PETROLIA DRILLING

PresentationPareto 1999

Page 1

PetroliaDrilling ASA

1999

Executive Summary

Page 3

• Company Overview: Petrolia Drilling ASA, a Norwegian, publicly listedlimited Company, owns and charters drilling vessels for offshore,deepwater oil and gas exploration and development drilling.

• Existing Rig Fleet: The Company owns the semi-submersible drilling rigPetrolia, holds a 20.19% interest in the semi-submersible rig Deep SeaBergen and has a 9-year remaining bareboat charter for the deepwaterDrillship Valentin Shashin.

• Business Strategy: The Company intends to continue to expand itscurrent rig fleet through a strategy of acquiring, refurbishing andselectively deploying offshore drilling rigs and drillships, on fixed rate,long-term contracts.

Executive Summary

Page 4

Company Overview

• Predecessor company formed by principals of DNO ASA in 1995.

• The Company was established in March 17, 1997.

• The Company has a market capitalization of approximately NOK 450million, as of August 31, 1999. Booked equity based on rig values yearmid ‘99 is NOK 547 million.

• DNO ASA holds 32,75% of outstanding shares.

Page 5

The key elements of the Company’s strategy are as follows:

– Acquire under-utilized or idle offshore drilling rigs

• Focus on acquiring contract for Petrolia

• Purchase Valentin Shashin

– Strategically deploy rigs in deepwater markets

• Offshore deepwater rig market represents the most attractive sector in the drilling

industry

– Capitalize on strong strategic relationships

• Russian authorities

• North Sea oil companies

• Petrobras

Business Strategy

Company Overview

Page 7

Company Overview

Operation and Business Management

Company operates through extensive network of business relationshipsand agreements --optimal for current tax structure and maintaining low,stable operating overhead.

B o a rd o f d ire c to rs

F inance and daily operations

S trategy and industria l re la tions

Technical O perations C ontract nego tia tions

Page 8

Existing Rig Fleet

Petrolia Deep Sea Bergen Valentin Shashin

Description:Class Semi Sub

3rd Generation AkerH-3.2 Semi Sub

Pelican Class DP-equipped

Drill Ship

Year Built: 1976/1995 1983/1991 1982/1998

Market Segment: Medium Depth Medium Depth Deepwater

Ownership Structure:

100 % 20,19 %Subleased under 9-year bareboat

charter with purchase right

Charter Party: n/a Saga Petroleum Petrobras

Charter Type: n/a Time Charter Bareboat

Charter Expiration: Stacked 9/01/99 March 2001

Current Day Rate: $ 0,000 $ 90,000 $69,000

2nd Generation Pentagone

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New BOP control System

(ABB Seatec)

New Top Drive & Compensator

(Maritime Hydraulics &Hydralift)

New Sponsons / Steel Construction

(J.Bladt)

New Dynamic Positioning System

(Kongsberg Simrad)

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DS Valentin Shashin

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Campos Basin

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Global deep water market

• Oil and gas companies are considering over 250 deep water field developments.

– Currently 1,300 deepwater wells planned compared to only 400 shallowwater wells.

• Brazil has been the pioneering region for deep water drilling.

– 35% of the regions offshore reserves are in water depths greater than3,000 feet.

– Brazil is opened to foreign oil and gas companies.

• Gulf of Mexico is alsoone of the most active deepwater region in the world.

Market Segment

Page 13

Need to replace reserves

• Oil companies need to increase their reserves even while oil prices are low.

• Most of the world’s major untapped oil and gas reserves are located in deepwater areas, asmost accessible land-based and shallow water reserves already been explored.

West Africa 18.0North America 10.0South America 8.0West of Shetland 3.5Norway 2.4Other 23.1Total 65.0

Source: Shell International

Industry Overview

Major Deepwater (>3,000 feet) oil reserves by region254 potential fields developments (Billions of barrels)

Page 14

• The world drillship fleet totals 24 units, of which R&B Falcon controls 12.

• Management is currently aware of five 5th generation semi subs under construction.

• The following chart lists Valentin Shashin’s sisterships.

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Market Segment

Global deep water market (cont’d)

Rig & Market Profile

Page 16

Rig Profile

Existing Rig Fleet

a) The Company owns 20.19% of KS Deep Sea Bergen.

b) The Company paid $45 million for a 10-year bareboat-charter, is upgrading the drillship for $70 million, plus $6 million in equipment

c) Average of 3 independent brokers

Rig/drill shi p Type Design Built Riser BOP Purchase Price Est. Mkt. Value (c)

(feet) (PSI)

Petrolia Semi-Sub Pentagone 1976 1,100 10,000 $41 $41

Deep Sea Bergen (a) Semi-Sub Aker H-3 1983 1,500 15,000 $105 $105

Valentin Shashin (b) Drill ship Pelican class 1982 4,500 15,000 $100 $130

($ million)

Notes:

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Supply and demand for oil and gas

• World demand for oil and gas is expected to increase through the year 2000.

