<PAGE>   1

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             ----------------------

                                    FORM 10-K
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000         COMMISSION FILE NO. 1-9245

                             ----------------------

                            NABORS INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                        <C>
                       DELAWARE                                                           93-0711613
               (State of incorporation)                                    (I.R.S. Employer Identification No.)

           515 WEST GREENS ROAD, SUITE 1200
                    HOUSTON, TEXAS                                                          77067
       (Address of principal executive offices)                                           (Zip Code)
</TABLE>

                                 (281) 874-0035
              (Registrant's telephone number, including area code)


           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<S>                                                                               <C>
                                                                                          Name of each
            Title of each class                                                   exchange on which registered

         COMMON STOCK, $.10 PAR VALUE PER SHARE                                  AMERICAN STOCK EXCHANGE, INC.
</TABLE>

Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

                                 YES [X]  NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained in this Form 10-K, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value on March 27, 2001 of voting stock held by
non-affiliates of the registrant was approximately $7,320.3 million.

The number of shares of common stock, par value $.10 per share, outstanding as
of March 27, 2001 was 146,810,020.

                       DOCUMENTS INCORPORATED BY REFERENCE
                        (TO THE EXTENT INDICATED HEREIN)

Specified portions of the 2000 Annual Report to Stockholders  (Parts I, II
and IV)
Specified portions of the 2001 Notice of Annual Meeting of Stockholders and
Proxy Statement  (Part III)

================================================================================


<PAGE>   2
                           FORWARD-LOOKING STATEMENTS

The statements in this document and the documents incorporated by reference that
relate to matters that are not historical facts are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. When used in this document and the
documents incorporated by reference, words such as "anticipate," "believe,"
"expect," "plan," "intend," "estimate," "project," "will," "could," "may,"
"predict" and similar expressions are intended to identify forward-looking
statements. Further events and actual results may differ materially from the
results set forth in or implied in the forward-looking statements. Factors that
might cause such a difference include:

     o    fluctuations in worldwide prices and demand for natural gas and crude
          oil;

     o    fluctuations in level of natural gas and crude oil exploration and
          development activities;

     o    fluctuations in the demand for our services;

     o    the existence of competitors, technological changes and developments
          in the oilfield services industry;

     o    the existence of operating risks inherent in the oilfield services
          industry;

     o    the existence of regulatory uncertainties, the possibility of
          political instability in any of the countries in which we do business;
          and

     o    general economic conditions, in addition to the other matters
          discussed under "Part II - Item 7 - Management's Discussion and
          Analysis of Financial Condition and Results of Operations."

                                     PART I

ITEM 1.  BUSINESS

Nabors is the largest land drilling contractor in the world, with over 500 land
drilling rigs as of March 29, 2001. Nabors conducts oil, gas and geothermal land
drilling operations in the US lower 48 states, Alaska and Canada, and
internationally, primarily in South and Central America and the Middle East.
Nabors also is one of the largest land well-servicing and workover contractors
in the United States. We own and operate approximately 740 land workover and
well-servicing rigs, in the southwestern and western United States, and
approximately 40 well-servicing and workover rigs in certain international
markets. Nabors also is a leading provider of offshore platform workover and
drilling rigs. Nabors markets 43 platform, 13 jackup and three barge rigs in the
Gulf of Mexico and international markets. These rigs provide well-servicing,
workover and drilling services. We own and operate 20 of these rigs through
international joint ventures in Saudi Arabia and Oman.

To further supplement our primary business, we offer a number of ancillary
well-site services, including oilfield management, engineering, transportation,
construction, maintenance, well logging and other support services, in selected
domestic and international markets. Our land transportation and hauling fleet
includes approximately 240 rig and oilfield equipment hauling tractor-trailers
and a number of cranes, loaders and light-duty vehicles. We also maintain over
300 fluid hauling trucks, approximately 950 fluid storage tanks, 12 salt water
disposal wells and other auxiliary equipment used in domestic drilling and
well-servicing operations. In addition, we market a fleet of 30 marine
transportation and support vessels in the Gulf of Mexico that provides
transportation of drilling materials, supplies and crews for offshore rig
operations and support for other offshore operations. And we manufacture and
lease or sell top drives for a broad range of drilling rig applications, rig
instrumentation and data collection equipment, and rig reporting software.

Nabors' principal executive offices are located at 515 West Greens Road, Suite
1200, Houston, Texas 77067. Our phone number is (281) 874-0035.

BUSINESS STRATEGY

Since 1987, with the installation of the current management team, Nabors has
adhered to a consistent strategy aimed at positioning our company to grow and
prosper in good times and to mitigate adverse effects during periods of poor
market conditions. We also have strived to attain a financial posture that would
allow us to capitalize on market weakness by adding to our business base,
thereby enhancing our upside potential at reasonable costs. The principal
elements of our strategy have been to:

     o    Establish and maintain a conservative and flexible balance sheet.

     o    Build a base of low-cost, premium assets.

     o    Build and maintain low operating costs through economies of scale.


                                       2
<PAGE>   3
     o    Develop and maintain long-term, mutually attractive, relationships
          with key vendors.

     o    Build a diverse business in long-term, sustainable and worthwhile
          geographic markets.

     o    Recognize and seize opportunities as they arise.

     o    Continually improve safety, quality and efficiency.

     o    Implement leading edge technology where cost-effective to do so.

MAJOR DEVELOPMENTS

Our business strategy is designed to allow us to grow and remain profitable in
any market environment. Once again, the major developments in our business in
the past year illustrate our implementation of this strategy and its continuing
success.

NABORS' BUSINESS

During 2000, we concentrated on growing our business and putting a substantial
number of rigs to work in the face of increasing customer demand, particularly
in the US lower 48 states. Industry market environment improvements,
coupled with the addition of the Bayard Drilling Technologies, Inc. and Pool
Energy Services Co. operations acquired in 1999, resulted in increased revenues
in all of our operations. We also continued our emphasis on training, safety and
quality performance, particularly with the significant increase in our employee
base as a result of increased rig activity. And, during 2000 and early 2001 we
took advantage of financial conditions and our strong balance sheet by
completing two convertible debt transactions at low rates that significantly
increased our available cash, and significantly lowered our cost of capital. In
addition, we devoted our efforts towards assimilating the operations acquired at
the end of 1999 from Pool.

Operating results. Operating revenues and earnings from unconsolidated
affiliates for our contract drilling segment totaled $1.3 billion and income
derived from operating activities totaled $204.5 million during 2000,
representing increases of 109% and 189%, respectively, compared to the prior
year. Utilization rates for Nabors' rigs increased from 31% during 1999 to 46%
during 2000. Equivalent rig years increased to 253.7 years during 2000 from an
average of 149.5 years during the prior year. We also had 430 domestic land
workover/well-servicing rigs under contract at December 31, 2000, compared with
390 at December 31, 1999, an increase of 9%. Most of our contract drilling
operations recorded higher revenues in 2000 compared to 1999, as a result of
increased drilling and workover activity and higher average dayrates due to
higher oil and natural gas prices and the addition of the Pool rigs acquired on
November 24, 1999.

Utilization rates and equivalent rig years are measures of demand for rigs
commonly used in the drilling industry. Utilization rates from period to period
may not be comparable as a measure of activity levels, because the calculation
of utilization does not reflect the impact of changes in the number of rigs
owned during the periods. Equivalent rig years (calculated as the number of days
rigs are in operation divided by the number of days in the period) measure the
operating volume of Nabors' rigs. These figures exclude labor contracts, land
well-servicing rigs and rigs owned by our joint ventures.

Manufacturing and logistics operating revenues and earnings from unconsolidated
affiliates were $167.1 million during 2000, as compared to $49.2 million during
1999, a 239% increase. Income derived from operating activities increased to
$41.1 million compared to $2.8 million in the prior year. Increases in this
segment resulted from increased top drive sales and a strong construction season
on the North Slope of Alaska by our joint venture construction entity. The
inclusion of our US lower 48 trucking operations which became 100% owned by
Nabors in November 1999, and our supply vessel operation acquired as part of the
Pool transaction also contributed to the increases. Equivalent supply vessel
years were 21.1 years during 2000.

The portion of our operating revenues and earnings from unconsolidated
affiliates generated by our contract drilling segment has been consistent for
the last three full fiscal years, accounting for approximately 93% of total
operating revenues and earnings from unconsolidated affiliates, and the
remainder of our revenues also has been consistently accounted for by our
manufacturing and logistics segment. Operating revenues in the manufacturing and
logistics segment include revenues from sales to other Nabors companies.

Additional information regarding our financial condition and results can be
found on pages 56 through 65 of the 2000 Annual Report, under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations".


                                       3
<PAGE>   4

Safety. While we have always focussed on the safety of our personnel and the
quality of our work and work force, we have increased our efforts in recent
years. Each of our principal operating units has had or is under going a safety
audit by an outside consultant, commencing with our US lower 48 drilling
operation in 1997. We used the findings of these audits to implement changes in
our safety program that have resulted in fewer lost time accidents and OSHA
recordables for our workforce. At the end of 2000, Nabors' US lower 48 drilling
operations had an OSHA recordable incident rate of 4.27, compared to the
December 1999 rate of 4.4. This reduction came at a time when we had increased
rig personnel substantially. Our US lower 48 well-servicing unit also improved
its OSHA recordable incident rate from 4.29 to 4.19 in 2000, in the face of an
18% increase in total man-hours worked. In Alaska and Canada, we continued to
meet high safety standards, and have received a number of industry recognitions
for our safety performance. In addition, we have implemented training schools
and programs at several of our operations to address the need for qualified rig
hands, and to ensure that experienced crews continue to give safety the highest
priority.

Financings. We completed several financing transactions that further enhanced
our capital structure and financial flexibility during 2000 and early 2001. In
June, we raised approximately $500 million through the placement of $825,000,000
principal amount at maturity of zero coupon convertible senior debentures due
2020. The issue price was $608.41 for each $1,000 in face value, representing a
yield-to-maturity of 2.5%. The conversion provision is at a fixed ratio of
10.738 shares per $1,000 face value, subject to adjustment in certain
circumstances. The debentures can be put to Nabors on June 20, 2003, June 20,
2008 and June 20, 2013 at the issue price plus the then accrued original issue
discount and can be paid in cash or stock at Nabors' option. The bonds are
callable by Nabors any time after June 20, 2003 of the issue at the issue price
plus accrued original issue discount. The accreted value of the debentures on
June 20, 2003, when they can first be put by the holder or called by us, will be
$655.50. At this accreted value, the implied break-even price, without regard to
taxes or transaction costs, would be $61.04. Nabors registered for resale the
debentures and the common stock issuable upon conversion or repurchase of the
debentures in September 2000.

In February 2001, we issued an aggregate of $1,151,000,000 principal amount at
maturity of zero coupon convertible senior debentures due 2021. The sale was
subject to an option for the initial purchaser to acquire an additional
$230,200,000 in debentures, which was exercised in March 2001. Total proceeds to
Nabors from these issuances were approximately $828.0 million. The issue price
was $608.41 for each $1,000 in face value, representing a yield-to-maturity of
2.5%. The debentures due 2021 are convertible into common stock at a fixed ratio
of 7.0745 shares per $1,000 face value. The debentures can be put to Nabors on
February 5, 2006, February 5, 2011 and February 5, 2016 at the issue price plus
the then accrued original issue discount and can be paid in cash or stock at
Nabors' option. The bonds are callable by Nabors any time after February 5, 2006
at the issue price plus accrued original issue discount. The accreted value of
the debentures on February 5, 2006, when they can first be put by the holder or
called by us, will be $688.89. At this accreted value, the implied break-even
price, without regard to taxes or transaction costs, would be $97.38. We have
agreed to file a registration statement with respect to the underlying shares of
common stock on or before May 5, 2001 and to use our best efforts to have the
registration statement declared effective by August 4, 2001. If we fail to meet
either of these deadlines we will be required to pay liquidated damages equal to
0.25% per year of the principal amount at maturity of debentures outstanding. We
expect to file the registration statement in April, 2001.

As a consequence of the debenture offering in 2001, we were in default of a
capitalization ratio covenant contained in our credit agreement with Bank of
America National Trust and Savings Association, Wells Fargo Bank (Texas),
National Association, and some other financial institutions. This default also
triggered a cross-default under a $30 million letter of credit facility with
Bank of America. We entered into a waiver and amendment to the credit agreement
on March 19, 2001, which cured both defaults and increased the capitalization
ratio in the covenant. We are currently eligible to make borrowings under both
facilities.

Proceeds from the issuances of debentures are being used for working capital,
investments in subsidiaries and general corporate purposes.

