Seadrill Limited — Interim / Quarterly Report 2013

Feb 25, 2014

SEVAN DRILLING ASA

INTERIM FINANCIAL REPORT FOURTH QUARTER and PRELIMINARY 2013

Highlights fourth quarter 2013

• Sevan Drilling had operating revenues in Q4 2013 of USD 67.7 million (USD 57.9 million in Q4 2012) and EBITDA of USD 5.5 million (USD 23.3 million in Q4 2012).
• Commercial uptime for Sevan Driller for the quarter was 89.9% (98.9% in Q4 2012).
• Commercial uptime for Sevan Brasil for the quarter was 92.3% (61.7% in Q4 2012).
• Sevan Louisiana was delivered from Cosco (Quidong) Offshore Limited on 23 October 2013 and is now in transit to the US Gulf of Mexico for a contract with LLOG. Expected arrival in the Gulf is April 2014.
• The delivery for the Sevan Developer (formerly Sevan Drilling Rig no 4) is now likely to be delayed from 30 April, to the third quarter 2014, due to delays in delivery of subsea equipment to the Cosco yard.
• Drawdown of USD 1,400 million was made on 8 October under a new term loan facility of USD 1,750 million. The remaining USD 350 million of the facility will be used to part finance the final instalment to Cosco for Sevan Developer (formerly Sevan Drilling Rig no 4).
• On 15 November Scott McReaken succeeded Scott Kerr as Chief Executive Officer of Sevan Drilling ASA.
• On 21 December, the Chief Financial Officer, Jon Wilmann, resigned. His responsibilities were assumed by Scott McReaken, Chief Executive Officer.

Highlights full year 2013

• Sevan Drilling had operating revenues in 2013 of USD 257.7 million (USD 173.4 million in 2012) and EBITDA of USD 57.5 million (USD 54.5 million in 2012).
• Commercial uptime for Sevan Driller for the total year 2013 was 84.6% (88.1% in 2012).
• Commercial uptime for Sevan Brasil for the total year 2013 was 95.0% (73.8% in 2012).
• Sevan Drilling issued USD 180 million of new equity in the first quarter and amended loan terms of the two term loans that were outstanding.
• In March 2013, LLOG Bluewater Holdings LLC contracted the Sevan Louisiana for a three year contract in the US Gulf of Mexico for commencement January 2014.
• On 26 June 2013 and 27 June 2013, Seadrill entered into arrangements to purchase 120,065,464 shares in Sevan with a settlement date of July 2 2013. Following settlement,

Seadrill has ownership and interests in Sevan Drilling of 297,893,964 shares equal to 50.1 percent of the outstanding shares in the company.

• On 22 August 2013, Seadrill completed a mandatory offer and obtained control of shares and votes for 50.11 percent of the outstanding shares in Sevan Drilling.
• On 31 July 2013, Sevan Drilling executed interim service agreements with Seadrill to provide marketing and management of the operations, construction, mobilization and operations preparation for the entire Sevan Fleet. The final agreements were executed in September 2013. The agreements have been negotiated on market terms and are consistent with management agreements provided by Seadrill to other entities.

All figures in MUSD	Q4 2013	Q4 2012	2013	2012
Operating revenue	67.7	57.9	257.7	173.4
EBITDA	5.5	23.3	57.5	54.5
Operating Profit	-9.7	8.0	-6.6	11.4
Net financial items	-16.6	-14.5	-89.1	-42.4
Net profit (loss)	-28.3	-1.9	-156.6	-11.7
EPS	-0.05	-0.01	-0.28	-0.03
Sevan Driller:
Technical Uptime (%)	91.9	95.9	86.2	89.2
Commercial Uptime (%)	89.9	98.9	84.6	88.1
Max charter rate per day ('000)	418	416	418	419
Operating revenue per day ('000)	368	395	341	353
Cash Opex per day ('000)	182	166	184	166
Sevan Brasil
Technical Uptime (%)	92.4	67.2	92.8	78.2
Commercial Uptime (%)	92.3	61.7	95.0	73.8
Max charter rate per day ('000)	386	389	390	389
Operating revenue per day ('000)	361	232	362	268
Cash Opex per day ('000)	207	145	182	147

Performance summary for the fourth quarter 2013

Operating revenues for the quarter amounted to USD 67.7 million, compared to USD 57.9 million in Q4 2012. EBITDA was USD 5.5 million in Q4 2013 compared to USD 23.3 million in Q4 2012.

