251844 Awilco_aars_eng.ps - COSL Drilling Europe AS

Awilco Offshore ASA
Annual Report 2005

Contents
Important events 2005
Important events 2
Key figures 3
A brief presentation 4
Premium Drilling 5
Board of directors’report 6
The offshore drilling market 10
Accommodation services 12
Investor information 14
Financial Statements
Group 17
• Listed on Oslo Stock Exchange in May 2005
• Four Ultra Premium jackup rigs ordered during the year
• Premium Drilling established as operating company for the drilling
rigs owned by Awilco Offshore and Sinvest
• First drilling rig WilPower contracted to Arabian Drilling Company for
five years
• New contracts for the accommodation rigs giving full utilization until
mid-2007 (Port Reval) and October 2008 (Port Rigmar)
• Purchase of approx. 20 % of Petrojack
• Purchase of 38 % in Offshore Rig Services
• Attractive bank financing secured
Profit and loss account 18
Balance sheet 19
Cash flow statement 20
Notes 21
Proforma figures 2004 40
Parent company 43
Profit and loss account 44
Balance sheet 45
Cash flow statement 46
Notes 47
Auditor’s report 60
2

Key figures
Figures in USD 1.000
Income statement 31.12.2005
Revenues 42 082
EBITDA 12 628
EBIT 5 405
Net profit 1 908
Balance sheet and cash flow
Cash and cash equivalents 35 753
Interest-bearing debt 123 595
Net cash flow 11 526
Total investment -200 643
Investment in jackup newbuildings - 192 090
Key figures
Number of outstanding shares 118 530 333
Share price at yearend NOK 42,4
Earnings per share (USD 1) 0,02
Market capitalization 742 489
Enterprise value 866 084
Share price development
70
60
50
40
30
20
10
0
11.05.05 11.06.05 11.07.05 11.08.05 11.09.05 11.10.05 11.11.05 11.12.05 11.01.06 11.02.06 11.03.06 11.04.06
3

A brief presentation
Awilco Offshore has seven ultra premium jackup drilling
rigs under construction, and one option for the construction
of a further drilling rig. The company holds 18,5 % of the
shares in Petrojack ASA and 40 % of the shares in Offshore
Rig Services ASA. Awilco Offshore intends to create the basis
for a leading international drilling contractor.
The company also owns two accommodation rigs, both
suited for operation on the Norwegian Continental Shelf,
which has some of the strictest requirements in the market.
Only four units of the world-wide fleet ofspecialized accommodation
units comply with the requirements for such
operation.
DRILLING Yard W. depth D.depth Delivery Deployment
WilPower PPL 375ft 30,000ft 2Q06 B/B July 2011
WilCraft Keppel 400ft 30,000ft 4Q06
WilSuperior PPL 375ft 30,000ft 2Q07
WilBoss Keppel 400ft 30,000ft 4Q07
WilForce PPL 375ft 30,000ft 4Q07
WilStrike Keppel 400ft 30,000ft 2Q09
WilSeeker PPL 375ft 30,000ft 2Q08
PPL option (window 1 March 07 to 1 Sept 07) PPL 375ft 30,000ft +27months
ACCOMMODATION Beds Built/converted
Port Reval 362 1976/2004 T/C July 2007
Port Rigmar 326 1979/1991 T/C October 2008
OTHER ASSETS Ownership Cost price
Petrojack ASA 18,5 % NOK 15 per share
Offshore Rig Services ASA 40 % NOK 26 per share
Contract coverage
Drilling
WilPower is employed on a five year bare-boat contract with
Arabian Drilling Company. Arabian Drilling Company has
the option to extend the contract for a further year.The rig
will be employed in Saudi Arabia, and will commence work
under the contract in July 2006. Arabian Drilling Company
will be responsible for all operating and local expenses.
Accommodation
The jackup accommodation unit Port Rigmar is currently
employed on a contract on the Ekofisk field on the
Norwegian Continental Shelf. The fixed contract runs until
October 2008. The client, ConocoPhillips, holds options to
extend the contract on a yearly basis until 2010 with rates to
be agreed.
The semi-submersible accommodation unit Port Reval was
converted from a service rig and upgraded to satisfy
requirements made for work on the Norwegian Continental
Shelf during 2005. Currently, the rig is employed on a
contract on the Eldfisk field with client ConocoPhillips.
Commencement was early September 2005 and duration is
10 months. Thereafter, the unit is fixed on contracts with
Aker Kværner until mid 2007.
4

Premium Drilling
In it’s venture into the high specification jack up drilling rig market, Awilco Offshore ASA,
together with Sinvest ASA, jointly formed Premium Drilling in April of 2005 to operate the
fleet of 15 jack-up rigs that both these companies have under construction.
In July 2005, Mr. Bill Rose was instated as President and Chief Executive
Officer of Premium Drilling. Mr. Rose, who has 26 years experience in the
offshore drilling industry, accepted the challenge of developing Premium
Drilling into a recognized, global offshore drilling contractor with a vision
to:
• Operating the industry’s most modern and effective fleet ofjack up
drilling units with outstanding capabilities
• Training and developing a workforce to ensure that Premium Drilling
can provide the most competent operational teams in the industry
• Valuing the integrity of Premium Drilling people and their safety as it’s
greatest responsibility
Toward this vision Premium Drilling has formed a very strong and experienced
onshore Senior Management Team. This team, based in Houston
and Singapore come from diverse backgrounds and bring together all the
skills required to operate the company. Rig management, supervisory and
maintenance personnel have been recruited to provide adequate time for
company and rig familiarization, including rig and company specific training
prior to operations start-up.Premium Drilling has developed a unique
crew awareness and systems integration program to allow confident
development of the rig crew over a two week period prior to mobilizing
to the first operator location.
Premium Drilling personnel and contractors have developed an integrated
Health Safety, Environmental and Operational System that allows for
rigorous management of the company. This system, which encompasses
both company proprietary components and industry leading commercial
systems, has proven to be simple, yet comprehensive with all policies,
procedures, routines and work instructions being developed, implemented
and in use, prior to the commencement of rig operations. Premium
Drilling plans to achieve ISO 9001 certification prior to the end of 2006.
Premium Drilling has achieved four Drilling Contracts since its inception
because of the quality of the equipment and capability of the team. These
early successes have been achieved through the hard work and experience
of Premium Drilling’s personnel.
Premium Drilling is committed to delivering:
PREMIUM SYSTEMS
PREMIUM PERSONNEL
PREMIUM EQUIPMENT
Non-Harsh Environment Jackups on Order (>350ft)
• Premium Drilling
• Others 29%
71%
Premium Drilling recruitment on schedule
Personnel
250
225
200
175
150
125
MC
HSE
ET
CE
CM
BE
100
75
50
25
0
Nov-05
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
The graph illustrates the employment requirements in Premium Drilling through 2008 and shows that Premium Drilling is on schedule.
D
ARMD
ARMN
RM
OM
5

From left: Arne Alexander Wilhelmsen, Tor Bergstrøm, Marianne Blystad, Jarle Roth, Sigurd E. Thorvildsen and managing director Henrik Fougner.
Board of Directors’ Report 2005
Awilco Offshore is involved in offshore drilling and accommodation services
worldwide.
The headquarters ofAwilco Offshore is in Oslo. During
2005, Awilco Offshore increased its investment in the drilling
segment by ordering four ultra premium
jack-up drilling rigs. In addition, Awilco Offshore made
large investments in the offshore companies Petrojack ASA
and Offshore Rig Services ASA. As of the date of this report,
Awilco Offshore had six jack-up drilling rigs under
construction. The scheduled deliveries for these rigs are
from 2006 through 2009. In addition, Awilco Offshore has
options for two jack-up units. Substantially all operating
revenues and operating costs in 2005 relate to its two
accommodation units.
Initial Public Offering (IPO)
Awilco Offshore ASA was incorporated on January 21,
2005, and acquired all offshore rig assets of Awilco AS
(a wholly owned company in the Anders Wilhelmsen group).
On May 11, 2005, the company completed an IPO of its
shares, which are listed on the Oslo Stock Exchange.
Profit and loss account
Total revenues were USD 42.1 million. Operating profit
before depreciation and amortization (EBITDA) was
USD 12.6 million, and operating profit after depreciation
and amortization (EBIT) was USD 5.4 million. Rig operating
expenses were USD 21.6 million for the year and relate to
the accommodation rigs. General and administrative
expenses were USD 6.8 million for the year, including
USD 2.1 million relating to share-based payments. The
share-based payments had no liquidity effect in 2005.
6

Depreciation expense was USD 7.2 million in 2005 and was primarily
attributable to the accommodation rigs. Awilco Offshore’s share of the
result in Premium Drilling was USD – 1.1 million in 2005.
Net financial items were USD – 3.1 million. Interest expense totaled
USD – 4.8 million. Profit before tax was USD 2.3 million, and net profit
was USD 1.9 million. Basic and diluted earnings per share were
USD 0.02.
The Board confirms that the accounts have been prepared based on the
assumption of going concern, in accordance with § 3.3 of the Norwegian
Accounting Act.
Capital
As of December 31, 2005, total assets amounted to USD 445 million.
Investments in 2005 were USD 192.1 million, including USD 8.8 million
related to upgrades for the accommodation unit Port Reval. Awilco
Offshore is well positioned to meet its future commitments through its
strong cash position and undrawn credit facilities.
During 2005, Awilco Offshore raised NOK 1 billion in new equity. In
addition, new shares were issued as settlement in connection with the
purchase of shares in Petrojack ASA and Offshore Rig Services ASA. At
December 31, 2005, Awilco Offshore had 130.3 million shares outstanding.
Liquidity and financing
Awilco Offshore expects to finance the rigs under construction with
internal funds and debt facilities. At December 31, 2005, Awilco Offshore
had USD 35.8 million in cash and cash equivalents. In addition, Awilco
Offshore had large undrawn credit facilities with Nordea and Standard
Chartered Bank. In January 2006, Awilco Offshore increased its credit
facility with Nordea to USD 410 million. In February 2006, Awilco
Offshore issued a USD 100 million unsecured bond loan.
Interest-bearing debt was USD 123.6 million at December 31, 2005.
Interest-bearing debt increased during 2005 and will continue to increase
due to the construction of the drilling rigs.
Drilling services
The Construction process
The rigs are under construction at two reputable yards in Singapore, PPL
Shipyard Pte Ltd. and Keppel FELS Ltd. The contracts are fixed price
based and the rigs will be delivered “ready to drill”. Total project costs
include contract price with the yard, site supervision, pipe handling
equipment, spare parts and finance costs during construction.
Awilco Offshore has established project teams at each yard responsible
for drawing approval and building supervision. The teams comprise of
people with extensive experience from similar projects. With the present
tightening in the offshore industry,both yards have an extensive workload.
However, Awilco Offshore is satisfied with the project development. It is
the company’s opinion that the designs of the rigs under construction
will meet the increasing requirements of the market.
First drilling contract awarded in 2005
In September 2005, Awilco Offshore secured a long-term contract for
WilPower with Arabian Drilling Company (ADC). The five-year
bare-boat contract has a day rate ofapproximately USD 70,000 per day
(transferable to T/C of approximately USD 107,000 per day). ADC will
employ the rig in Saudi Arabia and is responsible for all operating and
local expenses. The ADC contract placed Awilco Offshore in position to
declare options for further drilling rigs without raising additional equity.
Premium Drilling
During 2005, Awilco Offshore and Sinvest ASA established a joint owned
entity, Premium Drilling, to manage the operations of the companies’
fleet of drilling units. Premium Drilling has its headquarters in Houston,
Texas, as the majority of the companies clients are international oil companies.
Premium Drilling will be a substantial drilling contractor operating
a large share of ultra premium newbuildings worldwide. During the
first year of operations, focus has been on recruitment, establishing
management systems and preparation for operations. International oil
and gas companies’ already accept Premium Drilling as a provider of
drilling services.
Petrojack ASA
In August 2005, Awilco Offshore acquired approximately 20 % of the
shares in Petrojack ASA for USD 27.1 million. Petrojack has three jackup
drilling rigs under construction at the Jurong Shipyard in Singapore.
The scheduled deliveries are in 2007 and 2008. Petrojack is listed on the
Oslo Stock Exchange. Awilco Offshore and Sinvest ASA own approximately
40 % of the shares in Petrojack. The companies have agreed to cooperate
on any future investments in Petrojack. At December 31, 2005, the fair
value of the Petrojack investment was USD 39.3 million.
Offshore Rig Services ASA
On December 30, 2005, Awilco Offshore entered into an agreement to
acquire approximately 38 % of Offshore Rig Services ASA (OFRS) for
NOK 26 per share. The transaction was completed in January 2006.
OFRS has a semisubmersible drilling rig under construction at Yantai
Raffles Shipyard in China, and options for three more units. The rig is
a cost effective unit designed for the requirements in the North
Sea/NCS, and can bid for approximately 95 % of the contracts in the
North Sea. The shares of OFRS are traded on the Norwegian OTC
market.
Accommodation services
Awilco Offshore owns two of only four accommodation units approved
for work on the Norwegian Continental Shelf.
Port Rigmar, a jack-up type unit with 326 beds, is employed on a
long-term contract with ConocoPhillips at the Ekofisk Field (NCS).
The contract runs firm until October 2008.
Port Reval, a semisubmersible unit with 362 beds, completed a contract
with BP Clair (UKCS) in January 2005. During the spring of 2005, the
unit was in port for required upgrades in order to be compliant with
Norwegian rules and regulations. In June 2005, the unit mobilized for BG
Armada (UKCS). In August 2005, it moved to Eldfisk Field (NCS) for
7

