Smedvig has exercised the Company’s option and entered into an agreement with Keppel FELS in Singapore for the purpose of building a new semi-submersible self-erecting tender rig (semi-tender). Total capital expenditure for the new semi-tender is estimated at USD 105 million, of which Smedvig’s share is approximately USD 33 million. Keppel will build and own the semi-submersible hull, and Smedvig will own the derrick equipment set. Smedvig will be responsible for marketing, management and operation of the unit for a period of ten years. The agreement includes an option for Smedvig to purchase the semi-submersible hull during the ten-year period at a pre-agreed price. The new semi-tender will be based on a similar but improved design and specification as Smedvig’s West Setia. The new unit is targeted for deepwater drilling operations in combination with floating wellhead platforms such as TLPs and Spars in benign waters. The new rig is scheduled for delivery in the fourth quarter 2006.
