Nabors' 4Q EPS Beats Expectations at $0.44 versus $0.37 Mean Estimates, Excluding Certain Non-Cash E&P Related Adjustments

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HAMILTON, Bermuda, Feb. 15, 2011 /CNW/ -- Nabors Industries Ltd. (NYSE: NBR) today announced its results for the fourth quarter and full year 2010. The Company's non-GAAP net income from continuing operations was $127.7 million ($0.44 per diluted share) in the fourth quarter and $299.9 million ($1.03 per diluted share) for the full year. This compares to the Company's 2009 results which were $35.1 million ($0.12 per diluted share) and $384.4 million ($1.34 per diluted share), respectively, in net income from continuing operations. The quarter's adjusted income derived from operating activities was $222.4 million bringing the total for 2010 to $655.4 million. This compares to $140.4 million for the corresponding quarter of 2009 and $681.6 million for all of last year. This quarter's results do not include nearly $5 million or $0.02 per share of deferred income from work performed for the Company's NFR joint venture which have been eliminated for GAAP purposes and will be reflected in future periods through favorable adjustments to the Company's portion of their depletion. Revenues for the Company were $1.3 billion for the quarter and $4.2 billion for the full year. The quarter's GAAP income from continuing operations was $50.2 million ($0.17 per diluted share) and included non-cash impairments of certain E&P assets.

Gene Isenberg, Nabors' Chairman and CEO, commented, "Our fourth quarter results exceeded expectations in virtually all sectors of our business except the Gulf of Mexico where the permitting gridlock persists. Operating income rose sequentially by $58.0 million to $222.4 million. The addition of Superior Well Services generated the largest impact followed by Canada, US Lower 48 land drilling, International and US Well-servicing. Our Other Operating Segments income decreased sequentially as a result of lower activity in both our Alaska joint ventures and in our directional drilling entity, more than offsetting an increase in Canrig's results.

"We expect 2011 to show a 50-60 percent increase in non-GAAP earnings per share, even though the first and second quarters will be adversely impacted by several period-specific issues and the customary seasonal slowness in our US Pressure Pumping and US Well-servicing businesses. Among these issues are the usual first quarter payroll tax drag on our US businesses and approximately $90 million in International income reductions resulting from three events: lower market rates on three jackup renewals, scheduled downtime for regulatory inspections on four jackups, and approximately 360 days of downtime to accomplish upgrades on six land rigs in Saudi Arabia in preparation for long-term gas drilling contracts. Despite the magnitude of these items, we still expect International income in 2011 to approximate 90% of 2010 with a fourth quarter annualized run rate that far exceeds that result as rig activity increases. With the exception of Alaska, all of our units are expected to be up significantly and in the aggregate deliver a very strong year.

"Meanwhile, our financial position remains solid. Despite a significant increase in our 2011 investment opportunities, we plan to redeem our remaining $1.4 billion in convertible notes on May 15, 2011 from a combination of our cash on hand, interim cash generation, E&P sale proceeds and temporary use of our revolving lines of credit.

"Our US Pressure Pumping segment posted a very strong quarter at $54.7 million, a record performance that included a seasonally lower December. We expect the first quarter to be flat with the fourth quarter with seasonality in some areas, offsetting higher average volume and pricing in other areas. The first of nine incremental crews are expected to commence operations in March, with one deploying each month thereafter. We also expect to begin operating the first of our new coiled tubing units in June. We continue to see improvement in this business as increasing demand in oil and liquids-rich fields outstrips slowing activity in dry gas areas, with the notable exception being the Marcellus shale. The average number of stages per well continues to increase and we believe overcapacity will not be an issue for some time, particularly if commercial success is achieved in some of the numerous new oil shale plays. We anticipate 2011 will show significant further sequential increases in quarterly results.

"Results in our Canada operations increased substantially to $16.6 million as we ramped up into the seasonally strong first quarter. In addition to the normal improvement associated with the beginning of the winter drilling season, this market is seeing strong increases in oil and liquids-directed activity which more than offsets declining rig counts in gas areas such as Horn River and Montney. We expect 2011 to be a significantly better year than 2010.

"Our US Lower 48 land drilling unit also posted a large increase in operating income principally on higher average margins of $843 per rig day, with only $250 of that increase attributable to favorable end-of-year workers' compensation adjustments. Since our third quarter release, we have secured another six new build rig contracts bringing the total over the last four quarters to 29, including three economically equivalent SCR upgrades. Interest in additional new builds remains strong. The outlook for this business remains very good, although a sharper-than-anticipated decline in gas activity could partially offset the continuing ramp up in oil and liquids-directed work. In 2011, we expect that 68% of our operating cash flow in this unit will be derived from oil and liquids-directed drilling, as opposed to only 15% in 2006.

"Our International business exceeded our expectations with favorable costs and delayed repricing on the first of three jackups. The aforementioned $90 million reduction in income will largely be felt equally in the first and second quarters. However, a significant ramp-up in this unit's rig count during each quarter should result in sequential improvement as the year progresses, with the fourth quarter approximating this quarter's results. Prospects are improving in multiple markets and we are optimistic this unit will outperform our expectations over the next few years.

"Our US Well-servicing business achieved a significant improvement in results, with $12.1 million in operating income derived from improved rig rates and robust activity in its fluids management division. We expect this unit to achieve steady improvement subsequent to the seasonally weak first quarter leading to a possible doubling of the full-year results. There remains significant potential in this business with sustained oil prices and a large expansion of our fluids management fleet, facilitated by the synergies this unit is deriving from the Superior acquisition.

"Our Alaska operations were sequentially down slightly with the demobilization of two rigs following the completion of long-term projects. We expect 2011 results to be only 40% of those achieved in 2010 as another higher margin project winds up in May, adding to the effects of a significant decline in rig activity. There are early indications of improving activity later this year if proposed modifications to the progressive Alaska tax structure are enacted. Sustained high oil prices, additional demand for our proprietary coiled tubing technology and the eventual development of viscous oil deposits are promising longer term.

"Our US Offshore operations were down more than expected as the lack of permit issuance continued to severely curtail activity. We expect this situation to continue through mid-year, although increased workover and plug and abandonment work for our shallow water jackups and Sundowner® rigs should somewhat lessen the adverse financial effects. The longer-term outlook is solid, particularly considering the two new build high-spec deepwater rigs we are constructing for deployment around the end of next year under long-term contracts.

"Our Other Operating Segments posted lower results as a decline in Ryan's US gas-related directional drilling operations combined with a drop off in activity in both of our Alaska joint ventures. These effects were partially offset by a small increase in Canrig's results, principally on the strength of third party capital equipment sales and increasing contributions from its ROCKIT® technology. The outlook for this segment appears to be good with continued strength in Canrig and the commencement of the winter season in Ryan's Canada operations and in our Alaska joint ventures.

"In our Oil and Gas segment the quarter's GAAP results included dry-hole expense and impairment of certain gas properties, the development of which is unwarranted because of the current natural gas price environment. As we previously discussed, we are progressing toward the completion of the sale of a portion of our Colombian assets. We are evaluating a second stage of bid submissions and believe we will derive a value in line with the lower end of the range of our expectations.

"In summary, all of our units are poised to improve as 2011 progresses. Longer term, our global infrastructure, premium fleet and solid balance sheet position us to perform well in almost any market environment. Recovery in our International segment is commencing and we remain confident in the sustainability of growth in our North American markets even in the face of today's weak gas prices. The leverage we enjoy in the natural gas market positions us for even greater profitability when prices eventually improve."

