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January 20, 2006

SeaDrill wins Smedvig battle...and orders another semi

John Fredriksen controlled SeaDrill (Oslo:SDRL) had two major announcements today.

It now controls more than 50 percent of Norwegian drilling contractor Smedvig--and it has declared its option to build a second semi-submersible ultra deepwater drilling rig at Daewoo Shipbuilding in Korea.

SeaDrill says that, based on acceptances received under its voluntary offer, it now controls more than 50 percent of Smedvig's A-class shares and that settlement for these shares is expected to take place on Wednesday 25 January 2006.

SeaDrill says it will now put forward a mandatory offer in Norway together with a tender offer in the U.S. to all remaining shareholders in Smedvig ASA as soon as practically possible.

Meantime, the second semi it is ordering at Daewoo is a GVA-7500-N design and is fully capable of operating in harsh environments in water depths to 10,000 feet.

The contract price for the unit which includes some extra upgrades versus the first unit is approximately US $495 million out of which only 30 percent of the contract price is payable prior to delivery of a fully operational unit.

The price is based on a full turn-key delivery including an extensive testing program, 7,500f t of riser, a 15k BOP and a full mooring system.

SeaDrill's jack-up drilling rig, SeaDrill 5, is currently under contract to major oil company operating in India.

In jacking up the rig at its new location one of the legs punctured the ground and incurred some damage.

The jacking operation of the rig was performed based on ground information provided by the oil company. Under the terms of its contract, the rig remains on station on contract based on waiting rate.

SeaDrill says some repairs will have to be made to the leg and it is expected that the offhire in connection with such repairs will negatively influence the income for the rig in the first quarter. The physical damage to the leg and the repair needed is fully insured.

SeaDrill has received a signed letter of intent from a major oil company for a 2 year contract for its new building SeaDrill No. 3 which will be delivered in May of this year. The rate for this LOI is US $160,000 a day. SeaDrill has so far not countersigned the LOI but are in the process of evaluating this contract against several other employment opportunities. A final decision is expected shortly.