Seadrill has through its affiliate Sea Dragon de Mexico settled the final agreement with Pemex Exploracion y Produccion ("Pemex") for the provision of the ultra-deepwater semi-submersible drilling rig West Pegasus (previously Seadragon I). The five-year assignment in Mexico has a fixed operating dayrate for the first two years, and the dayrate will be adjusted annually thereafter based on market conditions. Estimated contract value is approximately US$850 million (excluding mobilization fee) assuming a constant dayrate over the five year term.

West Pegasus was recently delivered from the Jurong Shipyard in Singapore and proceeded for mobilization to Mexico on April 1. Commencement of operations is scheduled for the third quarter 2011.

Alf C Thorkildsen, Chief Executive Officer of Seadrill Management AS says, "This is Seadrill's first assignment for Pemex, and it presents an exciting opportunity to develop a strong relationship with one of the largest national oil companies in the world, as well as strengthening our position in the Gulf of Mexico. This contract further underlines the value of our recent acquisition of the Seadragon units, adding significant earnings visibility at what we believe is competitive terms and conditions."