The Nabors companies own and operate approximately 550 land drilling and approximately 727 land workover and well-servicing rigs in North America. Nabors' actively marketed offshore fleet consists of 37 platform rigs, 13 jackup units and 3 barge rigs in the United States and multiple international markets. In addition, Nabors manufactures top drives and drilling instrumentation systems and provides comprehensive oilfield hauling, engineering, civil construction, logistics and facilities maintenance, and project management services. Nabors participates in most of the significant oil and gas markets in the world.

The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements.

The Company will host a conference call tomorrow, February 16, 2011 at 10:00 a.m. Central Time to discuss the results and its outlook in more detail. You may access a webcast of the call through Nabors' website at www.nabors.com > Investor Relations > Events Calendar or via www.streetevents.com. The Company will also post a set of slides on its website in advance of the call in order to provide additional detail on its operations. For further information, please contact Dennis A. Smith, Director of Corporate Development for Nabors Corporate Services, Inc., at 281-775-8038. To request investor materials, contact our corporate headquarters in Hamilton, Bermuda at 441-292-1510 or via email at mark.andrews@nabors.com.

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     NABORS INDUSTRIES LTD. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                   (Unaudited)
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                                           Three Months Ended
                                           ------------------
                                   December 31,                 September 30,
                                   ------------                 -------------
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    (In thousands,
     except per
     share amounts)             2010                  2009              2010
                                ----                  ----              ----
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    <<
    Revenues and
     other income:
       Operating
        revenues          $1,317,999              $829,475        $1,069,261
       Earnings
        (losses) from
        unconsolidated
        affiliates (1)         4,928              (102,301)           11,842
       Investment
        income (loss)          8,624                    51              (733)
                               -----                   ---              ----
          Total revenues
           and other
           income          1,331,551               727,225         1,080,370
                           ---------               -------         ---------
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    Costs and other
     deductions:
       Direct costs          775,313               455,328           625,561
       General and
        administrative
        expenses             103,704                75,949            87,194
       Depreciation
        and
        amortization         219,169               168,270           198,151
       Depletion               2,297                 1,580             5,778
       Interest
        expense               74,009                66,263            66,973
       Losses (gains)
        on sales and
        retirements of
         long-lived
          assets and
          other expense
          (income), net        6,262                11,934             9,407
       Impairments and
        other charges
        (2)                  137,832               103,893           123,099
                             -------               -------           -------
          Total costs and
           other
           deductions      1,318,586               883,217         1,116,163
                           ---------               -------         ---------
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    Income (loss)
     from
     continuing
     operations
     before income
     taxes                    12,965           (155,992)       (35,793)
                              ------              --------           -------
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    Income tax
     expense
     (benefit):
       Current               (42,837)               25,599           (71,276)
       Deferred                4,869              (160,130)           67,046
                               -----              --------            ------
    Income tax
     expense
     (benefit)               (37,968)             (134,531)           (4,230)
                             -------              --------            ------
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    Subsidiary
     preferred
     stock dividend              750                     -                 -
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    Income (loss)
     from
     continuing
     operations,
     net of tax               50,183            (21,461)       (31,563)
    Income (loss)
     from
     discontinued
     operations,
     net of tax                1,591            (25,765)        (7,591)
    >>

    <<
    Net income
     (loss)                   51,774               (47,226)          (39,154)
         Less: Net
          (income) loss
          attributable
          to
          noncontrolling
          interest            (1,293)               (34)          (453)
                              ------                   ---              ----
    Net income
     (loss)
     attributable
     to Nabors               $50,481              $(47,260)         $(39,607)
                             -------              --------          --------
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    Earnings
     (losses) per
     share: (3)
       Basic from
        continuing
        operations              $.18                 $(.08)            $(.11)
       Basic from
        discontinued
        operations                $-                 $(.09)            $(.03)
                                 ---                 -----             -----
      Basic                     $.18                 $(.17)            $(.14)
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       Diluted from
        continuing
        operations              $.17                 $(.08)            $(.11)
       Diluted from
        discontinued
        operations                $-                 $(.09)            $(.03)
                                 ---                 -----             -----
      Diluted                   $.17                 $(.17)            $(.14)
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    Weighted-
     average number
       of common
        shares
        outstanding:
        (3)
       Basic                 285,443               283,854           285,282
                             -------               -------           -------
       Diluted               290,442               283,854           285,282
                             -------               -------           -------
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    Adjusted income
     (loss) derived
     from operating
     activities (1)
     (4)                    $222,444            $26,047       $164,419
                            ========               =======          ========



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                                                      Year Ended
                                                      ----------
                                                     December 31,
                                                     ------------
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    (In thousands, except per share
     amounts)                                      2010            2009
                                                   ----            ----
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    Revenues and other income:
       Operating revenues                    $4,174,635      $3,683,419
       Earnings (losses) from
        unconsolidated affiliates (1)            33,257        (155,433)
       Investment income (loss)                   7,648          25,599
                                                  -----          ------
          Total revenues and other income     4,215,540       3,553,585
                                              ---------       ---------
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    Costs and other deductions:
       Direct costs                           2,423,602       2,001,404
       General and administrative
        expenses                                346,661         428,161
       Depreciation and amortization            764,253         667,100
       Depletion                                 17,943           9,417
       Interest expense                         273,044         266,039
       Losses (gains) on sales and
        retirements of
         long-lived assets and other
          expense (income), net                  47,060          12,559
       Impairments and other charges (2)        260,931         330,976
                                                -------         -------
          Total costs and other deductions    4,133,494       3,715,656
                                              ---------       ---------
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    Income (loss) from continuing
     operations before income taxes              82,046        (162,071)
                                                 ------        --------
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    Income tax expense (benefit):
       Current                                  (83,816)         69,532
       Deferred                                  59,002        (203,335)
                                                 ------        --------
    Income tax expense (benefit)                (24,814)       (133,803)
                                                -------        --------
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    Subsidiary preferred stock
     dividend                                       750               -
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    Income (loss) from continuing
     operations, net of tax                     106,110         (28,268)
    Income (loss) from discontinued
     operations, net of tax                     (11,330)        (57,620)
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    <<
    Net income (loss)                            94,780         (85,888)
         Less: Net (income) loss
          attributable to noncontrolling
          interest                                  (85)            342
                                                    ---             ---
    Net income (loss) attributable to
     Nabors                                     $94,695        $(85,546)
                                                -------        --------
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    Earnings (losses) per share: (3)
       Basic from continuing operations            $.37           $(.10)
       Basic from discontinued operations         $(.04)          $(.20)
                                                  -----           -----
      Basic                                        $.33           $(.30)
    >>

    <<
       Diluted from continuing operations          $.37           $(.10)
       Diluted from discontinued
        operations                                $(.04)          $(.20)
                                                  -----           -----
      Diluted                                      $.33           $(.30)
    >>

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    Weighted-average number
       of common shares outstanding: (3)
       Basic                                    285,145         283,326
                                                -------         -------
       Diluted                                  289,996         283,326
                                                -------         -------
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    Adjusted income (loss) derived
     from operating activities (1) (4)         $655,433        $421,904
                                               ========        ========


