NABORS INDUSTRIES INC, DEF 14A, 1999-04-28

NABORS INDUSTRIES INC
DEF 14A, 1999-04-28
DRILLING OIL & GAS WELLS

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party Other than the Registrant [ ]
Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12

NABORS INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other that Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (1) and
0-11.

(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------

<PAGE> 2

===============================================================================

-----------------------------------------------------------

NOTICE
OF
1999 ANNUAL MEETING
OF
SHAREHOLDERS
AND
PROXY STATEMENT

-----------------------------------------------------------

[NABORS INDUSTRIES LOGO]

===============================================================================

<PAGE> 3

NABORS INDUSTRIES, INC.
515 WEST GREENS ROAD, SUITE 1200
HOUSTON, TEXAS 77067

May 3, 1999

TO OUR SHAREHOLDERS:

You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Nabors Industries, Inc., which will be held on Tuesday, June 8, 1999,
beginning at 2:00 p.m., Central Daylight Time, at the Wyndham Greenspoint Hotel,
12400 Greenspoint Drive, Houston, Texas 77060.

Information about the annual meeting, including matters on which
shareholders will act, may be found in the notice of annual meeting and proxy
statement accompanying this letter. We look forward to greeting in person as
many of our shareholders as possible.

Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed notice of
annual meeting and proxy statement, please sign, date and return the enclosed
proxy in the stamped envelope included with this letter.

Sincerely yours,

/s/ EUGENE M. ISENBERG
EUGENE M. ISENBERG
Chairman of the Board

<PAGE> 4

NABORS INDUSTRIES, INC.
515 WEST GREENS ROAD, SUITE 1200
HOUSTON, TEXAS 77067

---------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 8, 1999

---------------

The 1999 Annual Meeting of Shareholders of Nabors Industries, Inc. will be
held at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston, Texas
77060 on Tuesday, June 8, 1999 at 2:00 p.m., Central Daylight Time, to consider
and act upon the following matters:

1. The election of three Class II directors for terms expiring in 2002;

2. Such other business as may properly come before the annual meeting.

The Board has fixed the close of business on April 9, 1999 as the record
date for determining the shareholders who are entitled to vote at the annual
meeting and any adjournment or postponement of the meeting.

By Order of the Board of Directors,

/s/ DANIEL MCLACHLIN
DANIEL MCLACHLIN
Corporate Secretary

Dated: May 3, 1999

Please date and sign the enclosed proxy, and return it at your earliest
convenience in the enclosed stamped envelope, so that, if you are unable to
attend the annual meeting, your shares may be voted.

<PAGE> 5

NABORS INDUSTRIES, INC.
---------------

PROXY STATEMENT

---------------

1999 ANNUAL MEETING OF SHAREHOLDERS

JUNE 8, 1999

The Board of Directors of Nabors Industries, Inc., a Delaware corporation,
prepared this proxy statement for the purpose of soliciting proxies for the
1999 Annual Meeting of Shareholders. Our annual meeting will be held at the
Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston, Texas 77060 at
2:00 p.m., Central Daylight Time, on Tuesday, June 8, 1999, unless adjourned
or postponed. The Board is making this solicitation by mail, and Nabors will
pay all costs associated with this solicitation.

This proxy statement and accompanying notice of annual meeting and proxy
are first being mailed to shareholders on or about May 3, 1999.

At the annual meeting, each share of Nabors common stock will be entitled
to one vote. The common stock is the only outstanding class of voting
securities of Nabors. Only shareholders of record on Nabors' books at the close
of business on April 9, 1999 will be entitled to vote at the annual meeting. A
quorum is necessary to transact business at the annual meeting. The presence at
the annual meeting, in person or by proxy, of holders of a majority of the
shares outstanding on April 9, 1999, constitutes a quorum.

On April 9, 1999, there were approximately 106,985,837 shares outstanding
and entitled to vote. This number includes 100,818,801 Nabors shares
outstanding on that date and approximately 6,167,036 Nabors shares outstanding
as a result of the merger of a subsidiary of Nabors into Bayard Drilling
Technologies, Inc. on April 7, 1999. The merger provides that each Bayard
share converted into .3375 shares of Nabors common stock and $.30. The number
of Nabors shares issuable in exchange for Bayard shares is approximate because
cash will be issued in place of fractional shares, and we do not know at this
time how many whole shares of Nabors common stock will be outstanding after the
exchange of the Bayard shares.

Proxies received will be voted in accordance with the shareholders'
directions given in the proxies. In the absence of directions, shares will be
voted FOR the nominees for election as directors named in this proxy statement.
You may revoke your proxy at any time before it is actually voted by:

o filing with the Corporate Secretary of Nabors, at or before the
annual meeting, but in any event prior to the vote, a written notice
of revocation bearing a date later than the proxy being revoked;

o duly executing and submitting, prior to the annual meeting, a
subsequent proxy relating to the annual meeting; or

o voting in person at the annual meeting (although attendance at the
annual meeting will not, in and of itself, constitute a revocation of
a proxy).

You must send any written notice revoking your proxy to the Corporate Secretary
at our executive offices, 515 West Greens Road, Suite 1200, Houston, Texas
77067.

Nabors' restated certificate of incorporation provides that a plurality of
the votes cast at a meeting at which a quorum is present is required for the
election of directors. The election of directors is the only matter scheduled to
be considered at the annual meeting. If any other matter should be presented at
the annual meeting upon which a vote may be taken, shares represented by proxies
in the accompanying form will be voted in accordance with the judgment of Eugene
M.

<PAGE> 6

Isenberg and Anthony G. Petrello, who have been designated as proxies to vote
the shares solicited by this proxy statement.

A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to the particular item under
consideration and has not received instructions from the beneficial owner.
Under Delaware law abstaining votes (votes withheld by shareholders who are
present and entitled to vote) and broker non-votes are deemed to be present for
purposes of determining whether a quorum is present at a meeting and although
abstentions and broker non-votes are not deemed to be votes duly cast,
abstaining votes are deemed to be entitled to vote while broker non-votes are
not deemed to be entitled to vote. Abstentions and broker non-votes will not be
included in the tabulation of the voting results with respect to the election
of directors and therefore will not have any effect on such vote.

In December 1997, we changed our fiscal year from a year beginning October
1 and ending September 30 to a year beginning January 1 and ending December 31.
References in this document to a transition period are to the three month
period beginning October 1, 1997 and ending December 31, 1997.

ELECTION OF DIRECTORS

The restated certificate of incorporation authorizes the Board to fix the
number of directors from time to time, but at no less than five nor more than
eleven. The number of directors is currently established at eight. The restated
certificate of incorporation also provides for three classes of directors,
designated Class I, Class II and Class III, each currently having three-year
terms of office. Each class of directors is to consist of, as nearly as
possible, one-third of the total number of directors constituting the entire
Board. Except for directors elected to fill vacancies (whether created by
death, resignation, removal or expansion of the Board), the directors of each
class will be elected for a term of three years or until their successors have
been elected and qualified. At the annual meeting, three Class II directors,
Anthony G. Petrello, Myron M. Sheinfeld and Martin J. Whitman, are nominated
for election to the Board to serve for a three-year term.

As a result of death of Gary T. Hurford on April 12, 1999 the Board has
seven members. Mr. Hurford served as a Class III director. The Board is entitled
to fill this vacancy or to reduce the number of directors to seven, but has not
made a decision as to how it will proceed at this time.

If the enclosed proxy is signed and returned, it will be voted FOR the
election of Mr. Petrello, Mr. Sheinfeld and Mr. Whitman as Class II directors,
to serve until the 2002 annual meeting of shareholders or until their
successors have been duly elected and qualified, unless contrary directions are
given in your proxy. However, should any nominee become unavailable or prove
unable to serve for any reason, the proxy will be voted for the election of
such other person as the Board may select to replace such nominee, unless the
Board instead fixes the number of directors at less than eight. The Board has
no reason to believe that the nominees will not be available or will prove
unable to serve.

