Seadrill Limited — Interim / Quarterly Report 2014

May 28, 2014

SEVAN DRILLING ASA

INTERIM FINANCIAL REPORT FIRST QUARTER 2014

Highlights – First Quarter 2014

• Operating revenue amounted to USD 60.1 million in the first quarter 2014 (Q1 2013 USD 55.9 million) reflecting increased operational utilization of Sevan Driller.
• Sevan Driller achieved 93.8 percent technical utilization (Q1 2013 72.7 percent) and 87.5 percent economic utilization (Q1 2013 - 67.7 percent).
• Sevan Brasil achieved 89.9 percent technical utilization (Q1 2013 92.4 percent) and 86.0 percent economic utilization (Q1 2013 - 92.3 percent).
• EBITDA was USD 15.7 million, representing a significant increase (70.7 percent) from the first quarter of 2013, mainly due to higher operating efficiency following the transfer of management functions to Seadrill.
• Sevan Louisiana was mobilized to the US Gulf of Mexico in accordance with plans and budgets.

Unaudited figures in USD million, except where noted	Q1 2014	Q4 2013	Q1 2013
Operating revenue	60.1	65.7	55.9
EBITDA (1)	15.7	3.5	9.2
Operating Profit	0.8	-11.7	-5.8
Net financial items	-11.5	-16.6	-18.4
Net profit (loss)	-10.4	-28.3	-24.2
EPS (USD)	-0.02	-0.05	-0.05
Company performance:
Available days (2)	180	184	180
Technical Utilization (3)	91.9%	92.1%	82.5%
Economic Utilization (4)	86.8%	91.3%	79.7%
Average daily revenue (5)	363,000	388,000	376,000
Average daily operating expense (6)	188,000	211,000	223,000

(1) Earnings before interest, tax, depreciation, and amortisation equals operating profit adding back depreciation expense

(2) Available days are the total number of operating rig calendar days in the period. A rig is operating when accepted by the customer.

(3) Technical utilization is actual number of revenue earning days divided by available days. A revenue earning day is defined as a day for which a rig earns dayrate after commencement of operations.

(4) Economic utilization is operating revenue divided by total potential charter revenue for the period.

(5) Average daily revenue is operating revenue divided by revenue earning days. Average daily revenue will differ from contract dayrate due to billing adjustments for any non-productive time, bonus, amortized mobilization and demobilization fees.

(6) Average daily operating expense is total operating expense less general and administrative, restructuring, depreciation, and foreign exchange (loss)/gain related to operations divided by days in the period.

Financial performance summary

Operating revenue

Sevan Drilling reports operating revenue of USD 60.1 million in the first quarter of 2014 compared to USD 55.9 million in the first quarter of 2013. Operating revenue consist of earnings from Sevan Driller and Sevan Brasil. The revenue increase is explained by significantly improved operational utilization of Sevan Driller, slightly offset by downtime on Sevan Brasil.

Operating expenses

Total operating expenses were USD 59.3 million in the first quarter of 2014 compared to USD 61.7 million in the first quarter of 2013.

The decrease is explained by improved operational efficiencies as a consequence of the benefit of the transfer of management function to Seadrill taking effect. The cost reduction was achieved through reducing rental equipment expenses, adopting continuous repair and maintenance routines, eliminating end of well services and improving supply chain efficiencies.

General and administrative expenses were reduced by USD 0.9 million compared to the first quarter of 2013 following workforce reductions (offset by one-time costs of USD 1.5 million relevant to the integration with Seadrill's management systems).

Restructuring expenses of USD 2.2 million relate to employee severance costs. Workforce reductions onshore continue to progress as planned, and will be concluded in May.

The foreign exchange loss of USD 2.4 million is a consequence of the change in the exchange rate between USD and Brazilian Real.

Net financial items

Net financial items amounted to USD 11.5 million compared to USD 18.4 million in the first quarter of 2013, reflecting lower financing and foreign exchange costs.

