Seadrill Limited — Interim / Quarterly Report 2016

Nov 22, 2016

SEVAN DRILLING LIMITED

INTERIM FINANCIAL REPORT THIRD QUARTER 2016

Highlights Third Quarter 2016

• Economic Utilization of 99.4%
• Operating revenue of USD 59.6 million
• EBITDA of USD 20.2 million
• Non-cash asset impairment charge of USD 37.5 million
• Net loss of USD 53.1 million

Subsequent Events

• On October 14, 2016 Sevan Developer exercised the third six-month option of the delivery deferral agreement with Cosco Shipyard, which extends the deferral period to April 15, 2017.

Unaudited figures in USD million, except where noted	Q3 2016	Q2 2016	Q3 2015	YTD 2016	YTD 2015
Operating revenue	59.6	61.5	98.4	173.9	280.9
(1) EBITDA	20.2	29.1	59.5	62.0	149.9
Operating (loss)/profit	(34.0)	12.5	41.7	(26.2)	94.5
Net financial items	(16.9)	(18.5)	(17.6)	(52.2)	(52.3)
Net (loss)/profit	(53.1)	(7.4)	26.4	(80.9)	42.3
EPS - basic and diluted (USD)	(1.79)	(0.25)	0.89	(2.72)	1.42
Company performance:
Available days (2)	207	224	276	707	819
Technical Utilization (3)	98.8%	98.6%	96.5%	97.8%	92.1%
Economic Utilization (4)	99.4%	98.6%	94.6%	96.5%	90.7%

• (1) EBITDA equals net profit/loss adding back net financial items, tax income/expense, depreciation and amortization expense and impairment 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 the actual number of revenue earning days divided by Available Days. A revenue earning day is defined as a day on which a rig earns its day rate after commencement of operations.
• (4) Economic Utilization is total operating revenue, excluding bonuses, divided by total potential charter revenue for the period.

Financial performance summary

For the three months ended September 30, 2016

Operating revenue

Operating revenue was USD 59.6 million compared to USD 98.4 million in Q3 2015. The decrease in revenue is primarily due to the Sevan Driller operating at a lower day rate on the well service contract which concluded on July 23, 2016. In addition to the Sevan Brasil operating at an amended lower day rate for the full quarter. The Sevan Louisiana achieved a Q3 2016 technical utilization while on contract of 98.3% (97.5% in Q3 2015), Sevan Brasil 99.3% (91.2% in Q3 2015) and Sevan Driller for the days under contract was 98.7% (100.0% in Q3 2015).

Total Operating expenses

Total operating expenses were USD 93.6 million compared to USD 56.7 million in Q3 2015. Vessel operating expenses were USD 35.8 million compared to USD 34.1 million in Q3 2015. The increase is mainly attributable to costs relating to the mobilization of Sevan Driller to China offset by further cost savings in the period. General and administrative costs were USD 3.7 million compared to USD 3.3 million in Q3 2015. Depreciation expenses were USD 16.7 million compared to USD 17.8 million in Q3 2015. A non-cash impairment charge of USD 37.5 million was recognized in the quarter of which there was no comparative. An impairment of USD 9.6 million was recognized on Sevan Driller, USD 2.1 million on Sevan Brasil and USD 25.8 million on Sevan Louisiana.

Net financial items

Net financial items amounted to USD 16.9 million in Q3 2016 compared to USD 17.6 million in Q3 2015. Interest and commitment fees on the Revolving Credit Facility ("RCF") with Seadrill decreased by USD 0.1 million. Interest expenses on the secured bank loan facility decreased by USD 0.7 million.

Net loss for Q3 2016 was USD 53.1 million compared to a net profit of USD 26.4 million in Q3 2015.

For the nine months ended September 30, 2016

Operating revenue

Operating revenue was USD 173.9 million for the nine months ended September 30, 2016 compared to USD 280.9 million for the comparative period in 2015. The decrease in revenue is primarily due to the Sevan Driller being idle for four months during the current year and then operating for three months on a well service program at a lower day rate. The Sevan Brasil operated at a reduced day rate during the nine months in 2016.

