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Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-->
<!-- xbrl --> <div style="font-family: 'Times New Roman',Times,serif">
<!-- xbrl,ns --> <div align="center" style="font-size: 10pt; margin-top:
0pt"><b></b></div> <div align="left"> </div>
<div align="Center" style="font-size: 10pt; margin-top: 0pt"><b></b></div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note
1 Nature of Operations</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     Nabors
is the largest land drilling contractor in the world, with approximately 531
actively marketed land drilling rigs. We conduct oil, gas and geothermal 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
are also one of the largest land well-servicing and workover contractors in
the United States and Canada. We actively market approximately 594 land workover
and well-servicing rigs in the United States, primarily in the southwestern
and western United States, and actively market approximately 172 land workover
and well-servicing rigs in Canada. Nabors is a leading provider of offshore
platform workover and drilling rigs, and actively markets 40 platform rigs,
13 jack-up units and 3 barge rigs in the United States and multiple international
markets. These rigs provide well-servicing, workover and drilling services.
We have a 51% ownership interest in a joint venture in Saudi Arabia, which
owns and actively markets 9 rigs in addition to the rigs we lease to the joint
venture. We also offer a wide range of ancillary well-site services, including
engineering, transportation, construction, maintenance, well logging, directional
drilling, rig instrumentation, data collection and other support services
in selected domestic and international markets. We provide logistics services
for onshore drilling in Canada using helicopters and fixed-wing aircraft.
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 also
invest in oil and gas exploration, development and production activities in
the U.S., Canada and international areas through both our wholly-owned subsidiaries
and our separate joint venture entities in which we have 49.7% ownership interests
in the U.S. and international entities and a 50% ownership interest in the
Canadian entity. Each joint venture pursues development and exploration projects
with both existing customers of ours and with other operators in a variety
of forms including operated and non-operated working interests, joint ventures,
farm-outs and acquisitions. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
majority of our business is conducted through our various Contract Drilling
operating segments, which include our drilling, workover and well-servicing
operations, on land and offshore. Our oil and gas exploration, development
and production operations are included in a category labeled Oil and Gas for
segment reporting purposes. Our operating segments engaged in drilling technology
and top drive manufacturing, directional drilling, rig instrumentation and
software, and construction and logistics operations are aggregated in a category
labeled Other Operating Segments for segment reporting purposes. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Effective
January 1, 2009, Nabors changed its method of accounting for certain
of its convertible debt instruments in accordance with Financial Staff Position
(“FSP”) APB No. 14-1, “Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement).” Additionally, Nabors changed its method
for calculating its basic and diluted earnings per share using the two-class
method in accordance with EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities.”
In accordance with Statement of Financial Accounting Standards (SFAS) No. 154,
“Accounting Changes and Error Corrections,” financial
information and earnings per share calculations for prior periods have been
adjusted to reflect retrospective application of the FSP and EITF. See Notes
7 and 11 for additional information. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     As
used in the Report, “we,” “us,” “our,”
“the Company” and “Nabors” means Nabors
Industries Ltd. and, where the context requires, includes our subsidiaries
and “Nabors Delaware” means Nabors Industries, Inc., a
Delaware corporation and our subsidiary. </div> </div> </body>
</html>
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--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 2 - us-gaap:SignificantAccountingPoliciesTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 2 Summary of Significant
Accounting Policies</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt"><b>Interim Financial Information</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The
unaudited consolidated financial statements of Nabors are prepared in conformity
with accounting principles generally accepted in the United States of America
(“GAAP”). Certain reclassifications have been made to
the prior period to conform to the current period presentation, with no effect
on our consolidated financial position, results of operations or cash flows.
Pursuant to the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”), certain information and footnote disclosures
normally included in annual financial statements prepared in accordance with
GAAP have been omitted. Therefore, these financial statements should be read
along with our Annual Report on Form 10-K for the year ended December 31,
2008, as amended, and Exhibit 99.1 of our Current Report on Form
8-K filed with the SEC on May 29, 2009. In our management’s
opinion, the consolidated financial statements contain all adjustments necessary
to present fairly our financial position as of June 30, 2009, the
results of our operations for the three and six months ended June 30,
2009 and 2008, and our cash flows for the six months ended June 30,
2009 and 2008, in accordance with GAAP. Interim results for the three and
six months ended June 30, 2009 may not be indicative of results that
will be realized for the full year ending December 31, 2009. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our
independent registered public accounting firm has performed a review of, and
issued a report on, these consolidated interim financial statements in accordance
with standards established by the Public Company Accounting Oversight Board.
Pursuant to Rule 436(c) under the Securities Act of 1933, as amended (the
“Securities Act”), this report should not be considered
a part of any registration statement prepared or certified within the meanings
of Sections 7 and 11 of the Securities Act. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     The
Company has evaluated subsequent events through July 31, 2009, up to the time
of filing this Form 10-Q with the SEC. </div> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Principles of Consolidation</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Our
consolidated financial statements include the accounts of Nabors, all majority
owned and non-majority owned subsidiaries required to be consolidated under
Financial Accounting Standards Board (“FASB”) Interpretation
No. 46(R), “Consolidation of Variable Interest Entities,
an interpretation of ARB No. 51” (“FIN 46R”).
Our consolidated financial statements exclude majority-owned entities for
which we do not have either (1) the ability to control the operating
and financial decisions and policies of that entity or (2) a controlling
financial interest in a variable interest entity. All significant intercompany
accounts and transactions are eliminated in consolidation. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     Investments
in operating entities where we have the ability to exert significant influence,
but where we do not control operating and financial policies, are accounted
for using the equity method. Our share of the net income of these entities
is recorded as earnings (losses) from unconsolidated affiliates in
our consolidated statements of income (loss), and our investment in these
entities is included as a single amount in our consolidated balance sheets.
Investments in unconsolidated affiliates accounted for using the equity method
totaled $433.1 million and $410.8 million and investments in unconsolidated
affiliates accounted for using the cost method totaled $.9 million
as of each of June 30, 2009 and December 31, 2008. Similarly,
investments in certain offshore funds classified as non-marketable are accounted
for using the equity method of accounting based on our ownership interest
in each fund. Our share of the gains and losses of these funds is recorded
in investment income in our consolidated statements of income (loss), and
our investments in these funds are included in long-term investments and other
receivables in our consolidated balance sheets. </div> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Recent Accounting Pronouncements</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In
September 2006 the FASB issued SFAS No. 157, “Fair
Value Measurements.” This statement defines fair value, establishes
a framework for measuring fair value in accordance with GAAP and expands disclosures
about fair value measurements for assets and liabilities. We adopted and applied
the provisions of SFAS No. 157 to our financial assets and liabilities
on January 1, 2008 and our nonfinancial assets and liabilities on
January 1, 2009. The impact of SFAS No. 157 is provided
in Note 5. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     In December 2007
the FASB issued SFAS No. 141(R), “Business Combinations.”
This statement retains the fundamental requirement in SFAS No. 141,
“Business Combinations” that the acquisition method of
accounting be used for all business combinations and expands the same method
of accounting to all transactions and other events in which one entity obtains
control over one or more other businesses or assets at the acquisition date
and in subsequent periods. This statement replaces SFAS No. 141 by
requiring measurement at the acquisition date of the fair value of assets
acquired, liabilities assumed and any noncontrolling interests. Additionally,
SFAS No. 141(R) requires that acquisition-related costs, including
restructuring costs, be recognized as expense separately from the acquisition.
SFAS No. 141(R) applies prospectively to business combinations for
fiscal years beginning after December 15, 2008. We adopted SFAS No. 141(R)
on January 1, 2009 and will apply it to future acquisitions. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
December 2007 the FASB issued SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB No. 51.”
This statement establishes the accounting and reporting standards for a noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. This
statement clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS No. 160 requires retroactive
adoption of the presentation and disclosure requirements for existing minority
interests and applies prospectively to business combinations for fiscal years
beginning after December 15, 2008. The adoption of SFAS No. 160
on January 1, 2009 did not have a material impact on our consolidated
financial statements. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
March 2008 the FASB issued SFAS No. 161, “Disclosures
about Derivative Instruments and Hedging Activities, an amendment to FASB
Statement No. 133.” This statement is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced qualitative and quantitative disclosures regarding derivative
instruments, gains and losses on such instruments and their effects on an
entity’s financial position, financial performance and cash flows.
SFAS No. 161 is effective for financial statements issued for fiscal
years beginning after November 15, 2008, and interim periods within
those fiscal years. The adoption of SFAS No. 161 on January 1,
2009 did not have a material impact on our consolidated financial statements.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In
May 2008 the FASB issued FSP APB No. 14-1, “Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement).” This FSP clarifies that convertible
debt instruments that may be settled in cash upon conversion (including partial
cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14,
“Accounting for Convertible Debt and Debt Issued with Stock Purchase
Warrants.” Effective January 1, 2009, we adopted the provisions
of this FSP and applied them, on a retrospective basis, to our consolidated
financial statements. The impact of this FSP is provided in Note 7. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
June 2008 the FASB issued FSP EITF 03-6-1, “Determining
Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities.” This EITF provides that securities which are granted
in share-based transactions are “participating securities”
prior to vesting if they have a nonforfeitable right to participate in any
dividends, and such securities therefore should be included in computing basic
earnings per share. Effective January 1, 2009, we adopted the provisions
of this EITF and applied them, on a retrospective basis, to our consolidated
financial statements. The impact of this EITF is provided in Note 11. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
December 2008 the SEC issued a Final Rule, “Modernization
of Oil and Gas Reporting.” This Final Rule revises certain oil and
gas reporting disclosures in Regulation S-K and Regulation S-X
under the Securities Act and the Securities Exchange Act of 1934 (the “Exchange
Act”), as well as Industry Guide 2. The amendments are designed
to modernize and update oil and gas disclosure requirements to align them
with current practices and changes in technology. Additionally, this new accounting
standard requires that entities use trailing twelve month average natural
gas and oil prices when performing the full cost ceiling test calculation.
The disclosure requirements are effective for registration statements filed
on or after January 1, 2010 and for annual financial statements filed
on or after December 31, 2009. We are currently evaluating the impact
that this Final Rule may have on our consolidated financial statements. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
April 2009 the FASB issued FSP SFAS No. 157-4, “Determining
Fair Value When the Volume and Level of Activity Have Significantly Decreased
and Identifying Transactions That Are Not Orderly.” This FSP provides
additional guidance for determining whether a market for a financial asset
is not active and a transaction is not distressed for fair value measurements
under SFAS No. 157. The requirements of this FSP are effective for
financial statements issued for interim and annual periods ending after June 15,
2009. We adopted the provisions of this FSP as of April 1, 2009 and
have applied them to our consolidated financial statements for the three and
six months ended June 30, 2009. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
April 2009 the FASB issued FSP SFAS No. 115-2 and SFAS No. 124-2,
“Recognition and Presentation of Other-Than-Temporary Impairments.”
This FSP changes the method for determining whether an other-than-temporary
impairment exists with respect to debt securities. The requirements of this
FSP are effective for financial statements issued for interim and annual periods
ending after June 15, 2009. We adopted the provisions of this FSP
as of April 1, 2009 and have applied them to our consolidated financial
statements for the three and six months ended June 30, 2009. The impact of
this FSP is provided in Notes 3 and 4. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
April 2009 the FASB issued FSP SFAS No. 107-1 and APB No. 28-1,
“Interim Disclosures about Fair Value of Financial Instruments.”
This FSP increases the frequency of fair value disclosures required by SFAS
No. 107, “Disclosures about Fair Value of Financial Instruments”
from annual only to quarterly reporting periods. The requirements of this
FSP are effective for financial statements issued for interim and annual periods
ending after June 15, 2009. The provisions of this FSP have been
applied to our consolidated financial statements at June 30, 2009.
The impact of this FSP is provided in Note 5. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     In
June 2009 the FASB issued SFAS No. 165, “Subsequent
Events,” which requires entities to disclose the date through which
they have evaluated subsequent events and whether the date corresponds with
the release of their financial statements. The requirements of SFAS No. 165
are effective for interim and annual periods ending after June 15,
2009. SFAS No. 165 did not have any impact on our financial position,
results of operations or cash flows. </div> <!-- Folio --> <!--
/Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> </div> </body> </html>
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--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 3 - nbr:ImpairmentsAndOtherChargesTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Note 3 Impairments and other charges</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
following table provides the components of impairments and other charges recorded
during the three and six months ended June 30, 2009: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>For
the three and six months</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>ended</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000"><b>(In thousands)</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>June 30, 2009</b></td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Goodwill impairment (1) </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">14,689</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Impairment of long-lived assets to be disposed of other
than by sale, by operating segment: (2) </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">U.S.
Offshore </div></td> <td> </td> <td align="left">$</td>
<td align="right">28,062</td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Alaska </div></td>
<td> </td> <td> </td> <td align="right">15,000</td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Canada </div></td>
<td> </td> <td> </td> <td align="right">17,930</td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">International
</div></td> <td> </td> <td> </td>
<td align="right">3,237</td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Total impairment of
long-lived assets to be disposed of other than by sale </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td align="right">64,229</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Impairment of oil and gas financing receivable (3) </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td align="right">112,516</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Total other-than-temporary
impairment (4) </div></td> <td> </td> <td
align="left">$</td> <td align="right">40,300</td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Less other-than-temporary
impairment recognized in other comprehensive income (loss) </div></td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(4,651</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Credit related impairment on
investment </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td align="right">35,649</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total
impairments and other charges </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">227,083</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" colspan="2" align="right"
style="border-top: 1px solid #000000"> </td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%;
border-top: 1px solid #000000">  </div> </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr> <td width="3%"></td> <td
width="1%"></td> <td width="96"></td> </tr> <tr
valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>During the three months ended June 30, 2009, we recognized
goodwill impairment of approximately $14.7 million relating to Nabors
Blue Sky Ltd., one of our Canadian subsidiaries reported in our Other Operating
segments. The impairment charge was a result of our annual impairment test
on goodwill which compared the estimated fair value of each of our reporting
units to its carrying value. The estimated fair value of Nabors Blue Sky Ltd.
was determined using discounted cash flow models involving assumptions based
on our utilization of aircraft and revenues as well as direct costs, general
and administrative costs, depreciation, applicable income taxes, capital expenditures
and working capital requirements. We determined that the fair value estimated
for purposes of this test represented a Level 3 fair value measurement. During
the year ended December 31, 2008, goodwill impairment of $4.6 million
was recognized by this reporting unit. The current quarter non-cash pre-tax
impairment charge was deemed necessary due to the continued deterioration
during the quarter, and a now longer than previously expected duration of
the downturn in the oil and gas industry in Canada and the lack of certainty
regarding eventual recovery in the value of these operations. This downturn
has resulted in reduced capital spending on the part of our customers and
has diminished demand for our drilling services and for immediate access to
remote drilling sites. The goodwill recorded in our Nabors Blue Sky Ltd. reporting
unit was fully impaired as of June 30, 2009, and as such, is not
subject to further impairment. A significantly prolonged period of lower oil
and natural gas prices could continue to adversely affect the demand for and
prices of our services, which could result in future goodwill impairment charges
for other reporting units due to the potential impact on our estimate of our
future operating results. See Note 2 (included under the caption “Goodwill”)
to our Annual Report on Form 10-K for the year ended December 31,
2008 for additional discussion and amounts of goodwill related to each of
our reporting units.</td> </tr> <tr style="font-size: 3pt">
<td> </td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(2)</td> <td> </td>
<td>During the three months ended June 30, 2009, we retired
certain rigs and rig components in our U.S. Offshore, Alaska, Canada and International
Contract Drilling segments and reduced their aggregate carrying value from
$69.0 million to their estimated aggregate salvage value, resulting
in impairment charges of approximately $64.2 million. The retirements included
certain inactive workover jack-up rigs in our U.S. Offshore and International
operations, the structural frames of certain incomplete coiled tubing rigs
in our Canada operations and miscellaneous rig components in our Alaska operations.