ConocoPhillips. The assignment runs until July 2006 when it will
commence the eleven month long Frigg Decommissioning Program for
AkerKvaerner and Total.
Markets and Prospects
Drilling services
The rig market has developed positively throughout the year and by year
end most market segments were experiencing close to full utilization.
Awilco Offshore sees a strong market during the coming years based on its
view on the following:
• Continued high energy prices
• Increasing E&P spending by oil companies
• Demand for jackup drilling rigs outstripping supply
R/R-ratio at lowest levels ever seen
Sustained high oil prices have contributed to an increased demand for
drilling services, which have resulted in day rates for jack-up drilling units
showing a very positive development.
Correlation between oil price and drilling activity
USD/bbl
80
70
60
50
40
Number of rigs
5 000
4 500
4 000
3 500
3 000
2 500
160 %
150 %
140 %
130 %
120 %
110 %
100 %
90 %
80 %
70 %
60 %
152 % 155 %
128 %
110 %
123 %
110 % 112 %
102 %
103 %
95 %
85 %
76 %
74 %
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E
30
20
10
0
2 000
1 500
1 000
500
0
Organic reserve/Replacement ratio
Source: Enskilda Securities / Oil Companies
The early deliveries of Awilco Offshore’s uncommitted newbuildings
make it well positioned to benefit from the continued strong market.
jan-83 jan-85 jan-87 jan-89 jan-91 jan-93 jan-95 jan-97 jan-99 jan-01 jan-03 jan-05 jan-07 jan-09
Oil price (Brent) Oil futures price (WTI) Baker Hughes World Wide Rig Count
Source: Enskilda Securities / Oil Companies
The positive market view is also reflected in the increase of newbuilding
contracts entered into during 2005. As a result, most shipyards are operating
at full capacity and realistic new rig deliveries are now well into 2009.
In 2005, the industry saw the effects of multiple hurricanes making their
paths through some of the most active offshore areas in the US Gulf of
Mexico, resulting in a number of smaller and older units never returning
to active duty. This incident has highlighted the need for replacing an
aging worldwide jack-up fleet. It is our view that the industry’s focus on
Health, Safety and Environment (HSE) is a substantial argument in favor
of increased demand for new high specification jack-up units.
For the first time in several years, the market is experiencing close to full
utilization. Some segments are experiencing a shortage of available units,
resulting in the deferral of drilling programs. This situation is expected to
affect the jackup drilling market positively going forward. Awilco Offshore
believes it is well positioned to take part in the continued strong market.
Due to the increased demand for jackup drilling services and increased
focus on safety and efficiency, we expect all new jackups scheduled for
delivery over the next years to be absorbed and find attractive employment
in the market.
Accommodation services
The market for North Sea accommodation units improved considerably
during the second half of 2005. The utilization factor for the existing fleet
increased and rate levels improved. In early 2006, all North Sea units were
fully employed.
Port Reval is available from mid 2007, and Awilco Offshore is actively
seeking new employment for the unit. Awilco Offshore expects market
rates to remain at least at current levels. Hence, Port Reval should benefit
from a strong North Sea market with limited supply and a historically
high rate level. We also expect the current strong market will result in
additional contract opportunities for Port Rigmar.
HSE and Organization
Awilco Offshore emphasizes in all its business areas to stay in the forefront
of developments regarding safe and secure operations. The business
operates in compliance with national and international requirements
and guidelines. The operational management of the drilling and
accommodation units achieves high quality standards through
management agreements.
The Chairman of the Board is Sigurd E. Thorvildsen, and the Managing
Director is Henrik Fougner. The working environment and team spirit
are considered to be good.There have been no work accidents, resulting
in injuries to personnel, during the year 2005. The corporate management
of Awilco Offshore is focused on preventing any discrimination
due to gender or race in matters such as pay, promotion and recruitment.
8

Awilco Offshore has built up site teams in Singapore to supervise the
construction process at the two yards, Keppel FELS and PPL. Commercial
and operational management of the drilling rigs are ensured through
Premium Drilling.Premium Drilling has developed a systematic integrated
approach to HSE management that is designed to ensure compliance with
relevant laws and regulations and achieve continuous improvement of
business performance. These systems will be in place when the first rig is
to be delivered from the shipyard.
The operation of the accommodation units is handled through the independent
managers OSM Offshore and Polycrest. The management
companies report a negligible frequency of injury and accidents and no
spill or contamination to the external environment.
Statements on corporate governance
Awilco Offshore adheres to the Norwegian Code of Practice for Corporate
Governance issued in December 2005. The company applies this code to
ensure that it has implemented corporate governance that clarifies the
respective roles of shareholders, the board of directors and executive
management.
The Code of Practice is based on the comply or explain principle, whereby
the Board of Awilco Offshore annually produces a report where it explains
any differences from the Code ofPractice. The report can be viewed in
detail on our web site; www.awo.no.
Awilco Offshore is organized based on a clear and simple model in order
to achieve the highest possible efficiency,a clear division of responsibility
and the benefits of measurable corporate synergies within its organization
and business areas. The Board of Directors ofAwilco Offshore manages
business risks by fostering proper controls, though without discouraging
innovation and entrepreneurship.
The Board is comprised of people with broad experience within management,
finance, law and the offshore industry.Management and the Board
have a good working relationship that has enabled efficient management
and a profitable development of the company through its first year of
operations.
Company risks
Awilco Offshore is exposed to market risks, construction risks, operational
risks, financial risks and strategic risks. The Board and management
manage these risks through ensuring a close supervision of the construction
process, retaining a close relationship with the external management
providers and through continuous reporting and monitoring. Strict safety
management systems are implemented to ensure a safe and efficient
operation and working environment in the rig operations.
The increase in newbuilding activity for drilling rigs has resulted in
pressure on all parties involved in the construction of the rigs,mainly the
yards and the various suppliers ofequipment to the rigs. Although we
have no information that such increased newbuilding activity should
result in delays, it is a risk that is closely followed. Awilco Offshore’s
project teams monitor the construction progress closely.
Major factors in determining market risks are future oil and gas prices. As
presented elsewhere in this report we believe that future energy prices will
remain high. If, however, future oil and gas prices were to fall significantly
this could result in a lower than expected demand for Awilco Offshore’s
drilling rigs.
Shareholders and equity
Awilco Offshore’s main shareholder is Awilco AS, which, at the date of this
report, owns approximately 41.5 % of the outstanding shares. As of
December 31, 2005, the 20 largest shareholders owned approximately
80 % of the outstanding shares. Investors located outside Norway owned
approximately 50 % of the free float.
At December 31, 2005, Awilco Offshore ASA had distributable reserves
according to the Norwegian Companies Act of NOK 525.7 million,
including the transfer ofNOK 526.1 million from the share premium
reserve resolved by the general meeting of April 4, 2005. The parent
company showed a net profit of NOK 7.3 million for 2005, which the
Board proposes to allocate to retained earnings.
The annual general meeting is planned to be held on May 23, 2006. The
Board recommends no dividend to be paid.
Oslo,March 29, 2006
The Board of Directors of Awilco Offshore ASA
Sigurd E. Thorvildsen
Chairman
Tor Bergstrøm
Arne Alexander Wilhelmsen
Jarle Roth
Marianne Blystad
Henrik Fougner
Managing Director
9

The offshore drilling market
Exploration
Development &
construction
Production
Maintenance
Modification
Decommissioning
Drilling market
Jackup drilling rigs are used in exploration and production drilling in shallow
water offshore locations throughout the world. The Middle East, West
Africa, US Gulf of Mexico, South East Asia and the North Sea are the
regions with the highest drilling activity.
Exploration and Production activities are driven by the Oil companies
desire to provide the world with sufficient supply of oil and gas products
and the requirement to grow production at a sustainable rate while replacing
production lost through depletion.Drilling activity is closely correlated
to oil companies’investments in exploration and production activities
for oil and gas (often referred to as E&P spending).
The majority ofthe world wide jackup drilling fleet was built in the late
1970’s and early 1980’s, and the average age ofthe fleet is in excess of 20
years. In addition to the age of the exisitng fleet, it is expected that new
requirements for drilling deeper and more complex wells, will require
replacement of the older units.
The worldwide jackup drilling rig fleet comprises 385 units, and there are
approximately 60 jackup rigs on order.
10

PPL
Design:
Class:
Water depth
Drilling depth
Cantilever
BOP
Main Generators
Deckload
Pipe handling
Accommodation
Operational management
Baker Marine Pacific 375' Class
ABS +A1 Self-Elevating Drilling Unit
375ft
30,000ft
70ft outreach maximum
15,000psi
10,750bhp
3400mt
Remotely operated
115 persons in 1 and 2 man cabins
Premium Drilling
Keppel FELS
Design:
Class:
Water depth
Drilling depth
Cantilever
BOP
Main Generators
Deckload
Pipe handling
Accommodation
Operational management
KFELS MOD V ‘B' Class
ABS A1, CDS, Self-Elevating Drilling Unit
400ft
30,000ft
70ft outreach maximum
15,000psi
10,750bhp
2400mt
Remotely operated
112 persons in 1 and 2 man cabins
Premium Drilling
Awilco Offshore has seven drilling rigs under construction at yards in Singapore and one
option for the construction of a further unit.
PPL option: Declaration 1 March 2007 to 1 September 2007. A particular feature of the remaining PPL option is that both the steel price and
the currency exchange rate element of the contract price have been fixed. This is normally not the case, as yards will typically reserve the
right to adjust the final price for movements in steel prices, currency exchange rates and certain other factors. The PPL option is subject to
price increase for the drilling package.
11

Accommodation services
Exploration
Development &
construction
Production
Maintenance
Modification
Decommissioning
Accommodation market
The market for accommodation rigs is a highly specialized part of the
offshore market. It is a small market segment, dominated by few operators
globally, and is separated from the drilling markets by being more
directly linked to oil companies’production than to their exploration.
The key demand drivers are oil companies’ spending on new offshore
production facilities, maintenance and upgrades to enhance production
from fields in operation. The level of such spending is correlated to
expectations for future oil and natural gas prices, the requirement to
maintain production levels at a sustainable rate and the need to replace
production lost through depletion.
There are several sources of demand for accommodation units, linked to
the various phases of the oil fields. These include installation and commissioning,production
and maintenance, as well as abandonment.
Awilco Offshore owns two accommodation units, one jackup accommodation
unit and one semi-submersible accommodation unit. Both units
are accepted for operation on the Norwegian Continental Shelf, which
has some of the strictest requirements in the market. Only four units of
the world-wide fleet ofspecialized accommodation units comply with
the requirements for operation on the Norwegian Continental Shelf.
12

Port Rigmar
Design:
Built / converted:
Flag:
Suited for:
Accommodation:
Technical mgr.:
Robroy 300 self elevating jackup accommodation rig
Built 1979 as drilling rig, converted to accommodation mode
in 1991
Bahamas
Norwegian, UK and Danish continental shelf
326 beds
Polycrest AS, an independent manager of offshore units
Port Reval
Design:
Built / converted:
Flag:
Suited for:
Accommodation:
Technical mgr.:
Aker H-3 (enhanced) semi-submersible accommodation rig
Built 1976 as drilling rig; converted to tender support rig;
converted to accommodation mode in 2004
Bahamas
Norwegian and UK continental shelf
362 beds, of which more than 300 in single cabins
OSM Offshore AS, an independent manager of offshore units
Awilco Offshore has two accommodation units, one jackup and one semi-submersible
accommodation unit.
13

