Filed Pursuant to Rule 424(b)(3)
File No. 333-91296
File No. 333-59884
PROSPECTUS

NABORS INDUSTRIES, INC. NABORS INDUSTRIES LTD.

$1,381,200,000 PRINCIPAL AMOUNT AT MATURITY OF ZERO COUPON
CONVERTIBLE SENIOR DEBENTURES OF NABORS INDUSTRIES, INC. DUE 2021

COMMON SHARES, PAR VALUE U.S. $0.001 PER SHARE, OF NABORS INDUSTRIES LTD.
ISSUABLE UPON CONVERSION OR REPURCHASE OF SUCH DEBENTURES

This prospectus relates to the offering for resale of zero coupon
convertible senior debentures due 2021 of Nabors Industries, Inc. (which we
refer to as Nabors Delaware), and the common shares of Nabors Industries Ltd.,
(which we refer to as Nabors Bermuda) the parent company of Nabors Delaware,
issuable upon conversion or repurchase of the debentures. We issued and sold the
debentures, dated February 5, 2001, in a private placement on February 5, 2001
and March 13, 2001 to Morgan Stanley & Co. Incorporated, which resold them to
qualified institutional buyers in transactions exempt from the registration
requirements of the Securities Act of 1933. This prospectus will be used by
selling securityholders to resell their debentures and the common shares
issuable upon conversion of their debentures. This prospectus also relates to
the issuance of common shares by Nabors Bermuda to holders of debentures upon
the repurchase of their debentures by Nabors Delaware. 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. Neither Nabors Delaware nor Nabors Bermuda will receive
proceeds from the sale of any securities offered by this prospectus or in any
prospectus supplement.

The debentures are senior unsecured indebtedness of Nabors Delaware, and we
will not pay interest on the debentures prior to maturity. 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.

The debentures are convertible at any time prior to maturity, unless
previously redeemed or otherwise purchased, into common shares of Nabors Bermuda
at an initial conversion rate of 7.0745 shares per $1,000 principal amount at
maturity. The conversion rate will be adjusted in certain events. The debentures
are irrevocably and unconditionally guaranteed by Nabors Bermuda.

On or after February 5, 2006, Nabors Delaware may redeem all or part of the
debentures at redemption prices equal to the issue price plus accrued original
issue discount to the date of redemption. We may, in our sole discretion, extend
the period in which we cannot redeem the debentures.

Each holder may require Nabors Delaware to purchase such holder's
debentures on February 5, 2006, February 5, 2011 and February 5, 2016 at a
purchase price equal to the issue price plus accrued the original issue discount
to the applicable repurchase date. Subject to certain conditions, Nabors
Delaware may elect to pay any such purchase price in cash or common shares, or
any combination thereof. Each holder also may require us to repurchase 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 original issue discount to the date of
repurchase.

The common shares of Nabors Bermuda are traded on the American Stock
Exchange under the symbol "NBR." The reported last sale price of the common
shares on the American Stock Exchange on July 1, 2002 was $35.55 per share.

PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE DISCUSSION OF "RISK
FACTORS" ON PAGE 5.

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 July 2, 2002.

TABLE OF CONTENTS

<Table>
<Caption>
PAGE
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Summary..................................................... 1
The Offering................................................ 2
Risk Factors................................................ 5
Forward-Looking Statements.................................. 6
Ratio of Earnings to Fixed Charges.......................... 7
Guarantee................................................... 7
Use of Proceeds............................................. 8
Plan Of Distribution........................................ 8
Selling Securityholders..................................... 9
Description of Debentures................................... 14
Description of Nabor Bermuda's Share Capital................ 27
Material U.S. Federal Income Tax Considerations............. 31
Bermuda Income Tax Considerations........................... 37
Where You Can Find More Information......................... 37
Incorporation of Certain Documents by Reference............. 37
Legal Matters............................................... 38
Independent Accountants..................................... 38
</Table>

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

This document is called a prospectus and is part of a registration
statement that Nabors Delaware 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
Nabors Delaware and Nabors Bermuda 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 NABORS
DELAWARE, NABORS BERMUDA AND THE COMMON SHARES OF NABORS BERMUDA THAT IS NOT
INCLUDED IN, OR DELIVERED WITH, THIS PROSPECTUS. YOU MAY REQUEST AND OBTAIN THIS
INFORMATION FREE OF CHARGE BY WRITING OR TELEPHONING NABORS BERMUDA AT WHITEPARK
HOUSE, WHITE PARK ROAD, BRIDGETOWN, BARBADOS, ATTENTION: INVESTOR RELATIONS,
TELEPHONE: (246) 427-8617, WEBSITE: "http://www.nabors.com," OR NABORS DELAWARE
AT 515 WEST GREENS ROAD, SUITE 1200, HOUSTON, TEXAS 77067, ATTENTION: INVESTOR
RELATIONS, TELEPHONE: (281) 874-0035, WEBSITE: "http://www.nabors.com." WEBSITE
MATERIALS ARE NOT PART OF THIS PROSPECTUS.

Unless we indicate otherwise, references in this prospectus to "Nabors
Delaware," "we," "us" and "our" or similar terms are solely to Nabors
Industries, Inc. and not to its subsidiaries or Nabors Bermuda. References to
"Nabors Bermuda" are to Nabors Industries Ltd., a Bermuda exempted company, and
references to "common shares" are to the common shares of Nabors Bermuda.
Descriptions of operations refer to the operations of Nabors Bermuda and its
subsidiaries taken as a whole.

SUMMARY

Nabors Bermuda, together with its subsidiaries, is the largest land
drilling contractor in the world, with over 580 land drilling rigs as of June
21, 2002. Nabors Bermuda conducts oil, gas and geothermal land drilling
operations in the U.S. lower 48 states, Alaska and Canada, and internationally,
primarily in South and Central America, the Middle East and Africa. As of June
21, 2002, 142 of its approximately 596 land drilling rigs were located in
certain international markets. Nabors Bermuda is also one of the largest land
well-servicing and workover contractors in the United States and in Canada.
Nabors Bermuda owns approximately 745 land workover and well-servicing rigs in
the southwestern and western United States, and approximately 233 well-servicing
and workover rigs in certain international markets, including approximately 193
rigs in Canada. Nabors Bermuda also is a leading provider of offshore platform
workover and drilling rigs. Nabors Bermuda markets 42 platform, 16 jackup and
three barge rigs in the Gulf of Mexico and international markets. These rigs
provide well-servicing, workover and drilling services. Nabors Bermuda also owns
and operates a net of nine rigs through an international joint venture in Saudi
Arabia (giving effect to its 50% interest in the venture's 18 rigs).

To further supplement the primary business, Nabors Bermuda offers 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. Nabors Bermuda's land
transportation and hauling fleet includes approximately 240 rig and oilfield
equipment hauling tractor-trailers and a number of cranes, loaders and
light-duty vehicles. Nabors Bermuda also maintains over 290 fluid hauling
trucks, approximately 700 fluid storage tanks, eight salt water disposal wells
and other auxiliary equipment used in domestic drilling and well-servicing
operations. In addition, Nabors Bermuda markets a fleet of 30 marine
transportation and support vessels, primarily in the Gulf of Mexico, that
provides transportation of drilling materials, supplies and crews for offshore
rig operations and support for other offshore operations. And it manufactures
and leases or sells topdrives for a broad range of drilling rig applications,
rig instrumentation and data collection equipment, and rig reporting software.

Nabors Bermuda was formed as a Bermuda exempted company on December 11,
2001. Nabors Delaware was incorporated in Delaware in 1978. The principal
executive office for Nabors Bermuda is located at Whitepark House, White Park
Road, Bridgetown, Barbados, telephone number (246) 427-8617. The principal
executive office for Nabors Delaware is located at 515 West Greens Road, Suite
1200, Houston, Texas 77067, telephone number (281) 874-0035.

