Note 14 Condensed Consolidating Financial Information

Nabors has fully and unconditionally guaranteed all of the issued public debt securities of Nabors Delaware. The following condensed consolidating financial information is included so that separate financial statements of Nabors Delaware 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.

The following condensed consolidating financial information presents condensed consolidating balance sheets as of March 31, 2013 and December 31, 2012, statements of income (loss), statements of other comprehensive income (loss) and the statements of cash flows for the three months ended March 31, 2013 and 2012 of (a) Nabors, parent/guarantor, (b) Nabors Delaware, issuer of public debt securities guaranteed by Nabors, (c) the non-guarantor subsidiaries, (d) consolidating adjustments necessary to consolidate Nabors and its subsidiaries and (e) Nabors on a consolidated basis.

We corrected our condensed consolidating statement of cash flows for classification of changes in inter-company balances between Nabors Delaware (Issuer) and Other Subsidiaries (Non-Guarantors) for the three months ended March 31, 2012 to present them as cash flows from investing activities rather than cash flows from operating activities. For Nabors Delaware (Issuer), cash used for operating activities decreased $59.8 million and cash used for investing activities increased by the same amount for the three months ended March 31, 2012. For Other Subsidiaries (Non-Guarantors), cash provided by operating activities decreased $59.8 million and cash used for investing activities decreased by the same amount for the three months ended March 31, 2012. The impact of these revisions is not material to the related financial statements taken as a whole. Certain reclassifications to inter-company payable and receivable balances in the condensed consolidating balance sheet have been made to the prior period to conform to current period presentation, with no effect on our consolidated financial position, results of operations or cash flows.

Condensed Consolidating Balance Sheets

	March 31, 2013
						Other
	Nabors		Nabors			Subsidiaries
	(Parent/		Delaware			(Non-		Consolidating
	Guarantor)		(Issuer)			Guarantors)		Adjustments			Total
	(In thousands)
	ASSETS
Current assets:
Cash and cash equivalents	$	946	$	22,090		$	541,852	$	—		$	564,888
Short-term investments	—		—			125,592		—			125,592
Assets held for sale	—		—			385,133		—			385,133
Accounts receivable, net	—		—			1,434,530		—			1,434,530
Inventory	—		—			245,495		—			245,495
Deferred income taxes	—		—			92,310		—			92,310
Other current assets	50		17,074			253,626		—			270,750
Total current assets	996		39,164			3,078,538		—			3,118,698
Long-term investments	—		—			3,910		—			3,910
Property, plant and equipment, net	—		36,429			8,605,518		—			8,641,947
Goodwill	—		—			487,760		—			487,760
Intercompany receivables	184,068		3,874			713,094		(901,036		)	—
Investment in unconsolidated affiliates	5,788,937		5,272,011			600,500		(11,596,850		)	64,598
Other long-term assets	—		30,934			237,610		—			268,544
Total assets	$	5,974,001	$	5,382,412		$	13,726,930	$	(12,497,886	)	$	12,585,457
	LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	—		$	435	$	—		$	435
Trade accounts payable	54		23			492,817		—			492,894
Accrued liabilities	134		33,660			499,424		—			533,218
Income taxes payable	—		—			64,599		—			64,599
Total current liabilities	188		33,683			1,057,275		—			1,091,146
Long-term debt	—		4,379,704			54		—			4,379,758
Other long-term liabilities	—		31,005			459,554		—			490,559
Deferred income taxes	—		(48,573		)	618,694		—			570,121
Intercompany payable	—		901,036			—		(901,036		)	—
Total liabilities	188		5,296,855			2,135,577		(901,036		)	6,531,584
Subsidiary preferred stock	—		—			69,188		—			69,188
Shareholders’ equity	5,973,813		85,557			11,511,294		(11,596,850		)	5,973,814
Noncontrolling interest	—		—			10,871		—			10,871
Total equity	5,973,813		85,557			11,522,165		(11,596,850		)	5,984,685
Total liabilities and equity	$	5,974,001	$	5,382,412		$	13,726,930	$	(12,497,886	)	$	12,585,457

