Siem Signs Deal with Singa Star for Two AHTS Vessels

Siem Offshore has entered into an agreement for a long-term cooperation with the unrelated Singapore-based private company, Singa Star.

The initial elements for this long-term cooperation are as follows:

Siem Offshore exercises the option for 2 additional large anchor-handing tug supply vessels and transfers the shipbuilding contracts for such vessels to Singa Star. Singa Star grants an option for Siem Offshore to buy back the last of the two shipbuilding contracts Establishment of a pool for the 10 anchor-handling tug supply vessels under construction for Siem Offshore and the 2 additional vessels Siem Offshore to become the commercial manager of the pool and also to conduct the shipbuilding supervision and the technical management of the two additional vessels Singa Star to become a 11.82% shareholder in Siem Offshore.

Further Details:

The Board of Siem Offshore Inc has today decided to exercise its option to enter into construction contracts for 2 additional large anchor-handling tug supply vessels at the Kleven Verft AS (the "Yard"). The contract value is approximately NOK 1.1 billion, and the Vessels are scheduled for delivery in the fourth quarter 2010.

The Company and Singa Star have agreed to enter into a long-term cooperation whereby the first step will be for Singa Star to acquire the two Contracts from the Company based on the Contract Values. Siem Offshore shall conduct the shipbuilding supervision and be the technical manager for the Vessels. The Company and Singa Star have also agreed that the Vessels shall be included in a pool together with ten similar vessels currently under construction for Siem Offshore and that Siem Offshore shall be the commercial manager of the pool.

Siem Offshore has an option to buy back the second of the two Contracts based on the Contract Value with logical adjustments for interests and additional out-of-pocket expenses incurred by Singa Star in respect of the Contract.

The above decisions are in line with the Company's intention to become a major owner and operator in the segment for large anchor-handling tug supply vessels (AHTS vessels). Following the exercise of the options with the Yard and the transaction with Singa Star, the Company has the commercial control of 12 similar AHTS vessels under construction.

The vessels are of Vik-Sandvik VS 491 CD design and will have 28,000 BHP, a bollard pull of 300 tons, winch of 500 tons, accommodation for 60 persons, full PSV capacities and are designed with special focus on safe anchor-handling operations. The engine configuration will enable both diesel mechanical and diesel electric propulsion, which, in combination with the hull design, will represent efficient fuel consumption and reduced emission.

Singa Star has agreed to subscribe for 30,000,000 new shares to be issued by the Company following the publication of a prospectus later this year. Singa Star will thereafter hold 11.82% of the outstanding Company shares. The subscription price is NOK 18.12 per share, equivalent to gross proceeds of NOK 543,600,000. The subscription price is determined as the weighted average trading price of the Company's shares at the Oslo Stock Exchange during 26 October and 29 October.

The New Shares will be issued after a prospectus is prepared by the Company and approved by the Oslo Stock Exchange. It is expected that the New Shares will be issued in early December 2007 and the equity base of the Company will increase from 223,891,866 ordinary shares to 253,891,866 ordinary shares, each with a nominal value of USD 0.01.

The proceeds from the share issue will strengthen the capital base of the Company and will be used to finance the fleet of vessels currently under construction.

Singa Star is an unrelated privately-owned company involved in the ownership and operation of various types of vessels within the global shipping industry.