Total Operating expenses

Total operating expenses were USD 200.1 million compared to USD 186.4 million in the comparative period in 2015. Vessel operating expenses decreased by USD 20.8 million, primarily attributable to lower operating costs during the idle time on the Sevan Driller and continued cost saving initiatives across the fleet, offset by costs relating to commencing the mobilization of the Sevan Driller to China. General and administrative costs increased by USD 1.8 million due additional corporate activities part of which are reflected through higher costs from external advisers and in management services. Anon-cash impairment charge of USD 37.5 million was recognized in the quarter of which there was no comparative.

Net financial items

Net financial items amounted to USD 52.2 million for the nine months ended September 30, 2016 compared to USD 52.3 million in 2015. Interest and commitment fees on the Revolving Credit Facility ("RCF") with Seadrill decreased by USD 1.0 million.

Net loss was USD 80.9 million for the nine months ended September 30, 2016 compared to a net profit of USD 42.3 million for the comparative period in 2015.

Balance sheet

Cash and cash equivalents amounted to USD 22.4 million as of September 30, 2016 compared to USD 42.4 million as of December 31, 2015. During Q3 2016, interest and principal payments under the debt facility and RCF were USD 11.8 million and USD 35.0 million, respectively. As of September 30, 2016, USD 185.0 million was drawn on the RCF after repayments were made in the quarter.

Sevan Drilling Limited ("Sevan Drilling") is preparing its accounts on the assumption that the company is a going concern. Liquidity remains sensitive to performance of the rigs under their contracts, the continued availability of the RCF with Seadrill, and other market conditions.

Operations performance summary

In Q3 2016, the Sevan Drilling rigs achieved technical utilization of 98.8% and economic utilization of 99.4%.

The Sevan Brasil achieved technical utilization of 99.3% working for Petroleo Brasileiro S.A. ("Petrobras") in Brazil. The Sevan Louisiana achieved 98.3% working for LLOG Bluewater Holdings LLC ("LLOG").

The Sevan Driller achieved 98.7% working for Shell do Brasil ("Shell") in Brazil. The rig concluded Shell's well service program on July 23, and is mobilizing to an idle location in China. The rig will continue to be marketed while in its idle period.

The Sevan Developer remained ready for delivery (warm stacked) at the Cosco shipyard in China. In October 2016, the third six-month option period to extend the deferral period to April 15, 2017 was exercised. As part of the extension USD 26.3 million was refunded and the delivery installment was amended to USD 499.7 million. Sevan Developer continues to be marketed for an acceptable drilling contract where financing can be obtained to allow delivery.

At November 22, 2016 the fleet's contracted backlog revenue is USD 220 million, excluding option and extension periods.

Other items

During the second quarter of 2015, Sevan Drilling initiated an internal investigation regarding activities involving an agent under the Company's drilling contracts with Petrobras in Brazil. These contracts were entered into prior to the separation from the Sevan Marine Group and the subsequent listing in May 2011. The Company continues its investigation into the activities dating back to the separation from Sevan Marine. Reference is made to Note 10 of the interim financial statements for further details.

Outlook

While our long term view of the market for high specification drilling rigs remains positive, in the near term the offshore drilling sector remains extremely challenging. Oil prices remained in the \$40-50 range during the third quarter, a level that is not sufficient to reverse the declines in oil company upstream spending. It is expected that upstream spending will again decline in 2017, albeit less than previous reductions of approximately 27% in 2016 and 24% in 2015.

While the forecasted decline in spending sets the stage for another challenging year in the offshore drilling business it is important to recognize the resetting of costs across the value chain. This may facilitate increased activity on a year over year basis with only a marginal increase in commodity prices if accompanied by pricing stability.

The current downturn in the floater market now has the distinction of being the worst downturn in the history of offshore drilling both in terms of duration and absolute demand. The peak to current demand drop of 40% is double the average witnessed in prior cycles. There is an increasingly active market for short term work, albeit at operating cash flow breakeven dayrates. Even with this small improvement from a very low base, utilization in the floater market will likely gets worse before it improves.

The Sevan Driller continues its mobilization to China after it completed a short-term well service contract with Shell do Brasil in July. The rig is marketed globally and specifically targeting clients with well programs in challenging drilling environments. The cylindrical design continues to demonstrate it can efficiently operate in strong ocean currents and variable wave directions. The Company is evaluating when to install the extended bilge keel on the Sevan Driller which will bring the rig's specification similar to the other rigs in the Sevan fleet and increase marketability.

