##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    001-32657
 NABORS INDUSTRIES
    LTD.
 (Exact name of registrant as
    specified in its charter)
  Bermuda

980363970(State or Other Jurisdiction
    of
    Incorporation or
    Organization)

(I.R.S. Employer
    Identification No.)Mintflower Place
    8 Par-La-Ville Road
    Hamilton, HM08
    Bermuda(Address of principal
    executive offices)

N/A(Zip
    Code)   (441) 292-1510
 (Registrants telephone
    number, including area
    code )
  Securities registered pursuant to Section 12(b) of the
    Securities Exchange Act of 1934:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon shares, $.001 par value per share

The New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Securities Exchange Act of 1934:
    None.
  þ o
  o þ
  þ o
  Regulation S-T þ o
  Regulation S-K Form 10-K Form 10-K. þ
    Large accelerated filer þ

Accelerated filer o

Non-accelerated filero
    (Do not check if a smaller reporting company)

Smaller Reporting company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE (to the extent indicated
    herein)
  Specified
    portions of the definitive Proxy
    Statement to be distributed in connection with our 2011 annual
    meeting of shareholders (Part III).




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##### 





NABORS
    INDUSTRIES LTD.Form 10-K
    Annual Report
    For the Year Ended December 31, 2010Table of Contents
   
 PART IItem 1.


Business


4Item 1A.


Risk Factors


11Item 1B.


Unresolved Staff Comments


18Item 2.


Properties


19Item 3.


Legal Proceedings


24Item 4.


(Removed and Reserved)


25PART IIItem 5.


Market for Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities


26Item 6.


Selected Financial Data


28Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


59Item 8.


Financial Statements and Supplementary Data


62Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


143Item 9A.


Controls and Procedures


143Item 9B.


Other Information


144PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


145Item 11.


Executive Compensation


145Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Shareholder Matters


145Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


147Item 14.


Principal Accounting Fees and Services


147PART IVItem 15.


Exhibits, Financial Statement Schedules


148EX-12EX-21EX-23.1EX-23.2EX-23.3EX-23.4EX-23.5EX-23.6EX-23.7EX-31.1EX-31.2EX-32.1EX-99.1EX-99.2EX-99.3EX-99.4EX-99.5EX-99.6   2




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##### Table of Contents



www.nabors.com Form 10-K, Form 10-Q, Form 8-K www.sec.gov
  FORWARD-LOOKING
    STATEMENTS
      
    fluctuations in worldwide prices of and demand for natural gas
    and oil;
    fluctuations in levels of natural gas and oil exploration and
    development activities;
    fluctuations in the demand for our services;
    the existence of competitors, technological changes and
    developments in the oilfield services industry;
    the existence of operating risks inherent in the oilfield
    services industry;
    the possibility of changes in tax and other laws and regulations;
    the possibility of political instability, war or acts of
    terrorism in any of the countries where we operate; and
    general economic conditions including the capital and credit
    markets.    Risk Factors.
   3




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PART I  ITEM 1.
    BUSINESS  Introduction
    
    We actively market approximately 550 land drilling rigs for
    oil and gas land drilling operations in the U.S. Lower
    48 states, Alaska, Canada, South America, Mexico, the
    Caribbean, the Middle East, the Far East, Russia and Africa.
    We actively market approximately 555 rigs for land
    well-servicing and workover work in the United States and
    approximately 172 rigs for land well-servicing and workover work
    in Canada.  jack-up
    
    We offer a wide range of ancillary well-site services, including
    hydraulic fracturing, engineering, transportation and disposal,
    construction, maintenance, well logging, directional drilling,
    rig instrumentation, data collection and other support services
    in select United States and international markets.
    We manufacture and lease or sell top drives for a broad range of
    drilling applications, directional drilling systems, rig
    instrumentation and data collection equipment, pipeline handling
    equipment and rig reporting software.
    We invest in oil and gas exploration, development and production
    activities in the United States, Canada and Colombia through
    both our wholly owned subsidiaries and our oil and gas joint
    ventures in which we hold
    49-50%
    ownership interests.
    We have a 51% ownership interest in a joint venture in Saudi
    Arabia, which owns and actively markets nine rigs in addition to
    the rigs we lease to the joint venture.
    We also provide logistics services for onshore drilling in
    Canada using helicopters and fixed-wing aircraft.    (441) 292-1510.
  Our Fleet
    of Rigs
  
    Land Rigs.  A land-based drilling rig generally
    consists of engines, a drawworks, a mast (or derrick), pumps to
    circulate the drilling fluid (mud) under various pressures,
    blowout preventers, drill string and 4




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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.      
    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.
    Jack-up
    Rigs.Jack-up
    rigs are mobile, self-elevating drilling and workover platforms
    equipped with legs that can be lowered to the ocean 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. Many of our
    jack-up 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 shallow workover
    jack-up rigs
    generally are subject to a maximum water depth of approximately
    125 feet, while some of our
    jack-up rigs
    may drill in water depths as shallow as 13 feet. Nabors
    also has deeper water
    jack-up rigs
    that are capable of drilling at depths between eight feet and
    150 to 250 feet. The water depth limit of a particular rig
    is determined by the length of its legs and by 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. The
    rig is then towed to the new drilling site.
    Inland Barge Rigs.  One of Nabors barge
    rigs is a full-size drilling unit. We also own two workover
    inland barge rigs. 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 between three and 20 feet.   5




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Customers:
    Types of Drilling Contracts
    on-site
    Well-servicing
    and Workover Services
    
    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 activities, repairing and replacing pumps, sucker
    rods and tubing. They also occasionally include drilling
    services. 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. Maintenance
    services typically take less than 48 hours to complete.
    Rigs generally are provided to customers on a call-out basis. We
    are paid an hourly rate and work typically is performed five
    days a week during daylight hours.
    Workover Services.  Producing oil and natural
    gas wells occasionally require major repairs or modifications,
    called workovers. Workovers may be required to
    remedy failures, modify well depth and formation penetration to
    capture hydrocarbons from alternative formations, clean out and
    recomplete a well when production has declined, repair leaks or
    convert a depleted well to an injection well for secondary or
    enhanced recovery projects. Workovers normally are carried out
    with a rig that includes standard drilling accessories such as
    rotary drilling equipment, mud pumps, mud tanks and blowout
    preventers plus other specialized equipment for servicing rigs.
    A workover may last anywhere from a few days to several weeks.
    We are paid a daily rate and work is generally performed seven
    days a week, 24 hours a day.
    Completion Services.  The kinds of activities
    necessary to carry out a workover operation are essentially the
    same as those 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. The completion process may 6




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take a few days to several weeks. We are paid an hourly rate and
    work is generally performed seven days a week, 24 hours a
    day.  
    Production and Other Specialized Services.  We
    also can provide other specialized services, including onsite
    temporary fluid storage; the supply, removal and disposal of
    specialized fluids used during certain completion and workover
    operations; and the removal and disposal of salt water that
    often accompanies the production of oil and natural gas. We also
    provide plugging services for wells from which the oil and
    natural gas has been depleted or further production has become
    uneconomical. We are paid an hourly or a
    per-unit
    rate, as applicable, for these services.  Pressure
    Pumping Services
    Oil and
    Gas Investments
      Other
    Services
  tm tm
 7




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Our
    Employees
      Seasonality
    Research
    and Development
    Industry/Competitive
    Conditions
  Fluctuations in oil and natural gas prices could adversely
    affect drilling activity and our revenues, cash flows and
    profitability
   8




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Our
    Business Strategy
    
    Maintain flexibility to respond to changing conditions.
    Maintain a conservative and flexible balance sheet.
    Build a base of premium assets cost effectively.
    Establish and maintain low operating costs through economies of
    scale.
    Develop and maintain long-term, mutually attractive
    relationships with key customers and vendors. 9




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
    Build a diverse business in long-term, sustainable and
    worthwhile geographic markets.
    Recognize and seize opportunities as they arise.
    Continually improve safety, quality and efficiency.
    Implement leading-edge technology where cost effective to do so.
    Increase shareholder value by expanding our oil and gas reserves
    and production.  state-of-the-art
  Acquisitions
    and Divestitures
  jack-up
       10




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Environmental
    Compliance
  Changes to
    or noncompliance with governmental regulation or exposure to
    environmental liabilities could adversely affect Nabors
    results of operations.
  ITEM 1A.
    RISK
    FACTORS     11




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We
    have a substantial amount of debt outstanding
    
    Gross funded debt to capital, which is calculated by dividing
    (x) funded debt by (y) funded debt plusdeferred tax liabilities (net of deferred tax assets)
    pluscapital. Funded debt is the sum of
    (1) short-term borrowings, (2) the current portions of
    long-term debt and (3) long-term debt; and
    Net funded debt to capital, which is calculated by dividing
    (x) net funded debt by (y) net funded debt plusdeferred tax liabilities (net of deferred tax assets)
    plus capital. Net funded debt is funded debt minusthe sum of cash and cash equivalents and short-term and
    long-term investments and other receivables.    Fluctuations
    in oil and natural gas prices could adversely affect drilling
    activity and our revenues, cash flows and
    profitability
    Uncertain
    or negative global economic conditions could continue to
    adversely affect our results of operations
   12




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and/or
  As a
    holding company, we depend on our subsidiaries to meet our
    financial obligations
    Our
    access to borrowing capacity could be affected by the recent
    instability in the global financial markets
    We
    operate in a highly competitive industry with excess drilling
    capacity, which may adversely affect our results of
    operations
    The
    nature of our operations presents inherent risks of loss that
    could adversely affect our results of operations
   13




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Future
    price declines may result in a writedown of our oil and gas
    asset carrying values
  property-by-property units-of-production
  units-of-production 12-month
  Our
    acquisition of Superior may not be as financially or
    operationally successful as contemplated
   14




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The
    profitability of our operations could be adversely affected by
    war, civil disturbance, or political or economic turmoil,
    fluctuation in currency exchange rates and local import and
    export controls
    The
    loss of key executives could reduce our competitiveness and
    prospects for future success
    Changes
    to or noncompliance with governmental regulation or exposure to
    environmental liabilities could adversely affect our results of
    operations
  and/or
   15




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clean-up and/or cap-and-trade
  and/or
    Increased
    regulation of hydraulic fracturing could result in reductions or
    delays in drilling and completing new oil and natural gas wells,
    which could adversely impact the demand for fracturing and other
    services
   16




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Because
    our option, warrant and convertible securities holders have a
    considerable number of common shares available for issuance and
    resale, significant issuances or resales in the future could
    adversely affect the market price of our common
    shares
    Provisions
    in our organizational documents and executive contracts may
    deter a change of control transaction and decrease the
    likelihood of a shareholder receiving a change of control
    premium
    change-in-control
  We may
    have additional tax liabilities
     17




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Proposed
    tax legislation could mitigate or eliminate the benefits of our
    2002 reorganization as a Bermuda company
      Legal
    proceedings could affect our financial condition and results of
    operations
    Our
    financial results could be affected by changes in the value of
    our investment portfolio
    We do
    not currently intend to pay dividends on our common
    shares
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   18




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ITEM 2.
    PROPERTIES            Summary
    of Oil and Gas Reserves
  first-day-of-the-month 12-month
  12-month 12-month 12-month 12-month
 19




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ReservesLiquids


Natural GasReserve Category

(MMBbls)


(Bcf)ProvedDevelopedConsolidated SubsidiariesUnited States


2.7
(2)


17.1Canada






5.6Colombia


1.6



Total Consolidated


4.3



22.7Equity Companies(1)United States


3.0



147.1Canada






5.1Colombia


0.5



Total Equity Companies


3.5



152.2Total Developed


7.8



174.9UndevelopedConsolidated SubsidiariesUnited States


18.5



2.7Canada






Colombia


.4



Total Consolidated


18.9



2.7Equity Companies(1)United States


4.9



405.7Canada






Colombia


1.3



Total Equity Companies


6.2



405.7Total Proved


25.1



408.4     (1)
    
    Represents our proportionate interests in our equity companies.(2)
    
    During 2010, we purchased a 25% working interest in the Cat
    Canyon and West Cat Canyon fields in Santa Barbara County
    California for $25 million. At December 31, 2010,
    proved reserves in Cat Canyon were estimated at
    20.8 MMBbls. Workovers on approximately 273 productive
    wells began in late 2010, and 22 wells were producing as of
    December 31, 2010. The price used in our reserve report was
    $65.641 per barrel for oil at December 31, 2010.     20




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Technologies
    Used in Establishing Proved Reserves Additions in
    2010
    2-D 3-D
    Internal
    Controls over Proved Reserves
    Proved
    Undeveloped Reserves
  start-ups
 21




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Oil and
    Gas Production, Production Prices and Production Costs
  Oil
    and Gas Production
    United States


Canada


Colombia


TotalLiquids


Natural Gas


Liquids


Natural Gas


Liquids


Natural Gas


Liquids


Natural Gas(MMBbls)


(Bcf)


(MMBbls)


(Bcf)


(MMBbls)


(Bcf)


(MMBbls)


(Bcf)Oil and natural gas liquids productionConsolidated Subsidiaries


.073



3.533







3.058



.230







.303



6.591Equity Companies(1)


.249



12.338







1.535



.273







.522



13.873Average production sales prices:Consolidated Subsidiaries

$
63.77


$
4.19


$



$
3.69


$
72.25


$



$
70.19


$
2.71Equity Companies(1)

$
74.86


$
4.43


$



$
3.93


$
73.90


$



$
58.59


$
4.11Average production costs:Consolidated Subsidiaries





$
2.14/mcfe






$
2.60/mcfe


$
34.42/boeEquity Companies(1)





$
1.33/mcfe






$
5.89/mcfe


$
33.60/boe     (1)
    
    Represents our proportionate interests in our equity companies.  Drilling
    and Other Exploratory and Development Activities
    Number
    of Net Productive and Dry Wells Drilled
  For the Year Ended December 31, 2010Net Productive and


Net Dry ExploratoryDry Wells Drilled


Wells DrilledConsolidated SubsidiariesUnited States


1.9



Canada






Colombia


4.2



Total Consolidated


6.1



Equity Companies(1)United States


0.9



Canada






Colombia


3.3



2.1Total Equity Companies


4.2



2.1     (1)
    
    Represents our proportionate interests in our equity companies. 22




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For the Year Ended December 31, 2010Net Productive


Net DryDevelopment Wells


DevelopmentDrilled


Wells DrilledConsolidated SubsidiariesUnited States


1.2



0.1Canada






Colombia






Total Consolidated


1.2



0.1Equity Companies(1)United States


9.5



Canada






Colombia


1.6



Total Equity Companies


11.1



     (1)
    
    Represents our proportionate interests in our equity companies.  Present
    Activities
    Wells
    Drilling
  United States

Canada

Colombia

TotalGross

Net

Gross

Net

Gross

Net

Gross

NetConsolidated Subsidiaries


17.0



0.9



















17.0



0.9Equity Companies(1)


2.5



2.5



















2.5



2.5     (1)
    
    Represents our proportionate interests in our equity companies.  Oil and
    Gas Properties, Wells, Operations and Acreage
  Gross
    and Net Productive Wells
  For the Year EndedDecember 31, 2010Gross


NetConsolidated SubsidiariesUnited States


746.0



139.6Canada


2.0



2.0Colombia


7.0



4.9Total Consolidated


755.0



146.5Equity Companies(1)United States


337.8



225.4Canada


3.0



3.0Colombia


7.0



3.9Total Equity Companies


347.8



232.3     (1)
    
    Represents our proportionate interests in our equity companies. 23




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Gross
    and Net Developed Acreage
  December 31, 2010United States

Canada

Colombia

TotalGross

Net

Gross

Net

Gross

Net

Gross

NetConsolidated Subsidiaries


157,965



31,879



1,309



715



883



618



160,157



33,212Equity Companies(1)


211,638



112,227



9,801



8,134











221,439



120,361     (1)
    
    Represents our proportionate interests in our equity companies.  Gross
    and Net Undeveloped Acreage
  December 31, 2010United States

Canada

Colombia

TotalGross

Net

Gross

Net

Gross

Net

Gross

NetConsolidated Subsidiaries


347,662



128,244



46,440



34,554



546,384



247,299



940,486



410,097Equity Companies(1)


574,841



218,596



83,821



53,279



739,533



448,185



1,398,195



720,060     (1)
    
    Represents our proportionate interests in our equity companies.      ITEM 3.
    LEGAL
    PROCEEDINGS     24




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Jordan Denney,
    Individually and on Behalf of All Others Similarly
    Situated v. David E. Wallace, et al., No. 10-1154,
  ITEM 4.
    (REMOVED
    AND RESERVED) 25




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  STOCK
    PERFORMANCE GRAPH
    
  2006


2007


2008


2009


2010Nabors Industries Ltd.



79




72




32




58




62S&P 500 Index



116




122




77




97




112Dow Jones Oil Equipment and Services Index



113




164




67




111




141  26




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I.
    Market
    and Share Prices      Share PriceCalendar Year

High


Low2009First quarter


14.05



8.25Second quarter


19.79



9.38Third quarter


21.48



13.78Fourth quarter


24.07



19.182010First quarter


27.05



18.74Second quarter


22.82



16.90Third quarter


19.13



15.54Fourth quarter


23.93



17.36     Approximate DollarTotal Number


Average


Total Number of


Value of Sharesof Shares


Price Paid


Shares Purchased as


that May Yet BePurchased


per


Part of Publicly


Purchased Under thePeriod

(1)


Share(1)


Announced Program


Program(2)(In thousands, except per share amounts)October 1  October 31













$
35,458November 1  November 30





$
21.85






$
35,458December 1  December 31


3,073


$
23.15






$
35,458     (1)
    
    Shares were withheld from employees and directors to satisfy
    certain tax withholding obligations due in connection with
    grants of stock under our 2003 Employee Stock Plan and option
    exercises from our 1996 Employee Stock Plan, 1999 Stock Option
    Plan for Non-Employee Directors and our 1998 Employee Stock
    Plan. The 2003 Employee Stock Plan, 1998 Employee Stock Plan,
    1999 Stock Option Plan for Non-Employee Directors and 1996
    Employee Stock Plan provide for the withholding of shares to
    satisfy tax obligations, but do not specify a maximum number of
    shares that can be withheld for this purpose. These shares were
    not purchased as part of a publicly announced program to
    purchase common shares.(2)
    
    In July 2006 our Board of Directors authorized a share
    repurchase program under which we may repurchase up to
    $500 million of our common shares in the open market or in
    privately negotiated transactions. Through December 31,
    2010, $464.5 million of our common shares had been
    repurchased under this program. As of December 31, 2010, we
    had the capacity to repurchase up to an additional
    $35.5 million of our common shares under the July
    2006 share repurchase program.    II.
    Dividend
    Policy  We do not currently intend to pay
    dividends on our common shares
 27




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III.
    Shareholder Matters
    and/or
  ITEM 6.
    SELECTED
    FINANCIAL DATA  Year Ended December 31,Operating Data(1)(2)

2010


2009


2008


2007


2006(In thousands, except per share amounts and ratio data)Revenues and other income:Operating revenues

$
4,174,635


$
3,683,419


$
5,507,542


$
4,938,748


$
4,707,268Earnings (losses) from unconsolidated affiliates


33,257



(155,433
)


(192,548
)


20,980



20,545Investment income (loss)


7,648



25,599



21,412



(16,290
)


101,907Total revenues and other income


4,215,540



3,553,585



5,336,406



4,943,438



4,829,720Costs and other deductions:Direct costs


2,423,602



2,001,404



3,100,613



2,763,462



2,508,611General and administrative expenses


346,661



428,161



479,194



436,274



416,582Depreciation and amortization


764,253



667,100



614,367



469,669



365,357Depletion


17,943



9,417



22,308



30,904



38,580Interest expense


273,044



266,039



196,718



154,919



120,507Losses (gains) on sales and retirements of long-lived assets and
    other expense (income), net


47,060



12,559



15,829



11,777



22,092Impairments and other charges


260,931



330,976



176,123



41,017



Total costs and other deductions


4,133,494



3,715,656



4,605,152



3,908,022



3,471,729Income (loss) from continuing operations before income taxes


82,046



(162,071
)


731,254



1,035,416



1,357,991Income tax expense (benefit)


(24,814
)


(133,803
)


209,660



201,896



407,282Subsidiary preferred stock dividend


750















Income (loss) from continuing operations, net of tax


106,110



(28,268
)


521,594



833,520



950,709Income (loss) from discontinued operations, net of tax


(11,330
)


(57,620
)


(41,930
)


31,762



24,927Net income (loss)


94,780



(85,888
)


479,664



865,282



975,636Less: Net (income) loss attributable to noncontrolling interest


(85
)


342



(3,927
)


420



(1,914
)Net income (loss) attributable to Nabors

$
94,695


$
(85,546
)

$
475,737


$
865,702


$
973,722 28




---



##### Table of Contents



Year Ended December 31,Operating Data(1)(2)

2010


2009


2008


2007


2006(In thousands, except per share amounts and ratio data)Earnings (losses) per share:Basic from continuing operations

