Chiles Offshore Places an Order for a New Ultra-Premium Jackup Rig

Chiles Offshore Inc. of Houston, Texas (Amex: COD) today announced that it has placed an order to build an ultra-premium jackup rig of the KFELS Mod V "B" design at AMFELS shipyard in Brownsville, Texas.

The new rig is currently estimated to cost approximately $110 million to complete, exclusive of interest and other capitalized costs, and will be financed through equity raised in the Company's recent initial public offering of common stock and debt financing raised under a US Maritime Administration ("Marad") guarantee. The Company has received a commitment letter from Marad, which allows up to $81 million of construction and term financing for the new rig. Additionally, the commitment letter allows the Company to raise an additional $83 million in debt financing, should the Company exercise its option to order a second ultra-premium jackup rig from AMFELS within twelve months.

The Company also announced that its Board of Directors has been expanded to include three new members: Mr. Patricio Alvarez Morphy, Mr. Luis Alvarez Morphy, and Mr. Allan Locker.

Mr. William Chiles, Chief Executive Officer of the Company, commented: "We are very pleased to be able to further develop our company through the placement of this new rig order with AMFELS shipyard. This new ultra-premium jackup rig will be a sister rig to the ultra-premium jackup rig we have under construction in Singapore at Keppel FELS Limited and it will be conservatively financed with Marad financing. This order also provides us with an opportunity to extend our relationship with AMFELS shipyard which successfully delivered our first two ultra-premium jackup rigs in 1999."

Chiles Offshore Inc. is a provider of contract drilling services to the worldwide offshore oil and gas industry. The Company currently operates a fleet of three ultra-premium jackup rigs in the Gulf of Mexico, all of which have been delivered since June 1999. The Company is presently building its fourth and fifth ultra-premium jackup rigs in Singapore and Brownsville, Texas, respectively. These rigs are expected to be delivered in the 2nd and 3rd quarters of 2002. For further information, please contact Dick Fagerstal, Senior Vice President and Chief Financial Officer at (212) 621-9283 or (713) 339-3777 or via e-mail at: and/or visit our website at

This release includes "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Statements herein that describe the company's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements, including risks associated with the timely construction of new rigs in accordance with budget and obtaining final financing under the Marad guarantee. We urge you to carefully consider the more detailed discussion of these risks and uncertainties under the heading "Forward-Looking Statements" in the company's Amendment No. 4 to Registration Statement on Form S-1. The forward-looking statements included in this release are made only as of the date of this release and the company undertakes no obligation to publicly update the forward-looking statements to reflect subsequent events or circumstances.