Dennis Smith - Director of Corporate Development Eugene Isenberg - Chairman & CEO Siggi Meissner - President Larry Heidt - Chairman & CEO, Nabors Well Services Ltd.

Dan Boyd - Goldman Sachs Jim Crandell - Barclays Ole Slorer - Morgan Stanley Kevin Simpson - Miller Tabak Jim Rollyson - Raymond James Scott Gruber - Bernstein Jeff Tillery - Tudor Pickering Holt Robin Shoemaker - Citi

Good morning ladies and gentlemen. Thank you for standing by and welcome to the Nabors Industries fourth quarter 2009 earnings conference call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. (Operator Instructions). This conference is being recorded today February 17, 2010. I would now like to turn the conference over to Dennis Smith, Director of Corporate Development. Please go ahead sir.

Good morning everyone and thank you for joining us again for our fourth quarter and year end 2009 conference call. In addition to Eugene Isenberg our Chairman and CEO who will do most of the speaking today and myself with us today are Tony Petrello our President and Chief Operating Officer; Laura Doerre, our General Counsel; Clark Wood, our Chief Accounting Officer as well as the Presidents of most of our sizable business unit. The same format that we always follow; we [hold] the call to about one hour. Gene will do some initial remarks and overview of the quarter, the year and more importantly how we see the future playing out and we will open up to question-and-answer as soon as possible. Just want to remind everybody that a lot of the discussion constitutes forward-looking statements under the SEC rules, and as such we encourage everybody to acknowledge of the risk factors and the unpredictability of parts of our business and refer to our various filings in our 10-Qs and 10-Ks and the risk factors particularly. And with that all I'll turn it over to Gene.

