Smedvig's T-7 Awarded A Five-Year Contract

Unocal Thailand Ltd. has today issued a letter of intent to Smedvig Asia Ltd. for the assignment of the self-erecting tender rig T-7. The production drilling assignment has a duration of five years, and the contract value is estimated at approximately USD $75 million. The contract includes an incentive arrangement which could increase the contract value. The proposed contract includes early termination provisions after three years against payment of an early termination fee.

T-7 is currently working under a five year drilling contract for Unocal Thailand until mid December 2000. Thereafter the rig is scheduled for a six month extensive upgrading and classification survey, before it starts up under the new contract early July 2001.

The upgrade represents a major improvement of the T-7 capabilities, and includes widening of the barge, installation of new heavy lift cranes and new derrick for off line activities. The upgrading costs are estimated at approximately USD $15 million.