Nabors 3Q2009 EPS Equals $0.18 Ex-Items with Normalized Tax Rate


    



    
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<p>HAMILTON, <location>Bermuda</location>, <chron>Oct. 20</chron> /CNW/ -- Nabors Industries Ltd. (NYSE:   NBR) today announced its results for the third quarter and nine months ended <chron>September 30, 2009</chron>.  Adjusted income derived from operating activities was <money>$112.8 million</money> for the third quarter compared to <money>$364.5 million</money> in the third quarter of 2008 and <money>$143.9 million</money> (excluding non-cash items) in the second quarter of this year.   Due to the distortion caused by the level of non-cash charges incurred earlier this year, the majority of which is attributable to the ceiling test and other impairments in our oil and gas operations, the below numbers are presented excluding those non-cash charges and applying the current estimated full year tax rate while backing out the tax effects of the non-cash charges.  On that basis, net income was <money>$42.5 million</money> (<money>$0.15</money> per diluted share) for the third quarter compared to <money>$194.0 million</money> (<money>$0.67</money> per diluted share) in the third quarter of 2008 and <money>$90.9 million</money> (<money>$0.32</money> per diluted share) in the second quarter of 2009.  For the nine months ended <chron>September 30, 2009</chron>, adjusted income derived from operating activities was <money>$530.7 million</money> compared to <money>$916.0 million</money> in 2008.  Net income for the first nine months of 2009 was <money>$317.9 million</money> (<money>$1.12</money> per diluted share) compared to <money>$582.4 million</money> (<money>$2.01</money> per diluted share) in the first nine months of 2008.</p>
<p/>
<p><person>Gene Isenberg</person>, Nabors' Chairman and CEO, commented, "We expect this quarter to represent the bottom in our consolidated results for this cycle.  This is best illustrated by the bounce we have experienced in our US Lower 48 land drilling operations where we have seen over 20 rigs return to work since the low point in early August.  We have also seen modest rate increases on high efficiency rigs in selected markets.  In addition, we are receiving an increasing number of inquiries regarding incremental first quarter start-ups.  These positive indications are also evident in our US Offshore business where we already have a 2010 contract backlog which is approximately 20 percent higher than the anticipated full year results for 2009.  Although our International unit will not bottom out for another quarter or two, inquiries have increased significantly in the last quarter pointing to improved results in 2010 in this unit also.</p>
<p/>
<p>"Operationally, results in our US Lower 48 land drilling and Alaskan drilling operations were better than we had previously indicated, substantially offsetting weaker than expected results in our International, Canadian, US Offshore and US Well Servicing businesses.  The operating income result implies <money>$0.18</money> in non-GAAP EPS before the adverse effects of numerous items that ultimately reduced non-GAAP EPS to <money>$0.15</money> per share.  The principal reasons for the net income shortfall were foreign exchange losses of <money>$0.03</money> and a <money>$0.01</money> decline in the value of our holdings in the Chinese rig manufacturer Honghua Group.  These charges were slightly offset by a net tax benefit of <money>$0.01</money> that resulted from a catch up adjustment in our estimated full year effective tax rate, which reduced to 10 percent from the previous estimate of 15 percent.  The revised estimate is a result of lower income expectations in our higher taxed US and Canadian operations, with some entities actually operating at a loss, while our international tax rate remained at approximately 15 percent.  The additional interest deduction associated with the 9.25 percent notes we issued in <chron>January 2009</chron> is also serving to reduce the effective tax rate.</p>
<p/>
<p>"In our US Lower 48 land drilling unit we believe the number of employed rigs has bottomed out, rebounding from its low point of 117 rigs in early August to average 123.6 rigs during the quarter, 20 rigs below the second quarter average. Today the contracted rig count stands at 137 including 22 rigs on standby.  The recent increase in our rig count is exclusively the result of deployments for horizontal drilling applications in the higher profile shales.  Increasingly we are seeing tangible evidence supporting our long-held conviction that rig demand and margins are a function of drilling efficiency differentials.  This is borne out by recent increases in utilization and margins for our high end rigs in certain markets.</p>
<p/>
<p>"Today the utilization of our 86 PACE® rigs is 91 percent with only eight uncommitted and bidding.  During and subsequent to the third quarter we deployed another four new-built PACE® rigs, all with three year term contract commitments, and have 12 others contracted and scheduled to commence through the second quarter of next year.  This will bring the total number of PACE® rigs in our US Lower 48 land rig fleet to 98.  Rig margins during the quarter actually increased sequentially by <money>$768</money> per rig day when the lump sum early termination payments of the prior quarter are excluded.  Margins reached <money>$9,673</money> per rig day in the third quarter with most of that increase attributable to the cost reductions that were effected during the quarter and that will be more fully reflected in the fourth quarter.  Margins for our 62 PACE® rigs increased to an averaged of <money>$11,957</money> per rig day while margins for the balance of our operating rigs declined slightly to <money>$7,399</money> per rig day.  Demand for our PACE® and higher efficiency SCR rigs remains healthy, particularly in deeper areas such as the Bakken, Haynesville and Eagle Ford shales.</p>
<p/>
<p>"Our US Offshore business posted its first ever loss this quarter due to continuation of the slow down in activity that started in the second quarter in response to a drop in oil prices.  While virtually all of this unit's activity during the last two years has been oil related, what proved to be a rapid rebound in oil prices did not lead to higher rig activity due to the onset of hurricane season.  As a result, MODS(TM) platform rigs on deep water applications constituted almost all of the rig activity this quarter, activity that was insufficient to offset the complete shutdown of every other class of rig.  We expect the fourth quarter to realize a modest improvement as eight rigs return to work late in the quarter, some on short term commitments.  The outlook for 2010 and beyond is relatively strong as evidenced by the fact that next year's contract backlog already exceeds 2009's projected results by 20 percent, with several large, long-term incremental projects likely to materialize.</p>
<p/>
