Standard Drilling Exercises Option for Two Additional Jackups

The Board of Directors of Standard Drilling has decided to exercise its option to build two additional jackup rigs of the Gusto MSC CJ-46-X100D design. The rigs will be built by Singapore-based Labroy Offshore. In total Standard Drilling ASA will have 4 jackups on order with delivery dates in 2008 and 2009.

Standard Drilling has negotiated for an earlier delivery date of rig 3 and rig 4 than originally agreed upon in the option contract signed in March 2006. Rig number 3 is scheduled to be delivered in June 2009, 4 months ahead of the delivery date in the option contract. Rig number 4 is scheduled to be delivered in October 2009, 6 months ahead of the delivery date in the Option contract. The cost of the acceleration of the delivery is US $5 million per rig. Total contract price for rig 3 and 4 is therefore US $153.5 million per rig. Total liquidating damage in the contracts for L203 and L204 is a maximum of US $10 million per rig and the reduction in the contract price per day is structured such that if the rigs are delivered at the original dates in the option contract (delayed by 4 months for rig 3 and 6 months for rig 4), the construction price per rig will be adjusted to the original option contract price of US $148.5 million per rig.

Standard Drilling AS has the following Jackup rigs on order:

L201 Contract price is US $146.5 million, delivery September 2008
L202 Contract price is US $146.5 million, delivery April 2009*
L203 Contract price is US $153.5 million, delivery June 2009
L204 Contract price is US $153.5 million, delivery October 2009
*Standard Drilling ASA and Labroy are in discussion to accelerate the delivery of L202 by about 2 months (from April to February 2009). Currently, there is no final agreement for the accelerated delivery.

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