Schlumberger 1999 Third Quarter Results.

NEW YORK--(BUSINESS WIRE)--October 18, 1999--

Schlumberger Limited [NYSE:SLB] reported today that 1999 third quarter operating revenue of $2.25 billion was 23% below third quarter 1998. Net income and diluted earnings per share were $139 million and $0.25, both 60% lower than the same period last year before the 1998 third quarter charge.

Oilfield Services revenue decreased 28% year over year as the rig count declined 16%. Compared with the second quarter of 1999, revenue increased 2%.

Resource Management Services revenue was down 4%. Test & Transactions revenue was 10% higher than in the third quarter of 1998, excluding the contribution from Schlumberger Omnes, a joint venture which was 100% acquired during the quarter.

Chairman and Chief Executive Officer Euan Baird commented: "The third-quarter results for our ongoing oilfield businesses confirm that the second quarter of 1999 was the bottom of the cycle. Our new GeoMarket organization, focused on the reservoir, is capable of producing high-margin growth as our clients increase E&P spending to meet the growing demand for oil and gas." -0-

           CONSOLIDATED STATEMENT OF INCOME (Unaudited)(1)
            (Stated in thousands except per share amounts)

                              Third Quarter            Nine Months
For Periods Ended Sept. 30   1999        1998        1999        1998
Revenue
  Operating            $ 2,249,315 $ 2,932,447 $ 6,730,040 $ 9,040,053
  Interest and
   other income             61,974      48,562     286,534     120,989
                         2,311,289   2,981,009   7,016,574   9,161,042
Expenses
  Cost of goods sold
   and services          1,744,912   2,581,356   5,382,887   6,956,899
  Research & engineering   134,051     137,392     398,565     430,884
  Marketing                113,252     119,966     324,006     349,081
  General                   99,065     112,782     300,904     341,439
  Interest                  47,681      41,665     142,420      92,854
                         2,138,961   2,993,161   6,548,782   8,171,157
  Income (Loss) before
   taxes                   172,328    (12,152)    467,792     989,885
  Taxes on income           33,347     17,323     112,357     253,532
Net Income (Loss)(1)   $   138,981 $  (29,475) $  355,435  $  736,353


Basic Earnings(Loss)
  Per Share             $      0.25 $    (0.05) $     0.64  $     1.36
Diluted Earnings(Loss)
  Per Share(1)          $      0.25 $    (0.05) $     0.64  $     1.31

Average shares outstanding  548,671    545,110     547,386     543,800
Average shares outstanding
  assuming dilution         565,551    560,773     562,998     563,137
Depreciation and amortization
  included in expenses  $   285,229 $  288,479  $  848,911  $  845,088

(1)  The 1998 third-quarter results included an after-tax charge of
     $380 million ($0.68 per share-diluted). The 1999 first-quarter
     results included an after-tax charge of $90 million ($0.16 per
     share-diluted).

                 CONDENSED BALANCE SHEET (Unaudited)

                                                 (Stated in thousands)
Assets                            Sept. 30, 1999        Dec. 31, 1998
Current Assets
  Cash and short-term investments    $  4,021,531         $  3,956,694
  Other current assets                  4,616,465            4,848,530
                                        8,637,996            8,805,224
Long-term investments,
  held to maturity                        694,679              855,172
Fixed assets                           4,869,269            4,694,465
Excess of investment over
  net assets of companies purchased     1,321,744            1,302,678
Deferred taxes on income,
  and other assets                        835,710              420,390
                                     $ 16,359,398         $ 16,077,929

Liabilities and Stockholders' Equity
Current Liabilities
  Accounts payable and
   accrued liabilities               $  2,459,195         $  2,539,954
  Estimated liability for
   taxes on income                        411,502              480,123
  Bank loans and current
   portion of long-term debt              741,727              795,700
  Dividend payable                        103,590              102,891
                                        3,716,014            3,918,668
Long-term debt                          3,563,146            3,285,444
Postretirement benefits                   452,629              432,791
Other liabilities                         341,497              321,951
                                        8,073,286            7,958,854
Stockholders' Equity                    8,286,112            8,119,075
                                     $ 16,359,398         $ 16,077,929

