Nabors' 2Q06 EPS $0.77 ($0.82 before one-time tax charge) Versus $0.41(1)

Nabors Industries Ltd. (NYSE:NBR) today announced itsresults for the second quarter and six months ended June 30, 2006.Adjusted income derived from operating activities(2) was $349.5million for the current quarter, compared to $173.8 million in thesecond quarter of last year and $370.5 million in the first quarter ofthis year. Net income was $233.4 million ($0.77 per diluted share) forthe current quarter, compared to $131.8 million ($0.41(1) per dilutedshare) in the second quarter of last year and $256.8 million ($0.79(1)per diluted share) in the first quarter of this year. Operationally,we did $0.82 per share this quarter before a one-time net charge toincome tax expense amounting to $0.05 per diluted share, as previouslydisclosed. Revenues totaled $1,127.4 million in the current quarter,compared to $770.5 million in the second quarter of last year and$1,168.3 million in the first quarter of this year. For the six monthsended June 30, 2006, adjusted income derived from operating activitieswas $720.0 million compared to $345.8 million in the first six monthsof 2005. Net income for the first six months of 2006 was $490.2million ($1.56(1) per diluted share) compared to $259.2 million($0.81(1) per diluted share) in the first six months of 2005. Revenuesfor the first six months of 2006 rose to $2,295.7 million, up from$1,556.3 million for the first six months of 2005.

Gene Isenberg, Nabors Chairman and Chief Executive Officer,commented, "Nabors once again posted a record quarter at $0.82 beforethe one-time tax charge, which is particularly impressive consideringthe seasonally lower results in Canada and Alaska. All of our majoroperating businesses achieved a more than 50% increase inyear-over-year results, with our U.S. Lower 48 Land Drilling unitagain leading the way with 30 incremental rigs and uniformly higheraverage margins.

We are acutely aware that there appear to be two distinct rigmarkets, the one which actually exists and the one that the majorityof analysts expect to develop out of the current gas storage overhang.We fully recognize the potential for short-term softening in the rigmarket if gas prices cause significant customer spending reductions.While this situation reduces the degree of certainty of our outlookover the near-term, recent and prospective developments lead us toconclude that any impact on our results will likely be much less andshorter in duration than consensus expectations imply for both thisyear and next. We continue to see a high number of customers planningsizeable increases in rig requirements, particularly for new higherspecification rigs, across our global businesses.

Our U.S. Lower 48 Land Drilling business has seen no reduction inactivity or pricing, nor are we aware of any more than a handful ofcustomers who have specific issues that are leading to reductions intheir expenditures. When this has resulted in Nabors rigs becomingavailable, we have been able to secure commitments from othercustomers on our waiting list, usually at higher rates and with termcommitments. In some cases we have seen customers reallocate spendingfrom shallower to deeper wells, or from gas to oil, or gas to tarsands. There are also instances where customers are shifting activityfrom the Gulf of Mexico to land, and we continue to see incrementalactivity in the testing of new shale and other unconventional gasprospects and in the expanding application of improved drilling andcompletion techniques. All of this drives demand for additional rigs,albeit fewer than the frenzied market of the last four quarters, andwe continue to reallocate rigs to customers who are willing and ableto commit to longer terms and/or higher rates. As a result, our U.S.Lower 48 Land Drilling unit realized a $1,257 increase in averagemargins per rig day during the second quarter, which was much largerthan expected since rigs continue to renew at much higher currentmarket rates.

Going forward, we do expect the magnitude of sequential marginincreases to moderate, as we have been predicting for the last sixquarters. Future growth in this business will increasingly come fromincremental volume, all of which is contractually assured. The onlynegative we actually see is slippage in the delivery of our new rigs.We now expect to have 31 new rigs operating by year-end along with 10reactivated rigs, all with long-term contract commitments. The revisedschedule anticipates another 45 new rigs commencing in the first threequarters of 2007. Collectively, all of these rig commitments willcontribute an incremental 15 rig years in 2006, 65 in 2007 and 86 in2008, not including any of the many additional commitments we continueto discuss. The start-up of these rigs will bring the volume of termcontracts for our U.S. Lower 48 fleet to at least 150 by mid-2007, andthis number could well exceed 200 depending upon the extent ofrenewals and extensions of the 57 existing contracts maturing duringthis period. This gives us an unprecedented ability to weather ashort-term downturn with minimal impact on our consolidated results.