Thanks, again welcome everybody to the conference call for the fourth quarter calendar year. I want to thank you again for participating this morning. As usual we have posted to the Nabors website a series of slides that contain details about the performance of the various segments of the company. Please refer to these as we proceed because I'm not going to get into the specific detail, what I'd like to do is to briefly comment on the quarter. I mentioned several important developments worth summarizing that occurred during the year. Then briefly review from probably 10,000 feet each business unit where's that and where it's likely to go. All of my comments will be focused on non-GAAP results and frankly I expect my comment this morning to be reasonably shorter than we've had in the past. First quarter, as we suggested in our prerelease, our fourth quarter results came in a little better than estimates we had projected at something better than 16 and came in 18 excluding non-cash charges. Operating income for the quarter was $133 million which was remarkable considering we had a significant decline in our international operation which more than offset by sequential increases in all our other units including seasonal increases in Canada and Alaska. These results mark the first sequential improvement we have witnessed in the third quarter of '08. This probably confirms almost definitely confirms that third quarter of '09 was the bottom in this cycle. Our rig business other than international all saw improvements during the quarter and we think international will stabilize in the first quarter. And improve significantly as the year progresses which we'll elaborate on a little latter. Let me mention a couple of 2009 items that I think are worth recapping. First, we did our financing early in the year January of $1.125 billion. Looking back at what we saw in the fourth quarter of '08 in the beginning of '09 we saw at almost $3 billion of short-term debt i.e. debt maturing before May 15, 2011. Business looked bad, bank and borrowing public market was inaccessible and we we're really happy to get this debt albeit we paid a price that represents on insurance premiums namely (inaudible) interest. How that's evolved has been pretty favorable. First place we paid off a $1 billion, we brought back $1 billion of the $2.75 billion that matures in 2011 at a roughly $130 million savings and we paid off $225 million of debt and we are still sitting with $900 million of cash and equivalent and the credit markets open really wide open we almost get followed by requests to do straight debt convertible debt and things like that. We don't need it and we will probably get a revolver which we don't have yet. But basically, the picture now is we'll almost certainly be able to pay off totally the remainder of the $1.75 billion convertible debt in May 11 without any incremental borrowing. When we do that our debt-to-cap ratio will be down to the high 20s and more important we will have the fire power to continue to do attractive investment take advantage of attractive investment opportunities either organic or otherwise. Our rig performance last year was another feature worth commenting on. Our rigs continued to perform between very well and extremely well and our new rigs distinguish themselves regularly. 100% of our US PACE rigs are either working or committed. Some of the highlights that lead me to this overall position is we continue to achieve greater levels of success with the major oil companies and other discriminating uses of rig. We perform essentially a 100% of, not essentially, we perform a 100% of shelves land drilling in the US and Canada. We do about 80% of BPs work and the drilling work in the lower. We haven't had in the past success with that but we had our first land rig in the low 48 working for them and we've had kind of I would say extraordinary success with the highly sensitive highly technical project in Alaska, the Point Thomson Project and if you want any we will be happy to send you a release they put out adding the technical boundaries that we're extended with this well and how we performed extremely well on it. We've also been selected by Exxon to work on that, pretty important and high profile Papua New Guinea LNG work which is essentially two rigs. So I think we will go from zero to pretty significant position with Exxon even in the lower 48 as frankly we did with BP from being shut out essentially three years ago to having almost a 100% of the incremental work and 80% of the total work. Currently, we've have more than 50% again of those rigs working for majors in the lower 48 and we do more than 30% of the total horizontal drilling in the lower 48. And I won't get into the details but our technology provided by Canrig and [Epic] products continue to enhance our overall (inaudible) drilling resales. Now let me take a couple of minutes to give you a very big picture for each of our units. Nabors offshore, we actually have a 100% of the deep water platform rig market. Thanks to the innovative detours of our large technology. As we mentioned earlier, we're involved in the live conference call we're two front end engineering design or (inaudible) studies or first of that kind 4500 horsepower platform rigs on deep water platforms in the Gulf of Mexico. We're pretty close to having one of them, and the other one is pending but we're pretty optimistic. One of both of these awards will contribute pretty dramatically to our longer term results probably starting into 2012. But basically with technology in that organization is good. Our large rigs are few, but technologically advanced and things like the Davey Jones, fine we could drill wells. Canada, Canada is financially our worst performing unit, but still there are reasons for optimism. In very brief summary I think it's clear to observers of the situation that very significant part of future of Canada drilling is going to be the British Columbia shales, and in the British Columbia shales, Nabors has a 40% market position compared to a 10% market position or less overall now. So our fleet is geared to it so I would say that the future we have 40% and the present is 10%. We are looking the progress there from the most broadest possible view point. Even when the P&L results are short term abysmal in Canada, we still benefit from for example the technology developed there, an important case in point is we have a successful growth coil tubing rig developed there and now we have a big one very success one working in the Alaska which we'll talk about and these rigs soon will deployed at these highly profitable in Australia and I'd say likely in the Middle East. International, international we have really the broadest and deepest infrastructure of any contract driller in the world. Although the nature of this business is such that this unit will be characterized by fits and starts however the overall growth and demand for oil and increasing difficulty and offsetting decline in production leads us to concur with most people including the futures curve but whoever is going to be upward from here over the term and that is the main driver for performance in this unit. Although 2009 was disappointing, this unit grew compound annual growth rate of 27% per year between 2000 and 2008 and I am pretty confident that we'll get back to pretty quickly to significant levels of growth probably not compound 27% in the next 10 years. Nabors Wells Servicing, the upward trend in crude pricing should also benefit Nabors Well Servicing. Hence, I would guess approximately 70% of that unit's revenue are driven by oil prices. The fact that the market is finally recognizing the quality of our Millennium rigs, we are thinking about how to really effectively market them which is going to only enhance the future. These are the only [PLCAC] rigs in the market. I also agree about the consensus that a lot of the sales side guys that this oil based market, the whole work over market will get better being in the second half of 2010 and should be in pretty good shape by 2011. We are also currently making some significant changes in the management of this unit; have to address current issues and more importantly to prepare for the upturn which we think is very likely. Drilling USA, Nabors Drilling USA, operating income there is no getting around but it's clearly enhanced by the fact that we signed a bunch of long-term contracts when pricing and markups were better. These contracts are bleeding off and will eventually end, at least these original ones. This tends to bring income down and what's going to happen and what is happening is decline will be offset, I cannot tell you exactly when, with increase utilization of existing rigs, higher than current market price for redeployed rigs and actually new builds. We actually have the contracts for size, for new builds in addition to four so new builds that we haven't yet delivered this year. So, and those rates are good and also, the same factors that cost are coming down a little bit, and investment cost are coming down a little too, so we can get a good return at lower margins and these new rigs are at good margins. Our PACE rigs are fully utilized market, suggested market spot prices in general are improving and term contracts are being signed even for existing rigs particularly the better rigs or at least the rigs that can perform in markets like tight markets like the, Bakken. All of these would drive performance in this unit backup. I can't say that our question when the crossover will occur, when was that taling up because the new work and the new performance and the new requirements were high end Shale rigs will more than offset these decline in run