                           BUSINESS REVIEW
                         (Stated in millions)

                                    Resource
                   Oilfield         Management           Test &
                   Services         Services         Transactions(2)

Third Quarter 1999  1998 %chg    1999   1998 %chg    1999  1998  %chg
Operating
 Revenue   $1,607 $2,229 (28)% $  330 $  345  (4)% $  332 $  272  22%
Pretax
 Operating
  Income(1)$  167 $  445 (63)% $    6 $    7 (14)% $   11 $    2 358%
Nine Months
Operating
 Revenue   $4,875 $6,829 (29)% $1,018 $1,070  (5)% $  859 $  911 (6)%
Pretax
 Operating
Income(1)  $ 539 $1,401  (62)% $   4 $   38 (89)%  $   21 $ 64  (68)%

(1) Pretax operating income represents income before taxes, excluding

interest expense, interest and other income, and the

third-quarter 1998 and first-quarter 1999 charges. (2) Test & Transactions results include Schlumberger Omnes, formally

a joint venture which was 100% acquired during the quarter, and

exclude the Retail Petroleum Systems business sold on October 1,

1998.

OILFIELD SERVICES

During the third quarter, Oilfield Services operating revenue increased 2% sequentially and declined 28% year over year. The rig count declined 16%. Pretax operating income grew 4% sequentially and fell 63% versus the third quarter of 1998. Compared with last year, revenue decreased in all major geographic regions and across all of the oilfield services, except integrated project management. Geographical comments below exclude Camco and Sedco Forex Offshore, which are reported separately.

On July 14, Schlumberger and Smith International announced the completion of the combination of their drilling fluids operations under a joint venture agreement. The joint venture is the world's largest drilling and completions fluids business. Smith contributed its M-I LLC operations, including M-I SWACO, and Schlumberger contributed its non-US drilling fluids business. In addition, Schlumberger paid cash consideration of $280 million to Smith. Smith and Schlumberger own a respective 60% and 40% interest in the combined operations, which will continue to operate under the name M-I LLC. On July 27, 1999, the Department of Justice filed a petition in the United States District Court in Washington, DC, alleging that the transaction violated a 1994 Consent Decree entered in US v. Baroid Corporation. The parties strongly believe that the transaction does not violate the Decree and are vigorously defending their position.

On October 7, 1999, Schlumberger agreed to purchase Secure Oil Tools from Stellarton Corporation / Calgary, Alberta. Secure Oil Tools is an oil and gas service company offering advanced products in the areas of enhanced production technology (primarily plunger lift), Multi Lateral Production Systems (MLPS), sand filters (MeshRite) and production and thermal tools. This acquisition will advance the long-term Schlumberger strategy to be the leading service provider in optimizing reservoir performance.

North America

In North America, quarterly revenue of $375 million increased 18% sequentially and declined 23% year over year as the rig count declined 11%. Pretax operating income tripled sequentially and decreased 13% year over year. Compared with last year, revenue declined across all oilfield services except integrated project management. Improved production from PowerJet(a) perforating technology has produced pricing premiums of over 20%. The combination with ClearFRAC(a) polymer-free fracturing fluid is having a positive impact in a market focusing on productivity of reservoirs.

The use of ClearFRAC fluid helped BP Amoco in Wyoming to reduce costs and improve production. The fracturing fluid volume was greatly reduced and the initial gas production increased 2.5 times compared to conventional systems. In Canada, the CoilFRAC(a) coiled tubing fracturing system was used to stimulate 27 wells, resulting in cost savings of 60% and an average production increase of 190%.

Agip Petroleum Company, Inc. signed a five-year contract for PowerHouse(a) center-based E&P data management services and Finder(a) data management software.

Latin America

In Latin America, quarterly revenue of $212 million remained flat sequentially and declined 19% year over year as the rig count declined 20%. Pretax operating income decreased 13% sequentially and declined 77% year over year. Revenue for all services in all regions declined, with the exception of 62% growth from multipurpose service vessel (MPSV) activity and 58% growth in marine third-party and nonexclusive proprietary seismic surveys in Brazil.

PEMEX has selected Holditch-Reservoir Technologies to conduct two integrated reservoir studies of six fields to revitalize production and increase total recovery.