THE REORGANIZATION

The stockholders of Nabors Delaware have approved and we have consummated a
reorganization in which Nabors Delaware became a wholly owned, indirect
subsidiary of Nabors Bermuda on June 24, 2002. As a result of the
reorganization, all outstanding shares of Nabors Delaware common stock were
converted into the right to receive Nabors Bermuda common shares on a 1:1 basis,
so that the stockholders of Nabors Delaware, on the date of the merger, became
the owners of the same number of Nabors Bermuda common shares as they previously
held in shares of Nabors Delaware common stock.

Nabors Bermuda is continuing to conduct the business previously conducted
by Nabors Delaware and its subsidiaries. We consummated the reorganization
because international activities are an important part of our current business,
and we believe that international operations will account for a greater
percentage of our total revenues in the future. Expansion of our international
business is an important part of our current business strategy, and significant
growth opportunities exist in the international marketplace. We believe that
reorganizing as a Bermuda company will allow us to implement our business
strategy more effectively. In addition, we believe that the reorganization
should increase our access to international capital markets and acquisition
opportunities, increase our attractiveness to non-U.S. investors, improve global
cash management, improve global tax position and result in a more favorable
corporate structure for expansion of our current business.

It is important to note that several senior members of the United States
Congress have introduced legislation that, if enacted, would have the effect of
eliminating the anticipated tax benefits of the
1

reorganization. In addition, several other members of the United States Congress
and the Treasury Department have recently announced the intent to investigate
transactions such as the reorganization. On May 17, 2002, the Treasury
Department released its preliminary report on the issues arising in connection
with inversion transactions. The Treasury Report indicates that a prompt and
comprehensive review of the U.S. tax system is in order and concludes that
further work is needed to develop and implement an appropriate and effective
long-term response to the issues under study. As a result of the increased
scrutiny of such transactions, changes in the tax laws, tax treaties or tax
regulations may occur, with prospective or retroactive effect, which could
eliminate or substantially reduce the anticipated tax benefits of the
reorganization or have a material adverse effect on the tax consequences of the
reorganization to Nabors Bermuda.

THE OFFERING

Securities Offered............ 1,381,200,000 aggregate principal amount at
maturity of zero coupon convertible senior
debentures due 2021. 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
common shares which are issuable upon
conversion or repurchase of the debentures,
initially 9,771,300 shares calculated using the
conversion ratio described below. The
conversion ratio may be adjusted if certain
events occur, and the number of shares
ultimately issued may depend upon the market
value of common shares at the time of any
repurchase of debentures with common shares.

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

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 February 5, 2001.

Guarantee..................... The debentures are irrevocably and
unconditionally guaranteed by Nabors Bermuda,
the parent company of Nabors Delaware.

Conversion.................... You have the option to convert the debentures
into Nabors Bermuda common shares at any time
prior to maturity or their earlier redemption.
You can convert the debentures into common
shares at a conversion rate of 7.0745 shares
per $1,000 principal amount at maturity. The
conversion rate will be adjusted if certain
events occur. See "Description of
Debentures -- Conversion of Debentures by
Holders."

Nabors Delaware may elect to pay you cash
instead of common shares for all or a portion
of your debentures in an amount equal

to the last reported sales price of common
shares on the trading day preceding the
conversion date, multiplied by the then
applicable conversion rate.

You may only exercise the option to convert
before the maturity of the debentures 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 U.S. Federal
Income Tax Considerations."

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 Delaware............... We cannot redeem the debentures before February
5, 2006. On or after February 5, 2006, 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 Delaware's Option."

Fundamental Change............ You may require us to repurchase the debentures
if Nabors Bermuda experiences 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.................... The debentures can be put to Nabors Delaware on
February 5, 2006, February 5, 2011 and February
5, 2016 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
shares 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............... Neither Nabors Delaware nor Nabors Bermuda will
receive any proceeds from any sale of the
securities contemplated by this prospectus.

American Stock Exchange Symbol
(Nabors Bermuda common
shares)....................... NBR.

RISK FACTORS

You should consider carefully all of the information contained in and
incorporated by reference into this prospectus before making an investment
decision. In addition to the risk factors described: (i) in Nabors Delaware's
Annual Report on Form 10-K under the heading "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations" for the year
ended December 31, 2001, (ii) in Nabors Delaware's Quarterly Report on Form 10-Q
under the heading "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations" for the quarter ended March 31, 2002 and
(iii) in Nabors Bermuda's registration statement on Form S-4, filed with the SEC
on January 2, 2002, as amended, under the heading "Risk Factors," which are
incorporated by reference in this prospectus, and the other information
contained or incorporated by reference in this prospectus, you should carefully
consider the risk factors described below before making an investment decision.
The risks and uncertainties described below and incorporated by reference are
not the only risks Nabors Delaware and Nabors Bermuda face. Additional risks and
uncertainties not presently known to Nabors Delaware and Nabors Bermuda or that
we currently deem immaterial may impair future business operations.

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

The guarantee by Nabors Bermuda of the obligations of Nabors Delaware
pursuant to the debentures will be effectively subordinated to any secured debt
of Nabors Bermuda or its subsidiaries.

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

A number of investment bankers are presently making a market in the
debentures. Any market making activity may be discontinued at any time, for any
reason, without notice. 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.

NABORS DELAWARE AND NABORS BERMUDA, AS GUARANTOR, 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 Delaware or any of its subsidiaries. Delaware law may, among
other things, prevent our redemption of the debentures for cash if it would
impair Nabors Delaware's 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 a holder.
There is no guarantee that we will be able to redeem any or all of the
debentures for cash. For the foregoing reasons, there is also no assurance that
Nabors Bermuda, as guarantor, will be able to redeem any or all of the
debentures for cash.

THE CONVERSION OR REPURCHASE OF YOUR DEBENTURES IS GENERALLY TAXABLE IN THE
UNITED STATES.

Based on the tax laws as of the date of this prospectus, the conversion or
repurchase of the debentures for common shares is generally a taxable event in
the United States. United States federal income tax consequences will vary
depending on your particular circumstances. We strongly urge you to consult your
tax advisor as to the tax consequences of converting your debentures into common
shares.

THE MARKET PRICE OF NABORS BERMUDA COMMON SHARES MAY BE VOLATILE.

The market price of Nabors Bermuda common shares 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 security analysts, general market conditions and other factors.
Nabors Bermuda operates 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 Nabors
Bermuda common shares and the trading price of the debentures. Additionally,
broad market fluctuations may adversely affect the market price of Nabors
Bermuda common shares. We cannot assure you that the market price of Nabors
Bermuda common shares will not decline below the levels prevailing at the time
of this offering.

FORWARD-LOOKING STATEMENTS

The statements in this prospectus, any prospectus supplement and the
documents incorporated in this prospectus by reference that relate to matters
that are not historical facts are "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. When used in this prospectus, any prospectus supplement and the
documents incorporated in this prospectus by reference, words such as
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"will," "could," "may," "predict" and similar expressions are intended to
identify forward-looking statements. Further events and actual results may
differ materially from those set forth or implied in forward-looking statements.
Any forward-looking statements, including statements regarding the intent,
belief or current expectations of Nabors Delaware, Nabors Bermuda or management,
are not guarantees of future performance and involve risks, uncertainties and
assumptions about Nabors Delaware, Nabors Bermuda and the industry in which we
operate, including, among other things:

- an inability to realize expected benefits of the reorganization within
the anticipated time frame, or at all;

- changes in tax laws, tax treaties or tax regulations and the
interpretation or enforcement thereof or differing interpretation or
enforcement of applicable law by the U.S. Internal Revenue Service (the
"IRS") or other taxing authority;

- an inability to execute our business strategy;

- costs or difficulties related to the reorganization and related
transactions, which could be greater than expected;

- 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 operating risks inherent in the industry;

- changes in the rate of economic growth in the United States and other
major international economies;

- changes in trade, monetary and fiscal policies worldwide;

- currency fluctuations;

- outcomes of pending and future litigation;

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

- changes in capital needs;

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

- changing rates of inflation and other economic or business conditions.