Operating revenues consist of the earnings from the contracts for Sevan Driller and Sevan Brasil with Petrobras in Brazil.

Sevan Driller had, in Q4 2013, an average technical uptime of 91.9% compared to 95.9% in Q4 2012 and a commercial uptime of 89.9% compared to 98.9% in Q4 2012.

Sevan Brasil had, in Q4 2013, an average technical uptime of 92.4% compared to 67.2% in Q4 2012 and a commercial uptime of 92.3% (61.7% in Q4 2012).

Operating expenses were USD 62.2 million in Q4 2013 compared to USD 34.6 million in Q4 2012 consisting of the following:

• Net operational expenses for Sevan Driller - USD 16.8 million (USD 182.000 per day).
• Non-cash operational expenses for Sevan Driller - USD 0.7 million.
• Non-recurring operational expenses for Sevan Driller - USD -0.1 million.

• Net operational expenses for Sevan Brasil - USD 19.1 million (USD 207.000 per day).

• Non-cash operational expenses for Sevan Brasil - USD 0.1 million.

• Pre-operational expenses Sevan Louisiana - USD 2.3 million.
• Overhead expenses USD 18.5 million.
• Restructuring costs USD 5.2 million.
• Foreign exchange gain relating to operations – USD 0.4 million.

Operating loss was USD 9.7 million in Q4 2013 compared to a profit of USD 8.0 million in Q4 2012.

Net financial items were minus USD 16.6 million in Q4 2013 compared to minus USD 14.5 million in Q4 2012 consisting of the following main items:

• USD 8.0 million in interest expense
• Amortization of finance fees of USD 1.2 million.
• USD 2.0 million loss on the settlement of the interest rate swaps.
• Guarantee fee to Sevan Marine USD 0.3 million.
• Commitment and guarantee fees to Seadrill of USD 4.6 million
• USD 0.6 million in other finance gains.
• USD 1.1 million in foreign exchange losses relating to financing.

The Company had a net loss of USD 28.3 million in Q4 2013, compared to a net loss of USD 1.9 million in Q4 2012.

Preliminary Performance Summary for 2013

Operating revenue for 2013 was USD 257.7 million vs. USD 173.4 million in 2012.

EBITDA in 2013 was USD 57.5 million vs. USD 54.5 million in 2012.

Sevan Driller's average technical and commercial uptime was 86.2% and 84.6%

respectively. Comparable numbers in 2012 were 89.2% and 88.1%.

Sevan Brasil had average technical and commercial uptime of 92.8% and 92.3% vs. 78.2% and 73.8% in 2012.

The operating loss for the group in 2013 was USD 6.6 million. This compares to an operating loss of USD 11.4 million in 2012.

Net financial items was USD 89.1 million in 2013. The comparable amount in 2012 was USD 42.4 million.

The Company's (on a consolidated basis) net loss in 2013 was USD 156.6 million vs. USD 11.7 million in 2012.

Balance sheet

As of 31 December 2013 total assets amounted to USD 2,164.2 million (USD 1,719.7 million as of 31 December 2012) of which USD 1,916.6 million was the capitalised value of the Company's drilling rigs as follows:

• Sevan Driller USD 622.5 million (USD 646.2 million as of 31 December 2012),
• Sevan Brasil USD 654.8 million (USD 681.3 million as of 31 December 2012),
• Sevan Louisiana USD 563.5 million (USD 111.8 million as of 31 December 2012),
• Sevan Developer USD 75.8 million (USD 61.2 million as of 31 December 2012).

Cash and cash equivalents amounted to USD 128.7 million as of 31 December 2013 (USD 76.8 million as of 31 December 2012).

