Acquisitions

12 Months Ended

Dec. 31, 2011

Acquisitions [Abstract]

Acquisitions

Note 5    Acquisitions

2011 Acquisitions

In July 2011, we paid $65 million in cash to acquire the remaining 50 percent equity interest of Peak, making it a wholly owned subsidiary on this date. Peak operates in Alaska, providing construction and rig moving services in icy conditions as well as light and heavy-duty moving, hauling and maintenance services. Previously, we held a 50 percent equity interest with a carrying value of $38.1 million that we had accounted for as an equity method investment. As a result of the acquisition, we consolidated the assets and liabilities of Peak during the third quarter of 2011 based on their respective fair values, in accordance with Topic 805 — Business Combinations. The excess of the estimated fair value of the assets and liabilities over the net carrying value of our previously held equity interest resulted in a gain of $13.1 million and is reflected in losses (gains) on sales and retirements of long-lived assets and other expense (income) for the year ended December 31, 2011.

In June 2011, the equity owners of SMVP dissolved the partnership and a proportionate share of the assets and liabilities were conveyed to us in exchange for our ownership interest. The assets continued to be presented as held for sale and the operating results in discontinued operations for all periods presented. See Note 4 — Discontinued Operations for additional discussion.

2010 Acquisitions

In September 2010, we acquired through a tender offer and merger all of the outstanding common stock of Superior at a price per share equal to $22.12, for a cash purchase price of approximately $681.3 million. The effects of the Superior acquisition and the operating results are included in the accompanying consolidated financial statements for the period subsequent to the effective date of the acquisition. Superior contributed revenues of $1.2 billion to our consolidated revenues for the year ended December 31, 2011.

As part of this acquisition, we recognized $7.0 million of acquisition-related transaction costs in losses (gains) on sales and retirements of long-lived assets and other expense (income) for the year ended December 31, 2010. The acquisition-related transaction costs consisted primarily of investment banking fees and legal and accounting costs. The acquisition enhanced our well-servicing, including the addition of hydraulic fracturing to our services, and workover capacity work throughout the Appalachian, Mid-Continent, Rocky Mountain, Southeast and Southwest regions of the United States.

The following table provides the allocation of the purchase price as of the acquisition date. The purchase price for Superior was allocated to the net tangible and intangible assets acquired and liabilities assumed based on fair value. The excess of the purchase price over such fair values was recorded as goodwill.

	Estimated Fair Value
	(In thousands)
Assets:
Cash and cash equivalents	$	1,045
Accounts receivable		143,842
Inventory		33,963
Other current assets		7,612
Property, plant and equipment		415,000
Intangible assets		131,811
Goodwill		334,992
Other long-term assets		14,726
Total assets		1,082,991
Liabilities:
Current liabilities	$	78,277
Deferred income taxes		119,201
Long-term debt		124,792
Other long-term liabilities		10,258
Total liabilities		332,528
Preferred stock		69,188
Net assets acquired	$	681,275

Intangible assets

We identified other intangible assets associated with fracturing and fluid logistics services, including trade name, technology, employment contracts and non-compete agreements and customer relationships. The amortization of the intangible assets is calculated on a straight-line basis, which estimates the consumption of economic benefits. The following table summarizes the intangible assets recognized at the acquisition date, the monthly amortization expense as well as their estimated useful lives:

	Estimated Fair Value		Monthly Amortization		Estimated Useful Life
	(In thousands)
Superior trade name	$	88,767	$	740		10 years
Technology		5,294		88		5 years
Employment contracts and non-compete agreements		675		33		1-3 years
Customer relationships		37,075		308		10 years
Total identifiable intangible assets	$	131,811	$	1,169

Goodwill

Goodwill of $335.0 million arising from the Superior acquisition consisted largely of the expected synergies and economies of scale from combining the operations of Nabors and Superior. We have allocated the goodwill to our Pressure Pumping operating segment. See Note 2 — Summary of Significant Account Policies for additional information.

Long-term debt

Long-term debt included a secured revolving credit facility and second lien notes at the acquisition date. As of December 31, 2010, all amounts outstanding had been repaid. See Note 12 — Debt for additional information.

On December 31, 2010, we purchased the business of Energy Contractors for a total cash purchase price of $53.4 million. The assets were comprised of vehicles and rig equipment and have been included in our U.S. Well-servicing operating segment. The purchase price was allocated to the net tangible and intangible assets acquired based on their fair value as of December 31, 2010. The excess of the purchase price over the fair values of the assets acquired was recorded as goodwill in the amount of $4.2 million.