Nabors' EPS Equals $0.18 for 4Q and $1.29 for Full Year 2009, Before Non-Cash
Charges and Impairments


    


    
</pre>
<p>HAMILTON, <span class="xn-location">Bermuda</span>, <span class="xn-chron">Feb. 16</span> /CNW/ -- Nabors Industries Ltd. (NYSE:   NBR) today announced its results for the fourth quarter and full year 2009.  The Company's net income, excluding previously disclosed non-cash charges, was <span class="xn-money">$51.5 million</span> (<span class="xn-money">$0.18</span> per diluted share) in the fourth quarter and <span class="xn-money">$369.4 million</span> (<span class="xn-money">$1.29</span> per diluted share) for the full year.  On the same basis the quarter's adjusted income derived from operating activities was <span class="xn-money">$133 million</span>, bringing the total for the full year to <span class="xn-money">$664 million</span>.  Revenues for the Company were <span class="xn-money">$841 million</span> for the quarter and <span class="xn-money">$3.7 billion</span> for the full year.</p>
<p/>
<p><span class="xn-person">Gene Isenberg</span>, Nabors' Chairman and CEO, commented, "The quarter's sequential improvement was fueled by higher activity in our US Offshore, US Lower 48 Land Drilling and Well Servicing operations, bolstered by seasonal ramp-ups in Alaska and <span class="xn-location">Canada</span>.  These increases more than offset the predicted decrease in our International business.  We are confident the third quarter marked the bottom in our consolidated quarterly results, and we expect continuous sequential improvement from here, although we remain cautious as to the pace and magnitude.</p>
<p/>
<p>"As we predicted, the full year's results excluding non-cash charges proved to be relatively resilient considering the sharp contraction in industry activity.  Despite nearly 100 fewer rigs operating, our US Lower 48 Land Drilling business still managed to generate <span class="xn-money">$295 million</span> in operating income and <span class="xn-money">$522 million</span> in operating cash flow, much of which was attributable to the high number of term contracts in force.  Our International operations were impacted more than we previously anticipated, but still managed to post a respectable year at <span class="xn-money">$366 million</span> in operating income and <span class="xn-money">$575 million</span> in operating cash flow despite challenging market conditions.  These results make International our most profitable unit, a position it will likely retain for the foreseeable future.  In the aggregate, our other businesses contributed another <span class="xn-money">$138 million</span> in operating income and <span class="xn-money">$385 million</span> in operating cash flow, resulting in nearly <span class="xn-money">$1.5 billion</span> in operating cash flow before corporate expenses.</p>
<p/>
<p>"This strong operating cash flow, along with reduced working capital and the early January placement of <span class="xn-money">$1.125 billion</span> in ten-year notes, allowed us to fund nearly <span class="xn-money">$1.0 billion</span> in capital expenditures, repurchase <span class="xn-money">$1.07 billion</span> in shorter-term convertible debt at a savings of <span class="xn-money">$126 million</span>, and retire <span class="xn-money">$225 million</span> in term debt.  We still generated free cash flow of <span class="xn-money">$370 million</span> and ended the year with <span class="xn-money">$1.2 billion</span> in cash and marketable securities.  With this healthy balance, ongoing strong cash generation and continuing good access to the capital markets, we expect to be able to fund growth opportunities as they arise and comfortably redeem the remaining balance of our <span class="xn-money">$1.68 billion</span> in convertible debt due <span class="xn-chron">May 2011</span>.</p>
<p/>
<p>"In our US Lower 48 Land Drilling business, we started-up 20 rigs during the quarter, bringing our average rig count to 139, compared to 124 in the third quarter. The average number of rigs idle but generating revenue declined from 24 to 19.  Today we have a total of 160 rigs employed with 147 rigs working and 13 idle.  Our average rig margin of <span class="xn-money">$9,136</span> per day reflected a sequential decrease of <span class="xn-money">$537</span>.  We have deployed an additional eight new built PACE® rigs since the end of the third quarter and have another eight yet to deploy, including four incremental five-year contract awards from a key customer for use in the Bakken Shale.  Our PACE® rigs continue to perform exceptionally well and regularly achieve new performance records.  Today virtually all of our PACE® fleet is committed and we are seeing pricing improvement in the spot market, although renewal rates are still significantly below those of expiring contracts.  This has the effect of dampening the financial benefit of the fourth quarter increase in rig activity.  Over the next several months we have 20 long-term rig contracts renewing at lower rates, producing a drop in first quarter average margins of approximately <span class="xn-money">$1,200</span> per day, but stabilizing thereafter.  Consequently, while we expect improving quarterly performance going forward, operating income and cash flow for this segment in 2010 will be well below the level we achieved in 2009, although this unit's timely efforts to reduce overhead, internal and third party operating costs are mitigating this decline.  The full utilization of our PACE® rigs has improved the market for our SCR rigs proportionately as these rigs are particularly well suited to the deeper, longer duration wells in areas such as Eagle Ford and Haynesville.  Similarly, the increase in high-end rig utilization is benefitting our more capable mechanical rigs, albeit at much lower margins and in smaller increments.</p>
<p/>
<p>"Internationally, we believe the first quarter will mark the bottom for this segment with results moderately below the <span class="xn-money">$74 million</span> in operating income achieved in the fourth quarter.  We see the rig count increasing in the later stages of the first quarter, but the precise timing of these projects is always difficult to estimate, and there are unique circumstances leading to delayed contract awards and renewals in certain areas.  We recently received an award for eight rigs in <span class="xn-location">Colombia</span>, six of which are incremental, and we have other awards pending in multiple venues.  In <span class="xn-location">Mexico</span>, the last three of our six deep land rigs are slated to restart during the second quarter with our three idle platform rigs scheduled for the third quarter, although customer funding priorities may impact the timing of these deployments.  We were also recently awarded a project in <span class="xn-location">Papua New Guinea</span> for two new, seismically rated land drilling rigs patterned after our proprietary MODS(TM) dynamic offshore design.  These and numerous other prospective projects all reinforce our belief that our International segment will achieve continuous sequential increases in income starting in the second quarter and return to a healthy growth rate over the next few years.</p>
<p/>
<p>"Our US Land Well-servicing business posted a significant sequential increase as work hours for both rigs and trucks increased in each month of the fourth quarter.  We have increased our expectations for this year, but they remain well below the level achieved in previous years.  We expect that oil prices are likely to improve over time and, given the quality and performance of our Millennium rigs, a more robust outlook for the second half of 2010 and especially 2011 is all but certain.  We are reinforcing our management in this unit and continue to take additional measures to reduce costs and expand the markets we serve.</p>
<p/>
<p>"Our US Offshore business posted a solid quarter as activity rebounded sharply from the third quarter.  We continue to have high utilization in the deepwater platform rig market where we enjoy virtually 100% market share.  While the first quarter has gotten off to a slower than expected start due to numerous weather-related delays, we are seeing our more conventional platform and workover jackup rig activity improve, although most of these projects are short term in duration.  Still, contracted income for 2010 is expected to be 30% greater than our full year results in 2009, up from 20% just last quarter.  We have also received a tentative award for a new rig as a result of one of two FEED studies for new deepwater platform rigs that we conducted and are cautiously optimistic regarding our success with the second project.</p>
<p/>
<p>"Our Canadian unit improved to breakeven in the fourth quarter, partially attributable to extensive cost reductions.  We expect the first quarter to show a large increase during the peak winter drilling season, approximating last year's first quarter results.  While these results are good for the current market conditions, they are still well below recent years.  Visibility regarding timing of an eventual turnaround in this market remains limited; however, we remain optimistic about our long-term future in <span class="xn-location">Canada</span>.  We believe our assets are particularly well suited to the changing market there, particularly the northeast British Columbia shale plays which require more sophisticated rigs and in which we have a strong market share.</p>
<p/>
<p>"In Alaska, we achieved a modest increase in the quarter, bringing the full-year results to the best in that unit's history.  The outlook is challenging, however, as we expect to have at least three fewer rigs under contract in 2010.  As a result, our expectation is that the year will likely be approximately 40% below 2009 and represent the bottom in this market.   Over the longer term, there are several strategic projects that could significantly bolster results in subsequent years.  Sustained high oil prices and the realization of contemplated tax incentives by the State of Alaska should also improve the outlook.</p>
<p/>
<p>"Our Other Operating Segments also posted a modest increase as third-party sales in Canrig increased materially, while Ryan Technologies, our directional drilling entity, ramped up for Canada's winter drilling season.  We expect the first quarter to show additional improvement for the same reasons and further benefit from higher seasonal activity in our Alaskan joint ventures.  New technology rollouts in Canrig should be increasingly reflected in this segment's bottom line longer term.</p>
<p/>
<p>"Our Oil and Gas interests again incurred significant non-cash charges which obscure the inherent value we see in these holdings, as indicated in our pre-release.  We expect over time that this value will become more apparent as contributions to income increase and we prove up more of the core acreage holdings we possess.</p>
<p/>
<p>"The effective tax rate for 2009, exclusive of non-cash items, was 10%, yielding an 8% effective tax rate for the fourth quarter which is in line with our expectations.  This favorable tax rate arises from the fact that our international blended tax rate approximates 15%, while our US and Canadian taxes are minimal due to diminished income, actual losses incurred in some of these entities, and the additional interest expense associated with the 9.25 percent notes we issued in <span class="xn-chron">January 2009</span>.</p>
<p/>
<p>"In summary, it was a very challenging year both financially and operationally, although we fared relatively well in the face of the most abrupt decline in rig activity we have ever experienced, and considering the uncertainty that permeated the early part of the year.  It is my belief that our oil-directed markets are in a secular growth phase due to long-term demand trends and the need for more sophisticated and intense drilling to sustain production from legacy fields.  Our position in North American gas is solid due to our large share of the premium rig market, our concentration in the best markets and the unrecognized value of our oil and gas interests.  The inherent benefit of our premium rigs, particularly our PACE® rigs, was manifested in the higher utilization and margins we maintained throughout the trough and their rapid rebound as our US land rig count began to recover in the latter part of the year.  We are quite bullish over the longer term for all of our businesses, but remain uncertain as to the precise timing of a meaningful inflection, although I anticipate it may well be as soon as the second half of this year."</p>
<p/>
<p>The Nabors companies own and operate approximately 542 land drilling and approximately 730 land workover and well-servicing rigs in <span class="xn-location">North America</span>.  Nabors' actively marketed offshore fleet consists of; 40 platform rigs, 13 jackup units and 3 barge rigs in the <span class="xn-location">United States</span> 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.</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>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, <span class="xn-location">Bermuda</span> at 441-292-1510 or via email at <a href="mailto:mark.andrews@nabors.com">mark.andrews@nabors.com</a></p>
<pre>
    