The impairment charges resulted from the continued deterioration during the
quarter, and a now longer than previously expected duration of the downturn
in the demand for oil and gas drilling activities. During the quarter, uncertainty
increased with respect to the timing of a market upturn of sufficient magnitude
to return the affected assets to service in the foreseeable future. As a result
of these factors, we made the decision to retire these assets. A prolonged
period of lower natural gas and oil prices and its potential impact on our
utilization and dayrates could result in the recognition of future impairment
charges on additional rigs if future cash flow estimates, based upon information
then available to management, indicate that their carrying value may not be
recoverable.</td> </tr> </table> <!-- Folio --> <!--
/Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td
width="3%"></td> <td width="1%"></td> <td width="96"></td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td>
<td> </td> <td>As of June 30, 2009, we
recorded an impairment totaling $112.5 million to a certain oil and
gas financing receivable, which reduced the carrying value of our oil and
gas financing receivables recorded as long-term investments to $128.1 million.
The impairment was primarily due to commodity price deterioration and a longer
than expected duration of the lower price environment during the second quarter.
This is expected to significantly reduce demand for future gas production
and development in the Barnett Shale area of north central Texas, which significantly
influences capital expenditure decisions in the future. The impairment was
determined using discounted cash flow models involving assumptions based on
estimated cash flows for proved and probable reserves, undeveloped acreage
value, and current and expected natural gas prices. We believe the estimates
used provide a reasonable estimate of current fair value. We determined that
this represented a Level 3 fair value measurement.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(4)</td>
<td> </td> <td>During the three months ended June 30,
2009, we recorded an other-than-temporary impairment of $40.3 million
to a debt security issued by MBIA Insurance Inc. The credit loss related to
the other-than-temporary impairment was $35.6 million and the remaining
$4.7 million was recorded as an unrealized loss in accumulated comprehensive
income (loss) in our consolidated statements of changes in shareholders’
equity for the six months ended June 30, 2009. These bonds were downgraded
to non-investment grade level by Standard and Poor’s and Moody’s
Investors Service as of June 30, 2009. The impairment of this investment
was evaluated based on a variety of factors, including the length of time
and the extent to which the market value has been less than cost, the financial
condition of the issuer of the security as well as credit ratings and the
recent reorganization by MBIA Inc. While we do not intend to or anticipate
the need to sell the investment in the future for cash flow or working capital
requirements, we currently believe that we may not collect the full amounts
due according to the contractual terms of the investment.</td> </tr>
</table> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 4 - us-gaap:CashAndCashEquivalentsDisclosureTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 4 Cash and Cash
Equivalents and Investments</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     Our
cash and cash equivalents, short-term and long-term investments and other
receivables consisted of the following: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>December 31,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash
and cash equivalents </div></td> <td> </td>
<td align="left">$</td> <td align="right">1,023,653</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">442,087</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Short-term investments: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Trading
equity securities </div></td> <td> </td>
<td> </td> <td align="right">27,285</td>
<td> </td> <td> </td> <td> </td>
<td align="right">14,263</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Available-for-sale equity securities </div></td>
<td> </td> <td> </td> <td align="right">99,314</td>
<td> </td> <td> </td> <td> </td>
<td align="right">55,453</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Available-for-sale
debt securities </div></td> <td> </td> <td> </td>
<td align="right">46,188</td> <td> </td>
<td> </td> <td> </td> <td align="right">72,442</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total short-term investments
</div></td> <td> </td> <td> </td>
<td align="right">172,787</td> <td> </td>
<td> </td> <td> </td> <td align="right">142,158</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term
investments and other receivables </div></td> <td> </td>
<td> </td> <td align="right">140,101</td>
<td> </td> <td> </td> <td> </td>
<td align="right">239,952</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total
</div></td> <td> </td> <td align="left">$</td>
<td align="right">1,336,541</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">824,197</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     As
of June 30, 2009, our short-term investments consisted of investments
in available-for-sale marketable debt and equity securities of $145.5 million
and trading securities of $27.3 million and our long-term investments
and other receivables consisted of $128.1 million in oil and gas
financing receivables and $12.0 million in investments in certain
offshore funds accounted for using the equity method. The oil and gas financing
receivables represent our financing agreements for certain production payment
contracts in our Oil and Gas segment. Income and gains associated with our
oil and gas financing receivables are recognized as operating revenues. See
Note 3 for discussion of an impairment charge recorded during the three months
ended June 30, 2009 related to a certain oil and gas financing receivable.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     As
of December 31, 2008, our short-term investments consisted of investments
in available-for-sale marketable debt and equity securities of $127.9 million
and trading securities of $14.3 million and our long-term investments
and other receivables consisted of investments of $224.2 million
in oil and gas financing receivables and $15.7 million in investments
in offshore funds accounted for using the equity method. </div> <!--
Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Certain
information related to our cash and cash equivalents and short-term investments
follows: </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="64%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"><b>June
30,</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Gross</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Gross</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Unrealized</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Unrealized</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Fair</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Holding</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holding</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000"><b>(In thousands)</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Value</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Gains</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Losses</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash
and cash equivalents </div></td> <td> </td>
<td align="left">$</td> <td align="right">1,023,653</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Short-term
investments: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Trading
equity securities </div></td> <td> </td>
<td> </td> <td align="right">27,285</td>
<td> </td> <td> </td> <td> </td>
<td align="right">21,561</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Available-for-sale
equity securities </div></td> <td> </td>
<td> </td> <td align="right">99,314</td>
<td> </td> <td> </td> <td> </td>
<td align="right">59,191</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(22,339</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Available-for-sale debt securities:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Commercial paper and
CDs </div></td> <td> </td> <td> </td>
<td align="right">1,034</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Corporate debt securities
</div></td> <td> </td> <td> </td>
<td align="right">30,562</td> <td> </td>
<td> </td> <td> </td> <td align="right">1</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(4,679</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:45px; text-indent:-15px">Mortgage-backed
debt securities </div></td> <td> </td> <td> </td>
<td align="right">941</td> <td> </td> <td> </td>
<td> </td> <td align="right">21</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(76</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Mortgage-CMO debt securities
</div></td> <td> </td> <td> </td>
<td align="right">8,866</td> <td> </td> <td> </td>
<td> </td> <td align="right">124</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(307</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Asset-backed debt securities </div></td>
<td> </td> <td> </td> <td align="right">4,785</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(1,205</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Total available-for-sale debt
securities </div></td> <td> </td> <td> </td>
<td align="right">46,188</td> <td> </td>
<td> </td> <td> </td> <td align="right">146</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(6,267</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total available-for-sale
securities </div></td> <td> </td> <td> </td>
<td align="right">145,502</td> <td> </td>
<td> </td> <td> </td> <td align="right">59,337</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(28,606</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total
short-term investments </div></td> <td> </td>
<td> </td> <td align="right">172,787</td>
<td> </td> <td> </td> <td> </td>
<td align="right">80,898</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(28,606</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total
cash and cash equivalents and short-term investments </div></td>
<td> </td> <td align="left">$</td> <td
align="right">1,196,440</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">80,898</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(28,606</td> <td
nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Certain information
related to the gross unrealized losses of our cash and cash equivalents and
short-term investments follows: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="52%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px
solid #000000"><b>As of June 30, 2009</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Less Than 12 Months</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>More
Than 12 Months</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Gross</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Gross</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Unrealized</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Unrealized</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Loss</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair
Value</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Loss</b></td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Available-for-sale equity securities
<sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td align="left">$</td>
<td align="right">24,407</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(22,339</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Available-for-sale
debt securities: <sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Corporate debt securities </div></td>
<td> </td> <td> </td> <td align="right">24,700</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(4,651</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">5,365</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(28</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:45px; text-indent:-15px">Mortgage-backed
debt securities </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">247</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(76</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:45px;
text-indent:-15px">Mortgage-CMO debt securities </div></td>
<td> </td> <td> </td> <td align="right">195</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(2</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">2,172</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(305</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:45px; text-indent:-15px">Asset-backed
debt securities </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,785</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(1,205</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total
available-for-sale debt securities </div></td> <td> </td>
<td> </td> <td align="right">24,895</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(4,653</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">12,569</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(1,614</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total
</div></td> <td> </td> <td align="left">$</td>
<td align="right">49,302</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(26,992</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">12,569</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(1,614</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left"> <div style="font-size:
3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div> </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td
width="3%"></td> <td width="1%"></td> <td width="96"></td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td>
<td> </td> <td>Our unrealized loss on investments
in available-for-sale equity securities primarily relates to a single investment
recorded at approximately $45 million. The severity of the impairment
and the duration of the impairment, which as of June 30, 2009 has
been less than nine months, correlate with the deteriorating global economic
environment during late 2008. As of June 30, 2009, we do not consider
this investment to be other than temporarily impaired as a result of the decline
in its trading price per share. If the market price of this security continues
to be below our cost basis for a prolonged period, our future evaluation whether
this security has experienced impairment could result in an other-than-temporary
impairment charge.</td> </tr> <tr style="font-size: 3pt">
<td> </td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(2)</td> <td> </td>
<td>Our unrealized losses on available-for-sale debt securities held
for more than one year are comprised of various types of securities, four
of which have experienced impairment greater than $.1 million and
together represent approximately $1.6 million or 92%, of the gross
unrealized losses. Each of these four 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
not more likely than not that we will be required to sell the investments
to generate 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 June 30, 2009.</td>
</tr> </table> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The
estimated fair values of our corporate, mortgage-backed, mortgage-CMO and
asset-backed debt securities at June 30, 2009, classified by time
to contractual maturity, are shown below. Expected maturities differ from
contractual maturities because the issuers of the securities may have the
right to repay obligations without prepayment penalties and we may elect to
sell the securities prior to the contractual maturity date. </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="88%"> </td> <td
width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Estimated</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Fair Value</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>June 30, 2009</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Debt
securities: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Due
in one year or less </div></td> <td> </td>
<td align="left">$</td> <td align="right">5,600</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Due
after one year through five years </div></td> <td> </td>
<td> </td> <td align="right">1,355</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Due in more than five years </div></td>
<td> </td> <td> </td> <td align="right">39,233</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total
debt securities </div></td> <td> </td> <td
align="left">$</td> <td align="right">46,188</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Certain
information regarding our debt and equity securities is presented below: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="88%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Six
Months Ended</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>June 30, 2009</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Available-for-sale:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Proceeds
from sales and maturities </div></td> <td> </td>
<td align="left">$</td> <td align="right">18,675</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Realized
gains (losses), net </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(35,692</td>
<td nowrap="nowrap">) (1)</td> </tr> <!-- End
Table Body --> </table> </div> <div align="left"> <div
style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid
#000000">  </div> </div> <table width="100%" border="0"
cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Includes the net credit loss of an other-than-temporary impairment
of $35.6 million related to a corporate debt security.</td>
</tr> </table> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 5 - us-gaap:FairValueDisclosuresTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Note 5 Fair Value Measurements</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Effective
January 1, 2008, we adopted the provisions of SFAS No. 157,
“Fair Value Measurements,” which among other things, requires
enhanced disclosures about assets and liabilities carried at fair value. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As
defined in SFAS No. 157, fair value is the price that would be received
upon sale of an asset or paid upon transfer of a liability in an orderly transaction
between market participants at the measurement date (exit price). We utilize
market data or assumptions that market participants would use in pricing the
asset or liability, including assumptions about risk and the risks inherent
in the inputs to the valuation technique. These inputs can be readily observable,
market corroborated, or generally unobservable. We primarily apply the market
approach for recurring fair value measurements and endeavor to utilize the
best information available. Accordingly, we utilize valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable
inputs. The use of unobservable inputs is intended to allow for fair value
determinations in situations in which there is little, if any, market activity
for the asset or liability at the measurement date. We are able to classify
fair value balances based on the observability of those inputs. SFAS No. 157
establishes a fair value hierarchy such that 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. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The
following table sets forth, by level within the fair value hierarchy, our
financial assets and liabilities that are accounted for at fair value on a
recurring basis as of June 30, 2009. As required by SFAS No. 157,
financial assets and liabilities are classified in their entirety based on
the lowest level of input that is significant to the fair value measurement.
</div> <div align="center"> <table style="font-size: 10pt;
text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="52%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="14"
style="border-bottom: 1px solid #000000"><b>Fair Value as of June
30, 2009</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b><i>Recurring
Fair Value Measurements</i></b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Level</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Level</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Level</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>1</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>3</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Assets:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Short-term
investments: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:60px; text-indent:-15px">Available-for-sale equity securities
</div></td> <td> </td> <td align="left">$</td>
<td align="right">99,314</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">99,314</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:60px;
text-indent:-15px">Available-for-sale debt securities </div></td>
<td> </td> <td> </td> <td align="right">10,432</td>
<td> </td> <td> </td> <td> </td>
<td align="right">35,756</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">46,188</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:60px; text-indent:-15px">Trading securities
</div></td> <td> </td> <td> </td>
<td align="right">27,285</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">27,285</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:75px; text-indent:-15px">Total investments </div></td>
<td> </td> <td align="left">$</td> <td
align="right">137,031</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">35,756</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">172,787</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Liabilities: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Derivative contract
</div></td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">3,116</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3,116</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b><i>Nonrecurring Fair Value Measurements</i></b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Effective
January 1, 2009, we adopted the provisions of SFAS No. 157
with respect to our nonfinancial assets and liabilities measured on a nonrecurring
basis, which consists primarily of goodwill, intangible assets and other long-lived
assets, assets acquired and liabilities assumed in a business combination
and asset retirement obligations. Refer to Note 3 for additional discussion.
</div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Fair
Value of Financial Instruments</i></b> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     The
fair value of our financial instruments has been estimated in accordance with
the framework in SFAS No. 157. The fair value of our fixed rate long-term
debt is estimated based on quoted market prices or prices quoted from third-party
financial institutions. The carrying and fair values of our long-term debt,
including the current portion, are as follows: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px
solid #000000"><b>June 30, 2009</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>(In
thousands)</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>Carrying Value</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fair
Value</b></td> </tr> <!-- End Table Head --> <!--
Begin Table Body --> <tr style="font-size: 1px"> <td> </td>
<td> </td> <td colspan="7" align="left" style="border-top:
1px solid #000000"> </td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">$1.125 billion 9.25% senior notes due January 2019
</div></td> <td> </td> <td align="right">$</td>
<td align="right">1,125,000</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">1,296,371</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">$975 million
6.15% senior notes due February 2018 </div></td> <td> </td>
<td> </td> <td align="right">964,462</td>
<td> </td> <td> </td> <td> </td>
<td align="right">928,951</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">$2.75 billion
0.94% senior exchangeable notes due May 2011 </div></td>
<td> </td> <td> </td> <td align="right">1,699,957</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,740,474</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">5.375% senior notes due August 2012 <sup
style="font-size: 85%; vertical-align: text-top">(1)</sup> </div></td>
<td> </td> <td> </td> <td align="right">273,036</td>
<td> </td> <td> </td> <td> </td>
<td align="right">278,575</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">4.875% senior notes
due August 2009 </div></td> <td> </td>
<td> </td> <td align="right">168,399</td>
<td> </td> <td> </td> <td> </td>
<td align="right">168,400</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Other </div></td> <td> </td>
<td> </td> <td align="right">1,133</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,133</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> </td> <td> </td> <td colspan="7"
align="left" style="border-top: 1px solid #000000"> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="right">$</td> <td
align="right">4,231,987</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">4,413,904</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> </td> <td> </td> <td colspan="7"
align="left" style="border-top: 1px solid #000000"> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%;
border-top: 1px solid #000000">  </div> </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr> <td width="3%"></td> <td
width="1%"></td> <td width="96"></td> </tr> <tr
valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Includes $1.3 million as of June 30, 2009 related
to the unamortized loss on the interest rate swap that was unwound during
the fourth quarter of 2005.</td> </tr> </table> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     The
fair values of our cash equivalents, trade receivables and trade payables
approximate their carrying values due to the short-term nature of these instruments.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     As
of June 30, 2009, our short-term investments were carried at fair
market value and included $145.5 million and $27.3 million
in securities classified as available-for-sale and trading, respectively.
