Ladies and gentlemen, thank you for standing by and welcome to the Schlumberger Q3 Earnings Conference Call. At this time, all participants are in a listen-only mode and later we will conduct a question-and-answer session with instructions being given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the conference over to your host, Vice President of Investor Relations, Mr. Simon Farrant. Please go ahead, sir.

Thank you. Good morning and welcome to the Schlumberger Limited third quarter 2015 results conference call. Today's call is being hosted from New York following the Schlumberger Limited Board meeting yesterday. Joining us on the call are Paal Kibsgaard, Chairman and Chief Executive Officer and Simon Ayat, Chief Financial Officer. Our prepared comments will be provided by Simon and Paal. Simon will first review the financial results and then Paal will discuss the operational and technical highlights. However, before we begin with the opening remarks, I would like to remind the participants that some of the statement we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those in the projected statements. I therefore refer you to our latest 10-K filing and other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures can be found in our third quarter press release which is on our website. We welcome your questions after the prepared statements. Now, I will turn the call over to Simon.

Thank you, Simon. Ladies and gentlemen, thank you for participating in this conference call. Third quarter earnings per share were $0.78. This represent decreases of $0.10 sequentially and $0.71 when compared to the same quarter last year. Our third quarter revenue of $8.5 billion decreased 6% sequentially. Almost 40% of the revenue decline was attributable to pricing. Despite the very challenging environment both in terms of pricing and activity, pre-tax operating margins only declined by 101 basis points sequentially. This was due to the continued strong and proactive cost management across the entire organization. Sequential highlights by product group whereas follows. Third quarter Reservoir Characterization revenue of $2.3 billion decreased 5% sequentially as decreases in exploration spending impacted both wireline and testing services internationally. Despite the revenue decline, pre-tax margin -- operating margins remained essentially flat at 26.3%. Drilling Group revenue of $3.3 billion, decreased 7%, primarily due to pricing pressures and activity declines internationally that have mostly affected drilling and measurements and M-I SWACO. As a result of strong cost management, Drilling Group margins only declined 94 basis points to 18.6%. Production Group revenue of $3 billion, decreased 5% sequentially, while margins declined 173 basis points. These decreases were primarily driven by pricing and activity declines in Well Services. Now turning to Schlumberger as a whole. The effective tax rate was 20% in the third quarter. This was lower than the previous quarter by about 1 percentage point due to the geographic mix of earnings between North America and the Rest of the World as well as the mix of earnings amongst the international geo markets. Our cash flow generation continues to be very strong. During the third quarter, we generated $2.5 billion of cash flow from operations. During the first three quarters of 2015, we have generated $6.6 billion of cash flow from operations. This is all despite making severance payments of approximately $150 million during the third quarter and $600 million during the first nine month of the year. Net debt improved $400 million during the quarter to $5.2 billion. During the quarter, we spend $545 million to repurchase 6.9 million shares at an average price of $78.76. Subsequent to the announcement of our transaction with Cameron in August, we have been repurchasing the maximum number of shares allowable under the SEC’s regulations. We filed our S4 registration statement relating to the acquisition two weeks ago today. It’s worth highlighting that once the SEC declares our registration statement effective and the proxy statement is mailed. We will be prohibited under the securities laws from repurchasing our stock until the Cameron shareholder vote. We spent $590 million on Capex during the third quarter. Full-year 2015 Capex excluding multi-client and SPM investments is still expected to be approximately $2.5 billion. And now I will turn the conference call over to Paal.

