AWO Prospectus - COSL Drilling Europe AS

ProspectusAwilco Offshore ASAPrivate Placement of 9,500,000 New Shares in Awilco OffshoreASA, each with a par value of NOK 10Subscription price: NOK 56 per New ShareThe Private Placement has been completedManagers18 May 2006

Table of Contents1. Summary .............................................................................................................................. 51.1 Presentation of Awilco................................................................................................... 51.2 Board of Directors, senior management and employees................................................ 61.3 Advisors and auditors .................................................................................................... 71.4 Major shareholders and related party transactions......................................................... 71.5 Financial information..................................................................................................... 81.6 Shares and articles of association .................................................................................. 91.7 The transaction............................................................................................................... 91.8 Appendices and documents on display........................................................................ 101.9 Summary of risk factors............................................................................................... 102. Risk factors ........................................................................................................................ 123. Responsibility for the Prospectus..................................................................................... 154. The Private Placement ...................................................................................................... 164.1 Purpose of the Private Placement. Use of the proceeds............................................... 164.2 The Company's share capital prior to the Private Placement....................................... 164.3 The Private Placement ................................................................................................. 164.4 The Company’s share capital following the Private Placement .................................. 174.5 Rights conferred on the New Shares............................................................................ 174.6 Dilution........................................................................................................................174.7 Managers...................................................................................................................... 174.8 Expenses ...................................................................................................................... 175. Presentation of Awilco Offshore ...................................................................................... 185.1 History .........................................................................................................................185.2 Business idea, goals and strategy................................................................................. 185.3 Business overview ....................................................................................................... 185.4 The accommodation units............................................................................................ 205.5 The jack-up drilling rig newbuilding contracts............................................................ 215.6 Investments in other companies................................................................................... 235.7 Management agreements ............................................................................................. 255.8 Relation to the Anders Wilhelmsen Group.................................................................. 255.9 HSE and Organization ................................................................................................. 276. Market overview................................................................................................................ 286.1 Market positioning....................................................................................................... 286.2 The market for accommodation rigs............................................................................ 296.3 The market for drilling rigs.......................................................................................... 327. Organization ...................................................................................................................... 367.1 Registered address and organisation number............................................................... 367.2 Legal structure ............................................................................................................. 367.3 Organisational structure............................................................................................... 377.4 Board of Directors ....................................................................................................... 377.5 Management ................................................................................................................ 387.6 Remuneration to Management..................................................................................... 397.7 Shares and options ....................................................................................................... 407.8 Employees.................................................................................................................... 407.9 Pensions and other obligations .................................................................................... 407.10 Conflicts of interest...................................................................................................... 407.11 Corporate Governance ................................................................................................. 408. Financial information........................................................................................................ 428.1 Operating and Financial Review.................................................................................. 428.2 Accounts ...................................................................................................................... 438.3 Accounting principles.................................................................................................. 468.4 Other financial information ......................................................................................... 501

8.5 Events since 31 December 2005.................................................................................. 528.6 Financial Market Exposure.......................................................................................... 538.7 Statutory auditors......................................................................................................... 538.8 Investments .................................................................................................................. 538.9 Capital Resources ........................................................................................................ 548.10 Analytical information................................................................................................. 568.11 Capitalization and Indebtedness .................................................................................. 578.12 Working Capital Statement.......................................................................................... 589. Share capital and shareholder matters............................................................................ 599.1 Share capital................................................................................................................. 599.2 Share Registration and Listing..................................................................................... 599.3 Authorizations.............................................................................................................. 609.4 Shareholders and share trading.................................................................................... 609.5 Share price development.............................................................................................. 619.6 Articles of Association................................................................................................. 619.7 Related Party Transactions .......................................................................................... 629.8 Shareholder policy ....................................................................................................... 639.9 Dividend Policy ........................................................................................................... 639.10 Mandatory Bid Rules................................................................................................... 639.11 Compulsory Acquisition Rules.................................................................................... 649.12 Disclosure of Acquisition and Disposals ..................................................................... 649.13 Shareholders Agreement.............................................................................................. 6410. Legal matters ..................................................................................................................... 6510.1 Construction contracts ................................................................................................. 6510.2 Certain other legal matters........................................................................................... 6911. Taxation.............................................................................................................................. 7011.1 Introduction.................................................................................................................. 7011.2 Taxation related to holding and disposal of the shares ................................................ 7011.3 Duties on the transfer of shares.................................................................................... 7211.4 Inheritance tax ............................................................................................................. 7212. Documents on display........................................................................................................ 7313. Definitions .......................................................................................................................... 7414. Appendix 1 Q4 report 2005 ............................................................................................. 7515. Appendix 2 Articles of Association ..................................................................................852

Important NoticeThis Prospectus has been prepared in connection with the admission to trading on Oslo Børs ofNew Shares in Awilco Offshore ASA (“Awilco” or the “Company”) issued by way of the PrivatePlacement (as defined herein) and as further described herein. The Prospectus has been prepared tocomply with the Norwegian Securities Trading Act (the “Securities Trading Act”). This Prospectushas been published in an English version only. The Prospectus has been reviewed and approved byOslo Børs pursuant to section 5-7 of the Securities Trading Act.The information contained herein is as of the date hereof and subject to change, completion oramendment without notice. There may have been changes in matters, which affect the Company orits subsidiaries subsequent to the date of this Prospectus. Any new significant new factor, materialmistake or inaccuracy relating to the information included in the Prospectus which is capable ofaffecting the assessment of the Shares and which arises or is noted between the publication of thisProspectus and the admission to trading on Oslo Børs of the New Shares, will be mentioned in asupplement to this Prospectus in accordance with section 5-15 of the Securities Trading Act.Neither the Private Placement or delivery of this Prospectus nor any sale made in connection withthe Private Placement shall, under any circumstances, create any implication that the informationcontained herein is complete or correct as of any time subsequent to the date hereof or that theaffairs of the Company or its subsidiaries have not since changed.The contents of this Prospectus are not to be construed as legal, business, financial or tax advice.Each prospective investor should consult their own legal advisor, business advisor, financialadvisor or tax advisor as to legal, business, financial and tax advice.In certain jurisdictions, the distribution of this Prospectus is subject to legal restrictions. No actionshave been taken, other than the control of this Prospectus by Oslo Børs, to seek permission for thedistribution of the Prospectus in any jurisdiction where such specific action is required. Any personreceiving this Prospectus is required by the Company and the Managers to inform themselves aboutand to observe such restrictions.The Private Placement has been fully subscribed prior to the publication of this Prospectus. ThisProspectus does not constitute an offer to sell or a solicitation of an offer to buy any of the Sharesin the Company.No securities are being offered in the United States pursuant to the Prospectus. The Shares have notbeen and will not be registered under the U.S. Securities Act. Transfer of outstanding Shares maybe restricted. Any subsequent offer or sale of such Shares in the United States may only be made ifan exemption from registration under the U.S. Securities Act is available.The Shares of the Company have not been approved or recommended by any United States federalor state securities commission or regulatory authority. Furthermore, the foregoing authorities havenot confirmed the adequacy or accuracy of this document. Any representation to the contrary is acriminal offence.The distribution (which term shall include any form of communication) of this Prospectus and itscontent may be restricted pursuant to Section 21 (Restrictions on Financial Promotion) of theFinancial Services and Markets Act 2000 (as amended). In relation to the United Kingdom, thisProspectus is only directed at, an may only be distributed to, persons who fall within the meaningof Article 19 (Investment Professionals) and 49 (High Net Worth Companies, UnincorporatedAssociations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order2001 (as amended) or who are persons to whom the document may otherwise lawfully bedistributed. This Prospectus may only be distributed in circumstances which do not result in anoffer to the public in the United Kingdom within the meaning of the Public Offers of SecuritiesRegulations 1995 (as amended).3

All inquires relating to this Prospectus and the Private Placement should be directed to theManagers. Only the Managers are entitled to provide information in respect of the PrivatePlacement or in respect of matters described in this Prospectus. Information that might be providedby any other persons is of no relevance to the contents of this Prospectus and should not be reliedupon.In the ordinary course of their respective businesses, the Managers and certain of their affiliateshave engaged, and may in the future engage in investment banking transactions with the Companyand its subsidiaries.The Private Placement and this Prospectus are subject to Norwegian law. Any dispute arising inrespect of or in connection with this Prospectus is subject to the exclusive jurisdiction of theNorwegian courts with Oslo District Court as legal venue.Cautionary Note Regarding Forward-Looking StatementsCertain statements in section 2 “Risk Factors”, section 5 “Presentation of Awilco”, section 6 “TheMarket Overview”, section 8 “Financial information”, and elsewhere in this Prospectus areforward-looking. Such forward-looking statements and information are based on the beliefs of theCompany’s management or assumptions based on information available to the Company. Whenused in this document, the words “anticipate”, “believe”, “estimate“ and “expect” and similarexpressions, as they relate to the Company or its management, are intended to identify forwardlookingstatements. Such forward-looking statements reflect the current views of the Company orits management with respect to future events and are subject to certain risks, uncertainties andassumptions. The Company can give no assurance as to the correctness of such forward-lookingstatements. Many factors could cause the actual results, performance or achievements of theCompany to be materially different from any future results, performance or achievements that maybe expressed or implied by such forward-looking statements, including, among others, risks oruncertainties associated with the Company’s ability to successfully acquire and profitably developoil and gas projects. Some of these factors are discussed in more detail under section 2, “RiskFactors”. Should one or more of these risks or uncertainties materialise, or should underlyingassumptions prove incorrect, actual results may vary materially from those described in thisdocument as anticipated, believed, estimated or expected. Except as required by applicable law, theCompany does not intend, and does not assume any obligation, to update the forward-lookingstatements included in this Prospectus as at the date hereof.4

1. SUMMARYThis summary should be read as an introduction to the Prospectus and any decision to investshould be based on consideration of the Prospectus as a whole by the investor, including thedocuments incorporated by reference and the risks of investing in the New Shares set out in “RiskFactors”. This summary is not complete and does not contain all the information that you shouldconsider in connection with any decision relating to the New Shares. Where a claim relating to theinformation contained in this Prospectus is brought before a court, the plaintiff might under theapplicable legislation have to bear the costs of translating the Prospectus before the legalproceedings are initiated. No civil liability will attach to the Board of Directors of Awilco Offshorein respect of this summary, unless it is misleading, inaccurate or inconsistent when read togetherwith the other parts of this Prospectus.1.1 Presentation of AwilcoAwilco Offshore intends to create the basis for a leading international drilling contractor. TheCompany was incorporated on 21 January 2005 as a 100% owned subsidiary of Awilco, a companyin the Anders Wilhelmsen Group. The Company acquired all investments of the AndersWilhelmsen Group within offshore accommodation and drilling from Awilco and made largeoffshore investments through exercising jack up drilling rig options and through the purchase ofshares in Petrojack and Offshore Rig Services and establishment of Premium Drilling.The assets held by the Company fall within three offshore segments; accommodation units, jack-updrilling rigs and to a lesser extent semi-submersible drilling rigs through it’s approximately 40%investment in ORS.Accommodation unitsThe Company owns two accommodation units suited for employment in the North Sea; one jack-upaccommodation unit and one semi-submersible accommodation unit. Both units are suited foroperation on the Norwegian Continental Shelf, which has some of the strictest requirements in themarket. Only four units of the world-wide fleet of specialised accommodation units comply withthe requirements for operation on the Norwegian Continental Shelf.The jack-up accommodation unit “Port Rigmar” is currently employed on a contract on the Ekofiskfield on the Norwegian Continental Shelf. The fixed contract currently runs until October 2008.The client, ConocoPhillips, holds options to extend the contract on a yearly basis until 2010 withrates to be agreed.The semi-submersible accommodation unit “Port Reval” was converted from a service rig andupgraded 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 Norge.Commencement was early September and duration is 10 months. Thereafter, the unit is fixed oncontracts with Aker Kværner until mid 2007.5

Jack-up drilling rigs and optionsThe Company has 7 newbuilding contracts and one newbuilding option. A summary of thecontracts and option is set out below.Name Yard W. depth D. depth Decl. Delivery Project price FinancingContracted rigsWilPower PPL 375ft 30,000ft 2Q06 131 MUSD SCBWilCraft Keppel 400ft 30,000ft 4Q06 131 MUSD NordeaWilSuperior PPL 375ft 30,000ft 2Q07 130 MUSD NordeaWilBoss Keppel 400ft 30,000ft 4Q07 134 MUSD NordeaWilForce PPL 375ft 30,000ft 4Q07 144 MUSD NordeaWilStrike Keppel 400ft 30,000ft 2Q09 163 MUSD Nordea*WilSeeker PPL 375ft 30,000ft 2Q08 132-140MUSDNordea*Option rigPPL option III PPL 375ft 30,000ft 03/07 +27mo 132 MUSD* The Company is in discussions with Nordea for the financing of WilStrike and WilSeekerThe project prices set out above are the expected prices of the rigs delivered and fully equipped.The prices include yard contract prices (which are fixed for the contracted rigs and the PPL optionrigs), newbuilding supervision, owner furnished equipment, spares, financing, and other projectexpenses.A particular feature of the PPL option is that both the steel price and the currency exchange rateelement of the contract price have been fixed. This is normally not the case, as yards will typicallyreserve the right to adjust the final price for movements in steel prices, currency exchange rates andcertain other factors. The PPL option is subject to price adjustments for the drilling package.Other investmentsAwilco Offshore is also exposed to the semi-submersible drilling market through its ownership ofapproximately 40% of the shares in Offshore Rig Services. Offshore Rig Services is a Norwegiancompany which has under construction two semi-submersible drilling rigs at the Yantai RafflesShipyard in China. Offshore Rig Services also holds options to construct two additional drillingrigs of a similar type.MarketsThe Company’s main assets give exposure primarily to two market segments; accommodation unitsand jack-up drilling rigs. Both of these markets are related to the international oil and gas industryand have drivers linked to exploration and production of oil and gas. In addition, the Company isexposed to the market for semi-submersible drilling rigs through its investment in Offshore RigServices. The markets in which the Company operates, is described in Section 6.1.2 Board of Directors, senior management and employeesBoard of DirectorsSigurd E. Thorvildsen (Chairman), Arne Alexander Wilhelmsen, Jarle Roth, Marianne Blystad andTor Bergstrøm.ManagementAwilco Offshore currently has 5 persons directly employed.Corporate managementHenrik Fougner (Managing director),Key personnel – commercial managementThor Alexander Krafft, Knut Martin Wadet, Jan B. Usland6

Key personnel – technical managementClaus MørchIn addition, Anders Wilhelmsen & Co AS, the holding company of the Anders Wilhelmsen Group,provides accounting and treasury services to the Company. Certain management services areprovided to the Company by Premium Drilling AS, a company jointly owned with Sinvest.1.3 Advisors and auditorsFearnley Fonds and SEB Enskilda have acted as Managers for the Private Placement. TheManagers will receive an aggregate fee of NOK 14 million in connection with the PrivatePlacement.Wiersholm, Mellbye & Bech is the Company’s legal advisor. Awilco Offshore’s statutory auditoris Ernst & Young.1.4 Major shareholders and related party transactionsAs per 18 April 2006, the number of registered shareholders of the Company is 1,257, of which88% are Norwegian and 12% are non-Norwegian.More than 50% of free float is owned by investors located outside Norway.The following table sets forth the largest shareholders of the Company, as registered in VPS as at 4May 2006.Shareholder Shares PercentageAWILCO AS* 56,425,630 40.37%FEARNLEY FONDS ASA EMISJONSKONTO 6,281,749 4.49%MORGAN STANLEY CLIENT EQUITY ACCOUNT 5,994,658 4.29%JPMORGAN CHASE BANK M.STANLEY NORWAY EQU. 5,502,397 3.94%JPMORGAN CHASE BANK S/A ESCROW ACCOUNT 4,611,485 3.30%STATE STREET BANK & CLIENT 4,384,900 3.14%AWECO HOLDING AS 3,300,000 2.36%SEB ENSKILDA ASA EGENHANDELSKONTO 3,268,451 2.34%CREDIT SUISSE SECURI (EUROPE) PRIME BROKE 2,902,928 2.08%DEUTSCHE BANK (SUISS) 2,802,810 2.01%JPMORGAN CHASE BANK CLIENTS TREATY ACC. 2,724,365 1.95%SIS SEGAINTERSETTLE 2,527,898 1.81%HSBC BANK PLC 2,373,450 1.70%MORGAN STANLEY & CO. CLIENT EQUITY ACC. 2,171,991 1.55%ORKLA ASA 1,861,100 1.33%ODIN NORDEN 1,655,387 1.18%ODIN OFFSHORE ODIN FORVALTNING AS 1,526,000 1.09%BANK OF NEW YORK, BR BNY GCM CLIENT ACC. 1,304,600 0.93%COMMERZBANK AG S/A COMINVEST 1,288,800 0.92%SKANDINAVISKA ENSKIL (PUBL) OSLOFILIALEN 1,100,000 0.79%*adjusted for the Restricted Shares held by the ManagersAwilco holds approximately 40.4% of the shares of the Company following the completion of theOffering.The Company purchases certain administrative and management services (as e.g. budgeting,reporting, accounting, legal etc) from the Anders Wilhelmsen Group. See section 5.8 for adescription of the Anders Wilhelmsen Group. The Company’s subsidiaries will acquiremanagement services from Premium Drilling. See section 5.6 for a description of Premium Drillingand section 5.7 for a description of the management agreements.7

All transactions with related parties have been carried out at arms length prices, and are settled on aregular basis. See also section 9.7.1.5 Financial informationBelow is an extract of the financial statements of Awilco Offshore. For more detailed financialinformation, please see Section 8.Profit and loss statement(USD 1,000s - except per share data) 2005Operating revenue 42 082Total operating expenses 36 677Operating profit 5 405Profit before tax 2 341Profit / (loss) for the year 1 908Basic/diluted earnings per share 0.02Consolidated total revenues were USD 42.1 million. Operating profit before depreciation andamortization (EBITDA) was USD 12.6 million, and operating profit after depreciation andamortization (EBIT) was USD 5.4 million. Rig operating expenses were USD 21.6 million for theyear and relate to the accommodation rigs. General and administrative expenses were USD 6.8million for the year, including USD 2.1 million relating to share-based payments. The share-basedpayments had no liquidity effect in 2005. Depreciation expense was USD 7.2 million in 2005 andwas primarily attributable to the accommodation rigs. Awilco Offshore’s share of the result inPremium Drilling was USD –1.1 million in 2005.Net financial items were USD – 3.1 million. Interest expense totaled USD – 4.8 million. Profitbefore tax was USD 2.3 million, and net profit was USD 1.9 million. Basic and diluted earnings pershare were USD 0.02.Balance sheet(USD 1,000s) 31.12.2005Non current assets 323 392Current assets 121 348Total assets 444 740Equity 300 220Non current liabilities 116 220Current liabilities 28 299Total equity and debt 444 740As of 31.12.2005, total assets amounted to USD 445 million.Investments in 2005 were USD 192.1 million, including USD 8.8 million related to upgrades forthe accommodation unit Port Reval. Awilco Offshore is well positioned to meet its futurecommitments through its strong cash position and undrawn credit facilities.8