off of existing contracts that point of reflection will happen and my guess is in the second half of 2010. Alaska, in Alaska the results will decline in 2010. This year was a record year, but that's history. The decline in 2010, although its clear to practically everybody except the survey that checks these things that we have found a way the best approach is in Alaska. We have the only AC drilling rig in Alaska working for Pioneer and its working superbly. We've what I suggested, what I mentioned earlier we have a big well tubing unit, i.e. of 5000 meter capacity setting all kinds of records and that probably will be the tool of the future. I'd be unpleasantly surprised if there aren't at least two more of these units given in the next nine months of a year committed to and I'll be disappointed if it is not to us and I have already mentioned the Exxon Point Thompson accomplishments. Some of this aggregate and also we have a pretty good safety record i.e. very good safety record and performance for EP where we have many of our rigs working, they are happy so the outlook, short term P&L wise is bad but the infrastructure for long term favorable growth is there. Our other operating units see modest increase and we expect next quarter we'll be favorable largely through the third party sales of Camry. As I mentioned earlier, some of the new technology is really significant and is making a little money on its own but more important, enhancing neighbor's reputation generally and enabling us to enter markets. For example I think in Iraq and I'll talk to Iraq in a second. I think the fact that we sold a lot of the technology to the Italian company that sold them rigs, so they have our top drive (inaudible) I mean sure they didn't need much help to succeed with a little bit of help. Okay let me talk about oil and gas. Oil and gas has been a negative impact on our stock for a long time and I'd like to tell you briefly what our assets are, what the books what we take on, what our total investment is and book value was after all these impairments and what we think the fair market value is. The most significant investment is our investment in NFR, that's our joint venture with First Reserves, that's the domestic one. They have, I don't know I'd say probably 75% to 85% of their operations are in shales, good stuff. They are doing pretty well but just distribution accessed the public market for debt for the very first time. So we continually have to have, and I won't go through the litany of SEC requirements, but we invested $0.5 billion in that thing. We've marked it down to $112 million according to the SEC rules and basically we have one T of T1. We have one T of T2. We have potential beyond that and even if you say and its good stuff shale. So even if you say you are going to get more than $2, something north of $2 for just the T1 alone, our value is worth more than a $1 billion which I think is kind of realistic. I think the second area where we invest is say Columbia. When Columbia we do it two ways. When we have [more averages] our joint venture with First Reserve and our own stuff which is Ramson which essentially is bigger as the operation which preceded the joint venture and in both of those we have about $80 - $81 million of investment and we had a third party study, I am even reluctant to quote the price, so I won't quote the price of the valuation, but it shouldn't be based on, if I discount what they told us they could get for and this is a hot market because its all oily and this market is particularly hot for small E&P companies either recently public or going public particularly in Toronto, but that's going to be worth at least 450 and that's lower than the estimates we've been given and that's probably the first one that we'll market because after this dry season of drilling we're going to look and see what our alternatives are there. Probably the most sexy one is our Canadian operations. We have essentially an aggregate of 34,000 acres in the Horn River roughly 12 of those are with our joint venture the First Reserve and an entity called Stone Mountain and the other 22 is our own and that geologically is generally recognized to the kind of the best shale in North America, but it's been remote from market and it hasn't been developed super intensely yet although it probably will be meant to even this winter, but the other thing that's happening there is a lot of traffic including at least one LNG plants to take some of those stuff directly to the far east and there are lot of people fishing around co-gas, a couple of Japanese trading company. And so that it's highly likely that they'll have a market value much higher than right now on the domestic futures curve adjusted for the place that to manage. And that I think that's going to be good and basically, I can't really believe we could, we'd have anything less than three quarters of a $1 billion dollars in market value for that. but the other thing is we have other U.S. assets of our own, one of which is Alaska to total U.S. is probably around a $160 million, 25 million (inaudible) in Alaska and we have got a good find here and how big it will be, but its relatively light crude, relatively a lot of it, and things can happen but I cant believe that, that won't be at least twice on our investment and isn't worth twice our investment now and the (inaudible) factor is going to be with at least book. In addition to that we have pipeline in Canada which I think will be with also net net we have an investment of under 1.2, we have a book value of under 7 and I think we have market value at least twice our capital, at least twice or maybe more. Hence, the other point is why do we do this, why do we invest, what are the benefits we get from E&P. Firstly, we expect to make some money on it. Second place we get the total benefits of being associated with as the partner with First Reserve who I think are the primary private equity factor in the whole energy space including this. They were using rigs pretty effectively and other services on these operations but perhaps even more importantly our guys when they market rigs they know what the story is and at a much more effective at marketing because of our own direct experience and I think that's a partial explanation why we have 40% market position in British Columbia. Before I conclude let me take a couple of minutes. As I have mentioned some of the difficulties we have in forecasting and why we run the risk of either underperforming or over performing, mostly underperforming revenue projections. One obvious example is US natural gas prices. There are some pretty intelligent people who are projecting $750 for gas this year and those people, frankly, I respect a lot and there are other people obviously pretty reasonable as well who are projecting and are projecting $4 to $450. From our viewpoint, that can be pretty significant range of what's likely to happen particularly since the market generally considers us exclusively North American land driller but in fact that that's way below half our income. So that's the fact that that's beyond our control but I think basically that I think we could do real well in a range between $6 and $8 and I think we will probably see that and it would be better. Another for example is Mexico where we have a [high grade] customer but firstly we have a very good position both on land and more particularly offshore Type 1 rigs. You are not a (inaudible) but basically the word was that they were going to increase our land business, they were going to have a whole bunch of [mace] rigs or several and substitute of a large number of super sundowners for jackups and as that was progressing the next thing that happened was funding was basically shut out for everybody not just us. So when that comes back and how that comes back is going to be the difference whether we have a financier there or whether we over perform or under perform and the forecast that's in our forecast internal forecast leaves us room to over perform. Certainly, we won't go through all of them, but another example is Iraq. I think everybody is aware of the great potential in Iraq and I think we have a tremendous advantage there. But one thing, we've signed our deal with Iraq drilling company which gives us kind of an on trade to the company and kind of preferential service and that is, that's one thing. The other thing we have rigs and crews and all that stuff in Saudi Arabia which is for good reason considered a gold standard of drilling in that part of the world. So, altogether we've really good prospects and manifested by a lot of the other integrated services it is coming to us. There are political hands and security problems there and how they'll and out as nobody knows. Basically, we've a little bit of that in our forecast, but there is significant room for the upside. Again all these things, I mentioned these things and there were several others I could mention that give you an indication of how difficult it is to project our business particularly internationally, but I think things can turn quickly and I think I'm pretty personally optimistic that net, net of all these things, it will end up more positive even than our current internal projections. Let me close by saying I'm extremely bullish. I can't say with any degree of certainly when the absolute recovery will be manifest to the whole world, and that's mainly even though the business might go up, our stock is still going to be a functional when the crossover is occurring in the lower 48 drilling, when we start moving up in the newer offsets to declining historical work, but I think it could happen some time this year the second half and I am looking forward to it.