    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                      NABORS INDUSTRIES LTD. AND SUBSIDIARIES                 
                                                                              
                     CONSOLIDATED STATEMENTS OF INCOME (LOSS)                 
                                                                              
                                    (Unaudited)                               
                                                                              
                                                    Three Months Ended        
                                                    ------------------       
                                                December 31,     September 30,
     (In thousands, except per share           ------------      -------------
     amounts)                                2009        2008         2009 
                                             ----        ----         ---- 
                                                                             
    Revenues and other income:                                                
       Operating revenues                 $834,527  $1,475,076       $791,915 
       Earnings (losses) from                                                 
        unconsolidated affiliates (1)     (155,584)   (229,283)        13,457 
       Investment income (loss)                172      (7,278)        (1,805)
                                               ---      ------         ------ 
          Total revenues and other                                            
           income                          679,115   1,238,515        803,567 
                                           -------   ---------        ------- 
                                                                              
    Costs and other deductions:                                               
       Direct costs                        460,267     816,835        432,876 
       General and administrative                                             
        expenses                            76,462     129,101         82,050 
       Depreciation and amortization       168,917     167,156        174,372 
       Depletion                             2,440      (3,242)         3,295 
       Interest expense                     65,172      50,105         66,671 
       Losses (gains) on sales and
        retirements of long-lived assets
        and other expense (income), net     12,196      (3,866)        10,323 
       Impairments and other charges (2)   112,046     176,123              - 
                                           -------     -------            --- 
          Total costs and other                                               
           deductions                      897,500   1,332,212        769,587 
                                           -------   ---------        ------- 
                                                                              
    Income (loss) before income
     taxes (4)                            (218,385)    (93,697)        33,980 
                                          --------     -------         ------ 
                                                                              