Europe/CIS/West Africa

Quarterly revenue of $335 million decreased 2% sequentially and 34% year over year as the rig count declined 28%. Pretax operating income grew 24% sequentially and fell 69% year over year.

The new GHOST(a) sensor was introduced in the North Sea. This innovative technology allows clients to directly measure the flow of gas, oil and water at any point in a producing well.

In Norway, Statoil awarded Schlumberger Scandinavia 100% of its wireline logging projects. The scope of work includes 17 installations on fixed platforms and rigs, as well as additional future installations. The initial two-year contract can be extended up to a total of six years.

In North Africa, the LiteCRETE(a) slurry system saved our client an average of 20 hours rig time and approximately $40,000 per cementing job. During another drilling operation, a damaged well facing costly abandonment was saved with InstanSeal(b) lost circulation sealant, designed to stop fluid loss while drilling.

Other Eastern Hemisphere

Quarterly revenue of $321 million decreased 8% sequentially and 31% year over year, while the rig count declined 22%. Pretax operating income decreased 21% sequentially and 62% year over year. Activity fell across the region, except in integrated project management, which continued to grow in Asia.

Working closely with the client, a Schlumberger premium fracturing service team-a seamless integration of Holditch-Reservoir Technologies, wireline, data management, fluids management, and testing services-delivered customer savings of $48 million for the development of a major gas field in Egypt.

Saudi Aramco awarded Schlumberger two separate land seismic acquisition contracts with a combined duration of up to five years. The contracts will utilize the Olympus-FRS(a) field recording system, a fully integrated component of the Olympus(a) suite of seismic acquisition services, along with the new 80,000-lb. Desert Explorer(a) vibrator source.

Camco

Quarterly revenue of $189 million increased 7% sequentially and declined 12% year over year, as pretax operating income increased 44% sequentially and decreased 19% year over year.

Schlumberger successfully installed remote flow-control devices in a dual-lateral well in Wytch Farm for BP Amoco. These devices allowed the client to manage the production of each lateral well from the surface without costly interventions. In addition to saving considerable future operational costs, production gains from the well were estimated at more than 500,000 barrels. To date, Schlumberger has successfully installed seven of these intelligent completions with no downhole failures.

Working with a drilling company in Venezuela, Schlumberger established a new standard for drill bit performance, dramatically reducing costs while extending a well. The operation was conducted using a single Reed-Hycalog 8-3/8" 345GMT DuraDiamond(a) bit, instead of multiple conventional bits, thereby avoiding unproductive rig time.

Offshore Contract Drilling Activity

The Sedco Forex Offshore rig utilization rate was 76.4% compared with 94.2% in the third quarter of 1998. The semisubmersible utilization rate decreased from 95% to 72.2%, while the jackup utilization declined from 100% to 90%. The industry offshore rig utilization was 69% versus 88% in the third quarter last year.

At the end of September, the Sedco Forex Offshore fleet consisted of 24 semisubmersibles, 10 jackups, 2 drillships, 4 tenders, 6 swamp barges and 2 land rigs. In addition, 3 semisubmersibles and 1 jackup are under construction. Sedco Forex Offshore revenue and pretax operating income in the quarter were $165 million and $29 million, respectively, compared with $292 million and $132 million, respectively, last year.

The merger transaction in which the offshore contract drilling business of Schlumberger will be spun off and combined with Transocean Offshore is expected to be completed by year-end 1999.

RESOURCE MANAGEMENT SERVICES

Resource Management Services recorded a 4% decline in revenue in the third quarter compared with last year. Orders grew 2%. Pretax operating income fell 14%. On October 12, Schlumberger signed a 15-year agreement with PECO Energy of Philadelphia, Pennsylvania, whereby RMS will provide metering data and asset management services to PECO. This agreement represents the largest of its kind in the utility market.

In North America, revenue was up 2% compared with last year, while orders increased 26%. Growth in the US and Canada was mostly driven by a still-buoyant housing market and by aggressive infrastructure upgrades by utilities preparing for deregulated markets. Overall water meter sales were strong, notably for products including automatic reading and billing features. Demand was also strong for electricity meters, particularly for the state-of-the-art Centron(a) static meter with built-in AMR (automatic meter reading) capabilities.

