Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Summary of Significant Accounting Policies

Interim Financial Information

Interim Financial Information

The unaudited consolidated financial statements of Nabors are prepared in conformity with accounting principles generally accepted in the United States (“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 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, 2012 (“2012 Annual Report”).  In management’s opinion, the consolidated financial statements contain all adjustments necessary to present fairly our financial position as of September 30, 2013, as well as the results of our operations and other comprehensive income for the three and nine months ended September 30, 2013 and 2012, and our cash flows and changes in equity for the nine months ended September 30, 2013 and 2012, in accordance with GAAP.  Interim results for the nine months ended September 30, 2013 may not be indicative of results that will be realized for the full year ending December 31, 2013.

Our independent registered public accounting firm has reviewed 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 such Act.

Principles of Consolidation

Principles of Consolidation

Our consolidated financial statements include the accounts of Nabors, as well as all majority-owned and nonmajority-owned subsidiaries required to be consolidated under GAAP.  All significant intercompany accounts and transactions are eliminated in consolidation.

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 (loss) of these entities is recorded as earnings (losses) from unconsolidated affiliates in our consolidated statements of income (loss).  The investments in these entities are included in investment in unconsolidated affiliates in our consolidated balance sheets.

Inventory

Inventory

Inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out or average cost method, and includes the cost of materials, labor and manufacturing overhead.  Inventory included the following:

	September 30,		December 31,
	2013		2012
	(In thousands)
Raw materials	$	149,630	$	148,822
Work-in-progress	29,256		45,733
Finished goods	50,608		56,578
	$	229,494	$	251,133

Goodwill

Goodwill

The carrying amount and changes in recorded goodwill for our business lines as of and for the nine months ended September 30, 2013 were as follows:

			Acquisitions
			and
	Balance at		Purchase			Disposals			Cumulative			Balance at
	December 31,		Price			and			Translation			September 30,
	2012		Adjustments			Impairments			Adjustment			2013
	(In thousands)
Drilling & Rig Services:
U.S.	$	50,149	$	—		$	—		$	—		$	50,149
Rig Services	32,113		15,828		(1)	(8,000		)(2)	(597		)	39,344
Subtotal Drilling & Rig Services	82,262		15,828			(8,000		)	(597		)	89,493
Completion & Production Services
Completion	334,992		—			—			—			334,992
Production	55,072		—			—			—			55,072
Subtotal Completion & Production Services	390,064		—			—			—			390,064
Total	$	472,326	$	15,828		$	(8,000	)	$	(597	)	$	479,557

(1) Represents the goodwill recorded in connection with our acquisition of Navigate Energy Services, Inc. (“NES”). See Note 11 - Supplemental Information for additional discussion.

(2) Represents the goodwill related to Peak Oilfield Service Company (“Peak”), a wholly owned subsidiary in Alaska, for which the accounting criteria of assets held for sale was met at September 30, 2013.  Accordingly, we reclassified the goodwill and related carrying value of these assets to assets held for sale at September 30, 2013.  See Note 12 — Assets Held for Sale and Discontinued Operations for additional information.