<p>"Our International results were lower than projected as a large number of maturing contracts were suspended rather than renewed, in contrast to previous indications from customers.  This precipitated what is expected to be a further modest decline in the fourth quarter, which should reach bottom by year end or early in the first quarter.  Nearly all of the reduced expectations for this year result from this lower utilization.  We averaged 97 rigs operating in the third quarter, down from 104 rigs in the second quarter and 121 rigs at this time last year.  Margins have fared much better averaging <money>$17,802</money> per rig day in the third quarter, down only slightly from the second quarter peak of <money>$18,084</money>.  The forward outlook is brighter as some of these recently idled rigs, plus others that have been stacked longer, are beginning to return to work, with indications that even more of these rigs will return to service during 2010.</p>
<p/>
<p>"Our US Well Servicing business was also down to breakeven levels and would have been even lower were it not for aggressive cost reduction efforts that will aggregate to nearly <money>$50 million</money> annually.  Lower rig and truck hours had the greatest impact on the quarter's results, with rig hours at roughly one-half of the same quarter last year and truck hours off by one-third.  Revenue per hour was down 15 percent for rigs and 20 percent for trucks.  We expect to post a modest loss in the seasonally slow fourth quarter with hours falling further due to shorter work days and the number of non-working holidays.  Visibility as to an upturn in this business is still lacking, but the onset of a new budget year with a higher oil price environment augurs for improved activity in 2010.</p>
<p/>
<p>"In <location>Canada</location> we incurred a loss as business did not improve coming out of the seasonally slow second quarter spring thaw period.  Third quarter activity was essentially flat with an average of 12 rigs operating at an average margin per rig day of <money>$8,248</money> compared to 11 rigs at <money>$10,156</money> in the second quarter.  In the fourth quarter we expect to realize further cost savings plus an increase in rig activity that should be sufficient to achieve at least a return to breakeven operating income.  There is very limited visibility for full year 2010.  However, we think that first quarter results will be in line with the first quarter of 2009, reflecting further cost reductions and the seasonal high in activity.  Most of the increased activity will be in the further delineation and development of the highly promising Horn River and Montney shale plays of northeast British <location>Colombia</location>, areas particularly well suited to our rig fleet.  Longer term we believe <location>Canada</location> is vital to the North American gas supply and will restore rapidly once gas prices stabilize at economic levels, which the longer term strip implies.</p>
<p/>
<p>"Alaska results reflected the seasonal low point and benefited modestly from lump sum payments in settlement of two contracts that would have expired at the end of the year.  These accelerated payments will reduce fourth quarter results accordingly.  We expect next year to be a trough year with income down by as much as 50 percent as a result of three fewer rig years and a weak dayrate environment.  There are several significant opportunities that are likely to materialize between now and mid next year that would provide a basis for a more promising longer term outlook starting in 2011.  This includes the potential for incremental Coiled Tubing / Stem Drilling rigs.</p>
<p/>
<p>"Our Other Operating Segments unit was adversely impacted by lower activity, most notably a reduction in the quantity of third party top drive shipments during the quarter.  We expect the fourth quarter to post a modest improvement as top drive shipments are expected to be higher, partially offset by lower seasonal results in our Alaskan Joint Ventures.  Our Oil and Gas operations were at a breakeven level as profitability in our existing hedged gas production was offset by unhedged gas volumes.</p>
<p/>
<p>"Our financial position remains strong and we expect our free cash flow generation to increase in subsequent quarters as cost controls contribute further and capital spending decreases.  We believe these and other measures will allow us to increase cash and investments to a level where net debt to capitalization will be reduced to the high twenty's percentile range.  This should provide sufficient liquidity to redeem our convertible debt due <chron>May 2011</chron>. When combined with our ready access to capital including our plan to establish a <money>$400 to $500 million</money> revolving credit facility, this gives us the additional flexibility to take advantage of any attractive investment opportunities that may arise.</p>
<p/>
<p>"In summary, I am confident this quarter represents the low point for our US Lower 48 drilling, US Offshore, Canadian and Other Operating Segments entities, leading to a bottoming out of our consolidated operating income.  We also expect the fourth quarter will represent the seasonal low point in the results of our US Well Servicing and Alaskan businesses and a likely bottoming out in our International unit.  We believe the pace of the quarterly improvement in our results will be moderate for several quarters since the timing of significant increases in activity is not yet known.  Nonetheless we are confident the upturn will soon be felt.  One reason for our optimism is the higher forward prices for crude and gas which currently are over <money>$85</money> and <money>$7</money> respectively in 2011.  Additionally, the performance by our rigs and their growing acceptance with the most discriminating customers is enhancing our market penetration.  Regardless of the timing of the turnaround, the breadth of our market exposure and the suitability of our global fleet to today's changing rig requirements will allow us to outperform our peers."</p>
<p/>
<p>The Nabors companies own and operate approximately 538 land drilling and approximately 772 land workover and well-servicing rigs in <location>North America</location>.  Nabors' actively marketed offshore fleet consists of 40 platform rigs, 13 jackup units and 3 barge rigs in the <location>United States</location> 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, gas and geothermal markets in the world.</p>
<p/>
<p>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.</p>
<p/>
<p>The Company will host a conference call tomorrow, <chron>October 21, 2009</chron> at <chron>10:00 a.m. Central Time</chron> to discuss the results and its outlook in more detail.  You may access a webcast of the call through Nabors' website at <a href="http://www.nabors.com">www.nabors.com</a> > Investor Relations > Events Calendar or via <a href="http://www.streetevents.com">www.streetevents.com</a>.  The Company will 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, call our corporate headquarters in Hamilton, <location>Bermuda</location> at 441-292-1510 or inquire via email to <a href="mailto:mark.andrews@nabors.com">mark.andrews@nabors.com</a>.</p>
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                       NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                    (Unaudited)
    