	December 31, 2012
						Other
	Nabors		Nabors			Subsidiaries
	(Parent/		Delaware			(Non-		Consolidating
	Guarantor)		(Issuer)			Guarantors)		Adjustments			Total
	(In thousands)
	ASSETS
Current assets:
Cash and cash equivalents	$	1,639	$	106,778		$	416,505	$	—		$	524,922
Short-term investments	—		—			253,282		—			253,282
Assets held for sale	—		—			383,857		—			383,857
Accounts receivable, net	—		—			1,382,623		—			1,382,623
Inventory	—		—			251,133		—			251,133
Deferred income taxes	—		—			110,480		—			110,480
Other current assets	50		—			226,510		—			226,560
Total current assets	1,689		106,778			3,024,390		—			3,132,857
Long-term investments	—		—			4,269		—			4,269
Property, plant and equipment, net	—		37,300			8,674,788		—			8,712,088
Goodwill	—		—			472,326		—			472,326
Intercompany receivables	174,948		1,690,636			670,404		(2,535,988		)	—
Investment in unconsolidated affiliates	5,769,518		5,129,458			395,246		(11,232,532		)	61,690
Other long-term assets	—		31,904			240,888		—			272,792
Total assets	$	5,946,155	$	6,996,076		$	13,482,311	$	(13,768,520	)	$	12,656,022
	LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	—		$	364	$	—		$	364
Trade accounts payable	116		23			498,871		—			499,010
Accrued liabilities	1,110		91,520			506,750		—			599,380
Income taxes payable	—		—			33,628		—			33,628
Total current liabilities	1,226		91,543			1,039,613		—			1,132,382
Long-term debt	—		4,379,263			73		—			4,379,336
Other long-term liabilities	—		30,983			487,681		—			518,664
Deferred income taxes	—		(24,906		)	624,241		—			599,335
Intercompany payable	—		2,535,988			—		(2,535,988		)	—
Total liabilities	1,226		7,012,871			2,151,608		(2,535,988		)	6,629,717
Subsidiary preferred stock	—		—			69,188		—			69,188
Shareholders’ equity	5,944,929		(16,795		)	11,249,327		(11,232,532		)	5,944,929
Noncontrolling interest	—		—			12,188		—			12,188
Total equity	5,944,929		(16,795		)	11,261,515		(11,232,532		)	5,957,117
Total liabilities and equity	$	5,946,155	$	6,996,076		$	13,482,311	$	(13,768,520	)	$	12,656,022

Condensed Consolidating Statements of Income (Loss)

	Three Months Ended March 31, 2013
						Other
	Nabors		Nabors			Subsidiaries
	(Parent/		Delaware			(Non-			Consolidating
	Guarantor)		(Issuer)			Guarantors)			Adjustments			Total
	(In thousands)
Revenues and other income:
Operating revenues	$	—	$	—		$	1,578,645		$	—		$	1,578,645
Earnings from unconsolidated affiliates	—		—			2,895			—			2,895
Earnings (losses) from consolidated affiliates	107,873		42,320			2,023			(152,216		)	—
Investment income (loss)	—		16			79,405			—			79,421
Intercompany interest income	—		29			—			(29		)	—
Total revenues and other income	107,873		42,365			1,662,968			(152,245		)	1,660,961
Costs and other deductions:
Direct costs	—		—			1,026,042			—			1,026,042
General and administrative expenses	1,834		37			130,818			(144		)	132,545
Depreciation and amortization	—		902			272,463			—			273,365
Interest expense	—		63,049			(3,041		)	—			60,008
Intercompany interest expense	—		—			29			(29		)	—
Losses (gains) on sales of long-lived assets and other expense (income), net	6,918		21			52,724			144			59,807
Total costs and other deductions	8,752		64,009			1,479,035			(29		)	1,551,767
Income from continuing operations before income taxes	99,121		(21,644		)	183,933			(152,216		)	109,194
Income tax expense (benefit)	—		(23,667		)	34,939			—			11,272
Subsidiary preferred stock dividend	—		—			750			—			750
Income (loss) from continuting operations, net of tax	99,121		2,023			148,244			(152,216		)	97,172
Income (loss) from discontinued operations, net of tax	—		—			2,046			—			2,046
Net income (loss)	99,121		2,023			150,290			(152,216		)	99,218
Less: Net (income) loss attributable to noncontrolling interest	—		—			(97		)	—			(97		)
Net income (loss) attributable to Nabors	$	99,121	$	2,023		$	150,193		$	(152,216	)	$	99,121

