Nabors' First Quarter EPS Equals $0.65 Before $75 million in Pre-tax Non-Cash Ceiling Test Adjustments



    HAMILTON, Bermuda, April 21 /CNW/ -- Nabors Industries Ltd. (NYSE:   NBR)
today reported its financial results for the first quarter of 2009.  The
Company's results were again impacted by a non-cash, pre-tax adjustment of $75
million related to the ceiling test applied to the value of the reserves of
one its oil and gas joint ventures using commodity prices on March 31, 2009. 
When these charges are excluded adjusted income derived from operating
activities was $274.1 million compared to $286.4 million in the first quarter
of last year and $364.2 million in the sequential quarter ended December 31,
2008.  Likewise, net income was $184.4 million or $0.65 per diluted share
compared to $212.0 million or $0.74 per diluted share in the first quarter of
last year, and $208.0 million or $0.73 per diluted share in the fourth quarter
of 2008, the latter also excluding a goodwill impairment in Canada. 
Similarly, Operating Revenues and Earnings from unconsolidated affiliates for
this quarter totaled $1.13 billion compared to $1.30 billion in the comparable
quarter of the prior year and $1.47 billion in the fourth quarter of 2008.
    

    
    Gene Isenberg, Nabors Chairman and CEO, commented, "Our first quarter
results were better than expected led by a strong International showing and
solid performance from Alaska, US Offshore and our Other Operating Segments. 
Our US Land business performed relatively well due to the high number of term
contracts covering not only our new PACE rigs, but also other premium rigs
which constitute two-thirds of our fleet.
    

    
    "The largest increase in year-over-year quarterly operating income came
from our International business which was up 14% to $103.0 million.  Our US
Offshore business was up $10.4 million, posting $16.8 million in the quarter. 
Our Other Operating Segments, our Alaska business and even our US Lower 48
land drilling unit all posted smaller but meaningful increases over their
respective prior year quarterly results.  Conversely, our Canadian operations
declined by nearly $29.0 million over the prior year and finished at $13.2
million, followed closely by US Well Servicing operations which declined to
$13.7 million from 2008 first quarter results of more than $30.0 million.
    

    
    "Our US Lower 48 land drilling business posted operating income of $129.2
million in the first quarter with 193 rigs employed.  Average margins were
$11,200 per rig day, or $9,725 excluding that portion of the lump-sum payments
that would have been earned in future quarters.  Today the number of rigs
employed is 137, including 31 rigs which are not currently crewed or working
but are receiving revenue.  During the first quarter we recognized $31.3
million in lump-sum contract settlements and we anticipate to recognize
another $11.5 million in the second quarter, including approximately $5.4
million in income that would have been earned in each quarter of 2009 anyway. 
In addition, for a number of rigs, we are receiving daily standby payments or
lump-sum early contract termination payments which are being amortized over
the original duration of the contracts.  In the aggregate, these amount to
approximately $70 million with $48 million allocated to 2009.  Meanwhile our
market positions remain strong, especially in the most active areas such as
the Haynesville Shale where Nabors enjoys the dominant position with an
average of 35 rigs operating during the first quarter.  The decline in our rig
count is slowing and we are optimistic we will see it stabilize in the near
future.
    

    
    "Our International business continues to anticipate more than a 20%
increase in year-over-year income with the only weakness confined to lower
contributing markets and asset classes.  These are more than offset by
deployments of incremental higher specification rigs during the year.  In
January one of our new offshore rigs commenced operations on a high-profile
project in the Congo.  We expect to start up three more rigs in the second
quarter followed by another three in the second half, with potential for
several more in 2009 pending the outcome of current discussions.  We have
recently seen significant decreases in activity in some areas, most notably
Argentina and Colombia.   However, these are having minimal effect since our
margins in the Latin American markets are significantly lower than in other
areas, particularly Argentina where operations primarily consist of workover
and small drilling rigs.  This is reflected in the quarter's lower rig count
and the corresponding sizeable increase in average per rig day margins.  These
higher average margins in the face of a flat rig count will generally
characterize this unit's performance for the balance of the year.
    

    
    "As indicated, our US Well Servicing unit has experienced a large
decrease in quarterly income primarily attributable to a more than 30%
decrease in rig hours and a rapidly deteriorating pricing environment.  While
rig hours are beginning to show signs of stabilization, rig rates continue to
decrease, most notably in the Mid Continent area and the West and South Texas
regions.  This has tempered our outlook for the full year, although the impact
on Nabors should be muted by our performance in less susceptible markets.
    