The carrying values of our long-term investments that are accounted for using
the equity method of accounting approximate fair value. The fair value of
these long-term investments totaled $12.0 million as of June 30,
2009. The carrying value of our oil and gas financing receivables included
in long-term investments approximate fair value. </div> </div>
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<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 6 Share-Based Compensation</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The
Company has several share-based employee compensation plans, which are more
fully described in Note 4 of our Annual Report on Form 10-K for the year ended
December 31, 2008. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     During
the six months ended June 30, 2009, the Company awarded 9,981,850
stock options which vest over varying periods up to four years to its employees
and executive officers. These awards include 3.0 million and 1.7 million
stock options, with a grant date fair value of $8.8 million and $5.0 million
granted, to Messrs. Isenberg and Petrello, respectively, in February 2009.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The
fair value of stock options granted during the six months ended June 30,
2009 was calculated using the Black-Scholes option pricing model and the following
weighted-average assumptions: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="88%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <!-- End Table Head
--> <!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted
average fair value of options granted: </div></td> <td> </td>
<td align="right">$</td> <td align="right">2.84</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Weighted average risk
free interest rate: </div></td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">1.75</td>
<td nowrap="nowrap">%</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Dividend yield: </div></td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">0.0</td>
<td nowrap="nowrap">%</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:15px; text-indent:-15px">Volatility:
(1) </div></td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">34.78</td>
<td nowrap="nowrap">%</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Expected life: </div></td> <td> </td>
<td colspan="2" nowrap="nowrap" align="right">4 years</td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%;
border-top: 1px solid #000000">  </div> </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr> <td width="3%"></td> <td
width="1%"></td> <td width="96"></td> </tr> <tr
valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>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.</td> </tr>
</table> <!-- Folio --> <!-- /Folio --> </div> <!--
PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     There
were no stock options granted and, as a result, no fair value determinations
made during the six months ended June 30, 2008. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     The
total intrinsic value of options exercised during the six months ended June 30,
2009 and 2008 was $.4 million and $41.3 million, respectively.
The total fair value of options that vested during the six months ended June 30,
2009 and 2008 was $9.4 million and $4.1 million, respectively.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     During
the six months ended June 30, 2009, the Company awarded 84,000 shares
of restricted stock to its directors. These awards had an aggregate value
at their date of grant of $1.0 million and will vest over a period
of three years. The fair value of restricted stock that vested during the
six months ended June 30, 2009 and 2008 was $18.1 million
and $36.9 million, respectively. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Total
share-based compensation expense, which includes both stock options and restricted
stock, totaled $76.3 million and $10.9 million for the three
months ended June 30, 2009 and 2008, respectively, and $99.7 million
and $19.9 million for the six months ended June 30, 2009
and 2008, respectively. Share-based compensation expense has been allocated
to our various operating segments. See Note 14. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Included
in the total share-based compensation expense discussed above for the three
and six months ended June 30, 2009, the Company recognized $72.1 million
of compensation expense related to previously granted restricted stock and
option awards held by Messrs. Isenberg and Petrello that was unrecognized
as of April 1, 2009. The recognition of this expense was a result
of the provisions of their respective new employment agreements which effectively
eliminated the risk of forfeiture of such awards. See Note 10 for additional
information. </div> </div> </body> </html>
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Tagged Note 7 - us-gaap:DebtDisclosureTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Note 7 Debt</b> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     Long-term
debt consists of the following: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>December 31,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">$2.75 billion
0.94% senior exchangeable notes due May 2011 </div></td>
<td> </td> <td align="left">$</td> <td
align="right">1,699,957</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2,362,822</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">$1.125 billion
6.15% senior notes due January 2019 </div></td> <td> </td>
<td> </td> <td align="right">1,125,000</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">$975 million,
6.15% senior notes due February 2018 </div></td> <td> </td>
<td> </td> <td align="right">964,462</td>
<td> </td> <td> </td> <td> </td>
<td align="right">963,859</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">5.375% senior notes due August 2012 </div></td>
<td> </td> <td> </td> <td align="right">273,036</td>
<td> </td> <td> </td> <td> </td>
<td align="right">272,724</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">4.875% senior notes
due August 2009 </div></td> <td> </td>
<td> </td> <td align="right">168,399</td>
<td> </td> <td> </td> <td> </td>
<td align="right">224,829</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Other </div></td> <td> </td>
<td> </td> <td align="right">1,133</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,329</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td align="right">4,231,987</td> <td> </td>
<td> </td> <td> </td> <td align="right">3,825,563</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Less: current portion
</div></td> <td> </td> <td> </td>
<td align="right">168,699</td> <td> </td>
<td> </td> <td> </td> <td align="right">225,030</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td align="left">$</td>
<td align="right">4,063,288</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">3,600,533</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Prior
to January 1, 2009, we accounted for the embedded conversion option
in our convertible long-term debt following the recognition and measurement
principles under APB Opinion No. 14, “Accounting for Convertible
Debt and Debt Issued with Stock Purchase Warrants” and EITF 90-19,
“Convertible Bonds with Issuer Option to Settle for Cash upon Conversion.”
Under this authoritative guidance, separate accounting for the embedded conversion
option was not required when the conversion spread feature did not qualify
to be accounted for as a derivative instrument. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Effective
January 1, 2009, we adopted FASB FSP APB No. 14-1, “Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement).” The FSP clarifies the position
that convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) are not addressed by paragraph 12 of APB
Opinion No. 14, “Accounting for Convertible Debt and Debt Issued
with Stock Purchase Warrants.” The FSP requires that convertible
debt instruments be accounted for with a liability component based on the
fair value of a similar nonconvertible debt instrument and an equity component
based on the excess of the initial proceeds from the convertible debt instrument
over the liability component. Such excess represents proceeds related to the
conversion option and is recorded as capital in excess of par value. The liability
is recorded at a discount, which is then amortized as additional non-cash
interest expense over the convertible debt instrument’s expected
life. Our adoption of this FSP has been applied retrospectively to all past
periods presented for all convertible debt instruments within its scope. Both
our $2.75 billion 0.94% senior exchangeable notes issued May 2006
and our $700 million zero coupon senior exchangeable notes issued
June 2003 are within the scope of this FSP. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     Under
the provisions of this FSP the following assumptions were made in our adoption:
</div> <!-- Folio --> <!-- /Folio --> </div> <!--
PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>$700
million zero</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>coupon senior</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>$2.75
billion 0.94% senior</b></td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
1px solid #000000"><b>Assumptions</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>exchangeable notes</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>exchangeable notes</b></td> </tr>
<!-- End Table Head --> <!-- Begin Table Body --> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Date of issue </div></td> <td> </td>
<td colspan="3" align="center">June 2003</td> <td> </td>
<td colspan="3" align="center">May 2006</td> </tr> <tr
valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Expected
maturity date </div></td> <td> </td> <td
colspan="3" align="center">June 2008</td> <td> </td>
<td colspan="3" align="center">May 2011</td> </tr> <tr
valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Amortization period </div></td> <td> </td>
<td colspan="3" align="center">5 years</td> <td> </td>
<td colspan="3" align="center">5 years</td> </tr> <tr
valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Nonconvertible
debt borrowing rate </div></td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">2.8</td>
<td nowrap="nowrap">%</td> <td> </td> <td
nowrap="nowrap" align="right"> </td> <td align="right">6.1</td>
<td nowrap="nowrap">%</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Tax rate over term of debt </div></td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">37</td>
<td nowrap="nowrap">%</td> <td> </td> <td
nowrap="nowrap" align="right"> </td> <td align="right">37</td>
<td nowrap="nowrap">%</td> </tr> <!-- End Table Body
--> </table> </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="20%"> </td>
<td width="5%"> </td> <td width="75%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 1px solid #000000"><b>Conversion
Triggers</b></td> <td> </td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom"> <td valign="top"> <div style="margin-left:0px;
text-indent:-0px"><b>$700 million zero coupon senior exchangeable
notes</b> </div></td> <td> </td> <td
align="left" valign="top">In May 2008 Nabors Delaware called for
redemption of all of its $700 million zero coupon senior exchangeable notes
due 2023. The total amount paid to effect the redemption and related exchange
was $700 million in cash and the issuance of approximately 5.25 million
of our common shares with a fair value of $249.8 million, the price
equal to the principal amount of the notes plus the excess of the exchange
value of the notes over their principal amount.</td> </tr> <tr
valign="bottom"><!-- Blank Space --> <td valign="top"> <div
style="margin-left:0px; text-indent:-0px">  </div></td>
<td> </td> <td align="left" valign="top"> </td>
</tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px;
text-indent:-0px"><b>$2.75 billion 0.94% senior exchangeable
notes </b><sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup>
</div></td> <td> </td> <td align="left"
valign="top">The notes are exchangeable into cash and, if applicable, Nabors
common shares based on an exchange rate of the equivalent value of 21.8221
Nabors common shares per $1,000 principal amount of notes (which is equal
to an initial exchange price of approximately $45.83 per share), subject to
adjustment during the 30 calendar days ending at the close of business on
the business day immediately preceding the maturity date.</td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td valign="top">
<div style="margin-left:0px; text-indent:-0px">  </div></td>
<td> </td> <td align="left" valign="top"> </td>
</tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px;
text-indent:-0px">  </div></td> <td> </td>
<td align="left" valign="top">The number of shares that we would be
required to issue upon exchange consists only of 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. There would
be an if-converted value in excess of the principal amount of the notes only
when the price of our shares 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.</td> </tr> <!-- End Table Body -->
</table> </div> <div align="left"> <div style="font-size:
3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div> </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td
width="3%"></td> <td width="1%"></td> <td width="96"></td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td>
<td> </td> <td>Nabors Delaware entered into exchangeable
note hedge transactions with respect to our common shares. The call options
are designed to cover, subject to customary anti-dilution adjustments, the
net number of our common shares that would be deliverable to exchanging noteholders
in the event of an exchange of the notes. Nabors Delaware paid an aggregate
amount of approximately $583.6 million of the proceeds from the sale
of the notes to acquire the call options.</td> </tr> <tr style="font-size:
3pt"> <td> </td> </tr> <tr valign="top">
<td nowrap="nowrap" align="left"> </td> <td> </td>
<td>Nabors also entered into separate warrant transactions at the time
of the sale of the notes whereby we sold warrants which give the holders the
right to acquire approximately 60.0 million of our common shares
at a strike price of $54.64 per share. On exercise of the warrants, we have
the option to deliver cash or our common shares equal to the difference between
the then market price and strike price. All of the warrants will be exercisable
and will expire on August 15, 2011. We received aggregate proceeds
of approximately $421.2 million from the sale of the warrants and
used $353.4 million of the proceeds to purchase 10.0 million of Nabors’
common shares.</td> </tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left"> </td>
<td> </td> <td>The purchased call options and sold
warrants are separate contracts entered into by Nabors and Nabors Delaware
with two financial institutions and are not part of the terms of the notes
and will not affect the holders’ rights under the notes. The purchased
call options are expected to offset the potential dilution upon exchange of
the notes in the event that the market value per share of our common shares
at the time of exercise is greater than the strike price of the purchased
call options, which corresponds to the initial exchange price of the notes
and is simultaneously subject to certain customary adjustments. The warrants
will effectively increase the exchange price of the notes to $54.64 per share
of our common shares, from the perspective of Nabors, representing a 55% premium
based on the last reported bid price of $35.25 per share on May 17,
2006. In accordance with EITF 00-19, “Accounting for Derivative
Financial Instruments Indexed To and Potentially Settled In a Company’s
Own Stock” and SFAS No. 150, “Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity,” we recorded the exchangeable note hedge and warrants in
capital in excess of par value as of the transaction date, and will not recognize
subsequent changes in fair value.</td> </tr> </table> <!--
Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     The
effect of the adoption of FSP APB No. 14-1 on our previously reported
consolidated balance sheet is as follows: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="64%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="11"><b>December 31,</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="11"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left"> </td> <td> </td> <td
nowrap="nowrap" align="center" colspan="3"><b>As previously</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Effect
of</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>As currently</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>reported</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>change</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>reported</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td><b>Increase
(Decrease):</b></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Property, plant and
equipment, net </div></td> <td> </td> <td
align="right">$</td> <td align="right">7,282,042</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">49,917</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">7,331,959</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Long-term debt </div></td>
<td> </td> <td> </td> <td align="right">3,887,711</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(287,178</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">3,600,533</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Deferred income tax liability </div></td>
<td> </td> <td> </td> <td align="right">497,415</td>
<td> </td> <td> </td> <td> </td>
<td align="right">125,108</td> <td> </td>
<td> </td> <td> </td> <td align="right">622,523</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Capital
in excess of par value </div></td> <td> </td>
<td> </td> <td align="right">1,705,907</td>
<td> </td> <td> </td> <td> </td>
<td align="right">423,508</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,129,415</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Retained earnings </div></td>
<td> </td> <td> </td> <td align="right">3,910,253</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(211,521</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">3,698,732</td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     The
increase to deferred income tax liabilities was partially related to a reduction
of a deferred tax asset of $215.9 million which had been previously
recorded in the second quarter of 2006 for the effect of the future tax benefits
related to the exchangeable note hedge. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     The
effect of the adoption of FSP APB No. 14-1 on our previously reported
consolidated statements of income is as follows: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="28%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="11"><b>Three Months
Ended</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="11"><b>Six Months Ended</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="11"
style="border-bottom: 1px solid #000000"><b>June 30, 2008</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="11"
style="border-bottom: 1px solid #000000"><b>June 30, 2008</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>As</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>As</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>As</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>As</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>previously</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Effect
of</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>currently</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>previously</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Effect
of</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>currently</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000"><b>(In thousands, except
per share amounts)</b></td> <td> </td> <td
nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid
#000000"><b>reported</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>change</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>reported</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>reported</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>change</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>reported</b></td> </tr> <!--
End Table Head --> <!-- Begin Table Body --> <tr valign="bottom"
style="background: #cceeff"> <td><b>Increase (Decrease):</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Depreciation expense </div></td> <td> </td>
<td align="right">$</td> <td align="right">148,023</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">790</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">148,813</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">283,501</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">1,512</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">285,013</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest
expense </div></td> <td> </td> <td> </td>
<td align="right">21,676</td> <td> </td>
<td> </td> <td> </td> <td align="right">27,699</td>
<td> </td> <td> </td> <td> </td>
<td align="right">49,375</td> <td> </td>
<td> </td> <td> </td> <td align="right">39,785</td>
<td> </td> <td> </td> <td> </td>
<td align="right">56,282</td> <td> </td>
<td> </td> <td> </td> <td align="right">96,067</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Income tax expense
</div></td> <td> </td> <td> </td>
<td align="right">71,771</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(10,541</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">61,230</td>
<td> </td> <td> </td> <td> </td>
<td align="right">128,394</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(21,384</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">107,010</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income </div></td> <td> </td> <td> </td>
<td align="right">194,361</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(17,948</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">176,413</td>
<td> </td> <td> </td> <td> </td>
<td align="right">424,867</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(36,410</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">388,457</td>
<td> </td> </tr> <tr valign="top"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Earnings per share
— diluted </div></td> <td> </td>
<td align="right">$</td> <td align="right">.67</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right">$</td> <td align="right">(.07</td> <td
nowrap="nowrap">)</td> <td> </td> <td align="right">$</td>
<td align="right">.60</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">1.48</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right">$</td> <td align="right">(.14</td> <td
nowrap="nowrap">)</td> <td> </td> <td align="right">$</td>
<td align="right">1.34</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Weighted-average number of
shares outstanding </div></td> <td> </td>
<td> </td> <td align="right">291,454</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">3,033</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">294,487</td> <td nowrap="nowrap"><sup
style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td> <td> </td> <td align="right">287,407</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">2,726</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">290,133</td> <td nowrap="nowrap"><sup
style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%;
border-top: 1px solid #000000">  </div> </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr> <td width="3%"></td> <td
width="1%"></td> <td width="96"></td> </tr> <tr
valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Includes adoption of FSP EITF 03-6-1. See Note 11.</td> </tr>
</table> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The
following information is presented for comparative purposes and illustrates
the effect of FSP APB No. 14-1 on our convertible debt instruments.