During 2005, Awilco Offshore raised NOK 1 billion in new equity. In addition, new shares wereissued as settlement in connection with the purchase of shares in Petrojack ASA and Offshore RigServices ASA. At December 31, 2005, Awilco Offshore had 130.3 million shares outstanding.Capitalisation and indebtednessAt 31 December 2005 the Company had the following debt recorded in the balance sheet;All figures in USD 1000 Interest rate % Maturity 2005CurrentCurrent portion of long term debt Libor + 1 5/8 % 2006 11 440Other loans 0Total current 11 440Non-currentBank borrowings no 1 Libor + 2.25 % 52 920Bank borrowings no 2 Libor + 1 5/8 % 59 235Total non-current 112 155SecurityAccomodation rigs pledged as security for liabilities 76 807Jack up contracts pledged as security for liabilities 205 037Net book value of pledged assets 281 843Maturity non-current borrowingsLater than one year and not later than four years 57 396Five years and later 54 759112 155The Group had unused credit facilities of MUSD 179.8 as of 31 December 2005.After year end the company has increased its financial resources, mainly due to the followingactions;• In January 2006 the credit facility limit was increased from MUSD 210 to MUSD 410 -with mainly the same terms. See further specification in section 8.9.• Furthermore, in February 2006 the company issued a bond loan of MUSD 100. See furtherspecification in section 8.9.• The management is of the opinion that the above mentioned actions concerning refinancingduring 2006 is beneficial for the company. Furthermore, the management is not aware ofany material adverse change of the company’s capitalization and indebtedness situation.1.6 Shares and articles of associationThe Company's share capital prior to the Private Placement was NOK 1,302,778,800 divided into130,277,880 shares, each with a par value of NOK 10. The Company's share capital following thePrivate Placement is NOK 1,397,778,800 divided into 139,777,880 shares, each with a par value ofNOK 10.The Company’s articles of association are included as an appendix to this Prospectus.1.7 The transactionThe purpose of the Private Placement is to strengthen the Company's equity and liquidity, tofinance the Petrojack Transaction (as further described in section 8.5) and to improve theCompany's opportunities to implement strategic transactions.9

On 4 April 2006, the Board of Directors resolved to increase the Share Capital of the Company byNOK 95,000,000 through the issuance of 9,500,000 New Shares, each with a par value of NOK 10,in a private placement to selected investors. The New Shares were issued at a subscription price ofNOK 56 per New Share.The percentage of immediate dilution resulting from the Private Placement for the Company'sshareholders as at 4 April 2006 is 7.3%. The Subscription Price in the Private Placement wasidentical to the closing price on the date of placing and so had no dilutive effect on the share price.The New Shares were, at their issue, restricted shares (not tradable on Oslo Børs) and haveremained as such until the date this Prospectus was approved by Oslo Børs (being the date thereof).The first day of their trading will be 18 May 2006.1.8 Appendices and documents on displayThe Company’s annual report for 2005 and articles of association are included as appendices to thisProspectus.For the life of the Prospectus the following documents (or copies thereof), where applicable, maybe inspected at the offices of the Company at the Company’s offices at Beddingen 8, Aker Brygge,N-0250 Oslo, Norway:(a)the articles of association of the Company;(b) the Company’s financial statements for the Group and for the parent company for 2005;(c)historical financial information for the Company’s subsidiary undertakings for thefinancial year 2004 and 2005 (to the extent such information exists);(c) the Company’s fourth quarter report for 2005.1.9 Summary of risk factorsBelow is a summary of some of the most important risk factors described in Sector 2.Construction risks: There are risks associated with the Company’s newbuilding contracts. Latedelivery could have negative consequences for the company.Charters: The Company cannot be assured that it will obtain charter contracts for its rigs whencompleted, there are also risk associated with the terms and duration of such contracts.Oil prices: Historically, demand for offshore exploration, development and production has beenvolatile and closely linked to the price of hydrocarbons. As such the price of oil could affect theCompany’s results.Market risks: The Company is exposed to market risk related to the demand and supply of drillingservices.The Company may assume substantial liabilities: Contracts in the offshore sector require highstandards of safety, and it is important to note that all offshore contracts are associated withconsiderable risks and responsibilities.Political risks: Changes in the legislative and fiscal framework governing the activities of the oilcompanies could have an impact on exploration and development activity or affect the company'soperations directly.10

Currency fluctuations: A portion of Awilco Offshore's business is conducted in currencies otherthan USD, the Company will be exposed to volatility associated with foreign currency exchangerates.Interest rate risks: The Company's bank financing agreements are subject to floating interestrates. Hence, the Company will be financially exposed to fluctuations in interest rates.Service life and technical risks: The service life of drilling rigs is generally assumed to be morethan 30 years but will depend ultimately on their efficiency. There will always be some exposure totechnical risks.Environmental risk: The Company's operations could be restricted and its rigs could becomemore expensive to operate if new laws or legislation are enacted or other governmental actions aretaken that prohibit or restrict offshore drilling or impose additional environmental protectionrequirements.Fluctuations in share price: The market price of the Company's share may fluctuate and maydecline below the offer price in the Offering. The market price of the Company's shares mayfluctuate widely, depending on many factors beyond the Company's control.Control by major shareholder: Awilco is expected to hold approximately 40.4% of the shares ofthe Company following the completion of the Offering and will have the ability to significantlyinfluence the outcome of matters submitted for the vote of shareholders.11

2. RISK FACTORSA number of risk factors may adversely affect the Company. These risk factors include financialrisks, technical risks, risks related to the business operations of the Company, environmental andregulatory risks. If any of these risks or uncertainties actually occurs, the business, operatingresults and financial condition of the Company could be materially and adversely affected. Therisks presented in this Prospectus are not exhaustive, and other risks not discussed herein may alsoadversely affect the Company. Prospective investors should consider carefully the informationcontained in this Prospectus and make an independent evaluation before making an investmentdecision.Included in this Prospectus are various “forward-looking statements”, including statementsregarding the intent, opinion, belief or current expectations of the Company or its managementwith respect to, among other things, (i) the Company's target market, (ii) evaluation of theCompany's markets, competition and competitive position, (iii) trends which may be expressed orimplied by financial or other information or statements contained herein. Such forward-lookingstatements are not guarantees of future performance and involve known and unknown risks,uncertainties and other factors that may cause the actual results, performance and outcomes to bematerially different from any future results, performance or outcomes expressed or implied by suchforward-looking statements. Such factors include, but are not limited to, the risk factors describedbelow and elsewhere in this Prospectus.Construction risks: The Company has entered into the contracts for the fabrication, installationand commissioning of seven deep drilling jack-ups; including hull, marine equipment and supplyand installation of drilling equipment. The contracts stipulate dates of delivery and specified prices.In the case of late delivery, the Company may be in a position to impose penalties. However,delays may still represent serious negative consequences for the Company.The contractual rights of the relevant owner to take title to, and possession of, the rigs underconstruction will not be enforceable in the event of a bankruptcy or receivership of the relevantyard.Charters: The Company cannot be assured that it will obtain charter contracts for its rigs whencompleted, or that such contracts, if and when obtained, will be obtained on profitable terms to theCompany. Furthermore, there is often considerable uncertainty as to the duration of offshorecharters because most charter contracts give the operator both extension and early cancellationoptions. There can also be off-hire periods between charters. The cancellation or postponement ofone or more charters can have a major impact on the earnings of drilling and service companies.Oil prices: Historically, demand for offshore exploration, development and production has beenvolatile and closely linked to the price of hydrocarbons. Low oil prices typically lead to a reductionin exploration drilling as the oil companies' scale down their investment budgets. The sharpreduction in production costs on new oil fields will probably somewhat reduce the strong historicalcorrelation between rig rates and oil pricesMarket risks: Demand for drilling services in connection with exploration, development andproduction in the offshore oil and gas sector is particularly sensitive to price falls, reductions inproduction levels and disappointing exploration results. On the supply side, there is uncertaintywhen it comes to the construction of new rigs, the upgrading and maintenance of existing rigs, theconversion of other types of rigs into drilling units and alternative uses for equipment as marketconditions change.The Company may assume substantial liabilities: Contracts in the offshore sector require highstandards of safety, and it is important to note that all offshore contracts are associated withconsiderable risks and responsibilities. These include technical, operational, commercial and12

political risks, and it is impossible to insure against all the types of risk and liabilities mentioned.For instance, under some contracts the Company may have unlimited liability for losses caused byits own gross negligence.Political risks: Changes in the legislative and fiscal framework governing the activities of the oilcompanies could have an impact on exploration and development activity or affect the company'soperations directly. Changes in political regimes may constitute a risk factor for operations inforeign countries.Currency fluctuations: Because a portion of Awilco Offshore's business is conducted incurrencies other than USD, the Company will be exposed to volatility associated with foreigncurrency exchange rates in the course of business. There can be no assurance that the Companywill not experience currency losses in the future.Interest rate risks: The Company's bank financing agreements are subject to floating interestrates. Hence, the Company will be financially exposed to fluctuations in interest rates.Service life and technical risks: The service life of drilling rigs is generally assumed to be morethan 30 years but will depend ultimately on their efficiency. There will always be some exposure totechnical risks, with unforeseen operational problems leading to unexpectedly high operating costsand/or lost earnings.Environmental risk: The Company's operations may involve the use and/or disposal of materialsthat may be classified as hazardous substances. The environmental laws and regulations of thecountries in which the Company may operate expose the Company to liability for the conduct of, orfor conditions caused by, others, or for acts of the Company that were in compliance with allapplicable laws at the time such actions were taken. In the past several years, protection of theenvironment has become a higher and more visible priority of many governments throughout theworld. Offshore drilling in certain areas has been opposed by environmental groups and, in someareas, has been legally restricted. The Company's operations could be restricted and its rigs couldbecome more expensive to operate if new laws or legislation are enacted or other governmentalactions are taken that prohibit or restrict offshore drilling or impose additional environmentalprotection requirements. Moreover, the Company may have no right to compensation from itscustomers if its costs are increased through such governmental actions, and its operating marginsmay fall as a result.Fluctuations in share price: The market price of the Company's share may fluctuate and maydecline below the offer price in the Offering. The market price of the Company's shares mayfluctuate widely, depending on many factors beyond the Company's control, including:• market expectations of the rig construction performance;• investor perceptions of the outlook for the Company to obtain future engagements for its rigson profitable terms;• the other factors listed above under “Risk factors”.The price of the Company's shares will also be subject to fluctuations in line with generalmovements in the capital markets and the liquidity of the secondary market. Earnings of offshorecompanies and the value of the equipment used have historically seen large fluctuations.As a result of these and other factors, the Company cannot give assurance that any investor will beable to sell its shares at a price equal to or greater than the offer price in the Offering.Control by major shareholder: Awilco is expected to hold approximately 40.4% of the shares ofthe Company following the completion of the Offering. This means that Awilco will have theability to significantly influence the outcome of matters submitted for the vote of shareholders,13

including the election of members of the Board of Directors. The commercial goals of Awilco as ashareholder, and those of the Company, may not always remain aligned. The substantial equityinterest by Awilco may make it more difficult for the Company to maintain its businessindependence from other companies within the Anders Wilhelmsen Group.If Awilco were to sell a large number of shares in the Company, or there is a perception in themarket that such sales could occur, the trading price of the shares in the Company could decline.Such sales could also make it more difficult for the Company to offer equity securities in the futureat a time and at a price that are deemed appropriate.Since Awilco owns more than 40% of the shares in the Company as of the date of this Prospectusand has done so since the Company became listed on Oslo Børs, Awilco is currently exemptedfrom the mandatory bid requirements under the Norwegian Securities Trading Act unless at anytime the ownership of Awilco falls below 40%. This means that Awilco can acquire additionalshares in the Company without any obligation to make an offer to acquire all outstanding shares.Such acquisitions could have a negative effect on the liquidity and the price of the Company’sshares and could further strengthen Awilco’s control over the Company.14

3. RESPONSIBILITY FOR THEPROSPECTUSThe Board of DirectorsWe confirm that to the best of our knowledge, having taken all reasonable care to ensure that suchis the case, the information contained in the prospectus is in accordance with the facts and containsno omission likely to affect its import.Oslo, 18 May 2006The Board of Directors of Awilco Offshore ASASigurd E. Thorvildsen (Chairman)Jarle RothArne Alexander WilhelmsenMarianne BlystadTor Bergstrøm15

4. THE PRIVATE PLACEMENT4.1 Purpose of the Private Placement. Use of the proceedsThe purpose of the Private Placement is i) to strengthen the Company's equity and liquidity, ii) tofinance the Petrojack Transaction (as further described in section 8.5) and iii) to improve theCompany's opportunities to implement strategic transactions. The Company will require additionalbank or bond financing within 2008 to fund the remaining part of the Petrojack Transaction,expected to be in the range USD 180-225 million.4.2 The Company's share capital prior to the Private PlacementThe Company's share capital prior to the Private Placement was NOK 1,302,778,800 divided into130,277,880 shares, each with a par value of NOK 10.4.3 The Private PlacementOn 4 April 2006, the Board of Directors resolved to increase the Share Capital of the Company byNOK 95,000,000 through the issuance of 9,500,000 New Shares, each with a par value of NOK 10,in a private placement to selected investors. The New Shares were issued at a subscription price ofNOK 56 per New Share. Awilco, the Company's largest shareholder, subscribed for 2,375,000 ofthe New Shares.The Board of Directors passed the following resolution (translated from Norwegian):“The company’s share capital is increased by NOK 95,000,000 through the issuance of 9,500,000new shares, each with a par value of NOK 10, at a subscription price of NOK 56 per new share.The pre-emptive rights of the shareholders are set aside in favour of the subscribers listed inAppendix 1 to the board resolution. The subscription amount shall be paid to the company's shareissue account no later than 10 April 2006.The new shares shall carry rights to dividends from and including the financial year 2005 and shallotherwise have full shareholder rights as from the time the share capital increase is registered withthe Register of Business Enterprises.The new shares shall be registered in the VPS under a separate ISIN number until the prospectusin connection with the share capital increase has been approved by Oslo Børs. When theprospectus is available the shares shall be registered under the same ISIN number as the othershares of the company.”The resolution was passed pursuant to the following authorisation granted at an extraordinarygeneral meeting of the Company held on 4 April 2006 (translated from Norwegian):"The Board of Directors is authorised to increase the company's share capital by up to NOK525,666,750.The authorisation includes share capital increases against contributions other than in cash, a rightto incur special obligations for the company, see section 10-2 of the Public Limited Companies Actand resolutions on merger in accordance with section 13-5 of the Public Limited Companies Act.The authorisation is valid until 30 June 2006. The pre-emptive rights of the shareholders may beset aside.”The subscribers were notified of their allotment on 5 April 2006 and settlement was made on 10April 2006. The share capital increase was registered in the Norwegian Registry of Business16

Enterprises on 25 April 2006 and the New Shares were issued on the same date.The New Shares were, at their issue, restricted shares (not tradable on Oslo Børs) and haveremained as such until the date this Prospectus was approved by Oslo Børs (being the date thereof).The New Shares were held by the Managers on separate client accounts during the period theywere in issue as restricted shares.In order to provide to subscribers with unrestricted shares as settlement the Managers and theCompany entered into a share loan agreement with Awilco on 4 April 2006. Awilco agreed, on theterms set forth in this agreement, to make 9,500,000 of its unrestricted shares available to thesubscribers. Awilco did not receive any consideration for making this loan. The loan will be settledthrough the delivery to Awilco of the 9,500,000 shares held by the Managers when the status of theNew Shares change from restricted to unrestricted Shares on 18 May 2006 as a consequence ofOslo Børs’s approval of this Prospectus. The first day of their trading will be 18 May 2006.In accordance with the authorization set out above, the pre-emptive rights of the existingshareholders to subscribe for the New Shares were set aside. The Board of Directors consideredthat it was in the Company’s interest to structure the share capital increase as a private placementwithout pre-emptive rights since this was considered the best way of assuring a good pricing of theNew Shares, limited execution risk and a low cost level. The subscription price in the PrivatePlacement was equal to the closing price of the Company’s shares on Oslo Børs on 4 April 2006.For the above reasons, the Board of Directors believes that the setting aside of the pre-emptiverights of the existing shareholders was in compliance with applicable equal treatment requirements.Any advantage resulting from the setting aside of the pre-emptive rights will fall to the subscribersin the Private Placement.The New Shares were issued under Norwegian law.4.4 The Company’s share capital following the Private PlacementThe Company's share capital following the Private Placement is NOK 1,397,778,800 divided into139,777,880 shares, each with a par value of NOK 10.4.5 Rights conferred on the New SharesThe New Shares carry rights to dividends, if any, from and including the financial year 2005. TheNew Shares will rank equal with the existing shares of the Company and carry full shareholdersfrom the time of the registration of the share capital increase in the Norwegian Register of BusinessEnterprises. Each New Share gives the right to one vote at general meetings of the Company. TheNew Shares are freely transferable. For a description of the rights attaching to Shares in theCompany, see section 9 of this Prospectus.4.6 DilutionThe percentage of immediate dilution resulting from the Private Placement for the Company'sshareholders as at 4 April 2006 is 7.3%. The Subscription Price in the Private Placement wasidentical to the closing price on the date of placing and so had no dilutive effect on the share price.4.7 ManagersFearnley Fonds, Grev Wedels plass 9, N-0107 Oslo, Norway and SEB Enskilda, Filipstad Brygge1, N-0250 Oslo, Norway, have acted as Managers for the Private Placement.4.8 ExpensesThe Managers will each receive a fee of NOK 7 million, in aggregate 14 million in connection withthe Private Placement. This will give net proceeds from the Private Placement of approximatelyNOK 518 million.17

5. PRESENTATION OF AWILCOOFFSHORE5.1 HistoryAwilco Offshore was incorporated on 21 January 2005 as a 100% owned subsidiary of Awilco, acompany in the Anders Wilhelmsen Group. In February 2005, the Company acquired from Awilcoall investments of the Anders Wilhelmsen Group within offshore accommodation and drilling. Aspart of the transaction, the Company raised NOK 1,000 million in new equity from externalinvestors. In May 2005 the Company carried out a small new issue of shares and was listed on OsloBørs. During 2005 the company made large offshore investments through exercising jack updrilling rig options and through its purchase of shares in Petrojack and Offshore Rig Services.Awilco Offshore and Sinvest established Premium Drilling as a jointly held operation company forthe management of the companies’ fleet of drilling units. On 4 April 2006, Awilco Offshoretogether with Sinvest ASA announced the entry into a conditional agreement for the acquisition ofthe ownership interest in three jack-up rigs under construction in Singapore from Petrojack ASA.Awilco Offshore (AWO) is involved in offshore drilling and accommodation services world wide.Awilco Offshore has of the day hereof seven jackup drilling rigs under construction with deliveriesfrom 2006 through 2009. In addition, the company has two accommodation rigs in operation.5.2 Business idea, goals and strategyAwilco Offshore intends to create the basis for a leading international drilling contractor and will,in doing so, employ strategies as set forth below.InvestmentsAwilco Offshore intends to be a service provider to oil companies by offering first-class equipmentfor use in various stages of exploration for, and production of, oil and gas. The Company intends togrow, particularly in the drilling rig segment, through exercising its existing option and possiblenew investments.The Company has and will continue to have an opportunistic approach to expansion into otheroffshore segments.OperationThe Company’s exposure to the accommodation market has enabled the company in securingattractive bank financing. The Company’s strategy is to have a mix of long and short termcontracts, to secure cash flows and to provide the financial stability for additional investments.ConsolidationThe Company believes that further consolidation of the oil service industry will take place and willtake active part in such consolidation as the recent transactions with Offshore Rig Service andPetrojack show. The Company will consider opportunities to grow further through potentialmergers and acquisitions. The Company has been informed that Awilco, its largest shareholder,will consider any such consolidation on the basis of the transaction's financial implications and thatit will not resist any transaction from the point of view of having its ownership percentage reduced.The Company’s purpose is found in §3 in the Company’s articles of association, attached asAppendix II to this Prospectus.5.3 Business overviewThe assets held by the Company fall within three offshore segments; accommodation units, jack-updrilling rigs and to a lesser extent semi-submersible drilling rigs through its 40% investment inORS.18