Thank you Simon and good morning everyone. Schlumberger third quarter revenues fell 6% sequentially, driven by continuing decline in rig activity and persistent pricing pressure throughout our global operations. North America revenues fell 4% sequentially, as we maintain focus on balancing margins and market share, while international revenue was 7% lower as customer budget cuts and service pricing erosion impacted results. Still in the midst of what may well turn out to be the most severe downturn in several decades, our operating margins were maintained at levels much higher than in previous downturns. In North America, pre-tax operating margins were held at 8.9% in spite of an additional drop in activity and pricing both offshore and on land. While international margins dropped to 23.7% as customer budget cuts, activity cancellations and lower service pricing took further effect. In the first nine months of 2015, year-over-year revenue has dropped 34% in North America and 18% internationally, yet we have delivered nine month decremental operating margins of 34% in North America and 23% internationally, which represents a strong performance improvement over the 2009 downturn. We have delivered these results by proactively and decisively managing our cost and resource base, carefully navigating the commercial landscape with the aim of balancing margins and market share and at the same time, accelerating our internal transformation program. We also generated more than $1.7 billion in free cash flow in the third quarter, which represents a conversion rate of 170% of the quarter’s earnings. Our ability to generate significant free cash flow even in this part of the cycle is a major competitive edge which we actively use to pursue new business opportunities as well as targeted M&A activity. In terms of M&A, our main focus in recent months has been the proposed acquisition of Cameron announced…

Thank you. [Operator Instructions] Our first question will come from the line of Ole Slorer at Morgan Stanley. Please go ahead.

Well, thank you very much. And, Paal, I wonder whether we could start with the macro and maybe before that, Simon congrats with another great set of free cash flow numbers.

Thanks, Ole.

But let us start with the macro for now. Where do you think that the weakening supply has played our differently or similarly to what you would have thought 3, 6 or 12 months ago in light of recent CapEx cuts?

I think it’s playing out more or less as we have expected globally. I think what you see in OPEC, there is really no change to overall production capacity. There is a continuous shift from spare capacity into marketed supply. In North America, the production is coming down more or less as expected as well and internationally, we are starting to see signs of a weakening supply as well. I think in all these three main sources of supply, while production is starting to come down, I think there are also significant efforts to maximize production within each of these basis while in some cases taking more short-term actions to maximize production which might actually have a negative on long-term recovery. I think there is only a limited period that this can be done and while the various players exhaust these type of opportunities, if investments aren’t increased, I think you will see a further acceleration of the drop in production.

And the timing of that acceleration, do you have a view on that?

No, it’s still a bit difficult to say, but I think there are clear signs now in all – at least in North America and non-NAM and OPEC that production is weakening and we expect that to continue and potentially accelerate in the event the investments aren’t increasing.

Okay, thanks for that. Just sort of based on what you highlight here, with respect to CapEx trends in respect of oil prices, just having a shot at your fourth quarter and first quarter next year, with a 10% EPS reduction into the fourth quarter and then another 5% into the first quarter, would that be a reasonable trajectory?

Well, let me say this. Q4 looks challenging and visibility had actually dropped in the past month or two now. So, formal [ph] activity is down, but in Q4 we will see the start of the wind to slow down in the northern hemisphere. We also see further budget cuts in several of the key offshore markets such as Sub-Sahara Africa, Brazil and the Far East. We also expect rig activity in North America land to be down in Q4 due to the financial stress on many of our customers there and we expect very limited yearend sales of product, software and multiclient. So EPS will drop, but due to the lack of the visibility we have now, Ole, I am not really ready to commit to a number, but I will also say that Q1 in spite of Q4 not having the seasonal uptick in yearend sales, we also see Q1 being below Q4.

Okay, that makes sense. Thanks a lot.

Thanks, Ole.

Thank you. We will go next to the line of James West with Evercore ISI.

Hey, good morning Paal.

Good morning.

Paal, so we’ve now pushed out the recovery to ’17, but I wonder if you could elaborate a little bit more on how you see ‘16 playing out. Clearly you just mentioned 1Q is going to be below 4Q, does that mark the bottom in earnings and we are kind of going sideways from those next year or is there a potential for a second half modest upturn?

Well, we hope that Q1 will represent the bottom and there would be a gradually, but slow recovery during the year or even sideways. I think it is still too early to say, James. I think we have, even for Q4 now there is significant uncertainties in several of the markets on what’s going to happen. Beyond that we clearly see Q1 being below Q4, but visibility, Q1 is still very low. So I would hope that what you kind of depict will be the case, but I think it’s too early to say. But I would say also that there is a limit to how long these reductions in investment and activity can continue. And I think as the oil price now likely will start to move upwards, hopefully investments will turnaround, but anything meaningful will be late ‘16 and into 117 as we see it as per today.