$
.37


$
(.10
)

$
1.84


$
2.97


$
3.26Basic from discontinued operations


(.04
)


(.20
)


(.15
)


.11



.09Total Basic

$
.33


$
(.30
)

$
1.69


$
3.08


$
3.35Diluted from continuing operations

$
.37


$
(.10
)

$
1.80


$
2.89


$
3.16Diluted from discontinued operations


(.04
)


(.20
)


(.15
)


.11



.08Total Diluted

$
.33


$
(.30
)

$
1.65


$
3.00


$
3.24Weighted-average number of common shares outstanding:Basic


285,145



283,326



281,622



281,238



291,267Diluted


289,996



283,326



288,236



288,226



300,677Capital expenditures and acquisitions of businesses(3)

$
1,878,063


$
990,287


$
1,578,241


$
1,945,932


$
2,006,286Interest coverage ratio(4)


7.0:1



6.3:1



21.0:1



32.6:1



38.2:1   As of December 31,Balance Sheet Data(1)(2)

2010

2009

2008

2007

2006(In thousands, except ratio data)Cash, cash equivalents, short-term and long-term investments and
    other receivables(5)

$
841,490


$
1,191,733


$
826,063


$
1,179,639


$
1,653,285Working capital


458,550



1,568,042



1,037,734



719,674



1,650,496Property, plant and equipment, net


7,815,419



7,646,050



7,331,959



6,669,013



5,423,729Total assets


11,646,569



10,644,690



10,517,899



10,139,783



9,155,931Long-term debt


3,064,126



3,940,605



3,600,533



2,894,659



3,457,675Shareholders equity


5,328,162



5,167,656



4,904,106



4,801,579



3,889,100Funded debt to capital ratio:Gross(6)


0.42:1



0.41:1



0.41:1



0.39:1



0.43:1Net(7)


0.37:1



0.33:1



0.35:1



0.30:1



0.28:1     (1)
    
    All periods present the operating activities of oil and gas
    assets in the Horn River basin in Canada and in the Llanos basin
    in Colombia and the Sea Mar business as discontinued operations.(2)
    
    Our acquisitions results of operations and financial
    position have been included beginning on the respective dates of
    acquisition and include Superior (September 2010), Energy
    Contractors (December 2010), Pragma Drilling Equipment Ltd.
    assets (May 2006), and 1183011 Alberta Ltd. (January 2006).(3)
    
    Represents capital expenditures and the portion of the purchase
    price of acquisitions allocated to fixed assets and goodwill
    based on their fair market value.(4)
    
    The interest coverage ratio is a trailing
    12-month
    quotient of the sum of income (loss) from continuing operations,
    net of tax, net income (loss) attributable to noncontrolling
    interest, interest expense, subsidiary preferred stock
    dividends, depreciation and amortization, depletion expense,
    impairments and other charges, income tax expense (benefit) and
    our proportionate share of full-cost ceiling test writedowns
    from our unconsolidated oil and gas joint ventures lessinvestment income (loss) divided by cash interest 29




---



##### Table of Contents



expense plus subsidiary preferred stock dividends. This ratio is
    a method for calculating the amount of operating cash flows
    available to cover interest expense. The interest coverage ratio
    is not a measure of operating performance or liquidity defined
    by GAAP and may not be comparable to similarly titled measures
    presented by other companies.(5)
    
    The December 31, 2008 and 2007 amounts include
    $1.9 million and $53.1 million, respectively, in cash
    proceeds receivable from brokers from the sale of certain
    long-term investments that are included in other current assets.
    Additionally, the December 31, 2010, 2009 and 2008 amounts
    include $32.9 million, $92.5 million and
    $224.2 million, respectively, in oil and gas financing
    receivables that are included in long-term investments and other
    receivables.(6)
    
    The gross funded debt to capital ratio is calculated by dividing
    (x) funded debt by (y) funded debt plusdeferred tax liabilities (net of deferred tax assets)
    pluscapital. Funded debt is the sum of
    (1) short-term borrowings, (2) the current portion of
    long-term debt and (3) long-term debt. Capital is defined
    as shareholders equity. The gross funded debt to capital
    ratio is not a measure of operating performance or liquidity
    defined by GAAP and may not be comparable to similarly titled
    measures presented by other companies.(7)
    
    The net funded debt to capital ratio is calculated by dividing
    (x) net funded debt by (y) net funded debt plusdeferred tax liabilities (net of deferred tax assets)
    pluscapital. Net funded debt is funded debt minusthe sum of cash and cash equivalents and short-term and
    long-term investments and other receivables. The net funded debt
    to capital ratio is not a measure of operating performance or
    liquidity defined by GAAP and may not be comparable to similarly
    titled measures presented by other companies.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Management
    Overview
    jack-up
       30




---



##### Table of Contents



Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008Commodity prices:Average Henry Hub natural gas spot price ($/thousand cubic feet
    (mcf))

$
4.37


$
3.94


$
8.89


$
.43



11
%

$
(4.95
)


(56
)%Average West Texas intermediate crude oil spot price ($/barrel)

$
79.51


$
61.99


$
99.92


$
17.52



28
%

$
(37.93
)


(38
)%           jack-up
 31




---



##### Table of Contents



12-month single-day,
  other-than-temporary available-for-sale
      
    An expected incremental increase from ancillary well-site
    services, primarily technical pumping services and down-hole
    surveying services, resulting from our acquisition in the third
    quarter of 2010, and
    The anticipated positive impact on our overall level of drilling
    and well-servicing activity and margins resulting from our new
    and upgraded rigs added to our fleet over the past five years,
    which we expect will enhance our competitive position as market
    conditions improve. 32




---



##### Table of Contents



Year Ended December 31,


Increase/(Decrease)2010


2009


2008


2010 to 2009


2009 to 2008(In thousands, except percentages and rig activity)Reportable segments:Operating revenues and Earnings (losses) from unconsolidated
    affiliates from continuing operations: (1)Contract Drilling: (2)U.S. Lower 48 Land Drilling

$
1,294,853


$
1,082,531


$
1,878,441


$
212,322



20
%

$
(795,910
)


(42
)%U.S. Land Well-servicing


444,665



412,243



758,510



32,422



8
%


(346,267
)


(46
)%Pressure Pumping(3)


321,295











321,295



100
%






U.S. Offshore


123,761



157,305



252,529



(33,544
)


(21
)%


(95,224
)


(38
)%Alaska


179,218



204,407



184,243



(25,189
)


(12
)%


20,164



11
%Canada


389,229



298,653



502,695



90,576



30
%


(204,042
)


(41
)%International


1,093,608



1,265,097



1,372,168



(171,489
)


(14
)%


(107,071
)


(8
)%Subtotal Contract Drilling(4)


3,846,629



3,420,236



4,948,586



426,393



12
%


(1,528,350
)


(31
)%Oil and Gas (5)(6)


40,611



(158,780
)


(118,533
)


199,391



126
%


(40,247
)


(34
)%Other Operating Segments (7)(8)


456,893



446,282



683,186



10,611



2
%


(236,904
)


(35
)%Other reconciling items(9)


(136,241
)


(179,752
)


(198,245
)


43,511



24
%


18,493



9
%Total

$
4,207,892


$
3,527,986


$
5,314,994


$
679,906



19
%

$
(1,787,008
)


(34
)%Adjusted income (loss) derived from operating activities from
    continuing operations: (1)(10)Contract Drilling:U.S. Lower 48 Land Drilling

$
274,215


$
294,679


$
628,579


$
(20,464
)


(7
)%

$
(333,900
)


(53
)%U.S. Land Well-servicing


31,597



28,950



148,626



2,647



9
%


(119,676
)


(81
)%Pressure Pumping(3)


66,651











66,651



100
%






U.S. Offshore


9,245



30,508



59,179



(21,263
)


(70
)%


(28,671
)


(48
)%Alaska


51,896



62,742



52,603



(10,846
)


(17
)%


10,139



19
%Canada


22,970



(7,019
)


61,040



29,989



427
%


(68,059
)


(111
)%International


254,744



365,566



407,675



(110,822
)


(30
)%


(42,109
)


(10
)%Subtotal Contract Drilling(4)


711,318



775,426



1,357,702



(64,108
)


(8
)%


(582,276
)


(43
)%Oil and Gas(5)(6)


6,329



(190,798
)


(159,931
)


197,127



103
%


(30,867
)


(19
)%Other Operating Segments (8)(9)


43,179



34,120



68,572



9,059



27
%


(34,452
)


(50
)%Other reconciling items(11)


(105,393
)


(196,844
)


(167,831
)


91,451



46
%


(29,013
)


(17
)%Total

$
655,433


$
421,904


$
1,098,512


$
233,529



55
%

$
(676,608
)


(62
%)Interest expense


(273,044
)


(266,039
)


(196,718
)


(7,005
)


(3
)%


(69,321
)


(35
)%Investment income (loss)


7,648



25,599



21,412



(17,951
)


(70
)%


4,187



20
%Gains (losses) on sales and retirements of long-lived assets and
    other income (expense), net


(47,060
)


(12,559
)


(15,829
)


(34,501
)


(275
)%


3,270



21
%Impairments and other charges(12)


(260,931
)


(330,976
)


(176,123
)


70,045



21
%


(154,853
)


(88
)%Income (loss) from continuing operations before income taxes


82,046



(162,071
)


731,254



244,117



151
%


(893,325
)


(122
)%Income tax expense (benefit)


(24,814
)


(133,803
)


209,660



108,989



81
%


(343,463
)


(164
)%Subsidiary preferred stock dividend


750











750



100
%






Income (loss) from continuing operations, net of tax


106,110



(28,268
)


521,594



134,378



475
%


(549,862
)


(105
)%Income (loss) from discontinued operations, net of tax


(11,330
)


(57,620
)


(41,930
)


46,290



80
%


(15,690
)


(37
)%Net income (loss)


94,780



(85,888
)


479,664



180,668



210
%


(565,552
)


(118
)%Less: Net (income) loss attributable to noncontrolling interest


(85
)


342



(3,927
)


(427
)


(125
)%


4,269



109
%Net income (loss) attributable to Nabors

$
94,695


$
(85,546
)

$
475,737


$
180,241



211
%

$
(561,283
)


(118
)% 33




---



##### Table of Contents



Year Ended December 31,


Increase/(Decrease)2010


2009


2008


2010 to 2009


2009 to 2008(In thousands, except percentages and rig activity)Rig activity:Rig years: (13)U.S. Lower 48 Land Drilling


174.5



149.4



247.9



25.1



17
%


(98.5
)


(40
)%U.S. Offshore


9.4



11.0



17.6



(1.6
)


(15
)%


(6.6
)


(38
)%Alaska


7.4



10.0



10.9



(2.6
)


(26
)%


(0.9
)


(8
)%Canada


29.8



19.7



35.5



10.1



51
%


(15.8
)


(45
)%International(14)


97.8



100.2



120.5



(2.4
)


(2
)%


(20.3
)


(17
)%Total rig years


318.9



290.3



432.4



28.6



10
%


(142.1
)


(33
)%Rig hours: (15)U.S. Land Well-servicing


643,813



590,878



1,090,511



52,935



9
%


(499,633
)


(46
)%Canada Well-servicing


172,589



143,824



248,032



28,765



20
%


(104,208
)


(42
)%Total rig hours


816,402



734,702



1,338,543



81,700



11
%


(603,841
)


(45
)%     (1)
    
    All information present the operating activities of oil and gas
    assets in the Horn River basin in Canada and in the Llanos basin
    in Colombia as discontinued operations.(2)
    
    These segments include our drilling, workover and well-servicing
    and pressure pumping operations, on land and offshore.(3)
    
    Includes operating results of the Superior Merger after
    September 10, 2010.(4)
    
    Includes earnings (losses), net from unconsolidated affiliates,
    accounted for using the equity method, of $6.9 million,
    $9.7 million and $5.8 million for the years ended
    December 31, 2010, 2009 and 2008, respectively.(5)
    
    Represents our oil and gas exploration, development and
    production operations. Includes our proportionate share of
    full-cost ceiling test writedowns recorded by our unconsolidated
    U.S. oil and gas joint venture of $(189.3) million and
    $(207.3) million for the years ended December 31, 2009
    and 2008, respectively.(6)
    
    Includes earnings (losses), net from unconsolidated affiliates,
    accounted for using the equity method, of $18.7 million,
    $(182.6) million and $(204.1) million for the years
    ended December 31, 2010, 2009 and 2008, respectively.
    Additional information is provided in Note 24 
    Supplemental Information on Oil and Gas Exploration and
    Production Activities in Part II, Item 8. 
    Financial Statements and Supplementary Data.(7)
    
    Includes our drilling technology and top drive manufacturing,
    directional drilling, rig instrumentation and software, and
    construction and logistics operations.(8)
    
    Includes earnings (losses), net from unconsolidated affiliates,
    accounted for using the equity method, of $7.7 million,
    $17.5 million and $5.8 million for the years ended
    December 31, 2010, 2009 and 2008, respectively.(9)
    
    Represents the elimination of inter-segment transactions.(10)
    
    Adjusted income (loss) derived from operating activities is
    computed by subtracting direct costs, general and administrative
    expenses, depreciation and amortization, and depletion expense
    from Operating revenues and then adding
    Earnings (losses) from unconsolidated affiliates.
    These amounts should not be used as a substitute for those
    amounts reported under GAAP. However, management evaluates the
    performance of our business units and the consolidated company
    based on several criteria, including adjusted income (loss)
    derived from operating activities, because it believes that
    these financial measures are an accurate reflection of our
    ongoing profitability. A reconciliation of this non-GAAP measure
    to income (loss) from continuing operations before income taxes,
    which is a GAAP measure, is provided within the above table.(11)
    
    Represents the elimination of inter-segment transactions and
    unallocated corporate expenses. 34




---



##### Table of Contents



(12)
    
    Represents impairments and other charges recorded during the
    years ended December 31, 2010, 2009 and 2008, respectively.(13)
    
    Excludes well-servicing rigs, which are measured in rig hours.
    Includes our equivalent percentage ownership of rigs owned by
    unconsolidated affiliates. Rig years represent a measure of the
    number of equivalent rigs operating during a given period. For
    example, one rig operating 182.5 days during a
    365-day
    period represents 0.5 rig years.(14)
    
    International rig years include our equivalent percentage
    ownership of rigs owned by unconsolidated affiliates which
    totaled 2.2 years, 2.5 years and 3.5 years during
    the years ended December 31, 2010, 2009 and 2008,
    respectively.(15)
    
    Rig hours represents the number of hours that our well-servicing
    rig fleet operated during the year.  Segment
    Results of Operations
  Contract
    Drilling
    U.S. Lower 48 Land Drilling.
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages and rig activity)Operating revenues

$
1,294,853


$
1,082,531


$
1,878,441


$
212,322



20
%

$
(795,910
)


(42
)%Adjusted income derived from operating activities

$
274,215


$
294,679


$
628,579


$
(20,464
)


(7
)%

$
(333,900
)


(53
)%Rig years


174.5



149.4



247.9



25.1



17
%


(98.5
)


(40
)%         U.S. Land Well-servicing.
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages and rig activity)Operating revenues

$
444,665


$
412,243


$
758,510


$
32,422



8
%

$
(346,267
)


(46
)%Adjusted income derived from operating activities

$
31,597


$
28,950


$
148,626


$
2,647



9
%

$
(119,676
)


(81
)%Rig hours


643,813



590,878



1,090,511



52,935



9
%


(499,633
)


(46
)%      35




---



##### Table of Contents



Pressure Pumping.
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages and rig activity)Operating revenues

$
321,295


$



$



$
321,295



100
%

$




Adjusted income derived from operating activities

$
66,651


$



$



$
66,651



100
%

$




     U.S. Offshore.
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages and rig activity)Operating revenues

$
123,761


$
157,305


$
252,529


$
(33,544
)


(21
)%

$
(95,224
)


(38
)%Adjusted income derived from operating activities

$
9,245


$
30,508


$
59,179


$
(21,263
)


(70
)%

$
(28,671
)


(48
)%Rig years


9.4



11.0



17.6



(1.6
)


(15
)%


(6.6
)


(38
)%   ® tm ®
  tm jack-up ® ® ®
  Alaska.
  Year Ended December 31,


Increase/(Decrease)2010


2009


2008


2010 to 2009


2009 to 2008(In thousands, except percentages and rig activity)Operating revenues and Earnings from unconsolidated affiliates

$
179,218


$
204,407


$
184,243


$
(25,189
)


(12
)%

$
20,164



11
%Adjusted income derived from operating activities

$
51,896


$
62,742


$
52,603


$
(10,846
)


(17
)%

$
10,139



19
%Rig years


7.4



10.0



10.9



(2.6
)


(26
)%


(0.9
)


(8
%)      36




---



##### Table of Contents



Canada.
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages and rig activity)Operating revenues and Earnings from unconsolidated affiliates

$
389,229


$
298,653


$
502,695


$
90,576



30
%

$
(204,042
)


(41
)%Adjusted income (loss) derived from operating activities

$
22,970


$
(7,019
)

$
61,040


$
29,989



427
%

$
(68,059
)


(111
)%Rig years  Drilling


29.8



19.7



35.5



10.1



51
%


(15.8
)


(45
)%Rig hours  Well-servicing


172,589



143,824



248,032



28,765



20
%


(104,208
)


(42
%)       International.
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages and rig activity)Operating revenues and Earnings from unconsolidated affiliates

$
1,093,608


$
1,265,097


$
1,372,168


$
(171,489
)


(14
)%

$
(107,071
)


(8
)%Adjusted income derived from operating activities

$
254,744


$
365,566


$
407,675


$
(110,822
)


(30
)%

$
(42,109
)


(10
)%Rig years


97.8



100.2



120.5



(2.4
)


(2
)%


(20.3
)


(17
)%   year-over-year
  year-over-year jack-up start-up
 37




---



##### Table of Contents



Oil and Gas.
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)Operating revenues and Earnings (losses) from unconsolidated
    affiliates

$
40,611


$
(158,780
)

$
(118,533
)

$
199,391



126
%

$
(40,247
)


(34
)%Adjusted income (loss) derived from operating activities

$
6,329


$
(190,798
)

$
(159,931
)

$
197,127



103
%

$
(30,867
)


(19
)%   12-month
      Other
    Operating Segments
    Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)Operating revenues and Earnings from unconsolidated affiliates

$
456,893


$
446,282


$
683,186


$
10,611



2
%

$
(236,904
)


(35
)%Adjusted income derived from operating activities

$
43,179


$
34,120


$
68,572


$
9,059



27
%

$
(34,452
)


(50
%)      38




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##### Table of Contents



Discontinued
    Operations
      Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)Revenues

$
37,840


$
8,937


$
4,354


$
28,903



323
%

$
4,583



105
%Earnings (losses) from unconsolidated affiliates(1)

$
(10,628
)

$
(59,248
)

$
(37,286
)

$
48,620



82
%

$
(21,962
)


(59
)%Income (loss) from discontinued operations, net of taxIncome (loss) from discontinued operations, net of tax

$
(11,330
)

$
(57,620
)

$
(41,930
)

$
46,290



80
%

$
(15,690
)


(37
)%     (1)
    
    Includes our proportionate share of full-cost ceiling test
    writedowns of $47.8 million and $21.0 million, for the
    years ended December 31, 2009 and 2008, respectively.  OTHER
    FINANCIAL INFORMATION
  General
    and administrative expenses
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)General and administrative expenses

$
346,661


$
428,161


$
479,194


$
(81,500
)


(19
)%

$
(51,033
)


(11
)%General and administrative expenses as a percentage of operating
    revenues


8.3
%


11.6
%


8.7
%


(3.3
)%


(28
)%


2.9
%


33
%    39




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##### Table of Contents



Depreciation
    and amortization, and depletion expense
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)Depreciation and amortization expense

$
764,253


$
667,100


$
614,367


$
97,153



15
%

$
52,733



9
%Depletion expense

$
17,943


$
9,417


$
22,308


$
8,526



91
%

$
(12,891
)


(58
)%   Depreciation and amortization
    expense.
  Depletion expense. units-of-production
  Interest
    expense
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)Interest expense

$
273,044


$
266,039


$
196,718


$
7,005



3
%

$
69,321



(35
%)       Investment
    income (loss)
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)Investment income (loss)

$
7,648


$
25,599


$
21,412


$
(17,951
)


(70
)%

$
4,187



20
%        40




---



##### Table of Contents



Gains
    (losses) on sales and retirements of long-lived assets and other
    income (expense), net
  Year Ended December 31,

Increase/(Decrease)2010

2009

2008

2010 to 2009

2009 to 2008(In thousands, except percentages)Gains (losses) on sales and retirements of long-lived assets and
    other income (expense), net

$
(47,060
)

$
(12,559
)

$
(15,829
)

$
(34,501
)


(275
)%

$
3,270



21
%         Impairments
    and Other Charges
  Year Ended December 31,


Increase/(Decrease)2010


2009


2008


2010 to 2009


2009 to 2008(In thousands, except percentages)Impairment of oil and gas- related assets

