BW Offshore: In negotiation for a new FPSO contract

(Oslo, June 27, 2006) Bergesen Worldwide Offshore Ltd. (BWO) has signed a letter of intent with Peak Petroleum Industries Nigeria Ltd. and Equator Exploration Ltd. in which the purpose is to provide common terms and provisions to negotiate an agreement for an FPSO at the Bilabri Field, offshore Nigeria.

 

Peak and Equator (the `Companies`) intend to produce oil from the Bilabri Field, located in Block OML 122, offshore Nigeria with proven recoverable reserves of 45 million barrels of oil and 730 BCF of gas. BWO will use the FPSO BW Endeavour for the services and operations at the Bilabri Field. The BW Endeavour will have to undergo a general upgrade before commencement of production on the field.

 

The intended terms and provisions of the contract are the lease and operation of an FPSO for a firm period of 5 years with the Companies option to extend the contract for up to an additional 5 years. The operation on the Bilabri field is intended to commence mid 2007 at an estimated 30,000 barrels of oil per day. The hire rate will consist of a fixed day rate plus a production incentive rate. The nominal value of the fixed day rate in the contract including the 5 year option period is approx. USD 240 million. BWO expects, that when the FPSO is ready and producing at the field, the fixed day rate in the contract will generate an annual EBITDA of USD 16.5 million. In addition BWO will receive the production incentive rate which will be charged on a dollar per barrel of oil produced basis.