The balances of the liability and equity components as of each period presented
are as follows: </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>June
30,</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000"><b>(In thousands)</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Equity
component — net carrying value </div></td> <td> </td>
<td align="left">$</td> <td align="right">581,671</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">583,212</td> <td> </td>
</tr> <tr valign="top"><!-- Blank Space --> <td> <div
style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Liability
component: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Face amount due at
maturity </div></td> <td> </td> <td align="left">$</td>
<td align="right">1,861,469</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">2,650,000</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Less:
Unamortized discount </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(161,512</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(287,178</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Liability
component — net carrying value </div></td> <td> </td>
<td align="left">$</td> <td align="right">1,699,957</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2,362,822</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
remaining debt discount is being amortized into interest expense over the
expected remaining life of the convertible debt instruments using the effective
interest rate. Interest expense related to the convertible debt instruments
was recognized as follows: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="52%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>Three Months Ended June 30,</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six
Months Ended June 30,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest
expense on convertible debt instruments: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Contractual coupon interest </div></td>
<td> </td> <td align="left">$</td> <td
align="right">4,497</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">6,463</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">9,818</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">12,925</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Amortization
of debt discount </div></td> <td> </td> <td> </td>
<td align="right">20,550</td> <td> </td>
<td> </td> <td> </td> <td align="right">31,853</td>
<td> </td> <td> </td> <td> </td>
<td align="right">45,120</td> <td> </td>
<td> </td> <td> </td> <td align="right">64,747</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Total interest expense
</div></td> <td> </td> <td align="left">$</td>
<td align="right">25,047</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">38,316</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">54,938</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">77,672</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     During
2008 and the six months ended June 30, 2009 we purchased $888.5 million
par value of our $2.75 billion 0.94% senior exchangeable notes in
the open market, leaving approximately $1.86 billion par value outstanding.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On
January 12, 2009, Nabors Delaware completed a private placement of
$1.125 billion aggregate principal amount of 9.25% senior notes due
2019 with registration rights, which are unsecured and are fully and unconditionally
guaranteed by us. The issue of senior notes was resold by the initial purchasers
to qualified institutional buyers under Rule 144A and to certain
investors outside of the United States under Regulation S of the
Securities Act. The senior notes bear interest at a rate of 9.25% per year,
payable semiannually on January 15 and July 15 of each year,
beginning July 15, 2009. The senior notes will mature on January 15,
2019. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     The senior notes
are unsecured and are junior in right of payment to any of Nabors Delaware’s
future secured debt. The senior notes rank equally with any of Nabors Delaware’s
other existing and future unsubordinated debt and are senior in right of payment
to any of Nabors Delaware’s future senior subordinated debt. Our
guarantee of the senior notes is unsecured and ranks equal in right of payment
to all of our unsecured and unsubordinated indebtedness from time to time
outstanding. The senior notes are subject to redemption by Nabors Delaware,
in whole or in part, at any time at a redemption price equal to the greater
of (i) 100% of the principal amount of the senior notes then outstanding
to be redeemed; or (ii) the sum of the present values of the remaining
scheduled payments of principal and interest, determined in the manner set
forth in the indenture. In the event of a change in control triggering event,
as defined in the indenture, the holders of senior notes may require Nabors
Delaware to purchase all or any part of each senior note in cash equal to
101% of the principal amount plus accrued and unpaid interest, if any, to
the date of purchase, except to the extent Nabors Delaware has exercised its
right to redeem the senior notes. Nabors Delaware is using the proceeds of
the offering of the senior notes for the repayment or repurchase of indebtedness
and general corporate purposes. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     On
March 30, 2009, we and Nabors Delaware filed a registration statement
on Form S-4 under the Securities Act. The registration statement related to
the exchange offer to noteholders required under the registration rights agreement
related to the $1.125 billion senior notes. On May 11, 2009
the registration statement was declared effective by the SEC. The exchange
offer commenced on June 17, 2009 and expired on July 17,
2009. See Note 16 for additional information. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Our
$225 million 4.875% senior notes are due in August 2009
and accordingly, are classified as a current liability. During the six months
ended June 30, 2009, we repurchased $56.6 million par value
of these senior notes in the open market for cash totaling $56.8 million.
</div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 8 - us-gaap:IncomeTaxDisclosureTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Note 8 Income Taxes</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our
effective income tax rate was 7.2% and (37.2%) during the three and six months
ended June 30, 2009, respectively, compared to 25.8% and 21.6% during the
three and six months prior year periods. The decrease in our effective income
tax rate is a result of the proportion of income generated in the U.S. versus
the international jurisdictions in which we operate. Income generated in the
U.S. is generally taxed at a higher rate than income generated in international
jurisdictions. We expect to incur a loss in the U.S. for the year which will
produce a tax benefit. Overall, we expect to have a net tax benefit for the
year as the U.S. tax benefit is expected to be in excess of the tax expenses
associated with our international operations. This will likely result in an
overall negative tax rate. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     We
are subject to income taxes in the United States and numerous foreign jurisdictions.
Internationally, income tax returns from 1995 through 2007 are currently under
audit. The Company anticipates that several of these audits could be finalized
within 12 months. It is possible that the benefit that relates to
our unrecognized tax positions could significantly increase or decrease within
12 months. However, based on the current status of examinations,
and the protocol for finalizing audits with the relevant tax authorities,
which could include formal legal proceedings, it is not possible to estimate
the future impact of the amount of changes, if any, to recorded uncertain
tax positions at June 30, 2009. We recognize interest and penalties
related to income tax reserves in the income tax expense line item in our
consolidated statements of income. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
Company has recorded a deferred tax asset of approximately $1.4 billion
as of June 30, 2009 relating to net operating loss carryforwards
that have an indefinite life in one foreign jurisdiction. A valuation allowance
of approximately $1.4 billion has been recognized because the Company
believes it is more likely than not that none of the deferred tax asset will
be realized. </div> </div> </body> </html>
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--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 9 - us-gaap:ScheduleOfStockByClassTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Note 9 Common Shares</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During
the six months ended June 30, 2009, we did not repurchase any of
our common shares in the open market. During the six months ended June 30,
2008, we repurchased 3.7 million of our common shares in the open
market for $150.1 million, all of which are held in treasury. When
shares are reissued, we use the weighted average cost method for determining
cost. The difference between the cost of the shares and the issuance price
is added to or deducted from our capital in excess of par value account. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During
the six months ended June 30, 2009 and 2008, the Company withheld
.1 million and .4 million of our common shares with a fair value
of $1.5 million and $11.7 million, respectively, to satisfy
certain tax withholding obligations due in connection with grants of stock
awards under our 2003 Employee Stock Plan. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     During
the six months ended June 30, 2009 and 2008, our employees exercised
vested options to acquire .1 million and 2.3 million of
our common shares resulting in proceeds of $.5 million and $53.6 million,
respectively. </div> </div> </body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 10 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 10 Commitments
and Contingencies</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt"><b><i>Commitments</i></b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Employment
Contracts</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     Nabors’
Chairman and Chief Executive Officer, Eugene M. Isenberg, and its Deputy Chairman,
President and Chief Operating Officer, Anthony G. Petrello, had in effect
through the first quarter of 2009 employment agreements which had been amended
and restated effective October 1, 1996. Effective April 1,
2009, the Company entered into amended and restated employment agreements
(“new employment agreements”) with Messrs. Isenberg
and Petrello with terms extending through March 30, 2013. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Mr. Isenberg’s
employment agreement was originally negotiated with a creditors committee
in 1987 in connection with the reorganization proceedings of Anglo Energy,
Inc., which subsequently changed its name to Nabors. These contractual arrangements
were approved by the various constituencies in those reorganization proceedings,
including equity and debt holders, and confirmed by the United States Bankruptcy
Court. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Mr. Petrello’s
employment agreement was first entered into effective October 1,
1991. Mr. Petrello’s employment agreement was agreed upon as part
of arm’s length negotiations with the Board of Directors before
he joined Nabors in October 1991, and was reviewed and approved by
the Compensation Committee of the Board and the full Board of Directors at
that time. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     The employment agreements
for Messrs. Isenberg and Petrello were restated in 1996 and subsequently
amended in 2002, 2005, 2006 (in the case of Mr. Isenberg) and 2008
(as amended, the “prior employment agreements”). These
amendments were approved by the Compensation Committee of the Board and the
full Board of Directors at the time of each amendment. The new employment
agreements were approved by the Compensation Committee of the Board, which
is comprised of all directors other than Messrs. Isenberg and Petrello.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Effective
April 1, 2009, the new employment agreements for Messrs. Isenberg
and Petrello amend and restate the prior employment agreements. The new employment
agreements provide for an extension of the employment term through March 30,
2013, with automatic one-year extensions beginning April 1, 2011,
unless either party gives notice of non-renewal. The base salaries for Messrs. Isenberg
and Petrello were increased to $1.3 million and $1.1 million,
respectively. Mr. Isenberg has agreed to donate the after-tax proceeds of
his base salary to an educational fund intended to benefit Company employees
or other worthy candidates. </div> <!-- Folio --> <!-- /Folio
--> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times
New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top:
6pt">     On June 29,
2009, the new employment agreements for Messrs. Isenberg and Petrello
were amended to provide for a reduction of the annual rate of base salary
payable to each of Messrs. Isenberg and Petrello to $1.17 million
per year and $990,000 per year, respectively, for the period from June 29,
2009 to December 27, 2009. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
addition to a base salary, the new employment agreements provide for annual
cash bonuses in an amount equal to 2.25% and 1.5%, for Messrs. Isenberg
and Petrello, respectively, of Nabors’ net cash flow (as defined
in the respective employment agreements) in excess of 15% of the average shareholders’
equity for each fiscal year. The new employment agreements also provide a
quarterly deferred bonus of $.6 million and $.25 million,
respectively, to the accounts of Messrs. Isenberg and Petrello under
Nabors’ executive deferred compensation plan for each quarter they
are employed beginning June 30, 2009 and, in Mr. Petrello’s
case, ending March 30, 2019. In 18 of the last 19 years, Mr. Isenberg
has agreed voluntarily to accept a lower annual cash bonus (i.e., an amount
lower than the amount provided for under his employment agreement) in light
of his overall compensation package. Mr. Petrello has agreed voluntarily
to accept a lower annual cash bonus (i.e., an amount lower than the amount
provided for under his employment agreement) in light of his overall compensation
package in 15 of the last 18 years. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     For
2008, the annual cash bonuses for Messrs. Isenberg and Petrello pursuant
to the formula described in the prior employment agreements were $70.8 million
and $23.1 million, respectively. In October 2008, consistent
with historical practice, Messrs. Isenberg and Petrello agreed to
accept a portion of their bonuses in restricted stock awards and were awarded
2,078,900 and 851,246 shares of restricted stock, respectively. These stock
awards had a value at the date of grant of $28.4 million and $11.6 million,
respectively, for Messrs. Isenberg and Petrello. Messrs. Isenberg
and Petrello also agreed to further reduce the cash bonus payable by accepting,
in February 2009, 3.0 million and 1.7 million stock
options, with a value of $8.8 million and $5.0 million,
respectively. They received the balance of their bonuses in cash ($33.6 million
and $6.5 million, respectively). </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Messrs. Isenberg
and Petrello also are eligible for awards under Nabors’ equity plans
and may participate in annual long-term incentive programs and pension and
welfare plans, on the same basis as other executives, and may receive special
bonuses from time to time as determined by the Board of Directors. The new
employment agreements eliminate the risk of forfeiture of outstanding stock
awards. Accordingly, we recognized compensation expense during the second
quarter with respect to all previously granted unvested awards to Messrs. Isenberg
and Petrello. As a result, as of June 30, 2009, there was no unrecognized
compensation expense related to restricted stock and stock option awards for
either Messrs. Isenberg or Petrello. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     <u><i>Termination
in the event of death, disability, or termination without cause</i></u><i>.
</i>The new employment agreements provide for severance payments in
the event that either Mr. Isenberg’s or Mr. Petrello’s
employment agreement is terminated (i) upon death or disability (as
defined in the respective employment agreements), (ii) by Nabors
prior to the expiration date of the employment agreement for any reason other
than for Cause (as defined in the respective employment agreements) or (iii) by
either individual for Constructive Termination Without Cause (as defined in
the respective employment agreements). Mr. Isenberg would be entitled
to receive within 30 days of any such triggering event a payment
of $100 million. Mr. Petrello would be entitled to receive
within 30 days of his death or disability a payment of $50 million
or in the event of termination without cause or constructive termination without
cause, a payment based on a formula of three times the average of his base
salary and annual bonus (calculated as though the bonus formula under the
new employment agreement had been in effect) paid during the three fiscal
years preceding the termination. If, by way of example, there was a termination
without cause event that applied subsequent to June 30, 2009, then
the payment to Mr. Petrello would be approximately $58 million.
The formula will be further reduced to two times the average stated above
effective April 1, 2015. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
Company does not have insurance to cover its obligations in the event of death,
disability, or termination without cause for either Messrs. Isenberg
or Petrello and the Company has not recorded an expense or accrued a liability
relating to these potential obligations. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     In
addition, under both the prior employment agreements and the new employment
agreements, the affected individual is entitled to receive (a) any
unvested restricted stock outstanding, which shall immediately and fully vest;
(b) any unvested outstanding stock options, which shall immediately
and fully vest; (c) any amounts earned, accrued or owing to the executive
but not yet paid (including executive benefits, life insurance, disability
benefits and reimbursement of expenses and perquisites), which shall be continued
through the later of the expiration date or three years after the termination
date; (d) continued participation in medical, dental and life insurance
coverage until the executive receives equivalent benefits or coverage through
a subsequent employer or until the death of the executive or his spouse, whichever
is later; and (e) any other or additional benefits in accordance with applicable
plans and programs of Nabors. For Mr. Isenberg, as of June 30,
2009, the value of unvested restricted stock was approximately $38 million
and the value of in-the-money unvested stock options was approximately $9 million.
For Mr. Petrello, as of June 30, 2009, the value of unvested restricted
stock was approximately $17 million. Mr. Petrello had no unvested
stock options. Estimates of the cash value of Nabors’ obligations
to Messrs. Isenberg and Petrello under (c), (d) and (e) above
are included in the payment amounts above. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     <u><i>Termination
in the event of a Change in Control</i></u> . The new employment
agreements provide that a termination of Messrs. Isenberg’s
or Petrello’s employment related to a Change in Control (as defined
in their respective employment agreements) is considered a constructive termination
without cause. Accordingly, Mr. Isenberg would be entitled to receive
within 30 days of the triggering event a payment of $100 million
and Mr. Petrello would be entitled to receive within 30 days of the
triggering event a payment based on a formula of three times the average of
his base salary and annual bonus (calculated as though the new bonus formula
had been in effect) paid during the three fiscal years preceding the termination.
If, by way of example, there was a change of control event that applied subsequent
to March 31, 2009, then the payment to Mr. Petrello would
be approximately $58 million. The formula is further reduced to two
times the average stated above effective April 1, 2015. The new employment
agreements eliminate all tax gross-ups, including without limitation tax gross-ups
on golden parachute excise taxes, which applied under the prior employment
agreements. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Under both the prior
employment agreements and the new employment agreements, the affected individual
would receive (a) any unvested restricted stock outstanding, which
shall immediately and fully vest; (b) any unvested outstanding stock
options, which shall immediately and fully vest; (c) any amounts earned, accrued
or owing to the executive but not yet paid (including executive benefits,
life insurance, disability benefits and reimbursement of expenses and perquisites),
which shall be continued through the later of the expiration date or three
years after the termination date; (d) continued participation in
medical, dental and life insurance coverage until the executive receives equivalent
benefits or coverage through a subsequent employer or until the death of the
executive or his spouse, whichever is later; and (e) any other or
additional benefits in accordance with applicable plans and programs of Nabors.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Other
Obligations</i></u> . In addition to salary and bonus, each of
Messrs. Isenberg and Petrello receive group life insurance at an
amount at least equal to three times their respective base salaries, various
split-dollar life insurance policies, reimbursement of expenses, various perquisites
and a personal umbrella insurance policy in the amount of $5 million.
Premiums payable under the split-dollar life insurance policies were suspended
as a result of the adoption of the Sarbanes-Oxley Act of 2002. </div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Contingencies</i></b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Income
Tax Contingencies</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     We
are subject to income taxes in the United States and numerous foreign jurisdictions.
