Dennis Smith - Director ofCorporate Development Gene Isenberg - Chairman &CEO Joe Hudson - President of ND-USA Jim Payne - Chairman and CEO ofShona Energy Company, LLC

Arun Jayaram - Credit Suisse Marshall Adkins - Raymond James Mike Urban - Deutsche Bank Dan Pickering - PickeringEnergy Partners Geoff Kieburtz - Citigroup Kevin Simpson - Miller Tabak Roger Read - Natexis Bleichroeder Robert MacKenzie - FBR Ben Dell - Bernstein

Good morning, my name is Jakiaand I will be your conference operator today. At this time, I would like towelcome everyone to the Nabors Industries Ltd Third Quarter Conference Call.All lines have been placed on mute to prevent any background noise. After thespeaker's remarks, there will be a question-and-answer period. (OperatorInstructions) Thank you. It is now my pleasure to turn thefloor over to your host, Mr. Dennis Smith, Director of Corporate Development.Sir, you may begin your conference.

Thank you Jakia and good morningeveryone and welcome to our third quarter conference call. The usual formatthat we have always followed, we will do again today. Gene will give abouttwenty to thirty minutes of review of the quarter and the best view we haveright now, and I can give you a current outlook for fourth quarter and for therest of the year and for 2008. Of course this presentationconstitutes forward-looking statements, I want to remind everybody as such.Besides the changes we have demonstrated many times in the past, we areanxiously waiting for the change to the positive side. Also with us today as usual, isTony Petrello, our President, Chief Operating Officer; Bruce Koch, our ChiefFinancial Officer, who stays in our general counsel, and all the heads of ourmost significant business units are here as well. We've again posted a series ofslides on the website under www.nabors.com, including investor information, anevents calendar that you can use, and Gene will be highlighting a few others ashe talks about particularly international as we get a little farther into theremarks. With that I'll turn it over toGene to get started.

Thank you. Welcome to ourconference call. As usual, as Denny just said, we posted on the Nabors websitea series of slides, that contain details about the performance, and you mightget those ready to be referred to. I'll reserve my comments. What I think youexpect to hear from me namely is the bigger picture, the overall picture,what's happening now? What we expect to happen in the foreseeable and in ournear-term future. Let me first begin by commentingon our pre-announcement. At that time, we indicated earnings per share of $0.73to $0.76 compared to a first half consensus at that time of $0.82. Our finalresults came in at the high end of the range, and operating income for thequarter was $287.3 million, which represented a slight increase over the priorquarter, but the compelling fact was that it was a 22% decrease over the samequarter in 2003. The quarter included foursignificant below-the-operating line items, and let me discuss each of these.First, we experienced the net loss in investment income of $27.5 million, withmost of this occurring in August, when the various debt markets becameparticularly distressed. We believe these losses are largely behind us, we'veessentially gotten out as quickly as we can, of all the debt-related and highdata investments, and by the end of the year, we will be pretty close to wherewe would like to be longer term. The second significant item wasthe loss of $30.5 million on the other income line; this is primarily due tonon-cash impairment charges against equipment, which no longer meets thecriteria providing a positive return over the near term or the visible term. We've been doing this fromtime-to-time regularly in the past. I would like to point out this $30.5million doesn't affect anything except the book value of our remaining rigs andcomponents doesn't affect our earnings power that has no meaningful impact inany significant ways. More than offsetting the otherincome losses were reversal of tax reserves to $38 million. This is prettysignificant and we faired pretty well on these items and we also faired prettywell on items which we didn't yet reserve for. In general, we are doing prettywell on income taxes and the outlook looks better than it has on that front fora while. Finally, you'll note that this