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September 21, 2006

SeaDrill orders semi

John Fredriksen's venture into offshore drilling, SeaDrill Ltd. has signed a final contract with Daewoo Shipbuilding in Korea (DSME) for the construction of a GVA 7500-N ultra-deep water harsh environment semi-submersible drilling rig

The semi-submersible, which will be fully capable of operating in all of the most extreme weather and water depth drilling areas, will be delivered in February 2008. The contract price for the unit is US $496.5 million and is based on a full turnkey delivery including an extensive testing program, 7,500 ft of riser a 15 k BOP and a full mooring system.

SeaDrill says the rig will have a soft payment schedule with three 10 percent payments during the construction period and 70 percent by delivery.

"Through a combination of the company's cash flow, the cash position and the payment terms, SeaDrill sees no need to raise additional equity to finance the project," says a statement issued today.

SeaDrill says it has two options for the delivery of similar units in June 2008 and first half 2009. These options are declarable in two and eight months time and have a fixed contract price of US $486 million.

SeaDrill has, since it was established in May 2005, gathered an offshore fleet of twelve units including three ultra-deep water semi-submersibles. In addition, the Company has received fixed price options for one jack-up and three semi-submersibles declarable during the next year. The option package, with total value of US $1500 million, represents significant additional value for shareholders, both when it comes to a real value, optional value and value of early delivery.

"The board is currently working under the assumption that the company will exercise these four optional units," says SeaDrill. "It is, however, important to do this in such a way that the return on the existing equity is optimized. This can be achieved through reducing the need for additional equity by efficient debt financing, using cash flow from existing units and a good employment basis for the existing fleet.

SeaDrill will, based on an exercise of the three optional semi-submersibles have a fleet of six ultra-deep semi-submersibles and will own 25 percent of Ocean Rig which owns another two ultra-deep water units.

SeaDrill says it will then have "the second largest purpose built ultra-deep water fleet in the world and by far the most modern one."