Ocean Rig ASA's objective is to be-

come a leading international supplier

of drilling services focusing on operations in

deepwate r and har sh env i ronment s . The

Company will focus on offering customers

solutions that rank among the most cost-

effective and technologically advanced in the

market.

3

CONTENTS

Important events in 1997 . . . . . . . . . . . . . . page 4Major objectives for 1998 . . . . . . . . . . . . . . . . . . . 5The market for semisubmersible rigs . . . . 6Ocean Rig’s 5th generation rigs . . . . . . . . . . . 8Board of Directors’ report 1997 . . . . . . . . . . . 10Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Statement of Cash Flow . . . . . . . . . . . . . . . . . . . . . 18Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . 19

Notes to the Financial Statements . . . . . . . . 20Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Shareholder information . . . . . . . . . . . . . . . . . . . 26Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Strategic focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34The market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36The Bingo 9000 concept . . . . . . . . . . . . . . . . . . . . . 40The construction process . . . . . . . . . . . . . . . . . . . 42Ocean Rig AS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

To achieve this objective, the Company has four

semisubmersible baredeck units under construction

at Dalian New Shipyard. A contract has been

entered into with Friede Goldman Offshore for out-

fitting of the first baredeck unit as a fifth-generation

Bingo 9000 rig with opportunities for deepwater

operations throughout the world. During the spring

1998 it is also expected that Ocean Rig ASA and

Friede Goldman Offshore will enter into a contract

for outfitting of the Bingo 9000-2 unit.

4

Listing of Ocean Rig ASA on the Oslo Stock Exchange's SMB-List in January.

A share issue totalling NOK 270 million in January through a public share offering. The funds are to be applied for the financing of the second baredeck unit.

Preparation of detailed specification and design of the Bingo 9000 rigs for deepwaterdrilling in harsh environments.

Entry into contract with Friede Goldman Offshore for outfitting of Bingo 9000-1 as wellas Memorandum of Agreement and option agreements for the other rigs in December.

Recruitment of key personnel and establishment of Ocean Rig ASA's own technical andadministrative organization.

Acquisition of Polycrest AS (now Ocean Rig AS) in February 1998. The company'sprimary function will be the marketing and operation of the Bingo 9000 rigs in theNorwegian sector of the North Sea.

A share issue totalling NOK 2.3 billion through one of the largest public share offerings ever carried out in Norway. The funds are to be applied primarily for equity financing of the outfit-ting of the first Bingo 9000 rig as well as the construction of the third and fourth baredeck units.

5

Securing client contracts for two of the Company's drilling rigs.

Instituting a strategic alliance with an established drilling contractor for operationsand marketing of the Company’s rigs in international areas.

Integrating Ocean Rig AS (previously Polycrest A/S) as responsible for operations andmarketing in the Norwegian sector of the North Sea.

Ensuring satisfactory financing of the Company's construction program.

Following up the construction contracts.

6

3RD GENERATION DRILLING RIGSWere generally of a vintage up to the early1980’ies and provided:

• Simplified construction with reducednumber of columns and bracings

• Improvement in variable deck load capacity to approxi-mately 3000 tons

• Met the regulatory requirements for North Sea operations

4TH GENERATION DRILLING RIGSRepresented a step forward in the development of semisubmersibles, providing:

• High variable deck load (approximately 5000 tons)

• Large deck spaces

• Harsh environment operating capability in medium water depth (up to 1000 meters)

• High pressure, high temperature well control systems

7

5TH GENERATION DRILLING RIGSRepresent the most up-to-date capability by providing:

• Drilling systems which facilitatesubstantial operational efficiencies

• High operational displacement (approximately 50.000 tons)

• High variable deck load (approximately 6000 tons)

• Automatic pipe handling systems

• Large deck areas for tubular goods, assembling subsea systems and well testing

• High capacity fluid handling

• Environmentally friendly (zero spillsystems/low emissions)

• Powerful station keeping systems forultra-deep water operations (up to 3000meters) and harsh environments

• High pressure, high temperature wellcontrol systems

• Large, comfortable accommodation

8

9

CONSTRUCTION PROGRAM

RIG 1 RIG 2 RIG 3 RIG 4

BAREDECK – OCT. 11, 1996 FEB. 5, 1997 JULY 31, 1997 JULY 31, 1997

CONTRACT DATES

DALIAN NEW SHIPYARD

OUTFITTING DEC. 22, 1997 DEC. 22, 1997 OPTION OPTION

CONTRACT DATES (MOA)

FRIEDE GOLDMAN

OFFSHORE

ESTIMATED TIME AUGUST 1999 NOV. 1999 JUNE 2000* DEC. 2000*

OF COMPLETION

* IN ACCORDANCE WITH OPTION AGREEMENT

Outfitted for operations in deepwater areas (3,000 meters water depth) and harsh environ-ments in compliance with the latest and strictest industry requirements for such rigs.

Based on a flexible design and modern, but proved technology.

Have variable deck load capacity of approximately 6,000 tons.

Have advanced dynamic positioning systems, which make them particularly suitable for drilling and subsea completions in ultra-deep water.

Equipped with drilling systems which facilitate substantial operational efficiencies.

Designed with focus on maximum security for personnel and minimum pollution of the environment.

STRATEGY AND OBJECTIVES

Ocean Rig’s strategy is to become a leading drilling

contractor within offshore exploration, development

and production drilling with a focus on the deep

water market and harsh environment areas. Based on

this strategy, the Company has entered into contracts

with Dalian New Shipyard in China for construction

of four baredeck units based on the Bingo 9000 con-

cept. Furthermore, Ocean Rig has entered into

contracts and option agreements for the outfitting of

the baredeck units. This implies that the Company at

the beginning of year 2001 is in a position to operate a

total of four “state of the art” fifth-generation drilling

rigs for operations down to a water depth of 3000

meters. The rigs are currently marketed on a global

basis as the main markets for deepwater rigs over the

next few years are expected to be in the US Gulf, West

Africa and Brazil.

In order to succeed in carrying out the Company’s

strategy, it is fundamental to establish a technical and

marketing organization within the Company and to

possess operational capacity and experience in dif-

ferent geographical areas. The Company has initiated

this by recruiting highly skilled management and staff

with extensive technical and operational experience.

This process will continue with a focus on ensuring

that rigs operating in the North Sea will be fully man-

aged and operated by Ocean Rig employees. In other

geographical areas, Ocean Rig is seeking to establish

agreements with other drilling contractors for mar-

keting and operation of the Company’s drilling rigs.

OPERATIONS IN 1997

A number of important events have occurred during

the first full operating year of Ocean Rig ASA. In

January 1997, the Company completed a public offer-

ing with proceeds of NOK 270.3 million raised by the

issue of 54.1 million shares at a price of NOK 5 per

share. The purpose of the offering was to fund the

construction of the second baredeck unit at Dalian

New Shipyard, which was ordered early February

1997. Ocean Rig was quoted on the SMB List on the

Oslo Stock Exchange in January 1997.

During the spring, Ocean Rig completed drawings

and specifications for the outfitting of the Bingo 9000

units. In May, Ocean Rig entered into a Memorandum

of Agreement with Saga Petroleum for a 5-year

charter of Ocean Rig’s first deepwater rig in the North

Sea. However, Saga only had a 3-year program for

operation of the rig, and was therefore dependent on

an alliance with another oil company to complete the

agreement. That arrangement proved to be difficult

within the deadline, and Saga Petroleum withdrew

from the Memorandum of Agreement in September

1997.

Based on the limitations of yard capacity and Ocean

Rig’s favorable time schedule compared to competing

projects, the Board of Directors decided after Saga’s

cancellation to initiate a public offering to fund the

outfitting of the first Bingo 9000 rig. Due to the magni-

tude of the investment and the fact that Ocean Rig

was a newly established company, it was considered

crucial that the offering was underwritten by a con-

sortium of investors. The economic problems in Asia

also affected the Oslo Stock Exchange by the end of

the offering period. A relatively large part of the offer-

ing was, therefore, purchased by the underwriters.

This has had some negative effects on the trading of

10

11

OCEAN RIG ASA – THE BOARD OF DIRECTORS

BJARNE SKEIE TOM B. KNUDSENCHAIRMAN OF THE BOARD

J. FRITHJOF SKOUVERØE

the shares as some of the underwriters have reduced

their portfolios, which has lead to some pressure on

the share price. The Company did, however, succeed

in raising gross proceeds of about NOK 2.3 billion by

a global offering of 252.6 million shares at a sub-

scription price of 9.25 per share. This gave the

Company the ability to continue the construction

program as planned. In addition to outfitting of the

Bingo 9000-1, the net proceeds will be used to fund

the baredeck unit construction for Bingo 9000-3 and -4

at Dalian New Shipyard, as well as acquisition of the

shares in Polycrest AS.

The negotiation process with various yards for the

outfitting of Bingo 9000-1 to a fifth-generation rig for

harsh environment operations began in May 1997.

The extensive building activity both within the ship-

ping and the offshore market has resulted in signifi-

cant limitations in yard capacity all over the world.

Hence, it was important for the Company to enter into

the necessary contracts and option agreements to be

in a position to complete the construction program.

Based on this, Ocean Rig entered into a Memorandum

of Agreement with Hyundai Heavy Industries for the

outfitting of Bingo 9000-1 in October 1997. However,

based on a total evaluation of the economic situation

in South Korea, the Company decided to withdraw

from the Memorandum of Agreement on December

17, 1997. Ocean Rig had for some time been in contact

with the US shipyard, Friede Goldman Offshore, Inc.,

regarding the outfitting of Bingo 9000-2. After cancel-

lation of the Memorandum of Agreement with

Hyundai Heavy Industries, the Company imme-

diately started negotiating with Friede Goldman

Offshore, Inc. regarding the outfitting of Bingo 9000-1.

On December 22, the parties signed an outfitting

contract. At the same time, the Company entered into

a Memorandum of Agreement for the outfitting of

Bingo 9000-2, as well as option agreements for the last

two rigs. According to the agreements with Friede

Goldman Offshore, Ocean Rig is in the position to

complete two deepwater rigs by the second half of

1999 and two additional rigs by the end of 2000.

Completion of the last three rigs is, however, subject

to further financing.

Subsequent to year-end, Hyundai Heavy Industries

has taken legal action against Ocean Rig at the High

Court of Justice in London for breach of the

Memorandum of Agreement. The basis for the pro-

ceedings and the scope of their claim are not known.

The Board is confident that the Company has acted in

accordance with the agreement with Hyundai Heavy

Industries. With exception of compensation for de-

tailed engineering work performed by Hyundai, the

Company will reject all claims.

In October, the Company commenced a major

marketing program of Ocean Rig ASA and the Bingo

9000 concept. This work has mainly been performed

by Polycrest AS, which has presented the rigs to oil

companies on a global basis. Based on these mar-

keting efforts, it was concluded that contracts with oil

companies in areas other than the North Sea require

alliances with drilling contractors which have oper-

ational experience in the respective geographical

areas. The Board’s view is that such alliances will add

the necessary competence and capacity to ensure long

term and profitable contracts.