partas a result, included income from discontinued operations, this is the resultof the long heralded and legally necessary sale of both businesses. Thistransaction resulted in pre-tax booking of nearly $15 million. And we ended up,even though we have necessary service by the end of [August '07], I think itwas a good sale. It may turn out that we were forced to do something that atthe end of the day we feel better than if we had an option and kept it. Let me quickly go over as quicklyas I can, go over the units. Canadais pretty crummy no matter how you look at it. It did show improvement in thesecond quarter compared to the first quarter, but it would have been, as youprobably know, less money in the preceding quarter. This was still 60% belowlast year and I think even for the year, we'll end up probably 50% last year,which I could say there is something visible on the horizon but there isn't sothere is no visible upside in sight. However, we won't do this toooften. In a way analytically, you can make the case that in the ways of rapiddecline in drilling and clear evidence already of accelerating clientreduction, and also general knowledge of what's going on in the heavy oil andtar sands, it is pretty much predictable that will for sure have a reversal ofthose trends in the not too distant future even though we can't do all projectswell. Lower 48, again, this was thelargest sequential decrease we had quarter-to-quarter in all of our units.However, we believe the rates decrease in the subsequent quarters will besubstantially less as the impact of new rigs face full effect and also theother important thing is, you bring a new rig on, you have higher cost,breaking it in so to speak than when it is actually operating and that also isgoing to have a mitigating effect on an otherwise probable downward market. So,we have 222 rigs working for the quarter, an average gross margin of just under$8900 a day and our margins are expected to decline further. In the near term,we expect them to hold well or at least north of $8000 for 2008. We don’t see much change at thispoint in rig activity. For '08 there is a decline in older rigs should be madeup by the deployment of new rigs. Again, the important thing here is the newrigs have good going in, take up pay contracts at high margins and we also haveother affect continuing of getting the new rigs out of the breaking in stageand operating up to the full expectations. Nabors well service, thisprobably has been our biggest adverse surprise and its one of the elementsmaybe key element in tempering our further outlook, if you recall this isobviously an oil market. And nevertheless, we still are surprisingly down eventhough we have pretty good acceptance, I would say very good acceptance of our savingout new rigs. Anyway, the quarter was actuallyincreased, because we operated in better areas. We got premium for our rigs,but that can't match the fact that this business is below expectations and it'slikely to be there for this year, and it isn’t going to have a dramaticimprovement that I can see in the next year. Although the client will bemitigated if any and there probably will be a decline in '08, it will be lessthan the decline we had between '06 and '07. Nabors offshore, experience the significantdrop in sequential income in the third quarter, primarily to what I believe isgoing to be a predictable continuing pattern analogous to a break up in Canadawhere people are worried about hurricanes, and we don’t get the activity thatwe use to get in the summer time. We also had a fire in one of our new bargerigs, one of the new state-of-the-art rigs, operated a whole month before wehad a fire that's going to put it out, till the end of the year. Nevertheless, we expect thefourth quarter to show a rebound with several rigs returning to work and 2008should be modestly up, largely attributable to the contribution from two newbarge rigs and the one I just mentioned. This unit will be hampered by thetechnical non-activity in jack-ups. Lastly the picture is pretty muchcontinuing what we told you before. This unit is closer to the sequentialdownturn in the quarter as winter seasonality concluded in the second quarter.And the outlook here I think is very good, as I have told you in the last coupleof quarters. We have two new heli-portable rigs, did one start (inaudible).