Accommodation unitsThe Company owns two accommodation units suited for employment in the North Sea; one jack-upaccommodation unit and one semi-submersible accommodation unit. Both units are suited foroperation on the Norwegian Continental Shelf, which has some of the strictest requirements in themarket. Only four units of the world-wide fleet of specialized accommodation units comply withthe requirements for operation on the Norwegian Continental Shelf.The jack-up accommodation unit “Port Rigmar” is currently employed on a contract on the Ekofiskfield on the Norwegian Continental Shelf. The fixed contract currently runs until October 2008.The client, ConocoPhillips, holds options to extend the contract on a yearly basis until 2010 withrates to be agreed.The semi-submersible accommodation unit “Port Reval” was converted from a service rig andupgraded 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 Norge.Commencement was early September and duration is 10 months. Thereafter, the unit is fixed oncontracts with Aker Kværner until mid 2007.Jack-up drilling rigs and optionsThe Company has 7 newbuilding contracts and one newbuilding option. A summary of thecontracts and option is set out below.Name Yard W. depth D. depth Decl. Delivery Project price FinancingContracted rigsWilPower PPL 375ft 30,000ft 2Q06 131 MUSD SCBWilCraft Keppel 400ft 30,000ft 4Q06 131 MUSD NordeaWilSuperior PPL 375ft 30,000ft 2Q07 130 MUSD NordeaWilBoss Keppel 400ft 30,000ft 4Q07 134 MUSD NordeaWilForce PPL 375ft 30,000ft 4Q07 144 MUSD NordeaWilStrike Keppel 400ft 30,000ft 2Q09 163 MUSD Nordea*WilSeeker PPL 375ft 30,000ft 2Q08 132-140MUSDNordea*Option rigPPL option III PPL 375ft 30,000ft 03/07 +27mo 132 MUSD* The company is in discussions with Nordea for the financing of WilStrike and WilSeekerThe project prices set out above are the expected prices of the rigs delivered and fully equipped.The prices include yard contract prices (which are fixed for the contracted rigs and the PPL optionrig), newbuilding supervision, owner furnished equipment, spares, financing, and other projectexpenses.A particular feature of the remaining PPL option is that both the steel price and the currencyexchange rate element of the contract price have been fixed. This is normally not the case, as yardswill typically reserve the right to adjust the final price for movements in steel prices, currencyexchange rates and certain other factors. The PPL option is subject to price increase for the drillingpackage.Additional information on the rigs and designs is provided in section 5.5. A further description ofthe newbuilding contracts and the option agreement is set out in section 10.1. A description of thefinancing arrangements is set out in section 8.9.Other investmentsAwilco Offshore is exposed also to the semi-submersible drilling market through its ownership ofapproximately 40% of the shares in Offshore Rig Services. Offshore Rig Services is a Norwegiancompany which has two semi-submersible drilling rigs under construction at the Yantai RafflesShipyard in China. Offshore Rig Services also holds options to construct an additional two similardrilling rigs at the Yantai Raffles Shipyard.19

5.4 The accommodation unitsThe Company has two accommodation rigs suited for employment in the North Sea; one jack-upaccommodation unit and one semi-submersible accommodation unit. Both units are suited foremployment on the Norwegian Continental Shelf, which has some of the strictest requirements inthe market. Only four units in the world fleet of specialised accommodation units comply with therequirements for employment in this region.Key specificationsRig name: Port Rigmar Port RevalDesign:Built / converted:Robin 300 self elevating jack-upaccommodation rigBuilt 1979 as drilling rig, converted toaccommodation mode in 1991Aker H-3 (enhanced) semi-submersibleaccommodation rigBuilt 1976 as drilling rig; converted totender support rig; converted toaccommodation mode in 2004Flag: Bahamas BahamasClass:Suited for:Dimensions:DnV; +1A1 Self-elevating AccommodationUnitNorwegian, UK and Danish continentalshelfLength 65m, breadth 65m, depth 8m, leglengths 127m (417ft)DnV; +1A1 Accommodation HELDK,PASMOOR VNorwegian and UK continental shelfLength 108m, breadth 67m, main deckelevation 37m, operational draft 21mCapacities: Variable load 2200mt, fuel/diesel oil 254m3,helifuel bundle for 2 tanks, potable water532m3Deckload 1600t, fuel/diesel oil 2326m3,helifuel 7500ltr, potable water 602m3,displacement 22344tAccommodation:162 two bed cabins, 2 single bed cabins, allwith daylight, toilet and shower; galley anddining room for 152 persons; variousrecreation rooms; hospital and first aidtreatment rooms; gymnasium; 14 offices and1 conference room262 single bed cabins, 50 two bed cabins, allwith daylight, shared (separate) toilet andshower; galley and dining room for 152persons; various recreation rooms; hospitaland first aid treatment room; gymnasium;various offices and conference room; laydownand storage area and workshopMachinery: 3 main diesel engines each of 2200HP; 4generators each of 930kW; 1 emergencydiesel generator 400kW; 1 fresh water4 main diesel engines each 2200HP; 4generators each 1500kW; 1 emergencydiesel generator 800kW; 2 fixed four-blade20

maker 75m3/d; 3 deep well pumps each295m3/hMooring: 3 anchor winches with 3000' x 1.25” wire; 3anchors Bruce 1.5tpropellers with steerable rudders driven by 2electric DC motors each 1250kW; 2 freshwater makers 35+60m3/d12 anchor winches; 12 anchor chains each1370m;12 anchors Stevpris 14.5tTechnical mgr.:Employment:Opex:Polycrest AS, an independent manager ofoffshore unitsContract to Oct 2008 with ConocoPhillipsfor employment on the Ekofisk field. T/Ccontract with a rate of USD 68,000 per dayto Oct 2006 and USD 76,500 per day fromOct 2006 to Oct 2008.Charterer has 2x1 year options to extend thecontract. Rates for the next two option yearsare subject to negotiation and the optionstherefore have character of a right of firstrefusal. Options must be declared one yearin advance.Norwegian sector employment – about USD28,000 – 30,000 per dayOSM Offshore AS, an independent managerof offshore unitsThe unit is currently employed at the Eldfiskfield with client Conoco Phillips Norge. Thecontract runs until 1 July 2006 with a T/Crate of USD 79,000 per day.The unit will thereafter be employed forAker Kværner for UK/Norwegian sector onthe Frigg field for the periods:- Aug-Nov 06: USD 135,000/day (gross)- Dec 06: USD USD 100,000/day (gross)- Jan-Mar 07: USD 70,000/day (gross)- Apr-Jun 07: USD 135,000/day (gross)- Jul 07: Option at USD 135,000/day (gross)In the range USD 27,000 – 35,000 per dayFinal costs are influenced by amongst other:− Employment on UK or Norwegiansector− Degree of project costs5.5 The jack-up drilling rig newbuilding contractsThe Company has entered into seven newbuilding contracts to build jack-up drilling rigs. Thecontracts are distributed with four contracts at the PPL yard and three at the Keppel Fels yard.In addition to these firm contracts, the Company holds an option to construct one further jack-uprig at the PPL yard.21

Key features of the designs are set out below.Yard PPL KeppelDesign: Baker Marine Pacific 375' Class KFELS MOD V ‘B' ClassClass: ABS A1, CDS, Self-Elevating Drilling Unit ABS +A1 Self-Elevating Drilling UnitWater depth 375ft 400ftDrilling depth 30,000ft 30,000ftCantilever 70ft outreach maximum 70ft outreach maximumBOP 15,000psi 15,000psiGenerators 10,750bhp 10,750bhpDeckload 3400mt 2400mtPipe handling Remotely operated Remotely operatedContractsWilPower is secured on a five year bare-boat contract with Arabian Drilling Company. Thecontract value is approximately USD 131 mill (including mobilization and demobilization fees),and Arabian Drilling Company has the option to extend the contract for a further year, for acontract value of approximately USD 33 mill. Arabian Drilling Company will be responsible for alloperating and local expenses. The rig will be employed in Saudi Arabia, and will commence workunder the contract in July 2006.No contracts have been secured for any of the other jack-up drilling units.22

Expected capital expenditureThe table below sets forth the expected capital expenditure for the firm contract rigs. The amountsreferred to as paid are amounts that have been paid.USD mill.Paid 1q06 2q06 3q06 4q06 1q07 2q07 3q07 4q07 1q08 2q08 3q08 4q08 1q09 2q09 TotalInvestmentsWilPower 83 15 33 131WilCraft 75 26 30 131WilSuperior 20 20 45 13 13 19 130WilBoss 27 27 27 27 26 134WilForce 14 7 22 29 22 14 34 144WilStrikeWilStrike 33 33 33 33 31 163WilSeeker 14 7 21 28 21 14 14 21 140Total 205 29 160 74 70 90 69 35 107 14 54 0 33 0 31 973FinancingsourceEquity 152 17 28 33 20 44 25 18 41 7 23 0 17 0 21 448PPL debt 53 12 29 94Bank debt* 0 0 103 41 50 46 44 17 66 7 31 0 16 0 10 431Total 205 29 160 74 70 90 69 35 107 14 54 0 33 0 31 973* Corp. bank debt includes the Company's own estimate for financing of WilStrike and WilSeeker of USD 75m for each rig (in processwith Nordea). In addition to the bank debt specified above Awilco Offshore has USD 90m of debt on the accommodation units and willbe able to draw an additional USD 20m of bank debt for WilPower upon contract initiation and finally approximately USD 19m more onWilCraft to reflect the large amount of equity already paid.5.6 Investments in other companiesPremium DrillingAwilco Offshore has established Premium Drilling on a 50/50 basis together with Sinvest.Premium Drilling is responsible for the marketing and operations of the two companies’ fleet ofdrilling rigs.Sinvest and Awilco Offshore have entered into a shareholders' agreement relating to PremiumDrilling. The agreement defines and clarifies the areas of responsibility of Premium Drilling.Premium Drilling shall be responsible for the marketing, contracting and operation (includingrepair & maintenance) of the two companies' fleet of jack-up drilling rigs. Premium Drilling shallalso advise the owners on business development and market strategy. Each rig owing subsidiary ofAwilco Offshore and Sinvest will enter into separate management agreements with PremiumDrilling. Premium Drilling has also entered into a management agreement with Venture Drilling, acompany 50/50 owned by Sinvest and Petrolia Drilling.In July 2005, Mr. Bill Rose was instated as President and Chief Executive Officer of PremiumDrilling. Mr. Rose, who has 26 years experience in the offshore drilling industry, accepted thechallenge of developing Premium Drilling into a recognized, global offshore drilling contractorwith a vision to:• Operate the industry's most modern and effective fleet of jack-up drilling units withoutstanding capabilities• Train and develop a workforce to ensure that Premium Drilling can provide the mostcompetent operational teams in the industry• Ensure the integrity of Premium Drilling’s people and their safety as its greatest responsibilityPremium Drilling has its headquarters in Houston, Texas as the majority of the company’s clientsare international oil companies. Premium Drilling will be a substantial contractor operating a large23

share of Ultra Premium new buildings worldwide. During the first year of operations, focus hasbeen on recruitment, establishing management systems and preparation for operations that hasqualified the company to handle challenges of operating under current international rules andregulations. Premium Drilling is already accepted as a provider of drilling services by internationaloil & gas companies. Premium Drilling also has offices in Oslo and Singapore.ChiefExecutiveOfficerBill Rose(Noble)VPContractsAndMarketingM. Pope(Noble)VPOperationsSunil Pangarkar(Shlumberger)ManagerofAdministrationVPandFinancial ControllerSonny Ong(Noble)VPHealth,Safety,EnvironmentMike Cadigan(Noble)Marketing mgrSouth Eas AsiaT. Howard(GlobalSantaFe)Manager HumanResourcesAlan Gregorcyk(Nabors)Premium Drilling AS has its registered office at Beddingen 8, N-0250 Oslo, Norway. Its sharecapital is NOK 100,000. Premium Drilling posted a loss of NOK - 13.8 million in the financial year2005. Awilco Offshore did not receive any dividends on its Premium Drilling shares in respect ofthe financial year 2005. The book value of the Company’s shares in Premium Drilling is atDecember 31 2005, USD 2 million.PetrojackPetroJack is listed on Oslo Børs and has three jack-ups under construction at the Jurong Shipyard.The rigs are scheduled for delivery in March 2007, January 2008 and June 2008.In August 2005, Awilco Offshore launched a voluntary offer for Petrojack which was notcompleted. The Company has agreed with Sinvest to co-operate on any future purchase of shares inPetrojack. The Company currently holds approx. 18,5% of the shares in Petrojack, and approx.37% together with Sinvest.On 4 April 2006, Awilco Offshore and Sinvest announced that they on a 50/50 basis had reached aconditional agreement with Petrojack for the acquisition of their ownership interest in three jack-uprigs under construction. The agreement is conditional on a final sale and purchase agreement,completion of due diligence and approval by the general assembly of Petrojack. On 5 May 2006,Independent Oil Tool ASA stated that it has decided not to vote in favour of the transaction.According to this statement, Independent Oil Tool ASA holds 34.41% of the shares in Petrojack.Petrojack has its registered office at Stranden 1, N-0113 Oslo, Norway. Its share capital is NOK324,875,000. Petrojack posted a loss of NOK 10.85 million in the financial year 2005. AwilcoOffshore did not receive any dividends on its Petrojack shares in respect of the financial year 2005.The book value of the Company’s shares in Petrojack is USD 39.3 million.Offshore Rig ServicesAwilco Offshore acquired 37.8% of the shares in Offshore Rig Services in December 2005.Offshore Rig Services is a Norwegian company which has under construction two semisubmersibledrilling rigs at the Yantai Raffles Shipyard in China. The rigs are purpose designed as24

cost efficient units for the requirements of the North Sea and incorporate the latest in drillingtechnology as well as DP3 systems. The first rig is due for delivery in the second quarter of 2008,and the second rig is scheduled for delivery in the fourth quarter of 2008. Offshore Rig Servicesholds options to construct additional two similar drilling rigs at the Yantai Raffles Shipyard. ORShas secured a 3-5 year LOI with BP Norge AS for an offshore drilling contract on the BP-operatedSkarv/Idun field in the North Sea. The value of the contract is between USD 250-500 million.The shares of Offshore Rig Services have been traded in the Norwegian OTC market sinceSeptember 2005, when the company raised approximately USD 140 million in equity towards theconstruction of its first drilling rig. Offshore Rig Services is currently in the process of issuing afive year bond of USD 200 million, to part finance the construction of the two rigs.On 7 April, Awilco Offshore acquired an additional 1,000,000 shares in ORS taking the totalholding to approximately 40%.Offshore Rig Services has its registered office at Fabrikkveien 5, N-4033 Stavanger, Norway. Itsshare capital is NOK 12,560,612. Offshore Rig Services had not its 2005 result at the date of thisProspectus. Awilco Offshore did not receive any dividends on its Offshore Rig Services shares inrespect of the financial year 2005.5.7 Management agreementsPremium DrillingEach of Awilco Offshore’s jack-up rig owing subsidiaries will enter into a management agreementwith Premium Drilling. The agreements for WilPower and WilCraft have been or are in the processof being entered into. The agreements for the rigs with later deliveries will be entered into not laterthan six months before scheduled delivery of the rigs from the shipyard.The management fee is calculated based on the respective rig owners’ rig days, calculated as theremaining days from the day of delivery. Direct operating expenses for the drilling units will befunded by the respective owner of the drilling rig.Anders Wilhelmsen & Co ASAwilco Offshore has entered into a management agreement with Anders Wilhelmsen & Co AS.The agreement covers a minor part of the Company's support functions such as accounting-,treasury services and office rentals. The management fee will be on market terms. The agreementcan be terminated by the Company by six months written notice and by Anders Wilhelmsen & CoAS by twelve months written notice.5.8 Relation to the Anders Wilhelmsen GroupBackgroundThe Anders Wilhelmsen Group is a privately owned group of companies based in Norway and withheadquarters located in Oslo. The first company in the group, A Wilhelmsen AS, was founded in1939 as a shipowning and investment company, and the group has over the years been involved inmany sectors of the marine industry.25

The chart below gives an illustration of the main businesses in the Anders Wilhelmsen Group.The Anders Wilhelmsen Group21% 20%100%100%100%Royal Caribbean CruisesLtd.Linstow ASAwilco ASA Wilhelmsen Capital ASCruise linerReal estateHotelsShoppingShippingVenturePrivate equityShare tradingCurrently 45,4% ownershipCurrently 40.4% ownershipInInaddition,addition,WilhelmsenWilhelmsenfamilyfamilymembersmembersown approx.own approx.4,5%3.8%Awilco Offshore ASAJackupsAccommodation unitsThe Anders Wilhelmsen Group participated in the foundation of Royal Caribbean Cruise Line(RCCL) in 1969 which has since developed into one of the world's leading cruise liners. Currentownership, together with ownership of Wilhelmsen family members, is 20.4% of this company.Through a shareholders' agreement with Cruise Associates, the Anders Wilhelmsen Group is aleading and influential shareholder in RCCL.The group also has large engagements in real estate through its wholly-owned company Linstow,with primary investments in the Baltic region. Maritime investments are held through Awilco, aname with long traditions in the group. The group also has significant financial investments, heldthrough A Wilhelmsen Capital AS.OwnershipAs of the date of this Prospectus, Awilco has an ownership of approximately 40.4% of theCompany. In addition, members of the Wilhelmsen family have an ownership of approximately3.8%. However, the only part of the Wilhelmsen family group of companies that should be groupedis Aweco Holding AS which owns 2.36% of Awilco Offshore. Aweco Holding AS owns 60.6% ofA Wilhelmsen AS which again owns 100% of Awilco AS and therefore will be consolidated withAwilco under the Securities Trading Act § 4-5. Following the completion of the Offering, Awilco'sownership of the Offerer will be reduced to 40.4%, and the ownership of members of theWilhelmsen family will be reduced to approximately 3.8%.The purpose of the Anders Wilhelmsen Group's investment in the Company is to create value forall shareholders. The Anders Wilhelmsen Group expects to remain a significant shareholder in theCompany going forward, but considers its investment to be of a financial nature and will take itsdecisions to buy or sell shares in this perspective.Board representationThe Anders Wilhelmsen Group intends, for as long as it retains a significant ownership position inthe Company, to seek representation on the Board of Directors of the Company.Management agreementA minor part of the Company's support functions, such as accounting and treasury services, areprovided pursuant to a management agreement with Anders Wilhelmsen & Co AS. See section11.4 for a description of this agreement.26

5.9 HSE and OrganizationAwilco Offshore emphasizes in all its business areas to stay in the forefront of developmentsregarding safe and secure operations. The business operates in compliance with national andinternational requirements and guidelines. The operational management of the drilling andaccommodation units achieves high quality standards through management agreements.The working environment and team spirit are considered to be good. The corporate management ofAwilco Offshore is focused on preventing any discrimination due to gender or race in matters suchas pay, promotion and recruitment.Awilco Offshore has built up site teams in Singapore to supervise the construction process at thetwo yards, Keppel FELS and PPL. The supervision of the teams is closely conducted by the AwilcoOffshore management itself.27

6. MARKET OVERVIEWThe Company confirms that information in this section which has been sourced from third parties has beenaccurately reproduced and that as far as the Company is aware and is able to ascertain from informationpublished by such third parties, no facts have been omitted which would render the reproduced informationinaccurate or misleading.6.1 Market positioningThe Company’s main assets give exposure to two market segments; accommodation units and jackupdrilling rigs. Both of these markets are related to the international oil and gas industry and havedrivers linked to exploration and production of oil and gas. In addition, the Company is exposed tothe market for semi-submersible drilling rigs through its investment in Offshore Rig Services.Oil and gas projects have a life cycle from exploration, through production, to abandonment. TheCompany’s assets are typically employed in different phases of the life cycle, as illustrated below.Phase Seismic ExplorationdrillingAccommodationunitsJack-up drillingrigsDrilling ofexploration wellsEngineering,construction,installationAccommodationand supportProductionAccommodation,maintenance,upgrades,modifications,stand by, hospitalDrilling ofproduction wellsAbandonmentAccommodationand supportTypically, accommodation units are used in the production phase of a field and are less dependenton the general strength of the oil and gas markets. Accommodation units may therefore be thoughtof as late cyclical. On the other hand, drilling rigs are typically used both in the exploration phaseand the production phase, i.e. its demand is more directly correlated with the overall activity in theoil and gas markets. These markets are currently enjoying strong demand, as clearly evidenced bythe development in the oil price.The oil price have during the last few years been far above historical levels as seen from the graphbelow, showing the price of West Texas Intermediate oil since 1986 including current futurequotations.80706050USD per bbl's40302010002/01/86 02/01/88 02/01/90 02/01/92 02/01/94 02/01/96 02/01/98 02/01/00 02/01/02 02/01/04 02/01/06 02/01/08 02/01/10Source: Enskilda SecuritiesWTIWTI Future28

