NABORS INDUSTRIES INC, S-3, 2000-08-25

NABORS INDUSTRIES INC
S-3, 2000-08-25
DRILLING OIL & GAS WELLS

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<PAGE> 1

REGISTRATION NO. 333-

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

NABORS INDUSTRIES, INC.

(Exact Name of Registrant as Specified in its Charter)
---------------------

<TABLE>
<S> <C> <C>
DELAWARE 515 WEST GREENS ROAD, SUITE 1200 93-0711613
(State or Other HOUSTON, TEXAS 77067 (I.R.S. Employer
Jurisdiction of (281) 874-0035 Identification No.)
Incorporation or (Address, Including Zip Code, and Telephone Number, Including Area Code,
Organization) of Registrant's Principal Executive Offices)
</TABLE>

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With a copy to:

<TABLE>
<S> <C>
ANTHONY G. PETRELLO ALAN J. RICE, ESQ.
PRESIDENT AND CHIEF OPERATING OFFICER WINSTON & STRAWN
NABORS INDUSTRIES, INC. 200 PARK AVENUE
515 WEST GREENS ROAD, SUITE 1200 NEW YORK, NEW YORK 10166
HOUSTON, TEXAS 77067 (212) 294-6700
(281) 874-0035 (Name, Address, Including Zip Code, and Telephone
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Number, Including Area Code, of Agent for Service)
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
in light of market conditions and other factors.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box. [
]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Zero Coupon Convertible Senior Debentures
due 2020............................... $825,000,000 66.103% $545,349,750 $143,972.34
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Common Stock, par value $.10 per share... 8,858,850 shares(2) (2) (2) (3)
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Total........................... $545,349,750 $143,972.34
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</TABLE>

(1) The debentures were issued at an original price of $608.41 per $1,000
principal amount at maturity, which represents an aggregate issue price of
$501,938,250, and a principal amount at maturity of $825,000,000. Shares
estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457(c), based upon the average of the bid and asked prices
for the debentures, on August 22, 2000. The Proposed Maximum Aggregate Price
Per Unit represents the percentage of accrued value represented by such
average of the bid and ask prices on such date.
(2) Includes an undetermined number of shares of common stock issuable upon
conversion or repurchase of the debentures. Such number is initially
determined to be 8,858,850 based upon the initial conversion rate of 10.738
shares of common stock per $1,000 principal amount of debentures at
maturity. This registration statement covers the resale of such common stock
by holders of debentures who purchased debentures pursuant to a transaction
exempt from registration under the Securities Act and the issuance of such
common stock to subsequent holders of debentures who have purchased
debentures pursuant to transactions covered by this registration statement.
Such number of shares of common stock registered by this registration
statement shall also include an indeterminate number of shares of common
stock that may be issued in connection with a repurchase of the debentures
pursuant to the terms of the debentures, a stock split, stock dividend,
recapitalization or similar event or adjustment in the number of shares
issuable as provided in the indenture governing the debentures. See
"Description of Debentures" in the accompanying prospectus.
(3) Pursuant to Rule 457(i) under the Securities Act, there is no filing fee
with respect to the shares of common stock issuable upon conversion of the
debentures, because no additional consideration will be received in
connection with the exercise of the conversion privilege.
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<PAGE> 2

Information contained in this Prospectus is subject to completion or
amendment. A Registration Statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
Registration Statement becomes effective. This Prospectus is not an offer
to sell these securities. Neither Nabors nor the selling stockholders are
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.

(SUBJECT TO COMPLETION -- DATED AUGUST 25, 2000)

PRELIMINARY PROSPECTUS

NABORS INDUSTRIES, INC.

$825,000,000 PRINCIPAL AMOUNT AT MATURITY OF
ZERO COUPON CONVERTIBLE SENIOR DEBENTURES DUE 2020
AND
SHARES OF COMMON STOCK,
PAR VALUE $.10 PER SHARE, ISSUABLE UPON CONVERSION OR
REPURCHASE OF SUCH DEBENTURES

This prospectus relates to the offering for resale of Nabors' Zero Coupon
Convertible Senior Debentures due 2020, and the common stock of Nabors issuable
upon conversion or repurchase of the debentures. The debentures were issued and
sold on June 20, 2000 in a private placement to Morgan Stanley & Co.
Incorporated and were simultaneously sold by Morgan Stanley & Co. Incorporated
in transactions exempt from the registration requirements of the Securities Act
of 1933 to qualified institutional buyers (as defined in Rule 144A under the
Securities Act).

The debentures are senior unsecured indebtedness of Nabors. The debentures
are convertible at any time prior to maturity, unless previously redeemed or
otherwise purchased, into shares of common stock of Nabors at a conversion rate
of 10.738 shares per $1,000 principal amount at maturity. The conversion rate
will be subject to adjustment if certain events occur. The reported last sale
price of our common stock on the American Stock Exchange on August 24, 2000 was
$47 5/16 per share.

The debentures have an issue price of $608.41 per $1,000 principal amount
at maturity, which represented an original issue discount of 39.159% from the
principal amount payable at maturity. The issue price represented a yield to
maturity of 2.5% per year, compounded semi-annually.

After June 20, 2003, we may redeem the debentures at our option at
redemption prices equal to the issue price plus accrued original issue discount
to the date of redemption.

Each holder may require us to purchase such holder's debentures on June 20,
2003, June 20, 2008, and June 20, 2013 at a purchase price equal to the issue
price plus accrued the original issue discount to the applicable repurchase
date. Subject to certain conditions, we may elect to pay any such purchase price
in cash or common stock, or any combination. Each holder also may require us to
redeem such holder's debentures if there is a Fundamental Change (as defined
below under "Description of Debentures -- Certain Definitions") at redemption
prices equal to the issue price plus accrued the original issue discount to the
date of redemption, subject to adjustment in certain circumstances as described
herein.

The debentures and the common stock issuable upon conversion of the
debentures may be offered and sold from time to time pursuant to this prospectus
by the holders of the debentures named in this prospectus or by their
transferees, pledgees, donees or successors (all of which we refer to as the
selling securityholders). The securities may be sold by the selling
securityholders directly to purchasers or through agents, underwriters or
dealers. To the extent not already included under the headings "Selling
Securityholders" and "Plan of Distribution" of this prospectus, the names of any
selling securityholders, agents, underwriters or dealers involved in the sale of
the securities, and the agent's commission, dealer's purchase price or
underwriter's discount, if any, will be provided in supplements to this
prospectus. The selling securityholders will receive all of the proceeds from
the sale of the securities and will pay all underwriting discounts and brokerage
commissions, if any, applicable to any sale. We are responsible for the payment
of the registration expenses and certain expenses incident to the offer and sale
of the securities. The selling securityholders and any broker-dealers, agents or
underwriters that participate in the distribution of the securities may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commission received by them and any profit on the resale of the securities
purchased by them may be deemed to be underwriting commission or discounts under
the Securities Act.

Our common stock is traded on the American Stock Exchange under the symbol
"NBR." The common stock registered pursuant to the registration statement in
which this prospectus is included has been listed on the American Stock
Exchange.

PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE DISCUSSION OF "RISK
FACTORS" THAT BEGINS ON PAGE 4.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is , 2000.
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 1
The Offering................................................ 2
Risk Factors................................................ 4
Forward-Looking Statements.................................. 5
Ratio Of Earnings To Fixed Charges.......................... 5
Use Of Proceeds............................................. 6
Plan of Distribution........................................ 6
Selling Securityholders..................................... 7
Description Of Debentures................................... 9
Description Of Capital Stock................................ 22
Material Federal Income Tax Considerations.................. 23
Where You Can Find More Information......................... 30
Incorporation Of Certain Documents By Reference............. 30
Legal Matters............................................... 31
Experts..................................................... 31
</TABLE>

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

This document is called a prospectus and is part of a registration
statement that we filed with the Securities and Exchange Commission using a
"shelf" registration or continuous offering process. Under this shelf process,
selling securityholders may from time to time sell the securities described in
this prospectus in one or more offerings.

This prospectus provides you with a general description of the securities
that the selling securityholders may offer. Each time a selling securityholder
sells securities, the selling securityholder is required to provide you with a
prospectus and a prospectus supplement containing specific information about the
selling securityholder and the terms of the securities being offered. That
prospectus supplement may include additional risk factors or other special
considerations applicable to those securities. Any prospectus supplement may
also add, update or change information in this prospectus. If there is any
inconsistency between the information in this prospectus and any prospectus
supplement, you should rely on the information in that prospectus supplement.
You should read both this prospectus and any prospectus supplement together with
the additional information described under the headings "Where You Can Find More
Information" and "Incorporation of Certain Documents By Reference."

The registration statement containing this prospectus, including the
exhibits to the registration statement, provides additional information about us
and the securities offered under this prospectus. The registration statement,
including the exhibits, can be read at the Securities and Exchange Commission
web site or at the Securities and Exchange Commission offices mentioned under
the heading "Where You Can Find More Information."

You should rely only on the information incorporated by reference or
provided in this prospectus and the prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
or soliciting an offer of these securities in any jurisdiction in which the
offer or solicitation is not authorized or in which the person making the offer
or solicitation is not qualified to do so or to anyone to whom it is unlawful to
make the offer or solicitation. You should not assume that the information in
this prospectus or any prospectus supplement is accurate as of any date other
than the date on the front of the applicable document.

The prospectus incorporates business and financial information about us
that is not included in, or delivered with, the document. YOU MAY REQUEST AND
OBTAIN THIS INFORMATION FREE OF CHARGE BY WRITING OR TELEPHONING US AT THE
FOLLOWING ADDRESS OR

i
<PAGE> 4

PHONE NUMBER: 515 WEST GREENS ROAD, SUITE 1200, HOUSTON, TEXAS 77067, ATTENTION:
INVESTOR RELATIONS, TELEPHONE: (281) 874-0035. Unless we indicate otherwise,
references in this prospectus to "Nabors," "we," "us" and "our" or similar terms
are solely to Nabors Industries, Inc. and not to its subsidiaries.

ii
<PAGE> 5

SUMMARY

This summary highlights basic information about Nabors and the securities
offered by the selling securityholders, but does not contain all of the
information important to you in making an investment decision. You should read
the following summary together with the more detailed information contained in
this prospectus and any prospectus supplement and the other information
incorporated by reference into this prospectus.

We are the largest land drilling contractor in the world, with over 500
actively marketed land drilling rigs as of June 30, 2000. We conduct oil, gas
and geothermal land drilling operations in the US Lower 48 states, Alaska and
Canada, and internationally, primarily in South and Central America and the
Middle East. We also are one of the largest land well-servicing and workover
contractors in the United States. We own and operate approximately 680 actively
marketed land workover and well-servicing rigs, primarily in the southwestern
and western United States and in certain international markets. We also are a
leading provider of offshore platform workover and drilling rigs. We market 37
platform, 11 jackup and four barge rigs in the Gulf of Mexico and international
markets. Our offshore rigs provide well-servicing, workover and drilling
services. We own and operate 40 of our land and offshore rigs through
international joint ventures.

To further supplement our primary business, we offer a number of ancillary
well-site services, including oilfield management, engineering, transportation,
construction, maintenance, well logging and other support services, in selected
domestic and international markets. Our land transportation and hauling fleet
includes 160 rig and oilfield equipment hauling tractor-trailers, over 300 fluid
hauling trucks, approximately 970 fluid storage tanks, 15 salt water disposal
wells and other auxiliary equipment used in domestic drilling, workover and
well-servicing operations. We also have a fleet of 34 marine transportation and
support vessels in the Gulf of Mexico that provides transportation of drilling
materials, supplies and crews for offshore rig operations and support for other
offshore operations. In addition, we manufacture and lease or sell top drives
for a broad range of drilling rig applications and we manufacture and lease or
sell rig instrumentation and data collection equipment and rig reporting
software. We conduct our operations through our subsidiaries.

Nabors was incorporated in Delaware on May 3, 1978. Our principal executive
offices are located at 515 West Greens Road, Suite 1200, Houston, Texas 77067.
Our telephone number at that address is (281) 874-0035.

1
<PAGE> 6

THE OFFERING

Securities Offered......... $825,000,000 aggregate principal amount at maturity
of Zero Coupon Convertible Senior Debentures due
2020. We will not pay periodic interest on the
debentures, except as described under "Description
of Debentures -- Optional Conversion to Semiannual
Coupon Debentures Upon a Tax Event." See
"Description of Debentures -- General."

This prospectus also relates to the offering of our
shares of common stock which are issuable upon
conversion or repurchase of the debentures, which
amount is initially determined as 8,858,850. Such
number of shares of common stock was calculated
based upon the initial conversion ratio described
below. The conversion ratio may be adjusted if
certain events occur and the number of shares
ultimately issued will depend upon the market value
of common stock at the time of any repurchase of
debentures with common stock.