    Income tax expense (benefit):                                             
       Current                               6,400     (33,721)        37,901 
       Deferred                           (177,559)     46,037        (34,346)
                                          --------      ------        ------- 
          Total income tax expense                                            
           (benefit)                      (171,159)     12,316          3,555 
                                          --------      ------          ----- 
                                                                              
    Net income (loss)                      (47,226)   (106,013)        30,425 
         Less: Net (income) loss                                              
          attributable to noncontrolling                                      
          interest                             (34)       (690)          (895)
                                               ---        ----           ---- 
    Net income (loss) attributable to                                         
     Nabors (4)                           $(47,260) $ (106,703)      $ 29,530 
                                          --------   ---------        --------
                                                                              
    Earnings (losses) per Nabors
     share: (3) (4)                              
      Basic                               $   (.17) $     (.38)      $    .10 
      Diluted                             $   (.17) $     (.38)      $    .10 
                                                                              
                                                                              
    Weighted-average number                                                   
     of common shares
     outstanding: (3)                                      
       Basic                               283,854     283,081        283,197 
                                           -------     -------        ------- 
       Diluted                             283,854     283,081        287,407 
                                           -------     -------        ------- 
                                                                              
                                                                              
    Adjusted income (loss) derived                                            
     from operating activities (1) (5)    $(29,143) $  135,943       $112,779 
                                          ========  ==========       ======== 
                                                                              
                                                                              
                                                                              
                                               Year Ended                     
                                               ----------                     
                                              December 31,                    
     (In thousands, except per share           ------------   
     amounts)                               2009        2008                
                                            ----        ----                
                                                                              
    Revenues and other income:                                                
       Operating revenues               $3,692,356  $5,511,896                
       Earnings (losses) from                                                 
        unconsolidated affiliates (1)     (214,681)   (229,834)               
       Investment income (loss)             25,756      21,726                
                                            ------      ------                
          Total revenues and other                                            
           income                        3,503,431   5,303,788                
                                         ---------   ---------                
                                                                              
    Costs and other deductions:                                               
       Direct costs                      2,012,352   3,110,316                
       General and administrative                                             
        expenses                           429,663     479,984                
       Depreciation and amortization       668,415     614,367                
       Depletion                            11,078      25,442                
       Interest expense                    264,948     196,718                
       Losses (gains) on sales and
        retirements of                             
        long-lived assets and other                                          
        expense (income), net               12,962      15,027                
       Impairments and other charges (2)   339,129     176,123                
                                           -------     -------                
          Total costs and other                                               
           deductions                    3,738,547   4,617,977                
                                         ---------   ---------                
                                                                              
    Income (loss) before income
     taxes (4)                            (235,116)    685,811                
                                          --------     -------                
                                                                              
    Income tax expense (benefit):                                             
       Current                              50,333     188,832                
       Deferred                           (199,561)     17,315                
                                          --------      ------                
          Total income tax expense                                            
           (benefit)                      (149,228)    206,147                
                                          --------     -------                
                                                                              
    Net income (loss)                      (85,888)    479,664                
         Less: Net (income) loss                                              
          attributable to noncontrolling                                      
          interest                             342      (3,927)               
                                               ---      ------                
    Net income (loss) attributable to                                         
     Nabors (4)                         $  (85,546) $  475,737                
                                        ----------  ----------                
                                                                              
    Earnings (losses) per Nabors
     share: (3) (4)                              
      Basic                             $     (.30) $     1.69                
      Diluted                           $     (.30) $     1.65                
                                                                              
                                                                              
    Weighted-average number                                                   
       of common shares outstanding: (3)                                      
       Basic                               283,326     281,622                
                                           -------     -------                
       Diluted                             283,326     288,236                
                                           -------     -------                
                                                                              
                                                                              
    Adjusted income (loss) derived                                            
     from operating activities (1) (5)  $  356,167  $1,051,953                
                                        ==========  ==========                
    
</pre>
<p> </p>
<pre>
    
    (1)   Includes our proportionate share of full-cost ceiling test 
          writedowns recorded by our oil and gas joint ventures of $(162.1) 
          million and $(228.3) million for the three months ended December 31,
          2009 and 2008, respectively, and $(237.1) million and $(228.3) 
          million for the years ended December 31, 2009 and 2008, 
          respectively.
    
</pre>
<p> </p>
<pre>
    
    (2)   Represents impairments and other charges recorded for the three 
          months ended December 31, 2009 and 2008, and for the years ended 
          December 31, 2009 and 2008, respectively.  See detail of Impairments
          and other charges at "Summary of Non-Cash Charges (Non-GAAP)" 
          included herein as a separate schedule.
    
</pre>
<p> </p>
<pre>
    
    (3)   See "Computation of Earnings (Losses) Per Share" included herein as 
          a separate schedule.  
    
</pre>
<p> </p>
<pre>
    
    (4)   See impact of Impairments and other charges at "Consolidated 
          Statements of Income (Loss) Excluding Certain Non-Cash Items 
          (Non-GAAP)" included herein as a separate schedule.
    
</pre>
<p> </p>
<pre>
    
    (5)   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 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".
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                 NABORS INDUSTRIES LTD. AND SUBSIDIARIES             
      CONSOLIDATED STATEMENTS OF INCOME (LOSS) EXCLUDING CERTAIN NON- 
                          CASH CHARGES (NON-GAAP)                    
                               (Unaudited)                           
                                                                     
                                         Three Months Ended          
                                         ------------------          
                                         December 31, 2009           
                                         -----------------           
                                                         As adjusted  
                                                          to Exclude  
     (In thousands, except per   Actuals                   Charges   
     share amounts)              (GAAP)       Charges    (Non-GAAP)(1)  
                                 ------       -------    -------------  
                                                                   
    Revenues and other income:                                     
       Operating revenues        $834,527    $      -       $834,527 
       Earnings (losses) from                                        
        unconsolidated                                               
        affiliates               (155,584)    162,121          6,537 
       Investment income              172           -            172 
                                      ---         ---            --- 
          Total revenues  
            and other income      679,115     162,121        841,236 
                                  -------     -------        ------- 
                                                                   
