Scorpion Offshore Inks Deal with QGP to Build New Semisub

Scorpion Offshore has entered a cooperation agreement with Queiroz Galvao Perfuracioes, S.A. ("QGP"), a Brazilian drilling company, whereby the two parties agree to work together to pursue certain deep water drilling opportunities with Petrobras in Brazil.

QGP has been awarded a five-year drilling contract by Petrobras. The Scorpion/QGP venture will be responsible for constructing a 2400 meter water depth capable dynamically-positioned semisubmersible. The contract is expected to start around mid-2009 after shipyard construction, sea trials, mobilization to Brazil and customer acceptance. The Company and QGP are in the process of forming a jointly-owned and managed company to perform the Petrobras drilling contract and to construct, own and operate the DP semisubmersible rig.

The Company anticipates that the DP semisubmersible can be constructed for an all-in cost between $460 and $500 million, including financing and start-up costs. The five-year drilling contract will generate gross revenue of approximately $650 million, including mobilization.

Scorpion Offshore Ltd. is a Bermuda based corporation founded in 2005 to own and operate state-of-the-art offshore drilling rigs.

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