6.2 The market for accommodation rigsMarket overview and statusThe market for accommodation rigs is a highly specialized part of the offshore market. First of all,it is a small market; secondly, it is dominated by a few operators globally; and thirdly, it isseparated from the drilling markets by being more directly linked to oil companies’ production thanto their exploration.Accommodation units provide a flexible means of providing accommodation and service capacityto an offshore field. They are used for short- or long-term purposes whenever manning and/or deckcapacity is required beyond the capacity of the fixed installation.The market is geographically divided into a few segments. Historically, accommodation units havemainly been used in the North Sea and Mexico. With the long-term chartering of five Prosafe unitsby Pemex in 2003, Mexico took over as a leading market for such units.Very recently, we have seen an intended bid from Prosafe on Consafe Offshore. If this bid where tobe successful, it would solidify Prosafe’s standing as the world’s leading accommodation playerwith fleet counting 12 floating accommodation units.Demand for accommodation rigsThere are several sources of demand for accommodation units, linked to the various phases of theoil fields. These include;Installation and commissioningSupport services during installation and testing of new fixed installations. In the North Sea suchactivity was formerly a large market, but has now become a minor part of demand. The market inMexico has been stable to growing over the last 5 years. Additional growth is expected indeepwater provinces as West Africa, Brazil and South East Asia.Support services during hook-ups of satellite fields to existing installations (growth niche in theNorth Sea with a number of subsea tie back prospects).Production and maintenanceSupport services during upgrading and maintenance on fixed installations (the major part of theNorth Sea market).Stand-by and hospital services (small part of the market);Long-term addition of accommodation capacity on producing fields (small part of market).The accommodation market players await an increase in the demand from the production segment,should today’s expectations of a sharp increase in the global FPSO fleet materialize.AbandonmentAbandonment and de-commissioning of fixed installations (small but growing part of the market).The key demand drivers are oil companies’ spending on new offshore production facilities andupgrades to enhance production from fields in operation. The level of such spending is stronglycorrelated to expectations for future oil and natural gas prices, the requirement to grow productionat a sustainable rate and the need to replace production lost through depletion.The North Sea market is characterized by a harsh environment and there is traditionally littlemaintenance activity in the winter season.29

The supply of accommodation unitsThe current world fleet of dedicated accommodation units is limited and the most relevant units aresummarized in the table below.No. of beds Location North Sea capable Certified for Norway operationsSemi submersibleSafe Caledonia 550 West Africa XSafe Scandinavia 527 North Sea X XMSV Regalia 380 West Africa X XSafe Britannia 812 GoM XSafe Lancia 600 GoM XSafe Regency 771 GoM XJasmina 535 GoM XSafe Hibernia 500 GoM XSafe Astoria 256 Far East XSafe Bristolia 550 Far East XSafe Concordia 390 GoM XPort Reval 365 North Sea X XBorgholm Dolphin 600 North Sea XIolar 209 GoMJupiter 650 GoMChemul (ex. Safe Karinia) 450 GoMEtesco Millenium 272 Latin AmericaSum semi submersibles 8417JackupsSafe Esbjerg 139 North Sea XPort Rigmar 336 North Sea X XSeafox 2 238 North Sea XSeafox 4 139 North Sea XPride Rotterdam 140 North Sea XSum jackups 992Non-competitive jackupsSeafox 3 170 Asia XBibby One 60 Arbian GulfBibby Marinia 202 Arbian GulfAhmed 440 Arbian GulfDeema 460 West AfricaLeen 138 Arbian GulfSum non-comp. jackups 1470Sum total supply 10879Multipurpose diving and support vessels capable of accomodation workQ4000 131 GoMUncle John 102 GoM"Semi 1" (Halliburton) 89 GoM"Semi 2"(Halliburton) 89 GoMSource: R.S. Platou Offshore, SEB EnskildaThe world fleet of accommodation units declined significantly during the nineties as several unitswas converted into drilling rigs. With a fleet of about 20 units, there was a large overcapacity ofaccommodation units in the North Sea in the early to mid-1990s as many of the large constructionprojects came to an end.As a response to the oil and gas companies’ recent increase in E&P spending over the past threeyears, the accommodation market have seen the start-up of two new accommodation companies;Gothenburg based Consafe Offshore and Norwegian OTC listed company Atlantic OilfieldServices. Coincidently, this market strength has also led to a fairly large supply increase over thepast four years including Awilco’s own Port Reval, Fred. Olsen’s Borgholm Dolphin, ConsafeOffshore’s Safe Astoria, Safe Bristolia, and Safe Concordia, EER’s (Energy Equipment Resources)Etesco Millenium, and Atlantic Oilfield Services’ to be converted Thule Challenge.30

Current supply – demand balanceThe chart below illustrates the contract coverage for the global accommodation fleet.Rig name Beds2006 2007 2008max Area / Location 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QSafe Caledonia 550 Nigeria Shell EncanaSafe Scandinavia 527 N. Sea Shell Conoco Statoil StatoilMSV Regalia 380 W. Africa TotalSafe Britannia 812 GOM Ocean OilSafe Lancia 600 GOM Ocean OilSafe Regency 771 GOM Ocean OilJasminia 535 GOM Ocean OilSafe Hibernia 500 GOM Ocean OilSafe Astoria 256 Bass Strait Toll EnergySafe Bristolia 550 Sakhalin Yard Samsung LLCSafe Concordia 390 GOM ChevronSafe Esbjerg 139 Denmark MaerskConsa TBN Yantai R. 400 China Due to Yantai's difficulties in meeting the initial delivery schedule - project put on holdPort Reval 365 Norway Conoco AkerKvaernerPort Rigmar 336 Norway ConocoBorgholm Dolphin 600 UK ShellSeafox 2 238 North Sea TotalSeafox 4 139 North Sea ShellPride Rotterdam 140 North Sea Maersk Oil & GasIolar 209 GOM PemexJupiter 650 GOM PemexChemul (ex Safe Karinia) 450 GOM Yard PemexEtesco Millenium 272 Brazil YardPetrobrasContractOptionsStacked/Enroute/YardSource: Enskilda Securities31

6.3 The market for drilling rigsBackgroundDrilling on offshore oil and gas fields is primarily done with units of the three categories below.The selection of a unit will depend on several factors, such as water depth, drilling depth, weatherconditions, location, and availability of units.Jack-ups Semi-submersibles DrillshipsJack-ups have legs that are loweredto the seabed, whereafter the hull isjacked up clear of the sea surface.Depth capability is limited to leglength, so jack-ups are generallyshallow water units. Some of thelargest units can operate in 450ftwater depth but the majority of thefleet is equipped for 250-300ft waterdepth.Semis are floating units implyingthat their depth capacity is notlimited to leg length. They havehulls or pontoons that are filled withballast water to provide stability.When drilling, they are kept inposition by anchors or dynamicpositioning. Semis are often referredto in “generations”, with the lastgenerations being the last built andlargest units with water depthcapacity up to 10,000ft.Drillships have ordinary ship hulls and aderrick on top for drilling through a holein the hull. Being ships, they have anadvantage in more efficient movementbetween drilling operations. Like semis,the drillships may be anchored orequipped with dynamic positioning.Drillships represent a smaller element ofthe market.Awilco Offshore is currently exposed to the drilling market is primarily through jack-up drillingrigs, but also through its investment in Offshore Rig Services.Offshore rig activity is closely correlated to oil companies’ investments related to the explorationand production of oil and gas (often referred to as E&P spending). E&P activity is driven by thedual requirement to grow production at a sustainable rate while replacing production lost throughdepletion.E&P spending and the offshore rig activity have historically been highly cyclical. Such levels ofspending may be influenced significantly by oil and natural gas prices and expected changes orinstability of such prices, as well as other factors, including demand for oil and gas and regionaland global economic conditions.32

Demand for jack-up drilling rigsThe figure below demonstrates the link between jack-up rig demand and oil prices. We see that theoil price seem to peak and bottom one year ahead of the global demand for jackup rigs.400.070Number of jackups working globally350.0300.0250.0200.06050403020USD/bbls150.0Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-0510Source: Enskilda SecuritiesJackup demandBrent Fortis OsebergAs illustrated above the offshore rig market has experienced both booming periods (1995-97) andsoft markets (1998-2000). However, since bottoming out late 2001, demand for jack-ups has seena strong increase and current status is characterized by firm markets in all key regions andsegments.Supply of jack-up drilling rigsThe global jackup market supply currently consists of 385 units. In addition there are currently 61jack-up rigs on order representing 16% of the total fleet. 9 of the jackups under construction arescheduled for delivery in 2006, 20 are scheduled for delivery in 2007, 25 are scheduled for deliveryin 2008 and 7 are scheduled for delivery in 2009. The current lead time for new buildings is above30 months, and potential further new buildings will not enter the market before first half-2009.Of Awilco Offshore seven jackups currently under construction/on order, two are scheduled fordelivery in 2006, three are scheduled for delivery in 2007, one is scheduled for delivery in 2008and the last one is scheduled for delivery in 2009.The majority of the current operating rigs were constructed in the late 1970’s and early 1980’s, andthe average age of the fleet is 23 years today. Although the useful lifetime of rigs is difficult topredict, it is expected that new requirements for drilling deeper and more complex wells willrequire replacement of older assets over time. In addition attrition of units due to accidents,conversions and retirement has been in the range of 2-6 units annually over the last 5 years. Notethat 2005 was especially tough with nine jackup rigs lost only to the hurricanes Katrina and Ritathat hit the US GoM in August/October 2005.33

90807060Jack ups, year built5040302010063 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07E 09ESource: Enskilda SecuritiesExisting rigsNewbuildsJack-up market balanceTotal utilization of the worldwide jack-up fleet is around 95% today. Thus, all worldwide marketsare virtually in balance today, with little room for mobilization of units between regions as noregion seems to have available capacity to spare.Region Demand Active Supply UtilisationNorth Atlantic 34 35 97%Gulf of Mexico 107 109 98%South America 6 6 100%West & S. Africa 19 19 100%Pacific Rim 39 49 80%Rest of the World 112 114 98%World Total 317 332 95%Source: Ods-Petrodata / Platou OffshoreThe global fleet of harsh environment jackups counts today 33 rigs. Among the 61 jackupscurrently under construction/on order, many are targeting this segment.One issue that characterises these harsh environment rigs is that they are capable of efficientlydrilling deep and complex wells. Recent federal royalty waivers on “deep shelf” natural gasproduction in the US Gulf of Mexico, extensive use of horizontal wells in the North Sea region andtechnically challenging field developments in Middle East and South East Asia are forecasted toincrease demand for these rigs in the future.34

Harsh environment jackups and jackups under constructionContractor Rigs today On order Options TotalRowan 7 4 11Maersk 6 4 10GlobalSantaFe 8 0 8ENSCO 7 1 8Sinvest 8 8Awilco 7 1 8Seadrill 1 5 6Scorpion 5 5Petrojack 3 3Transocean 2 0 2Atwood 1 1 2Other 1 23 24Total 33 61 1 95Source: SEB Enskilda, Ods-PetrodataRate developmentsRates for all kind of jack-up equipment has seen substantial increases over the last two years, withleading edge rate structures surpassing previous peak levels in main “jack-up provinces” such asthe US Gulf of Mexico, North Sea and South East Asia. Below to the right we see the rate reboundsfor ultra premium units with technical characteristics similar to Awilco Offshore’s seven units onorder/under construction.160,000180,000.00140,000160,000.00120,000140,000.00Dayrate (USD/d)100,00080,00060,00040,00020,0000Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06US GOM Jackups 250-300'- Average (US$) Southeast Asia Jackups 250-300' IC- Average (US$)Source: Enskilda SecuritiesDayrate (USD/d)120,000.00100,000.0080,000.0060,000.0040,000.0020,000.000.00Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06US GOM Jackups 301'+ IC- Average (US$) US GOM Jackups 301'+ IC- High (US$)Source: Enskilda SecuritiesThe figure below shows the development in dayrates for semis on Norwegian sector. As we can seefrom the chart, we have seen a surge in dayrates over the past two years. Offshore Rig Services’design will be targeting work in the North Sea market.400000350000300000250000Dayrate in USD200000150000100000500000Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06Norway 15K BOP Semisubmersible- Average (US$)Source: Enskilda SecuritiesNorway 15K BOP Semisubmersible- High (US$)Semi-submersible drilling rigsThe Company is also exposed to the market for semi-submersible drilling rigs through itsinvestment in Offshore Rig Services, which has under construction two semi-submersible drillingrigs. The market development in this segment has been very strong during the last year. Marketobservations indicate that the dayrate level has increased from USD 150,000 per day early 2004 toin excess of USD 450,000 per day today.35

7. ORGANIZATION7.1 Registered address and organisation numberAwilco Offshore ASA is a Norwegian public limited liability company incorporated on 21 January2005. Awilco Offshore was registered with the Norwegian Register of Business Enterprises on 11February 2005 under the registration number 987 861 894. Under its articles of association, AwilcoOffshore ASA shall have its registered office in the municipality of Oslo. The registered address ofAwilco Offshore ASA is Beddingen 8 Aker Brygge, N-0250 Oslo, Norway. Its telephone numberis + 47 22 01 42 00.7.2 Legal structureThe chart below illustrates the group structure. All direct and indirect subsidiaries are whollyowned.The table below sets out the country of incorporation of each of the subsidiaries of the Company:CompanyPort Rigmar ASAwilco Sea Beds ASWilpower ASWilSuperior LtdWilSeeker LtdAwilco Drilling LtdWilForce LtdWilPower LtdWilcraft ASWilcraft LtdWilBoss LtdWilStrike LtdAwilco Sea Beds II ASWOG ASCountry of incorporationNorwayNorwayNorwayBermudaBermudaBermudaBermudaBermudaNorwayBermudaBermudaBermudaNorwayNorway36

7.3 Organisational structureThrough management agreements, the operational management of the drilling and accommodationunits is ensured to high quality standards. The construction process is closely supervised by siteteams built up and conducted by the Awilco Offshore management itself. Commercial andoperational management of the drilling rigs are ensured through Premium Drilling. The operationof the accommodation units is handled through the independent managers OSM Offshore andPolycrest.7.4 Board of DirectorsAs of the date of this Prospectus, the following persons serve on the Board of Directors of AwilcoOffshore.Sigurd E. Thorvildsen (41), Oslo, ChairmanMr. Thorvildsen has 15 years of experience from the shipping and offshore industries. He holds theposition as Managing Director of Awilco. Before joining Awilco, Mr.Thorvildsen was for severalyears a partner in the shipbroking firm O-J. Libaek and Partners AS. He is currently member of theboard of Marine Provider ASA, Dyviships XII AS, Sector Speculare AS, Offshore Rig ServicesASA. He holds a degree (Siviløkonom) from Handelshøyskolen BI.Arne Alexander Wilhelmsen (41), OsloMr. Wilhelmsen has 16 years of experience from finance and the shipping and offshore industries.He is CEO of Anders Wilhelmsen & Co AS and has held a variety of managerial positions withinthe Anders Wilhelmsen group since 1995. Mr. Wilhelmsen is a member of the board of directors ofA Wilhelmsen AS and various other business units within the Anders Wilhelmsen group ofcompanies, including as chairman of Awilco, and serves as a director of the board of RoyalCaribbean Cruise Line. He also serves on the board of directors for Nordisk Skipsrederforening andas a deputy board member in Norges Rederiforbund. Mr. Wilhelmsen has a Masters of BusinessAdministration from IMD, Lausanne, Switzerland.Jarle Roth (45), BærumMr. Roth is Executive Vice President of the Umoe Group. He has been employed in variouscompanies related to the Ulltveit-Moe Group since 1990, amongst them President and CEO ofUnitor ASA. He is currently a member of the board of directors of Umoe Industri AS, Umoe IKTAS, Umoe Mandal AS, Umoe Schat-Harding, Sønnico AS, Umoe Catering AS, Kacin Holding AS,Kacin AS and Fafo. He has also been member of the board of directors of Unitor ASA and Unitorssubsidiaries and partner in Kacin KS. He is educated as a naval architect (1983) and holds a degree(siviløkonom) from NHH (1987) in addition to a doctorate programme within organisation andstrategy from NHH (1989).Marianne Blystad (48), OsloMrs. Blystad has experience from her current position as an attorney with the law firm Nordia DAin Oslo. Her specialisation is within company law and real estate. She has also held positions inBull & Co, Citibank, Eksportfinans and Rederiet Arne Blystad AS. Mrs Blystad is member of theboard of directors of Spencer Finance Corp., Aker American Shipping ASA and Superoffice. Sheholds a degree (siviløkonom) from Handelshøyskolen BI (1984) and a law degree (cand.jur.) fromthe University of Oslo (2002).37

Tor Bergstrøm (57), KolbotnMr. Bergstrøm has more than 30 years of experience from banking, industry and assetmanagement, both in Norway and internationally. He holds the position as Executive VicePresident of Anders Wilhelmsen & Co AS. He is chairman of A Wilhelmsen Capital AS and,among other responsibilities, a member of the board of directors of Mamut ASA, APL ASA,Linstow AS, Awilco AS and Texcel International AB. He has also been a member of the board ofdirectors of Telenor Venture IV. Bergstrøm was for many years Executive Vice President and CFOof the Aker Group and before that heading Asset Management in the Storebrand Group. He hasalso been working in banking, both in Norway and in the US. He has broad experience as boardmember of manufacturing companies, investment companies and finance companies, both inNorway and internationally. He holds a degree (siviløkonom) from the Norwegian School ofEconomics and Business Administration.Mr. Wilhelmsen has 33.2% ownership in Aweco Holding AS which owns 3,300,000 shares in theCompany. No other directors hold shares in the Company.No remuneration has been paid or granted to the Company's Board of Directors. The level ofremuneration for 2005 will be determined at the annual general meeting in May 2006.None of the directors has been associated with any bankruptcies, receiverships, or liquidations forthe last five years. None of the directors has been the subject of any official public incriminationand/or sanctions by statutory or regulatory authorities (including designated professional bodies),or been disqualified by a court from acting as a member of the administrative, management orsupervisory body of an issuer or from acting in the management or conduct of the affairs of anyissuer, or convicted of any fraudulent offences, for the last five years.Thorvildesen, Wilhelmsen and Bergstrøm represent the Company’s largest shareholder, AwilcoAS, at the Board of Directors.The table below sets out the current term of office of each of the directors:Name of directorElected to the Board ofDirectorsExpiry of current term ofofficeSigurd F. Thorvildsen 4 April 2005 4 April 2007Tor Bergstrøm 4 April 2005 4 April 2007Arne Alexander Wilhelmsen 4 April 2005 4 April 2007Marianne Blystad 4 April 2005 4 April 2007Jarle Roth 4 April 2005 4 April 2007No contracts have been entered into with any of the directors entitling them to any benefits upontermination of their function as member of the board of directors.7.5 ManagementCorporate managementHenrik Fougner (43), managing director, BærumMr.Fougner has 20 years of experience from banking and the shipping and offshore industries, bothin Norway and internationally. He previously held the position as CFO of Awilco AS. Beforejoining Awilco in 2001 Henrik Fougner was CFO of Osprey Maritime Limited in Singapore. Hehas also been working in banking through Den norske Bank and Scandinavian Bank Group, both inLondon and Oslo, focusing on the shipping and offshore industry. He holds an MBA from theNorwegian School of Economics and Business Administration.He holds 5,000 shares in the Company.38

