New York, August 06, 2012 -- Moody's Investors Service assigned an A1 Issuer Rating to Schlumberger Holdings Corporation (SHC) with a stable outlook and affirmed its Prime-1 rating. Moody's also affirmed parent Schlumberger Ltd.'s (SLB) A1 and Prime-1 ratings, reflecting its competitive position as the petroleum industry's largest oilfield services company. SHC's A1 Issuer Rating is a first-time long-term rating for SHC, reflecting its scale, diversified operations and modest financial leverage, all of which rank it comparably with its peer group of large diversified oil services firms. SHC's debt obligations are not guaranteed by parent company SLB. However, its Issuer Rating benefits from a one notch uplift that factors in the subsidiary's size and strategic importance to Schlumberger Ltd.

SHC is an intermediate holding company for Schlumberger's US operations, which are conducted through two subsidiaries, Schlumberger Technology Corporation (STC) and Smith International Inc. (SII). Schlumberger combined its US operations under SHC in 2011, following the acquisition of Smith International Inc. in 2010. SHC provides audited financial statements and will take on the primary funding activities of the US operations. Concurrently, Moody's is withdrawing the A2 Issuer Rating and Prime-1 commercial paper rating for STC, which no longer issues long-term debt or commercial paper. STC and SII remain separate legal entities but going forward will not produce audited financial statements or provide upstream guarantees of SHC's commercial paper or long-term debt.

RATINGS RATIONALE

SHC's A1 long-term rating reflects a standalone credit profile of A2, with one notch of uplift from its ownership by SLB. SHC's standalone profile considers its position as a large diversified oil services company with very low leverage, offset by its concentration in US markets, which are more volatile than international operations. SHC's operations include a full range of services across the oilfield and drilling life cycle. SHC also owns the US operations of WesternGeco LLC, a leader in reservoir imaging, monitoring and development services, and MI-LLC, a drilling fluids joint-venture, which became wholly-owned when Smith merged with Schlumberger. In addition, SHC continues to be one of the chief sources of research and development within the Schlumberger group.

The Smith acquisition expanded Schlumberger's North American footprint, with SHC gaining major positions in land-focused completion and production services, drilling fluids, drill bits, wireline, directional drilling and other drilling-related services. SHC is Schlumberger's largest operating unit, accounting for 35%-40% of total revenues, assets and EBITDA, although its relative contribution fluctuates with oil services cycles. While SHC's size and geographic concentration in the US make its earnings and cash flow more volatile than its more globally diversified industry peers, the operations are benefiting from the surge in drilling on services-intensive unconventional oil and gas resource plays.

SHC generates free cash flow and its financial leverage is modest, consisting primarily of short-term debt and operating leases. Its financial policies and liquidity management are expected to remain aligned with its parent's conservative approach. SHC's liquidity is strong, including a sizeable share of Schlumberger's$3.7 billion of consolidated cash and investments as of June 30, 2012, and $1.5 billion of separate committed bank credit facilities that are non-recourse to the parent and provide commercial paper backup. Regarding distributions, the predecessor STC historically did not pay dividends, and SHC is expected to continue that policy, with the exception of some minimal dividends arising from group restructuring and asset sales.

Schlumberger Ltd. does not guarantee SHC's debt. However, SHC benefits from a strong balance sheet and from its strategic importance to and alignment with the parent. The one notch uplift reflects SHC's rising contribution and importance to Schlumberger's global operations. Given SHC's current modest debt level and internal cash generating profile, we do not believe financing by SHC creates a material structural subordination issue for SLB.

SHC's long-term rating currently benefits from uplift, but it would not necessarily move in tandem with any potential future upgrade of SLB. However, SHC could be upgraded in line with a potential SLB upgrade, depending on SHC's own growth, operating and financial performance, and maintenance of strong leverage metrics.

On a fundamental basis, SHC's ratings could be pressured by balance sheet deterioration via dividends or large debt-financed acquisitions. If SHC were to incur significant debt in the future, we could consider notching its long-term rating down from the parent's. SHC's ratings could also be pressured if it were to become less strategic to Schlumberger, or if the parent's ratings were downgraded.

The principal methodology used in rating Schlumberger Limited and Schlumberger Holdings was the Global Oilfield Services Industry Methodology published in December 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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Thomas S. Coleman Senior Vice President Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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