Nabors' EPS Equals $0.83 for 4Q and $3.03 for Full Year 2008, Before $1.13 in Non-Cash Ceiling Test Adjustments and Goodwill Impairments



    HAMILTON, Bermuda, Feb. 24 /CNW/ --  Nabors Industries Ltd. (NYSE:   NBR)
today announced its results for the fourth quarter and full year 2008.  The
Company's results were impacted by the previously disclosed non-cash, pre-tax
charges of $405 million ($1.13 per share) in the fourth quarter, with $250
million related to oil and gas ceiling test adjustments, predominantly in the
Company's joint ventures, and $155 million in goodwill and intangible asset
impairments in its Canadian operations.  When these charges are excluded the
quarter's adjusted income derived from operating activities is $365.1 million,
bringing the total for the full year to $1.28 billion.  Excluding these
charges adjusted net income would be $230.7 million ($0.83 per diluted share)
in the fourth quarter and $865.9 million for the full year ($3.03 per diluted
share).  Revenues for the Company reached an all-time high for both the
quarter and the full year at $1.48 billion and $5.5 billion, respectively.
    

    
    Gene Isenberg, Nabors' Chairman and CEO, commented, "Our fourth quarter
and full year results were severely impacted by the previously disclosed
non-cash charges.  These items obscure what operationally was a solid
performance despite the abrupt and severe reversal we saw in our Lower 48 land
drilling and well servicing businesses late in the year.
    

    
    "The largest increase in year-over-year performance came from our
International business where operating income was up 23%, to $408 million. 
Our Other Operating Segments recorded approximately $70 million in operating
income, a near doubling of last year's results, while our US Lower 48 land
drilling operation managed a 5% improvement and finished a very challenging
year at $629 million.  Our Alaskan drilling operations posted results of $53
million, a 40% increase, while our US Offshore business finished slightly
higher at $59 million as a result of higher platform activity and rates and in
spite of hurricane interruptions and lower workover jackup utilization.  Our
US Well servicing business declined modestly to $149 million while Canada
recorded its second consecutive year of lower results while finishing at $61
million, down from $87 million in 2007.
    

    
    "Our US Lower 48 land drilling business improved during the quarter
although the outlook is for substantially lower operating income over the next
two quarters.  The number of rigs working has fallen rapidly from a high of
273 in October and, after averaging 260 for the quarter, stands at 181 today. 
Dayrates are less relevant now as customers are more focused on reducing total
costs to be in line with cash flow.  Our new rigs are continuing to set
records and our customers are honoring their contractual commitments.  We are
unable to predict when or at what level the US rig count will bottom out, but
we are fortunate to have a large number of our new PACE rigs in service and a
significant number of term contracts for legacy rigs.  Collectively these
contracts will mitigate what will still be a large drop in results in 2009.
    

    
    "Our International operations experienced a sequential decline which was
primarily attributable to excess costs associated with protracted downtime on
our Jackup Rig 657 in Saudi Arabia.  We also experienced unusually high
expenses associated with an increase in spare parts inventory which expanded
to serve the increasing number of rigs in this market, and we also had a few
rigs released earlier than expected due to current market conditions.  Despite
these short term effects and the postponement of several prospective projects,
we still believe we will achieve an increase in 2009 operating income of
approximately $100 million.
    

    
    "Although the fourth quarter represented an improvement for our US Land
Well servicing operation, it also brought the beginning of what we expect to
be a precipitous decline in activity and pricing across every region as
customers abruptly adjust spending.  We expect the brunt of this decline to
occur in the first quarter since there are inherent delays in curtailing costs
in this operation.  We expect the majority of the decrease will be realized in
California and West Texas, with more modest effects in other areas.
    

    
    "Our U.S. Offshore operations posted a slight decrease as activity for
our workover jackups was weaker than expected.   A further decrease in the
customarily weak first quarter is likely as a result of slightly lower
utilization of several of our platform rigs, higher miscellaneous expenses and
lower revenue from auxiliary services.  Despite our expectation of lower
results in the first quarter, we still anticipate 2009 to be essentially flat
to modestly down compared with 2008.  Results should be bolstered by of higher
jackup rig utilization, albeit at lower rates, plus the recent deployment of
our new MASE Rig 202 on a long-term contract in deep water, as well as higher
year-over-year utilization of our Sundowner platform workover rigs.
    