In October 2016, the Sevan Developer delivery deferral period was extended by six months to April 2017, USD 26.3 million plus associated costs was refunded, and the final delivery installment was amended to 95% of the contract price. The Company continues to market the rig for an acceptable drilling contract and discuss alternatives with Cosco related to the final investment balance.

Good progress has been made on the overall terms and structure of an agreement with our banks that would reprofile our secured credit facilities to mature in the period from 2020 to 2023, reduce our fixed amortization obligations and amend financial covenants. We have initiated engagement with stakeholders on the other key elements of the plan and we now expect agreement to be reached by the end of April 2017.

November 22, 2016 The Board of Directors Sevan Drilling Limited Hamilton, Bermuda

Questions should be directed to Sevan Drilling Management AS represented by:

Scott McReaken, Chief Executive Officer

Interim and Preliminary 2016 financial statements

Consolidated Statement of profit of loss

		Three months ended September 30,		Nine months ended September 30,
Unaudited figures in USD million	Note	2016	2015	2016	2015
Operating revenue		59.6	98.4	173.9	280.9
Operating expense		(35.8)	(34.1)	(97.3)	(118.1)
General & administrative expense		(3.7)	(3.3)	(13.1)	(11.3)
Depreciation and amortization	4	(16.7)	(17.8)	(50.7)	(55.4)
Impairment	4	(37.5)	—	(37.5)	—
Foreign exchange gain/(loss) related to operations		0.1	(1.5)	(1.5)	(1.6)
Total operating expense		(93.6)	(56.7)	(200.1)	(186.4)
Operating (loss)/profit		(34.0)	41.7	(26.2)	94.5
Financial expense	5	(16.9)	(17.6)	(52.2)	(52.3)
Net financial items		(16.9)	(17.6)	(52.2)	(52.3)
(Loss)/profit before tax		(50.9)	24.1	(78.4)	42.2
Tax (expense)/credit		(2.2)	2.3	(2.5)	0.1
Net (loss)/profit		(53.1)	26.4	(80.9)	42.3
Attributable to:
Equity holders of the Company		(53.1)	26.4	(80.9)	42.3
Earnings per share for (loss)/profit attributable to the equity holders of the Company during the period (USD per

share): Basic and diluted (1.79) 0.89 (2.72) 1.42

Consolidated Statement of Comprehensive Income Three months ended September 30, Nine months ended September 30, Unaudited figures in USD million Note 2016 2015 2016 2015 Net (loss)/profit (53.1) 26.4 (80.9) 42.3 Items that may be reclassified to profit or loss Foreign currency translation — 0.2 — 0.1 Total Comprehensive (loss)/profit (53.1) 26.6 (80.9) 42.4 Attributable to: Equity holders of the Company (53.1) 26.6 (80.9) 42.4

Interim financial statements (continued)

Consolidated Balance Sheet
Unaudited figures in USD million	Note	As at September 30, 2016	As at December 31, 2015
ASSETS
Drilling rigs	4	1,457.7	1,565.5
Other fixed assets	4	0.3	0.6
Other non-current assets	6	1.7	14.7
Total non-current assets		1,459.7	1,580.8
Inventories		51.4	51.3
Trade and other receivables	7	54.8	79.2
Cash and cash equivalents		22.4	42.4
Total current assets		128.6	172.9
Total assets		1,588.3	1,753.7
EQUITY
Share capital	1	3.0	3.0
Share premium		713.5	713.5
Other equity		(391.5)	(310.6)
Total equity		325.0	405.9
LIABILITIES
Non-current portion of bank borrowings	5	834.8	937.7
Non-current loan from related party	5	185.0	—
Other non-current liabilities		—	1.7
Total non-current liabilities		1,019.8	939.4
Trade and other payables		32.7	38.0
Current portion of bank borrowings	5	133.8	134.6
Current portion of loan from related party	5	—	170.0
Other current liabilities	8,9	77.0	65.8
Total current liabilities		243.5	408.4
Total liabilities		1,263.3	1,347.8
Total equity and liabilities		1,588.3	1,753.7

Interim financial statements (continued)

