Smedvig to Purchase Remaining Interest in West Alliance

Smedvig has informed Keppel Shipyards in Singapore of its intention to exercise the Company's option to purchase the shipyard's 72 percent ownership interest in the semi-submersible tender rig West Alliance, under construction. Smedvig intends to exercise the option after delivery and after commencement of operations under the contract with Esso Malaysia. Start-up of the drilling operations is scheduled for early November this year. The agreed purchase price is approximately USD 61.5 million.

Smedvig's option to purchase Keppel Shipyard's ownership interest is part of the cooperation agreement that the two parties entered into last summer. Following the exercise of the option, Smedvig will own 100 percent of the West Alliance. The purchase will increase Smedvig's total capital expenditure on the rig to approximately USD 85 million.

The construction of the West Alliance is proceeding according to plan and budget. The unit is based on a design and specification similar to that of Smedvig's newest semi-tender West Menang, but is improved to accommodate for increased deckload capacity, larger accommodation facilities and off-line drilling activities. Capable of shallow water drilling, the unit is also designed for deepwater drilling operations in combination with floating wellhead platforms in benign waters.

The recently secured contract for the West Alliance is for a firm period of one year plus one optional year.