Yes.

And the second one?

December.

Okay. So we'll have full yearsfor two of those rigs, next year and the year after, even though we have only afew rig months this year. And we have signed contract on new 1,500 verticaltubing units, which will probably spud about a year. In addition, again I am repeatingmyself. They have changed the price decks in Alaska big time so that we are anticipatingfour rigs being re-priced in the next 12 months or before the next 12 months.At current market prices compared to what they were priced at may be threeyears ago in most cases, and we are also hoping that we are successful on twonew bill awards there. Our oil and gas business has beendoing pretty well. We had improvement this quarter largely on the sale of $15million pre-tax gain from Fayetteville Shale acreage. We will see anotherincrease in the fourth quarter and similar sale of this already completed inprobably October. The Barnett Shale, this transaction will gain approximately$70 million. We continue to have a significantamount of unrecognized value in our oil and gas operations. We view all theseproperties on a continual basis, we look at what the profitability is if weproduce and hope and whether or not its opportunity for us to selling tosomebody for whom they may have more value and accurately make their all in thelong run that evens out to do what's best with the assets that if you want toconsider it one time non-recurring, be my guest. In the future most of the stuffwill be done through a joint venture with Nabors and First Reserve. And I thinkwe have good teams in place there and I think we are off to a decent startthere. Our other operating segments aredoing pretty well, we had another good quarter even with only one month or fiveweeks contribution from our boat company. Growth in this segment is largelyattributable to increased third party sales by Can Rig and continuing the solidperformance by Ryan Technology our directional drilling company. We expectunits from this to continue to improve as third party sales increasing at CanRig and part of the Alaskan thing is drilling, which I referred to and also theASCP growth, which is essentially construction, which is going to have a goodfourth quarter. International operations areextremely strong, but again I think the strength is masked sequentially. Thismarket traditionally is characterized by fits and starts and more fits andstarts lately I guess, but it's the nature of the business and the fact thatour project is deferred a quarter, it bothers us in terms of what we led you toproject for quarter, but it doesn’t bother us in the long term. Visibly the market is somethingwe have never seen before and it's pretty hot and I'll ask you to refer tothree of the charts that we have here. I think chart 7, is the first one. Ithink if you look at international and Alaska,which is essentially totally removed from the North American gas situation.Even when we do gas internationally, it gets a tighter role than it is theNorth American gas. So, you can see from this that, we're going first theseties are increasing its size. Secondly, the amount of thisinternational and Alaska,which is essentially not a North American gas is growing like [topsy]. And infact, if I were just to look at the operating income before corporate cost,overhead costs and eliminations between 2006 and 2009, I would expect roughlytripling of the international and Alaskaoperating income. This is before corporate overhead expectations. So that’s pretty significant, Ithink this has emphasized a little bit in the next chart, which tries tobreakdown the worldwide oil versus gas versus North American gas picture. Andhere again, each product is bigger, '09 isn't that much bigger than '06 wasbigger and we can see what's happening with the oil segment. So, the NorthAmerican gas picture is troublesome but it's not even the bulk of our companyin the near term future. The last thing, I want to talk alittle bit about where the increase is going to come from. And I think theincrease internationally, the increased operating income, and I think theimportant part of about this chart is, that new rig startups are important partof this picture but not really super significant after this year. The moreimportant part is really the juiciest and best part is contract renewals, whichtraditionally had been way below, these are three-year contracts and stuff likethat. The market is going up in these places, so we have enormous cash flowsthat are coming because the market is tightening and essentially in almostevery market in the world its on a new replacement basis, and we are going tobenefit from that, and we are and will. Sometimes its hard, sometimes it takesa change in our managers, because we go from the situation, for example in Argentina wherethere was chronic oversupply and a tight situation to it. You want a rig youneed to get a new rig and unless somebody else is going to bring one in forfree. God bless them, let them do it. Even though the chart I justpresented showed zero contribution in '08 and '09 from incremental rigs. Weexpect to have quite a few opportunities there. We are in good shape withrespect to infrastructure, reputation, cash availability, everything is good.We have infrastructures, we have a situation where we should take advantage inincremental rigs of being great situation. I mean, right here and Mexico is sortof an example, rigs go down in the space and we can quickly refurbish them alittle bit. Spend some amount of capital on it, but we have an infrastructure,we know how to work it and then we work with them actually we work with theirsubcontractors, their prime contractors. And their demand is going up as fastas anyplace else in the world. I think that the other thing Ishould mention is that the rig refinance in this market are exclusively for newor almost new state-of-the-art rigs so almost state-of-the-art rigs, which wecan manufacture new or adapt from existing high quality rigs. There is no suchthing as taking a beat-up mechanical rig out of the weeds and fixing it up andgenerating EBITDA, which had been the situation for lower part of it. Even with respect to NorthAmerican gas market I am bullish in both the intermediate and long-term. At themoment, it costs about a half as much to buy a BTU of gas, there is BTU of oil,I don't think that will continue forever. The market works sooner or later,it's a good clean gas, it's the best CO2 gas that's available economically. AndI think we will move to a balance short-term. I think, the other factor is thatL&G is definitely going to be a major factor in the future, it's asignificant factor now. But the capital cost and another cost is not going downin spite of the scale improvements and the technology improvements. Anyway, I'll quickly concludethat we are in good shape with respect to cash, as we got reconfirmed with ourinvestment grade rating with one of the agencies. The only issue we have now isto make sure that our CapEx and our overall cost are contained in line in thosedivisions where they need to be contained with our efforts, work over indomestic. And I just want to say, I am personally optimistic and my money iswhere my mouth is. My family and I have bought 1.5 million shares in last threeto four months, in spite of the fact that I have not got the bridge and what'shappened to the stock price between January '06 and now. But I think the gameis not over and I think things will be a ton better from where they are beforethey are. That concludes my comments.

Operator, we are ready forquestion-and-answer session, please.

Thank you. (OperatorInstructions). We will pause for just a moment to compile the Q&A roster.Your first question comes from Arun Jayaram with Credit Suisse.

Yes, sir? Arun Jayaram - Credit Suisse: I am wondering if you couldcomment on the impact of your retooling efforts on your fleet, you worked 220rigs in the quarter. How much more efficient do you think the rig fleet isversus two or three years ago in the former well completions etc. I am justtrying to gauge how much more efficient you think your operations are in Lower48 versus couple of two three years ago?

I think there are two things. Thefirst terms of footing is knowledgeable, tough-minded operators are buyingso-called fit-for-purpose rigs compared to lower price rigs that are on themarket. So, that tells me whole lot. And depending on the market area, Denny,can you quote some of the areas where we've had what the old rigs- were whatthe modified rigs were and what the fit-for-purpose rigs were, in terms of say,rigs wells per year? Can you figure any of those? But it’s a pretty significantsaving, it's a saving to the extent that when you count the ROP, the rate ofpenetration, the number of feet drilled in a day, and the rig moves, you can'ttake an oil mechanical rig at a zero price and compete with a fit-for-purpose rig.