Investor Information
Share information
Awilco Offshore has been listed on the Oslo Stock Exchange
since 11 May 2005. From the establishment until end 2005,
the share capital increased by NOK 573 969 830 to
NOK 1 185 303 330 which equalled 118,5 million shares. In
January and April 2006, the share capital was increased by a
further NOK 212 475 470 to NOK 1 397 778 800 which
equals 139,8 million shares. The purpose of the capital
increases has been to finance corporate transactions
(Petrojack and Offshore Rig Services) and to strengthen the
company’s equity and liquidity.
The share is traded on the Oslo Stock Exchange under the
symbol AWO and is included in Oslo Stock Exchange’s
Energy Indices (OSE101010GI) and the All Share Index
(OSEAX). As at early May 2006, the company was ranked
at number 11 measured by market value against the
38 companies in the Energy Equipment & Services sector
on the Oslo Stock Exchange.
The 20 largest shareholders of Awilco Offshore held
approximately 80 % of the shares by year end 2005, and
approximately 50 % of free float was owned by investors
located outside Norway. The largest shareholder is Awilco
AS, which held 45,6 % of the shares at year end. Awilco AS
participated in the latest equity issue of the company
(April 2006) and hold in May 2006, 56 425 630 shares
(approximately 40 %). Awilco-related companies controlled
another 3,8 %.
Awilco Offshore has a broad shareholder representation
within and outside of Norway, including large institutional
investors and mutual funds.
Financing information
At December 31 2005, Awilco Offshore had a bank credit
facility with Nordea of USD 210 million, and in addition a
project financing with Standard Chartered Bank (SCB) of
USD 94 million. During the first quarter of 2006, the credit
facility with Nordea was increased to USD 410 million. The
amended facility is more flexible in that drawdown can be
done on a pro rata debt/equity basis, compared to previous
where the equity had to be paid in before any drawdown
could be done.
The company is currently in discussions with Nordea to
include the latest rigs ordered (WilStrike and WilSeeker) in
the bank credit facility,
In February 2006, Awilco Offshore issued a bond loan of
USD 100 million. The bond is unsecured, has a five year
bullet maturity and carries a fixed coupon of9,75 % p.a.
The bond is flexible, as it includes no change of control
provisions and allows for a possible demerger of the
company without bondholder approval in connection with
possible corporate transactions.
Awilco Offshore expects to finance the rigs under construction
with internal funds and debt facilities. On the next
page is a table showing the payment schedule for the drilling
rigs under construction.
The project prices are the expected prices of the rigs delivered
and fully equipped. The prices include the fixed yard
contract prices, newbuilding supervision, owner furnished
equipment, spares, financing and other project expenses.
In February 2005, the share was offered at NOK 20 through
a private placement in connection with the listing on OTC.
When listed on the Oslo Stock Exchange in May 2005, the
share was offered at NOK 22. At end 2005, the share price
was NOK 42, which corresponds to an increase from the
time of listing of 90 %. In early May 2006, the share is
trading above NOK 60.
14

USD mill. Paid 1q06 2q06 3q06 4q06 1q07 2q07 3q07 4q07 1q08 2q08 3q08 4q08 1q09 2q09 Total
Investments
WilPower 83 15 33 131
WilCraft 75 26 30 131
WilSuperior 20 20 45 13 13 19 130
WilBoss 27 27 27 27 26 134
WilForce 14 7 22 29 22 14 36 144
WilStrike 33 33 33 33 31 163
WilSeeker 14 7 21 29 21 14 14 20 140
Total 205 29 160 74 70 90 70 35 109 14 53 0 33 0 31 973

Financial Statements Awilco Offshore group
17

Profit and Loss Statement Awilco Offshore group
in USD thousands, except earnings per share Note 2005
Operating revenue
Operating income 3 42 040
Gain on disposal of fixed assets and other income 42
42 082
Operating expenses
Rig operating expenses 4 21 551
General and administrative expenses 4 6 830
Depreciation and amortization 5 7 223
Share of loss from joint ventures 7 1 073
36 677
Operating profit 5 405
Interest income 2 273
Interest expense -4 776
Net foreign exchange loss -105
Other financial items -456
Net financial items -3 064
Profit before tax 2 341
Tax expense 12 -433
Net profit 1 908
Basic and diluted earnings per share 23 0.02
18

Awilco Offshore group Balance Sheet
in USD thousands Note 12.31.05
ASSETS
Non-current assets
Property,plant and equipment 5 282 091
Investments in shares 9 39 252
Investment in joint ventures 7 2 049
Total non-current assets 323 392
Current assets
Financial investments 8 73 987
Trade receivables 14 10 531
Prepayments and other receivables 14 1 076
Cash and cash equivalents 13 35 753
Total current assets 121 348
TOTAL ASSETS 444 740
EQUITY AND LIABILITIES
Equity
Paid-in capital 20 283 039
Other equity 5 762
Asset revaluation reserve 11 419
Total equity 300 220
Non-current liabilities
Deferred tax liability 12 3 882
Long-term interest-bearing debt 15 112 155
Net pension liabilities 11 183
Total non-current liabilities 116 220
Current liabilities
Current portion of long-term debt 15 11 440
Trade and other payables 12 155
Accruals, provision 10 2 038
Income tax payable 2 666
Total current liabilities 28 299
TOTAL EQUITY AND LIABILITIES 444 740
Oslo,March 29, 2006
Sigurd E. Thorvildsen
Chairman
Tor Bergstrøm
Arne Alexander Wilhelmsen
Jarle Roth
Marianne Blystad
Henrik Fougner
Managing Director
19

Cash Flow Statement Awilco Offshore group
in USD thousands Note 2005
Profit before tax 2 341
Adjustments for:
Depreciation and amortization 5 7 223
Gain from disposal of fixed assets -21
Share of loss from joint ventures 7 1 073
Increase/decrease receivables and prepayments -1 630
Increase/decrease payables and accruals 7 796
Increase/decrease other provisions 183
Net cash flow from (used in) operating activities a) 16 966
Investments in tangible fixed assets 5 -192 090
Investments in financial assets -8 552
Net cash flow from (used in) investing activities -200 643
Proceeds from interest-bearing debt,net 132 920
Payment of interest-bearing debt -103 787
Proceeds from issuance of shares 166 070
Net cash flow from (used in) financing activities 195 202
Net change in cash and cash equivalents 11 526
Cash and cash equivalents at beginning of period 24 228
Cash and cash equivalents at end of period 35 753
a) Interest paid was USD 11.2 million, of which USD 5.5 million relates to investments in jack-up rigs.
Interest received was USD 2.3 million.
20

Awilco Offshore group Notes
Statement of changes in equity
Issued Share Retained Other
in USD thousands capital premium earnings reserves Total
Equity per opening balance (1) 94 051 9 402 -78 467 24 986
Reversal of proforma adjustments (1) 5 190 5 190
Share issue no 1 80 000 80 000 160 000
Share issue no 2 4 724 5 669 10 394
Share issue no 3 6 924 16 549 23 474
Share issue no 4 (2) 17 356 55 538 72 894
Share issue costs -4 323 -4 323
Reclassification of paid-in premium
to other equity -82 852 82 852 -
Net profit 1 908 1 908
Revaluation of available-for-sale investments 11 419 11 419
Translation adjustments -5 722 -5 722
Equity per ending balance 203 056 79 983 11 483 5 698 300 220
(1) Awilco Offshore ASA was established on January 21, 2005. The formation of Awilco AS’offshore segment into the Group is seen as a reorganization of a segment in a
wholly owned subgroup of Awilco AS. The reorganization has been recorded using the continuity method. Consequently, the net book value of the assets, rights and
liabilities transferred to the Group corresponds to the net book value under the previous organization and ownership structure.
Pro forma accounts have been prepared to illustrate the financial statements as if the reorganization occurred at beginning of the period presented, and are derived
from the historical audited consolidated financial statements of Awilco AS for 2004. Further information relating to the pro forma financial statements, including pro
forma adjustments, is presented as an attachment to the audited financial statements for information purposes.
The pro forma adjustments that were recorded in the pro forma financial statements are reversed to reconcile with the historical audited financial statements.
(2) The share issue was resolved by a Board of Directors' meeting held on December 27, 2005, and was registered with the Register of Business Enterprises in January 2006.
21

Notes Awilco Offshore group
Note 1
Corporate information
Awilco Offshore ASA is a public limited liability company incorporated and domiciled in Norway.The address of the main office is Beddingen 8,0118
Oslo,Norway.
The consolidated financial statements for the year ended December 31, 2005, were approved by the Board of Directors on March 29, 2006.
The principal activity of Awilco Offshore ASA and its subidiaries is the investment in and operation of accommodation rigs and jack-up drilling rigs.
Note 2
Summary of significant accounting policies
Basis of preparation
The consolidated financial statements of Awilco Offshore ASA and its subsidiaries (the “Group”) are prepared in accordance with International Financial
Reporting Standards (IFRS). The consolidated financial statements are prepared on a historical cost basis, except for investments bought for market purposes
or available-for-sale which have been measured at fair value and are presented in USD,except as otherwise indicated.
Awilco Offshore ASA was established on 21 January 2005. The formation of Awilco AS’offshore segment into the Group is seen as a reorganization of
a segment in a wholly owned subgroup of Awilco AS. The reorganization has been recorded using the continuity method. Consequently, the net book
value ofthe assets, rights and liabilities transferred to the Group corresponds to the net book value under the previous organization and ownership
structure.
Pro forma accounts have been prepared to illustrate the financial statements as if the reorganization occurred at the beginning of the period presented,
and are derived from the audited consolidated financial statements of Awilco AS for 2004. Further information of these pro forma financial statements,
including pro forma adjustments, is presented as an attachment to the audited financial statements for information purposes.
Basis of consolidation
The consolidated financial statements include Awilco Offshore ASA and its subsidiaries as of December 31 each year. The financial statements of the
subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.
All inter-company transactions and balances are eliminated in the consolidation.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated
until the date that such control ceases.
Joint ventures
The Group has an interest in a joint venture which is a jointly controlled entity. A joint venture is a contractual arrangement whereby two or more parties
undertake an economic activity that is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a
separate entity in which each venturer has an interest. The Group recognizes its interest in the joint venture using the equity method. Under the equity
method, the investment is initially recognized at cost and the carrying amount is increased or decreased to recognize the Group’s share of the profit or
loss of the investee after the date of acquisition. The Group’s share of the profit or loss of the investee is recognized in the Group’s profit or loss.
Distributions received from an investee reduce the carrying amount of the investment.
Associated companies
The Group’s investment in its associate is accounted for using the equity method. An associate is an entity in which the Group has significant influence
and which is neither a subsidiary nor a joint venture.
Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net
assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortized.After application of
the equity method, the Group determines whether it is necessary to recognize any impairment loss with respect to the Group’s net investment in the associate.
The Group’s share of the results of operations of the associate is recognized through profit and loss. Where there has been a change recognized directly
in the equity of the associate, the Group recognizes its share of any changes and discloses this, when applicable, in the statement of changes in equity.
22

Awilco Offshore group Notes
Estimates
The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect assets, liabilities,
revenues, expenses and information on potential liabilities. Estimates are based upon management’s best knowledge of information available at the date
the financial statements are authorized for issue. Future events may lead to these estimates being changed. Such changes will be recognized when new
estimates can be determined with certainty.
Assumptions regarding share based payments are stated in note 10.
Assumptions regarding pension liabilities are stated in note 11.
Revenue
Revenue is recognized when persuasive evidence of an agreement exists, the service has been delivered, fees are fixed and determinable, collectables are
probable and when other significant obligations have been fulfilled. Revenues from the rigs are recognized based on contractual daily rates or on a fixed
price basis.
Foreign currency
The financial statements are presented in USD,which also is the Group’s functional currency.When translating financial statements for foreign entities
from local currency into USD assets and liabilities are translated using year-end exchange rates, and results are translated using the average exchange
rates for the reporting period.
Transactions in foreign currencies are recorded at the exchange rate in effect at the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are translated at the exchange rate in effect at the balance sheet date. Non-monetary items that are measured at historical cost in
a foreign currency are translated using the exchange rates in effect at the dates of the initial transactions.
Property, plant and equipment
Rigs and equipment are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs
of bringing the asset to its working condition. In situations where it can be clearly demonstrated that expenditures have resulted in an increase in the
future economic benefits expected to be obtained from the use of the asset beyond its originally assessed standard of performance, the expenditures are
capitalized as an additional cost of the asset.
Depreciation is calculated using the straight-line method for each asset, after taking into account the estimated residual value, over its expected useful
life. Components of fixed assets with different economic useful lives are depreciated over their respective useful lives. The expected useful lives of the
assets are as follows:
Accommodation rigs
Equipment and components of rigs
Office equipment, cars, etc.
30 years*
15-30 year*
3-10 years
* Certain elements, such as costs recognized in connection with major classification/dry-docking,have shorter useful lives and are depreciated over shorter periods.
Docking expenses are regarded as a separate part of the rig value and are classified as depreciation, with a different depreciation period than the rig.
Newbuilding contracts include payments made under the contracts, capitalized interest and other costs directly associated with the newbuilding program.
Capitalized value is reclassified from rigs under construction to rigs upon delivery from the yard,which is when the asset is considered available
for its intended use and depreciation commences.
The residual values and useful lives of the assets are reviewed and adjusted if appropriate at each balance sheet date.
Impairment of assets
All assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable,
at least on an annual basis. Whenever the carrying amount of an asset exceeds its recoverable amount,an impairment loss is recognized.The recoverable
amount is the higher of an asset’s net selling price or value in use. The net selling price is the amount obtainable from the sale of an asset in an
arm’s length transaction less the costs of disposal while value in use is the present value of estimated future cash flows expected to arise from the cont-
23