All of the securities offered by this prospectus or
any prospectus supplement are being offered for
resale by existing holders of debentures except in
the case of issuance of common stock by Nabors to a
securityholder who has purchased debentures
pursuant to transactions contemplated by this
prospectus.

Issue Price................ The debentures were originally sold by Morgan
Stanley & Co. Incorporated to qualified
institutional buyers (as defined in Rule 144A under
the Securities Act) at an issue price of 60.841% of
the principal amount at maturity.

Yield to Maturity of
Debentures............... 2.5% per year compounded semi-annually, calculated
from June 20, 2000.

Conversion................. You have the option to convert the debentures into
our common stock at any time prior to maturity or
their earlier redemption. You can convert the
debentures into common stock at a conversion rate
of 10.738 shares per $1,000 principal amount at
maturity. The conversion rate will be subject to
adjustment if certain events occur. See
"Description of Debentures -- Conversion of
Debentures by Holders."

Instead of delivering shares of common stock upon
conversion of any debentures, we may elect to pay
you cash for all or a portion of your debentures in
an amount equal to the last reported sales price of
our common stock on the trading day preceding the
conversion date, multiplied by the applicable
conversion rate.

You may only exercise the option to convert before
the debentures reach maturity and before we redeem
or repurchase them.

Original Issue Discount.... The debentures were offered at an original issue
discount for federal income tax purposes equal to
the excess of their principal amount at maturity
over the amount of their issue price. We will not
make periodic cash payments of interest on the
debentures, except as described under "Description
of Debentures -- Optional Conversion to Semiannual
Coupon Debentures Upon a Tax Event." Nonetheless,
you should be aware that accrued original issue
discount will be included periodically in your
gross income for federal income tax purposes. See
"Material Federal Income Tax Considerations."

2
<PAGE> 7

You should be aware that you will be responsible
for the payment of taxes that may be due even
though you may not receive any cash payment at the
time original issue discount is included in your
gross income.

Sinking Fund............... None.

Redemption at the Option of
Nabors................... We cannot redeem the debentures before June 20,
2003. On or after June 20, 2003, we can redeem all
or part of the debentures for cash at any time. You
can convert the debentures after they are called
for redemption at any time up to the redemption
date.

Redemption prices are equal to the issue price plus
accrued original issue discount to the date of
redemption. See "Description of Debentures --
Redemption of Debentures at Nabors' Option."

Fundamental Change......... You may require us to repurchase the debentures if
we experience a Fundamental Change. See
"Description of Debentures -- Certain Definitions."
The Fundamental Change purchase price is equal to
the issue price plus accrued original issue
discount to the date of repurchase, subject to
adjustment in certain circumstances. See
"Description of Debentures -- Repurchase at the
Option of the Holder Upon a Fundamental Change."

Repurchase at the Option of
the Holder................. If you elect, we must repurchase the debentures on
June 20, 2003, June 20, 2008 and June 20, 2013 for
a purchase price equal to the issue price plus
accrued original issue discount to the date of
repurchase. We may elect to pay all or a portion of
the purchase price in common stock instead of cash
if certain conditions are met. See "Description of
Debentures -- Repurchase of Debentures at the
Option of the Holder."

Conversion to Semiannual
Coupon Debenture......... If a Tax Event prevents us from deducting for
federal tax purposes original issue discount
payable on the debentures, we can elect to pay you
interest in cash and terminate the further accrual
of original issue discount. See "Description of
Debentures -- Certain Definitions" and "-- Optional
Conversion to Semiannual Coupon Debentures Upon a
Tax Event."

Use of Proceeds............ We will not receive any proceeds from any sale of
the securities contemplated by this prospectus.

American Stock Exchange
Symbol (Nabors common
stock)................... NBR.

3
<PAGE> 8

RISK FACTORS

You should carefully consider all of the information contained in and
incorporated by reference into this prospectus before making an investment
decision. In particular, you should consider the information set forth under the
captions "Industry Conditions" and "Competitive Conditions" in Part I and Part
II of Nabors' Form 10-K for the fiscal year ended December 31, 1999, which are
incorporated by reference in this prospectus.

ALTHOUGH THE DEBENTURES ARE REFERRED TO AS "SENIOR DEBENTURES," THEY WILL BE
EFFECTIVELY SUBORDINATED TO ANY SECURED DEBT OF NABORS OR ITS SUBSIDIARIES.

The debentures are unsecured and therefore will be effectively subordinated
to any existing or future secured indebtedness to the extent of the value of the
assets securing such indebtedness. If we default on the debentures, become
bankrupt, liquidate or reorganize, any secured creditors could use their
collateral to satisfy their secured indebtedness before you would receive any
payment on the debentures. If the value of such collateral is not sufficient to
pay any secured indebtedness in full, our secured creditors would share the
value of our other assets, if any, with you and the holders of other claims
against us that rank equally with the debentures.

YOU CANNOT BE SURE THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE
DEBENTURES.

There is currently no established trading market for the debentures. We
have no plans to list the debentures on a securities exchange. We have been
advised by Morgan Stanley & Co. Incorporated that it presently intends to make a
market in the debentures; however, Morgan Stanley & Co. Incorporated is not
obligated to do so. Any market making activity, if initiated, may be
discontinued at any time, for any reason, without notice. If Morgan Stanley &
Co. Incorporated ceases to act as a market maker for the debentures for any
reason, we cannot assure you that another firm or person will make a market in
the debentures. The liquidity of any market for the debentures will depend upon
the number of holders of the debentures, our results of operations and financial
condition, the market for similar securities, the interest of securities dealers
in making a market in the debentures and other factors. An active or liquid
trading market may not develop for the debentures.

NABORS MAY BE UNABLE TO REDEEM OR OTHERWISE ACQUIRE THE DEBENTURES FOR CASH.

The liquidity and price of the debentures could be adversely affected if
our ability to redeem any or all of the debentures for cash is restricted,
prevented or prohibited for any reason, including by Delaware or other
applicable law or by the terms of any existing or future agreements relating to
debt of Nabors or any of our subsidiaries. Delaware law may, among other things,
prevent our redemption of the debentures for cash if it would impair our
capital. Also, our ability to pay cash in connection with any redemption is
subject to and restricted by applicable fraudulent transfer and fraudulent
conveyance laws. Finally, we may not have sufficient funds to pay the purchase
price for all the debentures tendered by the holder. There is no guarantee that
we will be able to redeem any or all of the debentures for cash.

THE MARKET PRICE OF NABORS' COMMON STOCK MAY BE VOLATILE.

The market price of our common stock may be adversely affected by factors
such as actual or anticipated fluctuations in our operating results, acquisition
activity, the impact of international markets, changes in financial estimates by
securities analysts, general market conditions and other factors. We operate in
an industry in which oil and gas prices, and therefore the level of drilling,
exploration and production activity, can be volatile; these industry conditions
are major factors in the value of our common stock. Additionally, broad market
fluctuations may adversely affect the market price of our common stock. We
cannot assure you that the market price of our common stock will not decline
below the levels prevailing at the time of this offering.

4
<PAGE> 9

FORWARD-LOOKING STATEMENTS

This prospectus, any prospectus supplement and the documents incorporated
in this prospectus by reference contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act. We typically
use words such as "anticipate," "believe," "plan," "expect," "intend," "will,"
"may" and similar expressions to identify forward-looking statements. You are
cautioned that actual results could differ materially from those anticipated in
forward-looking statements. Any forward-looking statements, including statements
regarding the intent, belief or current expectations of Nabors or its
management, are not guarantees of future performance and involve risks,
uncertainties and assumptions about us and the industry in which we operate,
including, among other things:

- fluctuations in worldwide prices and demand for oil and gas;

- fluctuations in levels of oil and gas exploration and development
activities;

- fluctuations in the demand for contract drilling and workover services;

- the existence of competitors, technological changes and developments in
the industry;

- the existence of operating risks inherent in the industry;

- the existence of regulatory uncertainties and the possibility of
political instability in any of the countries in which we do or will do
business;

- other risks detailed from time to time in our Securities and Exchange
Commission filings; and

- those items identified in "Risk Factors."

All forward-looking statements in this prospectus are based on information
available to us on the date of this prospectus. We do not intend to update or
revise any forward-looking statements that we may make in this prospectus or
other documents, reports, filings or press releases, whether as a result of new
information, future events or otherwise.

RATIO OF EARNINGS TO FIXED CHARGES

The ratio of earnings to fixed charges for each of the periods set forth
below has been computed on a consolidated basis and should be read in
conjunction with our consolidated financial statements (including the notes
thereto) set forth or incorporated by reference in our Form 10-K for the fiscal
year ended December 31, 1999 and our quarterly report on Form 10-Q for the
fiscal quarter ended June 30, 2000.

<TABLE>
<CAPTION>
FISCAL YEARS ENDED FISCAL YEARS ENDED
DECEMBER 31, SEPTEMBER 30,
SIX MONTHS ENDED ------------------ THREE MONTHS ENDED ----------------------
JUNE 30, 2000 1999 1998 DECEMBER 31, 1997 1997 1996 1995
------------------- ------- -------- ------------------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
4.92x 2.45x 11.56x 15.15x 10.97x 7.09x 7.67x
</TABLE>

For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of pretax income from continuing operations plus fixed
charges (excluding capitalized interest). "Fixed charges" represent interest
incurred (whether expensed or capitalized), amortization of debt expense, and
that portion of rental expense on operating leases deemed to be the equivalent
of interest. No preferred stock was outstanding during any of the periods
presented and, as a result, the ratio of earnings to combined fixed charges and
preferred stock dividends was the same as the ratio of earnings to fixed
charges.

5
<PAGE> 10

USE OF PROCEEDS

We will not receive any proceeds from the sale of the securities
contemplated by this prospectus.

PLAN OF DISTRIBUTION

The securities being offered by this prospectus may be sold from time to
time to purchasers directly by the selling securityholders listed in the table
set forth under the heading "Selling Securityholders" or alternatively, through
underwriters, broker-dealers or agents. In addition, if a securityholder has
purchased debentures in a sale contemplated by this prospectus, the common stock
issuable upon conversion or repurchase of such debentures may be issued to such
securityholder directly by us pursuant to this prospectus. The securities may be
sold by the selling securityholders in one or more transactions at fixed prices,
at prevailing market prices at the time of sale, at varying prices determined at
the time of sale or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block transactions:

- on any national securities exchange or quotation service on which these
securities may be listed or quoted at the time of sale;

- in the over-the-counter market;

- in transactions otherwise than on an exchange or over-the-counter market;
and

- through the writing of options.

In connection with sales of these securities, the selling securityholders
may enter into hedging transactions with broker-dealers, who may in turn engage
in short sales of the securities in the course of hedging the positions they
assume. The selling securityholders also may sell the securities short and
deliver them to close out the short positions, or loan or pledge the securities
to broker-dealers that in turn may sell them.

The selling securityholders and any of their brokers, dealers or agents who
participate in the distribution of the securities may be deemed to be
"underwriters," and any profits on the sale of the securities by them and any
discounts, commissions, or concessions received by any brokers, dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act.

To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any broker, dealer, agent
or underwriter regarding the sale of the securities by the selling
securityholders.

At any time a particular offer of the securities is made, a prospectus and
a prospectus or supplement, if required, will be distributed which will set
forth the aggregate amount and type of securities being offered and the terms of
the offering, including the name or names of any underwriters, dealers or
agents, any discounts, commissions and other items constituting compensation
from the seller securityholders and any discounts, commissions or concessions
allowed or reallowed or paid to dealers. Any supplement and, if necessary, a
post-effective amendment to the registration statement of which this prospectus
is a part, will be filed with the Securities and Exchange Commission to reflect
the disclosure of additional information with respect to the distribution of the
securities. In addition, the securities covered by this prospectus may be sold
in private transactions or under Rule 144 rather than under this prospectus.

We have agreed to indemnify the selling securityholders against specified
liabilities under the Securities Act. The selling securityholders will receive
all of the proceeds from the sale of the securities and will pay all
underwriting discounts and brokerage commissions, if any, applicable to any
sale. We are responsible for the payment of the registration expenses and
certain expenses incident to the offer and sale of the securities.

6
<PAGE> 11

SELLING SECURITYHOLDERS

All of the debentures, and any shares of common stock issued upon
conversion or repurchase of the debentures, are being offered by the selling
securityholders listed in the table below or referred to in a prospectus
supplement. The common stock which may be issued directly by us upon conversion
or repurchase of debentures which were purchased in a sale contemplated by this
prospectus is not being offered by the selling securityholders. Only those
shares of common stock issued upon conversion or repurchase of the debentures
may be offered by the selling securityholders or us. We issued and sold the
debentures in a private placement to Morgan Stanley & Co. Incorporated and the
debentures were simultaneously sold by Morgan Stanley to the selling
securityholders in transactions exempt from registration under the Securities
Act.