Consolidated Statement of Changes in Equity

Unaudited figures in USD million	Share Capital	Share Premium	General Reserve	Equity Settled Employee Benefits Reserve	Retained Earnings	Total Equity
Equity as at January 1, 2015	108.6	666.0	280.0	2.4	(499.3)	557.7
Net loss	—	—	—	—	(151.8)	(151.8)
Foreign currency translation	—	—	—	—	—	—
Capital decrease of Sevan Drilling ASA	(108.5)	—	—	—	108.5	—
Parent Migration	2.9	47.5	(280.0)	—	229.6	—
Equity as at December 31, 2015	3.0	713.5	—	2.4	(313.0)	405.9
Equity as at January 1, 2016	3.0	713.5	—	2.4	(313.0)	405.9
Net loss	—	—	—	—	(80.9)	(80.9)
Equity as at September 30, 2016	3.0	713.5	—	2.4	(393.9)	325.0

Interim financial statements (continued)

Consolidated Cash Flow Statement

Unaudited figures in USD million	Note	Nine months ended September 30, 2016	Nine months ended September 30, 2015
Cash flows from operating activities
Cash from operations		84.7	109.2
Interest paid	5	(37.2)	(38.5)
Net cash generated from operating activities		47.5	70.7
Cash flows from investment activities
Purchases of property, plant and equipment and other non
current assets		(3.9)	(16.9)
Refund of yard installment		29.0	—
Net cash flow generated from/(used in) investment activities		25.1	(16.9)
Cash flows from financing activities
Proceeds from interest-bearing debt	5	85.0	55.0
Repayment of interest-bearing debt	5	(175.0)	(105.1)
Debt fees paid		(3.3)	—
Net cash flow used in financing activities		(93.3)	(50.1)
Net cash flow for the period		(20.7)	3.7
Foreign Exchange on Cash and Cash Equivalents		0.7	—
Cash balance at beginning of period		42.4	30.2
Cash balance at end of period		22.4	33.9

Notes to the Interim and Preliminary 2016 financial statements

Note 1 - Organization and basis of preparation

General information - Sevan Drilling Limited

Sevan Drilling Limited (the "Company") and its subsidiaries (the Company and the subsidiaries collectively referred to as the "Group") is an international offshore drilling contractor specializing in the ultra-deepwater segment.

Sevan Drilling Limited was incorporated in Bermuda under the Companies Act on December 20, 2013 as an exempted company limited by shares. Its shares of common stock have been listed under the symbol "SEVDR" on the Oslo Stock Exchange (Oslo Børs).

The Group has three ultra-deepwater drilling rigs in operation (the Sevan Driller, Sevan Brasil, and Sevan Louisiana) and a fourth (the Sevan Developer) waiting delivery. Sevan Brasil is operating under a contract with Petrobras in Brazil expiring in July 2018. Sevan Louisiana is operating under a contract with LLOG Bluewater Holding LLC ("LLOG") expiring in May 2017.

Sevan Driller operated under a 60 day well intervention contract with Shell do Brasil, which concluded earning revenue on July 23 and is mobilizing to China where it will remain idle and actively marketed. Sevan Developer delivery period has been deferred until April 15, 2017, following agreements concluded in Q4 2014 and most recently amended in October 2016. The delivery can be extended six months further at the Group's option up to October 2017.

Basis of preparation

The consolidated financial statements include the assets and liabilities of the Company, its majority owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated on consolidation. Effective June 30, 2016 Sevan Drilling ASA was recapitalized as a wholly owned subsidiary of the group and continues to be consolidated.

These consolidated financial statements as at and for the three and nine months ended September 30, 2016 (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 2015 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 amortized cost with variable interest rates. Management believes that the carrying value, excluding financing fees, 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 2015 Annual Report. The Interim Financial Statements are unaudited and were approved by the Board of Directors on November 22, 2016.

Note 2 - Results of the interim period

During the three months ending September 30, 2016, the Group earned USD 59.6 million of revenue from the operation of Sevan Brasil and Sevan Driller in Brazil and Sevan Louisiana in the US Gulf of Mexico.

Total operating expenses for Q3 2016 were USD 93.6 million. Vessel operating expenses in Q3 2016 amounted to USD 35.8 million, which result from rigs operating under contracts. General and administrative costs were USD 3.7 million and depreciation and amortization were USD 16.7 million.

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.

Net financial items in Q3 2016 amounted to USD 16.9 million and included amortization of deferred financing costs, interest expense, and commitment and guarantee fees. The Group performed its obligations under its bank facility and the RCF in Q3 2016.

