Seadrill Limited — Capital/Financing Update 2010

Dec 16, 2010

SDRL - Seadrill launches conversion incentive period for convertible bonds due 2012 and 2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION TO ANY PERSON LOCATED OR RESIDENT

IN THE UNITED STATES OR LOCATED IN THE REPUBLIC OF ITALY.

Hamilton, Bermuda, December 16, 2010 - Seadrill Limited ("Seadrill") announces a

conversion incentive period for holders of up to US$250,000,000 of Seadrill's

US$1,000,000,000 principal amount convertible bond ("Bonds 2012") due 2012, and

for the entire US$500,000,000 principal amount convertible bond ("Bonds 2014")

due 2014, such Bonds issued pursuant to the loan agreements ("Loan Agreement")

between Seadrill and Norsk Tillitsmann ASA, dated November 2, 2007 and dated

September 29, 2009 respectively (the "Incentive Offers").

The acceptance period for the Incentive Offers is open until December 17, 2010

at 17:30 (CET) ("the Conversion Incentive Period").

Seadrill has engaged ABG Sundal Collier, Credit Suisse Securities (Europe)

Limited and Deutsche Bank AG, London Branch as managers (the "Managers") for the

Incentive Offer.

The Seadrill share price has since June this year showed strong performance

increasing from US$18.1 to US$33.4 at close of business yesterday. As such the

current share price is materially higher than the strike price for conversion

into equity of the convertible bonds due in 2012 and 2014. Based on the high

likelihood of future conversion of these bonds, Seadrill has decided to offer an

accelerated conversion to the bond holders. Seadrill has an optimistic view on

the prospects of the offshore drilling industry. An accelerated conversion will

increase our financial flexibility and strengthen our ability to undertake

further investments whilst maintaining our dividend policy.

For further information please see the attached offer documents and offer

restrictions.

The offering has been made to Norwegian professional investors and eligible

counterparties as defined in the Norwegian Securities Trading Regulation 10-2 to

10-4 and to non-United States persons in reliance on Regulation S under the

Securities Act of 1933, as amended (the "Securities Act"). Seadrill's common

shares that may be issued upon the conversion of the Bonds have not been

registered under the Securities Act or the securities laws of any other

jurisdiction and may not be offered or sold in the United States or to or for

the benefit of U.S. persons unless so registered except pursuant to an exemption

from, or in a transaction not subject to, the registration requirements of the

Securities Act and applicable securities laws in other jurisdictions. This

disclosure shall not constitute an offer to sell or the solicitation of an offer

to buy the common shares, nor shall there be any sale of the common shares in

any jurisdiction in which such offer, solicitation or sale is unlawful.

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

(Norwegian Securities Trading Act)

[HUG#1473081]