Pride Awarded 5-Year Contracts for Deepwater Semisubs in Brazil

Pride International, Inc. announced that it has entered into new five-year charter and service contracts with Petroleo Brasilerio S.A. ("Petrobras") for operation of two recently completed deepwater, dynamically positioned, semi-submersible drilling rigs, the Pride Carlos Walter and the Pride Brazil. Both rigs have been recently constructed in South Korea. The Pride Carlos Walter has been delivered by the shipyard and is currently in transit to Brazil. The Pride Brazil is undergoing final equipment commissioning and testing and is expected to be delivered by the shipyard in mid-February. It is expected that the rigs will be ready to commence operations under the new Petrobras charters in May and June, respectively, of this year. Pride is to receive aggregate revenues of more than $500 million over the five-year term of the new contracts.

In addition, Pride has agreed to purchase the remaining interest in the two rigs in order to increase its ownership to 100%. Pride will purchase the 61.7% interest owned by Maritima Petroleo e Engenharia Ltda. for approximately $85 million, payable in a note convertible into Pride common stock. At the same time, Pride will acquire the 11.9% interest owned by affiliates of First Reserve Corporation for approximately 500,000 shares of common stock pursuant to the existing terms of the agreement governing First Reserve's investment in the joint venture. These two transactions are expected to be completed within the next 30 days. The two rigs have associated financing arrangements for approximately $300 million of the costs to construct the two rigs.

"By entering into new five-year contracts with Petrobras and acquiring the complete ownership of these two rigs, we have finally resolved the most significant issues and uncertainties relating to our Amethyst Project," stated Paul A. Bragg, Pride's President and Chief Executive Officer. "Having recently concluded construction of the rigs and begun transit to Brazil, timing was clearly right for us to take this step. We are pleased with the terms of the new contracts, which will allow us to produce significant incremental returns for our shareholders.

"The transfer of full ownership of the rigs to Pride will allow us the additional opportunity to replace relatively high cost construction debt associated with the rigs with significantly less costly borrowings, as well as to reduce the total amount of debt associated with the rigs. We intend to utilize certain of the funds raised in connection with our zero coupon (21/2% yield) convertible debt offering earlier this month for this purpose. We would, therefore, anticipate that our returns will be enhanced further, when the contemplated refinancing is completed.

"In addition to the significant positive financial impact of these transactions, the strategic implications are important as well. With the arrival in Brazil of the Pride Carlos Walter and the Pride Brazil, we will enhance critical mass and have four semi-submersibles working for Petrobras offshore Brazil. The deepwater basins offshore Brazil are among the largest and most active in the world, and Petrobras is certainly in a leadership role with respect to deepwater drilling and development. We expect operations offshore Brazil to remain important to us for many years."


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