Significant judgment is required in determining our worldwide provision for
income taxes. In the ordinary course of our business, there are many transactions
and calculations where the ultimate tax determination is uncertain. We are
regularly under audit by tax authorities. Although we believe our tax estimates
are reasonable, the final determination of tax audits and any related litigation
could be materially different than that which is reflected in our income tax
provisions and accruals. Based on the results of an audit or litigation, a
material effect on our financial position, income tax provision, net income,
or cash flows in the period or periods for which that determination is made
could result. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     It is possible that
future changes to tax laws (including tax treaties) could have an impact on
our ability to realize the tax savings recorded to date as well as future
tax savings, resulting from our 2002 corporate reorganization. See Note 11
to our Annual Report on Form 10-K for the year ended December 31,
2008 for additional discussion. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     On
September 14, 2006, Nabors Drilling International Limited, one of
our wholly owned Bermuda subsidiaries (“NDIL”), received
a Notice of Assessment (the “Notice”) from the Mexican
Servicio de Administracion Tributaria (the “SAT”) in connection
with the audit of NDIL’s Mexican branch for tax year 2003. The Notice
proposes to deny depreciation expense deductions relating to drilling rigs
operating in Mexico in 2003. The notice also proposes to deny a deduction
for payments made to an affiliated company for the procurement of labor services
in Mexico. The amount assessed by the SAT was approximately $19.8 million
(including interest and penalties). Nabors and its tax advisors previously
concluded that the deduction of said amounts was appropriate and more recently
that the position of the SAT lacks merit. NDIL’s Mexican branch
took similar deductions for depreciation and labor expenses for tax years
2004 to 2008. On June 30, 2009, the SAT proposed similar assessments
against the Mexican branch of another wholly owned Bermuda subsidiary, Nabors
Drilling International II Ltd. (“NDIL II”) for the tax
year 2006. We anticipate that a similar assessment will eventually be proposed
against NDIL for the tax years 2004 through 2008 and against NDIL II for the
tax years 2007 to 2009. We believe that the potential assessments would range
from $6 million to $26 million per year for the period from 2004 to 2009,
and in aggregate, would be approximately $90 to $95 million. Although we believe
that any assessments related to the 2004 to 2009 years would also lack merit,
a reserve has been recorded in accordance with the requirements of FIN 48.
If these additional assessments were to be made and the Company ultimately
did not prevail, we would be required to recognize additional tax for the
amount of the aggregate over the current reserve. </div> <!-- Folio
--> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Self-Insurance Accruals</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We
are self-insured for certain losses relating to workers’ compensation,
employers’ liability, general liability, automobile liability and
property damage. Effective April 1, 2009, with our insurance renewal,
certain changes have been made to our self-insured retentions. Certain workers’
compensation claims are subject to a minimum $1.0 million deductible
and employers’ liability and marine employers’ liability
are subject to a $2.0 million per occurrence deductible. Certain
automobile liability is subject to a $.5 million per occurrence deductible
plus an additional $1.0 million corridor deductible. General liability
claims are subject to a $5.0 million per occurrence deductible. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
addition, we are subject to a $5.0 million deductible for all land
rigs and a $10.0 million deductible for offshore rigs. This applies
to all kinds of risks of physical damage except for named windstorms in the
U.S. Gulf of Mexico. Effective April 1, 2009, our risks of physical
damage from named windstorms in the U.S. Gulf of Mexico are self-insured.
</div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Litigation</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Nabors
and its subsidiaries are defendants or otherwise involved in a number of lawsuits
in the ordinary course of business. We estimate the range of our liability
related to pending litigation when we believe the amount and range of loss
can be estimated. We record our best estimate of a loss when the loss is considered
probable. When a liability is probable and there is a range of estimated loss
with no best estimate in the range, we record the minimum estimated liability
related to the lawsuits or claims. As additional information becomes available,
we assess the potential liability related to our pending litigation and claims
and revise our estimates. Due to uncertainties related to the resolution of
lawsuits and claims, the ultimate outcome may differ from our estimates. In
the opinion of management and based on liability accruals provided, our ultimate
exposure with respect to these pending lawsuits and claims is not expected
to have a material adverse effect on our consolidated financial position or
cash flows, although they could have a material adverse effect on our results
of operations for a particular reporting period. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     On
July 5, 2007, we received an inquiry from the U.S. Department of
Justice relating to its investigation of one of our vendors and compliance
with the Foreign Corrupt Practices Act. The inquiry relates to transactions
with and involving Panalpina, a vendor which provides freight forwarding and
customs clearance services to certain of our affiliates. To date, the inquiry
has focused on transactions in Kazakhstan, Saudi Arabia, Algeria and Nigeria.
The Audit Committee of our Board of Directors has engaged outside counsel
to review certain transactions with this vendor and their review is ongoing.
The Audit Committee of our Board of Directors has received periodic updates
at its regularly scheduled meetings and the Chairman of the Audit Committee
has received updates between meetings as circumstances warrant. The investigation
includes a review of certain amounts paid to and by Panalpina in connection
with the obtaining of permits for the temporary importation of equipment and
clearance of goods and materials through customs. Both the SEC and the U.S.
Department of Justice have been advised of the Company’s investigation.
The ultimate outcome of this review or the effect of implementing any further
measures which may be necessary to ensure full compliance with the applicable
laws cannot be determined at this time. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     A
court in Algeria has entered a judgment of approximately $19.7 million
against the Company related to certain alleged customs infractions. The Company
believes it did not receive proper notice of the judicial proceedings against
it, and that the amount of the judgment is excessive. We have asserted the
lack of legally required notice as a basis for challenging the judgment on
appeal. Based upon our understanding of applicable law and precedent, we believe
that this challenge will be successful. We do not believe that a loss is probable
and have not accrued any amounts related to this matter. However, the ultimate
resolution of this matter, and the timing of such resolution, is uncertain.
If the Company is ultimately required to pay a fine or judgment related to
this matter, the amount of the loss could range from approximately $140,000
to $19.7 million. </div> <div align="left" style="font-size: 10pt;
margin-top: 12pt"><b>Off-Balance Sheet Arrangements (Including Guarantees)</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We
are a party to certain transactions, agreements or other contractual arrangements
defined as “off-balance sheet arrangements” that could
have a material future effect on our financial position, results of operations,
liquidity and capital resources. The most significant of these off-balance
sheet arrangements involve agreements and obligations in which we provide
financial or performance assurance to third parties. Certain of these agreements
serve as guarantees, including standby letters of credit issued on behalf
of insurance carriers in conjunction with our workers’ compensation
insurance program and other financial surety instruments such as bonds. We
have also guaranteed payment of contingent consideration in conjunction with
an acquisition in 2005. Potential contingent consideration is based on future
operating results of the acquired business. In addition, we have provided
indemnifications to certain third parties which serve as guarantees. These
guarantees include indemnification provided by Nabors to our share transfer
agent and our insurance carriers. We are not able to estimate the potential
future maximum payments that might be due under our indemnification guarantees.
</div> <!-- Folio --> <!-- /Folio --> </div> <!--
PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Management
believes the likelihood that we would be required to perform or otherwise
incur any material losses associated with any of these guarantees is remote.
The following table summarizes the total maximum amount of financial and performance
guarantees issued by Nabors: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="40%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="18" style="border-bottom: 1px
solid #000000"><b>Maximum Amount</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Remainder</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000"><b>(In thousands)</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>of 2009</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Thereafter</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Financial
standby letters of credit and other financial surety instruments </div></td>
<td> </td> <td align="left">$</td> <td
align="right">36,655</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">120,049</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">967</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">279</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">157,950</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Contingent consideration in acquisition </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,125</td> <td> </td> <td> </td>
<td> </td> <td align="right">2,125</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,250</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Total </div></td>
<td> </td> <td align="left">$</td> <td
align="right">36,655</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">122,174</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3,092</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">279</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">162,200</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> </div> </body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 11 - us-gaap:EarningsPerShareTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Note 11 Earnings (Losses) Per Share</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Prior
to January 1, 2009, the Company excluded unvested restricted stock
awards in the calculation of basic earnings per share under the provisions
of SFAS No. 128, “Earnings per share” and applied
the treasury stock method of accounting in calculating the effect on fully
diluted shares of unvested restricted stock. In June 2008 the FASB
issued FSP EITF (“EITF”) 03-6-1, “Determining
Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities.” This EITF provides that securities which are granted
in share-based transactions are “participating securities”
prior to vesting if they have a nonforfeitable right to participate in any
dividends, and such securities therefore should be included in computing basic
and diluted earnings per share. Our awards of restricted stock are considered
participating securities under this definition. This EITF was applicable to
our financial statements effective January 1, 2009 and required that
all prior period earnings per share data be adjusted retrospectively to conform
with the provisions of the EITF. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     Effective
January 1, 2009, we adopted the provisions of FSP EITF 03-6-1 and
are now required to include unvested restricted stock awards in the calculation
of basic and diluted earnings per share using the two-class method. The adoption
of this EITF resulted in reductions of $.01 and $.02 for the three and six
months ended June 30, 2008, respectively, to our basic earnings per
share calculation and a reduction to our diluted earnings per share calculation
of $.01 for each of the three and six months ended June 30, 2008.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     A
reconciliation of the numerators and denominators of the basic and diluted
earnings (losses) per share computations is as follows: </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="52%"> </td> <td
width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>Three
Months Ended</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Six Months Ended</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>June 30,</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000"><b>(In thousands, except per share amounts)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income (loss) (numerator): </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Net income (loss) — basic </div></td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(192,986</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">176,413</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(67,816</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">388,457</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Add interest expense
on assumed conversion of our zero coupon convertible/exchangeable senior debentures/notes,
net of tax: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">$2.75 billion
due 2011 <sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">$82.8 million
due 2021 <sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">$700 million
due 2023 <sup style="font-size: 85%; vertical-align: text-top">(3)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Adjusted
net income (loss) — diluted </div></td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(192,986</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">176,413</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(67,816</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">388,457</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Earnings
(losses) per share: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Basic </div></td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(.68</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">.63</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(.24</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">1.38</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Diluted </div></td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(.68</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">.60</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(.24</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">1.34</td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Shares (denominator):
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Weighted-average
number of shares outstanding — basic <sup style="font-size: 85%;
vertical-align: text-top">(4)</sup> </div></td> <td> </td>
<td> </td> <td align="right">283,154</td>
<td> </td> <td> </td> <td> </td>
<td align="right">280,851</td> <td> </td>
<td> </td> <td> </td> <td align="right">283,126</td>
<td> </td> <td> </td> <td> </td>
<td align="right">280,508</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Net effect of dilutive
stock options, warrants and restricted stock awards based on the if converted
method </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">8,507</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">7,060</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Assumed conversion
of our zero coupon convertible/exchangeable senior debentures/notes: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">$2.75 billion
due 2011 <sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">$82.8 million
due 2021 <sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">$700 million
due 2023 <sup style="font-size: 85%; vertical-align: text-top">(3)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">5,129</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,565</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Weighted-average number
of shares outstanding — diluted </div></td> <td> </td>
<td> </td> <td align="right">283,154</td>
<td> </td> <td> </td> <td> </td>
<td align="right">294,487</td> <td> </td>
<td> </td> <td> </td> <td align="right">283,126</td>
<td> </td> <td> </td> <td> </td>
<td align="right">290,133</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left"> <div style="font-size:
3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div> </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td
width="3%"></td> <td width="1%"></td> <td width="96"></td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td>
<td> </td> <td>Diluted earnings (losses) per
share for the three and six months ended June 30, 2009 and 2008 do
not include any incremental shares issuable upon exchange of the $2.75 billion
0.94% senior exchangeable notes due 2011. During 2008 and the six months ended
June 30, 2009 we purchased $888.5 million par value of these
notes in the open market, leaving approximately $1.86 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 three and six months ended June 30, 2009 and 2008.</td>
</tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td>
<td> </td> <td>In June 2008 Nabors Delaware
called for redemption of the full $82.8 million aggregate principal
amount at maturity of its zero coupon senior convertible debentures due 2021
and in July 2008, paid cash of $60.6 million, an amount
equal to the issue price of $50.4 million plus accrued original issue
discount of $10.2 million. No common shares were issued as part of
the redemption of the $82.8 million zero coupon convertible senior
debentures.</td> </tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td>
<td> </td> <td>In May 2008 Nabors Delaware
called for redemption all of its $700 million zero coupon senior
exchangeable notes due 2023 and in June and July 2008 issued an aggregate
5.25 million common shares which equated to the excess of the exchange
value of the notes over their principal amount, as cash was required up to
the principal amount of the notes exchanged. Diluted earnings per share for
the three and six months ended June 30, 2008 reflect the conversion
of the $700 million zero coupon senior exchangeable notes due 2023
resulting in the inclusion of the incremental number of shares that were required
to be issued upon the exchange of these notes. The number of shares issued
upon exchange equated to the excess of the exchange value of the notes over
their principal amount, as Nabors Delaware was required to pay cash up to
the principal amount of the notes exchanged. Because the conversion was partially
completed in June 2008, only the .5 million of our treasury
shares that were actually issued in June 2008 were included in the calculation
of the weighted-average number of basic shares outstanding for the three and
six months ended June 30, 2008, resulting in an incremental increase
of .121 million weighted-average number of basic shares outstanding.
Because the remaining balance of the shares was issued in July 2008,
the effect of the 5.25 million shares issued in connection with the conversion
of the $700 million zero coupon senior exchangeable notes due 2023
was not reflected in the calculation of the weighted-avearge number of basic
shares outstanding until the three months ended September 30, 2008.
The calculation of the weighted-average number of diluted shares outstanding
include the effect of the entire 5.25 million shares for the three
months ended June 30, 2008.</td> </tr> <tr style="font-size:
3pt"> <td> </td> </tr> <tr valign="top">
<td nowrap="nowrap" align="left">(4)</td> <td> </td>
<td>Includes the following weighted-average number of common shares
and restricted stock of Nabors and weighted-average number of exchangeable
shares of Nabors (Canada) Exchangeco Inc. (“Nabors Exchangeco”),
respectively: 283.1 million and .1 million shares for the
three months ended June 30, 2009; 280.8 million and .1 million
shares for the three months ended June 30, 2008; 283.0 million
and .1 million shares for the six months ended June 30,
2009 and 280.4 million and .1 million shares for the six months ended
June 30, 2008. The exchangeable shares of Nabors Exchangeco are exchangeable
for Nabors common shares on a one-for-one basis, and have essentially identical
rights as Nabors common shares, including but not limited to, voting rights
and the right to receive dividends, if any. </td> </tr> </table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     For
all periods presented, the computation of diluted earnings (losses) per
share excludes outstanding stock options and warrants with exercise prices
greater than the average market price of Nabors’ common shares,
because the inclusion of such options and warrants would be anti-dilutive
and such options and warrants are not considered participating securities.
The average number of options and warrants that were excluded from diluted
earnings (losses) per share that would potentially dilute earnings
per share in the future was 35,783,476 shares during the three months ended
June 30, 2009, and 33,403,319 and 2,716,877 shares during the six
months ended June 30, 2009 and 2008, respectively. No options or
warrants were excluded from diluted earnings (losses) per share for
the three months ended June 30, 2008. In any period during which
the average market price of Nabors’ common shares exceeds the exercise
prices of these stock options and warrants, such stock options and warrants
will be included in our diluted earnings (losses) per share computation
using the if converted method of accounting. Restricted stock will be included
in our basic and diluted earnings (losses) per share computation
using the two-class method of accounting in all periods because such stock
is considered participating securities. </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> </div> </body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 12 - nbr:SupplementalBalanceSheetAndIncomeStatementInformationTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 12 Supplemental
Balance Sheet and Income Statement Information</b> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     At
June 30, 2009, other long-term assets included a deposit of $40 million of
restricted funds which is held by a financial institution to assure future
credit availability for an unconsolidated affiliate. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     Accrued
liabilities include the following: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>December 31,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued
compensation </div></td> <td> </td> <td
align="left">$</td> <td align="right">102,435</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">164,252</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Deferred
revenue </div></td> <td> </td> <td> </td>
<td align="right">85,299</td> <td> </td>
<td> </td> <td> </td> <td align="right">72,377</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other
taxes payable </div></td> <td> </td> <td> </td>
<td align="right">22,617</td> <td> </td>
<td> </td> <td> </td> <td align="right">24,191</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Workers’
compensation liabilities </div></td> <td> </td>
<td> </td> <td align="right">23,618</td>
<td> </td> <td> </td> <td> </td>
<td align="right">23,618</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Interest payable </div></td>
<td> </td> <td> </td> <td align="right">84,009</td>
<td> </td> <td> </td> <td> </td>
<td align="right">37,334</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Warranty accrual </div></td> <td> </td>
<td> </td> <td align="right">8,391</td> <td> </td>
<td> </td> <td> </td> <td align="right">8,639</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Litigation
reserves </div></td> <td> </td> <td> </td>
<td align="right">6,771</td> <td> </td> <td> </td>
<td> </td> <td align="right">4,825</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Other accrued liabilities </div></td> <td> </td>
<td> </td> <td align="right">33,865</td>
<td> </td> <td> </td> <td> </td>
<td align="right">32,157</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="left">$</td> <td
align="right">367,005</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">367,393</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Investment income
includes the following: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Six Months Ended</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>June 30,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest
and dividend income </div></td> <td> </td>
<td align="left">$</td> <td align="right">13,795</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">23,036</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Gains (losses) on short-term investments, net
<sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">13,594</td> <td> </td>
<td> </td> <td> </td> <td align="right">28,203</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td align="left">$</td>
<td align="right">27,389</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">51,239</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>For the six months ended June 30, 2009 and 2008, amount
includes realized gains of $13.0 million and $44.6 million,
respectively, on our equity securities classified as trading.</td> </tr>
</table> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Losses
(gains) on sales and retirements of long-lived assets and other expense
(income), net includes the following: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Six Months Ended</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>June 30,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Losses
on sales and retirements of long-lived assets </div></td> <td> </td>
<td align="left">$</td> <td align="right">4,419</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">10,535</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Litigation reserves </div></td> <td> </td>
<td> </td> <td align="right">2,943</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,715</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign
currency transaction losses (gains) </div></td> <td> </td>
<td> </td> <td align="right">690</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(725</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Gains on derivative instruments </div></td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(1,606</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(157</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Gain on debt extinguishment
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(15,969</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Other gains </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(1,305</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(113</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(10,828</td> <td
nowrap="nowrap">)</td> <td> </td> <td align="left">$</td>
<td align="right">11,255</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Comprehensive
income (loss) for the three and six months ended June 30,
2009 totaled $(39.8) million and $46.4 million, respectively, while
comprehensive income for the three and six months ended June 30,
2008 totaled $213.1 million and $465.5 million, respectively.