    
    "In Canada the fourth quarter reflected the beginning of the normal
seasonal upswing in activity which will culminate next quarter, although it
will likely be approximately 25% below last year's first quarter results.  We
expect only a small year-over-year decrease due to a number of developments
that favor Nabors in this market and which will likely lead to higher market
penetration.  These include the emergence of the deeper British Columbia shale
plays which require more capable rigs, the majority of our fleet.  We expect
to have up to 10 rigs in this area working for various key customers including
our joint venture and wholly owned entities.  Results will be further
bolstered by the alliances we have with certain customers who are increasing
activity in these areas, some of which is via an acquisition which will result
in Nabors rigs replacing competitive rigs.
    

    
    "Alaska saw a slight improvement as higher than expected summer
maintenance work dampened results.  While this unit is also experiencing a
slowdown we expect the first quarter and full year to be up significantly. 
This increase is attributable to higher winter operating dayrates compared to
lower summer standby rates for three rigs.  Results will also benefit from a
full year's contributions from two 2008 startups and from the second quarter
commencement of our new coiled tubing / stem drilling rig.  Our expectations
are lower than previously anticipated as we have seen some projects postponed,
a more competitive environment on contract renewals, and the recent loss of
the only ice reinforced workboat in Cook Inlet, which is resulting in a
temporary suspension of platform work.
    

    
    "Income from our Other Operating Segments has increased significantly
over the last two years driven by increased third-party sales in Canrig,
especially to foreign entities, a large increase in income from our
directional drilling business, and solid contributions from our Peak joint
venture in Alaska.  However, we expect activity and sales to be much lower in
2009 across most of our entities and the drop in income from these businesses
could approach 50%.
    

    
    "Fourth quarter results in our oil and gas operations reflected a large
loss primarily as a result of the application of the current methodology for
the ceiling test in valuing the reserves of our unconsolidated oil and gas
joint ventures.  This impairment obscures the long-term potential of this
business' portfolio of properties in multiple producing and rapidly emerging
areas.
    

    
    "We have taken a number of strategic steps to assure our financial
position remains strong and free cash flow generation is maximized going
forward.  We continue to reduce 2009 capital requirements and anticipate
significantly lower expenditures in 2010 as new rig deliveries abate.  In
January we placed $1.125 billion in 10-year Senior Unsecured Notes due 2019 at
a rate of 9.25%.  This provides additional funds which are available for
repayment of our shorter maturity issues.
    

    
    "In summary, the fourth quarter was not as bad as it could have been and
the future is probably going to be better than the price of our stock seems to
indicate.  Our North American land drilling markets are adjusting to a new
paradigm in natural gas drilling with the commercialization of abundant shale
deposits.  Over time this will benefit Nabors since much of the investments we
have made over the last few years were in assets that give us disproportionate
exposure and distinct competitive advantages in these areas that are
increasingly strategic to the US energy supply.  Our international markets are
also slowing, but our dominant position in high specification rigs provides
competitive advantages and this business is likely poised to grow in spite of
current conditions."
    

    
    The Nabors companies own and operate approximately 528 land drilling and
approximately 763 land workover and well-servicing rigs in North America. 
Nabors' actively marketed offshore fleet consists of; 37 platform rigs, 13
jackup units and 3 barge rigs in the United States and multiple international
markets. In addition, Nabors manufactures top drives and drilling
instrumentation systems and provides comprehensive oilfield hauling,
engineering, civil construction, logistics and facilities maintenance, and
project management services. Nabors participates in most of the significant
oil, gas and geothermal markets in the world.
    

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

    
    For further information, please contact Dennis A. Smith, Director of
Corporate Development of Nabors Corporate Services, Inc. at 281-775-8038. To
request Investor Materials, call our corporate headquarters in Hamilton,
Bermuda at 441-292-1510 or via email at mark.andrews@nabors.com.
    