Key personnel – commercial managementThor Alexander Krafft (62), senior vice president, AskerMr. Krafft is Senior Vice President in Awilco Offshore ASA, and has more than 35 years ofinternational experience from shipping and the oil and gas offshore industry. Mr. Krafft has workedfor Esso, Gotaas Larsen/Golar Nor Offshore and Arne Blystad Rederi. He is currently member ofthe board of Borgeskogen KS. He holds an MBA from University of Wisconsin, USA.Knut Martin Wadet (55)Mr. Wadet has 30 years experience from the offshore oil and gas and marine industries, both inNorway and internationally. He holds a position as Vice President with special responsibility forthe two accommodation units Port Reval and Port Rigmar. Previously Mr. Wadet was GeneralManager of the marine contracting entity Farmand Survey, he has been employed by Stolt-NielsenSeaway and the Kværner group, and has spent several years in the Middle East and South EastAsia. He holds a degree in business administration (Siviløkonom) and a degree in civil engineering.Jan B. Usland (46)Mr. Usland is Director – Offshore Business Development in Awilco Offshore ASA. He holds anMSc in Naval Architecture and Marine Engineering from NTNU (Norway) and enjoys more then20 years of experience within the offshore oil & gas industry primarily from management, businessdevelopment and technical positions with floating production and drilling contractors. He waspreviously Senior Vice President, Floating Production with Northern Offshore ASA. He iscurrently member of the board of Acon Consulting DA and Ucon Offshore AS.Key personnel – technical managementClaus Mørch (59)Mr. Mørch has both a MSc in Mechanical engineering and a BSc in Marine engineering from theUniversity of Newcastle upon Tyne. Mr. Mørch is Senior Vice President of Awilco Offshore ASA.He has more than 30 years experience in the marine and offshore market with broad experience inrelation to newbuilding projcts, conversions and management of shipping and offshore units andhas worked within the Anders Wilhelmsen group for 20 years.None of the above members of management has been associated with any bankruptcies,receiverships, or liquidations for the last five years. None of the above members of managementhas been the subject of any official public incrimination and/or sanctions by statutory or regulatoryauthorities (including designated professional bodies), or been disqualified by a court from actingas a member of the administrative, management or supervisory body of an issuer or from acting inthe management or conduct of the affairs of any issuer, or convicted of any fraudulent offences, forthe last five years.7.6 Remuneration to ManagementCEO Henrik Fougner received an aggregate remuneration of NOK 3.1 million from the Companyduring 2005, of which NOK 0.3 million was pension premium expense.The aggregate annual remuneration for management in 2005 was NOK 25.2 million, of whichNOK 1.7 million was pension costs.The Company’s net pension obligation is described in sections 8.2 and 8.3.The Company has an employee share incentive plan for senior management. Under the incentiveplan the management is granted share appreciation rights where the employees are entitled to acash payment equivalent to the gain that would have arisen from a holding of a particular numberof shares from the date of the grant to the date of exercise. The share appreciation rights are vestedover four years from the date of grant. The strike price is NOK 20. A total of 1,000,000 share39

appreciation rights have been issued, of which 300,000 have been issued to Managing DirectorHenrik Fougner.No member of management is entitled to any benefits upon the termination of his employment withthe Company.7.7 Shares and optionsThe table below provides an overview of shares held by the directors and the management.SharesSigurd E Thorvildsen, Chairman of the Board 0Arne Alexander Wilhelmsen, director (1) 3,300,000Jarle Roth, director 0Marianne Blystad, director 0Tor Bergstrøm, director 0Henrik Fougner, Managing Director 5,000Thor Alexander Krafft, senior vice president offshore 0Knut Martin Wadet, vice president offshore 0Jan B. Usland, offshore business development 0Claus Mørch, technical director 0(1) This equals the shareholding for Aweco Holding AS, a holding company controllingapproximately 60.6% of the main shareholder Awilco AS. Mr Arne Alexander Wilhelmsenowns 32.9% of Aweco Holding AS.The above Shares are not subject to any lock-up undertaking.Henrik Fougner’s Shares were acquired in the market on 19 October 2005 at a price of NOK 26 perShare.7.8 EmployeesAwilco Offshore currently has, and had as of 31 December 2005, five directly employedemployees. All other services and functions are ensured through the management agreements.7.9 Pensions and other obligationsAwilco Offshore has set up a defined benefit scheme with a life insurance company to providepension benefits for its employees. The scheme provides entitlement to benefits based on futureservice from the commencement date of the scheme. These benefits are principally dependent onan employee's pension qualifying period, salary at retirement age and the size of benefits from theNational Insurance Scheme. Full retirement pension will amount to approximately 70% of thescheme pension-qualifying income. The scheme also includes entitlement to disability, spouses andchildren’s pensions. The retirement age under the scheme is 67 years.7.10 Conflicts of interestThe Company is not aware of any potential conflicts of interests between any duties to theCompany and any private interests or other duties of any member of the Company’s managementor Board of Directors.7.11 Corporate GovernanceAwilco Offshore is dedicated to observing high standards of corporate governance. It is of great40

importance to Awilco Offshore that its shareholders and the society in general feel comfortable andhave trust in that its businesses are being run properly and that governing bodies are sufficientlyindependent to perform all its functions.Corporate governance treats issues and principles related to the distribution of roles between thegoverning bodies of a company and the responsibility and authority assigned to each of thesebodies. To manage the business risks the Board of Directors of Awilco Offshore foster propercontrols, though without discouraging innovation and entrepreneurship in the company. In AwilcoOffshore it is highly valued to be innovative and creative, as we believe these are some of thesuccess factors in a fast growing business environment.The Board of Directors acknowledges the substantial responsibility the company has in relation tosafety, security and environment. To have high ethical standards when executing our businessesand live up to our social responsibility standards, are carefully stated of all Board- and companymembers at any occasion.Awilco Offshore believes that it complies with the recommendations of the Norwegian Code ofPractice for Corporate Governance, dated December 8, 2005, with the following exception:- The Company has not established a nomination committee, as the Articles of Association do notinclude such a requirement. The Company is a fairly new company and that responsibility iscurrently handled by the Board and the Management. Establishing a nomination committee in thefuture will be considered.41

8. FINANCIAL INFORMATION8.1 Operating and Financial ReviewProfit and loss account 2005Consolidated Total revenues were USD 42.1 million. Operating profit before depreciation andamortization (EBITDA) was USD 12.6 million, and operating profit after depreciation andamortization (EBIT) was USD 5.4 million. Rig operating expenses were USD 21.6 million for theyear and relate to the accommodation rigs. General and administrative expenses were USD 6.8million for the year, including USD 2.1 million relating to share-based payments. The share-basedpayments had no liquidity effect in 2005. Depreciation expense was USD 7.2 million in 2005 andwas primarily attributable to the accommodation rigs. Awilco Offshore’s share of the result inPremium Drilling was USD –1.1 million in 2005.Net financial items were USD – 3.1 million. Interest expense totaled USD – 4.8 million. Profitbefore tax was USD 2.3 million, and net profit was USD 1.9 million. Basic and diluted earnings pershare were USD 0.02.CapitalAs 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 forthe accommodation unit Port Reval. Awilco Offshore is well positioned to meet its futurecommitments through its strong cash position and undrawn credit facilities.During 2005, Awilco Offshore raised NOK 1 billion in new equity. In addition, new shares wereissued as settlement in connection with the purchase of shares in Petrojack ASA and Offshore RigServices ASA. At December 31, 2005, Awilco Offshore had 130.3 million shares outstanding.SegmentsDrilling servicesThe rig market has developed positively throughout the year and by year end most marketsegments were experiencing close to full utilization.Sustained high oil prices have contributed to an increased demand for drilling services, which haveresulted in day rates for jack-up drilling units showing a very positive development.The positive market view is also reflected in the increase of newbuilding contracts entered intoduring 2005. As a result, most shipyards are operating at full capacity and realistic new rigdeliveries are now well into 2009.In 2005, the industry saw the effects of multiple hurricanes making their paths through some of themost active offshore areas in the US Gulf of Mexico, resulting in a number of smaller and olderunits never returning to active duty. This incident has highlighted the need for replacing an agingworldwide 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-upunits.For the first time in several years, the market is experiencing close to full utilization. Somesegments are experiencing a shortage of available units, resulting in the deferral of drillingprograms. This situation is expected to affect the jack-up 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 jack-up drilling services and increased focus on safety and42

efficiency, we expect all new jack-ups scheduled for delivery over the next several years to beabsorbed and find attractive employment in the market.Awilco Offshore sees a strong market during the coming years based on the following:Continued high energy pricesIncreasing E&P spending by oil companiesDemand for jack-up drilling rigs outstripping supplyThe early deliveries of Awilco Offshore’s uncommitted newbuildings make it well positioned tobenefit from the continued strong market.Accommodation servicesThe market for North Sea accommodation units improved considerably during the second half of2005. 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 employmentfor the unit. Awilco Offshore expects market rates to remain at least at current levels. Hence, PortReval should benefit from a strong North Sea market with limited supply and historically high ratelevels. We also expect the current strong market will result in additional contract opportunities forPort Rigmar.8.2 AccountsProfit and loss statementAll figures in USD 1000 (except per share data) 2005Operating revenue 42 082Rig operating expenses 21 551General and adminstrative expenses 6 830Depreciation and amotization 7 223Share of loss in joint venture 1 073Total operating expenses 36 677Operating profit 5 405Interest income 2 273Interest costs (4 776)Foreign exchange gain/(loss) (105)Other financial items (456)Net financial items (3 064)Profit before tax 2 341Tax expense (433)Profit / (loss) for the year 1 908Basic/diluted earnings per share 0.02Dividend per share 0.0043

Balance sheetAll figures in USD 100031 December2005Non current assetsProperty, plant and equipment 282 091Investment in shares 39 252Investment in join venture 2 049323 392Current assetsOther financial investment 73 987Trade and other receivables 10 531Prepayments 1 076Cash and cash equivalents 35 753121 348Total assets 444 740EquityPaid in capital 283 039Other equity 5 762Asset revaluation reserve 11 419300 220Non current liabilitiesDeferred tax liability 3 882Long term interest bearing debt 112 155Net pension liabilities 183116 220Current liabilitiesCurrent portion of long term debt 11 440Trade and other payables 12 155Accruals, provisions 2 038Income tax payable 2 66628 299Total equity and debt 444 74044

Cash flow statementAll figures in USD 1000 2005Profit before tax 2 341Adjustments forDepreciation and amortization 7 223Gains/loss on disposal of fixed assets (21)Shares of profit/loss joint ventures 1 073Increase/decrease receivables and prepayments (1 630)Increase/decrease payables and accruals 7 796Increase/decrease other provisions 183Net cash flow for operating activities 16 966Investments in fixed assets (192 090)Proceeds from sale of fixed assets 0Investments in financial assets (8 552)Other investments 0Net cash flow from investments (200 643)New debt 132 920Repayment debt (103 787)Equity contributions 166 070Net cash flow from financing activities 195 202Net cash flow for the year 11 526Cash and cash equivalents per opening balance 24 228Cash and cash equivalents per end of period 35 753Statement of changes in equity 31.12.2005All figures in USD 1000 Issued Share Retained OtherCapital premium earnings reserves TotalEquity per opening balance (1) 94 051 9 402 (78 467) 0 24 986Reversed pro forma adjustments (1) 0 0 5 190 0 5 1900 0 0 0 0Share issue no 1 80 000 80 000 0 0 160 000Share issue no 2 4 724 5 669 0 0 10 394Share issue no 3 6 924 16 549 0 0 23 474Share issue no 4 (2) 17 356 55 538 0 0 72 894Share issue costs 0 (4 323) 0 0 (4 323)Reclassified paid in premium to other equity 0 (82 852) 82 852 0 0Profit/(loss) in period 0 0 1 908 0 1 908Revaluation of available for sale investements 0 0 0 11 419 11 419Translation differences 0 0 0 (5 722) (5 722)203 056 79 983 11 483 5 698 300 220The Company’s share capital is NOK 1,302,778,800 made up of 130,277,880 shares with a parvalue of NOK 10 per share. All shares of the Company are of the same class and are equal in allrespects. The Company’s articles of association do not provide for shares of other classes.45

(1) Awilco Offshore ASA (AWO) was founded on 21 January 2005. The formation of Awilco’s offshore segment into theAWO group is seen as a reorganization of a segment in a wholly owned subgroup of Awilco, the reorganization has beenrecorded using the continuity method. Consequently, the net book value of the assets, rights and liabilities transferred tothe AWO group, corresponds to the net book value under the previous organization and ownership structure.Based on this, a set of pro forma accounts have been prepared, which illustrates the financials as if the offshore segmentwas reorganized per beginning of the period presented, and is derived from audited financial statements for Awilcogroup for 2004. The proforma figures is included in the Company’s fourtht quarter report 2005, attached as Appendix Ito this Prospectus.(2) The share issue was resolved by a Board of Director's meeting at end of December 2005. This share issue was notregistered in the Register of Business Enterprises until January 20068.3 Accounting principlesBasis of consolidationThe consolidated financial statements include Awilco Offshore ASA and its subsidiaries as of 31December each year. The financial statements of the subsidiaries are prepared for the samereporting year as the parent company, using consistent accounting policies. The consolidatedaccounts have been prepared in accordance with International Financial Reporting Standards(IFRS).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 Groupobtains control, and continue to be consolidated until the date that such control ceases.Joint venturesThe Group has an interest in a joint venture which is a jointly controlled entity. A joint venture is acontractual arrangement whereby two or more parties undertake an economic activity that issubject to joint control, and a jointly controlled entity is a joint venture that involves theestablishment of a separate entity in which each venturer has an interest. The Group recognizes itsinterest in the joint venture using the equity method. Under the equity method, the investment isinitially recognized at cost and the carrying amount is increased or decreased to recognize theGroup’s share of the profit or loss of the investee after the date of acquisition. The Group’s share ofthe profit or loss of the investee is recognized in the Group’s profit or loss. Distributions receivedfrom an investee reduce the carrying amount of the investment.Associated companiesThe Group’s investment in its associates is accounted for using the equity method. An associate isan entity in which the Group has significant influence and which is neither a subsidiary nor a jointventure.Under the equity method, the investment in the associate is carried in the balance sheet at cost pluspost-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to anassociate is included in the carrying amount of the investment and is not amortized. Afterapplication of the equity method, the Group determines whether it is necessary to recognize anyimpairment loss with respect to the Group’s net investment in the associate. The Group’s share ofthe results of operations of the associate is recognized through profit and loss. Where there hasbeen a change recognized directly in the equity of the associate, the Group recognizes its share ofany changes and discloses this, when applicable, in the statement of changes in equity.EstimatesThe preparation of financial statements in accordance with IFRS requires management to makeestimates and assumptions that affect assets, liabilities, revenues, expenses and information onpotential liabilities. Estimates are based upon management’s best knowledge of informationavailable at the date the financial statements are authorized for issue. Future events may lead tothese estimates being changed. Such changes will be recognized when new estimates can bedetermined with certainty.46

RevenueRevenue is recognized when persuasive evidence of an agreement exists, the service has beendelivered, fees are fixed and determinable, collectables are probable and when other significantobligations have been fulfilled. Revenues from the rigs are recognized based on contractual dailyrates or on a fixed price basis.Foreign currencyThe financial statements are presented in USD, which is also the Group’s functional currency.When translating financial statements for foreign entities from local currency into USD assets andliabilities are translated using year-end exchange rates, and results are translated using the averageexchange rates for the reporting period.Transactions in foreign currencies are recorded at the exchange rate in effect at the date of thetransaction. Monetary assets and liabilities denominated in foreign currencies are translated at theexchange rate in effect at the balance sheet date. Non-monetary items that are measured athistorical cost in a foreign currency are translated using the exchange rates in effect at the dates ofthe initial transactions.Property, plant and equipmentRigs and equipment are stated at cost less accumulated depreciation. The cost of an assetcomprises its purchase price and any directly attributable costs of bringing the asset to its workingcondition. In situations where it can be clearly demonstrated that expenditures have resulted in anincrease in the future economic benefits expected to be obtained from the use of the asset beyondits originally assessed standard of performance, the expenditures are capitalized as an additionalcost of the asset.Depreciation is calculated using the straight-line method for each asset, after taking into accountthe estimated residual value, over its expected useful life. Components of fixed assets with differenteconomic useful lives are depreciated over their respective useful lives. The expected useful livesof the assets are as follows:Accommodation rigs30 years*Equipment and components of rigs15-30 year*Office equipment, cars, etc.3-10 years* Certain elements, such as costs recognized in connection with major classification costs/drydocking,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 othercosts directly associated with the newbuilding program. Capitalized value is reclassified fromvessels under construction to rigs/vessels upon delivery from the yard, which is when the asset isconsidered available for its intended use and depreciation commences.The residual values and useful lives of the assets are reviewed and adjusted if appropriate at eachbalance sheet date.Impairment of assetsAll assets are reviewed for impairment whenever events or changes in circumstances indicate thatthe carrying amount of an asset may not be recoverable, at least on an annual basis. Whenever thecarrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized. Therecoverable amount is the higher of an asset’s net selling price and value in use. The net sellingprice is the amount obtainable from the sale of an asset in an arm’s length transaction less the costsof disposal while value in use is the present value of estimated future cash flows expected to arise47

from the continuing use of an asset and from its disposal at the end of its useful life. Recoverableamounts are estimated for individual assets or, if it is not possible, for the cash-generating unit.Impairment losses recognized in prior years are reversed and recorded in profit and loss when thereis an indication that previous impairment losses recognized no longer exist or have decreased.Financial assetsUnder IAS 39(R), the Group classifies its investments into the following categories: at fair valuethrough profit or loss, loans and receivables, held-to-maturity or available-for-sale depending onthe purpose for acquiring the investments as well as ongoing intentions. Financial assets arerecognized initially at fair value, and in the case of investments not at fair value through profit orloss directly attributable transaction costs.All regular way purchases and sales of financial assets are recognized on the trade date (that is, thedate that the Group commits to purchase or sell the asset.)Investments in shares are either categorized as held-for-trading or available-for-sale. Financialinstruments that are held with the intention of making a gain on short-term fluctuations in prices areclassified as financial assets at fair value through profit and loss. Other financial instruments, withthe exception of loans and receivables originally issued by the Group, are classified as availablefor-sale.Such investments are carried at fair value as observed in the market at the balance sheetdate. 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 thecontractual right that comprise the financial instrument, which is normally the case when theinstrument is sold, or all the cash flows attributable to the instrument are passed through to anindependent third party.The Group evaluates the designation of each financial asset at each financial year end.Trade and other receivablesTrade receivables are recognized and carried at original invoice amount less an allowance for anyuncollectible amounts. Provision is made when there is objective evidence that the Group will notbe able to collect the debts. Bad debts are written off when identified.Cash, cash equivalents and cash flow statementCash 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 intoknown amounts of cash with original maturities of three months or less.Long-term interest-bearing debtAll borrowings are initially recognized at the fair value of the consideration received less directlyattributable transaction costs. After initial recognition, interest-bearing borrowings aresubsequently measured at amortized cost using the effective interest method.A financial liability is derecognized when the obligation under the liability is discharged, cancelledor expires.Where an existing financial liability is replaced by another from the same lender on substantiallydifferent terms, or the terms of an existing liability are substantially modified, such an exchange ormodification is treated as a de-recognition of the original liability and the recognition of a newliability, and the difference in the respective carrying amounts is recognized in profit or loss.First year instalments of long-term debt are classified as current liabilities.48