$
192,179


$
197,744


$
21,537


$
(5,565
)


(3
)%

$
176,207



818
%Impairment of long-lived assets


58,045



64,229







(6,184
)


(10
)%


64,229



100
%Goodwill impairments


10,707



14,689



150,008



(3,982
)


(27
)%


(135,319
)


(90
)%Impairment of other intangible assets










4,578











(4,578
)


(100
)%Other-than-temporary
    impairment on securities






54,314







(54,314
)


(100
)%


54,314



100
%Total

$
260,931


$
330,976


$
176,123


$
(70,045
)


(21
)%

$
154,853



88
%   Impairments
    of Oil and Gas Assets
   41




---



##### Table of Contents



Impairments
    of Long-Lived Assets
    jack-up
  jack-up
 42




---



##### Table of Contents



longer-than-expected
  Goodwill
    Impairments
        Other
    than Temporary Impairments on Debt and Equity
    Securities
  other-than-temporary available-for-sale
   43




---



##### Table of Contents



Income
    tax rate
  Increase/(Decrease)Year Ended December 31,

2010 to

2009 to2010

2009

2008

2009

2008Effective income tax rate from continuing operations


(30
)%


83
%


29
%


(113
)%


(136
)%


54
%


186
%           Liquidity
    and Capital Resources
  Cash
    Flows
    Operating Activities.
 44




---



##### Table of Contents



Investing Activities.
  Financing Activities.
    Future
    Cash Requirements
     45




---



##### Table of Contents



Payments Due by PeriodTotal


< 1 Year


1-3 Years


3-5 Years


Thereafter(In thousands)Contractual cash obligations:Long-term debt:(1)Principal

$
4,478,455


$
1,403,455(2
)

$
275,000(3
)

$



$
2,800,000(4
)Interest


1,720,577



220,434



412,942



398,076



689,125Operating leases(5)


74,128



25,749



32,774



14,673



932Capital leases


4,297



2,201



1,811



285Purchase commitments(6)


754,605



603,960



77,145



73,500



Employment contracts(5)


28,319



11,965



16,035



319



Pension funding obligations


1,315



1,315











Transportation and Processing Contracts(7)


400,037



29,564



120,344



128,252



121,877Total contractual cash obligations

$
7,461,733


$
2,298,643


$
936,051


$
615,105


$
3,611,934  46




---



##### Table of Contents



(2)
    Includes the remaining portion of Nabors Delawares
    0.94% senior exchangeable notes due May 2011.    (4)
    Represents Nabors Delawares aggregate 6.15% senior
    notes due February 2018, 9.25% senior notes due January
    2019 and 5.0% senior notes due September 2020.(5)
    See Note 17  Commitments and Contingencies in
    Part II, Item 8.  Financial Statements and
    Supplementary Data.(6)
    Purchase commitments include agreements to purchase goods or
    services that are enforceable and legally binding and that
    specify all significant terms, including fixed or minimum
    quantities to be purchased; fixed, minimum or variable pricing
    provisions; and the approximate timing of the transaction.(7)
    We have contracts with a pipeline company to pay specified fees
    based on committed volumes for gas transport and processing, as
    calculated on a monthly basis. Due to low natural gas prices and
    our decision to delay drilling, our current available production
    flowing to pipelines and processing plants does not meet the
    daily committed volumes required under the contracts. The
    amounts set forth in the table above reflect the aggregate fees
    payable under these contracts.  and/or
      Financial
    Condition and Sources of Liquidity
   47




---



##### Table of Contents



plus plus
  plus plus minus
  12-month less
    1 2
     48




---



##### Table of Contents



Form S-4,
    letter-of-credit letter-of-credit
  (In thousands)Credit available

$
270,263Letters of credit outstanding, inclusive of financial and
    performance guarantees


(70,605
)Remaining availability

$
199,658         Off-Balance
    Sheet Arrangements (Including Guarantees)
      Maximum Amount2011

2012

2013

Thereafter

Total(In thousands)Financial standby letters of credit and other financial surety
    instruments

$
83,010


$
525


$
12,158


$



$
95,693  49




---



##### Table of Contents



Other
    Matters
  Risk
    Management
    
    monitoring managements identification and evaluation of
    major strategic, operational, regulatory, information and
    external risks inherent in our business,
    reviewing the integrity of our systems of operational controls
    regarding legal and regulatory compliance, and
    reviewing our processes for managing and mitigating operational
    risk.        
    risk of damage to the underground reservoir is allocated to the
    operator;
    loss of or damage to the hole is allocated to the operator,
    although the contractor may take responsibility for redrilling
    the hole at some negotiated discount if the loss is due to the
    contractors negligence or willful misconduct;
    pollution is allocated to the contractor if it is above the
    surface of the ground or water and emanates from the
    contractors equipment, with the risk of all other
    pollution allocated to the operator;
    the costs associated with bringing a wild well under control are
    allocated to the operator; and
    where deemed necessary, some measure of political risk is
    allocated to the operator.     50




---



##### Table of Contents



Recent
    Legislation and Actions
      Recent
    Accounting Pronouncements
  Regulation S-K Regulation S-X 12-month
   51




---



##### Table of Contents



Related-Party
    Transactions
            Critical
    Accounting Estimates
   52




---



##### Table of Contents




    it requires assumptions to be made that were uncertain at the
    time the estimate was made; and
    changes in the estimate or different estimates that could have
    been selected could have a material impact on our consolidated
    financial position or results of operations.    Financial Instruments.
  
    Level 1 measurements include unadjusted quoted market
    prices for identical assets or liabilities in an active market;
    Level 2 measurements include quoted market prices for
    identical assets or liabilities in an active market that have
    been adjusted for items such as effects of restrictions for
    transferability and those that are not quoted but are observable
    through corroboration with observable market data, including
    quoted market prices for similar assets; and
    Level 3 measurements include those that are unobservable
    and of a highly subjective measure.  Depreciation of Property, Plant and
    Equipment.
  units-of-production jack-up jack-up 30-year
     53




---



##### Table of Contents



Impairment of Long-Lived Assets.
      Impairment of Goodwill and Intangible
    Assets.
   54




---



##### Table of Contents



Oil and Gas Properties. property-by-property units-of-production Recent Accounting
    Pronouncements,
    units-of-production Recent Accounting Pronouncements
 55




---



##### Table of Contents



12-month
      Oil and Gas Reserves. unit-of-production
    Income Taxes.
 56




---



##### Table of Contents



We may
    have additional tax liabilities
      Self-Insurance Reserves.
     57




---



##### Table of Contents



Fair Value of Assets Acquired and Liabilities
    Assumed.
      Share-Based Compensation.
   58




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Foreign Currency Risk.
    Credit Risk.
  Interest Rate, and Marketable and Non-marketable Security
    Price Risk. non-U.S. securities
     59




---



##### Table of Contents



Fair Value of Financial Instruments.
  December 31,2010


2009Effective








EffectiveInterest


Carrying


Fair


Interest


Carrying


FairRate


Value


Value


Rate


Value


Value(In thousands, except interest rates)0.94% senior exchangeable notes due May 2011(1)


6.13
%

$
1,378,178


$
1,403,315



6.13
%

$
1,576,480


$
1,668,3686.15% senior notes due February 2018


6.42
%


966,276



1,041,008



6.42
%


965,066



992,5319.25% senior notes due January 2019


9.33
%


1,125,000



1,393,943



9.40
%


1,125,000



1,403,7195.00% senior notes due September 2020


5.20
%


697,037



678,335











5.375% senior notes due August 2012(2)


5.61
%


273,977



291,500



5.69
%


273,350



289,072Subsidiary preferred stock


4.0
%


69,188



68,625











Other






2,676



2,676



4.50
%


872



872$
4,512,332


$
4,879,402






$
3,940,768


$
4,354,562  60




---



##### Table of Contents



(1)
    
    During 2010 and 2009, we purchased $281.8 million and
    $964.8 million, respectively, par value of these notes in
    the open market.(2)
    
    Includes $.7 million and $1.1 million as of
    December 31, 2010 and 2009, respectively, related to the
    unamortized loss on the interest rate swap that was unwound
    during the fourth quarter of 2005.    December 31,2010


2009Weighted-







Weighted-Average







AverageFair


Interest

Life


Fair


Interest

LifeValue


Rates

(Years)


Value


Rates

(Years)(In thousands, except interest rates)Cash and cash equivalents

$
641,702


0% - .28%


0.00


$
927,815


0% - 1.55%


0.00Short-term investments:Trading equity securities


19,630









24,014





Available-for-sale
    equity securities


79,698









93,651





Available-for-sale
    debt securities:Commercial paper and CDs


1,275


.75%


.6



1,284


.25%


.6Corporate debt securities


52,022


10.01% - 13.99%


3.6



33,852


.38% -14.00%


2.6Mortgage-backed debt securities


372


2.79%


2.7



861


5.15% - 5.18%


3.0Mortgage-CMO debt securities


3,015


.42% - 5.9%


.3



5,411


2.58% -6.23%


1.9Asset-backed debt securities


3,476


.56% - 4.81%


1.3



3,963


2.64% -6.22%


2.1Total
    available-for-sale
    debt securities


60,160









45,371Total
    available-for-sale
    securities


139,858









139,022Total short-term investments


159,488









163,036Long-term investments and other receivables:Actively managed funds


7,427


N/A






8,341


N/AOil and gas financing receivables


32,873


13.10% - 13.52%






92,541


13.10% -13.52%Total long-term investments and other receivables


40,300









100,882Total cash, cash equivalents, short-term and long-term
    investments and other receivables

$
841,490








$
1,191,733   available-for-sale
 61




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  INDEX
   
 Page No.Report of Independent Registered Public
    Accounting Firm


63Consolidated Balance Sheets as of
    December 31, 2010 and 2009


65Consolidated Statements of Income (Loss) for the
    Years Ended December 31, 2010, 2009 and 2008


66Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2010, 2009 and 2008


67Consolidated Statements of Changes in Equity for
    the Years Ended December 31, 2010, 2009 and 2008


68Notes to Consolidated Financial Statements


70   62




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders
    of Nabors Industries Ltd.



In our opinion, the accompanying consolidated balance sheets and
    the related consolidated statements of income (loss), changes in
    equity and cash flows present fairly, in all material respects,
    the financial position of Nabors Industries Ltd. and its
    subsidiaries (the Company) at December 31, 2010 and
    December 31, 2009, and the results of their operations and
    their cash flows for each of the three years in the period ended
    December 31, 2010 in conformity with accounting principles
    generally accepted in the United States of America. In addition,
    in our opinion, the financial statement schedule listed in the
    index appearing under Item 15(a)(2) presents fairly, in all
    material respects, the information set forth therein when read
    in conjunction with the related consolidated financial
    statements. Also in our opinion, the Company maintained, in all
    material respects, effective internal control over financial
    reporting as of December 31, 2010, based on criteria
    established in Internal Control  Integrated
    Frameworkissued by the Committee of Sponsoring
    Organizations of the Treadway Commission (COSO). The
    Companys management is responsible for these financial
    statements and financial statement schedule, for maintaining
    effective internal control over financial reporting and for its
    assessment of the effectiveness of internal control over
    financial reporting, included in Managements Report on
    Internal Control over Financial Reporting appearing under
    Item 9A. Our responsibility is to express opinions on these
    financial statements, on the financial statement schedule, and
    on the Companys internal control over financial reporting
    based on our integrated audits. We conducted our audits in
    accordance with the standards of the Public Company Accounting
    Oversight Board (United States). Those standards require that we
    plan and perform the audits to obtain reasonable assurance about
    whether the financial statements are free of material
    misstatement and whether effective internal control over
    financial reporting was maintained in all material respects. Our
    audits of the financial statements included examining, on a test
    basis, evidence supporting the amounts and disclosures in the
    financial statements, assessing the accounting principles used
    and significant estimates made by management, and evaluating the
    overall financial statement presentation. Our audit of internal
    control over financial reporting included obtaining an
    understanding of internal control over financial reporting,
    assessing the risk that a material weakness exists, and testing
    and evaluating the design and operating effectiveness of
    internal control based on the assessed risk. Our audits also
    included performing such other procedures as we considered
    necessary in the circumstances. We believe that our audits
    provide a reasonable basis for our opinions.



As discussed in Note 2 to the consolidated financial
    statements, the Company changed the manner in which their oil
    and gas reserves are estimated as well as the manner in which
    prices are determined to calculate the ceiling limit on
    capitalized oil and gas costs as of December 31, 2009.



As described in Managements Report on Internal Control
    over Financial Reporting appearing under Item 9A,
    management has excluded Superior Well Services, Inc.
    (Superior) from its assessment of internal control
    over financial reporting as of December 31, 2010 because
    Superior was acquired by the Company in a purchase business
    combination during 2010. We have also excluded Superior from our
    audit of internal control over financial reporting. Superior is
    a wholly-owned subsidiary whose total assets and total revenues
    represent 10 and 8 percent, respectively, of the related
    consolidated financial statement amounts as of and for the year
    ended December 31, 2010.



A companys internal control over financial reporting is a
    process designed to provide reasonable assurance regarding the
    reliability of financial reporting and the preparation of
    financial statements for external purposes in accordance with
    generally accepted accounting principles. A companys
    internal control over financial reporting includes those
    policies and procedures that (i) pertain to the maintenance
    of records that, in reasonable detail, accurately and fairly
    reflect the transactions and dispositions of the assets of the
    company; (ii) provide reasonable assurance that
    transactions are recorded as necessary to permit preparation of
    financial statements in accordance with generally accepted
    accounting principles, and that receipts and expenditures of



63




---



##### Table of Contents



64




---



##### Table of Contents



NABORS
    INDUSTRIES LTD. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2010


2009(In thousands, except per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
641,702


$
927,815Short-term investments


159,488



163,036Assets held for sale


352,048



Accounts receivable, net


1,116,510



724,040Inventory


158,836



100,819Deferred income taxes


31,510



125,163Other current assets


152,836



135,791Total current assets


2,612,930



2,176,664Long-term investments and other receivables


40,300



100,882Property, plant and equipment, net


7,815,419



7,646,050Goodwill


494,372



164,265Investment in unconsolidated affiliates


267,723



306,608Other long-term assets


415,825



250,221Total assets

$
11,646,569


$
10,644,690LIABILITIES AND EQUITYCurrent liabilities:Current portion of long-term debt

$
1,379,018


$
163Trade accounts payable


355,282



226,423Accrued liabilities


394,292



346,337Income taxes payable


25,788



35,699Total current liabilities


2,154,380



608,622Long-term debt


3,064,126



3,940,605Other long-term liabilities


245,765



240,057Deferred income taxes


770,247



673,427Total liabilities


6,234,518



5,462,711Commitments and contingencies (Note 17)Subsidiary preferred stock (Notes 7 and 14)


69,188



Equity:Shareholders equity:Common shares, par value $.001 per share:Authorized common shares 800,000; issued 315,034 and 313,915,
    respectively


315



314Capital in excess of par value


2,255,787



2,239,323Accumulated other comprehensive income


342,052



292,706Retained earnings


3,707,881



3,613,186Less: treasury shares, at cost, 29,414 common shares


(977,873
)


(977,873
)Total shareholders equity


5,328,162



5,167,656Noncontrolling interest


14,701



14,323Total equity


5,342,863



5,181,979Total liabilities and equity

$
11,646,569


$
10,644,690    65




---



##### Table of Contents



NABORS
    INDUSTRIES LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
    (LOSS)
  Year Ended December 31,2010


2009


2008(In thousands, except per share amounts)Revenues and other income:Operating revenues

$
4,174,635


$
3,683,419


$
5,507,542Earnings (losses) from unconsolidated affiliates


33,257



(155,433
)


(192,548
)Investment income (loss)


7,648



25,599



21,412Total revenues and other income


4,215,540



3,553,585



5,336,406Costs and other deductions:Direct costs


2,423,602



2,001,404



3,100,613General and administrative expenses


346,661



428,161



479,194Depreciation and amortization


764,253



667,100



614,367Depletion


17,943



9,417



22,308Interest expense


273,044



266,039



196,718Losses (gains) on sales and retirements of long-lived assets and
    other expense (income), net


47,060



12,559



15,829Impairments and other charges


260,931



330,976



176,123Total costs and other deductions


4,133,494



3,715,656



4,605,152Income (loss) from continuing operations before income taxes


82,046



(162,071
)


731,254Income tax expense (benefit):Current


(83,816
)


69,532



188,832Deferred


59,002



(203,335
)


20,828Total income tax expense (benefit)


(24,814
)


(133,803
)


209,660Subsidiary preferred stock dividend


750







Income (loss) from continuing operations, net of tax


106,110



(28,268
)


521,594Income (loss) from discontinued operations, net of tax


(11,330
)


(57,620
)


(41,930
)Net income (loss)


94,780



(85,888
)


479,664Less: Net (income) loss attributable to noncontrolling interest


(85
)


342



(3,927
)Net income (loss) attributable to Nabors

$
94,695


$
(85,546
)

$
475,737Earnings (losses) per share:Basic from continuing operations

$
.37


$
(.10
)

$
1.84Basic from discontinued operations


(.04
)


(.20
)


(.15
)Total Basic

$
.33


$
(.30
)

$
1.69Diluted from continuing operations

$
.37


$
(.10
)

$
1.80Diluted from discontinued operations


(.04
)


(.20
)


(.15
)Total Diluted

$
.33


$
(.30
)

$
1.65Weighted-average number of common shares outstanding:Basic


285,145



283,326



281,622Diluted


289,996



283,326



288,236   The details of credit-related impairments to investments for
    the year ended December 31, 2009 is presented below:
  (In thousands)Other-than-temporary
    impairment on debt security

$
40,300Less:
    other-than-temporary
    impairment recognized in accumulated other comprehensive income
    (loss)


(4,651
)Credit-related impairment on investment(1)

$
35,649     (1)
    
    Included in Impairments and other charges (Note 3)   66




---



##### Table of Contents



NABORS
    INDUSTRIES LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Year Ended December 31,2010


2009


2008(In thousands)Cash flows from operating activities:Net income (loss) attributable to Nabors

$
94,695


$
(85,546
)

$
475,737Adjustments to net income (loss):Depreciation and amortization


766,519



668,415



614,367Depletion


27,002



11,078



25,442Deferred income tax expense (benefit)


55,964



(218,760
)


17,315Deferred financing costs amortization


5,431



6,133



7,661Pension liability amortization and adjustments


664



844



160Discount amortization on long-term debt


70,719



86,802



123,739Amortization of loss on hedges


786



580



548Impairments and other charges


260,931



339,129



176,123Losses (gains) on long-lived assets, net


(1,050
)


12,339



9,644Losses (gains) on investments, net


191



(9,954
)


18,736Losses (gains) on debt retirement, net


7,042



(11,197
)


(12,248
)Losses (gains) on derivative instruments


2,471



338



4,783Share-based compensation


13,746



106,725



45,401Foreign currency transaction losses (gains), net


17,880



8,372



(2,718
)Equity in (earnings) losses of unconsolidated affiliates, net of
    dividends


(13,630
)


229,813



236,763Changes in operating assets and liabilities, net of effects from
    acquisitions:Accounts receivable


(249,725
)


450,530



(157,697
)Inventory


(15,201
)


52,995



(26,774
)Other current assets


6,589



205,108



(81,764
)Other long-term assets


7,509



(22,233
)


(85,231
)Trade accounts payable and accrued liabilities


70,463



(146,470
)


38,129Income taxes payable


(19,208
)


(62,535
)


24,043Other long-term liabilities


(2,804
)


(5,534
)


10,665Net cash provided by operating activities


1,106,984



1,616,972



1,462,824Cash flows from investing activities:Purchases of investments


(34,147
)


(32,674
)


(269,983
)Sales and maturities of investments


34,613



57,033



521,613Cash paid for acquisition of businesses, net of cash acquired


(733,630
)






(287
)Investment in unconsolidated affiliates


(40,936
)


(125,076
)


(271,309
)Capital expenditures


(930,277
)


(1,093,435
)


(1,506,979
)Proceeds from sales of assets and insurance claims


31,072



31,375



69,842Net cash used for investing activities


(1,673,305
)


(1,162,777
)


(1,457,103
)Cash flows from financing activities:Increase (decrease) in cash overdrafts


(6,298
)


(18,157
)


23,858Proceeds from long-term debt


696,948



1,124,978



962,901Debt issuance costs


(8,934
)


(8,832
)


(7,324
)Payments for (proceeds from) hedge transactions


(5,667
)






Proceeds from Revolving Credit Facility


600,000







Proceeds from issuance of common shares


8,201



11,249



56,630Reduction in long-term debt


(398,514
)


(1,081,801
)


(836,511
)Reduction in Revolving Credit Facility


(600,000
)






Repurchase of equity component of convertible debt


(4,712
)


(6,586
)


Settlement of call options and warrants, net


1,134







Repurchase of common shares










(281,101
)Purchase of restricted stock


(1,935
)


(1,515
)