Nabors Bermuda's businesses depend, to a large degree, on the level of
spending by oil and gas companies for exploration, development and production
activities. Therefore, a sustained increase or decrease in the price of natural
gas or oil, which could have a material impact on exploration and production
activities, could also materially affect our financial position, results or
operations and cash flows.

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 Nabors Delaware for each of the
periods set forth below has been computed on a consolidated basis and should be
read in conjunction with the consolidated financial statements (including the
notes thereto) set forth or incorporated by reference in Nabors Delaware's Form
10-K for the fiscal years ended December 31, 1999, December 31, 2000 and
December 31, 2001, as amended, and Nabors Delaware's quarterly report on Form
10-Q for the fiscal quarter ended March 31, 2002.

<Table>
<Caption>
QUARTER ENDED
MARCH 31, FISCAL YEARS ENDED DECEMBER 31, THREE MONTHS ENDED FISCAL YEAR ENDED
- -------------- ---------------------------------- DECEMBER 31, SEPTEMBER 30,
2002 2001 2001 2000 1999 1998 1997 1997
- ----- ------ ------ ------ ------ ------- ------------------ -----------------

4.03x 10.08x 8.88x 6.14x 2.48x 11.60x 15.18x 10.97x
</Table>

For purposes of computing the ratio of earnings to fixed charges for Nabors
Delaware, "earnings" consist of pretax income from continuing operations less
earnings from unconsolidated affiliates (net of dividends) plus amortization of
capitalized interest and 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.

Nabors Bermuda was formed in December 2001. Since its inception through the
date the reorganization became effective, Nabors Bermuda has not generated any
earnings and has not incurred any debt or liabilities other than immaterial debt
and liabilities associated with the reorganization.

GUARANTEE

Nabors Bermuda has irrevocably and unconditionally guaranteed to each
holder of a debenture that the Principal Amount, Issue Price, accrued Original
Discount, Redemption Price, Purchase Price, Fundamental Change Purchase Price,
Liquidated Damages, if any, and interest, if any, on the debentures will be
promptly paid in full when due, whether at maturity, by acceleration,
redemption, repurchase or otherwise and all other obligations of Nabors Delaware
under the debentures. The obligations of Nabors Bermuda under the guarantee are
unconditional, regardless of the validity, legality or enforceability of the
indenture under which the debentures are issued or the debentures.

USE OF PROCEEDS

Neither Nabors Delaware nor Nabors Bermuda will receive any cash 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
shares 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 other 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 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
selling 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.

The selling securityholders and any other person participating in the sale
of the debentures or the underlying common shares will be subject to the rules
under the Securities Exchange Act, including without limitation, Regulation M
which may limit the timing of purchases and sales of any of the debentures and
the underlying common shares by the selling securityholders and any other such
person. In addition, Regulation M may restrict the ability of any person engaged
in the distribution of the debentures and the underlying common shares to engage
in market-making activities with respect to the particular debentures and the
underlying common shares being distributed for a period of up to five days
before the
8

commencement of such distribution. This may affect the marketability of the
debentures and the underlying common shares and the ability of any person or
entity to engage in market-making activities with respect to the debentures and
the underlying common shares.

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

SELLING SECURITYHOLDERS

Nabors Delaware issued and sold the debentures in private placements to
Morgan Stanley & Co. Incorporated and the debentures were simultaneously sold by
Morgan Stanley & Co. Incorporated to the selling securityholders in transactions
exempt from registration under the Securities Act. All of the debentures, and
any common shares 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. This prospectus also relates to the
issuance of common shares by Nabors Bermuda to the holders of debentures upon
our repurchase of their debentures. Only those common shares issued upon
conversion or repurchase of the debentures may be offered by the selling
securityholders or Nabors Bermuda pursuant to this prospectus.

No offer or sale under this prospectus may be made by a securityholder
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 shares issued by Nabors Bermuda as 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 shares 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 and that other securities owned by them will not be sold.

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;

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

- the amount of securities to be owned by each selling security holder
after the completion of the offering, assuming that all debentures or
common shares issuable upon their conversion or repurchase are sold in
the offering.

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.

<Table>
<Caption>
ZERO COUPON CONVERTIBLE
DEBENTURES DUE 2021 COMMON SHARES
------------------------------ ----------------------------------------
AMOUNT HELD % DEBENTURES NUMBER OF NUMBER OF NUMBER OF
BEFORE OFFERING OUTSTANDING SHARES HELD SHARES SHARES HELD
AND OFFERED FOR BEFORE BEFORE OFFERED FOR AFTER
SALE(1) OFFERING OFFERING SALE(1)(2) OFFERING(1)
--------------- ------------ ----------- ----------- -----------

ABN AMRO Securities LLC..... $ 5,000,000 * 35,372 35,372 0
Allstate Life Insurance
Company................... $ 10,625,000 * 83,966(3) 75,166 8,800(3)
Alpha U.S. Sub Fund VIII,
LLC....................... $ 1,000,000 * 7,074 7,074 0
Arbco Associates, L.P....... $ 4,000,000 * 28,298 28,298 0
Associated Electric & Gas
Insurance Services
Limited................... $ 1,600,000 * 11,319 11,319 0
Attorneys' Title Insurance
Fund Inc.................. $ 500,000 * 3,537 3,537 0
Banc of America Securities
LLC(4).................... $ 8,500,000 * 157,595 60,133 97,462
Barclays Capital Securities
Limited................... $ 33,150,000 2.40% 234,519 234,519 0
BBT Fund, L.P............... $ 30,000,000 2.17% 212,235 212,235 0
Bear, Stearns & Co.
Inc.(5)................... $ 28,750,000 2.08% 203,391 203,391 0
Black Diamond Offshore
Ltd....................... $ 5,124,000 * 36,249 36,249 0
CA State Automobile Assn.
Inter-Insurance........... $ 1,500,000 * 10,611 10,611 0
Cater Allen International
Limited................... $ 36,000,000 2.61% 254,682 247,607 7,075
Credit Lyonnais Securities
(USA) Inc................. $ 5,000,000 * 113,209 35,372 77,837
Deephaven Domestic
Convertible Trading
Ltd....................... $ 32,000,000 2.32% 226,384 226,384 0
Deutsche Banc Alex. Brown
Inc(6).................... $ 25,000,000 1.81% 176,862 176,862 0
Double Black Diamond
Offshore LDC.............. $ 23,744,000 1.72% 167,976 167,976 0
Farbitrage Partners......... $ 2,000,000 * 14,149 14,149 0
Gaia Offshore Master Fund
Ltd....................... $ 20,000,000 1.45% 141,490 141,490 0
GLG Market Neutral Fund..... $ 2,000,000 * 14,149 14,149 0
Granville Capital
Corporation(7)............ $ 13,000,000 * 91,968 91,968 0
Great-West Life & Annuity
Insurance Company......... $ 46,000,000 3.33% 325,427 325,472 0
Healthcare Underwriters
Mutual Insurance Co.(8)... $ 700,000 * 6,025 4,952 1,073
Jersey (IMA) Ltd............ $ 1,500,000 * 10,611 10,611 0
Kallista Master Fund
Limited................... $ 5,000,000 * 35,372 35,372 0
</Table>

