PROSPECTUS SEVAN DRILLING ASA/media/Files/S/SevanDrilling/...PROSPECTUS SEVAN DRILLING ASA (A public...

PROSPECTUS

SEVAN DRILLING ASA (A public limited liability company organized under the laws of the Kingdom of Norway)

Up to NOK 3.270 million initial public offering Indicative price range from NOK 16.00 to NOK 21.00 per Offer Share

The information contained in this prospectus (the “Prospectus”) relates to the initial public offering and listing on Oslo Børs, or alternatively, Oslo Axess, of ordinary shares, each with a par value of NOK 1.00 (the “Shares”), in Sevan Drilling ASA (“Sevan Drilling” or the “Company”), a public limited liability company organized under the laws of Norway (taken together with its consolidated subsidiaries, the “Sevan Drilling Group” or the “Group”). The Company intends to effect a global offering of Shares (“the Offer Shares”) of up to NOK 3.270 million (~USD 595 million) (the “Offering”) by way of a combined secondary offering of existing shares in the Company held by Sevan Marine ASA (“Sevan Marine” or the “Selling Shareholder”) and a primary issuance of new shares in the Company. The Offering will comprise (i) an institutional offering to (a) institutional and professional investors in Norway, (b) institutional investors outside Norway and the United States, and (c) in the United States, to “qualified institutional buyers” (“QIBs”) as defined in, and in reliance on, Rule 144A (“Rule 144A”) under the United States Securities Act of 1933, as amended (the “US Securities Act”) (the “Institutional Offering”); and (ii) a retail offering to the public in Norway (the “Retail Offering”); and (iii) an employee offering to Eligible Employees (as defined herein) (the “Employee Offering”). All offers and sales outside the United States will be made in reliance on Regulation S (“Regulation S”) under the US Securities Act.

The price of the Offer Shares (the “Offer Price”) will be fixed based on a bookbuilding period for the Institutional Offering (the “Bookbuilding Period”), which is expected to run from 09:00 hours (Central European Time, “CET”) on 5 April 2011 to 17:30 hours (CET) on 15 April 2011, whereas the application period for the Retail Offering and the Employee Offering (the “Application Period”) is expected to run from 09:00 hours (CET) on 5 April 2011 to 12:00 hours (CET) on 15 April 2011

The Selling Shareholder has granted the Managers (as defined below) an option to purchase, at the Offer Price, up to 13 million additional Shares (but not exceeding 10% of the number of Offer Shares initially allocated in the Offering) (the “Additional Shares”) to cover over-allotments in connection with the Offering and short positions, if any, exercisable within a 30-day period commencing at the time trading in the Shares on Oslo Børs (the “Over-Allotment Option”). The Over-Allotment Option will be effected by way of a further secondary sale of Existing Shares held by the Selling Shareholder, and may be exercised solely to cover over-allotments in connection with the Offering..

All Shares will be registered in the Norwegian Central Securities Depository (the “VPS”), and will be in book-entry form. All Shares will rank in parity with one another and carry one vote per Share.

THE OFFER SHARES AND ADDITIONAL SHARES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE US SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION IN THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT TO QIBS IN RELIANCE ON THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT PROVIDED BY RULE 144A, OR OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S.

THIS PROSPECTUS HAS NOT BEEN APPROVED NOR REVIEWED BY THE US SECURITIES AND EXCHANGE COMMISSION AND IS NOT FOR GENERAL DISTRIBUTION IN THE UNITED STATES. FOR CERTAIN SELLING AND TRANSFER RESTRICTIONS SEE SECTION 6 “SELLING AND TRANSFER RESTRICTIONS”.

Prior to the Offering, there has been no public trading market for the Shares. Sevan Drilling has applied for admission to trading of the Shares on Oslo Børs, and the listing application is expected to be approved by the Board of Directors of Oslo Børs on 27 April 2011. Completion of the Offering is conditional upon, inter alia, Oslo Børs approving the Company’s application for listing on Oslo Børs, or, alternatively, Oslo Axess.

The payment due date for the Offer Shares is expected to be on or about 27 April 2011. The Offer Shares will be delivered through the facilities of the VPS. Trading in the Shares on Oslo Børs, or, alternatively, Oslo Axess, is expected to commence on or about 29 April 2011, under the trading symbol “SDRILL”.

Global Coordinator Pareto Securities

Joint Lead Managers and Joint Bookrunners

Pareto Securities ABG Sundal Collier Arctic Securities First Securities ING Bank SEB Enskilda

The date of this Prospectus is 5 April 2011

IMPORTANT INFORMATION This Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the “Norwegian Securities Trading Act”) and related secondary legislation, including the Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in prospectuses (the “Prospectus Directive”) as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements (hereafter “EC Regulation 809/2004”). This Prospectus has been prepared solely in the English language; however a Norwegian language summary is included in Section 18 “Norwegian Summary (Norsk Sammendrag)”. The Financial Supervisory Authority of Norway (Nw. Finanstilsynet) (the “Norwegian FSA”) has reviewed and approved this Prospectus in accordance with Sections 7-7 and 7-8 of the Norwegian Securities Trading Act.

The Company and Sevan Marine have engaged Pareto Securities AS as Global Coordinator. Pareto Securities AS, ABG Sundal Collier Norge ASA, Arctic Securities ASA, First Securities AS, ING Bank N.V. and SEB Enskilda AS act as Joint Lead Managers and Joint Bookrunners for the Offering (together, the “Managers”).

Any reproduction or distribution of this Prospectus, in whole or in part, and any disclosure of its contents is prohibited.

This Prospectus and the terms and conditions of the Offering as set out herein shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Offering or this Prospectus.

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TABLE OF CONTENTS

Section Page

1 Summary ..................................................................................................................................................... 4

2 Risk Factors ............................................................................................................................................... 14

3 Responsibility Statement ........................................................................................................................... 25

4 notice to investors...................................................................................................................................... 26

5 The Offering .............................................................................................................................................. 29

6 Selling and Transfer Restrictions .............................................................................................................. 39

7 Market Overview....................................................................................................................................... 42

8 Company Description ................................................................................................................................ 63

9 Board of Directors, Management and Employees ..................................................................................... 75

10 Selected combined Financial INFORMATION ........................................................................................ 82

11 Operating and Financial Review ............................................................................................................... 86

12 Related Party Transactions ........................................................................................................................ 95

13 Dividends and Dividend Policy ................................................................................................................. 96

14 Description of the Shares and Share Capital ............................................................................................. 97

15 Securities Trading in Norway ................................................................................................................. 101

16 Taxation ................................................................................................................................................... 104

17 Additional Information ............................................................................................................................ 108

18 Norwegian Summary (Norsk Sammendrag) ........................................................................................... 109

19 Definitions and Glossary ......................................................................................................................... 119

Appendix A: Articles of Association of Sevan Drilling ASA ................................................................... A-1 Appendix B: Audited Combined Accounts (IFRS) for the Sevan Drilling Group for the accounting

years 2010, 2009 and 2008 .................................................................................................. A-2 Appendix C: Audited historical financial information (NGAAP) for Sevan Drilling ASA for the

years ended 31 December 2010, 2009 and 2008 ............................................................... A-37 Appendix D: Application Form Employee Offering (English and Norwegian) ...................................... A-56 Appendix E: Application Form Retail Offering (English and Norwegian) ............................................ A-61

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1 SUMMARY The following summary must be read as an introduction to the full text of this Prospectus, and is qualified in its entirety by, information presented in greater detail elsewhere in this Prospectus and the appendices hereto. This summary is not complete and does not contain all the information a potential investor should consider before investing in the Shares. Any investment decision relating to the Offering and an investment in the Shares should be based on the consideration of this Prospectus as a whole, including Section 2 “Risk Factors” and the Financial Statements included herein. Where a claim relating to the information contained in this Prospectus is brought before a court, a plaintiff investor might, under the national legislation of a Member State of the European Economic Area, have to bear the costs of translating this Prospectus before legal proceedings are initiated. No civil liability attaches to those persons who have prepared this summary, including any translations thereof, unless it is misleading, inaccurate or inconsistent when read together with other Sections of this Prospectus. For definitions of certain terms as used herein, see Section 19 “Definitions and Glossary”.

1.1 Introduction to Sevan Drilling Corporate information

Sevan Drilling was incorporated on 31 May 2006 as a public limited liability company. The Company is organized and existing under the laws of Norway in accordance with and pursuant to the Norwegian Public Limited Liability Companies Act. The Company’s registration number is 989 910 272.

According to section 2 of its articles of association, the Company’s head-quarters and registered office shall be in Stavanger. The Company is in the process of moving premises, but the current office is at Kittelsbuktveien 5, 4836 Arendal, Norway, telephone: +47 37 40 40 00 and telefax: +47 37 40 40 99. The Company’s website is www.sevandrilling.com.

Sevan Marine is as of the date of this Prospectus the sole shareholder in the Company.

Business overview

Sevan Marine has developed the cylinder shaped offshore floating unit (the “Sevan Unit”) based on the patented design and proprietary know-how held by Sevan Marine (the “Sevan Design”). Since 2001, Sevan Marine and its subsidiaries (the “Sevan Group”) have engaged in the design, building, owning and operation of units for floating production, storage and offloading of oil, as well as offshore drilling based its cylindrical design.

In February 2006, Sevan Marine announced its decision to pursue the development of ultra deepwater drilling units (the “Sevan Rig”) based on the Sevan Design as a separate business area within the Sevan Group. Since then, Sevan Drilling has become a fully integrated offshore drilling contractor with ownership of two ultra deepwater drilling units. The Company owns and operates Sevan Driller, which is one the world‘s most advanced, robust and “state-of-the-art” ultra deepwater drilling units. The Sevan Driller is of the Sevan 650 design and built for safe and efficient year-round operations in ultra deep waters worldwide. The Sevan Driller has been operating under a 6-year charter contract with Petrobras S.A (“Petrobras”) since June 2010 off the coast of Brazil. The second unit, the Sevan Brasil is under construction at the COSCO Qidong Shipyard, China (“COSCO”). The Sevan Brasil is also an ultra deepwater drilling unit of the Sevan 650 design, and is scheduled for delivery from the yard in the first quarter of 2012 and for commencement of a six-year charter contract with Petrobras in Brasil in the second quarter of 2012.

In March 2011, Sevan Drilling, through two wholly owned subsidiaries, entered into letters of intent with COSCO for the construction of two ultra deepwater drilling units, and options for two additional units of the same specifications, based on the Sevan 650 design. The Company estimates a price including project management, pre-delivery financing, capital spares, drilling tools and pre-operations) of approximately USD 525 million for each newbuild. The price for the two optional newbuilds will be the same, however, the price is subject to possible price adjustments for significant movements in exchange rates and prices of major equipment packages. Under the letters of intent, and provided binding construction contracts become effective as therein contemplated, the first firm newbuild shall be delivered in the fourth quarter of 2013, whereas the second firm newbuild shall be delivered in the second quarter of 2014. The first optional newbuild, assuming that the option is exercised (at the latest by first quarter 2012), shall be delivered in the fourth quarter of 2014, whereas the second optional newbuild, assuming that the option is exercised (at the latest by the third quarter of 2012), shall be delivered in the second quarter of 2015.

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Strategies

The Company has identified the following key strategic objectives in order to fulfill its ambition of being recognized as a world class and fully integrated drilling contractor, owning and operating drilling units:

• Utilize its market position in Brazil to further increase the activities there, as well as internationally, with focus on deep water and technically demanding areas;

• Utilize the Sevan Rig's competitive advantages to offer efficient and cost-effective drilling solutions to its clients;

• Develop a fleet of high specification, ultra deepwater rigs based on the Sevan Design, with state-of-the-art drilling equipment;

• Prioritize long term drilling contracts with professional and reputable clients;

• Develop relationships with key customers and suppliers; and

• Leveraging and enhancing its organisation's experience and competence.

1.2 Summary combined financial and operating information The Group’s first drilling unit commenced operations during 2010, and the financial results for 2008 and 2009 accordingly reflect no significant revenues before increasing to USD 40.6 million in 2010. Operating result was negative USD (47.1) million in 2010 compared to USD (32.6) million in 2009 and USD (23.4) million in 2008. Operating result before depreciation (“EBITDA”) was negative USD (4.4) million in 2010, compared to negative USD (30.5) million in 2009 and negative USD (19.3) million in 2008.

The information below has been extracted from the audited Sevan Drilling Combined Accounts prepared in accordance with IFRS as adopted by EU for the years ended 31 December, 2010, 2009 and 2008. The financial accounts are further described in Sections 10 and 11 below.

For the year ended 31 December USD million 2010

(audited) 2009

(audited) 2008

(audited) ..................................................................................................... Operating revenue ...................................................................... 40.6 0.6 0.0 ..................................................................................................... Operating expense ........................................................................ -28.0 -15.1 -12.3 Depreciation and write-down ....................................................... -42.7 -2.1 -4.1 Employee benefit expense ............................................................ -14.9 -13.5 -5.2 Other operating expense -1.7 -1.5 -2.6 Foreign exchange gain/(loss) related to operation ........................ -0.4 -1.0 0.7

Total operating expense ............................................................. -87.7 -33.2 -23.4 ..................................................................................................... Operating profit/(loss) ............................................................... -47.1 -32.6 -23.4 ..................................................................................................... Financial income .......................................................................... 2.9 2.1 5.2 Financial expense ......................................................................... -48.9 -4.3 -4.5 Foreign exchange gain/(loss) related to financing ........................

1.7 -23.1 31.1

Net financial items ......................................................................

-44.3 -25.3 31.8

Profit/(loss) before tax ................................................................ -91.3 -57.9 8.4 ..................................................................................................... Tax income/(expense) .................................................................. 4.5 6.6 3.6 ..................................................................................................... Net profit/(loss) ........................................................................... -86.8 -51.3 12.0 Earnings per share (USD 1,000) Comprehensive income

-28.9 -86.8

-17.1 -51.3

4.0 12.0

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Total assets and liabilities per year-end 2010 was USD 1,165.3 million, up from USD 964.4 million in 2009, due to progression on the construction programs and the delivery of the Company’s first drilling unit. Total equity was USD 116.8 million at year-end 2010, down from USD 203.6 million year-end 2009, due to a negative net profit during the year. Please refer to Section 10 for further details.

As at 31 December

USD million ASSETS Non-current assets

2010 (audited)

2009 (audited)

2008 (audited)

Drilling rigs .................................................................................. 1,009.6 767.3 528.7 Other fixed assets ......................................................................... 6.2 9.0 0.6 Intangible assets ........................................................................... 0.1 0.0 0.0 Deferred income tax assets ........................................................... 20.8 14.9 8.2 Other non-current assets ............................................................... 62.1 21.0 1.5 Total non-current assets ............................................................ Current assets

1,098.8 812.2 539.0

Inventory ...................................................................................... 7.7 13.9 1.9 Trade and other receivables .......................................................... 39.7 64.1 52.2 Cash and cash equivalents */*** .................................................. 19.1 74.2 1.5 Total current assets ....................................................................... 66.5 152.2 55.5 Total assets .................................................................................. EQUITY AND LIABILITIES

1,165.3 964.4 594.5

Share capital ................................................................................. 0.5 0.5 0.5 Other equity **............................................................................. 116.3 203.1 144.7 Total equity ................................................................................. 116.8 203.6 145.2 ..................................................................................................... Non-current liabilities

Other non-current liabilities ......................................................... 166.6 103.1 0.0 Derivate financial instruments 0.0 0.0 1.5 Interest-bearing debt */*** ........................................................... 393.3 51.9 286.1 Total non-current liabilities ....................................................... Current liabilities

559.9 155.0 287.6

Interest-bearing debt..................................................................... 102.7 401.0 0.5 Trade payables ............................................................................. 248.2 77.4 125.9 Other current liabilities ................................................................ 137.9 127.5 35.3 Total current liabilities .............................................................. 488.6 605.8 161.7 Total liabilities ** ....................................................................... 1,048.5 760.8 449.3 Total equity and liabilities ......................................................... 1,165.3 964.4 594.5 .....................................................................................................................

*) In February 2011, the first drawdown (USD 182 million) of the USD 525 million senior debt project finance facility for the Sevan Brasil was executed, thereby increasing cash and cash equivalents and non-current interest-bearing debt.

**) In March 2011, a conversion of debt to equity of USD 264.0 million was executed, thereby increasing the combined total equity to USD 380.8 million and reducing total liabilities.

***) In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes.

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The Group’s combined cash flow statement

For the year ended 31 December USD million Cash flows from operating activities

2010 (audited)

2009 (audited)

2008 (audited)

Cash from operations ................................................................... -0.2 -28.4 -14.1 Interest paid .................................................................................. -21.0 -23.9 -26.1 Net cash generated from operating activities ........................... Cash flows from investment activities

-21.2 -52.3 -40.2

Purchase of property, plant and equipment .................................. -164.6 -292.9 -154.2 Net cash flow from investment activities .................................. Cash flow from financing activities

-164.6 -292.9 -154.2

Net proceeds from issuance of ordinary shares ............................ 0.0 109.6 0.0 Loan from ultimate parent company Sevan Marine ASA 92.9 179.2 34.3 Repayment of interest-bearing debt -4.8 0.0 0.0 Net proceeds from interest-bearing debt* .................................... 42.6 129.2 100.0 Net cash flow from financing activities ..................................... 130.8 418.0 134.3 ..................................................................................................... Net cash flow for the period ...................................................... -55.1 72.8 -60.2 Cash balance at the beginning of the year .................................... 74.2 1.5 61.7 Cash balance at the end of the year*/** ................................... 19.1 74.2 1.5

*) In February 2011, the first drawdown (USD 182 million) of the USD 525 million senior debt project finance facility for the Sevan Brasil was executed, thereby increasing cash and cash equivalents and non-current interest-bearing debt.

**) In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes.

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The Group’s Combined capitalisation and indebtedness:

Amounts in USD million 31 Dec 2010

Draw-down new

loans

Debt-to-equity conv.

Adjusted 31 Dec

2010

Unaudited Unaudited Unaudited Unaudited Total equity (A) 117 0 264 381 Current debt (incl. provisions) Guaranteed/secured loans 103 0 0 103Unguaranteed/unsecured 386 0 ( 97) 289Total current debt 489 0 ( 97) 392 Non-current debt (incl. provisions) Guaranteed/secured loans 393 182 0 575Unguaranteed/unsecured loans 167 0 (167) 0Total non-current debt 560 182 ( 167) 575 Total indebtedness (B) 1 049 182 ( 264) 967 Total capitalisation (A+B) 1 165 182 0 1 348 Cash 19 182 0 201Cash equivalents - 0 0 0Trading securities - 0 0 0Liquidity (C) 19 182 0 201 Current financial receivables (D) 0 0 0 0 Leasing debt due within one year 0 0 0 0Current bank debt / current portion of non-current debt 103 0 0 103

Other current interest-bearing debt 109 0 (97) 12Bonds due within 1 year 0 0 0 0Current financial debt (E) 212 0 ( 97) 115 Net current financial indebtedness (E-C-D) (F) 193 ( 182) ( 97) ( 86)

Long-term leasing debt 0 0 0 0Other non-current interest-bearing debt 167 0 (167) 0Non-current bank loans 223 182 0 405Bonds due after 1 year 171 0 0 171Non-current financial debt (G) 560 182 ( 167) 575 Non-current receivables (H) 0 0 0 0 Net financial indebtedness (F+G-H) 753 0 ( 264) 489

*) In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes. The effect is not reflected in the capitalization and indebtedness table above.

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Major events subsequent to December 31, 2010

In February 2011, the Sevan Drilling Group made a drawdown of USD 182 million under the USD 525 million construction financing facility for the Sevan Brasil as described in Sections 11.3 and 12.

In March 2011, conversions of debt to Sevan Marine amounting to USD 264 million was effected, thereby increasing the equity ratio to approximately 32% following the conversion.

In April 2011, a transfer of Sevan Marine’s holding in Sevan Drilling Invest AS (formerly Sevan Drilling AS) AS was effected as a contribution in kind to the Company. The contribution in kind was performed with continuity values resulting in zero equity effect on the Sevan Drilling Group Combined Accounts.

In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes.

Trends

Except as otherwise disclosed in this Prospectus, the draw-down of new loans (described in Section 1.2), the share capital increase (described in Section 1.2) and the announcement of the planned Offering (described in Section 1.7), there have been no significant changes in the financial or trading position of the Group since the date of its latest financial information included in this Prospectus.

1.3 Board of Directors, senior management and employees The Company’s Articles of Association provide that the Board of Directors shall consist of 3 to 9 Directors. The Directors are elected by the shareholders.

New and current Board of Directors

The Company’s Board of Directors currently consists of Jan Erik Tveteraas (Chairman), Oskar Mykland and Birte Norheim (Board members), reflecting that as at the date of this Prospectus, the Company is a wholly-owned subsidiary of Sevan Marine.

As of the first day of trading of the Shares on Oslo Børs, the Company’s Board of Directors will consist of Jon C. Cole (Chairman), Scott I. Kerr (Deputy Chairman), Arne Smedal, Kitty Hall and Anne Breive (Board members). In addition, by such date two directors nominated by the employees will have been elected.

Senior management

The senior management of the Company currently consists of Jon H. Wilmann (VP Drilling), Håvard Haugland (Group Controller, Sevan Marine/Interim CFO, Sevan Drilling) and Paul Grimen (VP Operations).

As of the first day of trading of the Shares on Oslo Børs, Jan Erik Tveteraas will have been appointed CEO, and Jon H. Wilmann will have been appointed CFO, with IR responsibility as part of the job description. Bjørn Egil Gustavsen (VP Projects) and Pascal Busch (VP QHSE) will supplement the senior management team, together with Mr. Grimen. The Norwegian employees will be employed by the Company’s wholly-owned subsidiary Sevan Drilling Management AS, which will provide services under a management agreement.

Employees

The Sevan Drilling Group employs approximately 185 employees in Norway, Singapore and Brazil.

1.4 Sole shareholder and related party transactions Sole shareholder

Sevan Drilling is 100% owned by Sevan Marine, a company with registered address at Kittelsbuktveien 5, 4836 Arendal, Norway, and listed on the Oslo Stock Exchange with ticker “Sevan”.

Related party transactions

The Group has in the period covered by the Financial Statements included herein been subject to various related party transactions with Sevan Marine and companies in which Sevan Marine exerts considerable influence. For further information of the Group’s related party transactions, see Section 12 “Related Party Transactions” below in this Prospectus.

1.5 Share capital As at the date of this Prospectus, the Company’s share capital is NOK 96,000,000, divided into 96,000,000 Shares, each Share with a par value of NOK 1.00. All Shares in the Company are of the same class and vested with equal rights in all respects. The Shares have all been validly issued and are fully paid.

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1.6 Articles of association The Articles of Association of the Company (or a translation from Norwegian thereof) are included as Appendix A to this Prospectus.

1.7 Summary of the Offering The following table summarizes, and provides certain indicative key dates for, the Offering.

The Offering .............................................. The Offering is an offering of up to NOK 3,270 million (~USD 595 million) through an offering of a number of Shares to be determined in conjunction with determination of the final Offer Price, consisting of an Institutional Offering, a Retail Offering, and an Employee Offering. The Offering comprises between 92 million and 120 million new Shares (the “New Shares”) offered and issued by the Company and 64 million existing Shares (the “Existing Shares”) to be sold by the Selling Shareholder, thus aggregating a total of between 156 million and 184 million Offer Shares, excluding any Additional Shares.

Institutional Offering ................................. In the Institutional Offering, Offer Shares are being offered to institutional investors and professional investors in Norway and outside Norway and the United States in reliance on Regulation S under the US Securities Act, and in the United States to a limited number of QIBs in reliance on Rule 144A under the US Securities Act, subject to a lower limit per order of NOK 1,000,000.

Retail Offering .......................................... In the Retail Offering, Offer Shares are being offered to the public in Norway subject to a lower limit per application of an amount of NOK 10,000 and an upper limit per application of an amount of NOK 999,999 for each investor.

Employee Offering In the Employee Offering, Offer Shares are being offered to Eligible Employees (as defined herein), subject to a lower limit per application of an amount of NOK 10,000 and an upper limit per application of an amount of NOK 100,000 (in each case after deduction of the discount). Each Eligible Sevan Drilling Employee will receive a discount of 10% of the Offer Price per Offer Share allocated to such employee. For a brief description of the Norwegian tax effects of such discount, please see Section 16.3 below.

Additional Shares ...................................... The Selling Shareholder has granted the Managers an option to purchase, at the Offer Price, up to 13 million Additional Shares (but not exceeding 10% of the number of Offer Shares initially allocated in the Offering) to cover over-allotments in connection with the Offering and short positions, if any, exercisable within a 30-day period commencing at the time trading in the Shares on Oslo Børs.

Bookbuilding Period .................................. The Bookbuilding Period for the Institutional Offering is expected to take place from 09:00 hours (CET) on 5 April 2011 to 17:30 hours on 15 April 2011, subject to extensions.

Application Period ..................................... The period in which applications for Offer Shares will be accepted in the Retail Offering and the Employee Offering will last from 09:00 hours (CET) on 5 April 2011 to 12:00 hours (CET) on 15 April 2011, subject to extensions.

Indicative price range ................................ From NOK 16.00 to NOK 21.00 per Offer Share.

Notification of allocation ........................... On or about 18 April 2011.

Payment of Offer Shares ............................ On or about 27 April 2011.

Delivery of Offer Shares ............................ On or about 28 April 2011.

Admission to trading of the Shares ............ It is expected that trading in the Shares will commence on Oslo Børs on 29 April 2011.

Use of proceeds ......................................... The net proceeds from the offering of New Shares will be used (i) to finance the initial instalments equal to 20% of the contract price for the first two newbuilds at COSCO, (ii) working capital reserve for the newbuild rigs and (iii) for general corporate purposes.

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Dilution ...................................................... Assuming sale of 168 million Offer Shares in the Offering (the number of Offer Shares to be issued at the mid-point of the indicative price range plus the 64 million Offer Shares offered by the Selling Shareholder (not including the sale of any Additional Shares)), Sevan Marine’s ownership in the Company will be reduced from 100% to approximately 16%.

Expenses .................................................... Sevan Drilling estimates that the total expenses in connection with the Offering (inclusive of commission payable by the Company to the Managers, but excluding any discretionary commission) and the listing of its Shares on Oslo Børs will amount to approximately NOK 120 million (of which the Company will cover NOK 75 million).

ISIN ........................................................... NO 001 0455793

Oslo Børs trading symbol ......................... The Shares are expected to trade under the trading symbol “SDRILL”.

1.8 Documents on display Copies of the following documents will be available for inspection at the Company’s registered office during normal business hours from Monday to Friday each week (except public holidays) for a period of twelve months from the date of this Prospectus:

• the Articles and Memorandum of Association of the Company;

• the Combined Accounts for Sevan Drilling Group, and the financial statements of the Sevan Drilling ASA as of and for years ended 31 December 2010, 2009 and 2008;

• all reports included or referred to in this Prospectus; and

• this Prospectus.

1.9 Advisors and auditors Advisors

Pareto Securities AS is engaged as Global Coordinator. Pareto Securities AS, ABG Sundal Collier Norge ASA, Arctic Securities ASA, First Securities AS, ING Bank N.V and SEB Enskilda AS act as Joint Lead Managers and Joint Bookrunners for the Offering.

Bugge, Arentz-Hansen & Rasmussen (BA-HR) has acted as legal advisor to the Company as to Norwegian law. Wiersholm has acted as Norwegian legal advisor to the Managers, and Akin Gump Strauss Hauer & Feld LLP has acted as the Managers’ US legal advisor in connection with the Offering. Deloitte has acted as financial due diligence advisor to the Managers.

Auditor

PricewaterhouseCoopers AS (“PwC”) is the Company’s independent auditor. PwC is a member of the Norwegian Institute of Public Auditors (Nw. Den Norske Revisorforening).

1.10 Summary of risk factors Investing in the Shares involves inherent risks. Before deciding whether or not to participate in the Offering, an investor should consider carefully all of the information set forth in this Prospectus, and in particular, the specific risk factors set out below. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment.

If any of the risks described below materialize, individually or together with other circumstances, they may have a material adverse effect on the Group’s business, financial condition, results of operations and cash flow, which may cause a decline in the value and trading price of the Shares that could result in a loss of all or part of any investment in the Shares.

The risks and uncertainties described below are not the only ones faced by the Group. Additional risks and uncertainties that the Company currently believes are immaterial, unlikely or that are not presently known to the Company may also have a material adverse effect on its business, financial condition, results of operations and cash flow.

The order in which the risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of their severity or significance. These risks should also be considered in connection with the cautionary statement regarding forward-looking information set forth in Section 4 below.

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Risks relating to the industry in which the Group operates:

• The offshore contract drilling industry, which is capital intensive, is also cyclical, with volatile demand and day rates. The business, financial condition, and results of operations for drilling rig owners and operators depend on the level of activity in the offshore oil and gas industry, which is significantly affected by, among other things, volatile oil and gas prices and may be materially and adversely affected by a decline in offshore oil and gas exploration, development and production.

• Uncertainty relating to the development of the world economy may affect the oil price in general and/or reduce demand for drilling services or result in contract delays or cancellations.

• An over-supply of drilling units may lead to a reduction in dayrates, which are the amounts earned per day per drilling unit, which may materially impact the competition between and/or the profitability of rig owners.

• The market value of drilling units may decrease, which could cause rig owners to incur losses in case of sale of drilling rigs following a decline in their market values, and may result in lower day rates on subsequent charter contracts.

• Consolidation of suppliers may limit availability of supplies and services when needed, at an acceptable cost, or at all.

• Governmental laws and regulations could affect the operations of rig owners, increase their operating costs, reduce demand for drilling services and/or restrict the ability of rig owners to operate the drilling units or otherwise adversely affect their operational or financial condition.

• Rig owners may be subject to liability under environmental laws and regulations, which could have a material adverse effect on their results or operations and financial condition.

• The drilling s business involves numerous operating hazards.

• Rig owners may be subject to litigation that could have an adverse effect on their financial condition.

• Technology disputes involving rig owners, their suppliers or sub-suppliers could impact their operations or increase operating costs.

• Competition within the oilfield services industry is fierce and may adversely affect rig owners’ ability to market their services and/or secure profitable employment.

• Uncertainty relating to the development of the world economy may reduce demand for drilling services or result in contract delays or cancellations.

• The drilling units may, from time to time, operate in various jurisdictions exposing the relevant owners and operators to additional risks.

• Tax rules may change or new tax rules may be introduced, or the application of existing rules may change all of which could materially and adversely affect the profitability of the drilling business.

• Risk of war and/or terrorist attacks.

Risks relating to the Group:

• The Group currently has only one customer (Petrobras) and operates in one country only (Brazil).

• The letters of intent with COSCO for two newbuilds remain to be converted to firm and binding construction contracts, which depend, inter alia, on COSCO’s ability to secure pre-delivery financing on a ring-fenced basis relative to the contracting Sevan Drilling entities.

• If the letters of intent with COSCO for the two newbuilds result in binding and effective EPC contracts, the two new units will, initially, be without employment contracts and financing for 80% of the contract price. No assurance can be given that employment and financing can be obtained on acceptable terms, or at all, in time for scheduled delivery in fourth quarter 2013 and first quarter 2014, respectively. Additional equity financing may be necessary if bank financing is not secured by delivery of the newbuild rigs.

• The continued availability of the financing of the Sevan Brasil is conditional upon the unit being delivered by the yard no later than by 31 November 2012 and the acceptance by Petrobras of the unit under the charter contract no later than by 30 May 2013, failing which a mandatory prepayment event occurs.

• Certain existing guarantees, some of which contain financial covenants, provided by Sevan Marine in favour of lenders and certain other third parties will continue to be in effect until otherwise agreed with relevant beneficiaries, thus rendering Sevan Drilling dependent on the continued performance of Sevan Marine.

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• The Group’s operating and maintenance costs will not necessarily fluctuate in proportion to changes in operating revenues.

• The Group’s future contracted revenue for its drilling units may not be ultimately realized.

• The Group’s offshore drilling contracts may be terminated early due to certain events.

• The Group may not be able to renew or obtain new and favourable contracts for drilling units whose contracts are expiring or are terminated, which could adversely affect the Group’s revenues and profitability.

• The Group’s newbuilding projects are subject to risks which could cause delays or cost overruns.

• The Company may not be able to successfully implement its strategies.

• The Group’s success depends on key members of its management team.

• Failure to obtain or retain highly skilled personnel could adversely affect the Group’s operations.

• Labour interruptions could disrupt the Group’s business.

• In order to execute the Company’s growth strategy, the Company may require additional equity and/or debt capital in the future, which may not be available.

• The Group’s existing or future debt arrangements could limit the Group’s liquidity and flexibility in obtaining additional financing, in pursuing other business opportunities or the Company’s ability to declare dividends to its shareholders.

• If the Group is unable to comply with the restrictions and the financial covenants in the agreements governing its indebtedness, there could be a default under the terms of these agreements, which could result in an acceleration of payment obligations in respect of financial indebtedness.

• Interest rate fluctuations could affect the Group’s profitability, earnings and cash flow.

• Fluctuations in exchange rates could result in financial losses for the Group.

• A change in tax laws or their application of any country in which the Group operates from time to time, or complex tax laws associated with international operations which the Group may undertake from time to time could result in a higher tax expense or a higher effective tax rate on the Group’s earnings.

• A loss of a major tax dispute or a successful tax challenge to the Group’s operating structure from time to time, intercompany pricing policies, the taxable presence of subsidiaries in certain countries or other disputes related to or challenges to the Group’s tax payments could result in a higher tax rate on the Group’s worldwide earnings, which could result in a significant negative impact on its earnings and cash flows from operations.

Risks relating to the Shares:

• The price of the Shares may fluctuate significantly.

• There is no existing market for the Shares, and a trading market that provides adequate liquidity may not develop.

• Future sales of Shares by the Company’s major shareholder or any of its primary insiders may depress the price of the Shares.

• Future issuances of Shares or other securities may dilute the holdings of shareholders and could materially affect the price of the Shares.

• Investors may not be able to exercise their voting rights for Shares registered in a nominee account.

• Investors in the United States may have difficulty enforcing any judgement obtained in the United States against the Company or its Directors or executive officers in Norway.

• The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions.

• Shareholders outside of Norway are subject to exchange rate risk.

• The Company will have a major shareholder at completion of the Offering.

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2 RISK FACTORS Investing in the Shares involves inherent risks. Before deciding whether or not to participate in the Offering, an investor should consider carefully all of the information set forth in this Prospectus, and in particular, the specific risk factors set out below. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment.

If any of the risks described below materialize, individually or together with other circumstances, they may have a material adverse effect on the Group’s business, financial condition, results of operations and cash flow, which may cause a decline in the value and trading price of the Shares that could result in a loss of all or part of any investment in the Shares.

The risks and uncertainties described below are not the only ones faced by the Group. Additional risks and uncertainties that the Company currently believes are immaterial, unlikely or that are not presently known to the Company, may also have a material adverse effect on its business, financial condition, results of operations and cash flow.

The order in which the risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of their severity or significance. These risks should also be considered in connection with the cautionary statement regarding forward-looking information set forth in Section 4.

2.1 Risks relating to the industry in which the Group operates The general level of activity in the offshore oil and gas industry depends on the oil price, which for various reasons is likely to vary over time

The drilling business in general, including the Group’s business depends on the level of activity in oil and gas exploration, as well as the identification and development of oil and gas reserves and production in offshore areas worldwide. The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development, political concerns and regulatory requirements all affect customers' levels of activity and drilling campaigns. Accordingly, oil and gas prices and market expectations of potential changes in these prices significantly affect the level of activity and demand for the Group’s drilling units.

Oil and gas prices are extremely volatile and are affected by numerous factors beyond the Group’s control, including, but not limited to, the following:

• worldwide demand for oil and gas;

• the cost of exploring for, developing, producing and delivering oil and gas;

• expectations regarding future energy prices;

• new or changed taxes on the exploration, production, sale, purchase or consumption of oil or petroleum products;

• the ability of the Organisation of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and impact pricing;

• the level of production in non-OPEC countries;

• government laws and regulations, including environmental protection laws and regulations;

• local and international political, economic and weather conditions;

• political and military conflicts in oil-producing and other countries; and

• the development and exploitation of alternative energy sources.

An over-supply of drilling units may lead to a reduction in day rates and/or lower utilization of drilling units

Significant increases in the prices for oil and gas have in the past resulted in a large number of construction orders being placed for newbuild rigs. Periods with very high oil prices could be followed by periods of sharp and sudden declines in oil and gas prices, which in turn result in declines in utilization and day rates, and an increase in the number of idle drilling units without long-term contracts.

The worldwide fleet of ultra deepwater and harsh environment drilling units (including the Sevan Driller and the Sevan Brasil) is currently estimated to consist of 85 units, according to data extracted from ODS Petrodata’s Rig Base. An additional 60 ultra deepwater units are reported to be under construction or on order with delivery scheduled prior to November 2013, which would bring the expected total fleet to 145 units by expiry of 2013. The strong growth in ultra deepwater units is due to the increased focus of oil companies on existing and new ultra deepwater regions for exploration and production, and the inability to upgrade or modify the existing mid-water fleet to undertake ultra deepwater and harsh environment drilling campaigns.

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Lower utilization and day rates may adversely affect the value of drilling assets.

The market value of drilling units may decrease, and rig owners are exposed to potentially significant losses if they sell assets following a decline in market values or lower earnings if new charter contracts are signed at lower day rates.

If the offshore contract drilling industry suffers adverse developments in the future, the fair market value of drilling units may decline. The fair market value of the drilling units may increase or decrease depending on a number of factors, including:

• general economic and market conditions affecting the offshore contract drilling industry, including competition from other offshore contract drilling companies;

• types, sizes and ages of drilling units;

• supply and demand for drilling units;

• cost of newbuildings;

• prevailing level of drilling services contract day rates;

• the perceived efficiency, reliability and other competitive advantages or disadvantages of specific drilling designs and technology compared to alternative drilling solutions; the time required to build or deliver new units;

• government laws and regulations, including environmental protection laws and regulations and such laws becoming more stringent due to inter alia accidents such as the recent Deepwater Horizon accident; and

• technological advances.

Consolidation of suppliers may limit availability of supplies and services when needed, at an acceptable cost, or at all

Owners of drilling units generally rely on a significant supply by third parties of consumables, spare parts and equipment to operate, maintain, repair and upgrade its fleet of drilling units. During the last decade the number of available suppliers has been reduced, resulting in fewer alternatives for sourcing key supplies and services. In addition, certain key equipment used by drilling rig owners and operators is protected by patents and other intellectual property of its suppliers or other third parties. All of the foregoing may limit the availability of supplies and services when needed, at an acceptable cost, or at all. Cost increases, delays or unavailability could negatively impact the drilling industry at large and/or individual owners/operators of drilling units, and result in higher rig downtime due to delays in repair and maintenance.

Governmental laws and regulations could affect operations, increase operating costs, reduce demand for services from and restrict the ability of drilling rig owners to operate its drilling units or otherwise.

The drilling business is affected by governmental laws and regulations. The industry is dependent on demand for services from the oil and gas companies and, accordingly, is indirectly also affected by changing laws and regulations relating to the energy business in general. The laws and regulations affecting the drilling industry include, among others laws and regulations relating to;

• protection of the environment;

• quality, health and safety;

• import-export quotas, wage and price controls, imposition of trade barriers and other forms of government regulation and economic conditions;

• taxation.

The industry, including the Group and its customers are required to invest financial and managerial resources to comply with these laws and regulations. The future costs of complying with these laws and regulations cannot be predicted, and any new laws or regulations could materially increase the industry’s (including the Group’s) expenditures in the future. Existing laws or regulations or adoption of new laws or regulations limiting exploration or production activities by oil and gas companies or imposing more stringent restrictions on such activities could adversely affect the Group by increasing its operating costs, reducing the demand for its services and restricting its ability to operate drilling units.

The drilling business is subject to strict environmental laws and regulations with resulting potential exposure to liability and financial consequences for the Group

The drilling business is subject to environmental rules and regulations pursuant to international conventions and national legislation in relevant jurisdictions. Breach of these rules and regulations may result in fines, penalties and/or claims by authorities and customers. The operation of floating production and drilling units in offshore environments, entail inherent risk for pollution and resulting liability which could, potentially have a significant adverse effect on rig owners and operators, which may not be fully covered under contractual arrangements or insurances coverage.

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Environmental laws and regulations have become more stringent in recent years, and may in some cases impose strict liability, rendering a person liable for environmental damage without regard to negligence. Such laws and regulations may expose rig owners and operators to liability resulting from acts or omissions by themselves or by relevant third parties. The application of legislative and/or regulatory requirements or the adoption of new requirements could have a material adverse effect on the financial position, results of operations or cash flows of affected industry players. Some degree of contractual indemnification pursuant to which clients agree to protect, hold harmless and indemnify against liability for pollution, well and environmental damage may be available to rig owners; however, there is no assurance that such indemnities are available or that, in the event of extensive pollution and environmental damage, the indemnifying party would have the financial capability to fulfill their contractual obligations. Also, these indemnities may be held to be unenforceable as a result of public policy or for other reasons. In addition, insurance cover may not be available or sufficient to cover relevant exposure.

The drilling business involves numerous operating hazards

Drilling operations are subject to hazards inherent in the drilling industry, such as blowouts, reservoir damage, loss of production, loss of well control, lost or stuck drill strings, equipment defects, craterings, fires, explosions and pollution. Contract drilling and well servicing require the use of heavy equipment and exposure to hazardous conditions, which may subject the owners and operators to liability claims by employees, customers and third parties. These hazards can cause personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage, claims by third parties or customers and suspension of operations. The operation of drilling units is also subject to hazards inherent in marine operations, either while on-site or during mobilization, such as capsizing, sinking, grounding, collision, damage from severe weather and marine life infestations. Operations may also be suspended because of machinery breakdowns, abnormal drilling and/or weather conditions, and failure of subcontractors to perform or supply goods or services, or personnel shortages.

Damage to the environment could also result from drilling operations, particularly through spillage of fuel, lubricants or other chemicals and substances used in drilling operations, or extensive uncontrolled fires. Owners and operators of drilling units may also be subject to property, environmental and other damage claims by oil and gas companies. Relevant insurance policies and contractual rights to indemnity may not adequately cover losses, and may not be customary or available at all. Pollution and environmental risks are generally not totally insurable.

The insurances coverage offered to drilling rig owners includes policy limits. As a result, they retain the risk for any losses in excess of these limits, which could be substantial. Also, industry players may decide to retain additional risk through self-insurance in the future.

If a significant accident or other event occurs and is not fully covered by insurance or any enforceable or recoverable indemnity from a client, it could significantly and adversely affect the financial position, results of operations or cash flows of the affected rig owner or operator.

Competition within the oilfield services industry is fierce and may adversely affect the industry players’ ability to market their services

The oilfield services industry is highly competitive and fragmented and includes several large companies that compete in the markets the Group serves, or will serve, as well as numerous small companies that compete with the Group on a local basis. The solidity and resources of the Group’s larger competitors could enable them to better withstand industry downturns, compete more effectively on the basis of technology and geographic scope, they may be favoured by clients due to better perceived reliability due to greater size and balance sheet, and they may beat the Company at recruiting and retaining skilled personnel. The Company believes the principal competitive factors in the market areas the Group serve are price, product and service quality, availability of crews and equipment and technical proficiency. The Group’s operations may be adversely affected if its current competitors or new market entrants introduce new products or services with better features, performance, prices or other characteristics than the Group’s products and services, or expand into service areas where the Group operates. Competitive pressures or other factors may also result in significant price competition, particularly during industry downturns, which could have a material adverse effect on the Group’s results of operations and financial condition. In addition, competition among oilfield services and equipment providers is affected by each provider’s reputation for solidity, safety, quality and technological innovation.

Uncertainty relating to the development of the world economy may reduce demand for drilling services or result in contract delays or cancellations

The drilling industry depends on its existing and prospective customers’ willingness and ability to make operating and capital expenditures to explore, develop and produce oil and gas. Demand for drilling units and services is particularly sensitive to oil price developments fluctuations in production levels, general demand and activity in the oil industry as well as exploration results. In such a volatile market, no assurance can be given as to the Company’s ability to successfully secure contracts and seize opportunities. A decrease in the oil price may have a material adverse impact on participants’ ability to secure attractive employment opportunities and, accordingly, adversely affect their financial condition. A high oil price may have a negative effect on the demand for petroleum products, which could, ultimately, have a negative impact on the demand for the industry’s products and services. Recent volatility in the world economy

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has caused significant changes in the prices of oil and gas prices. Continued volatility may create uncertainty that can cause oil companies to cut spending budgets. Limitations on the availability of capital or higher costs of capital for financing expenditures, or the desire to preserve liquidity, may cause potential customers to make additional reductions in future capital budgets and outlays. Such adjustments could reduce demand for drilling services generally, and the Group’s products and services specifically, which could adversely affect its results of operations and cash flows.

The industry is generally fiercely competitive and specifically subject to continual and rapid technological developments

The deepwater drilling market is characterized by continual and rapid technological developments that have resulted in, and will likely continue to result in, substantial improvements in equipment functions and performance. As a result, the future success and profitability of industry participants will be dependent in part upon its ability to:

• improve existing services and related equipment;

• address the increasingly sophisticated needs of its customers; and

• anticipate changes in technology and industry standards and respond to technological developments on a timely basis.

If a rig owner such as the Group is not successful in acquiring new equipment or upgrading its existing equipment on a timely and cost-effective basis in response to technological developments or changes in standards in the industry, this could have a material adverse effect on such rig owner’s business.

Drilling operations are often international in scope and expose owners and operators to different formal challenges which may entail additional risks

Drilling activities in various jurisdictions and international operations involve additional risks, including risks of:

• terrorist acts, war, civil disturbances and piracy;

• seizure, nationalization or expropriation of property or equipment;

• political unrest;

• labour unrest and strikes;

• the inability to repatriate income or capital;

• complications associated with repairing and replacing equipment in remote locations;

• impositions of embargos;

• import-export quotas, wage and price controls, imposition of trade barriers and other forms of government regulation and economic conditions that are beyond the Group’s control;

• regulatory or financial requirements to comply with foreign bureaucratic actions; and

• changing taxation policies.

In addition, international contract drilling operations are subject to the various laws and regulations in relevant countries and jurisdictions, including laws and regulations relating to:

• the equipment requirements for operation of drilling units;

• repatriation of foreign earnings;

• oil and gas exploration and development;

• taxation of offshore earnings and the earnings of expatriate personnel;

• customs duties on the importation of drilling rigs and related equipment;

• requirements for local registration or ownership of drilling rigs by nationals of the country of operations; and

• the use and compensation of local employees and suppliers by foreign contractors.

Some foreign governments favour or effectively require (i) the awarding of drilling contracts to local contractors or to drilling rigs owned by their own citizens, (ii) the use of a local agent or (iii) foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These practices may adversely affect foreign third parties’, such as the Group’s, ability to compete in those regions. It is difficult to predict what governmental regulations may be enacted in the future that could adversely affect the international drilling industry. Failure to comply with applicable laws and regulations, including those relating to sanctions and export restrictions, may subject the Group to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets.

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Risk of war, civil attacks, piracy, and terrorist attacks

Terrorist attacks have among other things caused instability in the world’s financial and commercial markets. This has in turn contributed to high levels of volatility in prices for among other things oil and gas. Even war, civil disturbances and/or piracy occurs from time to time in areas where drilling business is undertaken. Continuing instability for one or more of these reasons may cause further disruption to financial and commercial markets and contribute to even higher level of volatility in prices. In addition, acts of war, piracy or terrorism could limit or disrupt drilling operations, including disruptions from evacuation of personnel, cancellation of contracts or the loss of personnel or assets, and may significantly affect the drilling business in general and/or affected individual drilling rig owners/operators’ business and results of operations in the future.

2.2 Risks relating to the Group The Group currently relies heavily on one customer

The Group’s contract drilling business is subject to the risks associated with having a limited number of customers for its services. While the Group expects to enter into contracts with multiple clients in the years to come, as of the date of the Prospectus, Petrobras alone accounts for all of the Group’s future contracted revenues. While the Group enjoys a good relationship with Petrobras, it is also directly exposed to the results and financial condition of its sole customer for the time being, and, therefore, dependent on the continued success of Petrobras. The Group’s results of operations could be materially adversely affected if Petrobras were to fail to compensate the Group for it services, were to terminate the contracts (or any of them) with or without cause, fail to renew the existing contract or refuse to award new contracts to the Group and the Group is unable to enter into contracts with new customers at comparable dayrates.

The letters of intent with COSCO entail particular risk

The letters of intent with COSCO for two newbuilds remain to be converted to firm and binding construction contracts, which depend, inter alia, on COSCO’s ability to secure pre-delivery financing on a ring-fenced basis relative to the contracting Sevan Drilling entities.