(13,061
)Tax benefit related to share-based awards


31



37



5,369Net cash provided by (used for) financing activities


280,254



19,373



(89,239
)Effect of exchange rate changes on cash and cash equivalents


(46
)


12,160



(5,701
)Net increase in cash and cash equivalents


(286,113
)


485,728



(89,219
)Cash and cash equivalents, beginning of period


927,815



442,087



531,306Cash and cash equivalents, end of period

$
641,702


$
927,815


$
442,087    67




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##### Table of Contents



NABORS
    INDUSTRIES LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN
    EQUITY
  AccumulatedCapital in


Other








Non-Common Shares


Excess of


Comprehensive


Retained


Treasury


Controlling


TotalShares


Par Value


Par Value


Income


Earnings


Shares


Interest


Equity(In thousands)Balances, December 31, 2007






305,458


$
305


$
2,133,579


$
322,635


$
3,222,995


$
(877,935
)

$
14,468


$
4,816,047Comprehensive income (loss):Net income (loss) attributable to Nabors

$
475,737



















475,737











475,737Translation adjustment attributable to Nabors


(228,865
)














(228,865
)














(228,865
)Unrealized gains/(losses) on marketable securities, net of
    income tax benefit of $4,374


(37,190
)














(37,190
)














(37,190
)Less: Reclassification adjustment for (gains)/losses included in
    net income (loss), net of income taxes of $129


(51
)














(51
)














(51
)Pension liability amortization, net of income taxes of $56


104















104















104Pension liability adjustment, net of income tax benefit of $1,915


(3,009
)














(3,009
)














(3,009
)Unrealized gains/(losses) and amortization of (gains)/losses on
    cash flow hedges, net of income taxes of $163


(104
)














(104
)














(104
)Comprehensive income (loss) attributable to Nabors

$
206,622Net income (loss) attributable to noncontrolling interest


3,927



























3,927



3,927Translation adjustment attributable to noncontrolling interest


(2,537
)


























(2,537
)


(2,537
)Comprehensive income (loss) attributable to noncontrolling
    interest


1,390Total comprehensive income (loss)

$
208,012Issuance of common shares for stock options exercised, net of
    surrender of unexercised stock options






2,480



2



56,628



















56,630Distributions from noncontrolling interest






























(1,540
)


(1,540
)Nabors Exchangeco shares exchanged






16



























Issuance of 5,246 treasury shares related to conversion of notes














(181,163
)










181,163







Repurchase of 8,538 treasury shares


























(281,101
)






(281,101
)Repurchase of equity component of convertible debt














(35
)


















(35
)Tax benefit related to the redemption of convertible debt














81,789



















81,789Tax benefit related to share-based awards














6,282



















6,282Restricted stock awards, net






4,389



5



(13,066
)


















(13,061
)Share-based compensation














45,401



















45,401Balances, December 31, 2008






312,343


$
312


$
2,129,415


$
53,520


$
3,698,732


$
(977,873
)

$
14,318


$
4,918,424Balances, December 31, 2008






312,343


$
312


$
2,129,415


$
53,520


$
3,698,732


$
(977,873
)

$
14,318


$
4,918,424Comprehensive income (loss):Net income (loss) attributable to Nabors

$
(85,546
)


















(85,546
)










(85,546
)Translation adjustment attributable to Nabors


150,290















150,290















150,290Unrealized gains/(losses) on marketable securities, net of
    income benefit of $839


36,727















36,727















36,727Unrealized gains/(losses) on adjusted basis for marketable debt
    security, net of income taxes of $1,199


1,956















1,956















1,956Less: Reclassification adjustment for (gains)/losses included in
    net income (loss), net of income tax benefit of $4,921


49,386















49,386















49,386Pension liability amortization, net of income taxes of $325


519















519















519Pension liability adjustment, net of income taxes of $89


130















130















130Unrealized gains/(losses) and amortization of (gains)/losses on
    cash flow hedges, net of income tax benefit of $18


178















178















178Comprehensive income (loss) attributable to Nabors

$
153,640Net income (loss) attributable to noncontrolling interest


(342
)


























(342
)


(342
)Translation adjustment attributable to noncontrolling interest


2,024



























2,024



2,024Comprehensive income (loss) attributable to noncontrolling
    interest


1,682Total comprehensive income (loss)

$
155,322Issuance of common shares for stock options exercised, net of
    surrender of unexercised stock options






1,476



2



11,247



















11,249Distributions from noncontrolling interest






























(1,677
)


(1,677
)Nabors Exchangeco shares exchanged






105



























Repurchase of equity component of convertible debt














(6,586
)


















(6,586
)Tax benefit related to share-based awards














37



















37Restricted stock awards, net






(9
)






(1,515
)


















(1,515
)Share-based compensation














106,725



















106,725Balances, December 31, 2009






313,915


$
314


$
2,239,323


$
292,706


$
3,613,186


$
(977,873
)

$
14,323


$
5,181,979    68




---



##### Table of Contents



NABORS
    INDUSTRIES LTD. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN EQUITY
      (Continued)
  AccumulatedCapital in


Other








Non-Common Shares


Excess of


Comprehensive


Retained


Treasury


Controlling


TotalShares


Par Value


Par Value


Income


Earnings


Shares


Interest


Equity(In thousands)Balances, December 31, 2009






313,915


$
314


$
2,239,323


$
292,706


$
3,613,186


$
(977,873
)

$
14,323


$
5,181,979Comprehensive income (loss):Net income (loss) attributable to Nabors

$
94,695



















94,695











94,695Translation adjustment attributable to Nabors


60,897















60,897















60,897Unrealized gains/(losses) on marketable securities, net of
    income taxes of $7,435


(7,157
)














(7,157
)














(7,157
)Less: Reclassification adjustment for (gains)/losses included in
    net income (loss), net of income taxes of $693


(1,001
)














(1,001
)














(1,001
)Pension liability amortization, net of income taxes of $259


405















405















405Pension liability adjustment, net of income tax benefit of $405


(635
)














(635
)














(635
)Unrealized gains/(losses) and amortization of (gains)/losses on
    cash flow hedges, net of income tax benefit of $2,119


(3,163
)














(3,163
)














(3,163
)Comprehensive income (loss) attributable to Nabors

$
144,041Net income (loss) attributable to noncontrolling interest


85



























85



85Translation adjustment attributable to noncontrolling interest


723



























723



723Comprehensive income (loss) attributable to noncontrolling
    interest


808Total comprehensive income (loss)

$
144,849Issuance of common shares for stock options exercised, net of
    surrender of unexercised stock options






714



1



8,200



















8,201Distributions from noncontrolling interest






























(867
)


(867
)Contributions to noncontrolling interest






























437



437Repurchase of equity component of convertible debt














(4,712
)


















(4,712
)Settlement of call options and warrants, net














1,134



















1,134Tax benefit related to share-based awards














31



















31Restricted stock awards, net






405







(1,935
)


















(1,935
)Share-based compensation














13,746



















13,746Balances, December 31, 2010






315,034


$
315


$
2,255,787


$
342,052


$
3,707,881


$
(977,873
)

$
14,701


$
5,342,863    69




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1
    Nature of
    Operations    
    We actively market approximately 550 land drilling rigs for
    oil and gas land drilling operations in the U.S. Lower
    48 states, Alaska, Canada, South America, Mexico, the
    Caribbean, the Middle East, the Far East, Russia and Africa.
    We actively market approximately 555 rigs for land
    well-servicing and workover work in the United States and
    approximately 172 rigs for land workover and well-servicing work
    in Canada.  jack-up
    
    We offer a wide range of ancillary well-site services, including
    hydraulic fracturing, engineering, transportation and disposal,
    construction, maintenance, well logging, directional drilling,
    rig instrumentation, data collection and other support services
    in select United States and international markets.
    We manufacture and lease or sell top drives for a broad range of
    drilling applications, directional drilling systems, rig
    instrumentation and data collection equipment, pipeline handling
    equipment and rig reporting software.
    We invest in oil and gas exploration, development and production
    activities in the United States, Canada and Colombia through
    both our wholly owned subsidiaries and our oil and gas joint
    ventures in which we hold
    49-50%
    ownership interests.
    We have a 51% ownership interest in a joint venture in Saudi
    Arabia, which owns and actively markets nine rigs in addition to
    the rigs we lease to the joint venture.
    We also provide logistics services for onshore drilling in
    Canada using helicopters and fixed-wing aircraft.       70




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 2
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
        Cash
    and Cash Equivalents
    Investments
  Short-term
    investments
  available-for-sale available-for-sale other-than-temporary.
 71




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Long-term
    investments and other receivables
  non-U.S. securities
  Inventory
  first-in, work-in-progress
  Property,
    Plant and Equipment
  units-of-production jack-up jack-up 30-year
     72




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Oil
    and Gas Properties
  property-by-property units-of-production Recent Accounting Pronouncements
    units-of-production Recent Accounting Pronouncements 12-month
     73




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Oil and
    Gas Reserves
  unit-of-production
    Goodwill
      AcquisitionsandBalance as of


Purchase





Cumulative


Balance as ofDecember 31,


Price





Translation


December 31,2008


Adjustments


Impairments


Adjustment


2009(In thousands)Contract Drilling:U.S. Lower 48 Land Drilling

$
30,154


$



$



$



$
30,154U.S. Land Well-servicing


50,839















50,839U.S. Offshore


18,003















18,003Alaska


19,995















19,995International


18,983















18,983Subtotal Contract Drilling


137,974















137,974Other Operating Segments


37,775







(14,689
)(1)


3,205



26,291Total

$
175,749


$



$
(14,689
)

$
3,205


$
164,265   74




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Balance as of


Acquisitions and





Cumulative


Balance as ofDecember 31,


Purchase Price





Translation


December 31,2009


Adjustments


Impairments


Adjustment


2010(In thousands)Contract Drilling:U.S. Lower 48 Land Drilling

$
30,154


$



$



$



$
30,154U.S. Land Well-servicing


50,839



5,000
(2)










55,839Pressure Pumping






334,992
(3)










334,992U.S. Offshore


18,003







(10,707
)(4)






7,296Alaska


19,995















19,995International


18,983















18,983Subtotal Contract Drilling


137,974



339,992



(10,707
)






467,259Other Operating Segments


26,291











822



27,113Total

$
164,265


$
339,992


$
(10,707
)

$
822


$
494,372     (1)
    
    Represents goodwill impairment associated with Nabors Blue Sky
    Ltd., a Canadian subsidiary, included in our Other Operating
    segment. The impairment charges to Nabors Blue Sky were deemed
    necessary due to the continued deterioration of the downturn in
    the oil and gas industry in Canada which has led to diminished
    demand for immediate heliportable access to remote drilling
    sites. As of December 31, 2009, Nabors Blue Sky Ltd. has no
    recorded goodwill.(2)
    
    Represents the preliminary calculations of goodwill recorded in
    connection with our acquisition of Energy Contractors LLC
    (Energy Contractors). See Note 7 
    Acquisitions and Divestitures for additional discussion.(3)
    
    Represents the goodwill recorded in connection with our
    acquisition of Superior. See Note 7 
    Acquisitions and Divestitures for additional discussion.(4)
    
    Represents goodwill impairment associated with our U.S. Offshore
    operating segment. The impairment charge was deemed necessary
    due to the uncertainty of utilization of some of our rigs as a
    result of changes in our customers plans for future
    drilling operations in the Gulf of Mexico. See
    Note 3  Impairments and other charges for
    additional information.    Derivative
    Financial Instruments
   75




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Litigation
    and Insurance Reserves
    Revenue
    Recognition
          out-of-pocket out-of-pocket
   76




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Share-Based
    Compensation
    Income
    Taxes
            Foreign
    Currency Translation
    Cash
    Flows
   77




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use of
    Estimates
    
    financial instruments;
    depreciation and amortization of property, plant and equipment;
    impairment of long-lived assets;
    impairment of goodwill and intangible assets;
    impairment of oil and gas properties;
    valuation of oil and gas reserves;
    income taxes;
    litigation and self-insurance reserves;
    fair value of assets acquired and liabilities assumed; and
    share-based compensation.  Recent
    Accounting Pronouncements
  Regulation S-K Regulation S-X 12-month
     78




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 3
    Impairments
    and Other Charges    Year Ended December 31,2010


2009


2008(In thousands)Impairment of oil and gas-related assets

$
192,179


$
197,744


$
21,537Impairment of long-lived assets


58,045



64,229



Goodwill impairments


10,707



14,689



150,008Impairment of other intangible assets










4,578Other-than-temporary
    impairment on equity security






18,665



Other-than-temporary
    impairment on debt security






40,300



Less
    other-than-temporary
    impairment recognized in accumulated other comprehensive income
    (loss)






(4,651
)


Credit-related impairment on investment






35,649



Impairments and other charges

$
260,931


$
330,976


$
176,123   Impairments
    of Oil and Gas Assets
       79




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Impairments
    of Long-Lived Assets
    jack-up
  jack-up
  Goodwill
    Impairments
   80




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Other
    than Temporary Impairments on Debt and Equity
    Securities
  other-than-temporary available-for-sale
   81




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4
    Cash and
    Cash Equivalents and Investments    December 31,


December 31,2010


2009(In thousands)Cash and cash equivalents

$
641,702


$
927,815Short-term investments:Trading equity securities


19,630



24,014Available-for-sale
    equity securities


79,698



93,651Available-for-sale
    debt securities


60,160



45,371Total short-term investments


159,488



163,036Long-term investments and other receivables


40,300



100,882Total

$
841,490


$
1,191,733     December 31,2010


2009Gross


Gross





Gross


GrossUnrealized


Unrealized





Unrealized


UnrealizedFair


Holding


Holding


Fair


Holding


HoldingValue


Gains


Losses


Value


Gains


Losses(In thousands)Cash and cash equivalents

$
641,702


$



$



$
927,815


$



$
Short-term investments:Trading equity securities


19,630



13,906







24,014



18,290



Available-for-sale
    equity securities


79,698



38,176



(2,274
)


93,651



50,211



(357
)Available-for-sale
    debt securities:Commercial paper and CDs


1,275











1,284







Corporate debt securities


52,022



15,274



(18
)


33,852



3,162Mortgage-backed debt securities


372



16







861



23



(20
)Mortgage-CMO debt securities


3,015



21



(6
)


5,411



71



(182
)Asset-backed debt securities


3,476







(268
)


3,963







(803
)Total
    available-for-sale
    debt securities


60,160



15,311



(292
)


45,371



3,256



(1,005
)Total
    available-for-sale
    securities


139,858



53,487



(2,566
)


139,022



53,467



(1,362
)Total short-term investments


159,488



67,393



(2,566
)


163,036



71,757



(1,362
)Total cash, cash equivalents and short-term investments

$
801,190


$
67,393


$
(2,566
)

$
1,090,851


$
71,757


$
(1,362
)  82




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As of December 31, 2010Less than 12 Months


More than 12 MonthsGross





GrossUnrealized





UnrealizedFair Value


Loss


Fair Value


Loss(In thousands)Available-for-sale
    equity securities

$
24,924


$
2,072


$
882


$
202Available-for-sale
    debt securities: (1)Corporate debt securities


19,747



18







Mortgage-CMO debt securities










149



6Asset-backed debt securities










3,464



268Total
    available-for-sale
    debt securities


19,747



18



3,613



274Total

$
44,671


$
2,090


$
4,495


$
476     (1)
    
    Our unrealized losses on
    available-for-sale
    debt securities held for more than one year are comprised of
    various types of securities. Each of these securities have a
    rating ranging from A to AAA from
    Standard & Poors and ranging from A2
    to Aaa from Moodys Investors Service and is
    considered of high credit quality. In each case, we do not
    intend to sell these investments, and it is less likely than not
    that we will be required to sell them to satisfy our own cash
    flow and working capital requirements. We believe that we will
    be able to collect all amounts due according to the contractual
    terms of each investment and, therefore, do not consider the
    decline in value of these investments to be
    other-than-temporary
    at December 31, 2010.    EstimatedFair ValueDecember 31, 2010(In thousands)Debt securities:Due in one year or less

$
1,279Due after one year through five years


Due in more than five years


58,881Total debt securities

$
60,160     Year Ended December 31,2010


2009


2008(In thousands)Available-for-sale:Proceeds from sales and maturities

$
13,062


$
23,411


$
202,382Realized gains (losses), net


(103
)


(54,314
)(1)


180     (1)
    
    Includes
    other-than-temporary
    impairments of $18.7 million related to an equity security
    and a $35.6 million credit-related impairment to a
    corporate debt security. 83




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5
    Fair
    Value Measurements    
    Level 1 measurements include unadjusted quoted market
    prices for identical assets or liabilities in an active market;
    Level 2 measurements include quoted market prices for
    identical assets or liabilities in an active market that have
    been adjusted for items such as effects of restrictions for
    transferability and those that are not quoted but are observable
    through corroboration with observable market data, including
    quoted market prices for similar assets; and
    Level 3 measurements include those that are unobservable
    and of a subjective measure.    Recurring
    Fair Value Measurements
  Fair Value as of December 31, 2010Level 1


Level 2


Level 3


Total(In thousands)Assets:Short-term investments:Available-for-sale
    equity securities  energy industry

$
79,698


$



$



$
79,698Available-for-sale
    debt securitiesCommercial paper and CDs


1,275











1,275Corporate debt securities






52,022







52,022Mortgage-backed debt securities






372







372Mortgage-CMO debt securities






3,015







3,015Asset-backed debt securities


3,476











3,476Trading securities  energy industry


19,630











19,630Total short-term investments

$
104,079


$
55,409


$



$
159,488Liabilities:Derivative contract

$



$
3,440


$



$
3,440  84




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nonrecurring
    Fair Value Measurements
    Fair
    Value of Financial Instruments
    December 31,2010


2009Carrying Value


Fair Value


Carrying Value


Fair Value(In thousands)0.94% senior exchangeable notes due May 2011

$
1,378,178


$
1,403,315


$
1,576,480


$
1,668,3686.15% senior notes due February 2018


966,276



1,041,008



965,066



992,5319.25% senior notes due January 2019


1,125,000



1,393,943



1,125,000



1,403,7195.00% senior notes due September 2020


697,037



678,335







5.375% senior notes due August 2012(1)


273,977



291,500



273,350



289,072Subsidiary preferred stock


69,188



68,625







Other


2,676



2,676



872



872$
4,512,332


$
4,879,402


$
3,940,768


$
4,354,562     (1)
    
    Includes $.7 million and $1.1 million as of
    December 31, 2010 and 2009, respectively, related to the
    unamortized loss on the interest rate swap that was unwound
    during the fourth quarter of 2005.    available-for-sale available-for-sale
  Note 6
    Share-Based
    Compensation   85




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Stock
    Option Plans
       86




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AverageRemaining


AggregateWeighted-Average


Contractual


IntrinsicOptions

Shares


Exercise Price


Term


Value(In thousands, except exercise price)Options outstanding as of December 31, 2009


33,416


$
18.90Granted


32



19.28Exercised


(714
)


13.28Surrendered(1)


(3,375
)


22.44Forfeited


(427
)


12.35Options outstanding as of December 31, 2010


28,932


$
18.73



4.42 years


$
199,164Options exercisable as of December 31, 2010


24,941


$
20.19



3.82 years


$
143,939     (1)
    
    Represents unexercised vested stock options, which were
    surrendered by key officers and directors, to satisfy the option
    exercise price and related income taxes. See related discussion
    at Note 13  Common Shares.        Year Ended December 31,2010


2009Weighted average fair value of options granted:

$
6.62


$
2.85Weighted average risk free interest rate:


1.49
%


1.75
%Dividend yield:


0
%


0
%Volatility:(1)


41.44
%


34.78
%Expected life:


4.0 years



4.0 years     (1)
    
    Expected volatilities are based on implied volatilities from
    publicly traded options to purchase Nabors common shares,
    historical volatility of Nabors common shares and other
    factors. 87




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Weighted-AverageGrant-Date FairUnvested Stock Options

Outstanding


Value(In thousands, except fair values)Unvested as of December 31, 2009


6,174


$
2.82Granted


32



6.62Vested


(1,929
)


2.91Forfeited


(336
)


2.73Unvested as of December 31, 2010


3,941


$
2.81       Restricted
    Stock and Restricted Stock Units
      Weighted-AverageGrant-Date FairRestricted Stock

Outstanding


Value(In thousands, except fair values)Unvested as of December 31, 2009


3,632


$
20.99Granted


539



22.15Vested


(2,172
)


22.68Forfeited


(54
)


28.10Unvested as of December 31, 2010


1,945


$
19.23      88




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 7
    Acquisitions
    and Divestitures  Acquisitions
        Estimated FairValue(In thousands)Consideration paid in cash

