SCAN Signs Sale, Lease-back Deal with Ship Finance International

SCAN Geophysical ASA has agreed to sell its three new building high-capacity 3D vessels, including complete seismic equipment, to Ship Finance International Limited based on a total price of US$210 million, or US$70 million per vessel. The agreement includes a lease-back over 12 years with purchase options after 6, 10 and 12 years.

The vessels are purpose-built at the ABG Shipyard in India and specifically designed for efficient 3D seismic acquisition with high streamer capacity of 10 tow points and streamer lengths of up to 10 km (applies for up to 8 streamers), corresponding to a total capacity of 80 km streamers. The largest known streamer tow in the seismic industry to date has been 72 km streamers.

SCAN is listed on the Norwegian OTC list and is expected to be listed on the Oslo Stock Exchange during first half of 2007. Ship Finance is a major international shipping company listed on the New York Stock Exchange, with a market capitalization of approx. US$2 billion. The company owns a fleet of 60 vessels, including crude oil, OBOs, container vessels, dry bulk carriers and two jack-up drilling rigs.

"We are very pleased to team up with Ship Finance for our core seismic vessel fleet, as their total fleet is one of the largest in the world," commented Lars Johan Frigstad, President and CEO of SCAN. "The seismic market is currently very healthy and we see promising outlook for the three state of the art vessels in the years to come."

Upon delivery from the shipyard, the vessels will begin 12-year bareboat contracts to SCAN, and the charter rate per vessel, including the seismic equipment (8 x 6 km streamers), is agreed to be approximately:

--Year 1-3: US$26,500 per day
--Year 4-6: US$24,500 per day
--Year 7-12: US$10,000 per day

SCAN has been granted fixed price purchase options for each of the vessels after 6, 10 and 12 years at approximately US$20 million, US$14 million and US$9 million, respectively.

Following a complete evaluation of consequences from the previously announced flood in 2006, the revised delivery dates are scheduled from the yard to be the end of January, April and July 2008. Ship Finance will replace SCAN's existing guarantees of US$48.9 million towards ABG Shipyard, or US$16.3 million per vessel. The sale lease back transaction is supported by a non-interest bearing seller's credit of approx. US$20 million per vessel from SCAN, which is amortized (non-cash) over 6 years.

SCAN Geophysical ASA was established in 2002 as a Norwegian seismic data acquisition company specializing in both marine streamer seismic and ocean bottom seismic. The company is currently operating one 2D and one 3D vessel, and will soon launch one 2002 built 3D 3 streamer vessel and three new building state-of-the-art 3D 8-10 streamer vessels. Administration is located in Oslo, with representatives in Moscow, Houston, Singapore and Caracas. SCAN Geophysical ASA is listed on the Norwegian OTC list and expects a listing on the Oslo Stock Exchange during 2007.

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