Realizing Synergies. We completed the Pool acquisition on November 24, 1999.
During 2000, we integrated many of Pool's drilling and workover operations into
our existing US Lower 48, Alaska, International and Offshore groups. We reduced
office space and duplicate yards in Houston, Texas; Houma, Louisiana; Anchorage
and the North Slope in Alaska; Saudi Arabia; and Oman. We also combined
insurance, computer, accounting and other systems, and reduced redundant
management, office and field personnel. And we repurchased and retired over
two-thirds of Pool's $150 million aggregate principal amount of 8.625% senior
subordinated notes during the year.


                                       4
<PAGE>   5

INDUSTRY CONDITIONS

The year 2000 saw a continuation of the increases in natural gas and oil prices
that had begun in early 1999. Natural gas prices, which averaged $2.19 per mcf
during 1999, increased steadily over the year, and averaged $4.17 per mcf during
2000. Oil prices also increased significantly, with average prices of $30.37 per
barrel during 2000, up from $19.30 per barrel on average during 1999. The lag in
customer spending that accompanied the beginnings of the rebound in 1999 all but
disappeared in 2000 in most areas of our operations.

The increased spending has been especially evident in our US Lower 48, Canada
and Gulf of Mexico operations for natural gas-related activities toward the
latter half of the year. Operations also improved in the fourth quarter in
Alaska. Offshore workover activity was strong, particularly in the first three
quarters, but offshore drilling activity was essentially flat. International
operations lagged the recovery in the rest of our units, but are expected to
improve with increased oil-directed activity. The manufacturing and logistics
segment showed significant improvements, particularly our marine transportation
group. Looking forward into 2001, we expect continued improvement in both
dayrates and utilization in virtually all areas of our operations. Our optimism
is based on the positive supply and demand fundamentals for oil and natural gas
that are currently in place and are expected to continue for at least the near
term, barring any major unforeseen event.

The long-term decline in the number of available rigs in our industry continued
during 2000. Industry sources estimate that from its peak of 4,500 domestic land
rigs in 1982, the supply has fallen to less than 1,400 rigs today, or almost
70%, as a result of normal attrition, cannibalization of components to refurbish
rigs, the magnitude of capital needed to upgrade and modernize rigs and the
export of rigs to international markets. This attrition has brought the U.S.
land market to the point where demand for rigs has far outstripped the supply of
rigs in ready-to-run condition. While dayrates have been rising to levels that
support refurbishment and reactivation of long stacked rigs, they are still
below replacement costs in most instances. Nabors continues to have a
substantial number of rigs that can be put into service in a short period of
time at relatively economical costs. At the end of 2000, we had nearly 250
drilling rigs unutilized in our various operations, of which 170 were located in
the U.S.

Nabors' revenues, cash flows and earnings are substantially dependent upon, and
affected by, the level of domestic and international oil and gas exploration and
development activity. See "Part II - Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Fluctuations in oil
and gas prices could adversely affect drilling activity and Nabors' revenues,
cash flows and profitability."

BUSINESS

CONTRACT DRILLING OVERVIEW

Rigs. Our rigs include land-based rigs and offshore platform, jackup and barge
rigs. Drilling rigs come in a wide variety of sizes and capabilities, and may
include specialized equipment, such as top drives, or have design features or
modifications for specialized drilling conditions, such as arctic drilling. The
rigs are classified by their depth capabilities and by whether their power
systems are mechanical or electric. They generally are powered by two to four
large diesel engines. An electric rig differs from a mechanical rig in that it
converts the diesel power into electricity to power the rig. This gives the rig
operator the ability to deliver the same amount of torque at high and low
speeds, permitting more finite control of the primary rig components, including
the drawworks and mud pumps. We believe this electric capability enhances
operating efficiency and safety, reduces drilling time and saves the customer
money, particularly in deeper applications. Because of these advantages, diesel
electric rigs, known in the industry as silicon-controlled rectifier or SCR
rigs, generally are preferred by our customers, and often enjoy higher
utilization and dayrates than similarly sized mechanical rigs.

Nabors' various types of rigs may perform drilling, workovers (major overhaul or
remediation of an existing wellbore and/or plugging and redrilling the well) or
well-servicing (routine repair and maintenance of mechanical problems). A
drilling rig can perform drilling, workover and well-servicing services,
depending on its configuration. However, primarily due to cost and size
considerations, a land drilling rig is rarely used for well-servicing or
workover applications. Instead, smaller, mobile well-servicing and workover rigs
are used. Offshore, a drilling rig is occasionally used for workover and
well-servicing applications, particularly if it is on location, because it is
more cost-effective to use a rig in place rather than bringing in an
alternative, specialty purpose rig. Each rig is rated for operations up to a
specific depth. The basic types of rigs operated by Nabors are described below.


                                       5
<PAGE>   6

     o    Land Rigs. A land-based drilling rig generally consists of engines, a
          drawworks (which hoists and lowers the drill string in and out of the
          well), a mast (or derrick), pumps to circulate the drilling fluid
          (mud) under various pressures, blowout preventers, drill string and
          related equipment. The engines power the different pieces of
          equipment, including a rotary table or top drive that turns the drill
          string, causing the drill bit to bore through the subsurface rock
          layers. Rock cuttings are carried to the surface by the circulating
          drilling fluid. The intended well depth, bore hole diameter and
          drilling site conditions are the principal factors that determine the
          size and type of rig most suitable for a particular drilling job. A
          land-based workover or well-servicing rig consists of a mobile
          carrier, engine, drawworks and a mast. The primary function of a
          workover or well-servicing rig is to act as a hoist so that pipe,
          sucker rods and down-hole equipment can be run into and out of a well.
          Typically, land-based drilling, workover and well-servicing rigs can
          be readily moved between well sites and between geographic areas of
          operations.

     o    Platform Rigs. Platform rigs provide offshore workover, drilling and
          re-entry services. Our platform rigs have drilling and/or
          well-servicing or workover equipment and machinery arranged in modular
          packages that are transported to, and assembled and installed on,
          fixed offshore platforms owned by the customer. Fixed offshore
          platforms are steel tower-like structures that either stand on the
          ocean floor or are moored floating structures. The top portion, or
          platform, sits above the water level and provides the foundation upon
          which the platform rig is placed. Our fleet of platform rigs includes:

     o    Minimum space, modular platform workover rigs with engines rated 750
          horsepower or below, which include the Sundowner(R) series. These
          platform workover rigs are self-elevating (that is, they can be
          off-loaded with their own crane, rather than requiring a separate
          barge and crane to assemble), and are designed to fit the geometry of
          nearly any producing platform without major modifications to either
          the rig or the platform.

     o    Minimum space, modular platform workover and re-drilling rigs with
          engines rated at horsepowers greater than 750, which include the Super
          Sundowner(R) rigs. These rigs, which are enhanced versions of the
          modular platform workover rigs, and have more powerful mud pump
          systems and greater hook load capacities. This enables the rigs to be
          used in more rigorous workover, re-entry, side-tracking or horizontal
          drilling operations.

     o    Minimum Area, Self-Elevating, or MASE(R), drilling rigs are our latest
          generation of modular platform rigs. They represent a smaller and
          lighter, full-scale drilling rig patterned after the Super
          Sundowner(R).

     o    API (American Petroleum Institute)-style drilling rigs have similar
          capabilities to the MASE(R) rigs, but generally come in larger
          modules. Unlike our other platform rigs, API-style rigs are not
          self-elevating, and require a separate barge crane to load onto, and
          off of, the platform.

     o    We also own several land rigs modified for offshore work for drilling
          on mudslide and selected conventional offshore platforms. These rigs
          generally are self-elevating and modular.

o    Jackup Rigs. Jackup rigs are mobile, self-elevating drilling and workover
     platforms equipped with legs that can be lowered to the ocean or lake floor
     until a foundation is established to support the hull, which contains the
     drilling and/or workover equipment, jacking system, crew quarters, loading
     and unloading facilities, storage areas for bulk and liquid materials,
     helicopter landing deck and other related equipment. The rig legs may
     operate independently or have a mat attached to the lower portion of the
     legs in order to provide a more stable foundation in soft bottom areas.
     Independent leg rigs are better suited for harsher or uneven seabed
     conditions. All of our jackup rigs are of cantilever design -- a feature
     that permits the drilling platform to be extended out from the hull,
     allowing it to perform drilling or workover operations over adjacent, fixed
     platforms. Nabors' jackup rigs generally are subject to a maximum water
     depth of approximately 125 feet, while some of our jackup rigs may drill in
     water depths as shallow as 13 feet. The water depth limit of a particular
     rig is determined by the length of the rig's legs and the operating
     environment. Moving a rig from one drill site to another involves lowering
     the hull down into the water until it is afloat and then jacking up its
     legs with the hull floating on the surface of the water. The hull is then
     towed to the new drilling site.


                                       6
<PAGE>   7

o    Barge Rigs. One of Nabors' barge rigs is a full-size drilling unit. Nabors
     also owns two self-propelled barge rigs having a covered structure or
     substructure and well service or workover equipment. These barges are
     designed to perform plugging and abandonment, well service or workover
     services in shallow inland, coastal or offshore waters. Our barge rigs can
     operate at depths from three to eight feet.

Additional information on the number and location of our rigs can be found below
under the caption "Business - Markets".

Drilling Contracts. Our rigs are employed under individual contracts which
extend either over a stated period of time or the time required to drill a well
or a stated number of wells to a specified depth. On land in the US Lower 48
states and Canada, we typically contract on a single well basis, with extensions
subject to mutual agreement on pricing and other significant terms. Offshore
drilling, and on land drilling in Alaska and international markets, contracts
generally provide for longer terms, usually from one to five years, although
offshore workover projects are often on a single-well basis. We generally are
awarded drilling contracts through competitive bidding, although we occasionally
enter into contracts by direct negotiation. Most of our well-to-well contracts
are subject to termination by the customer on short notice, but some can be firm
for a number of wells or a period of time, and may provide for early termination
compensation in certain circumstances. The contract terms and rates may differ
depending on a variety of factors, including competitive conditions, the
geographical area, the geological formation to be drilled, the equipment and
services to be supplied, the on-site drilling conditions and the anticipated
duration of the work to be performed.

Drilling contracts provide for compensation on a daywork, footage or turnkey
basis. In each case, we provide the rig and crews. The principal differences
among the types of contract that are set forth below.

o    Daywork Contracts. A daywork contract generally provides for a basic rate
     per day when drilling (the dayrate) and for lower rates when the rig is
     moving, or when drilling operations are interrupted or restricted by
     equipment breakdowns, actions of the customer or adverse weather conditions
     or other conditions beyond our control. In addition, daywork contracts may
     provide for a lump sum fee for the mobilization and demobilization of the
     rig, which in most cases approximates our incurred costs.

o    Footage Contracts. Under footage contracts we typically run casing and
     provide drill bits. We receive payment on the basis of a rate per foot
     drilled. The customer continues to provide drilling mud, casing, cementing
     and well design expertise. If we drill the well in less time than was
     estimated, then we have the opportunity to improve our margins over those
     that would be attainable under a daywork contract to the same depth. If,
     however, we take longer to drill the well than we estimated, our margins
     will be lower. In footage contracts we bear the cost of the services and
     supplies that we provide until the well has been drilled to the agreed
     depth. Such contracts therefore require us to make significant up-front
     working capital commitments prior to receiving payment. Footage contracts
     generally contain greater risks for a contractor such as Nabors than
     daywork contracts, but fewer risks than turnkey contracts. Under footage
     contracts, the contractor assumes certain risks associated with loss of
     hole from fire, blowout and other drilling risks. However, footage
     contracts generally protect the contractor from such risks when unexpected
     drilling conditions such as abnormal pressure, impenetrable geologic
     formation or loss circulation zones are present.

o    Turnkey Contracts. In turnkey contracts, we drill a well to a specified
     depth for a fixed price regardless of the time required or the problems
     encountered in drilling the well. On a turnkey well, we provide technical
     expertise and engineering services, as well as most of the equipment
     required to complete the well, and we are compensated only when the agreed
     scope of work has been satisfied. In addition, we often subcontract for
     related services and we manage the drilling process. In turnkey contracts,
     we bear the cost of performing the drilling services until the well has
     been drilled, and accordingly, such contracts require us to make
     significant working capital commitments. We also generally agree to furnish
     services such as testing, coring and casing the hole and other services
     which are not normally provided by a drilling contractor working under a
     daywork contract. If the well is not completed to the specified depth, we
     may not receive the turnkey price. Turnkey contracts generally involve a
     higher degree of risk to us than daywork and footage contracts because we
     assume greater risks (including risk of blowout, loss of hole, stuck drill
     pipe, machinery breakdowns, abnormal drilling conditions and risks
     associated with subcontractors' services, supplies, cost escalation and
     personnel) and bear the cost of unanticipated downhole problems and price
     escalation. Generally, however, our agreements limit catastrophic risks
     associated with blowout, redrill and pollution to a specific sum. The
     customer assumes the risk of losses in excess of the agreed level. If the
     well is successfully drilled without undue delay or


                                       7
<PAGE>   8
     complication, our margins under these types of contracts are usually
     greater than under daywork and footage contracts.

