Nabors Posts Third Quarter Earnings Per Diluted Share Of $0.76

    HAMILTON, Bermuda, Oct. 23 /CNW/ -- Nabors Industries Ltd. (NYSE:   NBR)
today announced its results for the third quarter and nine months ended
September 30, 2007.  Adjusted income derived from operating activities was
$287.3 million for the third quarter compared to $368.2 million in the third
quarter of 2006 and $280.5 million in the second quarter of this year.  Net
income was $218.0 million ($0.76 per diluted share) for the third quarter
compared to $292.8 million ($1.02 per diluted share) in the third quarter of
2006 and $228.3 million ($0.79 per diluted share) in the second quarter of
this year.  The quarter's results include $22.3 million ($0.08 per diluted
share) in income from discontinued operations derived from the sale of our Sea
Mar unit, which was completed in early August.  Previous periods have been
adjusted to reflect Sea Mar as a discontinued operation.
    For the nine months ended September 30, 2007, adjusted income derived
from operating activities was $907.9 million compared to $1.07 billion in
2006. Net income for the first nine months of 2007 was $708.5 million ($2.47
per diluted share) compared to $782.9 million ($2.57 per diluted share) in the
first nine months of 2006.
    Gene Isenberg, Nabors' Chairman and CEO, commented, "Our third quarter
results reflect the persistent challenges in our North American gas centric
and U.S. Offshore operations, as well as our land well-servicing markets.  Our
International business again was impacted by timing and unusual cost issues
which masked the early stages of the powerful upside that is emerging. Various
other below the line income elements, including the gain on the sale of our
Sea Mar entity and a reduction in tax reserves, more than offset the after tax
impact of another net loss in investment income and a non-cash asset
impairment charge.
    Year-over-year quarterly results significantly improved in our
International, Oil and Gas, Alaskan and Other Operating Segments.  Other than
Alaska these units posted sequential improvements over those of the second
quarter, albeit most were below our previous expectations.  Canada also
improved over the seasonally low second quarter.  The largest sequential
decline came from our U.S. Lower 48 Land drilling operations, followed by our
U.S. Offshore and Alaskan units.
    The sequential improvement of our International operations does not yet
reflect the strong potential that we expect to realize over the next two
years.  Although it is the nature of this business to experience delays in the
short-term, we still expect an improvement of over 50% for the full year 2007
and again next year.  The high degree of visibility of this unit's long-term
potential emanates from the fact that nearly all of the 2008 increase is
expected to be derived from a combination of the renewal of a large number of
contracts at current market prices, and the realization of a full year's
contribution from the 26 incremental rigs commencing operations throughout
2007.  It should also be noted that while our growth expectations do not
reflect it, there is great potential for incremental rigs.
    Alaska also enjoys a strong but smaller oil driven outlook and is
characterized by occasional delays and interruptions, as evidenced by the
sequential decline in the quarter's results due to higher than usual summer
maintenance work and the seasonal stacking of one rig.   The results for the
quarter and the full year remain on track to increase substantially compared
to the prior year, with higher average rates and incremental rig activity late
in the year.  Additional upside exists over the longer term as more of our
fleet renews at market rates early in 2008 and we realize a full year's
contribution from two new built heli-portable rigs which are deploying late
this year.  Longer term results will benefit from the recent award of a
contract for a 15,000 ft. capacity coiled tubing drilling rig and will be
further improved if we are successful on recent bids for additional new
drilling rigs in this market.
    Our Other Operating Segments improved slightly despite the loss of
contribution following the sale of our marine transportation business early in
the quarter.  The improvement in this business resulted primarily from higher
third party sales in Canrig and solid performance by Ryan Energy Technologies,
our directional drilling operation.  Income from this segment should continue
to be upwardly biased but subject to seasonal fluctuations with improving
prospects in our Alaskan logistics and construction joint ventures and the
timing of top drive shipments.
    Our Oil and Gas operations posted improved results with the early quarter
sale of properties in the Fayetteville Shale, which resulted in a pre-tax gain
of approximately $15 million.  We also completed a larger sale of properties
in the Barnett Shale in early October, which will result in a pre-tax gain of
approximately $70 million which will be reflected in our fourth quarter
    The significantly reduced results in our US Lower 48 Land drilling
business stems from the sequential decline in average rig margins of $767 per
rig day and a decline of seven rigs to an average of 222 rigs operating.  We
deployed 16 new rigs in the third quarter but saw another 16 existing rigs
idled, bringing to 84 the total number of idle rigs at the end of the quarter.
We expect the next several quarters to show much more modest declines in
income despite the likelihood of an even more difficult industry environment
well into 2008.  This resiliency in our results is attributable to the
positive effects on our average margins and rig count exerted by the