The Group drew USD 25.0 million under the RCF in Q3 2016, and repaid USD 35.0 million of principal on the current bank facility during the period. The closing cash and cash equivalents were USD 22.4 million at September 30, 2016.

Note 3 - Segment information

Basis of segmentation

The Board of Directors of the Company, which is identified as the chief operating decision maker in the Group ("CODM"), aggregates the rigs into a single reporting unit representing the fleet as a whole.

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, EBITDAand utilization rates.

Note 4 - Property, plant and equipment

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.

	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 December 31, 2015
Cost	95.2	2,037.1	2,132.3	9.7	2,142.0
Accumulated impairment	—	(298.1)	(298.1)	—	(298.1)
Accumulated depreciation	—	(268.7)	(268.7)	(9.1)	(277.8)
Net book value	95.2	1,470.3	1,565.5	0.6	1,566.1
As at September 30, 2016
Cost	66.2	2,046.2	2,112.4	9.7	2,122.1
Accumulated impairment	—	(335.6)	(335.6)	—	(335.6)
Accumulated depreciation	—	(319.1)	(319.1)	(9.4)	(328.5)
Net book value	66.2	1,391.5	1,457.7	0.3	1,458.0
Nine months ended September 30, 2016
Beginning net book value	95.2	1,470.3	1,565.5	0.6	1,566.1
Additions	—	9.1	9.1	—	9.1
Refund from yard	(29.0)	—	(29.0)	—	(29.0)
Depreciation charge	—	(50.4)	(50.4)	(0.3)	(50.7)
Impairment	—	(37.5)	(37.5)	—	(37.5)
Ending net book value	66.2	1,391.5	1,457.7	0.3	1,458.0

The closing net book values of the Company's drilling units were as follows:

Unaudited figures in USD million	As at September 30, 2016	As at December 31, 2015
Rig net book value
Sevan Driller	388.0	408.0
Sevan Brasil	498.9	511.6
Sevan Louisiana	504.6	550.7
Sevan Developer	66.2	95.2
Total	1,457.7	1,565.5

Sevan Developer - construction in progress

In October 2014, the Group entered an agreement with Cosco to defer the delivery date for 12 months with options to extend the date for subsequent periods of 6 months until October 2017. At the end of the deferral period and if options to extend are not exercised, the construction contract will terminate and the remaining USD 52.6 million initial investment will be refunded and the investment impaired. Refund guarantees have been provided for the full deferral period. Delivery will occur if and when a contract that can support financing of the final delivery installment is secured.

In April 2016, the Sevan Developer deferral agreement was extended to October, 15 2016 and as part of the extension, USD 26.3 million was refunded and the delivery installment was amended to USD 473.4 million on exercising the second deferral.

In October 2016, the Sevan Developer delivery deferral agreement was extended to April 15, 2017. As part of the extension USD 26.3 million was refunded and the delivery installment was amended to USD 499.7 million.

Sevan Drilling Rig VI Pte Ltd has the option to cancel the construction contract on each of the deferred delivery dates. Cosco will, in such case, refund the remaining installments paid under the construction contract. Cosco provided Sevan Drilling Rig VI Pte Ltd security through bank refund guarantees, effective for the 36 month potential deferral period beginning in October 2014.

Sevan Developer will remain in China at the Cosco Shipyard and the Company will continue marketing the rig for an acceptable drilling contract where financing can be obtained to allow delivery.

Impairment Analysis

The Company reviews the carrying amounts of its tangible assets at the end of each reporting period to determine whether there is any indication that those assets may be impaired. The net asset value of the Group exceeded its market capitalization as at September 30, 2016. This is identified as an indicator of impairment of assets. As a result, each of the Group's rigs was, as of September 30, 2016 identified as a cash-generating unit and tested for impairment.

The recoverable values of the rigs were calculated using an income method discounted cash flow. 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 post-tax weighted average cost of capital (WACC) of 11%. Estimated future cash flows are based on the Group's five-year forecast and utilize several assumptions including forecasted operational expense, operational taxes, utilization and day rates. Day rates are based on current contract amounts for the remaining contract term and expected market rates in the rigs' recontract years for forecasts beyond the contracted periods. The Company has assumed long-term day rates based on cyclical averages, but no growth above these expected market rates has been assumed for the remainder of the rig lives beyond the forecast period.