Amortisation of deferred finance cost was USD 5.3 million less than in the first quarter of 2013 due to one-time fees associated with the debt restructuring in the first quarter of 2013 and commitment and guarantee fees. Interest expense was USD 2.9 million less in the first quarter of 2014 than in the same period in the preceding year. This was caused by a lower interest rate on the new facility and a larger amount of interest capitalized, offset by a higher amount of debt. The net financial items in the first quarter of 2013 furthermore included a non-recurring gain of USD 4.4 million of interest rate swaps. No swaps were held in the first quarter of 2014.

Balance sheet

Cash and cash equivalents amounted to USD 45.8 million as of 31 March 2014 (USD 128.7 million as of 31 December 2013). In the first quarter of 2014, Sevan completed two payments of interest and principal (USD 20.6 million and USD 70.0 million, respectively) under its bank facility and funded construction and mobilization costs for two rigs with available cash and a drawdown on the revolving credit facility provided by Seadrill .

Financing

The cash position at the end of the first quarter, the flexibility of the revolving credit facility provided by Seadrill, and Sevan Louisiana's commencement of operations will provide adequate support of the Group's existing operations going forward. Liquidity will, however, remain sensitive to the performance of the rigs under their contracts.

Operational Performance Summary

Sevan Driller

Sevan Driller continued its contract with Petrobras in Brazil and had a technical utilization of 93.8 percent in first quarter of 2014. This compared to 72.7 percent in the first quarter of 2013. There were no major maintenance or inspections in the first quarter of 2014.

Sevan Brasil

Sevan Brasil continued its contract with Petrobras in Brazil and had a technical utilisation of 89.9 percent in the first quarter of 2014. This compared to 92.4 percent in the first quarter of 2013. The decrease is a result of subsea and well maintenance.

Sevan Louisiana

Sevan Louisiana arrived in the US Gulf of Mexico on 17 April. The mobilization fee for the three year contract with LLOG was paid on 13 May 2014. To date, the rig earned 8 days at 90 percent standby rate and the Company expects commencement of operations by the end of May.

Sevan Developer

Construction continues to progress according to plan. Third quarter 2014 remains the likely date for delivery due to delays in equipment from subcontractors to Cosco.

Corporate

The Company completed a reorganisation of its rig owning structure in early May. Ownership to Sevan Brasil and Sevan Driller transferred from Singapore to new subsidiaries in Bermuda. Sevan Louisiana transferred to a subsidiary in Hungary. All of the rigs are now flagged in Panama. The new structure allows for a more flexible and efficient operating structure for the fleet.

Outlook

Operating revenues and cash-flow will increase as a result of the commencement of operations for Sevan Louisiana.

Sevan Drilling expects further improvements in its results in the short term as a consequence of the completion of the transfer of management functions to Seadrill and the full integration of its operating rig fleet into that of Seadrill.

Becoming part of Seadrill's rig management system is increasing operational efficiency, improving safety in operations and has generally taken the quality of the Company's activities to a higher level.

The main challenge for the Company in the short term remains Sevan Developer. To date, no employment has been secured for the rig despite Seadrill's worldwide marketing efforts over the last 6-9 months.

The market is currently characterised by a very limited number of opportunities in the ultra-deep water segment. This is a direct consequence of the pause in spending on exploration by several oil companies. While the Company believes the market will improve in the medium to long term it is clear that the short term is very challenging.

Sevan Drilling retains the option of not taking delivery of Sevan Developer and will consider this as the delivery date approaches. Not taking delivery will mean that the final instalment will not be funded to the subsidiary holding the contract, whereafter it will default on the contract and the Group will lose the amount invested in the rig until such date. This is currently estimated at approximately USD 134.7 million.

While this may be the result if better alternatives are not found, it is not the Company's preferred solution. As the

delivery date draws closer, discussions will be initiated with Cosco to evaluate options such as delaying delivery. The Company is consulting with Seadrill and expects continued assistance in developing alternative solutions. Seadrill is furthermore expected to assist in providing such additional financing as will be required to cover shortfalls in the Company's financing at delivery of Sevan Developer if a decision to do so is made.