    

    
                      NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                   (Unaudited)
    


    
                                              Three Months Ended
                                              ------------------
                                            December 31,       September 30,
                                            ------------       -------------
     (In thousands, except per share
     amounts)                             2008        2007           2008
                                     ---------    ---------      ---------
    Revenues and other income:
      Operating revenues           $ 1,475,076  $ 1,317,852    $ 1,454,562
      Earnings (losses) from
       unconsolidated
       affiliates (1)                 (229,283)        (842)         7,933
      Investment (loss) income          (7,278)      (7,862)       (22,235)
                                     ---------    ---------      ---------
          Total revenues and other
           income                    1,238,515    1,309,148      1,440,260
                                     ---------    ---------      ---------
    

    
    Costs and other deductions:
      Direct costs                     816,835      721,100        805,533
      General and administrative
       expenses                        129,101      116,458        122,648
      Depreciation and
       amortization                    166,225      127,661        161,340
      Depletion (2)                     18,295       43,864          7,656
      Interest expense                  26,329       13,467         25,506
      Losses (gains) on sales,
       retirements and impairments
       of long-lived assets and
       other expense
       (income), net                   (14,517)       6,120         10,875
      Goodwill and intangible
       asset impairment (3)            154,586            -              -
                                     ---------    ---------      ---------
          Total costs and other
           deductions                1,296,854    1,028,670      1,133,558
                                     ---------    ---------      ---------
    

    
    Income (loss) from continuing
     operations before income taxes    (58,339)     280,478        306,702
                                     ---------    ---------      ---------
    Income tax expense (benefit):
      Current                          (33,721)      63,913         83,501
      Deferred                          59,375       (5,587)        12,902
                                     ---------    ---------      ---------
          Income tax expense            25,654       58,326         96,403
                                     ---------    ---------      ---------
    

    
    Income (loss) from continuing
     operations, net of tax            (83,993)     222,152        210,299
    Income from discontinued
     operations, net of tax                  -            -              -
                                     ---------    ---------      ---------
    Net income (loss) (5)          $   (83,993) $   222,152    $   210,299
                                     ---------    ---------      ---------
    

    
    Earnings (losses) per
     share: (4) (5)
      Basic from continuing
       operations                  $      (.30) $       .79    $       .75
      Basic from discontinued
       operations                  $         -  $         -    $         -
                                     ---------    ---------      ---------
    Total Basic                    $      (.30) $       .79    $       .75
                                     ---------    ---------      ---------
    

    
      Diluted from continuing
       operations                  $      (.30) $       .78    $       .73
      Diluted from discontinued
       operations                  $         -  $         -    $         -
                                     ---------    ---------      ---------
    Total Diluted                  $      (.30) $       .78    $       .73
                                     ---------    ---------      ---------
    


    
    Weighted-average number
     of common shares
     outstanding: (4)
      Basic                            277,987      279,757        279,373
                                     ---------    ---------      ---------
      Diluted                          278,413      285,744        287,590
                                     ---------    ---------      ---------
    

    
    Adjusted income derived
     from operating
     activities (1) (2) (6)        $   115,337  $   307,927    $   365,318
                                     =========    =========      =========
    




    
                                                   Twelve Months Ended
                                                   -------------------
                                                       December 31,
                                                       ------------
    

    
    (In thousands, except per share amounts)          2008        2007
                                                 ---------   ---------
    Revenues and other income:
      Operating revenues                       $ 5,511,896 $ 4,938,848
      Earnings (losses) from unconsolidated
       affiliates (1)                             (229,834)     17,724
      Investment (loss) income                      21,726     (15,891)
                                                 ---------   ---------
          Total revenues and other income        5,303,788   4,940,681
                                                 ---------   ---------
    

    
    Costs and other deductions:
      Direct costs                               3,110,316   2,764,559
      General and administrative expenses          479,984     436,282
      Depreciation and amortization                611,066     467,730
      Depletion (2)                                 46,979      72,182
      Interest expense                              91,620      53,702
      Losses (gains) on sales, retirements and
       impairments of long-lived assets and
       other expense (income), net                   7,613      10,895
      Goodwill and intangible asset
       impairment (3)                              154,586           -
                                                 ---------   ---------
          Total costs and other deductions       4,502,164   3,805,350
                                                 ---------   ---------
    

    
    Income (loss) from continuing operations
     before income taxes                           801,624   1,135,331
                                                 ---------   ---------
    

    
    Income tax expense (benefit):
      Current                                      188,832     227,951
      Deferred                                      61,619      11,713
                                                 ---------   ---------
          Income tax expense                       250,451     239,664
                                                 ---------   ---------
    

    
    Income (loss) from continuing
     operations, net of tax                        551,173     895,667
    Income from discontinued
     operations, net of tax                              -      35,024
                                                 ---------   ---------
    Net income (loss) (5)                      $   551,173 $   930,691
                                                 ---------   ---------
    

