PROSPECTUS

SEADRILL LIMITED (Organisation number: 36832)

Listing on Oslo Børs

FRN Seadrill Limited Senior Unsecured Bond Issue 2012/2014

ISIN NO 001 063 611.1 ________________________________________________________

THIS PROSPECTUS SERVES AS A LISTING PROSPECTUS ONLY AS REQUIRED BY NORWEGIAN LAW AND REGULATIONS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO BUY, SUBSCRIBE OR SELL ANY OF THE SECURITIES DESCRIBED HEREIN, AND NO SECURITIES ARE BEING OFFERED OR SOLD PURSUANT TO IT. THIS PROSPECTUS HAS NOT BEEN APPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION.

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Managers:

Nordea Markets Pareto Securities RS Platou Markets AS Swedbank

First Securities

16 January 2013

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Important information

This Prospectus has been prepared by Seadrill Limited (the “Company” and taken together with its

subsidiaries “Seadrill”) in order to provide information about the Company and its business in connection with

the listing on the Oslo Stock Exchange of bonds FRN Seadrill Limited Senior Unsecured Bond Issue 2012/ 2014 (the “Bond Issue”).

For the definitions of terms used throughout this Prospectus, see Section 11 “Definitions and Glossary of Terms”.

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The Company has furnished the information in this Prospectus and accepts responsibility for the information contained herein. The Managers make no representation or warranty, expressed or implied, as to the accuracy

or completeness of such information, and nothing contained in this Prospectus is, nor shall be relied upon as, a promise or representation by the Managers. This Prospectus does not contain any offer to subscribe and/or

purchase the Bonds. The Norwegian Financial Supervisory Authority has reviewed and approved this Prospectus in accordance with Sections 7-7 and 7-8 of the Norwegian Securities Trading Act. The Norwegian

Financial Supervisory Authority's control and approval in this respect is limited to whether the issuer has included descriptions according to a pre-defined list of content requirements. The Norwegian Financial

Supervisory Authority has not verified or approved the accuracy or completeness of the information provided in

this Prospectus. It is the Company's responsibility to ensure that the information in the prospectus is accurate

and complete. Furthermore, the Norwegian Financial Supervisory Authority has not made any sort of control or approval of the corporate matters described in or otherwise included in the prospectus.

All inquiries relating to this Prospectus should be directed to the Company or the Managers. No other person has been authorized to give any information about, or make any representation on behalf of, the Company in

connection with the Bond Issue, and, if given or made, such other information or representation must not be relied upon as having been authorized by the Company or the Managers.

The information contained herein is as of the date hereof and subject to change, completion or amendment without notice. There may have been changes affecting the Company or its subsidiaries subsequent to the date

of this Prospectus. The delivery of this Prospectus at any time after the date hereof will not, under any circumstances, create any implication that there has been no change in the Company’s affairs since the date

hereof or that the information set forth in this Prospectus is correct as of any time since its date. However, in accordance with Section 7-15 of the Norwegian Securities Trading Act, every new factor, material mistake or

inaccuracy which may have significance for the assessment of the Bonds and which is brought to light between the publication of this Prospectus and the listing of the Bonds, respectively, on Oslo Børs, will to the extent

required be included in a supplement to this Prospectus.

The distribution of this Prospectus in certain jurisdictions may be restricted by law. The Company

and the Managers require persons in possession of the Prospectus to inform themselves about and to observe any such restrictions. The Prospectus serves as a listing Prospectus as required by

applicable laws and regulations. The Prospectus does not constitute an offer to buy, subscribe or sell any of the securities described herein, and no securities are being offered or sold pursuant to it.

The Bonds have not been and will not be registered under the United States Securities Act of 1933,

as amended (the “U.S. Securities Act”) and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration

requirements of the U.S. Securities Act and applicable state securities laws.

The contents of this Prospectus shall not be construed as legal, business or tax advice. Each reader of this

Prospectus should consult its own legal, business or tax advisor as to legal, business or tax advice. If investors are in any doubt about the contents of this Prospectus, they should consult their stockbroker, bank manager,

lawyer, accountant or other professional adviser.

In the ordinary course of its business, the Managers and certain of its affiliates have engaged, and may

continue to engage, in investment and commercial banking transactions with the Issuer and its subsidiaries.

Investing in the Bonds involves certain inherent risks. See Section 1 “Risk Factors” of this

Prospectus.