Okay, got it. And then, Paal, you specifically called out M&A in the press release last night and you had a number of smaller deals in addition to Cameron this quarter, or last quarter excuse me. Are you preparing the market for something additional of size or is this just highlighting the fact that you guys are generating tons of cash, you got a huge flexibility?

Yeah, it’s still out there, we’re not preparing the market for anything other than refocus significantly our entire organization on generating free cash. Margins are a key ingredients to generate cash. So both of those are key focus areas for us in terms of protecting and extending our strong financial performance. And obviously, in this type of market, companies that can generate significant free cash has a broad range of opportunities and I think we’ve shown so far in the downturn that we will be opportunistic. What opportunities are there and which one we will convert, we will revert back to you when we have converted them. But as of now, we will continue to be opportunistic but there is no preparation or any methods beyond that.

Okay, got it. Thanks Paal.

We’ll go next to the line of Angie Sedita with UBS.

And again impressive free cash flow and decrementals there versus the peer group. So, Paal in your prepared remarks you talked a little bit about the outlook for 2016 as far as E&P spending and I know it’s obviously early to have much granularity. So, where we have less visibility is internationally and maybe you can just give us some color there on what you’re hearing with your conversations, with your customers around the world as far as the spending outlook for 2016 both land and offshore?

Yeah, we don’t have a lot of granularity Angie; it’s still just kind of broad-based statements. Most of our customers haven’t completed or just barely started our budgeting process for 2016. But the general feedback is very consistent. And that is, they expect, the vast of them that spend will be lower. So I can’t give you granularity of geography or land and offshore. I would say though that the part of that rule that is still very, very resilient is obviously the GCC countries in the Middle East. So I’m not expecting anything significant there in terms of lower investments. But broad-based pretty much everywhere else. There are significant challenges and we expect 2016 budgets to be below 2015.

Okay, okay, that’s helpful. And if you -- you think about the U.S. and obviously it’s a smaller market for you. But as you think about the U.S. and you’ve said on a number of occasions that the pricing is unsustainably low. And as we all know that many of these smaller companies are free cash flow negative. I mean how do you think this plays out in 2016 going into 2017, could even a modest increase in activity in oil prices led to even modest improvements in pricing or how do you think this plays out, any thoughts?

Yeah. I’m not very optimistic on any turnaround in service and product pricing for oilfield services in North America land. I think, yes, many of the small companies or most of the small companies are free cash flow negative. They are under significant financial stress and maybe some of them will go bankrupt in the coming quarters or in the coming year. But there is still massive overcapacity and even these small companies that go bankrupt will likely be picked up other investors and their assets will be returned back into the market. So, I think the overcapacity is going to be with industry for quite a considerable amount of time. So I don’t expect any real improvement in service and product pricing in the coming year in North America land.

All right, great. Thanks I’ll turn it over.

Thank you. We’ll go next to the line of Bill Herbert with Simmons & Company.

Wondering if we can talk about a little bit about the flexibility of the U.S. upstream value chain here as we’re getting deeper into this downturn. And I mean the supposition has been and perhaps continues to be the -- once the recovery narrative is embraced by the industry that the industry can respond quickly and assertively to an increase in spending and activity. Do we still think that’s the case given the duress of the industry and the fact that many are not only cutting into fat and muscle but now bone.

So I think the industry is -- so I think the market is probably overestimating how quickly the industry can respond whether it’s in North America or internationally. I think the fact that now four quarters into very low oil prices, the financial strength of many of our customers has significantly weakened and their appetite to invest is also a bit down. Any I think – any improvement in oil prices, I think will be to initially – is going to go towards the strength in the balance sheet and then the oil companies will likely assess how sustainable are these increases in oil prices before they start investing. So there is a delay, I believe, between an improvement in oil prices and the decision to increase budgets. And there is going to be a further delay between increasing budgets and realizing that into higher oil field activity. And then there is going to be a delay in between higher oil activity and higher production. So I think there – the market is underestimating how long this period is going to take and just the fact that the industry is again looking to reduce investments when we have this significant pending supply impact coming. This shows that I think we are – we even have increasing chance of a potential spike in oil prices if investments aren’t increased in time.