Kayne Anderson Capital
Income Partners (QP),
L.P....................... $ 2,000,000 * 14,149 14,149 0
KBC Financial Products
USA(9).................... $ 8,500,000 * 60,133 60,133 0
LibertyView Funds L.P....... $ 3,500,000 * 24,760 24,760 0
Lydian Overseas Partners
Master Fund(10)........... $ 25,000,000 1.81% 767,452 176,862 590,590
Lyxor Master Fund........... $ 22,600,000 1.64% 159,883 159,883 0
Mag Mutual Insurance
Co.(11)................... $ 200,000 * 1,682 1,414 268
Medical Liability Mutual
Insurance Co.(12)......... $ 23,000,000 1.67% 178,820 162,713 16,107
Morgan Stanley & Co.(13).... $200,000,000 14.48% 1,414,900 1,414,900 0
Morgan Stanley Int'l
Limited(14)............... $ 12,000,000 1.30% 126,633 84,894 41,739
Nationwide Separate Account
Trust, on behalf of its
Nationwide Equity Income
Fund...................... $ 1,000,000 * 7,074 7,074 0
NCMIC Insurance
Company(15)............... $ 250,000 * 2,036 1,768 268
NMS Services (Cayman)
Inc. ..................... $ 60,000,000 4.34% 424,470 424,470 0
OFIVM....................... $ 40,000,000 2.90% 282,980 282,980 0
OHIC Insurance Company...... $ 500,000 * 3,537 3,537 0
Ohio National Fund, Inc., on
behalf of its Equity
Income Portfolio.......... $ 200,000 * 1,414 1,414 0
Pacific Specialty........... $ 500,000 * 3,537 3,537 0
Protective Life Insurance
Company................... $ 33,000,000 2.39% 233,458 233,458 0
RBC Capital Services,
Inc. ..................... $ 500,000 * 3,537 3,537 0
Relative Value International
Holdings, LLC............. $ 6,000,000 * 42,447 42,447 0
Retirement Pension Plan of
the California State
Automobile Association.... $ 500,000 * 3,537 3,537 0
Royal Bank of Canada........ $ 10,000,000 * 444,129 70,745 373,384
Sagamore Hill Hub Fund
Ltd....................... $ 25,000,000 1.81% 176,862 176,862 0
Salomon Smith Barney
Inc. ..................... $ 12,500,000 * 88,431 88,431 0
Spear Leeds & Kellogg....... $ 5,000,000 * 35,372 35,372 0
Sylvan IMA Ltd.............. $ 7,600,000 * 53,766 53,766 0
Takai Asia Ltd.............. $ 23,000,000 1.67% 162,713 162,713 0
Teachers Insurance and
Annuity Association....... $ 24,500,000 1.77% 173,325 173,325 0
The Reciprocal of
America(16)............... $ 225,000 * 3,201 1,591 1,610
</Table>

The Travelers Insurance
Company -- Life(17)....... $ 25,000,000 1.81% 176,862 176,862 0
TQA Master Fund, Ltd........ $ 2,000,000 * 14,149 14,149 0
UBS O'Connor LLC f/b/o UBS
Global Convertible
Portfolio................. $ 300,000 * 2,122 2,122 0
UBS O'Connor LLC f/b/o UBS
Global Equity Arbitrage
Master Ltd.(18)........... $ 66,000,000 4.78% 466,917 466,917 0
UBS Warburg LLC(19)......... $ 4,745,000 * 78,802 33,568 45,234
White River Securities
L.L.C..................... $ 38,750,000 2.81% 274,136 274,136 0
Worldwide Transactions
Ltd....................... $ 1,132,000 * 8,008 8,008 0
Zola Partners, LP........... $ 1,000,000 * 7,074 7,074 0
Zurich Master Hedge Fund.... $ 3,400,000 * 24,053 24,053 0
Any other holder of the
debentures or future
transfer from any such
holder(20)................ $385,825,000 27.87% 2,729,518 2,729,518 0
</Table>

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

* Less than 1%

(1) Assumes all debentures or common shares issuable upon their conversion or
repurchase are sold in the offering. Under such assumption, the amount of
debentures to be owned by the holders of debentures after the completion of
the offering is zero.

(2) Assumes conversion of the full amount of debentures by each holder at the
conversion rate of 7.0745 common shares per $1,000 principal amount of
debentures at maturity. In accordance with the indenture, no fractional
shares will be issued upon conversion. Accordingly, the number of common
shares issuable upon conversion of the debentures has been rounded down to
the nearest whole share.

(3) Includes, $1,050,000 of Nabors Delaware zero coupon convertible debentures
due 2021 and 8,800 shares of Nabors Delaware common stock held by Allstate
Insurance Company.

(4) Bank of America Securities LLC also owns $9,073,000 Nabors Delaware zero
coupon convertible debentures due 2020.

(5) This entity and/or affiliates have provided, and may in the future provide,
investment banking services to Nabors Delaware or Nabors Bermuda, including
acting as lead underwriter and/or co-manager with respect to offerings of
debt and equity securities.

(6) Deutsche Banc Alex. Brown Inc. also owns $7,000,000 Nabors Delaware zero
coupon convertible debentures due 2020.

(7) Granville Capital Corporation also owns $17,626,000 Nabors Delaware zero
coupon convertible debentures due 2020.

(8) Healthcare Underwriters Mutual Insurance Co. also owns $100,000 Nabors
Delaware zero coupon convertible debentures due 2020.

(9) KBC Financial Products USA also owns $5,485,000 Nabors Delaware zero coupon
convertible debentures due 2020.

(10) Lydian Overseas Partners Master Fund also owns $25,000,000 Nabors Delaware
zero coupon convertible debentures due 2020.

(11) Mag Mutual Insurance Co. also owns $25,000 Nabors Delaware zero coupon
convertible debentures due 2020.

(12) Medical Liability Mutual Insurance Co. also owns $1,500,000 Nabors Delaware
zero coupon convertible debentures due 2020.

(13) Morgan Stanley & Co. Incorporated was the initial purchaser of these
securities in the Rule 144A offering in which these securities were issued.
This entity and/or affiliates have provided, and may in the future provide,
investment banking services to Nabors Delaware or Nabors Bermuda, including
acting as lead underwriter and/or co-manager with respect to offerings of
debt and equity securities.

(14) Morgan Stanley Int'l Limited also owns $5,900,000 in the securities that
were previously registered. An affiliate of this securityholder, Morgan
Stanley & Co. Incorporated, was the initial purchaser of these securities
in the Rule 144A offering in which these securities were issued. This
entity and/or affiliates have provided, and may in the future provide,
investment banking services to Nabors Delaware or Nabors Bermuda ,
including acting as lead underwriter and/or co-manager with respect to
offerings of debt and equity securities.

(15) NCMIC Insurance Company also owns $25,000 Nabors Delaware zero coupon
convertible debentures due 2020.

(16) The Reciprocal of America also owns $150,000 Nabors Delaware zero coupon
convertible debentures due 2020.

(17) The Travelers Insurance Company -- Life also owns $27,500,000 Nabors
Delaware 6.8% senior notes due 2004.

(18) UBS O'Connor LLC f/b/o UBS Global Equity Arbitrage Master Ltd. also owns
$15,000,000 of Nabors Delaware zero coupon convertible debentures due 2020.

(19) UBS Warburg LLC also owned $33,900,000 Nabors Delaware zero coupon
convertible debentures due 2020 at July 19, 2001. This entity and/or
affiliates have provided, and may in the future provide, investment banking
services to Nabors Delaware or Nabors Bermuda, including acting as lead
underwriter and/or co-manager with respect to offerings of debt and equity
securities.