During fiscal 2000, substantially all of our drilling contracts were on a
daywork basis. Our preferred strategy is to operate drilling rigs under daywork
contracts, because of their lower risk. However, we continually analyze market
conditions, customer requirements, rig demand and the experience of our
personnel to determine how to contract our fleet most profitably. In periods of
low utilization, competitive pressures and customer demands may require us to
consider entering into a larger number of footage or turnkey drilling contracts.
In addition, we may seek alternative accommodations with certain customers, as a
means of ensuring long-term drilling commitments and healthy customer relations.
Because of this, there can be no assurance that we will not suffer a loss that
is not insured as a result of entering into such higher risk contracts, and any
such uninsured loss could have a material adverse effect on our financial
position and results of operations.

Well-Servicing and Workover Services. Industry sources estimate that there are
approximately 920,000 producing oil wells in the world today, of which
approximately 563,000 are in the United States. In addition, there are
approximately 330,000 producing natural gas wells in the United States and a
large number in the rest of the world (Penn Well; Spears and Associates). In
December 2000, there were 1,116 active well-servicing and workover rigs in the
United States, up 8% from 1,030 active rigs in December 1999 (Baker Hughes).
While some wells in the United States flow oil to the surface without mechanical
assistance, most are in mature production areas that require pumping or some
other form of artificial lift. Pumping oil wells characteristically require more
maintenance than flowing wells due to the operation of the mechanical pumping
equipment installed. The extent and type of services we provide on producing
wells is dependent upon many variables. The following is a summary of our
well-servicing and workover services.

o    Well-Servicing/Maintenance Services. We provide maintenance services on the
     mechanical apparatus used to pump or lift oil from producing wells. These
     services include, among other things, repairing and replacing pumps, sucker
     rods and tubing. We provide the rigs, equipment and crews for these tasks,
     which are performed on both oil and natural gas wells, but which are more
     commonly required on oil wells. Well-servicing rigs have the same basic
     components as drilling rigs (i.e., a derrick, a hoisting mechanism and an
     engine). Many of these rigs also have pumps and tanks that can be used for
     circulating fluids into and out of the well. Maintenance jobs typically
     take less than 48 hours to complete. In general, well-servicing rigs are
     provided to customers on a call-out basis. We are paid an hourly rate and
     work is generally performed five days a week during daylight hours.

o    Workover Services. In addition to needing periodic maintenance, producing
     oil and natural gas wells occasionally require major repairs or
     modifications, called "workovers." Workovers may be done, for example, to
     remedy equipment failures, deepen a well in order to reach a new producing
     reservoir, plug back the bottom of a well to reduce the amount of water
     being produced with the oil and natural gas, clean out and re-complete a
     well if production has declined, repair leaks, or convert a producing well
     to an injection well for secondary or enhanced recovery projects. These
     extensive workover operations are normally carried out with a
     well-servicing rig that includes additional specialized accessory
     equipment, which may include rotary drilling equipment, mud pumps, mud
     tanks and blowout preventers, depending upon the particular type of
     workover operation. Most of Nabors' well-servicing rigs are designed and
     can be equipped to handle the more complex workover operations. A workover
     may last anywhere from a few days to several weeks.

o    Completion Services. The kinds of activities necessary to carry out a
     workover operation are essentially the same as those that are required to
     "complete" a well when it is first drilled. The completion process may
     involve selectively perforating the well casing at the depth of discrete
     producing zones, stimulating and testing these zones and installing
     down-hole equipment. Oil and gas production companies often find it more
     efficient to move a larger and more expensive drilling rig off location
     after an oil or natural gas well has been drilled and to move in a
     specialized well-servicing rig to perform completion operations. Our rigs
     are often used for this purpose. The completion process may require from a
     few days to several weeks.

o    Production And Other Specialized Services. We provide other specialized
     services that are required, or can be used effectively, in conjunction with
     the previously described basic services. The main additional services are
     production services, consisting of the provision of onsite temporary
     fluid-storage facilities, the provision, removal and disposal of
     specialized fluids used during certain completion and workover operations,
     and the removal and disposal of salt water that is often produced in
     conjunction with the production of oil and natural


                                       8
<PAGE>   9
     gas. We also provide plugging services for wells from which the oil and
     natural gas has been depleted and further production has become
     uneconomical.

MANUFACTURING AND LOGISTICS OVERVIEW

Through various subsidiaries and joint ventures, Nabors provides additional
well-site services that comprise our manufacturing and logistics segment. These
services can be packaged with our contract drilling services or provided on a
stand alone basis to operators or other contractors. They include top drive
rentals and sales, mudlogging services, rig instrumentation equipment rentals
and sales, rig reporting software, construction and maintenance services and
transportation services. Sales by these ancillary service providers to other
Nabors companies reduce our costs for similar third-party products and services.
These units also provide revenues to Nabors through sales to third parties.

o    Top Drives. Our Canrig Drilling Technologies subsidiary manufactures top
     drives, which are installed on both onshore and offshore drilling rigs to
     improve drilling efficiency. Rigs equipped with top drives enjoy more
     finite control and directional orientation than rigs without, and can trip
     drill string in and out of the well faster and more safely by handling
     preassembled "doubles" and "triples" of pipe. Top drives also allow the
     drill string to be simultaneously hoisted and rotated, which provides
     better well control and reduces the incidence of stuck pipe, yielding time
     and cost savings.

o    Mudlogging, Rig Instrumentation and Software. Our EPOCH Well Services
     subsidiary provides mud logging services. Mudlogging involves the analysis
     of exhausted drill cuttings to discern certain information about the
     presence of hydrocarbons, rates of penetration and the nature of the
     formation. EPOCH also offers rig instrumentation equipment, including
     sensors, proprietary RIGWATCH(TM) software and computerized equipment that
     monitors the real-time performance of a rig. In addition, EPOCH's C.A.P.E.
     International division specializes in daily reporting software for drilling
     operations.

o    Construction, Land Transportation and Related Services. Nabors has a 50%
     interest in Peak Oilfield Services Company, a general partnership with Cook
     Inlet Region, Inc., a leading Alaskan native corporation. Peak Oilfield
     Services provides heavy equipment to move drilling rigs, water, other
     fluids and construction materials. The partnership also provides
     construction and maintenance for roads, pads, facilities, equipment, drill
     sites and pipelines. Peak Oilfield Services is a partner to an alliance
     contract to provide maintenance services for the Prudhoe Bay Unit and has
     been chosen to coordinate and supply drilling support transportation
     services to the unit. Both arrangements are being renegotiated in 2001. We
     also have an investment in a small arctic road and site construction
     company.

o    Offshore Support Services. Nabors' fleet of offshore support vessels
     provides marine transportation of drilling materials, supplies and crews
     for offshore rig operations and support for other offshore facilities. In
     addition, we provide offshore logistical support to drilling and workover
     operations, pipelaying and other construction, production platforms and
     geophysical operations.

Service Contracts. We provide onshore transportation and support services
through long-term contracts or on a short-term demand basis. Long-term service
contracts may be negotiated or awarded by competitive bidding. Whether provided
on a long-term or short-term basis, equipment and labor are usually billed
separately at specified hourly rates. These hourly rates vary depending upon
numerous factors, including types of equipment and labor, and duration of the
work. Offshore support vessel operations are conducted throughout the year 24
hours a day, seven days a week, under vessel charters, which may range from
several days to several years. Some reduction in vessel utilization and charter
rates may be experienced during winter months due to seasonal declines in
offshore activities. We are paid on a daily rate basis for vessel charters.

Other. From time to time, we provide drilling engineering and integrated project
management services, ranging from well design and engineering expertise to site
preparation and road construction. We offer these services to help customers
eliminate or reduce management overhead which would otherwise be necessary to
supervise such services. While such services have not been significant in the
past, we are seeking to expand in this area, both domestically and
internationally.


                                       9
<PAGE>   10
MARKETS

Nabors operates in two primary business segments within the oilfield services
industry -- contract drilling and manufacturing and logistics. Within these
segments, we conduct business in the following distinct markets or business
lines:

     o    Contract Drilling: We provide drilling, workover, well-servicing and
          related services on land and offshore in the US Lower 48 states,
          Canada and Alaska and in international markets.

     o    Manufacturing and Logistics: We manufacture and lease or sell top
          drives, drilling instrumentation systems and rig reporting software
          domestically and internationally; and provide construction, logistics
          services and marine transportation and support services in Alaska and
          the US Lower 48 states.

Additional information regarding the geographic markets in which we operate and
our business segments can be found in Note 14 of the Notes to Consolidated
Financial Statements on pages 87 and 88 of the Nabors Industries, Inc. 2000
Annual Report and is incorporated into this document by reference.

CONTRACT DRILLING

US Lower 48 States. Nabors currently markets approximately 380 drilling rigs in
the US Lower 48 market. Over 160 of our land drilling rigs in the US Lower 48
states are diesel electric rigs controlled by a computerized SCR system.
Approximately 230 are capable of drilling to 15,000 feet or deeper. In addition,
we own 58 portable top drives for use on our rigs, depending on customer
requirements.

Our domestic land well-servicing, workover and production services operation has
locations in many of the major oil and natural gas producing fields in the US
Lower 48 states. This operation currently provides services in eleven states and
is divided into two separate geographic divisions: (i) the Central division
(principally Texas and Oklahoma) and (ii) the California division. We actively
market approximately 470 well-servicing rigs (including one land rig drilling on
a platform offshore California), in Texas, California, Oklahoma, New Mexico,
North Dakota, Montana, Arkansas, Utah and Louisiana.

Nabors had 170 land drilling rigs and 277 workover/well-servicing rigs stacked
in the US Lower 48 states at December 31, 2000. We have implemented a capital
expenditure program to refurbish, recommission and, in many cases, upgrade our
stacked, domestic drilling fleet. Since commencing this program in September
2000, we have recommissioned 37 rigs, and expect to roll out between 70 and 100
additional rigs during 2001, if the market remains strong. We will continue to
evaluate the market and may upgrade, refurbish or use the remaining stacked rigs
for spare parts as conditions warrant.

Canada. We have a fleet of 35 rigs in Canada. Fourteen rigs in the fleet are
diesel electric SCR rigs, 15 are equipped with top drives and 13 are capable of
drilling to 15,000 feet or deeper. Many of the rigs in our Canadian fleet are
capable of performing exploratory and development drilling under arctic and
sub-arctic conditions.

Alaska. Nabors markets 21 arctic drilling, workover and well-servicing rigs
(including 20 land rigs and one platform rig) on the North Slope and the Cook
Inlet area of South Central Alaska. Eighteen of these rigs are SCR rigs, and
nine are equipped with top drive units. Eleven are capable of performing
drilling or workover operations to depths of 18,000 feet or deeper. These
figures also include a coiled tubing drilling rig on the North Slope owned and
operated through a 50%-owned joint venture.

All of the North Slope rigs are designed to operate in severe arctic conditions
and most employ wheel mounted systems engineered by Nabors to permit efficient
movement of the rigs from well to well and over ice or gravel roads. Three of
these rigs are also self-propelled to further facilitate movement and
maneuverability. Several of the rigs have been designed with spacing capability
that allows them to move between reduced well spacing on drilling pads without
disrupting production. In addition, Nabors' arctic rigs generally incorporate
environmental protection features such as dry mud and fluid containment systems.

Rig operations in Alaska are normally conducted 24 hours a day, seven days a
week, under a term contract that is for a specific period of time or until a
program is completed. Generally we are paid on a daily rate basis for these
services.


                                       10
<PAGE>   11
International. We conduct our international operations primarily through Nabors
Drilling International Limited, Pool International, Ltd. and their subsidiaries.
Internationally, we provide drilling, workover and well-servicing services, both
onshore and offshore, with specialized rigs designed and fabricated to meet
various types of operating conditions. The International group actively markets
approximately 70 land drilling rigs, 40 workover/well-servicing rigs, two
pulling units, one platform and two jackup drilling rigs. Of these, over 68 are
SCR rigs, 14 are equipped with top drives and 48 are capable of drilling to
depths of 15,000 feet or deeper. We operate 20 of these rigs through joint
ventures in Saudi Arabia and Oman (13 drilling, including one jackup, and seven
workover/well-servicing rigs).