Notes Awilco Offshore group
Statement of changes in equity Awilco offshore group
inuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, ifit is not possible,
for the cash-generating unit.
Impairment losses recognized in prior years are reversed and recorded in profit and loss when there is an indication that previous impairment losses
recognized no longer exist or have decreased.
Financial assets
Under IAS 39, the Group classifies its investments into the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity
or available-for-sale depending on the purpose for acquiring the investments as well as ongoing intentions. Financial assets are recognized initially
at fair value, and in the case of investments not at fair value through profit or loss directly attributable transaction costs.
All regular way purchases and sales of financial assets are recognized on the trade date (that is, the date that the Group commits to purchase or sell the
asset.)
Investments in shares are either categorized as held-for-trading or available-for-sale. Financial instruments that are held with the intention of making a
gain on short-term fluctuations in prices are classified as financial assets at fair value through profit and loss. Other financial instruments, with the
exception of loans and receivables originally issued by the Group,are classified as available-for-sale. Such investments are carried at fair value as observed
in the market at the balance sheet date. Fair value is determined by reference to published price quotations in an active market.
The derecognition of a financial instrument takes place when the Group no longer controls the contractual right that comprise the financial instrument,
which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third
party.
The Group evaluates the designation of each financial asset at each financial year end.
Trade and other receivables
Trade receivables are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. Provision is made when there
is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.
Cash, cash equivalents and cash flow statement
Cash represents cash on hand and deposits with banks that are repayable on demand.
Cash equivalents represent short-term, highly-liquid investments which are readily convertible into known amounts of cash with original maturities of
three months or less.
The cash flow statement is prepared using the indirect method.
Long-term interest-bearing debt
All borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. After initial recognition,
interest-bearing borrowings are subsequently measured at amortized cost using the effective interest method.
A financial liability is derecognized when the obligation under the liability is discharged,cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts is recognized in profit or loss.
First year installments of long-term debt are classified as current liabilities.
Borrowing costs are capitalized and then amortized if they are directly attributable to the acquisition, construction or production of a qualifying asset.
Borrowing costs are capitalized until the assets are substantially ready for their intended use. If the resulting carrying amount of the asset exceeds its
recoverable amount,an impairment loss is recorded.Other borrowing costs are recognized as an expense when incurred.
24

Awilco Offshore group Notes
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a
separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is recognized through profit and loss net of
any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate,
the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a borrowing
cost.
Pension and other post-employment benefits
The present value of the pension liabilities under defined benefit pension plans has been calculated based on actuarial principles. The present value of
the pension plan liabilities and assets is recorded net and classified as either long-term liabilities or long-term assets. The change in net pension liabilities
is expensed in the profit and loss account as personnel expenses. The effect of changes in estimates, change in pension plans and actuarial gains and
losses are recognized as income or expense over the average remaining service period.
Net pension expenses include the present value of pension earnings for the period, interest expense on pension obligations incurred, expected return
on the pension funds and the amortized effect of changes in estimates and plans.
Share-based transactions
Employees receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for share appreciation
rights with cash settlement.
The cost of the share-based incentive plan is measured,at each balance sheet date, by reference to the fair value at the date which they are granted.The
fair value is determined by an external valuer using an option pricing model (Black & Scholes). The cost of the share-based payment is recognized,together
with a corresponding accrual, over the vesting period.The cumulative expense recognized for equity settled transaction at each reporting date until
the vesting date reflects the extent to which the vesting period has expired and the best available estimate of the number of equity instruments that will
ultimately vest.
Taxes
Income tax payable for the current and prior periods is measured at the amount expected to be paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences
to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income tax relating to items recognized directly in equity is recognized in equity and not in the profit and loss statement.
Deferred tax assets and deferred tax liabilities are offset,ifa legally enforceable right exists to set off current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity and the same taxation authority.
Segment information
Segment information is prepared in conformity with the accounting policies adopted for the Group’s consolidated financial statement. There have not
been any transactions between the segments.
25

Notes Awilco Offshore group
Note 3
Segment information
The primary segment reporting format is business segments, since the Group's risks and rates of return are affected predominantly by differences in the
products and services produced. The operating businesses are organized and managed separately according to the nature of the products and services
provided,with each segment representing a strategic business unit that offers different products.
The segment for accommodation rigs comprises of two units, Port Rigmar and Port Reval. These units are two of only four units in the world that are
approved for work on the Norwegian Continental Shelf.
The segments for jack-up drilling rigs contains five contracted rigs and options for three rigs.
There have not been any transactions between the segments.
Segment information 2005
Accommodation Jack-up Other Total
in USD thousands rigs rigs
Operating income 42 048 - 34 42 082
Operating costs -21 551 - - -21 551
Depreciation -7 172 - -52 -7 223
Administrative expenses -422 -844 -5 565 -6 830
Share of loss from joint ventures -1 073 -1 073
Operating profit (loss) 12 904 -844 -6 655 5 405
Assets 76 807 205 037 248 282 091
Segment trade and other payables (1) 3 897 400 7 859 12 155
Mortgage debt (including 1 year installment) (2) 71 429 52 166 - 123 595
Investments 8 775 183 016 299 192 090
Investment in joint ventures 2 049 2 049
(1) Includes USD 5.6 million payable to Awilco AS. Awilco AS is the major shareholder ofAwilco Offshore ASA and is a wholly owned subsidiary of the Anders Wilhelmsen
group.
(2) Relates to project financing related to the accommodation and jack-up segments, respectively.See note 15 for further information.
Segment information by geographic area
The geographical split of operating income refers to which continental shelf the rigs were employed during the reporting period.As the rigs are moveable
they may be employed in different jurisdictions during a reporting period.Therefore, depreciation is not split by geographical area. The same applies
for administrative expenses, fixed assets and investments.
Segment information 2005
in USD thousands
UK Norway Other, Total
unallocated
Operating income 11 976 30 072 34 42 082
Operating costs -4 893 -16 657 - -21 551
7 082 13 415 34 20 531
Depreciation -7 223 -7 223
Administrative expenses -6 830 -6 830
Share of loss from joint ventures -1 073 -1 073
Operating profit 7 082 13 415 -15 092 5 405
26

Awilco Offshore group Notes
Note 4
Specification of revenue and expenses
in USD thousands 2005
Rig operating expenses
Crewing expenses 11 370
Maintenance and stores 2 134
Spare parts and repairments 3 256
Insurance 1 070
Other operating expense 3 720
Total 21 551
General and administrative expenses
Employee benefit expenses 3 961
Management fee related parties 1 505
Other administrative expenses 1 364
Total 6 830
Fees to the Group's auditors are included in general and adminstrative expenses. The amounts for 2005 are shown below:
in USD thousands 2005
Audit fees (excluding VAT) 21
Audit related fees (excluding VAT) 62
Total 83
Note 5
Property,plant & equipment
Accomodation Jack-up rigs under Other Total
in USD thousands rigs construction assets
Acquisition cost, opening balance 86 606 22 021 - 108 627
Newbuilding,upgrades and reconstruction 8 775 183 016 299 192 090
Acquisition cost, ending balance 95 381 205 037 299 300 717
Accumulated depreciation, opening balance 11 403 - - 11 403
Depreciation 7 172 - 52 7 223
Accumulated depreciation, ending balance 18 574 - 52 18 626
Net carrying amount, ending balance 76 807 205 037 248 282 091
Specification of capitalization during the year
Installments to shipyards - 170 395 - 170 395
Acquisitions, reconstruction, capitalized costs 8 775 7 122 299 16 196
Capitalized interest - 5 499 - 5 499
Total capitalized during the year 8 775 183 016 299 192 090
Assets are depreciated on a straight-line basis over their expected lives as follows:
Accommodation rigs 30 years *
Equipment, components of the rigs 15-30 years *
Office equipment, cars, etc.
3-10 years
* Certain components, such as costs recognized in connection with major classification/dry-docking,have shorter useful lives.
27

Notes Awilco Offshore group
Statement of changes in equity Awilco Offshore group
As of December 31, 2005, the Group had entered into five newbuilding contracts to build jack-up drilling rigs. Three contracts are with the PPL yard
and the remaining two contracts are with the Keppel yard. The capitalized amounts on the jack-up drilling rigs include the installments paid to the yards
according to the construction contracts, initial project costs, project management costs, capitalized interest and other costs directly associated with the
newbuilding program.
Estimated project costs for the contracted rigs, including yard contract prices, newbuilding supervision, owner furnished equipment, spares, financing
and other project expenses, are specified as follows:
Contracted rigs Yard Delivery Project price
WilPower PPL 2Q 06 USDm 131
WilCraft Keppel 4Q 06 USDm 131
WilSuperior PPL 2Q 07 USDm 130
WilBoss Keppel 4Q 07 USDm 134
WilForce PPL 4Q 07 USDm 144
Contract from option exercised in March 2006
WilStrike Keppel 2Q 09 USDm 163
Contract from option exercised in April 2006
WilSeeker PPL 2Q 08 USDm 132-140
Note 6
Investment in subsidiaries
The consolidated financial statements include the financial statements of Awilco Offshore ASA and its subsidiaries listed in the following table:
Country of Ownership
Subsidiary incorporation interest
Port Rigmar AS Norway 100 %
Awilco Sea Beds AS Norway 100 %
Wilhelmsen Oil & Gas AS Norway 100 %
Awilco Sea Beds II AS Norway 100 %
Wilpower AS Norway 100 %
Wilcraft AS Norway 100 %
Awilco Drilling Ltd Bermuda 100 %
Wilsuperior Ltd Bermuda 100 %
Wilforce Ltd Bermuda 100 %
Wilpower Ltd Bermuda 100 %
Wilcraft Ltd Bermuda 100 %
All subsidiaries are included in the group accounts from January 1, 2005.
28

Awilco Offshore group Notes
Note 7
Investment in joint ventures
In June 2005, Awilco Offshore ASA and Sinvest ASA established a jointly owned entity, Premium Drilling, to manage the operation of the companies'
fleet of jack-up drilling rigs.The joint venture is accounted for using the equity method.
Premium Drilling is a private entity that is not listed on any public exchange. Therefore, no published quotation price for the fair value of the investment
is available. The reporting date of Premium Drilling follows the calendar year.
Country of Ownership
Name incorporation 12.31.05
Premium Drilling AS Norway 50 %
The effective share of the assets, liabilities, revenues and expenses of the jointly controlled entity at December 31, are as follows:
in USD thousands 2005
Operating revenue -
Operating expenses -1 101
Net financial items 28
Loss before tax -1 073
Taxes -
Net loss -1 073
Non-current assets 51
Current assets 2 357
Total assets 2 408
Net equity 2 049
Non-current liabilities -
Current liabilities 359
Total liabilities 359
Total equity and liabilities 2 408
The Group has no further capital commitments in relation to its ownership interest in Premium Drilling AS.
Note 8
Current financial investments
On December 30, 2005, Awilco Offshore entered into an agreement to acquire approximately 38% of Offshore Rig Services ASA (OFRS) for NOK 26
per share. The transaction was completed in January 2006. OFRS has a semisubmersible drilling rig under construction at Yantai Raffles Shipyard in
China, and options for three more units. The shares of OFRS are traded on the Norwegian OTC market.
Because the acquistion was not finalized at December 31, 2005, the investment is recorded as a forward agreement, in accordance with IAS 39, and classified
as a current asset. The assumed fair value at December 31, 2005 is deemed to be equal to the agreed to acquisition price. In addition, no share of
profit has been recorded for the year.
Country of Ownership
in USD thousands, unless otherwise indicated incorporation Interest Fair value
Offshore Rig Services ASA Norway 37.8%
Share investment at cost 73 987 -
Share of profit -
Net book value, end of period 73 987 73 987
The Group has no further capital commitments in relation to its ownership interest in Offshore Rig Services ASA.
29