No offer or sale under this prospectus may be made by a holder of the
securities unless listed in the table below or until that holder has notified us
and a supplement to this prospectus has been filed or an amendment to the
related registration statement has become effective or unless it is with respect
to common stock issued by us a described in the immediately preceding paragraph.
We will supplement or amend this prospectus to include additional selling
securityholders upon request and upon provision of all required information to
us.

The selling securityholders may offer and sell, from time to time, any or
all of their debentures or common stock issued with respect to those debentures,
either upon their conversion or repurchase. Because the selling securityholders
may offer all or only some portion of the shares listed in the table, no
estimate can be given as to the amount or percentage of these shares that will
be held by the selling securityholders upon termination of the offering.

The following table lists:

- the name of each selling securityholder which has provided us information
to the date of this prospectus;

- the amount of each type of security beneficially owned by that
securityholder before the offering; and

- the amount of securities being offered for sale by that selling
securityholder.

We obtained the information in the table below from the identified selling
securityholders. Unless otherwise disclosed in the footnotes to the table, no
selling securityholder has indicated that it has held any position, office or
other material relationship with us or our affiliates during the past three
years.

7
<PAGE> 12

<TABLE>
<CAPTION>
ZERO COUPON CONVERTIBLE DEBENTURES DUE 2020
---------------------------------------------------
SELLING SECURITYHOLDER AMOUNT BENEFICIALLY OWNED AMOUNT OFFERED FOR SALE
---------------------- ------------------------- -----------------------
<S> <C> <C>
Forest Performance Fund LP........................ $ 3,660,000 $ 3,660,000
Great-West Life & Annuity Insurance Company....... $10,000,000 $10,000,000
Hamilton Partners Limited......................... $16,500,000 $16,500,000
KBC Financial Products............................ $ 2,000,000 $ 2,000,000
Kentfield Trading, Ltd. .......................... $11,100,000 $11,100,000
Key Tr. Convertible Sec. Fd....................... $ 200,000 $ 200,000
Lehman Brothers Inc. ............................. $37,000,000 $37,000,000
LLT Limited....................................... $ 1,780,000 $ 1,780,000
Lydian Overseas Partners Master Fund.............. $30,000,000 $30,000,000
Lyxer Master Fund................................. $30,000,000 $30,000,000
Martin Capital Partners, L.P...................... $14,725,000 $14,725,000
McMahan Securities Co. L.P........................ $ 750,000 $ 750,000
Omnova Solutions.................................. $ 80,000 $ 80,000
Oppenheimer Convertible Securities Fund........... $10,000,000 $10,000,000
Pacific Specialty (Convertibles).................. $ 300,000 $ 300,000
Parker Society/Convertible........................ $ 260,000 $ 260,000
PIMCO Convertible Bond Fund....................... $ 1,400,000 $ 1,400,000
PIMCO Private Mortgage............................ $15,000,000 $15,000,000
PIMCO Private Short-Term Fund..................... $ 3,000,000 $ 3,000,000
PIMCO Private U.S. Government Sector.............. $10,000,000 $10,000,000
PIMCO Real Return Bond Fund....................... $ 5,000,000 $ 5,000,000
Potlatch-First Trust Co. of St. Paul.............. $ 750,000 $ 750,000
Ramius Capital Group Holdings, Ltd................ $ 2,000,000 $ 2,000,000
RBC Capital Services Inc. ........................ $ 630,000 $ 630,000
RET Pension Plan of the CA State Automob.......... $ 300,000 $ 300,000
SG Cowen Securities Corp.......................... $16,000,000 $16,000,000
Standard Insurance Co............................. $ 400,000 $ 400,000
Sylvan IMA Ltd.................................... $17,000,000 $17,000,000
UBS O'Connor LLC F/B/O............................ $63,500,000 $63,500,000
Union Security Life Insurance Co. ................ $ 30,000 $ 30,000
University of So. Florida Fdn..................... $ 300,000 $ 300,000
White River Securities L.L.C. .................... $11,100,000 $11,100,000
Zurich HFR Master Hedge Fund...................... $ 380,000 $ 380,000
</TABLE>

8
<PAGE> 13

DESCRIPTION OF DEBENTURES

The debentures were issued under an indenture dated as of June 20, 2000
between Nabors and Bank One, N.A., as trustee. We have summarized the material
terms and provisions of the indenture in this section. You should read the
indenture for additional information before you buy any debt securities or
common stock. References in this section to Nabors are solely to Nabors
Industries, Inc. and not to its subsidiaries.

GENERAL

The debentures are unsecured obligations of Nabors, ranking equal in right
of payment with all other senior unsecured indebtedness of Nabors. The
debentures are limited to $825,000,000 aggregate principal amount at maturity.
The debentures are scheduled to mature on June 20, 2020. They were initially
offered at a substantial discount from their principal amount at maturity and
therefore will have original issue discount for U.S. federal income tax
purposes. See "Material Federal Income Tax Considerations." The debentures were
issued and sold on June 20, 2000 in a private placement to Morgan Stanley and
were simultaneously sold by Morgan Stanley in transactions exempt from the
registration requirements of the Securities Act to qualified institutional
buyers (as defined in Rule 144A under the Securities Act).

Nabors will not make periodic cash payments of interest on the debentures,
except as described under "-- Optional Conversion to Semiannual Coupon
Debentures Upon a Tax Event." The calculation of the accrual of original issue
discount, the difference between the issue price of a debenture and the
principal amount at maturity of a debenture, in the period during which a
debenture remains outstanding will be compounded semi-annually using a year
composed of twelve 30-day months. The accrual of original issue discount will
commence on the issue date of the debentures. Original issue discount or, if the
debentures are converted to semiannual coupon debentures following the
occurrence of a Tax Event, interest on the debentures, will cease to accrue on
the debentures upon conversion, repurchase or redemption under the terms and
subject to the conditions of the indenture.

The principal amount at maturity of each debenture is payable at the office
or agency of the paying agent, initially the trustee, in the Borough of
Manhattan, The City of New York, or any other office of the paying agent
maintained for this purpose. Debentures may be presented for conversion into
common stock at the office of the conversion agent. Debentures in definitive
form may be presented for exchange for other debentures or registration of
transfer at the office of the registrar. Initially, the trustee will be the
paying agent, the conversion agent and the registrar. We will not charge a
service charge for any registration, transfer or exchange of debentures.
However, we may require the holder to pay for any tax, assessment or other
governmental charge to be paid in connection with any registration, transfer or
exchange of debentures.

CONVERSION OF DEBENTURES BY HOLDERS

A holder of a debenture may convert it into our common stock at any time
prior to maturity. However, if we elect to redeem a debenture, the holder may
convert it only until the close of business on the last trading day prior to a
redemption date, unless we default in the payment of the redemption price. If a
holder has delivered a repurchase notice exercising its option to require us to
repurchase its debenture, the holder may not convert the debenture unless it
withdraws the notice in accordance with the terms of the indenture. Similarly,
if a holder exercises its option to require us to repurchase its debenture upon
a Fundamental Change, that debenture may be converted only if the holder
withdraws its election to exercise its option in accordance with the terms of
the indenture. A holder may convert its debentures in part so long as the holder
converts debentures of $1,000 principal amount at maturity or an integral
multiple of $1,000.

The initial conversion rate is 10.738 shares of common stock per $1,000
principal amount at maturity of debentures, subject to adjustment upon the
occurrence of the events described below. A holder entitled to a fractional
share of common stock will receive cash equal to the then current market value
of the fractional share.
9
<PAGE> 14

On conversion of a debenture, a holder will not receive any cash payment
representing accrued original issue discount. Our delivery to the holder of the
fixed number of shares of common stock into which the debenture is convertible,
together with the cash payment, if any, in lieu of a fractional share of common
stock, will be deemed to satisfy our obligation to pay the principal amount at
maturity of the debenture including the accrued original issue discount
attributable to the period from the issue date to the conversion date.

Instead of delivering shares of common stock upon notice of conversion of
any debentures (for all or any portion of such debentures), we may elect to pay
holders surrendering debentures an amount in cash per debenture equal to the
last reported sale price of a share of its common stock on the trading day
immediately prior to the applicable conversion date, multiplied by the
conversion rate in effect on that trading day, subject to adjustment upon the
occurrence of the events described below; provided, that if the payment of cash
is not permitted pursuant to the provisions of the indenture or otherwise, we
will deliver shares of our common stock (and cash in place of fractional shares)
as described below. We will inform the holders through the trustee no later than
two business days following the conversion date of our election to deliver
shares of common stock or to pay cash in place of delivery of the shares. If we
elect to deliver all or a portion of such payment in shares of common stock, the
shares will be delivered through the trustee no later than the seventh business
day following the conversion date. If we elect to pay all or a portion of such
payment in cash, the payment will be made to holders surrendering debentures no
later than the tenth business day following the applicable conversion date. If
an event of default, as described under "-- Events of Default; Notice and
Waiver" below (other than a default in a cash payment upon conversion of the
debentures), has occurred or is continuing, we may not pay cash upon conversion
of any debentures (other than cash in place of fractional shares).

Pursuant to the indenture, the date on which all of the requirements for
delivery of the debenture for conversion have been satisfied is the conversion
date.

The conversion rate is subject to adjustment as provided in the indenture
in certain events, including:

(1) the issuance of our common stock as a dividend or distribution on
the common stock;

(2) certain subdivisions and combinations of our common stock;

(3) the issuance to all holders of common stock of certain rights or
warrants to purchase common stock;

(4) the distribution of capital stock, other than our common stock, to
all holders of common stock or evidences of our indebtedness or of assets.
This includes securities other than common stock, but excludes those
rights, warrants, dividends and distributions referred to in clauses (1)
and (3) above or paid in cash; and

(5) distributions consisting of cash, excluding any quarterly cash
dividend on the common stock to the extent that the aggregate cash dividend
per share of common stock in any quarter does not exceed the greater of:

- the amount per share of common stock of the immediately preceding
quarterly cash dividend on the common stock to the extent that the
preceding quarterly dividend did not require an adjustment of the
conversion rate pursuant to this clause (5) (as adjusted to reflect
subdivisions or combinations of the common stock); and

- 4.5% of the average of the last reported sales price of the common
stock during the ten trading days immediately prior to the date of
declaration of the dividend, and excluding any dividend or
distribution in connection with the liquidation, dissolution or
winding up of Nabors.

If an adjustment is required to be made as set forth in clause (5) above as
a result of a distribution that is a quarterly dividend, the adjustment would be
based upon the amount by which the distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant to clause (5) above.
10
<PAGE> 15

If an adjustment is required to be made as set forth in clause (5) above as a
result of a distribution that is not a quarterly dividend, the adjustment would
be based upon the full amount of the distribution.

The indenture provides that if we implement a stockholders' rights plan,
the rights plan must provide that upon conversion of the debentures the holders
will receive, in addition to the common stock issuable upon conversion, the
rights which would attach to the common stock issuable upon conversion,
regardless of whether the rights have separated from the common stock at the
time of conversion.

No adjustment in the conversion rate will be required unless the adjustment
would require a change of at least 1% in the rate then in effect; provided that
any adjustment that would otherwise be required to be made will be carried
forward and taken into account in any subsequent adjustment.

Except as stated above, the conversion rate will not be adjusted for the
issuance of common stock or any securities convertible into or exchangeable for
common stock or carrying the right to purchase any of the foregoing.

In the case of either:

- any reclassification of the common stock, or

- a consolidation or merger involving us or a sale or conveyance to another
corporation of our property and assets as an entirety or substantially as
an entirety,

if holders of common stock would be entitled to receive any form of
consideration with respect to or in exchange for common stock, the holders of
the debentures then outstanding would be entitled to convert their debentures
into the kind and amount of consideration which they would have owned or been
entitled to receive had their debentures been converted immediately prior to the
applicable transaction. This assumes that a holder of debentures would not have
exercised any rights of election as to the consideration receivable in
connection with the transaction.

In the event of a taxable distribution to holders of common stock or in
certain other circumstances requiring an adjustment to the conversion rate, the
holders of debentures may, in certain circumstances, be deemed to have received
a distribution subject to United States income tax as a dividend. In certain
other circumstances, the absence of an adjustment may result in a taxable
dividend to the holders of common stock. See "Material Federal Income Tax
Considerations."