	Three Months Ended March 31, 2012
						Other
	Nabors		Nabors			Subsidiaries
	(Parent/		Delaware			(Non-			Consolidating
	Guarantor)		(Issuer)			Guarantors)			Adjustments			Total
	(In thousands)
Revenues and other income:
Operating revenues	$	—	$	—		$	1,890,426		$	—		$	1,890,426
Earnings from unconsolidated affiliates	—		—			(68,669		)	—			(68,669		)
Earnings (losses) from consolidated affiliates	135,879		54,528			28,361			(218,768		)	—
Investment income (loss)	—		—			20,252			—			20,252
Intercompany interest income	—		16,932			—			(16,932		)	—
Total revenues and other income	135,879		71,460			1,870,370			(235,700		)	1,842,009
Costs and other deductions:
Direct costs	—		—			1,184,816			—			1,184,816
General and administrative expenses	1,527		140			134,942			(263		)	136,346
Depreciation and amortization	—		902			246,719			—			247,621
Interest expense	—		68,169			(5,515		)	—			62,654
Intercompany interest expense	—		—			16,932			(16,932		)	—
Losses (gains) on sales of long-lived assets and other expense (income), net	262		(433		)	(1,932		)	263			(1,840		)
Total costs and other deductions	1,789		68,778			1,575,962			(16,932		)	1,629,597
Income from continuing operations before income taxes	134,090		2,682			294,408			(218,768		)	212,412
Income tax expense (benefit)	—		(19,183		)	88,227			—			69,044
Subsidiary preferred stock dividend	—		—			750			—			750
Income (loss) from continuting operations, net of tax	134,090		21,865			205,431			(218,768		)	142,618
Income (loss) from discontinued operations, net of tax	—		—			(8,795		)	—			(8,795		)
Net income (loss)	134,090		21,865			196,636			(218,768		)	133,823
Less: Net (income) loss attributable to noncontrolling interest	—		—			267			—			267
Net income (loss) attributable to Nabors	$	134,090	$	21,865		$	196,903		$	(218,768	)	$	134,090

Condensed Consolidating Statements of Other Comprehensive Income

	Three Months Ended March 31, 2013
							Other
	Nabors			Nabors			Subsidiaries
	(Parent/			Delaware			(Non-			Consolidating
	Guarantor)			(Issuer)			Guarantors)			Adjustments			Total
	(In thousands)
Net income (loss) attributable to Nabors	$	99,121		$	2,023		$	150,193		$	(152,216	)	$	99,121
Other comprehensive income (loss) before taxes:
Translation adjustment attributable to Nabors	(23,265		)	(52		)	(23,317		)	23,369			(23,265		)
Unrealized gains/(losses) on marketable securities:
Unrealized gains/(losses) on marketable securities	10,139			185			10,324			(10,509		)	10,139
Less: reclassification adjustment for (gains)/losses on marketable securities	(75,974		)	(1,186		)	(77,160		)	78,346			(75,974		)
Unrealized gains/(losses) on marketable securities	(65,835		)	(1,001		)	(66,836		)	67,837			(65,835		)
Pension liability amortization and adjustment	281			281			562			(843		)	281
Unrealized gains/(losses) and amortization of (gains)/losses on cash flow hedges	153			153			153			(306		)	153
Other comprehensive income (loss) before taxes	(88,666		)	(619		)	(89,438		)	90,057			(88,666		)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(214		)	(214		)	(487		)	701			(214		)
Other comprehensive income (loss), net of tax	(88,452		)	(405		)	(88,951		)	89,356			(88,452		)
Comprehensive income (loss) attributable to Nabors	10,669			1,618			61,242			(62,860		)	10,669
Net income (loss) attributable to noncontrolling interest	97			—			97			(97		)	97
Translation adjustment to noncontrolling interest	(1,414		)	—			(1,414		)	1,414			(1,414		)
Comprehensive income (loss) attributable to noncontrolling interest	(1,317		)	—			(1,317		)	1,317			(1,317		)
Comprehensive income (loss)	$	9,352		$	1,618		$	59,925		$	(61,543	)	$	9,352

	Three Months Ended March 31, 2012
							Other
	Nabors			Nabors			Subsidiaries
	(Parent/			Delaware			(Non-			Consolidating
	Guarantor)			(Issuer)			Guarantors)			Adjustments			Total
	(In thousands)
Net income (loss) attributable to Nabors	$	134,090		$	21,865		$	196,903		$	(218,768	)	$	134,090
Other comprehensive income (loss) before taxes:
Translation adjustment attributable to Nabors	17,266			(53		)	17,213			(17,160		)	17,266
Unrealized gains/(losses) on marketable securities:
Unrealized gains/(losses) on marketable securities	12,223			64			12,287			(12,351		)	12,223
Less: reclassification adjustment for (gains)/losses on marketable securities	(12,465		)	(10,288		)	(22,753		)	33,041			(12,465		)
Unrealized gains/(losses) on marketable securities	(242		)	(10,224		)	(10,466		)	20,690			(242		)
Pension liability amortization and adjustment	260			260			520			(780		)	260
Unrealized gains/(losses) and amortization of (gains)/losses on cash flow hedges	191			191			191			(382		)	191
Other comprehensive income (loss) before taxes	17,475			(9,826		)	7,458			2,368			17,475
Income tax expense (benefit) related to items of other comprehensive income (loss)	(3,724		)	(3,724		)	(7,508		)	11,232			(3,724		)
Other comprehensive income (loss), net of tax	21,199			(6,102		)	14,966			(8,864		)	21,199
Comprehensive income (loss) attributable to Nabors	155,289			15,763			211,869			(227,632		)	155,289
Net income (loss) attributable to noncontrolling interest	(267		)	—			(267		)	267			(267		)
Translation adjustment to noncontrolling interest	243			—			243			(243		)	243
Comprehensive income (loss) attributable to noncontrolling interest	(24		)	—			(24		)	24			(24		)
Comprehensive income (loss)	$	155,265		$	15,763		$	211,845		$	(227,608	)	$	155,265

