Smedvig Rigs Receive Long Term Contracts

A letter of intent for development drilling on the Norwegian continental shelf has been awarded to Smedvig by Norsk Hydro for the assignment of the semi-submersible drilling rig West Delta. In addition, Norsk Hydro has awarded an extension of the existing drilling contract for the semi-submersible drilling rig West Vanguard.

The new drilling assignment for West Delta has a duration of two years and the estimated contract value is approximately USD 110 million. The assignment will include development drilling on fields operated by Norsk Hydro.

The West Delta is currently operating for Norsk Hydro in the Tampen area and is scheduled to complete the present drilling assignment within mid year 2001. Following a five to six week yard-stay for regular classification survey, commencement under the new contract is anticipated in the third quarter 2001. Norsk Hydro has the right to cancel the second year of the contract should Norsk Hydro's Plan for Development and Operations for one of the field developments not be approved by Norwegian authorities.

The extension of the drilling assignment for West Vanguard has a duration of 19 months in direct continuation of the existing drilling contract until the end of December 2002. The contract value is estimated at approximately USD 70 million. Norsk Hydro has an option to extend the contract for another five years.

The contracts are subject to approval by Norsk Hydro's license partners.

The foundation for today's agreements between Smedvig and Norsk Hydro dates back to 1996/97 when the extensive long-term agreement for West Delta and West Vanguard was signed, as well as the initiation of the development and construction of the dual drilling fifth generation semi-submersible rig West Venture. Today Smedvig is Norsk Hydro's main drilling contractor providing approximately 50 percent of the oil company's drilling capacity on the Norwegian continental shelf.

"The new contracts reinforce our long-term relationship with Norsk Hydro. Together, the new contract for West Delta and the contract extension for West Vanguard, rank among the largest drilling contracts the company has ever secured and will provide a significant cash flow over the next two years, says Kjell Jacobsen, Managing Director of Smedvig Offshore.