    Costs and other deductions:                                      
       Direct costs               460,267           -        460,267 
       General and                                                   
        administrative                                               
        expenses                   76,462           -         76,462 
       Depreciation and                                              
        amortization              168,917           -        168,917 
       Depletion                    2,440           -          2,440 
       Interest expense            65,172           -         65,172 
       Losses (gains) on sales  
        and retirements of                      
        long-lived assets and                                        
        other expense (income),                                     
        net                        12,196           -         12,196 
       Impairments and other                                         
        charges                   112,046    (112,046)             - 
                                  -------    --------        ------- 
          Total costs and other                                       
           deductions             897,500    (112,046)       785,454 
                                  -------    --------        ------- 
                                                                     
    Income (loss) before                                             
     income taxes                (218,385)    274,167         55,782 
    Income tax expense                                               
     (benefit)                   (171,159)    175,383          4,224 
                                 --------     -------          ----- 
    Net income (loss)             (47,226)     98,784         51,558 
         Less: Net (income) loss                                       
          attributable to                                            
          noncontrolling                                             
          interest                    (34)          -            (34)
                                      ---         ---            --- 
    Net income (loss)                                                
     attributable to Nabors      $(47,260)    $98,784       $ 51,524 
                                 --------     -------       -------- 
                                                                     
    Earnings (losses) per                                            
     Nabors share - diluted         $(.17)   $    .34(2)    $    .18 
                                                                     
    Weighted-average number                                          
     of common shares                                                
     outstanding - diluted        283,854                    289,427 
                                  -------                    ------- 
    Adjusted income (loss)  
     derived from operating
     activities  (3)             $(29,143)   $162,121       $132,978
                                 =========   ========       ========
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                             Year Ended              
                                             ----------              
                                         December 31, 2009           
                                         -----------------           
                                                         As adjusted  
                                                          to Exclude  
     (In thousands, except per   Actuals                   Charges   
     share amounts)              (GAAP)       Charges   (Non-GAAP)(1)
                                 ------       -------   -------------
                                                                     
    Revenues and other income:                                       
       Operating revenues      $3,692,356    $      -     $3,692,356 
       Earnings (losses) from                                        
        unconsolidated                                               
        affiliates               (214,681)    245,416         30,735 
       Investment income           25,756           -         25,756 
                                   ------         ---         ------ 
          Total revenues
           and other income     3,503,431     245,416      3,748,847 
                                ---------     -------      --------- 
                                                                     
    Costs and other deductions:                                      
       Direct costs             2,012,352           -      2,012,352 
       General and                                                   
        administrative                                               
        expenses                  429,663     (62,114)       367,549 
       Depreciation and                                              
        amortization              668,415           -        668,415 
       Depletion                   11,078           -         11,078 
       Interest expense           264,948           -        264,948 
       Losses (gains) on sales
        and retirements of                    
        long-lived assets and                                        
        other expense (income),                                       
        net                        12,962           -         12,962 
       Impairments and other                                         
        charges                   339,129    (339,129)             - 
                                  -------    --------            --- 
          Total costs and other                                       
           deductions           3,738,547    (401,243)     3,337,304 
                                ---------    --------      --------- 
                                                                     
    Income (loss) before                                             
     income taxes                (235,116)    646,659        411,543 
    Income tax expense                                               
     (benefit)                   (149,228)    191,734         42,506 
                                 --------     -------         ------ 
    Net income (loss)             (85,888)    454,925        369,037 
         Less: Net (income) loss                                       
          attributable to                                            
          noncontrolling                                             
          interest                    342           -            342 
                                      ---         ---            --- 
    Net income (loss)                                                
     attributable to Nabors    $  (85,546)   $454,925     $  369,379 
                               ----------    --------     ---------- 
                                                                     
    Earnings (losses) per                                            
     Nabors share - diluted   $      (.30)   $   1.59     $     1.29 
                                                                   
    Weighted-average number                                        
     of common shares                                              
     outstanding - diluted        283,326                    286,502 
                                  -------                    ------- 
    Adjusted income (loss)
     derived from operating
     activities  (3)             $356,167    $307,530       $663,697
                                 ========    ========       ========
                                                                     
                                                                     
    (1) 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. 
    
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<p> </p>
<pre>
    
    (2) The after-tax impact of the charges recorded during the fourth quarter
        of 2009 was $.65 per diluted share, as noted in our press release 
        dated February 9, 2010.  The difference between this amount and the 
        $.35 per diluted share noted in the table above relates to the tax 
        benefits associated with charges recorded during the second quarter of
        2009 that are required to be allocated to the current period in 
        accordance with the interim period tax allocation rules.  
    
</pre>
<p> </p>
<pre>
    
    (3) 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 Company.  
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                NABORS INDUSTRIES LTD. AND SUBSIDIARIES           
    CONSOLIDATED STATEMENTS OF INCOME (LOSS) EXCLUDING CERTAIN NON-
                        CASH CHARGES (NON-GAAP)                   
                              (Unaudited)                         
                                                                  
                                       Three Months Ended         
                                       ------------------         
                                        December 31, 2008         
                                        -----------------         
                                                         As adjusted  
                                                          to Exclude  
     (In thousands, except per   Actuals                   Charges 
     share amounts)              (GAAP)       Charges    Non-GAAP) (1) 
                                 ------       -------    ------------- 
                                                                    
    Revenues and other income:                                      
       Operating revenues      $1,475,076    $      -     $1,475,076 
       Earnings (losses) from                                       
        unconsolidated                                              
        affiliates               (229,283)    228,252         (1,031)
       Investment income                                            
        (loss)                     (7,278)          -         (7,278)
                                   ------         ---         ------ 
          Total revenues
           and other income     1,238,515     228,252      1,466,767 
                                ---------     -------      --------- 
                                                                    
    Costs and other deductions:                                     
       Direct costs               816,835           -        816,835 
       General and                                                  
        administrative                                              
        expenses                  129,101           -        129,101 
       Depreciation and                                             
        amortization              167,156           -        167,156 
       Depletion                   (3,242)          -         (3,242)
       Interest expense            50,105           -         50,105 
       Losses (gains) on sales
        and retirements of                 
        long-lived assets and                                       
        other expense (income),                                      
        net                        (3,866)          -         (3,866)
       Impairments and other                                        
        charges                   176,123    (176,123)             - 
                                  -------    --------            --- 
          Total costs and other                                      
           deductions           1,332,212    (176,123)     1,156,089 
                                ---------    --------      --------- 
                                                                    
