-related legislation and regulations that are focused on restricting greenhouse gas emissions. Such legislation,
as well as government initiatives to conserve energy or to promote the use of alternative energy sources, may
significantly curtail demand for and production of fossil fuels such as oil and gas in areas of the world where our
customers operate and thus adversely affect future demand for our services, which may in turn adversely affect our
financial condition, results of operations and cash flows.
Some international, national and state governments and agencies have also adopted laws and regulations or are
evaluating proposed legislation and regulations that are focused on the extraction of shale gas or oil using hydraulic
fracturing. Hydraulic fracturing is a stimulation treatment routinely performed on oil and gas wells in low-permeability
reservoirs. Specially engineered fluids are pumped at high pressure and rate into the reservoir interval to be treated,
9