One of the slides we have on theslide show here which tries to show what we believe the efficiencies are.Short-term, as Gene mentioned, there is issues getting the rigs up, the newtechnologies that kind of stuff, which is not getting us where we want to be,that’s working its way through, I think. We will have all that pretty wellextinguished by the time we get into first quarter and a lot of efficienciesare generated by the new bits and buts but, exploiting those efficienciesrequires the bigger rigs, the newer rigs. The brand new rigs got everythingthat we know how to put on the rig, all the automated pipe equipment,technology which is generating some of the learning curve issues. But when theyare up and running, they are really drilling efficiently and drilling wells inhalf the time of some of the wells that we used to drill. Arun Jayaram - Credit Suisse: Okay. That’s fair and secondquestion. Not trying to pick on you here, but the Baker Hughes rig count,year-over-year has been up 6% onshore in the US. Your rig count is down 14%year-over-year. So, just trying to understand maybe some of the elements whichgoes into it, is that geographies that mix, but just trying to understand thedeviation in your rig count versus the BHI number?

Joe, you want to comment on that,Joe Hudson who runs our ND USA.

Our rig count is slowing and 25rigs today, give and take basis we bought a lot of new mills obviously, 60 plusinto the marketplace, while we continue to see when you look the Baker Hughesrig count is not necessarily what I would call the big five, which is Naborsand three, four other publicly-traded companies but its others. And that’s wherethe majority of the rig count has come into. So, that’s the largest number inthe differential in the percentage of market share. Arun Jayaram - Credit Suisse: And I guess so, there are otheroperators more competing on price and you are being disciplined is thatcorrect?

Yeah. Arun Jayaram - Credit Suisse: Okay.

Too disciplined. Arun Jayaram - Credit Suisse: Okay. Thanks a lot guys.

Thank you. Your next questioncomes from Marshall Adkins with Raymond James. Marshall Adkins - Raymond James: Since Joe got warmed up there,Joe, help me out here on the USmargins going forward? Obviously, you had a pretty big drop on margin thisquarter, but with all, I guess, new rigs and longer term contracts that will bein place next year. Gene you mentioned that thing should play now margin wise8000 or higher. Help me with that progression over the next two-three quarters,extra long-term contracts maybe core day rates fall 500 a day. Is that tooaggressively down or are your long-term contracts going to hold you up morethan everyone else?

I think you got to break it intothree pieces. The uncommitted spot market which is your evaluation, is probablybetter than ours because you look at everybody, we look at Nabors primarily. Asbeen there are the term contracts, which are better generally, then there arenew bill contracts, which have few components. They will be better, but theyhave a breaking in period. So, we have a cumulative positive effect of having 60rigs just working right now, all of which are improving the day rate as we go,and we have 19 more coming by which time we will have less of identity in termsof both breaking it in, and we have slightly even higher day rate. So, I don’twant to promise more than we can deliver, but I think safely north of 8 is ourexpectation, which expectation on daily cost, we can deliver. Marshall Adkins - Raymond James: Okay. In your slide presentation,you ably showed by '09 that you are going to be more oil driven and moreinternational driven and we saw three - four years ago. Clearly, that is atrend that differentiates you from a lot of the other land drillers out there.Unfortunately, the questions I am going to get at are, what are you going to donext quarter, and a quarter after that, and quarter after that. So, help mefilling the gap on when we think the international market will start toactually kick in as we go through '08? Or maybe, in other words, can we getoperating income from where we were at mid 80’s this quarter? Can that be above100, next quarter?

I don’t know aboutquarter-to-quarter because the fits and the starts are something I don’t wantget involved in, but a year from now, I will get a bunch and two years from nowa bigger bunch. I can't really help you quarter-to-quarter although... Marshall Adkins - Raymond James: I am sure no one is going to askme those questions.

No, I know. But that's the fact of it. The perception is,frankly, there were about 100% on North American Gas is a determined company interms of stock price anyway. And the international stuff, it's coming. I soundwildly optimistic, if I told you every single thing we are looking at and everysingle aspiration we have because a lot of them won't come to pass and the onesthat do will take longer than we thought et cetera. But it's probably there andit isn’t. We are not indifferent to the kind of question you've got, Marshall,but frankly, if we get a contract and if it is a good contract on say, rig 660and it's three months later than what otherwise would be, I'll sleep just aswell, even though that per say one month or one product delay could be $12million to $15 million. Marshall Adkins -Raymond James: Alright, well let me maybe ask it a different way then. Youmentioned that operating income; I think it was '06 to '09 perhaps triplingcould we see a doubling?

International and Alaska. Marshall Adkins -Raymond James: Right. Could we see a doubling in international and Alaska from say thisquarter we just reported to say the very end of '08, does that make sense?

Yeah, I would guess probably. I haven’t looked at theforecast that I have in front of me, but I guess, probably. Marshall Adkins -Raymond James: Okay, well that’s very helpful guys, thanks.

Thank you your next question is coming from Mike Urban with DeutscheBank. Mike Urban - DeutscheBank: Thanks good morning. Gene, you said you were a bit surprisedby the well servicing business and we have been as well given that it is prettyheavily oily. What do you attribute it to? Is it customers holding back, or isthere over capacity, has there been a shift may be on preference towards coiltubing units or is there something else. Could you try and calibrate that forus or give us a sense of what your view is there?