    
    Earnings (losses) per share: (4) (5)
      Basic from continuing operations         $      1.98 $      3.21
      Basic from discontinued operations       $         - $       .13
                                                 ---------   ---------
    Total Basic                                $      1.98 $      3.34
                                                 ---------   ---------
    

    
      Diluted from continuing operations       $      1.93 $      3.13
      Diluted from discontinued operations     $         - $       .12
                                                 ---------   ---------
    Total Diluted                              $      1.93 $      3.25
                                                 ---------   ---------
    


    
    Weighted-average number
     of common shares outstanding: (4)
      Basic                                        278,166     279,026
                                                 ---------   ---------
      Diluted                                      285,285     286,606
                                                 ---------   ---------
    


    
    Adjusted income derived from operating
     activities (1) (2) (6)                    $ 1,033,717 $ 1,215,819
                                                 =========   =========
    

    
    (1) Includes $228.3 million, representing our proportionate share of
        non-cash pre-tax full cost ceiling test writedowns from our U.S.,
        international and Canadian joint ventures recorded during the three
        months ended December 31, 2008.
    

    
    (2) Includes non-cash pre-tax impairment charges of $21.5 million under
        application of the successful efforts method of accounting from our
        wholly owned Ramshorn business unit related to oil and gas
        properties recorded during the three months ended December 31,
        2008.
    

    
    (3) Represents non-cash pre-tax goodwill and intangible asset
        impairment charges recorded during the three months ended December
        31, 2008, all of which related to our Canadian business units.
    

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

    
    (5) Net income and earnings (losses) per share include $162.1
        million ($.58 per diluted share) and $152.6 million ($.55 per
        diluted share), respectively, related to non-cash impairments of
        oil and gas properties and goodwill and an intangible asset recorded
        during the three months ended December 31, 2008.
    

    
    (6) 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 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
        from continuing operations before income taxes, which is a GAAP
        measure, is provided within the  table set forth immediately
        following the heading "Segment Reporting".
    



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


    
                                     December 31, September 30, December 31,
    (In thousands, except ratios)       2008          2008         2007
                                    -----------   -----------  -----------
    ASSETS
    Current assets:
    Cash and short-term
     investments                   $    584,245  $    838,128 $    767,051
    Accounts receivable, net          1,160,768     1,161,426    1,039,238
    Other current assets                421,580       368,347      398,823
                                    -----------   -----------  -----------
         Total current assets         2,166,593     2,367,901    2,205,112
    Long-term investments and
     other receivables                  239,952       229,567      359,534
    Property, plant and
     equipment, net                   7,282,042     7,166,048    6,632,612
    Goodwill                            175,749       354,517      368,432
    Investment in
     unconsolidated affiliates          411,727       514,217      404,842
    Other long-term assets              191,919       143,527      132,850
                                    -----------   -----------  -----------
         Total assets              $ 10,467,982  $ 10,775,777 $ 10,103,382
                                    ===========   ===========  ===========
    

    
    LIABILITIES AND
     SHAREHOLDERS' EQUITY
    Current liabilities:
    Current portion of
     long-term debt                $    225,030  $    224,825 $    700,000
    Other current liabilities           903,829       867,253      794,132
                                    -----------   -----------  -----------
         Total current liabilities    1,128,859     1,092,078    1,494,132
    Long-term debt                    3,887,711     3,986,722    3,306,433
    Other long-term liabilities         759,293       700,363      788,696
                                    -----------   -----------  -----------
         Total liabilities            5,775,863     5,779,163    5,589,261
    Shareholders' equity              4,692,119     4,996,614    4,514,121
                                    -----------   -----------  -----------
         Total liabilities and
          shareholders' equity     $ 10,467,982  $ 10,775,777 $ 10,103,382
                                    ===========   ===========  ===========
    



    
    Cash, short-term and long-term
     investments (1)               $    826,063  $  1,073,784 $  1,179,639
    

    
    Funded debt to
     capital ratio: (2)
      - Gross                          0.44 : 1      0.44 : 1     0.44 : 1
      - Net of cash and
         investments                   0.39 : 1      0.37 : 1     0.36 : 1
    Interest coverage ratio: (3)       16.7 : 1      23.4 : 1     32.5 : 1
    

    
    (1) The December 31, 2008, September 30, 2008 and December 31, 2007
        amounts include $1.9 million, $6.1 million and $53.1 million,
        respectively, in cash proceeds receivable from brokers from the
        sale of certain investments that are included in other current
        assets and $224.2 million, $202.5 million and $123.3 million,
        respectively, in oil and gas financing receivables that are
        included in long-term investments and other receivables.
    