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        Includes our proportionate share of writedowns recorded by our
        unconsolidated U.S. oil and gas joint venture of $(114.3) million
        for the three months ended December 31, 2009 and $(197.6) million
    (1) for the year ended December 31, 2009.
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        Represents impairments and other charges recorded for the three
        months ended December 31, 2010 and 2009 and September 30, 2010, and
    (2) for the years ended December 31, 2010 and 2009.
    >>

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        See "Computation of Earnings (Losses) Per Share" included herein as
    (3) a separate schedule.
    >>

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        Adjusted income (loss) derived from operating activities is computed
        by: subtracting direct costs, general and administrative expenses,
        depreciation and amortization, and depletion expense from Operating
        revenues and then adding Earnings (losses) from unconsolidated
        affiliates.  These amounts should not be used as a substitute to
        those amounts reported under accounting principles generally
        accepted in the United States of America ("GAAP").  However,
        management evaluates the performance of our business units and the
        consolidated company based on several criteria, including adjusted
        income (loss) derived from operating activities, because it
        believes that these financial measures are an accurate reflection
        of the ongoing profitability of our Company.  A reconciliation of
        this non-GAAP measure to income (loss) from continuing operations
        before income taxes, which is a GAAP measure, is provided within
        the  table set forth immediately following the heading "Segment
    (4) Reporting".




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                                  NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED BALANCE SHEETS
                                                (Unaudited)
    >>

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                                                December 31,  September 30,
    (In thousands, except ratios)                        2010           2010
                                                         ----           ----
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    ASSETS
    Current assets:
    Cash and short-term investments                  $801,190       $772,469
    Accounts receivable, net                        1,116,510      1,002,974
    Assets held for sale                              352,048        345,138
    Other current assets                              343,182        445,343
                                                      -------        -------
         Total current assets                       2,612,930      2,565,924
    Long-term investments and other receivables        40,300         37,448
    Property, plant and equipment, net              7,815,419      7,884,874
    Goodwill                                          494,372        463,427
    Investment in unconsolidated affiliates           267,723        272,432
    Other long-term assets                            415,825        396,623
         Total assets                             $11,646,569    $11,620,728
                                                  ===========    ===========
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    LIABILITIES AND EQUITY
    Current liabilities:
    Current portion of long-term debt              $1,379,018     $1,442,714
    Other current liabilities                         775,362        818,806
                                                      -------        -------
         Total current liabilities                  2,154,380      2,261,520
    Long-term debt                                  3,064,126      3,066,748
    Other long-term liabilities                     1,016,012      1,002,702
                                                    ---------      ---------
         Total liabilities                          6,234,518      6,330,970
    >>

Subsidiary preferred stock (1) 69,188 69,188

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    Equity:
    Shareholders' equity                            5,328,162      5,207,632
    Noncontrolling interest                            14,701         12,938
                                                       ------         ------
         Total equity                               5,342,863      5,220,570
         Total liabilities and equity             $11,646,569    $11,620,728
                                                  ===========    ===========
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    Cash, short-term and long-term investments
     (2)                                             $841,490       $809,917
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    Funded debt to capital ratio: (3)
        - Gross                                      0.42 : 1       0.43 : 1
        - Net of cash and investments                0.37 : 1       0.38 : 1
    Interest coverage ratio: (4)                      7.0 : 1        6.3 : 1



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                                                          December 31,
    (In thousands, except ratios)                                  2009
                                                                   ----
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    ASSETS
    Current assets:
    Cash and short-term investments                          $1,090,851
    Accounts receivable, net                                    724,040
    Assets held for sale                                              -
    Other current assets                                        361,773
                                                                -------
         Total current assets                                 2,176,664
    Long-term investments and other receivables                 100,882
    Property, plant and equipment, net                        7,646,050
    Goodwill                                                    164,265
    Investment in unconsolidated affiliates                     306,608
    Other long-term assets                                      250,221
         Total assets                                       $10,644,690
                                                            ===========
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    LIABILITIES AND EQUITY
    Current liabilities:
    Current portion of long-term debt                              $163
    Other current liabilities                                   608,459
                                                                -------
         Total current liabilities                              608,622
    Long-term debt                                            3,940,605
    Other long-term liabilities                                 913,484
                                                                -------
         Total liabilities                                    5,462,711
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Subsidiary preferred stock (1) -

    <<
    Equity:
    Shareholders' equity                                      5,167,656
    Noncontrolling interest                                      14,323
                                                                 ------
         Total equity                                         5,181,979
         Total liabilities and equity                       $10,644,690
                                                            ===========
    >>

Cash, short-term and long-term investments (2) $1,191,733

    <<
    Funded debt to capital ratio: (3)
        - Gross                                                0.41 : 1
        - Net of cash and investments                          0.33 : 1
    Interest coverage ratio: (4)                                6.3 : 1


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            Represents preferred stock of Superior.  75,000 shares of such
            stock are outstanding and pay quarterly dividends at an annual
    (1)     rate of 4%.
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            The December 31, 2010, September 30, 2010 and December 31, 2009
            amounts include $32.9 million, $30.2 million and $92.5 million,
            respectively, in oil and gas financing receivables that were
    (2)     included in long-term investments and other receivables.
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            The gross funded debt to capital ratio is calculated by dividing
            * funded debt by (y) funded debt plus deferred tax
            liabilities (net of deferred tax assets) plus capital. Funded
            debt is the sum of (1) short-term borrowings, (2) the current
            portion of long-term debt and (3) long-term debt.  Capital is
            shareholders' equity.  The net funded debt to capital ratio is
            calculated by dividing * net funded debt by (y) net funded
            debt plus deferred tax liabilities (net of deferred tax assets)
            plus capital.  Net funded debt is funded debt minus the sum of
            cash and cash equivalents and short-term and long-term
            investments and other receivables.  Both of these ratios are
            used to calculate a company's leverage in relation to its
            capital.  Neither ratio measures operating performance or
            liquidity as defined by GAAP and, therefore, may not be
            comparable to similarly titled measures presented by other
    (3)     companies.
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            The interest-coverage ratio is a trailing 12-month quotient of
            the sum of income (loss) from continuing operations, net of
            tax, net income (loss) attributable to noncontrolling interest,
            subsidiary preferred stock dividends, interest expense,
            depreciation and amortization, depletion expense, impairments
            and other charges, income tax expense (benefit) and our
            proportionate share of writedowns from our unconsolidated oil
            and gas joint ventures less investment income (loss) divided by
            cash interest expense plus subsidiary preferred stock
            dividends. This ratio is a method for calculating the amount of
            operating cash flows available to cover cash interest expense.
            The interest coverage ratio is not a measure of operating
            performance or liquidity defined by GAAP and may not be
            comparable to similarly titled measures presented by other
    (4)     companies.