The board has initiated a process to evaluate the pros and cons of migrating the parent from Norway to Bermuda and will present a preliminary view on this to the shareholders at the ordinary general meeting scheduled for 19 June 2014.

Oslo, 27 May 2014 The Board of Directors Sevan Drilling ASA

Interim financial statements

Condensed Consolidated Income Statement
Unaudited figures in USD million	Note	Three months ended 31 March 2014	Three months ended 31 March 2013
Operating revenue	10	60.1	55.9
Operating expense		-33.9	-40.2
General & administrative expense		-5.9	-6.8
Restructuring expense		-2.2	-
Depreciation, amortisation and impairment		-14.9	-15.0
Foreign exchange (loss)/gain related to operations		-2.4	0.3
Total operating expense		-59.3	-61.7
Operating profit/(loss)		0.8	-5.8
Financial expense	5	-11.5	-15.9
Foreign exchange loss related to financing		-	-2.5
Net financial items		-11.5	-18.4
Loss before tax		-10.7	-24.2
Tax expense	10	0.3	-
Net loss		-10.4	-24.2
Attributable to:
Equity holders of the Group		-10.4	-24.2
Earnings per share for profit/(loss) attributable to the equity holders of the Group during the period
(USD per share):
- Basic and diluted		-0.02	-0.05

Condensed Consolidated Statement of Comprehensive Income
		Three months ended	Three months ended
Unaudited figures in USD million	Note	31 March 2014	31 March 2013
Net profit/(loss)		-10.4	-24.2
Foreign currency translation		0.2	-
Comprehensive income/(loss)		-10.2	-24.2
Attributable to: Equity holders of the Group		-10.2	-24.2

Interim financial statements (continued)

Unaudited figures in USD million	Note	As at 31 March 2014	As at 31 December 2013
ASSETS
Non-current assets
Drilling rigs	4	1,930.2	1,916.6
Other fixed assets	4	4.1	19.2
Other non-current assets	6	76.5	40.4
Total non-current assets		2,010.8	1,976.2
Current assets
Inventories		26.9	26.9
Trade and other receivables	7	25.1	32.4
Cash and cash equivalents		45.8	128.7
Total current assets		97.8	188.0
Total assets		2,108.6	2,164.2
EQUITY Capital and reserves attributable to equity holders of the Group Share capital (594,623,436 shares authorized, issued, and outstanding as at 31 March 2014 and 31 December 2013, par value of NOK 1 per share) Share premium Other equity Total equity		108.6 666.0 -101.1 673.5	108.6 666.0 -90.9 683.7
LIABILITIES
Non-current liabilities
Non-current portion of bank borrowings	5	1,167.2	1,196.1
Non-current loan from related party	5	15.0	-
Other non-current liabilities		0.1	0.1
Total non-current liabilities		1,182.3	1,196.2
Current liabilities
Trade and other payables		70.5	74.5
Current portion of bank borrowings	5	133.5	173.1
Other current liabilities	8	48.8	36.7
Total current liabilities		252.8	284.3
Total liabilities		1,435.1	1,480.5
Total equity and liabilities		2,108.6	2,164.2

Condensed Consolidated Balance Sheet

Interim financial statements (continued)

Unaudited figures in USD million	Share Capital	Share Premium	General Reserve	Equity Settled Employee Benefits Reserve	Foreign Currency Translation Reserve	Retained Earnings	Total Equity
Equity as at 1 January 2013	61.9	533.9	280.0	1.4	-0.8	-213.9	662.5
Capital increase	46.7	138.0	-	-	-	-	184.7
Transaction cost equity raise	-	-5.9	-	-	-	-	-5.9
Net profit/(loss)	-	-	-	-	-	-24.2	-24.2
Fair value of share options	-	-	-	0.2	-	-	0.2
Equity as at 31 March 2013	108.6	666.0	280.0	1.6	-0.8	-238.1	817.3
Equity as at 1 January 2014	108.6	666.0	280.0	2.4	-2.8	-370.5	683.7
Net profit/(loss)	-	-	-	-	-	-10.4	-10.4
Translation differences	-	-	-	-	0.2	-	0.2
Equity as at 31 March 2014	108.6	666.0	280.0	2.4	-2.6	-380.9	673.5