    
    (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.
    

    
    (3) The interest coverage ratio is a trailing twelve-month computation
        of the sum of income from continuing operations before income
        taxes, interest expense, depreciation and amortization, and
        depletion expense less investment income and then dividing by
        interest expense. This ratio is a method for calculating the amount
        of operating cash flows available to cover interest expense.  The
        interest coverage ratio from continuing operations 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.
    



    
                  NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                             SEGMENT REPORTING
                                (Unaudited)
    

    
    The following tables set forth certain information with respect to
     our reportable segments and rig activity:
    


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

    
    (In thousands, except rig
     activity)                         2008        2007           2008
                                   ----------  ----------     ----------
    Reportable segments:
    Operating revenues and
     Earnings (losses) from
     unconsolidated affiliates
     from continuing
     operations: (1)
       Contract Drilling: (2)
         U.S. Lower 48 Land
          Drilling                $   527,335 $   415,082    $   505,197
         U.S. Land Well-
          servicing                   201,118     170,416        204,029
         U.S. Offshore                 66,770      47,174         68,581
         Alaska                        46,264      37,023         38,496
         Canada                       130,726     144,233        125,335
         International                357,286     312,839        368,418
                                   ----------  ----------     ----------
           Subtotal Contract
            Drilling (3)            1,329,499   1,126,767      1,310,056
    

    
       Oil and Gas (4) (5)           (206,389)     85,311         29,532
       Other Operating Segments
        (6) (7)                       173,331     154,712        171,208
       Other reconciling
        items (8)                     (50,648)    (49,780)       (48,301)
                                   ----------  ----------     ----------
           Total                  $ 1,245,793 $ 1,317,010    $ 1,462,495
                                   ==========  ==========     ==========
    

    
    Adjusted income (loss)
     derived from
     operating activities
     from continuing
     operations: (1)
       Contract Drilling: (2)
        U.S. Lower 48 Land
         Drilling                 $   190,567 $   137,948    $   176,819
        U.S. Land Well-
         servicing                     44,339      30,491         42,433
        U.S. Offshore                  16,282       8,008         18,456
        Alaska                         11,195       8,388         10,159
        Canada                         19,997      24,990         13,396
        International                 104,225      92,282        111,048
                                   ----------  ----------     ----------
         Subtotal Contract
          Drilling (3)                386,605     302,107        372,311
    

    
       Oil and Gas (4) (5)           (239,107)     33,763         17,577
       Other Operating Segments
        (6) (7)                        18,757       6,643         18,375
       Other reconciling
        items (9)                     (50,918)    (34,586)       (42,945)
                                   ----------  ----------     ----------
         Total                        115,337     307,927        365,318
    Interest expense                  (26,329)    (13,467)       (25,506)
    Investment (loss) income           (7,278)     (7,862)       (22,235)
    (Losses) gains on sales,
     retirements and
     impairments of
     long-lived assets
     and other (expense)
     income, net                       14,517      (6,120)       (10,875)
    Goodwill and
     intangible asset
     impairment (10)                 (154,586)          -              -
                                   ----------  ----------     ----------
    Income (loss) from
     continuing operations
     before income taxes          $   (58,339)$   280,478    $   306,702
                                   ==========  ==========     ==========
    


    
    Rig activity:
    Rig years: (11)
      U.S. Lower 48 Land
      Drilling                          260.1       224.7          263.3
      U.S. Offshore                      17.9        14.0           19.2
      Alaska                             11.7         8.3           11.0
      Canada                             39.8        33.4           35.8
      International (12)                121.3       114.2          121.3
                                   ----------  ----------     ----------
         Total rig years                450.8       394.6          450.6
                                   ==========  ==========     ==========
    Rig hours: (13)
      U.S. Land Well-servicing        268,253     254,895        290,680
      Canada Well-servicing            61,497      71,677         67,141
                                   ----------  ----------     ----------
         Total rig hours              329,750     326,572        357,821
                                   ==========  ==========     ==========
    



    
                                            Twelve Months Ended
                                            -------------------
                                                December 31,
                                                ------------
    

    
    (In thousands, except rig activity)       2008        2007
                                           ---------   ---------
    