Alicia that concludes Eugene's remarks we are ready to start the question and answer session please.

Thank you sir we will now begin the question and answer session. (Operator Instructions). And our first question comes from the line of Dan Boyd with Goldman Sachs please go ahead. Dan Boyd - Goldman Sachs: Eugene, I'd like to start off with the E&P portfolio since you spent so much time going through it. I agree that the stock doesn't get credit for that, and you're clearly frustrated with that. How should we think about your strategy of monetizing those and how much say do you have in the timeline of that monetization given the relationship with your partner?

I think the relationship with the partner is first place good, and secondly they by the very nature of the business they have an excellent strategy that they come in the deal so I think they won't be an impediment to sell. So I think frankly as long as we get a return incremental return by waiting, they'll wait I think the first one likely use to be monetized is going to be Columbia. And the other issue for a lot of your sales side guys is whether we take it as a capital gain may be even a tax free or a tax deferred or cap tax free capital gain or whether we take it as ordinary and be my guest do what you like, but we look at it the same thing whether we make money by producing it or we make more money we think we are in the stages to sell it all at once they are interchangeable from our view point and you guys might consider them on non-recurring, the other recurring, but I think Columbia would be first. I think NFR which is the big one. As I mentioned, we entered the high yield market frankly I personally bought some of the debt and I think within some finite period of time whether its five months, a year or what depending on a variety of circumstances we'll go public with that, so that will give us both an opportunity to monetize or at a minimum to value it. I think the next likely factor is going to be our Canadian stuff which as I say is probably the sexiest of this pattern. There are foreign buyers in there, at least one LNG export plant underway. There are two or anymore trained and more capacity being discussed as we speak. There are rumors of some of the big buyers and some of the big importers like coal gas actually buying reserves to do that. So I think that might come but we are going to wait till they come to us on that. Dan Boyd - Goldman Sachs: Yes, it does seem like there are plenty of buyers out there in the market and your stock clearly gets I would almost zero or if not negative value for these given the noise you get every quarter.

