Scorpion Offshore Sees Loss in 3Q07

Scorpion began its contract with Cairn in India effective September 15, 2007. The Offshore Defender was delivered on schedule at the end of October and is currently preparing for its contract with Petrobras. The Company also has four rigs under construction and one on contract.

Net loss for the third quarter of 2007 totaled US $7.8 million compared to a net loss of US $0.8 million for the same period in 2006. Contract drilling revenue, including mobilization revenue of US $0.9 million, totaled US $5.1 million for the quarter. Excluding mobilization and equity placement fees, operating profit for the quarter totaled US $86,000. The Company expensed US $6.0 million in mobilization expenses and US $1.4 million in equity placement fees during the quarter. No mobilization costs or equity placement fees were incurred during the first quarter of 2006. All interest costs for the quarter were capitalized.

Total assets as of September 30, 2007 were US $663 million. This consists of US $19 million in cash and cash equivalents, US $9 million of which is restricted, fixed assets of US $142 million and US $470 million in construction in progress. Long-term debt totaled US $303 million and shareholder's equity US $301 million.

As of June 30, 2007 total assets were US $585 million. This consisted of US $29 million in cash and cash equivalents (US $16 million of which is restricted) and fixed assets of US $142 million and US $398 million in construction in progress. Long-term debt totaled US $291 million and shareholder's equity of US $252 million. Rig Construction The Offshore Defender was delivered on schedule at the end of October 2007. The Offshore Resolute, Offshore Vigilant and Offshore Intrepid are all currently under construction at the Keppel AmFELS shipyard in Brownsville, Texas and will be delivered progressively in 2008. The Offshore Freedom is under construction at Lamprell in Dubai and will be delivered in early 2009. Construction on the Offshore Freedom started in October 2007.

Offshore Courageous Contract Signed

Scorpion International Ltd signed its contract with RAK Petroleum Oman Limited for operations offshore Oman. The contract will begin after the Offshore Courageous completes its program with Cairn in India. The contract has a firm duration of 200 days and an estimated value of US $41 million, including US $3 million in mobilization and demobilization fees.

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