Some of everything, except the coil tubing unit. I will letJim Payne answer this, my perception is there is increased supply a lot ofcompanies are held on the margin but everything adds up to a not expectednegative here. They are not only using their own rigs but putting new guys inbusiness and Jim.

I think my comments would pretty much mirror what Joe said.We would get lot of small competitors coming into the market making it morecompetitive out there. Like we see in our West Texasmarket, where we pretty much dominated that there has been 100 new rigs come infrom small competitors alone. And a few of them are, we think, being financedby our some of our customers and stuff like that. And it's just a morecompetitive market out there right now. Mike Urban - DeutscheBank: Okay. And in the U.S. market in general on the laborside, that was clearly a big issue at one point with the labor cost rising. Towhat extent has that eased up the overall rig count obviously still prettyhigh. What are you seeing kind of on the wage and the cost side?

Still high once you guys come. I think what we are trying todo to ensure that we keep our key people and lastly we've expressed to theunits that are growing as rapidly as the international. You've got to have fivepeople getting paid well above average than eight people fairly making industryaverage rates. Mike Urban - DeutscheBank: Yeah. Especially Joe or Jim, both.

It's still competitive out there. Like I say, some of thesesmall companies coming in and they underwrite our employees. So, the market isstill very competitive out there.

I would mirror that last year was the last point we reallysaw wage increases that were industry wide. We're seeing some pressure in agiven area that up in the Rocky Mountain areas that wemay have to respond to. But that again is, in contracts that have all passedthrough those costs. But we're still finding the right number of people outthere and as the rig count is even stable that’s a small pool and everybody isfishing out of the same pond. So speaking, including the international guyslooking into that same area. So, it's a labor market from that perspective andstill. Mike Urban - DeutscheBank: And what would you put the overall level cost inflation inthe U.S.what number is that roughly?

As a percentage wise, Mike I don’t think it’s that largeright now, we are not… Mike Urban - DeutscheBank: No.

Last year only it increased. What's happening is that peopleare poaching the very talented and best people, both from the internationalmarkets, offshore markets and from competitors in certain markets. So, we haveto make higher offers to retain our people. Mike Urban - DeutscheBank: And you would be able to offset that in another places?

Well, I'm Joseph. Most of them are past. Mike Urban - DeutscheBank: Past. Okay. Alright, thank you.

Thank you. Your next question comes from Dan Pickering with Tudor Pickering. Dan Pickering - Pickering Energy Partners: Good morning, guys. I don’t know if I missed it, the capitalspending in the quarter, and then Gene, if you might provide an outlook for2008?

2008, I am hoping will have excess cash flow, i.e. all thefactors that go into cash income and everything of over $1 billion. I think theonly way that won't happen is if we have discretionary spending. If we havefive 3,000 horsepower rigs it costs the 30 million a [park] and we get reallygood contracts. We will spend that on dooms day. But in terms of absent that,in terms of the projections we now have, I think we will probably spend a mitemore than our maintenance than our depreciation. In other words, maintenanceCapEx depreciation next year is probably going to be, [510ph] for the wholecompany. And I would say operating cash flow should be probably 17 andtherefore, we are going to spend half $700 million or less, unless there isgood reason for it. Dan Pickering - Pickering Energy Partners: Alright.

Good reason has to be incremental income. Dan Pickering - Pickering Energy Partners: Alright and I guess that leads to the question, Eugene. Use of cash yousaid specific projects if those opportunities come up. I don't, unless youdidn’t tell us, I don’t think you bought any shares back this quarter, it’sbeen a few quarters since the company has repurchased shares. What was yourthinking around share repurchase at this point?

I think, we have been frankly preoccupied with a bunch ofother things. We still have authorized I think, $400 million-ish and as youguys all know that we could change that relatively quickly and we have plans tobuyback shares. Just other things have taken time and analytical attention andmy guess, is we brought it much back in the next periods. Dan Pickering - Pickering Energy Partners: Alright, I realize I am jumping around, I apologize. Themaintenance CapEx, the $700 million in CapEx that you are talking aboutpotentially, I guess, as I think about that number. Is that lower than youwould have told me six months ago or three months ago, have you changed yourplans or this is just the development of the '08 budget as its coming together?

No, I think we will have [done] 80 rigs in the last coupleof three years domestically, including a small piece next year. I only expectthe succeeding years to require that kind of -- if it does, god bless, it willdo it. But I frankly don’t see the domestic market growing that big, I don'tsee the Canadian market growing that big. There may be some, some stuff in Alaska, where Imentioned that we'd be bidding on a couple of rigs and we have had CapEx. Butyou have CapEx spending two heli-portable rigs and which have very goodcontracts. And those contracts frankly we could probably finance, withoutrecourse if we chose to and when we do something like we say, okay instead ofhaving a good party more than our cost to capital, we'll keep it ourselves. Ithink the answer is still speculative in the sense that, we welcome theopportunities to spend money at our returns, that's our business. Dan Pickering - Pickering Energy Partners: Okay last question, I just want to revisit Marshall's. Marshall pushed it a little bit in terms ofgrowth in international operating income. It’s roughly $90 million now and hehas to pick it double by the end of next year. I guess, as I schedule that out,that gets me to international operating profit growth at more like 75% than 50%and so.

