Net Income was $194.4 million ($0.67 per diluted share) for the current quarter compared to $228.3 million ($0.79 per diluted share) in the second quarter of last year and $230.5 million ($0.81 per diluted share) in the first quarter of this year.

Operating revenues and Earnings from unconsolidated affiliates was $1.28 billion in the current quarter compared to $1.14 billion in the second quarter of last year and $1.30 billion in the first quarter of this year. For the six months ended June 30, 2008, adjusted income derived from operating activities was $553.1 million compared to $620.6 million in the first six months of 2007. Net income for the first six months of 2008 was $424.9 million ($1.48 per diluted share) compared to $490.5 million ($1.71 per diluted share) in the first six months of 2007. Operating revenues and Earnings from unconsolidated affiliates for the first six months of 2008 rose to $2.57 billion, up from $2.39 billion for the first six months of 2007.

"Our second quarter saw a dramatic and rapid turnaround in activity and in the outlook for our North American businesses," said Gene Isenberg, Nabors Chairman and CEO, "although non-operational items obscured bottom line results. It is now clear that our operating income bottomed out in the second quarter and the outlook for the second half and beyond is improving more rapidly than we had anticipated.

"The quarter's net income and per share results were reduced by approximately six cents per diluted share as a result of an adjustment to our full year estimated taxes ($0.03), an accounting rules dictated increase in diluted shares ($0.01), and the non-cash mark-to-market loss on certain forward hedges in our First Reserve E&P joint venture entities ($0.02).

"Operationally, we achieved improving sequential results in every significant business unit except for Canada and Alaska, which were down seasonally although less than anticipated. The most significant evidence of the turn around in our businesses is demonstrated by more than 20 term contract commitments for additional new-built rigs that we received since last quarter, the preponderance of which were secured by our US Lower 48 Land Drilling unit. There are also a large number of additional term commitments pending. We have recently placed an order with National Oilwell Varco for a number of their Rapid Rigs, which we feel are ideally suited for the shallower shale plays that are increasingly active.

"In our US Lower 48 Land Drilling unit we have seen the working rig count increase by 31 rigs over our first quarter average. Our US Lower 48 rig count now stands at 257 rigs after averaging 242.3 rigs in the second quarter and to 225.7 in the first quarter. Our second quarter average margins were essentially flat sequentially at $8,900 per rig day. This is a combination of lower but higher than expected margins on renewing term contracts, offset by idle rigs returning to work at improving rates and the attainment of full margins on our 75 new rigs deployed to date. Our new PACE rigs continue to set records in virtually every area in which they operate and the magnitude of this quarter's new build commitments and the higher rates they are commanding substantiates their value.

"Our US Offshore operations experienced a very good quarter as income rebounded sharply from the lackluster first quarter. This primarily was due to more consistent utilization of our jackups and $1.6 million (pre-tax) in business interruption insurance associated with the Barge Rig 100 fire last summer. Rates and activity are improving and it appears that the current strong environment will continue for the foreseeable future. We do not expect to see the substantial slowdown in third quarter activity that has characterized the last two hurricane seasons. Rather we are seeing opportunities for additional rigs and interest is increasing for longer-term contract commitments.

"Although our US Well Servicing unit is not doing well, we still posted a slightly improved quarter on higher hours. This market is improving and we have recently instituted price increases in most regions in which we operate. We are regaining market share in certain markets where price competition has been acute and we expect further gains over the next two quarters. Customer recognition of the inherent advantages of the new technology that is incorporated in our Millennium rigs is increasing broadly. We will take delivery of 10 of the 400 horsepower version of these Millennium rigs during the second half of this year, with potential for another 90 thereafter.

"Our International unit posted a significant sequential improvement and expects to achieve much larger sequential increases over the next two quarters. The quarter was aided by $3.9 million (pre-tax) in business interruption insurance for one of our small jackups that incurred flooding damage during mobilization last fall. The largest increase will come from the full impact of our new jackup rig 660, which incurred delays and start up issues which hurt its second quarter contribution. This is followed by the start-up of jackup rig 657 in early July and the full contribution of four other land rigs that commenced in the first half, all of which also had some delays that impacted the second quarter. All of these rigs are now operating satisfactorily and contributing as expected. Six other land rigs are set to commence operations during the third quarter, with potentially as many as 13 other rigs in the fourth quarter. The international outlook remains strong in virtually every region and new rig possibilities continue to materialize. We still anticipate an increase in operating income of approximately 40% over 2007's results.

