Summary of Major Contractual Obligations
Contractual Obligations
Total
2011 2012 – 2013 2014 – 2015 After 2015
Payment Period
(Stated in millions)
Debt
(1)
$ 8,112 $2,595
$1,608
$2,915
$ 994
Operating Leases
1,334
325
409
223
377
Purchase Obligations
(2)
1,874 1,848
26
–
–
$11,320 $4,768
$2,043
$3,138
$1,371
(1) Excludes future payments for interest.
(2) Represents an estimate of contractual obligations in the ordinary course of business. Although these contractual obligations are considered
enforceable and legally binding, the terms generally allow Schlumberger the option to reschedule and adjust its requirements based on business
needs prior to the delivery of goods.
Refer to Note 18 of the
Consolidated Financial Statements
for details regarding Schlumberger’s pension and other
postretirement benefit obligations.
As discussed in Note 14 of the
Consolidated Financial Statements
, included in the Schlumberger
Consolidated
Balance Sheet
at December 31, 2010 is approximately $1.17 billion of liabilities associated with uncertain tax positions
in the over 100 jurisdictions in which Schlumberger conducts business. Due to the uncertain and complex application of
tax regulations, combined with the difficulty in predicting when tax audits throughout the world may be concluded,
Schlumberger cannot make reliable estimates of the timing of cash outflows relating to these liabilities.
Schlumberger has outstanding letters of credit/guarantees which relate to business performance bonds, custom/
excise tax commitments, facility lease/rental obligations, etc. These were entered into in the ordinary course of business
and are customary practices in the various countries where Schlumberger operates.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally
accepted in the United States requires Schlumberger to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue
and expenses. The following accounting policies involve “critical accounting estimates” because they are particularly
dependent on estimates and assumptions made by Schlumberger about matters that are inherently uncertain. A
summary of all of Schlumberger’s significant accounting policies is included in Note 2 to the
Consolidated Financial
Statements
.
Schlumberger bases its estimates on historical experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.
Multiclient Seismic Data
The WesternGeco segment capitalizes the costs associated with obtaining multiclient seismic data. The carrying value
of the multiclient seismic data library at December 31, 2010 and 2009 was $394 million and $288 million, respectively.
Such costs are charged to
Cost of revenue
based on the percentage of the total costs to the estimated total revenue that
Schlumberger expects to receive from the sales of such data. However, under no circumstances will an individual survey
carry a net book value greater than a 4-year straight-line amortized value.
The carrying value of surveys is reviewed for impairment annually as well as when an event or change in circumstance
indicates an impairment may have occurred. Adjustments to the carrying value are recorded when it is determined that
estimated future revenues, which involve significant judgment on the part of Schlumberger, would not be sufficient to
recover the carrying value of the surveys. Significant adverse changes in Schlumberger’s estimated future cash flows
could result in impairment charges in a future period. For purposes of performing the annual impairment test of the
multiclient library, future cash flows are analyzed primarily based on two pools of surveys: United States and non-United
States. The United States and non-United States pools were determined to be the most appropriate level at which to
perform the impairment review based upon a number of factors including (i) various macroeconomic factors that
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Part II, Item 7
