YARD SELECTION FOR UPGRADE OF BLACKFORD DOLPHIN

A wholly owned subsidiary of Fred. Olsen Energy
ASA has entered into a contract with Keppel FELS
in Singapore at a contract value of USD 177
million for the previously announced deepwater
upgrade of the semi submersible drilling rig
Blackford Dolphin. The drilling unit will be
able to operate in up to 7000 ft. water depth
with a new high capacity drilling package and an
innovative deck layout. The yard work will be
undertaken jointly by Keppel FELS and Keppel
Shipyard in Singapore and Keppel Verolme in
Rotterdam, the Netherlands. Delivery from the
yard in Rotterdam is mid 2007. The Blackford
Dolphin is currently in transit with expected
arrival in Rotterdam March/April 2006. The cost
for the upgrade is estimated to USD 400 million.

Marketing of the rig for drilling contracts
commencing from 3rd quarter 2007 continues and
the Company considers the possibilities of
achieving contracts at satisfactory day rates as
good.