In addition to management of the construction

12

program and marketing activities, the Company has

focused on recruiting corporate management and

staff. In addition to the President, this includes a

marketing function, a technical department and a

financial department. Upon moving into the new

office premises during mid February 1998, Ocean Rig

ASA will have 10 employees. Significant effort has

been made to establish the organization, and the

Board believes that the Company is now well

prepared for the upcoming challenges.

As part of the strategy of becoming an integrated

drilling contractor, the Company entered into a Letter

of Agreement regarding acquisition of Polycrest AS in

October 1997. The final agreement is expected to be

settled within a period of short time. Polycrest will be

responsible for the marketing and operations of the

Bingo 9000 rigs for the Ocean Rig Group in the

Norwegian Sector of the North Sea. Polycrest will be

integrated into the Ocean Rig Group, and hence, the

name of the company will be changed to Ocean Rig

AS. It has also been concluded to start up activities for

operations in the UK Sector of the North Sea to be

based in Aberdeen. A managing director has already

been appointed. With regards to marketing and

operations in other geographical areas, agreements

with other drilling contractors will be established.

In addition to the above-mentioned efforts, the

Company has entered into an agreement for Ocean

Engineering AS to merge with Ocean Rig from

January 1, 1998. This means that Ocean Rig ASA will

have the exclusive right to use the Bingo concept and

to license the use of the concept to third party rig con-

tractors.

NET INCOME AND BALANCE SHEET FOR 1997

No revenues will be reported until after the inte-

gration of Polycrest AS in 1998. Operating expenses

for 1997 mainly consist of fees for management,

marketing and advisors incurred throughout the year.

Operating loss for 1997 is NOK 20.3 million compared

to NOK 1.4 million for 1996. The Company’s strong

cash position resulted in net financial income of

NOK 28.5 million and an income before taxes of

NOK 8.2 million. No tax allocations are reported,

since expenses related to the share issues, which for

tax purposes are deductible, are reported as reduced

equity for financial purposes. Net income for 1997 is

NOK 8.2 million compared to a net loss of NOK 0.1

million for 1996.

The Company reported a positive change in cash

throughout 1997 of NOK 2,080 million with an

accumulated cash position of NOK 2,267 million as of

December 31, 1997.

Total investments in 1997 are NOK 402 million. This

includes NOK 214 million related to Bingo 9000-1,

while investments in the other rigs amount to NOK

188 million.

13

‘‘AT YEAR-END 1997THE EQUITY WAS

NOK 2,725 MILLION,WHICH MEANS THAT

THE COMPANY IS100% FINANCED BY

EQUITY’’

At year-end 1997 the equity was NOK 2,725 million

compared to NOK 223 million as of December 31,

1996. The Company is 100% financed by equity. The

share issues in 1997 resulted in an increase in equity of

NOK 2,494 million.

The share capital as of December 31, 1997 is NOK

357.9 million, consisting of 357.9 million shares at

NOK 1. There are no shareholders controlling more

than 20% of the Company. The founder of the

company, Bjarne Skeie, is the largest shareholder with

approximately 14% of the shares.

ORGANIZATION, PERSONNEL AND ENVIRONMENT

Ocean Rig ASA has undergone major organi-

zational changes throughout the year. The largest

shareholder of the Company, Bjarne Skeie, has been

appointed as a member of the Board. Also, Frederik

Steenbuch, in agreement with the Company, re-

signed from the Board which now consists of three

members. The Company is planning to elect a new

member to the Board.

Towards the end of the year, Ocean Rig’s adminis-

trative capacity has been strengthened, and the

Company now has 10 employees. This will help

ensure that the technical and administrative man-

agement of the construction program and mar-

keting effort, to a larger extent, are carried out by

Ocean Rig’s personnel. This is considered as an

important factor to ensure that the Company will

achieve its objectives in the most efficient way.

We refer to note 7 with regard to salary and other

compensation to the President, the members of the

Board and the Company’s auditor.

Ocean Rig ASA is in a start-up phase, and has no

operations that pollute the environment. The

Company’s future activities within exploration,

development and production drilling may, how-

ever, have a negative impact on the environment.

The Company focuses on establishing quality stan-

dards and procedures to reduce this risk to an

acceptable level. Minimal pollution from operations

is one of the advantages of the Bingo 9000 drilling

rigs.

MARKET EVALUATIONS

The demand for oil has developed very positively

throughout most of 1997. This has also influenced the

market for floating equipment, and currently there is

hardly any capacity of deepwater drilling rigs avail-

able in the market. Taking into consideration that a

significant part of existing oilfields are more than

20 years old and new fields, to a large extent, are

announced in deepwater areas, partly within harsh

environment, the market potential for the Company’s

drilling rigs is considered very positive. Oil companies

are also continuously reducing production expenses,

and global oil demand is not expected to decline.

Therefore, we do not expect any reduction in develop-

ment and production activity despite the downturn in

oil prices observed in the last part of 1997.

EXPECTATIONS FOR 1998

The main objective for Ocean Rig ASA for the coming

year is to secure contracts with Oil companies for two

of the company’s drilling rigs at satisfactory terms. As

part of this process, the integration of Polycrest AS as

14

Ocean Rig’s unit for marketing and operation in the

Norwegian Sector of the North Sea will be given a

high priority. Additionally, the Company will enter

into agreements for marketing and operations in areas

where Ocean Rig’s entities currently are not focused.

Completing the establishment of a project organi-

zation for construction of Bingo 9000-1 will also be a

high priority task.

During the spring of 1998, it is expected that Ocean

Rig ASA will enter into a contract with Friede

Goldman Offshore for the outfitting of Bingo 9000-2.

Furthermore, it is the Board’s firm objective to ensure

that the construction of the last two rigs commences in

accordance with the previously presented schedules.

Taking into consideration the positive market evalu-

ations, the increasing demand for deepwater rigs and

the positive feedback from our customers regarding

the Bingo 9000 design, the Company’s objectives areviewed as realistic.

ALLOCATION OF NET INCOME FOR 1997

The Board proposes the following transfer of net

income in Ocean Rig ASA:

Transferred to general reserve kr 8.243.395

Total kr 8.243.395

Oslo, February 9, 1998

TOM B . KNUDSEN BJARNE SKE IE J . FR I THJOF SKOUVERØECHA IRMAN OF THE BOARD (S IGN . ) (S IGN . )

(S IGN . )

CHR IST IAN HUSEBYPRES IDENT

(S IGN . )

15

‘‘THE MAIN

OBJECTIVE FOR 1998

IS TO SECURE

CONTRACTS FOR TWO

OF THE COMPANY’S

DRILLING RIGS’’

1,000 NOK Notes 1997 1996

Operating expenses:Personnel expenses 2,956 72Other operating expenses 17,246 1,320Ordinary depreciation 3 129 0Total operating expenses 20,331 1,392

O P E R AT I N G L O S S – 20,331 – 1,392

Financial income and expenses:Financial income 1 29,551 1,405Financial expenses – 976 – 116Net financial income 28,575 1,289

I N C O M E B E F O R E TA X E S 8,244 – 103

Taxes 4 0 0

N E T I N C O M E 8,244 – 103

Transfers/allocations: 5Legal reserves 0 – 103General reserves 8,244 0

16

17

1,000 NOK Notes 12.31.97 12.31.96

Current Assets:Cash and cash equivalents 1 2,267,228 187,314Other current assets 7,727 0Total Current Assets 2,274,955 187,314

Fixed Assets:Construction in progress 2/6 450,932 49,179Other fixed assets 3 811 0Total Fixed Assets 451,743 49,179

T O TA L A S S E T S 2,726,698 236,493

Current Liabilities:Accounts payable 1,485 13,731Other current liabilities 763 15Total Current Liabilities 2,248 13,746

Shareholders’ Equity:Share capital 5 357,882 47,000Legal reserve 5 175,747 175,747General reserve 5 2,190,821 0Total Shareholders’ Equity 2,724,450 222,747

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,726,698 236,493

18

1,000 NOK 1997 1996

Cash flow from operating activities:Net income before taxes 8,244 – 103Ordinary depreciation 129 0Change in other current assets – 7,727 0Change in accounts payable – 12,246 1,364Change in other current liabilities 748 15

Cash flow from operating activities (A) – 10,852 1,275

Cash flow from investing activities:Investment in building contracts – 401,753 – 22,561Investment in other operating fixed assets – 430 0Change in other investments – 510 0

Cash flow from investing activities (B) – 402,693 – 22,561

Cash flow from financing activities:Share issue 2,493,459 208,600

Cash flow from financing activities (C) 2,493,459 208,600

Net change in cash flow during the year (A + B + C) 2,079,914 187,314Cash and cash equivalents at the beginning of the year 187,314 0

Cash and cash equivalents at the end of the year (Note 1) 2,267,228 187,314

GENERAL

The financial statements for Ocean Rig ASA have beenprepared in accordance with Norwegian law and gener-ally accepted accounting principles in Norway. A com-parison between generally accepted accounting principlesin Norway and the United States is included in Note 9.

REVENUE AND EXPENSE RECOGNITION

Revenues are recognized as they are generated, and costsare expensed as incurred.

PRINCIPLES OF CLASSIFICATION

Assets and liabilities are classified as current if their maturity is within one year of the balance sheet date.Other assets and liabilities are classified as long term assets and long term liabilities, respectively.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash, bank depositsand other short term deposits with a maturity of 90 daysor less from the date of acquisition.

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

The accounting for assets and liabilities in foreign curren-cies is depending on whether hedged or not hedged. Cashin foreign currency is translated at the year-end exchangerate, except cash identified to hedge foreign exchange risk,which is translated to NOK at historical exchange rate.The items are considered as hedged if the financial impactof changes in exchange rates will be eliminated. Hedgingtransactions related to construction contracts are evalu-ated in connection with these, independent on whetherthe hedging is done off balance or not.

Other current assets and current liabilities denominated inforeign currencies are translated to NOK at the exchangerate on the balance sheet date. Long term assets in foreigncurrencies are translated at the lower of the historicaltransaction rate and the balance sheet rate. Long term liabilities are translated at the higher of the historicaltransaction rate and the balance sheet rate. Long term assets and liabilities denominated in the same currencyare accounted for as a net currency position at year-end.

RECEIVABLES

The Company’s receivables are recorded at cost lessprovision for uncollectable accounts.

CONSTRUCTION IN PROGRESS

Construction contracts are included in fixed assets basedon installments payable to the yard. Contracts denomi-nated in foreign currencies are translated to NOK at thehedged exchange rate. For contracts not hedged, the exchange rate on the due date of the installment is app-lied. Other investments not included in the constructioncontracts with the yard are capitalized during the con-struction period as incurred. No interest expense hasbeen incurred during the construction period.

