SUPERIOR WELL SERVICES

Although we acquired Superior Well Services late in the third quarter, it rapidly became a valued and integral part of Nabors and still contributed significantly to results. Fourth quarter operating income of approximately $55 million was a company record in spite of the seasonally low December. A major ramp-up in horizontal drilling, particularly in the new oil shales, led to increased activity throughout the year and a shortage of pumping equipment fueled an improved pricing environment.

Superior continues to enhance its reputation as an innovator in the industry. The company recently won both Hart Energy E&P Magazine’s Meritorious Award for Engineering Excellence and World Oil Magazine’s Best-In-Class recognition for its Gamma Frac System, a fluid that does not break down when exposed to salt.

Superior is already benefitting from exposure to the Nabors culture of safety. New gloves and standardized footwear are being tested and should quickly contribute to fewer hand and foot injuries, leading to an improved safety record.

The outlook for 2011 is for another significant improvement in results as pumping services remain in short supply. The integration with Nabors has allowed Superior to expand pumping capacity by approximately 80 percent to better participate in this growing market. The first of the new crews will commence operations in March, with one added each month through the end of the year.

Superior is expanding into a new service line with the addition of 12 coiled tubing units that will deliver in 2011 and 2012. The development of drillable plugs for use in multi-stage fracturing of horizontal wells should also contribute to results.

Superior continues to look at ways to improve fracturing efficiency with a goal of increasing the number of stages that can be completed in a given period of time. The company is also ramping up its safety and training programs and improving the way it services high-tech equipment on location, thereby reducing downtime. Superior will also leverage the Nabors global footprint to expand more rapidly into new markets domestically, along with selected international markets, and will also benefit from synergies with Nabors Well Services and Nabors Drilling USA.