$
681,275Assets:Cash and cash equivalents

$
1,045Accounts receivable


143,842Inventory


33,963Other current assets


7,612Property, plant and equipment


415,000Intangible assets


131,811Goodwill


334,992Other long-term assets


14,726Total assets


1,082,991Liabilities:Current liabilities

$
78,277Deferred income taxes


119,201Long-term debt


124,792Other long-term liabilities


10,258Total liabilities


332,528Preferred stock


69,188Net assets acquired

$
681,275   Intangible
    assets
   89




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Estimated Fair


Monthly


EstimatedValue


Amortization


Useful Life(In thousands)Superior trade name

$
88,767


$
740



10 yearsTechnology


5,294



88



5 yearsEmployment contracts and non-compete agreements


675



33



1-3 yearsCustomer relationships


37,075



308



10 yearsTotal identifiable intangible assets

$
131,811


$
1,169   Goodwill
    Long-term
    debt
      Pro
    Forma Impact of the Superior Merger
    Year Ended December 31,2010

2009(In thousands, except per share amounts)Total revenues and other income

$
4,936,407


$
3,954,445Net income (loss) attributable to Nabors

$
168,213


$
(203,719
)      90




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Divestitures
    Note 8
    Property,
    Plant and Equipment    December 31,2010


2009(In thousands)Land

$
12,087


$
9,251Buildings


122,635



93,874Drilling, workover and well-servicing rigs, and related equipment


10,632,968



9,515,677Marine transportation and supply vessels


13,663



13,663Oilfield hauling and mobile equipment


551,892



533,518Other machinery and equipment


143,976



202,389Oil and gas properties


664,289



752,809Construction in process(1)


349,455
(2)


314,49312,490,965



11,435,674Less: accumulated depreciation and amortization


(4,182,122
)


(3,453,193
)accumulated depletion on oil and gas properties


(493,424
)


(336,431
)$
7,815,419


$
7,646,050     (1)
    
    Relates to amounts capitalized for new or substantially new
    drilling, workover and well-servicing rigs that were under
    construction and had not yet been placed in service as of
    December 31, 2010 or 2009.(2)
    
    Includes suspended wells that have capitalized costs for more
    than one year as of December 31, 2010. Suspended wells
    include the following:  
    On the north slope of Alaska, three wells, including two drilled
    in 2007 and one drilled in 2008, were suspended with total
    capitalized costs of $13.7 million and $5.9 million,
    respectively for each year. Further drilling is needed over the
    area to determine if the discovery holds sufficient quantities
    of reserves to justify future investment of infrastructure.
    During 2010, we drilled two wells in this area, and another well
    is planned to spud in March 2011.
    In the Cotton Valley in Bossier County, Louisiana, five wells
    were suspended in the Sentell field. Total capitalized costs of
    $2.6 million and $3.6 million relate to three wells
    drilled in 2008 and two wells drilled in 2009, respectively for
    each year. The wells are suspended pending negotiation of a
    pipeline
    right-of-way.
    In the Fayetteville Shale in Conway County, Arkansas, two wells,
    drilled in 2008 with total capitalized costs of
    $11.2 million, are suspended pending the outcome of
    drilling in the area by other operators. 91




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    In Reeves County, Texas, five wells, drilled in 2009, have total
    capitalized costs of $3.0 million. Of the five, one well is
    producing and the remaining four are suspended and wait on
    hydraulic fracturing.
    In the Middle Magdalena basin of Colombia, two wells were
    suspended. The Guariquies #1 and Morpho #1 wells
    were drilled in 2005 and 2009 with total capitalized costs of
    $1.5 million and $4.3 million, respectively. The
    Guariquies #1 is expected to be turned to production in May
    2011, and the Morpho #1 was turned to production in January
    2011. An offset to Morpho #1 was drilled in 2010.
    In the Horn River Basin of British Columbia, Canada, one well
    was drilled in 2009 and was waiting on hydraulic fracturing as
    of December 31, 2010. Total capitalized costs were
    $12.5 million. This well is part of the Canadian oil and
    gas assets that are classified as held-for-sale at
    December 31, 2010. When completed, this well will be
    produced into the wholly owned compression and pipeline facility
    along with two other wells that were drilled in 2009 that are
    currently producing.        Note 9
    Investments
    in Unconsolidated Affiliates        December 31,2010

2009(In thousands)Current assets

$
322,086


$
354,504Long-term assets


1,332,212



1,005,605Current liabilities


345,279



313,317Long-term liabilities


460,198



283,945   92




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31,2010

2009

2008(In thousands)Gross revenues

$
901,742


$
960,823


$
827,044Gross margin


241,831



223,005



142,763Net income (loss)


48,426



(462,613
)


(444,470
)Nabors earnings (losses) from unconsolidated affiliates(1)


33,257



(155,433
)


(192,548
)     (1)
    
    Nabors earnings (losses) from unconsolidated affiliates
    included in discontinued operations, net of tax was
    $(10.6) million, $(59.2) million, and
    $(37.3) million, respectively, for the years ended
    December 31, 2010, 2009 and 2008.    Note 10
    Financial
    Instruments and Risk Concentration    Foreign
    Currency Risk
      Credit
    Risk
   93




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Interest
    Rate and Marketable and Non-marketable Security Price
    Risk
  non-U.S. securities
         94




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 11
    Debt    December 31,


December 31,2010


2009(In thousands)0.94% senior exchangeable notes due May 2011

$
1,378,178


$
1,576,4805.00% senior notes due September 2020


697,037



6.15% senior notes due February 2018


966,276



965,0669.25% senior notes due January 2019


1,125,000



1,125,0005.375% senior notes due August 2012


273,977



273,350Other


2,676



8724,443,144



3,940,768Less: current portion


1,379,018



163$
3,064,126


$
3,940,605     Paid at Maturity(In thousands)2011

$
1,403,455
(1)2012


275,000
(2)2013


2014


2015


Thereafter


2,800,000(3
)$
4,478,455     (1)
    
    Represents our 0.94% senior exchangeable notes due May 2011.(2)
    
    Represents our 5.375% senior notes due August 2012.(3)
    
    Represents our 6.15% senior notes due February 2018,
    9.25% senior notes due January 2019, and 5.0% senior
    notes due September 2020.  0.94% Senior
    Exchangeable Notes Due May 2011
     95




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form S-3
           96




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        5.0% Senior
    Notes Due September 2020
      Form S-4
   97




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.15% Senior
    Notes Due February 2018
      Form S-4
  9.25% Senior
    Notes Due January 2019
   98




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Form S-4
  5.375% Senior
    Notes Due August 2012
        Revolving
    Credit Facilities
   99




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1 2
    Other
    Debt Transactions
    Short-Term
    Borrowings
  letter-of-credit letter-of-credit
  December 31,2010


2009(In thousands)Credit available

$
270,263


$
245,442Letters of credit outstanding, inclusive of financial and
    performance guarantees


(70,605
)


(71,389
)Remaining availability

$
199,658


$
174,053   Note 12
    Income
    Taxes    Year Ended December 31,2010


2009


2008(In thousands)Balance as of January 1,

$
69,048


$
51,819


$
55,627Additions based on tax positions related to the current year


1,026



4,787



3,990Additions for tax positions of prior years


17,060



12,889



4,168Reductions for tax positions of prior years


(4,709
)


(447
)


(10,966
)Settlements


(1,251
)






(1,000
)Balance as of December 31,

$
81,174


$
69,048


$
51,819  100




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    non-United
    Year Ended December 31,2010


2009


2008(In thousands)United States and Other Jurisdictions:United States

$
(254,897
)

$
(716,694
)

$
313,704Other jurisdictions


336,943



554,623



417,550Income (loss) before income taxes from continuing operations

$
82,046


$
(162,071
)

$
731,254       2010


2009


2008(In thousands)Current:U.S. federal

$
(137,847
)

$
(15,434
)

$
59,914Outside the U.S.


54,779



84,220



119,889State


(748
)


746



9,029(83,816
)


69,532



188,832Deferred:U.S. federal


40,731



(148,188
)


57,845Outside the U.S.


12,006



(46,462
)


(44,651
)State


6,265



(8,685
)


7,63459,002



(203,335
)


20,828Income tax expense (benefit)

$
(24,814
)

$
(133,803
)

$
209,660  101




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Income tax provision at statutory rate (Bermuda rate of 0%)

$



$



$
Taxes on U.S. and other international earnings (losses) at
    greater than the Bermuda rate


(43,078
)


(130,607
)


190,466Increase in valuation allowance


2,407



6,062



6,604Effect of change in tax rate


40



(9,248
)


(5,406
)Establishment of a deferred tax asset, net of valuation allowance










1,990Tax reserves and interest


8,808



14,652



(657
)State income taxes


7,009



(14,662
)


16,663Income tax expense (benefit)

$
(24,814
)

$
(133,803
)

$
209,660Effective tax rate


(30
)%


83
%


29
%       December 31,2010


2009(In thousands)Deferred tax assets:Net operating loss carryforwards

$
1,848,956


$
1,852,829Equity compensation


19,262



23,340Deferred revenue


13,428



30,944Tax credit and other attribute carryforwards


89,141



17,521Insurance loss reserve


28,537



13,173Other


62,324



114,520Subtotal


2,061,648



2,052,327Valuation allowance


(1,514,153
)


(1,570,890
)Deferred tax assets

$
547,495


$
481,437 102




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31,2010


2009(In thousands)Deferred tax liabilities:Depreciation, amortization and depletion for tax in excess of
    book expense

$
1,123,622


$
950,318Variable interest investments


75,204



3,064Other


54,738



47,553Deferred tax liability


1,253,564



1,000,935Net deferred assets (liabilities)

$
(706,069
)

$
(519,498
)Balance Sheet SummaryNet current deferred asset

$
31,510


$
125,163Net noncurrent deferred asset(1)


33,694



37,559Net current deferred liability(2)


(1,027
)


(8,793
)Net noncurrent deferred liability


(770,246
)


(673,427
)Net deferred asset (liability)

$
(706,069
)

$
(519,498
)     (1)
    
    This amount is included in other long-term assets.(2)
    
    This amount is included in accrued liabilities.  non-U.S. jurisdictions.
 103




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,

Total


U.S. Federal


Non-U.S.(In thousands)2011

$
1,351


$



$
1,3512012


8,756







8,7562013


25,958







25,9582014


6,019







6,0192015


15,665







15,6652016


23,375







23,3752017


23,714







23,7142018


63,796



33,111



30,6852019


40,427



17,722



22,7052020


30,944







30,9442026










2027


8,663







8,6632028


31,385







31,3852029


193,487



139,347



54,1402030


629,243



569,127



60,116Subtotal: expiring NOLs


1,102,783



759,307



343,476Non-expiring NOLs


5,071,148







5,071,148Total

$
6,173,931


$
759,307


$
5,414,624          104




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 13
    Common
    Shares              Note 14
    Subsidiary
    Preferred Stock       105




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Dividends
      Liquidation
    Preference
    Redemption
      Voting
    Rights
    Note 15
    Pension,
    Postretirement and Postemployment Benefits  Pension
    Plans
   106




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pension Benefits2010


2009(In thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
18,865


$
17,781Interest cost


1,116



1,093Actuarial loss (gain)


1,289



590Benefit payments


(642
)


(599
)Benefit obligation at end of year(1)

$
20,628


$
18,865Change in plan assets:Fair value of plan assets at beginning of year

$
14,058


$
12,113Actual (loss) return on plan assets


1,364



1,902Employer contribution


439



642Benefit payments


(642
)


(599
)Fair value of plan assets at end of year

$
15,219


$
14,058Funded status:Underfunded status at end of year

$
(5,409
)

$
(4,807
)Amounts recognized in consolidated balance sheets:Other long-term liabilities

$
(5,409
)

$
(4,807
)Components of net periodic benefit cost (recognized in our
    consolidated statements of income):Interest cost

$
1,116


$
1,093Expected return on plan assets


(909
)


(794
)Recognized net actuarial loss


457



545Net periodic benefit cost

$
664


$
844Weighted-average assumptions:Weighted-average discount rate


5.50
%


6.00
%Expected long-term rate of return on plan assets


6.50
%


6.50
%     (1)
    
    As of December 31, 2010 and 2009, the accumulated benefit
    obligation was the same as the projected benefit obligation.       107




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fair Value as of December 31, 2010Level 1


Level 2


Level 3


Total(In thousands)Assets: (1)Cash

$



$
361


$



$
361Short-term investments:Available-for-sale
    equity securities(2)






8,491







8,491Available-for-sale
    debt securities(3)






6,368







6,368Total investments






14,859







14,859Total

$



$
15,220


$



$
15,220     (1)
    
    Includes investments in collective trust funds that are valued
    based on the fair value of the underlying investments using
    quoted prices in active markets or other significant inputs that
    are deemed observable.(2)
    
    Includes funds that invest primarily in U.S. common stocks and
    foreign equity securities.(3)
    
    Includes funds that invest primarily in investment grade debt.      Pension Benefits2010


2009Cash


2
%


3
%Equity securities


56
%


55
%Debt securities


42
%


42
%Total


100
%


100
%      108




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)2011

$
7152012


7772013


8792014


1,0072015


1,1162016  2020


6,830     Post-retirement
    Benefits Other Than Pensions
    Note 16
    Related-Party
    Transactions       109




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 17
    Commitments
    and Contingencies  Commitments
  Leases
      (In thousands)2011

$
2,2012012


1,2652013


5462014


2242015


61Thereafter


$
4,297     (In thousands)2011

$
25,7492012


18,5012013


14,2732014


10,3152015


4,358Thereafter


932$
74,128    110




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Employment
    Contracts
    (In thousands)2011

$
11,9652012


11,9652013


4,0702014


3192015 and thereafter


$
28,319              111




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Termination in the event of death, disability, or
    termination without cause (including in the event of a Change in
    Control).
    gross-ups, gross-ups
  Other Obligations .
  Contingencies
  Income
    Tax Contingencies
   112




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Self-Insurance
         113




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Litigation
        Jordan Denney,
    Individually and on Behalf of All Others Similarly
    Situated v. David E. Wallace, et al., No. 10-1154,
 114




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Off-Balance
    Sheet Arrangements (Including Guarantees)
      Maximum Amount2011


2012


2013


Thereafter


Total(In thousands)Financial standby letters of credit and other financial surety
    instruments

$
83,010


$
525


$
12,158


$



$
95,693   Note 18
    Earnings
    (Losses) Per Share   115




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands, except per share amounts)Net income (loss) (numerator):Income (loss) from continuing operations, net of tax

$
106,110


$
(28,268
)

$
521,594Less: net (income) loss attributable to noncontrolling interest


(85
)


342



(3,927
)Net income (loss) from continuing operations  basic


106,025



(27,926
)


517,667Add interest expense on assumed conversion of our zero coupon
    convertible/exchangeable senior debentures/notes, net of tax:0.94% senior exchangeable notes due 2011(1)










Zero coupon exchangeable notes due 2023(2)










Adjusted net income (loss) attributable to Nabors 
    diluted

$
106,025


$
(27,926
)

$
517,667Earnings (losses) per share:Basic from continuing operations

$
.37


$
(.10
)

$
1.84Diluted from continuing operations

$
.37


$
(.10
)

$
1.80Income from discontinued operations, net of tax

$
(11,330
)

$
(57,620
)

$
(41,930
)Earnings (losses) per share, discontinued operations:Basic from discontinued operations

$
(.04
)

$
(.20
)

$
(.15
)Diluted from discontinued operations

$
(.04
)

$
(.20
)

$
(.15
)Shares (denominator):Weighted-average number of shares outstanding 
    basic(3)


285,145



283,326



281,622Net effect of dilutive stock options, warrants and restricted
    stock awards based on the if-converted method


4,851







5,332Assumed conversion of our zero coupon convertible/exchangeable
    senior debentures/notes:0.94% senior exchangeable notes due 2011(1)










Zero coupon exchangeable notes due 2023(2)










1,282Weighted-average number of shares outstanding  diluted


289,996



283,326



288,236     (1)
    
    Diluted earnings (losses) per share for the years ended
    December 31, 2010, 2009 and 2008 exclude any incremental
    shares issuable upon exchange of the 0.94% senior
    exchangeable notes due 2011. As of December 31, 2010, we
    have purchased $1.3 billion par value of these notes in the
    open market, leaving approximately $1.4 billion par value
    outstanding. The number of shares that we would be required to
    issue upon exchange consists of only the incremental shares that
    would be issued above the principal amount of the notes, as we
    are required to pay cash up to the principal amount of the notes
    exchanged. We would issue an incremental number of shares only
    upon exchange of these notes. Such shares are included in the
    calculation of the weighted-average number of shares outstanding
    in our diluted earnings per share calculation only when our
    stock price exceeds $45.83 as of the last trading day of the
    quarter and the average price of our shares for the ten
    consecutive trading days beginning on the third business day
    after the last trading day of the quarter exceeds $45.83, which
    did not occur during any period for the years ended
    December 31, 2010, 2009 and 2008. 116




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (2)
    
    In June and July 2008 Nabors Delaware paid cash of
    $171.8 million and $528.2 million, respectively, to
    redeem all of the notes. In addition to the $700 million in
    cash, we issued 5.25 million common shares with a fair
    value of $249.8 million, which equated to the excess of the
    exchange value of the notes over their principal amount. Because
    the conversion was completed during 2008, diluted earnings per
    share for the year ended December 31, 2008 reflect the
    conversion of the zero coupon senior exchangeable notes due 2023
    which included the effect of the 5.25 million shares in the
    calculation of the weighted-average number of basic shares
    outstanding.(3)
    
    On July 31, 2009, the exchangeable shares of Nabors
    Exchangeco were exchanged for Nabors common shares on a
    one-for-one
    basis. Basic shares outstanding includes the following
    weighted-average number of common shares and restricted stock of
    Nabors and weighted-average number of exchangeable shares of
    Nabors Exchangeco, respectively: 285.1 million shares
    cumulatively for the year ended December 31, 2010;
    283.2 million and .1 million shares for the year ended
    December 31, 2009; and 281.5 million and
    .1 million shares for the year ended December 31, 2008.    Note 19
    Supplemental
    Balance Sheet, Income Statement and Cash Flow
    Information      December 31,


December 31,2010


2009(In thousands)Accrued compensation

$
116,680


$
79,195Deferred revenue


88,389



57,563Other taxes payable


25,227



33,126Workers compensation liabilities


31,944



31,944Interest payable


89,276



78,607Due to joint venture partners


6,030



25,641Warranty accrual


3,376



6,970Litigation reserves


12,301



11,951Professional fees


3,222



3,390Current deferred tax liability


1,027



8,793Other accrued liabilities


16,820



9,157$
394,292


$
346,337  117




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Interest and dividend income

$
7,162


$
15,777


$
40,148Gains (losses) on marketable and non-marketable securities, net


486
(1)


9,822
(2)


(18,736
)(3)$
7,648


$
25,599


$
21,412     (1)
    
    Reflects gain on sale of debt securities and gains from our
    long-term investments of $4.9 million, partially offset by
    net unrealized losses of $4.4 million from our trading
    securities.(2)
    
    Reflects net unrealized gains of $9.8 million from our
    trading securities.(3)
    
    Reflects net unrealized gains of $8.5 million from our
    trading securities, offset by losses of $27.4 million from
    our actively managed funds classified as long-term investments.    Year Ended December 31,2010


2009


2008(In thousands)Losses (gains) on sales, retirements and involuntary conversions
    of long-lived assets

$
6,623


$
5,525


$
14,013
(1)Acquisition-related costs


7,021







Litigation expenses


6,356



11,474



3,492Foreign currency transaction losses (gains)


17,878



8,372



(2,718
)Losses (gains) on derivative instruments


119



(1,399
)


14,581
(2)Losses (gains) on debt extinguishment(3)


7,042



(11,197
)


(12,248
)Other losses (gains)


2,021



(216
)


(1,291
)$
47,060


$
12,559


$
15,829     (1)
    
    Includes involuntary conversion losses recorded as a result of
    Hurricanes Gustav and Ike during 2008 of approximately
    $12.0 million, net of insurance recoveries.(2)
    
    Includes a $9.9 million loss on a three-month written put
    option and a $4.7 million loss on the fair value of our
    range-cap-and-floor derivative.(3)
    
    Includes $(7.0) million, $11.5 million and
    $12.2 million pre-tax (losses) gains on our purchases of
    our 0.94% senior exchangeable notes in the open market
    during 2010, 2009 and 2008, respectively. 118




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ended December 31,2010


2009


2008(In thousands)Cash paid for income taxes

$
58,574


$
107,994


$
235,907Cash paid for interest, net of capitalized interest


180,731



126,796



67,327Acquisitions of businesses:Fair value of assets acquired


796,399







7,328Goodwill


339,992







284Liabilities assumed


(332,528
)






(6,352
)Common stock of acquired company previously owned










Subsidiary preferred stock obligation


(69,188
)






Cash paid for acquisitions of businesses


734,675







1,260Cash acquired in acquisitions of businesses


(1,045
)






(973
)Cash paid for acquisitions of businesses, net

$
733,630


$



$
287   Note 20
    Unaudited
    Quarterly Financial Information  Year Ended December 31, 2010Quarter EndedMarch 31,


June 30,


September 30,


December 31,(In thousands, except per share amounts)Operating revenues and Earnings (losses) from unconsolidated
    affiliates from continuing operations(1)