From time to time, and to the extent permitted by law, we may increase the
conversion rate by any amount for any period of at least 20 business days, if
the board of directors has made a determination that the increase would be in
our best interests. Subsequent to such increase, we may from time to time lower
the conversion rate to any rate that is not lower than the conversion rate that
would have been applicable had such increase not occurred, if the board of
directors has determined that the decrease would be in our best interests. For
purposes of this paragraph, a determination by the board of directors will be
conclusive. If we increase or decrease the conversion rate, we will give at
least seven days' notice of the increase or decrease. We may, at our option,
make increases in the conversion rate, in addition to those described above, as
the board of directors deems advisable to avoid or diminish any income tax to
holders of common stock resulting from any dividend or distribution of stock, or
rights to acquire stock, or from any event treated as a dividend distribution or
a right to acquire stock for income tax purposes. See "Material Federal Income
Tax Considerations."

If we exercise our option to have interest accrue on a debenture instead of
original issue discount following a Tax Event, the holder will be entitled on
conversion to receive the same number of shares of common stock that the holder
would have received if we had not exercised our option. If we exercise our
option, debentures surrendered for conversion during the period from the close
of business on the record date next preceding the next interest payment date to
the opening of business on the next interest payment date (except debentures to
be redeemed on the next interest payment date) must also be accompanied by an
amount equal to the accrued and unpaid interest on the debenture that the
registered holder is to receive. Except where debentures surrendered for
conversion must be accompanied by the payment

11
<PAGE> 16

described in this paragraph, no interest on converted debentures will be payable
by us on any interest payment date subsequent to the date of conversion. See
"-- Conversion to Semiannual Coupon Debentures Upon a Tax Event."

REDEMPTION OF DEBENTURES AT NABORS' OPTION

We may not redeem the debentures prior to June 20, 2003. Beginning on June
20, 2003, we may redeem the debentures in whole or in part at any time, by
giving by mail to holders of debentures not less than 15 days' nor more than 60
days' notice of redemption prior to the redemption date for an amount in cash
equal to 100% of the sum of (1) the debenture issue price and (2) accrued
original issue discount through the date of redemption. At the same time, we
will provide public notice of redemption through certain financial news
services. The debentures will be redeemable in multiples of $1,000 principal
amount at maturity. No sinking fund is provided for the debentures.

The table below shows redemption prices of debentures per $1,000 principal
amount at maturity at June 20, 2003, at each June 20 thereafter prior to
maturity and at maturity on June 20, 2020. These prices reflect the accrued
original issue discount calculated to each date. The redemption price of a
debenture redeemed between any two dates below would include an additional
amount reflecting the additional original issue discount accrued since the date
in the table preceding the actual redemption date.

<TABLE>
<CAPTION>
(2)
(1) ACCRUED ORIGINAL (3)
DEBENTURE ISSUE ISSUE DISCOUNT REDEMPTION PRICE
PRICE AT 2.5% (1)+(2)
--------------- ---------------- ----------------
<S> <C> <C> <C>
June 20, 2003.................................... $608.41 $ 47.09 $ 655.50
June 20, 2004.................................... 608.41 63.57 671.98
June 20, 2005.................................... 608.41 80.48 688.89
June 20, 2006.................................... 608.41 97.81 706.22
June 20, 2007.................................... 608.41 115.57 723.98
June 20, 2008.................................... 608.41 133.79 742.20
June 20, 2009.................................... 608.41 152.46 760.87
June 20, 2010.................................... 608.41 171.60 780.01
June 20, 2011.................................... 608.41 191.22 799.63
June 20, 2012.................................... 608.41 211.34 819.75
June 20, 2013.................................... 608.41 231.96 840.37
June 20, 2014.................................... 608.41 253.10 861.51
June 20, 2015.................................... 608.41 274.77 883.18
June 20, 2016.................................... 608.41 296.99 905.40
June 20, 2017.................................... 608.41 319.76 928.17
June 20, 2018.................................... 608.41 343.11 951.52
June 20, 2019.................................... 608.41 367.05 975.46
June 20, 2020.................................... 608.41 391.59 1,000.00
</TABLE>

If we elect to convert the debentures to semiannual coupon debentures
following a Tax Event, the debentures will be redeemable at the restated
principal amount (as described below) plus accrued and unpaid interest, if any,
to the applicable redemption date.

If less than all of the outstanding debentures held in certificated form
are to be redeemed, the trustee will select the debentures held in certificated
form to be redeemed in principal amounts at maturity of $1,000 or integral
multiples thereof by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of a holder's certificated debentures is
selected for partial redemption and the holder converts a portion of its
debentures, the converted portion will be deemed to be the portion selected for
redemption. Debentures registered in the name of DTC or its nominee will be
redeemed as described under the caption entitled "-- Form, Denomination and
Registration -- Global Debenture; Book-Entry Form."

12
<PAGE> 17

REPURCHASE AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

If a Fundamental Change occurs at any time prior to June 20, 2020, each
holder will have the right, at the holder's option, to require us to repurchase
any or all of the holder's debentures. The debentures may be repurchased in
multiples of $1,000 principal amount at maturity. We will repurchase the
debentures at a price equal to the issue price plus accrued original issue
discount to the repurchase date. See the table under "-- Redemption of
Debentures at Nabors' Option." If, prior to the repurchase date, we elect to
convert the debentures to semiannual coupon debentures following a Tax Event,
the purchase price will be equal to the restated principal amount plus accrued
and unpaid interest to the repurchase date. See "-- Optional Conversion to
Semiannual Coupon Debentures Upon a Tax Event."

On or before the 30th day after the occurrence of a Fundamental Change, we
will mail to all holders of record of the debentures a notice of the occurrence
of the Fundamental Change and of the resulting repurchase right. We also will
deliver to the trustee a copy of the notice. To exercise the repurchase right,
holders of debentures must deliver, on or before the 30th day after the date of
our notice of a Fundamental Change, the debentures to be repurchased, duly
endorsed for transfer, together with the form entitled "Option to Elect
Repurchase Upon a Fundamental Change" on the reverse side of the debenture duly
completed, to us, or an agent designated by us.

We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Securities Exchange Act which may then be applicable in
connection with the repurchase of the debentures in the event of a Fundamental
Change.

The repurchase rights of the holders of debentures could discourage a
potential acquiror of us. The Fundamental Change repurchase feature, however, is
not the result of management's knowledge of any specific effort to obtain
control of us by any means or part of a plan by management to adopt a series of
anti-takeover provisions.

The term Fundamental Change is limited to specified transactions and may
not include other events that might adversely affect our financial condition. In
addition, holders may not be protected by the requirement that we offer to
repurchase the debentures upon a Fundamental Change in the event of a highly
leveraged transaction, reorganization, merger or similar transaction involving
us.

No debentures may be repurchased at the option of holders upon a
Fundamental Change if there has occurred and is continuing an event of default
described under "-- Events of Default; Notice and Waiver" below. However,
debentures may be repurchased if the event of default is in the payment of the
Fundamental Change purchase price with respect to the debentures. In the event
of a Fundamental Change and exercise by holders of the debentures of their right
to require us to repurchase all or a portion of their debentures, we may not
have sufficient funds to pay the purchase price for all the debentures tendered
by the holders.

REPURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER

On June 20, 2003, June 20, 2008, and June 20, 2013, we will be obligated to
repurchase, at the option of the holder, all or any portion of the outstanding
debentures. The purchase price payable in respect of a debenture will be equal
to the issue price plus accrued original issue discount to the repurchase date.
If, prior to the repurchase date, we elect to convert the debentures to
semiannual coupon debentures following a Tax Event, the purchase price will be
equal to the restated principal amount plus accrued and unpaid interest to the
repurchase date. See the discussion under the caption entitled "-- Optional
Conversion to Semiannual Coupon Debentures Upon a Tax Event."

13
<PAGE> 18

The table below shows the purchase prices of a debenture as of the
specified repurchase dates. We may elect to pay the purchase price payable, as
of any repurchase date, in cash or common stock or any combination of cash or
common stock.

<TABLE>
<CAPTION>
REPURCHASE DATE PRICE
--------------- -------
<S> <C>
June 20, 2003............................................. $655.50
June 20, 2008............................................. $742.20
June 20, 2013............................................. $840.37
</TABLE>

If we elect to pay the purchase price, in whole or in part, in common
stock, the number of shares to be delivered in respect of the portion of the
purchase price to be paid in common stock will be equal to the portion of the
purchase price divided by the Market Price (as defined below under "Certain
Definitions") of the common stock. However, no fractional shares of common stock
will be delivered upon any repurchase by us of debentures through the delivery
of common stock in payment, in whole or in part, of the purchase price. Instead,
we will pay cash based on the Market Price for all fractional shares of common
stock.

The holder's right to require us to repurchase debentures is exercisable by
delivery during the repurchase period of a written repurchase notice by the
holder to the office of the paying agent. The paying agent will initially be the
trustee. The repurchase period will begin at any time from the opening of
business on the date that is 20 business days prior to the applicable repurchase
date until the close of business on the applicable repurchase date. If the
repurchase notice is withdrawn during the period, we will not be obligated to
repurchase the debentures. Our repurchase obligation will be subject to
additional conditions set forth in the indenture.

The repurchase notice must state:

(1) the certificate numbers of the debentures to be delivered by the
holder for repurchase by us;

(2) the portion of the principal amount at maturity of debentures to
be repurchased, which must be $1,000 or in multiples of $1,000;

(3) that the debentures are to be repurchased by us pursuant to the
applicable provisions of the debentures and the indenture; and

(4) in the event that we elect to pay the purchase price in common
stock but do not end up satisfying the conditions to payment and ultimately
have to pay the holder in cash, whether the holder would choose:

- to withdraw the repurchase notice as to some or all of the
debentures to which it relates; or

- to receive cash in respect of the entire purchase price for all
debentures subject to the repurchase notice.

If the holder fails to indicate the holder's choice with respect to the
election described in clause (4) above, the holder will be deemed to have
elected to receive cash for the entire purchase price for all debentures subject
to the repurchase notice. For a discussion of the tax treatment of a holder
receiving cash or common stock pursuant to its election to tender its debentures
to us on a repurchase date, see the discussion under "Material Federal Income
Tax Considerations."

Any repurchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
repurchase date. The notice of withdrawal will state the principal amount at
maturity and the certificate numbers of the debentures as to which the
withdrawal notice relates and the principal amount at maturity, if any, which
remains subject to the repurchase notice.

14
<PAGE> 19

We will give notice not less than 20 business days prior to the repurchase
date to all holders at their addresses shown in the register of the registrar.
We also will give notice to beneficial owners as required by applicable law.
This notice will state, among other things:

- whether we will pay the purchase price of the debentures in cash or
common stock, or any combination of cash or common stock. The notice will
specify the percentage of each, and

- if we elect to pay in common stock, in whole or in part, the method of
calculating the Market Price of the common stock.

Upon determination of the actual number of shares of common stock in
accordance with the above provisions, we will publish the determination in a
daily newspaper of national circulation.

Our right to repurchase debentures with common stock is subject to the
satisfaction of various conditions, including:

- the registration of the common stock under the Securities Act, if
required, and

- compliance with other applicable federal and state securities laws, if
any.

If such conditions are not satisfied by a repurchase date, we will pay the
purchase price of the debentures to be purchased on the repurchase date entirely
in cash. We will comply with the provisions of Rule 13e-4 and any other tender
offer rules under the Securities Exchange Act which may then be applicable and
will file a Schedule 13E-4 or any other schedule required under the Securities
Exchange Act in connection with any offer by us to repurchase debentures at the
option of holders.

Payment of the repurchase price for a debenture for which a repurchase
notice has been delivered and not withdrawn is conditioned upon book-entry
transfer or delivery of the debenture, together with necessary endorsements, to
the paying agent at its office in the Borough of Manhattan, The City of New
York, or any other office of the paying agent, at any time after delivery of the
repurchase notice. Payment of the purchase price for the debenture will be made
promptly following the later of the repurchase date or the time of book-entry
transfer or delivery of the debenture. If the paying agent holds money or
securities sufficient to pay the purchase price of the debenture on the business
day following the repurchase date, then, on and after the date, the debenture
will cease to be outstanding and original issue discount on the debenture or, if
the debentures are converted to semiannual coupon debentures following the
occurrence of a Tax Event, interest on the debentures, will cease to accrue.
This will be the case whether or not book-entry transfer of the debenture is
made or the debenture is delivered to the paying agent, and all other rights of
the holder will terminate, other than the right to receive the purchase price
upon delivery of the debenture.

No debentures may be repurchased at the option of the holder for cash if
there has occurred, prior to, on or after the giving by the holders of the
debentures of the required repurchase notice, and is continuing an event of
default described under "-- Events of Default; Notice and Waiver" below, other
than a default in the payment of the purchase price with respect to the
debentures.

Even though we become obligated to repurchase any outstanding debenture on
a repurchase date, we may not have sufficient funds to pay the purchase price on
that repurchase date. If this were to occur, we could be required to issue
shares of common stock to pay the purchase price at valuations based on then
prevailing market prices for all the debentures tendered by the holders.