On 8 October, Sevan Drilling made a drawdown of USD 1,400 million under its new term loan. The amount was used to repay the loans secured against Sevan Driller and Sevan Brasil and to pay the final instalment to Cosco on Sevan Louisiana. The remaining commitment will be used to part finance the final instalment to Cosco for Sevan Developer. Seadrill Limited, the majority shareholder, has guaranteed the new term loan.

Sevan Drilling has also entered into a Revolving Credit Facility in the amount of USD 100 million with Seadrill. No drawdown had been made under this facility as of 31 December 2013.

Seadrill has furthermore made a commitment to the Company's lenders to provide additional funding (by way of an increase in the revolving credit facility and/or an underwriting of an equity issue) to cover a possible liquidity shortfall if the Company takes delivery of Sevan Developer in an amount of up to USD 120 million.

Seadrill also provides certain management support and administrative services to the Company and charged the Company fees for these services of USD 2.2 million in 2013. These amounts are included in "Operating expenses" and "Current liabilities".

Additional rigs for delivery

Sevan Louisiana:

The rig was delivered from Cosco 23 October 2013 and is now in transit to the US Gulf of Mexico. The estimated start-up of its contract with LLOG Bluewater is April 2014.

Sevan Developer:

The construction is progressing according to plan. Cosco has, however, notified the Company that delivery will be delayed due to delays in deliveries from its sub-

contractors. The Company is in a dialogue with Cosco on the fixing of a new delivery date. It appears likely that this will be in Q3 2014.

Events since the end of the quarter

Other than the indicated delay in the delivery of Sevan Developer, no events have occurred which would have significantly impacted the consolidated financial statements set forth below.

Outlook

The process focused on integrating the Company's operations with those of Seadrill as set forth in the management agreements concluded between Seadrill and the Company in the third quarter 2013 continues.

Seadrill has assumed full responsibility for the operation of Sevan Driller and Sevan Brasil, the mobilisation of Sevan Louisiana and the construction and marketing of Sevan Developer. The Company expects to realise significant improvements in operational efficiency, safety and cost control in 2014 as a consequence of this.

The Company has reduced its own cost base in parallel with the phasing in of Seadrill's services under the management agreements. This is expected to take effect from Q1 2014.

The Company has already recognised the benefits of Seadrill's support through the refinancing of its bank facilities in 2013.

The possibility of not taking delivery of Sevan Developer remains available to the Company. The consequence of this will be a loss of the payments so far made to Cosco and committed pre-operational costs, USD 75.8 million as of 31 December 2013, and estimated USD 110 to 120 million in Q3 2014.

This, however, is not the preferred option for the Company but an alternative which will be considered if it appears unlikely that an acceptable contract can be secured for the rig.

Seadrill is actively marketing Sevan Developer under its marketing agreement with the Company.

The market has experienced a noticeable weakening going into 2014 as a consequence of a reduction in demand combined with increasing supply of new units being delivered and existing units coming off contracts.

While the short term outlook for the ultradeep water market where the Company operates is challenging, the Company remains of the opinion that the long term prospects for the Company's services remain firm.

The demand from oil companies for drilling services on ultra-deep water is expected to remain strong both in order to explore new areas and to analyse and develop recent discoveries.

The Company believes that Sevan ultradeep water rigs are well positioned to meet this demand in the years to come because of the technical and design capabilities of its rigs.

The Company expects to draw part of the amount available under the Revolving Credit Facility provided by Seadrill in Q2 2014. The Company believes that this facility will be sufficient to cover the Company's liquidity needs going forward if the Company decides not to take delivery of Sevan Developer.

If the Company decides to take delivery of Sevan Developer following the securing of an acceptable contract, further financing (in addition to the USD 350 million available for drawing under the Company's term loan) needs to be raised in an amount of USD 100-150 million. The Company will consider all available alternatives for securing this together with Seadrill.

