Seadrill Limited — Capital/Financing Update 2014

Jul 18, 2014

SDRL - Seadrill launches voluntary incentive payment offer to convert the US$650 million 3.375% 2017 convertible bond

SDRL - Seadrill launches voluntary incentive payment offer to convert the US$650 million 3.375% 2017 convertible bond

Hamilton, Bermuda, July 18, 2014 - Seadrill Limited ("Seadrill" or the

"Company") announces today that is launching a voluntary incentive payment offer

to convert any and all of the US$650 million principal amount of 3.375% Seadrill

convertible bonds due 2017 (the "2017 Bonds").

On July 8, 2014 Seadrill launched a voluntary exchange offer that was contingent

upon the successful completion of a new convertible bond issuance.  Due to the

adverse share price development on the day of the issue leading to an

unfavorable conversion price, both transactions were cancelled.  A consequence

of the cancellation of the incentive payment offer was that a number of

convertible bondholders were harmed due to the common practice of hedging during

a conversion offer.

The Board bears significant responsibility to all stakeholders and never intends

to harm any of the Company's loyal supporters, however, the Board was left with

the difficult decision to accept an unattractive deal or create this unfortunate

situation.  The Company and the Board will not be forced to transact in any

market at unfavorable terms, therefore saw cancellation as the only viable

alternative.  In light of this the Board has decided to launch a new voluntary

incentive payment offer which will not be contingent on the completion of any

other transaction in order to counter the negative effects of last week's

events.  We look forward to putting this unfortunate situation behind us and

continue our innovative and cost effective funding strategy.

Seadrill hereby makes an offer of an incentive payment to the 2017 Bondholders

who elect to exercise their conversion rights from this public announcement

until July 24, 2014 at 5pm CET (the "Acceptance Period"). Bondholders may elect

to receive the incentive payment in cash or in shares of Seadrill. If a

bondholder does not make such election, they will receive the incentive payment

in cash. Seadrill may at its sole discretion extend the Acceptance Period (one

or more times). Seadrill will accept any acceptance of the voluntary incentive

payment offer from an eligible Bondholder that is validly tendered in accordance

with the terms of the voluntary incentive payment offer document during the

Acceptance Period. Bondholders holding in excess of 60% of the convertible bonds

outstanding have pre-committed to accept the voluntary incentive payment offer.

Bondholders exercising their conversion rights during the Acceptance Period will

receive (i) 3,612 Seadrill ordinary shares per US$100,000 principal amount of

the 2017 Bonds, (ii) a consideration of approximately US$11,840 per US$100,000

principal amount of the 2017 Bonds in cash or share of Seadrill (as adjusted in

accordance with the incentive offer document) and (iii) accrued interest on the

2017 Bonds from April 27, 2014 (excluded) to July 28, 2014 (included).

The voluntary incentive payment offer will not affect the rights of 2017

Bondholders who do not wish to exercise their conversion rights during the

Acceptance Period.

Questions should be directed to:

Rune Magnus Lundetræ:  Chief Financial Officer

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1830932]