KS Energy to Build Heavy Lift Vessel

KS Energy Services Limited (the “Company” or “KS Energy”) wishes to announce that it has signed a Letter of Intent (“LOI”) with Ezra Holdings Limited (“Ezra”) whereby it is agreed that the parties intend to enter into a joint venture to build, own and operate a Heavy Lift Accommodation Pipelay & Maintenance Vessel (the “Vessel”). The joint venture company, Emas Offshore Construction Pte Ltd (“Emas”) will have a proposed issued and paid up capital of US$1 million and will be 25% owned by KS Energy and 75% owned by Ezra.

The investment by KS Energy will be funded by internal resources. Emas will be awarding a contract to Labroy Shipbuilding and Engineering Pte Ltd (“Labroy”) for the building of the Vessel at a cost of approximately US$24.7 million, excluding the cost of certain owner furnished equipment.

In addition to pipelay capabilities, the 142-metre long and 40-metre wide Vessel has an 800MT heavy lift mast crane and state of the art DP2 system as well as accommodation facilities for up to 350 personnel. The DP2 system will enable the Vessel to undertake subsea construction work in deep waters in excess of 1,000 metres. The Vessel will support E&P activities in the offshore oil & gas industry.

Under the LOI, KS Energy will supply various equipment and machinery to be installed or utilised on board the Vessel. Ezra will operate the Vessel on behalf of Emas as well as provide the Vessel and Emas with ship management services. The Vessel is estimated to cost approximately US$80 million and delivery is expected in late 2006.

The joint venture is not expected to have a material impact on the Group’s earnings per share for the financial year ending 31 December 2005. None of the directors or substantial shareholders of the Company has any interest, directly or indirectly, in the above transaction.

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