The real value of construction in progress is comparedwith book value and the estimated remaining invest-ment obligations. Total obligations related to construc-tion contracts are described in Note 2.

The Company has changed its accounting policy for con-struction in progress in 1997 to the policy described above. Previously, the total construction contract was capitalized. This change is considered as a change in accounting principle. The 1996 balance has been restatedto reflect the change in accounting principle. The changehad no impact on the Company’s income statement.

FIXED ASSETS AND DEPRECIATION

Fixed assets are recorded at cost and depreciated on thestraight-line method over the estimated useful lives ofthe assets.

TAXES

Income tax expense consists of taxes payable and thenet change in deferred taxes arising as a result of timing differences between financial and tax reporting.

Deferred taxes/deferred tax benefits are calculated as28% of the timing differences between financial and taxable values, less taxable loss carried forward. Thereare specific rules for offsetting positive and negative timing differences and capitalization of deferred taxbenefits. Deferred tax benefits in excess of deferred taxliabilities are not capitalized.

SHARE ISSUE COSTS

Costs related to share issues are deducted directly fromshareholders’ equity.

RELATED PARTIES

Information regarding agreements and transactions withrelated parties is included in Note 6.

19

20

Cash and cash equivalents include amounts pledged as collateral for bank guarantees issued toshipyards of NOK 359.3 million and NOK 49.2 mil-lion at December 31, 1997 and 1996, respectively.Also included are taxes withheld from employeesof NOK 290,000 at December 31,1997.

At December 31, 1997, cash and cash equivalents

include USD 209.8 million, which the Companyholds as hedge on construction contracts denomi-nated in USD (see Note 2). The USD deposits arethus translated to NOK at the exchange rate on thetransaction date. If the deposits had been trans-lated to NOK at the exchange rate on the balancesheet date, an unrealized exchange gain of NOK38.5 million would have been reported.

The Company has entered into yard contracts forthe construction of four baredeck units at DalianNew Shipyard, China, and for the outfitting of RigNo. 1 at Friede Goldman Offshore, Inc., USA. In ad-dition, Ocean Rig ASA has entered into aMemorandum of Agreement with Friede Goldman

Offshore regarding the outfitting of Rig No. 2, aswell as option agreements for the outfitting of RigsNo. 3 and 4. Furthermore, the Company has ente-red into Letters of Intent for delivery of OwnerFurnished Equipment to Rig No. 1.

NOTE 1 CASH AND CASH EQUIVALENTS

Cash and cash equivalent include:

1,000 NOK 1997 1996Bank deposits 1,625,847 187,314Other short term deposits 641,381 0Total cash and cash equivalents 2,267,228 187,314

NOTE 2 CONSTRUCTION IN PROGRESS

Construction in progress consists of installments paid on yard contracts as well as other costs related to construction of the Company’s Bingo 9000 rigs. The capitalized amounts are allocated to the rigs as follows:

1,000 NOK Rig 1 Rig 2 Rig 3 Rig 4 Total Investments as of 12.31.96 49,179 – – – 49,1791997 investments 214,154 102,690 42,455 42,454 401,753Investments as of 12.31.97 263,333 102,690 42,455 42,454 450,932

Remaining contract obligations as of 12.31.97 related to construction of the rigs are as follows:

Yard contracts 1,000 USD 137,789 14,236 33,488 33,488 219,001Contracts for 1,000 USD 10,765 – – – 10,765other equipment 1,000 NOK 124,253 – – – 124,253

NOTE 3 OTHER FIXED ASSETS

1,000 NOKCost 1.1.97 0Additions 1997 430Disposals 1997 0Cost 12.31.97 430Accumulated depreciation 1.1.97 0Depreciation 1997 129Accumulated depreciation 12.31.97 129Net book value 12.31.97 301

NOTE 4 TAXES

Below is a summary of taxable loss, timing and permanent differences and calculation of deferred taxes.

1,000 NOK 1997 1996Basis for calculation of taxes payable:Income before taxes 8,244 –103Timing differences 0 0Permanent differences consisting of:

Share issue costs –156,232 –11,750Expenses not deductible 5 0

Basis for calculation of taxes payable –147,983 –11,853

Based on the above, taxes payable are NOK 0 in 1997 and 1996.

Deferred taxes:Loss carried forward 159,836 11,853Basis for calculation of deferred tax benefit 159,836 11,853Deferred tax benefit at 28% 44,754 3,319

The deferred tax benefit is in accordance with Norwegian GAAP not capitalized.

21

Other fixed assets include a long term receivable of NOK 510,000 as well as machines, EDP and other equip-ment which are depreciated on the straight line method with 30% per year. The cost and depreciation areshown below.

NOTE 5 EQUITY

Nominal share capital at December 31, 1997 is NOK 357,882,100 (357,882,100 shares at NOK 1).

The Company’s equity as of 12.31.97 is as follows:

1,000 NOK Share capital Legal reserves General reserves TotalStart up equity 9.29.96 100 – – 100Share issue 1996 46,900 187,600 – 234,500Share issue costs – – 11,750 – – 11,750Net loss 1996 – – 103 – – 103Shareholders’ equity as of 12.31.96 47,000 175,747 – 222,747Share issue 1997 310,882 – 2,338,809 2,649,691Share issue costs – – – 156,232 – 156,232Net income 1997 – – 8,244 8,244Shareholders’ equity as of 12.31.97 357,882 175,747 2,190,821 2,724,450

NOTE 6 AGREEMENTS / TRANSACTIONS WITH RELATED PARTIES

As of 12.31.97, Ocean Rig ASA has entered into the following agreements with companies that are fully or partially owned or controlled by the largest shareholder and member of the Board, Bjarne Skeie:

Scope of Payments made to related parties1,000 NOK agreement 1997 1996Technology agreement (design-package) with SSO Bingo Ltd. 94,660 68,660 26,000Agreement regarding Finders Fee with Skeie Shipping & Offshore 25,720 12,880 12,840

22

In addition, Ocean Rig is in the process of enteringinto an agreement with Hydralift ASA regardingequipment for Rig No. 1. Hydralift ASA is partiallyowned by Skeiegruppen AS and Bjarne Skeie. Alsosee Note 10 regarding the merger agreement withOcean Engineering AS which is currently owned bySSO Bingo Ltd., a wholly owned subsidiary ofSkeie Shipping & Offshore AS.

There are no outstanding receivables or payablesrelated to the above-mentioned transactions atDecember 31, 1997.

The transactions related to the above-mentionedtechnology agreement and Finders Fee are capital-ized as part of construction in progress (see Note 2).

NOTE 7COMPENSATION TO THE PRESIDENT, THE BOARD OF DIRECTORS

AND THE COMPANY’S AUDITOR

NOTE 8 INCENTIVE SCHEMES AND OTHER ITEMS RELATED TO EMPLOYEES

On October 7, 1997, the Company’s extraordinary general meeting approved a Stock Option Plan for theCompany’s Board and employees which authorizes the Board of Directors to issue up to 17 million sharesover the next five years. The options may be used as incentives for the Company’s Board and employees. Thefollowing options were issued in 1997:

Exercise price Total number of optionsMembers of the Board NOK 10.14, with an upward

adjustment of 12% per year 600,000Employees NOK 8.62, with an upward

adjustment of 12% per year 3,800,000

23

The President has been employed by Ocean RigASA since December 1, 1997, and has received a total compensation of NOK 112,500 for 1997. ThePresident has been granted options to purchase upto 1.8 million shares at an exercise price of NOK8.62, with an upward adjustment of 12% per year.If the President is requested to withdraw from hisposition, he is entitled to a compensation equi-valent to one year’s salary.

Each member of the Board of Directors has receivedcompensation of NOK 100,000 for 1997. The Boardmembers have also been granted options to pur-chase 200,000 shares at an exercise price of NOK10.14, with an upward adjustment of 12% per year.

Also see Note 8 regarding the incentive schemes forthe Company’s Board and employees.

Fees paid to the Company’s auditor were NOK107,400 in 1997.

The options must be exercised within 5 years, how-ever no later than October 6, 2002. The options cannot be transferred.

There is no compensation expense related to this in-centive scheme for 1997 as the market value of theoptions (calculated based on the difference between

market price and exercise price) and correspondingsocial security taxes are nil.

The Company has entered into an agreementregarding pensions for employees administratedby an insurance company. The 1997 costs related topensions are immaterial.

24

Acquisition of shares in Polycrest ASOctober 6, 1997 Ocean Rig entered into a “Letter ofagreement” with the owners of Polycrest AS regard-ing the acquisition of Polycrest shares by OceanRig. In 1998, the parties have agreed that all shareswill be acquired by Ocean Rig at NOK 90 million.The transaction is expected to be completed withina period of short time. Polycrest operates as a ma-nagement company for the offshore industry. Thelargest existing shareholder in Polycrest is Rasmus-sen Gruppen AS. The remaining shares are held byemployees, members of the Board and other relatedparties to Rasmussen Gruppen. Polycrest has so faroperated with an agreement for project manage-ment and marketing of the Bingo 9000 rigs.

Merger with Ocean Engineering ASOcean Engineering AS is the owner of the exclusiverights to the Bingo 9000 concept. Currently, OceanRig has acquired a design package for each of thefour rigs. In order to get the exclusive rights to useor license the use of the Bingo design and engineer-ing package, the Company has entered into anagreement whereby Ocean Engineering AS will

merge with Ocean Rig ASA as of January 1, 1998.The proposed merger requires the Company to paythe current shareholder NOK 55 million for OceanEngineering in the form of 5,424,060 shares inOcean Rig ASA at a subscription price of NOK10.14. The final settlement will be determined afterapproval of the companies’ financial statements for1997. Ocean Engineering AS is a wholly ownedsubsidiary of SSO Bingo Ltd., which is 100% heldby Skeie Shipping & Offshore AS.

Legal proceedings – conditional outcomeHyundai Heavy Industries Co. Ltd., a Korean yard,has taken legal actions against Ocean Rig ASA witha claim for compensation due to the fact that OceanRig decided not to enter into a contract for the out-fitting of the first Bingo 9000 rig at Hyundai HeavyIndustries. Hyundai has not stated the basis for theproceedings or the scope of their claim. Ocean Rigwill reject all claims. Ocean Rig is confident that theCompany has acted appropriately in connectionwith the cancellation of a Memorandum of Agree-ment with Hyundai Heavy Industries.

NOTE 10 SUBSEQUENT EVENTS

NOTE 9COMPARISON OF EQUITY ACCORDING TO ACCOUNTING PRINCIPLES

GENERALLY ACCEPTED IN NORWAY AND UNITED STATES

There are no material differences in the 1997 and 1996 equity balances between US and Norwegian accountingprinciples.