(20) Supercedes amounts previously reported in the prospectus for any other
holders. Information concerning other selling holders of debentures or
underlying common shares will be set forth in prospectus supplements from
time to time, if required. Assumes that any other holders of debentures, of
any future transferees, pledges, donees or successors of or from any such
other holders of debentures do not beneficially own any common shares other
than the common shares issuable upon conversion of the debentures at the
initial conversion rate.

The selling securityholders identified above may have sold, transferred or
otherwise disposed of some or all of their debentures since the date on which
the information in the preceding table is presented in transactions exempt from
the registration requirements of the Securities Act. Information concerning the
selling securityholders may change from time to time and, if necessary, Nabors
Delaware and Nabors Bermuda will supplement this prospectus accordingly.

DESCRIPTION OF DEBENTURES

The debentures were issued under an indenture dated as of February 5, 2001
between Nabors Delaware and Bank One, N.A., as trustee. The material terms and
provisions of the indenture are summarized in this section. You should read the
indenture for additional information before you buy any debt securities or
common shares. References in this section to Nabors Delaware, "we", "us" and
"our" are solely to Nabors Industries, Inc. and not to its subsidiaries or
Nabors Bermuda.

GENERAL

The debentures are unsecured obligations of Nabors Delaware, ranking equal
in right of payment with all other senior unsecured indebtedness of Nabors
Delaware. The debentures are limited to $1,381,200,000 aggregate principal
amount at maturity. The debentures are scheduled to mature on February 5, 2021.
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 U.S. Federal Income Tax
Considerations." The debentures were issued and sold as of February 5, 2001 in
private placements 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 to qualified institutional
buyers (as defined in Rule 144A under the Securities Act).

Nabors Delaware 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 shares 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. The holder will not be
charged a service charge for any registration, transfer or exchange of
debentures. However, the holder may be required 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 common shares any time prior to
maturity. However, if Nabors Delaware elects 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 7.0745 shares of common shares 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 common share will receive cash equal to the then current market
value of the fractional share.

On conversion of a debenture, a holder will not receive any cash payment
representing accrued original issue discount. The delivery to the holder of the
fixed number of common shares into which the debenture is convertible, together
with the cash payment, if any, in lieu of a fractional common share, will be
deemed to satisfy Nabors Delaware's 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 common shares upon notice of conversion of any
debentures (for all or any portion of such debentures), Nabors Delaware may
elect to pay holders surrendering debentures an amount in cash per debenture
equal to the last reported sale price of a common share 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 common shares (and cash in place of fractional shares) as described
below. We will use reasonable efforts to notify, on the same business day as our
receipt of a conversion notice (but in any event within one business day of our
receipt of a conversion notice), the conversion agent for delivery to the
holders of debentures of our election to deliver common shares or to pay cash in
place of delivery of the shares. If we elect to deliver all or a portion of such
payment in common shares, 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 debentures for conversion have been satisfied is the conversion
date.

The conversion rate will be adjusted under formulae as set forth in the
indenture in certain events, including:

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

(2) certain subdivisions and combinations of common shares;

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

(4) the distribution of capital stock, other than common shares, to
all holders of common shares or evidences of our indebtedness or of assets.
This includes securities other than common shares, 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 common shares to the extent that the aggregate cash dividend
per common share in any quarter does not exceed the greater of:

- the amount per common share of the immediately preceding quarterly
cash dividend on the common share 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 shares); and

- 4.5% of the average of the last reported sales price of the common
shares 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 Delaware.

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.
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 Nabors Bermuda implements a shareholders'
rights plan, the rights plan must provide that upon conversion of the debentures
the holders will receive, in addition to the common shares issuable upon
conversion, the rights which would attach to the common shares issuable upon
conversion, regardless of whether the rights have separated from the common
shares 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 shares or any securities convertible into or exchangeable for
common shares or carrying the right to purchase any of the foregoing.

In the case of either:

- any reclassification of the common shares, 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 shares would be entitled to receive any form of
consideration with respect to or in exchange for common shares, 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 shares 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 shares. See "Material U.S. Federal Income Tax
Considerations."

From time to time, and to the extent permitted by law, Nabors Delaware 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. Nabors
Delaware 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 shares resulting from any dividend
or distribution of shares, or rights to acquire common shares, or from any event
treated as a dividend distribution or a right to acquire common shares for
income tax purposes. See "Material U.S. Federal Income Tax Considerations."

If Nabors Delaware exercises the 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 common shares that the holder would have received if we had not exercised our
option. If Nabors Delaware exercises the 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 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 "-- Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event."

REDEMPTION OF DEBENTURES AT NABORS DELAWARE'S OPTION

We may not redeem the debentures prior to February 5, 2006. Beginning on
February 5, 2006, we may redeem the debentures for cash 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 February 5, 2006, at each February 5 thereafter prior to
maturity and at maturity on February 5, 2021. 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)
--------------- ---------------- ----------------

February 5, 2006......................... $608.41 $80.48 $ 688.89
February 5, 2007......................... 608.41 97.81 706.22
February 5, 2008......................... 608.41 115.58 723.99
February 5, 2009......................... 608.41 133.79 742.20
February 5, 2010......................... 608.41 152.46 760.87
February 5, 2011......................... 608.41 171.60 780.01
February 5, 2012......................... 608.41 191.22 799.63
February 5, 2013......................... 608.41 211.34 819.75
February 5, 2014......................... 608.41 231.96 840.37
February 5, 2015......................... 608.41 253.10 861.51
February 5, 2016......................... 608.41 274.77 883.18
February 5, 2017......................... 608.41 296.99 905.40
February 5, 2018......................... 608.41 319.76 928.17
February 5, 2019......................... 608.41 343.11 951.52
February 5, 2020......................... 608.41 367.05 975.46
February 5, 2021......................... 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 "-- Form, Denomination and
Registration -- Global Debenture; Book-Entry Form."

REPURCHASE AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

If a Fundamental Change occurs at any time prior to February 5, 2021, 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 Delaware's 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 Nabors Bermuda. The Fundamental Change repurchase feature,
however, is not the result of management's knowledge of any specific effort to
obtain control of Nabors Bermuda 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
Nabors Bermuda.

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 February 5, 2006, February 5, 2011, and February 5, 2016, 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
"-- Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event."

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 shares or any combination of cash or
common shares.

<Table>
<Caption>
REPURCHASE DATE PRICE
- --------------- -------

February 5, 2006............................................ $688.89
February 5, 2011............................................ $780.01
February 5, 2016............................................ $883.18
</Table>

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

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
shares 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 shares pursuant to its election to tender its
debentures to us on a repurchase date, see the discussion under "Material U.S.
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.

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 shares, or any combination of cash or common shares. The notice
will specify the percentage of each, and

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

Upon determination of the actual number of common shares 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 shares is subject to the
satisfaction of various conditions, including:

- the registration of the common shares 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
common shares 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 DELAWARE

Nabors Delaware 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;

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

- we or the successor person will not, immediately thereafter, 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 February 5 and August 5 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 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 common shares (including cash in
lieu of fractional shares) or, if we elect, cash in lieu of common shares, when
common shares 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.

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 "-- Modification."

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

MODIFICATION

Modification and amendment of the indenture or the debentures may be
effected by Nabors and the trustee 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.

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
Delaware, 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
Delaware, 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 Delaware, 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, 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, Nabors Delaware must notify the selling
securityholders within two business days after our board of directors determines
in good faith that it is in our best interest not to disclose the existence of
facts surrounding any proposed or pending material corporate transaction
involving Nabors Delaware or its

subsidiaries. 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 calendar year
without paying liquidated damages.

