Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2    Summary of Significant Accounting Policies

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, 2011 (“2011 Annual Report”). In management’s opinion, the consolidated financial statements contain all adjustments necessary to present fairly our financial position as of March 31, 2012 and the results of our operations, cash flows, changes in equity and other comprehensive income for the three months ended March 31, 2012 and 2011, in accordance with GAAP. Interim results for the three months ended March 31, 2012 may not be indicative of results that will be realized for the full year ending December 31, 2012.

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

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. 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.

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), 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 $303.1 million and $371.0 million as of March 31, 2012 and December 31, 2011, respectively. At each of March 31, 2012 and December 31, 2011, assets held for sale included investments in unconsolidated affiliates accounted for using the equity method totaling $13.7 million. See Note 3 — Discontinued Operations for additional information.

We have investments in offshore funds, which are classified as long-term investments and are accounted for using the equity method of accounting based on our ownership interest in each fund.

Inventory

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

	March 31, 2012		December 31, 2011
	(In thousands)
Raw materials	$	126,798	$	133,480
Work-in-progress		48,975		50,951
Finished goods		90,014		88,421
	$	265,787	$	272,852

Goodwill

The carrying amounts of goodwill for our operating segments as of and for the three months ended March 31, 2012 were as follows:

	Balance as of December 31, 2011		Acquisitions and Purchase Price Adjustments		Impairments		Cumulative Translation Adjustment		Balance as of March  31, 2012
	(In thousands)
Drilling and Rig Services:
U.S. Lower 48 Land Drilling	$	30,154	$	—	$	—	$	—	$	30,154
U.S. Offshore		7,296		—				—		7,296
Alaska		19,995		—		—		—		19,995
International		18,983		—		—		—		18,983
Other Rig Services		34,766		—		—		278		35,044
Subtotal Drilling and Rig Services		111,194		—		—		278		111,472
Completion and Production Services:
U.S. Land Well-servicing		55,072		—		—		—		55,072
Pressure Pumping		334,992		—		—		—		334,992
Subtotal Completion and Production Services		390,064		—		—		—		390,064
Total	$	501,258	$	—	$	—	$	278	$	501,536