(Translation from Norwegian)We have audited the financial statements for OceanRig ASA for 1997, showing a profit for the year ofNOK 8,243,395. The financial statements, consistingof the Board of Directors’ report, profit and loss account, balance sheet, cash flow statement and notes, have been presented by the company’s Boardof Directors and its managing director.

Our responsibility is to examine the company's financial statements, the accounts and accountingrecords and other related matters.

We have performed the audit in accordance withthe relevant laws, regulations and generally accepted auditing standards. We have performedthe audit procedures which we have considered necessary in order to confirm that the annual reportand accounts do not contain material errors or mis-statements. We have examined on a sample basis

the evidence supporting the accounting items andassessed the accounting principles applied, the estimates made by management and the overall financial statements' content and presentation. Tothe extent it is required by generally acceptedauditing standards we have reviewed the com-pany's management routines and internal control.

The Board's proposed disposition of the net profit isin accordance with the requirements of the JointStock Companies' Act.

In our opinion the financial statements are pre-pared in accordance with the Joint StockCompanies' Act and present fairly the financial position of the company pr. December 31, 1997 andthe result of the operations in the accounting yearin compliance with generally accepted accountingprinciples.

25

Oslo, February 9, 1998 Coopers & Lybrand ANS

R ITA GRANLUNDSTATE AUTHOR IZED PUBL IC ACCOUNTANT

INFORMATION STRATEGY

Ocean Rig ASA informs shareholders, analysts andother interested parties on an ongoing basis aboutdevelopments, activities and significant events inthe Company. The Company is in the developmentstage, with substantial investments that will continueuntil the end of the year 2000, while the revenueflow comes in the last part of 1999. The Companyconsiders it as important to provide fairly frequentinformation about developments in the construc-tion projects, the offshore market, and the Com-pany's marketing efforts. The aim is, to the greatestextent possible, to contribute to a pricing of theCompany that reflects the underlying values andexpectations of future performance.

We are striving to achieve open and structuredcommunications with the investor market and other players. This will be accomplished throughannual reports, quarterly reports, presentations, investor meetings and press releases. The objectiveis to ensure that the same information is availableto all shareholder groups at the same time.

FINANCIAL STRATEGY

Ocean Rig aims to manage shareholders' values insuch a way that the yield achieved through divi-dends and appreciation in the share price over timeis as high as possible. The intention is to stimulateinterest in Ocean Rig as an investment opportunity.This is to create a basis for providing the Companywith access to risk capital in the future as well, ifthis proves desirable.

The completion of the Company's investment prog-ram requires extensive financing, which it will tryto raise primarily through loans. In the first yearsafter the rigs are commissioned, the focus will be onrepayment of debt and further development of the

Company. The return to shareholders in the comingyears is thus likely to be in the form of maximalgrowth in Ocean Rig's share price based on themarket's valuation of existing and future earnings.No dividend payment should be anticipated in thisperiod.

FACTORS RELEVANT TO AN EVALUATION OF OCEAN RIG ASA

At the end of 1997, the price of Ocean Rig ASA wasNOK 7.80 per share with a total of 357.9 millionshares. The corresponding figures on the first daythat the Company was quoted on the Oslo StockExchange, January 7, 1997, were 6.40 and 101.1 mil-lion shares. The total market capitalization at thesetimes was NOK 2.8 billion and NOK 647 million respectively.

Ocean Rig is not presenting any valuation of theCompany. However, a number of brokerage houses produce ongoing analysis and valu-ations, based on various assumptions, which canbe used.

In the Company's opinion an assessment of OceanRig should take into consideration the followingfactors in particular:

Market conditions The existing situation and expected trend in themarket for the Company's deepwater rigs are speci-fically described in the annual report. No furthercomment is given here.

CurrenciesThe Company's operating revenues will be pricedand invoiced in USD. The same will apply to a sub-stantial part of the operating costs relating to therigs. The raising of loans in USD is also expected toreduce exposure. The Company aims to reduce itsforeign exchange exposure through hedging trans-actions in the currency markets.

26

A high USD rate will, however, always have a positive influence on Ocean Rig's earnings inNorwegian kroner.

Day rates and operating costs Ocean Rig aims to achieve market rates when it enters into contracts. As a result of an extensiveprogram of new construction, it is also an objectivethat contracts should preferably be long-term. Thisis to ensure optimal financing of the constructionprogram.

In profitability assessments, it is essential to takeinto consideration the day rates and operating costsfor different rig types and geographical areas. TheCompany is aware that day rates for recent con-tracts are in the range of USD 190,000 to 220,000. Inaddition to the fact that there is less and less sparecapacity available, the level of the day rates will depend on where the rigs are to operate, whetherthe contracts are short- or long-term, and the typeof drilling activity for which the rigs are being con-tracted. Short-term contracts in the Norwegiansector of the North Sea have typically yielded thehighest rates up to the present.

The market for deepwater rigs is volatile, and accele-rating growth in rates has been observed recently.

Direct operating costs also depend on the geo-graphical area in which the rigs are operating. Thecost level on the Norwegian side of the North Sea isestimated to be in the range of USD 52,000–55,000per day. On the British side, costs are estimated tobe USD 15,000–20,000 lower. These levels are alsotypical for West Africa and the US Gulf. Individualdifferences of the rigs to be used will also influencecosts. With the increasing activity in the rig market,a general increase in operating costs has been observed. A number of long-term contracts thatcompensate the drilling contractor for such increa-ses have been noted.

Investment level The Company is in the process of carrying out theconstruction of the first Bingo 9000 rig. Fixed-pricecontracts have been entered into with Dalian NewShipyard for the baredeck unit, Friede GoldmanOffshore, Inc. for the outfitting, and a number ofsuppliers for the owner furnished equipment(OFE), including diesel engines, the dynamic posi-tioning system, mooring system, drilling equip-ment, etc. The total level of investment for the rigsdepends on the final specifications chosen, in-cluding possible customization. The final specific-ation will also be influenced by whether the rigs areto be operated in areas that are subject to extreme weather conditions or not. Preparation ofthe rig specifications is expected to be completedshortly. It is estimated that the total investmentframework for each of the four rigs would be aboutUSD 300-330 million.

Taxes In Norway, the tax rate for companies is 28%. Thereare special regulations for the taxation of shippingcompanies that may have the result that rigs opera-ting in the Norwegian sector of the North Sea arenot taxed before dividends are paid by theCompany. Such taxation assumes, among other factors that the rigs are organized in separate legalunits without employees and chartered to oil com-panies through a management company. TheCompany's rig fleet is expected to be organized insuch a way that separate legal entities are estab-lished for each rig.

When operating the rigs in other countries' sectors, local tax regulations will also become applicable,but would be offset against Norwegian taxes toavoid double taxation. Ocean Rig's effective tax ratemay therefore vary depending on where the rigsare operated.

27

‘‘OCEAN RIG CONSIDERS IT AS IMPORTANT TO PROVIDEFAIRLY FREQUENT INFORMATION ABOUT DEVELOPMENTS

IN THE CONSTRUCTION PROJECTS, THE OFFSHORE MARKETS,AND THE COMPANY’S MARKETING EFFORTS’’

PRO FORMA ACCOUNTS

In February 1998, Ocean Rig ASA acquired all theshares in Polycrest AS. Preparations have also beenmade for a merger of the Company with OceanEngineering AS, with effect from January 1, 1998.The Board's annual report provides more detail ofthe acquisitions. A pro forma balance sheet as ofDecember 31, 1997, as if these transactions hadtaken place at the end of 1997, is set forth below.

1,000 NOK December 31, 1997Current assets:Cash and cash equivalents 2,189,417Other current assets 14,135Total Current Assets 2,203,552

Fixed assets:Construction in progress 450,932Goodwill 76,643Other fixed assets 12,596Total Fixed Assets 540,171

TOTAL ASSETS 2,743,724

Current liabilities:Accounts payable 4,297Other current liabilities 9,999Total Current Liabilities 14,296

Shareholders’ equity:Share capital 363,306Other shareholders’ equity 2,366,122Total Shareholders’ Equity 2,729,428

TOTAL LIABILITIES ANDSHAREHOLDERS’ EQUITY 2,743,724

SHARES AND SHARE CAPITAL

Transferability of the sharesOcean Rig ASA operates with a single class of share. There are no limitations on the transferabilityof the shares.

Largest shareholdersNumber % of

of totalshares share

capital1. Skeie Group 48,577,840 13.6%2. State Street Bank – Nom 23,814,126 6.7%3. Boston Safe Deposit – Nom 14,403,161 4.0%4. Storebrand Livsforsikring

– Aksjefondet 8,734,500 2.4%5. Morgan Guaranty – Nom 7,747,292 2.2%6. Aksjefondet K – Avkastning 7,420,741 2.1%7. Verdipapirfondet Delphi 7,099,000 2.0%8. Industrifinans – Aktiv 6,820,741 1.9%9. Just Invest AS 6,070,839 1.7%

10. DS Holding AS 5,860,339 1.6%11. Union Bank of Switzerland 5,619,750 1.6%12. Chase Manhattan – Nom 5,258,187 1.5%13. Verdipapirfondet Avanse 5,233,456 1.5%14. Sira PSV KS 5,008,750 1.4%15. Leif Høegh & Co 4,790,000 1.3%16. Coutts & Co S/A UBCS 4,442,309 1.2%17. Fokus Bank ASA 3,329,174 0.9%18. Samvirke Skadeforsikring 3,277,609 0.9%19. Samvirke Livsforsikring 3,218,297 0.9%Total – largest shareholders 176,726,111 49.3%

28

Development of the share capitalDate Change in Share capital Number Nominal Comment/(resolution) share capital after change of shares value transactionSep. 26, 1996 100,000 100,000 20,000 5.00 Cash placingOct. 4, 1996 – 100,000 100,000 1.00 Split 1:5Oct. 4, 1996 900,000 1,000,000 1,000,000 1.00 Cash placingOct. 29, 1996 5,200,000 6,200,000 6,200,000 1.00 Non-cash placingOct. 29, 1996 6,800,000 13,000,000 13,000,000 1.00 Cash placingNov. 6, 1996 34,000,000 47,000,000 47,000,000 1.00 Cash placingDec. 27, 1996 54,050,000 101,050,000 101,050,000 1.00 Offer and right issueOct. 7, 1997 252,625,000 353,675,000 353,675,000 1.00 Offer and right issueOct. 7, 1997 4,207,100 357,882,100 357,882,100 1.00 Non-cash placing

29

‘‘AS OF DECEMBER 31, 1997OCEAN RIG HAD 3,922 SHAREHOLDERS –

THE 20 LARGEST REPRESENTEDAPPROXIMATELY 50% OF THE SHARE CAPITAL’’

Shares distributed by shareholder groupTotal shares Number % of total % of total owned by of share- shareshareholder shareholders holders capital1 – 100 27 0.7% 0.0%101 – 1,000 717 18.3% 0.2%1,001 – 10,000 2,020 51.5% 2.7%10,001 – 100,000 875 22.3% 8.1%100,001 – 1,000,000 227 5.8% 21.5%1,000,001 – 10,000,000 53 1.3% 43.2%Over 10,000,000 3 0.1% 24.3%Totalt 3,922 100% 100%

Shares distributed by countryCountry Number % of total % of total

of share- shareshareholders holders capital

Norway 3,812 97.2% 80.0%USA 26 0.7% 8.5%UK 27 0.6% 4.8%Belgium 3 0.1% 2.2%Switzerland 7 0.2% 1.9%Other countries 47 1.2% 2.6%Total 3,922 100% 100%Holding outside Norway 812 2.8% 20%

Share price trend Since Ocean Rig's introduction on the Oslo StockExchange's SMB-list on January 8, 1997, the trend inthe share price has been as shown in the figure onthe next page.