Well, I would say that it could be the conservative. Thereal - what we are actually projecting would be probably something more like 90to 150 frankly, and also a substantial increase in Canada. But that's a smallernumber to increase so. Dan Pickering - Pickering Energy Partners: Right.

Doubling with would be a possibility but not a probability.Not a 50% shot. Dan Pickering - Pickering Energy Partners: Right, thank you very much.

Okay.

Thank you, your next question comes from Geoff Kieburtz withCitigroup Geoff Kieburtz -Citigroup: Good morning.

Hi. Geoff Kieburtz -Citigroup: Couple of questions, the new contracts you mentioned in thepress release are coming out for the lower 48 roughly 40% above current rates.Do you have experiences that having done that in the past, I guess the questionreally gets to, what is your confidence level that you are going to be able toactually collect on that that higher rate?

[37 to 110] Geoff Kieburtz -Citigroup: Okay.

The confidence level that we willdo everything we need to get the margins we are projecting is, that’s lowercertainty, 100% certainly given time, but lower certainty over time. Geoff Kieburtz -Citigroup: Because of the debugging issuesthat you mentioned?

You got it. Geoff Kieburtz -Citigroup: Right.

And also, we put out more newdose in the last year, in the Lower 48 than in Asian team at least 10% more. Plus,what we do in the rest of the world. So, maybe we're going to have to digest alittle slower than we would hope we would all those issues. Geoff Kieburtz -Citigroup: Okay. And I guess, you have talkedearlier about the pricing competition from the smaller players. Is there apoint at which, you more aggressively defend share?

Yes, I think we're trying to behere now. Geoff Kieburtz -Citigroup: Okay. And we've seen margins erodebut they haven’t really collapsed and I guess, the question is, how should wethink about the risk that you just - something happens that makes you break andget into a all out share war?

No, I think we've been around anumber of these things for longer than we would like to have been. I think theevidence so far we've been on the cautious side and I am not in a position probablyhas gone down two or three basis points since our peek. Geoff Kieburtz -Citigroup: Right.

And that replaces back that weare carefully balancing the effect on the overall market compared to theincremental business. But net-net-net, we're not going to go much slower in thatposition and I think we will grow higher. Geoff Kieburtz -Citigroup: Okay.

You take what Gene said, where wethink we won't go below 8000 as Nabors specific, and you as you add to that themagnitude of improvement from the additional rigs that are coming out and gettingall of our issues extinguished, as we hope to do early as a year. That impliesthat the spot market, for general rigs can go down for $3000 a day, and westill do, we think we will do.

If we are not projecting EBITDAwe are just saying that we will do at least 8000. Geoff Kieburtz -Citigroup: I figured you weren't necessarilyforecasting that.

Yeah, I mean, also that could accommodated,Danny, exactly said a minute ago a much lower prices than I expected to occurin the spot market. Geoff Kieburtz -Citigroup: Okay. Shifting to international,I think you acknowledge the fits and starts, you also you have made it clearyou are not really prepared to make it quarter-by-quarter forecast, but isthere a point on a quarter-to-quarter basis where your confidence in being ableto achieve that growth would really be challenged?

There are so many things, I don’tknow right now - there are lots of activity, all over, not implicate on deep rigs, for example. There islots of activity, even in Kazakhstanon deep rigs. I think I have told you this a bunch of times already, but thereis an opportunity to do almost always we can do more than we have chosen so farto do in Saudi Arabia, and Mexico is a good market, and Russia we are trying toestablish a primary market for ourselves down the road. So all those things arepending in, well, it actually come to pass and when it's hard to predict exceptthat the portfolio of opportunities looks really good right now. Geoff Kieburtz -Citigroup: Okay.

And it is easier to say that theconfidence then, to put up the quarterly number with that. So I can put up '09number much more confidence and something I think we can easily be, but I don'tknow how it's going to come and where it's going to come and... Geoff Kieburtz -Citigroup: Let me...

Let me put it in this way, theoutlook internationally is probably as good as it was domestically a couple ofyears ago except that there are five fewer qualified competitors and the kindof rigs you need, aren't the kind of rigs that worked in the states and we havea monster edge on both of those things. And putting reputation infrastructureyou name it tax benefit whole god damn thing. Geoff Kieburtz -Citigroup: If I kind of rephrase thequestion do you see any risk that your international contribution will be lowerthan your third quarter performance over the next five or six quarters?

