Smedvig Reports Improved Operating Profit for 2003

Smedvig reports preliminary consolidated operating profit for 2003 of NOK 530 million as compared to NOK 413 million in the previous year. The result reflects efficient operations and higher utilization of the Company's fleet of drilling units. Operating profit for the fourth quarter amounted to NOK 150 million as compared to NOK 176 million in the previous quarter.

Net financial expenses for the year were NOK 38 million as compared to NOK 169 million in the previous year. The improvement was attributable to a reduction in interest expenses and gains on currency forward contracts. For the fourth quarter, net financial items amounted to an income of NOK 4 million.

Consolidated net loss for the year was NOK 88 million as compared to a net loss of NOK 802 million in 2002. The loss was a result of the outcome of the ruling in the Balder litigation partly offset by the income from the settlement with the Singapore shipyard Keppel Fels. Net income for the fourth quarter was NOK 262 million as compared to net income of NOK 137 million for the previous quarter.

Earnings per share were minus NOK 0.71 in 2003 as compared to minus NOK 9.74 in 2002.

The Board proposes a dividend of NOK 1.25 per share for 2003, up from NOK 1.00 in 2002.

Operating profit for Mobile Units amounted to NOK 129 million as compared to an operating loss of NOK 87 million in 2002. The increase was attributable to higher utilization of the drilling units as well as reduced non-recurring operating expenses. The utilization rate for the mobile units averaged 89 percent in 2003 as compared to 76 percent in 2002. For the fourth quarter, the operating profit was NOK 28 million as compared to NOK 69 million in the previous quarter.

Operating profit for Tender Rigs amounted to NOK 326 million as compared to NOK 443 million in 2002. The reduction was primarily due to lower utilization rate for the tender rig fleet, averaging 94 percent as compared to 99 percent in 2002, as three units had planned yard-stays. The result was also impacted by lower average NOK/US$ exchange rate. For the fourth quarter, operating profit amounted to NOK 102 million as compared to NOK 91 million in the previous quarter.

Operating profit for Well Services amounted to NOK 88 million as compared to NOK 63 million in 2002. The increase was mainly due to improved cost performance. For the fourth quarter, operating profit amounted to NOK 22 million in line with the previous quarter.

Kjell E Jacobsen, Chief Executive Officer, commented: "Smedvig's improved operating profit for 2003 reflects a solid operational performance as well as a higher utilization rate for the company's drilling fleet. Smedvig has secured drilling contracts with a gross value of more than NOK 2 billion during the last two months, and has currently an average contract backlog of 16 months for the mobile units and 22 months for the tender rigs."
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