Notes Awilco Offshore group
Statement of changes in equity Awilco offshore group
Note 9
Investment in shares
Ownership Net
in USD thousands, unless otherwise indicated interest book value
Petrojack ASA 19.8%
Share investment at cost 27 832
Value adjustment 11 419
Net book value 39 252
In August 2005, the Group acquired approximately 20% of the shares in Petrojack ASA. Because Awilco Offshore did not have representation on the
board of Petrojack ASA at December 31, 2005, it did not have significant influence. Therefore, the investment is classified as an available-for-sale investment
and fair value adjustments are recorded directly to equity. Fair value equals the listed price at year end.
Awilco Offshore and Sinvest ASA own approximately 40% of the shares in Petrojack ASA. The companies have agreed to cooperate on any future investments
in Petrojack ASA.
Note 10
Employee benefits expense
in USD thousands 2005
Salaries and social security tax 790
Bonuses 783
Pension costs, defined benefit/contribution plan 247
Expense of share-based payments 2 141
Total 3 961
Number of employees 5
Awilco Offshore has an employee share incentive plan for senior management. Under the incentive plan, management is granted share appreciation
rights where the employees are entitled to a cash payment equivalent to the gain that would have arisen from a holding of a particular number of
shares from the date of the grant to the date of excercise. The share appreciation rights are vested over four years from the date of grant.
The fair value of the share appreciation rights has been estimated using the Black & Scholes option pricing model.
in USD thousands, unless otherwise indicated
Share
appreciation Fair Vesting
Grant date rights Vested value % Cost (1)
February 1, 2005 250 000 February 1, 2006 940 91.2 % 1 028
February 1, 2005 250 000 February 1, 2007 940 45.6 % 514
February 1, 2005 250 000 February 1, 2008 940 30.4 % 343
February 1, 2005 250 000 February 1, 2009 940 22.8 % 257
(1) includes social security tax
1 000 000 3 759 2 141
Foreign exchange effect -103
Fair value at December 31, 2005 2 038
Assumptions
Dividend yield 0 %
Expected volatility 41.1%
Risk free interest rate 3.3%
Expected life of options 3.09
Strike price NOK 20.0
Spot price at the end of year NOK 42.4
30

Awilco Offshore group Notes
Note 11
Pensions
Awilco Offshore has set up a defined benefit scheme with a life insurance company to provide pension benefits for its employees. The scheme provides entitlement
to benefits based on future service from the commencement date of the scheme. These benefits are principally dependent on an employee's pension
qualifying period,salary at retirement age and the size of benefits from the National Insurance Scheme. Full retirement pension will amount to approximately
70% of the scheme pension-qualifying income. The scheme also includes entitlement to disability, spouses and children’s pensions. The retirement
age under the scheme is 67 years.
Awilco Offshore may at any time make changes to the terms and conditions of the pension scheme and will inform the employees of any such changes. The
benefits accruing under the scheme are funded obligations.
All pension schemes are calculated in accordance with IAS 19. When the accumulated effect of changes in estimates, changes in assumptions and deviations
from actuarial assumptions exceed 10% of the higher of pension benefits obligations and pension plan assets, the excess is recognized over the estimated
average reamaining service period.
The amounts recognized are determined as follows:
in USD thousands 2005
Pension cost
Service cost 91
Interest cost 57
Estimated return on plan assets -33
Amortization of actuarial gain/loss, past service cost 116
Net pension cost 231
Social security tax 16
Total 247
Benefit asset / (obligation)
Benefit obligation -2 281
Plan assets 1 165
Funded status -1 116
Social security tax -157
Unamortized actuarial loss/gain, past service cost 1 090
Net obligation -183
Movements in the benefit asset / (liability) during the year
Benefit asset / (obligation) per opening balance -
Benefit expense -247
Contributions 64
Benefit asset / (obligation) per ending balance -183
Assumptions
Estimated return on plan assets 5.5%
Discount rate 4.5%
Salary increase 3.3%
Increase of national Insurance Basic Amount (G) 3.3%
Rate of pension increase 3.3%
Social security tax 14.1%
The company employed the offshore group of the Anders Wilhelmsen group,in this context the company assumed the obligations and benefits under the
pension scheme already established by the previous employer. The past service cost is amortized over the remaining service period.
Analysis of the plan assets
The defined benefit scheme is financed through an insurance contract with Storebrand Livsforsikring AS. The asset allocation at December 31, 2005 is set
out below:
Debt instruments 57 %
Equity instruments 27 %
Money market and similar 6 %
Property 10 %
Total 100 %
31

Notes Awilco Offshore group
Statement of changes in equity Awilco offshore group
Note 12
Income tax
in USD thousands 2005
Current income tax
Current income tax charge 4 576
Adjustments to previous years -227
Deferred income tax
Relating to origination and reversal of temporary differences -3 916
Income tax expense 433
Reconciliation of total income tax expense during the year to the income tax expense at the statutory income tax rate applicable in Norway:
2005
Profit before tax 2 341
Tax at Norway's statutory income tax rate of 28 % 656
Non-deductible expenses 4
Adjustment to previous years -227
Income tax expense 433
Tax effect charged to equity is as follows:
Tax effect of share issue costs -435
Deferred income tax at December 31, 2005 relates to the following:
Deferred tax assets
Accrued liabilities, other provisions 622
Investments 286
Tax loss and tax credits from CFC companies 2 696
Tax losses carried forward 1 857
Deferred tax assets 5 461
Deferred tax liabilities
Accelerated depreciation for tax purposes -238
Other temporary differences (untaxed reserves) -9 106
Deferred tax liabilities -9 343
Net deferred income tax liability -3 882
Deferred tax cost
Deferred tax, opening balance 6 294
Adjustments to previous years / translation adjustments 1 504
Deferred tax, ending balance 3 882
Deferred tax expense -3 916
The accommodation rigs have been organized under the Norwegian tonnage tax regime since the acquisition date of the rigs. In 2005, the tax law was
amended such that with effect from fiscal year 2006, the accommodation rigs will no longer qualify for the tonnage tax regime. The Group will not be
in position to benefit from the deferred taxation allowed under the new income tax regime. Consequently, deferred tax on historical operating profits
from the accommodation units will eventually become payable. The amended tax regulation is reflected in the deferred tax provision recorded in the
balance sheet.
Tax losses carried forward are available indefinitely to offset against future taxable profits. A deferred tax asset has been recognized in respect to these
tax losses as they may be used to offset taxable profits by group contribution in the Norwegian tax group.
32

Awilco Offshore group Notes
Note 13
Cash and cash equivalents
The Group's cash and cash equivalents are denominated in the following currencies as of December 31:
in USD thousands 2005
US Dollar 25 524
Norwegian kroner 10 145
Other currencies 84
Total cash and cash equivalents 35 753
Restricted bank deposits (tax withheld from employees) 71
Cash deposited in banks earns interest at floating rates based on daily bank deposit rates.
As of December 31, 2005, the Group had unused credit facilities of USD 179.8 million.
In January 2006, the credit facility limit was increased from USD 210 million to USD 410 million, with substantially the same terms. In February 2006,
the Group issued unsecured bonds in the amount of USD 100 million.
Note 14
Trade receivables, prepayments and other receivables
in USD thousands 12.31.05
Receivables from trade customers 10 531
Prepayments 925
Other receivables 151
Total 11 607
Trade receivables are non-interest bearing and are generally due on 60 days terms.
33

Notes Awilco Offshore group
Statement of changes in equity Awilco offshore group
Note 15
Interest-bearing debt
in USD thousand, unless otherwise indicated Effective interest rate % Maturity 12.31.05
Current
Current portion of long-term debt Libor + 1 5/8 % 2006 11 440
Total current 11 440
Non-current
Bank borrowing no 1 Libor + 2,25 % 52 920
Bank borrowing no 2 Libor + 1 5/8 % 59 235
Total non-current 112 155
Security
Accommodation rigs pledged 76 807
Jack-up contracts pledged 205 037
Net book value of pledged assets 281 843
Maturity non-current borrowings
Later than one year and not later than four years 57 396
Five years and later 54 759
112 155
Security
Total external borrowings are secured by mortgages on the Group's rigs. Net book value of these assets are specified in the above table.
Borrowing, loan no 1
A credit facility was entered into on May 7,2004, between Wilpower Ltd.(a wholly owned subsidiary) as borrower,certain financial institutions as lenders
and Standard Chartered Bank as Arranger,Facility Agent and Security Agent. The loan agreement was amended on May 14, 2004. The lenders have
provided a loan facility to Wilpower Ltd., in the amount of USD 94,080 thousand or, iflower, 80% of the contract price and the provisional contract
sum. The loan is repayable by eight installments, with the first seven installments in equal amounts of USD 3,136 thousand, and the final installment
being equal to the remaining outstanding balance of the loan. The first installment is to be paid on January 7, 2007,and each subsequent installment is
repayable at six-monthly intervals thereafter.
The loan agreement includes provisions usually found in loan agreements of this nature, including; (i) that Wilpower Ltd.will remain a wholly owned
subsidiary, (ii) that Awilco Offshore ASA remains listed,(iv) that Awilco AS will have control of 40% of the board of directors of Awilco Offshore ASA.
Borrowings, loan no 2
On February 22, 2005, certain subsidiaries entered into an agreement with Nordea for USD 210 million of senior credit facilities consisting of:
1) A revolving reducing credit facility in an aggregate principal amount of equal to the lesser of USD 90 million or 46% of the market value of the
accommodation units. The revolving facility shall be subject to 16 consecutive quarterly reductions, commencing three months after the closing date,
and the 16th and final installment repaying the remaining outstanding loan.
2) A pre- and post delivery term loan facility in an aggregate principal amount of equal to the lesser of USD 320 million or 50% of the fair market value
of the jack-up units. The loans shall be repaid in quarterly installments commencing three months from the delivery of each jack-up unit.
The loan agreement includes customary financial covenants, including covenants as to minimum cash, positive working capital, minimum interest
coverage ratio,capitalization ratio and collateral maintenance ratio. Other covenants will include maintaining the listing of Awilco Offshore ASA on the
Oslo Stock Exchange, Anders Wilhelmsen group maintaining negative control, limitations on consolidations, mergers and demergers and limitations
on dividends.
In January 2006, the credit facility was increased to USD 410 million, on generally the same terms as described above. However, the new credit facility
is more flexible in that drawdowns can be on a pro rata basis compared to equity payments to the yard, compared to previously the equity had to be
paid before any drawdowns could be done under the credit facility.
34

Awilco Offshore group Notes
Note 16
Commitments and contingencies
Capital commitments contracted for at the balance sheet date, but not recognized in the financial statements are as follows:
Rigs under construction Yard Delivery Total delivery cost Remaining expenditures
WilPower PPL 2Q06 USDm 131 USDm 46
WilCraft Keppel 4Q06 USDm 131 USDm 57
WilSuperior PPL 2Q07 USDm 130 USDm 111
WilBoss Keppel 4Q07 USDm 134 USDm 107
WilForce PPL 4Q07 USDm 144 USDm 144
In March 2006, the Group exercised an option with Keppel Fels to build a sixth jack-up drilling rig. The rig is to be delivered in 2Q09, has a contract price
with the yard of USD 146 million and an estimated total project cost of USD 163 milllion.
In April 2006, the Group exercised an option with PPL Shipyard Ltd.to build a seventh jack-up drilling rig. The rig is to be delivered in 2Q08, has a contract
price with the yard of USD 125 million and an estimated total project cost of USD 132 - 140 milllion.
Note 17
Financial instruments
The Group had not entered into any financial derivative agreeements as of December 31, 2005.
Note 18
Provisions
The Group had not recorded any contingent laibilities as of December 31, 2005.
Note 19
Shares and shareholders
The company's largest shareholders at February 14, 2006: Number of shares Ownership
AWILCO AS 54 050 630 41.49 %
MORGAN STANLEY AND C CLIENT EQUITY ACCOUN 7 558 746 5.80 %
CREDIT SUISSE SECURI (EUROPE) PRIME BROKE 4 399 599 3.38 %
AWECO HOLDING AS 3 300 000 2.53 %
SIS SEGAINTERSETTLE 2 935 369 2.25 %
ORKLA ASA 2 572 300 1.97 %
MORGAN STANLEY & CO. 2 568 105 1.97 %
JPMORGAN CHASE BANK CLIENTS TREATY ACCOU 2 470 903 1.90 %
STATE STREET BANK & CLIENT OMNIBUS D 2 388 810 1.83 %
HSBC BANK PLC S/A RE GULF 2 363 450 1.81 %
TEIGEN FRODE NAKA RACHA TLD,87/2 2 134 238 1.64 %
GOLDMAN SACHS INTERN EQUITY NONTREATY CUS 2 060 687 1.58 %
BANK OF NEW YORK, BR S/A EQUITY TRI-PARTY 1 947 785 1.50 %
JPMORGAN CHASE BANK S/A ESCROW ACCOUNT 1 884 855 1.45 %
DEUTSCHE BANK (SUISS 1 831 310 1.41 %
ODIN OFFSHORE ODIN FORVALTNING AS 1 700 000 1.30 %
UBS AG,LONDON BRANC IPB CLIENT ACCOUNT 1 596 006 1.23 %
ODIN NORDEN 1 495 287 1.15 %
DEUTSCHE BANK AG LON PRIME BROKERAGE FULL 1 278 280 0.98 %
SKANDINAVISKA ENSKIL (PUBL) OSLOFILIALEN 1 250 000 0.96 %
Total 20 largest shareholders 101 786 360 78.13 %
Other shareholders 28 491 520 21.87 %
Total number of shares 130 277 880 100.00 %
35

