Eirik Raude to Work on Statoil's Barents Sea Program

Ocean Rig has nominated Eirik Raude to perform drilling in the Barents Sea starting late this year. The rig has now a continuing program for 6 wells over a 333 days period and a total backlog of US $74 million. The company sees a tightening market for its services.

The rig has been drilling on the East Coast of Canada since November 2002 when she was delivered from the shipyard. During this time the rig has proven its capabilities in extreme weather and demonstrated good performance in challenging drilling conditions under strict environmental regulations.

The rig has the following program:

1. One well for Repsol in Cuba, contract started May 11, 2004,
2. One well for BG International, West of Shetland,
3. One well on the Troll Field in the North Sea,
4. Three wells for Statoil (two) and Norsk Hydro Production (one) in the Barents Sea.

Statoil plans to operate one well each in areas G and F, while Hydro intends to drill one in area C.

"We've opted for Eirik Raude because it's among the most suitable vessels for the job," explains Tor Gunnar Gloppen in the rig management unit of Exploration & Production Norway.

"It's big, new and built to work in environmentally-sensitive arctic waters. Over the past couple of years, it's operated off Canada in areas with weather just as tough as in the Barents Sea." Statoil and Hydro signed a letter of intent with Ocean Rig in April on drilling the three wells, but the rig to be used has only now been clarified.

Plans call for the first well to be spudded in late autumn. Eirik Raude will also do a minor job for Hydro on the Troll field in the North Sea before moving to the Barents Sea. The Troll work is included in the charter's overall value. This program will keep the rig employed until April 2005 according to the current drilling plans.

Total backlog for the program is estimated to be US $74 million over a period of 333 days, including time for mobilization and a short stay at a yard for minor modifications. A sum of US $5.3 million for modifications, paid by the oil companies, is not included in the figure above.

This backlog represents an estimated average day rate of US $222,000 for Ocean Rig, including the time for mobilization and the stay at the yard. The effective drilling time is estimated to be 259 days.

Ocean Rig is currently negotiating new contracts related to continuing employment for Eirik Raude following the Barents Sea campaign. The company is also in final discussions regarding new contracts for Leiv Eiriksson in Angola and expects to announce this within short time.

As a result of the recent contracting activity world wide, the company is experiencing a tightening market for its services.
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