In Canada, we are experiencing the same conditions as in our U.S.Lower 48 markets, with results nearly double what we anticipated as aresult of the quick recovery from the spring thaw. We are realizingimproved year-over-year summer season pricing in our middle and deeperdepth rigs, which comprise roughly 90% of our fleet. The shallow rigmarket is experiencing flat summer season pricing, but this is havinglittle to no impact on Nabors because we have very little exposure inthis rig class other than our new state-of-the-art AC coiledtubing/stem drilling rigs, which have unique advantages and areenjoying enthusiastic customer acceptance. We currently have four ofthese units working and we expect to have 10 deployed by year-end, allof which have either existing or strong prospects for contracts. Theinterest level in this new technology is high in both Canada and theU.S. Lower 48, and the prospects for extending this new rig's depthcapability from the current 1500 meters (5,000 feet) to 1,800 meters(6,000 feet) and eventually to 3,000 meters (10,000 feet) is openingup even more possibilities.

Regardless of the near-term North American natural gas outlook, westill expect significantly higher year-over-year quarterly resultsthroughout the balance of the year and next year for all of our majorbusinesses. We expect our U.S. Lower 48 Land Drilling business to grownicely over the next six quarters, but we expect even largerpercentage gains in our International, U.S. Well-Servicing and U.S.Offshore units.

Our International business particularly will be an increasinglylarge contributor to our future results as rates for both new andexisting rigs move rapidly toward replacement pricing and a large andgrowing volume of rig deployments commences. The tightness of globalrig supply is only beginning to be manifest in these markets. In thefirst half of 2006 we deployed 12 rigs and we expect to deploy another15 in the second half, all at margins which are nearly double those oflate last year. These rigs should contribute a net 13 rig years in2006 and another 14 in 2007. Over the next 6-24 months, much of ourexisting fleet will be up for renewal, in many cases from marginswhich are as low as one-third of current renewal levels. In addition,two of our larger international jackups will come off multi-yearcontracts in early 2007 and are expected to renew at much higherrates. We continue to have near and longer-term prospects for anexceptionally large number of additional rigs which should commence in2007 and beyond.

In our U.S. Offshore unit, results have improved meaningfully andshould continue to accelerate throughout the balance of this year asfour new rigs deploy and pricing remains strong across all assetclasses. We expect 2006 results to more than double last year'snumbers despite some temporary weakness in the jackup market, whereoperators are hesitant to commence projects during hurricane seasondue to the new MMS rules.

In U.S. Well-Servicing, where over 70% of our business is derivedfrom oil related work, we continue to experience significant strengthin activity and pricing. The impact of new rig deliveries began tomaterialize this quarter, with eight incremental rigs working comparedto the first quarter. New rig deliveries will accelerate rapidly overthe balance of this year, reaching 27 in the fourth quarter. In total,we should receive 100 new rigs by the third quarter of 2007, 80 ofwhich are new 500 horsepower Millennium(TM) Rigs. These rigs are beingwell received in the market, as evidenced by the magnitude of thepricing premium they are commanding and the length of the waiting listfor rigs yet to deploy. We are in the process of acquiring more ofthese highly successful state-of-the-art PLC rigs in a 400 HP class,and we will likely order more 200 HP rigs as well. We are alsoinvesting heavily in new capacity in our fluids storage, hauling anddisposal business. Pricing also continues to be surprisingly strong inthis unit. In early July we implemented another 15% price increaseacross all sizes of rigs with no commensurate loss in rig count. Thisreflects the continuing demand for expedient repairs to oil wells,which we expect to continue even with crude prices much lower thantoday's levels.

