PETROLIA DRILLING ASA 3rd QUARTER 2008 PRELIMINARY RESULT

Summary:
Building values
Petrolia Drilling continues to strengthen its exposure to the drilling market through the investments in PetroMena (51.5%), Venture Drilling (50%), Petrojack (39.9 %), Larsen Rig (30%), and PetroProd (16.9 % indirectly through Petrojack). The market value of the company’s deepwater floaters under construction has increased during 2008. Construction of similar rigs is more expensive and financing is both more expensive and more difficult to obtain. The current situation in the financial markets will impact the industry and available funding going forward.

* Petrolia Drilling has with effect from 1 January 2008 changed presentation currency from NOK to USD. All comparative figures have been converted and presented in USD for information purposes. As a consequence of this, the Company has booked an unrealised currency gain of mUSD 61.7 for the first nine months of 2008 on bond loans nominated in NOK. Total net result after tax was mUSD 31.6 for the third quarter 2008 and -13.2 YTD 2008.

* PetroMena’s PetroRig I, II and III have an average contract price of mUSD 490 per unit, excluding project- and financing costs. Contract prices for recent contracts for similar units are approximately mUSD 680, excluding project- and financing costs. The construction programs in PetroMena are running according to schedule and on budget. On 3 February 2008, SS Petrolia started operations under the contract with Pemex. Operating result before depreciation for the subsidiary PetroMena was mUSD 11.5 YTD 2008 and net result was mUSD 29.4. The result was positively impacted by an unrealised USD/NOK currency gain on PetroMena’s debt nominated in NOK of mUSD 50.8.

* Petrojack took delivery of Petrojack II on 28 March 2008 and entered into an agreement with Saipem for hire of the jack-up rig. The hire under the time charter is USD 100,000 per day. The agreement includes a put/call option at a price of mUSD 199.1, with expiration 12 months after the beginning of the contract. The construction program for the remaining jack-up rig is developing according to schedule. Operating profit before depreciation for Petrojack was mUSD 5.8 for the first nine months of 2008 and the net result was mUSD -103.5 including impairment of Petrojack’s shareholdings in Petrolia Drilling ASA and PetroProd Ltd of mUSD 81.3 and 24.2 respectively.

* In order to fully finance the last instalment on Petrojack IV, payable upon delivery in January 2009, Petrojack estimates that they need mUSD 30.8 of additional cash. Petrojack has therefore asked its bondholders for certain amendments to the loan agreements, freeing up cash from the possible sale of Petrojack II that may be used to finance the last instalment on Petrojack IV. The bondholders meeting will take place on 19 November 2008.

* Operating profit before depreciation for Venture Drilling was mUSD 62.8 for the first nine months of 2008. Net result after tax was mUSD 40.6.

* Revenues and operating profit before depreciation for Petrolia Services for the first nine months of 2008 totalled mUSD 64.9 and mUSD 26.1 respectively. Drilling equipment is depreciated over five years. Depreciation amounts to mUSD 22.3 for the first nine months of 2008. Book value of drilling equipment as of 30 September 2008 is mUSD 108.6. Market value is expected to be higher.

* Petrolia Drilling has invested mUSD 42.0 in Larsen Rig and thereby controls 30% of the company, which is building a new deepwater semisubmersible drilling rig at Jurong Shipyard in Singapore, identical to the PetroMena rigs. The rig is planned to be delivered in the second quarter 2011.

Financial information
The financial data have been prepared in accordance with the International Financial Reporting Standards (IFRS).

Impairment of investment in associate
The market price of the shares in Petrojack ASA has declined during the third quarter.
Due to the current financial turmoil and general market uncertainty the Board of Directors of Petrolia Drilling has impaired its Petrojack investments with mUSD 39.3 in the third quarter based on a fair value assessment.

Profit and loss in the first nine months 2008
Total revenues were mUSD 116.6 in the first nine months of 2008, whereof mUSD 51.4 came from SS Petrolia and mUSD 64.9 came from Petrolia Services. Total revenues in the first nine months of 2007 equalled mUSD 103.1.

Operating profit before depreciation was mUSD 28.6 in the first nine months of 2008 compared to mUSD 56.8 in 2007.
Total operating expenses equalled mUSD 88.0 in the first nine months of 2008 whereof mUSD 19.8 is operating expenses for SS Petrolia and mUSD 38.8 relates to Petrolia Services. The rest of the operating expenses relates to management services under the contracts with LOG and various other operative and administrative expenses.

Operating profit equalled mUSD 4.2 in the first nine months of 2008, including mUSD 24.3 in depreciation of equipment mainly related to Petrolia Services. Operating profit equalled mUSD 37.9 in the first nine months of 2007, including mUSD 18.8 in depreciations.
The net, after-tax result was mUSD -13.2 in the first nine months of 2008. This includes negative result from investments in associates of mUSD 11.2 and impairment of the Petrojack shares of mUSD 39.3. Venture Drilling contributes with a positive result of mUSD 20.5 after tax. Net financial items of 12.4 include the effect of PetroMena’s change of functional currency from NOK to USD. The USD has appreciated during 2008 resulting in an unrealised currency gain of mUSD 49.8 for the group as a total. The USD has appreciated against NOK from 5.41 as of 1 January 2008 to 5.83 as of 30 September 2008. The net, after-tax result was mUSD 10.9 during the first nine months of 2007, due to lower deprecation and no impairment of shares.

Enclosure : Preliminary result as per 3rd quarter 2008.

For further information please contact : Mr. Lars Moldestad, phone +47 906 99 197.

Bergen/Oslo, 18 November 2008
Board of Directors

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