</div> </div> </body> </html>
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Tagged Note 13 - us-gaap:EquityMethodInvestmentsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 13 Investment in
Unconsolidated Affiliate</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     Our
U.S. oil and gas joint venture (49.7% ownership) accounted for using the equity
method is included in investment in unconsolidated affiliates. For the six
months ended June 30, 2009 our earnings (losses) from unconsolidated
affiliates included non-cash pre-tax writedowns of $(8.3) million and $(75.0)
million. The non-cash pre-tax writedown of $(75.0) million represented our
proportionate share of a non-cash pre-tax ceiling test writedown from our
domestic oil and gas joint venture recorded during the three months ended
March 31, 2009. This writedown resulted from the ceiling test application
of the full cost method of accounting for costs related to oil and natural
gas properties. There was no ceiling test writedown recorded in the three
months ended June 30, 2009. In calculating our ceiling test charges,
we are required to hold commodity prices constant over the life of the reserves,
even though actual prices of natural gas and oil are volatile and change from
period to period. We may be required to record additional ceiling test charges
in the future if commodity prices continue to decrease. Presented below is
summarized income statement information for our U.S. joint venture: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="88%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Six
Months</b></td> </tr> <tr style="font-size: 8pt" valign="bottom">
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>Ended June 30,</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Gross revenues </div></td>
<td> </td> <td align="right">$</td> <td
align="right">63,931</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Gross
margin </div></td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(143,075</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Net loss </div></td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">(162,007</td>
<td nowrap="nowrap">)</td> </tr> <!-- End Table Body
--> </table> </div> <!-- Folio --> <!-- /Folio -->
</div> <!-- PAGEBREAK --> <div style="font-family: 'Times New
Roman',Times,serif"> </div> </body> </html>
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--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 14 - us-gaap:SegmentReportingDisclosureTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 14 Segment Information</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The
following table sets forth financial information with respect to our reportable
segments: </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="52%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Three Months Ended June
30,</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>Six Months Ended June 30,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000"><b>(In thousands)</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Operating
revenues and Earnings (losses) from unconsolidated affiliates: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Contract Drilling:
<sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">U.S. Lower 48 Land Drilling
</div></td> <td> </td> <td align="left">$</td>
<td align="right">249,859</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">438,848</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">639,738</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">845,909</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">U.S. Land Well-servicing </div></td> <td> </td>
<td> </td> <td align="right">100,080</td>
<td> </td> <td> </td> <td> </td>
<td align="right">182,222</td> <td> </td>
<td> </td> <td> </td> <td align="right">234,442</td>
<td> </td> <td> </td> <td> </td>
<td align="right">353,363</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">U.S. Offshore </div></td>
<td> </td> <td> </td> <td align="right">41,947</td>
<td> </td> <td> </td> <td> </td>
<td align="right">65,723</td> <td> </td>
<td> </td> <td> </td> <td align="right">102,339</td>
<td> </td> <td> </td> <td> </td>
<td align="right">117,178</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Alaska </div></td> <td> </td>
<td> </td> <td align="right">53,207</td>
<td> </td> <td> </td> <td> </td>
<td align="right">45,114</td> <td> </td>
<td> </td> <td> </td> <td align="right">115,989</td>
<td> </td> <td> </td> <td> </td>
<td align="right">99,483</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Canada </div></td>
<td> </td> <td> </td> <td align="right">45,035</td>
<td> </td> <td> </td> <td> </td>
<td align="right">67,782</td> <td> </td>
<td> </td> <td> </td> <td align="right">157,180</td>
<td> </td> <td> </td> <td> </td>
<td align="right">246,634</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">International </div></td> <td> </td>
<td> </td> <td align="right">327,551</td>
<td> </td> <td> </td> <td> </td>
<td align="right">342,892</td> <td> </td>
<td> </td> <td> </td> <td align="right">670,207</td>
<td> </td> <td> </td> <td> </td>
<td align="right">646,464</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:60px; text-indent:-15px">Subtotal Contract Drilling
<sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">817,679</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,142,581</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,919,895</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,309,031</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Oil and Gas <sup
style="font-size: 85%; vertical-align: text-top">(3)(4)</sup> </div></td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(6,001</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">11,352</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(66,045</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">25,392</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Other Operating Segments
<sup style="font-size: 85%; vertical-align: text-top">(5)(6)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">105,547</td> <td> </td>
<td> </td> <td> </td> <td align="right">172,865</td>
<td> </td> <td> </td> <td> </td>
<td align="right">262,464</td> <td> </td>
<td> </td> <td> </td> <td align="right">338,647</td>
<td> </td> </tr> <tr valign="top"> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Other reconciling items <sup style="font-size: 85%;
vertical-align: text-top">(7)</sup> </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(57,483</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(48,431</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(122,954</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(99,296</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:60px; text-indent:-15px">Total
</div></td> <td> </td> <td align="left">$</td>
<td align="right">859,742</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">1,278,367</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">1,993,360</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2,573,774</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Adjusted income derived from operating activities: <sup
style="font-size: 85%; vertical-align: text-top">(8)</sup> </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Contract
Drilling: <sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">U.S.
Lower 48 Land Drilling </div></td> <td> </td>
<td align="left">$</td> <td align="right">70,075</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">134,322</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">199,317</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">261,193</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">U.S.
Land Well-servicing </div></td> <td> </td>
<td> </td> <td align="right">6,192</td> <td> </td>
<td> </td> <td> </td> <td align="right">31,468</td>
<td> </td> <td> </td> <td> </td>
<td align="right">19,850</td> <td> </td>
<td> </td> <td> </td> <td align="right">61,854</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">U.S. Offshore </div></td>
<td> </td> <td> </td> <td align="right">6,724</td>
<td> </td> <td> </td> <td> </td>
<td align="right">17,983</td> <td> </td>
<td> </td> <td> </td> <td align="right">23,554</td>
<td> </td> <td> </td> <td> </td>
<td align="right">24,441</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Alaska </div></td>
<td> </td> <td> </td> <td align="right">16,374</td>
<td> </td> <td> </td> <td> </td>
<td align="right">13,466</td> <td> </td>
<td> </td> <td> </td> <td align="right">37,199</td>
<td> </td> <td> </td> <td> </td>
<td align="right">31,249</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Canada </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(10,151</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(14,326</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">3,024</td> <td> </td> <td> </td>
<td> </td> <td align="right">27,647</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">International
</div></td> <td> </td> <td> </td>
<td align="right">101,303</td> <td> </td>
<td> </td> <td> </td> <td align="right">101,752</td>
<td> </td> <td> </td> <td> </td>
<td align="right">204,278</td> <td> </td>
<td> </td> <td> </td> <td align="right">192,402</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:60px; text-indent:-15px">Subtotal Contract Drilling
<sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">190,517</td> <td> </td>
<td> </td> <td> </td> <td align="right">284,665</td>
<td> </td> <td> </td> <td> </td>
<td align="right">487,222</td> <td> </td>
<td> </td> <td> </td> <td align="right">598,786</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Oil
and Gas <sup style="font-size: 85%; vertical-align: text-top">(3) (4)</sup>
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(15,228</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(1,645</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(86,562</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(6,497</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:30px; text-indent:-15px">Other Operating
Segments <sup style="font-size: 85%; vertical-align: text-top">(5) (6)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">4,925</td> <td> </td> <td> </td>
<td> </td> <td align="right">19,006</td>
<td> </td> <td> </td> <td> </td>
<td align="right">24,029</td> <td> </td>
<td> </td> <td> </td> <td align="right">31,440</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total
segment adjusted income derived from operating activities </div></td>
<td> </td> <td> </td> <td align="right">180,214</td>
<td> </td> <td> </td> <td> </td>
<td align="right">302,026</td> <td> </td>
<td> </td> <td> </td> <td align="right">424,689</td>
<td> </td> <td> </td> <td> </td>
<td align="right">623,729</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Other reconciling items <sup style="font-size: 85%;
vertical-align: text-top">(9)</sup> </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(106,766</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(36,907</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(152,158</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(72,179</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Adjusted
income derived from operating activities </div></td> <td> </td>
<td> </td> <td align="right">73,448</td>
<td> </td> <td> </td> <td> </td>
<td align="right">265,119</td> <td> </td>
<td> </td> <td> </td> <td align="right">272,531</td>
<td> </td> <td> </td> <td> </td>
<td align="right">551,550</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Interest expense </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(66,027</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(49,375</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(133,105</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(96,067</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Investment income </div></td> <td> </td>
<td> </td> <td align="right">18,248</td>
<td> </td> <td> </td> <td> </td>
<td align="right">25,057</td> <td> </td>
<td> </td> <td> </td> <td align="right">27,389</td>
<td> </td> <td> </td> <td> </td>
<td align="right">51,239</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">(Losses) gains on sales and retirements of long-lived
assets and other (expense) income, net </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(6,469</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(3,158</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">10,828</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(11,255</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Impairments and other
charges <sup style="font-size: 85%; vertical-align: text-top">(10)</sup>
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(227,083</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(227,083</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) before
income taxes </div></td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(207,883</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">237,643</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(49,440</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">495,467</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>December 31,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total
assets: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Contract Drilling: <sup style="font-size: 85%; vertical-align:
text-top">(11) </sup> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">U.S.
Lower 48 Land Drilling </div></td> <td> </td>
<td align="left">$</td> <td align="right">2,618,590</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2,833,618</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">U.S. Land Well-servicing </div></td> <td> </td>
<td> </td> <td align="right">629,385</td>
<td> </td> <td> </td> <td> </td>
<td align="right">707,009</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">U.S. Offshore </div></td>
<td> </td> <td> </td> <td align="right">456,204</td>
<td> </td> <td> </td> <td> </td>
<td align="right">480,324</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Alaska </div></td> <td> </td>
<td> </td> <td align="right">399,777</td>
<td> </td> <td> </td> <td> </td>
<td align="right">356,603</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Canada </div></td>
<td> </td> <td> </td> <td align="right">1,132,847</td>
<td> </td> <td> </td> <td> </td>
<td align="right">906,154</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">International </div></td> <td> </td>
<td> </td> <td align="right">3,225,565</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3,080,947</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:60px; text-indent:-15px">Subtotal Contract Drilling
</div></td> <td> </td> <td> </td>
<td align="right">8,462,368</td> <td> </td>
<td> </td> <td> </td> <td align="right">8,364,655</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Oil and Gas <sup
style="font-size: 85%; vertical-align: text-top">(12)</sup> </div></td>
<td> </td> <td> </td> <td align="right">976,356</td>
<td> </td> <td> </td> <td> </td>
<td align="right">929,848</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Other Operating Segments
<sup style="font-size: 85%; vertical-align: text-top">(13)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">508,451</td> <td> </td>
<td> </td> <td> </td> <td align="right">578,802</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Other reconciling items
<sup style="font-size: 85%; vertical-align: text-top">(9) (14)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">922,187</td> <td> </td>
<td> </td> <td> </td> <td align="right">644,594</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:60px; text-indent:-15px">Total
assets </div></td> <td> </td> <td align="left">$</td>
<td align="right">10,869,362</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">10,517,899</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left"> <div style="font-size:
3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div> </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td
width="3%"></td> <td width="1%"></td> <td width="96"></td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td>
<td> </td> <td>These segments include our drilling,
workover and well-servicing operations, on land and offshore.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(2)</td>
<td> </td> <td>Includes earnings (losses), net
from unconsolidated affiliates, accounted for using the equity method, of
$.6 million and $2.8 million for the three months ended
June 30, 2009 and 2008, respectively, and $1.9 million and
$9.6 million for the six months ended June 30, 2009 and
2008, respectively.</td> </tr> <tr style="font-size: 3pt">
<td> </td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(3)</td> <td> </td>
<td>Includes our proportionate share of non-cash pre-tax writedowns
recorded by our domestic oil and gas joint venture of $(8.3) million and $(83.3)
million for the three and six months ended June 30, 2009, respectively.</td>
</tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(4)</td>
<td> </td> <td>Includes earnings (losses), net
from unconsolidated affiliates, accounted for using the equity method, of
$(11.0) million and $(6.7) million for the three months ended June 30,
2009 and 2008, respectively, and $(83.3) million and $(24.6) million for the
six months ended June 30, 2009 and 2008, respectively.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(5)</td>
<td> </td> <td>Includes our drilling technology
and top drive manufacturing, directional drilling, rig instrumentation and
software, and construction and logistics operations.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(6)</td>
<td> </td> <td>Includes earnings (losses), net
from unconsolidated affiliates, accounted for using the equity method, of
$2.3 million and $(.1) million for the three months ended June 30,
2009 and 2008, respectively, and $8.8 million and $6.6 million
for the six months ended June 30, 2009 and 2008, respectively.</td>
</tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(7)</td>
<td> </td> <td>Represents the elimination of inter-segment
transactions.</td> </tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(8)</td>
<td> </td> <td>Adjusted income derived from operating
activities is computed by subtracting direct costs, general and administrative
expenses, depreciation and amortization, and depletion expense from Operating
revenues and then adding Earnings (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 derived from operating activities, because it believes that this financial
measure is an accurate reflection of the ongoing profitability of our Company.