I think they do, but we still have to do what we think is better long term and we do. Dan Boyd - Goldman Sachs: Okay then just one follow-up on the North American market. What are you seeing in terms of demand for your mechanical rigs? Are we at a point where we're out of all the high spec or good rigs and you're going to see more the mechanical rigs going back to work potentially drilling the vertical leg and then bringing in the bigger rig to drill the horizontal rig? Are we there yet and what are your expectations there over the next couple of months?

PACE rigs are all utilized. We are getting increasingly utilized so I mean there is several categories of electric rigs that aren't PACE rigs. And they are doing much better. I don't know if we, I think there are one or two mechanics. Some mechanicals, high quality mechanical demand particularly in the Bakken, right? Can you put, can you (inaudible) down Dan Boyd - Goldman Sachs: Certainly.

(inaudible).

To answer the question yes there are some mechanical rig that are going to work in the market area. Then there are few of the mechanical rigs working in [West Texas]. It's not remarkably where we want to look to increase in rig count in the [West Texas], but the Bakken definitely is very far place to report. Dan Boyd - Goldman Sachs: I'll leave it there and follow-up with Dennis after the call.

And our next question comes from the line of Jim Crandell with Barclays. Jim Crandell - Barclays: Eugene, you mentioned I think that new bills, four new bills that you had recently, can you talk about the length of the contracts or terms you're getting on new bills?

Pretty good times in five years. Jim Crandell - Barclays: Five year contract

Our guys are good [this time]. Jim Crandell - Barclays: And can you comment also on what you are seeing in day rates for the PACE rigs and what you are seeing for some of your high-end electrical rigs in the Shale place today and what's going on there?

They are going on, I think we can fax you table showing how they dropped pretty dramatically generally, dropped pretty dramatically over than a year now, now they are up. I think the redeployment of PACE rig is very good and the rigs generally on average have gone up, both quarter-by-quarter analysis, the SCRs have gone up more than the mechanical rigs and less than the PACE rigs and that's all below the new build rates but they are all moving in the right direction and I would say some of rigs will never work, some of the old entire mechanical rigs will never work. There will be demand, because we see the evolution of the shale place for more new builds or upgraded SER rigs Jim Crandell - Barclays: Eugene, off the bottom roughly would you say how far up are we in percentage terms for your high-end rigs?

Anybody got a percentage?

No its, that was 13.5 up to 18 point or even lower than 13 here.

Again a piece of paper I misplaced it somewhere, do you get it?

From the (inaudible) on the PACE of around 13 or (inaudible). Yes my apologies I'm being told we are not seeing high- enough.

No more than that, some of the products, 13 products, 14 we are seeing dry end numbers 18 (inaudible). Jim Crandell - Barclays: After this, what about the other ones?

We have seeing some long mechanical wins maybe 5 to 9, (inaudible) 10 to 11, the SCRs were using, not use, that's not the right terminology where the PACE rigs actually are beginning to pull some of the higher SER rigs up into the 16 - 17 range. Jim Crandell - Barclays: One final question, Gene. If you took your most conservative or most negative view towards natural gas, let's say a $4 to $4.50 price and the forward curve came down below five and let's just for argument sake say it stayed there for some time, what's your sense about how shale drilling, horizontal rig count would be affected by that level of gas prices?

Fairly wouldn't help it. There are a couple of issues; one is a lot of people figure out there are a lot of (inaudible) costs when they brought the leases and take the leases and there's going to be drilling, less drilling but still drilling to preserve leases but otherwise it will be cut to the absolute bone and for folks like us who just look at the economics, even if we had a producing well, we'd shut it in. So basically it would be even the shales wouldn't exactly, and you know from my personal view point, I think they should get impacted even more because if it gets the $4 it's not going to stay $4. So there is going to be an upward opening pretty heavy angled forward curve so if you get a big chunk of your production in the first year, in other words you go from 100% IP down to 30% in the second or third year, why wouldn't you wait for higher price for that big chunk of production. So anyway, it would hurt it.