In the international markets in which we operate, we are subject to various laws
and regulations with respect to the operation and taxation of our business and
the import and export of our equipment from country to country, the imposition,
application and interpretation of which can be uncertain. Our operations may be
subject to various risks, including risk of war and civil disturbances and
governmental activities that may limit or disrupt markets, restrict the movement
of funds or result in the deprivation of contract rights or the taking of
property without fair compensation. In certain countries, such operations may be
subject to the additional risk of fluctuating currency values and exchange
controls. See also "Part II - Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations - The nature of Nabors' operations
presents inherent risks of loss that, if not insured or indemnified against,
could adversely affect its results of operations" and "- The profitability of
Nabors' international operations could be adversely affected by war, civil
disturbance or economic turmoil." Additional information on Nabors' foreign
currency transactions can be found under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Financial
Instruments and Market Risk" on page 64 of the 2000 Annual Report, and in Note 1
of the Notes to Consolidated Financial Statements under the caption "Foreign
Currency Risk" on page 75 of the 2000 Annual Report, each of which is
incorporated into this document by reference.

Offshore Drilling, Workover and Well-Servicing. Nabors currently performs
offshore drilling and offshore workover and well-servicing through its Nabors
Offshore and various other subsidiaries. The Offshore group actively markets a
fleet of 54 rigs, including 40 platform rigs (eight Sundowner(R) rigs, three 750
hp or below rigs, seven Super Sundowner(R) rigs, three concentric tubing rigs,
six greater than 750 hp rigs, three MASE(R) platform drilling rigs, three
self-elevating platform drilling rigs, five API-style platform drilling rigs and
two land rigs converted to self-elevating offshore platform drilling rigs), 11
jackup workover rigs and three inland barge rigs. Six of the Super Sundowner(R)
rigs, two of the Sundowner(R) rigs and eight of the platform drilling rigs
(including the MASE(R) rigs) are equipped with portable top drive units to
enhance drilling efficiency in sidetrack and horizontal drilling operations. Ten
of our platform rigs are capable of operating at well depths of 20,000 feet.
Twenty-two of our platform rigs are specifically designed for workover drilling.

Most of our Offshore group fleet (46 rigs) operates in the US Gulf of Mexico. We
also have three offshore rigs operating in Trinidad, two in Brazil, and one each
in Australia, Congo and Italy. In addition, other subsidiaries outside of our
Offshore group operate five offshore rigs, of which two are jackup drilling rigs
located in the Middle East and three are platform rigs located in Ecuador,
California and the Cook Inlet in Alaska. We also provide plugging and
abandonment services on the US Gulf Coast.

Additional information regarding our rig fleet can be found on pages 50 and 51
of the 2000 Annual Report.

MANUFACTURING AND LOGISTICS - ADDITIONAL WELL-SITE SERVICES

We manufacture top drives at our Magnolia, Texas facility. We market our top
drives throughout the United States and Canada, and to various international
markets, to customers serving the oil and gas industry. A substantial portion of
our top drive sales are made to other Nabors companies. We also rent top drives
and provide top drive installation, repair and maintenance services to our
customers.

We manufacture our rig instrumentation systems at our Magnolia, Texas facility.
We develop our rig reporting and related software out of our Houston, Texas
office. We sell or lease these products to customers within the oil and gas
industry, domestically and abroad. We provide mudlogging services within the US
Lower 48 states and Alaska. A substantial portion of our sales are made to other
Nabors companies.

We also provide site and road construction, rig transportation, fluid hauling
and related oilfield services in Alaska, principally through our Peak Oilfield
Services joint venture. In the US Lower 48 states, we provide rig


                                       11
<PAGE>   12

transportation and related services through our Peak USA Energy Services
subsidiary, primarily to our other operations.

Our offshore support vessels, which operate primarily in the Gulf of Mexico,
provide marine transportation of drilling materials, supplies and crews for
offshore rig operations and support for other offshore facilities. We also
provide offshore logistical support to drilling and workover operations,
pipe-laying and other construction, production platforms and geophysical
operations. Nabors markets 30 support vessels, including ten
recently-constructed platform supply vessels, 12 conventional offshore supply
vessels, six mini-supply vessels, one oceanographic research vessel and one
anchor handling tug supply vessel. Our supply vessels are used as
freight-carrying vessels for drill pipe, tubing, casing, drilling mud and other
equipment to drilling rigs and production platforms. Lengths for our supply
vessels range from 166 to 220 feet. Our mini-supply vessels are used primarily
in support of well service and production operations, such as moving offshore
pipe, fluids and equipment for offshore workovers. Mini-supply vessel lengths
range from 130 to 150 feet. Our research vessel, which is 150 feet in length, is
used to carry equipment and personnel necessary to perform offshore seismic
surveys. Our anchor handling tug supply vessel is used to tow rigs to offshore
locations and position anchors of floating drilling rigs and pipe-laying
vessels. The vessel is 200 feet long, with 6,140 horsepower, and could be
converted to a larger supply vessel if market conditions warranted.

Nabors' domestic onshore well-servicing and workover operation also provides
production services consisting chiefly of fluid hauling and fluid storage tank
rental. The production services assets, located primarily in Texas, consist of
over 300 fluid hauling trucks and 12 salt water disposal wells, which are
utilized for the transportation and disposal of drilling and used completion
fluids and salt water produced from operating wells, and approximately 950 fluid
storage tanks, which are utilized for the storage of fluids used in the
fracturing of producing zones during the completion or workover of wells.

ENGINEERING DEVELOPMENTS

In recent years, Nabors has been increasingly involved in engineering research
and development with respect to the commercialization of new drilling
technology. We own the rights to several proprietary designs and innovations
which, when applied to our rigs, can substantially reduce the costs of drilling
and working on offshore wells. These proprietary designs are being applied to a
new generation of modular MASE(R) rigs specifically for drilling. Three MASE(R)
rigs are presently operational.

Our Canrig subsidiary manufactures and markets electric top drives that are
designed with enhanced safety and drilling efficiency features. This top drive
design includes fixed and portable units that are being utilized in a broad
range of land and offshore applications.

In 1998, Nabors obtained certain license rights to build and operate drilling
rigs using coiled tubing technology developed by Transocean Sedco Forex. We
operate one rig on the North Slope of Alaska that employs this technology in a
joint venture with Transocean.

Nabors' engineers have obtained new patents during the past year and have patent
applications pending for new technology associated with drilling activities. Our
patents generally cover designs for various types of oilfield equipment and
methods for conducting certain oilfield activities. We use some of these designs
and methods in the conduct of our business. The patents expire at various times
through the year 2018. We also have several trademarks and service marks that we
use in various aspects of our business. These include Sundowner(R), MASE(R) and
RIGWATCH(TM). While management believes Nabors' patent and trademark rights are
valuable, their expiration or loss would not have a material adverse effect on
our financial statements or results of operations. The costs associated with our
research and development are not material to Nabors.

CUSTOMERS

Our customers include major oil and gas companies, foreign national oil and gas
companies and independent oil and gas companies. No customer provided in excess
of 10% of consolidated revenues in 2000 or in 1999.


                                       12
<PAGE>   13

COMPETITIVE CONDITIONS

Although the number of available rigs decreased materially over the past 15
years, the drilling, workover and well-servicing industry remains very
competitive. The number of rigs continues to exceed demand in many of our
markets, resulting in strong price competition. Many rigs can be readily moved
from one region to another in response to changes in levels of activity, which
may result in an over supply of rigs in such areas. Many of the total available
contracts are currently awarded on a bid basis, which further increases
competition based on price. The land drilling, workover and well-servicing
market is generally more competitive than the offshore market due to the larger
number of rigs and companies. As an enhancement to its competitive position,
Nabors has been able to establish strategic alliances with major customers in
its domestic onshore, international and Alaska operations. Many smaller
competitors may not be able to allocate the resources necessary to enter into
such alliances.

In all of our geographic market areas, price and availability and condition of
equipment are the most significant factors in determining which drilling
contractor is awarded a job. Other factors include the availability of trained
personnel possessing the required specialized skills; the overall quality of
service and safety record; and domestically, the ability to offer ancillary
services. In international markets, experience in operating in certain
environments and customer alliances also have been factors in the selection of
Nabors.

Certain competitors are present in more than one of Nabors' operating regions,
although no one competitor operates in all of these areas. In the US Lower 48
states, there are several hundred competitors with smaller national, regional or
local rig operations. In domestic land workover/well-servicing, we compete with
Key Energy Services, Inc., which owns approximately 1,400 well-servicing rigs
(according to its public filings), and with numerous other competitors having
smaller regional or local rig operations. In the Alaska market, Nabors has four
major competitors. In Canada and offshore, Nabors competes with several firms of
varying size many of which have more significant operations in those areas than
Nabors. Internationally, Nabors competes directly with various contractors at
each location where it operates. Nabors believes that the market for land
drilling, workover and well-servicing contracts will continue to be competitive
for the foreseeable future. Although Nabors believes it has a strong competitive
position in the domestic land drilling, workover and well-servicing sector,
certain of our competitors internationally and offshore may be better positioned
and have newer and more desirable equipment, allowing them to compete more
effectively.

Seasonality is not a significant factor with respect to our operations. However,
the contract drilling, workover and well-servicing industry has been cyclical
historically, with significant volatility in profitability and rig values. This
industry cyclicality has been due to changes in the level of domestic oil and
gas exploration and development activity and the available supply of drilling
rigs. From 1982 until 1996, the contract drilling business was severely impacted
by the decline and continued instability in the prices of oil and natural gas
following a period of significant increase in new drilling rig capacity. Rising
prices in 1997 gave way to a steep decline that continued through 1998 and most
of 1999. Although the market improved substantially in 2000, the rapid, severe
downturn in 1998 that continued into 1999, illustrates the dependence of the
industry on oil and natural gas prices.

Our manufacturing and logistics segment represents a relatively small part of
our business, and there are numerous competitors in each area in which we
operate who may have greater resources and may be better positioned than Nabors.
Canrig is one of the six major manufacturers of top drives. Its largest
competitors are Varco, Tesco and National Oilwell. EPOCH's largest competitor in
the manufacture of rig instrumentation systems is Varco's Totco subsidiary.
Mudlogging services are provided by a number of entities that serve the oil and
gas industry on a regional basis. EPOCH competes for mudlogging customers with
Sperry Sun and Baker Hughes in the Gulf Coast region, California and Alaska. In
the US Lower 48 states, there are hundreds of rig transportation companies, and
there are at least three or four that compete with Peak USA in each of its
operating regions. In Alaska, Peak Oilfield Services principally competes with
Alaska Petroleum Contractors for road, pad and pipeline maintenance, and is one
of many drill site and road construction companies, the largest of which is VECO
Corporation. We also compete with numerous offshore support vessel operators in
the Gulf of Mexico on the basis of quality of service, price, vessel suitability
and availability and reputation.


