Thule Drilling: Attempts to Reach Agreement with QGM Group Unsuccessful

On August 2, 2007, Thule Drilling ASA received a letter from QGM Group LLC in which it is stated that it is "completely out of funds" and that the yard will close down permanently. Thule has made several attempts both before and after receiving this letter to settle the matter amicably, regretfully without success.

Thule Drilling ASA has been informed that QGM Group LLC's vendors and subcontractors have filed "writs" against QGM Group LLC. As QGM Group LLC has admitted to be "completely out of funds" bankruptcy proceedings may be initiated by said vendors and subcontractors. As the registered titles to Thule Power, Thule Energy and Thule Force are vested with Thule Drilling ASA, our ownership to the rigs will not be affected by a bankruptcy. In the event of a bankruptcy, Thule Drilling ASA will immediately initiate negotiations with the bankruptcy estate. The first priority will be to secure completion and delivery of Thule Power.

Thule Drilling ASA has emphasized its contractual right to take control over the rigs and complete the rigs with the present workforce, material and equipment of QGM Group LLC's yard, but is still denied access to the yard and the rigs by QGM Group LLC.

Legal proceedings are continuing at the Court of Urgent Matters in the United Arab Emirates (UAE). As injunctive relief is not available under local law, these proceedings are not expected to be finalized in the immediate future. Thule has also filed three separate criminal charges in the UAE against certain senior management members of QGM Group LLC among others in connection with actions carried out by said individuals that Thule Drilling ASA considers to be fraudulent with the obvious intent to deny Thule Drilling ASA its rightful access and control over its assets at the QGM yard. These cases are currently under investigation by UAE authorities. Thule Drilling ASA has also initiated dispute resolution under the construction contracts by serving QGM Group LLC a notice of dispute, which has triggered a mandatory negotiation period before arbitration can commence. In addition to the legal proceedings, Thule Drilling ASA is also working to resolve the matter by assistance of the top management level of various administrative bodies in the UAE and through diplomatic channels. Thule Drilling ASA is also working with the Director General of the Hamriyah Freezone Authority, who supports a speedy resolution of the matter and is endeavoring to achieve that. Thule Drilling ASA is confident that justice will prevail and that the dispute will be resolved in its favor.

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