S&P affirms Schlumberger

Standard & Poor's said it affirmed the A+ corporate credit and senior unsecured debt ratings of Schlumberger Ltd. and subsidiary Schlumberger Technology Corp. following Schlumberger's announcement that it is acquiring Baker Hughes Inc.'s 30% minority stake in WesternGeco for $2.4 billion in cash and instituting a new 40 million share buy-back program.

The agency said Schlumberger maintains a sufficient level of flexibility to allow for the $2.4 billion cash acquisition and a moderate increase in share buybacks. Debt fell to $4.4 billion as of March 31 from $7.5 billion at the end of 2003, and S&P predicted that Schlumberger will continue to post strong revenue growth and profit margins in 2006 due to increased spending levels among exploration and production companies.

The ratings reflect Schlumberger's strong business profile and status as the world's largest and most profitable oilfield services company, the agency said. Pro forma for the acquisition, net adjusted debt to EBITDA for the trailing 12-months ended March 31 will be about 1x.

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