Aker Drilling to increase operations in growth markets

Aker Drilling intensifies its operations in strong growth markets, enters intoLetter of Intent for the building of two drillships with options for additionaltwo ships, aims to secure new capital and applies for listing on Oslo StockExchange - with Aker as minority shareholder in an independent drilling companywith an offensive strategy.

- Aker Drilling expands its activities in deep water operations. These aregrowing offshore markets characterised by an increasing demand for drillingunits with well-known, advanced technology.  Aker Drilling ASA aims to secure upto USD 600 million in equity through an initial public offering (IPO). Thecompany has applied for listing on Oslo Stock Exchange, says president and CEOØyvind Eriksen in Aker ASA.

A Letter of Intent (LOI) has been signed with Daewoo Shipbuilding & MarineEngineering Co. Ltd (DSME) for the delivery of two advanced ultra-deepwaterdrillships, and the option for delivery of two additional drillships. The priceper ship, including spare parts, drilling equipment, construction follow up, andactivities up to "ready to drill" is estimated at USD 600 million.

- Aker Drilling has a first class operational organisation and two harshenvironment rigs equipped for deepwater drilling with stable operations on theNorwegian Continental Shelf. The LOI for the two drillships provides us with theopportunity to participate in interesting growth areas for drilling operationsin ultra-deep waters in areas such as Brazil, the Gulf of Mexico and WesternAfrica. The company has already commenced the work to establish an experiencedconstruction follow-up team at the yard and an international, competentoperational organisation, says Eriksen.

Strong growth in demandAker Drilling currently has 440 employees, and the company has a position in themarket for drilling operations in areas with deep water and harsh environments.The deepwater market is the fastest growing of all offshore markets, but due totechnological, operational and experience issues, it also has the highestbarriers to entry for new competitors.

Half of the global oil and gas discoveries are made in ultradeep waters,according to Infield. In 2015, 13 per cent of the offshore production will comefrom ultradeep oil fields, compared to 3.5 per cent in 2010. The rig marketparticipants agree that future exploration will increase in deep waters andharsh environments. In the coming years, this will lead to an increase in demandfor advanced drilling units with well-known technologies.

Aker Drilling will focus its activities in deep water and harsh environments.The drillships will be valuable additions to the company's fleet, and thetechnology used in ultra-deep areas is known and efficient. DSME has built - andwill build - several ships of this type. The project execution risk for deliveryon schedule and budget is deemed low.

Efficient operations and solid order backlogThe company's two rigs, Aker Barents and Aker Spitsbergen, currently generate asignificant cash flow from stable operations. In operation, the two rigs have anEBITDA margin of approximately 60 per cent. The rigs are on long term leases,and their total order backlog at the end of 2010 was approximately USD 1.2billion.

- Aker Drilling has a solid cash flow and a strong dividend capacity, statesEriksen.

The two rigs have delivered a positive development with stable and safeoperations throughout 2010 and the beginning of 2011. In the fourth quarter of2010, Aker Barents and Aker Spitsbergen had a total paid uptime of more than 95per cent.

Letter of Intent with DSMEAker Drilling Offshore Services Public Ltd in Cyprus, a wholly owned subsidiaryof Aker Drilling ASA, has signed the LOI with DSME in South Korea for thedelivery of the two drillships in the fourth quarter of 2013. 25 per cent of thecontract value is due at the signing of the final contract agreement at the endof February 2011, and 75 per cent will be paid on delivery.

The options with DSME give Aker Drilling the right to have the third and fourthdrillships delivered in the second quarter of 2014 and the first quarter of2015 respectively.

The ships can drill wells up to 12000 metres deep, at water depths of up to3600 metres.

- With our two existing rigs and the new drillships we will have state-of-the-art units for safe, efficient and environmentally sound operations. AkerDrilling has a very competent operational organisation for the NorwegianContinental Shelf. This team will continue its work with focus on first class,safe operations for our Norwegian clients, while we are about to establish anequally professional organisation for international markets, built on thecapabilities of our Norwegian operations team. This provides us with a solidfoundation for further profitable growth, says CEO Geir Sjøberg in AkerDrilling.

Share issue of up to USD 600 millionAker Drilling intends to carry out a share issue of up to USD 600 million inFebruary 2011 through an IPO. The planned subscription period is expected tocommence on 7 February 2011, and close on 18 February 2011.

Institutional and private investors will be invited to invest in the drillingcompany. Aker will retain a strong position, but will reduce its ownership toless than 50 per cent, in order to enable the new Aker Drilling to develop as anindependent company listed on Oslo Stock Exchange with a liquid trade of theshares. Aker will thus become a minority shareholder, and this will also bereflected in the new board, which will have a majority of members elected by theshareholders who are independent from Aker.

In connection with the financing of the new drillships and the IPO, AkerDrilling will carry out refinancing of the company. Aker Drilling is currentlyin discussions with a bank syndicate in order to  increase the drillingcompany's bank loans from USD 605 million to USD 900 million. The increase ofUSD 295 million will be used to repay debt to Aker ASA. Furthermore, the companyaims to replace its 3 year NOK 1.5 billion bond loan with a longer-term bondloan at the same value, but without the guarantee from Aker ASA. The refinancingis in accordance with previously announced plans to further develop Aker's roleas equity investor and make Aker Drilling an independent company without anyother financial commitments to its largest owner.

For further information, please contact:Trond Brandsrud, CFO, Aker ASA, e-mail trond.brandsrud@akerasa.com,  tel.+47 90 11 46 63.Geir Sjøberg, CEO, Aker Drilling, e-mailgsjoberg@akerdrill.com, tel.+47 90 78 30 83.

This information is subject of the disclosure requirements acc. to §5-12 vphl(Norwegian Securities Trading Act)

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Aker ASA via Thomson Reuters ONE