    
    Reportable segments:
    Operating revenues and
     Earnings (losses) from
     unconsolidated affiliates from
     continuing operations: (1)
       Contract Drilling: (2)
         U.S. Lower 48 Land Drilling     $ 1,878,441 $ 1,710,990
         U.S. Land Well-servicing            758,510     715,414
         U.S. Offshore                       252,529     212,160
         Alaska                              184,243     152,490
         Canada                              502,695     545,035
         International                     1,372,168   1,094,802
                                           ---------   ---------
           Subtotal Contract Drilling (3)  4,948,586   4,430,891
    

    
       Oil and Gas (4) (5)                  (151,465)    152,320
       Other Operating Segments (6) (7)      683,186     588,483
       Other reconciling items (8)          (198,245)   (215,122)
                                           ---------   ---------
           Total                         $ 5,282,062 $ 4,956,572
                                           =========   =========
    

    
    Adjusted income (loss) derived from
     operating activities from
     continuing operations: (1)
       Contract Drilling: (2)
         U.S. Lower 48 Land Drilling     $   628,579 $   596,302
         U.S. Land Well-servicing            148,626     156,243
         U.S. Offshore                        59,179      51,508
         Alaska                               52,603      37,394
         Canada                               61,040      87,046
         International                       407,675     332,283
                                           ---------   ---------
           Subtotal Contract Drilling (3)  1,357,702   1,260,776
    

    
       Oil and Gas (4) (5)                  (228,027)     56,133
       Other Operating Segments (6) (7)       68,572      35,273
       Other reconciling items (9)          (164,530)   (136,363)
                                           ---------   ---------
           Total                           1,033,717   1,215,819
    Interest expense                         (91,620)    (53,702)
    Investment (loss) income                  21,726     (15,891)
    (Losses) gains on sales, retirements
     and impairments of
     long-lived assets and other
     (expense) income, net                    (7,613)    (10,895)
    Goodwill and intangible asset
     impairment (10)                        (154,586)          -
                                           ---------   ---------
    Income (loss) from continuing
     operations before income taxes      $   801,624 $ 1,135,331
                                           =========   =========
    


    
    Rig activity:
    Rig years: (11)
      U.S. Lower 48 Land Drilling              247.9       229.4
      U.S. Offshore                             17.6        15.8
      Alaska                                    10.9         8.7
      Canada                                    35.5        36.7
      International (12)                       120.5       115.2
                                           ---------   ---------
           Total rig years                     432.4       405.8
                                           =========   =========
    Rig hours: (13)
      U.S. Land Well-servicing             1,090,511   1,119,497
      Canada Well-servicing                  248,032     283,471
                                           ---------   ---------
           Total rig hours                 1,338,543   1,402,968
                                           =========   =========
    

    
    (1)  All segment information excludes the Sea Mar business, which has
         been classified as a discontinued operation.
    

    
    (2)  These segments include our drilling, workover and well-servicing
         operations, on land and offshore.
    

    
    (3)  Includes earnings (losses), net, from unconsolidated affiliates,
         accounted for by the equity method, of ($3.9) million, ($.3)
         million and $.1 million for the three months ended December 31,
         2008 and 2007 and September 30, 2008, respectively, and $5.8
         million and $5.6 million for the years ended December 31, 2008 and
         2007, respectively.
    

    
    (4)  Represents our oil and gas exploration, development and production
         operations.  Includes $228.3 million, representing our
         proportionate share, of non-cash pre-tax full cost ceiling test
         writedowns from our U.S., international and Canadian joint ventures
         and non-cash pre-tax impairment charges of $21.5 million under
         application of the successful efforts method of accounting from our
         wholly owned Ramshorn business unit related to oil and gas
         properties.
    

    
    (5)  Includes earnings (losses), net, from unconsolidated affiliates,
         accounted for by the equity method, of ($223.8) million, ($1.1)
         million and $7.1  million for the three months ended December 31,
         2008 and 2007 and September 30, 2008, respectively, and ($241.4)
         million and ($3.9) million for the years ended December 31, 2008
         and 2007, respectively.
    

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

    
    (7)  Includes earnings (losses), net, from unconsolidated affiliates,
         accounted for by the equity method, of ($1.6) million, $.6 million
         and $.7 million for the three months ended December 31, 2008 and 2007
         and September 30, 2008, respectively, and $5.8 million and $16.0
         million for the years ended December 31, 2008 and 2007, respectively.
    