The following tables set forth certain information concerning each Class
II director nominee, the continuing Class I and Class III directors and
executive officers of Nabors who are neither directors nor nominees for election
as directors.

2
<PAGE> 7

CLASS II DIRECTOR NOMINEES -- TERMS EXPIRING IN 2002

<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------

<S> <C> <C> <C>
Anthony G. Petrello.... 44 President and Chief Operating Officer of 1991
Nabors since 1992 and a member of the
Executive Committee of the Board since
1991. He also has been a Director of
Danielson Holding Corporation (a financial
services holding company) since 1996. From
1979 to 1991, Mr. Petrello was with the law
firm Baker & McKenzie, where he had been
Managing Partner of its New York Office
from 1986 until his resignation in 1991. He
continues as Of Counsel to the firm and the
firm continues to provide legal services to
Nabors. Mr. Petrello holds a J.D. degree
from Harvard Law School and B.S. and M.S.
degrees in Mathematics from Yale
University.

Myron M. Sheinfeld.... 69 Chairman of the Audit Committee of the Board 1988
since 1988 and a member of the Compensation
Committee since 1993. He is counsel to the
law firm Sheinfeld, Maley & Kay, a
professional corporation located in
Houston, Texas. Mr. Sheinfeld was an
adjunct professor of law at the University
of Texas, School of Law from 1975 to 1991,
and has been a contributing author to
numerous legal publications, and a
contributor, co-editor and co-author of
Collier On Bankruptcy, and a co-author of
Collier On Bankruptcy Tax for Matthew
Bender & Co., Inc. He is a member of the
Board of Editors of "The Practical Lawyer",
a member of the Board of Trustees of Third
Avenue Trust (a registered investment
company) and a Director of Anchor Glass
Container Corporation.
</TABLE>

3
<PAGE> 8

<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------

<S> <C> <C> <C>
Martin J. Whitman..... 74 Member of the Audit Committee of the Board 1991
since 1993. Chairman and Chief Executive
Officer of M. J. Whitman, Inc., and its
predecessors (a broker-dealer), since 1974;
Chairman of the Board and a Director of
Danielson Holding Corporation since 1990;
Chairman, Chief Executive Officer and
Director of Third Avenue Trust and its
predecessor and EQSF Advisors, Inc. (the
advisor to Third Avenue Trust) since 1990;
Director of Tejon Ranch Co. (an
agricultural and land management company)
since 1997; and Director from March 1993 to
February 1996 of Herman's Sporting Good's,
Inc. (a retail sporting goods chain) which
filed a voluntary petition under Chapter 11
of the United States Bankruptcy Code in
April 1996. Mr. Whitman is an Adjunct
Lecturer, Adjunct Professor and
Distinguished Fellow in Finance, Yale
University School of Management from 1972
to 1984 and 1992 to present. Mr. Whitman is
co-author of The Aggressive Conservative
Investor and author of Value Investing: A
Balanced Approach.
</TABLE>

4
<PAGE> 9

CLASS I CONTINUING DIRECTORS - TERMS EXPIRING IN 2001

<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------
<S> <C> <C> <C>
Hans W. Schmidt...... 69 Chairman of the Technical and Safety 1993
Committee of the Board since 1998. From
1958 to 1992, Mr. Schmidt held a number of
positions with C. Deilman A.G., a
diversified energy company located in Bad
Bentheim, Germany, including serving as a
Director from 1982 to 1992. He also served
from 1965 to 1992 as Director of a
subsidiary of C. Deilman A.G., Deutag
Drilling, a company with worldwide drilling
operations. From 1988 to 1991, Mr. Schmidt
served as President of Transocean Drilling
Company, a company of which he was also a
director from 1981 until 1991.

Richard A. Stratton.... 52 Vice Chairman of the Board, a member of the 1986
Executive Committee of the Board since 1992
and a member of the Technical and Safety
Committee of the Board since 1998. Mr.
Stratton served Nabors as President and
Chief Operating Officer from 1986 to 1992,
as Vice President from 1981 to 1986 and as
Corporate Controller from 1979 to 1981.
From 1970 to 1979, Mr. Stratton, a CPA, was
associated with the accounting firm Price
Waterhouse.
</TABLE>

<PAGE> 10

CLASS III CONTINUING DIRECTORS -- TERMS EXPIRING IN 2000

<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------
<S> <C> <C> <C>
Eugene M. Isenberg... 69 Chairman of the Board, Chairman of the 1987
Executive Committee of the Board and Chief
Executive Officer of Nabors since 1987. He
also has been a Director of Danielson
Holding Corporation (a financial services
holding company) since 1990. He also has
been a Governor of the National Association
of Securities Dealers (NASD) since 1998,
the National Association of Securities
Dealers Automated Quotation (NASDAQ) since
1998 and the American Stock Exchange (AMEX)
since 1996. From 1969 to 1982, Mr. Isenberg
was Chairman of the Board and principal
shareholder of Genimar, Inc. (a steel
trading and building products manufacturing
company), which was sold in 1982. From 1955
to 1968, Mr. Isenberg was employed in
various management capacities with Exxon
Corporation.

Jack Wexler............. 73 Chairman of the Compensation Committee of the 1987
Board and a member of the Executive and
Audit Committees of the Board since 1987.
He is an international business consultant
and has acted as a consultant to exporting
and petroleum service companies since 1983.
Prior to 1983, Mr. Wexler was employed by
Exxon Corporation and its affiliates,
serving in senior staff and operating
management positions in the United States
and the Far East.
</TABLE>

EXECUTIVE OFFICERS (NOT DIRECTORS)

<TABLE>
<CAPTION>
POSITION WITH NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE
---- --- -----------------------------

<S> <C> <C>
Bruce P. Koch........... 39 Vice President-Finance, since January 1996,
and Controller of Nabors since March 1990.
He was associated with the accounting firm
of Coopers & Lybrand from 1983 to 1990 in a
number of capacities including Audit
Manager. Mr. Koch has been a Certified
Public Accountant since 1982.

Daniel McLachlin.... 61 Vice President-Administration and Corporate
Secretary of Nabors since 1986. He was
Manager, Administration of Nabors from 1984
to 1986. From 1979 to 1984, he was the Vice
President, Human Resources of Nabors
Drilling Limited, a subsidiary of Nabors.
</TABLE>

6
<PAGE> 11

COMMITTEES OF THE BOARD

The Board has four committees - the Executive Committee, the Compensation
Committee, the Audit Committee and the Technical and Safety Committee. The
Board does not have a standing nominating committee. A shareholder who wishes
to nominate a candidate for election to the Board should forward the
candidate's name and detailed description of the candidate's qualifications to
Nabors' Corporate Secretary at 515 West Greens Road, Suite 1200, Houston, Texas
77067. Nabors requires notice of nominations by shareholders of persons for
election as directors at the 2000 annual meeting of shareholders to be held on
June 6, 2000 to be delivered to Nabors on or prior to January 3, 2000.

The Executive Committee is comprised of Mr. Isenberg (Chairman), Mr.
Petrello, Mr. Stratton and Mr. Wexler. The Compensation Committee is comprised
of Mr. Sheinfeld and Mr. Wexler (Chairman). The Audit Committee is comprised of
Mr. Sheinfeld (Chairman), Mr. Wexler and Mr. Whitman. The Technical and Safety
Committee is comprised of Mr. Schmidt (Chairman) and Mr. Stratton.

The Executive Committee met eleven times during the fiscal year ended
December 31, 1998 and sixteen times during the transition period. The Executive
Committee has all of the powers, rights and authority of the Board of Directors
to the extent permitted by law, except with respect to certain actions as
stated in Nabors' bylaws.

The Compensation Committee met three times during the fiscal year ended
December 31, 1998 and did not meet during the transition period. The
Compensation Committee is responsible for reviewing and making recommendations
with respect to the objectives, structure, cost and administration of Nabors'
compensation programs and in that context reviews employment agreements,
salaries, bonuses, stock options and employee benefit plans for officers and
key employees.

