NABORSNABORS INDUSTRIES,INDUSTRIES, INC.INC.

AADEAADE LuncheonLuncheon Nabors…ThenNabors…Then andand NowNow

FebruaryFebruary 7,7, 20022002

1 NABORS….THEN AND NOW

1987 2001/2002 Global Revenues $33 Million $/1.5 Billion Net Income ($21 Million) $360 Million Earnings Per Share ($5.90) $2.24 Worldwide Rig Count 45 1,350 Worldwide Employment 1,250 21,000/13,500 Market Capitalization $35 Million $10/5 Billion

Shareholders Equity ($27 Million) $1.8 Billion Cash & Equivalent $6 Million $1.0 Billion Return on Capital N/A 18%

Credit Ratings - S&P A-, Moodys A3 Incorporated into S&P 500 Index in October 2000 2 REVENUE VERSUS ACQUISITIONS

$2,200,000 11/01: COMMAND $2,000,000

$1,800,000 11/97: VECO & DIAMOND “L” ??? $1,600,000 8/97: CLEVELAND

$1,400,000 4/97: SAMSON RIG CO., CHELSEY PRUET, ADCOR-NICKLOS $1,200,000

12/99: POOL $1,000,000 12/96: EPOCH 11/96: NOBLE LAND FLEET 4/99: BAYARD $800,000 3/96: EXETER 1/95: DELTA DRILLING $600,000 10/94: SUNDOWNER 5/98: CAN- TEX & NEW 6/93: GRACE DRILLING PROSPECT $400,000 6/98: MMI 11/90: HENLEY DRLG 4/94: MND DRILLING $200,000 2/90: LOFFLAND BROS. 1991: CANRIG 1989: WESTBURNE $0 3 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 CUMULATIVE CAPITAL EXPENDITURES

($ in Millions) $3,500 $3,000

$2,500 Internal Investments $2,000 $1,500 $1,000 Acquisitions $500 $0 3 5 9 9 9 9 1999 2001 1 1 1997 1987 1989 1991 4 REINVESTING AGGRESSIVELY

($ Millions) 19981998 19991999 20002000 20012001 NewNew ConstructionConstruction $51$51 $5$5 $65$65 EnhancementsEnhancements $105$105 $16$16 $79$79 AcquisitionsAcquisitions $53$53 $591$591 $28$28 SustainingSustaining $104$104 $55$55 $129$129 TotalTotal $313$313 $668$668 $301$301 $785$785

TotalTotal $2.1$2.1 BillionBillion 5 CONSISTENT STRATEGY AND RESULTS

¾¾GrowGrow andand RemainRemain ProfitableProfitable inin AnyAny ExternalExternal EnvironmentEnvironment

¾¾MaintainMaintain aa VeryVery StrongStrong BalanceBalance SheetSheet

¾¾BuildBuild aa DiverseDiverse PortfolioPortfolio ofof MarketMarket PositionsPositions ¾¾ControlControl CostCost andand LeverageLeverage LowLow CostCost AssetsAssets

¾¾UseUse FinancialFinancial StrengthStrength andand CriticalCritical MassMass toto GainGain CompetitiveCompetitive AdvantagesAdvantages

¾¾Enhance Position with Major Customers Enhance Position with Major Customers 6 NABORS GLOBAL MARKETS

Alaska 21 Offshore Rigs: 53 GOM Int’l 52 Platform – Workover 21 6 Platform – Drilling 10 2 US 48 Drilling Jack ups 9 2 Active 290 Other 3 - Inventory 112 International: 108(1) Rigs Operating in: Total US 48 Drilling 402 Middle East Latin America US Land Workovers Active 492 Caspian Brazil Inventory 248 Bolivia Total 740 Columbia UAE Offshore Vessels Yemen Trinidad 200’ Deepwater DP 10 160’ – 200’ PSV’s 14 Other Mini Supply 6 Top Drives, Instrumentation, Rig Moving, 30 Fluid Management, & Construction 7 (1) Nabors Net Interest @ 50% of J.V. Rigs in Saudi Arabia TODAY’S BUSINESS ENVIRONMENT

¾¾TighteningTightening Supply/DemandSupply/Demand BalancesBalances ••Commodities,Commodities, RigsRigs andand ServicesServices ¾¾ShorterShorter CyclesCycles -- HigherHigher Highs,Highs, HigherHigher LowsLows ••RigRig Counts,Counts, MarginsMargins andand EarningsEarnings ¾¾ConsolidatingConsolidating IndustryIndustry ••Operators,Operators, ContractorsContractors andand SuppliersSuppliers ¾¾ImprovingImproving SafetySafety andand EfficiencyEfficiency ••Emphasis,Emphasis, InvestmentsInvestments andand TechnologicalTechnological AdvancesAdvances ¾¾ImprovingImproving FinancialFinancial ProfilesProfiles ••CashCash Flows,Flows, ReturnsReturns onon CapitalCapital andand BalanceBalance SheetsSheets 8 BUY WHEN INTERMEDIATE-TERM CATALYSTS ARE VISIBLE

•• GasGas marketmarket willwill tightentighten inin Q102Q102 – YOY supply will be down sharply – YOY demand will be up…Yes, UP! – Inventories still ugly but trends are bullish •• OilOil isis lessless visiblevisible butbut stillstill positivepositive – Cuts will probably happen January 1 – Will economy turn up? – Middle East wild cards

9 9 MACRO FACTORS – GLOBAL OIL

NEGATIVES:NEGATIVES: ¾¾WeakWeak GlobalGlobal EconomyEconomy ¾¾ShoulderShoulder MonthsMonths ApproachingApproaching ¾¾OPEC/NonOPEC/Non OPECOPEC ProductionProduction