A reconciliation of this non-GAAP measure to income (loss) before
income taxes, which is a GAAP measure, is provided within the above table.</td>
</tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(9)</td>
<td> </td> <td>Represents the elimination of inter-segment
transactions and unallocated corporate expenses, assets and capital expenditures.</td>
</tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(10)</td>
<td> </td> <td>Represents non-cash pre-tax impairments
and other charges recorded during the three months ended June 30,
2009.</td> </tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(11)</td>
<td> </td> <td>Includes $51.9 million
and $49.2 million of investments in unconsolidated affiliates accounted
for using the equity method as of June 30, 2009 and December 31,
2008, respectively.</td> </tr> <tr style="font-size: 3pt">
<td> </td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(12)</td> <td> </td>
<td>Includes $317.6 million and $298.3 million investments
in unconsolidated affiliates accounted for using the equity method as of June 30,
2009 and December 31, 2008, respectively.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(13)</td>
<td> </td> <td>Includes $63.6 million
and $63.3 million of investments in unconsolidated affiliates accounted
for using the equity method as of June 30, 2009 and December 31,
2008, respectively.</td> </tr> <tr style="font-size: 3pt">
<td> </td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(14)</td> <td> </td>
<td>Includes $.9 million and $.9 million of investments
in unconsolidated affiliates accounted for using the cost method as of June 30,
2009 and December 31, 2008, respectively.</td> </tr>
</table> <!-- Folio --> <!-- /Folio --> </div> <!--
PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
</div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 15 - us-gaap:QuarterlyFinancialInformationTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 15 Condensed Consolidating
Financial Information</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     Nabors
has fully and unconditionally guaranteed all of the issued public debt securities
of Nabors Delaware, and Nabors and Nabors Delaware have fully and unconditionally
guaranteed the $225 million 4.875% senior notes due August 2009 issued
by Nabors Holdings 1, ULC, an unlimited liability company formed under the
Companies Act of Nova Scotia, Canada and a subsidiary of Nabors (“Nabors
Holdings”). </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
following condensed consolidating financial information is included so that
separate financial statements of Nabors Delaware and Nabors Holdings are not
required to be filed with the SEC. The condensed consolidating financial statements
present investments in both consolidated and unconsolidated affiliates using
the equity method of accounting. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
following condensed consolidating financial information presents condensed
consolidating balance sheets as of June 30, 2009 and December 31,
2008, statements of income for the three and six months ended June 30,
2009 and 2008 and the consolidating statements of cash flows for the six months
ended June 30, 2009 and 2008 of (a) Nabors, parent/guarantor,
(b) Nabors Delaware, issuer of public debt securities guaranteed
by Nabors and guarantor of the $225 million 4.875% senior notes issued
by Nabors Holdings, (c) Nabors Holdings, issuer of the $225 million
4.875% senior notes, (d) the non-guarantor subsidiaries, (e) consolidating
adjustments necessary to consolidate Nabors and its subsidiaries and (f) Nabors
on a consolidated basis. </div> <!-- Folio --> <!-- /Folio
--> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times
New Roman',Times,serif"> <!-- Keep Ignore Comment, per XBRLMARK -->
<!-- /xbrl,ig --> <div align="left" style="font-size: 10pt; margin-top:
12pt"><b>Condensed Consolidating Balance Sheets</b> </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="22"
style="border-bottom: 1px solid #000000"><b>June 30, 2009</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Other</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td colspan="25" align="center"><b>ASSETS</b><br
/></td> </tr> <tr valign="bottom"><!-- Blank Space
--> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Current assets: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Cash and cash equivalents
</div></td> <td> </td> <td align="left">$</td>
<td align="right">343</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">5,297</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">341</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">1,017,672</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">1,023,653</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Short-term
investments </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">172,787</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">172,787</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Accounts
receivable, net </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">787,653</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">787,653</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Inventory </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">134,017</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">134,017</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Deferred income taxes
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(3,992</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">26,829</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">22,837</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Other current assets </div></td> <td> </td>
<td> </td> <td align="right">428</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(650</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">376</td>
<td> </td> <td> </td> <td> </td>
<td align="right">161,060</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">161,214</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Total current assets </div></td>
<td> </td> <td> </td> <td align="right">771</td>
<td> </td> <td> </td> <td> </td>
<td align="right">655</td> <td> </td> <td> </td>
<td> </td> <td align="right">717</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,300,018</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,302,161</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Long-term investments
and other receivables </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">140,101</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">140,101</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Property, plant and
equipment, net </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">49,917</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">7,571,269</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">7,621,186</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Goodwill </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">162,812</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">162,812</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Intercompany receivables
</div></td> <td> </td> <td> </td>
<td align="right">264,754</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,657,441</td>
<td> </td> <td> </td> <td> </td>
<td align="right">83,733</td> <td> </td>
<td> </td> <td> </td> <td align="right">36,715</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(2,042,643</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Investment in unconsolidated affiliates </div></td>
<td> </td> <td> </td> <td align="right">4,786,296</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,249,010</td> <td> </td>
<td> </td> <td> </td> <td align="right">291,478</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,332,012</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(11,224,841</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">433,955</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other
long-term assets </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">22,776</td>
<td> </td> <td> </td> <td> </td>
<td align="right">55</td> <td> </td> <td> </td>
<td> </td> <td align="right">186,316</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">209,147</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total assets </div></td>
<td> </td> <td align="left">$</td> <td
align="right">5,051,821</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">5,979,799</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">375,983</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">12,729,243</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(13,267,484</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">10,869,362</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td colspan="25" align="center"><b>LIABILITIES AND
SHAREHOLDERS’ EQUITY<br /></b></td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Current
liabilities: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Current
portion of long-term debt </div></td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">168,399</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">300</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">168,699</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Trade
accounts payable </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">31</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">262,514</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">262,545</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Accrued
liabilities </div></td> <td> </td> <td> </td>
<td align="right">3,997</td> <td> </td> <td> </td>
<td> </td> <td align="right">79,529</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3,086</td> <td> </td> <td> </td>
<td> </td> <td align="right">280,393</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">367,005</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Income taxes payable
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">75,017</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,166</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(32,933</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">46,250</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total
current liabilities </div></td> <td> </td>
<td> </td> <td align="right">3,997</td> <td> </td>
<td> </td> <td> </td> <td align="right">154,577</td>
<td> </td> <td> </td> <td> </td>
<td align="right">175,651</td> <td> </td>
<td> </td> <td> </td> <td align="right">510,274</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">844,499</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Long-term debt </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,062,456</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">832</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,063,288</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Other long-term liabilities
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,673</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">265,505</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">267,178</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Deferred income taxes
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">159,301</td>
<td> </td> <td> </td> <td> </td>
<td align="right">11,282</td> <td> </td>
<td> </td> <td> </td> <td align="right">475,990</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">646,573</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Intercompany
payable </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,042,643</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(2,042,643</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total
liabilities </div></td> <td> </td> <td> </td>
<td align="right">3,997</td> <td> </td> <td> </td>
<td> </td> <td align="right">4,378,007</td>
<td> </td> <td> </td> <td> </td>
<td align="right">186,933</td> <td> </td>
<td> </td> <td> </td> <td align="right">3,295,244</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(2,042,643</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">5,821,538</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Shareholders’ equity
</div></td> <td> </td> <td> </td>
<td align="right">5,047,824</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,601,792</td>
<td> </td> <td> </td> <td> </td>
<td align="right">189,050</td> <td> </td>
<td> </td> <td> </td> <td align="right">9,433,999</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(11,224,841</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">5,047,824</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total
liabilities and shareholders’ equity </div></td> <td> </td>
<td align="left">$</td> <td align="right">5,051,821</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">5,979,799</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">375,983</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">12,729,243</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(13,267,484</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">10,869,362</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="22"
style="border-bottom: 1px solid #000000"><b>December 31, 2008</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Other</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td colspan="25" align="center"><b>ASSETS</b><br
/></td> </tr> <tr valign="bottom"><!-- Blank Space
--> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Current assets: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Cash and cash equivalents
</div></td> <td> </td> <td align="left">$</td>
<td align="right">8,291</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">96</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">1,259</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">432,441</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">442,087</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Short-term
investments </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">142,158</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">142,158</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Accounts
receivable, net </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,160,768</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,160,768</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Inventory </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">150,118</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">150,118</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Deferred income taxes
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(3,992</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">32,075</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">28,083</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Other current assets </div></td> <td> </td>
<td> </td> <td align="right">136</td> <td> </td>
<td> </td> <td> </td> <td align="right">60,090</td>
<td> </td> <td> </td> <td> </td>
<td align="right">376</td> <td> </td> <td> </td>
<td> </td> <td align="right">182,777</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">243,379</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total
current assets </div></td> <td> </td> <td> </td>
<td align="right">8,427</td> <td> </td> <td> </td>
<td> </td> <td align="right">56,194</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,635</td> <td> </td> <td> </td>
<td> </td> <td align="right">2,100,337</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,166,593</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Long-term investments
and other receivables </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">239,952</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">239,952</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Property, plant and
equipment, net </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">49,917</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">7,282,042</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">7,331,959</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Goodwill </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">175,749</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">175,749</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Intercompany receivables
</div></td> <td> </td> <td> </td>
<td align="right">185,626</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,177,864</td>
<td> </td> <td> </td> <td> </td>
<td align="right">135,284</td> <td> </td>
<td> </td> <td> </td> <td align="right">36,715</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(1,535,489</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Investment in unconsolidated affiliates </div></td>
<td> </td> <td> </td> <td align="right">4,718,604</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,388,439</td> <td> </td>
<td> </td> <td> </td> <td align="right">378,237</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,527,973</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(11,601,526</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">411,727</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other
long-term assets </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">20,874</td>
<td> </td> <td> </td> <td> </td>
<td align="right">401</td> <td> </td> <td> </td>
<td> </td> <td align="right">170,644</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">191,919</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total assets </div></td>
<td> </td> <td align="left">$</td> <td
align="right">4,912,657</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">5,693,288</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">515,557</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">12,533,412</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(13,137,015</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">10,517,899</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td colspan="25" align="center"><b>LIABILITIES AND
SHAREHOLDERS’ EQUITY<br /></b></td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Current
liabilities: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Current
portion of long-term debt </div></td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">224,829</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">201</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">225,030</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Trade
accounts payable </div></td> <td> </td> <td> </td>
<td align="right">755</td> <td> </td> <td> </td>
<td> </td> <td align="right">79</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">424,074</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">424,908</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Accrued liabilities
</div></td> <td> </td> <td> </td>
<td align="right">7,796</td> <td> </td> <td> </td>
<td> </td> <td align="right">31,773</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,151</td> <td> </td> <td> </td>
<td> </td> <td align="right">323,673</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">367,393</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Income taxes payable
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">135,992</td>
<td> </td> <td> </td> <td> </td>
<td align="right">36</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(24,500</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">111,528</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total
current liabilities </div></td> <td> </td>
<td> </td> <td align="right">8,551</td> <td> </td>
<td> </td> <td> </td> <td align="right">167,844</td>
<td> </td> <td> </td> <td> </td>
<td align="right">229,016</td> <td> </td>
<td> </td> <td> </td> <td align="right">723,448</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,128,859</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Long-term debt </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3,599,404</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,129</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3,600,533</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Other long-term liabilities
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">261,878</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">261,878</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Deferred income taxes
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">117,125</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(333</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">505,731</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">622,523</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Intercompany payable
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,535,489</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(1,535,489</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total
liabilities </div></td> <td> </td> <td> </td>
<td align="right">8,551</td> <td> </td> <td> </td>
<td> </td> <td align="right">3,884,373</td>
<td> </td> <td> </td> <td> </td>
<td align="right">228,683</td> <td> </td>
<td> </td> <td> </td> <td align="right">3,027,675</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(1,535,489</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">5,613,793</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Shareholders’ equity
</div></td> <td> </td> <td> </td>
<td align="right">4,904,106</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,808,915</td>
<td> </td> <td> </td> <td> </td>
<td align="right">286,874</td> <td> </td>
<td> </td> <td> </td> <td align="right">9,505,737</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(11,601,526</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">4,904,106</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total
liabilities and shareholders’ equity </div></td> <td> </td>
<td align="left">$</td> <td align="right">4,912,657</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">5,693,288</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">515,557</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">12,533,412</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(13,137,015</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">10,517,899</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Condensed
Consolidating Statements of Income (Loss)</b> </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="28%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px
solid #000000"><b>Three Months Ended June 30, 2009</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Other</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues
and other income: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Operating
revenues </div></td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">867,869</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">867,869</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Earnings
(losses) from unconsolidated affiliates </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(8,127</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(8,127</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Earnings (losses) from consolidated affiliates
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(175,301</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(227,595</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(90,745</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(260,209</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">753,850</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Investment
income </div></td> <td> </td> <td> </td>
<td align="right">13</td> <td> </td> <td> </td>
<td> </td> <td align="right">528</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">17,707</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">18,248</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Intercompany interest income </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">14,979</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,194</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(17,173</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total
revenues and other income </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(175,288</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(212,088</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(88,551</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">617,240</td> <td> </td>
<td> </td> <td> </td> <td align="right">736,677</td>
<td> </td> <td> </td> <td> </td>
<td align="right">877,990</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Costs
and other deductions: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Direct costs </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">453,922</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">453,922</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">General and administrative expenses </div></td>
<td> </td> <td> </td> <td align="right">17,698</td>
<td> </td> <td> </td> <td> </td>
<td align="right">60</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">146,295</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(245</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">163,808</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Depreciation
and amortization </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">165,974</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">165,974</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Depletion </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,590</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,590</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Interest expense </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">72,287</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,141</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(8,401</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">66,027</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Intercompany interest
expense </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">17,173</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(17,173</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Losses (gains) on
sales and retirements of long-lived assets and other expense (income), net
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">843</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(11,111</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">16,492</td> <td> </td>
<td> </td> <td> </td> <td align="right">245</td>
<td> </td> <td> </td> <td> </td>
<td align="right">6,469</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Impairments
and other charges </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">227,083</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">227,083</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Total costs and other deductions
</div></td> <td> </td> <td> </td>
<td align="right">17,698</td> <td> </td>
<td> </td> <td> </td> <td align="right">73,190</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(8,970</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">1,021,128</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(17,173</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">1,085,873</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) before
income taxes </div></td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(192,986</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(285,278</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(79,581</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(403,888</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">753,850</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(207,883</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Income tax expense
(benefit) </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(21,343</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">17,453</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(11,007</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(14,897</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income (loss) </div></td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(192,986</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(263,935</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(97,034</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(392,881</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">753,850</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(192,986</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="22"
style="border-bottom: 1px solid #000000"><b>Three Months Ended June
30, 2008</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Nabors</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Other</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues
and other income: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Operating
revenues </div></td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">1,282,400</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">1,282,400</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Earnings
(losses) from unconsolidated affiliates </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(4,033</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(4,033</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Earnings (losses) from consolidated affiliates
</div></td> <td> </td> <td> </td>
<td align="right">180,332</td> <td> </td>
<td> </td> <td> </td> <td align="right">105,611</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3,637</td> <td> </td> <td> </td>
<td> </td> <td align="right">93,118</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(382,698</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Investment income </div></td>
<td> </td> <td> </td> <td align="right">52</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">25,005</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">25,057</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Intercompany interest income </div></td>
<td> </td> <td> </td> <td align="right">1,000</td>
<td> </td> <td> </td> <td> </td>
<td align="right">17,039</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(18,039</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total
revenues and other income </div></td> <td> </td>
<td> </td> <td align="right">181,384</td>
<td> </td> <td> </td> <td> </td>
<td align="right">122,650</td> <td> </td>
<td> </td> <td> </td> <td align="right">3,637</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,396,490</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(400,737</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">1,303,424</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Costs and other deductions:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Direct
costs </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">740,178</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">740,178</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">General and administrative
expenses </div></td> <td> </td> <td> </td>
<td align="right">4,971</td> <td> </td> <td> </td>
<td> </td> <td align="right">234</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">111,995</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(286</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">116,914</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Depreciation
and amortization </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">940</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">147,873</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">148,813</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Depletion </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">7,343</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">7,343</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Interest expense </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">49,320</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,860</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(2,805</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">49,375</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Intercompany interest
expense </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,234</td> <td> </td> <td> </td>
<td> </td> <td align="right">15,805</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(18,039</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Losses (gains) on
sales, retirements and impairments of long-lived assets and other expense
(income), net </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(1,544</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(7,146</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">11,562</td>
<td> </td> <td> </td> <td> </td>
<td align="right">286</td> <td> </td> <td> </td>
<td> </td> <td align="right">3,158</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Total
costs and other deductions </div></td> <td> </td>
<td> </td> <td align="right">4,971</td> <td> </td>
<td> </td> <td> </td> <td align="right">48,950</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(2,052</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">1,031,951</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(18,039</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">1,065,781</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income
before income taxes </div></td> <td> </td>
<td> </td> <td align="right">176,413</td>
<td> </td> <td> </td> <td> </td>
<td align="right">73,700</td> <td> </td>
<td> </td> <td> </td> <td align="right">5,689</td>
<td> </td> <td> </td> <td> </td>