MERGERS AND SALES OF ASSETS BY NABORS

We may not consolidate with or merge into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to
another person, unless, among other items:

- the resulting, surviving or transferee person, if other than us, is
organized and existing under the laws of the United States, any state
thereof or the District of Columbia;

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- the successor person assumes all of our obligations under the debentures
and the indenture; and

- we or the successor person, immediately after consolidating or merging,
will not be in default under the indenture.

Upon the assumption of our obligations by a successor as described above,
subject to certain exceptions, we will be discharged from all obligations under
the debentures and the indenture. Certain of these transactions which would
constitute a Fundamental Change would permit each holder to require us to
repurchase their debentures as described under "-- Repurchase at Option of the
Holder Upon a Fundamental Change."

OPTIONAL CONVERSION TO SEMIANNUAL COUPON DEBENTURES UPON A TAX EVENT

From and after the date (referred to as the Tax Event date) of the
occurrence of a Tax Event, we may elect to have interest in lieu of future
original interest discount accrue at 2.5% per annum on a principal amount per
debenture equal to the issue price plus original issue discount accrued to the
date immediately prior to the later of:

- the Tax Event date; or

- the date on which we make our election,

which is referred to as the option exercise date. The resulting amount would be
the restated principal amount. Interest would accrue from the option exercise
date and will be payable semiannually on the interest payment date, which would
be June 20 and December 20 of each year. The interest would be payable to
holders of record of the debentures at the close of business on the regular
record date, immediately preceding the interest payment date. Interest would be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Interest would accrue from the most recent date to which interest had been paid
or, if no interest had been paid, from the option exercise date.

EVENTS OF DEFAULT; NOTICE AND WAIVER

The indenture provides that, if an event of default specified in the
indenture has happened and is continuing, either the trustee or the holders of
not less than 25% in aggregate principal amount at maturity of the debentures
then outstanding may declare due and payable:

- the issue price of the debentures or, if the debentures are converted to
semiannual coupon debentures following the occurrence of a Tax Event, the
restated principal amount; plus

- the original issue discount on the debentures or, if the debentures are
converted to semiannual coupon debentures following the occurrence of a
Tax Event, interest on the debentures, accrued and unpaid to the date of
the declaration.

In the case of certain events of bankruptcy or insolvency, the issue price
plus the original issue discount on the debentures or, if the debentures are
converted to semiannual coupon debentures following the occurrence of a Tax
Event, the restated principal amount plus interest on the debentures, accrued
and unpaid to the occurrence of the event automatically will become and be
immediately due and payable.

Under certain circumstances, the holders of a majority in aggregate
principal amount at maturity of the outstanding debentures may rescind any
acceleration with respect to the debentures and its consequences.

Interest will accrue at the rate of 2.5% per annum and be payable on demand
upon a default in the payment of any redemption price or purchase price and,
after acceleration, of the issue price and accrued original issue discount or,
if the debentures are converted to semiannual coupon debentures following the
occurrence of a Tax Event, interest, to the extent that payment of the interest
is legally enforceable. Original issue discount or, if the debentures are
converted to semiannual coupon debentures following the

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occurrence of a Tax Event, interest on the debentures, will cease to accrue
after declaration of acceleration.

Under the indenture, events of default are defined as:

(1) default in payment of:

- the principal amount at maturity (if the default continues for 10
days),

- issue price (if the default continues for 10 days),

- accrued original issue discount, or, if the debentures are
converted to semiannual coupon debentures following the occurrence
of a Tax Event, interest on the debentures (if the default
continues for 30 days),

- liquidated damages (if the default continues for 30 days),

- redemption price (if the default continues for 10 days), or

- repurchase price (if the default continues for 10 days) with
respect to any debenture when it becomes due and payable;

(2) Our failure for 20 days to deliver shares of our common stock
(including cash in lieu of fractional shares) or, if we elect, cash in lieu
of shares of our common stock, when common stock or cash is required to be
delivered following the conversion of a debenture;

(3) Our failure to comply with any of our other agreements in the
debentures or the indenture upon the receipt by us of notice of the default
by the trustee or by holders of not less than 25% in aggregate principal
amount at maturity of the debentures then outstanding and our failure to
cure the default within 90 days after receipt by us of the notice; or

(4) certain events of bankruptcy or insolvency.

The trustee will give notice to holders of the debentures of any continuing
default known to the trustee within 90 days after the trustee becomes aware of
such default; provided that, except in the case of a default as described in
clause (1) above, the trustee may withhold notice if it determines in good faith
that withholding the notice is in the interests of the holders.

The holders of a majority in aggregate principal amount at maturity of the
outstanding debentures may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee; provided that the direction may not conflict
with any law or the indenture and will be subject to certain other limitations.
Before proceeding to exercise any right or power under the indenture at the
direction of the holders, the trustee will be entitled to receive from the
holders reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities incurred by it in complying with the direction. No
holder of any debenture will have any right to pursue any remedy with respect to
the indenture or the debentures unless:

(1) the holder has previously given us and the trustee written notice
of a continuing event of default;

(2) the holders of at least 25% in aggregate principal amount at
maturity of the outstanding debentures have made a written request to the
trustee to pursue the remedy;

(3) the holder or holders have offered to the trustee reasonable
indemnity satisfactory to the trustee;

(4) the holders of a majority in aggregate principal amount at
maturity of the outstanding debentures have not given the trustee a
direction inconsistent with the request within 60 days after receipt of the
request; and

(5) the trustee has failed to comply with the request within the
60-day period.

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However, the right of any holder:

(1) to receive payment of:

- the principal amount at maturity,

- issue price,

- accrued original issue discount, or, if the debentures are
converted to semiannual coupon debentures following the occurrence
of a Tax Event, interest on the debentures,

- liquidated damages,

- redemption price,

- repurchase price,

and any interest in respect of a default in the payment of any amounts due
in respect of a debenture, on or after the due date of the debenture;

(2) to institute suit for the enforcement of any payments or
conversion; or

(3) to convert debentures

will not be impaired or adversely affected without the holder's consent.

The holders of at least a majority in aggregate principal amount at
maturity of the outstanding debentures may waive an existing default and its
consequences, other than:

- any default in any payment on the debentures;

- any default with respect to the conversion rights of the debentures; or

- any default in respect of certain covenants or provisions in the
indenture which may not be modified without the consent of the holder of
each debenture as described under the caption entitled "-- Modification"
below.

We will be required to furnish to the trustee annually a compliance
certificate as to any default by us in the performance and observance of our
obligations under the indenture.

MODIFICATION

We may modify and amend the indenture or the debentures with the consent of
the holders of not less than a majority in aggregate principal amount at
maturity of the debentures then outstanding. However, no amendment may, without
the consent of each holder affected:

(1) reduce the principal amount at maturity, issue price, redemption
price or purchase price, or extend the stated maturity of any debenture or
alter the manner or rate of accrual of original issue discount or interest,
or make any debenture payable in money or securities other than that stated
in the debenture;

(2) make any change to the principal amount at maturity of debentures
whose holders must consent to an amendment or any waiver under the
indenture or modify the indenture provisions relating to amendments or
waivers with respect to the payment of principal at maturity;

(3) make any change that adversely affects the right to convert any
debenture or the right to require us to repurchase a debenture or the right
to require us to repurchase a debenture upon a Fundamental Change; or

(4) impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the debentures.

The indenture also provides for certain modifications of its terms without
the consent of the holders.
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FORM AND DENOMINATION

The debentures are issuable in fully registered form, without coupons, in
denominations of $1,000 principal amount at maturity and multiples of $1,000. We
may not reissue a debenture that has matured or been converted, redeemed,
repurchased by us at the option of a holder or otherwise canceled, except for
the transfer, exchange or replacement of the debenture.

Global Debenture; Book-Entry Form. The debentures have been issued in the
form of several global debentures (collectively, the "global debenture"). The
global debenture has been deposited with, or on behalf of, The Depository Trust
Company ("DTC") and registered in the name of Cede & Co., DTC's nominee. Except
as set forth below, the global debenture may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.

Purchasers of the debentures may hold their interests in the global
debenture directly through DTC if the purchaser is a participant in DTC, or
indirectly through organizations which are participants in DTC. Transfers
between participants will be effected in the ordinary way in accordance with DTC
rules and will be settled in clearing house funds. The laws of some states
require that certain persons take physical delivery of securities in definitive
form. As a result, the ability to transfer beneficial interests in the global
debenture to such persons may be limited.

Persons who are not participants may beneficially own interests in the
global debenture held by DTC only though participants, or certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. So long as Cede & Co., as the nominee of DTC, is the registered
owner of the global debenture, Cede & Co. for all purposes will be considered
the sole holder of the global debenture. Except as provided below, owners of
beneficial interests in the global debenture will not be entitled to have
certificates registered in their names. These owners will not receive or be
entitled to receive physical delivery of certificates in definitive registered
form and will not be considered the holders of the global debenture.

Payment of principal amount at maturity or the redemption price or the
purchase price of the global debenture will be made to Cede & Co., the nominee
for DTC, as the registered owner of the global debenture. Payments will be made
by wire transfer of immediately available funds on the payment date. Nabors, the
trustee and any paying agent will have no responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global debenture. In addition, Nabors, the trustee
and any paying agent will not have any responsibility or liability for
maintaining, supervising or reviewing any records relating to any beneficial
ownership interests.

We have been informed by DTC that, with respect to any payment of principal
amount at maturity or the redemption price or the purchase price of the global
debenture, DTC's practice is to credit participants' accounts on the payment
date. These payments will be in amounts proportionate to the participants'
respective beneficial interests in the principal amount represented by the
global debenture as shown on the records of DTC. DTC will not credit
participants' accounts if DTC has reason to believe that it will not receive
payment on the applicable payment date. Payments by participants to owners of
beneficial interests in the principal amount represented by the global debenture
held through participants will be the responsibility of the participants. This
is currently the case with securities held for the accounts of customers
registered in street name.

Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a person
having a beneficial interest in the principal amount represented by the global
debenture to pledge its interest to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of its interest, may be
affected by the lack of physical certificates evidencing its interest.

None of Nabors, the trustee, or any registrar, paying agent or conversion
agent under the indenture, will have any responsibility for the performance by
DTC or its participants or indirect participants of their operations. DTC has
advised us that it will take any action permitted to be taken by a holder of
debentures, including, without limitation, the presentation of debentures for
exchange as described below,
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<PAGE> 24

only at the direction of one or more participants to whose account with DTC
interests in the global debenture are credited. In addition, DTC only will take
action in respect of the principal amount of the debentures represented by the
global debenture as to which a participant or participants has or have given
direction.

DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a clearing corporation within the meaning of the Uniform
Commercial Code and a clearing agency registered pursuant to the provisions of
Section 17A of the Securities Exchange Act. DTC was created to hold securities
for its participants and to facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes to the accounts of its participants. This practice eliminates the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Some of the participants, or their representatives,
together with other entities, own DTC. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies that
clear through, or maintain a custodial relationship with, a participant, either
directly or indirectly.

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global debenture among participants, it is under
no obligation to perform or continue to perform these procedures, and these
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will cause the debentures to be issued in definitive
registered form in exchange for the global debenture.

Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and indirect participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices will be sent to Cede & Co., as nominee of DTC. If less than all of the
debentures are being redeemed, DTC will reduce the amount of interest of each
participant in the debentures in accordance with its procedures.

Certificated Debentures. Holders of debentures may request that
certificated debentures be issued in exchange for debentures represented by the
global debenture. Furthermore, certificated debentures may be issued in exchange
for debentures represented by the global debenture if no successor depositary is
appointed by us as set forth above under "-- Global Debenture; Book-Entry Form."
Likewise, a holder may exchange a certificated debenture for a beneficial
interest in the global debenture held by DTC by surrendering the certificated
debenture to a DTC participant, or banks, brokers, dealers, trust companies and
other parties that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.

REGISTRATION RIGHTS

We have filed a registration statement with the Securities and Exchange
Commission. We will use all reasonable efforts to keep the registration
statement effective until either the debentures are sold pursuant to the
registration statement or the expiration of the holding period for the
debentures held by non-affiliates of Nabors (as defined under Rule 144(k) of the
Securities Act). However, if our board of directors determines that, in
connection with a proposed material transaction, it is in our best interest or
that of our subsidiaries, the use of this prospectus may be suspended. In order
to suspend this prospectus, we must notify the selling securityholders within
two business days after our board of directors determines to suspend this
prospectus. The suspension of this prospectus may last up to 30 consecutive days
in any 90-day period for a total of up to 60 days in any year.

If the suspension of this prospectus exceeds this timeframe, we are
required to pay liquidated damages equal to 0.25% per year on (1) the total
principal amount on the debentures, and (2) the number of common shares
underlying the debentures outstanding multiplied by the conversion rate.