In May we placed $2.75 billion in five-year convertible notes withan effective interest rate of 2.3% and a 55% conversion premium. Theplacement was accomplished in a two-step process. This was the mostcost-effective and efficient means to accomplish an offering of thissize and serves to offset any dilution at maturity until the stockreaches $54.64 per share. Concurrently, we utilized $1.0 billion ofthe proceeds to repurchase 28.5 million shares of our common stockfrom buyers. This transaction will be accretive to our results byroughly $0.26 per share in 2006 and $0.56 in 2007. At the end of thesecond quarter, the year-to-date repurchases of our common stockstands at 37.4 million shares at an average price of $35.03 per share.All of this leaves us with over $2 billion in cash and investments,which puts us in even better position to capitalize on opportunities.

Competitive constraints and customer confidentiality make itimpossible to convey fully the magnitude and breadth of opportunitieswe have before us across all of our 16 operating entities. Ourexpectations for the longer-term continue to grow beyond those weoutlined at our December analyst meeting, near-term concerns overNorth American natural gas notwithstanding. As a result, we remainconfident in our ability to not only meet but exceed the forwardresults implied by consensus estimates."

The Nabors companies own and operate approximately 600 landdrilling and approximately 800 land workover and well-servicing rigsin North America. Offshore, Nabors operates 43 platform rigs, 21jack-up units and 3 barge rigs in the United States and multipleinternational markets. Nabors markets 29 marine transportation andsupply vessels, primarily in the U.S. Gulf of Mexico. In addition,Nabors manufactures top drives and drilling instrumentation systemsand provides comprehensive oilfield hauling, engineering, civilconstruction, logistics and facilities maintenance, and projectmanagement services. Nabors participates in most of the significantoil, gas and geothermal markets in the world.

The Company will post a group of slides on its website shortlyfollowing this release for interested investors to utilize infollowing the review of our business results and outlook during aconference call it will conduct, tomorrow, Tuesday, July 25, 2006, at11:00 a.m. Eastern Time (10:00 a.m. Central Time). The call can beaccessed on our website at www.nabors.com, or through First Call atwww.firstcallevents.com. The slides will be available on the Naborswebsite and can be viewed or downloaded by going to "InvestorInformation" and then to "Events Calendar."

The information above includes forward-looking statements withinthe meaning of the Securities Act of 1933 and the Securities ExchangeAct of 1934. Such forward-looking statements are subject to certainrisks and uncertainties, as disclosed by Nabors from time to time inits filings with the Securities and Exchange Commission. As a resultof these factors, Nabors' actual results may differ materially fromthose indicated or implied by such forward-looking statements.

For further information, please contact Dennis A. Smith, Directorof Corporate Development of Nabors Corporate Services, Inc. at281-775-8038. To request Investor Materials, call our corporateheadquarters in Hamilton, Bermuda at 441-292-1510 or via email atdan.mclachlin@nabors.com.

(1) All EPS numbers have been adjusted to reflect a two for one stock
split.

(2) Adjusted income derived from operating activities is computed by:
subtracting direct costs, general and administrative expenses,
depreciation and amortization, and depletion expense from
Operating revenues and then adding Earnings from unconsolidated
affiliates. Such amounts should not be used as a substitute to
those amounts reported under accounting principles generally
accepted in the United States of America (GAAP). However,
management evaluates the performance of our business units and the
consolidated company based on several criteria, including adjusted
income derived from operating activities, because it believes that
this financial measure is an accurate reflection of the ongoing
profitability of our company. A reconciliation of this non-GAAP
measure to income before income taxes, which is a GAAP measure, is
provided within the table set forth immediately following the
heading "Segment Reporting."


NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended Six Months Ended
---------------------------- -----------------------
(In thousands, June 30, March 31, June 30,
except per ---------------- ----------- -----------------------
share amounts) 2006 2005 2006 2006 2005
------ -------- ---------- ---------- ----------
Revenues and
other income:
Operating
revenues $1,118,000 $765,337 $1,163,926 $2,281,926 $1,549,065
Earnings
(losses)
from
unconsol-
idated
affiliates 9,370 5,204 4,399 13,769 7,207
Investment
income 16,728 15,578 13,870 30,598 27,366
---------- -------- ---------- ---------- ----------
Total
revenues
and other
income 1,144,098 786,119 1,182,195 2,326,293 1,583,638
---------- -------- ---------- ---------- ----------

Costs and
other
deductions:
Direct costs 594,226 454,584 614,617 1,208,843 929,210
General
and admin-
istrative
expenses 87,830 59,805 88,797 176,627 118,446
Depreciation
and amor-
tization 87,946 70,982 81,389 169,335 139,170
Depletion 7,913 11,343 13,017 20,930 23,696
Interest
expense 12,168 11,333 8,055 20,223 22,070
Losses on
sales of
long-lived
assets,
impairment
charges and
other expense
(income),
net 4,216 4,223 4,029 8,245 8,094
---------- -------- ---------- ---------- ----------
Total
costs and
other
deductions 794,299 612,270 809,904 1,604,203 1,240,686
---------- -------- ---------- ---------- ----------

Income before
income taxes 349,799 173,849 372,291 722,090 342,952

Income tax
expense:
Current 58,549 1,903 61,425 119,974 14,118
Deferred 57,817 40,141 54,103 111,920 69,615
---------- -------- ---------- ---------- ----------
Income tax
expense 116,366 42,044 115,528 231,894 83,733
---------- -------- ---------- ---------- ----------

Net income $ 233,433 $131,805 $ 256,763 $ 490,196 $ 259,219
========== ======== ========== ========== ==========

Earnings per
share(1)(3):
Basic $ .79 $ .42 $ .82 $ 1.61 $ .84
Diluted $ .77 $ .41 $ .79 $ 1.56 $ .81

Weighted-average
number of
common shares
outstanding(1):
Basic 294,419 314,881 312,990 303,704 309,606
---------- -------- ---------- ---------- ----------
Diluted 304,394 322,425 324,536 314,608 319,992
---------- -------- ---------- ---------- ----------


Adjusted income
derived from
operating
activities
(2) $ 349,455 $173,827 $ 370,505 $ 719,960 $ 345,750
========== ======== ========== ========== ==========

(1) See "Computation of Earnings Per Share" included herein as a
separate schedule.

(2) Adjusted income derived from operating activities is computed by:
subtracting direct costs, general and administrative expenses,
depreciation and amortization, and depletion expense from Operating
revenues and then adding Earnings from unconsolidated affiliates. Such
amounts should not be used as a substitute to those amounts reported
under accounting principles generally accepted in the United States of
America (GAAP). However, management evaluates the performance of our
business units and the consolidated company based on several criteria,
including adjusted income derived from operating activities, because
it believes that this financial measure is an accurate reflection of
the ongoing profitability of our company. A reconciliation of this
non-GAAP measure to income before income taxes, which is a GAAP
measure, is provided within the table set forth immediately following
the heading "Segment Reporting".

(3) On December 13, 2005, our Board of Directors approved a two-for-
one stock split on our common shares to be effectuated in the form
of a stock dividend. The stock split was subject to the approval by
our shareholders of a proposal to amend our Amended and Restated
Bye-Laws to increase the authorized share capital of Nabors by the
creation of additional common shares. This proposal was approved by
our shareholders in a Special Meeting of Shareholders on March 30,
2006. The stock dividend was distributed on April 17, 2006 to
shareholders of record on March 31, 2006. All common share, per share
and stock option amounts have been restated to reflect the effect of
the stock split.


NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30, March 31, December 31,
(In thousands, except ratios) 2006 2006 2005
------------- ---------- ------------
ASSETS
Current assets:
Cash and short-term
investments $ 1,659,088 $ 474,856 $ 1,423,525
Accounts receivable, net 1,007,878 949,524 822,104
Other current assets 370,735 331,690 371,679
------------- ---------- ------------
Total current assets 3,037,701 1,756,070 2,617,308
Long-term investments 349,406 250,413 222,802
Property, plant and
equipment, net 4,563,893 4,156,554 3,886,924
Goodwill, net 370,310 359,955 341,939
Other long-term assets 269,825 167,547 161,434
------------- ---------- ------------
Total assets $ 8,591,135 $6,690,539 $ 7,230,407
============= ========== ============

LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt $ - $ - $ 767,912
Other current liabilities 709,506 688,965 584,544
------------- ---------- ------------
Total current
liabilities 709,506 688,965 1,352,456
Long-term debt 4,002,963 1,252,384 1,251,751
Other long-term liabilities 802,807 936,040 868,060
------------- ---------- ------------
Total liabilities 5,515,276 2,877,389 3,472,267
Shareholders' equity 3,075,859 3,813,150 3,758,140
------------- ---------- ------------
Total liabilities and
shareholders' equity $ 8,591,135 $6,690,539 $ 7,230,407
============= ========== ============
Cash, short-term and long-
term investments $ 2,008,494 $ 725,269 $ 1,646,327

Funded debt to capital ratio:
- Gross 0.57 : 1 0.25 : 1 0.35 : 1
- Net of cash and
investments 0.39 : 1 0.12 : 1 0.09 : 1
Interest coverage ratio: 38.7 : 1 34.9 : 1 28 : 1


NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)

The following tables set forth certain information with respect to our
reportable segments and rig activity:

Three Months Ended Six Months Ended
----------------------------------------------------
June 30, March 31, June 30,
(In thousands, ----------------------------------------------------
except rig 2006 2005 2006 2006 2005
activity) ---------- -------- ---------- ---------- ----------

Reportable
segments:
Operating
revenues and
Earnings from
unconsolidated
affiliates:
Contract
Drilling:(1)
U.S. Lower
48 Land
Drilling $ 468,787 $300,700 $ 426,350 $ 895,137 $ 559,690
U.S. Land
Well-
servicing 168,841 118,776 160,733 329,574 224,889
U.S. Offshore 62,554 45,130 43,526 106,080 83,197
Alaska 24,912 21,955 26,806 51,718 46,723
Canada 120,587 73,530 226,557 347,144 239,857
International 169,147 135,168 146,895 316,042 259,198
---------- -------- ---------- ---------- ----------
Subtotal
Contract
Drilling
(2) 1,014,828 695,259 1,030,867 2,045,695 1,413,554

Oil and Gas(3) 9,703 15,218 29,837 39,540 30,517
Other
Operating
Segments(4)(5) 153,593 81,919 151,703 305,296 157,910
Other
reconciling
items(6) (50,754) (21,855) (44,082) (94,836) (45,709)
---------- -------- ---------- ---------- ----------
Total $1,127,370 $770,541 $1,168,325 $2,295,695 $1,556,272
========== ======== ========== ========== ==========

Adjusted income (loss)
derived from operating
activities:
Contract Drilling:(1)
U.S. Lower 48
Land Drilling $ 212,696 $101,813 $ 179,731 $ 392,427 $ 175,272
U.S. Land Well-
servicing 47,435 26,401 46,070 93,505 45,829
U.S. Offshore 23,667 12,498 10,454 34,121 19,509
Alaska 3,384 4,159 4,242 7,626 10,131
Canada 19,873 470 83,102 102,975 46,238
International 50,500 32,558 37,497 87,997 62,325
---------- -------- ---------- ---------- ----------
Subtotal
Contract
Drilling(2) 357,555 177,899 361,096 718,651 359,304

Oil and Gas(3) (584) 2,869 13,436 12,852 3,743
Other Operating
Segments(4)(5) 18,469 7,569 20,567 39,036 12,631
Other reconciling
items(7) (25,985) (14,510) (24,594) (50,579) (29,928)
---------- -------- ---------- ---------- ----------
Total 349,455 173,827 370,505 719,960 345,750
Interest expense (12,168) (11,333) (8,055) (20,223) (22,070)
Investment income 16,728 15,578 13,870 30,598 27,366
Losses on sales
of long-lived
assets, impairment
charges and
other income
(expense), net (4,216) (4,223) (4,029) (8,245) (8,094)
---------- -------- ---------- ---------- ----------
Income before
income taxes $ 349,799 $173,849 $ 372,291 $ 722,090 $ 342,952
========== ======== ========== ========== ==========