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                       NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                                  SEGMENT REPORTING
                                     (Unaudited)
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    The following tables set forth certain information with respect to
    our reportable segments and rig activity:



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                                             Three Months Ended
                                             ------------------
                                      December 31,              September 30,
                                      ------------              -------------
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    (In thousands,
     except rig
     activity)                     2010                 2009            2010
                                   ----                 ----            ----
    >>

    <<
    Reportable segments:
    Operating revenues
     and Earnings
     (losses) from
      unconsolidated
       affiliates:
        Contract Drilling:
         (1)
          U.S. Lower 48 Land
           Drilling            $369,591             $230,789        $350,348
          U.S. Land Well-
           servicing            122,687               88,342         119,127
          U.S. Pressure
           Pumping (2)          259,684                    -          61,611
          U.S. Offshore          20,081               29,258          26,504
          Alaska                 40,119               43,208          45,920
          Canada                127,186               81,189          85,728
          International         292,722              287,230         288,535
           Subtotal Contract
            Drilling (3)      1,232,070              760,016         977,773
    >>

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        Oil and Gas (4)           8,929             (104,906)         11,280
        Other Operating
         Segments (5) (6)       123,239               96,109         130,392
        Other reconciling
         items (7)              (41,311)             (24,045)        (38,342)
          Total              $1,322,927             $727,174      $1,081,103
                             ==========             ========      ==========
    >>

    <<
    Adjusted income
     (loss) derived from
      operating
       activities:
        Contract Drilling:
         (1)
          U.S. Lower 48 Land
           Drilling             $85,308              $48,980         $70,452
          U.S. Land Well-
           servicing             12,132                8,758           9,049
          U.S. Pressure
           Pumping (2)           54,664                    -          11,987
          U.S. Offshore          (5,142)               7,117          (1,090)
          Alaska                 11,252               14,398          14,299
          Canada                 16,572                  632           1,013
          International          71,814               74,423          64,379
                                 ------               ------          ------
           Subtotal Contract
            Drilling (3)        246,600              154,308         170,089
    >>

    <<
        Oil and Gas (4)             675             (114,693)          1,037
        Other Operating
         Segments (5) (6)        10,003                5,867          17,969
        Other reconciling
         items (8)              (34,834)             (19,435)        (24,676)
                                -------              -------         -------
          Total                 222,444               26,047         164,419
    Interest expense            (74,009)             (66,263)        (66,973)
    Investment income
     (loss)                       8,624                   51            (733)
    (Losses) gains on
     sales and
     retirements of
       long-lived assets
        and other (expense)
        income, net              (6,262)             (11,934)         (9,407)
    Impairments and
     other charges (9)         (137,832)            (103,893)       (123,099)
    Income (loss) before
     income taxes from
     continuing
     operations                 $12,965            $(155,992)       $(35,793)
                                =======            =========        ========
    >>

    <<
    Rig activity:
    Rig years: (10)
       U.S. Lower 48 Land
        Drilling                  184.3                139.1           182.2
       U.S. Offshore                6.5                  8.6             8.2
       Alaska                       6.0                  8.0             6.7
       Canada                      39.3                 21.2            27.5
       International (11)         102.1                 85.9           103.0
          Total rig years         338.2                262.8           327.6
                                  =====                =====           =====
    Rig hours: (12)
       U.S. Land Well-
        servicing               169,318              133,474         168,949
       Canada Well-
        servicing                49,740               38,018          44,606
          Total rig hours       219,058              171,492         213,555
                                =======              =======         =======



    >>

    <<
                                                         Year Ended
                                                         ----------
                                                        December 31,
                                                        ------------
    >>

    <<
    (In thousands, except rig activity)               2010            2009
                                                      ----            ----
    >>

    <<
    Reportable segments:
    Operating revenues and Earnings (losses)
     from
      unconsolidated affiliates:
        Contract Drilling: (1)
          U.S. Lower 48 Land Drilling           $1,294,853      $1,082,531
          U.S. Land Well-servicing                 444,665         412,243
          U.S. Pressure Pumping (2)                321,295               -
          U.S. Offshore                            123,761         157,305
          Alaska                                   179,218         204,407
          Canada                                   389,229         298,653
          International                          1,093,608       1,265,097
           Subtotal Contract Drilling (3)        3,846,629       3,420,236
    >>

    <<
        Oil and Gas (4)                             40,611        (158,780)
        Other Operating Segments (5) (6)           456,893         446,282
        Other reconciling items (7)               (136,241)       (179,752)
          Total                                 $4,207,892      $3,527,986
                                                ==========      ==========
    >>

    <<
    Adjusted income (loss) derived from
      operating activities:
        Contract Drilling: (1)
          U.S. Lower 48 Land Drilling             $274,215        $294,679
          U.S. Land Well-servicing                  31,597          28,950
          U.S. Pressure Pumping (2)                 66,651               -
          U.S. Offshore                              9,245          30,508
          Alaska                                    51,896          62,742
          Canada                                    22,970          (7,019)
          International                            254,744         365,566
                                                   -------         -------
           Subtotal Contract Drilling (3)          711,318         775,426
    >>

    <<
        Oil and Gas (4)                              6,329        (190,798)
        Other Operating Segments (5) (6)            43,179          34,120
        Other reconciling items (8)               (105,393)       (196,844)
                                                  --------        --------
          Total                                    655,433         421,904
    Interest expense                              (273,044)       (266,039)
    Investment income (loss)                         7,648          25,599
    (Losses) gains on sales and retirements of
       long-lived assets and other (expense)
        income, net                                (47,060)        (12,559)
    Impairments and other charges (9)             (260,931)       (330,976)
    Income (loss) before income taxes from
     continuing operations                         $82,046       $(162,071)
                                                   =======       =========
    >>

    <<
    Rig activity:
    Rig years: (10)
       U.S. Lower 48 Land Drilling                   174.5           149.4
       U.S. Offshore                                   9.4            11.0
       Alaska                                          7.4            10.0
       Canada                                         29.8            19.7
       International (11)                             97.8           100.2
          Total rig years                            318.9           290.3
                                                     =====           =====
    Rig hours: (12)
       U.S. Land Well-servicing                    643,813         590,878
       Canada Well-servicing                       172,589         143,824
          Total rig hours                          816,402         734,702
                                                   =======         =======


    >>

    <<
            These segments include our drilling, well-servicing, fluid
    (1)     logistics and workover operations, on land and offshore.
    >>

    <<
            Includes operating results related to our acquisition of
    (2)     Superior after September 10, 2010.
    >>

    <<
            Includes earnings (losses), net from unconsolidated
            affiliates, accounted for using the equity method, of $3.3
            million, $3.0 million and $.6 million for the three months
            ended December 31, 2010 and 2009 and September 30, 2010,
            respectively, and $6.9 million and $9.7 million for the years
    (3)     ended December 31, 2010 and 2009, respectively.
    >>

    <<
            Includes earnings (losses), net from unconsolidated
            affiliates, accounted for using the equity method, of $4.1
            million, $(109.4) million and $6.8 million for the three
            months ended December 31, 2010 and 2009 and September 30,
            2010, respectively, and $18.7 million and $(182.6) million
    (4)     for the years ended December 31, 2010 and 2009, respectively.
    >>

    <<
            Includes our drilling technology and top drive manufacturing,
            directional drilling, rig instrumentation and software, and
    (5)     construction and logistics operations.
    >>

    <<
            Includes earnings (losses), net from unconsolidated
            affiliates, accounted for using the equity method, of $(2.5)
            million, $4.1 million and $4.4 million, for the three months
            ended December 31, 2010 and 2009 and September 30, 2010,
            respectively, and $7.7 million and $17.5 million for the
    (6)     years ended December 31, 2010 and 2009, respectively.
    >>

(7) Represents the elimination of inter-segment transactions.