Due to the continued decline in demand in the ultra deep-water drilling market, the timeline for a projected recovery thereof, Management concluded that recoverable values of Sevan Driller, Sevan Brasil and Sevan Louisiana are less than their carrying amounts. Therefore, the carrying amounts of these rigs have been reduced to their estimated recoverable values through a non-cash impairment charge. Accordingly the Sevan Driller will be impaired by USD 9.6 million, Sevan Brasil by USD 2.1 million and Sevan Louisiana USD 25.8 million.

Based on sensitivity analysis performed, the Company believes that reasonable movements in the key assumptions could result in a further impairment loss to be recognized. Thus there is a possibility the Group may recognize an impairment in the following year if the facts underlying the key assumptions change over the coming year. An increase in the WACC of 100 basis points to 12% would increase the impairment by approximately USD 68.9 million, and a reduction of expected market rates in the re-contract years of 5% would increase the impairment by approximately USD 134.1 million over the whole fleet.

Note 5 - Financing activities

In October 2013, the Group entered into a USD 1,750 million secured bank loan facility with ING as agent for a syndicate of lenders. The facility was composed of a USD 350 million export credit facility provided by GIEK and a USD 1,400 million commercial facility provided by a syndicate of several commercial banks. The commercial facility had two tranches. Tranche A in the amount of USD 1,400 million (USD 200 million GIEK and USD 1,200 million commercial) and Tranche B in the amount of USD 350 million (USD 150 million GIEK and USD 200 million commercial).

Tranche A was drawn in October 2013 and used to, inter alia, refinance existing debt at the time. Tranche B was intended to be used to finance the delivery installment for Sevan Developer, and was cancelled in Q4 2014 as a consequence of the agreement made with Cosco to defer delivery of Sevan Developer. Upon delivery, new financing will have to be secured to cover the final installment. The availability of such financing is expected to depend on a satisfactory drilling contract having been secured for Sevan Developer and lending capacity at the time.

The GIEK tranche is extended to September 2023 and incurs interest on the amounts outstanding at a rate of LIBOR + 2.5%, payable quarterly in arrears. The commercial tranche matures in September 2018 and incurs interest on the amounts outstanding at a rate of LIBOR + 2.9%, payable quarterly in arrears.

The Company's bank facility is guaranteed by Seadrill at a cost of 1.0% per annum on amounts drawn.

Effective December 29, 2014 the Revolving Credit Facility ("RCF") with Seadrill was increased to USD 300 million and on April 28, 2016 it was extended to December 31, 2017. As a result the RCF has been reclassified as a non-current liability in the quarter. The RCF is secured with second priority in the Group's assets and incurs interest on drawn amounts at a rate of LIBOR + 6.0% (+5.5% previously), payable quarterly in arrears. There is a commitment fee of 2.4% (2.2% previously) per annum on the undrawn balance of the RCF.

		Financing Activities
Unaudited figures in USD million	GIEK Tranche	Commercial Tranche	Loan fees	Total bank facility	RCF with Seadrill	Total
As at December 31, 2015
Principal outstanding	151.3	933.6	(12.6)	1,072.3	170.0	1,242.3
Current portion	21.7	118.3	(5.4)	134.6	170.0	304.6
Non-current portion	129.6	815.3	(7.2)	937.7	—	937.7
Undrawn facility (available for utilization)	—	—	—	—	130.0	130.0
Nine months ended September 30, 2016
Additional drawdowns	—	—	—	—	85.0	85.0
Additional loan fees			(3.3)	(3.3)		(3.3)
Amortization of deferred financing costs1			4.6	4.6		4.6
Principal repayments	(16.2)	(88.8)	—	(105.0)	(70.0)	(175.0)
Interest payments	(1.6)	(26.3)	—	(27.9)	(9.3)	(37.2)
As at September 30, 2016
Principal outstanding	135.1	844.8	(11.3)	968.6	185.0	1,153.6
Current portion	21.7	118.3	(6.2)	133.8	—	133.8
Non-current portion	113.4	726.5	(5.1)	834.8	185.0	1,019.8
Undrawn facility (available for utilization)	—	—	—	—	115.0	115.0

¹Deferred financing costs were recognized on the bank facility as a whole and not allocated to the individual tranches