    Income (loss) before                                            
     income taxes                 (93,697)    404,375        310,678 
    Income tax expense                                              
     (benefit)                     12,316      89,680        101,996 
                                   ------      ------        ------- 
    Net income (loss)            (106,013)    314,695        208,682 
         Less: Net (income) loss                                      
          attributable to                                           
          noncontrolling                                            
          interest                   (690)          -           (690)
                                     ----         ---           ---- 
    Net income (loss)                                               
     attributable to Nabors    $ (106,703)   $314,695     $  207,992 
                               ----------    --------     ---------- 
                                                                    
    Earnings (losses) per                                         
     Nabors share - diluted    $     (.38)   $   1.11     $      .73 
                                                                    
    Weighted-average number                                         
     of common shares                                               
     outstanding - diluted        283,081                    283,530 
                                  -------                    ------- 
    Adjusted income (loss)
     derived from operating
     activities (2)              $135,943    $228,252       $364,195
                                 ========    ========       ========
                                                                  
                                                                  
                                                                  
                                           Year Ended             
                                           ----------             
                                        December 31, 2008         
                                        -----------------         
                                                          As adjusted  
                                                           to Exclude  
     (In thousands, except per   Actuals                    Charges
     share amounts)              (GAAP)        Charges   (Non-GAAP)(1) 
                                 ------        -------   ------------- 
                                                                  
    Revenues and other income:                                    
       Operating revenues      $5,511,896     $     -     $5,511,896 
       Earnings (losses) from                                        
        unconsolidated                                              
        affiliates               (229,834)    228,252         (1,582)
       Investment income                                             
        (loss)                     21,726           -         21,726 
                                   ------         ---         ------ 
          Total revenues
           and other income     5,303,788     228,252      5,532,040 
                                ---------     -------      --------- 
                                                                     
    Costs and other deductions:                                      
       Direct costs             3,110,316           -      3,110,316 
       General and                                                   
        administrative                                               
        expenses                  479,984           -        479,984 
       Depreciation and                                              
        amortization              614,367           -        614,367 
       Depletion                   25,442           -         25,442 
       Interest expense           196,718           -        196,718 
       Losses (gains) on
        sales and retirements of                 
        long-lived assets and                                        
        other expense (income),                                       
        net                        15,027           -         15,027 
       Impairments and other                                         
        charges                   176,123    (176,123)             - 
                                  -------    --------            --- 
          Total costs and other                                       
           deductions           4,617,977    (176,123)     4,441,854 
                                ---------    --------      --------- 
                                                                     
    Income (loss) before                                             
     income taxes                 685,811     404,375      1,090,186 
    Income tax expense                                               
     (benefit)                    206,147      89,680        295,827 
                                  -------      ------        ------- 
    Net income (loss)             479,664     314,695        794,359 
         Less: Net (income) loss                                       
          attributable to                                            
          noncontrolling                                             
          interest                 (3,927)          -         (3,927)
                                   ------         ---         ------ 
    Net income (loss)                                                
     attributable to Nabors    $  475,737    $314,695     $  790,432 
                               ----------    --------     ---------- 
                                                                  
    Earnings (losses) per                                         
     Nabors share - diluted         $1.65    $   1.09     $     2.74 
                                                                     
    Weighted-average number                                          
     of common shares                                                
     outstanding - diluted        288,236                    288,236 
                                  -------                    ------- 
    Adjusted income derived
     from operating
     activities (2)            $1,051,953    $228,252     $1,280,205
                               ==========    ========     ==========
                                                                  
                                                                  
    (1) 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. 
    
</pre>
<p> </p>
<pre>
    
    (2) 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 Company.  
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                      NABORS INDUSTRIES LTD. AND SUBSIDIARIES                 
                                                                              
                       CONDENSED CONSOLIDATED BALANCE SHEETS                  
                                    (Unaudited)                               
                                                                              
                                       December 31, September 30, December 31,
    (In thousands, except ratios)          2009          2009         2008
                                           ----          ----         ----
                                                                              
    ASSETS                                                                    
    Current assets:                                                           
    Cash and short-term investments     $ 1,090,851   $ 1,104,163  $   584,245
    Accounts receivable, net                724,040       702,712    1,160,768
    Other current assets                    380,973       284,211      421,580
                                            -------       -------      -------
         Total current assets             2,195,864     2,091,086    2,166,593
    Long-term investments and other                                           
     receivables                            100,882       138,093      239,952
    Property, plant and equipment, net    7,646,050     7,728,506    7,331,959
    Goodwill                                164,265       163,984      175,749
    Investment in unconsolidated                                              
     affiliates                             306,608       473,420      411,727
    Other long-term assets                  250,221       202,002      191,919
                                            -------       -------      -------
         Total assets                   $10,663,890   $10,797,091  $10,517,899
                                        ===========   ===========  ===========
                                                                              
    LIABILITIES AND EQUITY                                                    
    Current liabilities:                                                      
    Current portion of long-term debt   $       163   $       280  $   225,030
    Other current liabilities               608,459       663,595      903,829
                                            -------       -------      -------
         Total current liabilities          608,622       663,875    1,128,859
    Long-term debt                        3,940,605     4,084,587    3,600,533
    Other long-term liabilities             932,684       864,447      870,083
                                            -------       -------      -------
         Total liabilities                5,481,911     5,612,909    5,599,475
    Equity:                                                                   
    Shareholders' equity                  5,167,656     5,170,153    4,904,106
    Noncontrolling interest                  14,323        14,029       14,318
                                             ------        ------       ------
         Total equity                     5,181,979     5,184,182    4,918,424
                                          ---------     ---------    ---------
         Total liabilities and equity   $10,663,890   $10,797,091  $10,517,899
                                        ===========   ===========  ===========
                                                                              
                                                                             
                                                                              
    Cash, short-term and long-term                                            
     investments (1)                    $ 1,191,733   $ 1,242,256  $   824,197
                                                                              
    Funded debt to capital ratio: (2)                                         
        - Gross                           0.41 : 1      0.41 : 1     0.41 : 1 
        - Net of cash and investments     0.33 : 1      0.33 : 1     0.35 : 1 
    Interest coverage ratio: (3)           6.2 : 1       8.4 : 1     20.7 : 1 
    
</pre>
<p> </p>
<pre>
    
    (1)   The December 31, 2009, September 30, 2009 and December 31, 2008 
          amounts include $92.5 million, $127.7 million, and $224.2 million, 
          respectively, in oil and gas financing receivables that are included
          in long-term investments and other receivables.  
    