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                              Three Months Ended           Nine Months Ended
                           --------------------------      -----------------
                           September 30,      June 30,        September 30,
                           -------------      --------     -----------------
    
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    (In thousands,
     except per
     share amounts)      2009        2008       2009        2009        2008
                         ----        ----       ----        ----        ----
    
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    Revenues and
     other income:
      Operating
       revenues      $ 791,915  $1,454,562  $ 867,869  $2,857,829  $4,036,820
      Earnings
      (losses) from
       unconsolidated
       affiliates (1)   13,457       7,933     (8,127)    (59,097)       (551)
      Investment
       income (loss)    (1,805)    (22,235)    18,248      25,584      29,004
                        ------     -------     ------      ------      ------
          Total
           revenues
           and other
           income      803,567   1,440,260    877,990   2,824,316   4,065,273
                       -------   ---------    -------   ---------   ---------
    
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    Costs and other
     deductions:
      Direct costs     432,876     805,533    453,922   1,552,085   2,293,481
      General and
       administrative
       expenses         82,050     122,648    163,808     353,201     350,883
      Depreciation and
       amortization    174,372     162,198    165,974     499,498     447,211
      Depletion          3,295       7,656      2,590       8,638      28,684
      Interest
       expense          66,671      50,546     66,027     199,776     146,613
      Losses (gains)
       on sales and
       retirements of
       long-lived
       assets and other
       expense
       (income), net    11,218      10,875      6,469         390      22,130
      Impairments
       and other
       charges (2)           -           -    227,083     227,083           -
                       -------     -------    -------     -------     -------
          Total costs
           and other
           deductions  770,482   1,159,456  1,085,873   2,840,671   3,289,002
                       -------   ---------  ---------   ---------   ---------
    
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    Income (loss)
     before income
     taxes              33,085     280,804   (207,883)    (16,355)    776,271
                        ------     -------   --------     -------     -------
    
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    Income tax
     expense
     (benefit):
      Current           37,901      83,501    (43,425)     43,933     222,553
      Deferred         (34,346)      3,320     28,528     (22,002)    (28,722)
                        ------       -----     ------       -----     -------
          Income tax
           expense
           (benefit)     3,555      86,821    (14,897)     21,931     193,831
                         -----      ------    -------      ------     -------
    
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    Net income
     (loss) (4)      $  29,530  $  193,983  $(192,986) $  (38,286) $  582,440
                     ---------  ----------  ---------- ----------  ----------
    
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    Earnings
     (losses) per
     share: (3) (4)
      Basic          $    .10   $      .69  $    (.68) $     (.14) $     2.07
      Diluted        $    .10   $      .67  $    (.68) $     (.14) $     2.01
    
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    Weighted-average
     number of common
     shares
     outstanding:(3)
      Basic             283,197     282,389    283,154     283,150    281,135
                        -------     -------    -------     -------    -------
      Diluted           287,407     289,149    283,154     283,150    289,805
                        -------     -------    -------     -------    -------
    
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    Adjusted income
     derived from
     operating
     activities (1)
     (5)             $  112,779 $   364,460 $   73,448 $   385,310 $   916,010
                     ========== =========== ========== =========== ===========
    
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    (1) Includes ($75.0) million representing our proportionate share of a
        non-cash pre-tax full cost ceiling test writedown from our domestic
        oil and gas joint venture recorded during the nine months ended
        September 30, 2009.
    
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    (2) Represents non-cash pre-tax impairments and other charges recorded
        during the three months ended June 30, 2009 and nine months ended
        September 30, 2009.
    
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    (3) See "Computation of Earnings (Losses) Per Share" included herein as a
        separate schedule.
    