    <<
            Represents the elimination of inter-segment transactions and
    (8)     unallocated corporate expenses.
    >>

    <<
            Represents impairments and other charges recorded for the
            three months ended December 31, 2010 and 2009 and September
    (9)     30, 2010, and for the years ended December 31, 2010 and 2009.
    >>

    <<
            Excludes well-servicing rigs, which are measured in rig
            hours.  Includes our equivalent percentage ownership of rigs
            owned by unconsolidated affiliates.  Rig years represent a
            measure of the number of equivalent rigs operating during a
            given period.  For example, one rig operating 182.5 days
    (10)    during a 365-day period represents 0.5 rig years.
    >>

    <<
            International rig years included our equivalent percentage
            ownership of rigs owned by unconsolidated affiliates which
            totaled 2.0 years, 2.5 years and 2.0 years during the three
            months ended December 31, 2010 and 2009 and September 30,
            2010, respectively, and 2.2 years and 2.5 years during the
    (11)    years ended December 31, 2010 and 2009, respectively.
    >>

    <<
            Rig hours represents the number of hours that our well-
    (12)    servicing rig fleet operated during the period.






    >>

    <<
                         COMPUTATION OF EARNINGS (LOSSES) PER SHARE
                                        (Unaudited)
    A reconciliation of the numerators and denominators of the basic and
    diluted earnings (losses) per share computations is as follows:



    >>

    <<
                                             Three Months Ended
                                             ------------------
                                         December 31,           September 30,
                                         ------------           -------------
    >>

    <<
    (In thousands, except
     per share amounts)               2010                2009          2010
                                      ----                ----          ----
    >>

    <<
    Net income (loss)
     attributable to
     Nabors (numerator):
    Income (loss) from
     continuing
     operations, net of
     tax                           $50,183            $(21,461)     $(31,563)
       Less: net (income)
        loss attributable to
        noncontrolling
        interest                    (1,293)                (34)         (453)
                                    ------                 ---          ----
    Adjusted income (loss)
     from continuing
     operations, net of
     tax -basic                    $48,890            $(21,495)     $(32,016)
       Add interest expense
        on assumed conversion
        of our 0.94% senior
            exchangeable notes due
             2011, net of tax (1)        -                   -             -
                                       ---                 ---           ---
    >>

    <<
    Adjusted income (loss)
     from continuing
     operations, net of
     tax -diluted                  $48,890            $(21,495)     $(32,016)
    Income (loss) from
     discontinued
     operations, net of
     tax                             1,591             (25,765)       (7,591)
                                     -----             -------        ------
    Adjusted net income
     (loss) attributable
     to Nabors                     $50,481            $(47,260)     $(39,607)
                                   -------            --------      --------
    >>

    <<
       Earnings (losses) per
        share:
         Basic from continuing
          operations                  $.18               $(.08)        $(.11)
         Basic from
          discontinued
          operations                     -                (.09)         (.03)
                                       ---                ----          ----
    Total Basic                       $.18               $(.17)        $(.14)
                                      ----               -----         -----
    >>

    <<
         Diluted from
          continuing operations       $.17               $(.08)        $(.11)
         Diluted from
          discontinued
          operations                     -                (.09)         (.03)
                                       ---                ----          ----
    Total Diluted                     $.17               $(.17)        $(.14)
                                      ----               -----         -----
    >>

    <<
    Shares (denominator):
       Weighted-average
        number of shares
        outstanding-basic
        (2)                        285,443             283,854       285,282
       Net effect of dilutive
        stock options,
        warrants and
        restricted
          stock awards based on
           the if-converted
           method                    4,999                   -             -
       Assumed conversion of
        our 0.94% senior
        exchangeable notes
        due 2011 (1)                     -                   -             -
                                       ---                 ---           ---
       Weighted-average
        number of shares
        outstanding -
        diluted                    290,442             283,854       285,282
                                   -------             -------       -------



    >>

    <<
                                                           Year Ended
                                                           ----------
                                                          December 31,
                                                          ------------
    >>

    <<
    (In thousands, except per share
     amounts)                                           2010            2009
                                                        ----            ----
    >>

    <<
    Net income (loss) attributable to
     Nabors (numerator):
    Income (loss) from continuing
     operations, net of tax                         $106,110        $(28,268)
       Less: net (income) loss attributable to
        noncontrolling interest                          (85)            342
                                                         ---             ---
    Adjusted income (loss) from continuing
     operations, net of tax -basic                  $106,025        $(27,926)
       Add interest expense on assumed
        conversion of our 0.94% senior
            exchangeable notes due 2011, net of tax
             (1)                                           -               -
                                                         ---             ---
    >>

    <<
    Adjusted income (loss) from continuing
     operations, net of tax -diluted                $106,025        $(27,926)
    Income (loss) from discontinued
     operations, net of tax                          (11,330)        (57,620)
                                                     -------         -------
    Adjusted net income (loss) attributable
     to Nabors                                       $94,695        $(85,546)
                                                     -------        --------
    >>

    <<
       Earnings (losses) per share:
         Basic from continuing operations               $.37           $(.10)
         Basic from discontinued operations             (.04)           (.20)
                                                        ----
    Total Basic                                         $.33           $(.30)
                                                        ----           -----
    >>

    <<
         Diluted from continuing operations             $.37           $(.10)
         Diluted from discontinued operations           (.04)           (.20)
                                                        ----
    Total Diluted                                       $.33           $(.30)
                                                        ----           -----
    >>

    <<
    Shares (denominator):
       Weighted-average number of shares
        outstanding-basic (2)                        285,145         283,326
       Net effect of dilutive stock options,
        warrants and restricted
          stock awards based on the if-converted
           method                                      4,851               -
       Assumed conversion of our 0.94% senior
        exchangeable notes due 2011 (1)
    >>

    <<
       Weighted-average number of shares
        outstanding - diluted                        289,996         283,326
                                                     -------         -------


    >>

    <<
            Diluted earnings (losses) per share for the three months ended
            December 31, 2010 and 2009 and September 30, 2010, and for
            the years ended December 31, 2010 and 2009 excluded any
            incremental shares issuable upon exchange of the 0.94% senior
            exchangeable notes due 2011.  Between 2008 and December 31,
            2010, we purchased approximately $1.3 billion par value of
            these notes in the open market, leaving approximately $1.4
            billion par value outstanding.  The number of shares that we
            would be required to issue upon exchange consists of only the
            incremental shares that would be issued above the principal
            amount of the notes, as we are required to pay cash up to the
            principal amount of the notes exchanged. We would issue an
            incremental number of shares only upon exchange of these
            notes.  These shares are included in the calculation of the
            weighted-average number of shares outstanding in our diluted
            earnings per share calculation only when our stock price
            exceeds $45.83 as of the last trading day of the quarter and
            the average price of our shares for the ten consecutive
            trading days beginning on the third business day after the
            last trading day of the quarter exceeds $45.83, which did not
            occur during the three months ended December 31, 2010 and
            2009 and September 30, 2010 or the years ended December 31,
    (1)     2010 and 2009.
    >>

    <<
            On July 31, 2009, the exchangeable shares of Nabors (Canada)
            Exchangeco Inc. ("Nabors Exchangeco") were exchanged for
            Nabors common shares on a one-for-one basis.  Basic shares
            outstanding included (1) the weighted-average number of
            common shares and restricted stock of Nabors and (2) the
            weighted-average number of exchangeable shares of Nabors
            Exchangeco: 285.4 million shares cumulatively for the three
            months ended December 31, 2010; 283.9 million shares
            cumulatively for the three months ended December 31, 2009;
            285.3 million shares cumulatively for the three months ended
            September 30, 2010; 285.1 million shares cumulatively for the
            year ended December 31, 2010; and 283.2 million and .1
            million shares, respectively, for the year ended December 31,
    (2)     2009.
    >>