Thank you. Our next question comes from the line of Ole Slorer with Morgan Stanley. Please go ahead. Ole Slorer - Morgan Stanley: What are you going to do with all of that money that you'll realize from this E&P assets?

That's a high class problem. Ole Slorer - Morgan Stanley: Would be a vacation there, did I hear that?

Let me be able to cope with it where easily it's the last question. Ole Slorer - Morgan Stanley: to If you look at what you talked to us through, it sounds on the back of the envelope, if you're talking about something substantially maybe north of $2 billion or something along those lines,

Yes. I think it is. Ole Slorer - Morgan Stanley: You're talking about the tax implications realizing that how much actually cash, how much cash would accrue net to Nabors that you could either use for buybacks or debt reduction or anything else?

I think the stuff that's basically international. We own internationally and probably could end up with a pretty favorable tax result. The money would be outside the States, but that could be used to buyback stock too The Alaskan and the NFR stuff we're going to go public, well it's going to be under US tax regimes as well as Alaska, while the first one probably would be a Colombia and that would be probably tax free. I mean it would be international and that's probably through with Canada unless as we decide it's better to produce and pay taxes and sell it on some net of taxes which is unlikely. The thing that you and I discussed, if we use that to buyback stock it would be a pretty significant if we had. No. Whatever else, it would be a super high class problem. Ole Slorer - Morgan Stanley: And again the timeline, we are looking to realize some of this in 2010?

Frankly, we're going to be probably looking at the valuations realizable in Colombia by the end of the summer and the tactic in British Columbia is wait till one of these British Gas or co-gas or some other big consumer in India or China, and then if I were just go public as soon as the economical view so its just probably maybe even this calendar year, probably this calendar year Ole Slorer - Morgan Stanley: If it changed a little bit to the international performance, suppose the area that came through maybe a little bit below what we were looking for, you suggest that the trough I think should be here in the first quarter but can you take us through your level of visibility and certainty with respect to the recovery? I mean what areas? Can you just outline a little with it more clarity exactly what you're seeing into this trough and what you're seeing on the recovery side?

I think the recovery that we see first of all Eugene mentioned already Mexico, we will go back on the offshore side not on the land side they had some reshuffling to do, looking at reservoir and had this funding issue so they are going to come back obviously we have Iraq on the horizon for us on the radar screen so that's going to play a role for us later on in the year and I also see that in our landfall in the middle east that there will be more gas drilling more exploration drilling performed and we will have part of it so I think those are the big pieces. In Columbia as I mentioned in our report Columbia we got an eight rig six incremental award three year contract and eventually Algeria will come back I mean there is some clean up in house and so they would come back to full operations so I think the second year you will see us in a better life in the second half of the year. Ole Slorer - Morgan Stanley: Yes, so second half so the first quarter is a trough you start benefiting from some other trends. When, for example, does Columbia start up?

The Columbia rigs all will be working by the end of May. Ole Slorer - Morgan Stanley: End of May. Okay. So this will be a gradual step up as slight in the second quarter and then more meaningful into the third and fourth quarter?

First quarter, second quarter, third quarter yes.

Thank you. Our next question comes from the line of Kevin Simpson with Miller Tabak. Please go ahead. Kevin Simpson - Miller Tabak: Thanks. I wanted to get some a little better sense of the new build contract in the US, Gene, or Joe. Was that a kind of up for bid and if so was it widespread or was it a….

We split the results with H&P. We had a couple working there already which gave us a little bit of leverage. I would guess you can find out, back and tell us whether our deal is better than H&Ps? Kevin Simpson - Miller Tabak: So is it negotiated deal, then?

There were bids but they always negotiate before they sign. Kevin Simpson - Miller Tabak: So somewhere in between? I am just wondering if some of the other --

It's almost nothing except may be in Mexico or some place where the bid and that's the end of it and they award there usually or was it on discussion negotiation whatever. Kevin Simpson - Miller Tabak: I was just wondering if the others, P-10 and some of your other competitors were bidding into that contract.

I don't think they were allowed to bid. Kevin Simpson - Miller Tabak: Then there was technical specific?

I think its I don't know what I mean For example, BP generally will only take us from H&P domestically and then Exxon will take H&P and may be domestically. Kevin Simpson - Miller Tabak: Okay. And is there anything hot or whatever for additional PACE rig new builds or what would the status be of any potential there? You mentioned it but didn't really follow up on it.