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    (4) See impact of Impairments and other charges at "Consolidated
        Statements of Income Items Excluding Certain Non-Cash Items
        (Non-GAAP)" included herein as a separate schedule.
    
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    (5) Adjusted income 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 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 derived from operating
        activities, because it believes that this financial measure is an
        accurate reflection of the ongoing profitability of our Company.
        A reconciliation of this non-GAAP measure to income before income
        taxes, which is a GAAP measure, is provided within the  table set
        forth immediately following the heading "Segment Reporting".
    
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                   NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)
    
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                                      September 30,  June 30, December 31,
    (In thousands, except ratios)         2009         2009       2008
                                      -------------  -------- ------------
    
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    ASSETS
    Current assets:
    Cash and short-term
     investments                     $ 1,104,163 $ 1,196,440 $    584,245
    Accounts receivable, net             702,712     787,653    1,160,768
    Other current assets                 284,211     318,068      421,580
                                         -------     -------      -------
         Total current assets          2,091,086   2,302,161    2,166,593
    Long-term investments and
     other receivables                   138,093     140,101      239,952
    Property, plant and
     equipment, net                    7,728,506   7,621,186    7,331,959
    Goodwill                             163,984     162,812      175,749
    Investment in
     unconsolidated affiliates           473,420     433,955      411,727
    Other long-term assets               202,002     209,147      191,919
                                         -------     -------      -------
         Total assets                $10,797,091 $10,869,362 $ 10,517,899
                                     =========== ===========  ===========
    
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    LIABILITIES AND
     SHAREHOLDERS' EQUITY
    Current liabilities:
    Current portion of
     long-term debt                  $       280 $   168,699  $   225,030
    Other current liabilities            663,595     675,800      903,829
                                         -------     -------      -------
         Total current liabilities       663,875     844,499    1,128,859
    Long-term debt                     4,084,587   4,063,288    3,600,533
    Other long-term liabilities          878,476     913,751      884,401
                                         -------     -------      -------
         Total liabilities             5,626,938   5,821,538    5,613,793
    Shareholders' equity               5,170,153   5,047,824    4,904,106
                                       ---------   ---------    ---------
         Total liabilities and
          shareholders' equity       $10,797,091 $10,869,362 $ 10,517,899
                                     =========== ===========  ===========
    
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    Cash, short-term and long-term
     investments (1)                 $ 1,242,256 $ 1,336,541 $    824,197
    
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    Funded debt to
     capital ratio: (2)
        - Gross                         0.41 : 1    0.43 : 1     0.41 : 1
        - Net of cash and
         investments                    0.33 : 1    0.34 : 1     0.35 : 1
    Interest coverage ratio: (3)         8.4 : 1    11.4 : 1     20.7 : 1
    
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    (1) The September 30, 2009, June 30, 2009 and December 31, 2008
        amounts include $127.7 million, $128.1 million, and $224.2 million,
        respectively, in oil and gas financing receivables that are included
        in long-term investments and other receivables.
    
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    (2) The gross funded debt to capital ratio is calculated by dividing
        funded debt by funded debt plus deferred tax liabilities net of
        deferred tax assets plus capital. Funded debt is defined as the sum
        of (1) short-term borrowings, (2) current portion of long-term debt
        and (3) long-term debt.  Capital is defined as shareholders' equity.
        The net funded debt to capital ratio is calculated by dividing net
        funded debt by net funded debt plus deferred tax liabilities net of
        deferred tax assets plus capital.  Net funded debt is defined as the
        sum of (1) short-term borrowings, (2) current portion of long-term
        debt and (3) long-term debt reduced by the sum of cash and cash
        equivalents and short-term and long-term investments and other
        receivables.  Capital is defined as shareholders' equity.  Both of
        these ratios are a method for calculating the amount of leverage a
        company has in relation to its capital.  The gross funded debt and net
        funded debt to capital ratios are not measures of operating
        performance or liquidity defined by accounting principles generally
        accepted in the United States of America and may not be comparable to
        similarly titled measures presented by other companies.
    
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    (3) The interest coverage ratio is a trailing twelve-month computation
        of the sum of income (loss) before income taxes, interest expense,
        depreciation and amortization, depletion expense, impairments, and
        our proportionate share of non-cash pre-tax writedowns from our oil
        and gas joint ventures less investment income and then dividing by
        cash interest expense. 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 accounting principles generally
        accepted in the United States of America and may not be comparable to
        similarly titled measures presented by other 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
                                          ------------------------------
                                            September 30,       June 30,
                                            -------------       --------
    (In thousands, except rig             2009        2008        2009
     activity)                            ----        ----        ----
    
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    Reportable segments:
    Operating revenues and Earnings
     (losses) from unconsolidated
     affiliates:
        Contract Drilling: (1)
          U.S. Lower 48 Land
           Drilling                   $  212,004    $  505,197   $  249,859
          U.S. Land Well-servicing        89,459       204,029      100,080
          U.S. Offshore                   25,708        68,581       41,947
          Alaska                          45,210        38,496       53,207
          Canada                          58,219       127,412       45,651
          International                  307,660       368,418      327,551
                                         -------       -------      -------
           Subtotal Contract
            Drilling (2)                 738,260     1,312,133      818,295
    