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TAXATION OF DEBENTURES

See the description under "Material Federal Income Tax Considerations" for
a discussion of certain tax considerations relevant to a holder of debentures.

INFORMATION CONCERNING THE TRUSTEE

We have appointed Bank One, N.A. as trustee under the indenture, and as
paying agent, conversion agent, registrar and custodian with regard to the
debentures.

CERTAIN DEFINITIONS

Set forth below are certain defined terms used in this prospectus.

"Fundamental Change" means the occurrence of any transaction or event in
connection with which all or substantially all common stock will be exchanged
for, converted into, acquired for or constitute solely the right to receive any
form of consideration which is not all or substantially all common stock listed,
or, upon consummation of or immediately following such transaction or event,
which will be listed, on a United States national securities exchange or
approved for quotation on The NASDAQ National Market or any similar United
States system of automated dissemination of quotations of securities prices.

"Market Price" means the average of the Sale Prices of the Common Stock for
the five trading day period ending on the third business day prior to the
applicable purchase date, if the third business day prior to the applicable
purchase date is a trading day or, if it is not a trading day, then on the last
trading day prior to such third business day, appropriately adjusted to take
into account the occurrence during the period commencing on the first of such
trading days during such five trading day period and ending on such purchase
date of certain events that would result in an adjustment of the conversion rate
under the indenture with respect to the common stock. Because the Market Price
of the common stock is determined prior to the applicable purchase date, holders
of debentures bear the market risk with respect to the value of the common stock
to be received from the date of determination of such Market Price to such
purchase date. We may elect to pay the purchase price in common stock only if
the information necessary to calculate the Market Price is reported in a daily
newspaper of national circulation.

"Sale Price of the Common Stock" means, on any date, the closing per share
sale price, or if no closing sale price is reported, the average bid and ask
prices or, if more than one, in either case, the average of the average bid and
average ask prices, on such date as reported in the composite transactions for
the principal United States securities exchange on which the common stock is
traded or, if the common stock is not listed on a United States national or
regional stock exchange, as reported by The NASDAQ National Market.

"Tax Event" means that we have received an opinion from independent tax
counsel experienced in such matters to the effect that, as a result of:

(1) an amendment to, or change or announced prospective change in, the
laws or regulations of the U.S. or any political subdivision or taxing
authority thereof or therein; or

(2) any amendment to, or change in, an interpretation or application
of such laws or regulations by any legislative body, court, governmental
agency or regulatory authority, in each case which amendment or change is
enacted, promulgated, issued or announced or which interpretation is issued
or announced or which action is taken, on or after the date of this
prospectus; or

(3) there is more than an insubstantial risk that interest, including
original issue discount, payable on the debentures either (a) would not be
deductible on a current accrual basis or (b) would not be deductible under
any other method, in either case in whole or in part, by us by reason of
deferral, disallowance or otherwise for U.S. federal income tax purposes.

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DESCRIPTION OF CAPITAL STOCK

GENERAL

Pursuant to our Restated Certificate of Incorporation, as amended, the
authorized capital stock of Nabors consists of 400,000,000 shares of common
stock, par value $.10 per share, 8,000,000 shares of class B stock, par value
$.10 per share, none of which are outstanding, and 10,000,000 shares of
preferred stock, par value $.10 per share, none of which are outstanding.

As of July 31, 2000, Nabors had 145,986,296 shares of common stock
outstanding and 34,337,193 shares of common stock reserved for issuance pursuant
to the debentures, option and employee benefit plans, exercise of outstanding
warrants and exchange of shares of acquired entities.

COMMON STOCK; CLASS B STOCK

General. Holders of shares of common stock are entitled to one vote per
share, and holders of shares of class B stock have no voting rights except as
required by applicable law. Holders of shares of common stock do not have the
right to cumulate votes in the election of directors. A special meeting of
stockholders may be called by our board of directors and must be called upon the
written request of the holders of not less than 50% of our stock then
outstanding and entitled to vote. Any action required or permitted to be taken
at any annual or special meeting of stockholders may be taken without prior
notice by written consent only if the consent is signed by each stockholder
entitled to vote on the matter.

Holders of class B stock may convert their shares into shares of common
stock at any time, unless the conversion would cause a holder, together with the
holder's affiliates, to own, control or vote more shares of our stock than
permitted by applicable law. Stockholders of us do not have preemptive rights to
subscribe for shares of any class of our capital stock. As of the date of this
prospectus, we have no class B stock outstanding.

Dividends. Holders of shares of common stock and class B stock are entitled
to participate equally on a per-share basis in any dividends that our board of
directors may declare from time to time out of our funds legally available for
the payment of dividends. However, we have neither declared nor paid any cash
dividends on its common stock or class B stock since 1982. We do not intend to
pay any cash dividends on our common stock or class B stock for the foreseeable
future.

Transfer Agent and Registrar. The transfer agent and registrar for the
common stock is First Chicago Trust Company of New York.

PREFERRED STOCK

Under our Restated Certificate of Incorporation, as amended, our board of
directors is authorized, without further stockholder action, to issue from time
to time up to 10,000,000 shares of preferred stock and to fix and determine the
voting powers, designations, preferences and relative, participating, optional
or other special rights and qualifications, limitations or restrictions of any
series of preferred stock, including, without limitation, any voting rights, any
dividends payable and any right of the shares of that series to convert into or
be exchanged for other securities of us (provided, however, that any securities
issuable upon conversion or exchange of preferred stock will be subject to
registration under the Securities Act or an applicable exemption therefrom).
Thus, our board of directors, without stockholder approval, could authorize the
issuance of preferred stock with voting, conversion and other rights that could
adversely affect the voting power (if any) and other rights of other series of
the preferred stock or of the common stock. As of the date of this prospectus,
we have no preferred stock outstanding.

The foregoing descriptions of the preferred stock, class B stock and common
stock are summaries, and you should refer to the provisions of Nabors' Restated
Certificate of Incorporation, as amended, and By-Laws for more detail.

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CERTAIN CHARTER AND BY-LAW PROVISIONS

Under Delaware law, a corporation may include provisions in its certificate
of incorporation which relieve its directors of monetary liability for breach of
their fiduciary duties, except under certain circumstances. These include a
breach of a director's duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct and a knowing violation of law, or any
transaction from which the director derived an improper personal benefit. Our
Restated Certificate of Incorporation, as amended, provides that Nabors'
directors are not liable to us or our stockholders for monetary damages for
breaches of their fiduciary duties, subject to the exceptions specified by
Delaware law.

Delaware law also provides that, when an officer, director, employee or
agent of a corporation is a party to, or is threatened to be made a party to,
any action, the corporation may indemnify such persons against expenses
(including attorneys' fees) and judgments, fines and amounts paid in settlement,
if that person acted in good faith and reasonably believed his or her actions
were in, or not opposed to, the best interests of the corporation, and were not
unlawful. Delaware law also provides that a person to be indemnified has the
right to be advanced any expenses incurred in his defense against any action
prior to the final disposition thereof and upon such terms as the board of
directors may determine. Our Restated Certificate of Incorporation, as amended,
provides these rights to Nabors' officers, directors, employees and agents.
Certain directors and officers of Nabors also are parties to employment
agreements which provide for these and other indemnification rights in
accordance with Delaware law.

Under Delaware law, the power to adopt, amend and repeal by-laws is
conferred solely on the stockholders unless the corporation's certificate of
incorporation also confers this power upon its board of directors. Under our
Restated Certificate of Incorporation, as amended, the board of directors has
been granted this power. Our charter and by-laws also provide that the number of
directors shall be fixed by resolution of the board of directors of Nabors from
time to time, but shall not be less than five nor more than eleven. As of the
date of this prospectus, the number of directors is fixed at eight. These
provisions, in addition to the staggered board of directors discussed below and
the existence of authorized but unissued capital stock, may have the effect,
either alone or in combination with each other, of discouraging or making more
difficult an acquisition of Nabors deemed undesirable by the board of directors
of Nabors.

Our charter provides that the board of directors is divided into three
classes of directors. Each class of directors serves a staggered three-year
term. The classified board may make it more difficult for any stockholder who is
attempting to acquire Nabors, including a stockholder holding a majority of the
shares, to succeed. Such a stockholder would be unable to force immediate
changes in the composition of a majority of the board of directors of Nabors,
since the terms of approximately one-third of the incumbent directors would
expire each year, and at least two annual meetings would be required for
stockholders to change a majority of the board of directors.

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of material U.S. federal income tax
considerations relating to the purchase, ownership and disposition of the
debentures and common stock by U.S. holders, and certain material U.S. federal
income, withholding and estate tax considerations relating to the purchase,
ownership and disposition of the debentures and common stock by non-U.S.
holders. The discussion is a summary only and does not purport to be a complete
analysis of all the potential tax considerations relating to the purchase,
ownership and disposition of the debentures and common stock. We have based this
summary on the U.S. federal income tax laws, regulations, rulings and judicial
decisions as of the date of this prospectus. These laws may change, possibly
retroactively. There can be no assurance that the Internal Revenue Service will
not challenge one or more of the tax consequences described in this section, and
we have not obtained, nor do we intend to obtain, a ruling from the IRS or an
opinion of counsel with respect to the U.S. federal tax consequences of
purchasing, owning or disposing of debentures and common stock.

This discussion does not address all tax consequences that may be important
to you in light of your specific circumstances. For instance, this discussion
does not address the alternative minimum tax

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provisions of the tax code, or special rules applicable to certain categories of
investors, such as certain financial institutions, insurance companies,
tax-exempt organizations, dealers in securities, or persons who hold debentures
or common stock as part of a hedge, conversion or constructive sale transaction,
straddle or other risk reduction transaction, that may be subject to special
rules. This discussion is limited to persons who hold the debentures and any
common stock into which the debentures are converted as capital assets. This
discussion also does not address the tax consequences arising under the laws of
any foreign, state or local jurisdiction or U.S. estate and gift tax law as
applicable to U.S. holders.

Persons considering the purchase of a debenture should consult their own
tax advisors as to the particular tax consequences to them of acquiring,
holding, converting or otherwise disposing of the debentures and common stock,
including the effect and applicability of state, local or foreign tax laws and
the potential for a Tax Event to occur.

U.S. HOLDERS

As used in this discussion, the term U.S. holder means a holder of a
debenture or common stock that is:

(1) for United States federal income tax purposes, a citizen or
resident of the United States;

(2) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision
thereof;

(3) an estate, the income of which is subject to United States federal
income taxation regardless of its source; or

(4) a trust, the administration of which is subject to the primary
supervision of a court within the United States and which has one or more
United States persons with authority to control all substantial decisions,
or if the trust was in existence on August 20, 1996, and has elected to
continue to be treated as a United States trust.

A non-U.S. holder is any holder of debentures or common stock other than a U.S.
holder.

Original Issue Discount or Interest on the Debentures. The debentures were
issued at a substantial discount from their stated redemption price at maturity.
For U.S. federal income tax purposes, the excess of the stated redemption price
at maturity of each debenture over its issue price constitutes original issue
discount. The issue price of the debentures is $608.41 per $1000 principal
amount at maturity. Thus, the original issue discount of the debentures equals
$391.59 per $1000 principal amount at maturity.

A U.S. holder of a debenture will be required to include original issue
discount in income as ordinary interest income as it accrues before receipt of
the cash attributable to such income, regardless of such U.S. holder's regular
method of accounting for U.S. federal income tax purposes. A U.S. holder of a
debenture must include in gross income for federal income tax purposes the sum
of the daily portions of original issue discount with respect to the debenture
for each day during the taxable year or portion of a taxable year on which such
U.S. holder holds the debenture. The daily portion is determined by allocating
to each day of each accrual period a pro rata portion of an amount equal to the
adjusted issue price of the debenture at the beginning of the accrual period
multiplied by the yield to maturity of the debenture, determined by compounding
at the close of each accrual period and adjusted for the length of the accrual
period. The adjusted issue price of a debenture at the start of any accrual
period will be the issue price of the debenture increased by the accrued
original issue discount included in the U.S. holder's income for all prior
accrual periods. Under these rules, U.S. holders will have to include in gross
income increasingly greater amounts of original issue discount in each accrual
period. A U.S. holder's original tax basis for determining gain or loss on the
sale or other disposition of a debenture will be increased by any accrued
original issue discount includable in such U.S. holder's gross income.

There are circumstances under which we could make a payment on a debenture
which would affect the yield to maturity of a debenture, including, as described
under "Description of Debentures," in the event of certain defaults. According
to Treasury Regulations, the possibility of a change in the yield will
24
<PAGE> 29

not be treated as affecting the amount of original issue discount required to be
recognized by a holder, or the timing of such recognition, if the likelihood of
the change, as of the date the debt obligations are issued, is remote. We intend
to take the position that the likelihood of any change in the yield on the
debentures is remote. We also intend to take the position that there is no
alternative payment schedule that would minimize the yield on the debentures to
Nabors.

