KS Energy Services Wins Rig Upgrade Contract

KS Energy Services has entered into an agreement to provide an upgraded offshore jackup unit to an Asian-based state owned oil & gas group.

The total value of the project is approximately US$42.5 million and the Company will be paid a fee based on the total value of this project. KS Energy also intends to provide supply and procurement services to support the subsequent operations of the unit.

Inclusive of this project, KS Energy has secured seven such rig related projects in the last 19 months. Due to the high capital cost and long lead time of building new rigs, oil and gas companies are turning to upgrade vintage rigs as cost-effective and practical alternatives.

The buoyant oil & gas industry has resulted in stepped up offshore exploration and production activities. The current limited new build capacity is unable to meet the robust demand for offshore rigs. KS Energy has successfully completed the refurbishment of four out of its seven rig related projects secured to-date and the Company will continue to work closely with its clients to provide them with upgraded rigs as customized solutions to meet their operational requirements.

KS Energy is expected to deliver the jack-up unit within the next nine months. The fee will be recognized on completion and if the above project is completed by December 31, 2005, then the transaction is expected to have a positive material impact on the Group's earnings per share for the financial year ending December 31, 2005.

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