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        Oil and Gas (3)(4)                10,091        29,532       (6,001)
        Other Operating Segments (5)(6)   89,774       169,131      104,931
        Other reconciling items (7)      (32,753)      (48,301)     (57,483)
                                         -------       -------      -------
          Total                       $  805,372    $1,462,495   $  859,742
                                      ==========    ==========   ==========
    
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    Adjusted income derived from
     operating activities:
        Contract Drilling: (1)
          U.S. Lower 48 Land
           Drilling                   $   46,382    $  176,819   $   70,075
          U.S. Land Well-servicing           342        42,433        6,192
          U.S. Offshore                     (163)       18,456        6,724
          Alaska                          11,145        10,159       16,374
          Canada                         (10,448)       13,534      (10,538)
          International                   86,865       111,048      101,303
                                          ------       -------      -------
           Subtotal Contract
            Drilling (2)                 134,123       372,449      190,130
    
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        Oil and Gas (3) (4)                  (90)       17,577      (15,228)
        Other Operating Segments (5)(6)    3,978        18,239        5,321
        Other reconciling items (8)      (25,232)      (43,805)    (106,775)
                                         -------       -------     --------
          Total                          112,779       364,460       73,448
    Interest expense                     (66,671)      (50,546)     (66,027)
    Investment income (loss)              (1,805)      (22,235)      18,248
    (Losses) gains on sales and
     retirements of long-lived
     assets and other (expense)
     income, net                         (11,218)      (10,875)      (6,469)
    Impairments and other charges (9)          -             -     (227,083)
                                          ------        ------     --------
    Income (loss) before income taxes $   33,085    $  280,804   $ (207,883)
                                         =======      ========   ==========
    
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    Rig activity:
    Rig years: (10)
       U.S. Lower 48 Land Drilling         123.6         263.3        142.9
       U.S. Offshore                         7.8          19.2         12.2
       Alaska                                9.0          11.0         11.3
       Canada                               12.3          35.8         11.1
       International (11)                   97.1         121.3        104.1
                                            ----         -----        -----
          Total rig years                  249.8         450.6        281.6
                                           =====         =====        =====
    Rig hours: (12)
       U.S. Land Well-servicing          135,040       290,680      142,797
       Canada Well-servicing              31,686        67,141       23,896
                                          ------        ------       ------
          Total rig hours                166,726       357,821      166,693
                                         =======       =======      =======
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                                              Nine Months Ended
                                              -----------------
                                                 September 30,
                                                 -------------
    
</pre>
<p> </p>
<pre>
    
     (In thousands, except rig                 2009         2008
     activity)                                 ----         ----
    
</pre>
<p> </p>
<pre>
    
    Reportable segments:
    Operating revenues and Earnings
     (losses) from unconsolidated
     affiliates:
        Contract Drilling: (1)
          U.S. Lower 48 Land
           Drilling                        $  851,742  $1,351,106
          U.S. Land Well-servicing            323,901     557,392
          U.S. Offshore                       128,047     185,759
          Alaska                              161,199     137,979
          Canada                              217,464     376,952
          International                       977,867   1,014,882
                                              -------   ---------
           Subtotal Contract
            Drilling (2)                    2,660,220   3,624,070
    
</pre>
<p> </p>
<pre>
    
        Oil and Gas (3)(4)                    (55,954)     54,924
        Other Operating Segments (5)(6)       350,173     504,872
        Other reconciling items (7)          (155,707)   (147,597)
                                             --------    --------
          Total                            $2,798,732  $4,036,269
                                           ==========  ==========
    
</pre>
<p> </p>
<pre>
    
    Adjusted income derived from
     operating activities:
        Contract Drilling: (1)
          U.S. Lower 48 Land
           Drilling                        $  245,699  $  438,012
          U.S. Land Well-servicing             20,192     104,287
          U.S. Offshore                        23,391      42,897
          Alaska                               48,344      41,408
          Canada                               (7,651)     40,889
          International                       291,143     303,450
                                              -------     -------
           Subtotal Contract
            Drilling (2)                      621,118     970,943
    
</pre>
<p> </p>
<pre>
    
        Oil and Gas (3)(4)                    (86,652)     11,080
        Other Operating Segments (5)(6)        28,253      50,094
        Other reconciling items (8)          (177,409)   (116,107)
                                             --------    --------
          Total                               385,310     916,010
    Interest expense                         (199,776)   (146,613)
    Investment income (loss)                   25,584      29,004
    (Losses) gains on sales and
     retirements of long-lived
     assets and other (expense)
     income, net                                 (390)    (22,130)
    Impairments and other charges (9)        (227,083)          -
                                             --------    --------
    Income (loss) before income taxes      $  (16,355) $  776,271
                                           ==========  ==========
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Rig activity:
    Rig years: (10)
       U.S. Lower 48 Land Drilling              152.8       243.8
       U.S. Offshore                             11.7        17.5
       Alaska                                    10.7        10.6
       Canada                                    19.2        34.0
       International (11)                       105.0       120.2
                                                -----       -----
          Total rig years                       299.4       426.1
                                                =====       =====
    Rig hours: (12)
       U.S. Land Well-servicing               457,404     822,258
       Canada Well-servicing                  105,806     186,535
                                              -------     -------
          Total rig hours                     563,210   1,008,793
                                              =======   =========
    
</pre>
<p> </p>
<pre>
    
    (1)  These segments include our drilling, workover and well-servicing
         operations, on land and offshore.
    