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TABLE OF CONTENTS

1 RISK FACTORS ................................................................................................................................ 4 1.1 Risks relating to the industry ................................................................................................ 4 1.2 Risks relating to Seadrill ..................................................................................................... 13 1.3 Risks Relating to the Bonds and Seadrill’s other indebtedness ................................................. 20

2 RESPONSIBILITY FOR THE PROSPECTUS .......................................................................................... 25

3 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS .................................................... 26

4 THE BOND ISSUE........................................................................................................................... 27 4.1 Use of proceeds ................................................................................................................. 27 4.2 Terms of the Bonds............................................................................................................ 27

5 COMPANY OVERVIEW ..................................................................................................................... 30 5.1 Incorporation, registered office and registration number ......................................................... 30 5.2 Business overview ............................................................................................................. 30 5.3 The Fleet .......................................................................................................................... 31 5.4 Management of the Company .............................................................................................. 33 5.5 Contract Status ................................................................................................................. 33 5.6 Organizational structure ..................................................................................................... 36 5.7 Competitive position .......................................................................................................... 38

6 BOARD OF DIRECTORS AND MANAGEMENT ....................................................................................... 40 6.1 Board of Directors ............................................................................................................. 40 6.2 Executive Management team .............................................................................................. 41 6.3 Conflict of interests ............................................................................................................ 43

7 MAJOR SHAREHOLDERS ................................................................................................................. 44

8 FINANCIAL INFORMATION .............................................................................................................. 45 8.1 Introduction ...................................................................................................................... 45 8.2 Consolidated statements of income ...................................................................................... 46 8.3 Consolidated balance sheet ................................................................................................. 48 8.4 Consolidated statement of cash flows ................................................................................... 49 8.5 Consolidated statement of invested equity ............................................................................ 52 8.6 Legal and arbitration proceedings ........................................................................................ 53 8.7 Significant change in the Company’s financial or trading position ............................................. 53

9 TREND INFORMATION .................................................................................................................... 54 9.1 Material factors affecting Seadrill’s prospects ........................................................................ 54 9.2 Material contracts .............................................................................................................. 56

10 ADDITIONAL INFORMATION ............................................................................................................ 57 10.1 Third party information ...................................................................................................... 57 10.2 Documents on Display ........................................................................................................ 57 10.3 Statutory auditors ............................................................................................................. 57 10.4 Advisors ........................................................................................................................... 57 10.5 Expenses .......................................................................................................................... 57 10.6 Documents incorporated by references ................................................................................. 57

11 DEFINITIONS AND GLOSSARY OF TERMS.......................................................................................... 59

APPENDICES:

1 Bond Agreement

2 By-laws

3 Third Quarter Report for 2012

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1 RISK FACTORS

Investing in the Bonds involves inherent risks. This Section 1 “Risk factors” contains an overview of the risk

factors that are known to the Company and considered material by it. If any of the events or circumstances

discussed below occurs, Seadrill’s business, financial condition, results of operations and cash flow could be

materially and adversely affected, and this may have a material adverse effect on the Company’s ability to meet its obligations (including the payment of principal and interest) under the Bonds.

Prospective investors should carefully consider all the information set out in this Prospectus and particularly the risk factors set forth below before making an investment decision, and should consult his or her own expert

advisors as to the suitability of an investment in the Bonds. An investment in the Bonds is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of

all or part of the investment.

The order in which the risks are presented below is not intended to provide an indication of the likelihood of

their occurrence nor of their severity or significance.

1.1 Risks relating to the industry

1.1.1 Seadrill’s business in the offshore drilling sector depends on the level of activity in the offshore oil

and gas industry, which is significantly affected by, among other things, volatile oil and gas prices,

and may be materially and adversely affected by a decline in the offshore oil and gas industry.

The offshore contract drilling industry is cyclical and volatile. Seadrill’s business in the offshore drilling sector

depends on the level of activity in oil and gas exploration, development and production in offshore areas worldwide. The availability of quality drilling prospects, exploration success, relative production costs, the stage

of reservoir development and political and regulatory environments affect customers' drilling programs. Oil and gas prices and market expectations of potential changes in these prices also significantly affect this level of

activity and demand for drilling units.

