Bw Offshore Ltd. — M&A Activity 2010

Sep 13, 2010

Extended notice regarding agreement to sell APL to National Oilwell Varco for USD 500 million

NOT FOR PUBLIC DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED

STATES OF AMERICA, SOUTH AFRICA, CANADA, AUSTRALIA OR JAPAN

13 September 2010 - This stock exchange notice is being published pursuant to

Section 3.4 of the Oslo Stock Exchange's Continuing Obligations.

The transaction and parties

On 13 September 2010, BW Offshore Cyprus Ltd, a wholly owned subsidiary of BW

Offshore Limited ("BW Offshore" or the "Company") entered into an agreement to

sell all of its shares in its subsidiary APL (Advanced Production & Loading) Plc

("APL") to National Oilwell Varco Norway AS, a wholly owned subsidiary of

National Oilwell Varco, Inc. ("National Oilwell Varco"), (the "APL

Transaction"). As consideration for the purchase of APL, National Oilwell Varco

shall pay USD 500 million in cash to BW Offshore, adjusted for cash, debt and

deviations from an agreed level of working capital of the APL Group (as defined

below) at the time of completion of the transaction.

In connection with the transaction, BW Offshore and APL will enter into a supply

agreement, a technology agreement and a non-compete agreement (the "ancillary

agreements"). Pursuant to the ancillary agreements, BW Offshore will purchase

from APL on commercial terms certain systems on an exclusive basis for a period

of seven years, and the parties will cooperate with respect to technology

development.

BW Offshore has agreed that neither BW Offshore nor any of its subsidiaries

shall carry out activities in competition with APL's current business for a

period of five years.

The APL Transaction includes APL and the following subsidiaries of APL: BW

Offshore Norway AS, BW Offshore Singapore Pte Ltd, Advanced Production & Loading

Inc, Advanced Production & Loading Pte Ltd, APL do Brasil Ltda, APL UK Ltd, APL

Technology AS and BW Offshore France SAS (together with APL, the "APL Group").

Any FPSO related assets, liabilities and personnel of companies in the APL

Group, and certain other assets, will be transferred to other entities in the BW

Offshore group prior to completion of the APL Transaction.

Completion of the APL Transaction is subject to certain customary conditions,

among other things; receipt of regulatory and governmental approvals and third

party consents, no material adverse effect having occurred, correctness of

warranties, the parties entering into of the ancillary agreements and the

parties otherwise complying with the agreement.

Further, the completion of the APL Transaction is subject to board approval of

National Oilwell Varco and BW Offshore. The transaction agreement does not

include a financing condition.

Completion of the APL Transaction is expected to take place before end of the

fourth quarter of 2010, subject to satisfaction or waivers of the conditions set

forth therein. The transaction agreement may be terminated by either party if

completion has not occurred by 31 December 2010 for any reason other than

through the fault of the party seeking to terminate the agreement.

Description of APL

APL (Advanced Production & Loading) Plc is a public limited liability company

incorporated under the Cyprus Company Law with company registration number

HE189062. APL was acquired by BW Offshore in 2007 and is the parent company of

BW Offshore's APL division.

The APL division has gained a reputation as a leading provider of systems for

offshore production and transfer of oil and gas.  APL has since its start

experienced a substantial growth worldwide, and to date the APL division has

delivered more than 50 production and terminal systems and close to 120

shipboard and vessel systems.

The APL division is involved in two product lines; sale of mooring, turret and

fluid transfer systems to storage and production vessels (Production Systems)

and offshore terminals and cargo transfer systems for oil and gas, including

specialized ships-equipment (Terminal Systems). The systems and the equipment

delivered by the APL division are used in offshore production, storage and

transport of oil and gas, all of which are based on the usage of ships. The

products are sold to the international market and customers are usually oil

field operators, companies that are responsible for an integrated oil field

development, or shipping companies.

The current members of APL's board of directors are Carl K. Arnet (Chairman),

Knut Borgen and Panos Labropoulos. The current members of APL's management team

are Erik Svendsen (Executive VP), Høye Gerhard Høyesen (Senior VP), Arild I.

Stiansen Volden (Manager HSE & QA APL), Nordine Benbernou (Senior VP Business

Development), Arild Bech (Senior VP Engineering and Technology), Bjørn Morten

Mikalsen (Manager, After Sales and Service), Jens P. Kaalstad (President of

Advanced Production and Loading, Inc.) and Bjørn Reang (Senior VP Corporate

Controlling).

As of 30 June 2010, the APL Group had approximately 230 employees.

The following table sets out selected segment financial information for the APL

division as of, and for the periods ended, 31 December 2009 and 2008, and as of,

and for the six months period ended, 30 June 2010 and 2009.

As of and for the

As of and for the six year ended 31

months ended 30 June December

2010 2009 2009 2008

USD million (Unaudited) (Unaudited) (Audited) (Audited)

Operating

revenue.................................. 65.6 152.9 251.9 395.9

Operating

expenses................................ (60.5) (131.6) (220.4) (354.6)

Share of profit of

associates.................... 0.0 (39.5) (39.5) (0.4)

Impairment charge of associates........... 0.0 0.0 0.0 (81.3)

Operating profit / (loss) before

depreciation     5.1 (18.2) (8.0) (40.4)

Depreciation, amortization and write-down    (6.9) (9.9) (20.3) (189.1)

Operating profit /

(loss)...................... (1.8) (28.1) (28.3) (229.5)

Segment

assets...................................... 483.6 527.7 492.5 605.7

Importance of the APL Transaction to BW Offshore

BW Offshore's strategic focus is on maximizing shareholder value by obtaining

class leading return on invested capital. As part of BW Offshore's business

development strategy, the Company is continuously evaluating possibilities with

this aim. This may from time to time involve the acquisition or disposal of

certain assets or companies.