Notes Awilco Offshore group
Statement of changes in equity Awilco offshore group
Shares owned by board members and senior management as of December 31, 2005:
Number of Shares
Sigurd E. Thorvildsen, Chairman of the Board -
Arne Alexander Wilhelmsen, Director (1) 3 300 000
Jarle Roth, Director -
Marianne Blystad, Director -
Tor Bergstrøm, Director -
Henrik Fougner, CEO 5 000
Thor Alexander Krafft, Senior Vice President Offshore -
Knut Martin Wadet, Vice President Offshore -
Jan B. Usland, Offshore Business Development -
Claus Mørch,Technical Director -
(1) Equals the shareholding for Aweco Holding AS, a holding company controlling approximately 60.6% of the main shareholder Awilco AS. Mr. Arne Alexander
Wilhelmsen owns 32.9% of Aweco Holding AS.
Note 20
Issued capital and reserves
Issued capital
in USD thousands, unless otherwise indicated Number of shares Share capital Paid-in premium
Share issue, January and February 2005 61 133 350 94 051 9 402
Share issue, February 2005 50 000 000 80 000 80 000
Share issue, May 2005 3 000 000 4 724 5 669
Share issue, August 2005 4 396 983 6 924 16 549
Share issue, December 2005 (1) 11 747 547 17 356 55 538
Share issue costs (net of tax effect) - -4 323
Reclassification of paid-in premium to other equity - -82 852
Ending balance 130 277 880 203 056 79 983
All issued shares have a par value of NOK 10 and are of equal rights. Awilco Offshore ASA is incorporated in Norway and the share capital is denominated
in NOK. In the table above, the share capital and paid-in premium is translated to USD at the foreign exchange rate in effect at the time of each
share issue.
(1) The share issue was resolved by a Board of Directors' meeting held on December 27, 2005, and was registered with the Register of Business Enterprises in January 2006.
Other reserves
Available for sale Translation Total
in USD thousands investments, revaluations adjustments other reserves
Other reserves, opening balance - - -
Revaluation on available-for-sale investments 11 419 11 419
Currency translation adjustments - -5 722 -5 722
Other reserves, ending balance 11 419 -5 722 5 698
36

Awilco Offshore group Notes
Note 21
Related parties
In the normal course of its business, Awilco Offshore enters into a number of transactions with related parties.The Group purchases certain adminstrative
and management services (such as, budgeting, reporting, accounting, legal, etc.) from Anders Wilhelmsen group, which is a major shareholder
through its wholly owned subsidiary Awilco AS. All transactions with related parties have been made on an arms length basis and are settled on a regular
basis. The table below provides the total amount of transactions, which have been entered into with related parties for the relevant financial year.
Sales and purchases from related parties relates to services rendered under the above mentioned management agreements.
Sales to Purchases from Amounts owed
in USD thousands, unless otherwise indicated Year related parties related parties to related parties
Anders Wilhelmsen group (including Awilco AS) 2005 17 1 505 5 600
Entity with significant influence over the Group:
Awilco AS, which is a wholly owned subsidiary in the Anders Wilhelmsen group, owned 45.6 % of the shares in Awilco Offshore ASA as of December
31, 2005.
in USD thousands 2005
Compensation of key management personnel of the Group
Salaries and social security tax 790
Bonuses 783
Pension costs 247
Share-based payment 2 141
Total 3 961
Remuneration to the board of directors:
Sigurd E. Thorvildsen (Chairman of the Board) 59
Other board members 118
Total 177
Expensed remuneration to the CEO:
Salary 205
Bonus 222
Other salary related expenses 23
Pension premium expense 41
Total 490
Share-based payment (accrual of 300,000 share appreciation rights) 611
The Group has not issued any loans or security for loans to board members or executive employees. The CEO has no contractual right to termination
payments on voluntary termination of employment. In the case of forced termination, the CEO is entitled to a maximum of 12 months of salary. The
CEO has been awarded 300,000 share appreciation rights, which are valued using share option pricing models. In 2005, the Group incurred expense of
USD 611 thousand relating to the CEO's share appreciation rights.
37

Notes Awilco Offshore group
Note 22
Financial risk management objectives and policies
Awilco Offshore operates internationally and in a capital intensive industry. The Group is exposed to market risk relating to the development of interest
rates and foreign exchange rates.
Interest rates
The Group's interest-bearing debt totalled USD 123,595 thousand at December 31, 2005, of which all was USD denominated.Interest on this debt bears
interest at LIBOR plus a margin. The average interest rate in 2005 was 5.6%. Awilco Offshore will evaluate the proportion of interest-rate hedging in relation
to the repayment profile of its loans, the Group’s portfolio of contracts and cash flow.
Foreign currency
From January 2006, Awilco Offshore is compiling its accounts in USD.In normal operations, the Group will have a currency exposure to GBP,NOK and
SGD.The majority of the Group's revenues and operating costs are in USD.
The rigs owned by the Group are valued, traded and financed in USD. Investments such as the upgrading of rigs will be primarily in USD. To the extent
that such investments are denominated in currencies other than USD the cash flow will normally be hedged with the aid of currency forward contracts.
Note 23
Earnings per share
Basic earnings per share is calculated by dividing net profit for the year attributable to ordinary equity holders by the weighted average number of ordinary
shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent (after deducting interest
on the convertible non-cumulative redeemable preference shares) by the weighted average number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares to ordinary shares.
The Group has no dilutive potential ordinary shares. Therefore, diluted earnings per share is the same as basic earnings per share.
in USD thousands, unless otherwise indicated 2005
Net profit attributable to equity holders of the parent 1 908
Number of shares outstanding 130 278
Weighted average number of ordinary shares outstanding 107 351
Basic and diluted earnings per share 0.02
38

Awilco Offshore group Notes
Note 24
Events after the balance sheet date
Increase of credit facility with Nordea
Certain subsidiaries have at year end an agreement with Nordea for USD 210 million of senior credit facilities as explained in note 15. In January 2006,
the credit facility limit was increased to USD 410 million, with mainly the same terms. However, the new credit facility is more flexible in that drawdowns
can be made on a pro rata basis compared to equity payments to the yard.Previously, equity had to be paid before any drawdowns could be made
under the credit facility.
Bond loan of USD 100 million
In February 2006, the Group issued a bond in the amount of USD 100 million. The bond is unsecured,has a five year bullet maturity and carries a fixed
coupon of 9.75% p.a. The bond is flexible, as it includes no change of control provisions and a possible demerger of the Group in connection with possible
future corporate transactions is pre-approved by the bond holders.
Investment in Offshore Rig Services ASA (OFRS)
On December 30, 2005, the Group entered into an agreement to acquired approximately 37.8% of the shares in OFRS with shares in Awilco Offshore
ASA as settlement. The transaction made Awilco Offshore the largest shareholder in OFRS. The transaction was finalized in January 2006. At December
31, 2005, the investment was recorded as a forward agreement in accordance with IAS 39 and classified as a current asset.
Newbuilding contract no 6
In March 2006, Awilco Offshore exercised an option with the Keppel Fels yard in Singapore to build a 400 foot jack-up drilling rig with a drilling depth
of 30,000 feet.The rig is to be delivered during the second quarter in 2009, and has a contract price with the yard of USD 146 million.
Acquisition of Petrojack ASA rigs
On April 4, 2006, Awilco Offshore and Sinvest ASA mutually entered into an agreement with Petrojack ASA for the aquisition of its ownship interest in
three jack-up rigs under construction in Singapore.
Newbuilding contract no 7
In April 2006, Awilco Offshore exercised an option with the PPL Shipyard in Singapore to build a 375 foot jack-up drilling rig with a drilling depth of
30,000 feet.The rig is to be delivered during the second quarter in 2008, and has a contract price with the yard of USD 125 million.
39

Proforma figures 2004 Awilco Offshore group
Proforma accounts
General
Awilco Offshore ASA was founded on January 21, 2005. The proforma
group accounts for 2004 have been prepared on a historical cost basis on a
consolidated level. The pro forma accounts are presented as if the offshore
segment was reorganized per beginning of the period presented, and is
derived from audited financial statements for Awilco group for 2004. The
pro forma accounts have been provided based on the assumptions stated
below. Pro forma financial statements are provided for informational purposes
only and are not necessarily indicative of actual results that would
have been achieved if the transactions and assumptions described below
had occurred during the period presented. The proforma figures are unaudited.
Since the formation of Awilco’s offshore segment into the wholly owned
AWO group is seen as a reorganization of a segment in a wholly owned
subgroup of Awilco, the reorganization has been recorded using the continuity
method. Consequently, the net book value of the assets, rights and
liabilities transferred to the AWO group,corresponds to the net book value
under the previous organization and ownership structure.
Proforma adjustments
Equity contribution
The Company carried out a private placement in the period from
February 14 - 18, 2005. Prior to completion of the private placement, the
share capital of the Company was increased through the conversion into
equity of part of the consideration for the offshore assets transferred from
Awilco. This conversion of debt into equity is rolled-back and reflected in
the pro forma balance sheet per beginning of 2004. Correspondingly,debt
not converted to equity is also reflected in the pro forma balance sheet per
beginning of 2004. Interest cost on this debt is reflected in the accounts
using the same interest rate as agreed in 2005.
The transfer ofassets from Awilco to AWO is in the pro forma accounts
assumed to have been executed using the same underlying values as actually
used in the reorganization that took place in 2005.
The proceeds from the private placement was received by the Company at
end of February 2005, and will be reflected in the financial report for 1st
quarter 2005, and is not rolled back to be reflected in the pro-forma
accounts for 2004.
Management fee
The Company has entered into management agreement with Awilco. The
management fee will equal the costs incurred by Awilco in delivering the
agreed management services. The management fee for 2005 is estimated to
be NOK 15-20 million. The pro forma accounts for 2004 include a management
fee of approximately NOK 15 million.
Tax
The accommodation rigs have been organised within the Norwegian tonnage
tax regime since the acquisition date of the rigs. In 2005, the tax law
was amended such that with effect from fiscal year 2006, the accommodation
rigs will no longer qualify for the tonnage tax regime. The Company
will not be in position to benefit from the deferred taxation allowed under
the new income tax regime. Consequently, deferred tax on historical operating
profits from the accommodation units will eventually become payable.
The amended tax regulation is reflected in the deferred tax provision
recorded in the balance sheet.
Income tax expense has been adjusted for the effects of pro forma adjustments
to the profit and loss statement.
Conversion to USD of the proforma accounts
The pro forma accounts presented in the prospectus,dated April 28, 2005,
for the listing of the shares on the Oslo Stock Exchange were presented in
NOK. These pro forma accounts have been converted to USD appying the
following principles:
- Balance sheet items are translated at the USD/NOK exchange rate at the
balance sheet date, with the exception of fixed assets as the accommodation
rigs, jack-up rigs and other non-monetary assets, which are translated
at the exchange rate at the acquisition date for the specific assets.
- Profit and loss items are translated at the average USD/NOK exchange
rate,with the following exceptions;
• Depreciation of accommodation rigs are based on historic exchange
rates, i.e., the exchange rate at the acquisition date for each individual
asset.
• Currency gain or loss on USD denominated assets and debt in NOK
financials which is caused by USD/NOK exchange rate fluctuation is
reversed.
Inter-company debt
Part of the proceeds from the private placement was used to repay intercompany
debt to Awilco. In order to better reflect the actual funding of
the segment in 2004, combined with that the proceeds from the private
placement mentioned above is not rolled-back to 2004, no pro forma
adjustments are made to the actual inter-company debt that existed in
2004.
40

Awilco Offshore group Profit and loss statement
Proforma figures
in USD thousands 2004
Operating income 40 160
Operating expenses
Rig operating expenses 20 226
General and administrative expenses 3 129
Depreciation and amortization 5 244
Operating profit 11 562
Interest income 155
Interest expense -1 832
Net foreign exchange loss -2 931
Other financial items -143
Net financial items -4 750
Profit before tax 6 812
Tax expense -2 132
Net profit 4 679
41

Balance sheet Awilco Offshore group
Proforma figures
in USD thousands 12.31.04
ASSETS
Non-current assets
Property,plant and equipment 97 224
Total non-current assets 97 224
Current assets
Trade and other receivables 7 343
Prepayments 1 597
Cash and cash equivalents 24 228
Total current assets 33 168
TOTAL ASSETS 130 392
EQUITY AND LIABILITIES
Equity
Paid in capital 103 453
Retained earnings -78 467
Total equity 24 986
Non-current liabilities
Deferred tax liability 6 294
Long-term interest-bearing debt 66 107
Total non-current liabilities 72 401
Current liabilities
Current portion of long-term debt 4 375
Trade and other payables 26 598
Provisions 2 031
Total current liabilities 33 004
TOTAL EQUITY AND LIABILITIES 130 392
42