Borrowing costs are capitalized and then amortized if they are directly attributable to theacquisition, construction or production of a qualifying asset. Borrowing costs are capitalized untilthe assets are substantially ready for their intended use. If the resulting carrying amount of the assetexceeds its recoverable amount, an impairment loss is recorded. Other borrowing costs arerecognized as an expense when incurred.ProvisionsProvisions are recognized when the Group has a present obligation (legal or constructive) as aresult of a past event, it is probable that an outflow of resources embodying economic benefits willbe required to settle the obligation and a reliable estimate can be made of the amount of theobligation. Where the Group expects some or all of a provision to be reimbursed, for exampleunder an insurance contract, the reimbursement is recognized as a separate asset but only when thereimbursement is virtually certain. The expense relating to any provision is recognized throughprofit 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 risksspecific to the liability. Where discounting is used, the increase in the provision due to the passageof time is recognized as a borrowing cost.Pension and other post-employment benefitsThe present value of the pension liabilities under defined benefit pension plans has been calculatedbased on actuarial principles. The present value of the pension plan liabilities and assets is recordednet and classified as either long-term liabilities or long-term assets. The change in net pensionliabilities is expensed in the profit and loss account as personnel expenses. The effect of changes inestimates, change in pension plans and actuarial gains and losses are recognized as income orexpense over the average remaining service period.Net pension expenses include the present value of pension earnings for the period, interest expenseon pension obligations incurred, expected return on the pension funds and the amortized effect ofchanges in estimates and plans.Share-based transactionsEmployees receive remuneration in the form of share based payment transactions, wherebyemployees 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 tothe fair value at the date which they are granted. The fair value is determined by an external valuerusing an option pricing model (Black & Scholes). The cost of the share based payment isrecognized, together with a corresponding accrual, over the vesting period. The cumulative expenserecognized for equity settled transaction at each reporting date until the vesting date reflects theextent to which the vesting period has expired and the best available estimate of the number ofequity instruments that will ultimately vest.TaxesIncome tax payable for the current and prior periods is measured at the amount expected to be paidto the taxation authorities. The tax rates and tax laws used to compute the amount are those that areenacted or substantively enacted by the balance sheet date.Deferred income tax is provided using the liability method on temporary differences at the balancesheet date between the tax bases of assets and liabilities and their carrying amounts for financialreporting purposes.Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets arerecognized for all deductible temporary differences to the extent that it is probable that taxableprofits will be available against which the deductible temporary difference can be utilized.49

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply tothe year when the asset is realized or the liability is settled, based on tax rates (and tax laws) thathave 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 theprofit and loss statement.Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to setoff current tax assets against current tax liabilities and the deferred taxes relate to the same taxableentity and the same taxation authority.Segment informationSegment information is prepared in conformity with the accounting policies adopted for theGroup’s consolidated financial statement. There have not been any transactions between thesegments.8.4 Other financial informationSegment informationSplit by segments 2005All figures in USD 1000Accomodationrigs Jack-up rigs Other TotalOperating income 42 048 0 34 42 082Operating costs (21 551) 0 0 (21 551)Depreciation (7 172) 0 -52 (7 223)Administrative expenses -422 -844 (5 565) (6 830)Share of profit/loss joint venture 0 0 (1 073) (1 073)Operating profit 12 904 -844 (6 655) 5 405Assets 76 807 205 037 248 282 091Segmented trade and other payables 3 897 400 7 859 12 155Mortgage debt (incl 1 year inst) 71 429 52 166 0 123 595Investments 8 775 183 016 299 192 090Investment in joint venture 2 049 2 049Segment split by geographic area 2005All figures in USD 1000 UK NorwayUnallocatedeliminationsTotalOperating income 11 976 30 072 34 42 082Operating costs (4 893) (16 657) 0 (21 551)7 082 13 415 34 20 531Depreciation (7 223) (7 223)Administrative costs (6 830) (6 830)Share of profit(loss joint venture (1 073) (1 073)Operating profit 7 082 13415 (15 092) 5 405The geographic split of operating income refers to what continental shelf the rigs have beenemployed on during the period. As the rigs are moveable they may be employed in differentjurisdiction in an accounting period, therefore the depreciation is not split by geographic area. Thesame applies for administrative expenses, fixed assets and investments in the accounting period.50

Property, plants and equipment31.12.2005 Accomodation Jack-up rigs Other assets TotalRigs underAll figures in USD 1000 conctructionAcquisition cost, opening balance 86 606 22 021 0 108 627Newbuilding, upgrade, reconstrcuction 8 775 183 016 299 192 090Sale of assets 0 0 0 0Acquisition cost ending balance 95 381 205 037 299 300 717Acc depreciation, opening balance 11 403 0 0 11 403Depreciation 7 172 0 52 7 223Impairment charges, reversals 0 0 0 0Sale of assets 0 0 0 0Acc depreciation, ending balance 18 574 0 52 18 626Net carrying amount, ending balance 76 807 205 037 248 282 091Specification of capitalization during the yearInstallments to shipyard 0 170 395 0 170 395Acquisition, reconstruction, capitalized costs 8 775 7 122 299 16 196Capitalized interests 0 5 499 0 5 499Total capitalized during the year 8 775 183 016 299 192 090The Company had at year-end 2005 entered into five newbuilding contracts to build jack-updrilling rigs. The contracts are distributed with three contracts at the PPL yard and two at theKeppel yard. The capitalised amounts on the jack-up drilling rigs include the installments paid tothe yards according to the construction contracts, initial project costs, project management costs,capitalized interests and other costs directly associated with the newbuilding program.Estimated project price for the contracted rigs, including yard contract prices, newbuildingsupervision, owner furnished equipment, spares, financing and other project expenses, can bespecified as follows:Contracted rigs Yard Delivery Project priceWilPower PPL 2Q 06 MUSD 131WilCraft Keppel 4Q 06 MUSD 131WilSuperior PPL 2Q 07 MUSD 130WilBoss Keppel 4Q 07 MUSD 134WilForce PPL 4Q 07 MUSD 144WilStrike Keppel 2Q09 MUSD 163MUSD 132-WilSeeker PPL 2Q08 14051

8.5 Events since 31 December 2005Increase of credit facility with NordeaCertain subsidiaries have per year end an agreement with Nordea for MUSD 210 of senior creditfacilities. In January 2006 the credit facility limit was increased to MUSD 410 - with mainly thesame terms. However, the new credit facility is more flexible in that draw downs can be on a prorata basis compared to equity payments to the yard, compared to previously the equity had to bepaid before any draw-downs could be done under the credit facilityBond loan of MUSD 100In February 2006 the Company issued a bond loan of MUSD 100. The bond is unsecured, has afive year bullet maturity and carries a fixed coupon of 9.75% p.a. The bond is flexible, as itincludes no change of control provisions and allows for a possible demerger of the Companywithout bondholder approval in connection with possible corporate transactions.Investment in Offshore Rig Services ASA (OFRS)At end of December 2005 the company acquired approximately 37.8% of the shares in OFRS withshares in Awilco Offshore as settlement. The transaction made Awilco Offshore the largestshareholder in OFRS. The transaction was finalized in beginning of January 2006 when all theshareholder rights in OFRS was transferred to Awilco Offshore. Per year end this investment isrecorded as a forward agreement according to IAS 39 and classified as current assets.On 7. April 2006, Awilco Offshore acquired an additional 1,000,000 shares in ORS taking the totalholding to 39,8%.New-building contract no 6 and 7In beginning of March 2006 the company exercised an option with the Keppel Fels yard inSingapore to build a 400 ft jack-up drilling rig with drilling depth of 30.000 ft. The rig is to bedelivered in 2Q09, and has a contract price with the yard of MUSD 146.In middle of April 2006 the company exercised an option with the PPL yard in Singapore to build a375 ft jack-up drilling rig with drilling depth of 30.000 ft. The rig is to be delivered in 2Q08, andhas a contract price with the yard of MUSD 125.Acquisition of Petrojack rigsOn 4 April 2006, Awilco Offshore together with Sinvest ASA announced the entry into aconditional agreement for the joint acquisition of the ownership interest in three jack-up rigs underconstruction in Singapore.The purchase price is based on an aggregate price for all three rigs of approximately USD 600million. The agreement is conditional upon a final sale and purchase agreement, completion of duediligence and approval by the general assembly of Petrojack ASA.On 5 May 2006, Independent Oil Tool ASA stated that it has decided not to vote in favour of thetransaction. According to this statement, Independent Oil Tool ASA holds 34.41% of the shares inPetrojack.TrendsThe market for jack-up drilling rigs has shown a positive development since the end of 2005, withstrong demand and average dayrates around USD 200,000. Contract lengths are also increasing,with many examples of two and three-year contracts. See also section 6 “Market Overview”.52

8.6 Financial Market ExposureAWO operates internationally and in a capital intensive industry, and is exposed to market riskrelating to the development of foreign exchange rates and interest rates.Interest ratesAWO interest-bearing debt totalled USD 124 million at 31 December 2005, of which all was USDdenominated. Interest on this debt is in floating. AWO will evaluate the proportion of interest-ratehedging in relation to the repayment profile of its loans, the group’s portfolio of contracts and cashflow. The average interest rate in 2005 was 5.6%.Foreign currencyFrom January 2006 AWO is compiling its accounts in USD. In normal operation, the company willhave a currency exposure to GBP, NOK and SGD. The majority of the company’s revenues andoperating costs are in USD.The rigs owned by the group are valued, traded and financed in USD. Investments such asupgrading of rigs will be primarily in USD. To the extent that such investments are denominated incurrencies other than USD the cash flow will normally be hedged with the aid of currency forwardcontracts.AWO has required put options for a total of USD 1.2 million to sell crude oil with a strike price ofUSD 40 per barrel. The options run until December 2007.8.7 Statutory auditorsAwilco Offshore’s statutory auditor is Ernst & Young AS, Oslo, Norway. Ernst & Young has beenAwilco Offshore’s auditor since the company’s inception. The auditor’s registered address is:Ernst & Young ASOslo AtriumP.O Box 20N-0051 OsloThe audit partners of Ernst & Young AS are members of the Norwegian Institute of PublicAccountants (DnR).8.8 InvestmentsGross investment in 2005 was approx. USD 192 million, including USD 8.8 million related toupgrades for the accommodation unit Port Reval. Remaining investments for the new buildingcontracts is approx. USD 765 million (for seven drilling rigs). Awilco Offshore is well positionedto meet the remaining payments through its strong cash position and undrawn committed debtfacilities.During 2005, Awilco Offshore raised approx. NOK 1 billion in new equity. In addition, new shareswere issued as settlement in connection with the purchase of shares in Petrojack and Offshore RigServices, leading to the total 130.1 million shares outstanding at 31 December 2005.53

Future investments on which the Company already has made firm commitments can be specified asfollows;Rigs under constructionper year end Yard DeliveryTotal deliverycost (USD mill)Remainingexpenditures(USD mill)WilPower PPL 2Q06 USD 131 USD 46WilCraft Keppel 4Q06 USD 131 USD 57WilSuperior PPL 2Q07 USD 130 USD 111WilBoss Keppel 4Q07 USD 134 USD 107WilForce PPL 4Q07 USD 144 USD 144USD 465In March 2006 the company exercised an option with Keppel Fels to build a sixth jack up drillingrig. The rig is to be delivered in 2Q09 and has a contract price with the yard of USD 146 mill, andestimated total project price of MUSD 163.In April 2006 the company exercised an option with PPL to build a seventh jack up drilling rig.The rig is to be delivered in 2Q08 and has a contract price with the yard of USD 125 mill, andestimated total project price of MUSD 132-140.8.9 Capital ResourcesThe Company’s main capital resources is the equity raised through equity offerings since theincorporation of the Company, its borrowings (as described below) and income from its operatingactivities.Cash-FlowsThe group’s cash flow in 2005 can be illustrated as follows;Net cash flow from operating activities 16 966Net cash flow used in investing activities (200 643)Net cash flow from financing activities 195 202Net change in cash and cash equivalent 11 525Operating activities generated a cash flow of NOK 17.0 million in 2005, the cash flow frominvestment- and financing activities were respectively NOK -200.6 mill and NOK 195.2 million.Cash and cash equivalents amounted to NOK 35.8 million at 31.12.05.BorrowingsBond LoanThe Company has issued a USD 100 million senior unsecured bond loan. 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 itincludes no change of control provisions and allows for a possible demerger of the Companywithout bondholder approval in connection with possible corporate transactions.PPL Contract 1 financingA credit facility agreement (the ”Loan Agreement”) was entered into on 7 May 2004 betweenWilpower Ltd as borrower, certain financial institutions as lenders and Standard Chartered Bank(“SCB”) as Arranger, Facility Agent and Security Agent. The loan Agreement was amended by aletter dated 14 May 2004 (the “Amendment Letter”).To finance its obligations under the PPL Contract 1, the Lenders have provided a loan facility toWilpower Ltd of USD 94,080,000 or (if lower) 80% of the Contract Price and the PC Sum.54

As a condition of drawdown under the loan facility, Wilpower Ltd was required to deposit into anescrow account with SCB an amount of not less than USD 23,520,000, to fund the 20% balance ofthe Contract Price and the PC Sum. This condition has been fulfilled.The loan facility is available for drawing in multiple tranches for a period of 32 months from thedate of the Loan Agreement (ie until 7 January 2007).The loan carries interest at a rate of Libor (for interest periods of one, three or six months, or otherperiods agreed by the lenders) plus a margin of 2.25%.The loan is repayable by eight instalments, each of the first seven being in the amount of USD3,136,000 and the final instalment being equal to the outstanding balance of the loan.The first instalment is to be repaid on 7 January 2007 and each subsequent instalment is repayableat six-monthly intervals thereafter.The loan (or relevant part) shall be prepaid in the following circumstances:1. if the PPL Rig is sold or becomes a total loss;2. to the extent that it becomes unlawful for a lender to maintain its participation in the loan;3. to the extent that Wilpower Ltd receives damages from PPL under the PPL Contract 1 relatingto the performance of the PPL Rig;4. to the extent that the PC Sum is not fully utilised before delivery; or5. if Wilpower Ltd pays a dividend, an amount equal to one third of the dividend shall be prepaid.Wilpower Ltd's obligations under the Loan Agreement are (or are to be) secured by:1. a guarantee from SCM (the “SCM Guarantee”);2. a charge over Wilpower Ltd's escrow account with SCB,3. a charge granted by Awilco Drilling Ltd over the share capital of Wilpower Ltd,4. a security assignment and charge over (i) the PPL Contract 1 and SCM's performance guaranteeof that contract, (ii) insurances over the PPL Rig, (iii) any charter or other employment contractfor the PPL Rig, (iv) any sale contract for the PPL Rig, and (v) all other assets of Wilpower Ltd,and5. a mortgage over the PPL Rig.The PPL Contract 1 provides that in the event that SCM's guarantee of the financing of the PPLRig is released, PPL will procure that SCM provides a similar guarantee for the financing of one ofthe option units, provided that the financial terms of the new guarantee, and the underlyingobligations of the relevant borrower, are not more onerous than those in respect of the financing ofthe PPL Rig.In addition, Awilco Drilling Ltd has entered into a shareholder support agreement, under whichAwilco Drilling Ltd has agreed (amongst other things) to subscribe for further shares in WilpowerLtd in order to fund (i) any operating costs arising before delivery of the PPL Rig under the PPLContract 1 and (ii) any modification costs, in respect of which Wilpower Ltd does not haveavailable funds.The Loan Agreement includes provisions usually found in loan documentation of this nature,including (amongst others) covenants (i) that Wilpower Ltd will remain a wholly owned subsidiaryof Awilco Drilling Ltd, (ii) that Awilco Drilling Ltd will remain a subsidiary of Awilco Offshore,(iii) that, upon listing, Awilco Offshore remains listed, (iv) that Awilco will have control of 40% ofthe Board of Directors of Awilco Offshore, provided that such requirement is permitted by OsloBørs, and (v) that Wilpower Ltd will continue to be managed by Wilhelmsen Marine Services ASunder the terms of a management agreement.55

The Loan Agreement is governed by English law and the parties submit to the jurisdiction of theEnglish courts.Nordea Credit FacilityCertain subsidiaries of the Company entered into an agreement with Nordea Bank Norge ASA onFebruary 22 2005 for USD 210 million of senior credit facilities. On 19 January 2006 the facilitywas refinanced and increased to a USD 410 million senior credit facility consisting of:1. A term-loan facility in an aggregate principal amount equal to USD 90 million for the debtfinancing of the accommodation units, all of which has been drawn.2. A pre- and post delivery term loan facility in an aggregate principal amount equal to the lesserof (x) USD 320 million and (y) 50% of the delivered cost of the jack-up units to be financed bythe facility, being the WilPower, WilCraft, WilSuperior, WilBoss and WilForce rigs. Upon theWilPower Newbuilding being accepted by Arabian Drilling Company under the bareboatcharter agreement, an additional USD 20 million may be drawn in respect of this unit.Borrowers under the loan agreement are Port Rigmar AS, Wilhelmsen Oil & Gas AS, Wilcraft Ltd,Wilsuperior Ltd, Wilforce Ltd., Wilpower Ltd.The loans are secured by:1. Guarantees from the Company, Awilco Sea Beds AS, Awilco Sea Beds II AS, Wilcraft AS,Wilpower AS and Awilco Drilling Ltd.2. A first priority security interest in the rigs/accommodation units being financed by the loans,and all earnings from and insurances on such rigs/accommodation units.3. A first priority security interest in the shares of certain of the Company's subsidiaries.4. During the construction period of the jack-up rigs, a first priority security interest in theborrowers' rights under the shipbuilding contracts, insurance and related refund guarantees.The loans shall carry interest at a rate of LIBOR plus a margin of 1 5/8% per annum. Acommitment fee at a rate of 40% of the margin will accrue on the unutilized commitment from timeto time under the pre- and post delivery term loan facility.The loans will be repaid in quarterly instalments of USD 1.61 million in respect of each of theaccommodation units, commencing three months from the initial borrowing date, and in quarterlyinstalments of USD 1.56 million in respect of each of the WilCraft, WilSuperior, WilBoss andWilForce rigs. The final maturity of the credit facilities will be on the fifth anniversary of the initialborrowing date. The additional USD 20 million on WilPower, will be repaid in quarterlyinstalments of USD 1 million.Under the new pre and post delivery facility, the loan can be drawn on a pro rata basis equal to theamount of equity paid in.The loan agreement includes customary financial covenants, including covenants as to minimumcash, positive working capital, minimum interest coverage ratio, capitalization ratio and collateralmaintenance ratio. Other covenants include the maintenance of Awilco Offshore's listing on OsloBørs. Anders Wilhelmsen Group maintaining negative control (34%) over the Company,limitations on consolidation, mergers and de-mergers, limitations on dividends and limitations onnew indebtedness.The Company is in the process of amending the Nordea Credit Facility to also include the financingof WilStrike and WilSeeker.8.10 Analytical informationAwilco Offshore is exposed to two distinct markets; the market for accommodation units and themarket for jack-up drilling rigs, holding seven rigs under construction. See more information inchapter 7. The Company’s activity in 2005 was operation of the two accommodation units, of56

which Port Rigmar was in operation for the full year while Port Reval underwent a minor upgradeto satisfy the requirements for working on the Norwegian Continental Shelf. The net operatingincome and operating expenses for 2005, as set out in the accounts for 2005 in section 8.2, reflectthis activity. Set out below is an overview of contract rates received by the Company’saccommodation units in 2005.Unit / Contract Starting Ending Rate, USD/dayPort RigmarConocoPhillips February 2004 September 2005 55,500ConocoPhillips October 2005 october 2008 68,000 – 76.500Port RevalBP Clair June 2004 January 2005 110,000Haugesund Yard February 2005 June 2005 UpgradeBritish Gas Armada July 2005 August 2005 130,000ConocoPhllips September 2005 June 2006 79,000Aker Kværner July 2006 Mid 2007 70.000 – 135.0008.11 Capitalization and IndebtednessAt 31 December 2005 the Company had the following debt recorded in the balance sheet;All figures in USD 1000 Interest rate % Maturity 2005CurrentCurrent portion of long term debt Libor + 1 5/8 % 2006 11 440Other loans 0Total current 11 440Non-currentBank borrowings no 1 Libor + 2.25 % 52 920Bank borrowings no 2 Libor + 1 5/8 % 59 235Total non-current 112 155SecurityAccomodation rigs pledged as security for liabilities 76 807Jack up contracts pledged as security for liabilities 205 037Net book value of pledged assets 281 843Maturity non-current borrowingsLater than one year and not later than four years 57 396Five years and later 54 759112 155The Group had unused credit facilities of MUSD 179.8 as of 31 December 2005.After year end the company has increased its financial resources, mainly due to the followingactions;• In January 2006 the credit facility limit was increased from MUSD 210 to MUSD 410 -with mainly the same terms. See further specification in section 8.9.• Furthermore, in February 2006 the company issued a bond loan of MUSD 100. See furtherspecification in section 8.9.• The management is of the opinion that the above mentioned actions concerning refinancingduring 2006 is beneficial for the company. Furthermore, the management is not aware ofany material adverse change of the company’s capitalization and indebtedness situation.57