    
    "Our US Offshore operations are faring relatively well at more than
double last year's first quarter results.  Significantly weaker activity among
our barge and SuperSundowner platform rigs is essentially offset by ongoing
high utilization of our MASE and MODS platform drilling rigs, which has
recently been augmented by the January deployment of newly constructed MODS
Rig 202 on a term contract.  We currently expect the full year to be
essentially flat to the prior year.
    

    
    "The outlook in Canada continues to deteriorate as this unit posted a
very weak first quarter during the period that historically accounts for 40%
of the year's income.  Our Canadian management team is taking aggressive steps
to reduce costs while preserving our ability to react to the inevitable
recovery.  The emergence of the British Columbia shales is shifting the rig
market in Canada in favor of Nabors.  This development along with our
strategic customer alliances puts us in a position to recover quickly when
this market corrects.
    

    
    "Alaska posted its best quarter ever but the full year outlook has been
muted by weakening market conditions and now appears flat.  This dampened
outlook results from the winding down of a very busy winter exploration season
and the prospective release of one of our core rigs and several other
competitive rigs.  A full year's contributions from two rigs which deployed in
2008 and the current start-up of our new state-of-the-art coiled tubing / stem
drilling rig should offset these losses in activity and pricing.
    

    
    "Our Other Operating Segments posted its best quarter ever on seasonally
high and record contributions from our Peak Oilfield Services joint venture. 
The outlook for the balance of the year is lower with slowing activity in our
Canrig and directional drilling businesses and seasonally lower contributions
from our Alaskan joint ventures.  New products in Canrig and essentially flat
results in our Alaskan joint ventures will limit the downside.
    

    
    "As previously noted our Oil and Gas Operations again incurred a
significant non-cash impairment in the value of reserves related to the
ceiling test.  The impairment amounted to $75 million in the first quarter
based upon a quarter ending gas price of $3.59 per MCF.  Despite these
impairments the long-term potential of this business is very good given the
portfolio of properties it has in multiple producing and rapidly emerging
areas.  We also continue to pursue attractive investment opportunities.
    

    
    "Our financial position is strong and we took additional steps during the
quarter to assure that it remains healthy should our markets deteriorate
further than we expect.  On January 7, 2009 we placed $1.125 billion in
10-year Senior Unsecured Notes due 2019 at a rate of 9.25%.  A sizeable
portion of these funds was used to affect open market purchases of our shorter
term debt.  To date we have purchased $771 million face value of our 0.94%
convertible notes due May 2011 at a weighted average price of $85.55, and $57
million of our 4-7/8% notes due August 2009.  We continue to aggressively
reduce both operating and capital expenditures and anticipate free cash flow
to increase as the year progresses.  Our cash and investments stood at $1.4
billion at the end of the quarter and are currently projected to be higher by
year end assuming no additional debt purchases.
    

    
    "There are increasing signs that our business may well be bottoming out
in the seasonally low second quarter, but the timing of the inevitable
recovery remains difficult to predict.  The strength of our International
business and our smaller Alaskan and US Offshore operations should serve to
mitigate the loss of income from our US and Canadian drilling and well
servicing operations.  Our investments in new and upgraded rigs over the last
four years have substantially been returned through term contracts in force in
our US land drilling unit.  These rigs should support our results through 2010
and will enhance our leverage when market conditions improve."
    

    
    The Nabors companies own and operate approximately 534 land drilling and
approximately 763 land workover and well-servicing rigs in North America. 
Nabors' actively marketed offshore fleet consists of; 39 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
                                       ------------------------------------
                                              March 31,        December 31,
                                       ----------------------  ------------
    

    
    (In thousands, except per share
     amounts)                             2009        2008          2008
                                       ----------  ----------    ----------
    

    
    Revenues and other income:
       Operating revenues              $1,198,045  $1,299,858    $1,475,076
       Earnings (losses) from
        unconsolidated affiliates (1)     (64,427)     (4,451)     (229,283)
       Investment (loss) income             9,141      26,182        (7,278)
                                       ----------  ----------    ----------
          Total revenues and other
           income                       1,142,759   1,321,589     1,238,515
                                       ----------  ----------    ----------
    

    
    Costs and other deductions:
       Direct costs                       665,287     747,770       816,835
       General and administrative
        expenses                          107,343     111,321       129,101
       Depreciation and amortization      159,152     136,200       167,156
       Depletion (2)                        2,753      13,685        18,295
       Interest expense                    67,078      46,692        50,105
       Losses (gains) on sales,
        retirements and impairments of
        long-lived assets and other
        expense (income), net             (17,297)      8,097        (3,176)
       Goodwill and intangible asset
        impairment (3)                          -           -       154,586
                                       ----------  ----------    ----------
         Total costs and other
          deductions                      984,316   1,063,765     1,332,902
                                       ----------   ---------    ----------
    