The Audit Committee met five times during the fiscal year ended December
31, 1998 and one time during the transition period. The Audit Committee reviews
and approves the scope of audit and non-audit services, the results of the
audit, the adequacy of internal controls and fee estimates for audit and
certain non-audit services.

The Technical and Safety Committee was established by the Executive
Committee on December 30, 1998 and did not meet during the fiscal year ended
December 31, 1998. The Technical and Safety Committee provides leadership in
developing policy, implementing programs and monitoring performance in the
technical and safety aspects of Nabors' operations.

The Board of Directors met six times during the fiscal year ended December
31, 1998 and one time during the transition period. Except for Mr. Stratton, no
incumbent director attended fewer than 75% of the aggregate of the meetings of
the Board and meetings of all committees on which he served.

DIRECTOR COMPENSATION

Directors who are not employees of Nabors receive $28,000 per year and an
additional $3,000 per year for serving as chairman of a Board committee. Nabors
does not pay additional fees for attendance at meetings of Board committees,
except that non-employee directors who serve on the Executive Committee are
paid $2,000 per meeting for attendance at meetings of the Executive Committee.

In addition, Nabors issues stock options to its non-employee directors.
Under its 1993 Stock Option Plan for Non-Employee Directors, each non-employee
director in office at each annual meeting date receives a grant to purchase
5,000 shares at the market price on the date of grant. On March 3, 1998, each
of Mr. Hurford, Mr.

7
<PAGE> 12

Schmidt, Mr. Sheinfeld, Mr. Wexler and Mr. Whitman was granted options to
purchase 5,000 shares at a per share price of $24.5625. These options are
exercisable for ten years and become fully vested on June 1, 1999.

Effective December 30, 1998, the Board replaced this plan with the 1999 Stock
Option Plan for Non-Employee Directors. The new plan is intended to provide an
incentive to retain the services, and thereby encourage the continuity, of
Nabors' non-employee directors, with the objective of enhancing shareholder
value. Option grants under the new plan are determined by a committee comprised
of employee directors of the Board of Directors. On December 30, 1998, each
non-employee director received option grants based on his serving as a Board
member, a committee member and/or as a committee chairman, as follows: Mr.
Hurford, 12,500 shares; Mr. Schmidt, 15,000 shares; Mr. Sheinfeld, 17,500
shares; Mr. Wexler, 20,000 shares; and Mr. Whitman, 12,500 shares. All of the
options were granted at a per share price of $12.625, become fully vested on
December 30, 1999 and are exercisable for ten years.

CERTAIN RELATIONSHIPS

Mr. Anthony Petrello was a partner of, and is currently Of Counsel to,
Baker & McKenzie. Baker & McKenzie provided legal services to Nabors during the
fiscal year ended December 31, 1998 and is expected to continue to render such
services in the future. Mr. Petrello does not receive remuneration from Baker &
McKenzie for work performed by the firm in connection with Nabors.

For additional disclosure regarding relationships between members of the
Board and Nabors, see "Compensation Committee Interlocks & Insider
Participation".

SHARE OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS

The following table sets forth, as of April 15, 1999, information with
respect to the beneficial ownership of Nabors' outstanding shares by (a) each
Director and nominee for election as a Director, (b) executive officers who are
not directors or nominees for election as directors, (c) all directors and
executive officers as a group, (d) any other person or entity known by Nabors
to be the beneficial owner of more than 5% of the shares, which is Nabors' only
outstanding class of voting securities:

8
<PAGE> 13

<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED
----------------------------------------
BENEFICIAL OWNER(2) NUMBER OF SHARES PERCENT OF TOTAL(1)
---------------- -------------------

<S> <C> <C>
DIRECTORS
Eugene M. Isenberg(3).................................................. 4,775,902 4.27
Anthony G. Petrello(4)................................................. 1,234,500 1.14
Hans W. Schmidt(5)..................................................... 93,000 *
Myron M. Sheinfeld(6).................................................. 52,135 *
Richard A. Stratton(7)................................................. 291,245 *
Jack Wexler(8)......................................................... 60,000 *
Martin J. Whitman(9)................................................... 868,073 *

EXECUTIVE OFFICERS (NOT DIRECTORS)
Bruce P. Koch(10)...................................................... 40,000 *
Daniel McLachlin(11)................................................... 12,591 *
All Directors/Executive Officers as a group
(9 persons) (3)-(11)................................................. 7,427,446 6.65

OTHER
Merrill Lynch & Co. (12)............................................... 8,000,000 7.48
</TABLE>

- ---------------

* Less than 1%

(1) As of April 15, 1999 Nabors had outstanding and entitled to vote
106,985,837 shares.

(2) The address of each of the persons listed, unless otherwise indicated, is
in care of Nabors, 515 West Greens Road, Suite 1200, Houston, Texas 77067.

(3) The shares listed for Mr. Isenberg include 3,000,500 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999. The shares listed for Mr. Isenberg are held directly or indirectly
through certain trusts, defined benefit plans and individual retirement
accounts of which Mr. Isenberg is a grantor, trustee or beneficiary. Not
included in the table are 190,543 shares owned directly or held in trust
by Mr. Isenberg's spouse as to which Mr. Isenberg disclaims beneficial
ownership.

(4) The shares listed for Mr. Petrello include 1,084,500 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999. The shares listed for Mr. Petrello are held directly or indirectly
through certain trusts of which Mr. Petrello is a grantor, trustee or
beneficiary.

(5) The shares listed for Mr. Schmidt include 90,000 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999.

(6) The shares listed for Mr. Sheinfeld include 35,000 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999.

(7) The shares listed for Mr. Stratton include 262,500 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999. Not included in the table are 61 shares owned directly by Mr.
Stratton's spouse as to which Mr. Stratton disclaims beneficial ownership.

<PAGE> 14

(8) The shares listed for Mr. Wexler include 60,000 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999. Not included in the table are 300 shares owned directly by Mr.
Wexler's spouse as to which Mr. Wexler disclaims beneficial ownership.

(9) The shares listed for Mr. Whitman include 40,000 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999. The shares listed for Mr. Whitman also include 474,808 shares of
Nabors common stock owned by M. J. Whitman & Co., Inc. Because Mr. Whitman
is a majority stockholder in M.J. Whitman & Co, Inc., he may be deemed to
have beneficial ownership of the Nabors shares owned by that company. The
shares listed for Mr. Whitman exclude 2,805 shares owned directly by Mr.
Whitman's spouse as to which Mr. Whitman disclaims beneficial ownership
of.

(10) The shares listed for Mr. Koch include 40,000 shares which may be acquired
pursuant to the exercise of options within 60 days of April 15, 1999.

(11) The shares listed for Mr. McLachlin include 12,500 shares which may be
acquired pursuant to the exercise of options within 60 days of April 15,
1999.

(12) Based on the information contained in Schedule 13G of Merrill Lynch & Co.,
on behalf of Merrill Lynch Asset Management Group, and Merrill Lynch
Growth Fund (collectively "Merrill Lynch") filed with the Securities and
Exchange Commission on February 4, 1999, the shares listed for Merrill
Lynch & Co. include 8,000,000 shares of Nabors common stock beneficially
owned for which Merrill Lynch has shared voting power and shared
dispositive power. The address of the entities are as follows: Merrill
Lynch & Co., Inc. World Financial Center, North Tower, 250 Vesey Street,
New York, NY 10381 and Merrill Lynch Growth Fund, 800 Scudders Mill Road,
Plainsboro, NJ 08536.