Oslo, 24 February 2014

The Board of Directors Sevan Drilling ASA

Interim financial statements

Condensed Consolidated Income Statement
Unaudited figures in USD million	Note	2013		2012
		Q4	31. Dec.	Q4	31 Dec.
Operating income	5	67.7	257.7	57.9	173.4
Operating expense	8	-62.2	-200.2	-34.6	-119.0
EBITDA		5.5	57.5	23.3	54.5
Depreciation, amortization and impairment	3	-15.2	-64.1	-15.4	-43.1
Operating (loss)/profit		-9.7	-6.6	8.0	11.4
Financial expense	7	-15.5	-84.4	-14.4	-42.4
Foreign exchange loss relating to financing		-1.1	-4.6	-0.1	0.0
Net financial items		-16.6	-89.1	-14.5	-42.4
Loss before tax		-26.3	-95.6	-6.6	-31.0
Tax (expense)/income	6	-2.0	-60.9	4.7	19.3
Net loss		-28.3	-156.6	-1.9	-11.7
Earnings per share for loss attributable to the equity holders of the Company during the year (USD per share):
Basic		-0.05	-0.28	-0.01	-0.03
Diluted		-0.05	-0.28	-0.01	-0.03
Condensed Consolidated Statement of Comprehensive Loss
Unaudited figures in USD million
Net loss		-28.3	-156.6	-1.9	-11.7
Foreign currency translation		-0.5	-2.0	-0.1	-0.2
Total comprehensive loss		-28.8	-158.6	-2.0	-11.9

Condensed Consolidated Balance Sheet
Unaudited figures in USD million	Note	31/12/2013	31/12/2012
Drilling Rigs	3	1,916.6	1,500.4
Other fixed assets	3	19.2	12.5
Intangible assets		0.0	1.6
Deferred income tax assets		0.0	51.5
Other non-current assets		40.4	20.4
Total non-current assets		1,976.2	1,586.4
Inventories		26.9	22.5
Trade and other receivables		32.4	33.9
Cash and cash equivalents		128.7	76.8
Total current assets		188.0	133.2
Total assets		2,164.2	1,719.7
Share capital		108.6	61.9
Other equity		575.2	600.5
Total equity		683.8	662.4
Interest-bearing debt	4	1,196.1	717.9
Other non-current liabilities/provisions		0.1	73.0
Total non-current liabilities		1,196.2	790.9
Interest-bearing debt	4	173.1	140.8
Current liabilities	9	111.2	125.6
Total current liabilities		284.2	266.4
Total liabilities		1,480.5	1,057.3
Total equity and liabilities		2,164.2	1,719.7

Condensed Consolidated Cash Flow Statement
Unaudited figures in USD million	2013	2012
Cash flows from operation activities
Cash from operations	19.2	52.1
Interest paid	-38.8	-46.0
Net cash (used in)/generated from operating activities	-19.6	6.1
Cash flows from investment activities
Purchases of property, plant and equipment (PPE)	-583.8	-105.0
Net cash flow used in investment activities	-583.8	-105.0
Cash flows from financing activities
Net proceeds from capital increase	178.5	0.0
Proceeds from interest-bearing debt	1,369.2	43.8
Repayment interest-bearing debt	-892.3	-56.6
Net cash flow generated from/(used in) financing activities	655.4	-12.8
Net cash flow for the period	51.9	-111.7
Cash balance at beginning of period	76.8	188.5
Cash balance at end of period *	128.7	76.8

* 2013 cash balance contains restricted cash of USD 1.9 million for employees' tax deduction fund. 2012 cash balance contains restricted cash of USD 71.0 million for debt service repayments and USD 0.5 million for employees' tax deduction fund.