    
    Income (loss) before income taxes     158,443     257,824       (94,387)
                                       ----------  ----------    ----------
    

    
    Income tax expense (benefit):
       Current                             13,468      99,293       (33,721)
       Deferred                            19,805     (53,513)       46,037
                                       ----------  ----------    ----------
         Income tax expense               33,273      45,780        12,316
                                       ----------  ----------    ----------
    

    
                                       ----------  ----------    ----------
    Net income (loss) (5)              $  125,170  $  212,044    $ (106,703)
                                       ----------  ----------    ----------
    

    
    Earnings (losses) per share:(4)(5)
       Basic                           $      .44  $      .76    $     (.38)
       Diluted                         $      .44  $      .74    $     (.38)
    


    
    Weighted-average number
     of common shares outstanding:(4)
       Basic                              283,098     280,166       283,081
                                       ----------  ----------    ----------
       Diluted                            283,119     285,780       283,081
                                       ----------  ----------    ----------
    


    
    Adjusted income derived from
     operating activities (1)(2)(6)    $  199,083  $  286,431    $  114,406
                                       ==========  ==========    ==========
    


    
    (1) Includes ($75.0) million and ($228.3) million, representing our
        proportionate share of non-cash pre-tax full cost ceiling test
        writedowns from our oil and gas joint ventures recorded during the
        three months ended March 31, 2009 and December 31, 2008,
        respectively.
    

    
    (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 ($59.3) million
        (($.21) per diluted share) related to non-cash impairments of oil
        and gas properties recorded during the three months ended March 31,
        2009 and ($162.1) million (($.57) per diluted share) and ($152.6)
        million (($.54) 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 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)
    


    
                                                     March 31,   December 31,
    (In thousands, except ratios)                       2009         2008
                                                    -----------  -----------
    

    
    ASSETS
    Current assets:
    Cash and short-term investments                 $ 1,108,588  $   584,245
    Accounts receivable, net                            975,797    1,160,768
    Other current assets                                395,462      421,580
                                                    -----------  -----------
         Total current assets                         2,479,847    2,166,593
    Long-term investments and other receivables         254,714      239,952
    Property, plant and equipment, net                7,488,679    7,331,959
    Goodwill                                            174,806      175,749
    Investment in unconsolidated affiliates             405,393      411,727
    Other long-term assets                              191,052      191,919
                                                    -----------  -----------
         Total assets                               $10,994,491  $10,517,899
                                                    ===========  ===========
    

    
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
    Current portion of long-term debt               $   168,682  $   225,030
    Other current liabilities                           780,323      903,829
                                                    -----------  -----------
         Total current liabilities                      949,005    1,128,859
    Long-term debt                                    4,158,331    3,600,533
    Other long-term liabilities                         873,959      884,401
                                                    -----------  -----------
         Total liabilities                            5,981,295    5,613,793
    Shareholders' equity                              5,013,196    4,904,106
                                                    -----------  -----------
         Total liabilities and shareholders' equity $10,994,491  $10,517,899
                                                    ===========  ===========
    



    
    Cash, short-term and long-term investments (1)  $ 1,363,302  $   826,063
    

    
    Funded debt to capital ratio: (2)
        - Gross                                        0.44 : 1     0.41 : 1
        - Net of cash and investments                  0.35 : 1     0.35 : 1
    Interest coverage ratio: (3)                       15.7 : 1     20.7 : 1
    

    
    (1) The March 31, 2009 and December 31, 2008 amounts include $0 and $1.9
        million, respectively, in cash proceeds receivable from brokers from
        the sale of certain investments that are included in other current
        assets and $240.3 million and $224.2 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 before income taxes, interest expense,
        depreciation and amortization, depletion expense, goodwill and
        intangible asset impairments and our proportionate share of non-cash
        pre-tax full cost ceiling writedowns from our oil and gas joint
        ventures less investment income and then dividing by cash interest
        expense. This ratio is a method for calculating the amount of
        operating cash flows available to cover cash interest expense.  The
        interest coverage ratio is not a measure of operating performance or
        liquidity defined by accounting principles generally accepted in the
        United States of America and may not be comparable to similarly
        titled measures presented by other companies.
    