<PAGE> 15

MANAGEMENT COMPENSATION

SUMMARY COMPENSATION TABLE

The table below sets forth all reportable compensation awarded to, earned
by or paid to the named executive officers for services rendered in all
capacities to Nabors and its subsidiaries whose compensation for the year
exceed $100,000 for each of the last three fiscal years and the transition
period.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
-----------------------------------
AWARDS PAYOUTS
- -----------------------------------------------------------------------------------------------------------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION($)
POSITION YEAR(1) SALARY($) BONUS($) ($) (2) ($) SARS (1) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Eugene M. Isenberg 1998 325,000 1,000,000 (3) 0 8,249,119 (4) 0 114,648 (5)
Chairman of the
Board, Director and Transition 81,250 250,000 (3) 0 0 0 30,647 (6)
Chief Executive Officer Period
0
1997 325,000 1,350,000 0 6,012,500 141,453

1996 325,000 1,350,000 0 1,000,000 36,755
- -----------------------------------------------------------------------------------------------------------------------------------
Anthony G. Petrello 1998 275,000 200,000 (7) 0 3,905,423 (4) 0 295,041 (8)
Director, President and
Chief Operating Officer Transition 68,750 50,000 (7) 0 0 0 62,704 (9)
Period
0
1997 275,000 300,000 0 3,437,000 409,943

1996 275,000 300,000 0 303,000 447,238
- -----------------------------------------------------------------------------------------------------------------------------------
Richard A. Stratton 1998 275,000 180,000 0 1,363,125 (4) 0 14,539 (10)
Vice Chairman of the
Board and Director Transition 68,750 45,000 0 0 0 5,719 (11)
Period
0
1997 275,000 300,000 0 1,287,500 19,315

1996 275,000 300,000 0 75,000 18,774
- -----------------------------------------------------------------------------------------------------------------------------------
Bruce P. Koch 1998 130,000 11,200 (12) 0 21,000 (4) 0 5,850 (13)
Vice President-Finance
Transition 32,500 2,800 0 0 0 1,463 (14)
Period
0
1997 126,250 26,000 0 15,000 5,681

1996 111,250 23,000 0 20,000 5,006
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Information for the 1998 period reflects the period from January 1, 1998
to December 31, 1998 and the information for the transition period
reflects the period from October 1, 1997 to December 31, 1997. All other
periods are based on an October 1 to September 30 fiscal year.

(2) The aggregate amount of perquisites and other personal benefits did not
exceed the lesser of $50,000 or 10% of the salary and bonus for each of
the named executive officers.

11
<PAGE> 16

(3) Mr. Isenberg is entitled to receive an annual bonus as provided in his
employment agreement with Nabors. In place of the remainder of his bonus
for the transition period and for fiscal 1998, Mr. Isenberg was granted
options to purchase 2,200,000 shares.

(4) Includes 6,049,119 options for Mr. Isenberg; 3,005,423 options for
Mr. Petrello; 1,063,125 options for Mr. Stratton; and 21,000 options for
Mr. Koch that were repriced on December 11, 1998. These options replaced
8,065,492 options for Mr. Isenberg; 4,007,230 for Mr. Petrello; 1,417,500
options for Mr. Stratton; and 28,000 options for Mr. Koch that had been
granted previously during fiscal year 1998 and subsequently forfeited for
the repriced options (See "Option Grants in the Last Fiscal Year" and
"Repricing of Options").

(5) Includes (a) Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $7,200 and (b) $107,448
that is the benefit to Mr. Isenberg of the premiums paid by Nabors, as
projected on an actuarial basis, for a split dollar life insurance
arrangement.

(6) Includes (a) Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $3,785 and (b) $26,862
that is the benefit to Mr. Isenberg of the premiums paid by Nabors, as
projected on an actuarial basis, for a split dollar life insurance
arrangement.

(7) Mr. Petrello is entitled to receive an annual bonus as provided in his
employment agreement with Nabors. In place of the remainder of his bonus
for the transition period and for fiscal 1998, Mr. Petrello was granted
options to purchase 900,000 shares.

(8) Includes (a) Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $7,200; (b) $5,174 that
is the benefit to Mr. Petrello of the premiums paid by Nabors, as
projected on an actuarial basis, for a split dollar life insurance
arrangement; (c) imputed interest of $151,167 on a loan from Nabors in the
maximum amount of $2,881,915 pursuant to his employment agreement in
connection with his relocation to Houston, the balance of which was
$2,881,915 as of March 31, 1999 and no interest has been paid or charged
thereon; and (d) reimbursement of certain traveling and other expenses of
$131,500.

(9) Includes (a) Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $3,758; (b) $1,293 that
is the benefit to Mr. Petrello of the premiums paid by Nabors, as
projected on an actuarial basis, for a split dollar life insurance
arrangement; (c) imputed interest of $41,283 on a loan from Nabors in the
maximum amount of $2,881,915 pursuant to his employment agreement in
connection with his relocation to Houston, the balance of which was
$2,881,915 as of March 31, 1999 and no interest has been paid or charged
thereon; and (d) reimbursement of certain traveling and other expenses of
$16,370.

(10) Includes (a) Nabors' matching contributions to a retirement savings plan
and non-qualified deferred compensation plan of $7,200; (b) $1,864 that is
the benefit to Mr. Stratton of the premiums paid by Nabors, as projected
on an actuarial basis, for a split dollar life insurance arrangement; and
(c) imputed interest of $5,475 on a loan from Nabors in the maximum amount
of $104,375 in connection with his relocation to Houston, the balance of
which was $104,375 as of March 31, 1999 and no interest has been paid or
charged thereon.

(11) Includes (a) Nabors' matching contributions to a retirement savings plan
and non-qualified deferred compensation plan of $3,758; (b) $466 that is
the benefit to Mr. Stratton of the premiums paid by Nabors, as projected
on an actuarial basis, for a split dollar life insurance arrangement; and
(c) imputed interest of $1,495 on a loan from Nabors in the maximum amount
of $104,375 in connection with his relocation to Houston, the balance of
which was $104,375 as of March 31, 1999 and no interest has been paid or
charged thereon.

(12) Mr. Koch elected, in place of a portion of his cash bonus award, to be
granted options to purchase 5,600 shares on February 26, 1999.

(13) Includes Nabors' matching contributions to a retirement savings plan and a
non-qualified deferred compensation plan of $5,850.

12
<PAGE> 17

(14) Includes Nabors' matching contributions to a retirement savings plan and a
non-qualified deferred compensation plan of $1,463.

STOCK OPTION/SAR GRANT TABLE

The following table provides information with respect to stock options
granted during the fiscal year ended December 31, 1998 to the named executive
officers. Nabors did not grant any options or stock appreciation rights to
these officers during the transition period, nor did it grant stock
appreciation rights to these officers in fiscal 1998.

OPTION GRANTS IN THE LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL EXERCISE
SECURITIES OPTIONS OR
UNDERLYING GRANTED TO BASE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH) DATE VALUE ($)(5)
- -------------------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Eugene M. Isenberg 540,000 (1) 2.97% 12.500 10/18/06 1,699,710
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 222,750 (1) 1.23% 12.500 10/23/06 701,130
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 93,420 (1) 0.51% 12.500 11/11/06 294,050
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 131,580 (1) 0.72% 12.500 11/12/06 414,163
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 225,000 (1) 1.24% 12.500 11/13/06 708,213
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 112,500 (1) 0.62% 12.500 11/14/06 354,106
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 112,500 (1) 0.62% 12.500 11/20/06 354,106
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 247,500 (1) 1.36% 12.500 11/22/06 779,034
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 1,087,500 (1) 5.99% 12.500 12/12/06 3,423,027
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 1,736,625 (1) 9.57% 12.500 07/22/07 5,466,220
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 1,539,744 (2) 8.48% 12.500 01/09/08 4,846,515
---------- ---------- ---------- ---------- ----------
Eugene M. Isenberg 2,200,000 (3) 12.12% 12.625 12/30/08 7,045,060
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 360,000 (1) 1.98% 12.500 10/18/06 1,133,140
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 147,750 (1) 0.81% 12.500 10/23/06 465,060
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 62,280 (1) 0.34% 12.500 11/11/06 196,033
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 87,720 (1) 0.48% 12.500 11/12/06 276,108
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 150,000 (1) 0.83% 12.500 11/13/06 472,142
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 75,000 (1) 0.41% 12.500 11/14/06 236,071
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 75,000 (1) 0.41% 12.500 11/20/06 236,071
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 165,000 (1) 0.91% 12.500 11/22/06 519,356
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 487,500 (1) 2.69% 12.500 12/12/06 1,534,460
---------- ---------- ---------- ---------- ----------
Anthony G. Petrello 967,500 (1) 5.33% 12.500 07/22/07 3,045,314
========== ========== ========== ========== ==========
</TABLE>