If the letters of intent with COSCO results in final and binding contracts for construction of two additional units based on the Sevan 650 design, such projects will be commenced without any employment having been secured for the units upon delivery, and without financing in place for the instalments equal to 80% of the project price which is payable upon delivery, thus potentially exposing the 20% equity injected in the projects.

The financing of the Sevan Brasil is conditional

The continued availability of the financing of the Sevan Brasil is conditional upon the unit being delivered by the yard no later than by 31 November 2012 and the acceptance by Petrobras of the unit under the charter contract no later than by 30 May 2013, failing which a mandatory prepayment event occurs.

The Group has limited experience in operation of drilling rigs

The “Sevan Driller” has been in operation for 9 months only, so only limited experience from the operations of its drilling rigs has been gained. Because investors have limited historical operating and financial information on which to base the investment decision, the Company outlook must be considered in light of the risks, uncertainties and obstacles that it may face in an evolving and competitive market.

The Group’s operating and maintenance costs will not necessarily fluctuate in proportion to changes in operating revenues

The Group’s operating and maintenance costs will not necessarily fluctuate in proportion to changes in operating revenues. Operating revenues may fluctuate as a function of changes in supply and demand for contract drilling services, which in turn affect dayrates. In addition, equipment maintenance costs fluctuate depending upon the type of activity the unit is performing and the age and condition of the equipment. In connection with new assignments, the Group might incur expenses relating to preparation for operations under a new contract. The expenses may vary based on the scope and length of such required preparations and the duration of the firm contractual period over which such expenditures are amortized. In a situation where a drilling unit faces long idle periods, reductions in costs may not be immediate as some of the crew may be required to prepare drilling units for stacking and maintenance in the stacking period. Should drilling units be idle for a longer period, the Group may seek to redeploy crew members, who are not required to maintain the units, to active units to the extent possible. However, there can be no assurance that the Group will be successful in reducing its costs.

The Group’s future contracted revenue for its drilling units may not be ultimately realized

There may be uncertainty as to the duration of offshore charters due to extension and/or early cancellation options held by charterers, late delivery or deviation from contracted performance measures. Also, there may be off-hire periods during and between charters. The cancellation or postponement of one or more charters can have a major adverse impact on the earnings of drilling companies, including the Company. The Company may also suffer losses should

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customers seek to renegotiate contracts during periods with depressed market conditions, or upon downtime, operational difficulties, safety related issues or if a unit becomes a total loss.

As of 31 December 2010, the future estimated contracted revenue for the Group’s drilling units, or contract drilling backlog, was approximately USD 1.9 billion under firm commitments, including bonus potential. The Group may not be able to perform under these contracts due to events beyond its control or due to default of the Group, and any of the Group’s customers may seek to cancel or renegotiate contracts for various reasons, including adverse conditions, or invoke suspension periods, at their discretion, resulting in lower dayrates. The Group’s inability or the inability of its customers to perform contractual obligations under these contracts may have a material adverse effect on the Group’s financial position, results of operations and cash flows.

The operation of drilling rigs requires effective maintenance routines and functioning equipment. Certain pieces of equipment are critical regarding the rigs’ performance of the drilling services as required in customer contracts. While efforts are made to continuously identify the need for critical spare parts and equipment, there is a risk of unpaid downtime resulting from the time needed to repair or replace equipment which may have a long delivery time should there not be readily available spares. In addition, downtime and suspension periods may be prolonged due to complications with repairing or replacing equipment as the drilling units may be situated in remote locations.

Risks relating to counterparties

The Company relies on timely delivery of goods and services by numerous vendors and suppliers, and the performance in full by the charterers of the Sevan units. Failure to perform or financial difficulties encountered by any such counterpart can adversely affect the financial and/or operational condition of the Company.

The Group’s offshore drilling contracts may be terminated early due to certain events

Under certain circumstances the Group’s existing or future contracts may permit a customer to terminate their contract early without the payment of any termination fee, as a result of non-performance, longer periods of downtime or impaired performance caused by equipment or operational issues, or sustained periods of downtime due to force majeure events. Many of these events are beyond the Group’s control. During periods of challenging market conditions, the Group may be subject to an increased risk of its clients seeking to repudiate their contracts, including through claims of non-performance. The ability of the Group’s customers from time to time to perform their obligations under their drilling contracts with the Group may also be negatively impacted by the prevailing uncertainty surrounding the development of the world economy and the credit markets. If the Group’s customers from time to time cancel their contracts with the Group, and the Group is unable to secure new contracts on a timely basis and on substantially similar terms, or if contracts are suspended for an extended period of time or if the Group’s contracts are renegotiated, it could adversely affect the Group’s financial position, results of operations or cash flows.

The Group may not be able to renew or obtain new and favourable contracts for drilling units whose contracts are expiring or are terminated, which could adversely affect the Group’s revenues and profitability

Subject to certain extension options of up to six years granted to Petrobras, the Sevan Driller contract with Petrobras expires in June 2016, and the Sevan Brasil contract expires in 2018, 6 years after startup, which is estimated to second quarter 2012.The Group’s ability to have these contracts extended or renewed, or to obtain new contracts, will depend on the prevailing market conditions. In cases where the Group is not able to obtain new contracts in direct continuation, or where new contracts are entered into at dayrates substantially below the existing day rates or on terms less favourable compared to existing contracts terms, the Group’s revenues and profitability could be adversely affected.

The Group’s newbuilding projects are subject to risks which could cause delays or cost overruns

Drilling rig construction projects are subject to risks of delay or cost overruns inherent in any large construction project from numerous factors, including, but not limited to:

• shortages of equipment, materials or skilled labour;

• unscheduled delays in the delivery of ordered materials and equipment or shipyard construction;

• failure of equipment to meet quality and/or performance standards;

• financial or operating difficulties experienced by equipment vendors or the shipyard;

• unanticipated actual or purported change orders;

• inability to obtain required permits or approvals;

• unanticipated cost increases between order and delivery;

• design or engineering changes;

• work stoppages and other labour disputes;

• adverse weather conditions or any other events of force majeure.

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Significant cost overruns or delays could adversely affect the Group’s financial position, results of operations and cash flows. Additionally, failure to complete a project on time may result in the delay of revenue from that drilling unit. New drilling units may experience start-up difficulties following delivery or other unexpected operational problems that could result in uncompensated downtime, which also could adversely affect the Group’s financial position, results of operations and cash flows or the cancellation or termination of drilling contracts.

The Group may not be able to successfully implement its strategies

The Group’s strategies as described in this Prospectus include international operations with focus on the Brazil region. Maintaining and expanding the Group’s operations and achieving its other objectives involve inherent costs and uncertainties and there is no assurance that the Group will achieve its objectives or other anticipated benefits. There is no assurance that the Group will be able to undertake these activities within its expected time frame, that the cost of any of the Group’s objectives will be at expected levels or that the benefits of its objectives will be achieved within the expected timeframe or at all. Should there be any regulatory changes in Brazil, these could have a negative impact on the Group’s competitive or financial position. The Group’s strategy may also be affected by factors beyond its control, such as the speed of the economic recovery in each of its markets, the disposable income of customers and the availability of acquisition opportunities in a market. Any failures, material delays or unexpected costs related to implementation of the Group’s strategies could have a material adverse effect on its business, financial condition, results of operations and cash flow.

The Company is small compared to many of its competitors

Sevan Drilling is a small drilling company, which may be a competitive disadvantage when competing for certain contracts, as larger competitors may be perceived as more solid and/or experienced subcontractors than the Company.

The Group’s success depends on key employees and members of its management team

The successful development and performance of the Group’s business depends on its ability to attract and retain skilled professionals with appropriate experience and expertise. The Group’s success depends, to a significant extent, on the continued services of the individual members of its management team, who have substantial experience in the industry and in the local jurisdictions in which it operates. The Group’s ability to continue to identify and develop opportunities depends on management’s knowledge of, and expertise in, the industry and such local jurisdictions and on their external business relationships. There can be no assurance that any management team member will remain with the Group. Any loss of the services of key members of the management team could have a material adverse effect on its business and operations.

Failure to recruit or retain highly skilled personnel could adversely affect the Group’s operations

The Group requires highly skilled personnel to operate and provide technical services and support for its business. Competition for skilled and other labour required for the Group’s drilling operations has increased in recent years as the number of rigs activated or added to the worldwide fleets has increased. For deepwater operations utilization rates remain high and the number of deepwater units in operation is growing, not least in Brasil. This is expected to increase the demand for qualified personnel with deepwater experience in particular. If this expansion continues and is coupled with improved demand for drilling services in general, shortages of qualified personnel could develop, creating upward pressure on wages and making it more difficult to staff and service the Group’s rigs. Such developments could adversely affect the Group’s financial results and cashflow and ability to grow. The drilling contracts for Sevan Driller and Sevan Brasil contain mechanisms for adjusting the day rate based on the development of certain industry cost indices, but it cannot be guaranteed that such adjustments will fully compensate for increases in salaries and other operating costs the Group experiences.

Labour interruptions could disrupt the Group’s business

The Group has approximately 185 employees based in Brazil, Norway and China. Certain of the Group’s employees are members of labour unions and future employees may also be members of unions. Any labour unrest could prevent or hinder the Group’s services from being carried out normally and, if not resolved in a timely and cost-effective manner, could have a material adverse effect on its business, results of operations, cash flows and financial condition. The Group’s rigs are operated with offshore crews, the majority of which are organized in labour unions. If individuals of the offshore crew are involved in a strike or other form of labour unrest, the Group may not be able to operate its vessels, which may have a material adverse impact on its business, results of operations and financial condition.

The Company’s position and intended growth within a niche market segment may add exposure

As the Company’s main assets are limited in number and concentrated in the deepwater drilling industry, the Company may be more vulnerable to specific economic, political, regulatory, environmental or other developments than would a company holding a more diversified portfolio of assets. The Company has been and remains in a dynamic growth period with expansion in activities, organisation, newbuilding programmes and financial exposure, all of which constitute challenges which require continuous monitoring and ability to control and adapt to inherent risk.

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The Group will need additional financing to complete its newbuilding program

The Group will not be fully financed after the completion of the Offering, and may need to raise additional equity if bank financing is not available on delivery of the newbuild rigs.

The Group’s existing or future debt arrangements could limit the Group’s liquidity and flexibility in obtaining additional financing, in pursuing other business opportunities or the Company’s ability to declare dividends to its shareholders

The Group’s bank loan agreements contain customary covenants and event of default clauses, including cross default provisions. The bank financing agreements contain, inter alia, conditions to be satisfied in order for committed funds to be made available to the relevant Group member, as well as restrictive covenants and performance requirements, which may affect operational and financial flexibility. In particular, Sevan Drilling as the parent company of the Group may have limited operations and income of its own, and its cash flow is to some extent dependent on distributions and contributions from its operating subsidiaries, which may be restricted by law or limitations imposed by lenders. The Group may in the future enter into loan agreements with stricter, or less strict, conditions than those currently in place.

As of 31 December 2010, the Group had USD 496 million in principal amount of debt, representing approximately 89% of its total book capitalization. As of the date of this Prospectus, the Group had USD 714 million in principal amount of debt, representing approximately 63% of its total capitalization, including the contribution in kind and conversion of debt taking place during the first quarter of 2011, see Section 11.8. The current indebtedness and future indebtedness which the Group may incur could affect the Group’s future operations, as a portion of the Group’s cash flow from operations will be dedicated to the payment of interest and principal on such debt and will not be available for other purposes. Covenants contained in the Group’s debt agreements require the Company or the Group to meet certain financial measures, which may (i) affect the Company’s flexibility in planning for, and reacting to, changes in its business, and (ii) limit the Group’s ability to dispose of assets or use the proceeds from such dispositions, withstand current or future economic or industry downturns or compete with others in the industry for strategic opportunities. The Group’s ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes may be limited. In addition, such financial measures could place restrictions on the Company’s ability to declare dividends to its shareholders. The Group’s ability to meet its debt service obligations and to fund planned expenditures, including construction costs for its newbuilding projects, will be dependent upon the Group’s future performance, which will be subject to general economic conditions, industry cycles and financial, business and other factors affecting the Group’s operations, many of which are beyond the Group’s control. The Group’s future cash flows may be insufficient to meet all of its debt obligations and contractual commitments, and any insufficiency could negatively impact the Group’s business. To the extent that the Group is unable to repay its indebtedness as it becomes due, the Group may need to refinance its debt, raise new debt, sell assets or repay the debt with the proceeds from equity offerings.

Additional indebtedness or equity financing may not be available to the Group in the future for the refinancing or repayment of existing indebtedness, and the Group may not be able to complete asset sales in a timely manner sufficient to make such repayments.

If the Group is unable to comply with the restrictions and the financial covenants in the agreements governing its indebtedness, there could be a default under the terms of these agreements, which could result in an acceleration of repayment of funds that have been borrowed

If the Group is unable to comply with the restrictions and covenants in the agreements governing its indebtedness or in current or future debt financing agreements, there could be a default under the terms of those agreements. The Group’s ability to comply with these restrictions and covenants, including meeting financial ratios and measures, is dependent on its future performance and may be affected by events beyond its control. If a default occurs under these agreements, lenders could terminate their commitments to lend or accelerate the outstanding loans and declare all amounts borrowed due and payable. Borrowings under debt arrangements that contain cross-acceleration or cross-default provisions may also be accelerated and become due and payable. If any of these events occur, the value of Group’s assets may or may not be sufficient to repay in full all of its outstanding indebtedness, and the Group may be unable to find alternative financing. Even if the Group could obtain alternative financing, that financing might not be on terms that are favourable or acceptable.

Continued bank financing depends on timely delivery and acceptance of Sevan Brasil under construction contract and charter

The USD 525 million bank facility relating to Sevan Brasil requires the unit to have been delivered by the yard and accepted by the borrower no later than by 31 November 2012, and that the unit shall have been accepted by Petrobras under the charter no later than by 30 May 2013, failing which it shall constitute a mandatory prepayment event.

The Company remains dependent on Sevan Marine and its performance

Sevan Marine has provided certain guarantees in favour of lenders and other third parties as security for the relevant Group members’ performance of their respective obligations. These guarantees will remain in place for a period to

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come. Some of the Sevan Marine guarantees include certain financial and/or performance covenants. If a breach were to occur under any such guarantee provided by Sevan Marine, it could constitute an event of default and result in acceleration under contracts involving members of the Sevan Drilling Group.

Interest rate fluctuations could affect the Group’s profitability, earnings and cash flow

The Group has incurred, and may in the future incur, significant amounts of debt. 75 % of the Group’s existing debt arrangements as of the date of this Prospectus have been hedged towards fluctuations in floating interest rates. However, movements in interest rates may adversely affect the Group’s profitability, earnings and cash flow. The principal amount covered by interest rate swaps is evaluated continuously and determined based on the Group’s debt level, the Company’s expectations regarding future interest rates and the Group’s overall financial risk exposure. As of the date of this prospectus, the Group’s total net floating interest rate USD debt amount to USD 662 million (75% of which has been hedged) and the Group’s net fixed interest rate USD debt amounted USD 52 million.

Fluctuations in exchange rates could result in financial losses for the Group

The daily contract operating rates under the Group’s existing offshore rig contracts with Petrobras consist of both Reais and USD elements. The Group has operating costs mainly in NOK, Reais, Singapore dollars and USD, primarily personnel, maintenance and administrative costs, and its external debt is primarily in USD. Although the Group will attempt to achieve a match of incoming and outgoing cashflows in each currency it will never achieve a 100% hedge and some exchange rate fluctuation risk will be present. The Group is continuously considering alternatives in order to minimise exchange rate fluctuation effects.

A change in tax laws of any country in which the Group operates from time to time, or complex tax laws associated with international operations which the Group may undertake from time to time, could result in a higher tax expense or a higher effective tax rate on the Group’s earnings

The Group will from time to time conduct operations through various subsidiaries in countries throughout the world. Tax laws and regulations are highly complex and subject to interpretation and change. In addition to potential exposure to corporate taxation in relevant jurisdictions of incorporation for the relevant Group member, and controlled-foreign-company (CFC) tax treatment (Nw. NOKUS) under Norwegian tax laws of one or more of the Group’s non-Norwegian subsidiaries, the Group’s drilling units may inter alia become subject to taxation at their place of operation under local laws. Further, the Group will be subject to changing tax laws, treaties and regulations in and between countries in which it operates from time to time. New tax treatment could expose the Group to new or additional taxes which could adversely affect its profitability.

A loss of a major tax dispute or a successful tax challenge to the Group’s operating structure from time to time, intercompany pricing policies, the taxable presence of subsidiaries in certain countries or other disputes related to or challenges to the Group’s tax payments could result in a higher tax rate on the Group’s earnings, which could result in a significant negative impact on its earnings and cash flows from operations

From time to time the Group’s tax structure and/or payments may be subject to review or investigation by tax authorities of the jurisdictions in which the Group operates. If any tax authority successfully challenges the Group’s operational structure, intercompany pricing policies, the taxable presence of its subsidiaries in certain countries; or if the Group losses a material tax dispute in any country, or any tax challenge of the Group’s tax payments is successful its effective tax rate on its earnings could increase substantially and the Group’s earnings and cash flows from operations could be materially adversely affected.

The Group may be subject to litigation that could have an adverse effect on the Group

The operating hazards inherent in the Group’s business expose the Group to litigation, including personal injury litigation, environmental litigation, contractual litigation with clients, intellectual property litigation, tax or securities litigation, and maritime lawsuits including the possible arrest of the Group’s drilling units. The Group is currently not involved in any litigation that, in the Company’s view, may have a significant effect on the Group’s financial position or profitability. However, the Company anticipates that the Group may in the future, be involved in litigation matters from time to time in the ordinary course of business. The Company cannot predict with certainty the outcome or effect of any claim or other litigation matter. Any future litigation may have an adverse effect on the Group’s business, financial position, results of operations and the Company’s ability to pay dividends, because of potential negative outcomes, the costs associated with instigating or defending such lawsuits, and the diversion of management's attention to these matters.

Technological risks

The rig design used by the Company has not yet been tested under all environmental and operational conditions. The parent company has used a closely related design on FPSOs, which may be deemed proven in the North Sea and in Brazil, but the Group has limited operating experience for the Sevan drilling rigs.

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Technology disputes involving the Group, the Group’s suppliers or sub-suppliers could impact the Group’s operations or increase its costs

The Group utilizes the patented Sevan platform concept, and along with other patented or proprietary technology, this is an essential part of Sevan Drilling’s business concept. The proprietary design will be utilised in drilling rig operations and on drilling units, and involve a potential risk of infringement of third party rights. The Company’s drilling units are based on the Sevan Design, in respect of which the Company has secured a licence right. While the Sevan Design is patented, there is an inherent risk that a third-party company may question, challenge or infringe on these patents, which may lead the Company in a legal dispute. In the event that a member of the Company or one of the Company’s suppliers or sub-suppliers becomes involved in a dispute over infringement of intellectual property rights relating to equipment owned or used by the Company, the Company may lose access to repair services, replacement parts, or could be required to cease use of some equipment. The Company could also be required to pay royalties for the use of equipment. Technology disputes involving the Company’s suppliers, sub-suppliers or the Company could adversely affect the Company’s financial results and operations. Certain of the Company’s contracts with its suppliers provide contractual rights to indemnity from the supplier against intellectual property lawsuits on a limited basis. Such contractual rights to indemnity may not adequately cover all relevant risks or actual loss incurred, and no assurances can be given that the Company’s suppliers will be willing or financially able to indemnify the Company against these risks, or that such contractual indemnities will protect the Company from adverse consequences of such technology disputes

2.3 Risks relating to the Shares The price of the Shares may fluctuate significantly

The trading price of the Shares could fluctuate significantly in response to a number of factors beyond the Company’s control, including, but not limited to, quarterly variations in operating results, adverse business developments, changes in financial estimates and investment recommendations or ratings by securities analysts, or any other risk discussed herein materialising or the anticipation of such risk materialising.

In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in the offshore drilling industry. Those changes may occur without regard to the operating performance of these companies. The price of the Company’s Shares may therefore fluctuate based upon factors that have little or nothing to do with the Company, and these fluctuations may materially affect the price of its Shares.

There is no existing market for the Shares, and a trading market that provides adequate liquidity may not develop

Prior to the Offering, there was no public market for the Shares, and there can be no assurance that an active trading market will develop, or be sustained or that the Shares may be resold at or above the Offer Price. The market value of the Shares could be substantially affected by the extent to which a secondary market develops for the Shares following the completion of this Offering.

Future sales of Shares by the Company’s major shareholder or any of its primary insiders may depress the price of the Shares

The market price of the Shares could decline as a result of sales of a large number of Shares in the market after this Offering or the perception that these sales could occur, or any sale of Shares by any of the Company’s primary insiders from time to time. These sales, or the possibility that these sales may occur, might also make it more difficult for the Company to sell equity securities in the future at a time and at a price that it deems appropriate. Although Sevan Marine, the Company’s sole shareholder as of the date of this Prospectus, is subject to an agreement with the Managers that restricts its ability to sell or transfer its Shares for twelve months after the date of this Prospectus, the representatives of the Managers may, in their sole discretion and at any time, waive the restrictions on sales or transfer during this period. Additionally, following this period, all Shares owned by Sevan Marine will be eligible for sale in the public market, subject to applicable securities laws restrictions.

Future issuances of Shares or other securities may dilute the holdings of shareholders and could materially affect the price of the Shares

It is possible that the Company may in the future decide to offer additional Shares or other securities in order to finance new capital-intensive projects, in connection with unanticipated liabilities or expenses or for any other purposes, see Section 2.2 “Risks relating to the Group”. If the Company raises additional funds by issuing additional equity securities, that may result in dilution to the holdings of existing shareholders.

Investors may not be able to exercise their voting rights for Shares registered in a nominee account

Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or other third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the VPS prior to the Company’s general meetings. The Company cannot guarantee that beneficial owners of the Shares will receive the notice of a general meeting in time to instruct their nominees to either effect a re-registration of their Shares or otherwise vote their Shares in the manner desired by such beneficial owners.

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Investors in the United States may have difficulty enforcing any judgement obtained in the United States against the Company or its directors or executive officers in Norway

The Company is incorporated under the laws of Norway, and all of its current directors and executive officers reside outside the United States. Furthermore, and as of the date of this Prospectus, the Company’s assets and the assets of the Company’s directors and executive officers are located outside the United States. As a result, investors in the United States may be unable to effect service of process on the Company or its directors and executive officers or enforce judgements obtained in the United States courts against the Company or such persons in the United States, including judgements predicated upon the civil liability provisions of the federal securities laws of the United States. The United States and Norway do not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral awards) in civil and commercial matters.

The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions

The Shares have not been registered under the US Securities Act or any US state securities laws or any other jurisdiction outside of Norway and are not expected to be registered in the future. As such, the Shares may not be offered or sold except pursuant to an exemption from the registration requirements of the US Securities Act and applicable securities laws. See Section 6 “Selling and Transfer Restrictions”. In addition, there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in future capital increases or rights offerings.

Shareholders outside of Norway are subject to exchange rate risk

The Shares are priced in NOK, and any future payments of dividends on the Shares will be denominated in NOK. Accordingly, each investor outside Norway is subject to adverse movements in the NOK against its local currency, as the foreign currency equivalent of any dividends paid on the Shares or price received in connection with any sale of the Shares could be materially adversely affected.

The Company will have a major shareholder at completion of the Offering

Following completion of the Offering, it is expected that Sevan Marine will be a major shareholder of the Company with the potential ability to influence the outcome of matters submitted for the vote of the Company’s shareholders, including election of members of the Board of Directors.

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3 RESPONSIBILITY STATEMENT 3.1 The Board of Directors of Sevan Drilling This Prospectus has been prepared in connection with the Offering described herein and the listing of the Shares on Oslo Børs.

The board of directors of Sevan Drilling (the “Board of Directors”) accepts responsibility for the information contained in this Prospectus. The members of the Board of Directors confirm that, after having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import.

5 April 2011

The Board of Directors of Sevan Drilling ASA

Jan Erik Tveteraas (Chairman)

Oskar Mykland Birte Norheim

3.2 Sevan Marine ASA Sevan Marine ASA confirms that the Existing Shares offered by it, constituting a portion of the Offer Shares, are being offered free of any liens or encumbrances.

5 April 2011

Sevan Marine ASA

Jan Erik Tveteraas (CEO)

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4 NOTICE TO INVESTORS 4.1 Important investor information The information contained herein is current as of the date hereof and subject to change, completion and amendment without notice. In accordance with Section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the assessment of the Shares between the time when this Prospectus is approved and the date of listing of the Shares on Oslo Børs, will be included in a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus, nor any sale of Offer Shares or Additional Shares made hereunder, shall under any circumstances create any implication that there has been no change in the Group’s affairs or that the information herein is correct as of any date subsequent to the date of this Prospectus.

In making an investment decision each investor must rely on their own examination and analysis of, and enquiry into, the Company and the terms of the Offering, including the merits and risks involved. Neither the Company, the Selling Shareholder or the Managers, nor any of their respective representatives or advisers, is making any representation to any offeree or purchaser of the Offer Shares or Additional Shares regarding the legality of an investment in the Offer Shares or the Additional Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the Shares.

No person is authorized to give information or to make any representation in connection with the Offering or sale of the Offer Shares or Additional Shares other than as contained in this Prospectus. If any such information is given or made, it must not be relied upon as having been authorized by the Company, the Selling Shareholder or the Managers or by any of the affiliates, advisors or selling agents of any of the foregoing.

The distribution of this Prospectus and the Offering and sale of the Offer Shares or Additional Shares in certain jurisdictions may be restricted by law. This Prospectus does not constitute an offer of, or an invitation to purchase, any of the Offer Shares or Additional Shares in any jurisdiction in which such offer or sale would be unlawful. No action has been taken that would permit a public offering of Shares to occur outside of Norway. Accordingly, neither this Prospectus nor any advertisement or any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. The Company, the Selling Shareholder and the Managers require persons in possession of this Prospectus to inform themselves about and to observe any such restrictions.

The Offer Shares and Additional Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. For further information on the manner of distribution of the Offer Shares and Additional Shares and the transfer restrictions to which they are subject, see Section 6 “Selling and Transfer Restrictions”.

The Company has furnished the information in this Prospectus. The Managers make no representation or warranty, express or implied, as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by the Managers. The Managers disclaims all and any liability, to the fullest extent permissible by law, whether arising in tort or contract or otherwise, which it might otherwise have in respect of this Prospectus or any such statement.

4.2 Presentation of financial and other information In this Prospectus, all references to “NOK” are to the lawful currency of Norway, all references to “EUR” are to the lawful currency of the participating member states in the European Union (“Member States”), and all references to “USD,” are to the lawful currency of the United States of America.

Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly.

The audited Sevan Drilling Group combined financial statement as of and for the years ended 31 December 2010. 2009 and 2008 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The basis for the preparation of the combined financial statements is further described in section 11.2 below.

The Sevan Drilling ASA audited financial statements as of and for the years ended 31 December 2010, 2009 and 2008 have been prepared in accordance with Norwegian Generally Acceptable Accounting Procedures (“NGAAP”).

The preparation of the combined financial statements as referred to above in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. Areas involving a higher degree of judgement or complexity, or areas where

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assumptions and estimates are significant to the combined and consolidated financial statements are disclosed in the applicable combined and consolidated financial statements.

4.3 Industry and market data In this Prospectus, the Company has used industry and market data obtained from independent industry publications, market research, and other publicly available information.

While the Company has compiled, extracted and reproduced industry and market data from external sources, the Company has not independently verified the correctness of such data. Thus, the Company takes no responsibility for the correctness of such data. The Company cautions prospective investors not to place undue reliance on the above mentioned data.

Although the industry and market data is inherently imprecise, the Company confirms that where information has been sourced from a third party, such information has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading. Where information sourced from third parties has been presented, the source of such information has been identified.

4.4 Cautionary note regarding forward-looking statements This Prospectus includes forward-looking statements that reflect the Company’s current views with respect to future events and financial and operational performance, including, but not limited to, statements relating to the risks specific to the Group’s business, the strengths of the Group, and the implementation of strategic initiatives, as well as other statements relating to the Group’s future business development and financial performance. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “assumes”, “projects”, “forecasts”, “estimates”, “expects”, “anticipates”, “believes”, “plans”, “intends”, “may”, “might”, “will”, “would”, “can”, “could”, “should” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements are not historic facts. They appear in a number of places throughout this Prospectus and include statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, financial position, operating results, liquidity, prospects, growth, strategies and the industry in which the Group operates, such as, but not limited to, with respect to number of wells to be drilled and demand for ultra deepwater drilling units in the future, exploration and production companies ultra deepwater drilling unit backlog in the future and yard capacity for building of new ultra deepwater units in the future.

Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future performance and that the Group’s actual financial position, operating results and liquidity, and the development of the industry in which the Group operates, may differ materially from those made in or suggested by the forward-looking statements contained in this Prospectus. The Company cannot guarantee that the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur.

By their nature, forward-looking statements involve and are subject to known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set out in the forward-looking statements. Important factors that could cause those differences include, but are not limited to:

• the effect of changes in demand, pricing and competition for the Group’s existing and future drilling units;

• wells to be drilled and demand for ultra deepwater drilling units in the future;

• exploration and production companies ultra deepwater drilling unit backlog in the future;

• yard capacity for building of new ultra deepwater units in the future;

• the competitive nature of the business the Group operates in and the competitive pressure and changes to the competitive environment in general;

• earnings, cash flow, dividends and other expected financial results and conditions;

• the price volatility of oil and gas products;

• the ability to secure sufficient employment opportunities for the Group’s existing drilling units as the term of the drilling contracts for these units expire, and the new, planned drillships when these are being delivered;

• the utilization level for the Group’s existing drilling units and the new, planned drilling units;

• delay or cost overruns in the construction projects for the new, planned drilling units;

• level of required repair, maintenance expenditures and replacement costs on the existing and new drilling units of the Group;

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• technological changes and new products and services introduced into the Group’s market and industry;

• fluctuations of exchange rates;

• changes in general economic and industry conditions;

• political, governmental, social, legal and regulatory changes;

• dependence on and changes in management and failure to retain and attract a sufficient number of skilled personnel;

• access to funding; and

• legal proceedings.

Some of the risks that could affect the Group’s future results and could cause results to differ materially from those expressed in the forward-looking statements are discussed in Section 2 “Risk Factors”.

The information contained in this Prospectus, including the information set out under Section 2 “Risk Factors”, identifies additional factors that could affect the Group’s financial position, operating results, liquidity and performance. Prospective investors in the Shares are urged to read all Sections of this Prospectus and, in particular, Section 2 “Risk Factors” for a more complete discussion of the factors that could affect the Group’s future performance and the industry in which the Group operates when considering an investment in the Company.

Save as required according to Section 7-15 of the Norwegian Securities Trading Act, the Company undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Prospectus.

4.5 Enforcement of civil liabilities The Company is a Norwegian public limited liability company and its assets are located outside the United States. In addition, the members of the Company’s Board of Directors and its officers are non-residents of the United States whose assets are located primarily or entirely outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Company or such persons or to enforce against them or the Company judgements of courts of the United States, whether predicated upon the civil liability provisions of the federal securities laws of the United States or other laws of the United States or any state thereof. There is doubt as to the enforceability in Norway of original actions or of actions for enforcement of judgements of US courts of civil liabilities predicated solely upon the federal securities laws of the United States or other laws of the United States or any state thereof. In addition, awards of punitive damages in actions brought in the United States or elsewhere may not be enforceable in Norway.

4.6 Available information For as long as any of the Shares are “restricted securities” within the meaning of Rule 144(a)(3) under the US Securities Act, and the Company is not subject to Sections 13 or 15(d) of the Securities Act of 1934, as amended (the “ US Exchange Act”) and is exempt from reporting pursuant to Rule 12g3-2(b) under the US Exchange Act, it will, upon the request of any such person, furnish to any holder or beneficial owners of Shares, or to any prospective purchaser designated by any such registered holder, the information required to be delivered pursuant to Rule 144A(d)(4) of the US Securities Act.

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5 THE OFFERING 5.1 Background for the Offering and use of proceeds In March 2011, Sevan Drilling, through two wholly owned subsidiaries, entered into letters of intent with COSCO for the construction and purchase of two ultra deepwater Sevan Rigs, with options for purchase of two additional units, see Section 8 “Company Description”.

The net proceeds of the Offering will be used (i) assuming the letters of intent become binding and effective construction contracts as contemplated, to finance the initial instalments of in total 20% of the contract price for the first two newbuilds to be built by COSCO (approx. USD 210 million), (ii) working capital reserve newbuild rigs and (iii) for general corporate purposes. The Offering will also facilitate a reduction of Sevan Marine’s ownership in the Company by the way of a secondary sale of shares to investors.

The Offering is being pursued as part of the decision by the Company’s sole shareholder, Sevan Marine, to introduce new owners to Sevan Drilling and to list the Shares of the Company on Oslo Børs. Depending on the pricing of the Offering and the market interest, it is expected that Sevan Marine’s ownership interest in the Company following the completion of the Offering will be in the range of 15-17%. The Offering will, if completed, bring Sevan Drilling in compliance with the requirements for admission to trading on Oslo Børs of having at least 500 shareholders and a free float of at least 25% of the Shares. A stock exchange listing will provide a regulated market place for trading of the Shares. A listing of the Shares may also facilitate the use of the capital markets in order to raise equity should the Company wish to do so in the future, and allow Sevan Drilling to use its Shares as transaction currency in future acquisitions and mergers, if any.

5.2 Overview of the Offering The Offering consists of an offering of between 92 million and 120 million New Shares to be issued by the Company and up to 64 million Existing Shares to be sold by the Selling Shareholder, in total from 156 million up to 184 million Offer Shares, which will be offered through an Institutional Offering and a parallel Retail Offering and Employee Offering.

Estimated net proceeds to the Company is estimated to be USD 336 million, net of transaction expenses. The proceeds will be used for general corporate purposes, and to finance, in part, the construction of two new drilling rigs at COSCO shipyard and working capital related thereto. The total construction cost for these two units are estimated to USD 1,050 million, whereof 20% or USD 210 million is payable on signing, and the remainder on delivery of the rigs (expected fourth quarter 2013 and second quarter 2014). Please consult Sections 8.2, 8.8 and 8.9 for details.

The Offering comprises:

• An Institutional Offering, in which Offer Shares are being offered to institutional investors and professional investors in Norway and outside Norway and the United States in reliance on Regulation S under the US Securities Act, and in the United States to a limited number of QIBs in reliance on Rule 144A under the US Securities Act, subject to a lower limit per order of NOK 1,000,000.

• A Retail Offering, in which Offer Shares are being offered to the public in Norway subject to a lower limit per application of an amount of NOK 10,000 and an upper limit per application of an amount of NOK 999,999 for each investor. Multiple applications are allowed. One or multiple applications from the same applicant in the Retail Offering with a total application amount of above NOK 999,999 will be adjusted downwards to an application amount of NOK 999,999. Investors who intend to place an application in excess of an amount of NOK 999,999 must do so in the Institutional Offering.

• An Employee Offering in which Offer Shares are being offered to Eligible Employees (as defined herein), subject to a lower limit per application of an amount of NOK 10,000 and an upper limit per application of an amount of NOK 100,000 for each Eligible Employee. Each Eligible Employee will receive a discount of 10% of the Offer Price per Offer Share allocated to such employee in the Employee Offering. For a brief description of the Norwegian tax effects of such discount, please see Section 16.3. Multiple applications are allowed. One or multiple applications from the same applicant in the Employee Offering with a total application amount of above NOK 100,000 will be adjusted downwards to an application amount of NOK 100,000. Eligible Employees who intend to apply for Offer Shares with a total application amount in excess of NOK 100,000 can place a separate application for the excess amount in the Retail Offering, however so that no discount will be granted in respect of any Offer Shares allocated in the Retail Offering. The Employee Offering will be structured in two separate tranches: One to the Eligible Sevan Drilling Employees (who may benefit from the special tax rules described in Section 16.3), and one to the Eligible Sevan Marine Employees (who will not benefit from the tax rules described in Section 16.3).

It has been provisionally assumed that approximately 90% of the Offering will be allocated in the Institutional Offering and that approximately 10% of the Offering will be allocated in the Retail Offering and Employee Offering. The final

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allocation of the number of Offer Shares to the Institutional Offering, the Retail Offering and the Employee Offering will, however, be finally determined following the completion of the book-building process for the Institutional Offering, based on the level of orders relative to the level of applications received in the Retail Offering. The Company and the Selling Shareholder reserve the right to deviate from the provisionally assumed allocation between the tranches without further notice and at their sole discretion.

The Company and the Selling Shareholder have, in consultation with the Managers, set an indicative price range for the Offering from NOK 16.00 to NOK 21.00 per Offer Share. The bookbuilding process, which will form the basis for the final determination of the Offer Price and the number of Offer Shares, will be conducted only in connection with the Institutional Offering. The indicative price range may be amended during the Bookbuilding Period. Any such amendments to the indicative price range will be announced in releases through the electronic information system of Oslo Børs.

The Bookbuilding Period for the Institutional Offering is expected to take place from 09:00 hours (CET) on 5 April 2011 to 17:30 hours (CET) on 15 April 2011, subject to extensions. The Application Period for the Retail Offering and the Employee Offering will last from 09:00 hours (CET) on 5 April 2011 to 12:00 hours (CET) on 15 April 2011, subject to extensions.

On 25 March 2011, the Board of Directors of the Company resolved to launch the Offering. The New Shares are expected to be issued following a resolution by the sole shareholder (Sevan Marine) at an extraordinary general meeting to be held on or about 18 April 2011.

The Company expects that the share capital increase pertaining to the Offering will be registered in the Norwegian Register of Business Enterprises and that the Offer Shares are delivered to the investors’ VPS accounts on or about 28 April 2011, and that trading in the Shares on Oslo Børs will commence on or about 29 April 2011.

The table below provides certain indicative key dates for the Offering:

Date Commencement of Bookbuilding Period and Application Period ...................................................... 5 April 2011 Meeting of the Board of Directors of Oslo Børs (to resolve on the listing application) ..................... 27 April 2011 End of Bookbuilding Period at 17:30 hours (CET) ............................................................................ 15 April 2011(1) End of Application Period at 12:00 hours (CET) ............................................................................... 15 April 2011(1) Allocation of Offer Shares .................................................................................................................. 18 April 2011 Allocation letters distributed ............................................................................................................... 18 April 2011 Payment due date for the Offer Shares ............................................................................................... 27 April 2011 Registration of the share capital increase with the Norwegian Register of Business Enterprises ....... 27 April 2011 Delivery of Offer Shares ..................................................................................................................... 28 April 2011 Commencement of trading in the Shares on Oslo Børs ...................................................................... 29 April 2011 __________

(1) Subject to extensions. To the extent the Bookbuilding Period and the Application Period are extended, all other dates referred to in this table will be extended correspondingly.

The Selling Shareholder is Sevan Marine ASA, Kittelsbuktveien 5, 4836 Arendal, Norway.

5.3 The Institutional Offering

Determination of the Offer Price and the number of Offer Shares

The Company and the Selling Shareholder have, in consultation with the Managers, set an indicative price range for the Offering from NOK 16.00 to NOK 21.00 per Offer Share. The Company and the Selling Shareholder will determine the Offer Price and the number of Offer Shares to be sold in the Offering on the basis of the orders placed in the Institutional Offering during the bookbuilding process, and the level of applications made in the Retail Offering and the Employee Offering. The Offer Price will be determined on or around 18 April 2011 and will be announced through the electronic information system of Oslo Børs. The Offer Price may be set within, below or above the indicative price range. Investors’ orders for Offer Shares in the Institutional Offering will, after the end of the Bookbuilding Period, be irrevocable and, accordingly, investors will be bound by their orders regardless of what the Offer Price is finally set to be and regardless of whether the Offer Price is set within, above or below the indicative price range.

Minimum order

The Institutional Offering is subject to a lower limit per order of NOK 1,000,000.

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Placing of orders and withdrawal of or amendments to the order

Any orally placed order in the Institutional Offering will be binding upon the investor and subject to the same terms and conditions as a written order. The Managers may, at any time and in their sole discretion, require the investor to confirm any orally placed order by instrument in writing. Orders made may be withdrawn or amended by the investor at any time up to the end of the Bookbuilding Period. After the end of the Bookbuilding Period, all orders that have not been withdrawn or amended are irrevocable and binding upon the investor. By making an order (as amended, if applicable), and not having withdrawn such order prior to the end of the Bookbuilding Period, the investor irrevocably (i) confirms its request to subscribe for the number of Offer Shares allocated to such investor up to the number of Offer Shares ordered and (ii) authorizes and instructs each of the Managers acting jointly but not severally (or someone appointed by them) to subscribe for such number of Offer Shares at the Offer Price on behalf of the investor.

Bookbuilding Period

The Bookbuilding Period for the Institutional Offering is expected to take place from 09:00 hours (CET) on 5 April 2011 to 17:30 hours (CET) on 15 April 2011.

The Company, the Selling Shareholder, and the Managers reserve the right to extend the Bookbuilding Period at any time. Any extension of the Bookbuilding Period will be announced through the electronic information system of Oslo Børs on or before 09:00 hours (CET) on the last day of the (then prevailing) Bookbuilding Period. An extension of the Bookbuilding Period can be made one or several times, however in no event will the Bookbuilding Period be extended beyond 17:30 hours (CET) on 20 April 2011. In the event of extension of the Bookbuilding Period, the allocation date, the first trading date, the payment due date and the date of delivery of Offer Shares will be extended accordingly. The Bookbuilding Period cannot be closed early.

Application offices

Orders in the Institutional Offering can be made to either of Pareto Securities AS, ABG Sundal Collier Norge ASA, Arctic Securities ASA, First Securities AS, ING Bank N.V., or SEB Enskilda AS.

All orders in the Institutional Offering will be treated in the same manner regardless of which application office an order is placed with.

Allocation, payment for and delivery of Offer Shares

Subject to any extensions of the Bookbuilding Period, the Managers expect to issue notifications of allocation of Offer Shares in the Institutional Offering on or around 18 April 2011, by issuing contract notes to the applicants by mail.

Payment and delivery of Offer Shares (either in the form of New Shares or in the form of Existing Shares) in the Institutional Offering is expected to take place on or about 27 April 2011.

The Company and the Managers may choose to transfer the Offer Shares allocated to such applicants to a VPS account operated by Nordea for transfer to the non-paying applicant when payment for the relevant Offer Shares is received. In such case, the Managers reserve the right, without further notice, to sell or assume ownership of such Offer Shares if payment has not been received by the third day after the payment due date.

If Offer Shares are sold on behalf of the applicant, such sale will be for the applicant’s account and risk (however so that the applicant shall not be entitled to profits therefrom, if any) and the applicant will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or the Managers as a result of or in connection with such sales, and the Company and/or the Selling Shareholder and/or the Managers may enforce payment for any amount outstanding in accordance with Norwegian law.

For late payment, interest will accrue on the amount due at a rate equal to the prevailing interest rate under the Norwegian Act on Interest on Overdue Payments of 17 December 1976, no. 100, which, at the date of this Prospectus, was 9.00% per annum.

5.4 The Retail Offering

Offer Price

The Offer Price for the Offer Shares offered in the Retail Offering will be the same as in the Institutional Offering.

Each applicant in the Retail Offering will be permitted, but not required, to indicate on the application form that the applicant does not wish to be allocated Offer Shares should the Offer Price be set above the indicative price range. If the applicant does so, the applicant will not be allocated any Offer Shares in the event that the Offer Price is set above the upper end of the indicative price range. If the applicant does not expressly stipulate such reservation on the application form, the application will be binding regardless of whether the Offer Price is set within or above (or below) the indicative price range.

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Minimum and maximum application

The Retail Offering is subject to a lower limit per application of an amount of NOK 10,000 and an upper limit per application of an amount of NOK 999,999 for each investor. Multiple applications are allowed. One or multiple applications from the same applicant in the Retail Offering with a total application amount of above NOK 999,999 will be adjusted downwards to an application amount of NOK 999,999. Investors who intend to place an order in excess of an amount of NOK 999,999 must do so in the Institutional Offering.

Application Period

The period during which applications for Offer Shares will be accepted in the Retail Offering will last from 09:00 hours (CET) on 5 April 2011 to 12:00 hours (CET) on 15 April. Any extension of the Bookbuilding Period, see Section 5.3 above., will lead to a similar extension of the Application Period in the Retail Offering. Early close is not permitted.

Applications and application offices

Applications in the Retail Offering can be delivered to the following offices:

Pareto Securities AS Dronning Mauds gate 3

P.O. Box 1411 Vika 0115 Oslo, Norway

Telephone: +47 22 87 87 00 Telefax: +47 22 87 87 10

www.pareto.no

ABG Sundal Collier Norge ASA Munkedamsveien 45 E

P.O. 1444 Vika 0115 Oslo, Norway


www.abgsc.no

Arctic Securities ASA Haakon VII’s gate 5 P.O. Box 1833 Vika 0123 Oslo, Norway


www.arcticsec.no

First Securities AS Filipstad Brygge 1



www.first.no

SEB Enskilda AS Filipstad Brygge 1

P.O. Box 1363 Vika 0250 Oslo


www.sebenskilda.no

All applications in the Retail Offering will be treated in the same manner regardless of which application office the applicant submits the application to, and regardless of whether it is placed by delivery of an application form to an application office or through the VPS online subscription system.

Applications in the Retail Offering can be made on the application form attached to this Prospectus as Appendix G. Application forms together with this Prospectus can be obtained from the Company or the application offices set out above.

Applicants in the Retail Offering can also apply for Offer Shares through the VPS online subscription system through the link to such online subscription system on any of the following internet pages: www.pareto.no; www.abgsc.no; www.arcticsec.no; www.first.no; www.sebenskilda.no

Applicants will be able to download this Prospectus and the application form once they have confirmed residency in Norway and have a valid VPS account. Applications made through the VPS online subscription system must be duly registered during the Application Period.

Application forms that are incomplete or incorrectly completed, or that are received after the expiry of the Application Period, may be disregarded without further notice to the applicant. Subject to any extension of the Application Period, properly completed application forms must be received by one of the application offices by 12:00 hours (CET) on 15 April 2011. Neither the Company, the Selling Shareholder nor any of the Managers may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by any of the application offices.

All applications made in the Retail Offering will be irrevocable and binding upon receipt of a duly completed application form by an application office, or in the case of applications through the VPS online subscription system, upon registration of the application, irrespective of any extension of the Application Period, and cannot be withdrawn, cancelled or modified by the applicant after having been received by an application office, or in the case of applications through the VPS online subscription system, upon registration of the application.

By making an application, the applicant irrevocably (i) confirms its request to subscribe for the number of Offer Shares allocated to such applicant and (ii) authorizes and instructs each of the Managers acting jointly but not severally (or someone appointed by them) to (in respect of New Shares) subscribe for such number of Offer Shares at the Offer Price on behalf of the applicant.

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Allocation, payment and delivery of Offer Shares

Nordea, acting as settlement agent for the Retail Offering, expects to issue notifications of allocation of Offer Shares in the Retail Offering on or about 18 April 2011, by issuing allocation notes to the applicants by mail.

Any applicant wishing to know the precise number of Offer Shares allocated to it may contact one of the application offices from 12:00 (CET) on 18 April 2011 and onwards during business hours. Applicants who have access to investor services through an institution that operates the applicant’s VPS account should be able to see how many Offer Shares they have been allocated from 12:00 hours (CET) on 18 April 2011.

In completing an application form, or registering an application through the VPS online subscription system, the applicant gives Nordea (on behalf of the Managers) the right to debit the applicant’s Norwegian bank account for the total amount due for the Offer Shares allocated to the applicant. The applicant’s account number must be stipulated on the application form or in the VPS online subscription system.

Accounts will be debited on or about 27 April 2011 (the payment due date), and there must be sufficient funds in the stated bank account from and including 27 April 2011. Applicants who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the payment due date (27 April 2011). Details and instructions will be set out in the allocation notes to the applicant to be issued on or about 18 April 2011.

Should any applicant have insufficient funds on his or her account, or should payment be delayed for any reason, or if it is not possible to debit the account, interest will accrue on the amount due at a rate equal to the prevailing interest rate under the Norwegian Act on Interest on Overdue Payments of 17 December 1976, no. 100, which at the date of this Prospectus was 9.00% per annum.

Nordea (on behalf of the Managers) reserves the right (but has no obligation) to make up to three debit attempts through 4 May 2011 if there are insufficient funds on the account on the payment due date. Subject to timely payment by the applicant, delivery of the Offer Shares allocated in the Retail Offering is expected to take place on or about 28 April 2011.

The Managers reserve the right, without further notice, to sell or assume ownership of Offer Shares if payment has not been received by the third day after the payment due date. If Offer Shares are sold on behalf of the applicant, such sale will be for the applicant’s account and risk (however so that the applicant shall not be entitled to profits therefrom, if any) and the applicant will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or the Managers as a result of or in connection with such sales, and the Company and/or the Managers may enforce payment for any amount outstanding in accordance with Norwegian law.