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

    
    (9)  Represents the elimination of inter-segment transactions and
         unallocated corporate expenses.
    

    
    (10) Represents non-cash pre-tax goodwill and intangible asset impairment
         charges recorded during the three months ended December 31, 2008, all
         of which related to our Canadian business units.
    

    
    (11) 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.
    

    
    (12) International rig years include our equivalent percentage ownership
         of rigs owned by unconsolidated affiliates which totaled 3.1 years,
         4.0 years and 3.3 years during the three months ended December 31,
         2008 and 2007 and September 30, 2008, respectively, and 3.5 years and
         4.0 years during the years ended December 31, 2008 and 2007,
         respectively.
    

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




    
                      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:
    


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

    
    (In thousands, except per share amounts)    2008      2007          2008
                                              --------   --------     --------
    

    
    Net income (loss) (numerator):
      Income (loss) from continuing
       operations, net of tax - basic        $ (83,993) $ 222,152    $ 210,299
      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)                    -          -            -
                                              --------   --------     --------
      Adjusted income (loss) from
       continuing operations,
       net of tax - diluted                    (83,993)   222,152      210,299
      Income from discontinued
       operations, net of tax                        -          -            -
                                              --------   --------    
--------Total adjusted net income (loss)         $ (83,993) $ 222,152    $
210,299
                                              --------   --------     --------
    

    
      Earnings (losses) per share:
        Basic from continuing operations     $    (.30) $     .79    $     .75
        Basic from discontinued operations   $       -  $       -    $       -
                                              --------   --------     --------
      Total Basic                            $    (.30) $     .79    $     .75
                                              --------   --------     --------
    

    
        Diluted from continuing operations   $    (.30) $     .78    $     .73
        Diluted from discontinued operations $       -  $       -    $       -
                                              --------   --------     --------
      Total Diluted                          $    (.30) $     .78    $     .73
                                              --------   --------     --------
    

    
    Shares (denominator):
      Weighted-average number of shares
       outstanding-basic (4)                   277,987   279,757       279,373
      Net effect of dilutive stock options,
       warrants and restricted
       stock awards based on the
       treasury stock method                       426     5,987         8,217
      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                   278,413    285,744      287,590
                                              --------   --------     --------
    




    
                                                 Twelve Months
                                                     Ended
                                                 -------------
                                                  December 31,
                                                  ------------
    

    
    (In thousands, except per share amounts)      2008     2007
                                               --------  --------
    

    
    Net income (loss) (numerator):
      Income (loss) from continuing
       operations, net of tax - basic         $ 551,173 $ 895,667
      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)                    -         -
                                               --------  --------
      Adjusted income (loss) from
       continuing operations,
       net of tax - diluted                     551,173   895,667
      Income from discontinued
       operations, net of tax                         -    35,024
                                               --------  --------
      Total adjusted net income (loss)        $ 551,173 $ 930,691
                                               --------  --------
    

    
      Earnings (losses) per share:
        Basic from continuing operations      $    1.98 $    3.21
        Basic from discontinued operations    $       - $     .13
                                               --------  --------
      Total Basic                             $    1.98 $    3.34
                                               --------  --------
    

    
        Diluted from continuing operations    $    1.93 $    3.13
        Diluted from discontinued operations  $       - $     .12
                                               --------  --------
      Total Diluted                           $    1.93 $    3.25
                                               --------  --------
    

    
    Shares (denominator):
      Weighted-average number of shares
       outstanding-basic (4)                    278,166   279,026
      Net effect of dilutive stock options,
       warrants and restricted
       stock awards based on the
       treasury stock method                      5,837     7,580
      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)                1,282         -
                                               --------  --------
      Weighted-average number of shares
       outstanding - diluted                    285,285   286,606
                                               --------  --------
    


    
    (1) Diluted earnings (losses) per share for the three months ended
        December 31, 2008 and 2007 and September 30, 2008 and the years
        ended December 31, 2008 and 2007 do not include any incremental
        shares issuable upon exchange of the $2.75 billion 0.94% senior
        exchangeable notes due 2011.  In October 2008, we purchased $100
        million par value of these notes in the open market, leaving $2.65
        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 the three months ended December 31, 2008 and 2007 and
        September 30, 2008 and the years ended December 31, 2008 and 2007.
    