13
<PAGE> 18

(1) These options were repriced on December 11, 1998 at an exercise price of
$12.50. The original expiration dates and vesting schedules remained the
same as the previous schedules, except that no repriced options are
exercisable prior to December 14, 1999. Only 75% of the executive's then
outstanding options with an exercise price of $16.00 or greater were
replaced with new options. The remaining 25% were forfeited. The number of
options forfeited by the executive officers were as follows: Mr. Isenberg,
1,503,125; Mr. Petrello, 859,250; Mr. Stratton, 296,875; and Mr. Koch,
3,750.

(2) These options were originally granted on January 9, 1998. Mr. Isenberg's
and Mr. Petrello's options were granted in place of a portion of their
cash bonuses for fiscal year 1997. These options were repriced on December
11, 1998 at an exercise price of $12.50. The original expiration dates and
vesting schedules remained the same as the previous schedules, except that
no repriced options are exercisable prior to December 14, 1999. Only 75%
of the executive's then outstanding options with an exercise price of
$16.00 or greater were replaced with new options. The remaining 25% were
forfeited. The number of options forfeited by the executive officers were
as follows: Mr. Isenberg, 513,248; Mr. Petrello, 142,558; Mr. Stratton,
57,500; and Mr. Koch, 3,250.

(3) These options were granted on December 30, 1998 and vested immediately.
Mr. Isenberg's and Mr. Petrello's options were granted in place of a
portion of their cash bonuses for fiscal year 1998 and the transition
period.

(4) These options were granted on December 30, 1998 and vest in three equal
annual installments beginning December 30, 1999, subject to accelerated
vesting as set forth below. In the event that the shares trade for 20
consecutive days at an average price that is 15% per annum or greater than
the price on the date of grant, the first installment will vest; if the
shares trade at 32.3% or more, the second installment will vest; and if
the shares trade at 52.1% or more, the third installment will vest.

14
<PAGE> 19
(5) All options are granted at an exercise price equal to the market value of
the shares on the date of grant. Therefore, if there is no appreciation in
the market value, no value will be realizable. In accordance with
Securities and Exchange Commission rules, the Black-Scholes option pricing
model was chosen to estimate the grant date present value of the options
set forth in this table. Nabors' use of this model should not be construed
as an endorsement of its accuracy at valuing options. All stock option
valuation models, including the Black-Scholes model, require a prediction
about the future movement of the stock price. The following assumptions
were made for purposes of calculating the grant date present value: (a) for
options that were repriced, we assumed expected terms of two to three and
one-half years, volatility of 38.876%, dividends of $0 per share and risk
free rate of return of 4.451%; and (b) for options granted on December 30,
1998, we assumed expected terms of two to three and one-half years,
volatility of 38.876%, dividends of $0 per share and risk free rates of
return of 4.67% to 4.68%. The figures given are not intended to forecast
future price appreciation of the shares. The real value of the options in
this table depends solely upon the actual performance of the Nabors' stock
during the applicable period.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

The following table provides information with respect to the stock options
exercised during fiscal 1998 and the value as of December 31, 1998 of
unexercised in-the-money options held by the named executive officers. Nabors
did not grant any options or stock appreciation rights to these officers during
the transition period, nor did it grant stock appreciation rights to these
officers in fiscal 1998. The value realized on the exercise of options is
calculated using the difference between the per share option exercise price and
the market value of a share on the date of the exercise. The value of
unexercised in-the-money options at fiscal year end is calculated using the
difference between the per share option exercise price and the market value of
$12.9375 per share at December 31, 1998.

<TABLE>
<CAPTION>
NAME SHARES VALUE SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED REALIZED UNEXERCISED OPTIONS/SARS IN-THE-MONEY
ON AT FY-END OPTIONS AT FY-END
EXERCISE
EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- ----------------------- ------------ ----------- --------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Eugene M. Isenberg 0 $ 0 3,000,500 / 6,049,119 $ 3,389,188 / $ 2,646,490
------------ ----------- --------------------------------- ---------------------------------
Anthony G. Petrello 0 0 1,084,500 / 3,005,423 903,938 / 1,314,873
------------ ----------- --------------------------------- ---------------------------------
Richard A. Stratton 0 0 262,500 / 1,363,125 827,344 / 558,867
------------ ----------- --------------------------------- ---------------------------------
Bruce P. Koch 0 0 30,000 / 36,000 159,375 / 68,250
============ =========== ================================= =================================
</TABLE>

EMPLOYMENT CONTRACTS

Mr. Isenberg's and Mr. Petrello's employment contracts were amended and
restated effective October 1, 1996 and both contracts had an expiration date of
September 30, 2001. The expiration date automatically extends for an additional
one year term on each anniversary date, unless Nabors provides notice to the
contrary ten days prior to such anniversary. Mr. Isenberg's salary is subject
to annual review for increase at the discretion of the Board and its
Compensation Committee. The formula for the calculation of his cash bonus
remained as it had been under the prior version, a shareholder approved
contract which provided that Mr. Isenberg is entitled to receive an annual cash
bonus equal to 7% (6% for fiscal years commencing on or after October 1, 1999)
of Nabors' net cash flow (as defined in the employment contract) in excess of
15% of the average stockholder's equity for such fiscal year. Mr. Petrello's
salary is subject to annual review for increase at the discretion of the Board
and its Compensation Committee. His annual bonus remained as it had been at the
greater of $700,000 or 2% of the net cash flow (as defined in the employment
contract) in excess of 15% of the average stockholders equity in such year.
Messrs. Isenberg and Petrello are eligible for stock options and grants, may
participate in annual long-term incentive programs, and pension and welfare
plans, on

15
<PAGE> 20

the same basis as other executives and may receive special bonuses from time to
time as determined by the Board.

In addition to salary and bonus, each of Mr. Isenberg and Mr. Petrello is
entitled to group life insurance at an amount at least equal to three times
base salary; various split-dollar life insurance policies, reimbursement of
expenses, various perquisites and a personal umbrella policy in the amount of
$5 million. Further, if Mr. Isenberg or Mr. Petrello is subject to the tax
imposed by Section 4999 of the Internal Revenue Code, Nabors has agreed to
reimburse them for such tax on an after-tax basis.