$
898,988


$
904,874


$
1,081,103


$
1,322,927Income (loss) from continuing operations, net of tax

$
43,519


$
43,971


$
(31,563
)

$
50,183Income from discontinued operations, net of tax


(4,421
)


(909
)


(7,591
)


1,591Less: Net (income) loss attributable to noncontrolling interest


1,102



559



(453
)


(1,293
)Net income (loss) attributable to Nabors

$
40,200


$
43,621


$
(39,607
)

$
50,481Earnings (loss) per share:(2)Basic from continuing operations

$
.16


$
.15


$
(.11
)

$
.18Basic from discontinued operations


(.02
)






(.03
)


Total Basic

$
.14


$
.15


$
(.14
)

$
.18Diluted from continuing operations

$
.16


$
.15


$
(.11
)

$
.17Diluted from discontinued operations


(.02
)






(.03
)


Total Diluted

$
.14


$
.15


$
(.14
)

$
.17   119




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2009Quarter EndedMarch 31,


June 30,


September 30,


December 31,(In thousands, except per share amounts)Operating revenues and Earnings (losses) from unconsolidated
    affiliates from continuing operations(3)

$
1,132,406


$
862,103


$
806,303


$
727,174Income (loss) from continuing operations, net of tax

$
124,083


$
(184,565
)

$
53,675


$
(21,461
)Income from discontinued operations, net of tax


36



(8,641
)


(23,250
)


(25,765
)Less: Net (income) loss attributable to noncontrolling interest


1,051



220



(895
)


(34
)Net income (loss) attributable to Nabors

$
125,170


$
(192,986
)

$
29,530


$
(47,260
)Earnings per share:(2)Basic from continuing operations

$
.44


$
(.65
)

$
.18


$
(.08
)Basic from discontinued operations






(.03
)


(.08
)


(.09
)Total Basic

$
.44


$
(.68
)

$
.10


$
(.17
)Diluted from continuing operations

$
.44


$
(.65
)

$
.18


$
(.08
)Diluted from discontinued operations






(.03
)


(.08
)


(.09
)Total Diluted

$
.44


$
(.68
)

$
.10


$
(.17
)     (1)
    
    Includes earnings (losses) from unconsolidated affiliates, net,
    accounted for by the equity method, of $7.6 million,
    $8.8 million, $11.8 million and $4.9 million,
    respectively.(2)
    
    Earnings per share is computed independently for each of the
    quarters presented. Therefore, the sum of the quarterly earnings
    per share may not equal the total computed for the year.(3)
    
    Includes earnings (losses) from unconsolidated affiliates, net,
    accounted for by the equity method, of $(64.5) million,
    $(5.7) million, $17.1 million and
    $(102.3) million, respectively.  Note 21
    Discontinued
    Operations     120




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,Condensed Statements of Income

2010


2009


2008(In thousands)Revenues

$
37,840


$
8,937


$
4,354Earnings (losses) from unconsolidated affiliates(1)

$
(10,628
)

$
(59,248
)

$
(37,286
)Income (loss) from discontinued operationsIncome (loss) from discontinued operations

$
(13,195
)

$
(73,045
)

$
(45,443
)Less: income tax expense (benefit)


(1,865
)


(15,425
)


(3,513
)Income (loss) from discontinued operations, net of tax

$
(11,330
)

$
(57,620
)

$
(41,930
)     (1)
    
    Includes our proportionate share of full-cost ceiling test
    writedowns of $47.8 million and $21.0 million for the
    years ended December 31, 2009 and 2008, respectively.  Note 22
    Segment
    Information     121




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Operating revenues and earnings (losses) from unconsolidated
    affiliates from continuing operations:(1)Contract Drilling:(2)U.S. Lower 48 Land Drilling

$
1,294,853


$
1,082,531


$
1,878,441U.S. Land Well-servicing


444,665



412,243



758,510Pressure Pumping(3)


321,295







U.S. Offshore


123,761



157,305



252,529Alaska


179,218



204,407



184,243Canada


389,229



298,653



502,695International


1,093,608



1,265,097



1,372,168Subtotal Contract Drilling(4)


3,846,629



3,420,236



4,948,586Oil and Gas(5)(6)


40,611



(158,780
)


(118,533
)Other Operating Segments(7)(8)


456,893



446,282



683,186Other reconciling items(9)


(136,241
)


(179,752
)


(198,245
)Total

$
4,207,892


$
3,527,986


$
5,314,994Depreciation and amortization, and depletion:(1)Contract Drilling:U.S. Lower 48 Land Drilling

$
241,258


$
226,875


$
210,764U.S. Land Well-servicing


65,561



69,557



65,050Pressure Pumping(3)


32,204







U.S. Offshore


37,059



37,204



42,565Alaska


37,195



29,946



21,710Canada


74,735



65,883



67,373International


247,134



208,949



172,066Subtotal Contract Drilling


735,146



638,414



579,528Oil and Gas


19,988



9,476



22,308Other Operating Segments


31,880



30,542



38,903Other reconciling items(9)


(4,818
)


(1,915
)


(4,064
)Total depreciation and amortization, and depletion

$
782,196


$
676,517


$
636,675Adjusted income (loss) derived from operating activities from
    continuing operations:(1)(10)Contract Drilling:U.S. Lower 48 Land Drilling

$
274,215


$
294,679


$
628,579U.S. Land Well-servicing


31,597



28,950



148,626Pressure Pumping(3)


66,651







U.S. Offshore


9,245



30,508



59,179Alaska


51,896



62,742



52,603Canada


22,970



(7,019
)


61,040International


254,744



365,566



407,675Subtotal Contract Drilling(4)


711,318



775,426



1,357,702Oil and Gas(5)(6)


6,329



(190,798
)


(159,931
)Other Operating Segments(7)(8)


43,179



34,120



68,572Other reconciling items(11)


(105,393
)


(196,844
)


(167,831
)Total adjusted income derived from operating activities

$
655,433


$
421,904


$
1,098,512 122




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31,2010


2009


2008(In thousands)Interest expense


(273,044
)


(266,039
)


(196,718
)Investment income (loss)


7,648



25,599



21,412Gains (losses) on sales and retirements of long-lived assets and
    other (income) expense, net


(47,060
)


(12,559
)


(15,829
)Impairments and other charges(12)


(260,931
)


(330,976
)


(176,123
)Income (loss) from continuing operations before income taxes


82,046



(162,071
)


731,254Income tax expense (benefit)


(24,814
)


(133,803
)


209,660Subsidiary preferred stock dividend


750







Income (loss) from continuing operations, net of tax


106,110



(28,268
)


521,594Income (loss) from discontinued operations, net of tax


(11,330
)


(57,620
)


(41,930
)Net income (loss)


94,780



(85,888
)


479,664Less: Net income (loss) attributable to noncontrolling interest


(85
)


342



(3,927
)Net income (loss) attributable to Nabors

$
94,695


$
(85,546
)

$
475,737   Year Ended December 31,2010


2009


2008(In thousands)Capital expenditures and acquisitions of businesses:(13)Contract Drilling:U.S. Lower 48 Land Drilling

$
294,239


$
327,269


$
405,831U.S. Land Well-servicing


84,657



16,671



48,911Pressure Pumping(3)


924,693







U.S. Offshore


23,625



48,694



82,574Alaska


891



55,426



85,735Canada


53,834



29,214



85,113International


365,597



328,252



635,340Subtotal Contract Drilling


1,747,536



805,526



1,343,504Oil and Gas


113,361



184,185



191,937Other Operating Segments


28,799



20,446



32,191Other reconciling items(11)(17)


(11,633
)


(19,870
)


10,609Total capital expenditures and acquisitions of businesses

$
1,878,063


$
990,287


$
1,578,241   123




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31,2010


2009


2008(In thousands)Total assets:Contract Drilling:(14)U.S. Lower 48 Land Drilling

$
2,762,362


$
2,609,101


$
2,833,618U.S. Land Well-servicing


630,518



594,456



707,009Pressure Pumping(3)


1,163,236







U.S. Offshore


379,292



440,556



480,324Alaska


313,123



373,146



356,603Canada


1,065,268



984,740



906,154International


3,279,763



3,151,513



3,080,947Subtotal Contract Drilling


9,593,562



8,153,512



8,364,655Oil and Gas(15)


805,410



835,465



929,848Other Operating Segments(16)


539,373



502,501



578,802Other reconciling items(11)(17)


708,224



1,153,212



644,594Total assets

$
11,646,569


$
10,644,690


$
10,517,899     (1)
    
    All information presents the operating activities of oil and gas
    assets in the Horn River basin in Canada and in the Llanos basin
    in Colombia as discontinued operations.(2)
    
    These segments include our drilling, workover and well-servicing
    and pressure pumping operations, on land and offshore.(3)
    
    Includes operating results of the Superior Merger after
    September 10, 2010.(4)
    
    Includes earnings (losses), net from unconsolidated affiliates,
    accounted for using the equity method, of $6.9 million,
    $9.7 million and $5.8 million for the years ended
    December 31, 2010, 2009 and 2008, respectively.(5)
    
    Includes our proportionate share of full-cost ceiling test
    writedowns recorded by our unconsolidated U.S. oil and gas joint
    venture of $(189.3) million and $(207.3) million for
    the years ended December 31, 2009 and 2008, respectively.(6)
    
    Includes earnings (losses), net from unconsolidated affiliates,
    accounted for using the equity method, of $18.7 million,
    $(182.6) million and $(204.1) million for the years
    ended December 31, 2010, 2009 and 2008, respectively.
    Additional information is provided in Note 24 
    Supplemental Information on Oil and Gas Exploration and
    Production Activities.(7)
    
    Includes our drilling technology and top drive manufacturing,
    directional drilling, rig instrumentation and software, and
    construction and logistics operations.(8)
    
    Includes earnings (losses), net from unconsolidated affiliates,
    accounted for using the equity method, of $7.7 million,
    $17.5 million and $5.8 million for the years ended
    December 31, 2010, 2009 and 2008, respectively.(9)
    
    Represents the elimination of inter-segment transactions.(10)
    
    Adjusted income (loss) derived from operating activities is
    computed by subtracting direct costs, general and administrative
    expenses, depreciation and amortization, and depletion expense
    from Operating revenues and then adding Earnings (losses) from
    unconsolidated affiliates. Such amounts should not be used as a
    substitute for those amounts reported under GAAP. However,
    management evaluates the performance of our business units and
    the consolidated company based on several criteria, including
    adjusted income 124




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (loss) derived from operating activities, because it believes
    that these financial measures are an accurate reflection of the
    ongoing profitability of our Company. A reconciliation of this
    non-GAAP measure to income (loss) before income taxes, which is
    a GAAP measure, is provided within the above table.(11)
    
    Represents the elimination of inter-segment transactions and
    unallocated corporate expenses, assets and capital expenditures.(12)
    
    Represents impairments and other charges recorded during the
    years ended December 31, 2010, 2009 and 2008, respectively.(13)
    
    Includes the portion of the purchase price of acquisitions
    allocated to fixed assets and goodwill based on their fair
    market value.(14)
    
    Includes $54.8 million, $49.8 million and
    $49.2 million of investments in unconsolidated affiliates
    accounted for using the equity method as of December 31,
    2010, 2009 and 2008, respectively.(15)
    
    Includes $146.5 million, $190.1 million and
    $298.3 million investments in unconsolidated affiliates
    accounted for using the equity method as of December 31,
    2010, 2009 and 2008, respectively.(16)
    
    Includes $64.5 million, $65.8 million and
    $63.3 million of investments in unconsolidated affiliates
    accounted for using the equity method as of December 31,
    2010, 2009 and 2008, respectively.(17)
    
    Includes $1.9 million and $.9 million of investments
    in unconsolidated affiliates accounted for using the cost method
    as of December 31, 2010 and 2009, respectively.    Year Ended December 31,2010


2009


2008(In thousands)Operating revenues and earnings (losses) from unconsolidated
    affiliates from continuing operations:U.S.

$
2,633,055


$
1,802,140


$
3,306,064Outside the U.S.


1,574,837



1,725,846



2,008,930$
4,207,892


$
3,527,986


$
5,314,994Property, plant and equipment, net:U.S.

$
4,447,388


$
4,107,250


$
4,059,697Outside the U.S.


3,368,031



3,538,800



3,272,262$
7,815,419


$
7,646,050


$
7,331,959Goodwill:U.S.

$
459,560


$
130,275


$
130,275Outside the U.S.


34,812



33,990



45,474$
494,372


$
164,265


$
175,749   Note 23
    Condensed
    Consolidating Financial Information   125




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     126




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Balance Sheets
  December 31, 2010Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
10,847


$
20


$



$
630,835


$



$
641,702Short-term investments














159,488







159,488Assets held for sale














352,048







352,048Accounts receivable, net














1,116,510







1,116,510Inventory














158,836







158,836Deferred income taxes














31,510







31,510Other current assets


50



16,366







136,420







152,836Total current assets


10,897



16,386







2,585,647







2,612,930Long-term investments and other receivables














40,300







40,300Property, plant and equipment, net






44,270







7,771,149







7,815,419Goodwill














494,372







494,372Intercompany receivables


160,250











322,697



(482,947
)


Investment in unconsolidated affiliates


5,160,800



5,814,219







1,665,459



(12,372,755
)


267,723Other long-term assets






36,538







379,287







415,825Total assets

$
5,331,947


$
5,911,413


$



$
13,258,911


$
(12,855,702
)

$
11,646,569LIABILITIES AND EQUITYCurrent liabilities:Current portion of
    long-term
    debt

$



$
1,378,178


$



$
840


$



$
1,379,018Trade accounts payable














355,282







355,282Accrued liabilities


3,785



89,480







301,027







394,292Income taxes payable






6,859







18,929







25,788Total current liabilities


3,785



1,474,517







676,078







2,154,380Long-term debt






3,062,291







1,835







3,064,126Other long-term liabilities






12,787







232,978







245,765Deferred income taxes






71,815







698,432







770,247Intercompany payable






301,451







181,496



(482,947
)


Total liabilities


3,785



4,922,861







1,790,819



(482,947
)


6,234,518Subsidiary preferred stock














69,188







69,188Shareholders equity


5,328,162



988,552







11,384,203



(12,372,755
)


5,328,162Noncontrolling interest














14,701







14,701Total equity


5,328,162



988,552







11,398,904



(12,372,755
)


5,342,863Total liabilities and equity

$
5,331,947


$
5,911,413


$



$
13,258,911


$
(12,855,702
)

$
11,646,569   127




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2009Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
11,702


$
135


$



$
915,978


$



$
927,815Short-term investments














163,036







163,036Accounts receivable, net














724,040







724,040Inventory














100,819







100,819Deferred income taxes














125,163







125,163Other current assets


50



(15,606
)






151,347







135,791Total current assets


11,752



(15,471
)






2,180,383







2,176,664Long-term investments and other receivables














100,882







100,882Property, plant and equipment, net






46,473







7,599,577







7,646,050Goodwill














164,265







164,265Intercompany receivables


233,482



453,298







192,492



(879,272
)


Investment in unconsolidated affiliates


4,923,949



5,110,430







2,168,884



(11,896,655
)


306,608Other long-term assets






29,952







220,269







250,221Total assets

$
5,169,183


$
5,624,682


$



$
12,626,752


$
(12,775,927
)

$
10,644,690LIABILITIES AND EQUITYCurrent liabilities:Current portion of long-term debt

$



$



$



$
163


$



$
163Trade accounts payable


20



8







226,395







226,423Accrued liabilities


1,507



78,359







266,471







346,337Income taxes payable






9,530







26,169







35,699Total current liabilities


1,527



87,897







519,198







608,622Long-term debt






3,939,896







709







3,940,605Other long-term liabilities






3,446







236,611







240,057Deferred income taxes






112,760







560,667







673,427Intercompany payable














879,272



(879,272
)


Total liabilities


1,527



4,143,999







2,196,457



(879,272
)


5,462,711Shareholders equity


5,167,656



1,480,683







10,415,972



(11,896,655
)


5,167,656Noncontrolling interest














14,323







14,323Total equity


5,167,656



1,480,683







10,430,295



(11,896,655
)


5,181,979Total liabilities and equity

$
5,169,183


$
5,624,682


$



$
12,626,752


$
(12,775,927
)

$
10,644,690  128




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statements of Income (Loss)
  Year Ended December 31, 2010Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)Revenues and other income:Operating revenues

$



$



$



$
4,174,635


$



$
4,174,635Earnings (losses) from unconsolidated affiliates














33,257







33,257Earnings (losses) from consolidated affiliates


68,749



(183,242
)






(316,657
)


431,150



Investment income (loss)


15











7,633







7,648Intercompany interest income






72,435











(72,435
)


Total revenues and other income


68,764



(110,807
)






3,898,868



358,715



4,215,540Costs and other deductions:Direct costs














2,423,602







2,423,602General and administrative expenses


9,165



445







338,008



(957
)


346,661Depreciation and amortization






3,303







760,950







764,253Depletion














17,943







17,943Interest expense






283,396







(10,352
)






273,044Intercompany interest expense














72,435



(72,435
)


Losses (gains) on sales and retirements of long-lived assets and
    other expense (income), net


(35,096
)


42,504







38,695



957



47,060Impairments and other charges














260,931







260,931Total costs and other deductions


(25,931
)


329,648







3,902,212



(72,435
)


4,133,494Income (loss) from continuing operations before income taxes


94,695



(440,455
)






(3,344
)


431,150



82,046Income tax expense (benefit)






(95,168
)






70,354







(24,814
)Subsidiary preferred stock dividend














750







750Income (loss) from continuing operations, net of tax


94,695



(345,287
)






(74,448
)


431,150



106,110Income (loss) from discontinued operations, net of tax














(11,330
)






(11,330
)Net income (loss)


94,695



(345,287
)






(85,778
)


431,150



94,780Less: Net (income) loss attributable to noncontrolling interest














(85
)






(85
)Net income (loss) attributable to Nabors

$
94,695


$
(345,287
)

$



$
(85,863
)

$
431,150


$
94,695   129




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2009Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)Revenues and other income:Operating revenues

$



$



$



$
3,683,419


$



$
3,683,419Earnings (losses) from unconsolidated affiliates














(155,433
)






(155,433
)Earnings (losses) from consolidated affiliates


(74,204
)


(316,443
)


(86,751
)


(441,133
)


918,531



Investment income (loss)


58



2,357



101



23,083







25,599Intercompany interest income






66,150



5,558







(71,708
)


Total revenues and other income


(74,146
)


(247,936
)


(81,092
)


3,109,936



846,823



3,553,585Costs and other deductions:Direct costs














2,001,404







2,001,404General and administrative expenses


28,350



336



1



400,044



(570
)


428,161Depreciation and amortization






3,594







663,506







667,100Depletion














9,417







9,417Interest expense






288,715



5,634



(28,310
)






266,039Intercompany interest expense














71,708



(71,708
)


Losses (gains) on sales and retirements of long-lived assets and
    other expense (income), net


(16,950
)


4,145



5,069



37,972



(17,677
)


12,559Impairments and other charges














330,976







330,976Total costs and other deductions


11,400



296,790



10,704



3,486,717



(89,955
)


3,715,656Income (loss) from continuing operations before income taxes


(85,546
)


(544,726
)


(91,796
)


(376,781
)


936,778



(162,071
)Income tax expense (benefit)






(84,465
)


15,744



(65,082
)






(133,803
)Income (loss) from continuing operations, net of tax


(85,546
)


(460,261
)


(107,540
)


(311,699
)


936,778



(28,268
)Income (loss) from discontinued operations, net of tax














(57,620
)






(57,620
)Net income (loss)


(85,546
)


(460,261
)


(107,540
)


(369,319
)


936,778



(85,888
)Less: Net (income) loss attributable to noncontrolling interest














342







342Net income (loss) attributable to Nabors

$
(85,546
)

$
(460,261
)

$
(107,540
)

$
(368,977
)

$
936,778


$
(85,546
)   130




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2008Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)Revenues and other income:Operating revenues

$



$



$



$
5,507,542


$



$
5,507,542Earnings (losses) from unconsolidated affiliates














(192,548
)






(192,548
)Earnings (losses) from consolidated affiliates


490,138



197,934



19,335



130,981



(838,388
)


Investment income (loss)


364



2,373



3



18,672







21,412Intercompany interest income


4,000



70,017



11,840







(85,857
)


Total revenues and other income


494,502



270,324



31,178



5,464,647



(924,245
)


5,336,406Costs and other deductions:Direct costs














3,100,613







3,100,613General and administrative expenses


21,191



494



32



458,792



(1,315
)


479,194Depreciation and amortization






3,901







610,466







614,367Depletion














22,308







22,308Interest expense






197,145



11,440



(11,867
)






196,718Intercompany interest expense














85,857



(85,857
)


Losses (gains) on sales and retirements of long-lived assets and
    other expense (income), net


(2,426
)


(5,045
)


27,444



(5,459
)


1,315



15,829Impairments and other charges














176,123







176,123Total costs and other deductions


18,765



196,495



38,916



4,436,833



(85,857
)