Condensed Consolidated Statement of Changes in Equity
Unaudited figures in USD million
			Other
	Share	Share	restricted	Retained	Total
	Capital	Premium	equity	Earnings	Equity
Equity as of 1 January 2012	61.9	814.5	0.0	-202.9	673.4
Net loss YTD 2012				-11.7	-11.7
Other comprehensive loss YTD 2012				-0.2	-0.2
Translation differences ITD				-0.6	-0.6
Fair value of share options			1.4		1.4
Equity as of 31 December 2012	61.9	814.5	1.4	-215.3	662.4
Net loss YTD 2013				-156.6	-156.6
Other comprehensive loss YTD 2013				-2.0	-2.0
Capital increase	46.8	138.2			184.9
Transaction cost equity raise		-6.5			-6.5
Translation differences ITD				0.4	0.4
Fair value of share options			1.0		1.0
Equity as of 31 December 2013	108.6	946.2	2.5	-373.5	683.8

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – General accounting principles

Sevan Drilling ASA (the "Company") and its subsidiaries (together with the Company the "Group") is an international offshore drilling contractor specialising in the ultra-deepwater segment. The Group owns three ultra-deepwater drilling rigs. As at 31 December 2013 two deepwater drilling rigs, Sevan Driller and Sevan Brasil, are operating under six year fixed term contracts with Petrobras in Brazil. Sevan Driller entered the fourth year of its contract in July 2013. Sevan Brasil commenced work in July 2012. Sevan Louisiana was delivered in October 2013 and is in transit to the US Gulf of Mexico. It will begin operations in Q2 2014 under a three year contract with LLOG. In addition, the Group has an additional ultra deep water drilling vessel under construction at Cosco (Quidong), and is likely to be delivered in the third quarter 2014.

With effect from the third quarter 2013 the Company is consolidated into its main shareholder Seadrill Limited.

The Company is a public limited liability company, incorporated and domiciled in Norway.

The Group prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) and these financial statements have been prepared in accordance with the International Accounting Standard for Interim Financial Reporting (IAS 34).

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Annual Financial Statements for the year ended 31 December 2012.

Note 2 – Segment information

The segment results for Q4 2013

Figures in USD million	Operation	Construction in progress (CIP)	Other/not allocated	Group
Revenue	67.0	0.0	0.7	67.7
Operating profit/(loss) / Segment result	14.0	-2.3	-21.5	-9.7
Net financial items	-17.3	-2.3	2.9	-16.6
Loss before tax	-3.2	-4.5	-18.5	-26.3
Tax expense	-2.0	0.0	0.0	-2.0
Net loss for Q4	-5.2	-4.5	-18.6	-28.3

Other segment items included in the income statement are as follows;
Depreciation of PP&E	-15.1	0.0	-0.1	-15.2

All revenue is from one customer regarding Sevan Driller and Sevan Brasil in Brazil. There is no inter-segment revenue.

The segment results as at 31 December 2013

		Construction in	Other/not
Figures in USD million	Operation	progress (CIP)	allocated	Group
Revenue	257.0	0.0	0.8	257.7
Operating profit/(loss) / Segment result	43.1	-4.1	-45.6	-6.6
Net financial items	-98.8	-8.3	18.1	-89.1
Loss before tax	-55.8	-12.4	-27.5	-95.6
Tax expense	-8.0	0.0	-52.9	-60.9
Net loss as at 31 December 2013	-63.8	-12.4	-80.4	-156.6
Other segment items included in the income statement are as follows;

Depreciation of PP&E -59.8 0.0 -4.3 -64.1

All revenue is from one customer regarding Sevan Driller and Sevan Brasil in Brazil. There is no inter-segment revenue.

The total segment assets and liabilities and drilling rigs amounts as at 31 December 2013 are as follows:

		Construction in	Other/not
Figures in USD million	Operation	progress (CIP)	allocated	Group
Total assets	1,609.0	656.8	-101.6	2,164.2
Total liabilities	1,157.8	451.6	-128.9	1,480.5
Drilling rigs	1,277.3	639.3	0.0	1,916.6

All segment assets and liabilities are allocated.

The segment results for Q4 2012

0.0 -0.1	0.2 1.7	57.9
		8.0
-1.6	5.3	-14.5
-1.7	6.9	-6.6
0.0	6.5	4.7
-1.7	13.5	-1.9

Depreciation of PP&E -15.2 0.0 -0.2 -15.4

All revenue is from one customer regarding Sevan Driller and Sevan Brasil in Brazil. There is no inter-segment revenue.