</pre>
<p> </p>
<pre>
    
    (2)   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 defined as 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 reduced by 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 accounting principles generally accepted in 
          the United States of America (GAAP) and, therefore, may not be 
          comparable to similarly titled measures presented by other 
          companies.  
    
</pre>
<p> </p>
<pre>
    
    (3)   The interest coverage ratio is a trailing 12-month quotient of the 
          sum of net income (loss) attributable to Nabors, interest expense, 
          depreciation and amortization, depletion expense, impairments and 
          other charges, income tax expense (benefit) and our proportionate 
          share of full-cost ceiling test writedowns from our oil and gas 
          joint ventures less investment income (loss) divided by cash 
          interest expense. This ratio is a method for calculating the amount 
          of operating cash flows available to cover 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 companies.     
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                      NABORS INDUSTRIES LTD. AND SUBSIDIARIES                 
                                                                              
                                 SEGMENT REPORTING                            
                                    (Unaudited)                               
                                                                              
    The following tables set forth certain information with respect to our    
     reportable segments and rig activity:                                    
    
</pre>
<p> </p>
<pre>
    
                                                  Three Months Ended          
                                                  ------------------          
                                              December 31,       September 30,
                                              ------------       -------------
     (In thousands, except rig activity)    2009        2008         2009 
                                            ----        ----         ---- 
    Reportable segments:                                                      
    Operating revenues and Earnings (losses)
     from unconsolidated affiliates:                                          
        Contract Drilling: (1)                                                
          U.S. Lower 48 Land Drilling    $ 230,789    $527,335       $212,004 
          U.S. Land Well-servicing          88,342     201,118         89,459 
          U.S. Offshore                     29,258      66,770         25,708 
          Alaska                            43,208      46,264         45,210 
          Canada                            81,189     130,726         58,219 
          International                    287,230     357,286        307,660 
                                           -------     -------        ------- 
           Subtotal Contract Drilling (2)  760,016   1,329,499        738,260 
                                                                              
        Oil and Gas (3) (4)               (153,137)   (206,389)        10,091 
        Other Operating Segments (5) (6)    96,109     173,331         89,774 
        Other reconciling items (7)        (24,045)    (50,648)       (32,753)
                                           -------     -------        ------- 
          Total                           $678,943  $1,245,793       $805,372 
                                          ========  ==========       ======== 
                                                                              
    Adjusted income (loss) derived from        
      operating activities:                                                   
        Contract Drilling: (1)                                                
          U.S. Lower 48 Land Drilling    $  48,980  $  190,567       $ 46,382 
          U.S. Land Well-servicing           8,758      44,339            342 
          U.S. Offshore                      7,117      16,282           (163)
          Alaska                            14,398      11,195         11,145 
          Canada                               632      19,997        (10,448)
          International                     74,423     104,225         86,865 
                                            ------     -------         ------ 
           Subtotal Contract Drilling (2)  154,308     386,605        134,123 
                                                                              
        Oil and Gas (3) (4)               (169,883)   (217,570)           (90)
        Other Operating Segments (5) (6)     5,867      18,757          3,978 
        Other reconciling items (8)        (19,435)    (51,849)       (25,232)
                                           -------     -------        ------- 
          Total                            (29,143)    135,943        112,779 
    Interest expense                       (65,172)    (50,105)       (66,671)
    Investment income (loss)                   172      (7,278)        (1,805)
    (Losses) gains on sales and
     retirements of                                
     long-lived assets and other                                            
     (expense) income, net                 (12,196)      3,866        (10,323)
    Impairments and other charges (9)     (112,046)   (176,123)             - 
                                          --------    --------            --- 
    Income (loss) before income taxes    $(218,385) $  (93,697)      $ 33,980 
                                         =========  ==========       ======== 
                                                                              
                                                                              
    Rig activity:                                                             
    Rig years: (10)                                                           
       U.S. Lower 48 Land Drilling           139.1       260.1          123.6 
       U.S. Offshore                           8.6        17.9            7.8 
       Alaska                                  8.0        11.7            9.0 
       Canada                                 21.2        39.8           12.3 
       International (11)                     85.9       121.3           97.1 
                                              ----       -----           ---- 
          Total rig years                    262.8       450.8          249.8 
                                             =====       =====          ===== 
    Rig hours: (12)                                                           
       U.S. Land Well-servicing            133,474     268,253        135,040 
       Canada Well-servicing                38,018      61,497         31,686 
                                            ------      ------         ------ 
          Total rig hours                  171,492     329,750        166,726 
                                           =======     =======        ======= 
                                                                              
                                                                              
                                                                              
                                               Year Ended                     
                                               ----------                     
                                              December 31,                    
                                              ------------                    
     (In thousands, except rig activity)    2009        2008                
                                            ----        ----                
    Reportable segments:                                                      
    Operating revenues and Earnings (losses)
     from unconsolidated affiliates:                                          
        Contract Drilling: (1)                                                
          U.S. Lower 48 Land Drilling   $1,082,531  $1,878,441                
          U.S. Land Well-servicing         412,243     758,510                
          U.S. Offshore                    157,305     252,529                
          Alaska                           204,407     184,243                
          Canada                           298,653     502,695                
          International                  1,265,097   1,372,168                
                                         ---------   ---------                
           Subtotal Contract
            Drilling (2)                 3,420,236   4,948,586                
                                                                              
        Oil and Gas (3) (4)               (209,091)   (151,465)               
        Other Operating Segments (5) (6)   446,282     683,186                
        Other reconciling items (7)       (179,752)   (198,245)               
                                          --------    --------                
          Total                         $3,477,675  $5,282,062                
                                        ==========  ==========                
                                                                              
    Adjusted income (loss) derived from        
      operating activities:                                                   
        Contract Drilling: (1)                                                
          U.S. Lower 48 Land Drilling   $  294,679  $  628,579                
          U.S. Land Well-servicing          28,950     148,626                
          U.S. Offshore                     30,508      59,179                
          Alaska                            62,742      52,603                
          Canada                            (7,019)     61,040                
          International                    365,566     407,675                
                                           -------     -------                
           Subtotal Contract
            Drilling (2)                   775,426   1,357,702                
                                                                              