<td align="right">364,539</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(382,698</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">237,643</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Income tax expense
(benefit) </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(11,807</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">1,820</td>
<td> </td> <td> </td> <td> </td>
<td align="right">71,217</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">61,230</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Net income </div></td>
<td> </td> <td align="left">$</td> <td
align="right">176,413</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">85,507</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3,869</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">293,322</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(382,698</td> <td
nowrap="nowrap">)</td> <td> </td> <td align="left">$</td>
<td align="right">176,413</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="22"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30, 2009</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Nabors</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Other</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues
and other income: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Operating
revenues </div></td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2,065,914</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2,065,914</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Earnings
(losses) from unconsolidated affiliates </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(72,554</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(72,554</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Earnings (losses) from consolidated affiliates
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(53,028</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(186,688</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(86,759</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(243,740</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">570,215</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Investment
income </div></td> <td> </td> <td> </td>
<td align="right">50</td> <td> </td> <td> </td>
<td> </td> <td align="right">2,343</td> <td> </td>
<td> </td> <td> </td> <td align="right">1</td>
<td> </td> <td> </td> <td> </td>
<td align="right">24,995</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">27,389</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Intercompany interest income </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">29,250</td> <td> </td>
<td> </td> <td> </td> <td align="right">4,442</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(33,692</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total
revenues and other income </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(52,978</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(155,095</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(82,316</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">1,774,615</td> <td> </td>
<td> </td> <td> </td> <td align="right">536,523</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,020,749</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Costs
and other deductions: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Direct costs </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,119,209</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,119,209</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">General and administrative expenses </div></td>
<td> </td> <td> </td> <td align="right">23,450</td>
<td> </td> <td> </td> <td> </td>
<td align="right">208</td> <td> </td> <td> </td>
<td> </td> <td align="right">1</td> <td> </td>
<td> </td> <td> </td> <td align="right">247,863</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(371</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">271,151</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Depreciation and amortization
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">150</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">324,976</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">325,126</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Depletion </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">5,343</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">5,343</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Interest expense </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">145,768</td> <td> </td>
<td> </td> <td> </td> <td align="right">4,563</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(17,226</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">133,105</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Intercompany interest
expense </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">33,692</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(33,692</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Losses (gains) on
sales and retirements of long-lived assets and other expense (income), net
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(8,612</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(9,219</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(6,137</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">12,769</td> <td> </td>
<td> </td> <td> </td> <td align="right">371</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(10,828</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:30px; text-indent:-15px">Impairments
and other charges </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">227,083</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">227,083</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Total costs and other deductions
</div></td> <td> </td> <td> </td>
<td align="right">14,838</td> <td> </td>
<td> </td> <td> </td> <td align="right">136,907</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(1,573</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">1,953,709</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(33,692</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">2,070,189</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) before
income taxes </div></td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(67,816</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(292,002</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(80,743</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(179,094</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">570,215</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(49,440</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Income tax expense
(benefit) </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(38,966</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">17,081</td>
<td> </td> <td> </td> <td> </td>
<td align="right">40,261</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">18,376</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income (loss) </div></td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(67,816</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(253,036</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(97,824</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(219,355</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">570,215</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(67,816</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="22"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30, 2008</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Nabors</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Other</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues
and other income: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Operating
revenues </div></td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2,582,258</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2,582,258</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Earnings
(losses) from unconsolidated affiliates </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(8,484</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(8,484</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Earnings (losses) from consolidated affiliates
</div></td> <td> </td> <td> </td>
<td align="right">395,644</td> <td> </td>
<td> </td> <td> </td> <td align="right">244,816</td>
<td> </td> <td> </td> <td> </td>
<td align="right">11,981</td> <td> </td>
<td> </td> <td> </td> <td align="right">218,333</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(870,774</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Investment income </div></td>
<td> </td> <td> </td> <td align="right">194</td>
<td> </td> <td> </td> <td> </td>
<td align="right">127</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">50,918</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">51,239</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Intercompany interest income </div></td>
<td> </td> <td> </td> <td align="right">2,000</td>
<td> </td> <td> </td> <td> </td>
<td align="right">36,842</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(38,842</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Total
revenues and other income </div></td> <td> </td>
<td> </td> <td align="right">397,838</td>
<td> </td> <td> </td> <td> </td>
<td align="right">281,785</td> <td> </td>
<td> </td> <td> </td> <td align="right">11,981</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,843,025</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(909,616</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">2,625,013</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Costs and other deductions:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Direct
costs </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,487,948</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,487,948</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">General and administrative
expenses </div></td> <td> </td> <td> </td>
<td align="right">9,381</td> <td> </td> <td> </td>
<td> </td> <td align="right">274</td> <td> </td>
<td> </td> <td> </td> <td align="right">29</td>
<td> </td> <td> </td> <td> </td>
<td align="right">219,008</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(457</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">228,235</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Depreciation
and amortization </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,812</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">283,201</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">285,013</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Depletion </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">21,028</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">21,028</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Interest expense </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">95,165</td> <td> </td>
<td> </td> <td> </td> <td align="right">5,720</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(4,818</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">96,067</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Intercompany interest
expense </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">38,842</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(38,842</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Losses (gains) on
sales, retirements and impairments of long-lived assets and other expense
(income), net </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(132</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(4,214</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">15,144</td>
<td> </td> <td> </td> <td> </td>
<td align="right">457</td> <td> </td> <td> </td>
<td> </td> <td align="right">11,255</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total costs and other
deductions </div></td> <td> </td> <td> </td>
<td align="right">9,381</td> <td> </td> <td> </td>
<td> </td> <td align="right">97,119</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,535</td> <td> </td> <td> </td>
<td> </td> <td align="right">2,060,353</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(38,842</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">2,129,546</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Income before income taxes
</div></td> <td> </td> <td> </td>
<td align="right">388,457</td> <td> </td>
<td> </td> <td> </td> <td align="right">184,666</td>
<td> </td> <td> </td> <td> </td>
<td align="right">10,446</td> <td> </td>
<td> </td> <td> </td> <td align="right">782,672</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(870,774</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">495,467</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Income tax expense (benefit) </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(22,256</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">3,342</td> <td> </td> <td> </td>
<td> </td> <td align="right">125,924</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">107,010</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income </div></td> <td> </td> <td align="left">$</td>
<td align="right">388,457</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">206,922</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">7,104</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">656,748</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left">$</td>
<td align="right">(870,774</td> <td nowrap="nowrap">)</td>
<td> </td> <td align="left">$</td> <td
align="right">388,457</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Condensed Consolidating Statements of
Cash Flows</b> </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="22"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30, 2009</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Nabors</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Other</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
cash provided by (used for) operating activities </div></td> <td> </td>
<td align="left">$</td> <td align="right">899</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(364,872</td> <td
nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(727</td> <td
nowrap="nowrap">)</td> <td> </td> <td align="left">$</td>
<td align="right">1,372,015</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">1,007,315</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Cash flows from investing
activities: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Purchases
of investments </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(22,614</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(22,614</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:30px; text-indent:-15px">Sales and
maturities of investments </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">39,592</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">39,592</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Investment in unconsolidated
affiliates </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(100,670</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(100,670</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:30px; text-indent:-15px">Capital
expenditures </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(710,849</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(710,849</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:30px;
text-indent:-15px">Proceeds from sales of assets and insurance claims </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">12,791</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">12,791</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Cash paid for investments in consolidated affiliates
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(7,900</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">7,900</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Net cash provided by (used
for) investing activities </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(7,900</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(781,750</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">7,900</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(781,750</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Cash flows from financing
activities: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Increase
(decrease) in cash overdrafts </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(15,715</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(15,715</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Proceeds from long-term debt </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,124,978</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,124,978</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Debt issuance costs
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(8,699</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(8,699</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:30px; text-indent:-15px">Intercompany
debt </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(56,575</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">56,575</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Proceeds from issuance
of common shares </div></td> <td> </td> <td> </td>
<td align="right">549</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">549</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Reduction in long-term
debt </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(688,195</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(56,766</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(251</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(745,212</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:30px;
text-indent:-15px">Gain on repurchase of convertible debt — equity
component </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(1,541</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(1,541</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:30px; text-indent:-15px">Purchase
of restricted stock </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(1,496</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(1,496</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:30px;
text-indent:-15px">Tax benefit related to the exercise of stock options
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">105</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">105</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Proceeds from parent
contributions </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">7,900</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(7,900</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Net cash (used for) provided
by financing activities </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(947</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">370,073</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(191</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(8,066</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(7,900</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">352,969</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Effect of exchange
rate changes on cash and cash equivalents </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3,032</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3,032</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Net (decrease) increase
in cash and cash equivalents </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(7,948</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">5,201</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(918</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">585,231</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">581,566</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Cash and cash equivalents, beginning of period </div></td>
<td> </td> <td> </td> <td align="right">8,291</td>
<td> </td> <td> </td> <td> </td>
<td align="right">96</td> <td> </td> <td> </td>
<td> </td> <td align="right">1,259</td> <td> </td>
<td> </td> <td> </td> <td align="right">432,441</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">442,087</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash
and cash equivalents, end of period </div></td> <td> </td>
<td align="left">$</td> <td align="right">343</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">5,297</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">341</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">1,017,672</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">1,023,653</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="22"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30, 2008</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Nabors</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Other</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Delaware</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Nabors</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Subsidiaries</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Parent/</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Issuer/</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Holdings</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>(Non-</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Consolidating</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000"><b>(In thousands)</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantor)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Issuer)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Guarantors)</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Adjustments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
cash provided by (used for) operating activities </div></td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(25,929</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(159,601</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left">$</td> <td align="right">(163,530</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">1,139,181</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(158,126</td> <td
nowrap="nowrap">)</td> <td> </td> <td align="left">$</td>
<td align="right">631,995</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cash
flows from investing activities: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Purchases of investments </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(190,509</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(190,509</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Sales and maturities of investments </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">399,669</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">399,669</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Investment in unconsolidated
affiliates </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(47,452</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(47,452</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:45px; text-indent:-15px">Capital
expenditures </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(8,465</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(743,360</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(751,825</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Proceeds from sales
of assets and insurance claims </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">16,998</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">16,998</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Cash paid for investments in consolidated affiliates
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(7,800</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(150,626</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(163,548</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">321,974</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Net cash provided by (used
for) investing activities </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(7,800</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(159,091</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(728,202</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">321,974</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(573,119</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Cash flows from financing
activities: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Decrease
in cash overdrafts </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">15,771</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">15,771</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Proceeds from long-term debt </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">575,219</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">575,219</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Debt issuance costs
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(4,460</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(4,460</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:45px; text-indent:-15px">Proceeds
from issuance of common shares </div></td> <td> </td>
<td> </td> <td align="right">53,587</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">53,587</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Reduction in long-term
debt </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(171,788</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(171,788</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:45px; text-indent:-15px">Repurchase
of common shares </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(87,800</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(62,314</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(150,114</td> <td nowrap="nowrap">)</td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:45px; text-indent:-15px">Purchase of restricted
stock </div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(11,667</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(11,667</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:45px; text-indent:-15px">Tax benefit
related to the exercise of stock options </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,771</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4,771</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Proceeds from parent contributions
</div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">163,548</td> <td> </td>
<td> </td> <td> </td> <td align="right">158,426</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(321,974</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:45px;
text-indent:-15px">Cash dividends paid </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(158,126</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">158,126</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
cash (used for) provided by financing activities </div></td> <td> </td>
<td> </td> <td align="right">41,920</td>
<td> </td> <td> </td> <td> </td>
<td align="right">315,942</td> <td> </td>
<td> </td> <td> </td> <td align="right">163,548</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(46,243</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(163,848</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">311,319</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Effect
of exchange rate changes on cash and cash equivalents </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,320</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,320</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Net (decrease) increase
in cash and cash equivalents </div></td> <td> </td>
<td> </td> <td align="right">8,191</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(2,750</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">18</td>
<td> </td> <td> </td> <td> </td>
<td align="right">367,056</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">372,515</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Cash and cash equivalents, beginning of period </div></td>
<td> </td> <td> </td> <td align="right">10,659</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,753</td> <td> </td> <td> </td>
<td> </td> <td align="right">4</td> <td> </td>
<td> </td> <td> </td> <td align="right">517,890</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">531,306</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash
and cash equivalents, end of period </div></td> <td> </td>
<td align="left">$</td> <td align="right">18,850</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">22</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">884,946</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">903,821</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
</div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 16 - us-gaap:ScheduleOfSubsequentEventsTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Note 16 Subsequent Event</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On
July 17, 2009, the exchange offer of the Company and Nabors Delaware
to holders of Nabors Delaware’s $1.125 billion 9.25% senior notes
due 2019 expired. On July 23, 2009 Nabors Delaware issued $1,069,392,000
registered 9.25% senior notes due 2019 in exchange for an equal amount of
its unregistered 9.25% senior notes due 2019 that were properly tendered.
</div> </div> </body> </html>
N/A false --12-31
2009-06-30
10-Q
0001163739
284040728
Yes
Large Accelerated
Filer 11982378385
NABORS
INDUSTRIES LTD. No Yes
476000
476000
89000
89000
35649000
35649000
0
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191434000
191434000
495467000
237643000
-49440000 -207883000
1767000
-4651000
-4651000
11255000
3158000
-10828000
6469000
0
14000 3000 -14020000
-21735000 10472000
15608000 142000
99000
11667000 1496000
1541000
1541000
-11667000 -11669000 2000 -1496000
-1496000 1583000 4000 3938000 98000 -82406000
51558000
4000 -133968000
97279000
97279000
253000
253000
-9000
-9000
2129546000
1065781000
2070189000
1085873000
40300000
40300000
2625013000 1303424000
2020749000
877990000 -2884000
-2884000
424908000 262545000
1160768000
787653000
111528000
46250000 367393000
367005000
53520000
167775000
2129415000
2226694000
5884000
5884000
105000
105000
65756000
45947000
263000
290000
4356000
3279000
0 0
227083000 227083000
10517899000 10869362000
2166593000 2302161000
531306000
903821000
442087000
1023653000
372515000
581566000
0.001
0.001
800000000
800000000
312343000
312441000
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465534000
106467000
564000
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388457000
46439000
69786000
152000
44317000
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1487948000
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453922000
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39759000
6032000
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21471000
12344000
28528000
28083000
22837000
622523000
646573000
21028000 7343000
5343000 2590000
285013000
148813000
325126000
165974000
1.38
0.63
-0.24 -0.68
1.34
0.6
-0.24
-0.68 2320000
3032000
4771000
105000
-725000
690000
-157000
-968000
-28203000
-13594000
10407000
6886000
0
-15969000
228235000
116914000
271151000
163808000
175749000 162812000
-8484000
-4033000
-72554000
-8127000
15232000
81053000
107010000
61230000
18376000
-14897000 -55954000
-99039000
-59492000
379283000
38961000
-76675000
6152000
16888000
-43555000
83530000
96067000
49375000
133105000 66027000
150118000 134017000
51239000
25057000
27389000
18248000
411727000
433955000
5613793000 5821538000
10517899000
10869362000
1128859000 844499000
225030000 168699000
3600533000 4063288000
239952000
140101000
311319000
352969000
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631995000
1007315000
388457000 388457000 176413000 -67816000
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243379000 161214000
191919000 209147000
88000
88000
63000
63000
54000
54000
37000
37000
-29954000
-29954000
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44317000
687000
687000
-30752000
-30752000
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270000
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-4940000
107154000
107154000
41918000
41918000
723000
723000
-1015000
-1015000
261878000
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150114000
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4460000
8699000
47452000
100670000
190509000
22614000
751825000
710849000
53587000
549000
575219000
1124978000
15771000
-15715000
399669000
39592000
16998000
12791000
7331959000
7621186000
171788000 745212000
3698732000
3630916000
2582258000 1282400000
2065914000 867869000
19904000 19904000 99662000
99662000 305458000 309396000 312343000 312441000 142158000
172787000 4801579000 281000 -2293000
324647000 2133579000 305000 3222995000 -877935000 5184707000 106748000 -1729000
294693000 2185137000 309000 3611452000 -1011903000 4904106000
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2341000
91000
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-16146000
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53587000
53585000
2000
549000
549000
29414000 29414000
3650000
3650000
977873000 977873000
-150114000
-150114000
290133000
294487000
283126000
283154000
280508000
280851000
283126000
283154000
As of December 31, 2008, and for
the three and six months ended June 30, 2008, amount has been adjusted to
reflect the impact of adoption of FSP APB No. 14-1, "Accounting for Convertible
Debt Instruments That may Be settled in Cash upon Conversion (Including Partial
Cash Settlement)" and FSP EITF 03-6-1, "Determining whether Instruments Granted
in Share-Based Payment Transactions are Participating Securities."