NOK 1997Highest price 16.07Lowest price 4.89Closing price 7.80

TRADING OF THE SHARE

Ocean Rig ASA has been quoted on the Oslo StockExchange’s SMB-list since January 1997. At the la-test when the Company's first Bingo 9000 rig startsproduction in the autumn of 1999, an applicationwill be made for a transfer to the main list. Thenumber of shareholders, the capitalized value andthe Company's international orientation indicatethat in the longer term it should be quoted on themain list. The Company is not listed on other stockexchanges, but has an active approach towards fo-reign investors.

In 1997, a total of 417,564,000 Ocean Rig shareswere traded on the Oslo Stock Exchange, resultingin a turnover of approximately 340%.

30

ADJUSTMENT FOR ANNUAL CHANGES IN TAXED EQUITY (RISK ADJUSTMENT)

The RISK adjustment is an annual tax-related ad-justment of the opening value of the share, and isapplicable only to Norwegian shareholders. TheRISK adjustment is made on January 1 each year.Those who hold shares on this date can claim theRISK amount. The RISK amount per share for theyears 1996–1997 is as follows:

01.01.97 001.01.98 (Estimated amount) 0

TAXATION

Apart from the RISK adjustment, it is the followingprovisions in particular that influence the tax situa-tion for investors:

Taxation of dividends

Any dividend paid by Ocean Rig to shareholders

resident in Norway is regarded at the outset as tax-

able income. However, through a tax credit system

established to avoid double taxation of companies

and their shareholders, the tax on dividends for

such shareholders will in practice be payable by the

Company.

For dividends paid to non-resident shareholders, a

withholding tax of 25% is payable unless otherwise

provided for in an applicable tax convention.

Norway has entered into tax conventions with a

number of countries, and in general Norway's right

to claim withholding tax is limited to 15%. There

are special regulations for shares registered by in-

vestment managers.

Wealth tax For shareholders subject to wealth tax inNorway, the shares are included in taxable wealth. Natural persons resident in Norway aresubject to wealth tax, while limited-liability com-panies are exempted.

Shares quoted on the Oslo Stock Exchange’sSMB-list are valued at 30% of the quoted valueon January 1, in the assessment year. From the1998 tax year onwards, this rate has been changed to 70%. The marginal rate for the wealthtax amounts to 1.5%.

Non-resident shareholders are not subject toNorwegian wealth tax, unless the shares have aparticular relationship to business that the share-holder carries out in Norway.

INCENTIVE PLANS

At an extraordinary general meeting held by theCompany on October 7, 1997, the Board of Directorswas authorized to increase the share capital inOcean Rig ASA by up to NOK 17 million throughthe issue of up to 17 million shares with a nominalvalue of NOK 1 per share through one or more share offerings. The authorization was given for usein connection with incentive plans for employeesand members of the Board in the Company. The authorization is in force up to October 7, 2002.

As a result of the plan, a total of 3,800,000 optionshave been issued to executive employees, distri-buted as follows:

Name/Position Number of optionsChristian Huseby, President 1,800,000Arne Martin Bolstad, Chief Op. Officer 1,000,000Tore Valderhaug, Chief Financial Officer 1,000,000Total 3,800,000

The cost price per share is the market value at thetime of allotment, NOK 8.62, with an upward ad-justment of 1% per month up to the exercise of theoptions.

The incentive plans will be extended to include other executive employees as well as key person-nel. The objective is to establish shared criteria forsuccess for shareholders and executive employees.The plan is also considered important to supportrecruitment of experienced and highly capable per-sonnel in a job market with a great shortage of qualified people.

SHARES OWNED BY MEMBERS OF THE BOARD, THE PRESIDENT AND THE AUDITORS

Name Number of sharesThe Board:Tom B. Knudsen, Chairman 0Bjarne Skeie * 48,577,840J. Frithjof Skouverøe * 20,000Christian Huseby, President 0Auditors: Coopers & Lybrand ANSGeneral partners and employees 0

* Includes shares owned by companies controlled by the Board member orimmediate family.

PRACTICAL INFORMATION

The general meeting in Ocean Rig ASA for 1997 is held in Oslo on April 1, 1998. Ocean Rig aims toprovide financial reports to the market each quar-ter. Interim results for 1998 are scheduled to be announced on May 25, August 6, and November 8,respectively.

31

DEVELOPMENT IN SHARE PRICE

S INCE OCEAN R IG ’ S INTRODUCT ION ON THE OSLO STOCK EXCHANGE ’S SMB -L IST IN JANUARY 8 , 1997 , THETREND IN THE SHARE PR ICE HAS BEEN AS SHOWN IN THE F IGURE BELOW.

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0JAN. 97 FEB. 97 MAR. 97 APR. 97 MAY 97 JUN. 97 JUL. 97 AUG. 97 OCT. 97 NOV. 97 DEC. 97 JAN. 98 FEB. 98

3332

WILLY TØRHAUGVICE PRES IDENT

OPERAT IONSOCEAN R IG ASA

OSLO

GRO BAKSTADCORPORATE

F INANC IAL MANAGER

NINA E. TVEITAQA / HEALTH / SAFETY

MANAGEROCEAN R IG ASA

STAVANGER

PHILIPSTRAUMSHEIM

CORPORATE TREASURER

STURLA FJORANVICE PRES IDENT

ENG INEER ING ANDPROJECTS

OCEAN R IG ASAPASCAGOULA

ANTZ HELLRANDPROJECT MANAGER

OCEAN R IG ASASANDEFJORD

ROLF K. YTRELANDMANAG ING D IRECTOR

OCEAN R IG ASSTAVANGER

AGE: 54. EDUCATION: SENIOR ENGINEER,

TECHNICAL ENGINEER.EXPERIENCE: MANAGING

DIRECTOR, POLYCREST AS,TECHNICAL DIRECTOR,

POLYCREST AS,TECHNICAL / OP. DIRECTOR,

DOLPHIN.

ROBERT M.WARRACK

MANAGING DIRECTOROCEAN RIG LTD.

ABERDEENAGE: 51.

EDUCATION: MASTER OFSCIENCE, MECHANICAL

ENGINEERING, HERRIOT WATT.EXPERIENCE: VICE PRESIDENTCONTRACT & SALES, SONAT.

GENERAL MANAGER BUSINESSDEVELOPMENT, SMEDVIG

ARNE MART IN BOLSTADCHIEF OPERAT ING OFF ICER

AGE : 53 . EDUCAT ION : MASTER OF SC IENCE ,MECHAN ICAL ENG INEER , W ISCONS IN .

EXPER IENCE : PROJECT D IRECTOR , KVÆRNER O I L AND GAS ( JOTUN PROJECT ) ,

PROJECT D IRECTOR , GOLAR NOR OFFSHORE ,TECHN ICAL D IRECTOR , ARCADE DR ILL ING .

TOMAS NORRBYSEN IOR V ICE -PRES IDENT, MARKET ING

AGE : 44 . EDUCAT ION : MASTER OF BUS INESSADM IN ISTRAT ION , NORWEG IAN SCHOOL OF

MANAGEMENT, GRADUATE ENG INEER , CHALMERS UN IVERS ITY OF TECHNOLOGY.

EXPER IENCE : MANAG ING D IRECTOR , TOR DR IL -L ING INC . , MARKET ING D IRECTOR , W ILR IG AS .

TORE VALDERHAUGCHIEF F INANC IAL D IRECTOR

AGE : 38 . EDUCAT ION : CERT I F IED PUBL IC ACCOUNTANT. EXPER IENCE : F INANCE

D IRECTOR , UN ITOR ASA , AUD IT MANAGER ,ARTHUR ANDERSEN & CO , OSLO

CHRISTIAN HUSEBYPRESIDENT

AGE: 39. EDUCATION: MASTER OF BUSINESS ADMINISTRATION, NORWEGIAN SCHOOL OF

MANAGEMENT, CERTIFIED PUBLIC ACCOUNTANT. EXPERIENCE: FINANCE DIRECTOR,

PETROLEUM GEO SERVICES AS, SENIOR ACCOUNTANT, CHRISTIANIA BANK OG

KREDITKASSE.

34

OCEAN RIG ASA aims to focus its operations onspecific market niches to derive maximum benefitsfrom its competitive advantage. By concentratingon the most profitable segments in the drilling market, it will exploit its technological competenceto be well positioned to offer the best services to itscustomers.

FAVORABLE CONDITIONS IN THE DEEPWATER MARKET

Market conditions for deepwater drilling are currently favorable, for reasons that include thesubstantial increase in demand for rigs and othervessels in this market recently, while supply has remained relatively constant. There is a growingneed for offshore drilling at increasing waterdepths. Ocean Rig wishes to gain the maximum advantage from these conditions, which representthe basis for founding the Company and for thechoice of its rig design. To exploit the current market situation, Ocean Rig aims to negotiate long-term contracts for its rigs at advantageous day rates. Ocean Rig will strive to achieve a balancedcontract portfolio, in terms of both the duration andthe expiration of the contracts. This will maximizethe Company's potential for ensuring steady cashflows and reduce its exposure to market fluctu-ations, providing a better foundation for expandingits activities in the future.

FLEXIBILITY OF THE RIG FLEET

To be in a strong position to compete for contractswith the oil companies, Ocean Rig has chosen to focus on the flexibility of its rig fleet. This will allowthe Company to position its products in the geographical areas where it can achieve the optimalreturns at any time. The selection of the rig designis extremely important in this regard, and was oneof the key factors in the decision to use the Bingo9000 concept. A baredeck unit of the Bingo 9000type outfitted to a semisubmersible rig that can beused in both exploratory, development and produc-tion drilling, and in all geographical areas wherethere is a need for deepweater operations. Whenthe Company's units are completed as fifth-gene-ration drilling rigs, they will be among the mosttechnically advanced rigs available on the market.