You know as well as we do. The guys who have rig acreage in Shale place actually dig new acreage or dig new investment plans with big new partners with big new money. They are going to beginning rigs appropriate for that flight, and a lot of them, some of them will decide that they need to build for purpose rig that we don't have anything on the front runner and if we did we wouldn't tell you that. Kevin Simpson - Miller Tabak: Okay. And then Marcellus, speaking of an area of a lot of capital flow, what's your position is in that market now and do you need kind of a different configured rig to be more competitive in the Marcellus which looks like it is going to get a lot bigger?

We have two working there now, and as far as we can tell that. The problem right now in the Marcellus is Patterson originated in Appalachia, so they have a legacy position which they can expand on pretty readily. And Aubrey got big acreage and big money there and he has his own rigs that really, of these rigs he controls which he sees, so we're in there and we're going to move our work over the stuff up there, but it's an edge free and open. As for example, the Haynesville where we have a predominant position are not super, a dominant position although British Colombia Shales, where we've a dominant position so. Kevin Simpson - Miller Tabak: So behind the Marcellus, would not be is not number one or two or three on your hit parade of where you want to put capital?

We would like to. If we have the opportunity we will put where, wherever the opportunity is. Its not that we are against it, its just that Patterson had a flying start there, we should have bought that company when Bear Stearns owned it 20 years ago and our Aubrey has its own rigs and he is just probably the biggest player out there. Kevin Simpson - Miller Tabak: Okay. Just one other question, Gene. Well Service did a lot better than I thought it would. It has been some of what a troubled a lot better than low expectations.

Its doing better lately. Kevin Simpson - Miller Tabak: Yeah, it's been a troubled operation. How much is in terms of looking forward you feel like have you the right team in place and --

We have some changes that we will be coming pretty soon and that's an important part of it and I think we are more aware of strategy which Larry is implementing better than we had before, and frankly we are much better able to mark it up. state of the art really millennium rigs which are clearly the best we haven't been able to get a nickel more from than anybody else so we haven't done the right job and frankly we are going to move a lot of that internationally so we are addressing it and hopefully results would be manifested in a couple of quarters.

Our next question from the line of Jim Rollyson with Raymond James. Jim Rollyson - Raymond James: Good morning, gentlemen. Gene, could you going back on Ole's thoughts on the question on the international side you kind of talked about I guess activity and the thoughts of what you're seeing in terms of new activity. Can you maybe spend a minute kind of what you're seeing on the pricing front as things progress going forward or things start to turn back around there from where you have been in the last few months and how do you see that going forward?

I think the pricing what we see the pricing is almost I guess the cap I don't in some areas its very competitive so we have to tighten our expenses but I think overall I think the rates are pretty much the same I don't see that the rates are really changing a lot.

One of the problems is rates can be the same but margins get whacked at some places for example, Saudi Arabia. It is a monopoly basically and they can put whatever capital requirements they want on an expansion on a new bid. The rate stays maybe about the same, but incremental capital if this was true I talked with one of the big great jack up players the same thing the state of the art jack up when it comes to renewing the 10s and $20 million to $30 million to enhance it. So that's more of an issue than price deterioration. Jim Rollyson - Raymond James: Understood. And Gene, I think last quarter you talked about kind of your preliminary thoughts on capital spending for this year, maybe give us an update on where you stand. It sounds like you still have opportunities possibly for new PACE rigs and other things. What's your thought there?

Yeah, we are basically we can, I mean the critical thing was to be in a position without any lucky strike extras to pay off the debt and that we are in a comfortable position to do right now we had some fortunate things happen basically with respect to that and also with respect to after tax income and we're looking at opportunities a little tougher maybe than before but you come back, come up with four rigs for the Bakken. You come up another ten rigs for the Bakken. You come up with another twenty, and in those terms we will have the money part. So starting low and moving up as projects show up.

Yes. I think we're up a little bit now. I think we're now projecting for in this year probably 750 or something and that number was around 5 when it had to be 5.

Our next question comes from the line of Scott Gruber with Bernstein. Please go ahead. Scott Gruber - Bernstein: I wanted to turn back to the U.S. fleet. Gene, you touched on this from various angles but to pin you down, where do you see more opportunity going forward? Is it putting SCR rigs back to work or is it building new PACE rigs?

Hopefully both. Scott Gruber - Bernstein: I realize it is going to be a mix.

