Seadrill Limited — Capital/Financing Update 2010

Dec 16, 2010

1. Incentive Offer Restrictions
2. The distribution of this document in certain jurisdictions may be restricted by law. Persons into whose possession this document comes are required by Seadrill and the Managers to inform themselves about and to observe any such restrictions.
3. This document does not constitute an offer to buy or a solicitation of an offer to sell Bonds, and tenders of Bonds in the Incentive Offer will not be accepted from Bondholders, in any jurisdiction in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require the Incentive Offer to be made by a licensed broker or dealer and any of the Managers is such a licensed broker or dealer in such jurisdictions, the Incentive Offer shall be deemed to be made on behalf of Seadrill by that Dealer Manager.

Each Bondholder participating in the Incentive Offer will be deemed to give certain representations in respect of the below-mentioned jurisdictions and generally as set out in the Acceptance Form. Any offer of Bonds for conversion pursuant to the Incentive Offer from a Bondholder that is unable to make these representations will not be accepted. Seadrill and the Managers reserve the right, in their absolute discretion, to investigate, in relation to any offer of Bonds for conversion pursuant to the Incentive Offer, whether any such representation given by a Bondholder is correct and, if such investigation is undertaken and as a result Seadrill determines (for any reason) that such representation is not correct, such tender shall not be accepted.

1. Bondholders with any questions on the Incentive Offer should contact one of the Managers for further information.
2. United States
3. The Incentive Offer is not being made and will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, email and other forms of electronic transmission) of interstate or foreign commerce of, or any facility of a national securities exchange of, the United States, and the Bonds may not be offered for conversion in the Incentive Offer by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States. Accordingly, copies of this document and any other documents or materials relating to the Incentive Offer are not being, and must not be, directly or indirectly, mailed or otherwise transmitted, distributed or forwarded in or into the United States or to persons located or resident in the United States (including custodians, nominees and trustees). Any purported offer of Bonds for conversion in the Incentive Offer resulting directly or indirectly from a violation of these restrictions will be invalid and tenders of Bonds made by a person located in the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal giving instructions from within the United States will not be accepted.
4. Each holder of Bonds participating in the Incentive Offer will represent that it is not located in the United States and is not participating in the Incentive Offer from the United States or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in the Incentive Offer from the United States. For the purposes of this paragraph, United States means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.
5. United Kingdom
6. The communication of this document and any other documents or materials relating to the Incentive Offer is not being made and such documents and/or materials have not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to persons within the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)) or within Article 43(2) of the Order, or to other persons to whom it may lawfully be communicated.
7. Italy
8. The Incentive Offer is not being made, directly or indirectly, in the Republic of Italy (“Italy”). The Incentive Offer and this document have not been submitted to the clearance procedure of the Commissione Nazionale per le Società e la Borsa (CONSOB) pursuant to Italian laws and regulations. Accordingly, Bondholders are notified that, to the extent Bondholders are located in Italy, the Incentive Offer is not available to them and neither this document nor any other documents or materials relating to the Incentive Offer or the Bonds may be distributed or made available in Italy as part of a public purchase or exchange offer (offerta pubblica di acquisto o di scambio) (as defined in Article 1, paragraph 1(v) of Italian Legislative Decree No. 58 of 24 February 1998, as amended) from which no applicable exemption is available (a “Non-exempt Incentive Offer in Italy”).
9. Belgium
10. Neither this document nor any other documents or materials relating to the Incentive Offer have been submitted to or will be submitted for approval or recognition to the Belgian Banking, Finance and Insurance Commission (Commission bancaire, financière et des assurances/Commissie voor het Bank-, Financie- en Assurantiewezen) and, accordingly, the Incentive Offer may not be made in Belgium by way of a public offering, as defined in Article 3 of the Belgian Law of 1 April 2007 on public takeover bids or as defined in Article 3 of the Belgian Law of 16 June 2006 on the public offer of placement instruments and the admission to trading of placement instruments on regulated markets (the “Belgian Public Incentive Offer Law”), each as amended or replaced from time to time. Accordingly, the Incentive Offer may not be advertised and the Incentive Offer will not be extended, and neither this document nor any other documents or materials relating to the Incentive Offer (including any memorandum, information circular, brochure or any similar documents) has been or shall be distributed or made available, directly or indirectly, to any person in Belgium other than “qualified investors” in the sense of Article 10 of the Belgian Public Incentive Offer Law, acting on their own account. Insofar as Belgium is concerned, this document has been issued only for the personal use of the above qualified investors and exclusively for the purpose of the Incentive Offer. Accordingly, the information contained in this document may not be used for any other purpose or disclosed to any other person in Belgium.
11. France
12. The Incentive Offer is not being made, directly or indirectly, to the public in the Republic of France (“France”). Neither this document nor any other documents or materials relating to the Incentive Offer have been or will be distributed to the public in France and only (i) providers of investment services relating to portfolio management for the account of third parties and/or (ii) qualified investors (investisseurs qualifiés) other than individuals, all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code monétaire et financier,are eligible to participate in the Incentive Offer. This document has not been and will not be submitted to nor approved by the Autorité des Marchés Financiers.