In the event that either Mr. Isenberg's or Mr. Petrello's employment
contract is terminated by Nabors by reason of death, disability, or any reason
other than for cause, or is terminated by either individual for Constructive
Termination Without Cause (as defined in the agreements) or is terminated as a
result of or following a Change of Control (as defined in the agreements), the
terminated individual will be entitled to receive (a) all base salary which
would have been payable through the expiration date of the contract (currently,
September 30, 2003) or three times the then current base salary, whichever is
greater; (b) all annual cash bonus which would have been payable through the
expiration date, or three times the highest bonus, (including the imputed value
of grants of stock awards and stock options), paid or payable during the last
three fiscal years prior to termination, whichever is greater; (c) any
restricted stock outstanding, which shall become immediately and fully vested;
(d) any outstanding stock options, which shall become immediately and fully
vested; (e) any amounts earned, accrued or owing to the executive but not yet
paid (including executive benefits, life insurance, disability benefits and
reimbursement of expenses and perquisites) shall be continued through the later
of the expiration date or three years after the termination date; (f) continued
participation in medical, dental and life insurance coverage until the
executive receives equivalent benefits or coverage through a subsequent
employer or until the death of the executive or his spouse, whichever is later;
and (g) any other or additional benefits in accordance with applicable plans
and program of Nabors. In the event that either Mr. Isenberg's or Mr.
Petrello's termination is related to a Change in Control, the terminated
individual at his election shall be entitled to receive a cash amount equal to
one dollar less than the amount that would constitute an "excess parachute
payment" as defined in Section 280G of the Internal Revenue Code, in place of
the salary and bonus referred to in (a) and (b) above. In addition, the
terminated individual shall be entitled, upon his election to terminate because
of such Change in Control, to receive in lieu of any such number of outstanding
options, as selected by the individual, an amount of cash in exchange therefor
equal to (x) the excess of the Change in Control Price (as defined in the
agreements) over the exercise price of the options per share of common stock
multiplied by (y) the number of options selected by the individual. In
addition, they shall be entitled to be granted additional options immediately
exercisable for five years, at a price equal to the average closing price per
share during the 20 days prior to the Change of Control in an amount equal to
the highest number of options granted during any fiscal year during the period
comprising the then current fiscal year and the three fiscal years preceding
the Change in Control. In the event that either Mr. Isenberg's or Mr.
Petrello's employment contract is terminated for cause or as a result of
resignation (other than as described above), the terminated individual will be
entitled to receive (1) base salary through the date of termination; (2) all
annual cash bonus which would have been payable through the date of
termination; (3) all restricted stock that has vested on or prior to the date
of termination; (4) any outstanding stock options vested on or prior to the
date of termination; (5) any amounts earned, accrued or owing to the executive
but not yet paid (including executive benefits, life insurance, disability
benefits and reimbursement of expenses and perquisites if to be performed
following termination); and (6) other or additional benefits in accordance with
applicable plans and program of Nabors. If Mr. Petrello's employment is
terminated for any reason, he is entitled to certain relocation benefits as set
forth in his agreement.

Mr. Stratton entered into a new employment contract effective October 1,
1996, with an expiration date of September 30, 2001. The expiration date
automatically extends for an additional one year term on each anniversary date,
unless Nabors provides notice to the executive to the contrary ten days prior
to such anniversary. Mr. Stratton's salary is subject to annual review for
increase at the discretion of the Board and its Compensation Committee. Mr.
Stratton is also entitled to vacation, reimbursement of expenses,

16
<PAGE> 21

comprehensive medical, disability and life insurance protection, a split-dollar
life insurance agreement in an amount of not less that $2 million, other
perquisites and a personal umbrella policy in the amount of $5 million. Mr.
Stratton's term of employment continues until the earliest of the expiration
date of the contract (currently September 30, 2003), his death, permanent and
total disability, temporary partial or permanent disability, voluntary
resignation or discharge for cause as defined in the employment agreement. In
the event Mr. Stratton's employment is terminated by Nabors for any reason
other than cause or by Mr. Stratton's voluntary resignation or is terminated by
Mr. Stratton following a Change of Control (as defined in his agreement), Mr.
Stratton shall be entitled to (a) all base salary which would have been payable
for the period from the termination date until the expiration date; (b) all
deemed bonus which would have been payable for the period from the termination
date until the expiration date (for this purpose, deemed bonus for each fiscal
year shall equal the highest cash bonus paid to Mr. Stratton during the last
three fiscal years prior to the termination date); (c) any restricted stock
outstanding, which shall become immediately and fully vested; (d) any
outstanding stock options, which shall become immediately and fully vested; (e)
any amounts then earned, accrued or owing to Mr. Stratton but not yet paid
(including obligations to be performed following termination); and (f) certain
other benefits including vacation, life insurance and medical benefits will be
continued through the later of the expiration date or three years following the
date of termination. In the event Mr. Stratton is terminated for cause or
voluntarily resigns, he shall be entitled to receive only those outstanding
stock options which have then vested. Mr. Stratton may elect to treat any
breach of his employment contract by Nabors or its successor, in the event of a
merger, consolidation or sale of substantially all of the assets of Nabors, as
a discharge without cause.

REPORT OF THE COMPENSATION COMMITTEE ON REPRICING OF OPTIONS

In its review of outstanding stock options, the Compensation Committee
noted that Nabors had originally granted the options as an incentive for key
employees to remain in the employ of Nabors. The dramatic downturn in the
oilfield sector had significantly reduced the price of Nabors' stock and,
therefore, the benefit of the options. The Compensation Committee decided to
adjust the terms of outstanding stock options so that they would continue to
fulfill their original purpose. On December 11, 1998, the Compensation Committee
approved the repricing of outstanding options with an exercise price of $16.00
and over to $12.50, the closing stock price on that day. Optionees with salary
levels below $80,000 were entitled to have all outstanding options with an
exercise price of $16.00 or greater replaced with new options. Optionees with
salary levels of $80,000 and above were entitled to have 75% of their
outstanding options with an exercise price of $16.00 or greater replaced with
new options, subject to their forfeiting the remaining 25%. The original
expiration dates and vesting schedules remained the same as the previously
stated schedules, except that no repriced options are exercisable until December
14, 1999. The number of options forfeited by Nabors' executive officers were as
follows: Mr. Isenberg, 2,016,373; Mr. Petrello, 1,001,808; Mr. Stratton,
354,375; Mr. Koch, 7,000; and Mr. McLachlin, 3,000.

The following table provides information on stock options that were
repriced during fiscal 1998. Nabors has not repriced options in the last ten
years except as set forth below.

17
<PAGE> 22

TEN-YEAR OPTION REPRICINGS

<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET PRICE EXERCISE ORIGINAL
SECURITIES OF STOCK AT PRICE AT OPTION TERM
UNDERLYING TIME OF TIME OF NEW REMAINING AT
OPTIONS REPRICING OR REPRICING OR EXERCISE DATE IF
REPRICED OR AMENDMENT AMENDMENT PRICE REPRICING OR
NAME DATE AMENDED ($) ($) ($) AMENDMENT
- ------------------------ ---------- -------------- --------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Eugene M. Isenberg 12/11/98 540,000 12.50 16.7500 12.50 94 months
Chairman of the 12/11/98 222,750 12.50 16.0000 12.50 94 months
Board, Director and 12/11/98 93,420 12.50 17.0000 12.50 95 months
Chief Executive Officer 12/11/98 131,580 12.50 17.0000 12.50 95 months
12/11/98 225,000 12.50 17.0000 12.50 95 months
12/11/98 112,500 12.50 18.1250 12.50 95 months
12/11/98 112,500 12.50 20.0000 12.50 95 months
12/11/98 247,500 12.50 21.0000 12.50 95 months
12/11/98 1,087,500 12.50 17.5000 12.50 96 months
12/11/98 1,736,625 12.50 29.5500 12.50 103 months
12/11/98 1,539,744 12.50 24.4375 12.50 108 months
- ------------------------ ---------- -------------- --------------- --------------- ---------- ---------------
Anthony G. Petrello 12/11/98 360,000 12.50 16.7500 12.50 94 months
Director, President and 12/11/98 147,750 12.50 16.0000 12.50 94 months
Chief Operating Officer 12/11/98 62,280 12.50 17.0000 12.50 95 months
12/11/98 87,720 12.50 17.0000 12.50 95 months
12/11/98 150,000 12.50 17.0000 12.50 95 months
12/11/98 75,000 12.50 18.1250 12.50 95 months
12/11/98 75,000 12.50 20.0000 12.50 95 months
12/11/98 165,000 12.50 21.0000 12.50 95 months
12/11/98 487,500 12.50 17.5000 12.50 96 months
12/11/98 967,500 12.50 29.5500 12.50 103 months
12/11/98 427,673 12.50 24.4375 12.50 108 months
- ------------------------ ---------- -------------- --------------- --------------- ---------- ---------------
Richard A. Stratton 12/11/98 37,500 12.50 16.3750 12.50 94 months
Vice Chairman of the 12/11/98 168,750 12.50 16.0000 12.50 94 months
Board and Director 12/11/98 262,500 12.50 17.5000 12.50 96 months
12/11/98 112,500 12.50 22.5000 12.50 102 months
12/11/98 309,375 12.50 29.5500 12.50 103 months
12/11/98 172,500 12.50 24.4375 12.50 108 months
- ------------------------ ---------- -------------- --------------- --------------- ---------- ---------------
Bruce P. Koch 12/11/98 11,250 12.50 17.0000 12.50 98 months
Vice President - 12/11/98 9,750 12.50 24.4375 12.50 108 months
Finance
- ------------------------ ---------- -------------- --------------- --------------- ---------- ---------------
Daniel McLachlin 12/11/98 5,250 12.50 17.0000 12.50 98 months
Vice President - 12/11/98 3,750 12.50 24.4375 12.50 108 months
Administration and
Corporate Secretary
======================== ========== ============== =============== =============== ========== ===============
</TABLE>