    <<
    For all periods presented, the computation of diluted earnings
     (losses) per share excluded outstanding stock options and warrants
     with exercise prices greater than the average market price of
     Nabors' common shares, because their inclusion would have been
     anti-dilutive and because they were not considered participating
     securities. The average number of options and warrants that were
     excluded from diluted earnings (losses) per share that would have
     potentially diluted earnings (losses) per share in the future were
     13,693,063 and 34,197,583 shares during the three months ended
     December 31, 2010 and 2009, respectively; and 32,543,395 shares
     during the three months ended September 30, 2010; and 14,004,749
     and 34,113,887 shares during the years ended December 31, 2010 and
     2009, respectively. In any period during which the average market
     price of Nabors' common shares exceeds the exercise prices of
     these stock options and warrants, such stock options and warrants
     are included in our diluted earnings (losses) per share
     computation using the if-converted method of accounting.
     Restricted stock is included in our basic and diluted earnings
     (losses) per share computation using the two-class method of
     accounting in all periods because it is considered a participating
     security.


    >>

    <<
                   NABORS INDUSTRIES LTD. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF INCOME (LOSS) EXCLUDING CERTAIN NON-CASH
                             CHARGES (NON-GAAP)
                                 (Unaudited)
    >>

    <<
                                           Three Months Ended
                                           ------------------
                                           December 31, 2010
                                           -----------------
                                    As
                                 adjusted
                                    to
                                 Exclude
                             Actuals        Charges
    (In thousands,
     except per share
     amounts)                   -------                       ---------
                                                                 (Non-
                                 (GAAP)         Charges        GAAP)(1)
                                 ------         -------       ---------
    >>

    <<
    Revenues and other
     income:
       Operating revenues      $1,317,999             $-      $1,317,999
       Earnings (losses)
        from
        unconsolidated
        affiliates                  4,928              -           4,928
       Investment income            8,624              -           8,624
          Total revenues and
           other income         1,331,551              -       1,331,551
                                ---------            ---       ---------
    >>

    <<
    Costs and other
     deductions:
       Direct costs               775,313              -         775,313
       General and
        administrative
        expenses                  103,704              -         103,704
       Depreciation and
        amortization              219,169              -         219,169
       Depletion                    2,297              -           2,297
       Interest expense            74,009              -          74,009
      Losses (gains) on
       sales and
       retirements of
       long-lived assets
       and other expense
       (income), net             6,262           -        6,262
       Impairments and
        other charges             137,832      (137,832)               -
          Total costs and
           other deductions     1,318,586      (137,832)       1,180,754
                                ---------       --------       ---------
    >>

    <<
    Income (loss) from
     continuing
     operations before
     income taxes                  12,965        137,832         150,797
    Income tax expense
     (benefit)                    (37,968)        60,336          22,368
    Subsidiary
     preferred stock
     dividend                         750              -             750
                                      ---            ---             ---
    Income (loss) from
     continuing
     operations, net of
     tax                           50,183         77,496         127,679
    Income (loss) from
     discontinued
     operations, net of
     tax                            1,591              -           1,591
                                    -----            ---           -----
    Net income (loss)              51,774         77,496         129,270
         Less: Net (income)
          loss attributable
          to noncontrolling
          interest                 (1,293)             -          (1,293)
    Net income (loss)
     attributable to
     Nabors                       $50,481        $77,496        $127,977
                                  -------        -------        --------
    >>

    <<
    Earnings (losses)
     per share:
       Diluted from
        continuing
        operations                   $.17           $.27            $.44
       Diluted from
        discontinued
        operations                      -              -               -
                                      ---            ---             ---
    Earnings (losses)
     per share -
     diluted                         $.17           $.27            $.44
    >>

    <<
    Weighted-average
     number of common
     shares outstanding
     - diluted                    290,442                        290,442
                                  -------                        -------
    >>

    <<
    Adjusted income
     (loss) derived
     from operating
     activities (2)              $222,444             $-        $222,444
                                 ========            ===        ========



    >>

    <<
                                         Three Months Ended
                                         ------------------
                                         September 30, 2010
                                         ------------------
                                                            As adjusted
                                                            to Exclude
                              Actuals                         Charges
    (In thousands,
     except per share
     amounts)                 -------                      ------------
                                                               (Non-
                               (GAAP)        Charges          GAAP)(1)
                               ------        -------         ---------
    >>

    <<
    Revenues and other
     income:
       Operating revenues    $1,069,261            $-        $1,069,261
       Earnings (losses)
        from unconsolidated
        affiliates               11,842             -            11,842
       Investment income           (733)        3,656             2,923
          Total revenues and
           other income       1,080,370         3,656         1,084,026
                              ---------         -----         ---------
    >>

    <<
    Costs and other
     deductions:
       Direct costs             625,561             -           625,561
       General and
        administrative
        expenses                 87,194             -            87,194
       Depreciation and
        amortization            198,151             -           198,151
       Depletion                  5,778             -             5,778
       Interest expense          66,973             -            66,973
      Losses (gains) on
       sales and
       retirements of
       long-lived assets
       and other expense
       (income), net           9,407     (7,000)         2,407
       Impairments and
        other charges           123,099     (123,099)                 -
          Total costs and
           other deductions   1,116,163     (130,099)           986,064
                              ---------      --------           -------
    >>

    <<
    Income (loss) from
     continuing
     operations before
     income taxes               (35,793)      133,755            97,962
    Income tax expense
     (benefit)                   (4,230)       17,475            13,245
    Subsidiary preferred
     stock dividend                   -             -                 -
                                    ---           ---               ---
    Income (loss) from
     continuing
     operations, net of
     tax                        (31,563)      116,280            84,717
    Income (loss) from
     discontinued
     operations, net of
     tax                         (7,591)            -            (7,591)
                                 ------           ---            ------
    Net income (loss)           (39,154)      116,280            77,126
         Less: Net (income)
          loss attributable
          to noncontrolling
          interest                 (453)            -              (453)
    Net income (loss)
     attributable to
     Nabors                    $(39,607)     $116,280           $76,673
                               --------      --------           -------
    >>

    <<
    Earnings (losses)
     per share:
       Diluted from
        continuing
        operations                $(.11)         $.40              $.29
       Diluted from
        discontinued
        operations                 (.03)          .01              (.02)
                                   ----           ---              ----
    Earnings (losses)
     per share -diluted           $(.14)         $.41              $.27
    >>

    <<
    Weighted-average
     number of common
     shares outstanding
     - diluted                  285,282                         289,008
                                -------                         -------
    >>

    <<
    Adjusted income
     (loss) derived from
     operating
     activities (2)            $164,419            $-          $164,419
                               ========           ===          ========



    >>

    <<
                                                  Year Ended
                                                  ----------
                                               December 31, 2010
                                               -----------------
                                                                 As adjusted
                                                                  to Exclude
                                    Actuals                         Charges
    (In thousands, except per
     share amounts)                 -------                      ------------
                                                                     (Non-
                                     (GAAP)          Charges       GAAP)(1)
                                     ------          -------      ---------
    >>