        Oil and Gas (3) (4)               (256,535)   (206,490)               
        Other Operating Segments (5) (6)    34,120      68,572                
        Other reconciling items (8)       (196,844)   (167,831)               
                                          --------    --------                
          Total                            356,167   1,051,953                
    Interest expense                      (264,948)   (196,718)               
    Investment income (loss)                25,756      21,726                
    (Losses) gains on sales and
     retirements of                                
     long-lived assets and other                                            
     (expense) income, net                 (12,962)    (15,027)               
    Impairments and other charges (9)     (339,129)   (176,123)               
                                          --------    --------                
    Income (loss) before income taxes   $ (235,116) $  685,811                
                                        ==========  ==========                
    
</pre>
<p> </p>
<pre>
    
    Rig activity:                                                             
    Rig years: (10)                                                           
       U.S. Lower 48 Land Drilling           149.4       247.9                
       U.S. Offshore                          11.0        17.6                
       Alaska                                 10.0        10.9                
       Canada                                 19.7        35.5                
       International (11)                    100.2       120.5                
                                             -----       -----                
          Total rig years                    290.3       432.4                
                                             =====       =====                
    Rig hours: (12)                                                           
       U.S. Land Well-servicing            590,878   1,090,511                
       Canada Well-servicing               143,824     248,032                
                                           -------     -------                
          Total rig hours                  734,702   1,338,543                
                                           =======   =========                
    
</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 using the equity method, of $3.0 million, $(3.9) 
          million, and $4.9 million for the three months ended December 31, 
          2009 and 2008 and September 30, 2009, respectively, and $9.7 million
          and $5.8 million for the years ended December 31, 2009 and 2008, 
          respectively.
    
</pre>
<p> </p>
<pre>
    
    (3)   Represents our oil and gas exploration, development and production 
          operations.  Includes our proportionate share of full-cost ceiling 
          test writedowns recorded by our oil and gas joint ventures of 
          $(162.1) million and $(228.3) million for the three months ended 
          December 31, 2009 and 2008, respectively, and $(237.1) million and 
          $(228.3) million for the years ended December 31, 2009 and 2008, 
          respectively.
    
</pre>
<p> </p>
<pre>
    
    (4)   Includes earnings (losses), net from unconsolidated affiliates, 
          accounted for using the equity method, of $(162.7) million, $(223.8)
          million and $4.0 million for the three months ended December 31, 
          2009 and 2008 and September 30, 2009, respectively, and $(241.9) 
          million and $(241.4) million for the years ended December 31, 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 using the equity method, of $4.1 million, $(1.6) 
          million and $4.5 million, for the three months ended December 31, 
          2009 and 2008 and September 30, 2009, respectively, and $17.5 
          million and $5.8 million for the years ended December 31, 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 impairments and other charges recorded for the three 
          months ended December 31, 2009 and 2008, and for the years ended 
          December 31, 2009 and 2008, respectively.  See detail of Impairments
          and other charges at "Summary of Non-Cash Charges (Non-GAAP)" 
          included herein as a separate schedule.
    
</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, 
          3.1 years and 2.5 years during the three months ended December 31, 
          2009 and 2008 and September 30, 2009, respectively, and 2.5 years 
          and 3.5 years during the years ended December 31, 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)                             
                                                                          
                                                                          
    A reconciliation of the numerators and denominators of the basic and  
     diluted earnings (losses) per share computations is as follows:      
    
</pre>
<p> </p>
<pre>
    
                                                   Three Months Ended        
                                                   ------------------      
                                             December 31,        September 30,
     (In thousands, except per share         ------------        -------------
     amounts)                              2009         2008         2009
                                           ----         ----         ----
    Net income (loss) attributable
     to Nabors (numerator):                 
    Net income (loss) attributable to                                     
     Nabors - basic                     $(47,260)   $(106,703)     $29,530
       Add interest expense on
        assumed conversion of our                  
        zero coupon convertible/
        exchangeable senior                     
        debentures/notes,
        net of tax:                                   
            0.94% senior exchangeable notes                                   
             due 2011 (1)                      -            -            -
            Zero coupon convertible senior                                   
             debentures due 2021 (2)           -            -            -
            Zero coupon exchangeable
             notes due 2023 (3)                -            -            -
                                             ---          ---          ---
                                                                          
    Adjusted net income (loss)                                            
     attributable to Nabors - diluted   $(47,260)   $(106,703)     $29,530
                                        --------    ---------      -------
                                                                          
       Earnings (losses) per
        Nabors share:                               
         Basic                          $   (.17)   $    (.38)     $   .10
                                        --------    ---------     --------
         Diluted                        $   (.17)   $    (.38)     $   .10
                                        --------    ---------     --------
                                                                          
    Shares (denominator):                                                 
       Weighted-average number
        of shares outstanding-basic (4)  283,854      283,081      283,197
       Net effect of dilutive stock
        options, warrants and restricted      
        stock awards based on the 
        if-converted method                    -            -        4,210
       Assumed conversion of our
         zero coupon convertible/
         exchangeable senior
         debentures/notes:               
            0.94% senior exchangeable
             notes due 2011 (1)                -            -            -
            Zero coupon convertible
             senior debentures
             due 2021 (2)                      -            -            -
            Zero coupon exchangeable
             notes due 2023 (3)                -            -            -
                                             ---          ---          ---
       Weighted-average number of
        shares outstanding - diluted     283,854      283,081      287,407
                                         -------      -------      -------
                                                                          
                                                                          
                                                                          
                                              Year Ended                   
                                              ----------                   
                                             December 31,                  
    (In thousands, except per share          ------------                
     amounts)                              2009        2008               
                                           ----        ----               
    Net income (loss) attributable
     to Nabors (numerator):                 
    Net income (loss)
     attributable to                                     
     Nabors - basic                     $(85,546)    $475,737               
       Add interest expense on assumed
        conversion of our zero coupon
        convertible/exchangeable senior                     
        debentures/notes, net of tax:                                     
            0.94% senior exchangeable
             notes due 2011 (1)                -            -               
            Zero coupon convertible
             senior debentures
             due 2021 (2)                      -            -               
            Zero coupon exchangeable
             notes due 2023 (3)                -            -               
                                             ---          ---               
                                                                            