5.5 The Employee Offering

Eligible Employees

Subject to applicable laws, all direct employees, as of the last day of the Application Period, of Sevan Drilling or any of its consolidated subsidiaries (“Eligible Sevan Drilling Employees”) and all direct employees, as of the last day of the Application Period, of Sevan Marine or any of its consolidated subsidiaries (other than the members of the Group) (the “Eligible Sevan Marine Employees”, together with the Eligible Sevan Drilling Employees referred to as the “Eligible Employees”) are eligible for participation in the Employee Offering.

Offer Price

In the Employee Offering, each Eligible Employee will receive a discount of 10% of the Offer Price per Offer Share allocated to such Eligible Employee in the Employee Offering (the Offer Price less the 10% discount per Offer Share is hereinafter referred to as the “Employee Offering Offer Price”). For certain taxation matters of relevance for Eligible Sevan Drilling Employees participating in the Employee Offering, see Section 16.3.

Each applicant in the Employee Offering will be permitted, but not required, to indicate on the application form that the applicant does not wish to be allocated Offer Shares should the Offer Price be set above the indicative price range. If the applicant so elects, the applicant will not be allocated any Offer Shares in the event that the Offer Price is set above the upper end of the indicative price range. If the applicant does not expressly stipulate such reservation on the application form, the application will be binding regardless of whether the Offer Price is set within or above (or below) the indicative price range.

Minimum and maximum application

The Employee Offering is subject to a lower limit per application of an amount of NOK 10,000 and an upper limit per application of an amount of NOK 100,000 for each Eligible Employee (both limits taking into account the 10% discount). Multiple applications are allowed. One or multiple applications from the same applicant in the Employee Offering with a total application amount of above NOK 100,000 will be adjusted downwards to an application amount of NOK 100,000. Eligible Employees who intend to apply for Offer Shares with a total application amount in excess of

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NOK 100,000 can place a separate application for the excess amount in the Retail Offering, however so that no discount will be granted in respect of any allocation for Offer Shares allocated in the Retail Offering.

Application Period

The period during which applications for Offer Shares will be accepted in the Employee Offering will last from 09:00 hours (CET) on 5 April 2011 to 12:00 (CET) on 15 April 2011 Any extension of the Bookbuilding Period, see Section 5.3. above., will lead to a similar extension of the Application Period in the Employee Offering. Early close is not permitted.

All applications must be made on the application form attached to this Prospectus as Appendix F. Application forms together with this Prospectus can be obtained from the Company or the application office set out below.

Application forms that are incomplete or incorrectly completed, or that are received after the expiry of the Application Period, may be disregarded without further notice to the applicant. Subject to any extension of the Application Period, properly completed application forms must be received by the application office by 12:00 hours (CET) on 15 April 2011. Neither the Company nor any of the Managers may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by the application office.

Application office

The office at which applications in the Employee Offering can be made is as follows:

Nordea Bank Norge ASA Securities Services - Issuer Services Essendropsgate 7, Oslo Postboks 1166, Sentrum, N-0107 Oslo, Norway Telephone: +47 22 48 62 62 Telefax: +47 22 48 63 49

All applications made in the Employee Offering will be irrevocable and binding upon receipt of a duly completed application form by the application office irrespective of any extension of the Application Period, and cannot be withdrawn, cancelled or modified by the applicant after having been received by the application office.

By making an application, the applicant irrevocably (i) confirms its request to subscribe for the number of Offer Shares allocated to such applicant and (ii) authorizes and instructs each of the Managers acting jointly not severally (or someone appointed by them) to subscribe for such number of Offer Shares at the Offer Price on behalf of the applicant.

Allocation, payment and delivery of Offer Shares

Nordea, acting as settlement agent for the Employee Offering, expects, subject to any extensions of the Offer Period, to issue notifications of allocation of Offer Shares in the Employee Offering on or about 18 April 2011, by issuing allocation notes to the applicants by mail.

Any applicant wishing to know the precise number of Offer Shares allocated to it may contact the application offices from 12:00 (CET) on 18 April 2011 and onwards during business hours. Applicants who have access to investor services through an institution that operates the applicant’s VPS account should be able to see how many Offer Shares they have been allocated from 12:00 hours (CET) on 18 April 2011.

In completing an application form, the applicant gives Nordea (on behalf of the Managers) the right to debit the applicant’s Norwegian bank account for the total amount due for the Offer Shares allocated to the applicant. The applicant’s account number must be stipulated on the application form. Accounts will be debited on or about 27 April 2011 (the payment due date), and there must be sufficient funds in the stated bank account from and including 27 April 2011. Applicants who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the payment due date (27 April 2011). Details and instructions will be set out in the allocation notes to the applicant to be issued on or about 18 April 2011.

Subject to timely payment by the applicant, delivery of the Offer Shares allocated in the Employee Offering is expected to take place on or about 28 April 2011. Should any applicant have insufficient funds on his or her account, or should payment be delayed for any reason, or if it is not possible to debit the account, interest will accrue on the amount due at a rate equal to the prevailing interest rate under the Norwegian Act on Interest on Overdue Payments of 17 December 1976, no. 100, which at the date of this Prospectus was 9.00% per annum. Nordea (on behalf of the Managers) reserves the right (but has no obligation) to make up to three debit attempts through 4 May 2011 if there are insufficient funds on the account on the payment due date.

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The Managers reserve the right, without further notice, to sell or assume ownership of Offer Shares if payment has not been received by the third day after the payment due date. If Offer Shares are sold on behalf of the applicant, such sale will be for the applicant’s account and risk (however so that the applicant shall not be entitled to profits therefrom, if any) and the applicant will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or the Managers as a result of or in connection with such sales, and the Company and/or the Managers may enforce payment for any amount outstanding in accordance with Norwegian law.

5.6 Mechanism of allocation In the Institutional Offering, the Company and the Selling Shareholder together with the Managers will determine the allocation of Offer Shares. An important aspect of the allocation principles is the desire to create an appropriate long-term shareholder structure for the Company. The allocation principles will, in accordance with normal practice for institutional placements, include factors such as premarketing and management road-show participation and feedback, timeliness of the order, price level, relative order size, sector knowledge, investment history, perceived investor quality and investment horizon. In addition, the Company and the Selling Shareholder will aim at, and reserves its right to, give preference to applicants who were shareholders of Sevan Marine as of 11 April 2011 (as appearing in Sevan Marine’s register of shareholders with the VPS as of 15 April 2011, or otherwise as determined at the sole discretion of the Company and the Selling Shareholder). The Company and the Selling Shareholder, together with the Managers, further reserves the right, at their sole discretion, to take into account the creditworthiness of any applicant. The Company and the Selling Shareholder, together with the Managers, may also set a maximum allocation, or decide to make no allocation to any applicant.

In the Retail Offering, no allocations will be made for a number of Offer Shares representing an aggregate Offer Price of less than NOK 10,000 per applicant. In the Retail Offering, allocation will at the outset be made on a pro rata basis using the VPS’ automated simulation procedures and/or other allocation mechanism. However, the Company and the Selling Shareholder will aim at, and reserves its right to, give a higher allocation percentage to applicants who were shareholders of Sevan Marine as of 11 April 2011. For the purposes of determining who were shareholders of Sevan Marine as of 11 April 2011, the Company and the Selling Shareholder expects solely to rely on Sevan Marine’s register of shareholders with the VPS as of 15 April 2011. Hence, shareholders of Sevan Marine as of 11 April 2011 will be deemed to be those shareholders appearing as such in Sevan Marine’s register of shareholders with the VPS as of 15 April 2011 unless otherwise determined at the sole discretion of the Company and the Selling Shareholder. No allocations will be made in the Retail Offering for a number of Offer Shares representing an aggregate Offer Price of less than NOK 10,000 per applicant, however, all allocations will be rounded down to the nearest number of whole Shares and the payable amount will hence be adjusted accordingly. One or multiple orders from the same applicant in the Retail Offering with a total application amount of above NOK 999,999 will be adjusted downwards to an application amount of NOK 999,999.

In the Employee Offering, the Company will aim to give full allocation for all applications (within the maximum application amount), however so that the Company and the Board of Directors reserves the right, at its sole discretion, to determine the final allocation of Offer Shares and, in case, reduce allocations, as an important aspect of the allocation principles is the desire to create an appropriate long-term shareholder structure for the Company. No allocations will be made in the Employee Offering for a number of Offer Shares representing an aggregate Offer Price of less than NOK 10,000 (taking into account the 10% discount) per applicant, however, however, all allocations will be rounded down to the nearest number of whole Shares and the payable amount will hence be adjusted accordingly. One or multiple application from the same applicant in the Employee Offering with a total application amount of above NOK 100,000 (taking into account the 10% discount) will be adjusted downwards to an application amount of NOK 100,000 (taking into account the 10% discount).

The Managers, on behalf of the Company and the Selling Shareholder, are entitled in their sole discretion without further notice to disregard or reduce any order that is not fully in compliance with the instructions in the application forms, the VPS online subscription system and the Prospectus. The Managers, on behalf of the Company and the Selling Shareholder, are also entitled to deem applications that are not fully in compliance as valid.

In the event not all Offer Shares are allocated in the Offering, the number of Offer Shares allocated will be divided between New Shares and Existing Shares at the discretion of the Company and the Selling Shareholder, provided that allocations will be made to New Shares until the minimum number of New Shares offered in the Offering has been met.

No Offer Shares have been reserved for any specific national market.

5.7 Publication of information related to the Offering In addition to press releases at the Company’s and Sevan Marine’s website, the Company and Sevan Marine will use Oslo Børs’ electronic information system to publish information in respect of the Offering, such as information related to changes to the indicative price range, changes to the timetable of the Offering, including the Bookbuilding Period and the Application Period and determination of Offer Price.

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General information on the result of the Offering, including the final determination of the Offer Price, the number of Offer Shares allocated and the total amount of the Offering, is expected to be published on or about 18 April 2011 in the form of a release through Oslo Børs’ electronic information system.

5.8 Conditions for completion of the Offering On 25 March 2011, Sevan Drilling applied for admission to trading of its Shares on Oslo Børs or, alternatively, Oslo Axess. The Board of Directors of Oslo Børs is expected to consider the Company’s listing application at its board meeting scheduled to be held on 27 April 2011. Oslo Børs may approve the Company’s listing application subject to certain conditions. Completion of the Offering on the terms set forth in this Prospectus is expressly conditioned upon the approval of the Company’s listing application and the satisfaction of such conditions for admission to trading set by Oslo Børs, and the Offering will be cancelled in the event that the conditions are not satisfied. There can be no assurance that the listing application will be granted or that Sevan Drilling will satisfy these conditions.

In addition, the Company may, at its sole discretion, at any time until the share capital increase associated with the Offering is registered with the Norwegian Registry of Business Enterprises decide not to consummate the Offering.

5.9 The rights conferred by the Offer Shares The Shares of the Company are, and the New Shares will be, created under the Norwegian Public Limited Liability Companies Act of 13 June 1997 no. 45 (the “Norwegian Public Limited Liability Companies Act”). The Offer Shares will carry full shareholders’ rights and be vested with equal rights in all respects on an equal basis as any other Shares in the Company already in issue (including the right to receive dividend) for the New Shares from they are registered in the Norwegian Register of Business Enterprises. For a description of rights attached to the Shares, see Section 14 “Description of the Shares and Share Capital”.

5.10 Admission to trading, trading market, trading symbol and VPS registration Assuming that the conditions for completion of the Offering are satisfied, and the Offering is not withdrawn, it is expected that the Shares will be tradable on Oslo Børs or, alternatively, on Oslo Axess, on or about 29 April 2011. The Shares are expected to trade under the symbol “SDRILL”. The Offer Shares may not be transferred or traded before the share capital increase pertaining to the Offering has been registered with the Norwegian Register of Business Enterprises and the New Shares have been registered in the VPS.

Sevan Drilling has not applied for admission to trading of its Shares on any other stock exchange or regulated market than Oslo Børs (and, alternatively, Oslo Axess).

Prior to the Offering, there has been no public market for the Shares. Sevan Drilling and the Managers cannot assure that a liquid trading market for the Shares can be created or sustained. The prices at which the Shares will trade after the Offering may be lower than the Offer Price. The Offer Price may bear no relationship to the market price of the Shares subsequent to the Offering.

The New Shares will, as the existing Shares in the Company, be registered in book-entry form with the VPS and have ISIN NO 001 0455793. Sevan Drilling’s register of shareholders with the VPS is administrated by Nordea, Issuer Services, Postboks 1166 Sentrum, 0107 Oslo, Norway.

5.11 Mandatory anti-money laundering procedures The Offering is subject to the Norwegian Money Laundering Act No. 11 of 6 March 2009 and the Norwegian Money Laundering Regulations No. 302 of 13 March 2009 (collectively the “Anti-Money Laundering Legislation”).

Applicants who are not registered as existing customers with one of the Managers must verify their identity in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Applicants who have designated an existing Norwegian bank account and an existing VPS account on the application form are exempted, unless verification of identity is requested by any of the Managers. The verification of identity must be completed prior to the end of the Application Period or Bookbuilding Period (whichever is relevant). Applicants that have not completed the required verification of identity may not be allocated Offer Shares.

5.12 VPS account In participating in the Offering, each applicant must have a VPS account. The VPS account number must be stated on the application form, or in the VPS online subscription system. VPS accounts can be established with authorized VPS registrars, which can be Norwegian banks, authorized securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Non-Norwegian investors may, however, use nominee VPS accounts registered in the name of a nominee. The nominee must be authorized by the Norwegian Ministry of Finance. Establishment of a VPS account requires verification of identity before the VPS registrar in accordance with the Anti-Money Laundering Legislation.

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5.13 Over-Allotment Option Following the determination of the Offer Price, the Managers may over-allot a number of Additional Shares equalling up to 13 million Additional Shares (but not exceeding 10% of the number of Offer Shares initially allocated in the Offering) and, in order to permit delivery in respect of over-allotments made, the Stabilisation Manager (being Pareto Securities AS) may, pursuant to the Lending Option, require the Selling Shareholder to lend to the Stabilisation Manager, on behalf of the Managers, a number of Shares equal to the number of Additional Shares.

Further, the Managers will, pursuant to the Over-Allotment Option, have a one-time option to purchase, at the request of the Stabilisation Manager, up to 13 million Additional Shares (but not exceeding 10% of the number of Offer Shares initially allocated in the Offering) at a price per Additional Share equal to the Offer Price. The Over-Allotment Option will be effected by way of a further secondary sale of Existing Shares held by the Selling Shareholder, and may be exercised solely to cover over-allotments in connection with the Offering. The Stabilisation Manager will issue a statement on the first day of conditional trading in the Shares announcing whether the Managers will over-allot Shares in connection with the Offering. Any overallotted Shares will be sold at the Offer Price. Any exercise of the Over-Allotment Option will be promptly announced by the Stabilisation Manager through the information system of the Oslo Stock Exchange.

5.14 Price stabilisation Pareto Securities AS may, in its capacity as Stabilisation Manager on behalf of the Managers, effect transactions with a view to supporting the market price of the Shares at a level higher than what might otherwise prevail, by buying Shares in the open market at prices equal to or lower than the Offer Price. Such stabilisation transactions may thus result in a market price that is higher than would otherwise prevail. There is no obligation on the Stabilisation Manager to do so. Stabilising activities, if commenced, may be discontinued at any time, and will be brought to an end at the latest 30 calendar days from the first day of conditional trading in the Shares. 75% of the net profit, if any, resulting from the stabilisation activities conducted by the Stabilisation Manager on behalf of the Managers will be for the account of the Selling Shareholder while the remaining 25% will be for the account of the Managers. A stock exchange notice stating that stabilisation activities may occur will be issued on the first day of trading of the Shares on the Oslo Børs. Within one week after the end of the stabilisation period, the Stabilisation Manager will publish a statement through the information system of the Oslo Børs with information as to whether or not any stabilisation activities have been undertaken. If stabilisation activities have been undertaken, the statement will also include information on:

• the total amount of Shares purchased;

• the dates on which the Stabilisation Period began and ended;

• the price range between which stabilisation was carried out, as well as the highest, lowest and average price paid during the Stabilisation Period; and

• the date at which stabilisation activities last occurred.

Stabilisation activities will be conducted in accordance with Section 3-12 of the Norwegian Securities Trading Act and ancillary regulations.

5.15 Lock-up The Company and the Selling Shareholder have agreed with the Managers that they will not and will procure that none of their respective subsidiaries nor any other party acting on each of its or their behalf (other than the Managers) will, without the prior written consent of the Global Coordinator on behalf of the Managers directly or indirectly, issue, offer, pledge, sell, or contract to issue or sell any Shares for a period of twelve months following the first day of trading of the Shares on Oslo Børs. On the same basis, the Company and the Selling Shareholder have agreed that they will not and will procure that none of their respective subsidiaries nor any other party acting on each of its or their behalf (other than the Global Coordinator) will, without the prior written consent of the Global Coordinator on behalf of the Managers (i) directly or indirectly, issue, offer, pledge, sell or contract to issue or sell any securities convertible into or exercisable or exchangeable for Shares or (ii) enter into any swap or any other agreement or any transaction that has an equivalent effect to paragraph (i) above, whether any such swap or transaction described in paragraph (i) or (ii) above is to be settled by delivery of such securities, in cash or otherwise. The lock-up undertaking does not apply to (a) the sale and issue of the Offer Shares, (b) the sale and issue of any Additional Shares, (c) Shares lent out pursuant to the Lending Option, or (d) Shares issued upon exercise of existing options in respect of Shares.

5.16 Selling and transfer restrictions See Section 6 “Selling and Transfer Restrictions” for applicable selling and transfer restrictions relating to the Offering.

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5.17 Managers and advisers The Company has engaged Pareto Securities AS as Global Coordinator. Pareto Securities AS, ABG Sundal Collier Norge ASA, Arctic Securities ASA, First Securities AS, ING Bank N.V. and SEB Enskilda AS act as Joint Lead Managers and Joint Bookrunners for the Offering (together, the “Managers”)

Bugge, Arentz-Hansen & Rasmussen (BA-HR) has acted as legal advisor to the Company as to Norwegian law. Wiersholm has acted as Norwegian legal advisor to the Managers, and Akin Gump Strauss Hauer & Feld LLP has acted as the Managers US legal advisor in connection with the Offering. Deloitte has acted as financial due diligence advisor to the Managers.

5.18 Proceeds and expenses related to the Offering The gross proceeds of the Offering will depend on the Offer Price as determined following the bookbuilding process, and will be up to approximately NOK 3.270 million (exclusive of proceeds from sale of any Additional Shares). The proceeds will be allocated between the Company and the Selling Shareholder in proportion to the number of New Shares and Existing Shares that are sold in the Offering. Sevan Drilling estimates that the total expenses in connection with the Offering (inclusive of commission payable by the Company to the Managers, but excluding any discretionary commission) and the listing of its Shares on Oslo Børs, will amount to approximately NOK 120 million, of which (i) Sevan Marine will pay the commission relating to the Existing Shares, (ii) the Company will pay the commission relating to the New Shares and the expenses relating to the listing of its Shares on Oslo Børs, and (iii) each of Sevan Marine and the Company will pay their respective pro rate part (in proportion to the Existing Shares’ and the New Shares’ portion of the Offer Shares) of any and all other costs and expenses relating to the Offering.

5.19 Interests of natural and legal persons involved in the Offering The Managers (and/or their affiliates) have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. Further, in connection with the Offering, the Managers, their employees and any affiliates acting as an investor for their own account, may purchase Offer Shares and other securities of the Company or other investments for their own account and may offer or sell such securities (or other investments) otherwise than in connection with the Offering. Neither of the Managers intends to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

5.20 Dilution Assuming (i) a secondary sale by the Selling Shareholder of 64 million shares, (ii) issuance of 104 million New Shares by the Company through the Offering (the number of New Shares to be issued at the mid-point of the indicative price range), and (iii) use of the entire Over-Allotment Option, the Offering will result in an immediate dilution of Sevan Marine’s shareholding in the Company from 100% to approximately 9%.

5.21 Governing law and jurisdiction The terms and conditions of the Offering as set out in this Prospectus shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Offering or this Prospectus.

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6 SELLING AND TRANSFER RESTRICTIONS 6.1 Selling restrictions

United States

The Offer Shares and Additional Shares have not been and will not be registered under the US Securities Act, and may not be offered or sold except (i) within the United States to QIBs in reliance on Rule 144A or (ii) to certain persons in offshore transactions in reliance on Regulation S, and in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction. Accordingly, each Manager has represented and agreed that it has not offered or sold, and will not offer or sell, any of the Offer Shares or Additional Shares as part of its allocation at any time other than to QIBs in the United States in accordance with Rule 144A or outside of the United States in accordance with Rule 903 of Regulation S. Transfer of the Offer Shares and Additional Shares will be restricted and each purchaser of the Offer Shares and Additional Shares in the United States will be required to make certain acknowledgements, representations and agreements, as described under Section 6.2 “Transfer restrictions”.

Any offer or sale in the United States will be made by affiliates of the Managers who are broker-dealers registered under the US Exchange Act. In addition, until 40 days after the commencement of the Offering, an offer or sale of Offer Shares and Additional Shares within the United States by a dealer, whether or not participating in the Offering, may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A of the US Securities Act and in connection with any applicable state securities laws.

United Kingdom

Each Manager has represented, warranted and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of any Offer Shares and Additional Shares in circumstances in which section 21(1) of the FSMA does not apply to the Company; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to everything done by it in relation to the Offer Shares and Additional Shares in, from or otherwise involving the United Kingdom.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), an offer to the public of any Offer Shares or Additional Shares may not be made in that Relevant Member State other than the offers contemplated in this Prospectus in Norway once this Prospectus has been approved by the competent authority in such Member State and published in accordance with the Prospectus Directive as implemented in Norway except that an offer to the public in the Relevant Member State of any Offer Shares or Additional Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in the Relevant Member State:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity meeting two or more of the following criteria: (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than EUR 43 million and (3) an annual net turnover of more than EUR 50 million, as shown in its last annual or consolidated accounts;

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or

(d) in any other circumstances, not requiring the publication of a prospectus as provided under Article 3(2) of the Prospectus Directive, provided that no such offer of Shares shall result in a requirement for the publication by the Company or any Manager of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes hereof, the expression an “offer of notes to the public” in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase any securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression “Prospectus Directive” includes any relevant implementing measure in each Relevant Member State.

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6.2 Transfer restrictions

United States

The Offer Shares and Additional Shares have not been and will not be registered under the US Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and applicable state securities laws. Terms defined in Rule 144A or Regulation S shall have the same meaning when used in this Section.

Each purchaser of the Offer Shares or Additional Shares outside the United States pursuant to Regulation S will be deemed to have acknowledged, represented and agreed that it has received a copy of this Prospectus and such other information as it deems necessary to make an informed decision and that:

• The purchaser acknowledges that the Offer Shares and Additional Shares have not been and will not be registered under the Securities Act, or with any securities regulatory authority or any state of the United States, and are subject to significant restrictions on transfer.

• The purchaser is, and the person, if any, for whose account or benefit the purchaser is acquiring the Offer Shares or Additional Shares was located outside the United States at the time the buy order for the Offer Shares or Additional Shares was originated and continues to be located outside the United States and has not purchased the Offer Shares or Additional Shares for the benefit of any person in the United States or entered into any arrangement for the transfer of the Offer Shares or Additional Shares to any person in the United States.

• The purchaser is not an affiliate of Sevan Drilling or a person acting on behalf of such affiliate, and is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Offer Shares or Additional Shares from Sevan Drilling or an affiliate thereof in the initial distribution of such Shares.

• The purchaser is aware of the restrictions on the offer and sale of the Offer Shares and Additional Shares pursuant to Regulation S described in this Prospectus.

• The Offer Shares and Additional Shares have not been offered to it by means of any “directed selling efforts” as defined in Regulation S.

• Sevan Drilling shall not recognize any offer, sale, pledge or other transfer of the Offer Shares or Additional Shares made other than in compliance with the above restrictions.

Each purchaser of the Offer Shares or Additional Shares within the United States pursuant to Rule 144A acknowledge, represent and agree that it has received a copy of this Prospectus and such other information as it deems necessary to make an informed investment decision and that:

• The purchaser acknowledges that the Offer Shares and Additional Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to significant restrictions to transfer.

• The purchaser (i) is a QIB (as defined in Rule 144A), (ii) is aware that the sale to it is being made in reliance on Rule 144A and (iii) is acquiring such Offer Shares or Additional Shares for its own account or for the account of a QIB, in each case for investment and not with a view to any resale or distribution to the Offer Shares or Additional Shares, as the case may be.

• The purchaser is aware that the Offer Shares and Additional Shares are being offered in the United States in a transaction not involving any public offering in the United States within the meaning of the Securities Act.

• If, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such Offer Shares or Additional Shares, as the case may be, such Shares may be offered, sold, pledged or otherwise transferred only (i) to a person whom the beneficial owner and/or any person acting on its behalf reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (ii) in accordance with Regulation S, (iii) in accordance with Rule 144 (if available), (iv) pursuant to any other exemption from the registration requirements of the US Securities Act, subject to the receipt by the Company of an opinion of counsel or such other evidence that the Company may reasonably require that such sale or transfer is in compliance with the US Securities Act or (v) pursuant to an effective registration statement under the US Securities Act, in each case in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction.

• The purchaser is not an affiliate of Sevan Drilling or a person acting on behalf of such affiliate, and is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Offer Shares or Additional Shares from Sevan Drilling or an affiliate thereof in the initial distribution of such Shares.

• The Offer Shares and Additional Shares are “restricted securities” within the meaning of Rule 144(a) (3) and no representation is made as to the availability of the exemption provided by Rule 144 for resales of any Offer Shares or Additional Shares, as the case may be.

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• Sevan Drilling shall not recognize any offer, sale pledge or other transfer of the Offer Shares or Additional Shares made other than in compliance with the above-stated restrictions.

European Economic Area

Each person in a Relevant Member State other than, in the case of paragraph (a), persons receiving offers contemplated in this Prospectus in Norway who receives any communication in respect of, or who acquires any Offer Shares or Additional Shares under, the offers contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with the Managers and the Company that:

(a) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and

(b) in the case of any Offer Shares or Additional Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) such Shares acquired by it in the offer have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Managers has been given to the offer or resale; or (ii) where such Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Shares to it is not treated under the Prospectus Directive as having been made to such persons.

For the purposes of this provision, the expression an “offer” in relation to any of the Offer Shares or Additional Shares in any Relevant Member States means the communication in any form and by any means of sufficient information on the terms of the offer and any Offer Shares or Additional Shares to be offered so as to enable an investor to decide to purchase or subscribe for such Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

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7 MARKET OVERVIEW Market data and certain industry forecasts used in this Prospectus have been obtained from internal surveys, reports and studies, as well as market research, publicly available information and industry publications. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed and that the projections they contain are based on a number of significant assumptions. Sevan Drilling has not independently verified such information and therefore cannot guarantee its accuracy and completeness. The information in this Prospectus that has been sourced from third parties has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading.

In this Prospectus, Sevan Drilling makes some statements regarding its own competitive and market position. While the management believes that its internal surveys, estimates and market research are reliable, the Company has not independently verified this information.

7.1 Introduction Offshore oil and gas production is more challenging and expensive than onshore production due to the remote and often harsh environment in which the resources are located. During drilling the offshore well needs to be extended from the seabed to the rig floor. Due to the higher complexity of offshore drilling versus onshore operations, required rig time is significantly higher.

Within offshore rigs there are two main categories; Jack-up rigs and floaters (Semi-submersibles, the Sevan units and Drill ships). Jack-up rigs do not float during operation, they simply stand on retractable legs (usually three) and hence provide a stable platform from which to drill.

Source: First Securities

Jack-up rigs – A self-contained combination drilling rig and floating barge, fitted with long support legs that can be raised or lowered independently of each other. Upon arrival at the drilling location, the legs are jacked down onto the seafloor, preloaded to securely drive them into the sea bottom, and then all three legs are jacked further down. Since the legs have been preloaded and will not penetrate the seafloor further, this jacking down of the legs has the effect of raising the jacking mechanism, which is attached to the barge and drilling package. In this manner, the entire barge and drilling structure are slowly raised above the water to a predetermined height above the water, so that wave, tidal and current loading acts only on the relatively small legs and not the bulky barge and drilling package. A Jack-up rig can naturally only work in water depths that are less than the length of its legs, and typically this limits operations to less than 400 feet of water depth.

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Semi-submersibles – A particular type of floating vessel that is supported primarily on large pontoon-like structures submerged below the sea surface. The operating decks are elevated perhaps 100 or more feet above the pontoons on large steel columns. This design has the advantage of submerging most of the area of components in contact with the sea and minimizing loading from waves and wind. Semisubmersibles can operate in a wide range of water depths, including deep water. They are either anchored with six to twelve anchors tethered by strong chains and wire cables, which are computer controlled to maintain station keeping or using a thrusters based dynamic positioning (DP) system for station keeping. Semi-submersibles can be used in different operations, such as drilling, workover operations and production, depending on the equipment with which they are equipped.

Drill ships – A maritime vessel modified to include a drilling rig and using station-keeping equipment similar to semi-submersibles. The vessel is typically capable of operating in deep water. A drillship must stay relatively stationary on location in the water for extended periods of time. Drill ships typically carry larger payloads than semisubmersible drilling vessels, but their motion characteristics are usually inferior.

Sevan drilling unit – A cylindrical shaped floating vessel combining the favourable motion characteristics of a semi-submersible rig with the high variable deck load capacity of a drillship. The vessel shape enables larger internal storage capacity for bulk materials, like drilling fluids and chemicals. The station keeping positioning may be accomplished with multiple anchors, dynamic propulsion (thrusters) or a combination of these. The vessel is capable of operating in deep and ultra deepwater and has the same uses as a semi-submersible rig and a drillship.

7.2 The offshore drilling market

Introduction to the offshore drilling market

The major oil companies worldwide report of declining reserve replacement ratios (the ratio of new discoveries to oil produced), and an overall decline in reserves. According to the International Energy Agency (“IEA”), annual new discoveries have been lower than the annual oil production for the two last decades. Pareto Securities E&P survey of 2010, based on data from 15 major oil companies, estimates that that the reserve-replacement ratio (“RRR”; new discoveries compared to production, excluding any acquisitions) has been below 100% every year since 2000. The easiest extractable oil and gas reserves have already been found and developed. As a result, oil and gas companies are forced to explore new frontiers, and oil and gas field prospecting activity is moving from shallow to deeper waters, as well as a move towards harsher environments. This is also reflected in oil prices, which are at historically high levels.

Global oil production vs. discoveries (10-year periods)

Organic reserve-replacement ratio (RRR; new discoveries to production ratio)

Source:IEA, Pareto Securities Equity Research “2010 E&P Spending Survey”

The fastest growing segment in the offshore drilling industry is the ultra deepwater segment, where drilling operations are performed at water depths beyond 7,500 feet. The industry commonly classifies offshore drilling into four main water depth categories: shallow water (down to 500 feet), midwater (down to 3,000 feet), deepwater (down to 7,500 feet) and ultra deepwater (beyond 7,500 feet, “UDW”).

According to the US Energy Information Administration (EIA), the global oil and gas production is expected to grow by an average of 1% per annum over the next 20 years. Of the nearly 140 million1 barrels of oil equivalents (“mmboe”) of current global petroleum production, approximately 45 mmboe (35%) comes from offshore (source: BP Statistical Review 2010, EIA Energy Review 2009). By 2020, the offshore production is expected to increase to 75 million boe; an 1 Figures includes approx. 55 mmboe gas

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increase of approximately 67%. In order to achieve this, global exploration and production (“E&P”) spending is expected to increase further. In 2010, global offshore E&P expenditure is estimated to be around USD 500 billion, up from approximately USD 100 billion 10 years earlier. This will involve increased exploration in deeper waters, new geographical regions and in harsh environments.

Global oil demand and spare capacity compared to global E&P expenditure Demand and capacity in million boe/day; Expenditure in billion USD

Source:Schlumberger Investor Day 2011, Pareto Securities, February 2011

There is estimated to be around 200 billion barrels of ultra deepwater oil resources globally. Oil companies are struggling with diminishing reserves, and exploration in ultra deepwater areas is essential to maintain production rates. While the UDW exploration and production is still a relatively young segment, and has so far focused mostly on exploration, the exploration drilling in these areas will subsequently lead to development drilling, expected to lead to further significant demand growth for ultra deepwater and harsh environment drilling units.

Most of the recent large deep and ultra deepwater discoveries have been made in the regions commonly referred to as the deepwater “golden triangle”, comprising of the Gulf of Mexico, West Africa and South America. In addition, there are several other prosperous regions including East Africa, India and South East Asia.

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'70 '75 '80 '85 '90 '95 '00 '05 '10 '15World demand (lhs) Spare capacity (lhs)

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Oil demand and spare capacity (mbd)Oil price (USD/bbl)

E&P Expenditure (USDbn)

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The most important region within this “golden triangle” is Brazil, which has seen tremendous activity growth in the offshore sector recent years. It is estimated that the Brazilian sector holds 15 billion barrels of proven oil and gas reserves, and this figure is expected to more than double over the next three years. Petrobras plans to invest more than USD 224 billion over the next five years in order to achieve their 2020 production target of 5 million boe per day. Of the USD 224 billion investment plan, USD 119 billion is earmarked for exploration and production.

Resource base for global deepwater and harsh environment oil and gas production and exploration

Source: Pareto Securities equity research drilling presentation, February 2011

Deep and ultra deepwater market

According to Energyfiles Ltd the number of shallow water wells grew 2% annually in the period from 1994 to 2008, while deepwater wells grew 21% in the same period. Deepwater drilling requires more sophisticated equipment to extract the oil and gas, and it also drives increased drilling intensity per field. The preference for using floating production storage and offloading vessels (FPSOs) in most deep and ultra deepwater fields implies that mobile offshore drilling units will not only do the exploration drilling, but also the majority of the development drilling work, as the FPSOs have no drilling capabilities. More development work is also needed for the increasing number of subsea satellite field tie-backs.

From 2006 to 2009, deepwater discoveries accounted for 42-54% of all world discoveries according to Infield. As a result, deepwater discoveries in 2009 alone added 13 bn boe to the global reserves Deepwater discoveries are significantly larger than onshore with 2009 shallow water discoveries averaging 120 mm boe compared to deepwater discoveries of 270 mm boe on average.

Current developments

Future prospects Harsh environment

/cold climate

“Golden Triangle”

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As shown in the graph below, deepwater production has doubled over the past five years. In addition, the number of areas explored and developed has increased.

Growing deepwater production

Source: IHS CERA, Wood Mackenzie, Pareto Securities research, February 2011

Deepwater represents the main area for offshore production growth, and deepwater discoveries accounted for ~50% of world discoveries from 2006 to 2009. Deepwater discoveries are significantly larger in size than new onshore discoveries, with 150 mmboe avg. size in 2009 compared to 25 mmboe onshore. Deepwater production has doubled last five years, expected to double again next five years, increasing number of areas to explore and develop. Brazil is expected to see the highest growth going forward and is expected to constitute 32% of the worldwide deepwater production in 2015, compared to 30% in 2009 (source:IHS CERA and Wood Mackenzie, June 2010). The same sources expect the total annual deepwater growth to be 41% from 2009 to 2015.

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Deepwater rig rates are increasing again

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Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10

$'/day Ultra deepwater rigs >7500 ft dayrates

Source: ODS Petrodata, Pareto Securities research drilling report, February 2011

Day rates for ultra deepwater rigs have increased since a trough in 2010, with fixtures at up to USD 470,000 per day on multi-year contracts. For shorter contracts, with duration around 120 days, rates have been reported at USD 560,000 per day.

Pareto Securities research (15 February 2011) reports that 11 out of 22 UDW units that were available prior to 4Q 2010 now have secured contracts. Several of the remaining units are considered likely to be contracted in the coming months. The increased demand is estimated to absorb a growth in the UDW rig fleet from 32 rigs in 2007 to 117 projected at the end of 2011, an average of 22 rigs per year.

Since the peak in 2008 and the trough in 2010, the world has been through a deep financial crisis and the drilling industry has experienced the Deepwater Horizon accident. A significant pipeline of contracts is expected to be awarded during the next 12 months, and the uptick in oil prices is considered very positive for UDW rig rates.

The new UDW rigs are expected to be absorbed by demand growth

Floater Fleet Midwater DeepwaterUltra deepwater Total

CurrentContracted free 2010 18 1 1 20Contracted free 2011 36 13 10 59Contracted free later 41 35 63 139Hot/ Warm stacked 2 6 0 8Cold stacked 9 2 0 11Total current: 106 57 74 237NewbuildsContracted newbuilds 4 2 33 39Uncontracted newbuilds 2011 1 0 14 15Uncontracted newbuilds later 1 0 7 8Total newbuilds: 6 2 54 62

Total fleet: 112 59 128 299 Source: ODS Petrodata Rig Base, February 2011

The UDW rig fleet, being a relatively new segment, has experienced significant growth over the recent years. The number of UDW rigs has grown from 32 rigs in 2007 to 117 projected at the end of 2011, an average of 22 rigs per year.

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There is currently a fleet of 74 UDW rigs, with 54 newbuilds due for delivery. More than half (33) of these newbuilds already have contracts in place. The fleet growth rate is 11 rigs per year for 2012 and 2013, well below the average of 22 rigs since 2007.

The large players are the main demand drivers for UDW rigs

Source: Pareto Securities research February 2011, based on data from ODS Petrodata Rig Base

Pareto Securities research estimates that oil majors and the largest independent oil companies make up approximately half of the demand for ultra deepwater rigs, whereas National Oil Companies (“NOC’s”) constitute approx 1/3. Demand from large oil majors and NOCs is believed to be less volatile and less vulnerable to any market disruptions, a very positive aspect of the demand side for UDW rigs.

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Geographical reviews – Brazil

Brazil is one of the most promising offshore deepwater drilling regions in the world, holding 15 bn barrels of proven oil and gas reserves. This is expected to more than double over the next three years, as unproven reserves are developed in the deep waters of the Atlantic Ocean. Petrobras, the Brazilian national oil company, has announced an “aggressive” ramp up in their domestic offshore production, from current production of 2.5 million barrels per day to 5 million barrels per day in 2020.

As a comparison, peak oil production in the North Sea reached approximately 6 million barrels in late 1990s. Petrobras plans to invest more than USD 224 billion over the next five years in order to achieve their 2020 target, with USD 119 billion earmarked for exploration and production.

Current rig contract opportunities globally

Source: Deep Ocean Molokai targeted projects – Pride International Inc presentation at Jefferies & Company Global Energy Conference, December 2010

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The development of the great Tupi project is estimated to require between 200 and 300 wells, according to BG (licence holder on the Tupi field). Comparing to the speed of the most recently drilled ultra deepwater well of 156 days, this indicates that one rig can drill ~2.3 wells/ year (Pareto estimate). Efficiency gains will come, however, considering routine downtime (transit, shipyard etc.). Pareto estimates 2.3 wells per year to be reasonable also going forward. With 250 wells and an assumed development time of six years, this means Tupi alone will require 18 rigs, as much as 12% of the world UDW fleet including newbuilds.

Projected Brazilian domestic oil and gas production – fields that can be drilled with secured ultra deepwater capacity


Petrobras has been active in securing equipment and capacity to achieve its ambitious goal, including deepwater and ultra deepwater drilling rigs. One third of all ultra deepwater contract awards have come from Petrobras over the last five years. Petrobras has signed longer contracts than the industry average, resulting in over 50% of the estimated deep and ultra deepwater backlog. Pareto Securities equity research estimates that the Tupi field offshore Brazil alone could employ up to 12% of the World’s ultra deepwater drilling rig fleet.

Deepwater wells take significant time to complete

Source: AGR, Petrobras, Pareto Securities equity research drilling presentation, February 2011

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With water depths of up to 10,000 feet and difficult pre-salt structures, the drilling time per well is relatively long, exceeding 156 days on average. The pre-salt Tupi field alone holds approximately 5-8 billion barrels of oil equivalents in gross reserves and the field development may involve up to 300 producing and injector wells according to BG (license holder in the Tupi field). This implies that a significant number of additional deep and ultra deepwater units are required in Brazil for the foreseeable future.

With a political ambition of building a national Brazilian oil services industry, Petrobras has decided to tender for 28 domestic built offshore drilling units. These will reduce the company’s dependence on the international market, although there is a great deal of uncertainty related to the program as such units have never been built in Brazil. Historically, yards with limited experience in constructing complex drilling units have often suffered substantial delays and cost overruns.

Moreover, Petrobras is expected to be reluctant to awarding contracts to unproven contractors without operational track record and experience.

Petrobras has significant drilling rig requirements in pre-salt areas

Source: Petrobras, Pareto Securities research drilling presentation, February 2011

Norway (“NCS”)

Norwegian oil production has been subject to an annual decline of approximately 5% since its peak in 2000. In order to compensate for the declining trend, the number of exploration wells drilled started to increase significantly in 2008. From 2008 to 2010, 169 exploration wells were drilled compared to 178 in the previous seven years. Despite the increase in exploration drilling, reserves and production continue to decline.

In January 2011, the Norwegian Petroleum Directorate (“NPD”) downgraded the Norwegian undiscovered resources by more than 20% to 16.4 billion boe. The combination of declining oil and gas production, low reserve replacement ratios and a general downgrade of undiscovered reserves is expected to continue to increase the pressure for opening up sub-Arctic and Arctic regions like Lofoten and Vesterålen for exploration and subsequently production.

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Number of wells drilled on the NCS and daily oil production

200

168 165139 150 147 153

138162

124

39

22 26

1714 28

32 56

66

47

0

500

1000

1500

2000

2500

3000

3500

4000

0

50

100

150

200

250

300

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

000 barrels prod

uced

# of wells

Production wells Exploration wells Norway oilproduction Source: NPD, “Sokkelåret 2009”, January 2011

There are currently 29 drilling units operating on the NCS of which 22 units are semi-submersibles, six units are jackup rigs and one unit is a drill ship.

As shown in the graph below, the average age of the total floater fleet operating on the NCS is approximately 19 years. There are currently only six units that are younger than 5 years and 10 units younger than 15 years operating on the NCS. There is a strong need for rejuvenation of the fleet when new frontier acreage opens up for exploration. With the harshest and toughest of weather conditions and strict safety requirements in place to protect the environment, exploration and production (E&P) companies is expected to prefer and require the latest state-of-the-art equipment in order to comply with the expected safety and environmental standards.

Age distribution for floaters operating on the NCS

0 5 10 15 20 25 30 35 40

Bideford DolphinOcean Winner

Songa TrymBredford Dolphin

Songa DeltaOcean Vanguard

Transocean SearcherTransocean Winner

Songa DeePolar Pioneer

Transocean ArcticWest Alpha

Transocean LeaderScarabeo 5

Borgland DolphinWest NavigatorWest Venture

Stena DonAker Barents

Deepsea AtlanticAker Spitsbergen

COSLPioneerDeepsea Stavanger

Scarabeo 8

Years

Source: Extracted from NPD (www.npd.no)

Drilling in Lofoten, Vesterålen and Barents Sea will favour semi-submersibles over drill ships due to the superior motion characteristics of the semi-submersibles in harsh environment, leaving only 12 units competing for contracts in the near future as the graph below illustrates. Sevan Drilling is considered to be well positioned for winning contracts

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for operations in this area, due to Sevan’s cylindrical shape with capacity of drill ships and motion characteristics of semi submersibles.

Number of drilling units working on the NCS with Norwegian SUT(1), HE capability and zero discharge (January 2011)

Number of floaters qualified for working on the NCS with Norwegian SUT(1), HE and zero discharge capability built after 1999

Semis, 22, 76%

Drillships, 1, 3%

Jack Ups, 6, 21%

Semis, 12, 80%

Drillships, 3, 20%

Source: Extracted from ODS Petrodata database, January 2011

(1) A formal acknowledgement of compliance required for working on the NCS.

On 23 June 2010, the Ministry of Petroleum and Energy (MPE) announced the 21st licensing round for the NCS encompassing 94 blocks/parts of blocks, of which 43 were in the Norwegian Sea and 51 in the Barents Sea. This shows the shift in exploration to the northern parts of the NCS.

In February 2011, Statoil issued a “Category D” tender for construction of NCS compliant drilling units. Statoil is tendering for a minimum of two (2) units. The rationale behind the tender is believed to be a general need for renewal of the aging NCS fleet.

Arctic region

The area north of the Arctic Circle emerges as an increasingly attractive area for exploration and production. The Arctic region is estimated to hold approximately 22% of the undiscovered, technically recoverable oil and gas resources in the world according to Global Data and the U.S. Geological Survey (USGS) of 2008.

Petroleum potential in the Arctic

Source: US Geological Survey, July 2008

US Geological survey of 2008 estimates that the Arctic accounts for approximately 13% of the world’s undiscovered oil resources. Exploration activities north of the Arctic Circle have resulted in the discovery of more than 400 oil and gas fields. These fields contain approximately 40 billion barrels of oil, more than 1,100 tcf of gas, and 8.5 billion barrels of NGL. The vast potential in the region has lead to oil majors such as BP, ExxonMobil, Chevron, Shell and ConocoPhillips securing interest in order to position themselves in what is likely to be one of the most important future E&P regions. In addition, other E&P companies such as Cairn Energy, Statoil, Maersk, GDF Suez, Dong Energy and Greenland's national oil company Nunaoil have also secured licenses in the promising Arctic region.

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Scientific activities have been undertaken to improve the understanding of the region and the potential environmental consequences and risks of oil and gas activities in the Arctic region. The requirements for safe operations are even more critical in the Arctic as operations are far offshore and there is no effective method for containing and cleaning up oil spill in icy conditions. It is expected that drilling activity will ramp up three to five years from now, after the environmental aspects have been fully assessed and addressed. Cairn Energy is one of the most active explorers in the region with a multiyear campaign using harsh environment drilling units. Although it is expected that an increased number of the E&P companies, with interest in the region, will begin to explore these provinces over the next several years, it is difficult to quantify the amount of drilling capacity needed due to the political sensitive subject of opening up for exploration drilling in the region.

US Gulf of Mexico

The US Gulf of Mexico represents one of the first regions with deepwater drilling with the first discovery in 1986. From 2002 to 2008 exploration drilling in deepwater has found more than 6.6 bn boe according to the Department of the Interior Minerals Management Service (MMS). In 2008 alone, 15 new mid and deepwater discoveries were identified as a result of the exploration efforts. Five of these discoveries were drilled in water depths greater than 5,000 feet.

US Gulf of Mexico Deepwater wells drilled

Deepwater E&P is still in its infancyFocus has been on exploratory wellsWe believe a backlog is building up – more development drilling is needed25 deepwater discoveries in 2009 – 26 YTD

Deepwater wells in US GoM All wells in Norway

Norway is used as an example because of the availability of exact dataThis is believed to be showing a typicalprogressionA lot of exploration drilling in the beginning leads to increased development drilling further down theline

0

50

100

150

200

250

1996 1998 2000 2002 2004 2006 2008

# wells Exploration Development

0

50

100

150

200

250

1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010

# wells Exploration Development

Development/Exploration ratio: 2.4Development/Exploration ratio: 0.4

Source: BOEMRE, May 2009

The graph above shows the number of deepwater and ultra deepwater wells drilled in US Gulf of Mexico since 1996. The ultra deepwater drilling technology and capability, was developed in the late 1990s. During the first couple of years oil companies drilled exploration wells (shown in the graph above as the dark blue bars). Following a discovery, development drilling (light blue bars) is required to enable production. However, as shown in the light blue bars in the graph above, development drilling per year has historically shown certain volatility.

328 deepwater exploration and 141 development wells have been drilled from 1996 to 2008. A large number of deepwater units is required if the backlog of development wells is to be maintained or reduced.

The BP Deepwater Horizon accident on 20 April 2010 created short term uncertainties for the oil service industry. After the US government instated the federal drilling moratorium, a total drilling backlog of about 23 rig years has been built up in the US Gulf of Mexico. According to The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), processing for drilling permits can take up to 180 days versus 90 days before the accident, making the recovery of drilling activities in the US Gulf of Mexico a slow process. Six deepwater drilling rigs have already left the region and further units could leave during first half of 2011 should drilling permits continue to drag.

BOEMRE recently notified 13 companies that they may be able to resume their activities previously approved without the need to submit revised exploration or development plans. The companies must comply with BOEMRE’s new policies and regulations, including BOP certification and oil contamination response, welcoming the high-end segment of the drilling fleet for future operations. The first deepwater drilling permit since the Deepwater Horizon accident was given to Noble Energy on 28 February 2011.

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West Africa

The African region is estimated to hold more than 35 bn barrels of proven oil and gas reserves. West Africa is currently the most active deepwater region with 23 active deepwater drilling units.

Investments in deepwater offshore oil fields in West Africa have increased sharply from USD 1.5 billion in 2000 to USD 15.6 billion in 2010, resulting in a 30-fold increase in deepwater production from 85,000 barrels of oil equivalents per day in 2000 to 2.5 million barrels of oil equivalents per day in 2010. The deepwater production now accounts for more than 40% of West Africa’s total production.