No. Geoff Kieburtz -Citigroup: And then, just a last kind ofbigger question, in press release you've talking about '08, overall, againbeing near a record performance, do you think it's going to be above '07?

No, I think the safe thing to sayis about the same modestly lower, do I personally think it will be, not thewhole company. Geoff Kieburtz -Citigroup: Alright, yes, whole company.

I think so, particularly, insense to integrate in time of the other questions that were before.

At the end of the day we get themetric is per share, but even without that, I am referred. The first call islike 321 for this year at the moment it's 370 for next year. And I think thatis probably the call I hear about the same maybe, modestly lower '08, but Icertainly hope and frankly personally expect will do better but I am notprojecting it a promise here. Geoff Kieburtz -Citigroup: I got you, thanks very much.

Thank you. Your next question iscoming from Kevin Simpson with Miller Tabak. Kevin Simpson - Miller Tabak: Thanks couple of questions Joe,first for you when do you think the fleet of new rigs will be working up tocapability in the debugging and start up cost will really be behind you. Isthat a 1Q event for next year or is that going to linger do you think possiblywell into '08?

We are dying to hear the answer,Kevin.

Actually, I think I had thatdiscussion yesterday. No, I think by the first quarter of '08 we should see amajority of the forms past us in terms of the new build.

At the end of the quarter?

End of the quarter, yes. Kevin Simpson - Miller Tabak: And where do you stand nowrelative to where you thought you would be say, if we had when we had the callthree months ago. It seems like its taking longer but that may just be ourexpectation relative to your own…

Yeah, I think I said at the calllast time it is still looking in the first quarter we put a large number of newbuilds into the rig fleet in the last three to four months. And so, again, Iwould say at the end of the first quarter we should see I guess we call itdebugging majority of that past us and that should be the case. Kevin Simpson - Miller Tabak: Okay, thanks. And then one to Ziggyif you are there the…

But you can see it at the Middle East, but it's… Kevin Simpson - Miller Tabak: That’s a shame, that’s too bad.

Non-gas. Kevin Simpson - Miller Tabak: Talking about the internationalgrowth has clearly been, been below or I thought there would - I think belowwhere you guys thought it would be. So, I guess one, is that just the start upissues inherent and ramping up internationally which are always going to be thereor are those specific areas that have been disappointing in terms of cost or areyou having less success in rolling pricing higher than that, than you wouldexpect it, say at the beginning of this year?

I don’t it’s a lack of success ofrolling prices higher, because we've actually increased our day ratessignificantly. Some, we're still working on contract renewals we're trying toget rate increases. I think probably, the most as far as the growth is, as you havesaid the start up and some of that taking a little longer than anticipated. Butalso some of the growth in international is affected that as Gene said earlier.Some of the projects that we anticipate is starting six months ago havingstarted now and this is not under any control that we have, it’s whether it’sgovernment or just the project itself taking longer to get started. Kevin Simpson - Miller Tabak: And is that factor gotten worseover the last year, be just because of the stresses in the system or is itabout the same and I guess, should we be building it into our expectations for2008 and 2009?

It’s actually about the same. It’swhat I have seen in international over the year's, some of the projects takelonger to get started whether it's the operator, the government or whateverthose factors are most of them are beyond our control, but I don’t see it beingworse now than it's been in the past. Kevin Simpson - Miller Tabak: I mean that would be the biggestrisk to doing essentially 150 million EBIT in 4Q of '08?

I would say, yes that’s thebiggest risk. Kevin Simpson - Miller Tabak: Okay, and Gene do you have anysense on what your possible obligations are going to be on this first reservejoint venture that would be a call on capital for 2008 that’s incremental tothis 700 million units on…

That’s going to happen in their,but if it's anything north of $100 million or $150 million, it will be one ofthose things that it's a voluntary decision we can say yes or no, aren’t thisisn't good enough we will say no, and my hope is we say yes. Kevin Simpson - Miller Tabak: To win this 700-ish you have gota something up to $250 million for…

About… Kevin Simpson - Miller Tabak: About…

We don’t have this quite achieved,but that’s where I am expecting that will come up into. Kevin Simpson - Miller Tabak: Okay, that’s it from me, thanks.

Thank you.

Thank you. Your next question iscoming from Roger Read with Natexis Bleichroeder. Roger Read - Natexis Bleichroeder: Yeah. Good morning, gentlemen.

Good morning, Roger. Roger Read - Natexis Bleichroeder: Really quickly, Gene you guyshaven't touch on it historically and markets get weak acquisitions, costcutting, or items that come to the four, and on the last call you've talkedabout or maybe it was recent conference, you've mentioned the potential to MLP yourown on-shore business. Could you comment on what you think may lay ahead interms of consolidation you would want to do or consolidation you think otherscould be interested in the US Lower 48?