deployment of 57 new rigs in 2007 and early 2008 at average margins that are
roughly 40% higher than this quarter's full fleet average margin.  These
effects coupled with diminishing costs limits further downside in this unit's
income, which is contrary to industry trends.
    Our Canadian operations rebounded sharply from the dismal second quarter
but remain at less than one-half of the level of income we achieved last year,
reflecting the ongoing weakness in this market.  We expect further improvement
in the fourth quarter with the onset of the winter activity ramp-up, leading
to a full year result that is also less than one-half the prior year.  The
outlook for 2008 is essentially the same with no visible reasons to expect a
recovery before the 2008-2009 winter drilling season.
    Our U.S. Well-servicing business experienced a 6% reduction in hours
worked compared to the second quarter, reflecting weaker market conditions
primarily in the lower price and more competitive markets such as West Texas.
Despite the lower hours, sequential income actually increased slightly but is
more than 20% below last year.  The increased income on reduced hours was due
to the number of our new 500 hp Millennium and 200 hp rigs deployed into
higher revenue markets and strong results in the trucking and fluid handling
portion of this business.
    We expect the fourth quarter to show a reduction in income as we enter
the seasonally slowest period of the year due to the holidays and short
daylight hours.  The possibility of further deterioration in this largely oil
driven business has been the most significant adverse surprise, leading us to
significantly reduce our 2008 expectations to essentially flat.
    Results in our U.S. Offshore operations were significantly below the
second quarter as softening gas prices and the threat of hurricanes led to
many project deferrals, especially for our jackup and barge rigs which
contribute meaningfully when working and incur significant costs when stacked
for short periods.  Income from our barge rigs was further dampened when we
experienced an engine room fire early in the quarter which will keep a rig out
of service until early next year.  We expect a much improved fourth quarter as
seven rigs have returned or will soon return to work.  Next year should
reflect a modest increase despite moderating jackup and barge rig pricing as
we achieve a full year's contribution from the two new barge rigs that
deployed in mid-year, one of which only worked two months as a result of the
aforementioned fire.
    In other income we experienced two losses and two gains, the net result
of which was a modest positive effect on net income.  We recorded a pre-tax
loss of $30.5 million primarily related to the non-cash reduction in the book
value of our non-marketed inventory of rigs and components across several
units.  We again incurred a net cash loss in our investment portfolio of
approximately $27.5 million, the majority of which occurred in August as the
debt markets experienced significant turmoil.  We have substantially reduced
the risk in this portion of our portfolio and continue to redeem fixed income
and high beta funds as fast as possible.
    Offsetting these losses were the gain on the sale of Sea Mar and a
reversal of certain tax reserves.  The Sea Mar sale closed in early August and
resulted in a pre-tax gain of $50 million.  This gain and the income from
operations during part of the quarter are included in the $0.08 in earnings
per share from discontinued operations.  Our historical results, including our
Other Operating Segments breakout, are restated to reflect the Sea Mar results
as discontinued operations.  The reduction in tax reserves amounted to $38
million and occurred as a result of certain issues which were resolved in our
    In summary, the quarter contained an inordinate number of moving parts,
with a series of short-term, negative developments obscuring the potential of
our businesses.  2007 earnings per share will likely be the second best in the
company's history, partly due to a lower effective tax rate and reduced share
count, and operating income should approximate last year's record level.  We
expect 2008 also to achieve near record results in spite of continuing and
significant weakness in our North American gas directed and US land well
servicing units.  These accomplishments are largely due to the strength of our
International operations and the limited downside in our U.S. Land Drilling
    The longer term outlook for our international business is even stronger
and we expect it to be the primary driver of our future growth.  We expect
this growth to compound with the eventual self-correction in our North
American gas and U.S. Well servicing businesses.  Nabors is in an excellent
position to capitalize on strengthening markets because of the strategic
investments we have made in new rig capacity over the last three years, which
have been substantially underwritten by long-term contracts yielding good
returns.  By mid-2008 our expanded fleet will have over 140 new state-of-the-
art drilling rigs and 200 new generation workover/well-servicing rigs.  This
gives Nabors the largest fleet of enhanced capability rigs and positions us to
achieve much higher returns in the future."
    The Nabors companies own and operate approximately 670 land drilling and
approximately 825 land workover and well-servicing rigs in North America.
Nabors' actively marketed offshore fleet consists of; 41 platform rigs, 14
jack-up units and 4 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

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, +1-441-292-1510,

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