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Cash Flow Statement
		Three months ended	Three months ended
Unaudited figures in USD million	Note	31 March 2014	31 March 2013
Cash flows from operation activities
Cash from operations		12.9	3.0
Interest paid	5	-20.6	-8.4
Net cash (used in)/generated from operating activities		-7.7	-5.4
Cash flows from investment activities Purchases of property, plant and equipment and other non current assets		-20.2	-38.7
Net cash flow used in investment activities		-20.2	-38.7
Cash flows from financing activities
Net proceeds from capital increase		-	178.5
Proceeds from interest-bearing debt	5	15.0	-
Repayment of interest-bearing debt	5	-70.0	-61.0
Net cash flow generated from/(used in) financing activities		-55.0	117.5
Net cash flow for the period		-82.9	73.4
Cash balance at beginning of period		128.7	76.8
Cash balance at end of period *		45.8	150.2

* 2014 Cash balance contains restricted cash of \$0.5 million for employees' tax deduction fund. 2013 cash balance contains restricted cash of \$0.3 million for employees' tax deduction fund and \$60.3 million for debt service repayments.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Organisation and basis of preparation

General information

Sevan Drilling ASA and its subsidiaries (the "Group") is an international offshore drilling contractor specialising in the ultra-deepwater segment. The Group has three ultra-deepwater drilling rigs (Sevan Driller, Sevan Brasil, and Sevan Louisiana) in operation and a fourth (Sevan Developer) on order. Sevan Driller and Sevan Brasil are operating under six-year fixed term contracts with Petrobras in Brazil expiring on June 2016 and July 2018, respectively. Sevan Louisiana is contracted under a 3 year fixed term contract with LLOG in the US Gulf of Mexico. Sevan Developer is expected to be delivered in the third quarter of 2014.

Sevan Drilling ASA is a public limited liability company, incorporated and domiciled in Norway. Its shares are listed on the Oslo Stock Exchange.

Basis of preparation

These condensed consolidated financial statements as at and for the three months ended 31 March 2014 (the "Interim Financial Statements") have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. They do not include all disclosures that would be required in a complete set of financial statements and should be read in conjunction with the 2013 annual report.

The Interim Financial Statements have been prepared on a historical cost basis. The Group's financial instruments consist of cash, trade receivables, trade payables, and bank borrowings measured at amortised cost with variable interest rates. Management believes that the carrying value approximates fair value for all the Group's financial instruments.

The accounting policies adopted in the preparation of the Interim Financial Statements are consistent with those followed in the preparation of the 2013 annual report, with one exception related to the classification of gross revenue tax. Gross revenue tax was previously classified as tax expense and is now classified as a reduction of revenue; this change was applied retrospectively to prior periods presented. See further discussion in Note 10. The new standards, interpretations, and amendments effective for the first time from 1 January 2014 have not had a material effect on the Interim Financial Statements.

There have been no material revisions to the nature or amount of significant management estimates from amounts reported in the 2013 annual report.

The Interim Financial Statements are unaudited and were approved by the Board of Directors on 27 May 2014.

Note 2 – Results of the interim period

During the first quarter of 2014, the Group continued to realise cost savings resulting from the transfer of the majority of its management functions to Seadrill. Operating expenses and general and administrative expense were thus lower in first quarter of 2014 compared to the first quarter of 2013 by USD 6.3 million and USD 0.9 million, respectively.

As Sevan Louisiana was in transit during the quarter, the Group capitalised USD 37.1 million of mobilisation expense. The Group will receive the corresponding mobilisation fee relevant to Sevan Louisiana in the second quarter of 2014. The net mobilisation fee will begin amortising when the contract period begins in the second quarter of 2014.