Okay. And then secondly, so given the duress that you’re processing here for the next several quarters, notwithstanding the fact your decrementals in Q3 were still very laudable, they trended higher. And I’m just curious as to whether we see accelerating decrementals over the next quarters or do they stabilize or what’s your view with regards to the roadmap on that front?

Well, in terms of our decrementals, we are working flat out to continue to manage them at our own levels that you’ve seen so far this year. So we are not giving up on that, we have continuous efforts both in reducing cost and capacity as well as creating more leverage to offset pricing from our transformation. So we are going to continue to work very hard at delivering continuously very strong decrementals. We see that that’s very important to sort of maintain our financial strength and also to help us generate the strong free cash flow that you’ve seen so far this year.

Okay, thank you.

Thank you.

We’ll go next to the line of Jim Crandell at Cowen.

Good morning. Paal, the – based on maybe a more limited sample size, we seem to see a number of companies quarrelling for 20% to 30% reductions in their CapEx for 2016. Is that a range that you think is reasonable at this point?

I think, full year 2016 – for full year 2016, that sounds like a high number. At this stage, I don’t think it’s going to be as much as that, no.

And based on your conversations with the – with managements of some of the NOCs, would you think that the NOCs in Latin America, West Africa and Asia would be still one of the weakest points in the market. I noticed that Angola is cutting spending by 50% next year, and do you think that’s going to be indicative of some of the NOCs in those regions?

Well, that number again I think is high, but I think the fact that this customer group has cut significantly this year and would likely go down potentially further next year, I think is a reasonable assumption. But again, my commentary on 2016 is based on very high level discussions and I don’t have details of what budgets and what numbers are going to be. Other than that, it seems to be consensus that overall spend will be down. I think your 20% to 30% is very high. It’s likely to be less than that, but still I expect it to be down.

And how would you – in a declining market, how do you think that that affects the market share of integrated services for Schlumberger?

I don’t think it has a direct impact on anything in terms of up or down. There continues to be a broad range of integration type of opportunities. We are pursuing order, but it is all the way from bundle services from a few of our product lines all the way up to full turnkey lump sum contracts as well as SPM opportunities. So nothing dramatic in terms of shift of integration opportunities. It continues to be a key part of what they offer and there is a generally growing appetite from all customer groups to engage in those type of contracts.

Good. Okay, thank you.

Thank you.

We’ll go next to the line of Bill Sanchez at Howard Weil. Please go ahead.

Thanks. Good morning, Paal.

Good morning.

Paal, I want to try to understand a bit more from you the magnitude of the pricing declines internationally that you’re seeing and what the duration from here is going to be and I guess specifically kind of where are we now or where are you I should say in working through all of your contract renegotiations with your customers?

I can’t give you a number, Bill, on this, other than, I think, it’s clear that the pricing impact internationally all the way, it is significant to our operations, it is still significantly lower than what we’ve seen in North America and North America land. I would say that round one of the pricing discussion is complete. There might be more coming in the coming quarters and I think as long as oil prices are down, and the outlook is still relatively somber, then there is a constant pressure on pricing internationally as well as in North America land. So, we continue to work through that. We bid competitively on the tenders that are out there, customers that are looking to renegotiate, we engage in those discussions and obviously, we’re trying to minimize and protect how we -- what we concede in these type of discussions, but that’s a call we make in this situation around what market share we are looking at, what kind of terms and conditions we can get, so some of the things and how we look at the overall business that we run. This is a normal part of business. When there is overcapacity, there is pressure on pricing, and that’s part of what we do for a living to manage that.

Do past renegotiations that you’ve, for the like of, kind of settled with your customers, do those get reopened here as we go into 2016 or these are just incremental discussions that you’re still having on contracts that really haven’t been negotiated at this point or renegotiated at this point?

Well, I think it’s a mix of all of it that I think you see it in North America land and you see at international. Overcapacity, there is a continuous pricing discussion until we hit the bottom of the market and then it stabilizes and then we look upwards from there. So there is a mix of renegotiations of contracts already discussed and some of them, which have not been changed already. So there is a combination of all of that.

Okay. Simon, a follow-up for you or a question for you, can you give us an idea of when the share repurchase blackout period will begin for you?

Okay. So as I mentioned in my remarks, once we supplied the S4 and it is accepted, there will be a blackout period. I am expecting it to be about four to five weeks and could start maybe early November.

