Pension, Postretirement and Postemployment Benefits

12 Months Ended

Dec. 31, 2011

Pension, Postretirement and Postemployment Benefits [Abstract]

Pension, Postretirement and Postemployment Benefits

Note 16    Pension, Postretirement and Postemployment Benefits

Pension Plans

In conjunction with our acquisition of Pool Energy Services Co. (“Pool”) in November 1999, we acquired the assets and liabilities of a defined benefit pension plan, the Pool Company Retirement Income Plan (the “Pool Pension Plan”). Benefits under the Pool Pension Plan are frozen and participants were fully vested in their accrued retirement benefit on December 31, 1998.

Summarized information on the Pool Pension Plan is as follows:

	Pension Benefits
	2011			2010
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	20,628		$	18,865
Remeasurement		1,517			—
Interest cost		1,198			1,116
Actuarial loss (gain)		3,975			1,289
Benefit payments		(659	)		(642	)
Benefit obligation at end of year(1)	$	26,659		$	20,628
Change in plan assets:
Fair value of plan assets at beginning of year	$	15,219		$	14,058
Actual (loss) return on plan assets		480			1,364
Employer contribution		1,312			439
Benefit payments		(659	)		(642	)
Fair value of plan assets at end of year	$	16,352		$	15,219
Funded status:
Underfunded status at end of year	$	(10,307	)	$	(5,409	)
Amounts recognized in consolidated balance sheets:
Other long-term liabilities	$	(10,307	)	$	(5,409	)

	Year Ended December 31,
	2011			2010			2009
Components of net periodic benefit cost (recognized in our consolidated statements of income):
Interest cost	$	1,198		$	1,116		$	1,093
Expected return on plan assets		(1,008	)		(909	)		(794	)
Recognized net actuarial loss		628			457			545
Net periodic benefit cost	$	818		$	664		$	844
Weighted-average assumptions:
Weighted-average discount rate		4.25	%		5.50	%		6.00	%
Expected long-term rate of return on plan assets		6.50	%		6.50	%		6.50	%

(1) As of December 31, 2011 and 2010, the accumulated benefit obligation was the same as the projected benefit obligation.

For the years ended December 31, 2011, 2010 and 2009, the net actuarial loss amounts included in accumulated other comprehensive income (loss) in the consolidated statements of changes in equity were approximately $(12.1) million, $(6.7) million and $(6.3) million, respectively. There were no other components, such as prior service costs or transition obligations relating to pension costs recorded within accumulated other comprehensive income (loss) during 2011, 2010 and 2009.

The amount included in accumulated other comprehensive income (loss) in the consolidated statements of changes in equity that is expected to be recognized as a component of net periodic benefit cost during 2012 is approximately $1.0 million.

We analyze the historical performance of investments in equity and debt securities, together with current market factors such as inflation and interest rates to help us make assumptions necessary to estimate a long-term rate of return on plan assets. Once this estimate is made, we review the portfolio of plan assets and make adjustments thereto that we believe are necessary to reflect a diversified blend of investments in equity and debt securities that is capable of achieving the estimated long-term rate of return without assuming an unreasonable level of investment risk.

The following table sets forth, by level within the fair value hierarchy, the investments in the Pool Pension Plan as of December 31, 2011. The investments’ fair value measurement level within the fair value hierarchy is classified in its entirety based on the lowest level of input that is significant to the measurement.

	Fair Value as of December 31, 2011
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:(1)
Cash	$	—	$	396	$	—	$	396
Short-term investments:
Available-for-sale equity securities(2)		—		9,166		—		9,166
Available-for-sale debt securities(3)		—		6,790		—		6,790
Total investments		—		15,956		—		15,956
Total	$	—	$	16,352	$	—	$	16,352

(1) Includes investments in collective trust funds that are valued based on the fair value of the underlying investments using quoted prices in active markets or other significant inputs that are deemed observable.

(2) Includes funds that invest primarily in U.S. common stocks and foreign equity securities.

(3) Includes funds that invest primarily in investment grade debt.

The measurement date used to determine pension measurements for the plan is December 31.

Our weighted-average asset allocations as of December 31, 2011 and 2010, by asset category are as follows:

	Pension Benefits
	2011			2010
Cash		2	%		2	%
Equity securities		56	%		56	%
Debt securities		42	%		42	%
Total		100	%		100	%

We invest plan assets based on a total return on investment approach, pursuant to which the plan assets include a diversified blend of investments in equity and debt securities toward a goal of maximizing the long-term rate of return without assuming an unreasonable level of investment risk. We determine the level of risk based on an analysis of plan liabilities, the extent to which the value of the plan assets satisfies the plan liabilities and our financial condition. Our investment policy includes target allocations approximating 55% investment in equity securities and 45% investment in debt securities. The equity portion of the plan assets represents growth and value stocks of small, medium and large companies. We measure and monitor the investment risk of the plan assets both on a quarterly basis and annually when we assess plan liabilities.

We expect to contribute approximately $1.5 million to the Pool Pension Plan in 2012. This is based on the sum of (1) the minimum contribution for the 2011 plan year that will be made in 2011 and (2) the estimated minimum required quarterly contributions for the 2012 plan year. We made contributions to the Pool Pension Plan in 2011 and 2010 totaling $1.3 million and $.1 million, respectively.

As of December 31, 2011, we expect that benefits to be paid in each of the next five years after 2011 and in the aggregate for the five years thereafter will be as follows:

	(In thousands)
2012	$	791
2013		890
2014		1,004
2015		1,117
2016		1,193
2017 — 2021		7,428

Some of our employees are covered by defined contribution plans. Our contributions to the plans totaled $22.9 million and $13.6 million for the years ended December 31, 2011 and 2010, respectively. Nabors does not provide post-employment benefits to its employees, except for employees covered under the Pool Pension Plan.

Post-retirement Benefits Other Than Pensions

Prior to the date of our acquisition, Pool provided certain post-retirement healthcare and life insurance benefits to eligible retirees who had attained specific age and years of service requirements. Nabors terminated this plan at the date of acquisition (November 24, 1999). A liability of approximately $.2 million was recorded in our consolidated balance sheets as of each of December 31, 2011 and 2010, to cover the estimated costs of beneficiaries covered by the plan at the date of acquisition.