The segment results as per 31 December 2012

Operation	Construction in progress (CIP)	Other/not allocated	Group
172.4	0.0	1.0	173.4
18.5	-0.3	-6.9	11.4
-62.6	-6.8	27.0	-42.4
-44.1	-7.1	20.2	-31.0
1.3	0.0	18.0	19.3
-42.7	-7.1	38.1	-11.7

Other segment items included in the income statement are as follows; Depreciation of PP&E -42.5 0.0 -0.6 -43.1

All revenue is from one customer regarding Sevan Driller and Sevan Brasil in Brazil. There is no inter-segment revenue.

The total segment assets and liabilities and drilling rigs amounts as at 31 December 2012 are as follows:

Figures in USD million	Operation	Construction in progress (CIP)	Other/not allocated	Group
Assets	1,618.7	169.1	-68.1	1,719.7
Liabilities	1,167.2	5.5	-115.4	1,057.3
Drilling rigs	1,327.5	172.9	0.0	1,500.4

All segment assets and liabilities are allocated.

Note 3 – Property, plant and equipment

The Group's main non-current assets relate to those classified as Drilling rigs on the balance sheet. The table below summarises changes to the balance sheet values of such assets for 2012 and as of 31 December 2013.

Property, Plant and Equipment
Unaudited figures in USD million	Drilling	Other	Total
	Rigs	fixed	fixed
Year ended 31 December 2012:
Book value 1 January	1,319.3	8.6	1,327.9
Additions	222.8	5.2	228.1
Depreciation charge	-41.7	-1.4	-43.1
Write-down	0.0	0.0	0.0
Book value 31 December	1,500.5	12.4	1,512.9
At 31 December 2012:
Cost	1,574.4	15.2	1,589.6
Accumulated impairment	-8.5	0.0	-8.5
Accumulated depreciation	-65.5	-2.7	-68.2
Book value 31 December 2012	1,500.4	12.5	1,512.9
Period ended 31 December 2013:
Book value 1 January	1,500.4	12.5	1,512.9
Additions	474.8	12.2	487.0
Depreciation charge	-58.6	-5.5	-64.1
Write-down	0.0	0.0	0.0
Book value 31 December	1,916.6	19.2	1,935.8
At 31 December 2013:
Cost	2,049.2	27.4	2,076.6
Accumulated impairment	-8.5	0.0	-8.5
Accumulated depreciation	-124.1	-8.2	-140.8
Book value 31 December 2013	1,916.6	19.2	1,927.3

Note 4 – Financing facilities

Financing Facilities as at 31 Dec 2013
Unaudited figures in USD million
		Drawn as at	Drawn as at	Undrawn as at
Bank Facilities	Total Facility	31-Dec-12	31-Dec-13	31-Dec-13
Sevan Driller USD 480M Loan	480.0	480.0	-	-
Sevan Brasil USD 525M Loan	525.0	522.8	-	-
Sevan USD 1750M Loan	1,750.0	-	1,400.0	350.0
Total	1,750.0	1,002.8	1,400.0	350.0
Revolving Credit Facilities
Sevan USD 100M RCF with Seadrill	100.0	-	-	100.0
Total	100.0	-	-	100.0
Total Financing Facilities	1,850.0	1,002.8	1,400.0	450.0

Seadrill has also made a commitment to the banks for support of an additional USD 120 million.

Bank Borrowings as at 31 Dec 2013
Unaudited figures in USD million
Principal Unamortised
	outstanding as at 31-	financing costs as at	Total borrowings as
Bank Loans	Dec-13	31-Dec-13	at 31-Dec-13
Sevan Driller USD 480M Loan		-	-
Sevan Brasil USD 525M Loan		-	-
Sevan USD 1750M Loan	1,400.0	(30.8)	1,369.2
Total	1,400.0	(30.8)	1,369.2

