Oil Tanker Strikes Submerged Ensco Jackup

Ensco International Incorporated has been informed by the U.S. Coast Guard that an oil tanker, the SKS Satilla, apparently struck a submerged object which the U.S. Coast Guard has identified as the sunken hull of the ENSCO 74. The ENSCO 74, a jackup rig, was lost during Hurricane Ike last September. The U.S. Coast Guard has advised Ensco that the oil tanker reportedly suffered damage to its ballast tanks and was listing slightly, but its cargo tanks were not ruptured. ENSCO 74 reportedly is submerged in 115' of water approximately 65 miles south of Galveston.

As reported last September, ENSCO 74, a MLT Super 116-C, was lost and presumed sunk in the aftermath of Hurricane Ike. At the time of the storm, the rig had been located in approximately 230 feet of water 92 miles from shore in South Marsh Island Block 149. ENSCO conducted extensive aerial and sonar reconnaissance following the storm but failed to locate the rig.

Ensco maintains insurance policies for removal of wreckage and debris. Ensco also maintains liability policies which it believes will provide coverage for losses resulting from the incident for which Ensco may have responsibility, including any environmental issues, subject to a $10 million self-insured retention.

Ensco is relying on information primarily from the U.S. Coast Guard regarding the incident and has not had an opportunity to conduct an independent investigation of the facts surrounding the incident.

The U.S. Coast Guard issued a press release on March 8, 2009, which stated as follows:

"GALVESTON, Texas -- Coast Guard Marine Safety Unit Galveston personnel are monitoring lightering operations on the 900-foot tank ship SKS Satilla, 65 miles south of Galveston.

"Lightering operations began today, and weather conditions permitting, operations are scheduled to be complete Tuesday, March 10, 2009.

"The SKS Satilla is currently stable after sustaining damage to a large area along the port side of the ship's hull below the waterline. A remotely operated underwater vehicle contracted by SMIT Salvage retraced the tank ship's course to investigate the cause of the damage.

"The underwater vehicle discovered a submerged mobile offshore drilling unit, the ENSCO 74, in the vicinity of the ship's location prior to the incident. The ENSCO 74 was reported missing after Hurricane Ike. The unit's owner, ENSCO Offshore Company, has been notified. They are planning to place a marker buoy at the location, and salvage the unit as soon as possible.

"'Right now, we are achieving all of our objectives. The vessel remains stable and the crew is safe. No oil has been released into the water. We plan to continue offloading the entire cargo of over 41 million gallons of oil to two tank ships, and then ensure the damaged tanker makes it safely to a shipyard for repairs. The sunken mobile offshore drilling unit that we discovered today will be properly marked with a buoy to prevent additional accidents, and ultimately salvaged,' said Cmdr. James Elliott, commanding officer of MSU Galveston."

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