Smedvig Received LOI for the West Alliance

A letter of intent has been issued by Esso Production Malaysia Inc. for an assignment with the semi-tender rig West Alliance. The assignment has a duration of one year with an option for another year. The contract value is estimated at approximately $25 million USD for the firm one-year period.

West Alliance, of which Smedvig has a 28 percent ownership interest, is presently under construction in Singapore. The construction is proceeding according to plan and budget, and delivery is scheduled for late September this year.

The construction of West Alliance is based on a cooperation agreement with Keppel Shipyard in Singapore. Total capital expenditure is estimated at $83 million USD, of which Smedvig's share is approximately $23 million USD. Smedvig has an option to purchase Keppel's interest at a pre-agreed price.

West Alliance is designed for deepwater drilling operations in combination with floating wellhead platforms in benign waters.

Start-up of the contract for West Alliance is anticipated early October this year. The final contract award is subject to approval by the Malaysian authorities.