In Europe, revenue decreased 7% year over year, while orders fell 9% over the same period, mostly due to declines in the German electricity and gas businesses, lower demand for electricity products and services in the UK and continued adverse business conditions in the CIS. In France, water activity grew on firmer demand from domestic utilities, offsetting softer demand for gas products. A major energy data management system was begun for the extensive heating network in Stockholm, Sweden. Orders remained high in the electricity market in Spain, in the water market in France and in the gas market in Italy.

In South America, third-quarter revenue fell 18% compared with last year, while orders decreased 7%, reflecting continuing adverse economic conditions in Brazil.

In Asia, revenue grew 91% year over year, and orders rose 39% as a result of renewed growth in the region combined with higher export deliveries. Significant shipments included electricity meters for India, Thailand and Taiwan, and water meters for the Malaysian market.

TEST & TRANSACTIONS

Test & Transactions orders, including customer solutions activities, were up 41% compared with the same quarter last year and up 4% over last quarter. Revenue increased 10% compared with last year and 16% versus the second quarter of 1999. Both orders and revenue figures exclude results from Schlumberger Omnes, formally a joint venture which was 100% acquired during the quarter.

Smart Cards & Terminals revenue was 5% higher than last year and 6% above last quarter, while orders grew 13% versus last year and 8% over last quarter. Orders for cards were led by mobile communications SIM (subscriber identity module) cards in Asia and Europe, including the first Simera(a) Java(c)-programmable SIM cards orders in Malaysia and Taiwan.

Asian smart card sales grew largely due to the shipment of Qianflex(a) smart cards for several Chinese banks. European card sales increased strongly over the same period last year due to growing demand for Simera cards. Municipalities sales also rose strongly, reflecting high activity from the Paris regional transport authority (RATP) and first deliveries for London's Docklands Light Railway (DLR) ticketing project. New York City selected Schlumberger to provide an integrated on- and off-street parking solution that features the nation's first centralized wireless communication capability.

Automated Test Equipment (ATE) revenue rose 9% compared with the third quarter of 1998. Orders rose 212% year over year, and rose 6% sequentially. ATE experienced growth in orders across all businesses. Test Systems orders surged, reflecting strong demand for new system-on-chip (SOC) testers, as well as multiple orders for test systems for RDRAM(d) and DDR (double data rate) memory devices from North America, Asia and Japan. As memory chip manufacturers begin their ramp to RDRAM production, ATE has taken an early leadership position, with orders from three of the world's five leading manufacturers. The strong level of orders for SOC testers was the highest since the introduction of the initial product. In addition, Verification Systems revenue increased significantly compared with the third quarter of 1998, primarily because the front-end business in North America and Taiwan has grown over the last two quarters.

Leveraging ATE leadership in providing value-added business and engineering services worldwide, Schlumberger launched the industry-first Schlumberger Advanced Business Engineering Resources (SABER(a)) Technology Institute to serve as the premier instructional and certifying body for technical and professional semiconductor engineering and operational personnel.

CHANGE IN LIQUIDITY

Liquidity represents cash plus short-term and long-term investments less debt. A summary of the major components of the change in liquidity follows:

(Stated in millions) Nine Months 1999 1998 Funds provided by:

Net income $ 355 $ 736

First-quarter 1999/

third-quarter 1998 charge 90 380

Depreciation and amortization 849 845

Employee stock option plan 71 61

Employee stock purchase plan 71 70

Sale of financial instruments 204 - Funds used for:

Fixed asset additions (991) (1,342)

Businesses acquired (94) (30)

Drilling fluids joint venture (325) -

Dividends paid (307) (286)

Working capital and other (243) (521) Change in liquidity

(320) (87) Liquidity, beginning of period 731

527 Liquidity, end of period $ 411 $ 440

(a)   Mark of Schlumberger
(b)   Mark of Statoil
(c)   Java is a registered trademark of Sun Microsystems, Inc.
(d)   RDRAM is a registered trademark of Rambus, Inc.

This press release is on the Schlumberger Web site at
http://www.slb.com/ir