8.12 Working Capital StatementThe Company confirms that in its opinion its working capital is sufficient for its presentrequirements.58

9. SHARE CAPITAL AND SHAREHOLDERMATTERS9.1 Share capitalThe Company's share capital following the Private Placement is NOK 1,397,778,800, made up of139,777,880 shares with a par value of NOK 10 per Share, all fully paid. All Shares of theCompany are of the same class and are equal in all respects. The Company's articles of associationdo not provide for shares of other classes. Each Share carries the right to one vote in shareholders'meetings. The Company's articles of association do not provide for limitations on the transferabilityor ownership of Shares.All Shares carry rights to dividends, if any, which the general meeting may resolve to distribute inaccordance with the requirements of the Norwegian Public Limited Companies Act. There are noparticular restrictions or procedures relating to distributions of dividends to shareholders who areresident outside of Norway. See, however, section 11.2 for a description of the withholding taxprovisions relating to the distributions of dividends to non-residents.All Shares carry an equal right to any surplus in the event of a liquidation of the Company. TheShares are not subject to any redemption or conversion provisions.Under the Norwegian Public Limited Companies Act, existing shareholders of the Company will,as a main rule, have pre-emptive rights to subscribe for any new Shares which the Company mayissue. However, the pre-emptive rights of existing shareholders may be set aside by a majority oftwo thirds of the votes cast and the capital represented at the general meeting approving the sharecapital increase.The development of the Company's share capital is set forth in the table below.Time Event Capital increase Share price Share capital Shares issuedJanuary 2005 Incorporation 1,000,000 100.0 1,000,000 10,000February 2005 Contribution of assets 610,333,500 611,333,500 6,113,335February 2005 Split 10:1 - - 611,333,500 61,133,350February 2005 New issue 500,000,000 20.0 1,111,333,500 111,133,350May 2005 New issue 30,000,000 22.0 1,141,333,500 114,133,350August 2005 New issue 43,969,830 33.9 1,185,303,330 118,530,333December 2005 New Issue 117,475,470 42.0 1,302,778,800 130,277,880April 2006 New Issue 95,000,000 56.0 1,397,778,800 139,777,880More than 10% of the capital of the Company has been paid for with assets other than cash.There are no outstanding warrants, stock options, convertible bonds or other securities convertibleinto Shares of the Company.The Company does not own any of its own Shares.9.2 Share Registration and ListingThe Company's shares are registered in book entry form in the VPS. The securities number of theshares is ISIN NO 001 0255722. The registrar is Nordea Bank Norge ASA, Issuer Services, P.O.Box 1166 Sentrum, N-0107 Oslo, Norway. The Company's shares are listed on Oslo Børs.59

9.3 AuthorizationsAuthorizations to issue new sharesThe extraordinary general meeting on 4 April 2005 granted the Board of Directors an authorizationto increase the share capital by up to NOK 525,666,750. The authorization is valid until the annualgeneral meeting in 2006, but in no event later than June 30, 2006. The authorization includes sharecapital increases against contributions other than in cash, the right to incur special obligations forthe company, cfr. the Norwegian Public Limited Companies Act § 10-2, and resolutions onmergers in accordance with § 13-5 the Norwegian Public Limited Companies Act. The pre-emptiverights of the shareholders under § 10-4 of the Norwegian Public Limited Liability Companies Actmay be set aside. The general meeting has not issued any instructions to the Board of Directors asto the use of the authorization.As of the date of this Prospectus, Awilco Offshore has used NOK 286,445,300 of the abovementioned authorization.Other authorizationsThe Company does not hold any authorizations to issue convertible loans or to acquire own shares.9.4 Shareholders and share tradingAs at 18 April 2006, the number of registered shareholders of the Company is 1,257, of which 88%are Norwegian and 12% are non-Norwegian.The following table sets forth the largest shareholders of the Company, as registered in VPS as at 4May 2006.Shareholder Shares PercentageAWILCO AS* 56,425,630 40.37%FEARNLEY FONDS ASA EMISJONSKONTO 6,281,749 4.49%MORGAN STANLEY CLIENT EQUITY ACCOUNT 5,994,658 4.29%JPMORGAN CHASE BANK M.STANLEY NORWAY EQU. 5,502,397 3.94%JPMORGAN CHASE BANK S/A ESCROW ACCOUNT 4,611,485 3.30%STATE STREET BANK & CLIENT 4,384,900 3.14%AWECO HOLDING AS 3,300,000 2.36%SEB ENSKILDA ASA EGENHANDELSKONTO 3,268,451 2.34%CREDIT SUISSE SECURI (EUROPE) PRIME BROKE 2,902,928 2.08%DEUTSCHE BANK (SUISS) 2,802,810 2.01%JPMORGAN CHASE BANK CLIENTS TREATY ACC. 2,724,365 1.95%SIS SEGAINTERSETTLE 2,527,898 1.81%HSBC BANK PLC 2,373,450 1.70%MORGAN STANLEY & CO. CLIENT EQUITY ACC. 2,171,991 1.55%ORKLA ASA 1,861,100 1.33%ODIN NORDEN 1,655,387 1.18%ODIN OFFSHORE ODIN FORVALTNING AS 1,526,000 1.09%BANK OF NEW YORK, BR BNY GCM CLIENT ACC. 1,304,600 0.93%COMMERZBANK AG S/A COMINVEST 1,288,800 0.92%SKANDINAVISKA ENSKIL (PUBL) OSLOFILIALEN 1,100,000 0.79%*adjusted for the Restricted Shares held by the ManagersShareholders related to the Wilhelmsen family are Aweco Holding AS, Watrium AS and MiamiAS, which together hold approximately 3.8% of the shares in Awilco Offshore. Aweco Holding ASowns 60.1% of A Wilhelmsen AS which again owns 100% of Awilco AS and therefore AwecoHolding AS and Awilco AS will be consolidated with Awilco under the Securities Trading Act § 4-5 with respect to their ownership in Awilco Offshore ASA. In total the Wilhelmsen familytherefore controls 44.2% of the shares and votes in Awilco Offshore ASA.60

Mr.Arne Alexander Wilhelmsen has 33.2% ownership interest in Aweco Holding AS. For furtherdetail of the Wilhelmsen family ownership in Awilco Offshore ASA see section 5.8.Except for Awilco and its affiliated party Aweco Holding AS (whose holdings of shares aredescribed above), no person has an interest in the Company's capital or voting rights which isnotifiable under Norwegian law9.5 Share price developmentThe below chart shows the share price performance of Awilco Offshore since its listing on OsloBørs on 11 May 2005.6014,0005512,000Share price (NOK)504540353010,0008,0006,0004,000Volume ('000s)252,0002011 May 2005 6 July 2005 31 August 2005 26 October 2005 21 December 2005 15 February 200609.6 Articles of AssociationAwilco Offshore's articles of association are set out in Appendix 2 to this Prospectus.Pursuant to the articles of association, the purpose of the Company is to run offshore operationsand associated business, including shipping. The objectives also include undertaking acquisition,administration, and sale of capital assets within offshore and shipping, as well as investment inshares, bonds and partnership contributions of any nature, and participating with ownershipinterests in other companies as well as naturally associated operations.The articles of association provide that the Board of Directors of the Company shall have no lessthan three and no more than six members, elected by the annual general meeting.The articles of association do not lay down more significant conditions necessary to change therights of shareholders than required by the Public Limited Companies Act. Under the PublicLimited Companies Act, general meetings must be convened by written notice to all shareholderswhose address is known. The notice must be sent at the latest two weeks before the date of thegeneral meeting. The notice must set forth the time and date of the meeting and specify the agendaof the meeting. It must also name the person appointed by the Board of Directors to open themeeting. All shareholders who are registered in the register of shareholders maintained by the VPSas of the date of the general meeting, or have otherwise reported and proved an acquisition ofShares, are entitled to admission without any requirement for pre-registration.The articles of association do not contain any provisions as to the manner in which generalmeetings of the Company are called or as to the conditions of admission to general meetings.61

There are no provisions in the articles of association which would have an effect of delaying,deferring or preventing a change of control of the Company, or which require disclosure ofownership above any thresholds. However, please see section 9.12 for a description of therequirements under the Securities Trading Act for the disclosure of transactions which causecertain thresholds to be passed.The articles of association do not impose more stringent conditions for changing the capital of theCompany than required by law.9.7 Related Party TransactionsOngoing transactionsThe Company purchases certain administrative and management services (as e.g. budgeting,reporting, accounting, legal etc) from the Anders Wilhelmsen Group. See section 5.8 for adescription of the Anders Wilhelmsen Group.The Company’s subsidiaries will acquire management services from Premium Drilling. See section5.6 for a description of Premium Drilling and section 5.7 for a description of the managementagreements.All transactions with related parties have been carried out at arms length prices, and are settled on aregular basis. The table below provides the total amount of transactions, which have been enteredinto with related parties for the relevant financial year. Sales and purchase from related partiesrelates to services rendered under the mentioned management agreements.All figures in USD 1000YearSales torelatedpartiesPurchasesfrom relatedpartiesAmounts owedby relatedpartiesAmounts owedto relatedpartiesA Wilhelmsen group (inclAwilco) 2005 17 1 505 0 5 600Premium Drilling AS 2005 0 0 0 0Offshore Rig Services ASA 2005 0 0 0 0Transactions in connection with the incorporation of Awilco OffshoreThe Company acquired certain assets from Awilco AS in connection with its incorporation inJanuary 2005.Awilco Offshore was incorporated on 21 January 2005 as a wholly owned subsidiary of Awilco.Wilpower AS and Wilcraft AS were incorporated on the same date as wholly owned subsidiaries ofAwilco Offshore.On 13 February 2005, the Company entered into a share purchase agreement with Awilco pursuantto which the Company acquired all of the shares in Port Rigmar AS, Awilco Sea Beds AS, AwilcoSea Beds II AS and Wilhelmsen Oil & Gas AS for an aggregate purchase price of NOK571,645,229 plus interest at a rate of 2% p.a. from 1 January 2005 to closing. The acquisition wasmade with economic effect from 1 January 2005.On 13 February 2005, the Company's wholly owned subsidiary Wilpower AS entered into a sharepurchase agreement with Awilco pursuant to which it acquired all of the shares in Awilco Drilling62

Ltd for a purchase price of NOK 164,640,954 plus interest at a rate of 2% p.a. from 1 January 2005to closing. The acquisition was made with economic effect from 1 January 2005.On 13 February, 2005, the Company's wholly owned subsidiary Wilcraft AS entered into a sharepurchase agreement with Awilco pursuant to which it acquired all of the shares in Wilcraft Ltd fora purchase price of NOK 80,640 plus interest at a rate of 2% p.a. from 1 January 2005 to closing.The acquisition was made with economic effect from 1 January 2005.Shareholder agreementsOn 30 August 2005, Awilco Offshore entered into an agreement with Sinvest to co-operate withregard to an acquisition of Petrojack. The Company currently holds approx. 18,5% of the shares inPetrojack, and approx. 36.5% together with Sinvest. The agreement states that it is the intention ofthe parties to acquire control of Petrojack if market conditions permit this. The parties also agree towork towards placing Petrojack’s rigs under the management of Premium Drilling. Under theagreement, all further acquisitions by either party will be made on a 50/50 basis unless one of theparties notifies the other that it does not wish to participate in an intended acquisition. If the partiesjointly become the owners of more than 90% of the shares in Petrojack, they shall carry out asettlement resulting in each party holding 50% of the aggregate number of shares held by theparties and the aggregate cost price of each party for such shares being identical. Under theagreement, if either party desires to sell its Petrojack shares, the other party is entitled to acquirethem at market price or, alternatively, to require that the sale be carried out in a co-ordinatedmanner on a 50/50 basis. The co-operation agreement also includes an obligation on each of theparties to seek to co-ordinate their voting at general meetings of Petrojack.9.8 Shareholder policyThe Company intends to provide the market and its shareholders with reliable, timely andconsistent information to ensure that investors at all times have a sound basis for their investmentdecisions. In addition to regular quarterly reporting, the Company provides notifications in respectof significant events as they occur. The Company meets regularly with investors and analysts. Anyfinancial reports, notifications and presentations will be made available through the notificationsystem of Oslo Børs and on the company’s web page www.awo.no.9.9 Dividend PolicyAs the Company has large expected capital expenditures due to the newbuilding contracts, theBoard of Directors does not propose any dividends for 2005. The Board of Directors has no plansto propose any dividends until operating income has increased significantly relative to capitalexpenditure.It is however envisaged that the dividend policy will be reconsidered when the rigs currently underconstruction have been delivered and earnings from these rigs are being generated. Any suchdividends will be considered in light of the Company's financial position, its debt covenants, andcapital requirements for additional investment.The Company's bond loan (see section 8.9) restricts the Company's ability to pay dividend to 50%of net profit after taxes. However any un-utilized portion of the permitted dividend may be carriedforward and be distributed in any subsequent calendar year. Unrealized currency losses or gainsshall not be included in the definition of net profit after taxes.9.10 Mandatory Bid RulesNorwegian law requires any person, or associated persons that acquire more than 40% of the votingrights of a Norwegian company listed on Oslo Børs to make an unconditional general offer toacquire the whole of the outstanding share capital of that company. The offer must be made withinfour weeks of the transaction which triggers the obligation to make the offer. The offer is subject to63

approval by Oslo Børs before submission of the offer to the shareholders. The offer must be in cashor contain a cash alternative at least equivalent to any other consideration offered. The offeringprice per share must be at least as high as the highest price paid or agreed to be paid by the offerorin the six-month period prior to the date the 40% threshold was exceeded, but at least equal to themarket price when the 40% threshold was exceeded if it is clear that that market price was higherthan the highest price in the preceding six months. A shareholder who fails to make the requiredoffer must, within four weeks, dispose of sufficient shares to bring his shareholding below 40%.Otherwise, Oslo Børs may cause the shares exceeding the 40% limit to be sold by public auction. Ashareholder who fails to make such bid within the statutory time limit cannot, as long as themandatory bid requirement remains in force, vote for his shares or exercise any rights of shareownership, unless a majority of the remaining shareholders approve. However, such shareholderretains the right to receive dividends and preferential rights in the event of a share capital increase.In addition, Oslo Børs may impose a daily fine upon a shareholder who fails to make the requiredoffer.9.11 Compulsory Acquisition RulesA shareholder who, directly or via subsidiaries, acquires shares representing more than 90% of thetotal number of issued shares as well as more than 90% of the total voting rights of a company hasthe right (and each remaining minority shareholder of that company would have the right to requirethe majority shareholder) to effect a compulsory acquisition of any shares not already owned by themajority shareholder. A compulsory acquisition results in the majority shareholder becoming theowner of the shares of the minority shareholders with immediate effect.A majority shareholder who effects a compulsory acquisition is required to offer the minorityshareholders a specific price per share and to pay the consideration offered to a separate bankaccount for the benefit of the minority shareholders. The determination of the offer price is at thediscretion of the majority shareholder. Should any minority shareholder not accept the offeredprice, such minority shareholder may, within a specified period of not less than two months,request that the price be set by the Norwegian courts. The cost of such court procedure wouldnormally be charged to the account of the majority shareholder, and the courts would have fulldiscretion in determining the consideration due to the minority shareholder as a result of thecompulsory acquisition.9.12 Disclosure of Acquisition and DisposalsUnder the Securities Trading Act, a person, entity or group acting in concert that acquires ordisposes of shares, options for shares or other rights to shares resulting in its beneficial ownership,directly or indirectly, in the aggregate, reaching, exceeding or falling below the respectivethresholds of 1/20, 1/10, 1/5 1/3, 1/2, 2/3 or 9/10 of the share capital has an obligation to notifyOslo Stock Exchange immediately.9.13 Shareholders AgreementThe Company is not aware of any shareholders agreements having been entered into by theshareholders.64

10. LEGAL MATTERSThis following section makes use of a number of definitions not used elsewhere in this Prospectus.Such definitions are made in the text below.10.1 Construction contractsAwilco Offshore has seven jack-up drilling rigs under construction at two yards in Singapore; PPLShipyard Pte Ltd and Keppel FELS Ltd. The construction of the rigs is based upon fixed pricecontracts and the rigs will be delivered “ready to drill”.Project price 2) DeliveryName Yard Entered into Yard/ Contractprice 1)WilPower PPL 20. March 04 118 MUSD 131 MUSD 2Q06WilCraft Keppel 31. January 05 122 MUSD 131 MUSD 4Q06WilSuperior PPL 4. March 05 121 MUSD 130 MUSD 2Q07WilBoss Keppel 18. August 05 125 MUSD 134 MUSD 4Q07WilForce PPL 1. October 05 136 MUSD 144 MUSD 4Q07WilStrike Keppel 4 . April 06 146 MUSD 163 MUSD 2Q09WilSeeker PPL 12. April 06 125 MUSD 132-140 MUSD 2Q081)The yard price including costs for site supervision and spare parts2)The project price include contract price with the yard, site supervision, pipe handling equipment,spare parts and finance costs during construction.PPL ContractsAwilco Offshore has four rigs under construction at PPL Shipyard Ltd in Singapore (WilPower,WilSuperior, WilForce and WilSeeker).The PPL Contract 1 (WilPower) was entered into on 20 March 2004 between Mosvold Drilling Ltd(now called Awilco Drilling Ltd) and PPL under which PPL agreed to design, construct, launch,equip, test and deliver to Awilco Drilling Ltd a Pacific Class 375 ft jack-up drilling rig (the “PPLRig”). All rights and obligations of Awilco Drilling Ltd under the PPL Contract 1 have since beennovated to Mosbarron Ltd (now called Wilpower Ltd).The PPL Rigs shall be delivered with a “+A1 Self-Elevating Drilling Unit” classification with theAmerican Bureau of Shipping.The prices for the PPL Rigs are payable by eight instalments::1. 10% is payable upon signing of the contracts;2. 5% is payable on main scantling approval;3. 15% is payable on keel laying;4. 20% is payable on completion of the main deck;5. 15% is payable on installation of the three first leg sections;6. 10% is payable on launching;7. 10% is payable on completion of leg erection; and8. 15% is payable on delivery.To view what has been paid in on each respective rig, see section ()In addition to the Contract Price, Awilco Offshore shall for each rig pay to PPL a provisionalcontract sum of USD 5,500,000 (the “PC Sum”), according to the same payment schedule as theContract Price. The PC Sum shall be used by PPL to make payments on behalf of Wilpower Ltd:1. of up to USD 2,500,000 in respect of various project management costs; and2. of up to USD 3,000,000 in respect of equipment for the PPL Rig, variation orders and variousfinance costs.65

