Seadrill Limited — Capital/Financing Update 2010

Oct 21, 2010

SDRL - Seadrill launches up to US$650 million convertible bond

Hamilton, Bermuda, October 21, 2010 - Seadrill Limited ("Seadrill" or the

"Company") announces today that it intends to issue up to US$650 million in

principal amount of convertible bonds with a seven-year tenor. This amount

includes an increase option of up to US$100 million that has been granted to the

joint bookrunners of the offering.

The senior, unsecured bonds will be convertible into common shares of the

Company. The bonds are expected to have an annual coupon in the range of 2.875%

- 3.375% payable semi-annually in arrear and a conversion premium of 30% - 35%

over the volume weighted average price of the Company's shares on the Oslo Stock

Exchange (converted into US$) at the time of pricing.

The convertible bonds will be issued and redeemed at 100% of their principal

amount and will, unless previously redeemed, converted or purchased and

cancelled, mature in October 2017. Holders of the bonds will be entitled to

require an early redemption of the bonds on the fifth anniversary after the

issue date, at the principal amount together with accrued interest.  Seadrill

will have the right to call the bonds after five years plus 21 days, if the

value of the Seadrill shares underlying one bond on the Oslo Stock Exchange

(translated into US$) exceeds, for a specified period of time, 150% of the

principal amount of the bond.

The bonds are expected to be issued on or around October 27, 2010. Seadrill may

decide to list the bonds on an exchange at a later stage.

Seadrill has in the recent months seen signs of strengthening offshore drilling

market. The number of enquiries from oil companies is increasing in all segments

where Seadrill operates, particularly focusing on modern equipment managed by

experienced operators. Seadrill believes that this trend will continue in the

years to come and wants to capitalize on these opportunities and continue to

grow. Having recently entered into two newbuilding contracts for additional

jack-up rigs capacity at attractive pricing levels, the Company is currently in

advanced discussions regarding other growth investments. These will further

position Seadrill as a company focused on rapid growth with modern premium

assets.

ABG Sundal Collier, Credit Suisse and Deutsche Bank are acting as joint

bookrunners. DnB NOR Markets, Nordea Markets and SEB Enskilda are acting as co-

managers.

This announcement does not constitute or form part of an offer to sell or the

solicitation of an offer to subscribe for any securities of Seadrill Limited.

Seadrill expects to announce the final terms and conditions related to the

convertible bond transaction on October 21, 2010.

Analyst contact:

Jim Dåtland

VP Investor Relations

Seadrill Management AS

+47 51 30 99 19

Media contact:

Esa Ikäheimonen

Chief Financial Officer

Seadrill Management AS

+47 51 30 99 19

IMPORTANT NOTE

NOT FOR DISTRIBUTION OR RELEASE IN OR INTO THE UNITED STATES OF AMERICA,

AUSTRALIA, CANADA, JAPAN OR ITALY, OR IN ANY OTHER JURISDICTION IN WHICH OFFERS

OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW

This press release is for information purposes only and does not constitute or

form part of, and should not be construed as an offer or an invitation to sell

or issue, or the solicitation of any offer to buy or subscribe for, any

securities.  In connection with this transaction there has not been, nor will

there be, any public offering of the Bonds.  No prospectus will be prepared in

connection with the offering of the Bonds.  The Bonds may not be offered to the

public in any jurisdiction in circumstances which would require Seadrill to

prepare or register any prospectus or offering document relating to the Bonds in

such jurisdiction.  The distribution of this press release and the offer and

sale of the Bonds in certain jurisdictions may be restricted by law. Any persons

reading this press release should inform themselves of and observe any such

restrictions.

Stabilisation/FSA

This press release does not constitute an offer to sell or a solicitation of an

offer to purchase any securities in the United States.  The securities referred

to herein (including the Bonds and the shares of Seadrill) have not been and

will not be registered under the U.S. Securities Act of 1933, as amended (the

"Securities Act") or the laws of any state within the U.S., and may not be

offered or sold in the United States, except in a transaction not subject to, or

pursuant to an applicable exemption from, the registration requirements of the

Securities Act or any state securities laws. This press release and the

information contained herein may not be distributed or sent into the United

States, or in any other jurisdiction in which offers or sales of the securities

described herein would be prohibited by applicable laws and should not be

distributed to United States persons or publications with a general circulation

in the United States.  No offering of the Bonds is being made in the United

States.

This press release is only being distributed to and is only directed at (i)

persons who have professional experience in matters relating to investments

falling within Article 19(1) of the Financial Services and Markets Act 2000

(Financial Promotion) Order 2005 (the "Order") and (ii) high net worth entities

falling within Article 49(2) of the Order and (iii) persons to whom it would

otherwise be lawful to distribute it (all such persons together being referred

to as "relevant persons").  The Bonds are only available to, and any invitation,

offer or agreement to subscribe, purchase or otherwise acquire such Bonds will

be engaged in only with, relevant persons.  Any person who is not a relevant

person should not act or rely on this press release or any of its contents.

This information is subject of the disclosure requirements acc. to §5-12 vphl

(Norwegian Securities Trading Act)

[HUG#1453797]