INTEGRATED DRILLING CONTRACTOR INTEGRATED DRILLING SERVICES

To foster the growth of the Company and to be in aposition to market the rigs in the most effectiveway possible, Ocean Rig intends to build up anintegrated and highly skilled organization. To takecare of the operational side of the Company,Ocean Rig has established a technical and oper-ational management that will be ready to imple-ment the contracts that the Company expects to receive when the rigs are complete. In addition,Ocean Rig is creating an engineer-based compe-tence group to manage the construction programuntil all rigs are completed in 4th quarter 2000.The project organization will be responsible for investments of approximately 1,2 billion USD.Ocean Rig has appointed or otherwise gained access to highly competent technical personnelwith a great deal of industry experience and experience in carrying out this type of construc-tion projects.

IN TOUCH WITH THE MARKET

It is crucial for Ocean Rig to have a market-orientedorganization that can secure contracts for the fourrigs now under construction for operations in deep-water and harsh environments. It is therefore important for the Company to establish and deve-lop long-term relationships with major internatio-nal oil companies, with the aim of becoming a pre-ferred vendor of the services it offers. Ocean Rigwill establish itself on the international market,partly through strategic alliances with local part-ners in charge of marketing and operations, andpartly by acquiring companies engaged in similaroperations. Ocean Rig believes that as an inte-

grated drilling company, after the combinationwith Ocean Rig AS (Polycrest) in 1998, it will bein a position to strengthen its presence in the off-shore industry.

TECHNOLOGICAL EXPERTISE

To be the preferred vendor of technologically advanced services in the segments in which theCompany operates, Ocean Rig intends to establishclose ties with centers of expertise that can contri-bute to its technological development. Through thiscollaboration and exchange of competence, theCompany aims to develop solutions that realize thepotential offered by the latest technology. It willalso be natural for Ocean Rig to continue recruitingemployees from such environments. The Companyaims to attract leading expertise within the core areas in which it is to operate, and to recruit peoplewho can develop the Company in accordance withits goals and strategy. Value creation is the key objective for the Company's personnel policy;through its employees Ocean Rig will develop itsresources and be in a position to offer significantvalue to its customers.

35

‘‘OCEAN RIG AIMS TO FOCUS ITS OPERATIONSON SPECIFIC MARKET NICHES

TO DERIVE MAXIMUM BENEFITS FROM ITSCOMPETITIVE ADVANTAGES’’

36

OIL AND GAS INDUSTRY FUNDAMENTALS

The market for services in offshore drilling, floatingproduction, and offshore construction is primarilydetermined by how much the oil and gas compa-nies invest in exploration, development, and pro-duction, as well as the availability of drilling plat-forms and floating production vessels. The indus-try's investments in exploration, development, andproduction are in turn controlled by the cash flowof the oil and gas producers, which is primarily determined by oil and gas prices and the produc-tion volume. A number of political and economicfactors influence oil and gas prices, including thedemand for oil and gas on the global market, pro-duction levels, government plans for explorationand development of the reserves and political fac-tors in the producer countries.

In 1997, oil prices have been at an acceptable, although declining, level throughout the year, buthave fallen substantially in 1998. So far, however,there is no indication that operators have reducedtheir activity in exploratory drilling. Only a longerperiod of low oil prices will be able to influence thedemand for drilling rigs. However, it is expectedthat such a decline in demand would be temporaryand primarily related to exploratory drilling. Thisis due to the oil companies' need to secure new reserves, as well as production drilling now inprogress, which will continue in fields that have already been approved for development.

TRENDS IN THE RIG MARKET IN 1997

In 1997, capacity utilization for the drilling rigs available has approached 100% in all markets andfor all types of rigs. The demand for rigs has been

high throughout the year, and sizeable drilling programs have been postponed as a result of thelack of rig capacity. It looks as though this situationwill continue in 1998. This has led to an increase inboth the rate level and the duration of new drillingcontracts.

A substantial number of new contracts, conversionsand upgrades of rigs have been decided on in 1997.Most of these are, however, related to long-termdrilling contracts from the date of delivery.

THE DEEPWATER MARKET

At the end of 1997, there were 51 drilling rigs with awater-depth capacity of more than 2,500 feet inoperation. At the same time there were 11 rigs undergoing upgrades, while 28 newbuildings andconversions were on order. In total there are thus 90floating rigs with this capacity. Two years ago, thisfigure was 36. All rigs with the capacity to drill atwater depths greater than 5,000 feet (1,500 meters),apart from Ocean Rig's newbuildings, already havelong-term contracts. Based on this, Ocean Rigshould be in a good position with regard to newcontracts.

The semisubmersible rigs that Ocean Rig has underconstruction are suitable for operations in harsh en-vironments and great water depths. Apart from theCompany's rigs, there are only five semisubmersiblerigs with this water-depth capacity under construc-tion, all of which have contracts from delivery. A number of drilling contractors have started con-version of older rigs, which have previously beenin operation on other markets. Our evaluation is,however, that these do not achieve the functionalityand quality of the new deepwater rigs.

At greater sea depths, drillships represent thegreatest competition for our rigs. These are, how-ever, regarded as not that suitable for areas withharsh environments.

THE INDIVIDUAL MARKETS

In North-West Europe (Atlantic Margin), deep-water licenses have been allocated in areas west ofIreland, west of Shetland, and in deepwater in theNorwegian Sea. New allocations are also expectedon the Faeroes and Greenland Continental shelves,as well as the so-called White Zone between Shet-land and the Faeroes. In these areas, the focus hasbeen on exploratory drilling. The licenses havebeen awarded to a number of operators that allneed deepwater rigs to drill the mandatory wells.However, only the largest operators have a full pro-gram for a deepwater rig over several years. It is expected that a number of operators will collabo-rate when chartering a rig for their programs.

When significant discoveries are made, we expect a

growing market for drilling of extension and pro-duction wells in these areas.

In the Gulf of Mexico (GoM) in the USA thedeepwater market is considerably larger. Todaythere are 22 semisubmersible rigs and drillshipswith a water-depth capacity of more than 2,500feet in operation in this area. When the rigs andships under conversion/upgrading and construc-tion are delivered, the number will increase to 40.This represents nearly half of the global fleet ofsuch rigs. Most newbuildings for the GoM aredrillships - only three semisubmersible rigs areunder construction.

In the GoM there are currently more than 600 licensed blocks at water depths of between 1,000and 3,000 feet where drilling has not yet started.Half of these expire in the year 2000/2001. At water depths of more than 3,000 feet, there areabout 2,700 unused licenses with a deadline within the next eight years.

The GoM is the most important market for deep-

37

OPENING UP THE WORLD’S DEEPWATER RESERVE BASE

THE ATLANT IC MARG IN –WEST OF SHETLAND ,VOER ING PLATEAU , UK 17TH ROUND ,

ROCKALL TROUGH ,FAROE I SLANDS .

GULF OF MEX ICO – THEDEEPWATER GULF,

BEL IEVED TO HOLD UPTO THE EQU IVALENT

OF 25 B I LL ION BARRELSOF O I L .

BRAZ I L – HOME TOTHE WORLD ’S MOST

ESTABL ISHEDDEEPWATERAC I T I V I TY.

ADR IAT IC SEA –I TALY ’ S AG IP

HAS EXPLOREDFOR O I L IN NEARLY

3 ,300 FT.

NORTHWEST AUSTRAL IA– EXXON CORP. AND

BROKEN H I LLPROPR IETARY CO . ARE

CONS IDER ING DEVELOP-MENT OF A F I ELD .

WEST AFRICA – WITH GEO-LOGY SIMILAR TO BRAZIL,

WEST AFRICA HAS BECOMEONE OF THE WORLD’S

HOTTEST OFFSHORE PLAYSAFTER RECENT DISCOVERIES.

‘‘THE DEMAND FOR RIGS HAS BEEN HIGH THROUGHOUTTHE YEAR, AND DRILLING PROGRAMS HAVE BEEN POSTPONED

AS A RESULT OF LACK OF DRILLING CAPACITY’’

SOURCE: CHRONICLE REPORTS / PARETO FONDS.

38

water rigs. As a result of the fact that rig capacityhas currently been chartered almost exclusively forexploratory drilling, it is assumed that this marketwill be strengthened further in the years ahead. Asdiscoveries are made in this area, the developmentof the fields will require a large number of rigs inaddition to the need for continued exploratory capacity. A total of 57 oil companies have licensesfor water depths of more than 1,500 feet. Only approximately 20 of these have currently securedrig capacity for exploring their licensed areas.

In West Africa, there are currently eight rigs andships with a water-depth capacity of more than2,500 feet in operation along the West Coast.Discoveries have been made in deepwater, especi-ally in Angola, where Elf as operator has madethree major discoveries. West Africa includes verylarge areas, and it is expected that the need fordeepwater rigs will increase in the years to come.

In Brazil, Petrobras has up to now been the onlyoperator on its shelf. The company has 17 deep-water rigs in operation. In addition there are sevennewbuildings from different contractors that are todrill on the Brazilian shelf when they are deliveredfrom the respective shipyards. Petrobras is current-ly expanding its production capacity, with a total of24 floating production units under construction orconversion at shipyards in different parts of theworld.

A decision has also been made to allocate licensesto foreign companies for exploration and produc-tion on the Brazilian shelf. These companies willalso need capacity for deepwater drilling.

SUBSEA COMPLETIONS

Semisubmersible rigs are considered as more suit-able for production drilling and subsea comp-letions than drillships due to the favorable motioncharacteristics and deck space. Such subsea comp-letions have been carried out since 1961 on a total ofabout 1,100 wells. In a survey carried out by InfieldSystem Ltd. in London, it was estimated that morethan 2,200 wells would be completed under waterduring the next eight years, primarily in deepwater.This would imply utilization of about 60–70 rigsper year.

DEEPWATERMARKET

FIGURES IN MILL. 1996 2001 E AVG.BARRELS PER DAY GROWTH

OIL DEMAND 71.0 81.0 2.8%

ONSHORE – 48.6 52.0 1.4%SOURCES

OFFSHORE – 22.4 29.0 5.9%SOURCES

DEEPWATER 1.0 5.0 100%> 3.000 FT.

SOURCE: ALFRED BERG RESEARCH(BASED ON CONSENSUS OIL MARKET FORECAST)

SUMMARY

Today there is only a 3% reserve in production capacity in the world. Existing fields produce lesseach year, while the demand for oil is increasing.This implies that new capacity equivalent to theproduction of 3 million barrels per day must be developed every year. On this basis, the oil compa-nies have few other alternatives but to drill. A largepart of this drilling will take place in deepwaterwhere it is expected to find large reserves. OceanRig’s semisubmersible rigs are constructed for operations in deepwater and harsh environments.

The market for deepwater rigs is still in its infancy.Provided that the macroeconomic parameters suchas the oil price, global consumption, and economictrends in general do not worsen substantially, weexpect that the favorable market for drilling rigsthat we have seen in the past few years will cont-inue, or strengthen further.

39

EXCESS WW OIL PRODUCTION CAPACITY

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

40%

35%

30%

25%

20%

15%

10%

5%

0%

37%

3%

‘‘NEW CAPACITY EQUIVALENT TO THE PRODUCTION OF3 MILLION BARRELS PER DAY MUST BE DEVELOPED EVERY YEAR.