Rig activity:
Rig years:(8)
U.S. Lower 48
Land Drilling 255.2 229.3 253.4 254.3 225.9
U.S. Offshore 18.0 17.2 14.9 16.5 16.4
Alaska 7.8 6.8 7.2 7.5 6.7
Canada 37.9 26.2 73.3 55.5 46.1
International(9) 93.2 83.4 86.3 89.7 79.3
---------- -------- ---------- ---------- ----------
Total rig
years 412.1 362.9 435.1 423.5 374.4
========== ======== ========== ========== ==========
Rig hours:(10)
U.S. Land Well-
servicing 318,961 308,718 311,768 630,729 605,329
Canada Well-
servicing 61,648 60,297 121,224 182,872 174,633
---------- -------- ---------- ---------- ----------
Total rig
hours 380,609 369,015 432,992 813,601 779,962
========== ======== ========== ========== ==========


(1) These segments include our drilling, workover and well-servicing
operations, on land and offshore.

(2) Includes Earnings (losses) from unconsolidated affiliates,
accounted for by the equity method, of $4.1 million, $1.2 million and
$.69 million for the three months ended June 30, 2006 and 2005 and
March 31, 2006, respectively, and $4.8 million and $1.9 million for
the six months ended June 30, 2006 and 2005, respectively.

(3) Represents our oil and gas exploration, development and production
operations.

(4) Includes our marine transportation and supply services, drilling
technology and top drive manufacturing, directional drilling, rig
instrumentation and software, and construction and logistics
operations.

(5) Includes Earnings (losses) from unconsolidated affiliates,
accounted for by the equity method, of $5.3 million, $4.0 million and
$3.7 million for the three months ended June 30, 2006 and 2005 and
March 31, 2006, respectively, and $9.0 million and $5.3 million for
the six months ended June 30, 2006 and 2005, respectively.

(6) Represents the elimination of inter-segment transactions.

(7) Represents the elimination of inter-segment transactions and
unallocated corporate expenses.

(8) Excludes well-servicing rigs, which are measured in rig hours.
Includes our equivalent percentage ownership of rigs owned by
unconsolidated affiliates. Rig years represents a measure of the
number of equivalent rigs operating during a given period. For
example, one rig operating 182.5 days during a 365-day period
represents 0.5 rig years.

(9) International rig years include our equivalent percentage
ownership of rigs owned by unconsolidated affiliates which totaled 4.0
years during the three months ended June 30, 2006, June 30, 2005 and
March 31, 2006, and 4.0 years and 3.9 years during the six months
ended June 30, 2006 and 2005, respectively.

(10) Rig hours represents the number of hours that our
well-servicing rig fleet operated during the period.


NABORS INDUSTRIES LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)

A reconciliation of the numerators and denominators of the basic and
diluted earnings per share computations is as follows:

Six Months
Three Months Ended Ended
--------------------------------------------
June 30, March 31, June 30,
(In thousands, except --------------------------------------------
per share amounts) 2006 2005 2006 2006 2005
-------- -------- -------- -------- --------

Net income (numerator):
Net income $233,433 $131,805 $256,763 $490,196 $259,219
Add interest expense
on assumed conversion
of our zero coupon
convertible/ exchangeable
senior debentures/notes,
net of tax:
$2.75 billion due
2011(1) - - - - -
$1.381 billion due
2021(2) - - - - -
$700 million due
2023(3) - - - - -
-------- -------- -------- -------- --------
Adjusted net income -
diluted $233,433 $131,805 $256,763 $490,196 $259,219
-------- -------- -------- -------- --------

Earnings per share:
Basic $ .79 $ .42 $ .82 $ 1.61 $ .84
Diluted $ .77 $ .41 $ .79 $ 1.56 $ .81