    <<
    Revenues and other
     income:
       Operating revenues          $4,174,635              $-      $4,174,635
       Earnings (losses) from
        unconsolidated
        affiliates                     33,257               -          33,257
       Investment income                7,648           3,656          11,304
          Total revenues and other
           income                   4,215,540           3,656       4,219,196
                                    ---------           -----       ---------
    >>

    <<
    Costs and other
     deductions:
       Direct costs                 2,423,602               -       2,423,602
       General and
        administrative expenses       346,661               -         346,661
       Depreciation and
        amortization                  764,253               -         764,253
       Depletion                       17,943               -          17,943
       Interest expense               273,044               -         273,044
      Losses (gains) on sales
       and retirements of long-
       lived assets and other
       expense (income), net           47,060          (7,000)         40,060
       Impairments and other
        charges                       260,931        (260,931)              -
          Total costs and other
           deductions               4,133,494        (267,931)      3,865,563
                                    ---------        --------       ---------
    >>

    <<
    Income (loss) from
     continuing operations
     before income taxes               82,046         271,587         353,633
    Income tax expense
     (benefit)                        (24,814)         77,811          52,997
    Subsidiary preferred
     stock dividend                       750               -             750
                                          ---             ---             ---
    Income (loss) from
     continuing operations,
     net of tax                       106,110         193,776         299,886
    Income (loss) from
     discontinued operations,
     net of tax                       (11,330)              -         (11,330)
                                      -------             ---         -------
    Net income (loss)                  94,780         193,776         288,556
         Less: Net (income) loss
          attributable to
          noncontrolling interest         (85)              -             (85)
    Net income (loss)
     attributable to Nabors           $94,695        $193,776        $288,471
                                      -------        --------        --------
    >>

    <<
    Earnings (losses) per
     share:
       Diluted from continuing
        operations                       $.37            $.66           $1.03
       Diluted from discontinued
        operations                       (.04)              -            (.04)
                                         ----             ---            ----
    Earnings (losses) per
     share -diluted                      $.33            $.66            $.99
    >>

    <<
    Weighted-average number
     of common shares
     outstanding - diluted            289,996                         289,996
                                      -------                         -------
    >>

    <<
    Adjusted income (loss)
     derived from operating
     activities (2)                  $655,433              $-        $655,433
                                     ========             ===        ========


    >>

    <<
                   As-adjusted amounts include non-GAAP financial measures.
                   These measures are presented to provide management and
                   investors an opportunity to make meaningful assessments
                   and comparisons of results from operations, exclusive of
                   certain charges detailed below.  The presentation of non-
                   GAAP information is not intended to suggest that such
                   information is superior to the presentation of GAAP
                   information, but only to clarify some information and
                   assist the reader, and should be viewed in addition to,
                   not as an alternative for, our reported results prepared
    (1)            in accordance with GAAP.
    >>

    <<
                   Adjusted income (loss) derived from operating activities is
                   computed by: subtracting direct costs, general and
                   administrative expenses, depreciation and amortization,
                   and depletion expense from Operating revenues and then
                   adding Earnings (losses) from unconsolidated affiliates.
                   Such amounts should not be used as a substitute to those
                   amounts reported under GAAP.  However, management
                   evaluates the performance of our business units and the
                   consolidated company based on several criteria, including
                   adjusted income derived from operating activities, because
                   it believes that this financial measure is an accurate
    (2)            reflection of the ongoing profitability of our Company.


    >>

    <<
                   NABORS INDUSTRIES LTD. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF INCOME (LOSS) EXCLUDING CERTAIN NON-CASH
                             CHARGES (NON-GAAP)
                                 (Unaudited)
    >>

    <<
                                             Three Months Ended
                                             ------------------
                                              December 31, 2009
                                              -----------------
                                           Actuals
    (In thousands, except per
     share amounts)                        -------
                                            (GAAP)          Charges
                                            ------          -------
    >>

    <<
    Revenues and other income:
       Operating revenues                   $829,475               $-
       Earnings (losses) from
        unconsolidated affiliates           (102,301)         114,311
       Investment income (loss)                   51                -
          Total revenues and other
           income                            727,225          114,311
                                             -------          -------
    >>

    <<
    Costs and other deductions:
       Direct costs                          455,328                -
       General and administrative
        expenses                              75,949                -
       Depreciation and amortization         168,270                -
       Depletion                               1,580                -
       Interest expense                       66,263                -
       Losses (gains) on sales and
        retirements of long-lived
        assets and other expense
        (income), net                         11,934                -
       Impairments and other charges         103,893         (103,893)
          Total costs and other
           deductions                        883,217         (103,893)
                                             -------         --------
    >>

    <<
    Income (loss) from continuing
     operations before income
     taxes                                  (155,992)         218,204
    Income tax expense (benefit)            (134,531)         161,647
                                            --------          -------
    Income (loss) from continuing
     operations, net of tax                  (21,461)          56,557
    Income (loss) from
     discontinued operations, net
     of tax                                  (25,765)          42,227
                                             -------           ------
    Net income (loss)                        (47,226)          98,784
         Less: Net (income) loss
          attributable to
          noncontrolling interest                (34)               -
    Net income (loss) attributable
     to Nabors                              $(47,260)         $98,784
                                            --------          -------
    >>

    <<
    Earnings (losses) per share:
       Diluted from continuing
        operations                             $(.08)            $.20
       Diluted from discontinued
        operations                              (.09)             .15
                                                ----              ---
    Earnings (losses) per share -
     diluted                                   $(.17)            $.35
    >>

    <<
    Weighted-average number of
     common shares outstanding -
     diluted                                 283,854
                                             -------
    >>

    <<
    Adjusted income (loss) derived
     from operating activities (2)           $26,047         $114,311
                                             =======         ========



    >>

    <<
                             Three Months Ended                Year Ended
                             ------------------                ----------
                             December 31, 2009             December 31, 2009
                             -----------------             -----------------
                                  As
                               adjusted
                                  to
                               Exclude
                               Charges                    Actuals
    (In thousands,
     except per share
     amounts)                    ---------                      -------
                                    (Non-
                                  GAAP)(1)                       (GAAP)
                                 ---------                       ------
    >>

    <<
    Revenues and other
     income:
       Operating revenues                       $829,475          $3,683,419
       Earnings (losses)
        from
        unconsolidated
        affiliates                                12,010            (155,433)
       Investment income
        (loss)                                        51              25,599
          Total revenues and
           other income                          841,536           3,553,585
                                                 -------           ---------
    >>

    <<
    Costs and other
     deductions:
       Direct costs                              455,328           2,001,404
       General and
        administrative
        expenses                                  75,949             428,161
       Depreciation and
        amortization                             168,270             667,100
       Depletion                                   1,580               9,417
       Interest expense                           66,263             266,039
       Losses (gains) on
        sales and
        retirements of
        long-lived
        assets and other
        expense (income),
        net                                    11,934           12,559
       Impairments and
        other charges                                  -             330,976
          Total costs and
           other deductions                      779,324           3,715,656
                                                 -------           ---------
    >>