I don't know which rig now. Right now, it's probably more likely short-term for the SCR rigs. It's the PACE rigs by definition you're going to take [x quarters] to do. But we're doing both. I mean if the customer particularly and a lot of customers think they know precisely what they want and hope the other guy has isn't perfect and I'll say a lot of them are willing to pay for so called built to purpose rigs and they do, and they will in my view. But right now short-term, it's going to be SCR rigs and occasionally even the mechanical rigs that's in the right place at the right time with the right crew. Scott Gruber - Bernstein: Understood. As the utilization for the SCR rigs pick up, how far do you think the rate spread to the PACE rigs can be squeezed down?

I don't know. I think there is plenty of competition now for new builds, too. Some of our competitors other than H&P are talking about investing in new builds and LV is talking about sizeable orders for domestic new builds. So there will be competition. It's the performance and also I think we have an edge in technology which has manifested itself. You guys don't know about it and we don't publicize it nearly as well as H&P but if we didn't go from zero incremental to 100 incremental from BP because we took them to lunch. Scott Gruber - Sanford Bernstein: Okay. Great. Just one last question if I could. Based on the December or January figures, what is the run rate in hourly activity for the U.S. Well Servicing segment? You mentioned it was going up in the press release but I was wondering if you could provide a quarterly run rate.

Yeah basically September was kind of our low point. We have moved up month-over-month since September and we continue to trend upwards. We expect that trend to continue. Scott Gruber - Sanford Bernstein: Do you have a December over September percent increase offhand?

Its roughly about 9% to 10%.

Thank you. Our next question comes form the line of Jeff Tillery with Tudor Pickering & Holt. Please go ahead. Jeff Tillery - Tudor Pickering Holt: Just one more question on the lower 48 business. Obviously for the industry many rigs have gone back to work in the last few months. Do you see any signs that the pace of reactivations for the industry abating over the next six to eight weeks?

I think what we are seeing is there are a lot of rigs going to fill very quickly but still a lot of demand start and we are seeing and we are looking at an increase obviously quarter-to-quarter and we haven't seen we will be at the same pace or at the same level. I don't think it will be there but we still see a strong demand, and we've positioned ourselves well with this and our training rigs that are up and so another question in the past that are going between the two rigs and reposition ourselves than any one in the industry would do that so. Jeff Tillery - Tudor Pickering Holt: And as you think about how Nabors participates going forward, obviously the PACE rigs are pretty fully utilized. Do you think about Nabors activity increases from here as being basically on par with what the overall industry sees better or worse?

We'll be on par.

At least on par.

What answer did you expect sir? Jeff Tillery - Tudor Pickering Holt: Just hoping not worse.

Absolutely not. Jeff Tillery - Tudor Pickering Holt: And then just last question, do you think that lower 48 can average for the first quarter kind of where you are today 160 rigs on the payroll?

What did you say. Jeff Tillery - Tudor Pickering Holt: You have a 150 rigs working today. Do you think that's going to be the average for the first quarter?

Yes it will be close.

Operator, we're getting to close our one hour time limit. We're going to just take one more question and then wrap it up please.

Our final question comes from the line of Robin Shoemaker with Citi. Please go ahead. Robin Shoemaker - Citi: I wanted to ask about your forecast of roughly $1200 margin decline in lower 48 in the first quarter. You do show the term contracts at the end of the first quarter roughly similar to the end of the fourth quarter. So is that the case that the new term contracts at lower rates are offsetting old term contracts at higher rates and that's what causes the margin to drop down to the $8000 level?

No. Yes, a combination of a few things. One is the term fee drop off on the rigs and then you also have in the first quarter, you have in the first quarter you have an unemployment tax effects. So there is multiple issues that are affecting this including like you say we're the new build or the old PACE rigs contracts dropping off, so it's a revenue issue, but mainly it is term fee delta and unemployment factors. Robin Shoemaker - Citi: On the new build PACE rigs, are you proceeding with new builds of pace rigs without contracts are from the four you mentioned that are have five year contracts?

No. We're in discussion but not right now.

Operator, I'll think I'll wrap up after that. If you want to close up please. Thanks.

Yes sir. Ladies and gentlemen, this concludes the Nabors Industries Fourth Quarter 2009 Earnings Conference Call. If you would like to listen to a replay of today's conference please dial 1800-406-7325 or 303-590-3030 and enter the access code of 420-2123. Thank you for your participation. You may now disconnect.