The modification of the terms of the debentures by us upon a Tax Event as
described in "Description of Debentures -- Optional Conversion to Semiannual
Coupon Debenture upon a Tax Event," could possibly alter the timing of income
recognition by the holders with respect to the semiannual payments of interest
due after the option exercise date.

We or our paying agent will be required to furnish annually to the IRS and
each U.S. holder information regarding the amount of original issue discount
attributable to that year.

Acquisition Premium. A subsequent U.S. holder of a debenture is generally
subject to the rules for accruing original issue discount described above.
However, if the U.S. holder's purchase price for the debenture exceeds the
adjusted issue price but is less than or equal to the sum of all amounts payable
on the debenture after the purchase date, the excess is acquisition premium and
is subject to special rules.

Acquisition premium ratably offsets the amount of accrued original issue
discount otherwise includible in the U.S. holder's taxable income, that is, the
U.S. holder may reduce the daily portions of original issue discount by a
fraction, the numerator of which is the excess of the U.S. holder's purchase
price for the debenture over the adjusted issue price, and the denominator of
which is the excess of the sum of all amounts payable on the debenture after the
purchase date over the debenture's adjusted issue price. As an alternative to
reducing the amount of original issue discount otherwise includible in income by
this fraction, the U.S. holder may elect to compute original issue discount
accruals by treating the purchase as a purchase at original issue and applying
the rules described above under "-- Original Issue Discount or Interest on the
Debentures."

Market Discount. Under the market discount rules of the Internal Revenue
Code, a U.S. holder who purchases a debenture at a market discount will
generally be required to treat any gain recognized on the disposition of the
debenture as ordinary income to the extent of the lesser of the gain or the
portion of the market discount that accrued during the period that the U.S.
holder held the debenture. Market discount is generally defined as the amount by
which a U.S. holder's purchase price for a debenture is less than the revised
issue price of the debenture on the date of purchase, subject to a statutory de
minimis exception. A debenture's revised issue price equals the sum of the issue
price of the debenture and the aggregate amount of the original issue discount
includible in the gross income of all holders of the debenture for periods
before the acquisition of the debenture by the holder, likely reduced, although
the Internal Revenue Code does not expressly so provide, by any cash payment in
respect of the debenture. A U.S. holder who acquires a debenture at a market
discount may be required to defer a portion of any interest expense that
otherwise may be deductible on any indebtedness incurred or continued to
purchase or carry the debenture until the U.S. holder disposes of the debenture
in a taxable transaction.

A U.S. holder who has elected under applicable Internal Revenue Code
provisions to include market discount in income annually as the discount accrues
will not, however, be required to treat any gain recognized as ordinary income
or to defer any deductions for interest expense under these rules. A U.S.
holder's tax basis in a debenture is increased by each accrual of amounts
treated as market discount. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired on or
after the first day of the taxable year to which the election applies and may
not be revoked without the consent of the IRS. Holders should consult their tax
advisors as to the portion of any gain that would be taxable as ordinary income
under these provisions and any other consequences of the market discount rules
that may apply to them in particular.

Election to Treat All Interest as Original Issue Discount. U.S. holders may
elect to include in gross income all amounts in the nature of interest that
accrue on a debenture, including any stated interest, acquisition discount,
original issue discount, market discount, de minimis original issue discount,

25
<PAGE> 30

de minimis market discount and unstated interest, as adjusted by amortizable
bond premium and acquisition premium, by using the rules described above under
"-- Original Issue Discount or Interest on the Debentures." An election for a
debenture with amortizable bond premium results in a deemed election to amortize
bond premium for all debt instruments owned and later acquired by the U.S.
holder with amortizable bond premium and may be revoked only with the permission
of the IRS. Similarly, an election for a debenture with market discount results
in a deemed election to accrue market discount in income currently for the
debenture and for all other bonds acquired by the U.S. holder with market
discount on or after the first day of the taxable year to which the election
first applies, and may be revoked only with permission of the IRS. A U.S.
holder's tax basis in a debenture is increased by each accrual of the amounts
treated as original issue discount under the election described in this
paragraph.

Sale, Exchange or Retirement of the Debentures. Upon the sale, exchange or
retirement of a debenture, including as a result of a tender upon the occurrence
of a fundamental change, and, except as discussed in the next paragraph on a
purchase date, a U.S. holder will generally recognize gain or loss equal to the
difference between the sale or redemption proceeds and the U.S. holder's
adjusted tax basis in the debenture. Any such gain will be treated as ordinary
income to the extent such gain represents accrued but unrecognized market
discount.

If a U.S. holder elects to exercise its option to tender the debentures to
us on a purchase date and we issue common stock in satisfaction of all or part
of the purchase price, the exchange of the debentures for common stock should
qualify as a reorganization for federal income tax purposes. If the purchase
price is paid solely in common stock, except in the case of a fractional share
described below, a U.S. holder should not recognize any gain or loss realized.
If the purchase price is paid in a combination of common stock and cash, other
than cash received in place of a fractional share, gain, but not loss, realized
by the U.S. holder should be recognized, but only to the extent of the cash
received, and such gain will be subject to the rules governing recognition of
accrued market discount. A U.S. holder's initial tax basis in the common stock
received should be equal to such U.S. holder's adjusted tax basis in the
debenture tendered (except for any portion allocable to a fractional share of
common stock), increased by the amount of gain recognized, other than with
respect to a fractional share, and decreased by the amount of any cash received,
except cash received in lieu of a fractional share. The holding period for
common stock received in the exchange should include the holding period of the
debenture tendered to us in exchange for common stock. Subject to the market
discount rules discussed above, the receipt of cash in lieu of a fractional
share of common stock should generally result in capital gain or loss, measured
by the difference between the amount of cash received for the fractional share
and the U.S. holder's tax basis in the fractional share interest. To the extent
the debentures tendered in exchange for common stock have accrued market
discount, the amount of the unrecognized accrued market discount will carry over
to such common stock and will be treated as ordinary income upon disposition of
such common stock.

A U.S. holder's adjusted tax basis in a debenture generally will equal the
holder's cost of the debenture increased by any original issue discount or
market discount previously included in income by such holder with respect to
such debenture and decreased by any payments received thereon. Subject to the
market discount rules discussed above, gain or loss recognized on the sale,
exchange or retirement of a debenture generally will be capital gain or loss and
will be long-term capital gain or loss if the debenture has been held for more
than one year. Long-term capital gain recognized by an individual U.S. holder is
generally subject to a maximum U.S. federal rate of tax of 20%.

Conversion of Debentures. A U.S. holder's conversion of a debenture into
common stock will generally not be a taxable event, except with respect to cash
received in lieu of a fractional share. To the extent the debentures converted
into common stock have accrued market discount the amount of the unrecognized
accrued market discount will carry over to such common stock and will be treated
as ordinary income upon disposition of such common stock. A U.S. holder's basis
in the common stock received on conversion of a debenture will be the same as
the U.S. holder's basis in the debenture at the time of conversion, exclusive of
any tax basis allocable to a fractional share, and the holding period for the
common stock received on conversion will include the holding period of the
debenture converted. Subject to the market discount rules discussed above, the
receipt of cash in lieu of a fractional share of common
26
<PAGE> 31

stock should generally result in capital gain or loss, measured by the
difference between the cash received in lieu of the fractional share interest
and the portion of the U.S. holder's tax basis in the debenture that is
allocable to the fractional share interest. If we elect to pay cash in lieu of
issuing common stock upon the tender of a debenture for conversion, the U.S.
holder will recognize gain or loss equal to the difference between the proceeds
received and the U.S. holder's adjusted tax basis in the debenture. Any such
gain will be treated as ordinary income to the extent such gain represents
accrued but unrecognized market discount.

Dividends; Adjustment of Conversion Price. Dividends, if any, paid on the
common stock generally will be includable in the income of a U.S. holder of
common stock as ordinary income to the extent of our current and accumulated
earnings and profits as determined for U.S. federal income tax purposes. If at
any time we make a distribution of property to shareholders that would be
taxable to such shareholders as a dividend for federal income tax purposes and,
pursuant to the anti-dilution provisions of the indenture, the conversion rate
of the debentures is increased, such increase may be deemed to be the payment of
a taxable dividend to U.S. holders of debentures. If the conversion rate is
increased at our discretion or in certain other circumstances, or if we
implement a shareholder rights plan, such increase or implementation also may be
deemed to be the payment of a taxable dividend to U.S. holders of debentures.
The absence of such an adjustment to the conversion rate also may, in certain
circumstances, be treated as a taxable dividend to U.S. holders.

Certain Modifications or Assumptions. The terms of the debentures may be
modified upon the consent of a specified percentage of holders and, in some
instances, without consent of the holders. In addition, the debentures may be
assumed upon certain transactions in which we are involved. The modification or
assumption of a debenture could, in certain instances, give rise to a deemed
exchange of a debenture for a new debenture for U.S. federal income tax
purposes. If an exchange is deemed to occur by reason of a modification or
assumption, the amount and timing of taxable income required to be recognized by
a U.S. holder with respect to a debenture could be affected.

Sale of Common Stock. Subject to the market discount rules discussed above,
upon the sale or exchange of common stock, a U.S. holder generally will
recognize capital gain or capital loss equal to the difference between the
amount realized on such sale or exchange and the holder's adjusted tax basis in
such common stock. Such capital gain or loss will be long-term capital gain or
loss if the cumulative holding period of the common stock, including the holding
period of a debenture converted to such common stock as described above, is more
than one year. Long-term capital gain of individuals generally will be taxed at
a maximum U.S. federal tax rate of 20%. See "-- Sale, Exchange or Retirement of
the Debentures."

NON-U.S. HOLDERS

The following discussion is a summary of the principal U.S. federal income
and estate tax consequences resulting from the ownership of the debentures or
common stock by non-U.S. holders.

Withholding Tax on Payments of Principal and Original Issue Discount on
Debentures. Except as described below with respect to effectively connected
original issue discount, the payment of principal, including any original issue
discount included therein, of a debenture by us or any of our paying agents to
any non-U.S. holder will not be subject to U.S. federal income tax or
withholding tax, provided that in the case of payment of cash in respect of
original issue discount (1) the non-U.S. holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of our stock, (2) the non-U.S. holder is not a controlled foreign corporation
that is related to us within the meaning of the tax code, and (3) either (A) the
beneficial owner of the debenture certifies to the applicable payor or its
agent, under penalties of perjury, that it is not a U.S. holder and provides its
name and address on United States Treasury Form W-8BEN or a suitable substitute
or successor form, or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business, and holds the debenture certifies under penalties of
perjury that such a Form W-8BEN, or suitable substitute form, has been received
from the beneficial owner by it or by a

27
<PAGE> 32

financial institution between it and the beneficial owner and furnishes the
payor with a copy thereof. Except to the extent otherwise provided under an
applicable tax treaty, a non-U.S. holder generally will be subject to U.S.
federal income tax in the same manner as a U.S. holder with respect to original
issue discount on a debenture if such original issue discount is effectively
connected with a U.S. trade or business conducted by the non-U.S. holder.
Effectively connected original issue discount received by a corporate non-U.S.
holder, under certain circumstances, also may be subject to an additional
"branch profits tax" at a 30% rate, or, if applicable, a lower treaty rate. Such
effectively connected original issue discount will not be subject to withholding
tax if the holder delivers an IRS Form W-8ECI, to the payor.

Dividends. Dividends payable on the common stock to a non-U.S. holder, and,
after December 31, 2000, any deemed dividends resulting from an adjustment to
the conversion rate ("Dividends; Adjustment of Conversion Price" above),
generally will be subject to a 30% U.S. federal withholding tax unless such
non-U.S. holder is eligible for a lower rate under an applicable income tax
treaty. Currently, for purposes of determining whether tax is to be withheld at
the 30% rate or at a reduced treaty rate, we will ordinarily presume that
dividends paid to an address in a foreign country are paid to a resident of such
country absent knowledge that such presumption is not warranted. A non-U.S.
holder is required to satisfy certain certification requirements to claim treaty
benefits. Except as otherwise provided under an applicable tax treaty, a
non-U.S. holder will be taxed in the same manner as a U.S. holder on dividends
paid, or deemed paid, that: (1) are effectively connected with the conduct of a
U.S. trade or business by such non-U.S. holder or (2) if a tax treaty applies,
are attributable to a U.S. permanent establishment of the non-U.S. holder. Such
dividends generally are not subject to the 30% withholding rate provided that
the non-U.S. holder timely files the appropriate form with the paying agent. If
such dividends are received by a non-U.S. holder that is a foreign corporation,
the non-U.S. holder may also be required to pay U.S. branch profits tax on such
effectively connected income at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.

