Petroprod Ltd. to Build CJ70 Jackup

PetroProd Ltd has entered into a contract with Jurong Shipyard for the construction of an enhanced class CJ70 Jackup rig with delivery mid-2010.

The CJ70 jackup is a large, harsh environment drilling rig also capable of hosting production equipment enabling combined and simultaneous drilling and production. The unit will comply with Norwegian sector regulations and will be the largest jackup ever constructed.

Total estimated delivered project cost for the CJ70 Jackup rig amounts to approximately US $560 million including supervision, management and capitalized interest costs. The funding requirements during first half of construction phase will be financed through a US $80 million Equity Private Placement and a new Bond Issue of minimum US $185 million.

The Equity Private Placement is closed at a subscription price of NOK 11.30 per share (42.5m new shares). The Equity Private Placement is conditional upon a new Bond Issue of minimum US $185 million.

PetroProd has identified a number of employment opportunities on the Norwegian sector for a large jackup like the CJ70 capable of providing combined and simultaneous drilling and production. The company expects to be able to secure a long-term drilling and production contract ahead of additional funding requirements.

PetroProd is registered on the OTC list with the ticker code "PROD". Pareto Securities ASA acts as financial advisor in relation to the Equity and Bond private placements.

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