4,605,152Income (loss) from continuing operations before income taxes


475,737



73,829



(7,738
)


1,027,814



(838,388
)


731,254Income tax expense (benefit)






(45,920
)


(2,477
)


258,057







209,660Income (loss) from continuing operations, net of tax


475,737



119,749



(5,261
)


769,757



(838,388
)


521,594Income (loss) from discontinued operations, net of tax














(41,930
)






(41,930
)Net income (loss)


475,737



119,749



(5,261
)


727,827



(838,388
)


479,664Less: Net (income) loss attributable to noncontrolling interest














(3,927
)






(3,927
)Net income (loss) attributable to Nabors

$
475,737


$
119,749


$
(5,261
)

$
723,900


$
(838,388
)

$
475,737  131




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statements of Cash Flows
  Year Ended December 31, 2010Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)Net cash provided by (used for) operating activities

$
115,179


$
757,345


$



$
504,460


$
(270,000
)

$
1,106,984Cash flows from investing activities:Purchases of investments














(34,147
)






(34,147
)Sales and maturities of investments














34,613







34,613Cash paid for acquisition of businesses, net














(733,630
)






(733,630
)Investment in unconsolidated affiliates














(40,936
)






(40,936
)Capital expenditures














(930,277
)






(930,277
)Proceeds from sales of assets and insurance claims














31,072







31,072Cash paid for investments in consolidated affiliates


(122,300
)


(1,027,134
)










1,149,434



Net cash provided by (used for) investing activities


(122,300
)


(1,027,134
)






(1,673,305
)


1,149,434



(1,673,305
)Cash flows from financing activities:Increase (decrease) in cash overdrafts














(6,298
)






(6,298
)Proceeds from long-term debt






696,948















696,948Debt issuance costs






(8,934
)














(8,934
)Payments for hedge transactions






(5,667
)














(5,667
)Proceeds from Revolving Credit Facility






600,000















600,000Intercompany debt






















Proceeds from issuance of common shares


8,201



















8,201Reduction in long-term debt






(274,095
)






(124,419
)






(398,514
)Reduction in Revolving Credit Facility






(600,000
)














(600,000
)Repurchase of equity component of convertible debt






(4,712
)














(4,712
)Settlement of call options and warrants, net






1,134















1,134Purchase of restricted stock


(1,935
)


















(1,935
)Tax benefit related to share-based awards














31







31Cash dividends paid






(135,000
)






(135,000
)


270,000



Proceeds from parent contributions














1,149,434



(1,149,434
)


Net cash (used for) provided by financing activities


6,266



269,674







883,748



(879,434
)


280,254Effect of exchange rate changes on cash and cash equivalents














(46
)






(46
)Net (decrease) increase in cash and cash equivalents


(855
)


(115
)






(285,143
)






(286,113
)Cash and cash equivalents, beginning of period


11,702



135







915,978







927,815Cash and cash equivalents, end of period

$
10,847


$
20


$



$
630,835


$



$
641,702   132




---



##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2009Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)Net cash provided by (used for) operating activities

$
40,589


$
646,645


$
608


$
1,089,086


$
(159,956
)

$
1,616,972Cash flows from investing activities:Purchases of investments














(32,674
)






(32,674
)Sales and maturities of investments














57,033







57,033Investment in unconsolidated affiliates














(125,076
)






(125,076
)Capital expenditures














(1,093,435
)






(1,093,435
)Proceeds from sales of assets and insurance claims














31,375







31,375Proceeds from sale of consolidated affiliates










239,421



(239,421
)






Cash paid for investments in consolidated affiliates


(46,912
)


(900,000
)










946,912



Net cash provided by (used for) investing activities


(46,912
)


(900,000
)


239,421



(1,402,198
)


946,912



(1,162,777
)Cash flows from financing activities:Increase (decrease) in cash overdrafts














(18,157
)






(18,157
)Proceeds from long-term debt






1,124,978















1,124,978Debt issuance costs






(8,832
)














(8,832
)Intercompany debt










143,859



(143,859
)






Proceeds from issuance of common shares


11,249



















11,249Reduction in long-term debt






(856,203
)


(225,191
)


(407
)






(1,081,801
)Repurchase of equity component of convertible debt






(6,586
)














(6,586
)Purchase of restricted stock


(1,515
)


















(1,515
)Tax benefit related to share-based awards






37















37Cash dividends paid










(159,956
)






159,956



Proceeds from parent contributions














946,912



(946,912
)


Net cash (used for) provided by financing activities


9,734



253,394



(241,288
)


784,489



(786,956
)


19,373Effect of exchange rate changes on cash and cash equivalents














12,160







12,160Net (decrease) increase in cash and cash equivalents


3,411



39



(1,259
)


483,537







485,728Cash and cash equivalents, beginning of period


8,291



96



1,259



432,441







442,087Cash and cash equivalents, end of period

$
11,702


$
135


$



$
915,978


$



$
927,815   133




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2008Nabors





OtherNabors


Delaware


Nabors


Subsidiaries(Parent/


(Issuer/


Holdings


(Non


Consolidating


ConsolidatedGuarantor)


Guarantor)


(Issuer)


Guarantors)


Adjustments


Total(In thousands)Net cash provided by (used for) operating activities

$
39,987


$
287,628


$
(162,293
)

$
1,455,628


$
(158,126
)

$
1,462,824Cash flows from investing activities:Purchases of investments














(269,983
)






(269,983
)Sales and maturities of investments














521,613







521,613Cash paid for acquisitions of businesses, net














(287
)






(287
)Investment in unconsolidated affiliates














(271,309
)






(271,309
)Capital expenditures






(16,817
)






(1,490,162
)






(1,506,979
)Proceeds from sales of assets and insurance claims














69,842







69,842Cash paid for investments in consolidated affiliates


(85,927
)


(150,626
)






(163,548
)


400,101



Net cash provided by (used for) investing activities


(85,927
)


(167,443
)






(1,603,834
)


400,101



(1,457,103
)Cash flows from financing activities:Increase (decrease) in cash overdrafts














23,858







23,858Proceeds from long-term debt






962,901















962,901Debt issuance costs






(7,324
)














(7,324
)Proceeds from issuance of common shares


56,633











(3
)






56,630Reduction in long-term debt






(836,431
)






(80
)






(836,511
)Repurchase of common shares






(247,357
)






(33,744
)






(281,101
)Purchase of restricted stock


(13,061
)


















(13,061
)Tax benefit related to share-based awards






5,369















5,369Cash dividends paid














(158,126
)


158,126



Proceeds from parent contributions










163,548



236,553



(400,101
)


Net cash (used for) provided by financing activities


43,572



(122,842
)


163,548



68,458



(241,975
)


(89,239
)Effect of exchange rate changes on cash and cash equivalents














(5,701
)






(5,701
)Net (decrease) increase in cash and cash equivalents


(2,368
)


(2,657
)


1,255



(85,449
)






(89,219
)Cash and cash equivalents, beginning of period


10,659



2,753



4



517,890







531,306Cash and cash equivalents, end of period

$
8,291


$
96


$
1,259


$
432,441


$



$
442,087  134




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 24
    Supplemental
    Information on Oil and Gas Exploration and Production Activities
    (unaudited)          Results
    of Operations
   135




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year Ended December 31, 2010UnitedStates


Canada


Colombia


Total(In thousands)Results of OperationsConsolidated SubsidiariesRevenue

$
19,180


$
11,276


$
16,619


$
47,075Production costs


8,510



7,965



7,918



24,393Exploration expenses










39,047



39,047Depreciation and depletion


20,092



5,424



3,737



29,253Impairment of oil and gas properties


110,165











110,165Related income tax expense (benefit)


(15,856
)


(3,078
)


610



(18,324
)Results of producing activities for consolidated subsidiaries

$
(103,731
)

$
965


$
(34,693
)

$
(137,459
)Equity Companies(1)Revenue

$
64,736


$
6,038


$
20,176


$
90,950Production costs


18,460



9,036



9,174



36,670Depreciation and depletion


24,221



6,033



7,058



37,312Impairment of oil and gas properties


851











851Realized gain on derivative instruments


(25,424
)


(2,543
)






(27,967
)Related income tax expense (benefit)(2)














Results of producing activities for equity companies

$
46,628


$
(6,488
)

$
3,944


$
44,084Total results of operations

$
(57,103
)

$
(5,523
)

$
(30,749
)

$
(93,375
)     (1)
    
    Represents our proportionate share of interests in our equity
    companies.(2)
    
    Equity companies are
    pass-through
    entities for tax purposes.  Capitalized
    Cost
   136




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year Ended December 31, 2010United States


Canada


Colombia


Total(In thousands)Capitalized CostsConsolidated SubsidiariesProperty acquisition costs, proved

$
480,618


$
62,109


$
57,251


$
599,978Property acquisition costs, unproved


136,625



89,785



1,174



227,584Total acquisition costs


617,243



151,894



58,425



827,562Accumulated depreciation and depletion


(463,330
)


(7,344
)


(3,782
)


(474,456
)Net capitalized costs for consolidated subsidiaries

$
153,913


$
144,550


$
54,643


$
353,106Equity Companies(1)Property acquisition costs, proved

$
749,515


$
78,224


$
98,629


$
926,368Property acquisition costs, unproved


108,541



28,884



883



138,308Total acquisition costs


858,056



107,108



99,512



1,064,676Accumulated depreciation and depletion


(460,622
)


(72,338
)


(31,825
)


(564,785
)Net capitalized costs for equity companies

$
397,434


$
34,770


$
67,687


$
499,891     (1)
    
    Represents our proportionate share of interests in our equity
    companies.  Costs
    Incurred in Oil and Gas Property Acquisitions, Exploration and
    Development
   137




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year Ended December 31, 2010UnitedStates


Canada


Colombia


Total(In thousands)Costs incurred in property acquisitions, exploration and
    development activitiesConsolidated SubsidiariesProperty acquisition costs, proved

$
25,080


$



$



$
25,080Property acquisition costs, unproved


25,202







1,000



26,202Exploration costs


8,199







33,599



41,798Development costs


19,118



3,876







22,994Asset retirement costs










770



770Total costs incurred for consolidated subsidiaries

$
77,599


$
3,876


$
35,369


$
116,844Equity Companies(1)Property acquisition costs, proved

$
29,975


$



$



$
29,975Property acquisition costs, unproved


34,207











34,207Exploration costs


108







29,927



30,035Development costs


118,828



1,056



11,805



131,689Asset retirement costs


296







(104
)


192Total costs incurred for equity companies

$
183,414


$
1,056


$
41,628


$
226,098     (1)
    
    Represents our proportionate share of interests in equity
    companies.  Oil and
    Gas Reserves
  12-month first-day-of-the-month unit-of-production
  12-month 12-month 12-month 12-month
 138




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           139




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    United States


Canada


Colombia


TotalNatural





Natural





Natural





NaturalLiquids


Gas


Liquids


Gas


Liquids


Gas


Liquids


GasReserves

(MMBbls)


(Bcf)


(MMBbls)


(Bcf)


(MMBbls)


(Bcf)


(MMBbls)


(Bcf)Net proved reserves of consolidated subsidiariesJanuary 1, 2010


0.4



29.6







5.0



0.9







1.3



34.6Revisions


0.1



(11.7
)






3.6



(0.7
)






(0.6
)


(8.1
)Extensions, additions and discoveries






5.0











2.0







2.0



5.0Production


(0.1
)


(3.1
)






(3.1
)


(0.2
)






(0.3
)


(6.2
)Purchases in place


20.8























20.8



Sales in place






























December 31, 2010


21.2



19.8







5.5



2.0







23.2



25.3Proportional interest in proved reserves of equity
    companiesJanuary 1, 2010


5.2



466.9







7.5



0.6







5.8



474.4Revisions


1.5



(119.1
)






(0.8
)


0.5







2.0



(119.9
)Extensions, additions and discoveries


0.6



108.5











1.3







1.9



108.5Production


(0.2
)


(12.3
)






(1.5
)


(0.3
)






(0.5
)


(13.8
)Purchases in place


0.8



109.8



















0.8



109.8Sales in place






(1.0
)










(0.2
)






(0.2
)


(1.0
)December 31, 2010


7.9



552.8







5.2



1.9







9.8



558.0Total proved reserves at December 31, 2010


29.1



572.6







10.7



3.9







33.0



583.3Proved Developed Reserves at December 31, 2010Consolidated subsidiaries


2.7



17.1







5.5



1.6







4.3



22.6Equity companies(1)


3.0



147.1







5.2



0.5







3.5



152.3Proved Undeveloped Reserves at December 31, 2010Consolidated subsidiaries


18.5



2.7











0.4







18.9



2.7Equity companies(1)


4.9



405.7











1.4







6.3



405.7     (1)
    
    Represents our proportionate share of interests in equity
    companies.  Standardized
    Measure of Discounted Future Cash Flows
  first-day-of-the-month
 140




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      For the Year Ended December 31, 2010United States


Canada


Colombia


Total(In thousands)Standardized Measure of Discounted Future Cash FlowsConsolidated SubsidiariesFuture cash flows from sales of oil and gas

$
1,468,944


$
16,435


$
156,921


$
1,642,300Future production costs


(481,487
)


(5,600
)


(83,556
)


(570,643
)Future development costs


(152,309
)


(360
)


(16,216
)


(168,885
)Future income tax expense(2)


(268,774
)










(268,774
)Future net cash inflows


566,374



10,475



57,149



633,998Effect of discounting net cash flows at 10%


(353,232
)


(2,046
)


(10,256
)


(365,534
)Discounted future net cash flows

$
213,142


$
8,429


$
46,893


$
268,464Equity Companies(1)Future cash flows from sales of oil and gas

$
2,889,308


$
14,713


$
141,410


$
3,045,431Future production costs


(752,792
)


(6,463
)


(56,837
)


(816,092
)Future development costs


(850,053
)


(992
)


(12,307
)


(863,352
)Future income tax expense(3)














Future net cash inflows


1,286,463



7,258



72,266



1,365,987Effect of discounting net cash flows at 10%


(995,091
)


(1,477
)


(14,313
)


(1,010,881
)Discounted future net cash flows

$
291,372


$
5,781


$
57,953


$
355,106Total consolidated and equity interests in standardized
    measure of discounted future net cash flows

$
504,514


$
14,210


$
104,846


$
623,570     (1)
    
    Represents our proportionate share of interests in equity
    companies.(2)
    
    For Canada and Colombia, there are net operating loss
    carryforwards that are expected to offset any future taxable
    earnings.(3)
    
    Equity companies are pass-through entities for tax purposes. 141




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##### Table of Contents



Nabors
    Industries Ltd. and Subsidiaries
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Change
    in Standardized Measure of Discounted Future Net Cash Flows
    Relating to Proved Oil and Gas Reserves
    For the Year Ended December 31, 2010UnitedStates


Canada


Colombia


Total(In thousands)Change in Standardized Measure of Discounted Future Net Cash
    Flows Relating to Proved Oil and Gas ReservesConsolidated SubsidiariesDiscounted future net cash flows as of December 31, 2009

$
38,345


$
6,527


$
11,741


$
56,613Value of reserves added during the year due to extensions,
    discoveries and net purchase less related costs


8,037







45,072



53,109Changes in value of previous-year reserves due to:Sales of oil and gas produced, net of production costs


(10,670
)


(3,311
)


(8,701
)


(22,682
)Development costs incurred during the year


8,359











8,359Net change in prices and production costs


96,662



46



(2,555
)


94,153Net change in future development costs


4,155



(192
)


285



4,248Revisions of previous reserves estimates


(27,501
)


5,628



(7,093
)


(28,966
)Purchases of reserves


196,613











196,613Accretion of discount


3,562



496



1,030



5,088Other


(17,357
)


(765
)


7,114



(11,008
)Net change in income taxes(2)


(87,063
)










(87,063
)Total change in the standardized measure for consolidated
    subsidiaries

$
174,797


$
1,902


$
35,152


$
211,851Discounted future net cash flows as of December 31, 2010

$
213,142


$
8,429


$
46,893


$
268,464Equity Companies(1)Discounted future net cash flows as of December 31, 2009

$
52,941


$
9,569


$
13,706


$
76,216Value of reserves added during the year due to extensions,
    discoveries and net purchase less related costs


20,230







40,664



60,894Changes in value of previous-year reserves due to:Sales of oil and gas produced, net of production costs


(46,276
)


2,998



(11,002
)


(54,280
)Development costs incurred during the year


69,207











69,207Net change in prices and production costs


90,974



(5,205
)


3,032



88,801Net change in future development costs






(374
)


(847
)


(1,221
)Revisions of previous reserves estimates


76,723



(1,077
)


17,289



92,935Purchases of reserves


5,453











5,453Sales of reserves


(1,446
)






(5,418
)


(6,864
)Accretion of discount


5,294



794



529



6,617Other


18,272



(924
)






17,348Net change in income taxes(3)














Total change in the standardized measure for equity companies

$
238,431


$
(3,788
)

$
44,247


$
278,890Discounted future net cash flows as of December 31, 2010

$
291,372


$
5,781


$
57,953


$
355,106     (1)
    
    Represents our proportionate share of interests in equity
    companies.(2)
    
    For Canada and Colombia, there are net operating loss
    carryforwards that are expected to offset any future taxable
    earnings.(3)
    
    Equity companies are pass-through entities for tax purposes. 142




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES    Rules 13a-15(e) 15d-15(e)
  Rules 13a-15 15d-15
 143




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting
        ITEM 9B.
    OTHER
    INFORMATION   144




---



##### Table of Contents



PART III ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Election of Directors Other
    Executive Officers Section 16(a)
    Beneficial Ownership Reporting Compliance
  www.nabors.com
  Section 303A-12(a)
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Management Compensation
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED SHAREHOLDER MATTERS      (a)





(c)Number of





Number of SecuritiesSecurities to be


(b)


Remaining Available forIssued Upon


Weighted-Average


Future Issuance UnderExercise of


Exercise Price of


Equity CompensationOutstanding


Outstanding


Plans (ExcludingOptions, Warrants


Options, Warrants


SecuritiesPlan category

and Rights


and Rights


Reflected in Column (a))Equity compensation plans approved by security holders


24,618,032


$
17.9089



17,282,075Equity compensation plans not approved by security holders


4,313,779


$
23.4348



847,357Total


28,931,811







18,129,432     (1)
    
    The 1996 Employee Stock Plan incorporated an evergreen formula
    pursuant to which on each January 1, the aggregate number
    of shares reserved for issuance under the plan were increased by
    an amount equal to 1
    1/2 % of

    the common shares outstanding on September 30 of the immediately
    preceding fiscal year. The 1996 Employee Stock Plan expired on
    January 17, 2006.(2)
    
    The 2003 Employee Stock Plan provides, commencing on
    June 1, 2006 and thereafter for a period of four
    (4) years on each January 1, for an automatic increase
    in the number of shares reserved and available for 145




---



##### Table of Contents



issuance under the Plan by an amount equal to two percent (2%)
    of the Companys outstanding common shares as of each June
    1 or January 1 date.    1998
    Employee Stock Plan
    1999
    Stock Option Plan for Non-Employee Directors
   146




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##### Table of Contents



Share Ownership of Management and Principal
    Shareholders
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE  Certain Relationships and Related
    Transactions
  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES  Principal Accounting Fees and Services
 147




---



##### 



PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULE      Page No.Consolidated Balance Sheets as of December 31, 2010 and 2009


65Consolidated Statements of Income (Loss) for the Years Ended
    December 31, 2010, 2009 and 2008


66Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2010, 2009 and 2008


67Consolidated Statements of Changes in Equity for the Years Ended
    December 31, 2010, 2009 and 2008


68      
 Page No.Schedule II  Valuation and
    Qualifying Accounts


154      (b)
    Exhibits  Exhibit No.