Shares (denominator):(4)
Weighted-average
number of shares
outstanding - basic(5) 294,419 314,881 312,990 303,704 309,606
Net effect of dilutive
stock options,
warrants and
restricted stock
awards based on the
treasury stock method 9,975 7,544 10,986 10,344 10,386
Assumed conversion of
our zero coupon
convertible/exchangeable
senior debentures/notes:
$2.75 billion due
2011(1) - - - - -
$1.381 billion due
2021(2) - - - - -
$700 million due
2023(3) - - 560 560 -
-------- -------- -------- -------- --------
Weighted-average
number of shares
outstanding - diluted 304,394 322,425 324,536 314,608 319,992
-------- -------- -------- -------- --------

(1) Diluted earnings per share for the three and six months ended June
30, 2006 do not include any incremental shares issuable upon the
exchange of our $2.75 billion senior exchangeable notes. The number of
shares that we would be required to issue upon exchange consists of
only the incremental shares that would be issued above the principal
amount of the notes, as we are required to pay cash up to the
principal amount of the notes exchanged. We would only issue an
incremental number of shares upon exchange of these notes, and such
shares are only included in the calculation of the weighted-average
number of shares outstanding in our diluted earnings per share
calculation, when the price of our shares exceeds $45.83 on the last
trading day of the quarter, which did not occur during the quarter
ended June 30, 2006. The $2.75 billion notes were issued during the
quarter ended June 30, 2006 and had no effect on prior period's
earnings per share.

(2) Diluted earnings per share for the three and six months ended
June 30, 2006 and the three months ended March 31, 2006 excludes
approximately 1.2 million potentially dilutive shares initially
issuable upon the conversion of our $57 million zero coupon
convertible senior debentures. Diluted earnings per share for the
three and six months ended June 30, 2005 exclude approximately 17.0
million potentially dilutive shares initially issuable upon the
conversion of these debentures. Such shares did not impact our
calculation of dilutive earnings per share for those quarters as we
are required to pay cash up to the principal amount of any debentures
converted. We would only issue an incremental number of shares upon
conversion of these debentures, and such shares would only be included
in the calculation of the weighted-average number of shares
outstanding in our diluted earnings per share calculation if the price
of our shares exceeded approximately $49.

(3) Diluted earnings per share for the three months ended June 30,
2006 and 2005 do not include any incremental shares issuable upon the
exchange of our $700 million zero coupon senior exchangeable notes.
The number of shares that we would be required to issue upon exchange
consists of only the incremental shares that would be issued above the
principal amount of the notes, as we are required to pay cash up to
the principal amount of the notes exchanged. We would only issue an
incremental number of shares upon exchange of these notes, and such
shares are only included in the calculation of the weighted-average
number of shares outstanding in our diluted earnings per share
calculation, when the price of our shares exceeds $35.05 on the last
trading day of the quarter, which was the case for the applicable
measurement period for the three months ended March 31, 2006 and the
six months ended June 30, 2006.

(4) On December 13, 2005, our Board of Directors approved a two-for-
one stock split on our common shares to be effectuated in the form of
a stock dividend. The stock split was subject to the approval by our
shareholders of a proposal to amend our Amended and Restated Bye-Laws
to increase the authorized share capital of Nabors by the creation of
additional common shares. This proposal was approved by our
shareholders in a Special Meeting of Shareholders on March 30, 2006.
The stock dividend was distributed on April 17, 2006 to shareholders
of record on March 31, 2006. All common share, per share and stock
option amounts have been restated to reflect the effect of the stock
split.

(5) Includes the following weighted-average number of common shares of
Nabors and weighted-average number of exchangeable shares of Nabors
Exchangeco (Canada) Inc., an indirect wholly-owned Canadian
subsidiary of Nabors, respectively: 294.2 million and .2 million
shares for the three months ended June 30, 2006; 314.5 million and .4
million shares for the three months ended June 30, 2005; 312.8 million
and .2 million shares for the three months ended March 31, 2006; 303.5
million and .2 million shares for the six months ended June 30, 2006
and 309.2 million and .4 million shares for the six months ended June
30, 2005. The exchangeable shares of Nabors Exchangeco are
exchangeable for Nabors common shares on a one-for-one basis, and have
essentially identical rights as Nabors Industries Ltd. common shares,
including but not limited to voting rights and the right to receive
dividends, if any.