100% for others doing a wholebunch of consolidation, especially in Lower 48. I think the MLP thing was, Ispoke, well I should note, but I spoke in the sense that I didn't think it waspossible, I am not damn sure whether it is possible or isn't impossible. But ifwe're saying any of that I don't see anything that's likely to be a majoracquisition for Nabors drilling USAin the foreseeable future. I think, if there were something internationally welook at it, if there were something in work over, they would carefully look atit. And I don't really see, I think we've demonstrated that's it's our beliefand I think it's going to be confirmed that we are not going to buying EBITDA,we will buying state-of-art equipment that can win contracts with some customersand work to two, three, four, five years from now. Do whatever the cycle may be-- I hope I just do it. Roger Read - Natexis Bleichroeder: Okay. And then on the costcutting side, it sounds like the various people here backed up, it stillremains a very competitive markets. So clearly, tough time to try to sort ofrationalize your crews to the amount of work you had. Does that mean we're in aperiod here where, we are going to see continued labor cost increases in spiteof flat to down price changes for the rigs and equipments?

I don't really think so. I think wefrankly be paying your key guys more. So, we will probably have fewer people, Iwould say, except international, they are going to have to staff the growth,staff to grow. I think the other places will not have increased costs but theywill increase pay for the key guys. Roger Read - Natexis Bleichroeder: Okay, thanks.

And it is done to itself, ofcourse. They had their own and are having their own super inflation as we speak.

Thank you. Your next question iscoming from Robert MacKenzie with FBR. Robert MacKenzie - FBR: Thanks guys, one final questionleft, and you kind of answered it a little bit earlier Gene is, with the marketland drill is being down and out. What's your interest level and what you seein the market for potential acquisitions and how likely do you expect Nabors tobe or perhaps some of your competitors to be, in consolidating the industry?

I don't see anything that wewould be tempted within the Lower 48 type and as I have said before, I'd bedelighted if all of our competitors got together and merged into one. Robert MacKenzie - FBR: Okay. Fair enough, that's it fromme.

And that's price discipline.

Thank you. Your next question…

Operator, we've are running offthe time limits, so just one more question please. And if anybody else has anyother question, feel free to call us.

Thank you. Your final question iscoming from Ben Dell with Bernstein. Ben Dell - Bernstein: Hi guys.

Hi. Ben Dell - Bernstein: Maybe if I can just follow-up on aquestion on the North American market. You talked about, pricing of competitorscoming and taking market share. Yeah, they are obviously bringing in lowerquality rigs. What is the risk there as you bring in your new fleet and yourclients that have dropped some of your older rigs, that's why you continue toloose market share or do you have a strategy for pricing the old rigs that arerolling off on the low end just compete with those?

I don't think that’s where we,Joe, I am sorry. But I don't think that's where we've lost anything. I think alot of, a number of guys, we have had to deal - we take the old rig and the contracttill we deliver the new rig. A lot of them are continuing with the old rig andthe new rig. I don't know if any case where others have replaced us with theold rigs, Joseph.

Don’t make me a liar.

Well, to answer your againquestion is, the response would be, we obviously - the new builds are takingright now larger percentage of our overall fleet is currently operating, but weare seeing an aggressively marketing. A lot of our existing SCR's and SCRupgrades that are, that come and know who is it on being seconded or post tointernational, who is also looking a lot of that equipment. So no, we'reaggressively still pursuing the market share away from the new bills. Ben Dell - Bernstein: Okay. And just on a step upupdate, Gene in your prepared remarks you said, your investment funds by yearend would be, where you want them to be in the long-term. Can you just give ussome color on where exactly that is and what that means?

I am sorry, could you repeat thequestion? Ben Dell - Bernstein: In your prepared remarks, yousuggested that, the funds in your investment fund that obviously had someimpact this year in from the debt market - the money management side would bewhere you wanted them to be in the long-term by the end of the year. And I wasjust wondering, what you meant by that remark in terms of it, is that a riskmanagement, total investment style, have you changed what you are doing inthose investments?

Yeah, but not quick enough. Frankly,we had reliance that’s essentially my responsibility here on an organizationand individual that we thought. We only have five straight years of really goodresults on debt management, fixed income management and that turned out to be prettybad call in my part. But essentially, we are out or will be out by the end ofthe year on.

Anything related to fixed incomeand anything we’re already out essentially of anything that’s high data, whichwe had some with one of the most prestigious investment banks in the world. Butessentially where we are down to maybe other than LIBOR based, treasury basedinvestments we probably got 15%, and our alternative investments whichhopefully are not leverage hopefully in areas where manages an accurate resultsin, we hopefully get a decent return. So, that’s what I meant when I said wewould be hopefully where we wanted to be by the end of the year. Ben Dell - Bernstein: Okay, great. Thank you.

You're welcome.

Thank you.

Ladies and gentlemen, thank youvery much. Please always feel free to give us a call if there is any furtherquestion.

Thank you. This does concludetoday's Nabors Industries Conference Call. You may now disconnect your lines.