Nigeria and Angola have in particular enjoyed tremendous deepwater exploration success in the 1990s, with notable discoveries such as Erha, Bonga, Bosi and Agbami in Nigeria, and Girassol, Daila, Kissanga and Kizomba in Angola.

The E&P community has directed its attention towards East Africa following the successful development of the West African deepwater regions. Uganda, Tanzania, Kenya, Madagascar and Mozambique have attracted the interest of large companies like China National Offshore Oil Corporation, Total, ExxonMobil and Anadarko following several oil discoveries in the region.

India

India had approximately 5.6 bn barrels of proven oil reserves as of January 2010, according to Oil & Gas Journal (OGJ), the second largest reserve in the Asia-Pacific region after China.

India is a fast growing economy and an increasingly important consumer of oil and gas. India was the fourth largest energy consumer in 2009 after USA, China and Japan, according to EIA. Energy demand in the transport sector is expected to be particularly high. EIA expects a consumption growth of approximately 100,000 barrels per day in 2011.

The Indian government continues to hold licensing rounds in an effort to promote exploration activities and boost domestic oil and gas production. Despite recent major new natural gas discoveries, India will continue with vast oil and gas imports to meet its needs.

There are currently four ultra deepwater drill ships and one deepwater drill ship operating in Indian waters. India’s demand for domestic oil and gas, and its government’s effort to promote exploration activities is expected to increase demand for more ultra deepwater units in this region.

Other ultra deepwater regions

Regions within the deepwater “golden triangle” (the Gulf of Mexico, West Africa and South America) currently absorb more than 90% of the active ultra deepwater unit capacity.

Political regimes and restricted economies have postponed development of oil resources in many frontier regions. As these factors tend to change over time new regions may become available for exploration. As a result, deepwater and ultra deepwater drilling has already taken place or is planned in Cuba, Mediterranean, Israel, Black Sea, Indonesia, Philippines, Australia and China.

Noble Energy reported discovery of a large natural gas field off Israel’s northern coast in 2010. The field, named Leviathan, is reported to hold approximately 16 trillion cubic feet of gas, making it one of the world’s largest offshore gas discoveries of the past decade. The Leviathan field is located at almost 5,400 feet water depts.

A consortium of national and major oil companies have been tendering for ultra deepwater units for drilling offshore Cuba. The US trade embargo on Cuba makes most drilling contractors (and units) unable to participate.

The Canadian/Chinese oil company Husky has utilized Seadrill’s ultra deepwater harsh environment semi submersible West Hercules since 2008 for operations in the South China Seas. The West Hercules is perceived to be with specifications beyond what is required for this region, but during heavy typhoons the unit proved to be very useful due to its harsh environment capabilities.

Mexico has struggled with declining production over some time, and the Mexican national oil company PEMEX is increasing its tendering activity. The Mexican part of the Gulf of Mexico consists mainly of shallow water fields, where jackups are deployed for drilling. However, PEMEX chartered their first ultra deepwater unit in 2008 to explore the deepwater part of Mexican Gulf of Mexico. Another two ultra deepwater units will join by 2011. PEMEX has favoured newer assets, and has included age restrictions into their most recent jackup tender.

7.3 Demand

Ultra deepwater

With the advantages of subsea production developments, offshore drilling units are undertaking increasingly more development drilling than before. The massive increase in exploration activity over the past few years is expected to lead to increased demand for development drilling. A fair assumption is 25% discoveries and four (4) development wells per discovery establishing a one to one (1:1) ratio.

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As can be seen from the graph below, most successful exploration activities have recently taken place in deeper waters below 3,000 feet. Based on the same level of exploration activity, a significant need for deepwater rigs is expected.

Successful exploration

0

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80

90

1990

1991

1992

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2000

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2002

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2004

2005

2006

2007

2008

2009

2010

Discovery year

Nu

mb

er

of

dis

coveri

es

(belo

w 3

00

m)

0 - 2999 ft 3000 - 7499 ft Above 7500 ft Source: Extracted from Infield Systems Ltd (www.infieldlive.com), January 2011

Development of new fields is time consuming, and it normally takes more than six years from discovery to the first producing well. Drilling often commences one to two years before “first oil”. Fast-track tie-in development could in the best case occur with approximately two year lead-time for fields close to existing infrastructure.

After exploration comes development drilling – this will be case also in Brazil

0

50

100

150

200

250

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

Exploration Development

Source: Norwegian Petroleum Directorate, Pareto Securities equity research presentation, February 2011

In an early phase, exploration drilling is dominant. Successful exploration drilling subsequently leads to development drilling, with a time lag. The above graph shows the total number of wells drilled since the beginning of E&P in Norway (including fixed installations). This is believed to be representative of the way drilling progresses, with a gradual shift towards more development. The number of development wells soon exceeds the number of exploration

#

wel

ls

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wells, and the ratio currently stands at 2.4 development wells per exploration well on the NCS. While exploration drilling has remained stable, the development drilling activity increases. Deepwater drilling has so far focused mostly on exploration. The level of ultra deepwater exploration drilling is expected to continue, with the added need for development drilling.

The credit crisis in 2008 resulted in lower capex budgets for most oil companies as oil and gas prices decreased sharply and funding became more expensive. As a consequence, oil companies postponed exploration campaigns and field developments, and a limited number of new activities were planned in 2009 and early part of 2010. This impacted the short term demand for development and exploration drilling. These budget cuts created a large backlog of exploration and development activities that eventually is expected to be executed. This could lead to a cyclical effect where the market will experience another lasting upturn where the demand for rigs is likely to exceed available supply.

Significant demand growth for ultra deepwater rigs expected - Petrobras

The development plan implies that between 200 and 300 wells are needed at Tupi

Pareto Securities research expects this figureto be at least 300 including i.a. injection wells

Current contracted rig fleet implies 330 wells by 2014 in total, Pareto Securities estimatesPareto expects that we again may experience shortage

Petrobras development plan Number of ultra-deepwater wells

7 922

42

60

84

100

0

20

40

60

80

100

120

<2008 2009 2010 2011 2012 2013 2014

Ultra-deew pater w ells (based on 3.4 w ells per year, excl. sublets)

# of wells

Source: Pareto Securities drilling presentation, February Jan 2011

The international E&P companies’ (excluding Petrobras) ultra deepwater backlog is currently at 35 annual rig years, and it is expected to grow to 38 rig years in 2012. Increased contract activity from mid 2011 is likely in order to replenish the E&P companies’ contract backlog.

A combination of deeper and more complex wells, tighter safety and regulatory requirements, combined with a general focus on modern units post the Deepwater Horizon accident will lead to continued differentiation of the deepwater fleet. With the gradual increase in the ultra deepwater fleet over the next years, newbuilds are expected to gain market share from units with lower specifications – following the same development witnessed in the jack up segment.

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7.4 Supply

Fleet

There has been an increase in the mobile offshore drilling unit fleet of approximately 20% over the last five years to approximately 730 units at year-end 2010. There are currently 116 units under construction for delivery from 2011 onwards, including 38 drillships and 26 semis. With the exception of a few semi-submersible mid-water units, the newbuild floaters on order are in the ultra deepwater category. The units on order will be delivered between now and 2014. Most of the units are being constructed at South Korean and Singaporean yards, where the Company does not consider cancellations or severe delays to be likely.

The table below shows the age profile of floaters. 2nd to 4th generation units are in general viewed as mid-water units, while upgraded 4th generation and 5/6th generation are so called deep or ultra deepwater units. The trend is that the dayrate spread is higher than the efficiency differences for jackups, and utilization is significantly different. Older jackups are operating at below 80% utilization, while jackups built after 1998 operate at around 95% utilization. The trend in the floater market is the same.

Age profile of the drilling rig fleet

0

10

20

30

40

50

60

70

80

2013200820031998199319881983197819731968Newbuild Cold stacked Warm stacked Drilling

# of units

Bifurcation will most likely happen in this market as wellWe believe 2nd-4th gen. floaters will struggle while new rigs will be in favor

Floater fleetJackup fleet

Clear trend in the jackup market: spread in day rates and utilization for older compared to newbuild jackup rigs is increasingThere will be more newbuilds – we believe around 100 before 2015

0

5

10

15

20

25

30

35

<1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Delivered Expected

# of units

Source: Pareto Securities, ODS-Petrodata Rig Base, February 2011

Fleet growth may be mitigated by cold or hot stacking of the rigs or conversion into other modes. Stacking gives the rig owner the option to reactivate the rig if the market recovers. At the moment there are some units, especially some 2nd/3rd generation units that have been stacked for more than a year. If these units are to be reactivated it will take a minimum of 30 to 40 days, in addition to around USD 10-30 million in expenditure per unit. Further, the rigs need to be certified, which could double the time and cost.

Yard capacity and deliveries

Recent orders for ultra deepwater units from Korean yards have taken out more or less all yard capacity for the coming years. Next available delivery slot of drilling units from the Korean yards are likely to be in 2014. The Singaporean yards have yet to confirm any ultra deepwater newbuild orders during the last order cycle, the recent six months, and may be in a position to deliver within year-end 2013. However, delivery of drilling units is highly dependent on long lead items like drilling equipment, thrusters and engines. In particular drilling equipment, with only two main suppliers, is a bottleneck for the overall delivery time for a drilling unit. This may imply that Singaporean yards cannot make deliveries of any UDW units before 2014 either.

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7.5 Market balance and dayrates

Current

Ultra deepwater utilization and dayrates

50

250

450

650

Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10

$'/day Ultra deepwater rigs >7500 ft dayrates

90

92

94

96

98

100

0

20

40

60

80

100

J-01 J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 J-10 J-11

Utilization total %

Demand & Supply

Ultra Deepwater rigs > 7500 ft

Demand Total supply Utilization


As shown in the graph above, the utilization rate for ultra deepwater drilling units has remained ~100% through the last decade with volatile markets and times of high uncertainties, indicating a strong underlying demand growth.

The number of deep and ultra deepwater contracts increased slightly during the fourth quarter of 2010 with a total of 16 contracts being awarded (up from 14 in the third quarter of 2010). The number of awards is assumed to be negatively affected by the US Gulf of Mexico drilling moratorium and a general absence of Petrobras at the tendering table. However, with the recent fixtures it is becoming evident that dayrates are increasingly reflecting the drilling capabilities of the rigs and the contractors – where modern units with higher efficiency get higher rates than older and less efficient rigs.

Market differentiation continues as E&P companies show a clear preference for modern units in an attempt to upgrade their fleets. This combined with the ~100% utilization rate and visible demand exceeding supply should shift the market from supply to demand driven.

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Deepwater and ultra deepwater market differentiation (separation of dayrates between new and old rigs) is shown when looking at the fleet utilisation rate where the ultra deepwater fleet runs at 98/99% utilization compared to the deepwater fleet that is running at levels around 91/92% utilization.

Recent fixtures of ultra deepwater rigs

Fixturedate

Company Rig Rig type

Operator Region RateUSD/day

Duration Startup

23-Feb Noble Noble Jim Day 6GSS Shell USA 485 1Y Feb-11

11-Feb Sete Brasil Drillship TBN 6GDS Petrobras Brazil 450 10Y Feb-15

17-Jan Noble Drillship TBN 6GDS Shell TBA 410 6.5Y Jul-13

04-Jan Ocean RIg Leiv Eiriksson 5GSS Cairn Energy Greenland 480 180D Jun-11

04-Jan Ocean Rig Cocovado 6GDS Cairn Energy Greenland 560 180D Jun-11

04-Jan Ocean Rig Poseidon 6GDS Petrobras Tanzania 540 600D Aug-11

08-Dec Pacif ic Drilling Pacif ic Bora 6GDS Chevron Nigeria 470 3Y Feb-11

07-Dec Transocean DeepwaterMillenium

5GDS Tullow Oil Ghana 539 120D Mar-11

16-Nov Odf jell DeepseaAtlantic

6GSS Statoil Norway 490 1Y Aug-13

12-Nov Diamond Ocean Conf idence

5GSS Murphy Congo 390 195D Dec-10

11-Nov Ocean Rig Eirik Raude 5GSS Border Falkland 510 60D Nov-11

Source: ODS-Petrodata Rig Base, February 2011

The current price trend is increasing dayrates. Average dayrate for the ultra deepwater contracts awarded in the fourth quarter of 2010 was USD 471,000 per day, according to Pareto Securities research estimates.

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Long term perspective

Pareto has, based on data from ODS Petrodata, calculated that by 2020, there will be approximately 320 floating rigs world-wide (semi-submersibles and drill ships), whereof 175 or 66% will be older than 20 years of age. As much as 48% of the floating rig fleet will be older than 30 years of age.

The floater fleet is ageing – status at the start of 2011

Source: Pareto Securities extract from ODS-Petrodata database, February 2011

It is expected that a significant number of the floating rigs built before 1990 will be retired, and that significant number of newbuild floaters will be required.

Within the ultra deepwater segment, it is expected that new units will capture market share, squeezing the older deepwater rigs down into the midwater segment. In addition the oldest units with lowest specifications will be stacked and subsequently retired.

7.6 Newbuildings and shipyard capacity Newbuild prices and second hand values have dropped significantly since the peak in mid-2008. Current newbuild price for an ultra deepwater drill ship from reputable South Korean shipyards is less than USD 550 million depending on the specifications. Including project management, drilling and handling tools, spares, capitalized interest and operations preparations the ready-to-drill cost should be around USD 600 million – or about USD 250 million below peak levels.

The combination of favourable yard prices and installment terms (typically 25% payment prior to delivery) and a change in the ultra deepwater sentiment creates a window of opportunity now for a new newbuild cycle. There has been a significant increase in the newbuild ordering activity with 13 drill ships and 1 semis being ordered (firm contracts and LOI’s) the last three months. This includes:

• Seadrill: 2 drill ships plus options for additional 2 drill ships from Samsung Heavy Industries.

• Queiroz Galvao/Delba: 2 drill ships from Samsung Heavy Industries.

• Odebrecht: 1 semi and 1 drill ship from DSME.

• Pride International: 1 drill ship plus 1 drill ship option from Samsung Heavy Industries.

• Diamond Offshore: 1 drill ship plus 1 drill ship option from Hyundai Heavy Industries.

• Aker Drilling: 2 drill ships plus options for additional 2 drill ships from DSME.

• Noble Corp.: 2 drill ships plus options for additional 2 drill ship options from Hyundai Heavy Industries.

• Atwood Oceanics: 1 drill ship plus options for additional 2 drill ship options from DSME.

• Sete Brasil: 7 drill ship from EAS shipyard, Brazil.

• Sevan Drilling: 2 drilling units plus options for additional 2 drilling units from COSCO

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There have been few transactions to verify current second hand values. Songa Offshore acquired partial ownership in Larsen Rig 1 during early 2010, which is currently owned by the stand-alone company Deepwater Driller Ltd. The transaction, assuming 51% ownership, has an implied rig value of about USD 670 million. Seadrill acquired the UDW semis Seadragon I and II for a total consideration of USD 1.2 billion, with uncertainties regarding the actual delivery time and contract status. The units are expected to be delivered in 1Q 2011 and 4Q 2011, respectively. The price of the two Seadragon units is believed to reflect a material completion risk for the units as well as favourable financing package offered by the seller. The Seadragon transaction may represent the last attractive purchase of rigs having been owned by companies in distress in the market, and future fleet additions will probably be through newbuild orders or company acquisitions.

Shipyard capacity points to 2014 as delivery time for newbuilds

Source: ODS-Petrodata, 8 March 2011

Over the last year, yard capacity has been tightening and there has been more demand pressure on sub suppliers. The increased ordering activity over the last three months has enabled shipyards to increase their order backlog up to a comfortable level and reduce the need for new orders. As a result, shipyards are likely to become reluctant to offer the same back-end heavy payment profiles as earlier, and likely to be generally more restrictive on the terms they offer as there is less pressure on the yards to rush to secure orders in the future. This may lead to an increased delivery cost as well as a more front-end loaded payment structure. Increased costs of long lead items as well as improved shipyard margins are the main reasons for the expected increase of contract prices.

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8 COMPANY DESCRIPTION 8.1 Corporate information Sevan Drilling was incorporated on 31 May 2006, by Sevan Marine ASA. The Company is organized and existing under the laws of Norway in accordance with and pursuant to the Norwegian Public Limited Liability Companies Act and is a Public Limited Liability Company (“ASA”). The Company’s registration number is 989 910 272.

According to section 2 of its articles of association, the Company’s head-quarters and registered office is in Stavanger. The Company is in the process of moving premises, but its current office is at Kittelsbuktveien 5, 4836 Arendal, Norway, telephone: +47 37 40 40 00 and telefax: +47 37 40 40 99. The Company’s web site is www.sevandrilling.com.

Sevan Marine is as of the date of this Prospectus the sole shareholder of the Company.

8.2 Business overview Sevan Drilling is an international offshore drilling contractor specializing in the ultra deepwater segment. Sevan Drilling owns, operates and builds ultra deepwater rigs, and as of the date of the Prospectus, the Company comprises the operation activities related to Sevan Driller and construction activities related to Sevan Brasil.

Sevan Drilling is a fully integrated offshore drilling contractor, owning two of the world’s most advanced ultra deepwater drilling units. These semi-submersible drilling rigs of Sevan 650 design, Sevan Driller and Sevan Brasil, are built for safe and efficient operations in ultra deepwaters worldwide – including Brazil, West Africa and the US Gulf of Mexico. Sevan Driller has been in operation since June 2010 whereas Sevan Brasil is estimated to start operations in the second quarter of 2012. Both rigs are contracted to Petrobras on six-year drilling contracts for operations off the coast of Brazil. Sevan Driller has been operating at approximately 1,900 meters water depth in the Campos Basin. Since start-up, and following some start-up issues and downtime primarily as a result of defects in equipment provided by third parties, the Sevan Driller has demonstrated a rapidly increasing performance, with a utilization of 78%, 97% and 96% for January, February and March 2011, respectively, totaling 90% utilization for the first quarter of 2011. The rig has received good client feedback, and has attracted great interest from the market, which confirms that Sevan Drilling has succeeded in meeting oil company requirements with new and modern drilling units for complex and demanding ultra deepwater drilling operations.

For the year ended 31 December 2010, the Sevan Drilling Group generated a turnover of USD 40.6 million with a corresponding EBITDA of USD (4.4) million.

Sevan Drilling has been based in Arendal, Norway, but is in the process of moving headquarters to Stavanger, Norway. The Company has established a competent and experienced organisation. Long experience and strong focus on operating excellence and health, safety and environment (“HSE”) characterize both the management and the operating organisation of the whole Group, which comprises approximately 185 employees based in Brazil, Norway and China. Sevan Drilling offers the highest standards of safety for people and the environment.

In March 2011, Sevan Drilling, through two wholly owned subsidiaries, entered into letters of intent with COSCO for the construction of two ultra deepwater drilling units, and options for two additional units with the same specifications, based on the Sevan 650 design. Provided that the letters of intent are followed by binding and effective construction contracts as contemplated, the Company estimates a price including project management, pre-delivery financing, capital spares, drilling tools and pre-operations) of approximately USD 525 million for each newbuild. The price for the two optional newbuilds will be the same, however, the price is subject to possible price adjustments for significant movements in exchange rates, changes to a Chinese inflationary index for the industry segment, and prices of major equipment packages. Under the letters of intent, subject to firm contracts being entered into, the first newbuild shall be delivered in the fourth quarter of 2013, whereas the second newbuild shall be delivered in the second quarter of 2014. The first optional newbuild, assuming that the option is exercised (at the latest by first quarter 2012), shall be delivered in the fourth quarter of 2014, whereas the second optional newbuild, assuming that the option is exercised (at the latest by third quarter 2012), shall be delivered in the second quarter of 2015.

8.3 History Sevan Drilling was established in 2006 for the purpose of building state-of-the-art drilling rigs based on the Sevan 650 design. Later the same year, Sevan Marine successfully completed a private placement for the purpose of financing, in part, its drilling business, and an order for Sevan Driller was placed with COSCO in 2007.

In 2007, Sevan Drilling’s management team was in place, and key positions for both the offshore and onshore organizations of the Group were filled. A six-year drilling contract with Petrobras was secured.

In 2008, the Company secured its second six-year contract with Petrobras for a deepwater drilling unit and Sevan Brasil was ordered from COSCO. During 2008 and 2009, the Company continued to build up the operating organization of the Group with senior rig personnel. Sevan Driller went through commissioning work with Sevan Drilling resources working closely with the yard.

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In 2009, the Company was fully manned and all training programs were completed and the Company took delivery of the Sevan Driller. In June 2010, Sevan Driller commenced drilling operations off the coast of Brazil for Petrobras. The rig has since then been drilling in the Campos basin, currently at water depths of 1,900 meters.

In 2011, the construction of the Sevan Brasil is ongoing at COSCO, on schedule and budget. It is estimated that the Sevan Brasil will be delivered from the yard in the first quarter of 2012 and that it will start its six-year contract with Petrobras in the second quarter of 2012.

In March 2011, Sevan Drilling and Sevan Marine agreed to transfer all shares in Sevan Drilling Invest AS, the indirect 100% owner of the Sevan Driller, to Sevan Drilling from Sevan Marine, as a contribution in kind for issuance of new share capital in the Company. The transfer was completed in April 2011. Sevan Drilling is subsequently the 100% owner of the two drilling rigs; Sevan Driller and Sevan Brasil.

8.4 Competitive strengths Strong foundation from deepwater operations in Brazil

The Sevan Drilling Group has a well-established position in Brazil through existing operations with the two 6-year contracts with Petrobras for Sevan Driller and Sevan Brasil. Sevan Marine has been established in Brazil since 2001 and has been able to successfully build up a solid network and gained valuable experience (including from preparations for and operation of FPSO Sevan Piranema since 2007) in this fast growing market from which the Company is expected to benefit also in the future.

Following some start-up problems and downtime primarily as a result of defects in equipment provided by third parties, Sevan Driller has since start-up of operations in June 2010 demonstrated a rapidly increasing performance in the ultra deep waters of the Campos Basin in Brazil. The utilization in first quarter 2011 was 90% with a utilization of 78%, 97% and 96% for January, February and March 2011, respectively. Sevan Brasil is scheduled to commence operations in second quarter 2012. The Company has successfully proven its drilling concept and operations setup to Petrobras. The Brazilian continental shelf is one of the fastest growing ultra deep water markets in the world, and the market requires high standards with respect to personnel, equipment, HSE and operational procedures. With a good foothold in this market, and with Petrobras, the Company is in a good position for further growth in this market. The Company believes this represents a robust platform for a continued positive development of its business.

Premium rigs for ultra deepwater

The design of the Sevan Rig ensures a high variable deck load capacity and favourable motion characteristics. The variable deck load capacity is in line with ultra deepwater drillships and about 2.5 to 3 times the capacity of a sixth generation semi-submersible rig.

The Sevan Rig offers a particular advantage for drilling operations in ultra deep water far away from existing infrastructure, due to its variable deck load capacity and internal storage capacity for bulk materials, including drilling fluids and chemicals.

Sevan Driller and Sevan Brasil have an oil storage capacity of 150,000 barrels, enabling the rig to carry out extended well testing operations.

Following an initial period during the first months of operations, with downtime relating to issues with the BOP and other third party equipment, the uptime and performance of the Sevan Driller during the recent months of operation have been in accordance with expectations.

The performance so far suggests motion characteristics in line with model testing, with insignificant downtime caused by waiting on weather. The performance is also in line with the successful actual performance of FPSO Sevan Piranema which has been operating off the coast of Brazil since 2007, the FPSO Sevan Hummingbird which has been operating in the North Sea since 2008, and the FPSO Sevan Voyageur which has been operating in the North Sea in 2009-2010.

The key operating advantages of the Sevan Rig may be summarized as follows:

• high variable deck load capacity;

• ultra deep water capabilities;

• good motion characteristics;

• long structural life time; and

• storage capacity for crude oil.

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Well positioned for growth in the attractive deepwater segments

Operation of ultra deepwater drilling units in Brazil requires high specification units due to the environment, and with regards to technology and equipment, HSE and operational procedures in order to comply with Petrobras requirements and the regulatory regime. The Company believes its existing and scalable organisation, combined with the management- and operating systems in place, creates a strong platform for growth also in other deepwater regions, in particular West Africa and the US Gulf. With the more accessible oil reservoirs having been explored, offshore activities have moved towards deeper waters. A focus on operation of drilling units for deep waters will position the Company to meet, and take advantage of, oil and gas companies’ increasing need to drill in more demanding and complex regions in order to replace their current reserves and ensure future production.

Established organisation with experienced management and drilling team

The Company has a highly-qualified and experienced management team. The operational management has more than 25 years of experience on average from operational and leadership positions in well-regarded and relevant offshore companies. Through its employees, the Company has a broad and deep knowledge base, with significant experience and competence from deepwater operations internationally. The Group’s drilling crews have on average 10 to 15 years of experience each, and offshore leading positions have on average 25 years of experience.

8.5 Strategy Based on the key strengths outlined in Section 8.4 “Competitive strengths”, the Company believes that it has a strong basis for fulfilling its overall goal of being recognized as a leading and fully integrated drilling contractor owning and operating drilling units. The Company has identified the following key strategic objectives in order to fulfill this ambition:

Utilize the market position in Brazil to further increase the activities there, as well as internationally, with focus on deep water and technically demanding areas

The Company has developed a strong market position in the ultra deepwater market in Brazil, which one of the world’s most attractive offshore markets. The Company already holds two 6-year drilling contracts with Petrobras. The existing fleet of deepwater units in Brazil is not sufficient to cover the expected demand and Petrobras has announced that it will require several new deepwater drilling units to cover its program for exploration and development drilling in the coming years. The Company is well positioned to take advantage of opportunities in this market.

The position in Brazil, and the experience gained from the operation of rigs for demanding clients like Petrobras, will be used as a basis for pursuing opportunities in other ultra deepwater markets, especially in West Africa and the US Gulf.

Develop a fleet of high specification, ultra deepwater drilling rigs based on the Sevan design, with state-of-the-art drilling equipment

The Company today owns two ultra deepwater drilling units (one of which is under construction for delivery in the first quarter of 2012), and the rig fleet is expected to be complemented by the two additional newbuilds of same design. All rigs are equipped with the best available and proven drilling equipment from well recognized suppliers. The rationale for the newbuild orders is to take advantage of an expected increase in the demand for ultra deepwater drilling units in the years to come. This increase in demand is, amongst other things, due to a shift (which has been ongoing for several years) from shallow/mid water to deeper water with respect to exploration and development drilling, and higher technical requirements following amongst other things the Deepwater Horizon accident, which in general contribute to making older rigs obsolete.

Utilize the Sevan rig’s competitive advantages to offer efficient and cost-effective drilling solutions to its clients

The design of the Sevan drilling units ensures a high variable deck load capacity and favourable motion characteristics. The variable deck load capacity is in line with ultra deepwater drillships and about 2.5 to 3 times the capacity of a sixth generation semi-submersible rig. The Sevan drilling units offer a particular advantage for drilling operations in ultra deepwater far away from existing infrastructure, due to its variable deck load capacity and internal storage capacity for bulk materials, like drilling fluids and chemicals. This reduces the need for re-supply and the use of supply boats, thereby reducing the spread cost for the customer.

The motion characteristics of the Sevan design ensure stable working conditions even in areas with demanding weather conditions in terms of wind, waves and current. Due to the hull design of the Sevan drilling units, there is less heave and pitch motions for most wave conditions, compared to a conventional drillship, thus increasing the rig uptime.

Prioritize long term drilling contracts with professional and reputable clients

The Company currently has firm 6-year drilling contracts for Sevan Driller and Sevan Brasil. The strategy is to prioritize long-term contracts also with respect to the two newbuilds, with solid and professional customers that are financially robust and well recognized in the industry. Long term contracts ensuring stable long term cash flow visibility is important for the Company in order to secure financial flexibility and reduce the cost of capital.

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Develop relationships with key clients and suppliers

The Company will seek to develop relationships with key clients and suppliers in order to establish Sevan Drilling as the preferred partner. The Company will seek to minimise execution risk for newbuilds through selecting well-recognized yards for building rigs of proven design and technology, and aims to sign lump-sum contracts for construction and commissioning of the units.

Leverage off and enhance the organisation’s experience and competence The Company’s organization has long experience from ultra deepwater operations. The organization is international, and the offshore crews comprise both local and foreign personnel. The onshore and offshore organization’s experience and competence is the Company’s most valuable asset. The Company aims to further develop this competence to strengthen the Company’s position in Brazil and to expand the business to other geographical areas like West Africa and US Gulf.

8.6 Management and organization Since inception in 2006, the Group’s senior management team, and the organisation at large, has gradually been scaled up through a careful selection and recruitment process. The onshore and offshore drilling management and crews comprise senior and highly experienced people with extensive experience from deepwater operations internationally. Previous employers include well-known companies like Pride International, Ocean Rig and Diamond Offshore. The Sevan Drilling Group currently has approximately 185 employees (of which approximately 160 are offshore and approximately 25 onshore). The senior management and the employees based in Norway are to be employed by Sevan Drilling Management AS, which provides services to the Company and relevant subsidiaries under the terms of a management agreement.

The Company has the project organization in place to manage the construction of the newbuilds, due to the ongoing construction of Sevan Brasil. Continuity within the project organization has been preserved during the construction of these two units and the Company will benefit from this when the construction of the two newbuilds starts. COSCO has also built up experience from the construction of the first two rigs which will benefit the execution of the newbuild construction. The Company and COSCO emphasize joint lessons learnt processes, whereby experience from one project is collected and discussed, and utilized in the next project.

8.7 Competitive position The drilling industry consists of a very large number of participants. However, the industry has experienced consolidation and some large market participants have significant market shares. Sevan Drilling has competitors that are significantly larger in size, both in respect to fleet and market capitalization. The Company’s focus is to establish a fleet of modern ultra deepwater drilling units. Although, there are only a few companies in the drilling industry which focus exclusively on the ultra deepwater segment, the drilling industry consists of several companies with different types of drilling assets and operations, including deepwater. Such companies include Transocean, Noble, Ensco, Seadrill, Ocean Rig, Diamond, Saipem, Maersk, Stena, Pacific Drilling, Aker Drilling, North Atlantic Drilling and Pride.

Drilling contracts are traditionally awarded on a competitive bid basis. Governing factors for successful bids are in most cases based on price, availability, technical compliance, experience and performance record.

The drilling market is global. However, the competition may vary significantly from region to region at any particular time. Competing contractors may be able to relocate units from areas with low utilisation and dayrates to areas with higher activity and day rates. New orders of drilling units, upgrades of existing units and new technology may also increase competition.

8.8 Sevan Driller and Sevan Brasil

Specification

The specification of Sevan Driller and Sevan Brasil are substantially identical. Both rigs are state-of-the-art drilling units equipped for drilling in 10,000 ft of water depth.

The newbuilds will have substantially identical specifications.

Main particulars: Sevan Driller, Sevan Brasil and newbuilds Design Sevan 650 Registration Singapore Classification DNV Water depth 3,000 m (10,000 ft, upgradable to 12,000 ft) Drilling depth 12,000 m (40,000 ft) LOA (Length) 86 m Breadth 75 m (at waterline)

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Depth 24.5 m Displacement 55,800 mT at 12.5m draft Variable deck load 20,000 mT Diesel generators 8 x 5,535 kW Thrusters 8 x 3,800 kW Station keeping DP3 Living quarters 150 persons Helicopter deck Sikorsky S92 and S-61N, Superpuma AS332L2, EC225 and EH-101 Deck cranes 2 ea, max capacity: 100 mt at 15 m Oil storage 150,000 bbl Mud storage 2,850 m3 Transit speed 7-9 knots Deck area 5,700 m2 Riser tensioning system DAT - 3,200 kips Drilling lifting capacity 1,000 ton Set back load 1,000 mT

Drilling particulars: Type Parallel operations. Independent handling of BOP and X-mas trees Hook load, main/aux 908 mT BOP 18 3/4", 15,000 psi, 5-6 rams (upgradeable to 7) Mud pumps 4 x 2,200 hp, 7,500 psi

Construction contracts

“Sevan Driller”

On 15 March 2007 Sevan Drilling Pte Ltd entered into a contract with COSCO and China National Aero-Technical Import and Export Xiamen Corporation for the engineering, procurement, construction and installation of the drilling unit Sevan Driller. The Sevan Driller is of the Sevan 650 design. The rig was delivered by the yard in November 2009, travelled for its own propulsion and machinery from China, via Singapore and Cape Town to Brasil, where it was accepted under the charter agreements with Petrobras in June 2010.

Sevan Driller is currently in its last months of the warranty period under the construction contract with COSCO, which period expires in June 2011. No material warranty claims have been presented to the shipyard till date. Cost of repair carried out on the BOP, DAT cylinders and the thrusters systems are covered under warranties from respective vendors and insurance arrangements.

“Sevan Brasil”

On 29 April 2009 Sevan Drilling Rig II Pte Ltd entered into a contract with COSCO for the engineering, procurement and construction of the drilling unit Sevan Brasil

The contract covers all work and services required for delivery of a complete Sevan Rig. The Sevan Brasil is of the Sevan 650 design, and the rig will in all material respects be a sister unit of Sevan Driller.

The contract with COSCO comprises:

a) a lump sum portion, which covers, inter alia, engineering, procurement, construction, installation and commissioning of hull, marine systems, engine rooms, mud module, living quarter, outfitting, insurance and drillfloor. It may be adjusted based on (i) fluctuation in the conversion rate for USD/RMB, and (ii) increases or decreases in quantities/ re-measurements of material used. The risk related to fluctuation in the conversion rate for the USD/RMB has been fully hedged.

b) a provisional sum covering payment in respect of the vendor contracts and transportation thereof, which have been transferred and novated from Sevan to COSCO (see below) as per relevant payment terms under such vendor contracts (which are, generally, based on milestone progress schedules).

Payment of the contract price is made according to a payment milestone schedule set out in the contract.

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All pre-delivery milestone payments by Sevan and certain claims towards COSCO are secured by refund guarantees.

The delivery date is estimated to be in the first quarter of 2012.

In case of delays for which COSCO is responsible, Sevan shall be entitled to liquidated damages.

Delivery of the Sevan Brasil will occur when the parties jointly conclude a delivery protocol certifying that the unit has been completed, passed the tests specified in the contract and is ready for delivery together with all necessary certificates and documents.

COSCO has warranted the quality of the work relating to Sevan Brasil for a period from signing of the delivery protocol and until the earlier of (i) the date occurring two years after delivery, and (ii) 12 months from the date Sevan Brasil taken into commercial use. In order to secure delivery of certain long lead time equipment items, Sevan concluded relevant equipment contracts with certain key vendors prior to entering into the COSCO contract. These equipment contracts have been transferred and novated by Sevan to COSCO. COSCO’s liability for such key equipment as set out in the contract is subject to certain limitation.

Sevan and COSCO, respectively, have provided parent company commitments in favour of each other, whereby the respective parent companies are committed to ensure the due performance of the relevant respective subsidiaries’ obligations under the contract.

In case of material breach by COSCO of its obligations thereunder, Sevan is entitled to terminate the contract, under certain conditions.

In case of breach by Sevan of its obligations under the contract, COSCO may claim default interest if the breach relates to late payment, or claim adjustment of the contract price and contract schedule for other breaches, or, if such breach has not been cured within applicable remedy periods terminate the contract and claim limited direct damages

The contract is governed by English law. Any dispute arising under the Contract shall be settled by arbitration in London.

Capex overview under the construction contracts

USDm (per rig) New builds Sevan Brasil Sevan Driller

Hull & Equipment 459 568 525

Capital spares 14 18 19

Drilling tools 7 7 8

Project management / engineering 20 25 33

Pre-delivery financing cost - 43 84

Pre-operations 110 9 21

Con struction cost (pre internal cost) 510 670 690

Internal cost allocation2) 15 15 15

Total construction cost 525 685 705

Shipyard contract 525 252+3161) 214

Notes : 1) Owner furnished equipment of USDm 316 was novated to COSCO during construction period 2) Includes margins on man-hours and design fee, guarantees etc

Total capital expenditure for the letters of intents for two rigs at COSCO is budgeted to USD 1,050 million, subject to firm construction contracts being entered into. Of this, 20%, equal to USD 210 million, is payable upon signing of firm contracts. This initial payment will be funded by the net proceeds to the Company (expected to be USD 336 million), whereas an additional USD 420 million will be required secured by bank or bond financing prior to delivery of the first newbuild in Q4 2013 and additional USD 420 million by delivery of the second newbuild in Q2 2014.

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Drilling contracts for Sevan Driller and Sevan Brasil

Petrobras

As further described below, members of the Sevan Drilling Group are parties to contracts with Petrobras for the chartering of the Sevan Driller and the Sevan Brasil and the provision of certain operational services related thereto.

Petrobras is a publicly traded Brazilian corporation, with the Government of Brazil as the major shareholder. Petrobras is a leading international energy company, with a presence in most relevant sectors and segments, including exploration and production, refining, oil and natural gas trade and transportation, petrochemicals, and derivatives, electric energy, biofuel and other renewable energy source distribution. A front-runner in the Brazilian oil industry, Petrobras has significantly expanded its operations in recent years, aiming to be among the top five integrated energy companies in the world by 2020. Petrobras currently enjoys a presence in 28 countries. The 2010-2014 business plan foresees investments in the region of USD 174.4 billion.

General regarding contract structure

The rig-owning entities are members of the Group incorporated in Singapore. Brazilian authorities will, on a general basis, not permit offshore drilling contracts to be entered into with counterparts based in tax havens. Thus, the rig-owning companies have bareboat-chartered the relevant units to other members in the group, who satisfy and comply with Brazilian requirements. As per Petrobras’ general practice, the contractual arrangement with Petrobras is divided into two agreements: A charter contract regarding the provision of the drilling unit, and a service contract regarding the provision of drilling services. The two contracts are based on a similar basic structure and of identical duration, but the day rate payable under the charter is denominated in USD, and the service contract remuneration is denominated in Reais.

The remuneration payable by Petrobras under the Sevan Driller contracts equals (based on current exchange rates and indexation levels) a base dayrate of USD 422,000 as per today. An additional USD 37,000 per day is payable in the second year of operation only. The remuneration payable by Petrobras under the Sevan Brasil contracts will upon commencement which is expected to take place in the second quarter of 2012 (based on current exchange rates and indexation levels) equal a base dayrate of USD 397,000. Both charter contracts contain a bonus potential of up to 10% of the base dayrate which is linked to the operational performance on a monthly basis.

The contracts are based on Petrobras’ standard. No explicit governing law provision is included, but any disputes are to be resolved before the regular courts of Rio de Janeiro, Brazil.

Contract overview

In some more detail, the contractual arrangements can be described as follows:

Sevan Driller

Bareboat Charter Agreement

The Sevan Driller is owned by Sevan Drilling Pte. Ltd. (Singapore), who, as registered owner, has entered into a bareboat charter contract with its wholly-owned subsidiary Sevan Drilling Limited (a company incorporated in Scotland) as charterer.

Petrobras Charter Contract

Sevan Drilling Limited has chartered out the Sevan Driller to Petrobras under a bareboat charter contract entered into in September 2009. The bareboat charter contract is for a firm period of 6 years. Operations commenced in June 2010, and, accordingly, the contract expires in June 2016.

A part of the day rate is subject to annual escalation based on certain price indexes, as from the date of contract signature. Daily rate reduction mechanisms apply in respect of inter alia stand-by periods, force majeure events, periods during which repair works are carried out, and periods during which the rig is moved. As of the date of the Prospectus, Sevan Drilling has estimated the remaining value of the charter contracts with Petrobras for the Sevan Driller for the fixed term until June 2016 to approximately USD 893 million including the bonus potential Petrobras is entitled to assign their rights and obligations under the bareboat charter contract subject to the consent of Sevan Drilling Ltd.

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Service Contract

In September 2009, Sevan Marine Serviços De Perfuração Ltda. (Brazil), a wholly owned subsidiary of Sevan Drilling, entered into a service contract with Petrobras for the provision of drilling services in connection with the bareboat charter contract for Sevan Driller. The duration of the service contract is linked to the duration of the bareboat charter contract, and, accordingly, expires in June 2016.

Daily rate reduction mechanisms apply in respect of inter alia stand-by periods, force majeure events, periods during which repair works are carried out and periods during which the rig is moved. The daily rate is subject to annual escalation based on certain price indexes which reduces risks relating to inflation and escalation in operating expenses.

Sevan Brasil

Bareboat Charter Agreement

The Sevan Brasil is owned by Sevan Drilling Rig II Pte Ltd (Singapore), who, as registered owner, has entered into a bareboat charter contract with its sole shareholder, Sevan Drilling Rig II AS (Norway), as charterer.

Petrobras Charter Contract

Sevan Brasil has been chartered out to Petrobras by Sevan Drilling Rig II AS under a bareboat charter contract entered into in July 2008. The contract is for a firm period of 6 years. Sevan Drilling expect that Sevan Brasil will be delivered to Petrobras during the second quarter of 2012.

Daily rate reduction mechanisms apply in respect of inter alia stand-by periods, force majeure events, periods during which repair works are carried out and periods during which the rig is moved. The daily rate is subject to annual escalation based on certain price indexes.

The Company has, as of the date of the Prospectus, estimated the value of the contracts with Petrobras for Sevan Brasil for the fixed term of 6 years to approximately USD 973 million including the bonus potential and a mobilization fee of USD 29.3 million.

Petrobras is entitled to assign its rights and obligations under the bareboat charter contract subject to the consent of Sevan Drilling Rig II AS, except where the assignee is controlled or owned by Petrobras, in which case no consent is required.

The bareboat charter contract (and the service contract) stipulates that Sevan Marine is a “joint intervening party” to the contract, and as such liable for the relevant Group member’s performance thereunder.

Service Contract

In July 2008, Sevan Marine Serviços De Perfuração Ltda, a wholly owned subsidiary of Sevan Drilling, entered into a service contract with Petrobras for the provision of drilling services in connection with the bareboat charter contract for Sevan Brasil. The duration of the service contract is linked to the duration of the bareboat charter contract: The firm period of the service contract is 6 years.

Daily rate reduction mechanisms apply in respect of inter alia stand-by periods, force majeure events, periods during which repair works are carried out and periods during which the rig is moved. The daily rate is subject to annual escalation based on certain price indexes which reduces risks relating to inflation and escalation in operating expense.

8.9 The UDW Newbuild Rigs ordered from COSCO

Letters of intent for purchase of two UDWs

In March 2011, subsidiaries of the Company entered into a letters of intent (the “LOIs”) with COSCO with respect to contracts for the construction of two UDW newbuild drilling units based on the same design as the Sevan Driller and Sevan Brasil. The UDW newbuilds are to be delivered in fourth quarter of 2013 and second quarter of 2014, respectively. The Company estimates, based on the LOIs, an all-in price (incl. project management, pre-delivery financing, capital spares, drilling tools and pre-operations) of approximately USD 525 million for each rig. The reduced price compared to the two first units reflect, inter alia, efficiencies gained from construction experience and replication at the yard, increased competition and superb relationship with key equipment vendors, and attractive financing during the construction period.

The LOIs stipulate that the construction contracts shall be agreed and signed by 30 April 2011, and that the contracts will be subject to lifting of Board approvals by COSCO and Sevan Drilling by 15 May 2011.

The LOIs provide for 20% of the contract price to be payable shortly after the construction contracts becoming effective. This is subject to COSCO securing pre-delivery construction finance based on a non-rescource structure which will not expose the remaining Sevan Drilling Group to liability in the unlikely event of financial difficulties being encountered by the relevant Sevan Drilling subsidiaries which are contracting parties to the construction contracts. The LOIs provide for a full refund guarantees for amounts paid by the Company during construction. It

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should be noted, that commitments under binding and effective construction contracts will be assumed by the relevant contracting subsidiaries of the Company without future employment or post-delivery financing having been secured at this point in time, thus, potentially, exposing the contracting parties to significant risk. However, without being able to give any assurance as to final outcome, it remains the Company’s view, that the two newbuilds position the Company very attractively to secure interesting contract opportunities which are expected to materialize during the next couple of years.

The LOIs provide for options to build two additional UDW drilling units based on similar design and specifications. The price is the same as for the two initial units, subject to a price adjustment reflecting currency fluctuations between USD and RMB, and the development in a Chinese industrial index relating to equipment and materials to be purchased by COSCO (other than the major drilling equipment, in respect of which fixed and unadjusted prices have been secured). The options must be exercised within 10 and 16 months, respectively, of the date of the LOI. The second option does not lapse but remains exercisable if the first option is not utilized. In case of exercise, the agreed delivery dates are no later than fourth quarter of 2014 and second quarter of 2015 for the first and the second unit, respectively.

Quality, health, safety and environment policy

Sevan Drilling promotes and supports the "HSE Zero mindset". Sevan Drilling believes that all accidents causing harm to people and environment can be prevented by being proactive in its approach to QHSE. The corporate QHSE policy applies to all areas of business and is endorsed by the CEO. It is a policy of Sevan Drilling that all employees shall have the possibility to influence on their working situation in matters concerning health and safety. This basic principle gives the Company valuable feedback on how the QHSE performance is and makes it more efficient to identify improvement areas for the QHSE MS (Management System).

The corporate QHSE policy, states that “Ensuring the safety and health of our employees, taking care of the environment and delivering quality in everything we do”. These are core business principles to Sevan Drilling.

The QHSE management system is established with participation from the employees, ensuring acknowledgement and commitment. The following key QHSE principles apply:

Health

We shall evaluate and mitigate the risks to reduce the hazards at work places to an acceptable level. We shall monitor occupational health for our employees.

Safety

We shall manage our activities based on our own, the regulators and the clients’ standards. We shall focus on the communication and implementation of these standards.

Environment

We shall protect the environment and minimize the amount and effect of discharges, emissions and waste disposals from our operating facilities.

Quality Management

We shall fulfill our customers' needs and expectations and make commitments we fully understand.

Continuous improvement

We shall verify that our operations meet agreed requirements; monitor and continuously improve these operations and the organization’s performance.

Risk Management

Risk assessments are carried out using competent personnel, recognized tools and methodology. Focus is given to a correct approach to the different assessments performed (e.g. HAZID, HAZOP, Qualitative Risk Assessment, Emergency Preparedness Analysis, SJA, PtW system, etc.).

Compliance

Sevan Drilling shall comply with HSE legal requirements and other requirements applicable to our operations.

8.10 Legal structure The following chart illustrates the legal and organizational structure of the drilling business of the Sevan Drilling Group. Sevan Drilling (the parent company) is a pure holding company, and the ownership of the rigs and operations of the Sevan Drilling Group are carried out by the operating subsidiaries. As illustrated, rig ownership is held by the Singaporean subsidiaries Sevan Drilling Pte. Ltd. (owner of the Sevan Driller) and Sevan Drilling Rig II Pte. Ltd (owner of the Sevan Brasil) through Sevan Drilling Invest AS and Sevan Drilling Rig II AS, respectively. Contractual

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parties to Petrobras S.A. are Sevan Drilling Limited (charter contract) and Sevan Marine Servicos de Perfuracao Ltda (service contract) for the Sevan Driller and Sevan Drilling Rig II AS (charter contract) and Sevan Marine Servicos de Perfuracao Ltda (service contract) for the Sevan Brasil. The executive management of the Group, see Section 9 “Board of Directors, Management and Employees”, are employed with Sevan Drilling Management AS.

Subsidiaries Registered office Interest held

Sevan Drilling Rig Pte Ltd Singapore 100 %

Sevan Marine Servicos de Perfuracao Ltda Brazil 100 %

Sevan Drilling AS Norway 100 %

Sevan Drilling Rig AS Norway 100 %

Sevan Drilling Rig II AS Norway 100 %

Sevan Drilling Rig V AS Norway 100 %

Sevan Drilling Rig VI AS Norway 100 %

Sevan Drilling Rig VII AS Norway 100 %

Sevan Drilling Rig VIII AS Norway 100 %

Sevan Drilling Rig IX AS Norway 100 %

Sevan Drilling Rig II Pte Ltd Singapore 100 %

Sevan Drilling Rig IV Pte Ltd Singapore 100 %

Sevan Drilling Rig V Pte Ltd Singapore 100 %

Sevan Drilling Rig VI Pte Ltd Singapore 100 %

Sevan Drilling Rig VII Pte Ltd Singapore 100 %

Sevan Drilling Rig VIII Pte Ltd Singapore 100 %

Sevan Drilling Rig IX Pte Ltd Singapore 100 %

Sevan Drilling Holding Pte Ltd Singapore 100 %

Sevan Drilling Invest AS Norway 100%

Sevan Drilling Management AS Norway 100%

Sevan Drilling Pte Ltd Singapore 100 %

Sevan Drilling Limited UK 100 %

All subsidiaries are wholly owned (directly or indirectly) by Sevan Drilling. Each of the subsidiaries Sevan Drilling Invest AS, Sevan Drilling Rig II AS, Sevan Drilling Pte. Ltd., Sevan Drilling Rig II Pte. Ltd., Sevan Drilling Limited and Sevan Marine Servicos de Perfuracao Ltda. is considered by Sevan Drilling to be likely to have a significant effect on the assessment of the assets, liabilities, the financial position and/or the profits and losses of the Group:

Sevan Drilling Invest AS (up until a name change in March 2011 named Sevan Drilling AS) is a limited liability company organised and existing under the laws of Norway with registration number 989 417 541 and its registered office at Kittelsbuktveien 5, 4836 Arendal. The principal purpose of this entity is to be the holding company of Sevan Drilling Pte. Ltd.

