Notes to Consolidated Financial Statements
1. Business Description
Schlumberger Limited (Schlumberger N.V., incorporated in Curaçao) and its consolidated subsidiaries (collectively,
“Schlumberger”) form the world’s leading supplier of technology, integrated project management and information
solutions to customers in the international oil and gas exploration and production industry.
2. Summary of Accounting Policies
The
Consolidated Financial Statements
of Schlumberger have been prepared in accordance with accounting
principles generally accepted in the United States of America.
Principles of Consolidation
The accompanying
Consolidated Financial Statements
include the accounts of Schlumberger, its wholly-owned
subsidiaries, and other subsidiaries over which it exercises a controlling financial interest. All significant intercompany
transactions and balances have been eliminated.
Reclassifications
Certain prior year items have been reclassified to conform to the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. On an on-going basis, Schlumberger evaluates its estimates, including those related to
collectibility of accounts receivable; recoverability of goodwill, intangible assets and investments in affiliates; income
taxes; multiclient seismic data; contingencies and actuarial assumptions for employee benefit plans. Schlumberger
bases its estimates on historical experience and on other 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.
Revenue Recognition
Schlumberger recognizes revenue based upon purchase orders, contracts or other persuasive evidence of an
arrangement with the customer that include fixed or determinable prices provided that collectibility is reasonably
assured. Revenue is recognized for services when they are rendered. Revenue is recognized for products upon delivery,
when the customer assumes the risks and rewards of ownership.
Revenue from seismic contract services performed on a dayrate basis is recognized as the service is performed.
Revenue from other services, including pre-funded multiclient surveys, is recognized as the seismic data is acquired
and/or processed on a proportionate basis as work is performed. This method requires revenue to be recognized based
upon quantifiable measures of progress, such as square kilometers acquired. Multiclient data surveys are licensed or
sold to customers on a non-transferable basis. Revenue from sales of completed multiclient data surveys is recognized
upon obtaining a signed licensing agreement and providing customers with access to such data.
Revenue is occasionally generated from contractual arrangements that include multiple deliverables. Revenue from
these arrangements is recognized as each item is delivered based on their relative fair value and when the delivered
items have stand-alone value to the customer.
Revenue derived from the sale of licenses of Schlumberger software may include installation, maintenance,
consulting and training services. If services are not essential to the functionality of the software, the revenue for each
element of the contract is recognized separately based on its respective vendor specific objective evidence of fair value
when all of the following conditions are met: a signed contract is obtained, delivery has occurred, the fee is fixed or
determinable and collectibility is probable.
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