Chiles Offshore Announces First Quarter Results

For the quarter ended March 31, 2002, the Company reported net income of $4.1 million or $0.20 per diluted share after an extraordinary loss of $0.02 per diluted share, compared to net income of $5.3 million or $0.30 per diluted share reported for the corresponding quarter ended March 31, 2001. Revenue for the quarter ended March 31, 2002, was $19.8 million compared to revenue of $19.2 million for the corresponding quarter ended March 31, 2001.

The extraordinary loss incurred in the quarter ended March 31, 2002, resulted from the Company's decision to cancel an $82 million credit facility established to partially finance the construction of the Chiles Discovery. The Company never drew on the facility.

For the quarter ended March 31, 2002, the Company recorded zero other income consisting of other income of approximately $1.1 million, or $0.05 per diluted share, related to economic hedges regarding the anticipated future issuance of long-term debt, all of which was unrealized, and a loss of approximately $1.1 million, or $0.05 per diluted share, related to short positions in natural gas futures contracts, of which $0.3 million represented cash received from realized positions offset by $1.4 million in losses on unrealized positions. For the corresponding quarter ended March 31, 2001, the Company reported no other income.

For the quarter ended March 31, 2002, the rig fleet operated at 100% utilization and generated an average dayrate of $69,662 as compared to 100% utilization and an average dayrate of $68,926, for the corresponding quarter ended March 31, 2001.

In February 2002, the Company took scheduled delivery of its newest ultra-premium jackup rig, the Chiles Discovery, from the Keppel FELS shipyard in Singapore. The Chiles Discovery, which is a KFELS Mod V "B" design, has completed final commissioning and is currently expected to commence operations before the end of May 2002 under a 600-800 day contract with an affiliate of Phillips in the East Timor Sea located between East Timor and Australia.

Beginning with the quarter ended March 31, 2002, the Company presents its reported operating revenue and expense in two separate categories. "Contract revenue" refers to the revenue generated directly by the dayrates earned under its drilling contracts while "reimbursable revenue" refers to revenue related to pass-through operating costs, incurred from time to time, on behalf of customers. "Operating expense" refers to the direct operating costs incurred to operate the rigs and "reimbursable expense" refers to the offsetting costs of the reimbursable revenue. The Company has, furthermore, decided to provide additional financial and operational information in the "Supplementary Comparative Financial and Operational Data" section of the earnings release.

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