Sevan Drilling Rig II AS is a limited liability company organised and existing under the laws of Norway with registration number 992 643 382 and its registered office at Kittelsbuktveien 5, 4836 Arendal. The principal purpose of this entity is to be the holding company of Sevan Drilling Rig II Pte. Ltd. and to be party to the charter contract with Petrobras S.A. for the Sevan Brasil.

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Sevan Drilling Pte. Ltd. is a limited liability company organised and existing under the laws of Singapore with registration number 200602642M and its registered office at 350 Orchard Road, Shaw House #15‐08, Singapore 238868. The principal purpose of this entity is to be the owner of the Sevan Driller.

Sevan Drilling Rig II Pte. Ltd. is a limited liability company organised and existing under the laws of Singapore with registration number 200811526E and its registered office at 350 Orchard Road, #15-08 Shaw House, Singapore 238868. The principal purpose of this entity is to be the owner of the Sevan Brasil.

Sevan Drilling Limited is a limited liability company organised and existing under the laws of the United Kingdom with registration number 993472980 and its registered office at 191 West George Street, Glasgow G2 2LD, UK. The principal purpose of this entity is to be party to the charter contract with Petrobras S.A. for the Sevan Driller.

Sevan Marine Servicos de Perfuracao Ltda. is a limited liability company organised and existing under the laws of Brazil with registration number 09.655.055/0001-4 and its registered office at Palacio Austregèsilo de Athayde building, Av. Presidente Wilson no.231 suite 1003/1004, Centro, CEP 20030‐905, RJ, Brasil. The principal purpose of this entity is to be party to the service contract with Petrobras S.A. for the Sevan Driller and the Sevan Brasil.

Sevan Drilling Management AS is a limited liability company organised and existing under the laws of Norway with registration number 996 460 185 and its registered office at Kittelsbuktveien 5, 4836 Arendal. The principal purpose of this entity is to be the employer of the Norwegian employees of the Sevan Drilling Group. Provided that the LOIs with COSCO are followed by binding and effective construction contracts as contemplated, the Company expects that the following additional subsidiaries are likely to have a significant effect on the assessment of the assets, liabilities, the financial position and/or the profits and losses of the Group:

Sevan Drilling AS (up until a name change in March 2011 named Sevan Drilling Rig IV AS) is a limited liability company organised and existing under the laws of Norway with registration number 992 692 081and its registered office at Kittelsbuktveien 5, 4836 Arendal. Sevan Drilling AS is intended to be the holding company for the shares in Sevan Drilling V Pte Ltd og Sevan Drilling Rig VI Pte Ltd, see below.

Sevan Drilling Rig V AS, is a limited liability company organised and existing under the laws of Norway with registration number 992 297 794 and its registered office at Kittelsbuktveien 5, 4836 Arendal. The principal purpose of this entity is to be the holding company of Sevan Drilling Rig V Pte. Ltd.

Sevan Drilling Rig V Pte Ltd is a limited liability company organised and existing under the laws of Singapore with registration number 2008811702E and its registered office at 350 Orchard Road, #15-08 Shaw House, Singapore 238868. The company is party to the LOIs with COSCO and is intended to be the purchaser and owner of the first newbuild (‘Sevan UDW 3’).

Sevan Drilling Rig VI AS, is a limited liability company organised and existing under the laws of Norway with registration number 992 297 883 and its registered office at Kittelsbuktveien 5, 4836 Arendal. The principal purpose of this entity is to be the holding company of Sevan Drilling Rig VI Pte. Ltd.

Sevan Drilling Rig VI Pte Ltd is a limited liability company organised and existing under the laws of Singapore with registration number 2008812328N and its registered office at 350 Orchard Road, #15-08 Shaw House, Singapore 238868. The company is party to the LOIs with COSCO and is intended to be the purchaser and owner of the second newbuild (‘Sevan UDW 4’).

It is the intent of the Company to transfer the shares in Sevan Drilling Rig V Pte Ltd and Sevan Drilling Rig VI Pte Ltd, respectively, to Sevan Drilling AS (previously named Sevan Drilling Rig IV AS) in due course.

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Corporate structure for Sevan Drilling following the offering and listing

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9 BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES 9.1 Overview Sevan Drilling’s management is vested in the Company’s Board of Directors and the senior management. In accordance with Norwegian law, the Company’s Board of Directors is responsible for, among other things, supervising the general and day-to-day management of the Company’s business ensuring proper organization; preparing plans and budgets for its activities ensuring that the Company’s activities, accounts and assets management are subject to adequate controls and undertaking investigations necessary to perform its duties.

Sevan Drilling’s senior management is responsible for the day-to-day management of the Company’s operations within the business objective of the Company and in accordance with instructions set out by the Board of Directors. Among other responsibilities, the Company’s Chief Executive Officer (the “CEO”), is responsible for keeping the Company’s accounts in accordance with existing Norwegian legislation and regulations and for managing the Company’s assets in a responsible manner. At least once a month the Company’s CEO must report to the Board of Directors about the Company’s activities, financial position and operating results.

9.2 Board of Directors Sevan Drilling’s articles of association (the “Articles of Association”), as Appendix 1, provide that the Company’s Board of Directors shall consist of a minimum of three and a maximum of nine members. The Directors are elected by the shareholders.

The table below sets out the names of the current members of the board of directors of Sevan Drilling and their positions. All current Directors are employed by and/or associated with Sevan Marine.

Current Directors Name Position Jan Erik Tveteraas .................. Chairman Oskar Mykland ....................... Board Member Birte Norheim ......................... Board Member

Jan Erik Tveteraas, Chairman: Mr. Tveteraas holds an MBA from Norwegian School of Economics and Administration (NHH) in Bergen. Mr. Tveteraas was a founding shareholder and the CEO of Sevan Marine ASA since its inception in 2001. Mr. Tveteraas has previous experience as Chief Financial Officer of Navis from 1998 to 2001; Vice President Corporate Planning of Sonat Offshore (Transocean Offshore), Houston, from 1996 to 1998; and Chief Financial Officer in Transocean AS from 1991 to 1996. From 1985 to 1991, Mr. Tveteraas held various management positions within the offshore industry. Mr. Tveteraas is a Board member of INTSOK and a Norwegian citizen, residing in Stavanger. Mr. Tveteraas’ contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

Oskar Mykland, Board Member: Mr. Mykland has been CFO of Sevan Marine ASA since 2009 and holds a Bachelor degree in Business and Administration from BI Norwegian School of Management (BI) in Skien from 1992. Mr. Mykland has previous experience as Chief Financial Officer of Siem Offshore from 2006 to 2009 and Finance Director of Viking Supply Ships AS from 1998 to 2006. From 1994 to 1998, Mr. Mykland held various management positions within the offshore industry. Mr. Mykland is a Norwegian citizen, residing in Kristiansand. Mr. Mykland’s contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

Birte Norheim, Board Member: Ms Norheim has been Vice President Finance of Sevan Marine ASA since 2008 and holds a Master of Applied Finance from Queensland University of Technology, Australia, from 2002. From 2005 to 2008, Ms Norheim was Group Controller for Sevan Marine ASA, and she has previous experience as Finance Analyst for MI-SWACO, Houston, from 2004 to 2005; Chief Accountant for MI-SWACO, Norway, from 2003 to 2004; and Accountant for Laerdal Medical AS from 1993 to 1999. Ms Norheim is a Norwegian citizen, residing in Sola. Ms Norheim’s contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

On 25 March 2011, the annual general meeting of shareholders of Sevan Drilling elected a new Board of Directors, effective as of the first day of trading in the Shares on Oslo Børs (or, alternatively, Oslo Axess). The names and positions of the members of the new Board of Directors are set out in the table below.

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New Board of Directors as of the first day of trading in the Shares

Name Position Served since Term expires Jon C.Cole Chairman 2011 2013 Scott I. Kerr Deputy Chairman 2011 2013 Arne Smedal Board Member 2011 2013 Kitty Hall Board Member 2011 2013 Anne Breive Board Member 2011 2013

Jon C Cole, Chairman: Mr. Cole was CEO, President and Director of Scorpion Offshore Ltd from 2005 to 2010. Mr. Cole holds an MBA from University of Virginia and a B.A. Chemistry with honors from University of Virginia and has previous experience as Senior Vice President – Marketing, Business Development and Safety, Health & Environment of Ensco International Inc from 2003 to 2005; Executive Vice President - Shallow and Inland Water of Transocean Sedco Forex from 2001-2002; Executive Vice President - Marketing of Transocean Sedco Forex in 2000; Senior Vice President - Marketing and Administration of Transocean Offshore Inc in 1999; Senior Vice President – European Operations of Transocean Offshore Inc from 1997 to 1998. From 1977 to 1999, Mr. Cole held various management positions within Sonat Offshore and Transocean. Mr. Cole is a US citizen. Mr. Cole’s contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

Scott I. Kerr, Deputy Chairman: Mr. Kerr was CEO of Noreco from 2005 to 2011. Mr. Kerr holds a BSc in Petroleum Engineering from University of Wyoming and has previous experience as Managing Director of BP Norway from 2003 – 2005; Business Unit leader Russia and Kazakhstan of BP UK from 2000 to 2003; President CIS Region and North Africa Region of ARCO from 1998 to 2000; First Vice President of LUKARCO, Moscow, Russia from 1997 to 1998. From 1979 to 1997, Mr. Kerr held various management positions within ARCO Alaska, ARCO International and ARCO Indonesia. Mr. Kerr is a US citizen. Mr. Kerr’s contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

Arne Smedal: Mr. Smedal was a founding shareholder and is the Chairman of the Board of Sevan Marine ASA. Mr. Smedal holds an MSc in hydrodynamics from the Norwegian Institute of Technology (NTNU) in Trondheim. Mr. Smedal has previous experience as President and CEO of Navis ASA from 1997 to 2001; Executive Vice President of Hitec ASA from 1996 to 1997; founder and President of Marine Consulting Group and Advanced Production and Loading (APL) from 1989 to 1996; as well as various positions, incl. Project Manager, VP marketing and President, at Pusnes from 1979 to 1988; and Det Norske Veritas (DNV) from 1974 to 1979. Mr. Smedal has served as Board Member of various companies within the shipping and electronics industries and is a Norwegian citizen. Mr. Smedal’s contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

Anne Breive: Ms Breive is CFO of Løvenskjold-Vækerø AS since 2008. She holds an MBA from Glasgow University and has previous experience as CFO of Statnett SF from 2005 to 2008; Vice President Finance at Norske Skog from 2000 to 2005; Various management postions within finance at Norske Skog from 1994 to 2000; various positions within Kreditkassen from 1989 to 1994. Ms Breive is a Board Member and member of Audit Committee of TTS Group ASA since 2005 and a Board Member of NEMKO AS since 2009. Ms Breive is a Norwegian citizen. Ms. Breive’s contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

Katherine (“Kitty”) J. Hall: Ms Hall is President and Director of ARKeX Ltd. She holds an MSc in Stratigraphy from University of London and has previous experience as CEO and founding shareholder of ARKeX Ltd from 2004 to 2010; CEO and founding shareholder of ARK Geophysics Ltd from 1986 to 2004; Sales & Marketing Manager and Processing Geophysicist of Rebbeck Hunter Ltd from 1979 to 1986. From 1974 to 1979 Ms Hall held various positions within geophysiology. Ms Hall is a Board Member of Polarcus and Vice President of Petroleum Exploration Society of Great Britain. Ms Hall is a British citizen. Ms. Hall’s contact address (registered office) is at Kittelsbuktveien 5, 4836 Arendal, Norway.

Each of the Directors have been elected for an initial term of two years as per section 6-6(1) of the Public Limited Liability Company Act of 1997.

Two additional Directors nominated by the employees will be elected prior to the first day of trading of the Shares on Oslo Børs. The composition of the Company’s Board of Directors will, as of the first day of trading in the Shares on Oslo Børs (or, alternatively, Oslo Axess), be in compliance with the independence requirements of the Norwegian Code of Practice for of 21 October 2010 (the “Corporate Governance Code”).

The Company’s senior management is not represented on the Board of Directors.

As at the date of this Prospectus, none of the Board Members (current or new) holds any Shares, options or other rights to acquire Shares in the Company.

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9.3 Senior management The Company’s senior management team currently consists of three individuals:

Current management The Company’s senior management team currently consists of three individuals employed by Sevan Marine ASA. Their expertise and experience is set out below:

Name Position Jon H Wilmann ....................... Vice President Drilling Håvard Haugland .................... Group Controller Paul Grimen Vice President Operations Jon H. Wilmann, Vice President Drilling: Mr. Wilmann holds an MBA from Norwegian school of Economics and Administration (NHH) in Bergen from 1985. Mr. Wilmann has previous experience as Managing Director and Head of Offshore Oil & Gas Financing in GE Transportation Finance (GE Capital) from 2002 to 2009; Senior Vice President Offshore Oil & Gas Financing in ABB Financial Services from 1998 to 2002; and Deputy General Manager Corporate Division in DnB NOR in Oslo and Luxembourg from 1985 to 1998. Mr. Wilmann is a Norwegian citizen.

Håvard Haugland, Group Controller: Mr. Haugland holds an MBA from Norwegian School of Economics and Administration (NHH) and is certified as a state authorized public accountant. Mr. Haugland is Group Controller with Sevan Marine and has previous experience as Audit Manager in Ernst & Young AS and PricewaterhouseCoopers AS from 2000 to 2008. Mr. Haugland is a Norwegian citizen.

Paul Grimen, Vice President Operations: Mr. Grimen is a certified electrician from Bergen Technical School, from 1968 to 1974, and is also certified for work on all electrical equipment for offshore and maritime shipping from Arendal Maritime School in 1976. Mr. Grimen has more than 30 years of experience from the offshore industry in various operational and management positions worldwide from Odfjell Drilling, Pride International, Songa Offshore and other drilling operators. Mr. Grimen is a Norwegian citizen.

From the first day of listing, the senior management team will comprise five individuals. Their expertise and experience is set out below:

Management

Name Position

Jan Erik Tveteraas ........................Jon H Wilmann ............................

CEO CFO/IR

Pascal Busch ................................Paul Grimen ................................Bjørn Egil Gustavsen ...................

VP QHSE VP Operations VP Projects

Jan Erik Tveteraas, CEO: Mr. Tveteraas, CEO and founding shareholder of Sevan Marine ASA and Chairman of the Board of Sevan Drilling, will assume the position of CEO of Sevan Drilling as of the first day of listing. Mr. Tveteraas has been the CEO of Sevan Marine since its inception in 2001. Mr. Tveteraas holds an MBA from Norwegian School of Economics and Administration (NHH) in Bergen and has previous experience as Chief Financial Officer of Navis from 1998 to 2001; Vice President Corporate Planning of Sonat Offshore (Transocean Offshore), Houston, from 1996 to 1998; and Chief Financial Officer in Transocean AS from 1991 to 1996. From 1985 to 1991, Mr. Tveteraas held various management positions within the offshore industry. Mr. Tveteraas is a Board member of INTSOK and a Norwegian citizen.

Jon H. Wilmann, CFO/IR: Mr. Wilmann holds an MBA from Norwegian school of Economics and Administration (NHH) in Bergen from 1985. Mr. Wilmann has previous experience as VP Drilling in Sevan Marine ASA from 2009 to 2011; Managing Director and Head of Offshore Oil & Gas Financing in GE Transportation Finance (GE Capital) from 2002 to 2009; Senior Vice President Offshore Oil & Gas Financing in ABB Financial Services from 1998 to 2002; and Deputy General Manager Corporate Division in DnB NOR in Oslo and Luxembourg from 1985 to 1998. Mr. Wilmann is a Norwegian citizen.

Paul Grimen, Vice President Operations: Mr. Grimen is a certified electrician from Bergen Technical School, from 1968 to 1974, and is also certified for work on all electrical equipment for offshore and maritime shipping from Arendal Maritime School in 1976. Mr. Grimen has more than 30 years of experience from the offshore industry in various operational and management positions worldwide from Odfjell Drilling, Pride International, Songa Offshore and other drilling operators. Mr. Grimen is a Norwegian citizen.

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Bjørn Egil Gustavsen, Vice President Projects: Mr. Gustavsen is a BSc Electronics from Agder University. Mr. Gustavsen has been employed with Sevan Marine since 2004 and was Project Manager for the construction of Sevan Driller and has previous experience as EI Manager in Remora Technology from 2002 to 2004, where he also was one of the co-founders; EI Manager in Hitec Marine AS, for HiLoad Development Project from 2001 to 2002; Various Positions, first as Project Engineer, later Project and Service Manager, from 1991 to 2001 in Scana Marine Electronics. Mr. Gustavsen is a Norwegian citizen.

Pascal Busch, Vice President QHSE: Mr. Busch holds a Nautical Science License from the Nautical College in Antwerpen. He has 29 years of experience from the shipping and offshore industry in various operational and management positions, including Offshore Installation Manager (OIM), from various companies, including Pride and Foramer. Mr. Busch is a Belgian citizen.

As of the date of this Prospectus, none of the members of the Company’s senior management team holds any Shares, options or other rights to acquire Shares in the Company. The contact address for the senior management is Kittelsbuktveien 5, 4836 Arendal, Norway.

9.4 Directorships and management positions held by the Board members and the senior management

The following tables sets forth all companies and partnerships in which the members of the Board of Directors and senior management have been members of the administrative, management and supervisory bodies in the previous five years (not including subsidiaries within the Group).

Current Board members

Name

Position in Sevan Drilling Current other directorships and

management positions

Previous directorships and management positions

(last 5 years)

Jan Erik Tveteraas Chairman Intsok (BM) Sevan Marine ASA (CEO),

Sevan Drilling ASA (CM)

Oskar Mykland Board Member Sevan Marine ASA (CFO)

Siem Offshore ASA (CFO), ), Siem Offshore AS (BM), Siem Offshore Invest AS (BM), Siem Offshore Rederi AS (BM), Siem Offshore Crewing AS (BM), Siem Shipping AS (BM), Rovde Supply AS (BM), Rovde Industripark AS (BM), Ocean Commander AS (BM), Næringsbygg Idrettsveien 13 DA (BM)

Birte Norheim

Board Member

Sevan Marine ASA (VP Finance)

New Board Members

Name




(last 5 years)

Jon C. Cole Chairman Scorpion Offshore (CM, CEO), Transocean (EVP), SVP Ensco (SVP)

Scott I. Kerr Deputy Chairman Noreco (CEO), BP Norway (MD), Arco (President CIS Region)

Arne Smedal Board Member Sevan Marine ASA (CM) Kitty Hall Board Member ARKex Ltd (CEO), Polarcus (BM)

Anne Breive Board Member Løvenskiold-Vækerø (CFO) Statnett (CFO), Norske Skog (VP Finance)

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Current management

Name




(last 5 years) Jon H. Wilmann Håvard Haugland Paul Grimen

VP Drilling (Sevan Marine ASA) Group Controller (Sevan Marine ASA) VP Operations (Sevan Marine ASA)

GE Transportation Finance (MD) Ernst&Young (Audit Manager) Songa Offshore (Operation Manager)

New senior management from listing:

Name




(last 5 years) Jan Erik Tveteraas CEO Intsok (BM) Sevan Marine ASA (CEO), Sevan

Drilling ASA (CM) Jon H. Wilmann Paul Grimen Bjørn Egil Gustavsen Pascal Busch

CFO VP Operations VP Projects VP QHSE

Sevan Marine ASA (VP Drilling), GE Transportation Finance (MD) Sevan Marine ASA (Director Drilling Operations), Songa Offshore (Operation Manager) Sevan Marine ASA (Projects Director Drilling) Sevan Marine ASA (Marine Manager Drilling)

9.5 Remuneration and benefits No remuneration has been paid to the Directors from Sevan Drilling. The Directors have received remuneration as indicated in the table below in capacity of being employees of Sevan Marine ASA.

In USD thousands Compensation Compensation from Sevan Drilling from Sevan Marine ASA Name for 2010 for 2010 (salaries + other benefits) Jan Erik Tveteraas (Chairman) 0 977 + 61 Birte Norheim (Board member) 0 301 + 14 Oskar Mykland (Board member) 0 313 + 14

Remuneration of the members of the senior management

At balance sheet date, there were no employees in Sevan Drilling. The table below sets forth remuneration paid to the senior management team and other key personnel in capacity of being employees of Sevan Marine ASA for the year ended 31 December 2010.

In USD thousands Compensation Compensation from Sevan Drilling from Sevan Marine ASA Name for 2010 for 2010 (salaries + other benefits) Jon H. Wilmann 0 313 + 49 Håvard Haugland 0 172 + 12 Paul Grimen 432 + 53 0

The basis and principles for remuneration are intended to promote a results-oriented culture based on the Group’s values, as well as to contribute to strong financial results and increased value creation for the owners. The compensation package for the CEO and the senior management team (currently compensated by Sevan Marine ASA) comprises company car, newspapers, mobile phone and refund of expenses for internet subscription in accordance with common market practice. The senior management team currently participates in Sevan Marine’s schemes for bonus, stock options, collective pension and insurance along with all employees in the Group.

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The CEO and the senior management currently receive a fixed base salary, and a variable salary of up to 50% of the base salary. The variable salary (bonus) is based on the achievement of financial, operational and personal goals and the provision of leadership in line with the Company’s values.

In Sevan Marine, the annual wage adjustment takes place on July 1, and shall be based on the general wage and development in the market, combined with an evaluation of the previous year’s achievements and results. Any individual salary adjustment shall be based on the annual performance appraisal.

Sevan Marine uses stock options as part of its compensation package for key employees. The general framework for the option scheme, including the number of options that may be allotted, is presented to the Annual General Meeting for approval every year. The number of stock options allotted shall not exceed 3-5% of the outstanding shares. The exercise prices for stock options shall minimum correspond to the market price at the date of allotment. Within the said frames, the Board of Directors of Sevan Marine is free to allot options to key employees. The employment contract of the CEO can be terminated with six months’ notice and entitles the CEO to 6-24 months’ severance pay dependant on the fulfillment of certain conditions. There is no other form of compensation/benefits nor any other severance pay arrangements in place for the CEO and the senior management than those disclosed above. As reflected in the 2010 reports adopted by the Company, it is expected that the Company will adopt compensation policies along the lines currently adopted by Sevan Marine, and the employment of senior management has been agreed on this basis, it being acknowledged and understood that the new Board of Directors should assess and review the arrangements on an independent basis once in office.

9.6 Pension scheme The Company’s employees will be included in a pension scheme to be established which will satisfy the requirements in the Norwegian legislation regarding mandatory occupational pension

9.7 Loans and guarantees The Company has not granted any loans, guarantees or other commitments to any of its Directors or to any member of the senior management team of the Sevan Drilling Group.

9.8 Audit Committee The new Board of Directors, will following the first day of trading in the Shares on Oslo Børs, elect an Audit Committee amongst the members of the new Board of Directors. The primary purposes of the Audit Committee are to:

• assist the Board of Directors in discharging its duties relating to the safeguarding of assets; the operation of adequate system and internal controls; control processes and the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements, corporate governance and accounting standards; and

• provide support to the Board of Directors on the risk profile and risk management of the Company.

The Audit Committee reports and makes recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations.

9.9 Nomination Committee The articles of association of the Company provides for a Nomination Committee, including one member of the Board of the Company, to be elected in accordance with the requirement of the Corporate Governance guidelines. In the Company’s General Meeting on March 25, 2011, John Hatleskog was elected as Chairman of the Nomination Committee while Kjell O. Johannessen and Scott I. Kerr were elected as Members.

9.10 Corporate governance The Company’s corporate governance principles are based on, and comply with, the Norwegian Code of Practice for Corporate Governance Code as amended on 21 October 2010.

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9.11 Conflicts of interests etc. During the last five years preceding the date of this Prospectus, no member of the current Board of Directors, the new Board of Directors or the senior management has

• any convictions in relation to indictable offences or convictions in relation to fraudulent offences;

• received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company; or

• been declared bankrupt or been associated with any bankruptcy, receivership or liquidation in his capacity as a founder, director or senior manager of a company.

All of the Company’s current Board Members, Jan Erik Tveteraas, Birte Norheim and Oskar Mykland, are employed with Sevan Marine, the Selling Shareholder.

The Managers’ remuneration for their assistance in relation to the Offering is a fee calculated as a percentage of the total issue proceeds.

We further refer to Section 12 “Related party transactions”.

To the Company’s knowledge, there are currently no other actual or potential conflicts of interest between the Company and the private interests or other duties of any of the members of the Company’s senior management, the current Board of Directors or the new Board of Directors.

9.12 Employees As of the date of this Prospectus, the Sevan Drilling Group employs approximately 185 employees. The table below shows the development in number of employees over the last four years, as per 31 December each calendar year from 2007 to 2010.

As of 31 December Employees 2007 2008 2009 2010 Total Sevan Drilling Group ..................... 9 45 81 185 Onshore employees ..................................... 5 5 5 11 Offshore employees .................................... 4 40 76 174

Geographically, 179 employees are currently based in Brazil, 5 are based in Norway and 1 is based in China. Prior to commencement of operations for Sevan Driller, the offshore crew assisted the project team on the commissioning and preparation of the rig for operations in China.

As of 31 December Employees 2007 2008 2009 2010 Total Sevan Drilling Group ..................... 9 45 81 185 Onshore employees .................................... 5 5 5 11Onshore employees, Norway 5 5 5 5 Onshore employees, China 0 0 0 1 Onshore employees, Brazil 0 0 0 5

Offshore employees ................................... 4 40 76 174 Offshore employees, Norway 0 0 0 0 Offshore employees, China 4 40 76 0 Offshore employees, Brazil 0 0 0 174

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10 SELECTED COMBINED FINANCIAL INFORMATION The following tables represent the Group’s selected combined financial and other information. The selected combined financial information has been extracted from the audited Sevan Drilling Group Combined Accounts prepared in accordance with IFRS as adopted by EU (except as stated therein) for the years ended 31 December, 2010, 2009 and 2008 as enclosed in Appendix B to this prospectus. Accounting principles, notes to the financial accounts and the audit opinion is included in these attached financial statements.

The selected combined financial information should be read in connection with, and is qualified in its entirety by reference to the Combined Accounts for the Sevan Drilling Group, and should be read together with Section 11 “Operating and Financial Review”.

For information regarding the basis of preparation of the Combined Financial Statements refer to Section 11.2 “Operating and Financial Review—Presentation of financial information”.

10.1 Selected Combined Statement of Income The table below sets out a summary of the Group’s combined income statement information for the years ended 31 December 2010, 2009 and 2008:


(audited) 2009

(audited) 2008

(audited) ...................................................................................................... Operating revenue ...................................................................... 40.6 0.6 0.0 ...................................................................................................... Operating expense ........................................................................ -28.0 -15.1 -12.3 Depreciation and write-down ........................................................ -42.7 -2.1 -4.1 Employee benefit expense ............................................................ -14.9 -13.5 -5.2 Other operating expense -1.7 -1.5 -2.6 Foreign exchange gain/(loss) related to operation ........................ -0.4 -1.0 0.7

Total operating expense .............................................................. -87.7 -33.2 -23.4 ...................................................................................................... Operating profit/(loss) ................................................................ -47.1 -32.6 -23.4 ...................................................................................................... Financial income ........................................................................... 2.9 2.1 5.2 Financial expense ......................................................................... -48.9 -4.3 -4.5 Foreign exchange gain/(loss) related to financing ........................

1.7 -23.1 31.1

Net financial items ......................................................................

-44.3 -25.3 31.8

Profit/(loss) before tax ................................................................ -91.3 -57.9 8.4 ...................................................................................................... Tax income/(expense) ................................................................... 4.5 6.6 3.6 ...................................................................................................... Net profit/(loss) ........................................................................... -86.8 -51.3 12.0 Earnings per share (USD 1,000) Comprehensive income

-28.9 -86.8

-17.1 -51.3

4.0 12.0

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10.2 Selected Combined Balance Sheet The table below sets out a summary of the Group’s combined balance sheet as at 31 December 2010, 2009 and 2008:

As at 31 December

USD million ASSETS Non-current assets

2010 (audited)

2009 (audited)

2008 (audited)

Drilling rigs .................................................................................. 1,009.6 767.3 528.7 Other fixed assets .......................................................................... 6.2 9.0 0.6 Intangible assets ............................................................................ 0.1 0.0 0.0 Deferred income tax assets ........................................................... 20.8 14.9 8.2 Other non-current assets ............................................................... 62.1 21.0 1.5 Total non-current assets ............................................................. Current assets

1,098.8 812.2 539.0

Inventory ....................................................................................... 7.7 13.9 1.9 Trade and other receivables .......................................................... 39.7 64.1 52.2 Cash and cash equivalents */*** .................................................. 19.1 74.2 1.5 Total current assets ....................................................................... 66.5 152.2 55.5 Total assets .................................................................................. EQUITY AND LIABILITIES

1,165.3 964.4 594.5

Share capital ................................................................................. 0.5 0.5 0.5 Other equity ** ............................................................................. 116.3 203.1 144.7 Total equity ................................................................................. 116.8 203.6 145.2 ...................................................................................................... Non-current liabilities

Other non-current liabilities .......................................................... 166.6 103.1 0.0 Derivate financial instruments ...................................................... 0.0 0.0 1.5 Interest-bearing debt */*** ........................................................... 393.3 51.9 286.1 Total non-current liabilities ....................................................... Current liabilities

559.9 155.0 287.6

Interest-bearing debt ..................................................................... 102.7 401.0 0.5 Trade payables .............................................................................. 248.2 77.4 125.9 Other current liabilities ................................................................. 137.9 127.5 35.3 Total current liabilities ............................................................... 488.6 605.8 161.7 Total liabilities ............................................................................. 1,048.5 760.8 449.3 Total equity and liabilities .......................................................... 1,165.3 964.4 594.5 ......................................................................................................................

*) In February 2011, the first drawdown (USD 182 million) of the USD 525 million senior debt project finance facility for the Sevan Brasil was executed, thereby increasing cash and cash equivalents and interest-bearing debt.

**) In March 2011, a conversion of debt to equity of USD 264.0 million was executed, thereby increasing the combined total equity to USD 380.8 million and reduced total liabilities.

***) In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes.

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10.3 Selected Combined Statement of Cash Flow The table below sets out a summary of the Group’s combined cash flow data for the years ended 31 December 2010, 2009 and 2008:

For the year ended 31 December USD million Cash flows from operating activities

2010 (audited)

2009 (audited)

2008 (audited)

Cash from operations .................................................................... -0.2 -28.4 -14.1 Interest paid .................................................................................. -21.0 -23.9 -26.1 Net cash generated from operating activities ........................... Cash flows from investment activities

-21.2 -52.3 -40.2

Purchase of property, plant and equipment ................................... -164.6 -292.9 -154.2 Net cash flow from investment activities ................................... Cash flow from financing activities

-164.6 -292.9 -154.2

Net proceeds from issuance of ordinary shares ............................. 0.0 109.6 0.0 Loan from ultimate parent company Sevan Marine ASA 92.9 179.2 34.3 Repayment of interest-bearing debt -4.8 0.0 0.0 Net proceeds from interest-bearing debt*/** ................................ 42.6 129.2 100.0 Net cash flow from financing activities ..................................... 130.8 418.0 134.3 ...................................................................................................... Net cash flow for the period*/** ................................................ -55.1 72.8 -60.2 Cash balance at the beginning of the year ..................................... 74.2 1.5 61.7 Cash balance at the end of the year*/** .................................... 19.1 74.2 1.5

*) In February 2011, the first drawdown (USD 182 million) of the USD 525 million senior debt project finance facility for the Sevan Brasil was executed, thereby increasing cash and cash equivalents and interest-bearing debt.

**) In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes. Major events subsequent to December 31, 2010

In February 2011, the first drawdown (USD 182 million) of the USD 525 million senior debt project finance facility for the Sevan Brasil was executed, thereby increasing cash and cash equivalents and interest-bearing debt.

In March 2011, a conversion of debt to equity of USD 264.0 million was executed, thereby increasing the combined total equity to USD 380.8 million and reduced total liabilities. Share capital post this transaction was NOK 36,570,000.

In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes.

In April 2011, a transfer of Sevan Marine’s holding in Sevan Drilling Invest AS was effectuated as a contribution in kind to the Company. The contribution in kind was performed with continuity values resulting in zero equity effect on the Sevan Drilling Group Combined Accounts. Share capital post this transaction is NOK 96,000,000.

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10.4 Changes in equity The table below sets out a summary of the Group’s combined changes in equity for the years ended 31 December 2010, 2009 and 2008:

USD million

Share capital

Share premium

Retained earnings

Total equity

1 January 2010 0.5 0.0 203.1 203.6 Comprehensive income for the year -86.8 -86.8 31 December 2010 0.5 0.0 116.3 116.8

1 January 2009 0.5 0.0 144.7 145.2 Capital increase 109.6 109.6 Reduction of share premium -109.6 109.6 0.0 Comprehensive income for the year -51.3 -51.3 31 December 2009

0.5 0.0 203.1 203.6

1 January 2008 0.5 0.0 132.7 133.2 Comprehensive income for the year 12.0 12.0 31 December 2008 0.5 0.0 144.7 145.2

**) In March 2011, a conversion of debt to equity of USD 264.0 million was executed, thereby increasing the combined total equity to USD 380.8 million and reduced total liabilities.

10.5 Auditor PricewaterhouseCoopers AS (“PWC”) is the Company’s independent auditor. PWC is a member of the Norwegian Institute of Public Auditors (Nw. Den Norske Revisorforening). PWC has registered address Dronning Eufemiasgate 8 N-0106 Oslo, Norway.

PwC has audited the Combined Accounts for the Sevan Drilling Group for the financial years ended 31 December 2010, 2009 and 2008. PwC has audited the financial statement of Sevan Drilling ASA for the years ended 31 December 2010, 2009 and 2008.

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11 OPERATING AND FINANCIAL REVIEW This operating and financial review should be read together with Section 10 “Selected Financial Information” and the enclosed Sevan Drilling Group Combined Accounts for the years ended 31 December 2010, 2009 and 2008.

References to “Sevan Drilling” or to the “Company” are to Sevan Drilling and all references to the “Group” are to the combined Sevan Drilling Group accounts and its consolidated subsidiaries, including, for periods prior to April 2011, Sevan Drilling Invest AS that was transferred to Sevan Drilling during April 2011, the “Drilling Business”.

11.1 Overview The following section contains what the Company considers to be key information regarding the Company’s financial and operational position.

11.2 Presentation of Financial Information

Introduction

Sevan Drilling Combined Accounts have been prepared in accordance with IFRS as adopted by EU except as stated therein and further described below.

Sevan Drilling was incorporated as a public limited liability company on 31 May 2006 to ultimately serve as the holding company for the Group. In April 2011, Sevan Drilling acquired all the shares in Sevan Drilling Invest AS by way of a contribution in kind made by Sevan Marine. The history of the Group is described in Section 8.3 “History”, and the separation from Sevan Marine is described in Section 12 “ Related Party Transactions”.

Prior to 2010, Sevan Marine did not prepare separate consolidated financial statements for the Drilling Group, which has now been combined as described in this Prospectus. Consequently, historical consolidated financial information for the Drilling Group other than included in this prospectus is not available.

The Sevan Drilling combined financial statements comprise the consolidated accounts for Sevan Drilling and the consolidated accounts for Sevan Drilling Invest AS (formerly known as Sevan Drilling AS). The combined financial statements have been prepared specifically for purposes of this Prospectus and for the purpose of providing comparable historic information.

In April 2011, the ownership of Sevan Drilling Invest AS was transferred from Sevan Marine ASA to Sevan Drilling. This transaction was considered to be a common control transaction, and was recognized on a carry-over basis (referred to as “predecessor accounting”). In general, all amounts presented are therefore recorded at predecessor values as formerly included in Sevan Marine ASA’s consolidated financial statements.

Under predecessor accounting, Sevan Drilling will account for the transaction ‘as if’ the combination had taken place prior to the comparative periods presented. The combined financial statements therefore present historical information for the two sub groups for the year 2010 as if they were part of the same group for all periods presented.

The combined financial statements are prepared on a basis consistent with IFRS as adopted by EU, using polices consistent with those of the Sevan Marine ASA group, with the following exception: The accounts does not conform with the control notion in IAS 27 Consolidated and Separate financial Statements because Sevan Drilling was not the parent company of Sevan Drilling Invest AS for the years covered by the combined financial statements.

The combined financial statements are otherwise prepared using the principles of IAS 27 such as the elimination of intra-group transactions. However, transactions with other entities within the Sevan Marine ASA group have not been eliminated, as these are regarded as third party transactions to the combined entity.

Sevan Drilling’ management believes the assumptions underlying the Combined Financial Statements are reasonable.

Key Principles and Adjustments made in the Preparations of the Combined Financial Statements

The Combined Financial Statements are prepared based on the consolidated financial statements of Sevan Drilling Invest AS and the consolidated financial statements of Sevan Drilling for the periods specified. In general, when separate financial statements are required to combine from a smaller operating group, a number of adjustments are required because the relevant extracted entity or group did not actually operate as a separate entity or group for the periods presented.

The following describes the key principles used in preparing the Combined Financial Statements as well as key adjustments made in the preparation of the Combined Financial Statements:

All intercompany transactions and balances between the consolidated Sevan Drilling Invest AS and consolidated Sevan Drilling were eliminated in the Combined Accounts.

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11.3 Principal Factors Affecting the Group’s Results and Business As of the date of this prospectus both of the Group’s UDW rigs are fully funded by equity, bank facilities of USD 480 million (Sevan Driller) and USD 525 million (Sevan Brasil) and long term vendor credit (USD 52 million outstanding). As the construction of Sevan Brasil is currently ongoing, only USD 182 million of the USD 525 bank facility has been drawn. In addition to the bank facility, there is an additional long term vendor credit facility of USD 80 million available in relation to Sevan Brasil.

Up until the first drawdown of the USD 525 million bank facility, the Sevan Brasil construction project was funded by equity and loans from the ultimate parent company; Sevan Marine. The majority of such loans was converted to equity during March 2011.

The USD 480 million bank facility was executed in March 2011 and replaced the existing 1st and 2nd lien financing of USD 250 million facility (bank) and NOK 1,000 million (bond) respectively.

With minor adjustments as to timing, the payment schedule for the newbuilds as described in sections 8.2 and 8.9 reflects 20% down-payment upon effectiveness of contracts, and 80% payment upon delivery from the yard. Thus, with equity covering the initial 20% of the total construction cost of USD 525 million for each rig, 80%, or USD 420 million in total for each of the two rigs, is intended to be financed by long-term debt at the time of delivery in the fourth quarter of 2013 and second quarter of 2014 respectively.

11.4 Critical Accounting Policies and Estimates The Company’s significant accounting policies are summarized in Note 2 to the Sevan Drilling Combined Accounts for the years ended 31 December 2010, 2009 and 2008. Summarized below are those accounting policies that require management to apply judgements which management believes to have the most significant effect on the amounts recognized in the Combined Accounts:

Critical Accounting Estimates and Assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the actual results. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below. Estimated impairment of Drilling rigs The Group has tested whether the Drilling rigs have suffered any impairment, in accordance with the accounting policy stated in Note 2.5. The recoverable amounts of the assets have been determined based on value-in-use calculations. These calculations require the use of estimates. Income taxes The Group is subject to income taxes in various jurisdictions. Judgment is required in determining the provision for income taxes. During the ordinary course of business, transactions and calculations occur for which the ultimate tax effect is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The accounting for deferred income taxes relies upon management’s judgment of the Group’s ability to generate future positive taxable income in each respective jurisdiction. Commitments The Group uses estimates regarding assessment of remaining commitments. Depreciation of units in operation The Group uses estimates when assessing each Drilling Rig asset’s useful life and residual value to determine the depreciation plan for each unit in operation. Approved International Shipping Enterprise (AIS) Should one or more Sevan entities leave the AIS regime by choice or because it no longer qualifies, the tax exemption will cease to apply going forward. The current tax implications of this would depend on the taxable status of each individual company. There are currently no indications of an imminent exit from the AIS regime. Critical Judgments in Applying the Group’s Policies Assumptions applied for the purpose of impairment testing of Drilling rigs include estimated WACC and expected future cash flows. Due to the inverse relationship between discount rate and net present value, a decrease in WACC will increase the net present value and an increase in WACC will decrease the net present value. An increase in estimated

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future cash flows will increase the net present value and a decrease in estimate expected future cash flows will decrease the net present value. Estimation of WACC is based on determination of an average WACC for the Group of 10.5%. Estimation of future cash flows is based on several assumptions, including forecasted operational expense, utilization and day rates which are based on actual contracts as well as forecasts beyond the contracted periods.

11.5 Results of Operations The activities in the Sevan Drilling Group relate to the design, engineering, construction and operation of the Sevan UDW rigs. This includes Sevan Driller, which commenced operation off the coast of Brazil under a 6-year charter contract with Petrobras S.A in June 2010. The second rig, the Sevan Brasil, is under construction at COSCO with scheduled for delivery from the yard in the first quarter of 2012 and commencement of a six-year charter contract with Petrobras in Brasil in the second quarter of 2012. For further details of the charter contracts for Sevan Driller and Sevan Brasil, reference is made to Section 8.8 above.

The financial year 2010 (2009)

Operating revenues for the financial year 2010 (2009) amounted to USD 40.6 million (USD 0.6 million). Operating loss was USD 47.1 million (USD 32.6 million), and net loss was USD 86.8 million (USD 51.3 million).

The increase in revenue from the previous year was due to the commencement of operation of Sevan Driller mid-year. During the initial period of operation, defects on third party equipment caused higher than anticipated downtime on the rig. The downtime was mainly due to defects in the riser tensioning system and the BOP and reduced the Technical Uptime to 50.3% and the Commercial Uptime to 49.5% for 2010. The increase in operating expense compared to previous year was mainly due to an increase in activities in relation to the commencement of operation of the Sevan Driller as also reflected in the revenues.

The increase in net financial loss of USD 19.0 million was mainly due to changes in amortization schedules for financing fees (USD 5.5 million) as the refinancing of debt effectuated in March 2011 was anticipated already upon securing the underwriting agreement with the syndicate of banks in December 2010. In addition, an increase in interest expense relating to Sevan Driller (USD 28 million) was due to interest being expensed through profit and loss rather than capitalized as part of the construction cost following completion of the rig at the inception of 2010. These effects were partly offset by a reduction (USD 24.8 million) in unrealized financial currency losses mainly relating to the NOK nominated bond.

As of December 31, 2010 (2009), total assets amounted to USD 1,165.3 million (USD 964.4 million), of which USD 1,009.6 million (USD 767.3 million) was capitalized as “Drilling rigs”. Cash and cash equivalents amounted to USD 19.1 million (USD 74.2 million).

Interest bearing debt as of December 31, 2010 (2009), consisted of a bond loan with a nominal value of NOK 1,000 million (NOK 1,000 million), a bank facility of USD 245.2 million (USD 207.4 million) and a vendor credit facility of USD 77.8 million (USD 77.8 million).

Cash flow from operations was negative USD 21.2 million in 2010 (negative USD 52.3 million in 2009), due to only one rig being operational, and only from mid-year, combined with lower efficiency and higher operating expense in the start-up phase. Cash flow from operations also include interest payments.

Cash flow from investments was negative USD 164.6 million, compared to negative USD 292.9 million in 2009. The cash flows from investments relate to the construction of Sevan Driller and Sevan Brasil.

Cash flow from financing was positive USD 130.8 million (USD 418.0 million), mainly due to drawdowns on debt facilities during 2010. In addition to drawdowns on debt facilities, a USD 109.6 million share issue was carried out during 2009.

The ending cash balance was USD 19.1 million at 31 December 2010, compared to USD 74.2 million at year-end 2009.

The financial year 2009 (2008)

Operating revenues for the financial year 2009 (2008) amounted to USD 0.6 million (USD 0.0 million). The operating loss was USD 32.6 million (USD 23.4 million loss in 2008), and net profit was USD 51.3 million negative (USD 12.0 million positive).

The figures reflect that the Company was in a startup phase during both years, with no material revenues as the Company’s assets were still under construction.

The change in net financial items of USD 57.1 million was mainly due to unrealized currency losses on the NOK nominated bond. Net foreign exchange loss in 2009 was USD 23.1 million compared to a gain of USD 31.1 million in 2008.

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As of December 31, 2009 (2008), total assets amounted to USD 964.4 million (USD 594.5 million), of which USD 767.3 million (USD 528.7 million) was capitalized as “Drilling rigs”. Cash and cash equivalents amounted to USD 74.2 million (USD 1.5 million).

Interest bearing debt as of December 31, 2009 (2008), consisted of a bond loan with a nominal value of NOK 1,000 million (NOK 1,000 million), a bank facility of USD 207.4 million (USD 156.0 million) and a vendor credit facility of USD 77.8 million (USD 0 million).

Cash flow from operations was negative USD 52.3 million in 2009 (negative USD 40.2 million in 2008), mainly due to interest payments, cost of establishing an operational organisation as well as general pre-operational expense relating to Sevan Driller.

Cash flow from investments was negative USD 292.9 million in 2009, compared to USD 154.2 million in 2008. The cash flows from investments relate to the construction of Sevan Driller and Sevan Brasil.

Cash flow from financing was positive USD 418.0 million (USD 134.3 million), consisting of drawdown on debt facilities and a USD 109.6 million share issue during 2009 and drawdown on debt facilities during 2008.

The ending cash balance was USD 74.2 million at year-end in 2009, compared to USD 1.5 million in 2008.

11.6 Liquidity and Capital Resources

Sources of Liquidity

Historically, the Group’s primary sources of liquidity have been equity, interest-bearing debt including loans from companies in the Sevan Marine Group. Following the Offering, the sources of liquidity will be a combination of equity and interest-bearing debt.

The combined equity ratio as per 31. December 2010 was 10.0%. Following conversion of debt in March 2011, the equity ratio was 32.7% (calculated using post-conversion equity and debt).

Capitalisation and indebtedness per 31 December 2010:


Draw-down new

loans


Adjusted 31 Dec

2010

Unaudited

Unaudited

Unaudited

Unaudited

Total equity (A) 117 0 264 381 Current debt (incl. provisions) Guaranteed/secured loans 103 0 0 103Unguaranteed/unsecured 386 0 ( 97) 289Total current debt 489 0 ( 97) 392 Non-current debt (incl. provisions) Guaranteed/secured loans 393 182 0 575Unguaranteed/unsecured loans 167 0 (167) 0Total non-current debt 560 182 ( 167) 575 Total indebtedness (B) 1 049 182 ( 264) 967 Total capitalisation (A+B) 1 165 182 0 1 348 Cash 19 182 0 201Cash equivalents - 0 0 0Trading securities - 0 0 0Liquidity (C) 19 182 0 201 Current financial receivables (D) 0 0 0 0

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Draw-down new

loans


Adjusted 31 Dec

2010

Leasing debt due within one year 0 0 0 0Current bank debt / current portion of non-current debt 103 0 0 103

Other current interest-bearing debt 109 0 (97) 12Bonds due within 1 year 0 0 0 0Current financial debt (E) 212 0 ( 97) 115 Net current financial indebtedness (E-C-D) (F) 193 ( 182) ( 97) ( 86)

Long-term leasing debt 0 0 0 0Other non-current interest-bearing debt 167 0 (167) 0Non-current bank loans 223 182 0 405Bonds due after 1 year 171 0 0 171Non-current financial debt (G) 560 182 ( 167) 575 Non-current receivables (H) 0 0 0 0 Net financial indebtedness (F+G-H) 753 0 ( 264) 489

*) In March 2011, a USD 480 million loan facility in respect of the Sevan Driller was advanced and applied towards refinancing of previous bank and bond project funding facilities pertaining to the Sevan Driller and for general corporate purposes. The effect is not reflected in the capitalization and indebtedness table above.

Borrowings

The following table summarizes the Group’s principal borrowing arrangements and their repayment schedule as at 31 December 2010. Payments due by period, as at 31 December 2010

(USD million) Lenders/Agent Original

facility currency and

amount

Total

outstanding

2011

2012

2013

2014

and later

Bond loan NOK 1,000 m 170.8 0.0 -170.8 0.0 0.0 Bank debt ....................... USD 250 m 245.2 -33.3 -35.8 -38.5 -137.6 Vendor credit ................. USD 77.8 m 77.8 -77.8 0.0 0.0 0.0 Total ......................................................................................... 493.8 -111.1 -206.6 -38.5 -137.6

As at the date of this prospectus, USD 25.9 million of the outstanding vendor credit has been repaid, and the maturity for the remainder USD 51.9 million has been extended until 2012. In addition, the USD 480 million bank facility described in section 11.3 has been drawn, and early repayment of the existing 1st lien bank debt and 2nd lien bond loan was subsequently executed.