A LARGE PART OF THE DRILLING WILL TAKE PLACE IN DEEPWATERWHERE IT IS EXPECTED TO FIND LARGE RESERVES.’’

SOURCE: P / W OIL MARKET INTELLIGENCE & IEA

40

The first four projects involve the construction ofthe supporting structure and deck (baredeck units)of the type Bingo 9000, which can be completed asfifth-generation semisubmersible deepwater rigs.

In the baredeck version, the Bingo 9000 platformcan be outfitted for a number of different operatio-nal requirements, including exploratory, develop-ment and production drilling.

HISTORY

In the late 1970s, Trosvik Mekaniske Verksted deve-loped a design for a smaller type of Bingo rig(Bingo 3000). Five of these units have been built. In1983 the company Laly ordered the design for aBingo 7000, and started construction of a unit ofthis type. In all, about 60,000 engineering hourswere dedicated to this work, and about half of theconstruction work on the rig had been completedwhen Laly went bankrupt in 1986. This in turn resulted in the bankruptcy of Trosvik MekaniskeVerksted.

In 1986, the former Skeie Group (which later became the Maritime Group, and now is part ofAker Maritime) bought the rights to the Bingo de-sign from Trosvik Mekaniske Verksted. In 1989/90Skeie Shipping & Offshore AS and KCA DrillingLtd. founded the company KCA Bingo Ltd. (nowSSO Bingo Ltd.), in which each of the parties owned 50% of the shares. KCA Bingo Ltd. commis-sioned Norwegian Rig Consultants to do furtherdevelopment work on the design, resulting in aBingo FPV 7000 version that complied with the la-test requirements for floating production laid downby Det Norske Veritas. (Norwegian Rig Consult-ants has now become Maritime Tentech AS, a partof Aker Maritime.) After investments of about NOK30 million, the development project ended in 1992.

Later, KCA Bingo Ltd. made some minor adjust-ments to the FPV 7000 design.

In 1995, Skeie Shipping & Offshore acquired all theshares and liabilities in KCA Bingo Ltd., and changed its name to SSO Bingo Ltd. SSO Bingocontinued the development of the Bingo design. Bythe summer of 1997, after investments totallingabout NOK 37 million, the company had developedboth the Bingo 8000 and the Bingo 9000 as well as aspecially constructed Bingo 8000.

Since then, the right to the use of the design hasbeen transferred to Ocean Engineering, which iswholly owned by SSO Bingo Limited. So far, OceanRig has bought a design package for each of thefour rigs. However, the Company is interested in acquiring the rights that are currently held byOcean Engineering. An agreement on a merger ofOcean Engineering with Ocean Rig from 1 January1998 has been signed, in terms of which Ocean Rigis the acquiring company.

THE BINGO 9000 CONCEPT

The Bingo 9000 is a twin-pontoon hull with six columns. The pontoons are coupled with aft and foretransfer bracing. Achieving simplified constructionand material handling was an important objective ofthe design work. The plate and strut sizes over the entire rig have been standardized as far as possible.Structural symmetry was also emphasized. The plat-form has been designed to achieve the structuralsymmetry over the longitudinal and transverse axes.

The inherent flexibility of the design was a key factorin Ocean Rig's choice. This makes it possible to use thefully equipped rigs in a wide variety of applications.

The Bingo 9000 is based on the earlier Bingo 7000 and8000, but with a larger deck area and load capacitythan its predecessor. Bingo 9000 is designed for dril-

BINGO 9000 – DESIGN SPECIFICATIONS

ling in areas with deepwater and extreme weatherconditions, and satisfies the latest and most string-ent requirements for such drilling rigs. Equippedwith dynamic positioning, the Bingo 9000 will beparticularly attractive for ultra water depths andsubsea completion. In addition, the Bingo 9000 has a

number of technical improvements over its prede-cessor, including structures providing greater capa-city, an improved positioning response, and betterstability. Every aspect of the design focuses on maxi-mum safety for the personnel and on avoiding pol-lution of the environment.

41

DESIGN / SUPPLIERS ODECO AKER H.4.2. M.E.4500 BINGO 8000 BINGO 9000

DECK AREA, M2 (NET) 1,880 5,160 5,000 5,000 5,300

DISPLACEMENT, MT 46,358 38,000 42,000 39,317 50,000

OPERATING DRAFT, MT 25 23,5 23,5 23,75 23,75

VARIABLE DECK LOAD, MT 4,500 4,300 4,500 4,500 6,000

WATER DEPTH, M DP 1,450 600 DP 1,800 DP 2,000 DP 3,000

MAIN POWER, KW 28,000 12,800 28,000 28,000 MAX 60,000

PROPULSION, KW 8x2,950 4x2,570 8x2,350 8x2,400 8x5,500

MOORING LINES, M 8x1,600 8x2,200 8x2,400 8x1,700 8x2,400

DERRICK CAPACITY, MN LBS 1.8 1.5 1.5 1.75 1.75

HOOK LOAD, MT 750 650 650 750 750

DRILLING DEPTH, M 7,600 7,600 9,000 10,000 10,000

LIQ. MUD, T 1,500 3,200 1,000 1,650 1,680

BULK MUD, M3 750 460 800 800 800

FUEL, M3 3,500 2,400 2,600 3,500 2,500

POT. WATER, MT 225 700 720 750 700

DRLG. WATER, MT 2,500 2,000 1,500 1,500 1,500

CRANES, MT 3x55 2x45 2x60 2x70 2x75

BAREDECK UNIT

EXPLORATION / DEVELOPMENT PRODUCTION MAINTENANCE / OTHER

5TH GENERATION SEMISUBMERSIBLE

(MULTIPURPOSE SEMISUBMERSIBLE)

EXPLORATION DRILLING

INSTALL SUBSEA TEMPLATES

DEVELOPMENT DRILLING

WELL COMPLETION

SIMULTANEOUS OPERATIONS

(MULTIPURPOSE UNIT)

FLOATING

PRODUCTION UNIT

THE BINGO 9000 DESIGN CAN

BE EQUIPPED WITH PROCESS

FACILITIES CAPABLE OF A

THROUGHPUT OF 100,000 B.O.D.

OR MORE

TEST PRODUCTION

EARLY PRODUCTION

LIFETIME PRODUCTION

SPECIAL SERVICES

MAINTENANCE /

WORKOVER

CAPABLE OF BEINGUSED AS A:

FLOATING POWERSTATION

FLOATING BASE FORHAZARDOUS

PROCESSING PLANTSUCH AS METHANOL

FLOTEL

NORTH SEA SPECIFICATIONS

‘‘THE INHERENT FLEXIBILITYOF THE BINGO 9000 CONCEPT WAS A KEY FACTOR

IN OCEAN RIG’S CHOICE OF DESIGN’’

42 43

INTRODUCTION

The main objective for the completion of theCompany's deepwater rigs is to ensure that the construction takes place in compliance with the stipulated quality and environmental requirements,delivery schedules, and cost estimates. The pre-requisite for this is a competent project organization,structured and detailed project management in allaspects of the work, and highly qualified businesspartners with adequate resources. Since Ocean RigASA established its own technical operations de-partment in December 1997, the development of theproject organization has been a high-priority task.

As a result of the very low activity level related toconstruction of offshore rigs in the past 10 to 15 years,there are currently few shipyards that have themanagement and organizational competence and capacity to carry out extensive offshore projects. Inthis connection it should be emphasized that there

are a number of challenges related to buildingrigs compared with ships. This applies to thequality requirements for engineering and con-struction work, the practical application of safety analysis, the implementation of opera-tional requirements, and ensuring adequatestability and supporting capacity, among otherfactors. In addition there has been a very highlevel of shipbuilding activity in recent years,which – regardless of competence – results in ashortage of spare shipyard capacity. TheCompany's strategy for project implement-ation takes these factors into consideration.

‘‘DALIAN NEW SHIPYARD IS OWNED BYTHE CHINA STATE SHIPBUILDING CORPORATION (CSSC) – AND IS

CSSC’S LARGEST YARD, AND WIDELY REGARDED AS ITS BEST’’

44

CONTRACT STRUCTURE

Ocean Rig ASA was founded as a result of a contract with Dalian New Shipyard (Dalian) forthe construction of a Bingo 9000 baredeck unit. Atthis stage neither the financial nor the operativeprerequisites for starting construction of completefifth-generation rigs were in place. During the firsthalf year of 1997, Ocean Rig changed its strategy,and it was decided to develop the Company into acomplete drilling rig contractor. As a result, thenecessary technical and administrative expertisewas brought into the Company. Follow-up of theconstruction, which was initially carried out byOcean Rig AS (Polycrest) and Rasmussen Mari-time Services AS (RMS), has functioned satisfact-orily in the main throughout the period. For theCompany's extensive plans to succeed, however, itis vital that the projects are actively managed byfunctions and people who are employed by theCompany, and hold direct responsibility for the final product. In terms of an agreement with RMS,the previous management contract has thereforebeen concluded and replaced by a service contractin which RMS provides resources as needed, butOcean Rig ASA manages the project. In addition,the Company has entered into a service agreementwith Allum Marine AS for delivery of engineeringservices.

The construction of the Bingo 9000 rigs consistsof a number of activities:

• Engineering and detailed design• Construction of the baredeck units at Dalian• Purchase and transport of substantial parts of

the equipment for the rig from various supp-liers.

• Construction of the topside, installation of the

equipment packages and testing and adjust-ment of the fully outfitted Bingo 9000 rig atFriede Goldman Offshore (FGO) in the USA.

In addition, the rig must be towed from China tothe USA. The contract structure is illustrated in thefigure on the following page.

The various parts of the construction process arediscussed in more detail below. It must be emphasized that even though a constructionprocess that is distributed among several con-tractors may appear less effective than a turnkeycontract at one shipyard, this is a method thathas been applied in rig construction for a num-ber of years. A distributed construction processgives the Company more scope for ensuring thatthe Company's operative objectives are taken careof. There is also some flexibility regarding thetime between the completion of the baredeckunit and the beginning of the outfitting,which is an advantage for the project. For thesubsequent rigs, some changes may be made re-garding work to be carried out in China and inthe USA respectively to optimize the construc-tion process further. However, these are prima-rily decisions to be made by FGO in cooperationwith Ocean Rig ASA and Dalian.

PROJECT ORGANIZATION

Ocean Rig ASA has appointed or otherwise gained access to highly competent technical per-sonnel with a great deal of experience in carryingout this type of construction projects. Beyond focusing on the follow-up of the constructioncontracts, the technical operations division hasplaced great emphasis on establishing functions

45

for health, environment, and safety as well asquality assurance, in addition to detailed track-ing of the engineering and purchasing process.Efforts are, however, being made to implementboth the detailed design and engineeringthrough an integrated partnership with FGO andother units in the Friede Goldman Group.