POSITIVES:POSITIVES: ¾¾PoliticalPolitical RiskRisk ¾¾MaturingMaturing FieldsFields ¾¾CycleCycle TimesTimes 10 MACRO FACTORS – NORTH AMERICA NATURAL GAS

DemandDemand Factors:Factors: -- ElectricElectric GenerationGeneration -- EconomicEconomic GrowthGrowth -- EnvironmentalEnvironmental DesirabilityDesirability -- NaturalNatural GasGas PricingPricing

SupplySupply Factors:Factors: -- HighHigh DeclineDecline RatesRates -- DeeperDeeper LessLess AccessibleAccessible ProspectsProspects -- RegulatoryRegulatory IssuesIssues -- LeadLead timestimes RequiredRequired forfor StrandedStranded GasGas -- NaturalNatural GasGas PricingPricing

11 TODAY’S U.S. GAS PRODUCTION IS REPLAY OF 1970’S OIL PRODUCTION

U.S. Gas Rig Count vs. RJ Estimated Gas Production 1200 55 54 1100 Forecast U.S. Gas Production 1000 53 52 900 51 800 Rigs 50

Rigs 700 49 600 Bcf/d 48 500 47 400 U.S. Gas Rig Count 46 Bcf/d 300 45 3/01 6/01 9/01 3/00 6/00 9/00 3/99 6/99 9/99 3/98 6/98 9/98 3/97 6/97 9/97 12/01 12/00 12/99 12/98 12/97 12/96 3/02E 6/02E 9/02E Source: DOE, BHI, RJ&A Est. 12/02E

12 12 MARKET STATUS & OUTLOOKS

Alaska: ↑ Exploration and Development Canada: ↑ ↑ Lower Utilization but Higher Margins Command Drilling Acquisition International: ↑ ↑ ↑ 16 Rigs Since July 01, 2–4 More 1Q02 Offshore GOM: → Platform Workovers ↑ Platform Re-entry/Re-Drilling → Platform Drilling → Jackups US Well Service: ↓ Lower Utilization and Margins Marine Transport: → 180’ PSV Weak, Super 200’s Strong

US Lower 48 Drilling: ↓ Utilization Near Bottom Prices Averaging Down 13 MANAGING VOLATILITY - CONSTANT FOCUS PEOPLE, IRON, & MONEY

¾¾ImprovingImproving Safety,Safety, Productivity,Productivity, andand EfficiencyEfficiency ¾¾ImprovingImproving QualityQuality andand ReliabilityReliability ¾¾WorkforceWorkforce TrainingTraining andand HighHigh GradingGrading ¾¾CustomerCustomer ServicesServices −−MarketMarket ShareShare withwith BestBest CustomersCustomers −−MultipleMultiple MarketMarket AvailabilityAvailability −−ExpandingExpanding BreadthBreadth ofof ServicesServices ¾¾PlannedPlanned && OpportunisticOpportunistic InvestmentsInvestments

14 U.S. RIG FLEET & ACTIVITY

Fleet 300 402

Jul/01 – 260 rigs 290 Nov/97 – 203 rigs 240 190 140 Current – 110 rigs 90 Mar/99 – 71 rigs 40 NDUSA Avg. Active Rigs Active Avg. NDUSA

96 96 97 97 98 98 99 99 00 00 01 01 02 ------l l l l l l n n n n n n n u u u a u a a a a u a u a J J J J J J J J J J J J J

15 MEETING THE PERSONNEL CHALLENGE NABORS US LOWER 48 DRILLING EMPLOYEES 9000 8000 8,200 7000 7,654 7,108 6000 6,444

5,386 5000 5,183

4000 3,888 3,736 3,745 3000 3,477 2,489 2000 2,086 2,242 1000 0

1Q99 99 9 2Q 9 3Q 4Q99 00 1Q 2Q00 16 3Q00 00 4Q 1Q01 2Q01 01 1 3Q 0 02 4Q / 1/31 OPERATING EFFICIENTLY NABORS’ US LAND SAFETY PERFORMANCE

16

14

12

IADC INCIDENTS (1) 10 NABORS’ INCIDENTS (11.96)

8 8.89

6 IADC LTA 4 (1) (3.20) 3.353.35 2 Incident Rate Per 200K MH 200K Per Rate Incident 2.19

0 NABORS’ LTA 0.370.37 1994 1995 1996 1997 1998 1999 2000 2001

NABORS TR IADC TR NABORS LTA IADC LTA

(1) IADC Rate without Nabors 17 Source: International Association of Drilling Contractors “IADC” Statistical Data RIG SAFETY MILESTONES

NumberNumber ofof RigsRigs TimeTime SinceSince LastLast Recordable Recordable LTA LTA >> 66 MonthsMonths 172 172 241 241 >> 11 YearYear 90 90 209 209 >> 22 YearsYears 26 26 149 149 >> 33 YearsYears 9 9 94 94

18 SUMMARY

¾¾VolatilityVolatility inin CommodityCommodity PricesPrices andand OilfieldOilfield ServicesServices ActivityActivity willwill Continue.Continue.

¾¾IndustryIndustry FocusFocus onon CostsCosts willwill ProbablyProbably LeadLead toto FurtherFurther ConsolidationConsolidation andand ProductivityProductivity Investments.Investments.

¾¾MoreMore HigherHigher SpecificationSpecification RigsRigs willwill LikelyLikely bebe NeededNeeded toto IncreaseIncrease NorthNorth AmericanAmerican GasGas Supply.Supply.

¾¾ImprovedImproved IndustryIndustry FinancialFinancial ConditionCondition willwill FacilitateFacilitate QuickQuick ReboundRebound withwith ImprovingImproving Fundamentals.Fundamentals. 19 NABORSNABORS INDUSTRIES,INDUSTRIES, INCINC. 20