Fitch Rates $575MM Nabors Sr. Note Offering 'A-'; Outlook Stable

Business Wire, Feb 15, 2008

NEW YORK -- Fitch Ratings has assigned an 'A-' rating to the recently announced note offering by Nabors Industries, Inc. (Nabors). In addition, Fitch has affirmed the following ratings on Nabors:

--Issuer Default Rating (IDR) at 'A-';

--Senior unsecured at 'A-';

--Convertible debentures at 'A-'.

Fitch also affirmed the rating of Nabors Industries, Ltd. (the parent company of Nabors Industries, Inc.):

--IDR at 'A-'.

The Rating Outlook is Stable.

Nabors' ratings continue to be supported by the company's conservative management team and the size, diversity and quality of the company's fleet of drilling and workover rigs. Nabors has a solid history of maintaining a robust credit profile throughout industry cycles. The company's ability to maintain its credit profile is supported by its significant cash balances and the flexibility to reduce capital expenditures and generate significant free cash flows during weak market conditions. In addition, the future outlook for the company is currently supported by the robust international land and offshore drilling markets.

Offsetting factors include the weak North American land drilling market which is highly correlated with U.S. natural gas prices. Fitch also continues to monitor cash balances at the company following the significant drawdown in cash balances during the fourth quarter of 2007. Cash balances have steadily fallen for the past two years as the company invested heavily in both capital expenditures for new rigs and investments in the Nabors First Reserve (NFR) joint venture. While Fitch anticipates significantly lower capital expenditures during 2008, upward pressure on capital expenditures remain as the company looks to expand its international operations. In addition, Nabors repurchased over $100 million of stock during the fourth quarter and the potential for additional share repurchases remains if the stock price weakens materially. Management currently has authority to repurchase approximately $300 million of stock under the previously authorized $400 million repurchase program.

Fitch currently considers Nabors to be at the weak end of the current rating category and as a result will monitor the company's performance during 2008. During 2008, Fitch expects Nabors to be free cash flow positive resulting in higher levels of cash and marketable securities and therefore reduced net debt levels. Expectations of increased cash balances include the company continuing to fund international growth opportunities, investments in the NFR joint venture, and changes in the company's capital structure. Changes in the capital structure stem from the current senior note offering of $575 million and the potential put/call of the $700 million convertible note offering in June and are expected to result in reduced debt balances by year-end. Based on Fitch's expectations for increased cash balances and falling debt levels, leverage as measured by net debt-to-EBITDA should improve during the year.

Credit metrics for the latest 12 months ending Dec. 31, 2007 are based on estimated EBITDA of $1.738 billion, and provided interest coverage of approximately 27.5 times (x) and leverage, as measured by debt-to-EBITDA of approximately 2.3x. Fitch estimates net debt-to-EBITDA for Nabors at 1.7x. Liquidity remains strong with $1 billion of cash and equivalents on hand.

Nabors is the largest North American land drilling contractor with a fleet of approximately 535 land drilling units and 737 land workover and well-servicing rigs. In addition to its large land fleet, Nabors owns a sizable offshore fleet consisting of 35 platform rigs, 12 jackup units and four barge rigs. Nabors also owns businesses which manufacture top drives and drilling instrumentation systems, and provide oilfield hauling, engineering, construction and project management services.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.