Awilco parent company Financial Statements

Profit and Loss Statement Awilco parent company
in NOK thousands, except earnings per share Note 2005
Operating revenue
Operating income 3 2 709
Gain on disposal of fixed assets 135
2 844
Operating expenses
General and administrative expenses 4 38 477
Depreciation 5 334
38 811
Operating loss -35 966
Interest income 30 711
Interest expense -2 065
Net foreign exchange gain 19 080
Other financial items -1 603
Net financial items 46 124
Profit before tax 10 157
Tax expense 11 -2 852
Net profit 7 305
Basic and diluted earnings per share 22 0.07
44

Awilco parent company Balance Sheet
in NOK thousands Note 31.12.05
ASSETS
Non-current assets
Deferred tax asset 11 7 674
Property,plant and equipment 5 1 676
Shares in subsidiaries 6 549 865
Investment in joint ventures 7 19 500
Investment in associates 8 500 798
Other investments 9 176 979
Loans to group companies 951 892
Total non-current assets 2 208 384
Current assets
Prepayments and other receivables 13 4 037
Loans to group companies 209 353
Cash and cash equivalents 12 9 019
Total current assets 222 409
TOTAL ASSETS 2 430 793
EQUITY AND LIABILITIES
Equity
Share capital 1 302 779
Share premium reserve 524 962
Other equity 533 418
Total equity 19 2 361 159
Non-current liabilities
Net pension liabilities 10 1 240
Total non-current liabilities 1 240
Current liabilities
Trade and other payables 263
Provisions 30 648
Debt to group companies 1 407
Debt to related party companies 20 36 076
Total current liabilities 68 395
TOTAL EQUITY AND LIABILITIES 2 430 793
45

Cash Flow Statement Awilco parent company
in NOK thousands 2005
Profit before tax 10 157
Adjustments for:
Depreciation 334
Gain on disposal of fixed assets -135
Unrealized foreign exchange gains -42 834
Difference between pension cost and pension premium paid 1 240
Net change in working capital -144 996
Net cash flow used in operating activities -176 234
Investments in tangible fixed assets -1 875
Investments in shares in subsidiaries -549 865
Other share investments -54 822
Net cash flow used in investing activities -606 562
Change in loans to group companies -909 058
Proceeds from issuance of shares, net 1 700 873
Net cash flow from financing activities 791 815
Net change in cash and cash equivalents 9 019
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period 9 019
46

Awilco parent company Notes
Statement of changes in equity
Issued Share Other
in NOK thousands capital premium equity Total
Equity per incorporation of the company 1 000 100 - 1 100
Conversion of debt to equity 610 334 61 033 - 671 367
Share issue no 1 500 000 500 000 - 1 000 000
Share issue no 2 30 000 36 000 - 66 000
Share issue no 3 43 970 105 088 - 149 058
Share issue no 4 117 475 375 922 - 493 397
Share issue costs - -27 068 - -27 068
Reclassification of paid in premium to other equity - -526 113 526 113 -
Net profit - - 7 305 7 305
Equity per ending balance 1 302 779 524 962 533 418 2 361 159
47

Notes Awilco parent company
Note 1
Corporate information
Awilco Offshore ASA is a public limited liability company incorporated and domiciled in Norway. The address of the main office is Beddingen 8,0118
Oslo,Norway.
The consolidated financial statements for the year ended December 31, 2005, were approved by the Board of Directors on March 29, 2006.
The principal activity of Awilco Offshore ASA and its subidiaries is the investment in and operation of accommodation rigs and jack-up drilling rigs.
Note 2
Summary of significant accounting policies
General
The parent company’s accounts are prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway.
Reporting currency
The parent company’s reporting currency is the Norwegian kroner (NOK).
Recognition of revenues and expenses
Revenues are recognized as earned. Costs are expensed in the same period as related revenue.
Classification of balance sheet items
Assets and liabilities related to the operation of the company are classified as current assets and liabilities. Assets for long-term ownership or use are
classified as fixed assets. Other assets are classified as current assets. Liabilities which fall due more than one year after being incurred are classified as
long-term liabilities. Liabilities which fall due less than one year after they are incurred are classified as current liabilities.
Pensions
The present value of the pension liabilities under defined benefit pension plans has been calculated based on actuarial principles. The present value of
the pension liabilities and the pension plan assets is included under long-term liabilities and long-term assets, respectively. The change in net pension
liabilities is expensed in the profit and loss account as personnel expenses. The effect of changes in estimates, change in pension plans and actuarial gains
and losses are recognized as income or expense over the average remaining service period.
Net pension expenses include the present value of pension earnings for the period, interest expense on pension obligations incurred, expected return
on the pension funds and the amortized effect of changes in estimates and plans.
Fixed assets
Fixed assets are stated at acquisition cost less accumulated amortization, accumulated depreciation and write downs. Assets are amortized or depreciated
on a straight-line basis over their estimated economically useful lives. Write downs are made if the fair value of a fixed asset is lower than its book
value and if the reduction is not deemed temporary.A write down is reversed to the extent that the basis for the write down is no longer present.
Share-based transactions
Employees receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for share appreciation
rights with cash settlement.
The cost of the share-based incentive plan is measured,at each balance sheet date, by reference to the fair value at the date which they are granted.The
fair value is determined by an external valuer using an option pricing model (Black & Scholes). The cost of the share-based payment is recognized,together
with a corresponding accrual, over the vesting period.The cumulative expense recognized for equity settled transaction at each reporting date until
the vesting date reflects the extent to which the vesting period has expired and the best available estimate of the number of equity instruments that will
ultimately vest.
48

Awilco parent company Notes
Income taxes
Taxes are calculated based on the financial result and consists of taxes payable and deferred taxes. Deferred tax is calculated on the basis of temporary
differences between book and tax values that exist at the end of the financial period,and based on the nominal value calculation.
Shares in subsidiaries and other shares
Investments in subsidiaries are recorded at historic cost in the balance sheet.The same applies for other share investments. A write down is recorded if
the underlying market value is estimated to be lower than recorded book value.
Monetary items in foreign currency
Monetary items in foreign currency are translated at year end exchange rates. Realized currency gains and losses are taken to the profit and loss account
when an installment is paid.
Cash, cash equivalents and cash flow statement
Cash represents cash on hand and deposits with bank that are repayable on demand.
Cash equivalents represent short-term, highly-liquid investments which are readily convertible into known amounts of cash with original maturities of
three months or less.
The cash flow statement is prepared using the indirect method.
Note 3
Operating revenue
Operating revenue is mainly related to services performed for other group companies. The company also recorded a supervisory technical management
fee that was invoiced to a company in the Anders Wilhelmsen group,which is the main shareholder of Awilco Offshore ASA.
in NOK thousands 2005
Management fee from subsidiaries 2 600
Management fee from other related parties 109
Total operating income 2 709
Note 4
General and adminstrative expenses
in NOK thousands, unless otherwise indicated
Employee related expenses 2005
Salaries and social security tax 4 755
Bonuses 5 300
Pension costs, defined benefit/contribution plan 1 672
Share-based payments 13 793
Total 25 521
Number of employees 5
Other administrative expenses
Accrued board of directors fees 1 200
Stock listing fees 1 217
Lawyer fees 1 952
Management fees 6 630
Other 1 956
Total 12 956
Total general and administrative expenses 38 477
49

Notes Awilco parent company
The company has an employee share incentive plan for senior management. Under the incentive plan,management is granted share appreciation rights
where the employees are entitled to a cash payment equivalent to the gain that would have arisen from a holding of a particular number of shares from
the date of the grant to the date of excercise. The share appreciation rights are vested over 4 years from the date of grant.
The fair value of the share appreciation rights has been estimated using the Black & Scholes option pricing model.
in NOK thousands, unless otherwise indicated
Share
appreciation FV Fair Vesting Accrued
Grant date rights Vested call value % value (1)
February 1, 2005 250 000 February 1, 2006 25.44 6 361 91.2 % 6 621
February 1, 2005 250 000 February 1, 2007 25.44 6 361 45.6 % 3 311
February 1, 2005 250 000 February 1, 2008 25.44 6 361 30.4 % 2 207
February 1, 2005 250 000 February 1, 2009 25.44 6 361 22.8 % 1 654
1 000 000 13 793
(1) includes social security tax
Assumptions
Dividend yield 0 %
Expected volatility 41.1%
Risk free interest rate 3.3%
Expected life of options 3.09
Strike price NOK 20.0
Spot price at the end of year NOK 42.4
Fees to the company's auditors are included in general and adminstrative expenses. The amounts for 2005 are shown below:
in NOK thousands 2005
Audit fees (excl VAT) 135
Audit related fees (excl VAT) 401
Total 536
Note 5
Property,plant & equipment
in NOK thousands
Vehicles
Acquisition cost, opening balance -
Newbuilding,upgrade,reconstruction 2 091
Disposal of assets -97
Acquisition cost, ending balance 1 994
Accumulated depreciation, opening balance -
Depreciation 334
Disposal of assets -16
Accumulated depreciation, ending balance 318
Net carrying amount, ending balance 1 676
50

Awilco parent company Notes
Note 6
Investment in subsidiaries
The company records investment in subsidiaries at historical cost.
in NOK thousands, unless otherwise indicated
Country of Ownership Share Net book
Subsidiary incorporation interest capital value
Port Rigmar AS Norway 100 % 100 304 967
Awilco Sea Beds AS Norway 100 % 110 6 537
Wilhelmsen Oil & Gas AS Norway 100 % 1 400 231 052
Awilco Sea Beds II AS Norway 100 % 100 7 090
Wilpower AS Norway 100 % 100 110
Wilcraft AS Norway 100 % 100 110
549 865
Wholly owned companies held indirectly through subsidiaries include the following companies:
Country of Ownership
Subsidiary incorporation interest
Awilco Drilling Ltd Bermuda 100 %
Wilsuperior Ltd Bermuda 100 %
Wilforce Ltd Bermuda 100 %
Wilpower Ltd Bermuda 100 %
Wilcraft Ltd Bermuda 100 %
All subsidiaries are included in the group accounts from January 1, 2005.
Note 7
Investment in joint ventures
In June 2005, Awilco Offshore ASA and Sinvest ASA established a jointly owned entity,Premium Drilling,to manage the operations of the companies'
fleet of jack-up drilling rigs.The investment is recorded in the parent company at historical cost.
in NOK thousands, unless otherwise indicated
Country of Ownership Net book
Name incorporation 31.12.05 value
Premium Drilling AS Norway 50 % 19 500
Note 8
Investment in associates
Awilco Offshore has a 37.8 % interest in Offshore Rig Services ASA, which is a Norwegian company with a semisubmersible drilling rig under construction at the Yantai
Raffles Shipyard in China. Offshore Rig Services ASA is listed on the Norwegian OTC list.
The acquisition date was at the end of December 2005 and was finalized in January 2006. The investment is recorded in the parent company at historical cost.
in NOK thousands, unless otherwise indicated
Country of Ownership Net book
Name incorporation Interest value
Offshore Rig Services ASA Norway 37.8%
Acquisition cost 493 397
Capitalized purchase cost 7 401
Net book value 500 798
51

Notes Awilco parent company
Note 9
Financial investments
in NOK thousands, unless otherwise indicated
Ownership Net book
Name Interest value
Petrojack ASA 19.8%
Share investment at cost 173 362
Capitalized purchase cost 3 616
Net book value 176 979
The investment is classified as an available-for-sale investment and recorded at cost price in the parent company's financial statements. Because Awilco
Offshore did not have representation on the board of Petrojack ASA at December 31, 2005, it did not have significant influence. In the group financial
statements the investment is recorded at fair value. The fair value of the investment at the end of the year was approximately NOK 253.3 million.
Awilco Offshore ASA and Sinvest ASA own approximately 40% of the shares in Petrojack ASA. The companies have agreed to cooperate on any future
investments in Petrojack ASA.
Note 10
Pensions
The company has set up a defined benefit scheme with a life insurance company to provide pension benefits for its employees. The scheme provides
entitlement to benefits based on future service from the commencement date of the scheme. These benefits are principally dependent on an employees
pension qualifying period,salary at retirement age and the size of benefits from the National Insurance Scheme. Full retirement pension will amount
to approximately 70% of the scheme pension-qualifying income. The scheme also includes entitlement to disability, spouses and children’s pensions.
The retirement age under the scheme is 67 years.
The company may at any time make changes to the terms and conditions of the pension scheme and will inform the employees of any such changes.
The benefits accruing under the scheme are funded obligations.
All pension schemes are calculated in accordance with IAS 19. When the accumulated effect of changes in estimates, changes in assumptions and deviations
from actuarial assumptions exceed 10% of the higher of pension benefits obligations and pension plan assets, the excess is recognized over the
estimated average reamaining service period.
The amounts recognized are determined as follows:
in NOK thousands 2005
Pension cost
Service cost 617
Interest cost 386
Estimated return on plan assets -225
Amortization of actuarial gain/loss, past service cost 784
Net pension cost 1 562
Social security tax 110
Total 1 672
Benefit asset / (obligation)
Benefit obligation -15 439
Plan assets 7 888
52

