Northern Offshore Backs Out of North Sea Rigs Purchase

Northern Offshore, Ltd.

Northern Offshore announced that it had advised Transocean that two wholly owned subsidiaries of Northern Offshore are terminating their previously announced agreements to acquire two North Sea semisubmersible drilling rigs --the GSF Arctic II and GSF Arctic IV-- from affiliates of Transocean, Inc.

The acquisition of these rigs by Northern Offshore affiliates is contingent upon its ability to obtain Northern Offshore's lender consents to the acquisition and related financing. Northern Offshore has been unable to obtain the consent of its lenders on terms acceptable to Northern Offshore and has advised Transocean of this development.

While Northern Offshore and Transocean continue to discuss alternative structures which could result in Northern Offshore's acquisition of one or both of these rigs, there is no assurance that these discussions will lead to an agreement which will permit Northern Offshore to acquire these rigs on acceptable terms.

Marion Woolie, Northern Offshore President and CEO, said, "We are extremely disappointed that Northern Offshore affiliates will not be able to conclude this acquisition given the recent uncertainties in the global credit markets and the addition of the related financial obligations for these two semisubmersible rigs."