In 2007, BW Offshore acquired APL, which at that point was regarded as a

strategically important step in the development of the Company. The rationale

behind the acquisition was to strengthen the Company's market position, enhance

engineering and project execution capabilities and create a strong technology

edge to offer an integrated service offering to oil companies. The collaboration

between the BW Offshore and APL organizations has been successful in attaining

this goal. In addition, BW Offshore wanted to ensure access to mooring

technology at this crucial point in the development of the Company's business.

Mooring technology is an important element in FPSO developments and APL was the

only available mooring contractor of significance.

BW Offshore's FPSO business has grown considerably in terms of fleet size,

presence, experience and competence since the acquisition of APL in 2007. BW

Offshore has in that period completed three large and complex FPSO conversions

and is today operating a fleet of six FPSOs and one FSO. BW Offshore has in

addition contracted a further three conversion projects that will be in

operation in 2-3 years, in addition to one significant engineering, procurement

and construction (EPC) job. This development of the Company combined with the

proposed transaction to acquire Prosafe Production Public Limited makes the

ownership in APL less strategically important for BW Offshore today.

National Oilwell Varco is a worldwide leader in providing major mechanical

components for land and offshore drilling rigs, complete land drilling and well

servicing rigs, tubular inspection and internal tubular coatings, drill string

equipment, extensive lifting and handling equipment, and a broad offering of

downhole drilling motors, bits and tools. National Oilwell Varco also provides

supply chain services through its network of distribution service centers

located near major drilling and production activity worldwide. National Oilwell

Varco has a large footprint in the Norwegian oil service industry and more than

700 worldwide manufacturing, sales and service centers. National Oilwell Varco

has a stated strategy to enter the FPSO business as a provider of systems and

mechanical components. The supply agreement with APL, as described above, will

continue to secure BW Offshore access to APL's products and services at market

terms for a period of five years. BW Offshore believes that National Oilwell

Varco, through its substantial global manufacturing activity and competence,

will be able to contribute significantly to APL's further development of cost

effective, reliable and safe turret and mooring technology.

Following the sale of APL, BW Offshore will become a pure-play leading FPSO

provider with a portfolio of long term contracts and worldwide operations in all

important markets. This will create even better transparency for analyzing the

Company from an equity market perspective.

The total consideration from the sale of APL of USD 500 million will

significantly strengthen BW Offshore's balance sheet and improve strategic

flexibility going forward, which will enable further profitable growth for BW

Offshore in the present market.

Related party agreements

No agreements have been, or are expected to be, entered into in connection with

the APL Transaction for the benefit of the executive management, key employees

or members of the board of directors of BW Offshore or APL.

Information memorandum and supplemental offer document

Further details of the APL Transaction will be presented in an information

memorandum that will also contain supplemental information to the offer document

dated 27 July 2010 issued by BW Offshore regarding the voluntary exchange offer

(the "Offer") for all of the issued and outstanding shares of Prosafe Production

Public Limited (the "Supplemental Offer Document"). BW Offshore will publish the

Supplemental Offer Document as soon as possible, following review by the Oslo

Stock Exchange and the Norwegian Financial Supervisory Authority.

Investors having accepted the Offer prior to publishing of the Supplemental

Offer Document shall have the right to withdraw their acceptance within two days

following the date of the publishing of the Supplemental Offer Document. In

order to exercise such right, investors must deliver their withdrawal to

Carnegie ASA by mail, fax or by hand within the said deadline: Carnegie ASA,

Stranden 1, Aker Brygge, P.O.Box 684 Sentrum, N-0106 Oslo, Norway (fax number

+47 22 00 99 60). Investors that have accepted the Offer before the publishing

of the Supplemental Offer Document, and who do not withdraw their acceptances,

will be deemed to have accepted the adjusted offer.

Carnegie ASA is acting as financial advisor to BW Offshore in relation to the

APL Transaction.

Advokatfirmaet Thommessen AS is acting as BW Offshore's legal advisor as to

Norwegian law in connection with the APL Transaction.

For further information, please contact:

Carl K. Arnet, CEO, +65 9630 3290

Knut R. Sæthre, CFO, +47 9111 7876

About BW Offshore

BW Offshore is one of the world's leading FPSO contractors and a market leader

within advanced offshore loading and production systems to the oil and gas

industry. BW Offshore has more than 25 years' experience and has successfully

delivered 14 FPSO projects and 50 turrets and offshore terminals. BW Offshore's

technology division APL has delivered solutions for production vessels, storage

vessels and tankers in a wide range of field developments. Adapting through

competence, in-house technology, solid project execution and operational

excellence, BW Offshore ensures that customer needs are met through versatile

solutions for offshore oil and gas projects. BW Offshore has a global network

with offices in Europe, Asia Pacific, West Africa and the Americas. BW Offshore

has 1,100 employees and is listed on the Oslo Stock Exchange. For more

information, please visit www.bwoffshore.com and www.apl.no.

This announcement is not an offer for sale of any securities in the United

States. Securities may not be offered or sold in the United States absent

registration or an exemption from registration under the U.S. Securities Act. BW

Offshore has not registered and does not intend to register any portion of any

offering of shares in the United States or to conduct a public offering of any

securities in the United States.

[HUG#1444031]