Northern Offshore Announces Drilling Contract

Northern Offshore Announces Drilling Contract

Monday, August 25th 2008

Northern Offshore, Ltd. announced that it has entered into a drilling contract with AGR Peak Well Management Limited, a subsidiary of AGR Group ASA (Oslo Bors: AGR.OL) for the use of the semisubmersible GSF Arctic II in the North Sea. As previously announced, Northern Offshore has entered into an agreement with an affiliate of Transocean, Inc. to acquire the rig and expects to close on the rig purchase in the fourth quarter of 2008. Following the closing, the rig will be renamed the Energy Atlas.

The contract is for a period of one year and has a contract value of approximately US$155 million. It is anticipated that commencement will occur near year end 2008 and follow in direct continuation of the rig’s current contract backlog after a brief handover period from Transocean. The contract is subject to customary customer rig acceptance and regulatory approvals.

Marion Woolie, Northern Offshore president and CEO, said, “This agreement with AGR is an important step in realizing the value we see in the recently announced acquisition of two semisubmersibles from Transocean. It also represents a cornerstone in building the Company’s presence in the North Sea, a core operating region for the company.”

The company also reported that a 145-day commitment it had entered into for the Energy Searcher to begin in mid-July has been terminated as a result of the counterparty’s inability to deliver the required financial guarantees. “It is disappointing,” Mr. Woolie said, “that the Searcher will experience some idle time in the third and possibly fourth quarters as a result of this development. That said, demand is robust and there are a number of opportunities for the rig in the near future.”

Northern Offshore, Ltd. is a Bermuda holding company which operates offshore oil and gas production and drilling vessels deployed around the world. The Company’s recently updated fleet consists of one floating production facility, and five drilling units (a drillship, a semisubmersible and three jackup drilling rigs). Additionally, the Company recently announced an agreement to acquire two North Sea-based semisubmersible drilling rigs. The Northern Offshore fleet operates in various markets including the North Sea, the Indian Ocean, offshore Russia and Southeast Asia.

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