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Marine Log

DRILLSHIP

September 11, 2007

GlobalSantaFe orders drillship at Hyundai

Making a break with its previous policy of ordering only against an executed drilling contract, GlobalSantaFe Corporation (NYSE:GSF) has reached an agreement with Hyundai Heavy Industries, Ltd. (HHI) to build a new ultra-deepwater exploration and development drillship for delivery in September 2010.

GlobalSantaFe President and CEO Jon Marshall commented that "tight capacity with the shipyards and major equipment suppliers has resulted in construction options that move faster than our customers' tender processes."

Shipyard construction costs are expected to total approximately $740 million.

The drillship will be constructed in Ulsan, Korea, under a turnkey agreement, which provides that HHI will contract directly with equipment suppliers and deliver the drillship to GlobalSantaFe for a fixed price.

The new vessel is an enhanced version of GlobalSantaFe's successful GSF C.R. Luigs and GSF Jack Ryan drillships, which entered service in 2000.

Like those rigs, it will be capable of drilling in water depths up to 10,000 feet and is upgradeable to 12,000 feet.

In addition, the new rig will feature advanced dynamic positioning capabilities, triple activity load paths, a derrick rated for 4 million pounds, dual liquid-storage systems, larger quarters and an efficient deck design that provides significantly more space than previous-generation drillships.

"This next-generation drillship resulted from listening to our customers, assessing the growing need for deepwater capacity and combining the best features of our drillships and semisubmersibles in a single unit capable of meeting our customers' full range of exploration and development drilling needs," noted Marshall. "We are especially pleased that this drillship will be constructed under a turnkey contract by HHI, which has earned a reputation for excellent engineering and on-time delivery."

Marshall added: "During our extensive marketing reviews, customers have responded enthusiastically to the innovative and efficient design of this drillship, but tight capacity with the shipyards and major equipment suppliers has resulted in construction options that move faster than our customers' tender processes. Our decision to move forward without an executed drilling contract is clearly a departure from our much more conservative past approach. However we would not have taken such a capital risk without a very high degree of confidence in the ongoing strength of the ultra-deepwater market. The turnkey construction contract protects us from rising costs and, considering our customers' strong interest in this design and the substantial unfilled demand we have identified in the ultra-deepwater markets, we are confident of getting an attractive long-term contract well in advance of delivery."

GlobalSantaFe is one of the largest offshore oil and gas drilling contractors and the leading provider of drilling management services worldwide. The company owns or operates a contract drilling fleet of 37 premium jackup rigs; six heavy-duty, harsh environment jackups; 11 semisubmersibles and three dynamically positioned, ultra-deepwater drillships, as well as two semisubmersibles owned by third parties and operated under a joint venture agreement. In addition, an ultra-deepwater semisubmersible is under construction and scheduled for delivery in early 2009.

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