Smedvig Increases Ownership in Eastern Drilling

Smedvig has increased the investment in Eastern Drilling ASA from US $27.5 million to US $50 million, which represents an increase in ownership interest in the company from 10 percent to 25 percent.

The investment is made in relation to the construction of a new 6th generation semi-submersible drilling unit where Smedvig will be responsible for the construction supervision, marketing and operations management.

The semisubmersible drilling rig will be constructed by Samsung Heavy Industries in South Korea. Total investment is estimated to US$ 550 million. The rig is designed with dual derrick, dynamic positioning and with water depth capability up to 3,000 meters. The deepwater unit will be constructed for winter operations in northern areas with special focus on minimizing the exposure to the environment. The drilling rig will be ready for delivery from the yard in the fourth quarter 2007, and commencement of operations is scheduled for the first quarter of 2008.

The contract between Eastern Drilling and Samsung includes an option for an identical unit on similar terms and conditions, which has to be declared within 12 months from signing of the contract.

Smedvig's ownership share is subject to final completion of the debt and equity structure.

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