Smedvig Reports 2nd Quarter Results

Smedvig reported consolidated operating profit for the second quarter of NOK 152 million as compared to NOK 161 million in the previous quarter. The decline primarily reflects the appreciation of the Norwegian kroner against the US dollar, reducing the contribution from the tender rigs division. Operating profit for the first half year was NOK 313 million as compared to NOK 492 million for the same period in 2001.

Net financial expenses for the second quarter was NOK 40 million as compared to net financial expenses of NOK 9 million in the preceding quarter. The increase was mainly due to higher interest expenses as a result of losses on interest rate swap agreements.

Net income for the second quarter was NOK 98 million as compared to NOK 129 million in the first quarter. Net income for the first half of the year was NOK 227 million.

Earnings per share were NOK 1.19 for the second quarter. Cash flow for the quarter amounted to NOK 255 million. Cash flow per share was NOK 3.11.

Operating profit from the Mobile Units Division amounted to NOK 25 million, slightly up from NOK 23 million in previous quarter. The utilization rate for the mobile units averaged approximately 71 percent as compared to 70 percent in the preceding quarter.

Operating profit from the Tender Rigs Division amounted to NOK 113 million as compared to NOK 124 million in the previous quarter. The result reflects the appreciation of the Norwegian kroner against the US dollar. The operations of all units proceeded satisfactorily, and the utilization rate was 100 percent, in line with the preceding quarter.

Operating profit from the Platform Drilling Division amounted to NOK 16 million, in line with the result from the first quarter. The operations in the platform drilling division proceeded satisfactorily during the quarter.

In the Balder litigation, the Stavanger City Court has informed the parties that a ruling most likely will be announced mid 2003, previously expected in the fourth quarter 2002.

At the end of the second quarter, Smedvig has a backlog of drilling contracts averaging 10 months for its mobile units and 26 months for its tender rigs. This sound contract situation is expected to provide a reasonable cash flow maintaining the strength of the Company's financial position.

The third quarter is expected to be significantly impacted by the assumed lower US$ exchange rate, the current Norwegian offshore labor dispute, costs related to yard-stay and idle time between contracts for a few mobile units, reducing the operating profit to some NOK 25 - 50 million.

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