</pre>
<p> </p>
<pre>
    
    (2)  Includes earnings (losses), net, from unconsolidated affiliates,
         accounted for by the equity method, of $4.9 million, $.1 million,
         and $.6 million for the three months ended September 30, 2009 and
         2008 and June 30, 2009, respectively, and $6.8 million and $9.7
         million for the nine months ended September 30, 2009 and 2008,
         respectively.
    
</pre>
<p> </p>
<pre>
    
    (3)  Includes our proportionate share of non-cash pre-tax writedowns
         recorded by our domestic oil and gas joint venture of ($8.3)
         million for the three months ended June 30, 2009 and ($83.3)
         million for the nine months ended September 30, 2009.
    
</pre>
<p> </p>
<pre>
    
    (4)  Includes earnings (losses), net, from unconsolidated affiliates,
         accounted for by the equity method, of $4.0 million, $7.1 million
         and ($11.0) million for the three months ended September 30, 2009
         and 2008 and June 30, 2009, respectively, and ($79.2) million and
         ($17.6) million for the nine months ended September 30, 2009 and
         2008, respectively.
    
</pre>
<p> </p>
<pre>
    
    (5)  Includes our drilling technology and top drive manufacturing,
         directional drilling, rig instrumentation and software, and
         construction and logistics operations.
    
</pre>
<p> </p>
<pre>
    
    (6)  Includes earnings (losses), net, from unconsolidated affiliates,
         accounted for by the equity method, of $4.5 million, $.7 million
         and $2.3 million, for the three months ended September 30, 2009
         and 2008 and June 30, 2009, respectively, and $13.3 million and
         $7.4 million for the nine months ended September 30, 2009 and 2008,
         respectively.
    
</pre>
<p> </p>
<p>(7)  Represents the elimination of inter-segment transactions.</p>
<p> </p>
<pre>
    
    (8)  Represents the elimination of inter-segment transactions and
         unallocated corporate expenses.
    
</pre>
<p> </p>
<pre>
    
    (9)  Represents non-cash pre-tax impairments and other charges recorded
         during the three months ended June 30, 2009.
    
</pre>
<p> </p>
<pre>
    
    (10) 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 during a 365-day period
         represents 0.5 rig years.
    
</pre>
<p> </p>
<pre>
    
    (11) International rig years include our equivalent percentage ownership
         of rigs owned by unconsolidated affiliates which totaled 2.5 years,
         3.3 years and 2.3 years, during the three months ended September 30,
         2009 and 2008 and June 30, 2009, respectively, and 2.6 years and 3.6
         years during the nine months ended September 30, 2009 and 2008,
         respectively.
    
</pre>
<p> </p>
<pre>
    
    (12) Rig hours represents the number of hours that our well-servicing rig
         fleet operated during the period.
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                    NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                   COMPUTATION OF EARNINGS (LOSSES) PER SHARE
                                  (Unaudited)
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    A reconciliation of the numerators and denominators of the basic and
     diluted earnings (losses) per share computations is as follows:
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                                     Three Months Ended
                                                 -------------------------
                                                 September 30,    June 30,
                                                 -------------    --------
                                                 2009      2008      2009
    (In thousands, except per share amounts)     ----      ----      ----
    
</pre>
<p> </p>
<pre>
    
    Net income (loss) (numerator):
    Net income (loss) - basic                 $29,530   $193,983 $(192,986)
       Add interest expense on
        assumed conversion of our
        zero coupon convertible/
        exchangeable senior
        debentures/ notes, net of
        tax:
            $2.75 billion due 2011 (1)              -          -         -
            $82.8 million due 2021 (2)              -          -         -
            $700 million due 2023 (3)               -          -         -
                                                  ---        ---       ---
    
</pre>
<p> </p>
<pre>
    
    Adjusted net income
     (loss) - diluted                         $29,530   $193,983 $(192,986)
                                              -------   -------- ---------
    
</pre>
<p> </p>
<pre>
    
       Earnings (losses) per share:
                                              -------   -------- ---------
         Basic                                $  .10    $    .69 $    (.68)
                                              -------   -------- ---------
         Diluted                              $  .10    $    .67 $    (.68)
                                              -------   -------- ---------
    
</pre>
<p> </p>
<pre>
    
    Shares (denominator):
       Weighted-average number of
        shares outstanding-basic (4)          283,197    282,389   283,154
       Net effect of dilutive stock
        options, warrants and restricted
        stock awards based on the if
        converted method                        4,210      6,760         -
       Assumed conversion of our zero
        coupon convertible/exchangeable
        senior debentures/notes:
            $2.75 billion due 2011 (1)              -          -         -
            $82.8 million due 2021 (2)              -          -         -
            $700 million due 2023 (3)               -          -         -
                                                  ---        ---       ---
       Weighted-average number of
        shares outstanding - diluted          287,407    289,149   283,154
                                              -------    -------   -------
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                                       Nine Months Ended
                                                       -----------------
                                                          September 30,
                                                          -------------
    
