Petrolia Drilling Says 2006 Results Positive

Current contract for SS Petrolia (100% owned) started on March 28, 2006 and the rig has performed well during the 4th quarter 2006, and into the 1st quarter of 2007. The existing contract with Apache will be followed by a five-month contract starting in the spring of 2007 at a rate of US $300,000 per day.

DS Deep Venture (50% owned through Venture Drilling AS) will start on an 18 months contract with ExxonMobil in the 1st quarter 2007. The value of the contract is in the range of US$200 - 220 million.

As per Year end 2006, Petrolia Drilling ASA controls approximately 44% of PetroMena AS, building three modern, semi submersible drilling rigs (PetroRig I, II and III) at the Jurong Shipyard in Singapore. The rigs are harsh environment 6th generation units designed for drilling in ultra deep waters in areas such as Brazil, the Gulf of Mexico and West Africa. PetroRig I and II have recently entered into 5 -year contracts with Petrolio Braseliero S.A. with gross values of MUSD 700 and MUSD 645 respectively.

Stronger balance sheet: book value of equity increased in the 4th quarter 2006, as a result of a share capital increase and positive results, to MNOK 1,396. The balance sheet incorporates the 44% ownership in Petromena AS. SS Petrolia has a book value of MNOK 168, which reflects historic cost, including upgrades, adjusted for depreciation. The market value of the rig is believed to be higher.

After the balance date, Petrolia Drilling ASA purchased 25 mill shares in Petrojack, and now control 39,93% of the outstanding shares in Petrojack. The purchase will be incorporated in the accounts as per 1st quarter 2007.

After the balance date, Petrolia Services AS, a 100% owned subsidiary of Petrolia Drilling ASA, purchased 100% of the shares in Independent Oil Tools AS for MNOK 380. The purchase will be incorporated in the accounts as per 1st quarter 2007.

Financial information

The financial data have been prepared in accordance with the International Financial Reporting Standards (IFRS).

SS Petrolia commenced its current contract on March 28, 2006, and has performed well during the 4th quarter.

EBITDA for the 4th quarter 2006 was MNOK 46.8. The operational expenses of MNOK 57.4 mainly relates to OPEX on the SS Petrolia contract. 4th quarter EBIT equaled MNOK 36.8.

The net result for the 4th quarter 2006 was MNOK 37.1, including positive net financial items of MNOK 9.8 and negative result from investments in associated companies (Venture Drilling AS and PetroMena AS) of MNOK 10.2.

EBITDA for the full year 2006 was MNOK 122.1. The expenses consist mainly of reactivation/mobilization of SS Petrolia in the 1st quarter, and OPEX related to SS Petrolia in the last three quarters. EBIT for 2006 equals MNOK 95.1 after deducting depreciation of MNOK 27.

2006 net profit equals MNOK 59.6, including negative net financial items of MNOK (55.4) and negative results from investments in associated companies (Venture Drilling and PetroMena AS) of MNOK (12.0).

As per December 31, 2006 total assets amounted to MNOK 2,179. SS Petrolia has a book value MNOK 168.7, which reflects historic cost, including upgrades, adjusted for depreciation. The market value of the rig in today's market is believed to be higher.

The 43.8% ownership in Petromena AS s booked at a value of NOK 6 per share. The market value of the share as per 31.12.06 was NOK 5. Based on recent newbuilding prices, the Board of Directors of Petrolia Drilling considers the book value of Petromena reasonable.

Petrolia Drilling ASA has during 2006 issued 297,096,056 new shares, including 2,096,056 shares issued in connection with conversion of former convertible bonds. As per 31 December 2006, the total number of shares outstanding in Petrolia Drilling ASA equaled 849,391,998, each with a par value of NOK 0.50.

In 2007, Petrolia Drilling ASA has issued an additional 163,204,747 shares in order to finance the purchase of 25,000,000 Petrojack ASA shares. As per 21 February 2007, the total number of shares outstanding in Petrolia Drilling equals 1.012.596.745, each with a par value of NOK 0.50.

The Market

The semi market has continued to develop positively during the 4th quarter of 2006, with stabile day rates and rig utilization. The utilization for semi's in UK is close to 90%, while the overall utilization is in excess of 95%.

Recent fixtures in the 2nd generation semi market on the UK shelf in the North Sea corresponds to day rates of approximately US $300.000.

The utilization in the deepwater segment, hereunder drillships, is close to 100%. Recent fixtures in the drill ship market correspond to day rates of approximately US $300,000-400,000.

Petrolia Drilling ASA has invested in PetroMena AS in order to increase its exposure to modern deepwater units. Petromena AS has entered into agreements for construction of three modern, semi submersible drilling rigs, at the Jurong-yard in Singapore. The deepwater water rigs are 6th generation units for drilling in ultra deep waters as the Mexico-gulf, Brazil and West Africa. Petrolia Drilling also has exposure to the jack-up market through Petrojack ASA, with two modern units under construction a Jurong.

The company's board is expecting a favorable rig market in the next few years.

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