Petrojack Releases First Quarter Preliminary Results

Petrojack was incorporated on October 4, 2004 by Larsen Oil & Gas AS. Larsen Oil & Gas AS is engaged as manager for Petrojack ASA.

Petrojack has entered into EPC contracts with Jurong Shipyard for the construction of three jackups. The jackups have an operating water depth capacity of 375 feet and drilling depth capacity of approximately 30,000 feet.

The rig price for the first jackup is US $125.3 million. The Contract Price including PC-sum and financing during the construction period amounts to US $133.6 million. Development Bank of Singapore (DBS Bank) has provided Petrojack with a loan facility of up to US $106.0 million (but subject to a maximum of 80 percent of the rig price plus certain other defined costs) for the construction of the jackup. Delivery date is on or before March 15, 2007.

The rig price for the second jack-up rig is US $127.1 million (US $139.9 million including PC-sum and financing) with 80% yard financing during the construction period. Delivery date is on or before January 15, 2008.

The rig price for the third jackup is US $131.2 million (US $144.2 million including PC-sum and financing) with 80% yard financing during the construction period. Delivery date is on or before July 2008.

Petrojack has initiated certain minor improvements of all three rigs (automatic pipehandling and other minor variation work) amounting to approximately US $3 million per rig. No further major upgrades are foreseen.

During the first quarter of 2006 Petrojack has received several offers for purchase of the rigs. All offers are in the region US $200 million per unit.

Construction progress
There have been no significant lost time accidents, and the construction processes are developing according to schedule and on budget.

Financial information
The financial data have been prepared in accordance with the International Financial Reporting Standards (IFRS). No material revenues are expected before delivery of the rigs.

Operating loss for the first quarter 2006 came to MNOK (9.7). The expenses consist mainly of costs related to the management of the company, hereunder project management costs. Net financial items came at MNOK (8.6), as a result of currency losses. The net result for the 1st quarter of 2006 was equal to MNOK (18.3).

As per March 31, 2006 total assets amounted to MNOK 500.6, of which MNOK 455.7 was related to capitalization of construction in progress of the jackup units. Initial project costs and project management costs related to the project management agreements are included in the capitalized amounts.

Petrojack carried out a private placement of 4,300,000 new shares at a subscription price of NOK 24.50 per share in the 1st quarter to finance the construction program.

Petrojack has no outstanding or authorized stock options, warrants or convertible debt.

The share capital is NOK 324.875.000. The number of shares is 64.975.000.

Recent events
In a stock exchange notice on May 5, 2006, Independent Oil Tools ASA, Petrojack's largest shareholder, stated that "the board of directors of IOT ASA has in a board meeting decided not to vote in favor of a sale of all three rigs as described in a stock exchange announcement from Petrojack ASA on April 4, 2006, when and if the general meeting is invited to approve the sale".

The jackup market has continued to develop positively, with improving day rates and rig utilization. The utilization for modern jackups is close to 100%, and the day-rates for high specification jackups are in the US $180,000 - $200,000 range.

The average age of the global jack-up fleet is approximately 23 years. There are currently approximately 61 jackups under construction, including options, corresponding to approximately 15% of the global jackup fleet. In spite of the significant newbuilding activity, the expected medium-term demand for modern rigs is expected to remain strong. Petrojack's jackups will be delivered in 2007 and 2008.