"Alaska was down slightly as the winter exploration season wound down early in the quarter. This market is seeing healthy increases in activity and rates both in and away from the established producing fields on the North Slope and in the Cook Inlet. We expect to see a large increase in income contribution over the next two years, albeit from a small base as several incremental development projects commence and exploration activity increases. Results will be bolstered by two new built Heli-portable rigs which commenced operations near the start of 2008, and by two legacy rigs which are receiving standby revenue while being upgraded and refurbished for long term contracts. Our new Coiled Tubing/Stem drilling rig, which is the only such rig capable of drilling to 15,000 feet, will commence operations in early 2009 and we have two proposals pending for additional multi-year contracts.

"As anticipated, Canada experienced the worst quarter in its history during this year's spring thaw, although it was modestly better than we had expected. The outlook has improved substantially over the last two months, although it is still too early to be definitive regarding the timing and extent of the recovery. To date the third quarter has been plagued by wetter than normal weather, with approximately 30 rigs currently waiting to commence contracts. The extent of future activity in Alberta is still dependant upon modifications to the provincial royalty increases there which are set to commence in 2009 and which have driven several operators to deploy capital elsewhere. Meanwhile, in British Columbia we are seeing rapidly accelerating activity, particularly in the new shale plays of Horn River and Montney. We have a large number of both new and legacy rig commitments for these and other emerging shale plays in other areas of Canada and we are currently negotiating commitments for several more. We will also soon deploy one of our new Heli- portable rigs for what looks to be year-around work in Horn River, where no roads currently exist and where access has heretofore been limited to winter only.

"Our Other Operating Segments posted a very good quarter and continues to enjoy a very strong outlook. The primary contributor to this unit's performance was our Canrig entity where sales are increasing significantly, particularly to third parties. Our instrumentation and data management entity and our directional drilling unit also posted very good results despite the seasonally weak Canadian market. Our 50% owned Alaskan construction and logistics joint ventures contributed less significantly due to the customary spring quarter drop off in activity and income.

"I remain very pleased with the performance of our oil and gas entities, although operating income results will not be evident until the latter part of the year. Even though we have experienced accounting losses associated with the commodity price hedges we have in place, they are providing us with exactly what we envisioned, that being higher than expected returns while substantially eliminating downside risk. We continue to find very attractive investment opportunities and we have acreage holdings in most of the emerging North American shale plays. Not only is this business poised to contribute significantly in the near future, it is providing us with valuable insight to better target our rig marketing activities.

"Earlier today, we closed on the issuance, through a wholly owned subsidiary, an additional $400 million of our 6.15% Senior Notes due 2018. The notes were issued at an offering price of 97.192%, plus accrued interest from February 20, 2008. This was an additional placement of the $575 million in notes we issued in February of this year. This brings to $975 million the aggregate total of these notes which are fully and unconditionally guaranteed by Nabors Industries Ltd. These notes will provide financing for what we think will be a large and profitable investment program for new built rigs and other attractive capital expenditures.

"Our expectations for 2009 are increasing although we will be subject to a recent non-cash, non-operational, accounting rule change regarding convertible debt which will effect our net income and earnings per share starting with the beginning of 2009. This rule will require us to record non-cash interest expense on our 0.94% coupon convertible debt due 2011 in an amount equal to the extent that the actual coupon represents a discount to our estimated borrowing rate for conventional debt at the time the convertible notes were issued. We will also be required to restate three years of results for any convertible issues that were outstanding during that period. The offsetting entry will be to treat the lower coupon as a debt discount on our balance sheet and to accrete the value of the debt as the non-cash interest expense is recorded. This change will have no effect on the real economic results of our business but will obviously affect our reported GAAP earnings.

"I remain convinced of the strength of the North American gas markets, short-term volatility notwithstanding. Gas remains the most attractive fuel and there is minimal likelihood that LNG will be a negative price factor in these markets for the foreseeable future. This puts Nabors in an advantageous position to prosper going forward across all of our North American business lines and, when coupled with the ongoing strength and growing market share we enjoy internationally, promises a very bright future."

The Nabors companies own and operate approximately 548 land drilling and approximately 749 land workover and well-servicing rigs in North America. Nabors' actively marketed offshore fleet consists of; 36 platform rigs, 13 jackup units and 4 barge rigs in the United States and multiple international markets. In addition, Nabors manufactures top drives and drilling instrumentation systems and provides comprehensive oilfield hauling, engineering, civil construction, logistics and facilities maintenance, and project management services. Nabors participates in most of the significant oil, gas and geothermal markets in the world. -- www.cnxmarketlink.com