THE COMPENSATION COMMITTEE

Jack Wexler, Chairman
Myron M Sheinfeld

18
<PAGE> 23

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee, for fiscal 1998 and the transition period, was
comprised of three non-employee directors: Mr. Wexler (Chairman), Mr. Hurford
and Mr. Sheinfeld. During fiscal 1998 Nabors provided drilling and logistical
services to Hunt Oil Company, of which Mr. Gary Hurford, served as the
President until his death in April 1999. The drilling and logistical services
were provided by Nabors to Hunt, at prevailing market rates. Amounts received
for such services represented approximately 0.5% of Nabors' consolidated gross
revenue. The Compensation Committee is currently comprised of Mr. Wexler
(Chairman) and Mr. Sheinfeld.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

COMPOSITION AND ROLE OF THE COMPENSATION COMMITTEE

The Compensation Committee meets periodically to review and recommend to
the Board for its approval policies and procedures relating to employment
agreements, salaries, bonuses, stock grants, stock options and employee benefit
plans for officers and employees. In particular, the committee is responsible
for recommendations with regard to:

o Salary, cash bonuses, stock awards and stock option grants to
management and other key employees;

o Policies and practices in regards to employment agreements; and

o Stock-based compensation plan, other benefit programs including
shareholder-approved stock option plans and defined contribution
plans.

The committee conducts periodic meetings throughout the year, culminating
in an extended session, following the close of the fiscal year, to consider
salary adjustments, incentive compensation and related issues.

COMPENSATION POLICIES

The committee's goal is to establish compensation policies and programs
designed to attract and retain a qualified executive staff for the purpose of
enhancing shareholder value. The committee is mindful that, over the past
decade, the oil field services industry, particularly drilling contractors,
have undergone severe contractions in activity forcing many companies to
withdraw or be eliminated from the market place. The ability of companies to
compete in this new marketplace depends in part on the need to attract and
retain executives with the necessary industry knowledge and management and
financial skills to preserve and enhance Nabors' position, notwithstanding the
industry's characteristics. For this reason, the committee also is of the view
that attracting executive talent from both inside and outside the industry is
important to the continued enhancement of Nabors. Consistent with these goals,
the committee seeks to:

o Attract and retain high quality executives needed to manage Nabors
and maintain its competitive position;

o Reward effective ongoing management performance that achieved Nabors'
operating, financial and strategic goals established each year;

o Focus executive attention on enhancing long-term shareholder value
through stock-based compensation programs; and

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<PAGE> 24

o Reward key employees for exceptional performance with regard to
Nabors' success.

Nabors' executive compensation program includes base salary and incentive
bonuses as follows:

Base Salary: The committee reviews the performance of each senior
executive officer individually with the Chief Executive Officer and determines
an appropriate salary level for each senior executive officer based primarily
on individual performance and competitive factors. These competitive factors
include as a reference the base salary of other top executives of drilling
contractors and the oil service sector generally, and also the compensation
levels needed to attract and retain highly talented executives from outside the
industry. For fiscal 1998, the committee noted that generally the salaries of
the Chief Executive Officer and the next three most highly compensated
executive officers were, in the majority of cases, below the mean of the
salaries for the same categories of Nabors' competitors, as reported in the
latest available proxy statements of the five companies other than Nabors that
comprise the Dow Jones Oil Drilling Index. The salaries of the Chief Executive
Officer and the President have remained the same since 1987 and 1992,
respectively.

Incentive Bonus Program: The committee administers annual review programs
to determine to what extent to reward senior executive officers and key
employees based upon Nabors' performance in relation to performance goals.
Financial performance goals are set forth in the contractual bonus formula for
the Chief Executive Officer and President as described above under "Management
Compensation-Employment Contracts". With respect to other senior executive
officers, the performance goals include both financial and non-financial
objectives, including achieving certain financial targets in relation to
internal budgets, developing internal infra-structure and enhancing positions
in certain markets. The financial criteria include, among other things,
increasing revenues, controlling direct and overhead expenses and increasing
cash flow from operations. The non-financial criteria include maintaining
Nabors' share in its principal geographic markets, enhancing Nabors' technical
capabilities and developing operations in identified strategic markets. Based
on these reviews, annual incentive rewards are recommended by the committee to
the Board. Annual incentive awards include cash, options or shares, or a
combination thereof. Share awards or stock option grants typically have been
issued on a four-year vesting schedule, but the committee reserves the right to
modify the vesting schedule in its discretion, particularly where options are
given in lieu of cash bonuses. Annual incentive bonus awards are not guaranteed
except for those subject to contractual arrangements. The committee believes
that stock option grants and share awards are critical in motivating and
rewarding the creation of long-term shareholder value, and the committee has
established a policy of awarding stock options from time to time based on
continuing progress of Nabors and on individual performance. For fiscal 1998,
the bonus and stock options granted to the Chief Executive Officer and the next
two most highly compensated executive officers were higher than those for the
same categories of Nabors' competitors, as reported in the latest available
proxy statements of the five companies other than Nabors that comprise the Dow
Jones Oil Drilling Index. Mr. Isenberg's and Mr. Petrello's cash bonuses are
determined under a contractual formula based upon financial results (see
"Management Compensation Employment Contracts"). However, for fiscal 1998 and
the transition period, the committee, with the concurrence of Mr. Isenberg and
Mr. Petrello, reduced the cash bonus awards that they were entitled to under
the formula arrangements. In lieu thereof, on December 30, 1998, the committee
granted to Mr. Isenberg and Mr. Petrello 2,200,000 and 900,000 stock options,
respectively, with a per share exercise price of $12.625, the market value of
an underlying share on the date of the grant. The committee believes that
replacing a portion of a cash bonus with stock options aligns executive
interests with shareholders and is a widespread accepted practice.

Section 162(m) of the Internal Revenue Code of 1986, as amended , limits
to $1,000,000 the amount of compensation that may be deducted by Nabors in any
year with respect to certain of Nabors' highest paid executives. Certain
performance-based compensation that has been approved by shareholders is not
subject to the $1,000,000 limit, as well as compensation paid pursuant to
employment contracts in existence prior to the adoption of Section 162(m) in
1993. Section 162(m) applied to Nabors for the first time in fiscal 1995.
Although the contractual bonus arrangements remained the same from their
previous contracts, certain bonus compensation, as well as the share options
granted to Mr. Isenberg, Mr. Petrello and Mr. Stratton pursuant to

20
<PAGE> 25

the new and amended employment contracts entered into in 1996, may not be
exempt from Section 162(m) and, therefore, Nabors may not be able to deduct
that portion of such compensation that exceeds $1,000,000 (see "Management
Compensation-Option/SAR Grants in the Last Fiscal Year" and "- Employment
Contracts"). The cash compensation paid to Mr. Isenberg in excess of $1,000,000
for fiscal 1998 is not deductible. While the committee intends to take
reasonable steps to obtain deductibility of compensation, it reserves the right
not to do so in its judgment, particularly with respect to retaining the
service of its principal executive officers.