    
                    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
                                      ------------------------------------
                                             March 31,        December 31,
                                      ----------------------  ------------
    

    
    (In thousands, except rig
     activity)                           2009        2008          2008
                                      ----------  ----------    ----------
    

    
    Reportable segments:
    Operating revenues and Earnings
     (losses) from
     unconsolidated affiliates:
       Contract Drilling: (1)
         U.S. Lower 48 Land
          Drilling                    $  389,879  $  407,061    $  527,335
         U.S. Land Well-servicing        134,362     171,141       201,118
         U.S. Offshore                    60,392      51,455        66,770
         Alaska                           62,782      54,369        46,264
         Canada                          112,145     178,852       130,726
         International                   342,656     303,572       357,286
                                      ----------  ----------    ----------
          Subtotal Contract Drilling
           (2)                         1,102,216   1,166,450     1,329,499
    

    
       Oil and Gas (3) (4)               (60,044)     14,040      (206,389)
       Other Operating Segments
        (5) (6)                          156,917     165,782       173,331
       Other reconciling items (7)       (65,471)    (50,865)      (50,648)
                                      ----------  ----------    ----------
         Total                        $1,133,618  $1,295,407    $1,245,793
                                      ==========  ==========    ==========
    

    
    Adjusted income (loss) derived
     from operating activities:
       Contract Drilling: (1)
         U.S. Lower 48 Land
          Drilling                    $  129,242  $  126,871    $  190,567
         U.S. Land Well-servicing         13,658      30,386        44,339
         U.S. Offshore                    16,830       6,458        16,282
         Alaska                           20,825      17,783        11,195
         Canada                           13,175      41,973        19,997
         International                   102,975      90,650       104,225
                                      ----------  ----------    ----------
          Subtotal Contract Drilling
            (2)                          296,705     314,121       386,605
    

    
       Oil and Gas (3) (4)               (71,334)     (4,852)     (239,107)
       Other Operating Segments
        (5) (6)                           19,104      12,434        18,757
       Other reconciling items (8)       (45,392)    (35,272)      (51,849)
                                      ----------  ----------    ----------
         Total                           199,083     286,431       114,406
    Interest expense                     (67,078)    (46,692)      (50,105)
    Investment (loss) income               9,141      26,182        (7,278)
    (Losses) gains on sales,
     retirements and impairments of
     long-lived assets and other
     (expense) income, net                17,297      (8,097)        3,176
    Goodwill and intangible asset
     impairment (9)                            -           -      (154,586)
                                      ----------  ----------    ----------
    Income (loss) before income taxes $  158,443  $  257,824    $  (94,387)
                                      ==========  ==========    ==========
    


    
    Rig activity:
    Rig years: (10)
       U.S. Lower 48 Land Drilling         192.8       225.7         260.1
       U.S. Offshore                        15.3        16.1          17.9
       Alaska                               11.9        10.6          11.7
       Canada                               34.4        49.4          39.8
       International (11)                  114.0       117.8         121.3
                                      ----------  ----------    ----------
         Total rig years                   368.4       419.6         450.8
                                      ==========  ==========    ==========
    Rig hours: (12)
       U.S. Land Well-servicing          179,567     259,477       268,253
       Canada Well-servicing              50,224      79,137        61,497
                                      ----------  ----------    ----------
         Total rig hours                 229,791     338,614       329,750
                                      ==========  ==========    ==========
    

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

    
    (2) Includes earnings (losses), net, from unconsolidated affiliates,
        accounted for by the equity method, of $1.3 million, $6.8 million and
        ($3.9) million for the three months ended March 31, 2009 and 2008
        and December 31, 2008, respectively.
    

    
    (3) Represents our oil and gas exploration, development and production
        operations.  Includes ($75.0) million and ($228.3) million,
        representing our proportionate share of non-cash pre-tax full cost
        ceiling test writedowns from our joint ventures for the three months
        ended March 31, 2009 and December 31, 2008, respectively, 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
        for the three months ended December 31, 2008.
    

    
    (4) Includes earnings (losses), net, from unconsolidated affiliates,
        accounted for by the equity method, of ($72.2) million, ($17.9)
        million and ($223.8) million for the three months ended March 31,
        2009 and 2008 and December 31, 2008, respectively.
    

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

    
    (6) Includes earnings (losses), net, from unconsolidated affiliates,
        accounted for by the equity method, of $6.5 million, $6.7 million and
        ($1.6) million, for the three months ended March 31, 2009 and 2008
        and December 31, 2008, respectively.
    

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

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

    
    (9) 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.
    

    
    (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.
    

    
    (11) International rig years include our equivalent percentage ownership
         of rigs owned by unconsolidated affiliates which totaled 2.8 years,
         4.0 years and 3.1 years, during the three months ended March 31, 2009
         and 2008 and December 31, 2008, respectively.
    