Sevan drew USD 15 million on the revolving credit facility with Seadrill to assist with the funding of the mobilisation of Sevan Louisiana and general purposes. Sevan also repaid USD 70.0 million of principal on the current bank facility during the first quarter.

The Group continued to incur severance costs (USD 2.2 million) associated with the transfer of management functions to Seadrill during the quarter.

As the Group's revenue and operating expenses are based on contractual day rates, the Group is not exposed to significant fluctuations in revenue and expense as a result of seasonality or cyclicality.

Note 3 – Segment information

Basis of segmentation

The Board of Directors, which is identified as the chief operating decision maker ("CODM") in Sevan Drilling ASA, along with management has reassessed the operating segments in 2014. Beginning in the first quarter of 2014, the Group will aggregate the rigs into a single reporting unit representing the fleet as a whole. Sevan Louisiana has begun operations in the second quarter of 2014, whereafter its revenue will be included in the second quarter of 2014. The construction of Sevan Developer is expected to be completed in the third quarter of 2014, which will negate the need for a separate CIP segment in the 2014 financial year.

The CODM evaluates the operating results of each rig but is primarily focused on the results of the overall fleet with a focus on several key metrics at the Group level, including revenue, operating profit, EBITDA and utilisation rates.

The rigs are aggregated for reporting purposes as they all provide the same service, have the same production process, are marketed to the same customer base, are based on the same design/ use the same methods to provide their services and operate in the same regulatory environment. The rigs form a single global fleet and each rig can be redeployed to other locations based on demand.

All revenues and operating expenses during the first quarter of 2014 were from Sevan Driller and Sevan Brasil operating off the coast of Brazil under contracts with Petrobras.

Note 4 – Property, plant and equipment

		Property, Plant and Equipment
Unaudited figures in USD million	Construction in process (CIP)	Units in operation (UIO)	Drilling rigs	Other fixed assets	Total fixed assets
As at 31 December 2013
Cost	639.3	1,401.4	2,040.7	27.4	2,068.1
Accumulated depreciation	-	-124.1	-124.1	-8.2	-132.3
Net book value	639.3	1,277.3	1,916.6	19.2	1,935.8
As at 31 March 2014
Cost	645.4	1,408.7	2,054.0	27.4	2,081.5
Accumulated depreciation	-	-138.8	-138.8	-8.4	-147.2
Transfers	-	14.9	14.9	-14.9	-
Net book value	645.4	1,284.8	1,930.2	4.1	1,934.2
Three months ended 31 March 2014
Beginning net book value	639.3	1,277.3	1,916.6	19.2	1,935.8
Additions	6.1	7.3	13.3	-	13.3
Transfers	-	14.9	14.9	-14.9	0.0
Depreciation charge	-	-14.7	-14.7	-0.2	-14.9
Ending net book value	645.4	1,284.8	1,930.2	4.1	1,934.2

Unaudited figures in USD million	As at 31 March 2014	As at 31 December 2013
Rig net book value
Sevan Driller	629.1	622.5
Sevan Brasil	655.8	654.8
Sevan Louisiana	568.4	563.5
Sevan Developer	77.0	75.8
Total	1,930.2	1,916.6

Additions to CIP include capitalisation of borrowing costs of USD 3.8 million during the first quarter of 2014.

The CIP amounts above consist of Sevan Louisiana and Sevan Developer. Sevan Louisiana was in transit to its initial drill site during the first quarter of 2014 and will be transfered to UIO in the second quarter. The contract with Cosco for the construction of Sevan Developer is payable in instalments as construction milestones are completed. No payments were made during the first quarter of 2014.

As at 31 March 2014, we have a remaining commitment of USD 424.3 million payable upon delivery of Sevan Developer, which is expected in third quarter of 2014.