    Adjusted net income (loss)                                              
     attributable to Nabors - diluted   $(85,546)    $475,737               
                                        --------     --------               
                                                                            
       Earnings (losses) per
        Nabors share:                               
         Basic                          $   (.30)    $   1.69               
                                        --------      -------               
         Diluted                        $   (.30)    $   1.65               
                                        --------     --------               
                                                                            
    Shares (denominator):                                                   
       Weighted-average number
        of shares outstanding-basic (4)  283,326      281,622               
       Net effect of dilutive
        stock options, warrants
        and restricted      
        stock awards based
        on the if-converted method             -        5,332               
       Assumed conversion of our
        zero coupon                              
        convertible/exchangeable
        senior debentures/notes:               
            0.94% senior exchangeable
             notes due 2011 (1)                -            -               
            Zero coupon convertible
             senior debentures
             due 2021 (2)                      -            -      
            Zero coupon exchangeable
             notes due 2023 (3)                -        1,282               
                                             ---        -----               
       Weighted-average number
        of shares outstanding - diluted  283,326      288,236               
                                         -------      -------               
    
</pre>
<p> </p>
<pre>
    
    (1)   Diluted earnings (losses) per share for the three months ended 
          December 31, 2009 and 2008 and September 30, 2009, and for the years
          ended December 31, 2009 and 2008 exclude any incremental shares 
          issuable upon exchange of the 0.94% senior exchangeable notes due 
          2011.  During 2008 and 2009 we cumulatively purchased $1.1 billion 
          par value of these notes in the open market, leaving approximately 
          $1.7 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.  Such 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 any period for the three months ended December 31, 2009 and 
          2008 and September 30, 2009, and for the years ended December 31, 
          2009 and 2008.  
    
</pre>
<p> </p>
<pre>
    
    (2)   In July 2008 Nabors Delaware paid $60.6 million in cash to redeem 
          the notes, which equaled 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 zero coupon convertible
          senior debentures.
    
</pre>
<p> </p>
<pre>
    
    (3)   In June and July 2008 Nabors Delaware paid cash of $171.8 million 
          and $528.2 million, respectively, to redeem all of the notes.  In 
          addition to the $700 million in cash, we issued 5.25 million common 
          shares with a fair value of $249.8 million, which equated to the 
          excess of the exchange value of the notes over their principal 
          amount.  Because the conversion was completed during 2008, diluted 
          earnings per share for the year ended December 31, 2008 reflect the 
          conversion of the zero coupon senior exchangeable notes due 2023 
          which included the effect of the 5.25 million shares in the 
          calculation of the weighted-average number of basic shares 
          outstanding.     
    
</pre>
<p> </p>
<pre>
    
    (4)   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 
          includes the following weighted-average number of common shares and 
          restricted stock of Nabors and weighted-average number of 
          exchangeable shares of Nabors Exchangeco, respectively: 283.9 
          million shares cumulatively for the three months ended December 31, 
          2009; 283.0 million and .1 million shares for the three months ended
          December 31, 2008; 283.1 million and .1 million shares for the three
          months ended September 30, 2009; 283.2 million and .1 million shares
          for the year ended December 31, 2009; and 281.5 million and .1 
          million shares for the year ended December 31, 2008.  
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    For all periods presented, the computation of diluted earnings (losses) 
    per Nabors' share excludes outstanding stock options and warrants with 
    exercise prices greater than the average market price of Nabors' common 
    shares, because their inclusion would be anti-dilutive and because they 
    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 34,197,583 and 26,102,054 shares during the three months ended 
    December 31, 2009 and 2008, respectively; 16,595,790 shares during the 
    three months ended September 30, 2009; and 34,113,887 and 7,416,865 shares
    during the years ended December 31, 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                
                     SUMMARY OF NON-CASH CHARGES (NON-GAAP)                
                                  (Unaudited)                              
                                                                           
                                          Three Months Ended               
                                          ------------------               
                                       December 31,        September 30,   
                                       ------------        -------------   
     (In thousands)                2009            2008         2009     
                                   ----            ----         ----     
    Equity method oil and gas                                              
     joint venture impairments $(162,121)      $(228,252)     $      -     
    Goodwill and intangible                                                
     asset impairments                 -        (154,586)            -     
    Impairments of long-lived
     assets to be disposed
     of other than           
     by sale                           -               -             -     
    Stock compensation charge          -               -             -     
    Impairments of oil and gas-                                            
     related assets              (93,381)        (21,537)            -     
    Other-than-temporary                                                   
     impairments on securities   (18,665)              -             -     
                                 -------             ---           ---     
                                                                           
    Total charges before                                                   
     income taxes               (274,167)       (404,375)            -     
                                                                           
    Tax benefit (expense)        175,383 (1)      89,680 (1)   (12,997) (1)
                                 -------          ------        ------     
                                                                           
    Total charges after
     income taxes              $ (98,784)      $(314,695)     $(12,997)    
                               =========       =========      ========     
                                                                           
                                                                           
                                                                           
                                      Year Ended                            
                                      ----------                            
                                      December 31,                           
                                      ------------                           
     (In thousands)                2009           2008                      
                                   ----           ----                      
    Equity method oil and gas                                              
     joint venture
     impairments               $(245,416)      $(228,252)                  
    Goodwill and intangible                                                
     asset impairments           (14,689)       (154,586)                  
    Impairments of long-lived
     assets to be disposed of
     other than           
     by sale                     (64,229)              -                   
    Stock compensation charge    (62,114)              -                   
    Impairments of oil and gas-                                             
     related assets             (205,897)        (21,537)                  
    Other-than-temporary                                                   
     impairments on securities   (54,314)              -                   
                                 -------             ---                   
                                                                           
    Total charges before                                                   
     income taxes               (646,659)       (404,375)                  
                                                                           
    Tax benefit (expense)        191,734          89,680                   
                                 -------          ------                   
                                                                           
    Total charges after
     income taxes              $(454,925)      $(314,695)                  
                               =========       =========                   
                                                                           
                                                                           
    (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.



    

For further information: For further information: Dennis A. Smith, Director of Corporate Development of Nabors Corporate Services, Inc., +1-281-775-8038, or Investors, Nabors Industries Ltd., +1-441-292-1510, mark.andrews@nabors.com

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Nabors Industries Ltd.

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