CHIEF EXECUTIVE OFFICER AND PRESIDENT

The committee's arrangements with its Chief Executive Officer and
President have been designed from the outset to align compensation to enhancing
shareholder value. Mr. Isenberg's compensation is made pursuant to a
contractual formula that originated with several of Nabors' major shareholders
in 1987 following Nabors' bankruptcy proceedings. These arrangements were
subsequently approved by the various constituencies in Nabors' bankruptcy
proceedings, including equity and debt holders, and confirmed by the United
States Bankruptcy Court. Mr. Isenberg's base salary remained constant since
1987, and Mr. Petrello's since his employment date in 1991. The major portion
of their cash compensation is the performance based bonus compensation. Mr.
Isenberg and Mr. Petrello receive a cash bonus according to a formula based on
a percentage (Isenberg-7%, Petrello-2%) of cash flow in excess of a 15% return
on shareholders' average book equity. The Committee believes that tying the
cash bonus to cash flow in excess of a return on shareholders' average equity
aligns Mr. Isenberg's and Mr. Petrello's bonus' to achieving superior financial
results that should enhance shareholder value. In order to ensure that Mr.
Isenberg and Mr. Petrello would continue to be available to Nabors, the
Committee amended and restated their employment contracts effective October 1,
1996 for additional five-year terms that renew annually absent notice to the
contrary (see "Management Compensation - Employment Contracts"). Mr. Isenberg's
contractual bonus (as well as Mr. Petrello's) provides for the mandatory
application of a bonus formula. However, as indicated above, for fiscal 1997,
fiscal 1998 and the transition period, the committee, with the concurrence of
Mr. Isenberg and Mr. Petrello, reduced the cash bonus awards to which they were
entitled under the formula arrangements and in lieu of a portion thereof,
granted stock options as described above.

In reviewing Mr. Isenberg's compensation, the committee took into account
the long-term shareholder value which he helped create since becoming Nabors'
Chief Executive Officer in 1987. The committee also took note of Nabors'
expansion of its U.S. operations, which has enhanced Nabors' operating leverage
in the U.S. domestic market. The result of this effort is reflected in the
chart below.

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<PAGE> 26

FINANCIAL HIGHLIGHTS
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
(In millions, except per share amounts)

<TABLE>
<CAPTION>
1998 VERSUS 1997 1998 VERSUS 1993
------------------------- ------------------------
FISCAL YEAR (1) INCREASE/(DECREASE) INCREASE/(DECREASE)
-------------------------------------------------------------------------------------------------
FINANCIAL DATA 1998 1997 1993(2) $ % $ %
(Unaudited)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues .................. $ 968.2 $ 1,115.0 $ 419.4 $ (146.8) (13)% $ 548.8 131%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income ................ 125.0 136.0 38.6 (11.0) (8)% 86.4 224%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income per share ...... 1.16 1.24 .50 (0.08) (6)% .66 132%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Stockholders' equity ...... 867.5 767.3 307.6 100.2 13% 559.9 182%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Year end market value of
shares outstanding .... $ 1,304.0 $ 3,170.0 $ 781.8 $ (1,866.0) (59)% $ 522.2 67%
========== ========== ========== ========== ========== ========== ==========
</TABLE>

(1) The fiscal years ended 1998 and 1997 is for the period January through
December and the fiscal year ended 1993 is for The period October through
September. The financial data for 1997 was recast to reflect Nabors'
change in its fiscal year end effective January 1, 1998.

(2) The financial data for 1993 was restated to include Sundowner Offshore
Services, Inc., which was acquired on October 27, 1994.

THE COMPENSATION COMMITTEE

Jack Wexler, Chairman
Myron M. Sheinfeld

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<PAGE> 27

STOCK PERFORMANCE GRAPH

The following graph illustrates comparisons of five-year cumulative total
returns among Nabors Industries, Inc., the S&P Midcap Index and the Dow Jones
Oil Drilling Index. Total returns assumes $100 invested on December 31, 1993 in
shares of Nabors Industries, Inc., the S&P Midcap Index, and the Dow Jones Oil
Drilling Index. It also assumes reinvestment of dividends and is calculated at
the end of each fiscal year, December 31, 1993 to December 31, 1998.

[GRAPH]

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Nabors Industries, Inc. 100 80 138 237 389 166
------ ------ ------ ------ ------ ------
S&P Midcap Index 100 96 126 150 199 237
------ ------ ------ ------ ------ ------
Dow Jones Oil Drilling Index 100 85 147 304 416 172
------ ------ ------ ------ ------ ------
</TABLE>

23
<PAGE> 28

ACCOUNTANTS

PricewaterhouseCoopers LLP, independent accountants, have been selected to
serve as Nabors' accountants for the current fiscal year. They, or a
predecessor, have been our accountants since May 1987.

A representative from PricewaterhouseCoopers is expected to be present at
the annual meeting. This representative will have an opportunity to make a
statement and will be available to respond to appropriate questions.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires Nabors'
directors and executive officers, and persons who own more than 10% of a
registered class of Nabors' equity securities, to file with the Securities and
Exchange Commission and the American Stock Exchange initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of Nabors. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish Nabors with all Section 16(a) forms which
they file.

To Nabors' knowledge, based solely on review of the copies of such reports
furnished to Nabors and written representation that no other reports were
required during the fiscal year ended December 31, 1998, all Section 16(a)
filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with on a timely basis.

OTHER MATTERS

The Board knows of no other business to come before the annual meeting.
However, if any other matters are properly brought before the annual meeting,
the persons named in the accompanying form of proxy or their substitutes will
vote in their discretion on such matters.

SHAREHOLDERS' PROPOSALS FOR PRESENTATION
AT 2000 ANNUAL MEETING

If a shareholder of Nabors wishes to present a proposal for consideration
at the 2000 Annual Meeting of Shareholders, the proposal must be received at
the executive offices of Nabors no later than January 3, 2000 to be considered
for inclusion in Nabors' proxy statement and form of proxy for that annual
meeting.

NABORS INDUSTRIES, INC.

/s/ DANIEL MCLACHLIN
DANIEL MCLACHLIN
Dated: May 3, 1999 Corporate Secretary

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<PAGE> 29

[X] Please mark your votes as in this example.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL
BE VOTED FOR ELECTION OF EACH NOMINEE FOR DIRECTOR.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE FOR
DIRECTOR.

FOR [ ] WITHHELD [ ]

1. Election of Directors. (see reverse)

For, except vote withheld from the following nominee(s):

- --------------------------------------------------------

In their discretion the proxies are authorized to vote upon such other business
as may properly come before the meeting.

NOTE: Please mark the proxy, sign exactly as your name appears below, and
return it promptly in the enclosed addressed envelope. When shares are held by
joint tenants, both parties should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized person. If a partnership, please sign in full partnership name by an
authorized person.

- ----------------------------------------
Signature Date

<PAGE> 30

PROXY

NABORS INDUSTRIES, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Eugene M. Isenberg and Anthony G. Petrello, and
each of them (with full power to designate substitutes), proxies for the
undersigned to represent, vote and act with respect to all shares of common
stock of Nabors Industries, Inc. held of record by the undersigned at the close
of business on April 9, 1999 at Nabors' annual meeting of shareholders to be
held on June 8, 1999 and any adjournments or postponements thereof, upon the
matters designated below and upon such other matters as may properly come
before the meeting, according to the number of votes the undersigned might cast
and with all powers the undersigned would possess if personally present.

1. ELECTION OF DIRECTORS: Election of three directors of Nabors to serve
until the 2002 annual meeting of shareholders or until their successors
are elected and qualified.

Nominees: Anthony G. Petrello, Myron M. Sheinfeld and Martin J. Whitman

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.

SEE REVERSE
SIDE