DALIAN NEW SHIPYARD

Dalian New Shipyard (Dalian) is owned by theChina State Shipbuilding Corporation (CSSC),and is in the Lianoning Province of northeastChina. By all standards, it is a modern shipyard.It received ISO 9001 certification from DetNorske Veritas in 1992, and meets today the standards set by the world's major ship classi-fication organizations. Dalian is CSSC's largestyard, and widely regarded as its best.

Dalian has a workforce of about 5,000, and covers an area of about 1,000,000 square meters.Dalian has the capacity to build ships and shipstructures of up to 300,000 dwt, and has a sepa-rate dock for building offshore structures.

The yard has extensive experience in ship-building, and has good, long-standing relation-ships with a number of Norwegian shippingcompanies. Offshore structures that Dalian hasbuilt include a number of jackup rigs.

The yard's contracts with Ocean Rig ASA are related only to the construction of the steel struc-tures for the baredeck unit. The steel has beenpurchased from quality vendors in Sweden andGermany. All the outfitting of the rigs, includingthe baredeck unit, is to be carried out by FriedeGoldman Offshore in the USA.

A site team consisting of 12 people, of whomeight have special expertise in welding, is carry-ing out follow-up of the construction project atDalian. This is to ensure effective control of thework carried out. At the same time, Ocean Rigwishes to transfer competence and experience tothe local workers. This will bring about a contin-uous improvement in quality and greater effici-ency throughout the construction projects, whichis in the interest of both parties. The teamworkwith Dalian has been functioning extremely wellthroughout the period.

BINGO 9000 CONTRACT STRUCTURE

BINGO 9000

HSE / QAPROJECT SERVICES

RASMUSSENMARITIMESERVICES

SERVICE AGREEMENT

ALLUM MARINE ASENGINEERING

SERVICES

DALIAN NEW SHIPYARD

BAREDECK

FRIEDE GOLDMANOFFSHORE

OUTFITTINGCOMPLETION

VARIOUSSUPPLIERSO.F.E. / TOWING

‘‘A DISTRIBUTED CONSTRUCTION PROCESS GIVESOCEAN RIG MORE SCOPE FOR ENSURING THAT THE COMPANY’S

OPERATIVE OBJECTIVES ARE TAKEN CARE OF’’

46 47

progress of the project according to schedule,with delivery of the first Bingo 9000 rig inAugust, 1999.

Ocean Rig is planning to establish a site team at FGO from the summer of 1998 to follow upthat the construction work is performed andcompleted in compliance with the agreed speci-fications.

Together with Ocean Rig's own control and project management, Det Norske Veritas (DNV)has been engaged for quality assurance and clas-sification of the baredeck units. DNV works inclose co-operation with both the yard and thesite team, and has so far approved all aspects ofthe construction process.

FRIEDE GOLDMAN OFFSHORE

Friede Goldman International, Inc. (FGII) is a listed American company that owns three ship-yards as well as the engineering company FriedeGoldman Ltd (FG), among others. FG was estab-lished more than 50 years ago, and was one ofthe pioneers in rig design. This has given thecompany a leading role in deepwater projects forsemisubmersible rigs. FG also carries out engine-ering projects related to jackups, drillships, andFPSOs.

HAM Marine, Inc. is the oldest shipyard in theFGII Group, and was founded in 1982. With itsstrategic position in the US Gulf, the shipyardhas focused on repair, modernization and con-version of rigs. The yard has more than 1,200 em-ployees and a close customer relationship with anumber of the largest American drilling opera-tors. Major projects carried out by HAM include conversion of submersible rigs to semi-submersible rigs and upgrading of rigs for deep-water contractors.

Ocean Rig ASA's outfitting contract was origin-ally entered into with HAM Marine, but was inJanuary 1998 transferred to FGII's new shipyard,Friede Goldman Offshore (FGO). FGO is theonly shipyard in North America that is specially

designed for new rig construction, and has capa-city for the construction of four rigs per year.Apart from the contracts with Ocean Rig ASA,FGO is outfitting a Bingo 8000 for another dril-ling contractor. The new shipyard is already inoperation, with full completion expected in June1998.

FGO has started with detailed design work andplanning of the construction process as well asordering subcontracts. This should ensure the

‘‘FGO IS THE ONLY SHIPYARD IN NORTH AMERICA THATIS SPECIALLY DESIGNED FOR NEW RIG CONSTRUCTION, AND HAS A

CAPACITY FOR THE CONSTRUCTION OF FOUR RIGS PER YEAR.’’

Source: Friede Goldman Offshore.

CONTINENTAL

EMSCO

DRILLING MUD PUMPS

CONTINENTAL

EMSCO

VARCO

48 4948

PURCHASE OF OWNER FURNISHEDEQUIPMENT (OFE)

In the design of the Bingo 9000 rig, Ocean Righas emphasized the purchase of owner furn-ished equipment (OFE) of high quality fromreputed vendors. An important competitive advantage is the extremely good operationalefficiency of the Company's rigs, which satis-fies customers' requirements. However, newlydeveloped technological equipment has notbeen included in the design. The Bingo 9000 rigswill consist of tested and approved equipmentthat ensures stable operations with high effici-ency.

Purchase of OFE is primarily Ocean Rig's ownresponsibility. In cooperation with the outfittingyard, the project management will decide whenthe individual parts of the equipment are to bedelivered to the shipyard. Fixed-price contractshave been entered into for the most importantparts of the equipment.

ABBINDUSTRI

POWER ANDELECTRICAL SYSTEMS

ABBINDUSTRI

HYDRALIFT

DERRICK, PIPEHANDLING,CRANES AND LIFTING TACKLE

HYDRALIFT

MARTIN DECKERTOTCO

DRILLING CONTROL SYSTEM

MARTIN DECKERTOTCO

OTHER MECHANICALDRILLING EQUIPMENT

VARCO

ULSTEINMOORING WINCHES

ULSTEIN

KAMEWATHRUSTERS

KAMEWA

KONGSBERGSIMRAD

DYNAMICPOSITIONING (DP) SYSTEMS

KONGSBERGSIMRAD

WÄRTSILÄDIESEL ENGINES

WÄRTSILÄ

GRANT PRIDECODRILL PIPES

GRANT PRIDECO

ABBVETCO GREY

MARINE RISER SYSTEM

ABBVETCO GREY

CAMERON

BLOWOUT PREVENTER (BOP)AND CONTROL SYSTEMS

CAMERON

49

‘‘THE BINGO 9000 RIGS WILL CONSIST OFTESTED AND APPROVED EQUIPMENT THAT ENSURES

STABLE OPERATIONS WITH HIGH EFFICIENCY’’

50

OCEAN RIG AS

In February 1998, Ocean Rig ASA acquired all of theshares in Polycrest AS. With the acquisition byOcean Rig ASA, the focus is on integrating the com-pany into the Ocean Rig Group. On this basis,Polycrest AS will change its name to Ocean Rig AS.Rolf K. Ytreland, who has headed the business since 1987, is continuing in his position asmanaging director.

Polycrest AS was founded in 1985 by the Ras-mussen Group as an independent company offering its services to the offshore industry.These services are primarily related to the admi-nistration and operation of offshore vessels, including the administration and operation oftwo semisubmersible drilling rigs in the Nor-wegian sector of the North Sea.

The company has more than 35 employees, andmanages almost 200 offshore personnel on behalf ofothers. The company's offices are in Dusavik out-side Stavanger. Revenues for 1997 amounted toNOK 25 million, with a pre-tax profit of NOK 8 mil-lion. The revenues and pre-tax profit related to assignments for Ocean Rig ASA amounted to NOK9 million and NOK 2 million respectively.

One of the most important activities in 1997 hasbeen the operation of the drilling rig “SCARABEO5”on the Snorre, Tordis and Vigdis fields for SagaPetroleum ASA. The owner of the rig is SaipemS.p.A, which has had a service contract withPolycrest since 1989. “SCARABEO 5” has beenoperating on schedule, and includes drilling andcompletion of subsea wells through templates. Theservice contract expires at the end of 1998, afterwhich there are two options of two years each. In

1996 the company also entered into a four-year service contract and an agreement of 2x2 yearoptions with Saga Petroleum ASA for the adminis-tration and operation of Saipem's SSDR “SCARA-BEO 6”from 1998.

Since 1985, Ocean Rig AS (Polycrest) has been working together with COTEMAR Sa.De.CV. inMexico to provide operational and technical support for running the accommodation rig “JUPITER-1”, the diving/accommodation rig“CHEMUL”, and the diving /crane vessel “BOACANOPUS”. All three vessels operate in the Gulf ofMexico for the Mexican company PEMEX. Theseactivities were extended in January 1996 whenPolycrest took over the management contract forthe accommodation rig “PORT REGENCY”in theGulf of Mexico.

In August 1996 Polycrest entered into a manage-ment contract for full operation and marketing ofthe jackup accommodation vessel “RIGMAR301”, which is located in the North Sea.

Since the establishment of Ocean Rig ASA, OceanRig AS (Polycrest) has had an operations con-tract for project management and marketing of theBingo 9000 rigs. Ocean Rig ASA is in the final phaseof establishing its own functions for handling thesetasks. In accordance with its strategy, Ocean Rig ASwill be responsible for marketing and operation ofthe Group's Bingo 9000 rigs in the Norwegian sec-tor of the North Sea.

With the acquisition of Polycrest and the establish-ment of an experienced technical and operatingstaff in the parent company, Ocean Rig is wellequipped to take on contracts in the North Sea.

51

ANNE IRENE S. RAUSTEIN

ADMINISTRATION MANAGER

KEVIN J. MCKIELOGISTICS / IT

MANAGER

JØRGENCEDERFELDT

OPERATION MANAGER

JØRGEN LEATECHNICAL MANAGER

JØRGENCEDERFELDT

MARINE SERVICES

ALF G. ASTRUPMARKETING / CONTRACTS

ROLF K. YTRELANDMANAGING DIRECTOR

NINA E. TVEITAMANAGER, QA / HEALTH,SAFETY, ENVIRONMENT

JAN-RUNE BROXMARKETING / CONTRACT

COORDINATOR

ANNE MARIT LIEBJØRNAR KILDAL

DAN EGGANQA / HSE ENGINEERS

OCEAN RIG AS – ORGANIZATION(FORMER POLYCREST AS)

OCEAN RIG ASAHAAKON VII’S GATE 10

P.O.BOX 1537 VIKA

N-0117 OSLO, NORWAY

TEL + 47 22 04 80 04

FAX + 47 22 04 80 05

Tryk

kman

n A

S

BE

RG

MA

NN

@Hugin 1998. All rights reserved.

97Table of Contents

Overview

Summary 1997

Key figures

Report of the Board of Directors

Income Statement

Balance Sheet

Cash Flow Analysis

Notes

Shareholders Policy

Selskaper

Main menu