Okay. And I guess we would expect repurchases to take place up until that point?

Yeah. Now, I like to take this opportunity just to remind you that first, we are issuing a large number of shares and the number of shares that will be issued, it’s going to take place by our US based subsidiary. You’re going to see a large movement in the capital structure of Schlumberger between our US subsidiary and the parent company. In other words, the US subsidiary will be the one acquiring Cameron and as a result, it’s going to acquire the shares from the parent company. So you’re going to see eventually when we close the transaction of Cameron, a large swing in the capital structure between the US based subsidiary, our parent company because of the structure of the acquisition and this would require the US subsidiary as I said to acquire shares from the parent company. So, there will be a large movement of cash from the US based subsidiary into the parent company. But when times will come, we’ll explain it to you in more details and how it’s going to work out.

Great. I appreciate the time. I’ll turn it back.

Thank you.

We’ll go next to the line of David Anderson of Barclays. Please go ahead.

Thanks. Paul, I was hoping you could expand a bit more on what you see on the exploration front. In the commentary, you noted Gulf of Mexico continue to transition. Now, West Africa is starting to roll those exploration programs. And what’s the mindset of your customers at this point of where that fits in the portfolio, you talked about -- the first and foremost about the balance sheet is obviously about dividend, but is it just about getting development costs down first and this exploration is kind of pushed out, well, how does that kind of fit in terms of your vision for the next couple of years?

Yeah. I think what you’re saying is correct. The focus on driving cost down is on development and exploration is basically eliminated. That’s how I think many customers look at it. There are significant cuts in exploration activity and they continue both for seismic and for drilling. The Q3 exploration rig count was down about 25% year-over-year and the seismic spend was also down in excess of 30% and that’s following a pretty low year in 2014 as well. So it is very challenging for exploration activity for us, but again the impact of this is still fully absorbed in our results which are still reasonably good. So, yes, in summary, our customers are more or less cutting completely exploration and focusing a lot more in driving further cost out of the development.

And on that side, on the development, as you integrate OneSubsea into Schlumberger, this will be a pretty big opportunity to pull on the rest of Schlumberger to help bring down development cost. If I think about you leaning on your reservoir expertise and well design capabilities, how receptive have customers been so far to Schlumberger taking a greater role in that offshore development. It would seem to be as a pretty big mindset change for your customers. I mean, is that happening? Do you feel confident of that? Do you think projects can actually move ahead in ’16 because of that or is that a little too optimistic in terms of the timing?

It might be slightly optimistic on the timing, but I think – so first of all, many of the things that you mention in terms of bringing together these capabilities of Schlumberger and OneSubsea is already happening, but obviously we can accelerate and have an even further impact on this as we close the transaction and take full management of OneSubsea, but I am very pleased with the progress that OneSubsea has made and the close working relationship we’ve had OneSubsea from the Schlumberger side. But I think over time and maybe not already in 2016, there is significant cost reduction potential in the – for the deepwater, I think both, when it comes to the well cost as well as for the overall infrastructure. I think we can simplify, we can standardize, we can engineer costs out of the system and what that will allow, if you can, for instance, reduce the well cost by, say, 30%, you can potentially drill four wells for the price of three, which again will help you increase production and recovery from the deepwater fields which obviously will help lower cost of barrel and then improve the economics. So I think we are in very, very early innings in terms of driving down costs for deepwater, both production and then the drilling part of it. And I think what we are doing now with the Cameron acquisition is going to address both those dimensions.

Great. Thank you.

Thanks.

We will go next to the line of Scott Gruber at Citi.

Good morning.

Good morning.

Turning back to international decrementals, you guys continue to post very impressive figures during this down cycle, but at what rate of upstream spending decline abroad with this 25%, 30% decrementals be at risk of rising? I know there is not a lot of clarity on exactly how spending will turn out next year, but spending is down 15%, would you start to become concerned or would it take a steeper drop to really threaten those decrementals?

You are talking about 2016 spending.

Correct.