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Not included in the table above is a USD 275.2 million loan from related parties, whereof USD 264 million was converted to equity in March 2011. The remaining outstanding amount of USD 11.2 falls due in 2011. The loan from related parties, as well as the repayment structure following the refinancing executed in 2011, provides for the following repayment structure for outstanding debt as of the date of this Prospectus: Payments due by period, as at 1 April 2011

(USD million) Lenders/Agent Original

facility currency and

amount

Total

outstanding

2011

2012

2013

2014

and later

Bank debt USD 480 m 480.0 -53.9 -56.6 -59.4 -310.1 Bank debt ....................... USD 182 m 182.0 0.0 -23.5 -54.4 -104.1 Vendor credit ................. USD 77.8 m 51.9 0.0 -51.9 0.0 0.0 Related parties ................ USD 11.2 m 11.2 -11.2 0.0 0.0 0.0 Total ......................................................................................... 725.1 -65.1 -132.0 -113.8 -414.2

Under the credit facilities as set out in the tables above, the Group is subject to certain covenants:

The bank loans have conceptually been structured on a project finance basis, however, guaranteed by Sevan Marine in whole or in part. The agreements reflect that the respective borrowers are single purpose companies, with extensive security arrangements and customary limitations, restrictions and obligations as regards actions and operations. Accordingly, the borrowing entities may not cease to carry on its business, make disposals or restructurings or otherwise enter into arrangements which may adversely affect its ability to fulfill its obligations towards the lenders or the security granted in their favour. The finance documents include financial covenants at borrower or group level (as the case may be), such as a minimum debt service coverage ratio of no less than 1.1, an equity ratio of minimum 25%, liquidity requirements and a leverage ratio from 6 to 4 (stepwise reduced over the term of the facilities). The finance documents include restrictions on ownership changes and dividend distributions, affecting the ability of subsidiary borrowers to upstream funds, as well as cross default and material adverse change provisions. The bond loan agreement contains customary covenants and conditions, including cross default, material adverse effect and other restrictive provisions.

A summary description of the financing agreements currently in place:

Sevan Drilling Pte Ltd. USD 480 million Bank Facility: In March 2011, Sevan Drilling Pte Ltd entered into a credit facility with a syndicate with NIBC, ING Bank, DvB and China Development Bank as Mandated Lead Arrangers (“MLA’s”). NIBC is the Facility Agent and DvB is the Security Trustee. The syndicate includes in addition to the MLA’s, GIEK/Eksportfinans, Banco Itau, Natexis and DEKA Bank. Interests accrue at LIBOR plus a margin of 350 bp.

The final maturity date in respect of the commercial tranche is 9 June 2016, and in respect of the GIEK/Eksportfinans tranche 9 June 2018, provided that GIEK/Eksportfinans may demand repayment in 2016 together with the commercial tranche if the commercial tranche is not refinanced at that time on terms acceptable to GIEK/Eksportfinans.

The loan shall be repaid in quarterly installments, in the initial amount of USD 13,235,000, increasing gradually over the term of the loan to USD 17,068,814 with a balloon payment to the commercial lenders in June 2016 of USD 95,312,500. If GIEK/Eksportfinans require prepayment in June 2016, the amount due to them will be USD 53,046,913, which is otherwise repayable over the two remaining years until June 2018. The loan may be prepaid subject to a prepayment fee.

The loan facility is structured as a project finance facility on a single purpose basis, with securities customary in this type of financing, including, inter alia, a mortgage over the Sevan Driller, assignment of earnings and insurances, pledge of accounts, security in various contracts, and share pledges. The loan agreement contains customary provisions for agreements of this nature, such as (i) mandatory prepayment provisions relating to loss events, termination of charter and other project contracts, (ii) restrictive covenants regarding, inter alia, dividend distribution (which may affect availability of upstream funds to the Company), the operation and sale of the unit, change of ownership, and

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amendments to material contracts, and (iii) detailed reporting and compliance requirements. There is a debt service cover ratio covenant of not less than 1.1:1.0.

Sevan Marine has guaranteed the obligations of the borrower. The guarantee includes certain financial covenants, including a liquidity covenant of USD 50 million on a consolidated group basis, and a book equity at least equal to 25%, in each case on a consolidated Sevan Marine Group basis. In addition, Sevan Marine and Sevan Drilling Invest AS have given certain undertakings to support the project (including the performance by the Brazilian subsidiary of its obligations under the service contract with Petrobras), and to ensure compliance with various requirements, including without limitation ownership requirements regarding ownership, reporting, and subordination of claims.

Sevan Drilling Rig II Pte Ltd USD 525 million Bank Facility: In December 2010, Sevan Drilling Rig II Pte Ltd (an indirectly owned subsidiary of Sevan Drilling) entered into a credit facility with a syndicate of banks lead by ING as agent. The facility includes three tranches: A commercial facility tranche, a GIEK/Eksportfinans tranche, and a Sinosure/China Construction Bank tranche. The facility is partially guaranteed by Garantiinstituttet for Eksportkreditt (GIEK). Eksportfinans has funded GIEK’s portion of the facility. The facility consists of a USD 525 million loan used to finance, in part, the Sevan Brasil. Drawing is subject to certain milestone criteria and conditions precedent being fulfilled. As at the date of the Prospectus, USD 182 million has been drawn.

Interest accrues at LIBOR plus an average margin of 340 bps prior to acceptance of the Sevan Brasil by the client and 310 bps from the time of acceptance.

The final maturity date in respect of the commercial tranche and the Sinosure/China Construction Bank tranche is May 2018, and in respect of the GIEK/Eksportfinans tranche May 2020, provided that GIEK/Eksportfinans may demand repayment in 2018 together with the other tranches if such tranches have not been refinanced at that time on terms acceptable to GIEK/Eksportfinans.

The loan shall be repaid in quarterly installments during the tenor of the loan. Subject to timely delivery of the unit from the yard, the repayment schedule contemplates an initial installment in November 2012 in the amount of USD 23,529,412, and thereafter quarterly installments of starting at USD 13,014,706 increasing gradually over the period to May 2018 to USD 18,764,706 with a balloon payment to the commercial lenders in May 2018 of USD 36,750,000 and to Sinosure of USD 58,823,528. If GIEK/Eksportfinans require prepayment in May 2018, the amount due to them will be USD 58,823,528, which is otherwise repayable over the two and half remaining years until November 2020. From May 2018 till November 2020, the quarterly installments due to GIEK/Eksportfinans each equal USD 5,882,353. The loan may be prepaid subject to a prepayment fee.

The loan facility is structured as a project finance facility on a single purpose basis, with securities customary in this type of financing, including during the pre-delivery stage security in the hull under construction, in the various contracts, assignment of refund guarantees and insurances, pledge in shares and account pledges, to be supplemented from delivery by a first mortgage over the unit and assignment of earnings borrower.

Sevan Marine has guaranteed the obligations of the borrower during the pre-delivery period, and assumed a performance undertaking as to the operational ability of the Sevan Driller, with financial covenants applicable as in the Sevan Driller facility.

The loan agreement contains customary provisions for this type of financings, such as (i) mandatory prepayment provisions relating to loss events, termination of charter and other project contracts,(ii) mandatory prepayment provisions if the unit has not been delivered by COSCO on or prior to 31 November 2012 or the unit has not been accepted under the Petrobras charter by 30 May 2013, (iii) restrictive covenants regarding, inter alia, dividend distribution (which may affect availability of upstream funds to the Company), the operation and sale of the unit, change of ownership, and amendments to material contracts, and (iv) detailed reporting and compliance requirements both during construction and after completion. There is a debt service cover ratio covenant of not less than 1.1:1.0.

Sevan Drilling Pte Ltd USD 78 million vendor credit arrangement with COSCO The USD 78 million vendor credit facility with COSCO was drawn in November 2009 and has a repayment structure divided in three equal installments of USD 26 million whereby the first installment was paid in January 2011, the second installment is due in January 2012 and the third installment is due in June 2012. The interest rate under the

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credit facility is fixed at 4.5 per cent p.a. and interest is payable together with the installments. The loan is currently secured by a parent company guarantee from Sevan Marine. Following prepayment of the USD 250 million Bank Facility and the NOK 1 billion bond described above, a subordinated mortgage in Sevan Driller will be established.

Sevan Drilling Rig II Pte Ltd USD 80 million vendor credit arrangement with COSCO The USD 80 million vendor credit facility with COSCO may be drawn at the time of delivery of Sevan Brasil from COSCO and has a repayment structure divided in three equal installments of USD 27 million whereby the first installment is payable 24 months after delivery, the second installment is due 36 months after delivery and the third installment is due 48 months after delivery. The interest rate under the credit facility is fixed at 4.5 per cent p.a. and interest is payable together with the installments. The loan is currently secured by a parent company guarantee from Sevan Marine which may be replaced by a parent company guarantee from the Company.

In February 2011, the Group made a drawdown of USD 182 million under the USD 525 construction financing facility for the Sevan Brasil as described in Sections 11.3 and 12.

Cash Flows

The cash flow from operations relates to revenues from Sevan Driller less interest payments and operating expense. Cash flow from investment activities relates to investments in relation to the construction of Sevan Driller and Sevan Brasil.

Working Capital Statement

The Company is of the opinion that the Group’s working capital is sufficient for its present requirements. For purposes of this statement, “working capital” means the ability to access cash and other available liquid resources in order to meet liabilities as they fall due, and “present requirements” means 12 months from the date of this Prospectus.

11.7 Financial and Other Liabilities The table below provides an overview of the Group’s combined financial and other liabilities to third parties and related parties as at 31 December 2010, 2009 and 2008:


(audited) 2009

(audited) 2008

(audited) Interest-bearing debt ................................................................. 496.0 452.9 286.6 Interest-bearing debt to related parties ...................................... 275.2* 229.5 34.4 Other liabilities (external trade payables, accruals etc) ............. 277.3 78.4 128.3

*USD 264 million was converted to equity in March 2011

11.8 Capital Expenditures The table below shows the Group’s capital expenditures on fixed assets the periods ended 31 December 2010, 2009 and 2008:


(audited) 2009

(audited) 2008

(audited) Capital expenditures Sevan Driller ............................................ 52.7 199.2 194.0 Capital expenditures Sevan Brasil ............................................. 216.9 40.1 70.2

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11.9 Contractual Commitments The table below provides a maturity analysis of the Group’s contractual obligations, commercial commitments and principal payments scheduled as at 31 December 2010: Payments due by period (USD million) Contractual obligations (1) Total Less than 1 year 1-5 years More than 5

years Construction obligations Sevan Brasil .............. 252.5 172.0 80.5 0.0 Total ................................................................. 252.5 172.0 80.5 0.0

(1) The table above does not show the Group’s contractual commitments towards personnel (salary and benefit obligations), pension obligations or deferred tax obligations. Purchase obligations set forth in the table represent estimated minimum purchase commitments, not likely purchases.

The possible capital expenditure commitments relating to the two newbuild COSCO rigs, for which the Company has entered into LOIs to construct, is described in section 8.8 and 8.9.

11.10 Off Balance Sheet Arrangements The Group has undertaken contractual obligations which are not treated as liabilities on its balance sheet because the Group is not required to do so by IFRS. The Group is not party to any off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on its financial condition, changes in financial condition, revenues, or expenses, operating results, liquidity, capital expenditures or capital resources. When the Group treats contractual obligations as liabilities in the Group’s balance sheet, it involves the application of assumptions and estimates to determine the amount of the liability. Because of the inherent uncertainty in the application of assumptions and estimates, the Group’s actual liabilities could turn out to be different from the amounts counted as liabilities on its balance sheet.

11.11 Significant Changes and Trends Except as otherwise disclosed in this Prospectus, the draw-down of new loans (described in Section 10.3), the capital raise (described in Section 10.3) and the announcement of the planned Offering (described in Section 5), there have been no significant changes in the financial or trading position of the Group since the date of its latest financial information included in this Prospectus.

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12 RELATED PARTY TRANSACTIONS Sevan Marine exerts considerable influence over Sevan Drilling as it is the sole shareholder. Sevan Marine is therefore considered to be a related party to Sevan Drilling and the Company’s subsidiaries in accordance with IAS 24. The objective of IAS 24 is to ensure that an entity’s financial statements contain the disclosures necessary to draw attention to the possibility that its financial position, and profit or loss, may have been affected by the existence of related parties, and by transactions and outstanding balances with such parties. Below is a summary of the Group’s related party transaction for the periods covered by the Financial Statements included in this Prospectus and up until the date of the Prospectus.

• Sevan Marine has charged the Group USD 1.0 million in 2010 (2009: USD 3.0 million) (2008: nil) in design fee in relation to the construction of Sevan Driller and Sevan Brasil. Remaining design fee in relation to Sevan Brasil, USD 5.0 million, will be charged upon completion of the rig in 2012.

• Sevan Marine has charged the Group USD 1.4 million in 2010 (2009: USD 0.9 million) (2008: USD 1.1 million) in management fee in relation to management and support services.

• Sevan Marine has charged the Group USD 5.7 million in 2010 (2009: USD 8.3 million) (2008: USD 9.3 million) in relation to engineering, site supervision and project management services in relation to the construction of Sevan Driller and Sevan Brasil.

• Sevan Marine has charged the Group USD 3.4 million in 2010 (2009: USD 2.8 million) (2008: USD 2.4 million) in relation to parent company guarantees.

• In March 2011, a conversion of debt to equity of USD 264.0 million was executed by Sevan Marine. This is further described in Section 14.1 (“Share capital and share capital history”)

• Agreement relating to transfer of all shares in Sevan Drilling Invest AS to Sevan Drilling from Sevan Marine, as contribution in kind for issuance of new share capital in the Company (by an increase of the par value of the shares). The transfer and share issue in Sevan Drilling will be made in accordance with section 10-2 of the Norwegian Public Limited Liability Companies Act with a review report by Kjelstrup & Wiggen on corresponding value.

• In March 2011, Sevan Marine and Sevan Drilling entered into an agreement whereby Sevan Drilling is granted non-exclusive license rights (subject to certain conditions related to the use of the rights) to the Sevan Design and related know-how and trademarks for the applications (i) exploratory drilling, (ii) development drilling, (iii) well-intervention and (iv) production drilling (provided that Sevan Marine shall have the right to use the licensed applications onboard its FPSOs in combination with oil & gas production and well intervention combined with oil & gas production). The fee payable for the licensed applications is USD 6 million for each of the two new vessels contracted under the letters of intent described in Section 8.9, and for each and every contract which Sevan Drilling and/or any of its subsidiaries may enter into thereafter for the construction of a drilling unit based on the Sevan Design. The license fee is subject to adjustment and increase of 5% annually from the signing date of the license agreement. The right to use the “Sevan” name and logo in conjunction with “Drilling” names may be terminated by Sevan Marine if Sevan Marine reduces its ownership stake in the Company (by way of sale or similar) below 5%, in which case the Company has a period of 12 months within which to change name). The license agreement has been approved by the General Meeting in Sevan Drilling and has been subject to a review report on corresponding value by Kjelstrup & Wiggen pursuant to section 3-8 of the Norwegian Public Limited Liability Companies Act.

• In March 2011 Sevan Marine and the Company entered into a services agreement relating to provision of certain financial/accounting/administrative support functions by Sevan Marine during an interim period (from the time of listing and for a period of up to 12 months with termination rights for the Company) as well as provision of business premises, and facilities and services related to ICT and helpdesk functions, support personnel, IT equipment and computer systems. The services will be provided at market terms.

• In March 2011 the Company and Sevan Drilling Management AS entered into a standard form of management for the provision of employees and services going forward, from the first day of trading of the shares in the Company on Oslo Børs. The services will be made at market terms.

• Sevan Marine has granted certain parent payment and performance guarantees for Sevan Drilling Rig II Pte Ltd under the USD 525 million credit facility and for Sevan Drilling Pte Ltd under the USD 480 million credit facility. In addition, Sevan Marine has issued certain guarantees in favour of some suppliers of equipment to Sevan Brasil as well as parent company payment and performance guarantees for Sevan Drilling Pte Ltd under the USD 78 million vendor credit facility (USD 52 million currently outstanding) and Sevan Drilling Rig II Pte Ltd under the USD 80 million vendor credit facility (currently undrawn). Sevan Marine is “an intervening party” with related liability under the charter contract with Petrobras for Sevan Brasil.. It is the intent of the Company and Sevan Marine to approach relevant beneficiaries at the appropriate time with a view to having Sevan Marine released from these obligations, as time constraints in connection with the listing process did not allow these issues to be addressed and resolved. In the meantime they are mirrored by counter guarantees and performance undertakings from relevant members of the Sevan Drilling Group to Sevan Marine. Sevan Marine and relevant guarantee providers within the Group charge customary and market terms commissions for the provisions of guarantees.

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13 DIVIDENDS AND DIVIDEND POLICY 13.1 Dividend policy Sevan Drilling has not distributed any dividends since the Company’s inception, and no dividends will be paid prior to listing of the Shares.

The Company aims at obtaining a sound financial structure, reflecting the capital intensive nature of its business, the offshore market fluctuations and the duration of the contract portfolio for its units. The Company’s goal will be to provide its shareholders with a competitive return on their investment over time, in terms of dividend and development in share price. The Company aims to distribute dividends to its shareholders on a regular basis.

When determining whether to declare a dividend or the size of a dividend, account will be taken of the Company’s financial targets, large investments or commitments made, possible future acquisitions, expected future results of operations, financial condition, cash flows and other factors. There can be no assurance that in any given year a dividend will be proposed or declared.

13.2 Legal constraints on the distribution of dividends Dividends may be paid in cash or in some instances in kind. The Norwegian Public Limited Liability Companies Act sets forth several constraints on the distribution of dividends:

• Unless the procedures stipulated in Sections 12-4 and 12-6 of the Norwegian Public Limited Liability Companies Act in respect of reduction of share capital, dividends are payable only out of distributable reserves of the Company (Sevan Drilling). Section 8-1 of the Norwegian Public Limited Liability Companies Act provides that distributable reserves consist of the profit for the prior fiscal year (as reflected in the income statement approved by the annual general meeting) and the retained profit from previous years (adjusted for any reclassification of equity), less (i) uncovered losses, (ii) the book value of research and development, goodwill and net deferred tax assets (as recorded in the balance sheet, as of the most recent fiscal year end, approved by the annual general meeting), (iii) the total nominal value of treasury shares acquired for ownership or as security in previous fiscal years, and credit and security that, pursuant to Sections 8-7 to 8-9 of the Norwegian Public Limited Liability Companies Act, fall within the limits of distributable equity, and (iv) that part of the profit for the prior fiscal year which, by law or pursuant to the Company’s Articles of Association, must be allocated to the un-distributable reserves or cannot be distributed as a dividend.

• Dividends cannot be distributed if the Company’s (Sevan Drilling’s) equity amounts to less than 10% of its total assets unless the procedures stipulated in Sections 12-4 and 12-6 of the Norwegian Public Limited Liability Companies Act for the reduction of share capital are complied with.

• Dividends can only be distributed to the extent compatible with good and careful business practice, with due regard to any losses that may have been incurred since the balance sheet date (i.e. the prior fiscal year end) or that may be expected to be incurred.

• The amount of distributable dividends is calculated on the basis of the Company’s (Sevan Drilling’s) separate financial statements and not on the basis of the consolidated financial statements of the Company and its subsidiaries.

• Distribution of dividends is resolved by a majority vote at the general meeting of the shareholders of the Company, and on the basis of a proposal from the Board of Directors. The general meeting cannot distribute a larger amount than what is proposed or accepted by the Board of Directors.

The Norwegian Public Limited Liability Companies Act does not provide for any time limit after which entitlement to dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from the date on which an obligation is due. There are no dividend restrictions or specific procedures for non-Norwegian resident shareholders to claim dividends. For a description of withholding tax on dividends applicable to non-Norwegian residents, see Section 16 “Taxation”.

The Group’s existing debt arrangements contain, and the Group’s future debt arrangement may contain, restrictions on distribution of dividends. Under the new senior secured debt discussed in Section 11.9., the Company will be subject to dividend restrictions such that a maximum of 50% of the net income in the relevant financial year, adjusted for tax and write downs on the Sevan Driller and the Sevan Brasil, may be distributed as dividends. Any amount permitted to be distributed, but not distributed in one year, may be carried forward and distributed in subsequent years.

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14 DESCRIPTION OF THE SHARES AND SHARE CAPITAL The following is a summary of certain material information relating to the Shares and share capital of Sevan Drilling and certain other shareholder matters, including summaries of certain provisions of the Company’s Articles of Association and applicable Norwegian law in effect as of the date of this Prospectus, including the Norwegian Public Limited Liability Companies Act. The summary does not purport to be complete and is qualified in its entirety by the Company’s Articles of Association and Norwegian law.

14.1 Share capital and share capital history The Company’s issued and registered share capital is as of the date of this Prospectus NOK 96,000,000 divided into 96,000,000 Shares, each fully paid up and with a par value of NOK 1.00. Following completion of the Offering, and assuming that the Offering is fully subscribed at the mid-point of the indicative offer price range (NOK 18.50) the share capital of the Company will be increased by NOK 104,054,054 (104,054,054 new Shares each with a par value of NOK 1.00) to NOK 200,054,054, divided into 200,054,054 Shares each with a par value of NOK 1.00.

The table below shows the development in the Company’s share capital development for the period from inception to the date hereof:

Date Type of change Capital increase

(NOK) New share capital

(NOK) Shares

outstanding

31 May 2006 Incorporation 3,000,000 3,000,000 3,000,000

21 March 2011 Debt to equity conversion 33,570,000 36,570,000 3,000,000

21 March 2011 Contribution in kind 59,430,000 96,000,000 3,000,000

21 March 2011 Share split (1:32) 0 96,000,000 96,000,000

5 April 2011 Currently outstanding n/a 96,000,000 96,000,00

14.2 Sole shareholder As of the date of this Prospectus, Sevan Drilling has only one shareholder, Sevan Marine, which owns 100% of the Shares. The Shares held by the sole shareholder will not carry any different voting rights than the Offer Shares issued or sold in connection with the Offering. The Company does not own any treasury shares.

14.3 Outstanding authorizations As of the date of this Prospectus, there are no outstanding authorizations granted to the Board of Directors to issue new shares or rights to have issued shares or other securities giving rights in the share capital of the Company, nor are there any outstanding authorizations to acquire treasury shares.

14.4 Other financial instruments Neither Sevan Drilling nor any of its subsidiaries has issued any options, warrants, convertible loans or other instruments that would entitle a holder of any such instrument to subscribe for any shares in Sevan Drilling or its subsidiaries.

14.5 Shareholder rights Sevan Drilling has one class of shares in issue, and in accordance with the Norwegian Public Limited Liability Companies Act, all shares in that class provide equal rights in Sevan Drilling.

14.6 The Articles of Association Sevan Drilling’s Articles of Association and Memorandum of Association (a translation thereof) are set out in Appendix A to this Prospectus. Below is a summary of provisions of the Articles of Association. The Articles of Association of the Company do not place more stringent conditions for the change of rights of holders than those required by the Norwegian Public Limited Liability Companies Act, see Section 14.7, “Voting rights – Amendments to the Articles of Association and other resolutions”.

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Objective of Sevan Drilling

The objective of Sevan Drilling is, on its own, or through participation in or together with other companies, to own and operate drilling units as well as to undertake thereto associated activities. Sevan Drilling’s objective can be found in Article 3 of its Articles of Association, or in Article 3 of the articles included in the Memorandum of Association.

Registered office

Sevan Drilling’s registered office is in the city of Stavanger, Norway.

Share capital and par value

Sevan Drilling’s share capital is NOK 96,000,000 divided into NOK 96,000,000 Shares, each Share with a par value of NOK 1.00.

Board of Directors and nomination committee

According to article 5 of the Articles of Association of Sevan Drilling, the Company’s Board of Directors shall consist of a minimum of three and a maximum of nine members. According to article 6 of the Articles of Association of Sevan Drilling, the Company shall have a nomination committee consisting of minimum three members, of whom one member shall be a Director.

Restrictions on transfer of Shares

The Articles of Association do not provide for any restrictions, or a right of first refusal, on transfer of Shares. Share transfers are not subject to approval by the Board of Directors.

General meetings

Documents which deal with matters that are to be handled at the general meeting of Sevan Drilling’s shareholders are not required to be sent to the shareholders, provided that such documents have been made available on the internet site of the Company. A shareholder may in any case require the submission of documents which deal with matters that are to be handled at the general meeting of Sevan Drilling’s shareholders.

14.7 Certain aspects of Norwegian corporate law

General meetings

In accordance with Norwegian law, the annual general meeting of Sevan Drilling’s shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that written notice of general meetings setting forth inter alia the time, date and agenda of the meeting be sent to all shareholders whose addresses are known at least three weeks prior to the date of the meeting. A shareholder may vote at the general meeting either in person or by proxy. Although Norwegian law does not require Sevan Drilling to send proxy forms to its shareholders for general meetings, Sevan Drilling plans to include a proxy form with notices of general meetings. All of Sevan Drilling’s shareholders who are registered in the register of shareholders maintained with the VPS as of the date of the general meeting, or who have otherwise reported and documented ownership to Shares, are entitled to participate at general meetings, without any requirement of pre-registration. Sevan Drilling’s Articles of Association do not currently include any provisions requiring shareholders to pre-register in order to participate at general meetings, however the Company may include such requirements in notices for general meetings. The deadline for pre-registration may not be more than five days prior to the relevant general meeting.

Apart from the annual general meeting, extraordinary general meetings of shareholders may be held if the Board of Directors considers it necessary. An extraordinary general meeting of shareholders must also be convened for the consideration of specific matters at the written request of the Company’s auditor or of shareholders representing a total of at least five % of Sevan Drilling’s share capital. The requirements for notice and admission to the annual general meeting of Sevan Drilling’s shareholders also apply for extraordinary general meetings of shareholders.

Voting rights – Amendments to the Articles of Association and other resolutions

Each of Sevan Drilling’s Shares carries one vote. In general, decisions that shareholders are entitled to make under Norwegian law or Sevan Drilling’s Articles of Association may be made by a simple majority of the votes cast. In the case of elections, the persons who obtain the greatest number of votes cast are elected. However, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights to subscribe in connection with any share issue in Sevan Drilling, to approve a merger or demerger of Sevan Drilling, to amend the Articles of Association, to authorize an increase or reduction in the share capital, to authorize an issuance of convertible loans or warrants by Sevan Drilling or to authorize the Board of Directors to purchase Shares and hold them as treasury shares or to dissolve Sevan Drilling, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least

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two-thirds of the share capital represented at a general meeting of Sevan Drilling’s shareholders. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval by the holders of such shares or class of shares as well as the majority required for amending the Articles of Association.

Decisions that (i) would reduce the rights of some or all of Sevan Drilling’s shareholders in respect of dividend payments or other rights to assets or (ii) restrict the transferability of the Shares, require that at least 90 % of the share capital represented at the general meeting of Sevan Drilling’s shareholders in question vote in favour of the resolution, as well as the majority required for amending the Articles of Association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amending the Articles of Association.

In general, only a shareholder registered in the VPS is entitled to vote for such Shares. Beneficial owners of Sevan Drilling’s Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor is any person who is designated in the VPS register as the holder of such Shares as nominees. Investors should note that there are varying opinions as to the interpretation of the right to vote on nominee registered shares.

There are no quorum requirements that apply to the general meetings of the shareholders of Sevan Drilling.

Additional issuances and preferential rights

If Sevan Drilling issues any new Shares, including bonus share issues, Sevan Drilling’s Articles of Association must be amended, which requires the same vote as other amendments to its Articles of Association. In addition, under Norwegian law, Sevan Drilling’s shareholders have a preferential right to subscribe for new Shares issued by Sevan Drilling. Preferential rights may be derogated from by resolution in a general meeting of Sevan Drilling’s shareholders passed by the same vote required to approve an amendment of the Articles of Association. A derogation from the shareholders’ preferential rights in respect of bonus issues requires the approval of all outstanding Shares.

At a general meeting Sevan Drilling’s shareholders may, by the same vote as is required for amending the Articles of Association, authorize the Board of Directors to issue new Shares, and to derogate from the preferential rights of shareholders in connection with such issuances. Such authorisation may be effective for a maximum of two years, and the par value of the Shares to be issued may not exceed 50 % of the registered nominal share capital when the authorisation is registered with the Norwegian Register of Business Enterprises.

Under Norwegian law, Sevan Drilling may increase its share capital by a bonus share issue, subject to approval by Sevan Drilling’s shareholders, by transfer from Sevan Drilling’s distributable equity or from Sevan Drilling’s share premium reserve and thus the share capital increase does not require any payment of a subscription price by the shareholders. Any bonus issues may be effected either by issuing new shares to Sevan Drilling’s existing shareholders or by increasing the par value of Sevan Drilling’s outstanding Shares.

Issuance of new Shares to shareholders who are citizens or residents of the United States upon the exercise of preferential rights, may require Sevan Drilling to file a registration statement in the United States under United States securities laws. Should Sevan Drilling in such a situation decide not to file a registration statement, Sevan Drilling’s US shareholders may not be able to exercise their preferential rights. If a US shareholder is ineligible to participate in a rights offering, such shareholder would not receive the rights at all and the rights would be sold on the shareholder’s behalf by Sevan Drilling.

Minority rights

Norwegian law sets forth a number of protections for minority shareholders of Sevan Drilling, including but not limited to those described in this paragraph and the description of general meetings as set out above. Any of Sevan Drilling’s shareholders may petition Norwegian courts to have a decision of the Board of Directors or Sevan Drilling’s shareholders made at the general meeting declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or Sevan Drilling itself. Sevan Drilling’s shareholders may require the courts to dissolve Sevan Drilling as a result of such decisions. Minority shareholders holding five % or more of Sevan Drilling’s share capital have a right to demand in writing that Sevan Drilling’s Board of Directors convene an extraordinary general meeting of Sevan Drilling’s shareholders to discuss or resolve specific matters. In addition, any of Sevan Drilling’s shareholders may in writing demand that Sevan Drilling place an item on the agenda for any general meeting as long as Sevan Drilling is notified in time for such item to be included in the notice of the meeting. If the notice has been issued when such a written demand is presented, a renewed notice must be issued if at least two weeks remain before the general meeting is to be held.

Rights of redemption and repurchase of Shares

The share capital of Sevan Drilling may be reduced by reducing the par value of the Shares or by cancelling Shares. Such a decision requires the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds

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of the share capital represented at a general meeting of Sevan Drilling’s shareholders. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed.

Sevan Drilling may purchase its own Shares provided that the Board of Directors has been granted an authorisation to do so by a general meeting of Sevan Drilling’s shareholders with the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds of the share capital represented at the meeting. The aggregate par value of treasury shares so acquired, and held by the Company must not exceed 10 % of Sevan Drilling’s share capital, and treasury shares may only be acquired if Sevan Drilling’s distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares. The authorisation by the general meeting of Sevan Drilling’s shareholders cannot be granted for a period exceeding 18 months.

Shareholder vote on certain reorganisations

A decision of Sevan Drilling’s shareholders to merge with another company or to demerge requires a resolution by the general meeting of the shareholders passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the general meeting. A merger plan, or demerger plan signed by the Board of Directors along with certain other required documentation, would have to be sent to all Sevan Drilling’s shareholders at least one month prior to the general meeting of Sevan Drilling’s shareholders to pass upon the matter.

Liability of directors

Members of the Board of Directors owe a fiduciary duty to Sevan Drilling and its shareholders. Such fiduciary duty requires that the Board members act in the best interests of the Company when exercising their functions and exercise a general duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the Company.

Members of the Board of Directors may each be held liable for any damage they negligently or willfully cause the Company. Norwegian law permits the general meeting of Sevan Drilling’s shareholders to discharge any such person from liability, but such discharge is not binding on the Company if substantially correct and complete information was not provided at the general meeting of Sevan Drilling’s shareholders passing upon the matter. If a resolution to discharge Sevan Drilling’s directors from liability or not to pursue claims against such a person has been passed by a general meeting of Sevan Drilling’s shareholders with a smaller majority than that required to amend Sevan Drilling’s Articles of Association, shareholders representing more than 10 % of the share capital or, if there are more than 100 shareholders, more than 10 % of the shareholders may pursue the claim on Sevan Drilling’s behalf and in its name. The cost of any such action is not the Company’s responsibility but can be recovered from any proceeds the Company receives as a result of the action. If the decision to discharge any of Sevan Drilling’s directors from liability or not to pursue claims against Sevan Drilling’s directors is made by such a majority as is necessary to amend the Articles of Association, the minority shareholders of Sevan Drilling cannot pursue such claim in Sevan Drilling’s name.

Indemnification of directors

Neither Norwegian law nor the Articles of Association contains any provision concerning indemnification by Sevan Drilling of the Board of Directors. Sevan Drilling is permitted to purchase, and have purchased, insurance to cover Sevan Drilling’s directors against certain liabilities that they may incur in their capacity as such.

Distribution of assets on liquidation

Under Norwegian law, Sevan Drilling may be wound-up by a resolution of Sevan Drilling’s shareholders at the general meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the meeting. In the event of liquidation, the Shares rank equally in the event of a return on capital by Sevan Drilling.

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15 SECURITIES TRADING IN NORWAY 15.1 Trading and settlement Trading of equities on Oslo Børs is carried out in the electronic trading system TradElect. This trading system is in use by all markets operated by the London Stock Exchange as well as by the Borsa Italiana and the Johannesburg Stock Exchange.

Official trading on Oslo Børs takes place between 09:00 hours (CET) and 17:30 hours (CET) each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET), a closing auction from 17:20 hours (CET) to 17:25 hours (CET) and a post-trade period from 17:25 hours (CET) to 18:15 hours (CET).

The settlement period for trading on Oslo Børs is three trading days (T+3).

Investment services in Norway may only be provided by Norwegian investment firms holding a license under the Securities Trading Act, branches of investment firms from an EEA member state or investment firms from outside the EEA that have been licensed to operate in Norway. Investment firms in an EEA member state may also provide cross-border investment services into Norway.

It is possible for investment firms to undertake market-making activities in shares listed in Norway if they have a license to this effect under the Norwegian Securities Trading Act, or in the case of investment firms in an EEA member state, a license to carry out market-making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Norwegian Securities Trading Act relating to brokers’ trading for their own account. Such market-making activities do not as such require notification to the Norwegian FSA or Oslo Børs except for the general obligation of investment firms that are members of Oslo Børs to report all trades in stock exchange listed securities.

15.2 Information, control and surveillance Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control functions. The Surveillance and Corporate Control unit of Oslo Børs monitors all market activity on a continuous basis. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments.

Under Norwegian law, a company that is listed on a Norwegian regulated market, or is subject to the application for listing on such market, must promptly release any inside information directly concerning the company (that is, precise information about financial instruments, the issuer thereof or other matters that are likely to have a significant effect on the price of the relevant financial instruments or related financial instruments, and that are not publicly available or commonly known in the market). A company may, however, delay the release of such information in order not to prejudice its legitimate interests, provided that it is able to ensure the confidentiality of the information and that the delayed release would not be likely to mislead the public. Oslo Børs may levy fines on companies violating these requirements.

15.3 The VPS and transfer of shares The Company’s shareholder register is operated through the VPS. The VPS is the Norwegian paperless centralised securities register. It is a computerised bookkeeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. The VPS and Oslo Børs are both wholly owned by Oslo Børs VPS Holding ASA.

All transactions relating to securities registered with the VPS are made through computerised book entries. No physical share certificates are, or may be, issued. The VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To give effect to such entries, the individual shareholder must establish a share account with a Norwegian account agent. Norwegian banks, Norges Bank (that is, Norway’s central bank), authorized securities brokers in Norway and Norwegian branches of credit institutions established within the EEA are allowed to act as account agents.

The entry of a transaction in the VPS is prima facie evidence in determining the legal rights of parties as against the issuing company or any third party claiming an interest in the given security. A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such shares unless such transferee or assignee has registered such shareholding or has reported and shown evidence of such share acquisition, and the acquisition is not prevented by law, the relevant company’s articles of association or otherwise.

The VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or deletion of, rights in respect of registered securities unless the error is caused by matters outside the VPS’ control which the VPS could not reasonably be expected to avoid or overcome the consequences of. Damages payable by the VPS may, however, be reduced in the event of contributory negligence by the aggrieved party.

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The VPS must provide information to the Norwegian FSA on an ongoing basis, as well as any information that the Norwegian FSA requests. Further, Norwegian tax authorities may require certain information from the VPS regarding any individual’s holdings of securities, including information about dividends and interest payments.

15.4 Shareholder register Under Norwegian law, shares are registered in the name of the beneficial owner of the shares. As a general rule, there are no arrangements for nominee registration and Norwegian shareholders are not allowed to register their shares in VPS through a nominee. However, foreign shareholders may register their shares in the VPS in the name of a nominee (bank or other nominee) approved by the Norwegian FSA. An approved and registered nominee has a duty to provide information on demand about beneficial shareholders to the company and to the Norwegian authorities. In case of registration by nominees, the registration in the VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions, but cannot vote in general meetings on behalf of the beneficial owners.

15.5 Foreign investment in Norwegian shares Foreign investors may trade shares listed on Oslo Børs through any broker that is a member of Oslo Børs, whether Norwegian or foreign.

15.6 Disclosure obligations If a person’s, entity’s or consolidated group’s proportion of the total issued shares and/or rights to shares in a company listed on a regulated market in Norway (with Norway as its home state, which will be the case for the Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of that company, the person, entity or group in question has an obligation under the Norwegian Securities Trading Act to notify Oslo Børs and the issuer immediately. The same applies if the disclosure thresholds are passed due to other circumstances, such as a change in the company’s share capital.

15.7 Insider trading According to Norwegian law, subscription for, purchase, sale or exchange of financial instruments that are listed, or subject to the application for listing, on a Norwegian regulated market, or incitement to such dispositions, must not be undertaken by anyone who has inside information, as defined in Section 3-2 of the Norwegian Securities Trading Act. The same applies to the entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights whose value is connected to such financial instruments or incitement to such dispositions.

15.8 Mandatory offer requirement The Norwegian Securities Trading Act requires any person, entity or consolidated group that becomes the owner of shares representing more than one-third of the voting rights of a Norwegian company listed on a Norwegian regulated market to, within four weeks, make an unconditional general offer for the purchase of the remaining shares in that company. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of shares that, together with the party’s own shareholding, represent more than one-third of the voting rights in the company and Oslo Børs decides that this is regarded as an effective acquisition of the shares in question.

The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered.

When a mandatory offer obligation is triggered, the person subject to the obligation is required to immediately notify Oslo Børs and the company in question accordingly. The notification is required to state whether an offer will be made to acquire the remaining shares in the company or whether a sale will take place. As a rule, a notification to the effect that an offer will be made cannot be retracted. The offer and the offer document required are subject to approval by Oslo Børs before the offer is submitted to the shareholders or made public.

The offer price per share must be at least as high as the highest price paid or agreed by the offeror for the shares in the six-month period prior to the date the threshold was exceeded. However, if it is clear that that the market price was higher when the mandatory offer obligation was triggered, the Norwegian Securities Trading Act states that the offer price shall be at least as high as the market price. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate its offer at such higher price. A mandatory offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered.

In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, Oslo Børs may force the acquirer to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise rights in the company, such as voting in a general meeting of the Company’s shareholders, without the

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consent of a majority of the remaining shareholders. The shareholder may, however, exercise his/her/its rights to dividends and pre-emption rights in the event of a share capital increase. If the shareholder neglects his/her/its duty to make a mandatory offer, Oslo Børs may impose a cumulative daily fine that runs until the circumstance has been rectified.

Any person, entity or consolidated group that owns shares representing more than one-third of the votes in a Norwegian company listed on a Norwegian regulated market is obliged to make an offer to purchase the remaining shares of the company (repeated offer obligation) if the person entity or consolidated group through acquisition becomes the owner of shares representing 40%, or more of the votes in the company. The same applies correspondingly if the person entity or consolidated group through acquisition becomes the owner of shares representing 50% or more of the votes in the company. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares which exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered.

Any person, entity or consolidated group that has passed any the above mentioned threshold in such a way as not to trigger the mandatory bid obligation, and has therefore not previously made an offer for the remaining shares in the company in accordance with the mandatory offer rules is, as a main rule, obliged to make a mandatory offer in the event of a subsequent acquisition of shares in the company.

15.9 Compulsory acquisition Pursuant to the Norwegian Public Limited Liability Companies Act and the Norwegian Securities Trading Act, a shareholder who, directly or through subsidiaries, acquires shares representing more than 90% of the total number of issued shares in a Norwegian public limited liability company, as well as more than 90% of the total voting rights, has a right, and each remaining minority shareholder of the company has a right to require such majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such majority shareholder. Through such compulsory acquisition the majority shareholder becomes the owner of the remaining shares with immediate effect.

If a shareholder acquires shares representing more than 90% of the total number of issued shares, as well as more than 90% of the total voting rights, through a voluntary offer in accordance with the Norwegian Securities Trading Act, a compulsory acquisition can, subject to the following conditions, be carried out without such shareholder being obliged to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a financial institution authorized to provide such guarantees in Norway.

A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, the determination of which is at the discretion of the majority shareholder. However, where the offeror, after making a mandatory or voluntary offer, has acquired more than 90% of the voting shares of a company and a corresponding proportion of the votes that can be cast at the general meeting, and the offeror pursuant to Section 4-25 of the Public Limited Liability Companies Act completes a compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it follows from the Norwegian Securities Trading Act that the redemption price shall be determined on the basis of the offer price for the mandatory /voluntary offer unless specific reasons indicating another price.

Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the compulsory acquisition.

Absent a request for a Norwegian court to set the price or any other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the specified deadline.

15.10 Foreign exchange controls There are currently no foreign exchange control restrictions in Norway that would potentially restrict the payment of dividends to a shareholder outside Norway, and there are currently no restrictions that would affect the right of shareholders of a Norwegian company who are not residents in Norway to dispose of their shares and receive the proceeds from a disposal outside Norway. There is no maximum transferable amount either to or from Norway, although transferring banks are required to submit reports on foreign currency exchange transactions into and out of Norway into a central data register maintained by the Norwegian customs and excise authorities. The Norwegian police, tax authorities, customs and excise authorities, the National Insurance Administration and the Norwegian FSA have electronic access to the data in this register.

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16 TAXATION Below is a summary of certain Norwegian tax matters related to the purchase, holding and disposal of shares. The summary is based on Norwegian laws, rules and regulations applicable as of the date of this Prospectus, and is subject to any changes in law occurring after such date. Such changes could possibly be made on a retroactive basis. The summary does not address foreign tax laws. The summary is of a general nature and does not purport to be a comprehensive description of all the Norwegian tax considerations that may be relevant for a decision to acquire, own or dispose of the shares. Shareholders who wish to clarify their own tax situation should consult with and rely upon their own tax advisers. Shareholders resident in jurisdictions other than Norway should consult with and rely upon local tax advisers with respect to the tax position in their country of residence. The statements only apply to shareholders who are beneficial owners of the shares.

16.1 Tax consequences related to the ownership and realization of shares - Norwegian Shareholders

This Section summarizes certain Norwegian tax rules relevant to shareholders that are residents of Norway for Norwegian tax purposes (“Norwegian Shareholders”).

Taxation of repayments of paid-in capital

Repayments of paid-in capital for tax purposes that are equally distributed on all shares are not considered taxable income in Norway. Paid-in capital for tax purposes is determined on a share-by-share basis, and may differ between the shares. Repayments of paid-in capital on a share exceeding the paid-in capital for tax purposes on the same share should be taxed as dividends, see Section 16.1. below.

Repayments of paid-in capital for tax purposes on a share should reduce Norwegian Shareholders’ cost price on the same share.

Taxation of dividends

Norwegian Personal Shareholders

Dividends received by shareholders who are individuals tax-resident in Norway (“Norwegian Personal Shareholders”) from a limited liability company tax-resident in Norway are subject to tax in Norway as general income at a flat rate of 28%.

Norwegian Personal Shareholders may be entitled to deduct a calculated allowance when calculating their taxable dividend income. The allowance is calculated on a share-by-share basis, and the allowance for each share is equal to the cost price of the share, multiplied by a risk-free interest rate. The allowance is calculated for each calendar year, and is allocated solely to Norwegian Personal Shareholders holding shares at the expiration of the relevant calendar year. Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. Any part of the calculated allowance one year exceeding the dividend distributed on the share can be forwarded and deducted when calculating taxable dividend income on the same share a later year. Furthermore, unused allowance can be added to the cost price of the share and included in the basis for calculating the allowance on the same share the following years.

Norwegian Corporate Shareholders

Dividends received by shareholders that are limited liability companies or similar entities tax-resident in Norway (“Norwegian Corporate Shareholders”) from a limited liability company tax-resident in Norway are comprised by the participation exemption method.

Three % of the net annual income comprised by the participation exemption method is to be entered as general income and taxed at the flat rate of 28%. Losses on shares may reduce the net annual income comprised by the participation exemption method to zero, but cannot be forwarded nor reduce taxable income from other sources.

Norwegian Shareholders holding shares through partnerships

Partnerships are as a general rule transparent for Norwegian tax purposes. Taxation occurs at partner level, and each partner is taxed on a current basis for its proportional share of the net income generated by the partnership at a rate of 28%, regardless of whether such income is distributed to the partners or not.

For partnerships, dividends received on shares from a limited liability company tax-resident in Norway are comprised by the participation exemption method. Three per cent of the net annual income comprised by the participation exemption method is to be entered as general income and taxed at the flat rate of 28%, see the description of tax issues related to Norwegian Corporate Shareholders above.

For partners who are Norwegian Personal Shareholders, further taxation occurs when the dividends received are distributed from the partnership to such partners. Such distributions will be taxed as general income at a rate of 28%.

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The Norwegian Personal Shareholders will be entitled to deduct a calculated allowance when calculating their taxable income from the partnership. Norwegian Corporate Shareholders holding shares through a partnership are exempt from further taxation when the dividends received are distributed by the partnership.

Taxation of capital gains on realization of shares

Norwegian Personal Shareholders

Sale, redemption or other disposal of shares is considered a realization for Norwegian tax purposes. A capital gain or loss generated by a Norwegian personal shareholder through a disposal of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for computation of general income in the year of realization. General income is taxable at a rate of 28%. Gain is subject to tax and loss is tax deductible irrespective of the duration of the ownership and the number of shares disposed of.

The capital gain is calculated as the consideration received less the cost price of the share, including costs incurred in relation to the acquisition or realization of the share. From this capital gain, Norwegian Personal Shareholders may be entitled to deduct a calculated allowance when calculating their taxable income, provided that the allowance has not already been used to reduce taxable dividend income, see above. The allowance for each share will be equal to the cost price of the share multiplied by a determined risk-free interest rate. The allowance is calculated per each calendar year, and is allocated solely to Norwegian Personal Shareholders holding shares at the expiration of the relevant calendar year. Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. The unused allowance may only be deducted in order to reduce a taxable gain on the same share, and may not be deducted in order to increase or produce a deductible loss. Further, unused allowance may not be set off against gains from realization of other shares.

If the shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis.

Special rules apply for Norwegian Personal Shareholders who cease to be tax-resident in Norway.

Norwegian Corporate Shareholders

For Norwegian Corporate Shareholders a capital gain or loss on realization of shares in a limited liability company tax-resident in Norway are comprised by the participation exemption method.

Three per cent of the net annual income comprised by the participation exemption method shall be entered as general income and taxed at a rate of 28%. Losses on shares may reduce the net annual income comprised by the participation exemption method to zero, but cannot be forwarded nor reduce taxable income from other sources.

If the shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis.

Special rules apply for Norwegian Corporate Shareholders that cease to be tax-resident in Norway.

Norwegian Shareholders holding shares through partnerships

Partnerships are as a general rule transparent for Norwegian tax purposes. Taxation occurs at partner level, and each partner is taxed on a current basis for its proportional share of the net income generated by the partnership at a rate of 28%, regardless of whether such income is distributed to the partners or not.

For partnerships, realization of shares in a limited liability company tax-resident in Norway is comprised by the participation exemption method. Three per cent of the net annual income comprised by the participation exemption method is to be entered as general income, see the description of tax issues related to Norwegian Corporate Shareholders above.

If the shares are acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis.

For partners who are Norwegian Personal Shareholders, further taxation occurs when the capital gains received are distributed from the partnership to such partners. Such distributions will be taxed as general income at a rate of 28%. The Norwegian Personal Shareholders will be entitled to deduct a calculated allowance when calculating their taxable income from the partnership. Norwegian Corporate Shareholders holding shares through a partnership are exempt from further taxation when the capital gains received are distributed by the partnership

Net wealth tax

For Norwegian Personal Shareholders, shares will form part of their basis for calculation of Norwegian net wealth tax. Listed shares are valued at 100% of their quoted value as of 1 January in the assessment year (the year following the income year). The current marginal net wealth tax rate is 1.1%.