Gain on Disposition of the Debentures and Common Stock. A non-U.S. holder
generally will not be required to pay U.S. federal income tax on gain realized
on the sale, exchange or redemption of a debenture, including the exchange of a
debenture for common stock, or the sale or exchange of common stock unless:

(1) in the case of an individual non-U.S. holder, such holder is
present in the United States for 183 days or more in the year of such sale,
exchange or redemption and either (A) has a tax home in the United States
and certain other requirements are met, or (B) the gain from the
disposition is attributable to an office or other fixed place of business
in the United States;

(2) the non-U.S. holder is required to pay tax pursuant to the
provisions of U.S. tax law applicable to certain U.S. expatriates;

(3) the gain is effectively connected with the conduct of a U.S. trade
or business of or, if a tax treaty applies, is attributable to a U.S.
permanent establishment of, the non-U.S. holder; or

(4) in the case of the disposition of common stock, we are a U.S. real
property holding corporation. We do not believe that we currently are a
U.S. real property holding corporation or that we will become one in the
future.

U.S. Federal Estate Tax. A debenture held by an individual who at the time
of death is not a citizen or resident of the United States, as specifically
defined for U.S. federal estate tax purposes, will not be included in such
holder's gross estate for U.S. federal estate tax purposes if the individual did
not actually or constructively own 10% or more of the total combined voting
power of all classes of our stock and, at the time of the individual's death,
payments with respect to such debenture would not have been effectively
connected with the conduct by such individual of a trade or business in the
United States. Common stock held by an individual who at the time of death is
not a citizen or resident of the United States, as specifically defined for U.S.
federal estate tax purposes, will be included in such individual's gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
otherwise applies.

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<PAGE> 33

BACKUP WITHHOLDING AND INFORMATION REPORTING

U.S. Holders. Information reporting will apply to original issue discount
and any payments of interest or dividends on or the proceeds of the sale or
other disposition of the debentures or shares of common stock with respect to
certain noncorporate U.S. holders, and backup withholding at a rate of 31% may
apply to such payments unless the recipient of such payment supplies a taxpayer
identification number, certified under penalties of perjury, as well as certain
other information or otherwise establishes an exemption from backup withholding.
Any amount withheld under the backup withholding rules is allowable as a credit
against the U.S. holder's federal income tax, provided that the required
information is provided to the IRS on a timely basis.

Non-U.S. Holders. We must report annually to the IRS and to each non-U.S.
holder the amount of any dividends paid to, and the tax withheld with respect
to, such non-U.S. holder, regardless of whether any tax was actually withheld.
Copies of these information returns also may be made available under the
provisions of a specific treaty or agreement to the tax authorities of the
country in which the non-U.S. holder resides.

Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of principal, including cash payments in
respect of original issue discount, on the debentures by us or our agent to a
non-U.S. holder if the non-U.S. holder certifies as to its non-U.S. holder
status under penalties of perjury or otherwise establishes an exemption,
provided that neither we nor our agents have actual knowledge that the holder is
a U.S. person or that the conditions of any other exemptions are not in fact
satisfied. The payment of the proceeds on the disposition of debentures or
shares of common stock to or through the United States office of a United States
or foreign broker will be subject to information reporting and backup
withholding unless the owner provides the certification described above or
otherwise establishes an exemption. The proceeds of the disposition by a
non-U.S. holder of debentures or shares of common stock to or through a foreign
office of a broker will not be subject to backup withholding or information
reporting. However, if such broker is a U.S. person, a controlled foreign
corporation for U.S. tax purposes, or a foreign person, 50% or more of whose
gross income from all sources for certain periods is from activities that are
effectively connected with a U.S. trade or business, or, in the case of payments
made after December 31, 2000, a foreign partnership with certain connections to
the United States, information reporting requirements will apply unless such
broker has documentary evidence in its files of the holder's non-U.S. status and
has no actual knowledge to the contrary or unless the holder otherwise
establishes an exemption.

The Treasury Department recently promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general,
these regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. In addition, these
regulations impose more stringent conditions on the ability of financial
intermediaries acting for a non-U.S. holder to provide certifications on behalf
of the holder, which may include entering into an agreement with the IRS to
audit certain documentation with respect to such certifications. These
regulations generally are effective for payments made after December 31, 2000,
subject to certain transition rules. You should consult with your own tax
advisor to determine the effects of the application of these regulations to your
particular circumstances.

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<PAGE> 34

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may inspect and
copy such material at the public reference facilities maintained by the
Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Securities and Exchange
Commission's regional offices at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. You may also obtain copies of such material from the Securities
and Exchange Commission at prescribed rates by writing to the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, reports, proxy statements and other
information concerning Nabors can be inspected at the American Stock Exchange,
86 Trinity Place, New York, New York 10006, where Nabors' common stock is
listed.

Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
more information on the public reference rooms. You can also find our Securities
and Exchange Commission filings at the Commission's website at
http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

Rather than restate certain information in this prospectus that we have
already included in reports filed with the Securities and Exchange Commission,
we are incorporating this information by reference, which means that we can
disclose important information to you by referring to those publicly filed
documents that contain the information. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the Securities and Exchange Commission will automatically update
and supersede the information in this prospectus. Accordingly, we incorporate by
reference the following documents filed by us:

1. Annual Report on Form 10-K for the fiscal year ended December 31,
1999;

2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000 and June 30, 2000; and

3. Current Report on Form 8-K filed on June 22, 2000.

In addition, all reports and other documents we file pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the date of this
prospectus shall be deemed to be incorporated by reference in this prospectus
and to be part of this prospectus from the date of the filing of such reports
and documents. Any statement contained herein in this prospectus or in a
document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for the purposes of this prospectus to the
extent that a statement contained in any subsequently filed document which is or
is deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.

We will provide without charge to each person to whom this prospectus is
delivered, upon request of such person, a copy of any or all documents that are
incorporated into this prospectus by reference, other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the documents that this prospectus incorporates. You should direct such requests
to: Nabors Industries, Inc., 515 West Greens Road, Suite 1200, Houston, Texas
77067, Attention: Investor Relations, phone number (281) 874-0035.

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<PAGE> 35

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by
Winston & Strawn, New York, New York.

EXPERTS

The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the fiscal year ended December
31,1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.

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<PAGE> 36

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following sets forth the best estimate of Nabors as to its anticipated
expenses and costs (other than underwriting discounts and commissions) expected
to be incurred in connection with the issuance and distribution of the
securities being registered (except for the Securities and Exchange Commission
registration fee, all amounts are estimates):

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $143,972.34
American Stock Exchange listing fee......................... 17,500.00
Printing and engraving expenses............................. 75,000.00
Legal fees and expenses..................................... 70,000.00
Accounting fees and expenses................................ 15,000.00
Miscellaneous............................................... 3,527.66
-----------
Total............................................. $325,000.00
===========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law permits the
indemnification of directors, officers, employees and agents of Delaware
corporations. Article Seventh of Nabors' Restated Certificate of Incorporation,
as amended, states:

(a) Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter collectively
referred to as a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director
or officer of Nabors or is or was serving at the request of Nabors as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by Nabors to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits Nabors to provide broader indemnification rights than said law
permitted Nabors to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and
such indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his
or her heirs, executors and administrators.

(b) The right to indemnification conferred in this Section shall
include the right to be paid by Nabors the expenses incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that if the Delaware General Corporation Law requires, the payment of such
expenses incurred by a director or officer in advance of the final
disposition of a proceeding, shall be made only upon delivery to Nabors of
an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of its Board of Directors,
provide information to employees and agents of Nabors with the same scope
and effect as the foregoing indemnification of directors and officers.

(c) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this Section shall not be exclusive of any other right

II-1
<PAGE> 37

which any person may have or hereafter acquire under any statute, provision
of the Certificate of Incorporation, By-laws, agreement, vote of
stockholders or disinterested directors or otherwise.

(d) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of Nabors or another
corporation, partnership, joint venture, trust or other enterprise against
any such expense, liability or loss, whether or not Nabors would have the
power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.

(e) Any repeal or modification of this Section directly or indirectly,
such as by adoption of an inconsistent provision of this Certificate of
Incorporation, shall not apply to or have any effect on the rights of any
officer and director to indemnification and advancement of expenses with
respect to any acts or omissions occurring prior to such repeal or
modification.

(f) If this Section or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then Nabors shall
nevertheless indemnify each director and officer of Nabors as to expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
with respect to any proceeding to the full extent permitted by any
applicable portion of this Section that shall not have been invalidated and
to the full extent permitted by applicable law.

Nabors has entered into agreements with certain of its directors and
officers indemnifying them against expenses, settlements, judgments and fines in
connection with any threatened, pending or completed action, suit, arbitration
or proceeding where the individual's involvement is by reason of the fact that
he is or was a director or officer or served at Nabors' request as a director or
officer of another organization, except that indemnification is not provided
against judgments or fines in a derivative suit unless permitted by Delaware
law.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 -- Indenture dated as of June 20, 2000 between Nabors
Industries, Inc. and Bank One, N.A., as trustee
(Incorporated by reference to Exhibit 4.1 to the
registrant's current report on Form 8-K filed on June 22,
2000 (File No. 1-09245)).
4.2 -- First Supplemental Indenture dated as of July 5, 2000
between Nabors Industries, Inc. and Bank One, N.A., as
trustee.
4.3 -- Form of Zero Coupon Convertible Senior Debenture Due 2020
(Incorporated by reference to Exhibit 4.2 to the
registrant's current report on Form 8-K filed on June 22,
2000 (File No. 1-09245)).
4.4 -- Registration Rights Agreement dated as of June 15, 2000
between Nabors Industries, Inc. and Morgan Stanley & Co.
Incorporated (Incorporated by reference to Exhibit 4.3 to
the registrant's current report on Form 8-K filed on June
22, 2000 (File No. 1-09245)).
5.1 -- Opinion of Winston & Strawn, special counsel to Nabors
Industries, Inc.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of Winston & Strawn (included in Exhibit 5.1).
</TABLE>

II-2
<PAGE> 38

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
23.2 -- Consent of PricewaterhouseCoopers LLP.
24.1 -- Powers of Attorney of certain officers and directors of
Nabors Industries, Inc. (included on the signature page
of this registration statement).
25.1 -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of Bank One, N.A. as
trustee under the Indenture.
</TABLE>

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) (a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
registration statement or any material change to such information in this
registration statement; provided, however, that clauses (i) and (ii) do not
apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act that are incorporated by reference in this registration
statement;

(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and

(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(2) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(3) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
therefore is unenforceable. In the event that a claim for indemnification
against such liabilities, other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-3
<PAGE> 39

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act, and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act, that is incorporated by reference in this registration statement,
shall be deemed to be a new registration statement, relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Securities and Exchange Commission under Section
305(b)(2) of the Trust Indenture Act.

II-4
<PAGE> 40

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 25th day of August, 2000.

NABORS INDUSTRIES, INC.

By: /s/ ANTHONY G. PETRELLO
----------------------------------
Anthony G. Petrello,
President and Chief Operating
Officer

In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates stated. Each person whose signature to this
Registration Statement appears below hereby appoints Anthony G. Petrello or
Bruce P. Koch as his attorney-in-fact, with full power of substitution, to sign
on his behalf, individually and in the capacities stated below, and to file (i)
any and all amendments and post-effective amendments to this Registration
Statement and (ii) any registration statement relating to the same offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, which
amendment or amendments or registration statement may make such changes and
additions as such attorney-in-fact may deem necessary or appropriate.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ EUGENE M. ISENBERG Chairman, Chief Executive officer August 25, 2000
----------------------------------------------------- and Director (principal
Eugene M. Isenberg executive officer)

/s/ ANTHONY G. PETRELLO President, Chief Operating Officer August 25, 2000
----------------------------------------------------- and Director
Anthony G. Petrello

/s/ RICHARD A. STRATTON Vice Chairman and Director August 25, 2000
-----------------------------------------------------
Richard A. Stratton

/s/ BRUCE P. KOCH Vice President-Finance (principal August 25, 2000
----------------------------------------------------- financial and accounting
Bruce P. Koch officer)

/s/ JAMES L. PAYNE Director August 25, 2000
-----------------------------------------------------
James L. Payne

/s/ HANS W. SCHMIDT Director August 25, 2000
-----------------------------------------------------
Hans W. Schmidt
</TABLE>

II-5
<PAGE> 41

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ MYRON M. SHEINFELD Director August 25, 2000
-----------------------------------------------------
Myron M. Sheinfeld

/s/ JACK WEXLER Director August 25, 2000
-----------------------------------------------------
Jack Wexler

/s/ MARTIN J. WHITMAN Director August 25, 2000
-----------------------------------------------------
Martin J. Whitman
</TABLE>

II-6
<PAGE> 42

INDEX TO EXHIBITS