</pre>
<p> </p>
<pre>
    
                                                          2009      2008
    (In thousands, except per share amounts)              ----      ----
    
</pre>
<p> </p>
<pre>
    
    Net income (loss) (numerator):
    Net income (loss) - basic                          $(38,286) $582,440
       Add interest expense on assumed
        conversion of our zero coupon
        convertible/exchangeable senior
        debentures/notes, net of tax:
            $2.75 billion due 2011 (1)                        -         -
            $82.8 million due 2021 (2)                        -         -
            $700 million due 2023 (3)                         -         -
                                                            ---       ---
    
</pre>
<p> </p>
<pre>
    
    Adjusted net income (loss) - diluted               $(38,286) $582,440
                                                       --------  --------
    
</pre>
<p> </p>
<pre>
    
       Earnings (losses) per share:
                                                       --------  --------
         Basic                                         $  (.14)  $   2.07
                                                       --------  --------
         Diluted                                       $  (.14)  $   2.01
                                                       --------  --------
    
</pre>
<p> </p>
<pre>
    
    Shares (denominator):
       Weighted-average number of shares
        outstanding-basic (4)                           283,150   281,135
       Net effect of dilutive stock options,
        warrants and restricted
        stock awards based on the if
        converted method                                      -     6,960
       Assumed conversion of our zero coupon
        convertible/exchangeable senior
        debentures/notes:
            $2.75 billion due 2011 (1)                        -         -
            $82.8 million due 2021 (2)                        -         -
            $700 million due 2023 (3)                         -     1,710
                                                          -----     -----
       Weighted-average number of shares
        outstanding - diluted                           283,150   289,805
                                                        -------   -------
    
</pre>
<p> </p>
<pre>
    
    (1) Diluted earnings (losses) per share for the three and nine months
        ended September 30, 2009 and 2008 and the three months ended
        June 30, 2009 do not include any incremental shares issuable upon
        exchange of the $2.75 billion 0.94% senior exchangeable notes due
        2011.  During 2008 and the nine months ended September 30, 2009,
        we purchased $888.5 million par value of these notes in the open
        market, leaving $1.86 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 only
        issue an incremental number of shares upon exchange of these notes.
        Such shares are only included in the calculation of the
        weighted-average number of shares outstanding in our diluted
        earnings per share calculation, 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 any period for the three and nine
        months ended September 30, 2009 and 2008 and the three months ended
        June 30, 2009.
    
</pre>
<p> </p>
<pre>
    
    (2) In June 2008 Nabors Delaware called for redemption of the full $82.8
        million aggregate principal amount at maturity of its zero coupon
        senior convertible debentures due 2021 and in July 2008, paid cash of
        $60.6 million; an amount equal to the issue price of $50.4 million
        plus accrued original issue discount of $10.2 million.  No common
        shares were issued as part of the redemption of the $82.8 million
        zero coupon convertible senior debentures.
    
</pre>
<p> </p>
<pre>
    
    (3) In May 2008 Nabors Delaware called for redemption all of its $700
        million zero coupon senior exchangeable notes due 2023 and in June
        and July 2008 issued an aggregate 5.25 million common shares which
        equated to the excess of the exchange value of the notes over their
        principal amount, as cash was required up to the principal amount of
        the notes exchanged.  Diluted earnings per share for the three months
        ended June 30, 2008 reflect the conversion of the $700 million zero
        coupon senior exchangeable notes due 2023 resulting in the inclusion
        of the incremental number of shares that were required to be issued
        upon the exchange of these notes.  The number of shares issued upon
        exchange equated to the excess of the exchange value of the notes over
        their principal amount, as Nabors Delaware was required to pay cash up
        to the principal amount of the notes exchanged.  Because the
        conversion of the remaining balance of the shares was issued in July
        2008, the entire dilutive effect of the 5.25 million shares was not
        recognized until the nine months ended September 30, 2008.
    