Bank Borrowings as at 31 Dec 2012
Unaudited figures in USD million
	Principal	Unamortised
	outstanding as at 31-	financing costs as at	Total borrowings as
Bank Loans	Dec-12	31-Dec-12	at 31-Dec-12
Sevan Driller USD 480M Loan	369.5	-9.4	360.1
Sevan Brasil USD 525M Loan	522.8	-24.2	498.6
Total	892.3	-33.6	858.7

	Total borrowings as	Total borrowings as
Bank Loans	at 31-Dec-12	at 31-Dec-13
Non-Current	784.4	1,196.1
Sevan Driller USD 480M Loan	357.6	-
Sevan Brasil USD 525M Loan	426.8	-
Sevan USD 1750M Loan	-	1,196.1
Current	76.9	173.1
Sevan Driller USD 480M Loan	54.8	-
Sevan Brasil USD 525M Loan	22.1	-
Sevan USD 1750M Loan	-	173.1
Total	861.3	1,369.2

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1 :Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 :Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)

Level 3 :Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

31 December 2013	Level 1	Level 2	Level 3	Sum
Assets
Financial derivates	0.0	0.0	0.0	0.0
Liabilities
Financial derivates	0.0	0.0	0.0	0.0
31 December 2012	Level 1	Level 2	Level 3	Sum
Assets
Financial derivates	0.0	0.0	0.0	0.0
Liabilities
Financial derivates	0.0	27.4	0.0	27.4

Note 5 – Breakdown of operating income

Breakdown Operating Income
		Q4 2013		2013
	MUSD	Avg KUSD/day	MUSD	Avg KUSD/day
Max charter rate Sevan Driller	38.4	418	152.6	418
less moving/standby rate Sevan Driller	-0.6	-6	-2.7	-7
less downtime Sevan Driller	-3.1	-34	-20.7	-57
plus bonus achieved Sevan Driller	0.0	0	1.3	4
less penalties Sevan Driller	-0.6	-7	-2.7	-8
less agency fees Sevan Driller	-1.1	-12	-4.0	-11
add charter indexation adjustment for 2Q2013 and 3Q2013	0.6	7	0.7	2
add warranty claim Sevan Driller	0.2	2	0.2	1
Total Sevan Driller	33.9	368	124.6	341
Max charter rate Sevan Brasil	35.5	386	142.3	390
less moving/standby rate Sevan Brasil	-0.5	-6	-0.8	-2
less downtime Sevan Brasil	-2.7	-29	-10.3	-28
plus bonus achieved Sevan Brasil	0.6	6	5.1	14
less penalties Sevan Brasil	-0.2	-2	-1.4	-4
less agency fees Sevan Brasil	-1.0	-11	-4.1	-11
add insurance claim Sevan Brasil	1.5	16	1.5	4
Total Sevan Brasil	33.2	361	132.3	362
Other revenue	0.7	7	0.8	1
Total Operating income	67.7	736	257.7	706
	Breakdown Operating Income
	Q4 2012
	MUSD	Avg KUSD/day	MUSD	2012 Avg KUSD/day
Max charter rate Sevan Driller	38.3	416	153.2	419
less moving/standby rate Sevan Driller	-0.4	-4	-1.3	-3
less downtime Sevan Driller	-1.6	-17	-16.4	-45
plus bonus achieved Sevan Driller	1.9	21	3.1	9
less penalties Sevan Driller	-0.8	-9	-5.0	-14
less agency fees Sevan Driller	-1.2	-13	-4.3	-12
add charter indexation adjustment for 2Q2013 and 3Q2013	0.0	0	0.0	0
add warranty claim Sevan Driller	0.0	0	-2.1	-6
add compensation for disputed items	0.0	0	2.0	5
Total Sevan Driller	36.3	395	129.3	353
Max charter rate Sevan Brasil	35.8	389	62.6	389
less moving/standby rate Sevan Brasil	0.0	0	-1.5	-10
less downtime Sevan Brasil	-11.9	-129	-15.7	-97
plus bonus achieved Sevan Brasil	0.0	0	1.2	7
less penalties Sevan Brasil	-1.9	-20	-2.2	-14
less agency fees Sevan Brasil	-0.7	-7	-1.3	-8
add insurance claim Sevan Brasil	0.0	0	0.0	0
Total Sevan Brasil	21.4	232	43.2	268
Other revenue	0.1	1	0.9	10

