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From the perspective of safety, 2010 was a year of improvement in performance, with both injury rates and automotive
accident rates falling by 8%. I believe that the effort put into driving management processes is paying off, and I expect
us to continue to involve our land transportation contractors in our practices in 2011. Unfortunately, three fatal work
process-related events reminded us that we must remain vigilant in the workplace and ensure that all work procedures
are followed. The coming year will be one of consolidating lessons already learnt as well as one of instilling our safety
practices in the 25,000 employees who joined us in 2010.
Two years ago we began a program called “Excellence in Execution”. This was designed to create a step change in
our service quality and efficiency and, in deepwater, was aimed at enabling clients to reduce the risk and cost of their
deepwater operations. The program, in addition to equipment and procedural improvements, provides for competency
certification of all personnel involved in deepwater operations. We have been encouraged by the initial results of this
multiyear initiative, as well as by our customers’ acceptance of it. While additional control and oversight will undoubtedly
add cost, this will be offset in the long run by improvements in operating procedures and technology. We therefore
welcome current efforts to better understand and control the risks associated with deepwater operations.
As we look forward to 2011, it is important to remember that the primary driver of our business has always been, and
will remain, the demand for oil and gas. Oil prices have moved into a range that will encourage increased investment,
particularly in exploration, which remains the swing factor in operators’ budgets. While we do not anticipate any
substantial recovery in deepwater US Gulf of Mexico, we do expect a marked increase in deepwater activity in the rest
of the world. These factors, coupled with increases in development activity and production enhancement in many other
areas, promise stronger growth rates as the year unfolds.
For natural gas, activity in the United States is likely to remain strong—at least through the first half of the year—
owing to the commitments necessary to retain leases, the backlog of wells to be completed, and the contribution of
natural gas liquids to overall project economics. Increased service capacity, however, will negatively affect pricing at some
stage during the year.
Overseas, the governing factor on gas activity, particularly in the Middle East, will be the ability of many nations to use gas
as a substitute for oil to meet increased local energy demand, thus freeing up more liquids for export. Elsewhere, the long
lead time necessary to execute large gas projects for LNG export will ensure that a certain level of activity is maintained.
Unconventional gas resources will continue to attract considerable interest outside North America. The leading activity
will continue to be for conventional gas in tight, or low-permeability, reservoirs and in coalbed methane developments.
There will be exploration activity around the potential that shale gas offers in many parts of the world.
In conclusion, I would like to thank our customers for their confidence and support and our employees for their dedication
and commitment. Increased activity coupled with the greater technology needs of higher exploration, deepwater
spending, and tight gas activity—particularly outside North America—will make 2011 a stronger year for Schlumberger.
The importance of risk reduction and the minimization of drilling cost make the acquisitions of Geoservices and Smith
major contributors to our future growth.
Andrew Gould
Chairman and Chief Executive Officer