Well, we have delivered I think very strong financial performance in the international market now for a number of years. In 2014, we generated 69% incrementals on quite limited revenue growth and so far 23% decrementals on 18% drop in revenue this year. So our performance so far this year is not a fluke, we have been very good at managing our international business. So I am expecting that even with still further headwinds in terms of top line in 2016, we should be able to continue to hold the decrementals at a very respectable level, whether they are going to be at 23% or slightly higher, it will be difficult to say. But in terms of offsetting activity reductions through cost cutting, I think we have proven that we can do that. And beyond that it is how much leverage we can generate from the transformation to offset pricing. So both of those are – we are very active on trying to delivery both of those type of results. And we are going to go very hard at it for 2016 to continue to delivery strong decrementals internationally.

Got it. And then you already touched on the need for customers to repair their balance sheets which will likely contribute to the delay in activity recovery. Is there also an oil price threshold that you have in mind that need to be achieved before your customers start to increase CapEx? I mean, do we need to see $65 Brent or $70 Brent. At what level do you think customers are comfortable expanding their budgets even if there is some delay?

I don’t have a specific oil price number in mind. I think it’s going to be much more functional how sustainable our customers see the increases in oil prices to be. I think it’s more about having a stable basis for increasing investments before they go ahead and do it right. I still that they are -- that there is going to be conservatism based on the very tough four quarters that the industry has gone through at this stage. And that’s why again we are basically saying that there is going to be a lag between higher oil prices and investments, and even a tag between our investments and realizable oil selectivity.

Anything further Mr. Gruber?

Well nope, that’s it, got it. Thanks.

We’ll go next to the line of Michael LaMotte with Guggenheim.

If I could follow-up just on transformation quickly and ask you to expand upon two areas in particular. First you’re comments on the reorganization of the manufacturing operations and how long that is expected to take and if you could quantify the gross margin benefit perhaps of that effort. And then secondly, in the press release, this is the first time we’ve seen the references to the multiskilling. So if you could give us an update in terms of where we are in the progress of that effort as well?

Yeah. On the transformation around the global manufacturing and distribution, the charge we’re taking is for consolidating facilities, moving much more towards campuses and clusters and also the introduction of some new automation manufacturing type of technology. Similarly, we’re also looking to consolidate how we do global distribution going more from a global and local set up to a much more regional setup in terms of how we manage that. So the process of getting it done, we are -- we have already embarked on. And there are some charges associated with it that we will take in the fourth quarter and we will continue implementing that program in 2016 and 2017. So, I’m not going to be able to give you a specific impact on margins and what this is going to generate for us, although that we’re -- we are very excited about doing this. It’s going to modernize a core part of the company and its going to make us even more competitive in the international market. Now in terms of multiskilling, this is part of how we’re continuing to drive people productivity. There is many other aspects of what we do there, we have remote operations as another key part of this as well, where we can centralize much more of our expertise and have them oversee more jobs centrally rather than being at the well side as well. So, all of these elements are key part of the transformation program and we are still not at the halfway point of rolling this out globally and for it to have the full impact on our operations on our results. So there is still a lot of runway left in both the multiskilling, the remote operations and what we’re going to do on manufacturing and distribution as well as all the other parts of the transformation. So we’re excited about it and there is a strong pull from the entire organization on this and we continue to work hard on implementing it.

Great, thank you. And if I could ask a follow-up quickly to Simon. Would you be perhaps, I noticed debt came down; total debt came down in the third quarter from the second quarter. During the blackout would you be using free cash flow to further pay down debt or can we just assume that that cash builds on the balance sheet in that interim?

So, good question Michael. Some of the -- most of our debt actually is a fixed debt. So we do have certain percentage which is more reflective of commercial paper, et cetera, this will go down. But as I said earlier and I like to repeat this that you’re going to see a large movement in our capital structure. And perhaps eventually, we will have a little bit more debt associated with the transaction coming from our North America or our U.S.-based subsidiary. And this to acquire the shares from the parent company. So you’re going to see a different type of movement and eventually there will be larger debt that we will have in the U.S. subsidiary in order to acquire the shares.

Post close?

In the meantime, during the blackout period, as you highlighted it would reflect into a reduction in the debt, which is the current debt that is reflected in the simple [ph] program that we issue on daily basis.

Great, thanks Simon.

We’ll go next to the line Jud Bailey with Wells Fargo Securities.

