Prosafe Loses Contracts for Gullfaks, Snorre & Heidrun

Prosafe Drilling Services has received a notification from Statoil that the company has lost the current drilling contracts on respectively Gullfaks A, B and C, Snorre A and B and Heidrun. The loss of the contracts will take effect as from October 1, 2004, and gradually through the fourth quarter of 2004.

For Prosafe Drilling Services this will imply a significant reduction in the number of employees, and a reduction in the annual turnover of about NOK 600 mill as from 2005. The effect on the operating result for the current year is estimated to be limited to NOK 15-20 million.

After the loss of these contracts, Prosafe Drilling Services will have a market share of about 30% in the market for platform drilling on the Norwegian Continental Shelf.

Prosafe will immediately initiate cost reducing efforts in Prosafe Drilling Services to secure the best possible profitability for the business unit.

Prosafe will after the loss of these contracts have drilling contracts on Kvitebjørn for Statoil, Ringhorne/Jotun B for Esso, and on Oseberg B, Oseberg C, Oseberg East, Oseberg South, Brage and Njord for Norsk Hydro. In addition, the company will start operations for Paladin Resources on the UK Continental Shelf with the lightweight rig Rubicon this autumn.

The drilling company's strategy hereafter will be a continued priority on safe and cost efficient operations of the remaining contract portfolio, and in addition focus on competence and equipment for the industry's focus on increased oil recovery from fields that are already in production.

For the Prosafe group the order backlog is strong and the market outlook is positive. 2004 will show a considerable improve in the result compared to 2003, and correspondingly solid profitability is expected in the coming years.