                                       13
<PAGE>   14
ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

We have grown from a land drilling business centered in Canada and Alaska to an
international business with operations on land and offshore in many of the major
oil, gas and geothermal markets in the world. At the beginning of 1990, our
fleet consisted of 44 land drilling rigs in Canada, Alaska and in various
international markets. Today, Nabors' worldwide fleet consists of over 500 land
drilling rigs, approximately 740 domestic and 40 international land workover and
well-servicing rigs, 43 offshore platform rigs, 13 jackups, three barge rigs, 30
marine transportation and support vessels, and a large component of trucks and
fluid hauling vehicles. Much of this growth was fueled by strategic
acquisitions, as summarized in the following chart:

<TABLE>
<CAPTION>
     DATE       ACQUIRED OR SELLING ENTITY         ASSETS ACQUIRED(1)                  LOCATIONS
     ----       --------------------------         ------------------                  ---------
<S>            <C>                                 <C>                               <C>
       3/1990   Loffland Brothers Company          63 rigs; yards; miscellaneous     North Sea, Middle East,
                                                   equipment and inventory;          Canada, US Lower 48, Gulf of
                                                   financial assets                  Mexico, Venezuela

      11/1990   Henley Drilling Co.                11 rigs                           US Lower 48, Yemen

       6/1993   Grace Drilling Co.                 110 rigs; yards;                  US Lower 48
                                                   miscellaneous equipment
                                                   and inventory

       4/1994   MND Drilling                       16 land rigs                      US Lower 48

      10/1994   Sundowner Offshore Services, Inc.  15 platform rigs, 1 platform      Gulf of Mexico, International
                                                   rig under construction, 5
                                                   jackup workover rigs, 3
                                                   workover and plug and
                                                   abandonment barges

         1994   Various                            8 mobile, medium-depth rigs       US Lower 48

       1/1995   Delta Drilling Company             30 rigs (15 SCR, 15,000+          Texas, Louisiana
                                                   capable depth), yards and
                                                   office facilities

       4/1996   Exeter Drilling Company            49 shallow and medium depth rigs  United States (47),
                                                                                     International (2)

       4/1996   J.W. Gibson Well Servicing         78 workover and well-servicing    Rocky Mountains, Mid-continent
                Company(2)                         rigs (10 leased from third        Region
                                                   parties)

      11/1996   EPOCH Well Logging, Inc.           Mud logging units                 Not applicable

      12/1996   Noble Drilling Company             47 land rigs (19 operating and    United States (38),
                                                   28 stacked); yards; equipment     Canada (9)
                                                   and inventory

       1/1997   Adcor-Nicklos Drilling             36 land rigs (30 active, 6        US Lower 48
                Company                            stacked, including 14 SCR),
                                                   equipment, drill pipe, yards,
                                                   vehicles and support equipment

       4/1997   Chesley Pruet Drilling Company     12 land rigs (10 active, 2        Alabama, Louisiana, Mississippi
                                                   stacked, including 9 SCR)

       4/1997   Samson Rig Company                 25 stacked SCR land rigs and      Oklahoma
                                                   large component of equipment

       8/1997   Cleveland Drilling Company, Inc.   7 land rigs (6 active, 1          California, Nevada
                                                   stacked, including 6 SCR rigs)

      11/1997   VECO Drilling, Inc.;               6 land rigs (5 active, 1          California, Texas
                Diamond L                          stacked, including 3 SCR) and
                                                   two offshore labor contracts; 3
                                                   active mechanical rigs

      12/1997   C.A.P.E. International, Inc.       Rig reporting software            Not applicable

       5/1998   New Prospect Drilling Company      6 land rigs                       Arkansas, Oklahoma

       5/1998   Can-Tex Drilling & Exploration,    7 land rigs                       Alberta, Canada
                Ltd.
</TABLE>


                                       14
<PAGE>   15

<TABLE>
<CAPTION>
     DATE       ACQUIRED OR SELLING ENTITY         ASSETS ACQUIRED(1)                  LOCATIONS
     ----       --------------------------         ------------------                  ---------
<S>            <C>                                 <C>                               <C>

       6/1998   Transocean-Nabors Drilling         Joint interest in a coiled        Alaska
                Technology LLC                     tubing drilling rig; certain
                                                   technology rights

       4/1999   Bayard Drilling Technologies,      87 rigs (73 actively marketed);   Oklahoma, Texas, Louisiana,
                Inc.                               significant inventories of new    Arkansas
                                                   component equipment (e.g.,
                                                   drill pipe, engines and mud
                                                   pumps); oilfield hauling
                                                   equipment fleet

      11/1999   Pool Energy Services Co.           790 land well                     US Lower 48, Gulf of Mexico,
                                                   servicing/workover rigs (470      Alaska, International
                                                   actively marketed); 34 land
                                                   rigs; 25 offshore rigs; 300+
                                                   fluid handling trucks; 1,060
                                                   storage tanks and 15 salt-water
                                                   disposal wells; 27 offshore
                                                   supply vessels

      12/1999-  Various                            7 offshore supply vessels (5      Gulf of Mexico
      10/2000                                      new-builds)

      12/2000   Parker Drilling Company            1 arctic land rig; 1 ball mill    Alaska
                                                   unit
</TABLE>

---------------

(1)  With the exception of the MND Drilling and Samson Rig Company transactions,
     all acquisitions of rigs also included substantial quantities of drill
     collars and drill pipe.

(2)  Sold in January 1998.

While Nabors continues to examine opportunities, there can be no assurance that
attractive rigs or other acquisition targets will continue to be available, that
the pricing will be economical or that we will be successful in making such
acquisitions in the future.

DIVESTITURES

From time to time, we may sell a subsidiary or group of assets outside of our
core markets or business, if it is economically advantageous for us to do so.
During 2000, we sold one older supply vessel, because it no longer met our fleet
profile. In January 1998, Nabors sold its J.W. Gibson Well Service Company
subsidiary to Key Energy Group, Inc. (now known as Key Energy Services, Inc.).
We acquired Gibson as part of the Exeter Drilling Company acquisition in 1996.
Gibson represented Nabors' entry into the domestic well servicing business.
However, at the time, Nabors' management did not believe it could establish a
dominant position in that business, and determined to sell the subsidiary. On
completing the sale, we received $20 million plus the value of Gibson's working
capital in cash, 100,000 shares of Key Energy common stock and warrants to
acquire 265,000 shares of Key Energy common stock at an exercise price of $18
per share, subject to adjustment. We recorded a pre-tax gain on the sale of
approximately $16.0 million during 1998. (Nabors exercised the warrants, as
adjusted, in January 2000, and acquired 1,673,684 shares of Key Energy stock at
an adjusted exercise price of $2.85 per share. Nabors has since sold 834,500 of
such shares in market transactions.)

In November 1996, Nabors sold substantially all of its North Sea labor contract
operation, which was viewed as having slower growth potential and weaker margins
than our other operations, to a subsidiary of Abbot Group plc, a diversified
holding company listed on the London Stock Exchange. We received approximately
$36 million plus the value of working capital in cash, and warrants to acquire
10.8 million ordinary shares of Abbot Group plc, and recorded a gain of $29.9
million during 1997. We exercised the warrants at various times during 1997 and
recorded a gain of $8.8 million from the sale of the underlying shares.

EMPLOYEES

As of December 31, 2000, Nabors employed approximately 17,980 persons, of whom
approximately 2,380 were employed by unconsolidated affiliates. On October 18,
2000, the National Labor Relations Board confirmed the selection of a collective
bargaining representative at our Alaska drilling subsidiary. The unit to be
represented is


                                       15
<PAGE>   16
comprised of approximately 500 members at December 31, 2000 and covers most
non-supervisory drilling and related field personnel working on or about our
rigs within the State of Alaska. Negotiations with the union commenced in
December 2000. We anticipate that our relations with the union will be
agreeable, and that the formation and continuation of a collective bargaining
unit at our Alaska drilling subsidiary will not have any materially adverse
impact on the operations of that entity or Nabors as a whole. Certain rig
employees in Argentina, Venezuela and Australia are represented by collective
bargaining units. We believe our relationship with our employees generally is
good.

ITEM 2.  PROPERTIES

Information regarding Nabors' rig fleet can be found on pages 50 and 51 of the
2000 Annual Report and is incorporated into this document by reference.

Many of the international drilling rigs and certain of the Alaska rigs in our
fleet are supported by mobile camps which house the drilling crews and a
significant inventory of spare parts and supplies. In addition, we own various
trucks, forklifts, cranes, earth moving and other construction and
transportation equipment which are used to support the drilling and logistics
operations.

Nabors and its subsidiaries own or lease executive and administrative office
space in Houston, Texas (headquarters); Anchorage, Alaska; Harvey, Houma,
Arcadia, New Iberia and Lafayette, Louisiana; Bakersfield, California; Magnolia,
Texas; Calgary and Nisku, Alberta, Canada; Sana'a, Yemen; Dubai, U.A.E.;
Dhahran, Saudi Arabia; and Anaco, Venezuela. We also own or lease a number of
facilities and storage yards used in support of operations in each of our
geographic markets. Until December 31, 2000, we also leased from an unrelated
party a 65-acre former rig and equipment manufacturing and storage facility in
San Angelo, Texas, which includes approximately 245,000 square feet of buildings
and other structural facilities. We terminated the lease on December 31, 2000
pursuant to its terms, and have outstanding an irrevocable offer to purchase the
facility, pay deferred rent and refund a ground lease prepayment, for an
aggregate of $8,635,109. Our former landlord disputes exercise of the purchase
option, and the matter is in litigation.

Additional information about our properties can be found in Notes 1 (under the
caption "Property, Plant and Equipment"), 4 and 11 (under the caption "Operating
Leases") of the Notes to Consolidated Financial Statements on pages 73, 78 and
85, respectively, of the 2000 Annual Report and is incorporated into this
document by reference. The revenues and property, plant and equipment by
geographic area for the fiscal years ended December 31, 1998, 1999 and 2000, can
be found in Note 14 of the Notes to Consolidated Financial Statements in the
table on page 89 of the 2000 Annual Report, and are incorporated into this
document by reference.

Nabors' management believes that our equipment and facilities are adequate to
support our current level of operations as well as an expansion of drilling
operations in those geographical areas where we may expand.

ITEM 3.  LEGAL PROCEEDINGS

Information with respect to legal proceedings can be found in Note 11 of the
Notes to Consolidated Financial Statements under the caption "Contingencies" on
pages 85 and 86 of the 2000 Annual Report and is incorporated into this document
by reference.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of Nabors' security holders during the
quarter ended December 31, 2000.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET AND STOCK PRICES

The information called for by this item can be found under the caption
"Corporate Information - Price of Common Stock" on page 90 of the 2000 Annual
Report and is incorporated into this document by reference.


                                       16
<PAGE>   17

DIVIDEND POLICY

Nabors has not declared or paid any cash dividends on its common stock since
1982. We do not intend to pay any cash dividends on our common stock for the
foreseeable future.

ITEM 6.  SELECTED FINANCIAL DATA

The information called for by this item can be found under the caption "Selected
Financial Data" on pages 54 and 55 of the 2000 Annual Report and is incorporated
into this document by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information called for by this item can be found under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 56 through 65 of the 2000 Annual Report and is incorporated
into this document by reference. In addition, the principal risks associated
with Nabors' business are noted below.

FLUCTUATIONS IN OIL AND GAS PRICES COULD ADVERSELY AFFECT DRILLING ACTIVITY AND
NABORS' REVENUES, CASH FLOWS AND PROFITABILITY

Nabors' operations are materially dependent upon the level of activity in oil
and gas exploration and production. Both short-term and long-term trends in oil
and gas prices affect the level of such activity. Oil and gas prices and,
therefore, the level of drilling, exploration and production activity can be
volatile. Worldwide military, political and economic events, including
initiatives by the Organization of Petroleum Exporting Countries, affect both
the demand for, and the supply of, oil and gas. Fluctuations during the last few
years in the demand and supply of oil and gas have contributed to, and are
likely to continue to contribute to, price volatility. Nabors believes that any
prolonged reduction in oil and gas prices would depress the level of exploration
and production activity. This would likely result in a corresponding decline in
the demand for Nabors' services and could have a material adverse effect on
Nabors' revenues, cash flows and profitability. There can be no assurances as to
the future level of demand for Nabors' services or future conditions in the oil
and gas and oilfield services industries.

NABORS OPERATES IN A HIGHLY COMPETITIVE INDUSTRY WITH EXCESS DRILLING CAPACITY,
WHICH MAY ADVERSELY AFFECT NABORS' RESULTS OF OPERATIONS

The oilfield services industry in which Nabors operates is very competitive.
Contract drilling companies compete primarily on a regional basis, and
competition may vary significantly from region to region at any particular time.
Many drilling, workover and well-servicing rigs can be readily moved from one
region to another in response to changes in levels of activity, which may result
in an oversupply of rigs in such area. In many markets in which Nabors operates,
the number of rigs available for use exceeds the demand for rigs, resulting in
price competition. Most drilling and workover contracts are awarded on the basis
of competitive bids, which also results in price competition. The land drilling
market generally is more competitive than the offshore drilling market because
there are larger numbers of rigs and competitors.

Certain competitors are present in more than one of Nabors' regions, although no
one competitor operates in all of these areas. In the US Lower 48 states, there
are several hundred competitors with smaller national, regional or local rig
operations. In the Alaska market, Nabors has four major competitors. In Canada
and offshore, Nabors competes with several firms of varying size many of which
have more significant operations in those areas than Nabors. Internationally,
Nabors competes directly with various competitors at each location where it
operates. Nabors believes that the market for land drilling and workover
contracts will continue to be competitive for the foreseeable future. Although
Nabors believes it has a strong competitive position in the domestic land
market, certain of the our competitors internationally and offshore may be
better positioned and have newer and more desirable equipment, allowing them to
compete more effectively.

See also "Part I - Item 1 - Business - Competitive Conditions."