</pre>
<p> </p>
<pre>
    
    (4) On July 31, 2009,  the exchangeable shares of Nabors Exchangeco were
        exchanged for Nabors' common shares on a one-for-one basis, and had
        essentially identical rights as Nabors Industries Ltd. common shares,
        including but not limited to, voting rights and the right to receive
        dividends, if any.  Basic shares outstanding includes the following
        weighted-average number of common shares and restricted stock of
        Nabors and weighted-average number of exchangeable shares of Nabors
        (Canada) Exchangeco Inc., respectively: 283.2 million shares
        cumulatively for the three months ended September 30, 2009; 282.3
        million and .1 million shares for the three months ended September 30,
        2008; 283.1 million and .1 million shares for the three months ended
        June 30, 2009; 283.1 million and .1 million shares for the nine months
        ended September 30, 2009; and 281.0 million and .1 million shares for
        the nine months ended September 30, 2008.
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    For all periods presented, the computation of diluted earnings (losses)
    per share excludes outstanding stock options and warrants with exercise
    prices greater than the average market price of Nabors' common shares,
    because the inclusion of such options and warrants would be anti-dilutive
    and such options and warrants are not considered participating securities.
    The average number of options and warrants that were excluded from diluted
    earnings (losses) per share that would potentially dilute earnings
    (losses) per share in the future were 16,595,790  and 3,402,760 shares
    during the three months ended September 30, 2009 and 2008, respectively;
    35,783,476 shares during the three months ended June 30, 2009; and
    34,085,988 and 2,945,505 shares during the nine months ended September 30,
    2009 and 2008, 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 will be
    included in our diluted earnings (losses) per share computation using the
    if converted method of accounting.  Restricted stock will be included in
    our basic and diluted earnings (losses) per share computation using the
    two class method of accounting in all periods because such stock is
    considered participating securities.
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                    NABORS INDUSTRIES LTD. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF INCOME ITEMS EXCLUDING CERTAIN NON-CASH
                             CHARGES (NON-GAAP)
                                (Unaudited)
    
</pre>
<p> </p>
<pre>
    
                               Actuals                  As adjusted to Exclude
    (In thousands, except      (GAAP)        Charges      Charges (Non-GAAP)
     per share amounts)        -------       -------    ----------------------
    
</pre>
<p> </p>
<pre>
    
                                  Three Months Ended September 30, 2009
                                  -------------------------------------
    
</pre>
<p> </p>
<pre>
    
    Operating revenues and
     Earnings (losses)
     from unconsolidated
     affiliates              $  805,372      $      -        $  805,372
    Adjusted income
     derived from
     operating
     activities                 112,779             -           112,779
    Income before
     income taxes                33,085             -            33,085
    Net income (loss)            29,530       (12,997)           42,527
    Diluted earnings
     (losses) per share      $     0.10      $  (0.05)       $     0.15
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                  Three Months Ended June 30, 2009
                                  --------------------------------
    
</pre>
<p> </p>
<pre>
    
    Operating revenues and
     Earnings (losses)
     from unconsolidated
     affiliates              $  859,742      $ (8,295)         $868,037
    Adjusted income
     derived from
     operating
     activities                  73,448       (70,409)          143,857
    Income (loss)
     before income
     taxes                     (207,883)     (297,492)           89,609
    Net income (loss)          (192,986)     (283,894)           90,908
    Diluted earnings
     (losses) per share      $    (0.68)     $  (1.00)       $     0.32
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                 Nine Months Ended September 30, 2009
                                 ------------------------------------
    
</pre>
<p> </p>
<pre>
    
    Operating revenues and
     Earnings (losses)
     from unconsolidated
     affiliates              $2,798,732      $(83,295)       $2,882,027
    Adjusted income
     derived from
     operating
     activities                 385,310      (145,409)          530,719
    Income (loss)
     before income
     taxes                      (16,355)     (372,492)          356,137
    Net income (loss)           (38,286)     (356,141)          317,855
    Diluted earnings
     (losses) per share      $    (0.14)     $  (1.26)       $     1.12
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                   NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                   SUMMARY OF NON-CASH CHARGES (NON-GAAP)
                                  (Unaudited)
    
</pre>
<p> </p>
<pre>
    
                               Three Months Ended           Nine Months Ended
                       ---------------------------------   -------------------
                       September 30, 2009  June 30, 2009   September 30, 2009
    (In thousands)     ------------------  -------------   ------------------
    
</pre>
<p> </p>
<pre>
    
    Impairment to
     oil and gas
     financing
     receivable                  $  -    $  (112,516)         $  (112,516)
    Rig asset
     retirements
     and impairments                -        (64,229)             (64,229)
    Other-than-
     temporary
     impairment -
     debt security                  -        (35,649)             (35,649)
    Goodwill impairment             -        (14,689)             (14,689)
    Stock compensation
     charges                        -        (62,114)             (62,114)
    Equity method
     oil and gas
     venture impairments            -         (8,295)             (83,295)
                              -------         ------              -------
    
</pre>
<p> </p>
<pre>
    
    Total charges
     before income
     taxes                          -       (297,492)            (372,492)
    
</pre>
<p> </p>
<pre>
    
    Tax benefit/
     expense (1)              (12,997)        13,598               16,351
                              -------         ------               ------
    
</pre>
<p> </p>
<pre>
    
    Total charges
     after taxes           $  (12,997)   $  (283,894)         $  (356,141)
                           ==========    ===========          ===========
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    (1) This represents the difference between the tax (expense) benefit
        recorded during the period in accordance with the interim period tax
        allocation rules and the amount of tax (expense) benefit that would
        have resulted from the application of the interim period tax
        allocation rules if the non-cash charges were excluded. The remaining
        tax effect of these items will be recognized during the fourth quarter
        of 2009.




    

For further information: For further information: Dennis A. Smith, Director of Corporate Development for Nabors Corporate Services, Inc., +1-281-775-8038, or for Investor Materials, corporate headquarters in Hamilton, Bermuda, 441-292-1510, mark.andrews@nabors.com Web Site: http://www.nabors.com

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Nabors Industries Ltd.

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