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   &lt;div style="font-family: 'Times New Roman',Times,serif"&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;&lt;b&gt;NOTE 13. COMMITMENTS AND CONTINGENCIES&lt;/b&gt;
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&lt;b&gt;LITIGATION&lt;/b&gt;
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;We are involved in litigation or proceedings that have arisen in our ordinary business
   activities as well as litigation or proceedings assumed in connection with the acquisition of BJ
   Services. We insure against these risks to the extent deemed prudent by our management and to the
   extent insurance is available, but no assurance can be given that the nature and amount of that
   insurance will be sufficient to fully indemnify us against liabilities arising out of pending and
   future legal proceedings. Many of these insurance policies contain deductibles or self-insured
   retentions in amounts we deem prudent and for which we are responsible for payment. In determining
   the amount of self-insurance, it is our policy to self-insure those losses that are predictable,
   measurable and recurring in nature, such as claims for automobile liability, general liability and
   workers compensation. The accruals for losses are calculated by estimating losses for claims using
   historical claim data, specific loss development factors and other information as necessary.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;&lt;b&gt;BJ Services Acquisition Related Stockholder Lawsuits&lt;/b&gt;
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;As previously reported, the stockholder lawsuits filed in connection with the BJ Services
   acquisition have been settled. On July&amp;#160;15, 2010, the Delaware Chancery Court certified the Class
   of BJ Services stockholders, approved the settlement terms, awarded $500,000 in attorneys&amp;#8217; fees and
   $36,000 in costs to the Class counsel, and entered a Final Judgment dismissing all of the Class
   claims with prejudice, In re: BJ Services Company Shareholders Litigation, C.A. No.&amp;#160;4851-VCN. On
   July&amp;#160;23, 2010, the 80&lt;sup style="font-size: 85%; vertical-align: text-top"&gt;th&lt;/sup&gt; Judicial District Court of Harris County, Texas, entered a Final
   Judgment dismissing the plaintiff&amp;#8217;s claims with prejudice in the consolidated actions styled as
   Garden City Employees&amp;#8217; Retirement System, et al. v. BJ Services Company, et al., Cause No.
   2009-57320, 80&lt;sup style="font-size: 85%; vertical-align: text-top"&gt;th&lt;/sup&gt; Judicial District Court of Harris County, Texas.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;&lt;b&gt;Customer Claim&lt;/b&gt;
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;On November&amp;#160;19, 2009, BJ Services received correspondence from a customer operating in the
   North Sea, claiming that BJ Services&amp;#8217; decision to move a stimulation vessel out of the North Sea
   market constituted a breach of contract. The customer alleges that it was forced to purchase well
   stimulation services from other providers at a higher cost than in the original agreement between
   the customer and BJ Services. The customer further alleges that it has incurred actual and
   estimated future damages of $40&amp;#160;million
   plus an undisclosed amount for production loss and/or production deferral. The customer has
   initiated a request for arbitration and we are responding accordingly. We believe that this claim
   is without merit, and we intend to vigorously defend ourselves in this matter based on the
   information available to us at this time. We do not expect the outcome of this matter to have a
   material adverse effect on our consolidated condensed financial statements; however, there can be
   no assurance as to the ultimate outcome of this matter.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;&lt;b&gt;ENVIRONMENTAL&lt;/b&gt;
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;BJ Services operations included activities which are subject to domestic (including U.S.
   federal, state and local) and international environmental regulations with regard to air, land and
   water quality and other environmental matters. BJ Services has conducted environmental
   investigations and remedial actions at current and former locations of BJ Services and, along with
   other companies, are currently named as a potentially responsible party at five waste disposal
   sites owned by third parties. As a result of the acquisition of BJ Services, we have recorded
   approximately $11&amp;#160;million as a preliminary estimate for environmental remediation. As of
   September&amp;#160;30, 2010, our total accrual for environmental remediation on a combined company basis is
   $32&amp;#160;million.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;&lt;b&gt;OTHER&lt;/b&gt;
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;In the normal course of business with customers, vendors and others, we have entered into
   off-balance sheet arrangements, such as surety bonds for performance, letters of credit and other
   bank issued guarantees, which totaled approximately $1,067&amp;#160;million at September&amp;#160;30, 2010. None of
   the off-balance sheet arrangements either has, or is likely to have, a material effect on our
   consolidated condensed financial statements.
   &lt;/div&gt;
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