                                       17
<PAGE>   18

THE NATURE OF NABORS' OPERATIONS PRESENTS INHERENT RISKS OF LOSS THAT, IF NOT
INSURED OR INDEMNIFIED AGAINST, COULD ADVERSELY AFFECT ITS RESULTS OF OPERATIONS

Nabors' operations are subject to many hazards inherent in the drilling,
workover and well-servicing industries, including blowouts, cratering,
explosions, fires, loss of well control, loss of hole, damaged or lost drilling
equipment and damage or loss from inclement weather. Any of these hazards could
result in personal injury or death, damage to or destruction of equipment and
facilities, suspension of operations, environmental damage and damage to the
property of others. Nabors' offshore operations are also subject to the hazards
of marine operations including capsizing, grounding, collision, damage from
heavy weather or sea conditions and unsound bottom conditions. In addition,
Nabors' international operations are subject to risks of war, civil disturbances
or other political events. Generally, drilling contracts provide for the
division of responsibilities between a drilling company and its customer, and
Nabors seeks to obtain indemnification from its customers by contract for
certain of these risks. To the extent that Nabors is unable to transfer such
risks to customers by contract or indemnification agreements, Nabors seeks
protection through insurance which its management considers to be adequate.
However, there is no assurance that such insurance or indemnification agreements
will adequately protect Nabors against liability from all of the consequences of
the hazards described above. The occurrence of an event not fully insured or
indemnified against, or the failure of a customer or insurer to meet its
indemnification or insurance obligations, could result in substantial losses to
Nabors. In addition, there can be no assurance that insurance will be available
to cover any or all of these risks, or, even if available, that it will be
adequate or that insurance premiums or other costs will not rise significantly
in the future, so as to make such insurance prohibitive.

THE PROFITABILITY OF NABORS' INTERNATIONAL OPERATIONS COULD BE ADVERSELY
AFFECTED BY WAR, CIVIL DISTURBANCE OR ECONOMIC TURMOIL

Nabors derives a significant portion of its business from international markets,
including major operations in Canada, the Middle East, Asia and South and
Central America. These operations are subject to various risks, including the
risk of war, civil disturbances and governmental activities, that may limit or
disrupt markets, restrict the movement of funds or result in the deprivation of
contract rights or the taking of property without fair compensation. In certain
countries, Nabors' operations may be subject to the additional risk of
fluctuating currency values and exchange controls. In the international markets
in which Nabors operates, it is subject to various laws and regulations that
govern the operation and taxation of its business and the import and export of
its equipment from country to country, the imposition, application and
interpretation of which can prove to be uncertain.

NONCOMPLIANCE WITH GOVERNMENTAL REGULATION OR EXPOSURE TO ENVIRONMENTAL
LIABILITIES COULD ADVERSELY AFFECT NABORS' RESULTS OF OPERATIONS

The drilling of oil and gas wells is subject to various federal, state, local
and foreign laws, rules and regulations. The cost to Nabors of compliance with
these laws and regulations may be substantial. For example, federal law imposes
specific design and operational standards on rigs and platforms. Failure to
comply with these requirements could subject Nabors to substantial civil and
criminal penalties as well as potential court injunctions. In addition, federal
law imposes a variety of regulations on "responsible parties" related to the
prevention of oil spills and liability for damages from such spills. Nabors, as
an owner and operator of onshore and offshore rigs and transportation equipment
may be deemed to be a responsible party under federal law. In addition, our
well-servicing, workover and production services operations routinely involve
the handling of significant amounts of waste materials, some of which are
classified as hazardous substances. Our operations and facilities are subject to
numerous state and federal environmental laws, rules and regulations, including,
without limitation, laws concerning the containment and disposal of hazardous
substances, oilfield waste and other waste materials, the use of underground
storage tanks and the use of underground injection wells. Nabors generally tries
to require its customers to contractually assume responsibility for compliance
with environmental regulations. However, Nabors is not always successful in
shifting all of these risks nor is there any assurance that the applicable
customer will be financially able to bear those risks assumed.


                                       18
<PAGE>   19
We employ personnel responsible for monitoring environmental compliance and
arranging for remedial actions that may be required from time to time and also
use outside experts to advise on and assist with our environmental compliance
efforts. Costs we incur to investigate and remediate contaminated sites are
expensed unless the remediation extends the useful lives of the assets employed
at the site. Remediation costs that extend the useful lives of the assets are
capitalized and amortized over the remaining useful lives of such assets.
Liabilities are recorded when the need for environmental assessments and/or
remedial efforts become known or probable and the cost can be reasonably
estimated.

Laws protecting the environment generally have become more stringent than in the
past and are expected to continue to become more so. Under the Comprehensive
Environmental Response, Compensation and Liability Act, also known as CERCLA or
Superfund, and related state laws and regulations, joint and several liability
can be imposed without regard to fault or the legality of the original conduct
on certain classes of persons that contributed to the release of a "hazardous
substance" into the environment. Under CERCLA, such persons may be liable for
the costs of cleaning up the hazardous substances that have been released into
the environment and for damages to natural resources, and it is not uncommon for
the neighboring land owners and other third parties to file claims for personal
injury, property damage and recovery of response costs allegedly caused by the
hazardous substances released into the environment. We have been notified of our
possible responsibility with respect to the cleanup of a federal national
priority list site and a state abandoned site, which were formerly operated by
parties unrelated to Nabors as oilfield waste disposal facilities. In addition,
we have been named as a potentially responsible party with respect to the
cleanup of three other sites which were formerly operated by various parties
unrelated to Nabors. Nabors believes that its cost to clean up each of these
sites will be less than $100,000. Although at this time information regarding
our possible responsibility with respect to cleanup of the federal national
priority list site and the state abandoned site has not been fully developed and
it is not feasible to predict such outcome with certainty, management is of the
opinion that their ultimate resolution should not have a material adverse effect
on our financial statements or results of operations.

Changes in federal and state environmental regulations may also negatively
impact oil and natural gas exploration and production companies, which in turn
could have a material adverse effect on Nabors. For example, legislation has
been proposed from time to time in Congress which would reclassify oil and
natural gas production wastes as hazardous wastes. If enacted, such legislation
could dramatically increase operating costs for domestic oil and natural gas
companies and this could reduce the market for our services by making many wells
and/or oilfields uneconomical to operate.

With respect to our offshore support vessel operations, we are affected by
additional governmental regulations. Under the Merchant Marine Act of 1920, as
amended, if persons other than U.S. citizens own in the aggregate in excess of
25% of Nabors' outstanding stock, our U.S. flagged vessels would lose the
privilege of engaging in the transportation of merchandise in the U.S. coastwise
trade. In addition, our offshore support vessel operations are materially
affected by federal, state and local regulation, as well as certain
international conventions and private industry organizations. These regulations
govern worker health and safety and the manning, construction and operation of
vessels. Private industry organizations establish safety criteria and are
authorized to investigate vessel accidents and recommend approved safety
standards. The failure to comply with the requirements of any of these laws or
the rules or regulations of these agencies and organizations could have a
material adverse effect on our offshore support vessel operations.


                                       19
<PAGE>   20
The Oil Pollution Act of 1990, as amended, contains provisions specifying
responsibility for removal costs and damages resulting from discharges of oil
into navigable waters or onto the adjoining shorelines. Among other
requirements, this law requires owners and operators of vessels over 300 gross
tons to provide the U.S. Coast Guard with evidence of financial responsibility
to cover the costs of cleaning up oil spills from such vessels. We believe we
have provided satisfactory evidence of financial responsibility to the U.S.
Coast Guard for all vessels over 300 tons. In addition, the Outer Continental
Shelf Lands Act provides the federal government with broad discretion in
regulating the leasing of offshore oil and gas production sites. Because our
offshore support vessel operations rely on offshore oil and gas exploration and
production, if the government were to exercise its authority under this law to
restrict the availability of offshore oil and gas leases, such an action could
have a material adverse effect on our offshore support vessel operations.

NABORS, AS A HOLDING COMPANY, DEPENDS ON ITS SUBSIDIARIES TO MEET ITS FINANCIAL
OBLIGATIONS

Nabors is a holding company with no significant assets other than the stock of
our subsidiaries. In order to meet our financial needs, Nabors relies
exclusively on repayments of interest and principal on intercompany loans made
by Nabors to its operating subsidiaries and income from dividends and other cash
flow from such subsidiaries. There can be no assurance that Nabors' operating
subsidiaries will generate sufficient net income to pay upstream dividends or
cash flow to make payments of interest and principal to Nabors in respect of its
intercompany loans. In addition, from time to time, Nabors' operating
subsidiaries may enter into financing arrangements which may contractually
restrict or prohibit such upstream payments to Nabors.

UNDER EXISTING DIVIDEND POLICY, NABORS DOES NOT PAY DIVIDENDS

As part of Nabors' policy, Nabors has not paid any dividends on its common stock
since 1982. Nabors does not anticipate that it will pay any dividends on its
common stock in the foreseeable future.

AS NABORS AND ITS OPTION, WARRANT AND CONVERTIBLE SECURITIES HOLDERS HAVE A
CONSIDERABLE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE AND RESALE,
SIGNIFICANT ISSUANCES OR RESALES IN THE FUTURE MAY ADVERSELY AFFECT THE MARKET
PRICE OF NABORS COMMON STOCK

As of March 27, 2001, there were 400,000,000 authorized shares of Nabors common
stock, of which 146,810,020 shares were issued and outstanding. In addition,
26,654,009 shares of Nabors common stock were reserved for issuance pursuant to
option and employee benefit plans, 237,800 shares of Nabors common stock were
reserved for issuance upon the exercise of outstanding warrants and 18,630,150
shares were reserved for issuance upon conversion or repurchase of outstanding
zero coupon convertible debentures. The exercise price of most of the options is
substantially lower than the trading prices of Nabors common stock on that date.
Certain of the shares to be issued pursuant to the exercise of options may be
"restricted securities," as that term is defined in Rule 144 promulgated under
the Securities Act. The sale, or availability for sale, of substantial amounts
of Nabors common stock in the public market, whether directly by Nabors or due
to the exercise of warrants or options (and, where applicable, sales pursuant to
Rule 144) or to the conversion into, or repurchase of debentures using, common
stock, could adversely affect the prevailing market price of Nabors common stock
and could impair our ability to raise additional capital through the sale of
equity securities.

PROVISIONS OF NABORS' ORGANIZATIONAL DOCUMENTS MAY DETER A CHANGE OF CONTROL
TRANSACTION AND DECREASE THE LIKELIHOOD OF A STOCKHOLDER RECEIVING A CHANGE OF
CONTROL PREMIUM

Nabors' board of directors is divided into three classes of directors, with each
class serving a staggered three-year term. In addition, our board of directors
has the authority to issue a significant amount of common stock and up to
10,000,000 shares of preferred stock and to determine the price, rights
(including voting rights), conversion ratios, preferences and privileges of the
preferred stock, in each case without further vote or action by the holders of
the common stock. Although Nabors has no present plans to issue shares of common
or preferred stock, the classified board and the Nabors board's ability to issue
additional shares of common or preferred stock may discourage, delay or prevent
changes in control of Nabors that are not approved by the Nabors board, thereby
possibly preventing certain Nabors' stockholders from realizing a possible
premium on their shares.

NABORS HAS A SUBSTANTIAL AMOUNT OF DEBT OUTSTANDING; THE REPURCHASE FEATURE OF
THE ZERO COUPON DEBT MAY HAVE A TEMPORARY ADVERSE EFFECT ON OUR STOCK


                                       20
<PAGE>   21
Nabors had approximately $1.7 billion in debt outstanding at March 13, 2001,
resulting in a debt-to-capitalization ratio of 0.475:1.00. Due to restrictions
under our credit agreement, Nabors is unlikely to be able to incur any
significant additional debt obligations for the foreseeable future.

Nabors has outstanding two series of 20-year zero coupon senior convertible
debentures due 2020 and 2021, respectively. Each has a feature that permits us
to pay all or a portion of the purchase price for debentures that are put to us
in common stock instead of cash. Because the market price of the common stock we
may use to repurchase some or all of the debentures for common stock when they
are put to us will be determined after we announce our decision to repurchase
debentures with common stock, decreases in the market price during the
determination period would require us to issue a greater number of shares for
this repurchase than we might have had to issue as of the date of the
announcement of our decision. This potential downward pressure on our stock
price may, in turn, adversely affect the market price of our common stock at
such time.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this item can be found under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Financial Instruments and Market Risk" on pages 64 and 65 of the
2000 Annual Report and is incorporated into this document by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and notes thereto, together with the
report thereon of PricewaterhouseCoopers LLP, appear on pages 66 through 89 of
the 2000 Annual Report and are incorporated herein by reference. With the
exception of the specific information expressly incorporated into Items 1, 2, 3,
5, 6, 7, 7A, 8 and 14 of this document, the 2000 Annual Report is not deemed to
be filed as part of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information called for by this item will be contained in the Nabors
Industries, Inc. definitive proxy statement to be distributed in connection with
its 2001 annual meeting of stockholders under the captions "Election of
Directors" and "Executive Officers" and is incorporated into this document by
reference.

Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the
Securities Exchange Act of 1934 requires Nabors' directors and executive
officers, and persons who own more than 10% of a registered class of Nabors'
equity securities, to file with the Securities and Exchange Commission and the
American Stock Exchange initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of Nabors. Officers,
directors and greater than 10% shareholders are required by Commission
regulation to furnish Nabors with copies of all Section 16(a) forms which they
file.

To our knowledge, based solely on review of the copies of such reports furnished
to us and written representations that no other reports were required, with
regard to the period from January 1, 1998 to December 31, 2000, all Section
16(a) filings required to be made by Nabors' officers, directors and greater
than 10% beneficial owners were timely filed, except that one outside director,
James L. Payne, inadvertently filed a Form 4 regarding a single sale transaction
one month later than required under Section 16(a).

ITEM 11. EXECUTIVE COMPENSATION

Except as specified in the following sentence, the information called for by
this item will be contained in the 2001 proxy statement under the caption
"Remuneration of Management" and is incorporated into this document by
reference. Information in Nabors' 2001 proxy statement not deemed to be
"soliciting material" or "filed" with the Commission under its rules, including
the Report of the Compensation Committee on Executive Compensation, the


                                       21
<PAGE>   22
Report of the Audit Committee and the Five Year Stock Performance Graph, is not
deemed to be incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information called for by this item will be contained in Nabors' 2001 proxy
statement under the caption "Share Ownership of Management and Principal
Shareholders" and is incorporated into this document by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for by this item will be contained in Nabors' 2001 proxy
statement under the captions "Business Relationships" and "Compensation
Committee Interlocks and Insider Participation" and is incorporated into this
document by reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      The following documents are filed as part of this report:

         (1)      The consolidated financial statements of Nabors Industries,
                  Inc. and subsidiaries, and the notes thereto, are incorporated
                  herein by reference from the 2000 Annual Report commencing
                  from the respective page numbers indicated:

<TABLE>
                                                                        Page No.
                                                                        --------
<S>                                                                     <C>
         Report of Independent Accountants..................................  66
         Consolidated Balance Sheets........................................  67
         Consolidated Statements of Income..................................  68
         Consolidated Statements of Cash Flows..............................  69
         Consolidated Statements of Changes in Stockholders' Equity.........  70
         Notes to Consolidated Financial Statements.........................  72
</TABLE>

         (2)      Financial Statement Schedules

                  Supplemental schedules are omitted because of the absence of
                  the conditions under which they are required or because the
                  required information is included in the financial statements
                  or related notes.

(b)      Exhibits

<TABLE>

         Exhibit No.      Description
         -----------      -----------
<S>                       <C>
         3.1              Restated Certificate of Incorporation of Nabors
                          Industries, Inc. dated March 4, 1997 (Incorporated by
                          reference to the exhibits to Form 10-Q, File No.
                          1-9245, filed May 16, 1997)

         3.2              Amendment to Restated Certificate of Incorporation of
                          Nabors Industries, Inc. dated June 7, 2000
                          (Incorporated by reference to exhibits to Form 8-K,
                          File No. 1-9245, filed June 22, 2000)

         3.3              Restated By-Laws of the Nabors Industries, Inc.
                          adopted December 4, 1997 (Incorporated by reference
                          to the exhibits to Form 10-K, File No. 1-9245, filed
                          December 29, 1997)

         4.1              Indenture dated as of March 1, 1999 between Nabors
                          Industries, Inc., as Issuer, and Norwest Bank
                          Minnesota, National Association, as Trustee, in
                          connection with $325,000,000 aggregate principal
                          amount of 6.80% Notes due 2004 (Incorporated by
</TABLE>


                                       22
<PAGE>   23
<TABLE>
<S>                        <C>
                           reference to Post-Effective Amendment No. 1 to
                           Registration Statement on Form S-3, Registration No.
                           333-25233, filed March 5, 1999)

         4.2               Supplemental Indenture No. 1 dated as of March 1,
                           1999 between Nabors Industries, Inc., as Issuer, and
                           Norwest Bank Minnesota, National Association, as
                           Trustee, in connection with the 6.80% Notes
                           (Incorporated by reference to Post-Effective
                           Amendment No. 1 to Registration Statement on Form
                           S-3, Registration No. 333-25233, filed March 5, 1999)

         4.3               Indenture dated as of March 31, 1998 among Pool
                           Energy Services Co., the guarantors named therein and
                           Marine Midland Bank, as trustee, with respect to
                           $150,000,000 aggregate principal amount of 8-5/8%
                           Senior Subordinated Notes due 2008, Series A and B
                           (Incorporated by reference to the exhibits to Form
                           10-K, File No. 1-9245, filed March 30, 2000)

         4.4               Supplemental Indenture dated as of March 31, 1998
                           among Pool Energy Services Co., the guarantors named
                           therein and Marine Midland Bank, as trustee
                           (Incorporated by reference to the exhibits to Form
                           10-K, File No. 1-9245, filed March 30, 2000)

         4.5               Second Supplemental Indenture dated as of December 1,
                           1999 among Nabors Holding Company (formerly Pool
                           Energy Services Co.), the guarantors named therein
                           and HSBC Bank USA (formerly Marine Midland Bank), as
                           trustee (Incorporated by reference to the exhibits to
                           Form 10-K, File No. 1-9245, filed March 30, 2000)

         4.6               Third Supplemental Indenture dated as of February 14,
                           2000 among Nabors Holding Company, the guarantors
                           named therein and HSBC Bank USA (Incorporated by
                           reference to the exhibits to Form 8-K dated February
                           2, 2000, File No. 1-9245, filed February 24, 2000)

         4.7               Indenture dated as of June 20, 2000 between Nabors
                           Industries, Inc. and Bank One, N.A., as Trustee, in
                           connection with $825,000,000 original principal
                           amount of Zero Coupon Convertible Senior Debentures
                           due 2020 (Incorporated by Reference to the exhibits
                           to Form 8-K, File No. 1-9245, filed June 22, 2000)

         4.8               Form of Debenture (contained in Exhibit 4.7)

         4.9               First Supplemental Indenture dated July 5, 2000
                           between Nabors Industries, Inc. and Bank One, N.A.,
                           as Trustee, in connection with the Zero Coupon
                           Convertible Senior Debentures due 2020 (Incorporated
                           by reference to Registration Statement on Form S-3,
                           Registration No. 333-44532, filed August 25, 2000)

         4.10              Registration Rights Agreement dated as of June 15,
                           2000 between Nabors Industries, Inc. and the initial
                           purchaser of the Zero Coupon Convertible Senior
                           Debentures due 2020 (Incorporated by reference to the
                           exhibits to Form 8-K, File No. 1-9245, filed June 22,
                           2000)

         4.11              Indenture dated as of February 5, 2001 between the
                           Nabors Industries, Inc. and Bank One, N.A., as
                           Trustee, in connection with $1,382,200,000 principal
                           amount at maturity of Zero Coupon Convertible Senior
                           Debentures due 2021

         4.12              Form of Debenture (contained in Exhibit 4.11)

         4.13              Registration Rights Agreement dated as of January 31,
                           2000 between Nabors Industries, Inc. and the initial
                           purchaser of the Zero Coupon Convertible Senior
                           Debentures due 2021

         10.1(+)           1993 Stock Option Plan for Non-Employee Directors
                           (Incorporated by reference to Registration Statement
                           on Form S-8, Registration No. 33-87322, filed
                           December 29, 1994)
</TABLE>


                                       23
<PAGE>   24

<TABLE>
<S>                        <C>
         10.2(+)           1994 Executive Officers Stock Plan (Incorporated by
                           reference to Registration Statement on Form S-8,
                           Registration No. 333-11313, filed September 3, 1996)

         10.3(+)           1996 Employee Stock Plan (Incorporated by reference
                           to Registration Statement on Form S-8, Registration
                           No. 333-11313, filed September 3, 1996)

         10.4(+)           1994 Executive Stock Option Agreement effective
                           December 28, 1994 between Nabors Industries, Inc. and
                           Eugene M. Isenberg (Incorporated by reference to the
                           exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1996)

         10.5(+)           1994 Executive Stock Option Agreement effective
                           December 28, 1994 between Nabors Industries, Inc. and
                           Anthony G. Petrello (Incorporated by reference to the
                           exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1996)

         10.6(+)           1994 Executive Stock Option Agreement effective
                           December 28, 1994 between Nabors Industries, Inc. and
                           Richard A. Stratton (Incorporated by reference to the
                           exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1996)

         10.7(+)           Employment Agreement effective October 1, 1996
                           between Nabors Industries, Inc. and Eugene M.
                           Isenberg (Incorporated by reference to the exhibits
                           to Form 10-Q, File No. 1-9245, filed May 16, 1997)

         10.8(+)           Employment Agreement effective October 1, 1996
                           between Nabors Industries, Inc. and Anthony G.
                           Petrello (Incorporated by reference to the exhibits
                           to Form 10-Q, File No. 1-9245, filed May 16, 1997)

         10.9(+)           Employment Agreement effective October 1, 1996
                           between Nabors Industries, Inc. and Richard A.
                           Stratton (Incorporated by reference to the exhibits
                           to Form 10-K, File No. 1-9245, filed December 29,
                           1997)

         10.10(+)          Nabors Industries, Inc. 1996 Chairman's Executive
                           Stock Plan (Incorporated by reference to the exhibits
                           to Form 10-K, File No. 1-9245, filed December 29,
                           1997)

         10.11(+)          Nabors Industries, Inc. 1996 Executive Officers Stock
                           Plan (Incorporated by reference to the exhibits to
                           Form 10-K, File No. 1-9245, filed December 29, 1997)

         10.12(+)          Nabors Industries, Inc. 1996 Executive Officers
                           Incentive Stock Plan (Incorporated by reference to
                           the exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1997)

         10.13(+)          Nabors Industries, Inc. 1997 Executive Officers
                           Incentive Stock Plan (Incorporated by reference to
                           the exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1997)

         10.14             Form of Indemnification Agreement entered into
                           between Nabors Industries, Inc. and the directors and
                           executive officers identified in the schedule thereto
                           (Incorporated by reference to the exhibits to Form
                           10-K, File No. 1-9245, filed December 29, 1997)

         10.15             Agreement and Plan of Merger by and among Nabors
                           Industries, Inc., Nabors Acquisition Corp. VII and
                           Bayard Drilling Technologies, Inc., dated October 19,
                           1999, as amended (Incorporated by reference to
                           Registration Statement on Form S-4, Registration No.
                           333-72397, filed February 16, 1999)

         10.16             Agreement and Plan of Merger by and among Nabors
                           Industries, Inc., Starry Acquisition Corp. and Pool
                           Energy Services Co. dated as of January 10, 1999
                           (Incorporated by reference to the exhibits to Form
                           8-K, File No. 1-9245, filed January 11, 1999)

         10.17             Underwriting Agreement dated March 4, 1999 between
                           Nabors and the underwriters named therein
                           (Incorporated by reference to the exhibits to
                           Post-Effective Amendment
</TABLE>


                                       24
<PAGE>   25

<TABLE>
<S>                        <C>
                           No. 1 to Registration Statement on Form S-3,
                           Registration No. 333-25233, filed March 5, 1999)

         10.18(+)          Nabors Industries, Inc. 1998 Employee Stock Plan
                           (Incorporated by reference to the exhibits to Form
                           10-K dated December 31, 1998, File No. 1-9245, filed
                           March 31, 1999)

         10.19(+)          Nabors Industries, Inc. 1998 Chairman's Executive
                           Stock Plan (Incorporated by reference to the exhibits
                           to Form 10-K dated December 31, 1998, File No.
                           1-9245, filed March 31, 1999)

         10.20(+)          Nabors Industries, Inc. 1999 Stock Option Plan for
                           Non-Employee Directors (Incorporated by reference to
                           the exhibits to Form 10-K dated December 31, 1998,
                           File No. 1-9245, filed March 31, 1999)

         11                Computation of Per Share Earnings

         12                Computation of Ratios of Earnings to Fixed Charges

         13(1)             2000 Annual Report of Nabors Industries, Inc.

         21                Significant Subsidiaries of Nabors Industries, Inc.

         23                Consent of Independent Accountants

         99.1              Credit Agreement among Nabors Industries, Inc., the
                           subsidiary borrowers thereto, Bank of America
                           National Trust and Savings Association, Wells Fargo
                           Bank (Texas) National Association and the other
                           financial institutions party thereto dated September
                           5, 1997 (Incorporated by reference to the Exhibits to
                           Form 10-K, File No. 1-9245, filed December 29, 1997)

         99.2              Waiver and First Amendment to Credit Agreement dated
                           as of March 19, 2001
</TABLE>


                                       25
<PAGE>   26

----------

(1)   With the exception of the specific information expressly incorporated
      into Items 1, 2, 3, 5, 6, 7, 7A, 8 and 14 of this document, the 2000
      Annual Report is not deemed to be filed as part of this report.