Awilco parent company Notes
Funded status -7 552
Social security tax -1 065
Unamortized actuarial loss/gain, past service cost 7 377
Net obligation -1 240
Movements in the benefit asset / (liability) during the year
Benefit asset / (obligation) per opening balance -
Benefit expense -1 672
Contributions 432
Benefit asset / (obligation) per ending balance -1 240
Assumptions
Estimated return on plan assets 5.5%
Discount rate 4.5%
Salary increase 3.3%
Increase of national Insurance Basic Amount (G) 3.3%
Rate of pension increase 3.3%
Social security tax 14.1%
The company employed the offshore group of the Anders Wilhelmsen group,in this context the company assumed the obligations and benefits under
the pension scheme already established by the previous employer. The past service cost is amortized over the remaining service period.
Analysis of the plan assets
The defined benefit scheme is financed through an insurance contract with Storebrand Livsforsikring AS. The asset allocation at December 31, 2005, is
set out below:
Debt instruments 57 %
Equity instruments 27 %
Money market and similar 6 %
Property 10 %
Total 100 %
Note 11
Income tax
in NOK thousands 2005
Current income tax
Current income tax charge 10 526
Deferred income tax
Relating to origination and reversal of temporary differences -7 674
Income tax expense 2 852
Reconciliation of total income tax expense during the year to the income tax expense at the statutory income tax rate applicable in Norway:
2005
Profit before tax 10 157
Tax at Norway's statutory income tax rate of 28 % 2 844
Non-deductible expenses 8
Income tax expense 2 852
Tax effect charged to equity is as follows:
Tax effect of share issue costs -10 526
53

Notes Awilco parent company
Deferred income tax at December 31, 2005, relates to the following:
Deferred tax assets
Accrued liabilities, other provisions 4 209
Tax losses carried forward 3 514
Deferred tax assets 7 723
Deferred tax liabilities
Accelerated depreciation for tax purposes -49
Deferred tax liabilities -49
Net deferred income tax asset 7 674
Deferred tax cost
Deferred tax opening balance -
Deferred tax ending balance -7 674
Deferred tax benefit -7 674
Note 12
Cash and cash equivalents
The company's cash and cash equivalents are denominated in the following currencies as of December 31:
in NOK thousands 2005
US Dollar 2 490
Norwegian kroner 6 529
Total cash and cash equivalents 9 019
Restricted bank deposits (tax withheld from employees) 477
Cash deposited in banks earns interest at floating rates based on daily bank deposit rates.
The company had unused credit facilities of USD 179.8 million as of December 31, 2005.
Note 13
Prepayments and other receivables
in NOK thousands 2005
Prepayments 4 036
Receivables from related parties 1
Total prepayments and other receivables 4 037
Note 14
Interest-bearing loans and borrowings
The company had no external loans or borrowings as of December 31, 2005.
Note 15
Commitments and contingencies
The company had no capital commitments or contingencies as of December 31, 2005.
54

Awilco parent company Notes
Note 16
Financial instruments
The company had not entered into any financial instrument agreeements as of December 31, 2005.
Note 17
Provisions
The company had not recorded any provisions or contingent liabilities of as December 31, 2005.
Note 18
Shares and shareholders
Number of
The company's largest shareholders at February 14, 2006: shares Ownership
AWILCO AS 54 050 630 41.49 %
MORGAN STANLEY AND C CLIENT EQUITY ACCOUN 7 558 746 5.80 %
CREDIT SUISSE SECURI (EUROPE) PRIME BROKE 4 399 599 3.38 %
AWECO HOLDING AS 3 300 000 2.53 %
SIS SEGAINTERSETTLE 2 935 369 2.25 %
ORKLA ASA 2 572 300 1.97 %
MORGAN STANLEY & CO. 2 568 105 1.97 %
JPMORGAN CHASE BANK CLIENTS TREATY ACCOU 2 470 903 1.90 %
STATE STREET BANK & CLIENT OMNIBUS D 2 388 810 1.83 %
HSBC BANK PLC S/A RE GULF 2 363 450 1.81 %
TEIGEN FRODE NAKA RACHA TLD,87/2 2 134 238 1.64 %
GOLDMAN SACHS INTERN EQUITY NONTREATY CUS 2 060 687 1.58 %
BANK OF NEW YORK, BR S/A EQUITY TRI-PARTY 1 947 785 1.50 %
JPMORGAN CHASE BANK S/A ESCROW ACCOUNT 1 884 855 1.45 %
DEUTSCHE BANK (SUISS 1 831 310 1.41 %
ODIN OFFSHORE ODIN FORVALTNING AS 1 700 000 1.30 %
UBS AG,LONDON BRANC IPB CLIENT ACCOUNT 1 596 006 1.23 %
ODIN NORDEN 1 495 287 1.15 %
DEUTSCHE BANK AG LON PRIME BROKERAGE FULL 1 278 280 0.98 %
SKANDINAVISKA ENSKIL (PUBL) OSLOFILIALEN 1 250 000 0.96 %
Total 20 largest shareholders 101 786 360 78.13 %
Other shareholders 28 491 520 21.87 %
Total number of shares 130 277 880 100.00 %
Shares owned by board members and senior management as of December 31, 2005:
Number
of Shares
Sigurd E. Thorvildsen, Chairman of the Board -
Arne Alexander Wilhelmsen, director (1) 3 300 000
Jarle Roth, Director -
Marianne Blystad, Director -
Tor Bergstrøm, Director -
Henrik Fougner, CEO 5 000
Thor Alexander Krafft, Senior Vice President Offshore -
Knut Martin Wadet, Vice President Offshore -
Jan B. Usland, Offshore Business Development -
Claus Mørch,Technical Director -
(1) Equals the shareholding for Aweco Holding AS, a holding company controlling approximately 60.6 % of the main shareholder Awilco AS.
Mr.Arne Alexander Wilhelmsen owns 32.9 % of Aweco Holding AS.
55

Notes Awilco parent company
Note 19
Issued capital and reserves
Issued capital
Share Share premium Other
in NOK thousands, unless otherwise indicated Number of shares capital reserve equity Total
Incorporation of the company 100 000 1 000 100 1 100
Share issue, January and February 2005 61 033 350 610 334 61 033 671 367
Share issue, February 2005 50 000 000 500 000 500 000 1 000 000
Share issue, May 2005 3 000 00 30 000 36 000 66 000
Share issue, August 2005 4 396 98 43 970 105 088 149 058
Share issue, December 2005 (1) 11 747 547 117 475 375 922 493 397
Share issue costs (net of tax effect) -27 068 -27 068
Reclassification of paid-in premium to other equity -526 113 526 113 -
Net profit 7 305 7 305
Ending balance 130 277 880 1 302 779 524 962 533 418 2 361 159
All issued shares have a par value of NOK 10 and are of equal rights.
The general meeting held on April 4, 2005, resolved that NOK 526,113,350 should be transferred from the share premium reserve to other equity. The transfer was effected
in the Register of Business Enterprises in March 2006, after the expiry of the creditor's notice period.
(1) The share issue was resolved by a Board of Director's meeting held on December 27, 2005. The share issue was not registered in the Register of Business Enterprises
until January 2006.
Note 20
Related party disclosures
In the normal course of its business, the company enters into a number of transactions with related parties. The company purchases certain adminstrative
and management services (as such, budgeting, reporting, accounting, legal, etc.) from Anders Wilhelmsen group, which is a major shareholder
through its wholly owned subsidiary Awilco AS. All transactions with related parties have been made on an arms length basis, and are settled on a regular
basis. The table below provides the total amount of transactions, which have been entered into with related parties for the relevant financial year.
Sales and purchase from related parties relates to services rendered under the above mentioned management agreements.
Interest is calculated on inter-company loans based on market interest rates. Terms for repayment of the loans have not been negotiated.
56

Awilco parent company Notes
Sales to Purchases from Amounts owed
in NOK thousand, unless otherwise indicated Year related parties related parties to related parties
Subsidiaries 2005 2 600 - -
Entity with significant influence over the Group:
Anders Wilhelmsen group (including Awilco AS) 2005 109 6 630 36 076
Joint venture:
Premium Drilling AS 2005 - - 1
Entity with significant influence over the Group:
Awilco AS, a wholly owned subsidiary in Anders Wilhelmsen group,owned 45.6 % of the shares in Awilco Offshore ASA as of December 31, 2005.
Joint venture:
Awilco Offshore has a 50 % interest in Premium Drilling AS.
Associate:
Awilco Offshore has a 37.8 % interest in Offshore Rig Services ASA.
in NOK thousands 2005
Compensation of key management personnel of the company
Salaries and social security tax 4 755
Bonuses 5 300
Pension costs 1 672
Share-based payment 13 793
Total 25 521
Accrued remuneration to the board of directors:
Sigurd E. Thorvildsen (Chairman of the Board) 400
Other board members 800
Total 1 200
Expensed remuneration to the CEO:
Salary 1 386
Bonus 1 500
Other salary related expenses 152
Pension premium expense 280
Total 3 318
Share-based payment (accrual of 300,000 share appreciation rights) 4 138
The company has not issued any loans or security for loans to board members or executive employees. The CEO has no contractual right to termination
payments on voluntary termination of employment. In the case of forced termination, the CEO is entitled to a maximum of 12 months of salary.
The CEO has been awarded 300,000 share appreciation rights, which are valued using share option pricing models. In 2005, the company incurred
expense of NOK 4.1 million relating to the CEO's share appreciation rights.
57

Notes Awilco parent company
Note 21
Financial risk management objectives and policies
See note 22 in the Group's financial statements for details.
Note 22
Earnings per share
Basic earnings per share is calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders ofthe parent (after deducting
interest on the convertible non-cumulative redeemable preference shares) by the weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary
shares.
The company has no dilutive potential ordinary shares. Therefore, diluted earnings per share is the same as basic earnings per share.
in NOK thousands, unless otherwise indicated 2005
Net profit attributable to equity holders of the parent 7 305
Number of shares outstanding 130 278
Weighted average number of ordinary shares outstanding 107 351
Basic and diluted earnings per share 0.07
58

Awilco parent company Notes
Note 23
Events after the balance sheet date
Increase of credit facility with Nordea
Certain subsidiaries have at year end an agreement with Nordea for USD 210 million of senior credit facilities as explained in note 15. In January 2006,
the credit facility limit was increased to USD 410 million, with mainly the same terms. However, the new credit facility is more flexible in that drawdowns
can be made on a pro rata basis compared to equity payments to the yard.Previously, equity had to be paid before any drawdowns could be made
under the credit facility.
Bond loan of USD 100 million
In February 2006, the company issued a bond in the amount of USD 100 million. The bond is unsecured, has a five year bullet maturity and carries a
fixed coupon of 9.75% p.a. The bond is flexible, as it includes no change of control provisions and a possible demerger of the Group in connection with
possible future corporate transactions is pre-approved by the bond holders.
Investment in Offshore Rig Services ASA (OFRS)
The acquisition of 37.8 % of the shares in OFRS announced on December 30, 2005 was finalized in January 2006.
Newbuilding contract no 6
In March 2006, Awilco Offshore exercised an option with the Keppel Fels yard in Singapore to build a 400 foot jack-up drilling rig with a drilling depth
of 30,000 feet.The rig is to be delivered during the second quarter in 2009, and has a contract price with the yard of USD 146 million.
Acquisition of Petrojack ASA rigs
On April 4, 2006, Awilco Offshore ASA and Sinvest ASA mutually entered into an agreement with Petrojack ASA for the aquisition of their ownship
interest in three jack-up rigs under construction in Singapore.
Newbuilding contract no 7
In April 2006, Awilco Offshore exercised an option with the PPL Shipyard in Singapore to build a 375 foot jack-up drilling rig with a drilling depth of
30,000 feet.The rig is to be delivered during the second quarter in 2008, and has a contract price with the yard of USD 125 million.
59

Auditor's Auditors Report report for 2005
60

signatur.no
OFFSHORE
Awilco Offshore ASA
Beddingen 8 Aker Brygge
P.O.Box 1583 Vika
NO-0118 Oslo
Tel.: +47 22 01 43 00
Fax: +47 22 01 43 70
www.awo.no