Marine Log

July 14, 2006

Chevron drilling contracts for Stena drillship and MODU

Chevron North Sea Limited, a U.K. subsidiary of Chevron Corporation, says it has agreed to contracts with Stena companies for the newbuild Deep Water Harsh Environment Drillship Stena DrillMAX II and the Semi-Submersible MODU (Mobile Offshore Drilling Unit) Stena Spey.

The contract for the Stena DrillMAX II is for a three-year firm program with extension options that could add up to another five years. The contract for the Stena Spey is for a two-year firm program with a one-year extension option.

Operational commencement dates are expected to be June 30th, 2008 for the DrillMAX II and immediately following current term of an existing contract for the Stena Spey in June 2007.

Total contract value before extension options is expected to be in excess of $800 million and, with extension options, may be in excess of $1.5 billion.

Commenting on the contracts, Rick Cohagan, President and Managing Director of Chevron Upstream Europe, said, 'We are pleased to reach this agreement with Stena to support our exploration, appraisal and development drilling programs during a period of tight rig capacity. This is a significant award for both companies; it is indicative of Chevron's commitment to its European operations and builds on the already sound relationship we have with Stena.'

Dan Sten Olsson, Chief Executive Officer of the Stena Sphere group of companies and Chairman of Stena Drilling, said, 'It is a milestone for Stena to reach this agreement with our longest term client, both for our drilling operations and our tanker business.'

The area of operation for both rigs is planned to be the United Kingdom Continental Shelf, including the West of Shetland and North Sea, and the Faroe Islands, though the contract for the DrillMAX II allows for a change of locale beyond these areas at Chevron's discretion.

The Stena DrillMAX II will be a newbuild, dynamically positioned, dual mast drillship designed for year-round worldwide operations in harsh environments and ultra-deep waters. It will be built at the Samsung Heavy Industries Koje Shipyard, South Korea.