Eastern Drilling Advises Shareholders not to Accept Seadrill's Share Offer


SeaDrill Ltd yesterday presented a Mandatory Cash Offer of NOK 92 per share in Eastern Drilling ASA (EDRILL or Eastern). The acceptance period is from September 18, 2006 until October 16, 2006. The Offer followed share purchases announced by SeaDrill 8 September 2006 that brought SeaDrill`s ownership stake to 60,43 % of the outstanding number of shares and approximately 53,47% of the fully diluted number of shares.

Pursuant to the Securities Trading Act Section 4- 16, the Board of Directors of EDRILL is required to make a statement regarding the Offer.

The Board of Directors in Eastern Drilling has formed a quorum of board members that are deemed not to have a conflict of interest (The Independent Board).

The Independent Board has retained First Securities ASA (First) and Wikborg Rein (Wikborg) to advise Eastern in connection with the Offer from SeaDrill.

The Independent Board has reviewed a valuation analysis prepared by First as well as evaluating other available valuation materials. The valuation analysis indicates fair values per share in Eastern in excess of the NOK 92 offered by SeaDrill. The Independent Board refers to the Separate Fairness opinion issued by First.

The Board has made the following observations:

--SeaDrill's offered price does not include any takeover premium. Customary market practice would involve a premium typically in the 20-30% range.

--SeaDrill triggered the mandatory offer obligation based on an approximately 40% shareholding. There has been no competition for the control of the company; therefore the market for company control has not been tested. A third party attempting to achieve control in Eastern would likely have had to pay a higher price than SeaDrill.

--NOK 135 per share was offered 5 months ago by Ocean Rig ASA. This corresponds to approximately NOK 119 per share today adjusted for the subsequent equity issue in Eastern.

--On a fully diluted basis 46.53% of the shareholders have not sold to SeaDrill and approximately 71.5% of the Non-SeaDrill shareholders have chosen not to sell at this point in time.

Furthermore, The Independent Board advises the shareholders to consider the future ownership situation of Eastern. Depending on what ownership share SeaDrill ends up holding, the future liquidity in Eastern's share may be negatively affected by SeaDrill's large ownership stake.

The shareholders should also be aware that if SeaDrill acquires shares representing more than 90% if the capital and the votes of EDRILL, there may be a subsequent compulsory acquisition of the remaining shares pursuant to the Public Limited Companies Act Section 4-25. The courts who will determine the price in such compulsory acquisition will not necessarily base their determination on the same price and assessment as described above.

The Offer documents have been approved by the Oslo Stock Exchange. However, EDRILL has requested Oslo Stock Exchange to investigate whether there has been agreements etc. which may influence the offer price of NOK 92 per share under this Offer. The Board has not made any investigation with respect to the Offer's compliance with laws in other jurisdictions.

On this basis the Independent Board recommends the shareholders not to sell at NOK 92 and consequently not to accept the Offer from SeaDrill.

Chief executive officer Arve Andersson holds 10,000 shares in EDRILL through a company controlled by him. He has declared that he will not accept the Offer. The members of the Independent Board own no shares in the company.

Board members Kjell Jacobsen, Alf C. Thorkildsen and Kate Blankenship have not participated in preparing this statement. Andreas Mellbye resigned from the board prior to the Independent board dealing with this matter.