Ocean Rig: Strong Increase in Expected Cash Flow from mid 2006

Ocean Rig's 4th Quarter EBITDA was $ 23.2 million, unchanged from the 3rd Quarter. Ocean Rig has experienced a stable operation under the current contracts and will see strong increase in cash flow from mid 2006, when both rigs will commence work under new contracts at significantly higher day rates.

The net result for the 4th Quarter amounted to $ 56.3 million ($ -24.8 million), corresponding to earnings per share of $ 0.63 ($ -0.33), and diluted earnings per share of $ 0.60 ($ -0.33). The operating result for the 4th Quarter amounted to $ 71.9 million ($ -0.5 million) and EBITDA was $ 23.2 million ($ 10.9 million). Adjusted for $ 0.7 million of expenses related to employee and Board member options, EBITDA was $ 23.9 million.

The operating result was affected by $ 60.4 million increase in the book value of the drilling rig Eirik Raude according to the IFRS accounting standard.

Main events:

  • On October 21, 2005, the company signed a two-year firm contract (plus a one-year option) with Shell for Leiv Eiriksson for exploration drilling in the UK, Irish and Norwegian sectors, with estimated contract value of $ 340 - 350 million ($ 535 - 545 million if the option is declared).
  • Total estimated backlog at the year end 2005 is approximately $ 860 million ($ 1,055million including the Shell option).
  • On December 29, 2005, the company announced a capital repayment program.
  • On January 4, 2006, employees and members of the board exercised all outstanding options for a total of 5,337,500 shares.

The Executive Chairman, Geir Aune said: "We now see increasing confidence within the oil service industry, in the long term strength of the market. This will result in continuing high day rate levels and increased merger and acquisition activity."

The Board also announces that Christian Mowinckel will resign as Interim Managing Director and SVP Finance with effect from 28th February 2006. He resigns for personal reasons and the Board would like to thank him for his contribution to the Company. The company has started a process to appoint a new CEO.

Ocean Rig owns and operates two of the world's largest and most modern drilling rigs, built for ultra deep waters and extreme weather conditions. The units are currently operating offshore Congo and Norway.

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