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 at maturity on the debentures outstanding, (2) the total number
of common shares underlying the debentures outstanding multiplied by the
conversion rate and (3) with respect to combinations thereof, the sum of (1) and
(2) for the relevant debentures and common shares underlying the debentures.

TAXATION OF DEBENTURES

See the description under "Material U.S. 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 shares 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 shares
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 Shares
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 shares. Because the Market Price
of the common shares is determined prior to the applicable purchase date,
holders of debentures bear the market risk with respect to the value of the
common shares 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 shares
only if the information necessary to calculate the Market Price is reported in a
daily newspaper of national circulation.

"Sale Price of the Common Shares" 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 shares is
traded or, if the common shares are 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.

DESCRIPTION OF NABOR BERMUDA'S SHARE CAPITAL

Nabor Bermuda's authorized share capital consists of 425,000,000 shares of
capital stock of which 400,000,000 are common shares, par value $0.001 per
share, and 25,000,000 are preferred shares, par value $0.001 per share. The
following summary is qualified in its entirety by the provisions of Nabors
Bermuda's Memorandum of Association, dated December 10, 2001 and Nabors
Bermuda's Amended and Restated Bye-Laws, which are both publicly available. See
"Where You Can Find More Information" and "Incorporation of Certain Documents by
Reference." As of close of business June 24, 2002, there were 144,185,776 Nabors
Bermuda common shares outstanding and one Nabors Bermuda special voting
preferred share, par value $0.001 per share, outstanding. No other shares of any
class or series were outstanding as of June 24, 2002.

COMMON SHARES

Holders of common shares are entitled to one vote on any question to be
decided on a show of hands and one vote per share on a poll on all matters
submitted to a vote of the shareholders of Nabors Bermuda. Except as
specifically provided in the Nabors Bermuda's bye-laws or in The Companies Act
1981 (Bermuda), as amended (which we refer to as the Companies Act in this
prospectus), any action to be taken by shareholders at any meeting at which a
quorum is in attendance shall be decided by a majority of the issued shares
present in person or represented by proxy and entitled to vote. There are no
limitations imposed by Bermuda law or Nabors Bermuda's bye-laws on the right of
shareholders who are not Bermuda residents to hold or to vote their Nabors
Bermuda common shares.

Nabors Bermuda's bye-laws do not provide for cumulative voting. A special
meeting of shareholders may be called by Nabors Bermuda's board of directors or
as otherwise provided by the Companies Act and applicable law. Any action,
except the removal of auditors and directors, required or permitted to be taken
at any annual or special meeting of shareholders may be taken by written consent
if the consent is signed by each shareholder, or their proxy, entitled to vote
on the matter.

Holders of Nabors Bermuda common shares do not have a preemptive or
preferential right to purchase any other securities of Nabors Bermuda. Nabors
Bermuda's common shares have no sinking fund provision.

PRICE RANGE OF COMMON SHARES

Nabors Bermuda's common shares began trading on the American Stock Exchange
on June 26, 2002 under the symbol "NBR," the same symbol under which Nabors
Delaware common stock traded prior to such date. The following table sets forth,
for the periods indicated, the high and low sale price per share of Nabors
Delaware common stock, up to and including June 25, 2002, on the American Stock
Exchange and the high and low sale price per Nabors Bermuda common share from
and after June 26, 2002, on the American Stock Exchange.

<Table>
<Caption>
HIGH LOW
------- -------
(U.S.$) (U.S.$)

1999 -- NABORS DELAWARE
First Quarter............................................... 19.00 10.75
Second Quarter.............................................. 25.3125 15.50
Third Quarter............................................... 29.50 21.5625
Fourth Quarter.............................................. 31.25 19.75
2000 -- NABORS DELAWARE
First Quarter............................................... 40.5625 28.125
Second Quarter.............................................. 44.25 34.00
Third Quarter............................................... 53.8125 38.5625
Fourth Quarter.............................................. 60.47 40.50
</Table>

<Table>
<Caption>
HIGH LOW
------- -------
(U.S.$) (U.S.$)

2001 -- NABORS DELAWARE
First Quarter............................................... 63.12 50.70
Second Quarter.............................................. 61.25 37.20
Third Quarter............................................... 38.12 18.00
Fourth Quarter.............................................. 36.15 19.76
2002 -- NABORS DELAWARE
First Quarter............................................... 43.00 26.98
Second Quarter (through June 25, 2002)...................... 49.98 36.00
2002 -- NABORS BERMUDA
Second Quarter (from June 26, 2002 to June 28, 2002)........ 37.00 35.13
</Table>

On July 1, 2002, the last sale price reported on the American Stock
Exchange for Nabors Bermuda's common shares was $35.55 per share.

DIVIDEND POLICY

Nabors Bermuda has never declared or paid any cash dividends on its common
shares. Nabors Delaware last paid a cash dividend in 1982. Nabors Bermuda does
not anticipate paying any cash dividends on common shares in the foreseeable
future.

PREFERRED SHARES

The board of directors of Nabors Bermuda is authorized, without further
shareholder action, to issue from time to time up to 25,000,000 preferred shares
in one or more classes or series, and fix for each such class or series such
voting power, full or limited, or no voting power, and such designations,
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as are provided in the
resolutions adopted by the board of directors providing for the issuance of

such class or series. The Nabors Bermuda board of directors in authorizing such
class or series may provide that any such class or series may be:

- subject to redemption at the option of the company or the holders, or
both, at such time or times and at such price or prices;

- entitled to receive dividends (which may be cumulative or non-cumulative)
at such rates, on such conditions, and at such times, and payable in
preference to, or in relation to, the dividends payable on any other
class or classes or any other series;

- entitled to such rights upon the dissolution of, or upon any distribution
of the assets of, Nabors Bermuda; or

- convertible into, or exchangeable for, shares of any other class or
classes of shares, or of any other series of the same or any other class
or classes of shares, of Nabors Bermuda at such price or prices or at
such rates of exchange and with such adjustments;

in each case, as set forth in the resolutions authorizing the class or series of
preferred shares.

On April 26, 2002, pursuant to a plan of arrangement, Nabors Exchangeco
(Canada) Inc., then a Canadian subsidiary of Nabors Delaware, acquired all of
the outstanding common shares of Enserco Energy Service Company, Inc., a
Canadian corporation, in exchange for approximately Cdn. $184 million in cash
and approximately 3.55 million exchangeable shares of Exchangeco, 2.64 million
of which were immediately exchanged for shares of Nabors Delaware common stock.
The exchangeable shares are now exchangeable for one of Nabors Bermuda common
shares on a 1:1 basis. The exchangeable shares effectively have the same voting
rights, dividend entitlements and other attributes of the common shares.

A series of preferred shares, consisting of one share, have been designated
as a special voting preferred share, having a par value of $0.001 per share and
a liquidation preference of $0.01. Except as otherwise required by law, the
Nabors Bermuda memorandum of association or bye-laws, the one special voting
preferred share will possess a number of votes for the election of directors and
on all other matters submitted to a vote of Nabors Bermuda's shareholders equal
to the number of outstanding exchangeable shares from time to time not owned by
Nabors Bermuda or any entity controlled by Nabors Bermuda. The holders of Nabors
Bermuda common shares and the holder of the special voting preferred share will
vote together as a single class on all matters on which holders of common shares
are eligible to vote. In the event of the liquidation, dissolution or winding-up
of Nabors Bermuda, all outstanding exchangeable shares will automatically be
exchanged for shares of Nabors Bermuda common shares, and the holder of the
special voting preferred share will not be entitled to receive any assets
available for distribution to Nabors Bermuda's shareholders (other than the $.01
liquidation preference). The holder of the special voting preferred share will
not be entitled to receive dividends. The special voting preferred share will be
issued to Computershare Trust Company of Canada, as trustee under a voting and
exchange trust agreement among Nabors Bermuda, Exchangeco and such trustee. At
such time as the one special voting preferred share has no votes attached to it
because there are no exchangeable shares outstanding not owned by Nabors Bermuda
or an entity controlled by Nabors Bermuda, the special voting preferred share
will be canceled.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for Nabors Bermuda's common shares is
EquiServe.