    
    (12) 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
                                                   ------------------
                                               March 31,        December 31,
                                          ------------------    ------------
    

    
    (In thousands, except per share
     amounts)                               2009       2008           2008
                                          --------   --------      ---------
    

    
    Net income (loss) (numerator):
    Net income (loss) - basic             $125,170   $212,044      $(106,703)
       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 net income (loss) - diluted  $125,170   $212,044      $(106,703)
                                          --------   --------      ---------
    

    
       Earnings (losses) per share:
                                          --------   --------      ---------
         Basic                            $    .44   $    .76      $    (.38)
                                          --------   --------      ---------
         Diluted                          $    .44   $    .74      $    (.38)
                                          --------   --------      ---------
    

    
    Shares (denominator):
       Weighted-average number of shares
        outstanding-basic (4)              283,098    280,166        283,081
       Net effect of dilutive stock
        options, warrants and restricted
        stock awards based on the if
        converted method                        21      5,614              -
       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              283,119    285,780        283,081
                                          --------   --------      ---------
    

    
    (1) Diluted earnings (losses) per share for the three months ended March
        31, 2009 and 2008 and December 31, 2008 do not include any
        incremental shares issuable upon exchange of the $2.75 billion 0.94%
        senior exchangeable notes due 2011.  During 2008 and the three months
        ended March 31, 2009, we purchased $760.6 million par value of these
        notes in the open market, leaving $2.0 billion par value outstanding.
        The number of shares that we would be required to issue upon exchange
        consists of only the incremental shares that would be issued above
        the principal amount of the notes, as we are required to pay cash up
        to the principal amount of the notes exchanged. We would only issue
        an incremental number of shares upon exchange of these notes.  Such
        shares are only included in the calculation of the weighted-average
        number of shares outstanding in our diluted earnings per share
        calculation, when our stock price exceeds $45.83 as of the last
        trading day of the quarter and the average price of our shares for
        the ten consecutive trading days beginning on the third business day
        after the last trading day of the quarter exceeds $45.83, which did
        not occur during any period for the three months ended March 31, 2009
        and 2008 and December 31, 2008.
    

    
    (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) In May 2008 Nabors Delaware called for redemption all of its $700
        million zero coupon senior exchangeable notes due 2023 and in June
        and July 2008 issued an aggregate 5.25 million common shares which
        equated to the excess of the exchange value of the notes over their
        principal amount, as cash was required up to the principal amount of
        the notes exchanged.  Diluted earnings per share for the three months
        ended March 31, 2008 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 March 31,
        2008.
    

    
    (4) Includes the following weighted-average number of common shares and
        restricted stock of Nabors and weighted-average number of
        exchangeable shares of Nabors (Canada) Exchangeco Inc., respectively:
        283.0 million and .1 million shares for the three months ended March
        31, 2009; 280.1 million and .1 million shares for the three months
        ended March 31, 2008; and 283.0 million and .1 million shares for the
        three months ended December 31, 2008.  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
    and such options and warrants are not considered participating securities.
    The average number of options and warrants that were excluded from diluted
    earnings (losses) per share that would potentially dilute earnings
    (losses) per share in the future were 31,023,161 shares during the three
    months ended March 31, 2009; 5,433,755 shares during the three months
    ended March 31, 2008; and 20,830,947 shares during the three months ended
    December 31, 2008.  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 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.
    



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

    
                                                          Three Months Ended
                                                       ----------------------
    

    
                                                       March 31,  December 31,
    (In thousands, except per share amounts)              2009        2008
                                                        --------    ---------
    

    
    GAAP:
       Net Income (loss)                                $125,170    $(106,703)
                                                        --------    ---------
       Earnings (losses) per diluted share              $    .44    $    (.38)
                                                        --------    ---------
    

    
    Non-GAAP non-cash adjustments:
       Goodwill and intangible asset impairment -
        Canadian business                               $      -    $ 154,586
        units
       Full cost ceiling test writedowns - oil and gas
        joint ventures                                    75,000      228,252
       Impairment charges to oil and gas
        properties - wholly owned Ramshorn
        business unit                                          -       21,537
                                                        --------    ---------
           Total pre-tax adjustments                      75,000      404,375
    Tax benefit of non-GAAP adjustments                   15,750       89,680
                                                        --------    ---------
         Net income effect                              $ 59,250    $ 314,695
                                                        --------    ---------
         Diluted Earnings (losses) per share effect     $    .21    $    1.11
                                                        --------    ---------
    

    
       Adjusted net income                              $184,420    $ 207,992
                                                        ========    =========
       Adjusted earnings per diluted share              $    .65    $     .73
                                                        ========    =========
    

    
    (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 Investors,
+1-441-292-1510, mark.andrews@nabors.com

Organization Profile

Nabors Industries Ltd.

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