The difference between the project price set out above and the Contract Price and the PC Sumcomprises inter alia variation orders, spare parts, pipe handling, cost of site teams and otherconstruction supervision costs and financing costs.Any part of the PC Sum which has not been used by delivery shall be repaid to the respective rigowing company or its financing banks to reduce the rig owning company’s indebtedness.Property and risk in the PPL Rigs shall remain with PPL until delivery, when it shall pass to the rigowning companies.Following the deliveries, PPL provides a 12 month warranty against defects in workmanship andmaterials, and failure of the PPL Rigs to meet the performance criteria set out in the Specifications.Subject to permissible delays and force majeure, delivery of the PPL Rigs shall take place inaccordance to the table above, being 24-27 months after the payment of the first instalment of theContract Price.If delivery is delayed by more than 14 days beyond the contractual delivery dates, and the delay isnot due either to force majeure or other permissible delays, then PPL will pay liquidated damagesof USD 50,000 for each day of delay after a14 day grace period, subject to a maximum of 5% ofthe Contract Price, when the rig owning companies shall be entitled to cancel the PPL Contracts.PPL will also pay liquidated damages if the variable load criteria set out in the PPL Contracts arenot achieved, subject to a maximum of USD 5,000,000. If the deficiency in any variable loadexceeds 5%, the rig owing companies shall be entitled to cancel the PPL Contracts.If the total delay, whether for permissible or non-permissible delays, reaches 240 days, the rigowing companies shall be entitled to cancel the PPL Contracts.On cancellation on any of the above grounds, the rig owing companies’ only remedy is to recoverall amounts then paid by it under the contract, together with interest at three month Libor plus 2%.In addition to the circumstances mentioned above, the rig owing companies shall be entitled tocancel the PPL Contracts for material continuing breach or delay on the part of PPL, or on thebankruptcy or receivership of PPL for all contracts and or SCM for PPL Contract 1.On cancellation of the PPL Contracts by the rig owing companies in such circumstances, they shallbe entitled to recover damages for its losses and/or to take possession and title to the rigs underconstruction, and all material and equipment in the possession or owned by PPL and intended to beincorporated into the PPL Rigs, and either remove them from PPL's shipyard or complete the workat such shipyard. If the rig owing companies exercise its rights to take possession and title to therigs under construction, PPL's liability for loss or damage sustained by the rig owing companiesshall be limited to 10% of the Contract Price.PPL may cancel the PPL Contracts for material breach or delay on the part of the rig owingcompanies, or on its bankruptcy or receivership, and recover damages for its losses.The PPL Contracts are governed by English law with non-exclusive submission to the CommercialCourt in London.PPL's obligations under the PPL Contracts are guaranteed by SCM, by a performance guarantee.PPL OptionAwilco Offshore has an option to construct an additional Pacific Class 375 ft jack-up drilling rig.The PPL Option Agreement was entered into on 30 March 2004 between PPL and Awilco DrillingLtd under which PPL granted to Awilco Drilling Ltd options to require PPL to design, construct,equip, complete and deliver up to three further jack-up drilling units similar to the PPL Rig.66

The PPLoption III is exercisable during the period 1 March 2007 to 1 September 2007.No option may be exercised if Awilco Drilling Ltd is then in breach of the PPL Contract 1.The option may be exercised by notice from Awilco Drilling Ltd and, within 30 days from theexercise of the option, the parties will enter into a construction contract in substantially the sameform as the PPL Contract 1, subject to the following amendments:1. construction will commence three months after the date of the notice exercising the option, andthe contractual delivery date shall be 24 months after commencement of construction;2. the contract price for PPL option III is USD 123,157,000, but is subject to adjustment if the costof the relevant drilling package (which is supplied by third parties) exceeds USD 25,000,000(The difference between the project prices set out above and these contract prices comprisesinter alia variation orders, spare parts, pipe handling, cost of site teams and other constructionsupervision costs and financing costs);3. subject to Awilco Drilling Ltd's consent (not to be unreasonably withheld) the relevant unit maybe built at another shipyard in Singapore wholly owned by SCM.Awilco Drilling Ltd may assign its rights under the PPL Option Agreement to a special purposecompany with satisfactory equity and which is wholly owned, controlled or managed by AwilcoDrilling Ltd.In the event that SCM's guarantee of the financing of the PPL Rig is released, PPL will procure thatSCM provides a similar guarantee for the financing of one of the option units, provided that thefinancial terms of the new guarantee, and the underlying obligations of the relevant borrower, arenot more onerous than those in respect of the financing of the PPL Contract 1.The PPL Option Agreement is governed by English law with non-exclusive submission to theCommercial Court in London.Keppel ContractsAwilco Offshore has 3 rigs under construction at Keppel Fels Ltd in Singapore (WilCraft,WilBoss and WilStrike).The Keppel Contracts were entered into at the dates in the table above between Keppel FELS andWilcraft Ltd under which Keppel FELS agreed to design, construct, equip, complete, test anddeliver a “Keppel FELS MOD V Enhanced B-Class” mobile offshore self-elevating drilling unit(the “Keppel FELS Rig”).The Keppel FELS Rigs shall be delivered with a “+A1 Self-Elevating Drilling Unit” classificationwith the American Bureau of Shipping.The prices for the Keppel FELS Rigs are as in the table above. The difference between the Projectandthe Contract price is that the Project price / Delivered cost includes cost of constructionsupervision, pipe handling equipment, spare parts and finance cost during construction. TheContract price is a fixed lump sum price, subject only to adjustment for variation orders. TheContract price includes allowances for USD 700,000 per rig for spares beyond those required byclass and other regulatory bodies.The Contract Prices arepayable in five instalments.1. 20% is payable 4 days after contract award2. 20% is payable within three business days of notice that strike of steel has taken place3. 20% is payable within three business days of notice that keel-laying of the first doublebottomblock has taken place;4. 20% is payable within three business days of notice of launching/float-out; and67

5. 20% is payable on delivery of the rig to Wilcraft Ltd.To view what has been paid in on each respective rig, see section ()The contractual delivery dates are as set out in the table above. If delivery is delayed by more than30 days, and the delay is not due either to force majeure or other permissible delays, then KeppelFELS will pay liquidated damages of USD 40,000 for each day of delay after the 30 day graceperiod, subject to a maximum of USD 6,000,000.If the rig owing companies has secured a drilling contract and can financially benefit from earlydelivery, the rig owing companies will pay a bonus of USD 15,000 for each day by which deliveryprecedes the contractual delivery date, subject to a maximum of USD 900,000.Keppel FELS will also pay liquidated damages if the variable load criteria set out in the KeppelContracts are not achieved, subject to a maximum of USD 2,400,000.Risk of loss or damage to the Keppel FELS Rig shall remain with Keppel FELS until delivery.Title to the rigs, and all equipment, raw materials, goods and appurtenances intended forincorporation or installation in the rigs, shall pass progressively to the rig owing companies as theyare constructed.Following delivery, Keppel FELS provides a 12 month warranty against defects in workmanshipand materials.The rig owing companies may terminate the Keppel FELS Contracts for material continuing breachby Keppel FELS, on the insolvency of Keppel FELS, or if delivery is delayed by reason of forcemajeure or other non-permissible delays aggregating 180 days or more, in which event the rigowing companiesmay, at its option, either:1. recover all amounts paid to Keppel FELS under the contract, together with interest at threemonth Libor plus 1.5%, and any purchaser's supplies (and will then retransfer title to the rigsunder construction and all other equipment, raw materials, goods and appurtenances which hadbeen transferred to it by Keppel FELS); or2. take possession of the rigs under construction, together with all other equipment, raw materials,goods and appurtenances which it then owns, and any purchaser's supplies.Keppel FELS may terminate the Keppel FELS Contracts if delivery is delayed by reason of forcemajeure aggregating 180 days or more, in which event the rig owing companies may exercise itsoptions as described above.Keppel FELS may also terminate the Keppel FELS Contract:1. if the rig owing companies fails to make any payment due under the contract within seven daysof demand;2. if the rig owing companies fails to take delivery of the rig on completion; or3. on the insolvency of the rig owing companies;in which event Keppel FELS may recover from the rig owing companies all costs incurred by it inthe construction of the rigs, and in terminating the construction work, to the extent that such costsexceed the amounts already paid by the rig owing companies under the contract.Except for its liability:1. to refund instalments and interest;2. to pay liquidated damages;3. to deliver the Keppel FELS Rig to the rig owing companies free from encumbrance; and4. certain indemnities;Keppel FELS' liability under the Keppel FELS Contracts are limited to 10% of the Contract Price.68

The Keppel FELS Contracts are governed by English law with non-exclusive submission to thecourts of Singapore.The obligations of Keppel FELS to refund amounts paid by Wilcraft Ltd under the Keppel FELSContracts plus interest on those amounts, in the event of termination have been guaranteed byKeppel Marine and Offshore Limited, Keppel FELS' immediate parent company.Awilco Offshore, the intermediate parent company of the rig owing companies, has issued letters ofcomfort to Keppel FELS regarding its policy towards its subsidiaries.10.2 Certain other legal mattersRights to the Awilco nameAWO has entered into an agreement with Awilco in respect of the Awilco name. Under thisagreement, AWO is granted free of charge a non-exclusive, non-transferable right to use the name“Awilco” as part of its corporate name and, subject to certain restrictions, as a trade mark. Awilcomay terminate the agreement by six months' notice if Awilco's ownership in AWO should for anyreason be reduced below 20 per cent. Awilco may terminate the agreement with immediate effect ifAWO is in material breach of the agreement or if AWO uses the “Awilco” name in a manner whichis likely to cause material harm to the goodwill attached to the name. A termination of theagreement by Awilco would mean that AWO would need to change its corporate name and to ceaseusing any trade marks which include the name “Awilco”.Legal and arbitration proceedingsThe Company is not and has not during the previous 12 months been involved in anygovernmental, legal or arbitration proceedings which may have, or have had in the recent past,significant effects on the Company’s or the Group’s financial position or profitability, and to itsknowledge no such proceedings are pending or threatened.69

11. TAXATION11.1 IntroductionThe following is a summary of certain Norwegian tax considerations relevant to the ownership anddisposition of shares by shareholders that are residents of Norway for purposes of Norwegiantaxation ("Norwegian shareholders") and shareholders that are not residents of Norway for suchpurposes ("foreign shareholders").The summary is based on applicable Norwegian laws, rules and regulations as they exist as of thedate of this Prospectus. Such laws, rules and regulations are subject to change, possibly on aretroactive basis. The summary does not purport to be a comprehensive description of all the taxconsiderations that may be relevant to the shareholders and does not address foreign tax laws.Each shareholder should consult his or her own tax advisor to determine the particular taxconsequences for him or her and the applicability and effect of any Norwegian or foreign tax lawsand possible changes in such laws.11.2 Taxation related to holding and disposal of the sharesNorwegian shareholdersNet wealth taxCorporate resident shareholders are exempt from Norwegian net wealth tax. For individual residentshareholders, shares are included as part of the taxable base for net wealth tax purposes. Shareslisted on Oslo Børs are as from 1 January 2006 valued at 80% of market value on 1 January in theassessment year. The current marginal net wealth tax rate is 1.1%.Taxation of dividends and capital gain on realization of sharesCorporate shareholdersNorwegian corporate shareholders are not subject to tax on received dividend distributions andcapital gains from sale of shares in companies which are tax resident in Norway. Likewise losseson realisation of such shares will not be deductible for tax purposes. Costs incurred in connectionwith the acquisition and realisation of such shares are not tax deductible.Individual shareholdersDividends distributed to Norwegian individual shareholders are taxable as ordinary income at a flatrate of 28% to the extent the dividends exceed a tax free allowance. The tax free allowance iscomputed for separately for each share on the basis of the cost price of each of the sharesmultiplied by a risk-free interest. The risk-free interest rate is based on the average rate of intereston government certificates of three month's maturity the relevant year. Any unused allowance maybe carried forward and set off against future dividends received on, or against gains upon therealisation of, the same share.For Norwegian individual shareholders, gains are taxable as ordinary income at a tax rate of 28% inthe year of realisation, and losses may be deducted from ordinary income in the year of realisation.Capital gains or losses are calculated per share as the consideration received by the realisation lessthe tax purchase price of the share. Any unused allowance on a share may be set off against gainsupon the realisation of the same share, but may not lead to or increase a deductible loss, i.e. anyunused allowance exceeding the capital gain upon the realisation of a share will be annulled. Costsincurred in connection with the purchase and realisation of shares may be deducted in the year ofrealisation.If shares are acquired at different times are realised, the shares that were first acquired will bedeemed as first sold upon calculating taxable gain or loss (the “FIFO” principle).70

Foreign shareholdersIn generalThis section summarizes Norwegian rules of taxation relevant to shareholders who are not regardedas residents of Norway for tax purposes (“foreign shareholders”). Foreign shareholders' taxliabilities in their home country or other countries will depend on tax rules applicable in therelevant country.Net wealth taxNon resident shareholders are not liable to pay net wealth tax in Norway on holding of shares inNorwegian companies, unless the shareholder is an individual and the shareholding is effectivelyconnected with a business which the shareholder takes part in or carries out in Norway.Corporate shareholders - taxation of dividendsAccording to the Participation Exemption Method, foreign corporate shareholders resident withinthe European Economic Area (“EEA”) are not subject to Norwegian dividend withholding tax.Corporate shareholders tax resident outside of the EEA are subject to Norwegian dividendwithholding tax at a rate of 25%, unless the recipient qualifies for a reduced rate according to anapplicable tax treaty. Norway has entered into income tax treaties with over 80 countries, withwithholding taxes reduced to 15% in most tax treaties.Individual shareholders – taxation of dividendsAccording to Norwegian domestic legislation dividends paid to foreign individual shareholders aresubject to a maximum dividend withholding tax of 25%, or a lower rate pursuant to the provisionsof an applicable income tax treaty. Norway has entered into income tax treaties with over 80countries, with withholding taxes reduced to 15% in most tax treaties.Individual shareholders who are tax resident within the EEA are subject to the regular Norwegianwithholding tax at a rate of 25% on dividends distributed from Norwegian limited liabilitycompanies and similar entities, unless a lower rate is applicable under the relevant tax treaty.However, such shareholders may choose to have dividends subject to the general withholding taxof 25% and seek refund for an amount corresponding to the tax free allowance on each individualshare (see above). In contrast to Norwegian individual shareholders, foreign shareholders will nothave the right to carry forward any unused allowance.In accordance with the present administrative system in Norway, a distributing company willgenerally deduct withholding tax at the applicable reduced rate when dividends are paid directly toan eligible foreign shareholder, based on information registered with the VPS as to the taxresidence of the foreign shareholder. Dividends paid to foreign shareholders in respect of nomineeregistered shares are not eligible for reduced treaty-rate withholding at the time of payment unlessthe nominee, by agreeing to provide certain information regarding beneficial owners, has obtainedapproval for reduced treaty-rate withholding from the Central Office - Foreign Tax Affairs(Sentralskattekontoret for utenlandssaker), or formerly the Directorate of Taxes.Foreign shareholders should consult their own advisors regarding the availability of treaty benefitsin respect of dividend payments, including the ability to effectively claim refunds of over-withheldamounts. Foreign shareholders that have suffered a higher withholding tax than set out by anapplicable tax treaty may apply to the Norwegian tax authorities for a refund of the excesswithholding tax deducted.Taxation on realization of sharesGains from sale or other disposition of shares by a foreign corporate shareholder will according toNorwegian domestic legislation not be subject to taxation in Norway.For foreign individual shareholders, capital gains upon the realisation of shares in Norwegiancompanies will be subject to tax in Norway if the shareholding is effectively connected with abusiness which the shareholder takes part in or carries out in Norway. If a foreign individual71

shareholder has been a resident of Norway for tax purposes and has realised shares less than fivecalendar years after termination of the tax residency in Norway, the latent capital gain on the sharesat the time of such termination will be subject to tax in Norway, provided that such latent capital onthe shareholder’s total shareholding exceeds a tax free allowance. However, such taxation may belimited pursuant to applicable tax treaties.11.3 Duties on the transfer of sharesNo stamp or similar duties are currently imposed in Norway on transfer of shares, whether onacquisition or disposal.11.4 Inheritance taxWhen shares are transferred either through inheritance or as a gift, such transfer may give rise toinheritance or gift tax in Norway if the decedent, at the time of death, or the donor, at the time ofthe gift, is a resident or citizen of Norway. However, in the case of inheritance tax, if the decedentwas a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied ifinheritance tax or a similar tax is levied by the decedent's country of residence. Irrespective ofresidence or citizenship, Norwegian inheritance tax may be levied if the shares are held inconnection with the conduct of a trade or business in Norway.The basis for the inheritance or gift tax computation on listed shares is the market value of theshares at the time the transfer takes place.72

12. DOCUMENTS ON DISPLAYFor the life of the Prospectus the following documents (or copies thereof), where applicable, maybe inspected at the offices of the Company at the Company’s offices at Beddingen 8, Aker Brygge,N-0250 Oslo, Norway:(a)the articles of association of the Company;(b) the Company’s financial statements for the Group and for the parent company for 2005;(c)historical financial information for the Company’s subsidiary undertakings for thefinancial year 2004 and 2005 (to the extent such information exists).(c) the Company’s fourth quarter report for 2005.73

13. DEFINITIONSAnders Wilhelmsen GroupAwilcoAWO, Awilco Offshore, theCompanyBoard of DirectorsDBS BankFearnley FondsGroupJurongKeppel FELSManagersNew SharesNOKNordeaOffshore Rig Services orORSPrivate PlacementProspectusPetrojackPetrojack TransactionPPLSCBSEB EnskildaSharesSinvestA Wilhelmsen AS and its subsidiariesAwilco AS, a company in the Anders Wilhelmsen GroupAwilco Offshore ASA and, unless the context requiresotherwise, its consolidated subsidiariesThe board of directors of the CompanyDevelopment Bank of Singapore LtdFearnley Fonds ASAThe Company and its subsidiariesJurong Shipyard PTE LtdKeppel FELS LimitedFearnley Fonds and SEB EnskildaThe 9,500,000 new shares issued by the Company in the PrivatePlacement.Norwegian KronerNordea Bank Norge ASAOffshore Rig Services ASAShare capital increase by means of a private placement directedtowards a selected group of professional Norwegian andinternational investors approved by the Board of Directors, asfurther described in section 4 of this Prospectus.This documentPetrojack ASAA conditional agreement under which the Company and Sinvesthave jointly agreed to acquire three jack-up drilling rigs underconstruction from Petrojack. See section 8.5.PPL Shipyard Pte LtdStandard Chartered BankSEB Enskilda ASAOrdinary shares of the CompanySinvest ASAUSDVPSUnited States DollarsVerdipapirsentralen, the Norwegian Central SecuritiesDepositary74

14. APPENDIX 1 Q4 REPORT 200575

15. APPENDIX 2 ARTICLES OFASSOCIATIONThe Company's Articles of Association are set out below in Norwegian official form, as lastamended on 4 April 2006, and in an English office translation.§1 Firma §1 CompanySelskapets firma er Awilco Offshore ASA. Selskapet er etallmennaksjeselskap.The name of the Company is Awilco Offshore ASA. TheCompany is a public limited-liability company.§2 Forretningskontor §2 Registered officesSelskapets forretningskontor er i Oslo kommune.The Company's registered offices are in the municipality ofOslo.§3 Virksomhet §3 ActivitiesSelskapets virksomhet er å drive offshorevirksomhet ogdermed beslektet virksomhet inkludert skipsfart. Innenforformålet er også å drive erverv, forvaltning, belåning ogsalg av kapitalgjenstander innenfor offshore ogshippingvirksomhet, samt investering i aksjer, obligasjonerog interessentinnskudd av enhver art, og delta medeierinteresser i andre selskaper med naturlig tilhørendevirksomhet.The activities of the Company are to run offshoreoperations and associated business, including shipping.The objectives also include undertaking acquisition,administration, and sale of capital assets within offshoreand shipping, as well as investment in shares, bonds andpartnership contributions of any nature, and participatingwith ownership interests in other companies as well asnaturally associated operations.§4 Aksjekapital §4 Share capitalSelskapets aksjekapital er NOK 1.397.778.800 fordelt på139.777.880 aksjer, hver med pålydende NOK 10.The Company's share capital is NOK 1,397,778,800divided into 139,777,880 shares, each with a nominal valueof NOK 10.§5 Ledelse §5 ManagementSelskapets styre består av 3 – 6 styremedlemmer ettergeneralforsamlingens nærmere beslutning.Selskapets firma tegnes av styrets leder. Styret kanmeddele prokura. Selskapet skal ha en daglig leder.The Company's Board of Directors comprises 3 – 6directors in accordance with the general meeting's furtherresolution.The Chairman of the Board signs for the Company. TheBoard of Directors may grant powers of procuration. TheCompany shall have a chief executive director.§6 Generalforsamling §6 General meetingDen ordinære generalforsamling skal behandle:The annual general meeting shall consider:1. Godkjennelse av årsregnskapet og årsberetningen,herunder utdeling av utbytte.2. Andre saker som etter loven eller vedtektene hørerunder generalforsamlingen.1. Approval of the financial statements for the year andthe annual report, including distribution of adividend.2. Other matters that according to law or to the Articlesof Association are appropriate to the generalmeeting.85

Awilco Offshore ASABeddingen 8N-0250 OsloGrev Wedels plass 9P.O.Box 1158 Sentrum0107 Oslo, NorwayFilipstad Brygge 1PO Box 1363 Vika0113 Oslo, Norway77