Condensed Consolidating Statements of Cash Flows

	Three Months Ended March 31, 2013
							Other
	Nabors			Nabors			Subsidiaries
	(Parent/			Delaware			(Non-			Consolidating
	Guarantor)			(Issuer)			Guarantors)			Adjustments			Total
	(In thousands)
Net cash provided by (used for) operating activities	$	1,144		$	(138,791	)	$	308,348		$	12,800		$	183,501
Cash flows from investing activities:
Purchases of investments	—			—			—			—			—
Sales and maturities of investments	—			—			142,336			—			142,336
Proceeds from sale of unconsolidated affiliates	—			—			—			—			—
Investment in unconsolidated affiliates	—			—			(12		)	—			(12		)
Cash paid for acquisition of businesses, net	—			—			(37,516		)	—			(37,516		)
Capital expenditures	—			—			(235,539		)	—			(235,539		)
Proceeds from sales of assets and insurance claims	—			—			6,605			—			6,605
Cash paid for investments in consolidated affiliates	—			(100,000		)	(200,000		)	300,000			—
Changes in intercompany balances	—			54,192			(54,192		)	—			—
Net cash provided by (used for) investing activities	—			(45,808		)	(378,318		)	300,000			(124,126		)
Cash flows from financing activities:
Increase (decrease) in cash overdrafts	—			—			(1,975		)	—			(1,975		)
Cash dividends paid	(12,891		)	—			—			—			(12,891		)
Proceeds from (payments for) issuance of common shares	1,027			—			—			—			1,027
Proceeds from (payments for) issuance of parent common shares to affiliates	12,800			—			—			(12,800		)	—
Proceeds from parent contributions	—			100,000			200,000			(300,000		)	—
Purchase of restricted stock	(2,773		)	—			—			—			(2,773		)
Tax benefit related to share-based awards	—			—			(4		)	—			(4		)
Other	—			(89		)	55			—			(34		)
Net cash (used for) provided by financing activities	(1,837		)	99,911			198,076			(312,800		)	(16,650		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(2,759		)	—			(2,759		)
Net increase (decrease) in cash and cash equivalents	(693		)	(84,688		)	125,347			—			39,966
Cash and cash equivalents, beginning of period	1,639			106,778			416,505			—			524,922
Cash and cash equivalents, end of period	$	946		$	22,090		$	541,852		$	—		$	564,888

	Three Months Ended March 31, 2012
							Other
	Nabors			Nabors			Subsidiaries
	(Parent/			Delaware			(Non-			Consolidating
	Guarantor)			(Issuer)			Guarantors)			Adjustments			Total
	(In thousands)
Net cash provided by (used for) operating activities	$	10,693		$	(90,170	)	$	336,160		$	(12,500	)	$	244,183
Cash flows from investing activities:
Purchases of investments	—			—			(791		)	—			(791		)
Sales and maturities of investments	—			—			23,478			—			23,478
Capital expenditures	—			—			(473,687		)	—			(473,687		)
Proceeds from sales of assets and insurance claims	—			—			21,321			—			21,321
Cash paid for investments in consolidated affiliates	—			—			—			—			—
Changes in intercompany balances	—			(59,830		)	59,830			—			—
Net cash provided by (used for) investing activities	—			(59,830		)	(369,849		)	—			(429,679		)
Cash flows from financing activities:
Increase (decrease) in cash overdrafts	—			—			(2,269		)	—			(2,269		)
Proceeds from revolving credit facility	—			150,000			—			—			150,000
Proceeds from (payments for) issuance of common shares	(5,319		)	—			(1		)	—			(5,320		)
Reduction in long-term debt	—			—			(1,072		)	—			(1,072		)
Purchase of restricted stock	(1,769		)	—			—			—			(1,769		)
Tax benefit related to share-based awards	—			—			(31		)	—			(31		)
Cash dividends paid	—			—			(12,500		)	12,500			—
Net cash (used for) provided by financing activities	(7,088		)	150,000			(15,873		)	12,500			139,539
Effect of exchange rate changes on cash and cash equivalents	—			—			1,404			—			1,404
Net increase (decrease) in cash and cash equivalents	3,605			—			(48,158		)	—			(44,553		)
Cash and cash equivalents, beginning of period	203			21			398,351			—			398,575
Cash and cash equivalents, end of period	$	3,808		$	21		$	350,193		$	—		$	354,022