WITHHOLDING RIGHTS

Nabors Bermuda will be entitled to deduct and withhold from any dividend or
other consideration otherwise payable to any holder of common shares such
amounts as Nabors Bermuda is required to deduct and withhold with respect to
such payment under the United States Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of federal, state, local or foreign tax law. To
the extent that amounts are so withheld, such withheld amounts will be treated
for all purposes as having been paid to the holder of common shares in respect
of which the deduction and withholding was made, provided that the

withheld amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount required to be deducted or withheld from any payment
to a holder exceeds the cash portion of the dividend or other consideration
otherwise payable to the holder, Nabors Bermuda is authorized to sell or
otherwise dispose of the portion of the consideration necessary to provide
sufficient funds to Nabors Bermuda to enable it to comply with the deduction or
withholding requirement and Nabors Bermuda will notify the holder and remit to
the holder any unapplied balance of the net proceeds of such sale.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF NABORS BERMUDA'S BYE-LAWS

Nabors Bermuda's bye-laws have provisions that could have an anti-takeover
effect. Generally, these provisions are intended to substantively replicate
provisions which were in Nabors Delaware's certificate of incorporation and
by-laws. In addition, Nabors Bermuda's bye-laws include an "advance notice"
provision which places time limitations on shareholders' nominations of
directors and submission of proposals for consideration at an annual general
meeting. These provisions are intended to enhance the likelihood of continuity
and stability in the composition of the board of directors and in the policies
formulated by the board of directors and to encourage negotiations with the
board of directors in transactions that may involve an actual or potential
change of control of Nabors Bermuda.

The bye-laws provide that Nabors Bermuda's board of directors will be
divided into three classes serving staggered three-year terms. Directors can be
removed from office prior to the expiration of their term only for cause by the
affirmative vote of the holders of a majority of the voting power of Nabors
Bermuda on the relevant record date. The board of directors does not have the
power to remove directors. As long as a quorum of directors remains and is
present, vacancies on the board of directors may be filled by a majority vote of
the remaining directors. Any general meeting can authorize the board of
directors to fill any vacancy left unfilled at a general meeting. Each of these
provisions can delay a shareholder from obtaining majority representation on the
board of directors.

The bye-laws also provide that the board of directors will consist of not
less than five nor more than eighteen persons, the exact number to be set from
time to time by the affirmative vote of a majority of the directors then in
office. Accordingly, the board of directors, and not the shareholders, has the
authority to determine the number of directors and could delay any shareholder
from obtaining majority representation on the board of directors by enlarging
the board of directors and filling the new vacancies with its own nominees.

The bye-laws of Nabors Bermuda provide that at any annual general meeting,
only such business shall be conducted as shall have been brought before the
meeting by or at the direction of the board of directors, by any shareholder who
complies with certain procedures set forth in the bye-laws or by any shareholder
pursuant to the valid exercise of the power granted under the Companies Act.

For business to be properly brought before an annual general meeting by a
shareholder in accordance with the terms of the bye-laws the shareholder must
have given timely notice thereof in proper written form to the Secretary of
Nabors Bermuda and satisfied all requirements under applicable rules promulgated
by the SEC. To be timely for consideration at the annual general meeting, a
shareholder's notice must be received by the Secretary at Nabors Bermuda's
principal executive offices and its registered office in Bermuda not less than
60 days nor more than 90 days prior to the anniversary date of the immediately
preceding annual general meeting, provided that in the event that the annual
general meeting is called for a date that is not within 30 days before or after
such anniversary date, not later than the 10th day following the day on which
such notice of the date of the annual general meeting was mailed or public
disclosure of the date of the annual general meeting was made, whichever occurs
first. In order for a shareholder to nominate directors in connection with an
annual general meeting of shareholders, a shareholder's notice of his intention
to make such nominations must be received in proper written form as specified in
the bye-laws of Nabors Bermuda by the Secretary of Nabors Bermuda within the
time limits described above.

In addition, the Companies Act provides for a mechanism by which 100
shareholders acting together or shareholders holding at least 5% of the voting
power of a Bermuda company may properly propose a resolution for consideration
at a general meeting of the company.

Subject to the terms of any other class of shares in issue, any action
required or permitted to be taken by the holders of Nabors Bermuda's common
shares must be taken at a duly called annual or special general meeting of
shareholders unless taken by written consent of all holders of common shares.
Under the bye-laws, special general meetings may be called at any time by the
board of directors or when requisitioned by shareholders pursuant to the
provisions of the Companies Act. The Companies Act currently permits
shareholders holding 10% of the shares of a company entitled to vote at general
meeting to requisition a special general meeting.

The board of directors is authorized, without obtaining any vote or consent
of the holders of any class or series of shares unless expressly provided by the
terms of issue of a class or series, to from time to time issue any authorized
and unissued shares on such terms and conditions as it may determine. For
example, the board of directors could authorize the issuance of preferred shares
with terms and conditions that could discourage a takeover or other transaction
that holders of some or a majority of the Nabors Bermuda common shares might
believe to be in their best interests or in which holders might receive a
premium for their shares over the then market price of the shares.

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of material U.S. federal income tax
considerations relating to the purchase pursuant to this offering, the ownership
and disposition of the debentures and the conversion to, ownership and
disposition of, common shares by U.S. holders, and certain material U.S. federal
income and withholding tax considerations relating to the purchase, ownership
and disposition of the debentures and common shares 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 shares. 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.
It should be noted that legislation has been introduced which, if enacted in its
present form, could materially change the discussion set forth below. Moreover,
the United States Treasury Department is currently studying transactions such as
the reorganization and, as a result, changes in these income tax laws,
regulations, and interpretations may occur, possibly with retroactive effect,
which could affect the discussion set forth below. There can be no assurance
that the Internal Revenue Service, or IRS, 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 shares.

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 provisions of the federal tax code,
or special rules applicable to certain categories of investors, such as tax-
exempt organizations, banks, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, dealers or traders in
securities or currencies, grantor trusts, persons having a "functional currency"
other than the United States dollar, non-United States holders, holders who own,
or are deemed to own, 10% or more, determined by voting power or value, of
common shares, holders who hold debentures or common shares as part of a hedge,
straddle, wash sale, synthetic security, conversion transaction or other
integrated investment and holders of debentures or common shares who acquired
their interests through the exercise of employee stock options or otherwise as
compensation for services. This discussion is limited to persons who hold the
debentures and any common shares 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.

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
31

debentures and common shares, 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 beneficial owner
of a debenture or common shares 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 that has elected to
continue to be treated as a United States trust.

A non-U.S. holder is any beneficial owner of debentures or common shares other
than a U.S. holder. If a partnership (including for this purpose any entity
treated as a partnership for United States federal income tax purposes) is a
beneficial owner of debentures or common shares, the treatment of a partner in
the partnership will generally depend upon the status of the partner and upon
the activities of the partnership. A holder that is a partnership and partners
in such partnership are urged to consult their tax advisors about the United
States federal income tax consequences of holding and disposing of debentures or
common shares. Based on current estimates of gross income and gross assets and
the nature of the business, Nabors Bermuda believes that it will not be
classified as a foreign personal holding company or a passive foreign investment
company for the current taxable year. The status of Nabors Bermuda in future
years, however, will depend on its income, assets and activities in those years.
Accordingly, this summary assumes that Nabors Bermuda is not nor will be a
"foreign personal holding company" or a "passive foreign investment company" for
United States federal income tax purposes.

