Atwood Oceanics to Build New LeTourneau Jackup

Atwood Oceanics' wholly owned subsidiary, Atwood Oceanics Pacific Limited ("AOPL"), has executed a letter of intent with Keppel AmFELS, Inc. for the construction of a mobile self-elevating LeTourneau SUPER 116 Jackup. In conjunction therewith, AOPL has also secured an option to purchase from LeTourneau, Inc. a SUPER 116 KIT and license which will be required for the construction of the new rig. At this time, AOPL retains the right to enhance the "base" SUPER 116 design to possibly the "enhanced" version of SUPER 116. Enhancements which are under consideration include, but are not limited to, increasing the cantilever capability, quarters capacity, variable deck load and mud system and tanks capacities. If constructed, the new rig will be an ultra-premium class jack-up, suited for operations throughout most of the world.

The new rig would be constructed at the Keppel AmFELS yard in Brownsville, Texas, and delivery is expected to occur no later than September 30, 2008. AOPL estimates the total cost of construction (including administrative and overhead costs and capitalized interest) would be between $150 million to $160 million, depending upon the possible enhancements, and subject to any additional modifications which would be addressed via change orders. The new rig will be financed from expected cash on hand balances and, if necessary, through the use of existing sources of credit.

The construction of the new rig is subject to execution of customary definitive agreements with Keppel AmFELS and LeTourneau. The new rig is not presently under contract and upon delivery, becomes the ninth mobile offshore drilling unit owned by Atwood Oceanics, Inc. and its subsidiaries.