Note 4 – Property, plant and equipment (continued)

At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets may be impaired. The net asset value of the Group exceeded its market capitalisation as at 31 March 2014, which the Group identified as an indicator of impairment for the current interim period. As a result, each rig was identified as a cashgenerating unit and was tested for impairment at the reporting date. Management concluded that the carrying amount of the rigs did not exceed their value-in-use; therefore, no impairment loss was recognised.

The key assumptions applied for the purpose of impairment testing of rigs in operation include a discount rate and expected future cash flows. To discount the future cash flows, management used a pre-tax weighted average cost of capital (WACC) of 7.2%. Estimated future cash flows are based on the Group's five-year forecast and utilise several assumptions including forecasted operational expense, utilisation and day rates. Day rates are based on current contract amounts for the remaining contract term and current market rates for forecasts beyond the contracted periods. Management has assumed no growth above current market rates for the remainder of the rig lives beyond the five-year forecast. Based on sensitivity analyses performed, Management believes that reasonable movements in the key assumptions would not result in an impairment loss to be recognised. Neither an increase in the WACC of 100 basis points nor a reduction of 20% of future cash flows would result in impairment of a rig.

Note 5 – Financing activities

In October 2013, the Group entered into a USD 1,750 million bank facility with ING as agent for a syndicate of lenders. The facility is composed of two tranches: a USD 350.0 million export credit facility provided by GIEK and a USD 1,400 million commercial facility provided by a syndicate of several commercial banks.

The GIEK tranche matures in September 2023 and incurs interest on drawn amounts at a rate of LIBOR + 2.5%, payable quarterly in arrears. There is a commitment fee of 1.0% per annum on the undrawn balance of the GIEK tranche.

The commercial tranche matures in September 2018 and incurs interest on drawn amounts at a rate of LIBOR + 2.9%, payable quarterly in arrears. There is a commitment fee of 1.4% per annum on the undrawn balance of the commercial tranche.

The total facility is guaranteed by Seadrill at a cost of 1.0% per annum on amounts drawn.

The Group also entered into a USD 100 million revolving credit facility ("RCF") with its majority shareholder, Seadrill Limited, in October 2013. The RCF matures in December 2015 and incurs interest on drawn amounts at a rate of LIBOR + 5.5%, payable quarterly in arrears. There is a commitment fee of 2.2% per annum on the undrawn balance of the RCF.

Seadrill made, in the fourth quarter of 2013, a commitment to the Group's lenders to provide additional funding in an amount of up to USD 120 million in order to cover a possible liquidity shortfall if the Group takes delivery of Sevan Developer.

Note 5 – Financing activities (continued)

		Financing Activities
Unaudited figures in USD million	GIEK Tranche	Commercial Tranche	Total bank facility	RCF with Seadrill	Total
As at 31 December 2013
Principal outstanding	200.0	1,200.0	1,400.0	-	1,400.0
Unamortised deferred financing costs1	-	-	-30.8	-	-30.8
Total borrowings	200.0	1,200.0	1,369.2	0.0	1,369.2
Current portion	27.1	147.9	173.1	-	173.1
Noncurrent portion	172.9	1,052.1	1,196.1	-	1,196.1
Undrawn facility (available for utilisation)	150.0	200.0	350.0	100.0	450.0
Three months ended 31 March 2014
Additional drawdowns	-	-	-	15.0	15.0
Additional deferred financing costs1	-	-	0.2	-	0.2
Amortisation of deferred financing costs1,2	-	-	1.7	-	1.7
Principal repayments	10.8	59.2	70.0	-	70.0
Interest payments	2.6	18.0	20.6	-	20.6
As at 31 March 2014
Principal outstanding	189.2	1,140.8	1,330.0	15.0	1,345.0
Unamortised deferred financing costs1	-	-	-29.3	-	-29.3
Total borrowings	189.2	1,140.8	1,300.7	15.0	1,315.7
Current portion	21.7	118.3	133.5	-	133.5
Noncurrent portion	167.5	1,022.5	1,167.2	15.0	1,182.2
Undrawn facility (available for utilisation)	150.0	200.0	350.0	85.0	435.0