Note 6 – Tax (expense)/income

Tax (expense)/income
Unaudited figures in USD million	Q4 2013	2013	Q4 2012	2012
Payable tax	-2.0	-8.0	-2.0	-5.3
Calculated change in deferred tax asset	0.0	-52.9	6.7	24.7
Tax (expense)/income	-2.0	-60.9	4.7	19.3

Note 7 – Breakdown of financial expense

Breakdown Financial Expense
MUSD	Q4 2013	2013	Q4 2012	2012
Interest expense	8.0	39.9	10.4	27.7
Amortization of finance fees	1.2	47.2	3.3	7.1
Realised hedging loss/(gain)	2.0	-10.1	-0.6	2.5
Guarantee fees to Sevan Marine ASA	0.3	3.2	1.0	4.0
Commitment and guarantee fees to Seadrill	4.6	4.6	0.0	0.0
Other finance (income)/expense	-0.6	-0.4	0.3	1.1
Total financial expense	15.5	84.4	14.4	42.4

Note 8 – Breakdown of operating expense

Breakdown Operating Expense
	Q4 2013			2013
	MUSD	Avg KUSD/day	MUSD	Avg KUSD/day
Sevan Driller cash OPEX	16.8	182	67.3	184
Sevan Driller non-cash OPEX	0.7	7	2.8	8
Sevan Driller non-recurring cash OPEX	-0.1	-1	9.1	25
Sevan Brasil cash OPEX	19.1	207	66.4	182
Sevan Brasil non-cash OPEX	0.1	1	0.7	2
Sevan Brasil non-recurring cash OPEX	0.0	0	0.0	0
Pre-operational expenses	2.3	25	6.5	18
Administrative and management expenses Sevan Drilling Group	18.5	201	39.4	108
Restructuring costs	5.2	57	6.9	19
Foreign exchange (gain)/loss relating to operation	-0.4	-4	1.1	3
Total Operating Expenses	62.2	676	200.2	548

Cash OPEX is operating expenses with cash effect.

Breakdown Operating Expense
	Q4 2012			2012
	MUSD	Avg KUSD/day	MUSD	Avg KUSD/day
Sevan Driller cash OPEX	15.3	166	60.8	166
Sevan Driller non-cash OPEX	0.7	7	2.8	8
Sevan Driller non-recurring cash OPEX	0.5	6	2.5	7
Sevan Brasil cash OPEX	13.4	145	23.7	147
Sevan Brasil non-cash OPEX	0.0	0	0.0	0
Sevan Brasil non-recurring cash OPEX	2.8	30	2.9	18
Pre-operational expenses	0.3	3	2.3	6
Administrative and management expenses Sevan Drilling Group	1.3	14	23.2	63
Restructuring costs	0.0	0	0.0	0
Foreign exchange (gain)/loss relating to operation	0.4	4	0.8	2
Total Operating Expenses	34.6	376	119.0	417

Cash OPEX is operating expenses with cash effect.

Note 9 – Breakdown of current liabilities

Breakdown Current Liabilities
Unaudited figures in USD million	31/12/2013	31/12/2012
Trade creditors	25.4	45.7
Accruals for goods/service received	29.9	15.7
Other accruals	19.3	12.8
Cosco agreements liabilities	8.8	37.4
Other current liabilities	27.8	14.0
Current liabilities	111.2	125.6

Note 10 – Events after balance sheet date

The Company 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 other than an expected delay in the delivery date for Sevan Developer.

Oslo, 24 February 2014 The Board of Directors of Sevan Drilling ASA

_______________________ _______________________ _______________________

Chairman Board Member Board Member

Erling Lind Birgitte Ringstad Vartdal Benedicte Schilbred Fasmer

Board Member Board Member

_______________________ _______________________

_______________________

Per Wulff Kristian Johansen

Scott McReaken CEO