	Three months ended September 30,		Nine months ended September 30,
Unaudited figures in USD million	2016	2015	2016	2015
Financial expense
Interest expense	9.2	9.9	28.3	29.0
Amortization of finance fees	1.6	1.5	4.6	5.0
Interest on RCF, commitment and guarantee fees to Seadrill	6.1	6.2	19.3	18.3
Total	16.9	17.6	52.2	52.3

Note 6 - Other non-current assets

Unaudited figures in USD million	As at September 30, 2016	As at December 31, 2015
Net late delivery penalties	0.6	1.4
Net mobilization expense	0.5	12.2
Other non-current assets	0.6	1.1
Total	1.7	14.7

Note 7 - Trade and other receivables

Unaudited figures in USD million	As at September 30, 2016	As at December 31, 2015
Trade receivables	40.8	67.3
Other receivables	14.0	11.9
Total	54.8	79.2

Note 8 - Other current liabilities

Unaudited figures in USD million	As at September 30, 2016	As at December 31, 2015
Income and gross revenue tax payable	1.4	0.2
Other taxes payable	6.4	6.0
Related party payable	51.3	45.3
Other current liabilities	17.9	14.3
Total	77.0	65.8

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 300 million) of which USD 185 million was outstanding as of September 30, 2016. Seadrill charged the Group interest on the RCF and guarantee and commitment fees in a total amount of USD 6.1 million and USD 19.3 million during the three and nine months ended September 30, 2016 respectively.

As a consequence of being responsible for the day-to-day operation of the Group's rigs, Seadrill entities incur direct costs on behalf of the Group. Seadrill also provides executive services, management support and administrative services to the Group. The total fees charged for operating and management services were USD 6.9 million and USD 25.3 million for the three and nine months ended September 30, 2016.

The Group had a total current liability (including the commitment, guarantee and management fees mentioned above) of USD 51.3 million to Seadrill as at September 30, 2016 (compared to USD 45.3 million as at December 31, 2015).

The Group has a total current asset with North Atlantic Drilling of USD 0.4 million for the provision of executive services. The total fees charged were USD 0.1 million and USD 0.4 million for the three and nine months ended September 30, 2016.

Seadrill Limited issued a guarantee for the obligations under the well intervention program contract for the Sevan Driller. The guarantee is capped at USD 20.0 million matured in July 2016 on conclusion of the contract.

Note 10 - Contingencies

In 2011, Sevan Drilling was separated out from the 100% ownership of Sevan Marine ASA and listed separately on the Oslo Stock Exchange. On October 16, 2015, Sevan Marine ASA issued an Oslo Stock Exchange notice advising that its Board had received a report from external counsel it had engaged to investigate allegations of improper conduct related to historical contracts with Petrobras. Sevan Marine handed over the report to the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime ("ØKOKRIM"). The report concluded that it was more likely than not that illegal conduct had occurred, in the form of improper payments to obtain business, when Petrobras awarded contracts to subsidiaries of Sevan Marine ASA between 2005-2008.

Against this background, the Company reports that Sevan Drilling ASAhas been accused of breaches of Sections 276 a and 276 b of the Norwegian Criminal Code in respect of payments made in connection with the performance during 2012 to 2015 of drilling contracts originally awarded by Petrobras to subsidiaries of Sevan Marine ASA in the period between 2005-2008. In connection with the accusation, ØKOKRIM has performed a search and seizure in the Company's offices. The Company is co-operating with the authorities in identifying and making available all documents, which the authorities consider relevant.

The Company has also voluntarily approached the Brazilian authorities with regard to these matters. The Company's own investigation into these matters in ongoing but to date has uncovered no evidence of improper conduct by the Company.

We cannot predict the scope or ultimate outcome of the ØKOKRIM investigation. We also cannot predict whether any other governmental authority will seek to investigate this matter, or if a proceeding were opened, the scope or ultimate outcome of any such investigation. As a result no loss contingency has been recognized in the Company's consolidated financial statements.

Note 11 - Events after balance sheet date

The Group has evaluated subsequent events after the balance sheet date through the date the accompanying Consolidated Financial Statements became available to be issued.

On October 14, 2016 Sevan Developer exercised the third six-month option of the delivery deferral agreement with Cosco Shipyard, which extends the deferral period to April 15, 2017.