2001 Maritime

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October 10, 2001

Ocean Rig faces another $20 million costs on first Bingo
Leiv Eiriksson, the first of the two Bingo 9000 rigs delivered to Ocean Rig by Friede Goldman Halter, has now started its final acceptance program for affiliates of ExxonMobil Corporation and a subsidiary of BP p.l.c.

During this program Ocean Rig will be paid a maximum of $1,875,000. The remaining portion of the acceptance test program includes deepwater testing of the BOP (blow-out preventor) in 6,500 feet of water in the Gulf of Mexico, further testing of the dynamic positioning systems and other system tests. Installation of customer defined equipment is essentially completed. The rig will commence mobilization to West Africa upon completion of the acceptance test program and drilling operations on the first well is estimated to start early December.

Ocean Rig says Leiv Eiriksson's sea trials have lasted longer than anticipated. The company says it has experienced problems during testing of equipment and systems that have led to increased costs. As a result, the investment on this rig will increase by approximately $20 million compared to budget. This includes the costs, including man hours, of replacing needed equipment plus daily operating costs and financing costs while the problems are being rectified. These extra costs will not be refunded by the company's customer.

"As a consequence of increased costs," says the company, "Ocean Rig will require additional funding. The company's board and administration is currently considering various solutions. For this purpose, the brokerage house Pareto Securities ASA has been retained to act as financial advisor."

Orders for FGH
Friede Goldman Halter's Halter Marine, Inc. unit reports that it has signed a contract with an undisclosed customer to build a 332 ft x 74 ft x 25 ft double-skin, clean oil tank barge with an estimated 80,000 bbl capacity meeting OPA ’90 requirements. It is similar in design to a barge currently under construction at the Halter Gulfport, Miss. facility.

Construction will begin at Halter's Gulfport, Miss. facility and take approximately 12 months. Although no new jobs will be created, the project is expected to sustain the facility's current workforce. In recent years, Halter has built 88 similar barges, and currently holds contracts and options for an additional 8 vessels.

Friede and Goldman, Ltd. the design engineering segment of Friede Goldman Halter, has also been awarded a new contract with a major drilling contractor to perform the design engineering for the upgrade of a drilling unit. The upgrade includes a new cantilever beam design as well as reinforcement of the hull.

The two new contracts will have a value of approximately $7.5 million.