¹Deferred financing costs were recognised on the bank facility as a whole and not allocated to the individual tranches ²USD 0.6 million of amortisation of deferred finance costs related to Sevan Louisiana were capitalised in the first quarter of 2014

	Three months ended	Three months ended
Unaudited figures in USD million	31 March 2014	31 March 2013
Financial expense
Interest expense	7.2	10.1
Amortization of finance fees	1.2	8.6
Unrealised hedging loss	-	-4.4
Commitment and guarantee fees to Seadrill	3.1	-
Guarantee fees to Sevan Marine ASA	-	1.0
Other finance expense	-	0.6
Total	11.5	15.9

Note 6 – Other non-current assets

Unaudited figures in USD million	As at 31 March 2014	As at 31 December 2013
Other non-current assets
Net late delivery penalties	4.0	4.2
Net mobilization expense	71.5	35.1
Other non-current assets	1.0	1.1
Total	76.5	40.4

Note 7 – Trade and other receivables

Unaudited figures in USD million	As at 31 March 2014	As at 31 December 2013
Trade and other receivables
Trade receivables	15.7	14.7
Prepayments	5.2	7.1
Other receivables	4.2	10.6
Total	25.1	32.4

Note 8 – Other current liabilities

Unaudited figures in USD million	As at 31 March 2014	As at 31 December 2013
Other current liabilities
Income and gross revenue tax payable	1.1	2.6
Other taxes payable	3.9	2.5
Related party payable (Note 9)	35.0	6.8
Other current liabilities	8.8	24.8
Total	48.8	36.7

Note 9 – Related party activities

Balances and transactions between the entities within the Group have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

Seadrill has guaranteed the bank facility referred to in Note 5. Seadrill is also providing the RCF (in the amount of USD 100 million), of which USD 15 million was drawn on 31 March 2013. Seadrill charged the Group guarantee and commitment fees in a total amount of USD 3.1 million during the interim period.

Note 9 – Related party activities (continued)

Seadrill also provides management support and administrative services to the Group for which a fee of USD 6.3 million was charged during the interim period.

As a part of the integration into Seadrill, Seadrill entities incur direct costs on behalf of Sevan. Sevan has a total current liability (including the commitment, guarantee and management fees mentioned above) of USD 35.0 million to Seadrill as at 31 March 2014 (compared to USD 6.8 million as at 31 December 2013).

Note 10 – Changes in Accounting Judgment

The Group previously classified gross revenue taxes in Brazil as tax expense. Management has reassessed the nature of these taxes and has determined that they are better classified as a reduction of revenue, as the starting point for determining the amount of tax paid is more dependent on the amount of gross sales than on a concept of taxable profit. This is a reclassification of items on the Income Statement with no impact on net income. There is no impact on the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, or the Cash Flow Statement. This change has been made retrospectively and is included in all other prior period information presented in these interim financial statements.

The impact on the Income Statement is as follows:

Unaudited figures in USD million	Three months ended 31 Mar 2013	Three months ended 30 June 2013	Three months ended 30 Sep 2013	Three months ended 31 Dec 2013	Year ended 31 Dec 2013
Decrease in Operating revenue	-1.9	-2.2	-1.9	-2.0	-8.0
Decrease in Tax expense	-1.9	-2.2	-1.9	-2.0	-8.0
Change in Net loss	-	-	-	-	-

Note 11 – Events after balance sheet date

The Group has evaluated its subsequent events from the balance sheet date through the date the accompanying condensed consolidated financial statements became available to be issued. There have been no significant subsequent events not described herein.

Oslo, 27 May 2014 The Board of Directors of Sevan Drilling ASA

Chairman Board Member Board Member

Erling Lind Birgitte Ringstad Vartdal Benedicte Schilbred Fasmer

Per Wulff Kristian Johansen Board Member Board Member

Scott McReaken CEO