Norwegian Corporate Shareholders are exempt from Norwegian net wealth tax.

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16.2 Tax consequences related to the ownership and realization of shares Foreign Shareholders

This Section summarizes certain Norwegian tax rules relevant to shareholders that are not resident in Norway for Norwegian tax purposes (“Foreign Shareholders”). The potential tax liabilities for foreign shareholders in the jurisdiction where they are resident for tax purposes or other jurisdictions will depend on tax rules applicable in the relevant jurisdiction.

Taxation of repayments of paid-in capital

Repayments of paid-in capital for tax purposes are not considered as dividends in Norway. Paid-in capital for tax purposes is determined on a share-by-share basis, and may differ between the shares. Repayment of paid-in capital on a share exceeding the paid-in capital for tax purposes on the same share should be taxed as dividends, see Section 16.2 below.

Repayments of paid-in capital for tax purposes on a share to Foreign Shareholders should not be subject to withholding tax in Norway.

Taxation of dividends

Dividends paid by Norwegian limited liability companies and similar entities to Foreign Shareholders, both corporate and individuals, are as a general rule subject to withholding tax in Norway at the regular rate of 25%, unless otherwise provided for in an applicable income tax treaty or the recipient is covered by the specific regulations for corporate shareholders tax-resident within the European Economic Area (EEA). The withholding obligation lies with the company distributing the dividends.

Foreign Shareholders who are individuals (“Foreign Personal Shareholders”) tax-resident within the EEA for tax purposes are subject to Norwegian withholding tax on dividends received from Norwegian companies at the regular rate or at a reduced rate according to an applicable tax treaty. However, if withholding tax at the regular rate is deducted, such shareholders may apply individually to the tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each individual share (see above). Foreign Personal Shareholders tax-resident within the EEA may carry forward any unused allowance, if the allowance exceeds the dividends.

Foreign Shareholders that are corporate entities tax-resident within the EEA for tax purposes are exempt from Norwegian withholding tax on dividends distributed from Norwegian limited liability companies, provided that the Foreign Shareholder in fact is genuinely established within the EEA and manages a genuine business within the EEA.

In accordance with the present administrative system in Norway, the Norwegian distributing company will normally deduct withholding tax at the regular rate or reduced rate according to an applicable tax treaty, based on the information registered with the VPS with regard to the tax- residence of the Foreign Shareholder. Dividends paid to Foreign Shareholders in respect of nominee- registered shares will be subject to withholding tax at the general rate of 25% unless the nominee, by agreeing to provide certain information regarding beneficial owners, has obtained approval for a reduced rate from the Central Office for Foreign Tax Affairs (Nw. Sentralskattekontoret for utenlandssaker).

Foreign Shareholders that are exempt from withholding tax and Foreign Shareholders who have suffered a higher withholding tax than set out by an applicable tax treaty can apply for a refund of any excess withholding tax deducted.

If a Foreign Shareholder is engaged in business activities in Norway, and the shares are effectively connected with such business activities, dividends distributed to such shareholder will generally be subject to the same taxation as that of Norwegian Shareholders, as described above.

Foreign Shareholders should consult their own advisers regarding the availability of treaty benefits in respect of dividend payments, including the ability to effectively claim refunds of withholding tax.

Taxation of capital gains on realization of shares

As a general rule, capital gains generated by Foreign Shareholders are not taxable in Norway.

If a Foreign Shareholder is engaged in business activities in Norway, and the shares are effectively connected with such business activities, capital gains realized by such shareholder will generally be subject to the same taxation as that of Norwegian Shareholders, cf the description of tax issues related to Norwegian Shareholders above.

Net wealth tax

Foreign Shareholders are not subject to net wealth tax in Norway on shares unless the shareholder is an individual who is engaged in business activities in Norway, and the shares are effectively connected with such business activities.

Inheritance tax

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When shares are transferred either through inheritance or as a gift, such transfer may give rise to inheritance tax in Norway if the decedent, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway, or if the shares are effectively connected with a business carried out through a permanent establishment in Norway. However, in the case of inheritance, if the decedent was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax or a similar tax is levied by the decedent’s country of residence.

VAT and transfer taxes

Norway does not impose VAT, stamp duty or similar taxes on the transfer of shares.

16.3 Eligible Sevan Drilling Employees participating in the Employee Offering Employees participating in the Employee Offering will receive a discount of 10% on the Offer Price per Offer Share allocated to such Eligible Employee. For employees resident in Norway and for employees who are taxable in Norway on income from their employment, such discount is as a starting point taxable as employment income. Employment income is taxed at progressive rates of up to 47.8%. The employer will be obliged to carry out a withholding in any amount that is taxed as employment income according to these rules, and report such benefit to the tax authorities. There is, however, a special exemption for certain employee offerings, whereby a discount of up to 20% of the market value of the shares (maximum NOK 1,500 per employee per year) is not considered taxable. Provided the offer is directed at all employees, this exemption applies to all direct Eligible Sevan Drilling Employees. Gain or loss on realization of shares acquired through the Employee Offering will be taxed according to the rules described in 16.1.3 “Taxation of capital gains on realization of shares” above. In the calculation of gain or loss, the cost price of the shares will be equal to the market value of the shares at the time of acquisition. Such market value will also form the basis for the calculation of the calculated allowance described in 16.1. For employees not resident in Norway and who are not taxable in Norway on income from their employment, the tax consequences of participating in the Employee Offering will depend on inter alia the tax rules in their country of residence.

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17 ADDITIONAL INFORMATION 17.1 Litigation and disputes From time to time, the Company and other companies in the Group may be involved in litigation, disputes and other legal proceedings arising in the normal course of its business. No Group member is at the date of this Prospectus, nor has any Group member during the course of the preceding twelve months been, involved in any legal, governmental or arbitration proceedings which may have, or have had in the recent past, any -, significant effect on the Group’s financial position or profitability. The Company is not aware of any such proceedings which are pending or threatened.

17.2 Documents on display Copies of the following documents will be available for inspection at the Company’s registered office during normal business hours from Monday to Friday each week (except public holidays) for a period of twelve months from the date of this Prospectus:

• the Articles and Memorandum of Association of the Company;

• the Combined Accounts for Sevan Drilling Group, and the financial statements of the Sevan Drilling ASA as of and for years ended 31 December 2010, 2009 and 2008;

• all reports included or referred to in this Prospectus, and

• this Prospectus.

17.3 Expert statements No expert statements have been incorporated in this document.

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18 NORWEGIAN SUMMARY (NORSK SAMMENDRAG) This Norwegian summary has been prepared for the Norwegian securities market in connection with the Offering and listing of the Shares in Sevan Drilling on Oslo Børs. The information provided in this section is a summary of information provided in the rest of this Prospectus and does not contain any additional information. The information is thus only provided in the Norwegian language.

Dette norske sammendraget er utarbeidet for det norske verdipapirmarkedet i forbindelse med Tilbudet av aksjer i Sevan Drilling og notering av Aksjene på Oslo Børs. Informasjonen i dette kapittelet utgjør et sammendrag av informasjon som fremgår andre steder i dette Prospektet og inneholder ikke noe informasjon ut over dette. Dette norske sammendraget er en oversettelse av Prospektets kapittel 1 “Summary”. Sammendraget utgjør en del av det engelskspråklige Prospektet. Investeringsgrunnlaget for det norske verdipapirmarkedet består således ikke kun av det norske sammendraget, men av hele Prospektet. Investorer oppfordres til å lese hele Prospektet nøye før en investeringsbeslutning eventuelt treffes. Ved motstrid mellom det norske sammendraget og de deler av Prospektet som er skrevet på engelsk, skal den engelske delen av Prospektet gå foran.

* * * * * *

Det følgende sammendraget må leses som en innledning til det fulle innholdet av Prospektet. Sammendraget fremhever, og er i sin helhet kvalifisert av, den mer detaljerte informasjonen som presenteres annensteds i dette Prospektet og dets vedlegg. Sammendraget er ikke komplett og inneholder ikke all den informasjon du bør vurdere før du investerer i Aksjene. Enhver investeringsbeslutning vedrørende Tilbudet og en investering i Aksjene bør baseres på en vurdering av dette Prospektet i sin helhet, herunder Kapittel 2 ”Risk Factors” samt regnskapene som er inntatt. Dersom et krav vedrørende informasjonen i dette Prospektet fremmes for retten, vil saksøker i henhold til nasjonal lovgivning i en medlemsstat i EØS, kunne bli pålagt å bære kostnadene knyttet til oversettelse av Prospektet før den rettslige prosessen iverksettes. Intet sivilrettslig erstatningsansvar påligger de personer som har utarbeidet dette sammendraget, herunder oversettelser av dette, med mindre sammendraget er misvisende, unøyaktig eller inkonsistent når det leses i sammenheng med Prospektets øvrige deler. For definisjoner av visse begreper som benyttes, se kapittel 19 ”Definitions and Glossary of Terms”. I dette norske sammendraget skal definerte ord og uttrykk (angitt med stor forbokstav) som er oversatt til norsk forstås i samsvar med tilsvarende engelskspråklige ord eller uttrykk slik disse er definert i det engelskspråklige Prospektet. Noen eksempler på slike engelskspråklige motstykker til definerte ord og uttrykk som er oversatt til norsk er som følger: Med “Prospektet” forstås “Prospectus”; med “Selskapet” forstås “Company”; med “Tilbudet” forstås “Offering”; med “Aksjene” forstås “Shares”; med “Tilbudsaksjene” forstås “Offer Shares”; med “Berettigede Ansatte” forstås “Eligible Employees”; med “Tilbudsprisen” forstås “Offer Price”.

18.1 Introduksjon av Sevan Drilling Selskapsinformasjon

Sevan Drilling ASA ble stiftet som et aksjeselskap (AS) 31. mai 2006, Selskapet er stiftet i henhold til, og underlagt norsk lovgining etter allmennaksjeloven. Selskapet har organisasjonsnummer 989 910 272.

Selskapets hovedkontor og registrerte forretningskontor er Kittelsbuktveien 5, 4836 Arendal, Norge, telefon: +47 37 40 40 00 og telefax:+47 37 40 40 99. Selskapets internettside er www.sevandrilling.com.

Sevan Marine er per dato for Prospektet den eneste aksjonæren i Selskapet.

Oversikt over virksomheten

Sevan Marine har utviklet et sylinderformet skrogdesign for flytere basert på et patentert design og proprietær kunnskap i Sevan Marine (”Sevan Designet”). Siden 2001, har Sevan Marine og dets datterselskaper (”Sevan Konsernet”) vært engasjert i design, bygging, drift og tilhørende eierskap i flytere for produksjon, lagring og avlasting av olje, i tillegg til offshore borerigger basert på det sylinderformede designet.

I februar 2006 annonserte Sevan Marine at selskapet ønsket å utvikle ultradypvanns borerigger basert på Sevan designet i et separat forretningsområde innenfor Sevan Konsernet. Sevan Drilling har siden annonseringen blitt en fullintegrert offshore bore-kontraktør med eierskap i to ultradypvanns bore-enheter. Selskapet eier og betjener Sevan Driller, er en av verdens mest avanserte, robuste og høyteknologiske ultradypvanns borerigger. Sevan Drilling er basert på Sevan 650 designet og er bygget for sikker og effektiv drift i krevende ultra dypvannsområder. Sevan Driller er i drift under et 6-årig certeparti med Petrobras S.A (”Petrobras”) siden juni 2010 utenfor kysten av Brasil. Den andre enheten, Sevan Brasil, er under bygging på COSCO Qidong verftet (”COSCO”) i Kina. Sevan Brasil, også en ultra dypvanns borerigg basert å Sevan 650-designet, er planlagt for levering fra verftet i løpet av første kvartal 2012 og har ingått et 6-årig certeparti med Petrobras i Brasil, med forventet oppstart i andre kvartal 2012.

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I mars 2011 inngikk Sevan Drilling, gjennom to heleide datterselskaper, en intensjonsavtale med COSCO for bygging av to ultradypvanns borerigger og opsjoner for kjøp av to ytterligere ultradypvanns borerigger med samme spesifikasjoner og basert på Sevan 650-designet. Selskapet har estimerer at nøkkelferdig kjøpspris inklusivt kostnader relatert til prosjektstyring, byggefinansiering, reservedeler, boreutstyr og pre-operasjon, vil beløpe seg til ca USD 525 millioner, for hvert av nybyggene. Prisen for de to nybyggende det foreligger opsjon for, er estimert å utgjøre tilsvarende beløp, dog slik at beløpene er gjenstand for mulige prisjusteringer for vesentlige endringer i vekslingskurser og i priser på større utstyrspakker. I henhold til intensjonsavtalen skal (forutsatt endelig avtale) den første bekreftede enheten bli levert i fjerde kvartal 2013 mens den andre enheten er forventet levert i andre kvartal 2014. Det første nybygget det foreligger opsjon for, skal (forutsatt at opsjonen utøves før første kvartal 2012) leveres i fjerde kvartal 2014, mens den andre enheten det foreligger opsjon for, skal (forutsatt at opsjonen utøves før tredje kvartal 2012) levers i andre kvartal 2015.

Strategi

Selskapet har identifisert de følgende viktigste strategiske mål for å oppfylle sin ambisjon om å bli anerkjent som en fullt integrert boreentreprenør i verdensklasse, og som eier og driver av boreenheter:

• Kapitalisere på Selskapets posisjon i Brasil og videreutvikle aktivitetene i dette området, i tillegg til internasjonal ekspandering med fokus på ultradypvann og teknisk krevende områder;

• kapitalisere på Selskapet’s konkurransemessig fortrinn og tilby kostnadseffektive bore-løsninger til klienter;

• utvikle en flåte av høyspesifikasjon, ultradypvann rigger basert på Sevan design og med høyteknologisk boreutstyr;

• søke å inngå langsiktige borekontrakter med profesjonelle og anerkjente kunder;

• utvikle relasjon med nøkkelkunder og leverandører, og

• utnytte og forbedre Selskapets organisatoriske erfaring og kompetanse.

18.2 Sammendrag av finansiell og operasjonell informasjon Den første boreriggen, Sevan Driller, hadde sin driftsstart i 2010 og de finansielle resultatene for 2008 og 2009 gjenspeiler derfor ingen signifikante inntekter før en økning til USD 40,6 millioner i 2010. Operasjonelt resultat var minus USD (47,1) millioner i 2010 sammenliknet med minus USD (32,6) millioner i 2009 og minus USD (23,4) millioner i 2008. Operasjonelt resultat før avskrivninger og nedskrivninger var minus USD (4,4) millioner in 2010, sammenliknet med minus USD (30,5) millioner i 2009 og minus USD (19,3) millioner i 2008.

Informasjonen nedenfor er utledet av Sevan Drilling ASA’s reviderte sammenstilte regnskap, i overenstemmelse med IFRS for årene 2010, 2009 og 2008. Grunnlaget for det sammenstilte regnskapet er blitt beskrevet i kapittel 10 av prospektet, og bør leses sammen med Selskapets årsrapporter for perioden.

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Konsernets sammenstilte resultatregnskap

Året som endte 31. desember I millioner USD 2010

(revidert) 2009

(revidert) 2008

(revidert) ...................................................................................................... Driftsinntekter ............................................................................ 40.6 0.6 0.0 ...................................................................................................... Driftskostnader ............................................................................. -28.0 -15.1 -12.3 Avskrivninger og andre nedskrivninger ........................................ -42.7 -2.1 -4.1 Lønnskostnader ............................................................................. -14.9 -13.5 -5.2 Andre driftskostnader -1.7 -1.5 -2.6 Valutagevinst/(tap) relatert til drift ............................................... -0.4 -1.0 0.7

Totale driftskostnader ................................................................ -87.7 -33.2 -23.4 ...................................................................................................... Driftsresultat ............................................................................... -47.1 -32.6 -23.4 ...................................................................................................... Finansinntekter ............................................................................. 2.9 2.1 5.2 Finanskostnader ............................................................................ -48.9 -4.3 -4.5 Valutagevinst/(tap) relatert til finansering ....................................

1.7 -23.1 31.1

Netto finansposter .......................................................................

-44.3 -25.3 31.8

Resultat før skatt ........................................................................ -91.3 -57.9 8.4 ...................................................................................................... Skattekostnad ................................................................................ 4.5 6.6 3.6 ...................................................................................................... Årets resultat ............................................................................... -86.8 -51.3 12.0 Resultat per aksje (USD 1,000) Totalt fullstending resultat

-28.9 -86.8

-17.1 -51.3

4.0 12.0

Totale eiendeler for året som endte 31. desember 2010 var USD 1.165,3 millioner, sammenliknet med USD 964,4 millioner i 2009, som et resultat av progresjon i byggeprogrammet og levering av Selskapets første borerigg. Total egenkapital var USD 116,8 millioner per 31. desember 2010, sammenliknet med USD 203,6 millioner 31. desember 2009 og USD 145,0 millioner per 31. desember 2008. Nedgangen i egenkapitalen var et result av et negativt resultat for 2009.

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Balanse

Per 31. desember

I USD millioner Eiendeler Anleggsmidler

2010 (revidert)

2009 (revidert)

2008 (revidert)

Borerigger ..................................................................................... 1,009.6 767.3 528.7 Annet utstyr .................................................................................. 6.2 9.0 0.6 Immaterielle eiendeler .................................................................. 0.1 0.0 0.0 Utsatt skattefordel ......................................................................... 20.8 14.9 8.2 Andre anleggsmidler ..................................................................... 62.1 21.0 1.5 Sum anleggsmidler ...................................................................... Omløpsmidler

1,098.8 812.2 539.0

Varelager ...................................................................................... 7.7 13.9 1.9 Kundefordringer og andre kortsiktige fordringer .......................... 39.7 64.1 52.2 Kontanter og kontantekvivalenter*/*** ........................................ 19.1 74.2 1.5 Sum omløpsmidler ...................................................................... 66.5 152.2 55.5 Sum eiendeler .............................................................................. Egenkapital og forpliktelser

1,165.3 964.4 594.5

Innskutt egenkapital ...................................................................... 0.5 0.5 0.5 Annen egenkapital ** ................................................................... 116.3 203.1 144.7 Total egenkapital ........................................................................ 116.8 203.6 145.2 ...................................................................................................... Langsiktige forpliktelser

Andre langsiktige forpliktelser ..................................................... 166.6 103.1 0.0 Derivatforpliktelser ....................................................................... 0.0 0.0 1.5 Rentebærende gjeld*/*** ............................................................. 393.3 51.9 286.1 Sum langsiktige forpliktelser ..................................................... Kortsiktige forpliktelser

559.9 155.0 287.6

Rentebærende gjeld ...................................................................... 102.7 401.0 0.5 Leverandørgjeld ............................................................................ 248.2 77.4 125.9 Andre kortsiktige forpliktelser ...................................................... 137.9 127.5 35.3 Sum kortsiktige forpliktelser ..................................................... 488.6 605.8 161.7 Sum forpliktelser ........................................................................ 1,048.5 760.8 449.3 Sum egenkapital og forpliktelser ............................................... 1,165.3 964.4 594.5

*) I februar 2011 ble det første nedtrekket (USD 182 millioner) gjennomført på USD 525 millioner banklånet vedrørende Sevan Brasil. Nedtrekket medførte en økning i kontantbeholdning og en økning i langsiktig rentebærende gjeld.

**) I mars 2011 ble USD 264,0 millioner av gjelden konvertert til egenkapital. Egenkapitalen økte følgelig til USD 380,8 millioner.

***) I mars 2011 ble et USD 480 millioner banklån relatert til Sevan Driller utbetalt. Banklånet ble benyttet til refinansiering av eksisterende bank- og obligasjonslån relatert til Sevan Driller prosjektet, samt generelle selskapsforhold.

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Kontantstrøm

For året som endte 31. desember I USD millioner Kontantstrøm fra driften

2010 (revidert)

2009 (revidert)

2008 (revider

t) Kontanter fra driften ..................................................................... -0.2 -28.4 -14.1 Renter betalt .................................................................................. -21.0 -23.9 -26.1 Skatt betalt .................................................................................... Netto kontantstrøm fra driften .................................................. Kontantstrøm fra investeringer

-21.2 -52.3 -40.2

Kjøp av eiendeler og utstyr .......................................................... -164.6 -292.9 -154.2 Netto kontantstrøm fra investeringer ....................................... Kontantstrøm fra finasiering

-164.6 -292.9 -154.2

Netto proveny fra utstedelse av ny aksjekapital ............................ 0.0 109.6 0.0 Lån fra morselskap Sevan Marine ASA 92.9 179.2 34.3 Tilbakebetaling av rentebærende gjeld -4.8 0.0 0.0 Netto endringer i rentebærende gjeld*/** ..................................... 42.6 129.2 100.0 Netto kontantstrøm fra finansiering ......................................... 130.8 418.0 134.3 ...................................................................................................... Netto kontantstrøm for perioden*/** ........................................ -55.1 72.8 -60.2 Kontanter og kontantekvivalenter ved starten av perioden ........... 74.2 1.5 61.7 Kontater ved utgangen av perioden*/** ................................... 19.1 74.2 1.5

*) I februar 2011 ble det første nedtrekket (USD 182 millioner) gjennomført på USD 525 millioner banklånet vedrørende Sevan Brasil. Nedtrekket medførte en økning i kontantbeholdning og en økning i langsiktig rentebærende gjeld.

**) I mars 2011 ble et USD 480 millioner banklån relatert til Sevan Driller utbetalt. Banklånet ble benyttet til refinansiering av eksisterende bank- og obligasjonslån relatert til Sevan Driller prosjektet, samt generelle selskapsforhold.

18.3 Styre, ledelse og ansatte Selskapets vedtekter fastsetter at Selskapets styre skal bestå av 3 til 9 styremedlemmer. Styremedlemmene er valgt av aksjonærene.

Nytt og eksisterende styre

Selskapets styre består p.t. av Jan Erik Tveteraas (styreleder), Oskar Mykland og Birte Norheim (styremedlemmer). Dette reflekterer at Selskapet per dato for Prospektet er et heleid datterselskap av Sevan Marine.

På første noteringsdag for Aksjene på Oslo Børs vil Selskapets styre bestå av John Cole (styreleder), Scott Kerr (nestleder) og Arne Smedal, Kitty Hall og Anne Breive (styremedlemmer).

Ledelse

Selskapets ledelse består p.t. av Jon Wilmann (VP Drilling), Håvard Haugland (Group Controller, Sevan Marine/midlertidig CFO Sevan Drilling), Bjørn Egil Gustavsen (VP Projects), Pascal Busch, (VP QHSE) og Paul Grimen (VP Operations). Jan Erik Tveteraas, CEO i Sevan Marine, vil ta over som CEO for Sevan Drilling fra første noteringsdag og Jon Wilmann overta som CFO med ansvar for Investor Relations.

Ansatte

Sevan Drilling Group har om lag 185 ansatte i Norge, Singapore og Brasil.

18.4 Eneaksjonær og transaksjoner med nærstående Eneaksjonær

Sevan Drilling eies 100% av Sevan Marine, et selskap med registrert adresse Kittelsbuktveien 5, 4836 Arendal, Norge og listet på Oslo Børs under tickeren “Sevan”.

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Transaksjoner med nærstående

Konsernet har i perioden som dekkes av årsregnskapene inntatt i Prospektet, tatt del i flere nærstående transaksjoner med Sevan Marine og selskaper der Sevan Marine har betydelig innflytelse. For ytterligere informasjon om Konsernets transaksjoner med nærstående, se punkt 12 “Related Party Transactions” i Prospektet.

18.5 Aksjekapital Per dato for prospektet er Selskapets aksjekapital NOK 96.000.000 fordelt på 96.000.000 Aksjer, hver aksje med pålydende verdi NOK 1,00. Alle aksjer i Selskapet er av samme klasse og med samme rettigheter. Aksjene har alle blitt gyldig utstedt og fullt innbetalt.

18.6 Vedtekter Selskapets vedtekter er inntatt som Vedlegg til dette Prospektet.

18.7 Oversikt over Tilbudet Den følgende tabellen gir en oversikt over Tilbudet og angir visse indikative nøkkeldatoer.

Tilbudet ...................................................... Tilbudet er på opp til NOK 3.270 millioner (~USD 595 millioner) og gjelder tilbud av et antall Tilbudsaksjer som vil bestemmes i forbindelse med fastsettelse av den endelige Tilbudsprisen. Tilbudet består av et Institusjonelt Tilbud, et Offentlig Tilbud og et Ansattetilbud. Tilbudet består av mellom 92 millioner og 120 millioner nye Aksjer (“Nye Aksjer”) tilbudt og utstedt av Selskapet og opp til 64 millioner eksisterende aksjer (”Eksisterende Aksjer”) som blir tilbudt solgt av den Selgende Aksjonæren, samlet totalt mellom 156 millioner og 184 millioner Tilbudsaksjer, ikke inkludert eventuelle Tilleggsaksjer.

Det Institusjonelle Tilbudet ........................ I det Institusjonelle Tilbudet tilbys Tilbudsaksjer til institusjonelle investorer og profesjonelle investorer i Norge og utenfor Norge og USA i henhold til Regulation S i US Securities Act, og i USA til et begrenset antall QIBer i henhold til Rule 144A i US Securities Act, med en minste grense per ordre på NOK 1 000 000.

Det Offentlige Tilbudet ............................. I det Offentlige Tilbudet tilbys Tilbudsaksjer til offentligheten i Norge, med en minste grense per bestilling på NOK 10 000 og en øvre grense per bestilling på NOK 999 999 per investor.

Ansattetilbudet ..........................................

I Ansattetilbudet tilbys Tilbudsaksjer til Berettigede Ansatte (som definert i Prospektet), med en minste grense per bestilling på NOK 10 000 og en øvre grense per bestilling på NOK 100 000. Hver Berettigede Ansatte vil motta en rabatt på 10 % av Tilbudsprisen per Tilbudsaksje for Tilbudsaksjer allokert til den aktuelle ansatte. For en kort beskrivelse av de norske skattevirkningene av slik rabatt, se punkt 16.3.

Overtildelingsopsjon (“Over-allotment option”) .....................................................

Selgende aksjonærer har bevilget tilretteleggerne et tilbud om å kjøpe, til Tilbudspris, opp til 13 millioner Tilleggsaksjer, begrenset oppad til maksimalt 10% av det antallet Aksjer som i utgangspunktet blir tildelt i Tilbudet, for å dekke overtildelinger i forbindelse med Tilbudet og short-posisjoner, hvis noen, med utøvelse innen 30 dager etter at Aksjene er blitt notert på Oslo Børs.

Bookbuilding-perioden ............................... Bookbuilding-perioden i det Institusjonelle Tilbudet forventes å finne sted fra 09:00 (CET) den 5. april 2011 til 17:30 (CET) den 15. april 2011, med mulighet for forlengelse.

Bestillingsperioden ..................................... Bestillingsperioden der bestillinger av Tilbudsaksjer vil tas imot i det Offentlige Tilbudet og Ansattetilbudet, vil vare fra 09:00 (CET) den 5. april 2011 til 12:00 (CET) den 15. april 2011, med mulighet for forlengelse.

Indikativt prisintervall ................................ Fra NOK 16.00 til NOK 21.00 per Tilbudsaksje.

Notifikasjon om allokering ......................... På eller omkring 18. april 2011.

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Betaling for Tilbudsaksjene ........................ På eller omkring 27. april 2011.

Levering av Tilbudsaksjene ........................ På eller omkring 28. april 2011.

Opptak til handel av Aksjene ..................... Det er ventet at handel i Aksjene på Oslo Børs vil begynne på eller omkring 29. april 2011.

Bruk av proveny ......................................... Nettoprovenyet fra Tilbudet av Nye Aksjer vil benyttes til (i) finansiering av det initielle avdraget på 20 % av kontraktsbeløpet for det første av de to nybyggene ved COSCO, (ii) arbeidskapital knyttet til nybyggene og (iii) generelle selskapsformål.

Utvanning ................................................... Forutsatt salg av 168 millioner Tilbudsaksjer i Tilbudet (antallet Nye Aksjer utstedt av Selskapet med en Tilbudspris midt i det indikative prisintervallet samt 64 millioner Eksisterende Aksjer solgt av den Selgende Aksjonæren (ikke inkludert eventuelle Tilleggsaksjer)), vil Sevan Marines eierandel i Selskapet bli redusert fra 100% til omtrent 16 %.

Kostnader ................................................... De samlede kostnadene i forbindelse med Tilbudet og noteringen av Aksjene på Oslo Børs er forventet å beløpe seg til ca. NOK 120 millioner (hvoran Selskapet vil dekke NOK 75 millioner).

ISIN ............................................................ NO 001 0455793

Oslo Børs handelssymbol .......................... Aksjene forventes å handles under handelssymbolet “SDRILL”.

18.8 Dokumenter til gjennomsyn Kopier av de følgende dokumentene vil være tilgjengelige for gjennomsyn på Selskapets registrerte forretningskontor i normal åpningstid fra mandag til fredag hver uke (med unntak av helligdager og offentlige høytidsdager) i en periode på 12 måneder fra dato for Prospektet:

• Selskapets vedtekter og stiftelsesdokument;

• Konsernets sammenstilte årsregnskaper, samt avlagte årsregnskaper for Sevan Drilling ASA for regnskapsårene som endte 31. desember 2010, 2009 og 2008;

• Alle rapporter inkludert eller referert til i dette Prospektet; og

• Prospektet.

18.9 Rådgivere og revisor Rådgivere

Pareto Securitites er engasjert som Global Koordinator (Global Coordinator). Pareto Securities, ABG Sundal Collier Norge ASA, Arctic Securities ASA, First Securities AS, ING Bank N.V og SEB Enskilda fungerer som tilretteleggere (Joint Lead Managers og Joint Bookrunners) for Tilbudet.

Bugge, Arentz-Hansen & Rasmussen (BA-HR) har vært norsk juridisk rådgiver for Selskapet. Advokatfirmaet Wiersholm har vært norsk juridisk rådgiver for Tilretteleggerne, og Akin Gump Strauss Hauer & Feld LLP har vært Tilretteleggernes amerikanske juridiske rådgiver i forbindelse med Tilbudet. Deloitte har vært finansiell due diligence-rådgiver for Tilretteleggerne.

Revisor

PricewaterhouseCoopers AS (“PWC”) er Selskapets uavhengige revisor. PwC er medlem av Den Norske Revisorforening

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18.10 Sammendrag av risikofaktorer En investering i Aksjene medfører iboende risiko. Før en beslutning om hvorvidt man skal delta i Tilbudet, bør investorer nøye vurdere all informasjonen som fremgår av Prospektet, og særlig de spesifikke risikofaktorene som fremgår nedenfor. En investering i Aksjene egner seg kun for investorer som forstår risikofaktorene knyttet til denne typen investering og som har råd til å tape hele eller deler av investeringen.

Dersom noen av risikoene beskrevet nedenfor materialiserer seg, enkeltvis eller sammen med andre omstendigheter, vil de kunne ha en vesentlig negativ innvirkning på Konsernets virksomhet, finansielle stilling, driftsresultater og kontantstrøm, som vil kunne føre til en nedgang i verdien og handelskursen på Aksjene og som igjen vil kunne føre til et tap av hele eller deler av en investering i Aksjene.

Risikoene og usikkerhetene som er beskrevet nedenfor er ikke de eneste som vedrører Konsernet. Ytterligere risikoer og usikkerheter som Selskapet p.t. tror er mindre vesentlige eller som Selskapet ikke kjenner til, vil også kunne ha en vesentlig negativ innvirkning på Selskapets virksomhet, finansielle stilling, driftsresultat og kontantstrøm.

Rekkefølgen risikoene presenteres i nedenfor er ikke ment å utgjøre en indikasjon på sannsynligheten for at de vil oppstå eller hvor alvorlige de er. Disse risikoene bør også vurderes i sammenheng med advarselen vedrørende forutseende uttalelser i punkt 4 “General Information—Cautionary note regarding forward-looking statements”.

Risiko knyttet til industrien Konsernet opererer i:

• Konsernets virksomhet, finansielle stilling, driftsresultat og mulighet til å utbetale utbytte avhenger av nivået på aktiviteten i offshore olje- og gassindustrien, som påvirkes vesentlig av blant annet volatile olje- og gasspriser og kan påvirkes vesentlig og negativt av en nedgang i offshore olje- og gassleting, utvikling og produksjon.

• En overtilgang på boreenheter vil kunne føre til reduksjon i dagratene, det vil si de beløp som tjenes per dag per boreenhet, noe som vesentlig kan påvirke Konsernets lønnsomhet.

• Markedsverdien av Konsernets nåværende boreenheter og de Konsernet erverver i fremtiden, vil kunne synke, noe som kan føre til at Konsernet lider tap dersom det beslutter å selge dem etter et fall i markedsverdien.

• Konsolidering av tilbydere vil kunne begrense Konsernets evne til å skaffe utstyr og tjenester når det trengs, til en akseptabel pris eller i det hele tatt.

• Offentlige lover og forskrifter vil kunne hindre eller forsinke Konsernets virksomhet, øke Konsernets driftskostnader, redusere etterspørselen etter dets tjenester og begrense muligheten til å drive boreenhentene eller på annen måte.

• Konsernet vil kunne være gjenstand for erstatningsplikt i henhold til miljørettslige lover og forskrifter, noe som vil kunne ha en vesentlig negativ innvirkning på Konsernets driftsresultater og finansielle stilling.

• Konsernets virksomhet innebærer en rekke farer ved driften.

• Konsernet vil kunne være gjenstand for rettssaker som kan ha en negativ innvirkning på Konsernet.

• Teknologidisputter som vedrører konsernet, Konsernets leverandører eller underleverandører vil kunne påvirke Konsernets virksomhet eller øke dets kostnader.

• Konkurranse innenfor oljefelttjensteindustrien vil kunne negativt påvirke Konsernets mulighet til å markedsføre sine tjenester.

• Usikkerhet relater til utvikling av verdensøkonomien vil kunne redusere etterspørselen for Konsernets boretjenester eller resultere i kontraktsforsinkelser eller kanselleringer.

• Boreenhetene kommer fra tid til annen til å operere i jurisdiksjoner som utsetter Konsernet for ytterligere risiko.

• Risiko for terroristangrep.

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Risiko relatert til Konsernet:

• Konsernet har i dag kun én kunde (Petrobras) og opererer i dag bare i ett land (Brasil).

• Konsernets drift- og vedlikeholdskostnader vil ikke nødvendigvis endre seg proporsjonalt med endringer i driftsinntektene.

• Konsernets fremtidige kontraktsmessige inntekter for boreenhetene vil ikke nødvendigvis bli realisert.

• Konsernets offshore borekontrakter vil kunne bli terminert før utløp som følge av visse forhold.

• Konsernet vil ikke nødvendigvis kunne fornye eller inngå nye og gunstige kontrakter for boreenheter i tilfeller der kontrakter utløper eller termineres, noe som vil kunne påvirke Konsernets driftsinntekter og lønnsomhet.

• Konsernets nybyggprosjekter er gjenstand for risiko som vil kunne forårsake forsinkelser eller kostnadsoverskridelser.

• Selskapet vil ikke nødvendigvis klare å gjennomføre sine strategier på en vellykket måte.

• Konsernets suksess er avhengig av nøkkelpersoner i ledelsen.

• Manglende evne til å skaffe og beholde høyt kvalifisert personell vil kunne negativt påvirke Konsernets virksomhet.

• Forstyrrelser blant arbeiderne vil kunne forstyrre Konsernets virksomhet.

• Selskapet vil trenge å skaffe vesentlige ytterligere midler for å finansiere de planlagte nye boreenhentene og boreenhetene har enda ikke fått signert kontrakt fra oppdragsgivere

• For å utføre Selskapets vekststrategi, vil Selskapet i fremtiden kunne trenge ytterligere kapital, som ikke nødvendigvis vil være tilgjengelig.

• Selskapet kan måtte hente ny egenkapital for å finansiere de to nybyggene på COSCO.

• Konsernets eksisterende eller fremtidige gjeldsarrangementer vil kunne begrense Konsernets likviditet og fleksibilitet til å skaffe ytterligere finansiering, til å benytte andre forretningsmuligheter eller Selskapets evne til å dele ut utbytte til sine aksjonærer.

• Dersom Konsernet ikke er i stand til å overholde restriksjonene og de finansielle forpliktelsene i avtalene som regulerer dets gjeld, vil det kunne utgjøre et brudd på vilkårene i disse avtalene, noe som vil kunne resultere i en akselerasjon av tilbakebetalingene av de lånte midlene.

• Mulighetene til finansering av Sevan Brasil er avhengig av at boreenheten fra verftet ikke er levert senere enn 31. november 2012 og at Petrobras aksepterer kontrakter med enheten ikke senere inn 30. mai 2013.

• Selskapet vil ha et finansieringsbehov ved levering av hver av boreenhetene overfor verftet. Denne forpliktelsen er tenkt å bli dekket av et banklån, men dette er ikke blitt garantert, og Selskapet kan måtte dekke sitt finansieringsbehov gjennom andre lånefasiliteter eller gjennom egenkapital

• Endringer i rentenivået vil kunne påvirke Konsernets lønnsomhet, inntekter og kontantstrøm.

• Endringer i valutakursene vil kunne føre til finansielle tap for Konsernet

• En endring i skattelovgivningen i ethvert land der Konsernet fra tid til annen driver virksomhet, eller kompliserte skattelover knyttet til internasjonal virksomhet som Konsernet fra tid til annen vil kunne drive, vil kunne resultere i en høyere skattekostnad eller en høyere effektiv skattesats på Konsernets inntekter.

• Tap av en viktig skattetvist eller et angrep på korrektheten av de skattemessige konsekvensene av Konsernets virksomhetsstruktur slik denne er fra tid til annen, ordninger for internprising, skatterettslig tilstedeværelse av datterselskaper i visse land, eller andre tvister relatert til eller angrep på korrektheten av Konsernets skattebetaling vil kunne resultere i en høyere skattesats på Konsernets inntekter på verdensbasis, som igjen vil kunne resultere i en vesentlig negativ innvirkning på dets inntekter og kontantstrøm fra virksomheten.

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Risiko relatert til Aksjene:

• Kursen på Aksjene vil kunne svinge vesentlig.

• Det er ikke noe eksisterende marked for Aksjene, og et handelsmarked som gir tilstrekkelig likviditet vil ikke nødvendigvis utvikle seg.

• Fremtidige salg av Aksjer fra Selskapets hovedaksjonær eller noen av dets primærinnsidere vil kunne senke prisen på Aksjene.

• Fremtidige utstedelser av Aksjer eller andre verdipapirer vil kunne utvanne aksjonærers eierandel og vil vesentlig kunne påvirke prisen på Aksjene.

• Investorer vil ikke nødvendigvis kunne utøve stemmerettigheter for Aksjer som er registrert på en forvalterkonto.

• Investorer i USA vil kunne ha vanskeligheter med å håndheve eventuelle dommer skaffet i USA mot Selskapet eller dets styremedlemmer og ledelse i Norge.

• Overdragelse av Aksjene er gjenstand for restriksjoner i henhold til verdipapirlovgivningen i USA og andre jurisdiksjoner.

• Aksjonærer utenfor Norge er utsatt for valutakursrisiko.

• Selskapet vil ha én hovedaksjonær etter gjennomføring av Tilbudet.

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19 DEFINITIONS AND GLOSSARY

Additional Shares ........................ A number of additional Shares equalling up to 10% of the number of Offer Shares initially allocated in the Offering.

Sevan Drilling ............................. Sevan Drilling ASA.

Sevan Drilling Group…………. Sevan Drilling ASA and its subsidiaries

Anti-Money Laundering Legislation ...............................

The Norwegian Money Laundering Act no. 11 of 6 March 2009 and the Norwegian Money Laundering Regulations no. 302 of 13 March 2009 taken together.

Articles of Association: ............... The Company’s articles of association.

Application Period ....................... The application period for the Retail Offering and the Employee Offering, which is expected to run from 09:00 hours (CET) on 5 April 2011 to 12:00 hours (CET) on 15 April 2011, subject to extensions.

Bookbuilding Period ................... The book-building period for the Institutional Offering, which is expected to run from 09:00 hours (CET) on 5 April 2011 to 17:30 hours (CET) on 15 April 2011, subject to extensions.

Board of Directors ....................... The Board of Directors of the Company.

BOEMRE .................................... Bureau of Ocean Energy Management, Regulation and Enforcement

BOP ............................................. Blow-out-preventer.

Capex........................................... Capital expenditures.

Combined Accounts .................... The Company’s audited combined accounts as of and for the years ended 31 December 2010, 2009 and 2008 consisting of Sevan Drilling ASA Group and Sevan Drilling Invest AS Group.

Company ..................................... Sevan Drilling.

Corporate Governance Code ....... The Norwegian Code of Practice for Corporate Governance, recommended by Norsk Utvalg for Eierstyring og Selskapsledelse (NUES) of 21 October 2010.

Deepwater ................................... Water depths greater than 3,000 feet.

EIA .............................................. The US Energy Information Administration.

E&P ............................................. Exploration and production.

EBITDA ...................................... Earnings before interest, tax, depreciation and amortization.

Employee Offering......................

A tranche of the Offering in which Offer Shares are being offered to Eligible Employees.

Employee Offering Offer Price The Offer Price less 10% (the discount in the Employee Offering) per Offer Share.

FSMA .......................................... Financial Services and Markets Act 2000.

GAAP .......................................... Generally Accepted Accounting Practices. Specifically, US GAAP is the generally accepted accounting practices used by US companies.

Group........................................... The Company and its subsidiaries.

Global Coordinator…………… Pareto Securities AS.

HSE ............................................. Health, safety and environment.

IEA .............................................. The International Energy Agency.

IAS .............................................. International Accounting Standard.

IFRS ............................................ International Financial Reporting Standards as adopted by the European Union.

Institutional Offering ................... An institutional offering (a) to institutional and professional investors in Norway, (b) to institutional investors outside Norway and the United States, and (c) in the United States, to QIBs as defined in, and in reliance on, Rule 144A.

Managers ..................................... Pareto Secuitites AS, ABG Sundal Collier Norge ASA, Arctic Securities ASA, First Securities AS, ING Bank N.V. and SEB Enskilda AS.

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Member States ............................. The participating member states of the European Union.

NCS ............................................. The Norwegian Continental Shelf.

NGL ............................................ Natural gas liquids.

NOK ............................................ Norwegian Kroner, the lawful currency of Norway.

Norwegian FSA ........................... The Norwegian Financial Supervisory Authority (Nw. Finanstilsynet).

Norwegian Public Limited Liability Companies Act .............

The Norwegian Public Limited Companies Act of 13 June 1997, no. 45 (Nw. allmennaksjeloven).

Norwegian Securities Trading Act ...............................................

The Norwegian Securities Trading Act of 28 June 2007, no. 75 (Nw. verdipapirhandelloven).

OPEC........................................... The Organization of Petroleum Exporting Countries.

Oslo Børs ..................................... Oslo Børs ASA, or, as the context may require, Oslo Børs, a Norwegian regulated stock exchange operated by Oslo Børs ASA. (Eng. The Oslo Stock Exchange).

Prospectus ................................... This Prospectus, dated 5 April 2011.

Prospectus Directive .................... Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003.

QIBs ............................................ Qualified institutional buyers as defined in Rule 144A.

Registrar Nordea Bank Norge, Issuer Services.

Regulation S ................................ Regulation S under the US Securities Act.

Retail Offering ............................. A tranche of the Offering in which Offer Shares are being offered to the public in Norway.

Rule 144A ................................... Rule 144A under the US Securities Act.

Relevant Member State ............... Each Member State of the European Economic Area which has implemented the Prospectus Directive.

Selling Shareholder .................... Sevan Marine ASA.

Semi ............................................ A semi-submersible drilling rig.

Share(s) ...................................... Means ordinary shares in the capital of the Company, each with a par value of NOK 1.00, or any one of them.

Stabilization Agent Pareto Securities AS.

UDW ........................................... Ultra deepwater, specifying water depths greater than 7,500 feet.

US Securities Act ........................ The United States Securities Act of 1933, as amended.

USD ............................................. United States Dollars.

USGS........................................... US Geological Survey.

VPS ............................................. The Norwegian Central Securities Depository (Nw. Verdipapirsentralen or VPS).

VPS account ................................ An account with VPS for the registration of holdings of securities.

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Appendix A: Articles of Association

ARTICLES OF ASSOCIATION OF SEVAN DRILLING ASA (as amended at the Annual General Meeting on 25 March 2011)

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Appendix B: Audited Combined Accounts (IFRS) for the Sevan Drilling Group

for the accounting year 2010, 2009 and 2008

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Appendix C: Audited historical financial information (NGAAP) for Sevan Drilling

ASA for the accounting year 2010, 2009 and 2008

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Appendix D: Application Form ▬ Employee Offering (Norwegian and English)

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BESTILLINGSBLANKETT — TILBUD TIL ANSATTE OM AKSJER I SEVAN DRILLING ASA For fullstendig informasjon om Ansattetilbudet, se Prospektet datert 5. april 2011 som er utarbeidet i forbindelse med det Offentlige Tilbudet av aksjer i Sevan Drilling ASA og noteringen av Selskapets Aksjer på Oslo Børs. Det er kun direkte ansatte i Sevan Drilling ASA eller et av dets konsoliderte datterselskaper, samt direkte ansatte i Sevan Marine ASA eller et av dets konsoliderte datterselskaper (bortsett fra medlemmene i Konsernet), som har anledning til å delta i Ansattetilbudet (Berettigede Ansatte). Alle definerte ord og uttrykk (angitt med stor bokstav) som ikke er definert i denne bestillingsblanketten, skal ha samme betydning som i Prospektet.

Bestilling av Tilbudsaksjer: Alle bestillinger i Ansattetilbudet må foretas på denne bestillingsblanketten. Korrekt utfylt bestillingsblankett må være mottatt av Nordea (omtalt som ”Oppgjørsagenten” i denne bestillingsblanketten) som bestillingssted:


Korrekt utfylt bestillingsblankett må være mottatt av bestillingsstedet innen kl 12:00 (CET) den 15. april 2011, med mindre Bestillingsperioden er blitt forlenget.

For sent ankomne, mangelfulle eller feilaktig utfylte bestillingsblanketter kan forkastes uten ytterligere varsel. Den som bestiller Tilbudsaksjer har selv risikoen for eventuell forsinkelse i postgang, utilgjengelige fakslinjer eller datatekniske problemer som medfører at bestillinger ikke blir mottatt av bestillingsstedet innenfor Bestillingsperioden. Alle bestillinger i Ansattetilbudet er ugjenkallelige og bindende og kan ikke trekkes tilbake, kanselleres eller endres når en korrekt og komplett utfylt bestillingsblankett er registrert mottatt av Oppgjørsagenten, uavhengig av en eventuell forlengelse av Bestillingsperioden.

Allokering, betaling og levering av Tilbudsaksjer: Nordea, som opptrer som oppgjørsagent for Ansattetilbudet, forventer å sende tildelingsbrev med informasjon om allokering av Tilbudsaksjer i Ansattetilbudet per post ca. 18. april 2011. Dersom noen bestillere ønsker å få opplyst det eksakte antallet Tilbudsaksjer som er tildelt, kan bestilleren kontakte Oppgjørsagenten fra kl. 12:00 den 18. april 2011 og fremover, innenfor ordinær arbeidstid. Bestillere som har tilgang til investorservice gjennom en institusjon som er kontofører for bestillerens VPS-konto, vil fra kl 12:00 den 18. april 2011 og fremover også på denne måten kunne se hvor mange Tilbudsaksjer som er tildelt. Ved å fylle ut og sende inn en bestillingsblankett, gir hver bestiller i Ansattetilbudet Nordea fullmakt til å debitere bestillerens norske bankkonto for et beløp som tilsvarer den samlede kjøpesummen for de Tilbudsaksjene som bestilleren får tildelt. Bankkontoen vil debiteres ca 27. april 2011 (betalingsdato), og det må være tilstrekkelige innestående på den aktuelle kontoen fra og med 27. april 2011. Bestillere som ikke har en norsk bankkonto må forsikre seg om at betaling for tildelte Aksjer foretas senest på betalingsdato (27. april 2011). Ytterligere betalingsdetaljer vil fremgå av tildelingsbrevet som sendes ut ca. 18. april 2011, og kan også fås ved å kontakte Nordea på telefon +47 22 48 55 40. Se også ”Forsinket eller manglende betaling” på side 2 i av denne bestillingsblanketten.