Thanks, good morning. Paal, I ask you about a couple of different markets outside of North America, it seems like Latin America continues to trend some of the more – one of the more difficult international markets. Could you maybe comment on Mexico and also, particularly on Brazil given all the issues going on the Petrobras and some of the contract renegotiations and how you’re thinking about that market and how it may impact you in 2016?

Yeah, both markets, as you point out, both Mexico and Brazil have been very challenging this year. Mexico, even more than Brazil, I would say. So there has been significant budget reductions and they have continued throughout the year. Like I mentioned in my prepared remarks, our Q3 revenues now stands at an eight-year low, which is quite remarkable for a sizable market as Mexico is for us. So in terms of next year, it’s still very early for both of these countries, Mexico and Brazil, but I think it’s going to be challenging as we enter into 2016. Though, I don’t have a lot of details of it yet, but no positive signs either from Pemex or from Petrobras at this stage.

Okay. Thank you. And I’ll – my follow-up is on – just to circle back on international pricing, understanding you’re kind of done with Round 1, but as you kind of look at the market today, is pricing getting – is it starting to decline worse than it did earlier in the year or is there any sign of it stabilizing or do you get the sense that the pricing is slipping even more? And are there any particular markets internationally, where you are seeing more pricing pressure than others?

No, it is not, I’d say slipping further, it’s just – there is a continuing pricing pressure in this part of a cycle. It’s quite normal. There is nothing special about it. And as long as the outlook is negative, then there will be continued pricing pressure. Every bit that is out, there is even increased competition to get it and that creates the downward pricing pressure. So nothing exceptional. I don’t see it accelerating. Other than that is not going way, and we will just continue to manage it and navigate it the way we have been doing so far in the downturn.

Great, thank you.

Thank you.

And the last question will come from Kurt Hallead with RBC Capital.

Hey, good morning.

Good morning, Kurt.

So just I’m curious Paal, when you think about the – going back to the M&A dynamic, the Eurasia deal kind of fell through, that’s – is that something that still could be – come back on the table at some point going forward? And when you think more broadly about M&A, is the Schlumberger interest right now more in some geographic opportunities or is it in some product specific areas generally speaking?

Just to say the Eurasia deal first of all, obviously we were disappointed that we couldn’t get it closed within the several extensions of the timeline that we agreed with Eurasia. But that deal is now closed for us. So I don’t really have any more comments on that. In terms of other M&A, we continue to be opportunistic. I can’t go into details of what that will entail or what we may or may not do. Other than that, we have a broad view of the entire market and what opportunities are there, what they are interested in. And we continue to evaluate companies on a monthly basis and if there is a willing seller and a good price, then we might be able to do something more, but it’s still too early to say. So I can’t promise anything or I can’t make any further comments on what may happen. Other than that, we continue to be active in assessing the market and look for opportunities to further extend and strengthen our portfolio and we keep generating the cash to allow us to do that.

Okay. That’s great. I’ll keep it there, and we’re seeing a little bit.

Very good.

All right, so before we close this morning, I would like to summarize the three most important points we have discussed. First, while the business environment clearly got worsened in third quarter, our focus on cost management and transformation has enabled us to deliver strong financial performance and generate significant liquidity, which is a clear competitive edge in this part of the cycle. Second, our forward visibility has again been reduced and we will consequently revert back to managing the company quarter-by-quarter. This means a further round of capacity and overhead reductions in the fourth quarter as we adjust resources to a lower activity outlook. At the same time, we will continue to accelerate our transformation program with the next step being a significant restructuring of our global manufacturing and distribution network, which will further modernize the core part of our company. And third, our outlook for the oil market remains unchanged with a continuing tightening of the supply and demand balance as the dramatic cost in E&P investments start to take full effect, ultimately leading to an increase in oil prices. Given the conservative view our customers are taking on 2016 investment levels and the general state of the industry, following a year of low oil prices, we see an increasing likelihood of a timing gap between higher oil prices and a subsequent increase in E&P investment and oilfield activity. In this environment, we continue to proactively manage our business, to preserve our financial strength into 2016, which will allow us to better navigate the market uncertainty and to respond faster to new business opportunities and ultimately, higher activity. Thank you for participating.

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