    
    (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.
    

    
    (3) Diluted earnings per share for the year ended December 31, 2008
        reflect the conversion of the $700 million zero coupon senior
        exchangeable notes due 2023.  In May 2008 Nabors Delaware called
        for redemption all of its $700 million zero coupon senior
        exchangeable notes 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 December 31,
        2008 and 2007 and September 30, 2008 and for the year ended
        December 31, 2007 does not include any incremental shares issuable
        upon exchange of the $700 million zero coupon senior exchangeable
        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 the price of our shares exceeds
        $35.05 on the last trading day of the quarter, which did not occur
        on December 31, 2007.
    

    
    (4) Includes the following weighted-average number of common shares of
        Nabors and weighted-average number of exchangeable shares of Nabors
        (Canada) Exchangeco Inc., respectively: 277.9 million and .1
        million shares for the three months ended December 31, 2008; 279.7
        million and .1 million shares for the three months ended December
        31, 2007; 279.3 million and .1 million shares for the three months
        ended September 30, 2008; 278.1 million and .1 million shares for
        the year ended December 31, 2008; and 278.9 million and .1 million
        shares for the year ended December 31, 2007.  The exchangeable
        shares of Nabors Exchangeco are exchangeable for Nabors' common
        shares on a one-for-one basis, and have essentially identical
        rights as Nabors Industries Ltd. common shares, including but not
        limited to, voting rights and the right to receive dividends, if
        any.
    

    
    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. 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 20,044,584, 5,923,720
    and 2,528,478 during the three months ended December 31, 2008 and 2007
    and September 30, 2008, respectively, and 7,319,342 and 4,952,799
    shares during the years ended December 31, 2008 and 2007, 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 per share computation using the treasury stock method of
    accounting.  Restricted stock will similarly be included in our diluted
    earnings (losses) per share computation using the treasury stock method
    of accounting in any period where the amount of restricted stock
    exceeds the number of shares assumed repurchased in those periods based
    upon future unearned compensation.


    

    
                     NABORS INDUSTRIES LTD. AND SUBSIDIARIES
                      RECONCILIATION OF NON-GAAP ITEMS (1)
                                   (Unaudited)
    

    
                                                     December 31, 2008
                                                     -----------------
                                                Three months   Twelve months
    (In thousands, except per share amounts)        ended          ended
                                                ------------  --------------
    GAAP:
       Net Income (loss)                            $(83,993)       $551,173
                                                    --------        --------
       Earnings (losses) per diluted share             $(.30)          $1.93
                                                    --------        --------
    Non-GAAP non-cash adjustments:
       Goodwill and intangible asset
        impairment - Canadian business units        $154,586        $154,586
       Full cost ceiling test writedowns - oil
        and gas joint ventures                       228,252         228,252
       Impairment charges to oil and
        gas properties - wholly owned
        Ramshorn business unit                        21,537          21,537
                                                      ------          ------
           Total pre-tax adjustments                 404,375         404,375
    Tax benefit of non-GAAP adjustments               89,680          89,680
                                                    --------        --------
         Net income effect                          $314,695        $314,695
                                                    --------        --------
         Diluted Earnings (losses) per share
          effect                                       $1.13           $1.10
                                                    --------        --------
    

    
       Adjusted net income                          $230,702        $865,868
                                                    ========        ========
       Adjusted earnings per diluted share              $.83           $3.03
                                                    ========        ========
    

    
    (1)  Adjusted net income is computed by: adding the non-GAAP adjustments
         of our goodwill and intangible asset impairment charges, all related
         to our Canadian business units, full cost ceiling test writedowns
         from our U.S., international and Canadian oil and gas joint ventures
         and impairment charges to oil and gas properties from our wholly
         owned Ramshorn business unit and then subtracting the tax benefit
         related to these non-GAAP adjustments.  Such amounts should not be
         used as a substitute to those reported under GAAP.  We have provided
         a reconciliation of net income, as presented herein, to net income
         including the effect of these non-GAAP adjustments and diluted
         earnings (losses) per share, as presented herein.  The Company
         included these net income and diluted earnings (losses) per share
         amounts in the release even though these amounts exclude the
         incremental effect of the non-GAAP adjustments because Management
         believes these non-GAAP financial measures to be more indicative of
         the Company's ongoing operating results and financial condition.








    




For further information:

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

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Nabors Industries Ltd.

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