Description2
.1

Agreement and Plan of Merger among Nabors Industries, Inc.,
    Nabors Acquisition Corp. VIII, Nabors Industries Ltd. and Nabors
    US Holdings Inc. (incorporated by reference to Annex I to the
    proxy statement/prospectus included in our Registration
    Statement on Form S-4 (File No. 333-76198) filed with
    the SEC on May 10, 2002, as amended).2
.2

Asset Purchase Agreement dated July 20, 2007, by and among
    Nabors US Finance LLC, Nabors Well Services Co. (inclusive of
    its Sea Mar Division), Sea Mar Management LLC and Hornbeck
    Offshore Services, Inc. (incorporated by reference to Exhibit
    2.5 to our Form 10-Q (File No. 001-32657) filed with the SEC on
    August 2, 2007).2
.3

Agreement and Plan of Merger, by and among Nabors Industries
    Ltd., Diamond Acquisition Corp., and Superior, dated as of
    August 6, 2010 (incorporated by reference to Exhibit 2.2 to our
    Form 8-K (File No. 001-32657) filed with the SEC on August 9,
    2010).3
.1

Memorandum of Association of Nabors Industries Ltd.
    (incorporated by reference to Annex II to the proxy
    statement/prospectus included in our Registration Statement on
    Form S-4 (File No. 333-76198) filed with the SEC on
    May 10, 2002, as amended).3
.2

Amended and Restated Bye-Laws of Nabors Industries Ltd.
    (incorporated by reference to Exhibit 4.2 to our Form 10-Q (File
    No. 000-49887) filed with the SEC on August 3, 2005).3
.2(a)

Amendment to Amended and Restated Bye-Laws of Nabors Industries
    Ltd. (incorporated by reference to Exhibit A of our Proxy
    Statement (File No. 001-32657) filed with the SEC on February
    24, 2006).3
.3

Form of Resolutions of our Board of Directors authorizing the
    issue of the Special Voting Preferred Share (incorporated by
    reference to Exhibit 3.3 to our Post-Effective Amendment No. 1
    to Registration Statement on Form S-3 (File No. 333-85228-99)
    filed with the Commission on June 11, 2002).4
.1

Indenture, dated August 22, 2002, among Nabors Industries, Inc.,
    as issuer, Nabors Industries Ltd., as guarantor, and Bank One,
    N.A., with respect to Nabors Industries, Inc.s Series A
    and Series B 5.375% Senior Notes due 2012 (incorporated by
    reference to Exhibit 4.1 to Nabors Industries, Inc.s
    Registration Statement on Form S-4 (File No. 333-10049201) filed
    with the SEC on October 11, 2002). 148




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##### Table of Contents



Exhibit No.

Description4
.2

Purchase Agreement, dated May 18, 2006, among Nabors Industries,
    Inc., Nabors Industries Ltd., Citigroup Global Markets Inc. and
    Lehman Brothers Inc., with respect to Nabors Industries,
    Inc.s 0.94% Senior Exchangeable Notes due 2011
    (incorporated by reference to Exhibit 4.1 to our Form 8-K (File
    No. 001-32657) filed with the SEC on May 24, 2006).4
.2(a)

Indenture, dated as of May 23, 2006, among Nabors Industries,
    Inc., Nabors Industries Ltd. and Wells Fargo Bank, National
    Association, as trustee, with respect to Nabors Industries,
    Inc.s 0.94% Senior Exchangeable Notes due 2011
    (including form of 0.94% Senior Exchangeable Note due 2011)
    (incorporated by reference to Exhibit 4.2 to our Form 8-K (File
    No. 001-32657) filed with the SEC on May 24, 2006).4
.2(b)

Registration Rights Agreement, dated as of May 23, 2006, among
    Nabors Industries, Inc., Nabors Industries Ltd., Citigroup
    Global Markets Inc. and Lehman Brothers Inc., with respect to
    Nabors Industries, Inc.s 0.94% Senior Exchangeable
    Notes due 2011 (incorporated by reference to Exhibit 4.3 to our
    Form 8-K (File No. 001-32657) filed with the SEC on May 24,
    2006).4
.3

Purchase Agreement, dated February 14, 2008, among Nabors
    Industries, Inc., Nabors Industries Ltd., Citigroup Global
    Markets Inc. and UBS Securities LLC, with respect to Nabors
    Industries, Inc.s 6.15% Senior Notes due 2018
    (incorporated by reference to Exhibit 4.1 to our Form 8-K (File
    No. 001-32657) filed with the SEC on February 25, 2008).4
.3(a)

Indenture, dated February 20, 2008, among Nabors Industries,
    Inc., Nabors Industries Ltd. and Wells Fargo Bank, National
    Association, as trustee, with respect to Nabors Industries,
    Inc.s 6.15% Senior Notes due 2018 (including form of
    6.15% Senior Note due 2018) (incorporated by reference to
    Exhibit 4.2 to our Form 8-K (File No. 001-32657) filed with the
    SEC on February 25, 2008).4
.3(b)

Registration Rights Agreement, dated as of February 20, 2008,
    among Nabors Industries, Inc., Nabors Industries, Ltd.,
    Citigroup Global Markets Inc. and UBS Securities LLC, with
    respect to Nabors Industries, Inc.s 6.15% Senior
    Notes due 2018 (incorporated by reference to Exhibit 4.3 to our
    Form 8-K (File No. 001-32657) filed with the SEC on February 25,
    2008).4
.4

Purchase Agreement, dated July 17, 2008, among Nabors
    Industries, Inc., Nabors Industries, Ltd., Citigroup Global
    Markets Inc. and UBS Securities LLC, with respect to Nabors
    Industries, Inc.s 6.15% Senior Notes due 2018
    (incorporated by reference to Exhibit 4.1 to our Form 8-K (File
    No. 001-32657) filed with the SEC on July 23, 2008).4
.4(a)

Registration Rights Agreement, dated July 22, 2008, among Nabors
    Industries, Inc., Nabors Industries, Ltd., Citigroup Global
    Markets Inc. and UBS Securities LLC, with respect to Nabors
    Industries, Inc.s 6.15% Senior Notes due 2018
    (incorporated by reference to Exhibit 4.2 to our Form 8-K (File
    No. 001-32657) filed with the SEC on July 23, 2008).4
.5

Purchase Agreement, dated January 7, 2009, among Nabors
    Industries, Inc., Nabors Industries Ltd., Goldman, Sachs &
    Co., UBS Securities LLC, Citigroup Global Markets Inc., Deutsche
    Bank Securities Inc., Howard Weil Incorporated, J.P. Morgan
    Securities Inc., Morgan Stanley & Co. Incorporated, Tudor,
    Pickering, Holt & Co. Securities, Inc. and Wells Fargo
    Securities, LLC, with respect to Nabors Industries, Inc.s
    9.25% Senior Notes due 2019 (incorporated by reference to
    Exhibit 4.1 to our Form 8-K (File No. 001-32657) filed with the
    SEC on January 14, 2009).4
.5(a)

Indenture related to the Senior Notes due 2019, dated as of
    January 12, 2009, among Nabors Industries, Inc., Nabors
    Industries Ltd. and Wells Fargo Bank, National Association, as
    trustee, with respect to Nabors Industries, Inc.s
    9.25% Senior Notes due 2019 (including form of
    9.25% Senior Note due 2019) (incorporated by reference to
    Exhibit 4.2 to Nabors Industries Ltd.s Form 8-K (File No.
    001-32657) filed with the Commission on January 14, 2009). 149




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##### Table of Contents



Exhibit No.

Description4
.5(b)

Registration Rights Agreement, dated as of January 12, 2009,
    among Nabors Industries, Inc., Nabors Industries Ltd., Goldman,
    Sachs & Co., UBS Securities LLC, Citigroup Global Markets
    Inc., Deutsche Bank Securities Inc., Howard Weil Incorporated,
    J.P. Morgan Securities Inc., Morgan Stanley & Co.
    Incorporated, Tudor, Pickering, Holt & Co. Securities, Inc.
    and Wells Fargo Securities, LLC, with respect to Nabors
    Industries, Inc.s 9.25% Senior Notes due 2019
    (incorporated by reference to Exhibit 4.2 to our Form 8-K (File
    No. 001-32657) filed with the SEC on January 14, 2009).4
.6

Purchase Agreement, dated September 9, 2010, among Nabors
    Industries, Inc., Nabors Industries Ltd., UBS Securities LLC,
    Citigroup Global Markets Inc., Deutsche Bank Securities Inc.,
    Mizuho Securities USA Inc., Banc of America Securities LLC,
    Morgan Stanley & Co. Incorporated, HSBC Securities (USA)
    Inc., PNC Capital Markets LLC and Scotia Capital (USA) Inc.
    (incorporated by reference to Exhibit 4.1 to our Form 8-K (File
    No. 001-32657) filed with the SEC on September 15, 2010).4
.6(a)

Indenture related to the 5.0% Senior Notes due 2020, dated
    as of September 14, 2010, among Nabors Industries, Inc., Nabors
    Industries Ltd., Wilmington Trust Company, as trustee and
    Citibank, N.A. as securities administrator (including form of
    5.0% Senior Note due 2020) (incorporated by reference to
    Exhibit 4.2 to our Form 8-K (File No. 001-32657) filed with the
    SEC on September 15, 2010).4
.6(b)

Registration Rights Agreement, dated as of September 14, 2010,
    among Nabors Industries, Inc., Nabors Industries Ltd., UBS
    Securities LLC, Citigroup Global Markets Inc., Deutsche Bank
    Securities Inc., Mizuho Securities USA Inc., Banc of America
    Securities LLC, Morgan Stanley & Co. Incorporated, HSBC
    Securities (USA) Inc., PNC Capital Markets LLC and Scotia
    Capital (USA) Inc. (incorporated by reference to Exhibit 4.3 to
    our Form 8-K (File No. 001-32657) filed with the SEC on
    September 15, 2010).4
.7

Tender and Voting Agreement, by and among Nabors Industries
    Ltd., Diamond Acquisition Corp, and certain Superior
    stockholders, dated as of August 6, 2010 (incorporated by
    reference to Exhibit 10.2 to our Form 8-K (File No. 001-32657)
    filed with the SEC on August 9, 2010).10
.1 (+)

Executive Employment Agreement between Nabors Industries, Inc.,
    Nabors Industries Ltd. and Eugene M. Isenberg, dated as of April
    1, 2009 (incorporated by reference to Exhibit 10.1 to our Form
    8-K (File No. 001-32657) filed with the SEC on April 30, 2009).10
.1(a) (+)

First Amendment to Executive Employment Agreement between Nabors
    Industries, Inc., Nabors Industries Ltd. and Eugene M. Isenberg,
    dated as of June 29, 2009 (incorporated by reference to Exhibit
    10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on
    July 1, 2009).10
.1(b) (+)

Second Amendment to Executive Employment Agreement between
    Nabors Industries, Inc., Nabors Industries Ltd. and Eugene M.
    Isenberg, dated as of December 28, 2009 (incorporated by
    reference to Exhibit 10.1 to our Form 8-K (File No. 001-32657)
    filed with the SEC on December 28, 2009).10
.2 (+)

Executive Employment Agreement between Nabors Industries, Inc.,
    Nabors Industries Ltd. and Anthony G. Petrello, dated as of
    April 1, 2009 (incorporated by reference to Exhibit 10.2 to our
    Form 8-K (File No. 001-32657) filed with the SEC on April 30,
    2009).10
.2(a) (+)

First Amendment to Executive Employment Agreement between Nabors
    Industries, Inc., Nabors Industries Ltd. and Anthony G.
    Petrello, dated as of June 29, 2009 (incorporated by reference
    to Exhibit 10.2 to our Form 8-K (File No. 001-32657) filed with
    the SEC on July 1, 2009).10
.2(b) (+)

Second Amendment to Executive Employment Agreement between
    Nabors Industries, Inc., Nabors Industries Ltd. and Anthony G.
    Petrello, dated as of December 28, 2009 (incorporated by
    reference to Exhibit 10.2 to our Form 8-K (File No. 001-32657)
    filed with the SEC on December 28, 2009).10
.2(c) (+)

Employment Agreement effective October 1, 1996, among Nabors
    Industries, Inc. and Anthony G. Petrello (incorporated by
    reference to Exhibit 10.8 to our Form 10-Q (File No. 1-9245)
    filed May 16, 1997).10
.3

Form of Indemnification Agreement entered into between Nabors
    Industries Ltd. and the directors and executive officers
    identified in the schedule thereto (incorporated by reference to
    Exhibit 10.28 to our Form 10-K (File No. 000-49887) filed with
    the SEC on March 31, 2003). 150




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##### Table of Contents



Exhibit No.

Description10
.4 (+)

Form of Stock Option Agreement  Isenberg/Petrello
    (incorporated by reference to Exhibit 10.03 to our Form 8-K
    (File No. 000-49887) filed with the SEC on March 2, 2005).10
.5 (+)

Form of Stock Option Agreement  Others (incorporated
    by reference to Exhibit 10.04 to our Form 8-K (File No.
    000-49887) filed with the SEC on March 2, 2005).10
.6 (+)

2003 Employee Stock Plan (incorporated by reference to Annex D
    of our Proxy Statement (File No. 000-49887) filed with
    the SEC on May 8, 2003).10
.6(a) (+)

First Amendment to 2003 Employee Stock Plan (incorporated by
    reference to Exhibit 4.1 to our Form 10-Q (File No. 000-49887)
    filed with the SEC on August 3, 2005).10
.6(b) (+)

Amended and Restated 2003 Employee Stock Plan (incorporated by
    reference to Exhibit A of our Proxy Statement (File No.
    001-32657) filed with the SEC on May 4, 2006).10
.6(c) (+)

Nabors Industries Ltd. Amended and Restated 2003 Employee Stock
    Plan (incorporated by reference to Exhibit A of Nabors
    Industries Ltd.s Revised Definitive Proxy Statement on
    Schedule 14A (File No. 001-32657) filed with the Commission on
    May 4, 2006) (incorporated by reference to Exhibit 99.1 to our
    Form S-8 filed with the SEC on November 12, 2008.10
.7(+)

1996 Employee Stock Plan (incorporated by reference to Nabors
    Industries Inc.s Registration Statement on Form S-8 (File
    No. 333-11313) filed with the SEC on September 3, 1996).10
.8 (+)

Nabors Industries, Inc. 1997 Executive Officers Incentive Stock
    Plan (incorporated by reference to Exhibit 10.20 to Nabors
    Industries Inc.s Form 10-K (File No. 1-9245) filed with
    the SEC on December 29, 1997).10
.9 (+)

Nabors Industries, Inc. 1998 Employee Stock Plan (incorporated
    by reference to Exhibit 10.19 to Nabors Industries Inc.s
    Form 10-K (File No. 1-9245) filed with the SEC on March 31,
    1999).10
.10 (+)

Nabors Industries, Inc. 1999 Stock Option Plan for Non-Employee
    Directors (incorporated by reference to Exhibit 10.21 to Nabors
    Industries Inc.s Form 10-K (File No. 1-9245) filed with
    the SEC March 31, 1999).10
.10(a) (+)

Amendment to Nabors Industries, Inc. 1999 Stock Option Plan for
    Non-Employee Directors (incorporated by reference to Exhibit
    10.19 to Nabors Industries Inc.s Form 10-K (File No.
    1-09245)
    filed with the SEC on March 19, 2002).10
.10(b) (+)

Amended and Restated 1999 Stock Option Plan for Non-Employee
    Directors (amended on May 2, 2003) (incorporated by reference to
    Exhibit 10.29 to our Form 10-Q (File No. 000-49887) filed with
    the SEC on May 12, 2003).10
.11

Purchase and Sale Agreement (Red River) by and among
    El Paso Production Company and El Paso Production GOM
    Inc., jointly and severally as Seller and Ramshorn Investments,
    Inc., as Purchaser dated October 8, 2003 (incorporated by
    reference to Exhibit 10.23 to our Form 10-K (File No. 000-49887)
    filed with the SEC on March 15, 2004).10
.12

Purchase and Sale Agreement (USA) between El Paso
    Production Oil & Gas USA, L.P., as Seller and Ramshorn
    Investments, Inc., as Purchaser dated October 8, 2003
    (incorporated by reference to Exhibit 10.24 to our Form 10-K
    (File No. 000-49887) filed with the SEC on March 15, 2004).10
.13

Credit Agreement, dated as of September 7, 2010, among Nabors
    Industries, Inc., as borrower, Nabors Industries Ltd., as
    guarantor, UBS Securities LLC, Citibank, N.A., Deutsche Bank AG
    New York Branch and Mizuho Corporate Bank (USA), as joint lead
    arrangers and joint bookrunners, UBS Securities LLC, as
    documentation agent and syndication agent, UBS AG, Stamford
    Branch, as administrative agent, the lenders party thereto from
    time to time and UBS Loan Finance, LLC, as swingline lender
    (incorporated by reference to Exhibit 10.1 to our Form 8-K (File
    No. 001-32657) filed with the SEC on September 7, 2010).12


Computation of Ratios. *14


Code of Business Conduct (incorporated by reference to Exhibit
    14 to our Form 10-K (File No. 000-49887) filed with the SEC on
    March 15, 2004). 151




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##### Table of Contents



Exhibit No.

Description18


Preference Letter of Independent Accountants Regarding Change in
    Accounting Principle (incorporated by reference to Exhibit 18 to
    our Form 10-Q (File No. 000-49887) filed with the SEC on
    November 2, 2005).21


Significant Subsidiaries*23
.1

Consent of Independent Registered Public Accounting
    Firm  PricewaterhouseCoopers LLP  Houston.
    *23
.2

Consent of Independent Auditors  Ernst & Young
    LLC  Houston. *23
.3

Consent of Miller and Lents, Ltd.*23
.4

Consent of Netherland, Sewell & Associates, Inc.*23
.5

Consent of AJM Petroleum Consultants*23
.6

Consent of Lonquist & Co., LLC*23
.7

Consent of Miller and Lents, Ltd.- NFR Energy LLC*31
.1

Rule 13a-14(a)/15d-14(a) Certification of Eugene M. Isenberg,
    Chairman and Chief Executive Officer*31
.2

Rule 13a-14(a)/15d-14(a) Certification of R. Clark Wood,
    principal accounting and financial officer*32
.1

Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and
    Section 1350 of Chapter 63 of Title 18 of the United States Code
    (18 U.S.C. 1350), executed by Eugene M. Isenberg, Chairman
    and Chief Executive Officer and R. Clark Wood, principal
    accounting and financial officer (furnished herewith).99
.1

Report of Miller and Lents, Ltd.*99
.2

Report of Netherland, Sewell & Associates, Inc.*99
.3

Report of AJM Petroleum Consultants*99
.4

Report of Lonquist & Co., LLC*99
.5

Report of Miller and Lents, Ltd.  NFR Energy LLC*99
.6

Financial Statements and Notes for NFR Energy LLC*     *
    
    Filed herewith.  (+)
    
    Management contract or compensatory plan or arrangement. 152




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##### Table of Contents



SIGNATURES
      By:
    /s/  Eugene
    M. Isenberg      By:
    /s/  R.
    Clark Wood          Signature

Title

Date/s/  Eugene
    M. IsenbergEugene
    M. Isenberg

Chairman and Chief Executive Officer

March 1, 2011/s/  Anthony
    G. PetrelloAnthony
    G. Petrello

Deputy Chairman, President and Chief Operating Officer

March 1, 2011/s/  R.
    Clark WoodR.
    Clark Wood

Principal accounting officer and principal financial officer

March 1, 2011/s/  William
    T. ComfortWilliam
    T. Comfort

Director

March 1, 2011/s/  John
    V. LombardiJohn
    V. Lombardi

Director

March 1, 2011/s/  James
    L. PayneJames
    L. Payne

Director

March 1, 2011/s/  Myron
    M. SheinfeldMyron
    M. Sheinfeld

Director

March 1, 2011/s/  Martin
    J. WhitmanMartin
    J. Whitman

Director

March 1, 2011/s/  John
    YearwoodJohn
    Yearwood

Director

March 1, 2011  153




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##### Table of Contents



SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS    Balance at


Charged to


Charged to





Balance atBeginning


Costs and


Other





End ofof Period


Expenses


Accounts


Deductions


Period(In thousands)2010Allowance for doubtful accounts

$
23,681


$
1,545


$
167


$
(2,886
)

$
22,507Inventory reserve


4,824



(182
)


1,695



447



6,784Valuation allowance on deferred tax assets


1,570,890











(56,737
)


1,514,1532009Allowance for doubtful accounts

$
23,224


$
5,793


$
239


$
(5,575
)

$
23,681Inventory reserve


4,483



1,429







(1,088
)


4,824Valuation allowance on deferred tax assets


132,262



1,438,628











1,570,8902008Allowance for doubtful accounts

$
16,713


$
6,715


$
1,241


$
(1,445
)

$
23,224Inventory reserve


2,309



4,573







(2,399
)


4,483Valuation allowance on deferred tax assets


29,658



102,604











132,262  154




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##### Table of Contents



Exhibit Index
  Exhibits

Description12


Computation of Ratios.21


Significant Subsidiaries23
.1

Consent of Independent Registered Public Accounting
    Firm  PricewaterhouseCoopers LLP  Houston.23
.2

Consent of Independent Auditors  Ernst &
    Young LLC  Houston.23
.3

Consent of Miller and Lents, Ltd.23
.4

Consent of Netherland, Sewell & Associates, Inc.23
.5

Consent of AJM Petroleum Consultants23
.6

Consent of Lonquist & Co., LLC23
.7

Consent of Miller and Lents, Ltd.  NFR Energy LLC31
.1

Rule 13a-14(a)/15d-14(a)
    Certification of Eugene M. Isenberg, Chairman and Chief
    Executive Officer31
.2

Rule 13a-14(a)/15d-14(a)
    Certification of R. Clark Wood, principal accounting and
    financial officer99
.1

Report of Miller and Lents, Ltd.99
.2

Report of Netherland, Sewell & Associates, Inc.99
.3

Report of AJM Petroleum Consultants99
.4

Report of Lonquist & Co., LLC99
.5

Report of Miller and Lents, Ltd.  NFR Energy LLC99
.6

Financial Statements and Notes for NFR Energy LLC  155