Pris på Tilbudsaksjene: Det indikative prisintervallet (”Prisintervallet”) for det Offentlige Tilbudet er fra NOK 16,00 til NOK 21,00 per Tilbudsaksje. Den endelige prisen per Tilbudsaksje og antall Tilbudsaksjer vil bli fastsatt av Selskapet og Selgende Aksjonær på basis av ordrer som plasseres i det Institusjonelle Tilbudet gjennom bookbuildingprosessen, og nivået av bestillinger i det Offentlige Tilbudet og Ansattetilbudet. Prisen per Tilbudsaksje vil fastsettes ca. 18. april 2011. Prisen per Tilbudsaksje kan fastsettes over eller under Prisintervallet. Hver bestiller i Ansattetilbudet kan indikere på bestillingsblanketten at bestilleren ikke ønsker å bli tildelt Tilbudsaksjer dersom prisen per Tilbudsaksje blir fastsatt over den øvre grensen av Prisintervallet. Dersom bestilleren ikke uttrykkelig gir uttrykk for en slik reservasjon på bestillingsblanketten, vil bestillingen være bindende uavhengig av om prisen per Tilbudsaksje fastsettes over, under eller innenfor Prisintervallet. Hver Berettigede Ansatt vil motta 10 % rabatt per Tilbudsaksje for Tilbudsaksjer tildelt slik Berettiget Ansatt.

Retningslinjer for bestilleren: For ytterligere retningslinjer for bestillingen henstilles bestilleren til å lese side 2 av denne bestillingsblanketten.

Bestillerens VPS-konto (12 siffer):

Jeg/vi bestiller herved aksjer for totalt NOK(1) (min. NOK 10 000 og max. NOK 100 000):

(1) Beløpet tar hensyn til rabatten på 10 %

Bestillerens bankkonto som skal debiteres (11 siffer):

TILBUDSPRISEN: Min/vår bestilling er betinget av at den endelige prisen for Tilbudsaksjene ikke fastsettes over det øvre nivået i Prisintervallet (kryss av) (Dette feltet skal kun fylles ut dersom bestillingen er betinget av at den endelige tilbudsprisen ikke fastsettes over den øvre prisen i Prisintervallet):

Herved (i) foretar jeg/vi, i henhold til de betingelser som fremkommer ovenfor og av Prospektet, en ugjenkallelig bestilling av et slikt antall Tilbudsaksjer som allokeres til meg/oss opp til det beløp som er angitt ovenfor, (ii) gir jeg/vi hver av Tilretteleggerne (eller noen utpekt av dem) en ugjenkallelig fullmakt, og instruerer hver av dem, til samlet (og ikke hver for seg), å tegne et slikt antall Tilbudsaksjer til Tilbudsprisen på mine vegne, og (iii) gir jeg vi Nordea en ugjenkallelig fullmakt til å debitere min/vår bankkonto som angitt ovenfor for den samlede kjøpesummen for de Tilbudsaksjene som jeg/vi får tildelt.

Dato og sted *:

Bindende signatur**:

* Må være datert i bestillingsperioden **Undertegneren må være myndig. Dersom undertegning skjer på vegne av bestilleren, må det vedlegges dokumentasjon for at undertegner har slik kompetanse (eksempelvis fullmakt eller firmaattest)

INFORMASJON OM BESTILLEREN – ALLE FELT MÅ FYLLES UT

Fornavn

Etternavn

Adresse

Postnummer og sted

Fødselsnummer (11 siffer)

Nasjonalitet

Telefonnummer (dagtid)

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RETNINGSLINJER FOR BESTILLEREN Regulatoriske forhold: I henhold til lov 29. juni 2007 nr 75 om verdipapirhandel (”Verdipapirhandelloven”) med tilhørende forskrifter, må Tilretteleggerne kategorisere alle nye kunder i en av tre kategorier; kvalifiserte motparter, profesjonelle og ikke-profesjonelle kunder. Alle bestillere som bestiller Tilbudsaksjer i det Offentlige Tilbudet og som ikke allerede er kunde hos en av Tilretteleggerne, vil bli kategorisert som ikke-profesjonell kunde. Bestilleren kan ved skriftlig henvendelse til Tilretteleggerne anmode om å be kategorisert som profesjonell kunde dersom Verdipapirhandellovens vilkår for dette er oppfylt. For ytterligere informasjon om kundekategorisering kan bestilleren kontakte Tilretteleggerne. Bestilleren bekrefter herved å inneha tilstrekkelig kunnskap og erfaring om finansielle og forretningsmessige forhold for å kunne evaluere risikoen ved å investere i Selskapet gjennom å bestille Tilbudsaksjer i det Offentlige Tilbudet, og bestilleren bekrefter å være i stand til å bære et fullstendig tap av sin investering i Selskapet.

Kun ordreutførelse: Tilretteleggerne vil behandle bestillingen av Tilbudsaksjer som en instruksjon om utførelse av ordre (”execution only”) fra bestilleren, ettersom Tilretteleggerne ikke vil være i stand til å avgjøre om bestillingen er hensiktsmessig for bestilleren. Bestilleren vil derfor ikke kunne påberope seg Verdipapirhandellovens regler om investorbeskyttelse.

Om Tilretteleggerne – Informasjonsbarrierer: Tilretteleggerne er verdipapirforetak som tilbyr et bredt spekter av investeringstjenester. For å sikre at oppdrag som gjennomføres av Tilretteleggernes ”corporate finance”-avdelinger holdes konfidensielle, er disse avdelingene adskilt fra Tilretteleggernes andre avdelinger, herunder avdelinger for analyse og aksjemegling, gjennom bruk av informasjonsbarrierer også kjent om ”chinese walls”. Bestilleren erkjenner at som en konsekvens av dette kan Tilretteleggernes analyse- og aksjemeglingsavdelinger komme til å opptre i strid med bestillerens interesser i forbindelse med transaksjoner i Aksjene.

VPS-konto – hvitvasking: For å kunne bestille Tilbudsaksjer må bestilleren ha en VPS-konto eller en forvalter for norske aksjer. En slik konto kan kun etableres ved personlig oppmøte med nødvendig identifikasjon hos en kontofører for VPS eller et autorisert verdipapirforetak. Det Offentlige Tilbudet er underlagt kravene i hvitvaskingslovgivningen. Alle bestillere som ikke er registrert som kunde hos en av Tilretteleggerne må bekrefte sin identitet til en av Tilretteleggerne, i samsvar med Hvitvaskingslovgivningen, med mindre det gjelder spesielle unntak. Bestillere som har oppgitt en norsk bankkonto og en VPS-konto på bestillingsblanketten er unntatt dersom den samlede kjøpesummen for bestilleren er lavere enn NOK 100,000 og en av Tilretteleggerne ikke likevel anmoder bestilleren om verifikasjon av identitet. Verifikasjon av identitet må være tilfredsstillende gjennomført innen utløpet av Bestillingsperioden. Bestillere som ikke har gjennomført tilstrekkelig verifikasjon av identitet vil ikke få allokert Tilbudsaksjer. Bestillere som ikke er kunde av en av Tilretteleggerne må derfor fylle ut en av Tilretteleggernes kunderegistreringsskjemaer og umiddelbart sende dette via e-post eller telefaks til Tilretteleggerne for å kunne få tildelt Tilbudsaksjer i det Offentlige Tilbudet med mindre et unntak er tilgjengelig.

Salgsrestriksjoner: Tilbudet er underlagt salgsrestriksjoner i enkelte jurisdiksjoner, se Prospektet, kapittel 6 ”Selling and Transfer Restrictions” for en komplett liste over salgsrestriksjoner. Verken Tilretteleggerne eller Selskapet påtar seg noe ansvar dersom noen bryter disse restriksjonene.

Forsinket eller manglende betaling: Dersom en bestiller ikke har tilstrekkelig innestående på den aktuelle bankkontoen, eller betaling er forsinket av en eller annen årsak, eller dersom det ikke er mulig å debitere kontoen, vil det påløpe forsinkelsesrente i henhold til lov av 17. desember 1976 nr. 100 om renter ved forsinket betaling m.m., som per datoen for Prospektet var 9,00 prosent. Nordea (på vegne av Tilretteleggerne) forbeholder seg retten (men er ikke forpliktet) til å foreta opp til tre debiteringer innen 4. mai 2011 dersom det ikke er tilstrekkelig innestående på betalingsdato. Dersom betaling for tildelte Tilbudsaksjer er mottatt på betalingsdagen, vil levering av tildelte Tilbudsaksjer i det Offentlige Tilbudet foretas ca. 28. april 2011. Tilretteleggerne forbeholder seg retten til å overta eierskap til eller å selge slike tildelte Tilbudsaksjer dersom betaling ikke er mottatt innen den tredje dagen etter betalingsdato. Dersom Tilbudsaksjer selges på vegne av bestilleren vil slikt salg skje for bestillerens regning og risiko (og slik at bestilleren ikke vil ha krav på en eventuell gevinst av salget), og den opprinnelige bestilleren vil være ansvarlig for alle kostnader pådratt eller lidt av Selskapet og/eller Tilrettelegger som følge av eller i forbindelse med slikt salg, og Selskapet eller Tilrettelegger vil kunne foreta tvangsinndrivelse av ethvert utestående beløp i samsvar med norsk lov.

Vilkår for Betaling med engangsfullmakt – verdipapirhandel. Betaling med engangsfullmakt er en banktjeneste som bankene i Norge samarbeider om. I forholdet mellom betaler og betalers bank gjelder følgende standard vilkår:

1. Tjenesten Betaling med engangsfullmakt – verdipapirhandel suppleres av kontoavtalen mellom betaler og betalers bank, se særlig kontoavtalen del C, Generelle vilkår for innskudd og betalingsoppdrag.

2. Kostnader ved å bruke Betaling med engangsfullmakt – verdipapirhandel fremgår av bankens gjeldende prisliste, kontoinformasjon og/eller opplyses på annen egnet måte. Banken vil belaste oppgitt konto for påløpte kostnader.

3. Engangsfullmakten signeres av betaler og leveres til betalingsmottaker. Betalingsmottaker vil levere belastningsoppdraget til sin bank som igjen kan belaste betalers bank.

4. Ved et eventuelt tilbakekall av engangsfullmakten skal betaler først ta forholdet opp med betalingsmottaker. Etter finansavtaleloven skal betalers bank medvirke hvis betaler tilbakekaller et betalingsoppdrag som ikke er gjennomført. Slikt tilbakekall kan imidlertid anses som brudd på avtalen mellom betaler og betalingsmottaker.

5. Betaler kan ikke angi et større beløp på engangsfullmakten enn det som på belastningstidspunktet er disponibelt på konto. Betalers bank vil normalt gjennomføre dekningskontroll før belastning. Belastning ut over disponibelt beløp skal betaler dekke inn umiddelbart.

6. Betalers konto vil bli belastet på angitt belastningsdag. Dersom belastningsdag ikke er angitt i engangsfullmakten vil kontobelastning skje snarest mulig etter at betalingsmottaker har levert oppdraget til sin bank. Belastningen vil likevel ikke skje etter engangsfullmaktens gyldighetsperiode som er angitt foran. Betaling vil normalt være godskrevet betalingsmottaker en til tre virkedager etter angitt belastningsdag/innleveringsdag.

7. Dersom betalers konto blir urettmessig belastet på grunnlag av en engangsfullmakt, vil betalers rett til tilbakeføring av belastet beløp bli regulert av kontoavtalen og finansavtaleloven.

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APPLICATION FORM — EMPLOYEE OFFERING OF SHARES IN SEVAN DRILLING ASA For complete information on the Employee Offering, please refer to the Prospectus dated 5 April 2011 which has been issued in connection with the Offering of shares in Sevan Drilling ASA and the listing of its Shares on Oslo Børs. Only direct employees, as of the last day of the Application Period, of Sevan Drilling ASA or any of its consolidated subsidiaries, as well as all direct employees, as of the last day of the Application Period, of Sevan Marine ASA or any of its consolidated subsidiaries (other than the members of the Group) (Eligible Employees) are eligible for participation in the Employee Offering. All capitalised terms not defined herein shall have the meaning ascribed to them in the Prospectus.

Application process: All applications in the Employee Offering must be made on this application form. Application forms must be correctly completed and submitted to Nordea (in this application form referred to as the “Settlement Agent”) as application office:


Subject to any extension of the Application Period, properly completed application forms must be received by the application office within 12.00 hours CET on 15 April 2011.

Application forms that are incomplete or incorrectly completed, or that are received after expiry of the Application Period, may be disregarded without further notice to the applicant. Neither the Company nor the Settlement Agent may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by the application office. All applications made in the Employee Offering will be irrevocable and binding upon receipt of a duly completed application form by the application office irrespective of any extension of the Application Period, and cannot be withdrawn, cancelled or modified by the applicant after having been received by the application office.

Allocation, payment and delivery of Offer Shares: Nordea, acting as Settlement Agent for the Employee Offering, expects, subject to any extensions of the Offer Period, to issue notifications of allocation of Offer Shares in the Employee Offering on or about 18 April 2011, by issuing allocation notes to the applicants by mail. Any applicant wishing to know the precise number of Offer Shares allocated to it, may contact the application office from 12:00 hours CET on 18 April 2011 and onwards during business hours. Applicants who have access to investor services through an institution that operates the applicant’s VPS account should be able to see how many Offer Shares they have been allocated from 12:00 hours CET on 18 April 2011. By completing an application form, each applicant in the Employee Offering authorise Nordea to debit the applicant’s Norwegian bank account for the total amount due for the Offer Shares allocated to the applicant. Accounts will be debited on or about 27 April 2011 (the payment due date), and there must be sufficient funds on the stated bank account from and including 27 April 2011. Applicants who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the payment due date (27 April 2011). Details and instructions will be set out in the allocation notes to the applicant to be issued on or about 18 April 2011, or obtained by contacting Nordea at +47 22 48 55 40. See also “Late or missing payments” on the second page of this application form.

Price of Offer Shares: The indicative price range (the “Price Range”) for the Offering is from NOK 16.00 to NOK 21.00 per Offer Share. The Company and the Selling Shareholder will determine the final Offer Price and the number of Offer Shares to be sold in the Offering on the basis of the orders placed in the Institutional Offering during the bookbuilding process, and the level of applications made in the Retail Offering and the Employee Offering. The Offer Price will be determined on or around 18 April 2011. The Offer Price may be set within, below or above the indicative price range. Each applicant in the Employee Offering will be permitted, but not required, to indicate on the application form that the applicant does not wish to be allocated Offer Shares should the Offer Price be set above the upper end of the Price Range. If the applicant does not expressly stipulate such reservation on the application form, the application will be binding regardless of whether the Offer Price is set within or above (or below) the Price Range. Each Eligible Employee will receive a discount of 10% on the Offer Price per Offer Share allocated to such Eligible Employee.

Additional application guidelines: Please refer to the next page of this application form for further application guidelines.

Applicant’s VPS-account (12 digits):

I apply for shares for a total of NOK(1) (min.

NOK 10,000 and max. NOK 100,000)

(1) Figure takes into account the 10% discount

Applicant’s bank account to be

debited (11 digits):

OFFER PRICE: My/our application is conditional upon the final Offer Price not being set above the upper end of the Price Range (insert cross) (must only be completed if the application is conditional upon the final Offer Price not being set above the upper end of the Price Range):

I/we hereby irrevocably (i) apply for the number of Offer Shares allocated to me/us up to the amount as specified above subject to the terms and conditions set out above and contained in the Prospectus, (ii) authorise and instruct each of the Managers acting jointly and not severally (or someone appointed by them) to subscribe for such number of Offer Shares at the Employee Offering Offer Price on my behalf, and (iii) authorise Nordea to debit my/our bank account as set out above for the amount of the Offer Shares allotted to me.

Date and place*:

Binding signature**:

* Must be dated during the application period ** The applicant must be of age. If the application form is signed by a proxy, documentary evidence of authority to sign must be attached in the form of a Power of Attorney or Company Registration Certificate

DETAILS OF THE APPLICANT — ALL FIELDS MUST BE COMPLETED

First name

Surname/Family name

Home address

Zip code and town

Identity number (11 digits)

Nationality

Telephone number (daytime)

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ADDITIONAL GUIDELINES FOR THE APPLICANT Regulatory issues: Legislation passed throughout the EEA pursuant to the Markets and Financial Instruments Directive (“MiFID”) implemented in the Norwegian Securities Trading Act, imposes requirements in relation to business investment. In this respect the Manager must categorise all new clients in one of three categories: Eligible counterparties, Professional and Nonprofessional clients. All applicants subscribing for Offer Shares in the Offering who/which are not existing clients of the Manager will be categorised as Non-professional clients. The applicant can by written request to the Manager ask to be categorised as a Professional client if the applicant fulfils the provisions of the Norwegian Securities Trading Act. For further information about the categorisation the applicant may contact the Manager. The applicant represents that it has sufficient knowledge, sophistication and experience in financial and business matters to be capable of evaluating the merits and risks of an investment decision to invest in the Company by applying for Offer Shares, and the applicant is able to bear the economic risk, and to withstand a complete loss of an investment in the Company.

Execution only: As the Manager is not in the position to determine whether the application for Offer Shares is suitable for the applicant, the Manager will treat the application as an execution only instruction from the applicant to apply for Offer Shares in the Offering. Hence, the applicant will not benefit from the corresponding protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act.

About the Manager — information barriers: The Manager is a securities firm, offering a broad range of investment services. In order to ensure that assignments undertaken in the Manager’s corporate finance departments are kept confidential, the Manager’s other activities, including analysis and stock broking, are separated from its corporate finance departments by information barriers known as “Chinese walls”. The applicant acknowledges that the Manager’s analysis and stock broking activity may act in conflict with the applicant’s interests with regard to transactions in the Offer Shares as a consequence of such Chinese walls.

VPS account — anti-money laundering: To apply for Offer Shares the applicant must have a VPS account or a custodian for Norwegian shares. Such account can only be established by personal appearance with sufficient identification at a VPS bookentry agent or an authorised investment firm. The Offering is subject to the Anti-Money Laundering Legislation. All applicants not registered as existing customers with the Manager must verify their identities to the Manager in accordance with requirements of the Anti-Money Laundering Legislation unless an exemption is available. Applicants that have designated an existing Norwegian bank account and an existing VPS account on the application form are exempted, provided the aggregate subscription price is less than NOK 100,000 unless verification of identity is requested by the Manager. The verification of identification must be completed prior to the end of the Application Period. Applicants that have not completed the required verification of identification will not be allocated Offer Shares. Applicants who are not registered as clients with the Manager must therefore complete the Manager’s Customer Registration Form and send it to the Manager immediately by fax or e-mail in order to be considered for an allocation of shares under the Offering unless an extension is available.

Selling restrictions: The Offering is subject to specific legal or regulatory restrictions in certain jurisdictions, see Section 6 “Selling and Transfer Restrictions” of the Prospectus. Neither the Company nor the Manager assumes any responsibility in the event there is a violation by any person of such restrictions.

Late or missing payments: Should any applicant have insufficient funds on his or her account, or should payment be delayed for any reason, or if it is not possible to debit the account, interest will accrue on the amount due at a rate equal to the prevailing interest rate under the Norwegian Act on Interest on Overdue Payments of 17 December 1976, No. 100, which at the date of the Prospectus was 9.00% per annum. Nordea (on behalf of the Managers) reserves the right (but has no obligation) to make up to three debit attempts through 4 May 2011 if there are insufficient funds on the account on the payment due date. Subject to timely payment by the applicant, delivery of the Offer Shares allocated in the Employee Offering is expected to take place on or about 28 April 2011. The Managers reserve the right, without further notice, to sell or assume ownership of such Offer Shares if payment has not been received by the third day after the payment due date. If Offer Shares are sold on behalf of the applicant, such sale will be for the applicant’s account and risk (however so that the applicant shall not be entitled to profits therefrom, if any) and the applicant will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or the Managers as a result of or in connection with such sales, and the Company and/or the Managers may enforce payment for any amount outstanding in accordance with Norwegian law.

Terms and conditions for Payment by direct debiting - securities trading. Payment by direct debiting is a service provided by cooperating banks in Norway. In the relationship between the payer and the payer’s bank the following standard terms and conditions apply:

1. The service “Payment by direct debiting — securities trading” is supplemented by the account agreement between the payer and the payer’s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions. 2. Costs related to the use of “payment by direct debiting — securities trading” appear from the bank’s prevailing price list, account information and/or information is given by other appropriate manner. The bank will charge the indicated account for incurred costs. 3. The authorisation for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank who in turn will charge the payers bank account. 4. In case of withdrawal of the authorisation for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Financial Contracts Act the payer’s bank shall assist if payer withdraws a payment instruction which has not been completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary. 5. The payer cannot authorise for payment a higher amount than the funds available at the payer’s account at the time of payment. The payer’s bank will normally perform a verification of available funds prior to the account is being charged. If the account has been charged with an amount higher than the funds available, the difference shall be covered by the payer immediately. 6. The payer’s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorisation for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorisation has expired as indicated above. Payment will normally be credited the beneficiary’s account between one and three working days after the indicated date of payment/delivery. 7. If the payer’s account is wrongfully charged after direct debiting, the payer’s right to repayment of the charged amount will be governed by the account agreement and the Financial Contracts Act.

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Appendix E: Application Form ▬ Retail Offering (Norwegian and English)

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BESTILLINGSBLANKETT – OFFENTLIG TILBUD AV AKSJER I SEVAN DRILLING ASA For fullstendig informasjon om det Offentlige Tilbudet, se Prospektet datert 5. april 2011 som er utarbeidet i forbindelse med Tilbudet av aksjer i Sevan Drilling ASA og noteringen av Selskapets Aksjer på Oslo Børs. Alle definerte ord og uttrykk (angitt med stor bokstav) som ikke er definert i denne bestillingsblanketten, skal ha samme betydning som i Prospektet.

Bestilling av Tilbudsaksjer: Alle bestillinger i det Offentlige Tilbudet må foretas på denne bestillingsblanketten som er vedlagt Prospektet som Vedlegg (Appendix) H (Application Form – Retail Offering) eller på en av følgende internettsider: www.arcticsec.no, www.pareto.no, www.abgsc.no, www.first.no, www.sebenskilda.no. Korrekt utfylt bestillingsblankett må være mottatt av ett av de følgende bestillingsstedene:

Pareto Securities AS Dronning Mauds gate 3 P.O. Box 1411 Vika 0115 Oslo, Norway Telephone: +47 22 87 87 00 Telefax: +47 22 87 87 10 www.pareto.no

ABG Sundal Collier Norge ASA Munkedamsveien 45 E P.O. 1444 Vika 0115 Oslo, Norway Telephone: +47 22 01 60 00 Telefax: +47 22 01 60 62 www.abgsc.no

Arctic Securities ASA Haakon VII’s gate 5 P.O. Box 1833 Vika 0123 Oslo, Norway Telephone: +47 21 01 31 00 Telefax: +47 21 01 31 36 www.arcticsec.no

First Securities AS Filipstad Brygge 1 P.O. Box 1441 Vika 0250 Oslo, Norway Telephone: +47 23 23 80 00 Telefax: +47 23 23 80 01 www.first.no

SEB Enskilda AS Filipstad Brygge 1 P.O. Box 1363 Vika 0250 Oslo Telephone: +47 21 00 85 00 Telefax: +47 21 00 89 62 www.sebenskilda.no

Korrekt utfylt bestillingsblankett må være mottatt av en av Tilretteleggerne innen kl 12:00 (CET) den 15. april 2011, med mindre Bestillingsperioden for det Offentlige Tilbudet er blitt forlenget.

For sent ankomne, mangelfulle eller feilaktig utfylte bestillingsblanketter kan forkastes uten ytterligere varsel. Den som bestiller Tilbudsaksjer har selv risikoen for eventuell forsinkelse i postgang, utilgjengelige fakslinjer eller datatekniske problemer knyttet til forannevnte internett-adresser som medfører at bestillinger ikke blir mottatt innenfor Bestillingsperioden. Foretatte bestillinger i det Offentlige Tilbudet er ugjenkallelige og bindende og kan ikke trekkes tilbake, kanselleres eller endres av bestilleren når en korrekt og komplett utfylt bestillingsblankett er registrert mottatt av en av Tilretteleggerne eller når en bestilling er registrert hos VPS dersom bestilling foretas direkte gjennom VPS, uavhengig av en eventuell forlengelse av Bestillingsperioden.

Allokering, betaling og levering av Tilbudsaksjer: Nordea, som opptrer som oppgjørsagent for det Offentlige Tilbudet, forventer å sende tildelingsbrev med informasjon om allokering av Tilbudsaksjer i det Offentlige Tilbudet per post ca. 18. april 2011. Dersom noen bestillere ønsker å få opplyst det eksakte antallet Tilbudsaksjer som er tildelt, kan bestilleren kontakte en av Tilretteleggerne fra kl. 12:00 den 18. april 2011 og fremover, innenfor ordinær arbeidstid. Bestillere som har tilgang til investorservice gjennom en institusjon som er kontofører for bestillerens VPS-konto, vil fra kl 12:00 den 18. april 2011 og fremover også på denne måten kunne se hvor mange Tilbudsaksjer som er tildelt. Ved å fylle ut og sende inn en bestillingsblankett, gir hver bestiller i det Offentlige Tilbudet Nordea fullmakt (på vegne av Tilretteleggerne) til å debitere bestillerens norske bankkonto for et beløp som tilsvarer den samlede kjøpesummen for de Tilbudsaksjene som bestilleren får tildelt. Bankkontoen vil debiteres ca 27. april 2011 (betalingsdato), og det må være tilstrekkelige innestående på den aktuelle kontoen fra og med 27. april 2011. Bestillere som ikke har en norsk bankkonto må forsikre seg om at betaling for tildelte Aksjer foretas senest på betalingsdato (27. april 2011). Ytterligere betalingsdetaljer vil fremgå av tildelingsbrevet som sendes ut ca. 18. april 2011, og kan også fås ved å kontakte Nordea på telefon +47 22 48 55 40. Se også ”Forsinket eller manglende betaling” på side 2 i av denne bestillingsblanketten.

Pris på Tilbudsaksjene: Det indikative prisintervallet (”Prisintervallet”) for Tilbudet er fra NOK 16,00 til NOK 21,00 per Tilbudsaksje. Den endelige prisen per Tilbudsaksje og antall Tilbudsaksjer vil bli fastsatt av Selskapet og Selgende Aksjonær på basis av ordrer som plasseres i det Institusjonelle Tilbudet gjennom bookbuilding-prosessen, og nivået av bestillinger i det Offentlige Tilbudet og Ansattetilbudet. Prisen per Tilbudsaksje vil fastsettes ca. 18. april 2011. Prisen per Tilbudsaksje kan fastsettes over eller under Prisintervallet. Hver bestiller i det Offentlige Tilbudet kan indikere på bestillingsblanketten at bestilleren ikke ønsker å bli tildelt Tilbudsaksjer dersom prisen per Tilbudsaksje blir fastsatt over den øvre grensen av Prisintervallet. Dersom bestilleren ikke uttrykkelig gir uttrykk for en slik reservasjon på bestillingsblanketten, vil bestillingen være bindende uavhengig av om prisen per Tilbudsaksje fastsettes over, under eller innenfor Prisintervallet.

Retningslinjer for bestilleren: For ytterligere retningslinjer for bestillingen henstilles bestilleren til å lese side 2 av denne bestillingsblanketten.

Bestillerens VPS-konto (12 siffer):

Jeg/vi bestiller herved aksjer for totalt NOK (min. NOK 10 000 og max. NOK 999 999):

Bestillerens bankkonto som skal debiteres (11 siffer):

TILBUDSPRISEN: Min/vår bestilling er betinget av at den endelige prisen for Tilbudsaksjene ikke fastsettes over det øvre nivået i Prisintervallet (kryss av) (Dette feltet skal kun fylles ut dersom bestillingen er betinget av at den endelige tilbudsprisen ikke fastsettes over den øvre prisen i Prisintervallet):

Herved (i) foretar jeg/vi, i henhold til de betingelser som fremkommer ovenfor og av Prospektet, en ugjenkallelig bestilling av et slikt antall Tilbudsaksjer som allokeres til meg/oss opp til det beløp som er angitt ovenfor, (ii) gir jeg/vi hver av Tilretteleggerne (eller noen utpekt av dem) en ugjenkallelig fullmakt, og instruerer hver av dem, til samlet (og ikke hver for seg), å tegne et slikt antall Tilbudsaksjer til Tilbudsprisen på mine vegne, og (iii) gir jeg/vi Nordea en ugjenkallelig fullmakt til å debitere min/vår bankkonto som angitt ovenfor for den samlede kjøpesummen for de Tilbudsaksjene som jeg/vi får tildelt.

Dato og sted *:

Bindende signatur**:

* Må være datert i bestillingsperioden **Undertegneren må være myndig. Dersom undertegning skjer på vegne av bestilleren, må det vedlegges dokumentasjon for at undertegner har slik kompetanse (eksempelvis fullmakt eller firmaattest)

INFORMASJON OM BESTILLEREN – ALLE FELT MÅ FYLLES UT

Fornavn

Etternavn / Foretaksnavn

Adresse / For foretak: registrert forretningsadresse

Postnummer og sted

Fødselsnummer (11 siffer)/organisasjonsnummer

Nasjonalitet

Telefonnummer (dagtid)

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RETNINGSLINJER FOR BESTILLEREN Regulatoriske forhold: I henhold til lov 29. juni 2007 nr 75 om verdipapirhandel (”Verdipapirhandelloven”) med tilhørende forskrifter, må Tilretteleggerne kategorisere alle nye kunder i en av tre kategorier; kvalifiserte motparter, profesjonelle og ikke-profesjonelle kunder. Alle bestillere som bestiller Tilbudsaksjer i det Offentlige Tilbudet og som ikke allerede er kunde hos en av Tilretteleggerne, vil bli kategorisert som ikke-profesjonell kunde. Bestilleren kan ved skriftlig henvendelse til Tilretteleggerne anmode om å be kategorisert som profesjonell kunde dersom Verdipapirhandellovens vilkår for dette er oppfylt. For ytterligere informasjon om kundekategorisering kan bestilleren kontakte Tilretteleggerne. Bestilleren bekrefter herved å inneha tilstrekkelig kunnskap og erfaring om finansielle og forretningsmessige forhold for å kunne evaluere risikoen ved å investere i Selskapet gjennom å bestille Tilbudsaksjer i det Offentlige Tilbudet, og bestilleren bekrefter å være i stand til å bære et fullstendig tap av sin investering i Selskapet.

Kun ordreutførelse: Tilretteleggerne vil behandle bestillingen av Tilbudsaksjer som en instruksjon om utførelse av ordre (”execution only”) fra bestilleren, ettersom Tilretteleggerne ikke vil være i stand til å avgjøre om bestillingen er hensiktsmessig for bestilleren. Bestilleren vil derfor ikke kunne påberope seg Verdipapirhandellovens regler om investorbeskyttelse.

Om Tilretteleggerne – Informasjonsbarrierer: Tilretteleggerne er verdipapirforetak som tilbyr et bredt spekter av investeringstjenester. For å sikre at oppdrag som gjennomføres av Tilretteleggernes ”corporate finance”-avdelinger holdes konfidensielle, er disse avdelingene adskilt fra Tilretteleggernes andre avdelinger, herunder avdelinger for analyse og aksjemegling, gjennom bruk av informasjonsbarrierer, også kjent om ”chinese walls”. Bestilleren erkjenner at som en konsekvens av dette kan Tilretteleggernes analyse- og aksjemeglingsavdelinger komme til å opptre i strid med bestillerens interesser i forbindelse med transaksjoner i Aksjene.

VPS-konto – hvitvasking: For å kunne bestille Tilbudsaksjer må bestilleren ha en VPS-konto eller en forvalter for norske aksjer. En slik konto kan kun etableres ved personlig oppmøte med nødvendig identifikasjon hos en kontofører for VPS eller et autorisert verdipapirforetak. Det Offentlige Tilbudet er underlagt kravene i hvitvaskingslovgivningen. Alle bestillere som ikke er registrert som kunde hos en av Tilretteleggerne må bekrefte sin identitet til en av Tilretteleggerne, i samsvar med Hvitvaskingslovgivningen, med mindre det gjelder spesielle unntak. Bestillere som har oppgitt en norsk bankkonto og en VPS-konto på bestillingsblanketten er unntatt dersom den samlede kjøpesummen for bestilleren er lavere enn NOK 100.000 og en av Tilretteleggerne ikke likevel anmoder bestilleren om verifikasjon av identitet. Verifikasjon av identitet må være tilfredsstillende gjennomført innen utløpet av Bestillingsperioden. Bestillere som ikke har gjennomført tilstrekkelig verifikasjon av identitet vil ikke få allokert Tilbudsaksjer. Bestillere som ikke er kunde av en av Tilretteleggerne må derfor fylle ut en av Tilretteleggernes kunderegistreringsskjemaer og umiddelbart sende dette via e-post eller telefaks til Tilretteleggerne for å kunne få tildelt Tilbudsaksjer i det Offentlige Tilbudet med mindre et unntak er tilgjengelig.

Salgsrestriksjoner: Tilbudet er underlagt salgsrestriksjoner i enkelte jurisdiksjoner, se Prospektet, kapittel 6 ”Selling and Transfer Restrictions” for en komplett liste over salgsrestriksjoner. Verken Tilretteleggerne eller Selskapet påtar seg noe ansvar dersom noen bryter disse restriksjonene.

Forsinket eller manglende betaling: Dersom en bestiller ikke har tilstrekkelig innestående på den aktuelle bankkontoen, eller betaling er forsinket av en eller annen årsak, eller dersom det ikke er mulig å debitere kontoen, vil det påløpe forsinkelsesrente i henhold til lov av 17. desember 1976 nr. 100 om renter ved forsinket betaling m.m., som per datoen for Prospektet var 9,00 prosent p.a. Nordea (på vegne av Tilretteleggerne) forbeholder seg retten (men er ikke forpliktet) til å foreta opp til tre debiteringer frem til og med 4. mai 2011 dersom det ikke er tilstrekkelig innestående på betalingsdato. Dersom betaling for tildelte Tilbudsaksjer er mottatt på betalingsdagen, vil levering av tildelte Tilbudsaksjer i det Offentlige Tilbudet foretas ca. 28. april 2011. Tilretteleggerne forbeholder seg retten til å overta eierskap til eller å selge slike tildelte Tilbudsaksjer dersom betaling ikke er mottatt innen den tredje dagen etter betalingsdato. Dersom Tilbudsaksjer selges på vegne av bestilleren vil slikt salg skje for bestillerens regning og risiko (og slik at bestilleren ikke vil ha krav på en eventuell gevinst av salget), og den opprinnelige bestilleren vil være ansvarlig for alle kostnader pådratt eller lidt av Selskapet og/eller Tilretteleggerne som følge av eller i forbindelse med slikt salg, og Selskapet eller Tilretteleggerne vil kunne foreta tvangsinndrivelse av ethvert utestående beløp i samsvar med norsk lov.

Vilkår for Betaling med engangsfullmakt – verdipapirhandel. Betaling med engangsfullmakt er en banktjeneste som bankene i Norge samarbeider om. I forholdet mellom betaler og betalers bank gjelder følgende standard vilkår:

1. Tjenesten Betaling med engangsfullmakt – verdipapirhandel suppleres av kontoavtalen mellom betaler og betalers bank, se særlig kontoavtalen del C, Generelle vilkår for innskudd og betalingsoppdrag.

2. Kostnader ved å bruke Betaling med engangsfullmakt – verdipapirhandel fremgår av bankens gjeldende prisliste, kontoinformasjon og/eller opplyses på annen egnet måte. Banken vil belaste oppgitt konto for påløpte kostnader.

3. Engangsfullmakten signeres av betaler og leveres til betalingsmottaker. Betalingsmottaker vil levere belastningsoppdraget til sin bank som igjen kan belaste betalers bank.

4. Ved et eventuelt tilbakekall av engangsfullmakten skal betaler først ta forholdet opp med betalingsmottaker. Etter finansavtaleloven skal betalers bank medvirke hvis betaler tilbakekaller et betalingsoppdrag som ikke er gjennomført. Slikt tilbakekall kan imidlertid anses som brudd på avtalen mellom betaler og betalingsmottaker.

5. Betaler kan ikke angi et større beløp på engangsfullmakten enn det som på belastningstidspunktet er disponibelt på konto. Betalers bank vil normalt gjennomføre dekningskontroll før belastning. Belastning ut over disponibelt beløp skal betaler dekke inn umiddelbart.

6. Betalers konto vil bli belastet på angitt belastningsdag. Dersom belastningsdag ikke er angitt i engangsfullmakten vil kontobelastning skje snarest mulig etter at betalingsmottaker har levert oppdraget til sin bank. Belastningen vil likevel ikke skje etter engangsfullmaktens gyldighetsperiode som er angitt foran. Betaling vil normalt være godskrevet betalingsmottaker en til tre virkedager etter angitt belastningsdag/innleveringsdag.

7. Dersom betalers konto blir urettmessig belastet på grunnlag av en engangsfullmakt, vil betalers rett til tilbakeføring av belastet beløp bli regulert av kontoavtalen og finansavtaleloven.

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APPLICATION FORM — RETAIL OFFERING — INITIAL PUBLIC OFFERING OF SHARES IN SEVAN DRILLING ASA

For complete information on the Retail Offering, please refer to the Prospectus dated 5 April 2011 which has been issued in connection with the Offering of shares in Sevan Drilling ASA and the listing of its Shares on Oslo Børs. All capitalised terms not defined herein shall have the meaning ascribed to them in the Prospectus.

Application process: All applications in the Retail Offering must be made on this application form as attached to the Prospectus as Appendix H (Application form – Retail Offering). Applicants in the Retail Offering can also apply for Offer Shares by using the following internet pages: www.arcticsec.no; www.pareto.no; www.abgsc.no; www.arcticsec.no; www.first.no; www.sebenskilda.no. Application forms must be correctly completed and submitted to one of the following application offices:

Pareto Securities AS Dronning Mauds gate 3 P.O. Box 1411 Vika 0115 Oslo, Norway Telephone: +47 22 87 87 00 Telefax: +47 22 87 87 10 www.pareto.no

ABG Sundal Collier Norge ASA Munkedamsveien 45 E P.O. 1444 Vika 0115 Oslo, Norway Telephone: +47 22 01 60 00 Telefax: +47 22 01 60 62 www.abgsc.no

Arctic Securities ASA Haakon VII’s gate 5 P.O. Box 1833 Vika 0123 Oslo, Norway Telephone: +47 21 01 31 00 Telefax: +47 21 01 31 36 www.arcticsec.no

First Securities AS Filipstad Brygge 1 P.O. Box 1441 Vika 0250 Oslo, Norway Telephone: +47 23 23 80 00 Telefax: +47 23 23 80 01 www.first.no

SEB Enskilda AS Filipstad Brygge 1 P.O. Box 1363 Vika 0250 Oslo Telephone: +47 21 00 85 00 Telefax: +47 21 00 89 62 www.sebenskilda.no

Subject to any extension of the Application Period, properly completed application forms must be received by one of the application offices by 12.00 hours CET on 15 April 2011.

Application forms that are incomplete or incorrectly completed, or that are received after expiry of the Application Period, may be disregarded without further notice to the applicant. Neither the Company nor any of the Managers may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by any of the application offices or through the VPS online subscription system. All applications made in the Retail Offering will be irrevocable and binding upon receipt of a duly completed application form by an application office, or in the case of applications through the VPS online subscription system, upon registration of the application, irrespective of any extension of the Application Period, and cannot be withdrawn, cancelled or modified by the applicant after having been received by an application office, or in the case of applications through the VPS online subscription system, upon registration of the application.

Allocation, payment and delivery of Offer Shares: Nordea, acting as settlement agent for the Retail Offering, expects to issue notifications of allocation of Offer Shares in the Retail Offering on or about 18 April 2011, by issuing allocation notes to the applicants by mail. Any applicant wishing to know the precise number of Offer Shares allocated to it may contact one of the application offices from 12:00 (CET) on 18 April 2011 and onwards during business hours. Applicants who have access to investor services through an institution that operates the applicant’s VPS account should be able to see how many Offer Shares they have been allocated from 12:00 hours CET on 18 April 2011. By completing an application form, each applicant in the Retail Offering authorises Nordea (on behalf of the Managers) to debit the applicant’s Norwegian bank account for the total amount due for the Offer Shares allocated to the applicant. Accounts will be debited on or about 27 April 2011 (the payment due date), and there must be sufficient funds on the stated bank account from and including 27 April 2011. Applicants who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the payment due date (27 April 2011). Details and instructions will be set out in the allocation notes to the applicant to be issued on or about 18 April 2011, or obtained by contacting Nordea at +47 22 48 55 40. See also “Late or missing payments” on the second page of this application form.

Price of Offer Shares: The indicative price range (the “Price Range”) for the Offering is from NOK 16.00 to NOK 21.00 per Offer Share. The Company and the Selling Shareholder will determine the final Offer Price and the number of Offer Shares to be sold in the Offering on the basis of the orders placed in the Institutional Offering during the bookbuilding process, and the level of applications made in the Retail Offering and the Employee Offering. The Offer Price will be determined on or around 18 April 2011. The Offer Price may be set within, below or above the indicative price range. Each applicant in the Retail Offering will be permitted, but not required, to indicate on the application form that the applicant does not wish to be allocated Offer Shares should the Offer Price be set above the upper end of the Price Range. If the applicant does not expressly stipulate such reservation on the application form, the application will be binding regardless of whether the Offer Price is set within or above (or below) the Price Range.

Additional application guidelines: Please refer to the next page of this application form for further application guidelines.

Applicant’s VPS-account (12 digits):

I apply for shares for a total of NOK (min.

NOK 10,000 and max. NOK 999,999)

Applicant’s bank account to be

debited (11 digits):

OFFER PRICE: My/our application is conditional upon the final Offer Price not being set above the upper end of the Price Range (insert cross) (must only be completed if the application is conditional upon the final Offer Price not being set above the upper end of the Price Range):

I/we hereby irrevocably (i) apply for the number of Offer Shares allocated to me/us up to the amount as specified above subject to the terms and conditions set out above and contained in the Prospectus, (ii) authorise and instruct each of the Managers acting jointly and not severally (or someone appointed by them) to subscribe for such number of Offer Shares at the Offer Price on my behalf, and (iii) authorise Nordea to debit my/our bank account as set out above for the amount of the Offer Shares allotted to me/us.

Date and place*:

Binding signature**:

* Must be dated during the application period ** The applicant must be of age. If the application form is signed by a proxy, documentary evidence of authority to sign must be attached in the form of a Power of Attorney or Company Registration Certificate

DETAILS OF THE APPLICANT — ALL FIELDS MUST BE COMPLETED

First name

Surname / Family name / Company name

Home address / For companies: registered business address

Zip code and town

Identity number (11 digits) / For companies: registration number

Nationality

Telephone number (daytime)

A -65

ADDITIONAL GUIDELINES FOR THE APPLICANT Regulatory issues: Legislation passed throughout the EEA pursuant to the Markets and Financial Instruments Directive (“MiFID”) implemented in the Norwegian Securities Trading Act, requires the Managers to categorise all new clients in one of three categories: Eligible counterparties, Professional and Non-professional clients. All applicants subscribing for Offer Shares in the Offering who/which are not existing clients of one of the Managers will be categorised as Non-professional clients. The applicant can by written request to the Managers ask to be categorised as a Professional client if the applicant fulfils the provisions of the Norwegian Securities Trading Act. For further information about the categorisation the applicant may contact the Managers. The applicant represents that it has sufficient knowledge, sophistication and experience in financial and business matters to be capable of evaluating the merits and risks of an investment decision to invest in the Company by applying for Offer Shares, and the applicant is able to bear the economic risk, and to withstand a complete loss of an investment in the Company.

Execution only: As the Managers are not in the position to determine whether the application for Offer Shares is suitable for the applicant, the Managers will treat the application as an execution only instruction from the applicant to apply for Offer Shares in the Offering. Hence, the applicant will not benefit from the corresponding protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act.

About the Managers — information barriers: The Managers are securities firms, offering a broad range of investment services. In order to ensure that assignments undertaken in the Managers’ corporate finance departments are kept confidential, the Managers’ other activities, including analysis and stock broking, are separated from their corporate finance departments by information barriers known as “Chinese walls”. The applicant acknowledges that the Managers’ analysis and stock broking activity may act in conflict with the applicant’s interests with regard to transactions in the Offer Shares as a consequence of such Chinese walls.

VPS account — anti-money laundering: To apply for Offer Shares the applicant must have a VPS account or a custodian for Norwegian shares. Such account can only be established by personal appearance with sufficient identification at a VPS book entry agent or an authorised investment firm. The Offering is subject to the Anti-Money Laundering Legislation. All applicants not registered as existing customers with one of the Managers must verify their identities to one of the Managers in accordance with requirements of the Anti-Money Laundering Legislation unless an exemption is available. Applicants that have designated an existing Norwegian bank account and an existing VPS account on the application form are exempted, provided the aggregate subscription price is less than NOK 100,000 unless verification of identity is requested by the Managers. The verification of identification must be completed prior to the end of the Application Period. Applicants that have not completed the required verification of identification will not be allocated Offer Shares. Applicants who are not registered as clients with the Managers must therefore complete one of the Managers’ Customer Registration Forms and send it to the Managers immediately by fax or e-mail in order to be considered for an allocation of shares under the Offering unless an extension is available.

Selling restrictions: The Offering is subject to specific legal or regulatory restrictions in certain jurisdictions, see Section 6 “Selling and Transfer Restrictions” of the Prospectus. Neither the Company nor the Managers assume any responsibility in the event there is a violation by any person of such restrictions.

Late or missing payments: Should any applicant have insufficient funds on his or her account, or should payment be delayed for any reason, or if it is not possible to debit the account, interest will accrue on the amount due at a rate equal to the prevailing interest rate under the Norwegian Act on Interest on Overdue Payments of 17 December 1976, No. 100, which at the date of the Prospectus was 9.00% per annum. Nordea (on behalf of the Managers) reserves the right (but has no obligation) to make up to three debit attempts through 4 May 2011 if there are insufficient funds on the account on the payment due date. Subject to timely payment by the applicant, delivery of the Offer Shares allocated in the Retail Offering is expected to take place on or about 28 April 2011. The Managers reserve the right, without further notice, to sell or assume ownership of such Offer Shares if payment has not been received by the third day after the payment due date. If Offer Shares are sold on behalf of the applicant, such sale will be for the applicant’s account and risk (however so that the applicant shall not be entitled to profits therefrom, if any) and the applicant will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or the Managers as a result of or in connection with such sales, and the Company and/or the Managers may enforce payment for any amount outstanding in accordance with Norwegian law.

Terms and conditions for Payment by direct debiting - securities trading. Payment by direct debiting is a service provided by cooperating banks in Norway. In the relationship between the payer and the payer’s bank the following standard terms and conditions apply:

1. The service “Payment by direct debiting — securities trading” is supplemented by the account agreement between the payer and the payer’s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions.

2. Costs related to the use of “payment by direct debiting — securities trading” appear from the bank’s prevailing price list, account information and/or information is given by other appropriate manner. The bank will charge the indicated account for incurred costs.

3. The authorisation for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank who in turn will charge the payer’s bank account.

4. In case of withdrawal of the authorisation for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Financial Contracts Act the payer’s bank shall assist if the payer withdraws a payment instruction which has not been completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary.

5. The payer cannot authorise for payment a higher amount than the funds available at the payer’s account at the time of payment. The payer’s bank will normally perform a verification of available funds prior to the account is being charged. If the account has been charged with an amount higher than the funds available, the difference shall be covered by the payer immediately.

6. The payer’s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorisation for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorisation has expired as indicated above. Payment will normally be credited the beneficiary’s account between one and three working days after the indicated date of payment/delivery.

7. If the payer’s account is wrongfully charged after direct debiting, the payer’s right to repayment of the charged amount will be governed by the account agreement and the Financial Contracts Act.

110391 / signatur.no

Registered office and advisors

Registered office:

Sevan Drilling ASA Kittelsbuktveien 5

4836 Arendal Norway

Telephone: +47 37 40 40 00 Telefax: +47 37 40 40 99 www.sevandrilling.com

Global Coordinator: Pareto Securities AS

Joint Lead Managers and Joint Bookrunners:

Pareto Securities AS

Dronning Mauds gate 3 P.O. Box 1411 Vika 0115 Oslo, Norway


www.pareto.no

ABG Sundal Collier Norge ASA Munkedamsveien 45E

P.O. 1444 Vika 0115 Oslo, Norway


www.abgsc.no

Arctic Securities ASA Haakon VII’s gate 5 P.O. Box 1833 Vika 0123 Oslo, Norway


www.arcticsec.no

First Securities AS Filipstad Brygge 1



www.first.no

ING Bank N.V Bijlmerplein 888

1102 MG AmsterdamThe Netherlands Telephone: + +31 20 563 8979

Telefax: + +31 20 563 8502 www.ing.com

SEB Enskilda AS Filipstad Brygge 1

P.O. Box 1363 Vika 0250 Oslo


www.sebenskilda.no

Legal advisors to the Company: (as to Norwegian law)

Bugge, Arentz-Hansen & Rasmussen P.O. Box 1524 Vika

N-0117, Oslo Norway

Legal advisors to the Managers:

(as to Norwegian law)

Wiersholm Postboks 1400 Vika

0115 Oslo Norway

(as to US law) Akin Gump Strauss Hauer & Feld LLP

One Bryant Park New York, NY 10036-6745

United States of America

Date post:	12-May-2020
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