(+)   Management contract or compensatory plan or arrangement

(c)      Reports on Form 8-K:

     o    Report on Form 8-K filed with the Securities and Exchange Commission
          on February 1, 2001 with regard to issuance and sale of zero coupon
          convertible senior debentures due 2021.

     o    Report on Form 8-K filed with the Securities and Exchange Commission
          on March 9, 2001 with regard to the exercise of the initial
          purchaser's option to acquire additional zero coupon convertible
          senior debentures due 2021.


                                       26
<PAGE>   27
                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, as of March 30, 2001.

                                        NABORS INDUSTRIES, INC.


                                        By:  /s/ Anthony G. Petrello
                                             ----------------------------------
                                               Anthony G. Petrello
                                               President and Chief Operating
                                                 Officer

                                        By:  /s/ Bruce P. Koch
                                             ----------------------------------
                                               Bruce P. Koch
                                               Vice President - Finance
                                               (Principal Financial and
                                                 Accounting Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
 Signature                                                    Title                              Date
 ---------                                                    -----                              ----
<S>                                                                                           <C> <C>
/s/ Eugene M. Isenberg                               Chairman and                       March 30, 2001
------------------------------------                 Chief Executive Officer
Eugene M. Isenberg

/s/ Anthony G. Petrello                              President and                      March 30, 2001
------------------------------------                 Chief Operating Officer
Anthony G. Petrello

/s/ Richard A. Stratton                              Vice Chairman                      March 30, 2001
------------------------------------
Richard A. Stratton

/s/ James L. Payne                                   Director                           March 30, 2001
------------------------------------
James L. Payne

/s/ Hans Schmidt                                     Director                           March 30, 2001
------------------------------------
Hans Schmidt

/s/ Myron M. Sheinfeld                               Director                           March 30, 2001
------------------------------------
Myron M. Sheinfeld

/s/ Jack Wexler                                      Director                           March 30, 2001
------------------------------------
Jack Wexler

/s/ Martin J. Whitman                                Director                           March 30, 2001
------------------------------------
Martin J. Whitman
</TABLE>


                                       27
<PAGE>   28

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
         Exhibit No.       Description
         -----------       -----------
<S>                        <C>
         3.1               Restated Certificate of Incorporation of Nabors
                           Industries, Inc. dated March 4, 1997 (Incorporated by
                           reference to the exhibits to Form 10-Q, File No.
                           1-9245, filed May 16, 1997)

         3.2               Amendment to Restated Certificate of Incorporation of
                           Nabors Industries, Inc. dated June 7, 2000
                           (Incorporated by reference to exhibits to Form 8-K,
                           File No. 1-9245, filed June 22, 2000)

         3.3               Restated By-Laws of the Nabors Industries, Inc.
                           adopted December 4, 1997 (Incorporated by reference
                           to the exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1997)

         4.1               Indenture dated as of March 1, 1999 between Nabors
                           Industries, Inc., as Issuer, and Norwest Bank
                           Minnesota, National Association, as Trustee, in
                           connection with $325,000,000 aggregate principal
                           amount of 6.80% Notes due 2004 (Incorporated by
                           reference to Post-Effective Amendment No. 1 to
                           Registration Statement on Form S-3, Registration No.
                           333-25233, filed March 5, 1999)

         4.2               Supplemental Indenture No. 1 dated as of March 1,
                           1999 between Nabors Industries, Inc., as Issuer, and
                           Norwest Bank Minnesota, National Association, as
                           Trustee, in connection with the 6.80% Notes
                           (Incorporated by reference to Post-Effective
                           Amendment No. 1 to Registration Statement on Form
                           S-3, Registration No. 333-25233, filed March 5, 1999)

         4.3               Indenture dated as of March 31, 1998 among Pool
                           Energy Services Co., the guarantors named therein and
                           Marine Midland Bank, as trustee, with respect to
                           $150,000,000 aggregate principal amount of 8-5/8%
                           Senior Subordinated Notes due 2008, Series A and B
                           (Incorporated by reference to the exhibits to Form
                           10-K, File No. 1-9245, filed March 30, 2000)

         4.4               Supplemental Indenture dated as of March 31, 1998
                           among Pool Energy Services Co., the guarantors named
                           therein and Marine Midland Bank, as trustee
                           (Incorporated by reference to the exhibits to Form
                           10-K, File No. 1-9245, filed March 30, 2000)

         4.5               Second Supplemental Indenture dated as of December 1,
                           1999 among Nabors Holding Company (formerly Pool
                           Energy Services Co.), the guarantors named therein
                           and HSBC Bank USA (formerly Marine Midland Bank), as
                           trustee (Incorporated by reference to the exhibits to
                           Form 10-K, File No. 1-9245, filed March 30, 2000)

         4.6               Third Supplemental Indenture dated as of February 14,
                           2000 among Nabors Holding Company, the guarantors
                           named therein and HSBC Bank USA (Incorporated by
                           reference to the exhibits to Form 8-K dated February
                           2, 2000, File No. 1-9245, filed February 24, 2000)

         4.7               Indenture dated as of June 20, 2000 between Nabors
                           Industries, Inc. and Bank One, N.A., as Trustee, in
                           connection with $825,000,000 original principal
                           amount of Zero Coupon Convertible Senior Debentures
                           due 2020 (Incorporated by Reference to the exhibits
                           to Form 8-K, File No. 1-9245, filed June 22, 2000)

         4.8               Form of Debenture (contained in Exhibit 4.7)

         4.9               First Supplemental Indenture dated July 5, 2000
                           between Nabors Industries, Inc. and Bank One, N.A.,
                           as Trustee, in connection with the Zero Coupon
                           Convertible Senior Debentures due 2020 (Incorporated
                           by reference to Registration Statement on Form S-3,
                           Registration No. 333-44532, filed August 25, 2000)

         4.10              Registration Rights Agreement dated as of June 15,
                           2000 between Nabors Industries, Inc. and the initial
                           purchaser of the Zero Coupon Convertible Senior
                           Debentures due 2020 (Incorporated by reference to the
                           exhibits to Form 8-K, File No. 1-9245, filed June 22,
                           2000)

         4.11              Indenture dated as of February 5, 2001 between the
                           Nabors Industries, Inc. and Bank One, N.A., as
                           Trustee, in connection with $1,382,200,000 principal
                           amount at maturity of Zero Coupon Convertible Senior
                           Debentures due 2021

         4.12              Form of Debenture (contained in Exhibit 4.11)
</TABLE>
<PAGE>   29

<TABLE>
<S>                        <C>
         4.13              Registration Rights Agreement dated as of January 31,
                           2000 between Nabors Industries, Inc. and the initial
                           purchaser of the Zero Coupon Convertible Senior
                           Debentures due 2021

         10.1(+)           1993 Stock Option Plan for Non-Employee Directors
                           (Incorporated by reference to Registration Statement
                           on Form S-8, Registration No. 33-87322, filed
                           December 29, 1994)

         10.2(+)           1994 Executive Officers Stock Plan (Incorporated by
                           reference to Registration Statement on Form S-8,
                           Registration No. 333-11313, filed September 3, 1996)

         10.3(+)           1996 Employee Stock Plan (Incorporated by reference
                           to Registration Statement on Form S-8, Registration
                           No. 333-11313, filed September 3, 1996)

         10.4(+)           1994 Executive Stock Option Agreement effective
                           December 28, 1994 between Nabors Industries, Inc. and
                           Eugene M. Isenberg (Incorporated by reference to the
                           exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1996)

         10.5(+)           1994 Executive Stock Option Agreement effective
                           December 28, 1994 between Nabors Industries, Inc. and
                           Anthony G. Petrello (Incorporated by reference to the
                           exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1996)

         10.6(+)           1994 Executive Stock Option Agreement effective
                           December 28, 1994 between Nabors Industries, Inc. and
                           Richard A. Stratton (Incorporated by reference to the
                           exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1996)

         10.7(+)           Employment Agreement effective October 1, 1996
                           between Nabors Industries, Inc. and Eugene M.
                           Isenberg (Incorporated by reference to the exhibits
                           to Form 10-Q, File No. 1-9245, filed May 16, 1997)

         10.8(+)           Employment Agreement effective October 1, 1996
                           between Nabors Industries, Inc. and Anthony G.
                           Petrello (Incorporated by reference to the exhibits
                           to Form 10-Q, File No. 1-9245, filed May 16, 1997)

         10.9(+)           Employment Agreement effective October 1, 1996
                           between Nabors Industries, Inc. and Richard A.
                           Stratton (Incorporated by reference to the exhibits
                           to Form 10-K, File No. 1-9245, filed December 29,
                           1997)

         10.10(+)          Nabors Industries, Inc. 1996 Chairman's Executive
                           Stock Plan (Incorporated by reference to the exhibits
                           to Form 10-K, File No. 1-9245, filed December 29,
                           1997)

         10.11(+)          Nabors Industries, Inc. 1996 Executive Officers Stock
                           Plan (Incorporated by reference to the exhibits to
                           Form 10-K, File No. 1-9245, filed December 29, 1997)

         10.12(+)          Nabors Industries, Inc. 1996 Executive Officers
                           Incentive Stock Plan (Incorporated by reference to
                           the exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1997)

         10.13(+)          Nabors Industries, Inc. 1997 Executive Officers
                           Incentive Stock Plan (Incorporated by reference to
                           the exhibits to Form 10-K, File No. 1-9245, filed
                           December 29, 1997)

         10.14             Form of Indemnification Agreement entered into
                           between Nabors Industries, Inc. and the directors and
                           executive officers identified in the schedule thereto
                           (Incorporated by reference to the exhibits to Form
                           10-K, File No. 1-9245, filed December 29, 1997)

         10.15             Agreement and Plan of Merger by and among Nabors
                           Industries, Inc., Nabors Acquisition Corp. VII and
                           Bayard Drilling Technologies, Inc., dated October 19,
                           1999, as amended (Incorporated by reference to
                           Registration Statement on Form S-4, Registration No.
                           333-72397, filed February 16, 1999)

         10.16             Agreement and Plan of Merger by and among Nabors
                           Industries, Inc., Starry Acquisition Corp. and Pool
                           Energy Services Co. dated as of January 10, 1999
                           (Incorporated by reference to the exhibits to Form
                           8-K, File No. 1-9245, filed January 11, 1999)

         10.17             Underwriting Agreement dated March 4, 1999 between
                           Nabors and the underwriters named therein
                           (Incorporated by reference to the exhibits to
                           Post-Effective Amendment No. 1 to Registration
                           Statement on Form S-3, Registration No. 333-25233,
                           filed March 5, 1999)

         10.18(+)          Nabors Industries, Inc. 1998 Employee Stock Plan
                           (Incorporated by reference to the exhibits to Form
                           10-K dated December 31, 1998, File No. 1-9245, filed
                           March 31, 1999)

         10.19(+)          Nabors Industries, Inc. 1998 Chairman's Executive
                           Stock Plan (Incorporated by reference to the exhibits
                           to Form 10-K dated December 31, 1998, File No.
                           1-9245, filed March 31, 1999)
</TABLE>

<PAGE>   30

<TABLE>
<S>                        <C>
         10.20(+)          Nabors Industries, Inc. 1999 Stock Option Plan for
                           Non-Employee Directors (Incorporated by reference to
                           the exhibits to Form 10-K dated December 31, 1998,
                           File No. 1-9245, filed March 31, 1999)

         11                Computation of Per Share Earnings

         12                Computation of Ratios of Earnings to Fixed Charges

         13(1)             2000 Annual Report of Nabors Industries, Inc.

         21                Significant Subsidiaries of Nabors Industries, Inc.

         23                Consent of Independent Accountants

         99.1              Credit Agreement among Nabors Industries, Inc., the
                           subsidiary borrowers thereto, Bank of America
                           National Trust and Savings Association, Wells Fargo
                           Bank (Texas) National Association and the other
                           financial institutions party thereto dated September
                           5, 1997 (Incorporated by reference to the Exhibits to
                           Form 10-K, File No. 1-9245, filed December 29, 1997)

         99.2              Waiver and First Amendment to Credit Agreement dated
                           as of March 19, 2001
</TABLE>

----------

(1)  With the exception of the specific information expressly incorporated
     into Items 1, 2, 3, 5, 6, 7, 7A, 8 and 14 of this document, the 2000
     Annual Report is not deemed to be filed as part of this report.

(+)  Management contract or compensatory plan or arrangement