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. We may, upon at least 30 days' notice given to the to the holders of
debentures, on one or more occasions, elect to extend the period during which we
cannot redeem the debentures.

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. Subject to the rules
for acquisition premium described below, 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
32

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 liquidated damages
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. We intend to take the position for U.S. federal income tax
purposes that any such payments should be taxable to the recipient U.S. holder
as additional gross income when received or accrued in accordance with such U.S.
holder's method of tax accounting. This position is based in part on the
Treasury Regulations providing that the possibility of a change in the yield
will 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 or incidental. We intend to take the position that the likelihood of any
change in the yield on the debentures is remote or incidental within the meaning
of the Treasury Regulations as of the date of the issuance of the debentures. We
also intend to take the position that none of the repurchase options or other
features of the debentures should offset the accrual of original issue discount
on the debentures to Nabors for federal income tax purposes.

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 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 with respect to the debentures 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 of 1986, as
amended (the "Code"), a U.S. holder who purchases a debenture at a market
discount generally will 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 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
33

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 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
market discount and unstated interest, as adjusted by acquisition premium, by
using the rules described above under "-- Original Issue Discount or Interest on
the Debentures." 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 OTHER DISPOSITION OF THE DEBENTURES

Upon the sale, exchange or other disposition of a debenture, including as a
result of a conversion or repurchase, a U.S. holder generally will recognize
gain or loss equal to the difference between the fair market value of the
property received in exchange for the debenture 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.

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 other disposition 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%. For
United States federal income tax purposes, gain recognized on the sale, exchange
or other disposition of debentures will generally be treated as United States
source gain. In the event of a conversion or repurchase, a United States
holder's tax basis in the common shares received would be equal to the fair
market value of such shares at the time of the conversion or repurchase and the
holding period for such common shares would begin on the day after the
conversion or repurchase.

ADJUSTMENT OF CONVERSION PRICE

If at any time Nabors Bermuda makes 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 Nabors Bermuda implements 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.

DISTRIBUTION ON THE COMMON SHARES

Any dividends paid with respect to the common shares out of Nabors
Bermuda's earnings and profits would be treated as foreign source dividend
income and would generally not be eligible for the dividends received deduction
allowed to corporate shareholders under the Code.

Dividends paid in Bermudian dollars will be includible in the income of a
United States holder in a United States dollar amount calculated by reference to
the exchange rate in effect on the date the dividends are deemed received.
United States holders are urged to consult their tax advisors regarding the
treatment of any foreign currency gain or loss on any Bermudian dollars received
which are not converted into United States dollars on such date.

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 shares 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 Code, and (3) either (A) the non-U.S. holder 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 IRS
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 non-U.S. holder by it or by
a financial institution between it and the non-U.S. holder 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. Under
certain circumstances, effectively connected original issue discount received by
a corporate non-U.S. holder 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.

GAIN ON DISPOSITION OF THE DEBENTURES

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 shares, 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; or

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

A non-United States holder should generally not be subject to United States
federal income tax as a result of the ownership and disposition of common
shares. However, as noted above, legislation has been introduced which, if
enacted in its present form, could materially change the United States federal
income tax consequences of the ownership and disposition of common shares to
non-United States holders. It is difficult at this time to predict what, if any,
changes might occur. Non-United States holders are urged to consult their tax
advisors regarding the possibility and effect of any such changes.

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 common shares with respect to certain
noncorporate U.S. holders, and backup withholding at the then applicable rate
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

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 on an appropriate Form W-8 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 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. Except as described below, the proceeds of
the disposition by a non-U.S. holder of debentures to or through a foreign
office of a broker will not be subject to backup withholding or information
reporting. 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, a foreign partnership with certain
connections to the United States, information reporting requirements will apply
unless such broker has certain documentary evidence in its files of the holder's
non-U.S. status (and has no actual knowledge to the contrary) or the holder
otherwise establishes an exemption.

BERMUDA INCOME TAX CONSIDERATIONS

Under current Bermuda law, we are not subject to tax in Bermuda on our
income or capital gains. Furthermore, we have obtained from the Minister of
Finance of Bermuda, under the Exempted Undertakings Tax Protection Act 1966, an
undertaking that, in the event that Bermuda enacts any legislation imposing tax
computed on any income or capital gains, that tax will not be applicable to us
until March 28, 2016. This undertaking does not, however, prevent the imposition
of any tax or duty on persons ordinarily resident in Bermuda or any property tax
on leasehold interests we may have in Bermuda. We will pay an annual government
fee in Bermuda based on our authorized share capital and share premium. The
maximum annual government fee applicable to us is currently $29,215, and we
expect to be subject to the maximum fee.

Under current Bermuda law, no income, withholding or other taxes or stamp
or other duties are imposed in Bermuda upon the issue, transfer or sale of our
common shares or on any payments in respect of our common shares (except, in
certain circumstances, to persons ordinarily resident in Bermuda).

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 read and copy
any of such materials at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at
the Securities and Exchange Commission's regional offices at The Woolworth
Building, 233 Broadway, New York, New York 10279. You may also obtain copies of
such material from the Securities and Exchange Commission at prescribed rates by
writing to the Public Reference Room 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 shares are listed.

Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
more information on the operation of the Public Reference Room. 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:

1. Nabors Delaware's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 (File No. 001-09245), as amended by Form 10-K/A
filed by Nabors Bermuda on June 27, 2002 (File No. 000-49887);

2. Nabors Delaware's Current Reports on Form 8-K filed on January 3,
2002, January 25, 2002, April 18, 2002, June 14, 2002 and June 25, 2002
(File No. 001-09245);

3. Nabors Bermuda's Current Reports on Form 8-K filed on June 25, 2002
(File No. 333-76198) and June 26, 2002 (File No. 000-49887);

4. Nabors Delaware's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002 (File No. 001-09245); and

5. Description of Nabors Bermuda common shares contained in Nabors
Bermuda's Registration Statement on Form S-4, Filed on January 2, 2002, as
amended by Pre-Effective Amendment No. 1, Pre-Effective Amendment No. 2,
Pre-Effective Amendment No. 3 and Pre-Effective Amendment
37

No. 4 to Form S-4, filed with the SEC on March 3, 2002, April 17, 2002,
April 29, 2002 and May 10, 2002, respectively (Registration No. 333-76198).

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 Ltd., Whitepark House, White Park Road, Bridgetown,
Barbados, Attention: Investor Relations, telephone number (246) 427-8617 or
Nabors Industries, Inc., 515 West Greens Road, Suite 1200, Houston, Texas 77067,
Attention: Investor Relations, telephone number (281) 874-0035.

LEGAL MATTERS

The validity of the guarantee and the common shares issuable hereunder will
be passed upon for Nabors Bermuda by Appleby, Spurling & Kempe.

INDEPENDENT ACCOUNTANTS

The financial statements incorporated in this prospectus by reference to
Nabors Delaware's Annual Report on Form 10-K for the year ended December 31,
2001 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

With respect to the unaudited financial information of Nabors Delaware for
the three-month period ended March 31, 2002 incorporated by reference in this
prospectus, PricewaterhouseCoopers LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report dated April 17, 2002, except for
Notes 1 and 2, as to which the date is April 29, 2002, incorporated by reference
herein, states that they did not audit and they do not express an opinion on
that unaudited financial information. Accordingly, the degree of reliance on
their report on such information should be restricted in light of the limited
nature of the review procedures applied. PricewaterhouseCoopers LLP is not
subject to the liability provisions of Section 11 of the Securities Act of 1933
for their report on the unaudited financial information because that report is
not a "report" or a "part" of the registration statement prepared or certified
by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the
Act.