    <<
    Income (loss) from
     continuing
     operations before
     income taxes                                 62,212            (162,071)
    Income tax expense
     (benefit)                                    27,116            (133,803)
                                                  ------            --------
    Income (loss) from
     continuing
     operations, net
     of tax                                       35,096             (28,268)
    Income (loss) from
     discontinued
     operations, net
     of tax                                       16,462             (57,620)
                                                  ------             -------
    Net income (loss)                             51,558             (85,888)
         Less: Net (income)
          loss attributable
          to noncontrolling
          interest                                   (34)                342
    Net income (loss)
     attributable to
     Nabors                                      $51,524            $(85,546)
                                                 -------            --------
    >>

    <<
    Earnings (losses)
     per share:
       Diluted from
        continuing
        operations                                  $.12               $(.10)
       Diluted from
        discontinued
        operations                                   .06                (.20)
                                                     ---                ----
    Earnings (losses)
     per share -
     diluted                                        $.18               $(.30)
    >>

    <<
    Weighted-average
     number of common
     shares
     outstanding -
     diluted                                  289,427          283,326
                                                 -------             -------
    >>

    <<
    Adjusted income
     (loss) derived
     from operating
     activities (2)                             $140,358            $421,904
                                                ========            ========



    >>

    <<
                                             Year Ended
                                             ----------
                                          December 31, 2009
                                          -----------------
                                              As
                                          adjusted
                                              to
                                           Exclude
                                           Charges
    (In thousands, except per
     share amounts)                                           ---------
                                                                (Non-
                                             Charges          GAAP)(1)
                                             -------          ---------
    >>

    <<
    Revenues and other income:
       Operating revenues                            $-      $3,683,419
       Earnings (losses) from
        unconsolidated affiliates               197,606          42,173
       Investment income (loss)                       -          25,599
          Total revenues and other
           income                               197,606       3,751,191
                                                -------       ---------
    >>

    <<
    Costs and other deductions:
       Direct costs                                   -       2,001,404
       General and administrative
        expenses                                (62,114)        366,047
       Depreciation and amortization                  -         667,100
       Depletion                                      -           9,417
       Interest expense                               -         266,039
       Losses (gains) on sales and
        retirements of long-lived
        assets and other expense
        (income), net                                 -          12,559
       Impairments and other charges           (330,976)              -
          Total costs and other
           deductions                          (393,090)      3,322,566
                                               --------       ---------
    >>

    <<
    Income (loss) from continuing
     operations before income
     taxes                                      590,696         428,625
    Income tax expense (benefit)                177,998          44,195
                                                -------          ------
    Income (loss) from continuing
     operations, net of tax                     412,698         384,430
    Income (loss) from
     discontinued operations, net
     of tax                                      42,227         (15,393)
                                                 ------         -------
    Net income (loss)                           454,925         369,037
         Less: Net (income) loss
          attributable to
          noncontrolling interest                     -             342
    Net income (loss) attributable
     to Nabors                                 $454,925        $369,379
                                               --------        --------
    >>

    <<
    Earnings (losses) per share:
       Diluted from continuing
        operations                                $1.44           $1.34
       Diluted from discontinued
        operations                                  .15            (.05)
                                                    ---            ----
    Earnings (losses) per share -
     diluted                                      $1.59           $1.29
    >>

    <<
    Weighted-average number of
     common shares outstanding -
     diluted                                                    286,502
                                                                -------
    >>

    <<
    Adjusted income (loss) derived
     from operating activities (2)             $259,720        $681,624
                                               ========        ========


    >>

    <<
                    As-adjusted amounts include non-GAAP financial measures.
                     These measures are presented to provide management and
                     investors an opportunity to make meaningful assessments
                    and comparisons of results from operations, exclusive of
                    certain charges detailed below.  The presentation of non-
                    GAAP information is not intended to suggest that such
                    information is superior to the presentation of GAAP
                    information, but only to clarify some information and
                    assist the reader, and should be viewed in addition to,
                    not as an alternative for, our reported results prepared
    (1)             in accordance with GAAP.
    >>

    <<
                    Adjusted income (loss) derived from operating activities
                    is computed by: subtracting direct costs, general and
                    administrative expenses, depreciation and amortization,
                    and depletion expense from Operating revenues and then
                    adding Earnings (losses) from unconsolidated affiliates.
                    Such amounts should not be used as a substitute to those
                    amounts reported under GAAP.  However, management
                    evaluates the performance of our business units and the
                    consolidated company based on several criteria, including
                    adjusted income derived from operating activities,
                    because it believes that this financial measure is an
                    accurate reflection of the ongoing profitability of our
    (2)             Company.


    >>

    <<
                                       NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                                        SUMMARY OF NON-CASH CHARGES (NON-GAAP)
                                                     (Unaudited)
    >>

    <<
                                            Three Months Ended
                                            ------------------
                                                                September
                                            December 31,                  30,
                                            ------------        ----------
    >>

    <<
    (In thousands)                        2010            2009       2010
                                          ----            ----       ----
    >>

    <<
    Equity method oil and gas joint
     venture impairments                    $-       $(114,311)        $-
    Goodwill impairment                      -               -    (10,707)
    Rig asset retirements and
     impairments                             -               -    (58,045)
    Stock compensation charge                -               -          -
    Impairments of oil and gas
     assets                          (137,832)         (85,228)   (54,347)
    Other-than-temporary
     impairments on securities               -         (18,665)         -
    Acquisition related expenses             -               -     (7,000)
    Other non-operational items              -               -     (3,656)
                                           ---             ---     ------
    Total charges before income
     taxes                           (137,832)        (218,204)  (133,755)
    >>

    <<
    Tax benefit (1)                     60,336         161,647     17,475
                                        ------         -------     ------
    >>

    <<
    Total charges after income taxes   (77,496)        (56,557)  (116,280)
                                       -------         -------   --------
    >>

    <<
    Discontinued Operations                  -         (42,227)         -
                                           ---         -------        ---
    >>

    <<
    Total charges, net of income
     taxes                            $(77,496)       $(98,784) $(116,280)
                                      ========        ========  =========



    >>

    <<
                                                          Year Ended
                                                          ----------
                                                         December 31,
                                                         ------------
    >>

    <<
    (In thousands)                                      2010            2009
                                                        ----            ----
    >>

    <<
    Equity method oil and gas joint venture
     impairments                                          $-       $(197,606)
    Goodwill impairment                              (10,707)        (14,689)
    Rig asset retirements and impairments            (58,045)        (64,229)
    Stock compensation charge                              -         (62,114)
    Impairments of oil and gas assets               (192,179)       (197,744)
    Other-than-temporary impairments on securities         -         (54,314)
    Acquisition related expenses                      (7,000)              -
    Other non-operational items                       (3,656)              -
                                                      ------             ---
    Total charges before income taxes               (271,587)       (590,696)
    >>

    <<
    Tax benefit (1)                                   77,811         177,998
                                                      ------         -------
    >>

    <<
    Total charges after income taxes                (193,776)       (412,698)
                                                    --------        --------
    >>

    <<
    Discontinued Operations                                -         (42,227)
                                                         ---         -------
    >>

    <<
    Total charges, net of income taxes             $(193,776)      $(454,925)
                                                   =========       =========
    >>

    <<
    (1) This represents the difference between the tax benefit recorded
    during the period in accordance with the interim period tax
    allocation rules and the amount of tax benefit that would have
    resulted from the application of the interim period tax allocation
    rules if the non-cash charges were excluded.




    >>

SOURCE Nabors Industries

For further information: Nabors Industries, +1-441-292-1510, mark.andrews@nabors.com Web Site: http://www.nabors.com

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Nabors Industries

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