Sevan Drilling : 26.05.2016 Sevan Drilling Ltd Q1 2016

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• Operating revenue in Q1 2016 was USD 52.8 million (Q1 2015 - USD 83.1 million).

• EBITDA in Q1 2016 was USD 12.7 million (Q1 2015 - USD 38.3 million).

• Net loss in Q1 2016 was USD 20.4 million (Q1 2015 - profit of USD 2.2 million).

• On March 30, 2016 the Company announced the Sevan Driller contract with Petrobras was terminated effective December 1, 2015 and the Sevan Brasil contract with Petrobras was amended to a day rate of USD 250,000, effective February 26, 2016 through the remainder of its term to July 2018.

• On March 30, 2016 the Company announced the Sevan Driller was awarded a contract with Shell for 60 days with two 30 day options to perform non-drilling services in Brazil. The contract commenced May 19, 2016.

  Subsequent Events

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

• On April 29, 2016 the Company announced extension of the revolving credit facility to December 31, 2017 and amendments to certain covenants in its bank facility.

  Unaudited figures in USD million, except where noted	Q1 2016	Q4 2015	Q1 2015
  Operating revenue	52.8	85.9	83.1
  EBITDA (1)	12.7	36.9	38.3
  Operating (loss)/profit	(4.7)	(178.1)	19.8
  Net financial items	(16.8)	(15.0)	(17.4)
  Net (loss)/profit	(20.4)	(194.1)	2.2
  EPS - basic and diluted (USD)	(0.69)	(6.53)	0.00
  Company performance:Available days (2)	276	276	270
  Technical Utilization (3)	93.9%	98.7%	82.5%
  Economic Utilization (4)	83.4%	91.1%	81.7%

• EBITDA equals net profit/loss adding back net financial items, tax income/expense, depreciation and amortization expense and impairment expense

• Available Days are the total number of operating rig calendar days in the period. A rig is operating when accepted by the customer.

• 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.

• Economic Utilization is operating revenue divided by total potential charter revenue for the period.

For the three months ended March 31, 2016

Operating revenue was USD 52.8 million compared to USD 83.1 million in Q1 2015. The revenue decrease is explained by the Sevan Driller contract termination December 1, 2015, the reduced rate on the Sevan Brasil offset by rate efficiencies on the Sevan Brasil and Sevan Louisiana during the quarter. The Sevan Louisiana achieved a Q1 2016 technical utilization of 96.9% (80.8% in Q1 2015), and Sevan Brasil technical utilization was 90.8% (71.8% in Q1 2015).

Total operating expense was USD 57.5 million compared to USD 63.3 million in Q1 2015. Vessel operating expenses were USD 33.7 million compared to USD 40.8 million in Q1 2015. The decrease is mainly attributable to lower operating costs from the Sevan Driller being idle and continued cost savings initiatives across the fleet. General and administrative costs were USD 5.6 million compared to USD 4.1 million in Q1 2015, the increase is related to additional corporate activities part of which are reflected through higher costs from external advisors and in management services. Depreciation expenses were USD 17.4 million compared to USD 18.5 million in Q1 2015.

Net financial items amounted to USD 16.8 million in Q1 2016 compared to USD 17.4 million in Q1 2015. Interest and commitment fees on the Revolving Credit Facility ("RCF") with Seadrill decreased by USD 0.3 million. Interest expenses on the secured bank loan facility increased by USD 0.1 million.

Net loss for Q1 2016 was USD 20.4 million compared to a net profit of USD 2.2 million in Q1 2015.

Balance sheet

Cash and cash equivalents amounted to USD 36.1 million as of March 31, 2016 compared to USD 42.4 million as of December 31, 2015. During Q1 2016, interest and principal payments under the debt facility and RCF were USD 11.5 million and USD 35.0 million, respectively. As of March 31, 2016, USD 200.0 million was drawn on the RCF.

At March 31, 2016 trade receivables were USD 66.5 million, including USD 34.1 million of receivables related to administrative delays from the import authorities in Brazil for the Sevan Driller. The full balance was collected in April 2016.

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 and other market conditions.

In Q1 2016, the Sevan Drilling rigs achieved technical utilization of 93.9% and economic utilization of 83.4%. The Sevan Brasil achieved technical utilization of 90.8% working for Petroleo Brasileiro S.A. ("Petrobras") in Brazil. The contract day rate was reduced to USD 250,000 per day effective from February 26, 2016.

The Sevan Louisiana achieved 96.9% working for LLOG Bluewater Holdings LLC ("LLOG"). In April 2016, LLOG cancelled the 365 day extension that was previously agreed in November 2014.

The Sevan Driller remained idle for the quarter with reduced staffing and operating costs. The Sevan Driller has been awarded a well intervention contract by Shell in Brazil for 60 days with two 30 day options commencing May 19, 2016.

The Sevan Developer remained ready for delivery (warm stacked) at the Cosco shipyard in China. In April 2016, the second six-month option period to extend the deferral period to October 15, 2016 was exercised. The final delivery instalment has been amended to $473.4 million, representing 90% of the $526.0 million contract price. In Q1 2016 Cosco has refunded 5%, or $26.3 million, of the contract value plus interest. Sevan Developer remains in China at the Cosco Shipyard and the Company continues marketing the rig for an acceptable drilling contract where financing can be obtained to allow delivery.

At May 25, 2016 the fleet's contracted backlog revenue is USD 323 million, excluding option and extension periods.

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.

As a result of the decline in oil prices and reductions in oil company expenditures, the offshore drilling market is currently entering its third year of a downturn. Rig owners continue to bid extremely competitively for available work and the focus has been on rig utilization rather then returns.

Contracting activity, including blend and extend deals, have slowed and more rigs have become available through early terminations as rig demand has softened. More scrapping of older rigs has occurred in this last quarter, however the pace of scrapping has not offset the oversupplied rig market and day rates continue to be depressed. Sevan Drilling's long-term outlook is that a rebalancing of the market will occur as field production declines from lowered activities, however visibility of the timing and the extent of a recovery remain uncertain.

In March, the Company concluded extended commercial negotiations with Petrobras that began in mid-2015. It was mutually agreed to early terminate the Sevan Driller contract and lower the day rate of the Sevan Brasil. This was the preferred alternative to potentially having both contracts terminated and exposing the Company to a protracted legal challenge with an uncertain outcome. With the Sevan Driller being available earlier, short-term employment with Shell was secured and the Sevan Driller commenced operations in May 2016.

The Sevan Developer delivery deferral period was extended in April 2016 by six months to October 2016 and 5% of the contract price, USD 26.3 million, and other associated costs was refunded. While the current market conditions are not indicating demand for additional rig capacity, this extension provides the Company with the ability to take delivery when an acceptable contract can be obtained in addition to improving its financial condition.