• Offshore production will represent a larger contribution to global oil supplies as onshore fieldproduction declines.

• About 50% of offshore oil & gas production is conducted outside of OPEC areas such as theNorth Sea, GOM and South America (Brazil).

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Industry Overview

Source: IEA

Page 18

Technology

• Advances in new technologies have driven down the cost of oil and gas exploration

• Cost of exploring for and developing new offshore reserves

• Most new offshore fields have a breakeven oil price of $8-10 per barrel due to:– more accurate and cheaper seismic survey technology

– increased usage of cost effective floating production units

– better and cheaper subsea installation opportunities

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Industry Overview

Source: Saga Petroleum

Page 19

Fleet Capacity• Demand for all types of mobile drilling rigs increased substantially after 1995, reaching full

utilization in the second half of 1997.

• The fall in oil price in 1998 was necessary to stabilize the supply/demand.

• End 1999 GOM lease auction and the ramp-up in Brazil and in West Africa will cause oilcompanies to scramble for deepwater rigs.

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Industry Overview

Source: Bassoe Offshore Monthly

Historical Second Hand Rig Value

Source: Offshore Data Services, Inc.

World Capacity Utilization

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

1993 1994 1995 1996 1997 1998

Semi-submersible Drilling Rigs, 3rd Generation Semi-submersible Drilling Rigs, 2nd Generation

Drillships, Dynamically positioned Jackups, 75-90 meters

Page 20

Newbuildings

• Demand for deep- and medium-water rigs is expected to remain firm over the next two years.

• Factors limiting additional newbuildings:– Many newbuildings have experienced significant cost overruns recently - a new deepwater unit

costs approximately $300 - 400 million

– Few rig owners will order newbuildings without advance contract - most of the rigs on order havecontracts

• Limited yard capacity and long delivery lead times also serves to limit flow of newbuildings

D e liv e ry A v g. co ntr.C o ntra c t Ye s N o Ye s N o Ye s N o Ye s N o le ng thT o ta l se mi ne w b uild ings 1 0 7 2 5 0 1 3 2 4 ,9T o ta l se mi c o nve rs io ns 1 1 0 1 0 1 0 0 2 1 1 4 ,0T o ta l d r illship ne w b uild s 4 0 5 0 3 2 1 2 2 4 ,6T o ta l d r illship c o nve rs io ns 3 2 1 0 0 0 4 2 3 ,8T o ta l a ll c a te go r ie s 1 9 2 2 3 3 8 2 5 0 7 4 ,3

R igs o n orde r a bo ve 1 ,50 0 fe e t1 9 98 1 9 99 2 0 00 T o ta l

Industry Overview

Source: FT Rig Forecast

Appendix

Page 22

Key Events of the Company

Company Overview

• Company founded• $24 million share

issue• Acquisition of

Petrolia for $41million - contractwith DNO

• Listing on OsloStock Exchange

• Acquisition of 20%interest in KS DeepSea DrillingCompany (ownerof Deep SeaBergen) for $20million - contractwith SagaPetroleum

• 2-Year contractwith Petrobras forValentin Shashincommenced.

• Private placementUS$ 4 mill.

Prior toSeptember

1997February

1999

• Enter into 10-yearbareboat agreement forDrillship ValentinShashin - cost $45million

• Commenced $50million upgrade ofValentin Shashin

September1997

• $8 million privateplacement tofinance part ofValentin Shashinupgrade

December1997

• $35 million rightsoffering to continueValentin Shashinupgrade

March1998

• 2-Year contractwith Petrobrasfor ValentinShashin

June1998

October1998

• Convertiblebond issueNOK 90 MillStrike NOK 19

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Share Price Performance

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Shareholders as of August, 1999(conform chart)

N ame Share s Owne rs hipD N O A S A 1 1 0 02 96 1 3 2,9 5 %D elphi F ond s 8 07 00 0 2 ,4 2 %A tlantis V est A S 5 71 60 0 1 ,7 1 %S ira P S V III A S 5 70 60 0 1 ,7 1 %F o kus S M B 4 70 00 0 1 ,4 1 %S k ib s A S A b aco 4 68 42 6 1 ,4 0 %S and nes Investering 4 00 00 0 1 ,2 0 %K F o nd ene 3 50 00 0 1 ,0 5 %Teigum, H ans I 2 48 60 0 0 ,7 4 %Energy D rilling 2 31 13 0 0 ,6 9 %To tal 10 largest shareho ld ers 1 5 1 20 31 7 4 5,2 8 %

O the r shareho ld ers 1 8 2 69 47 4 5 4,7 2 %To tal shareho ld ers 3 3 3 89 79 1 1 00 ,00 %

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