Oil and gas prices are extremely volatile and are affected by numerous factors beyond Seadrill’s control,

including the following:

worldwide production and demand for oil and gas;

the cost of exploring for, developing, producing and delivering oil and gas;

expectations regarding future energy prices;

advances in exploration, development and production technology;

the ability of OPEC to set and maintain levels and pricing;

the level of production in non-OPEC countries;

government regulations;

local and international political, economic and weather conditions;

domestic and foreign tax policies;

development and exploitation of alternative fuels;

the policies of various governments regarding exploration and development of their oil and gas

reserves; and

the worldwide political and military environment, including uncertainty or instability resulting

from an escalation or additional outbreak of armed hostilities, insurrection or other crises in the Middle East or other geographic areas or further acts of terrorism in the United States, or

elsewhere.

Declines in oil and gas prices for an extended period of time, or market expectations of potential decreases in

these prices, could negatively affect Seadrill’s business in the offshore drilling sector. Sustained periods of low oil prices typically result in reduced exploration and drilling because oil and gas companies' capital expenditure

budgets are subject to cash flow from such activities and are therefore sensitive to changes in energy prices. These changes in commodity prices can have a dramatic effect on rig demand, and periods of low demand can

cause excess rig supply and intensify the competition in the industry which often results in drilling units,

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particularly older and lower technical specification drilling units, being idle for long periods of time. The Issuer cannot predict the future level of demand for Seadrill’s services or future conditions of the oil and gas industry.

Any decrease in exploration, development or production expenditures by oil and gas companies could reduce Seadrill’s revenues and materially harm Seadrill’s business and results of operations.

In addition to oil and gas prices, the offshore drilling industry is influenced by additional factors, including:

the availability of competing offshore drilling units;

the level of costs for associated offshore oilfield and construction services;

oil and gas transportation costs;

the discovery of new oil and gas reserves;

the cost of non-conventional hydrocarbons;

the political and military environment of oil and gas reserve jurisdictions; and

regulatory restrictions on offshore drilling.

Any of these factors could reduce demand for the Seadrill’s services and adversely affect its business and results of operations.

1.1.2 Seadrill’s business and operations involve numerous operating hazards.

Seadrill`s operations are subject to hazards inherent in the drilling industry, such as blowouts, reservoir

damage, loss of production, loss of well control, lost or stuck drill strings, equipment defects, punch-throughs,

craterings, fires, explosions and pollution. Contract drilling and well servicing require the use of heavy equipment and exposure to hazardous conditions, which may subject Seadrill to liability claims by employees,

customers and third parties. These hazards can cause personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage, claims by third parties or

customers and suspension of operations. Seadrill`s offshore fleet is also subject to hazards inherent in marine operations, either while on-site or during mobilization, such as capsizing, sinking, grounding, collision, damage

from severe weather and marine life infestations. Operations may also be suspended because of machinery breakdowns, abnormal drilling conditions, failure of subcontractors to perform or supply goods or services or

personnel shortages. Seadrill customarily provide contract indemnity to Seadrill’s customers for claims that could be asserted by Seadrill relating to damage to or loss of its equipment, including rigs and claims that

could be asserted by Seadrill or its employees relating to personal injury or loss of life.

Damage to the environment could also result from Seadrill`s operations, particularly through spillage of fuel,

lubricants or other chemicals and substances used in drilling operations, or extensive uncontrolled fires. Seadrill may also be subject to property, environmental and other damage claims by oil and gas companies.

Seadrill`s insurance policies and contractual rights to indemnity may not adequately cover losses, and Seadrill

do not have insurance coverage or rights to indemnity for all risks. Consistent with standard industry practice,

Seadrill`s clients generally assume, and indemnify Seadrill against, well control and subsurface risks under daily rates contracts. These are risks associated with the loss of control of a well, such as blowout or cratering,

the cost to regain control of or re-drill the well and associated pollution. However, there can be no assurances that these clients will be willing or financially able to indemnify Seadrill against all these risks. Seadrill

maintains insurance coverage for property damage, occupational injury and illness, and general and marine third-party liabilities (except as described below with respect to drilling units and equipment in the U.S. GOM).

However, pollution and environmental risks generally are not totally insurable.

Seadrill maintains a portion of deductibles for damage to Seadrill`s offshore drilling equipment and third-party

liabilities. With respect to hull and machinery Seadrill currently maintain a deductible per occurrence of $5 million for all of its fleet, except for tender barges, for which it is $1 million. However, in the event of a total

loss or a constructive total loss of a drilling unit, such loss is fully covered by Seadrill`s insurance with no deductible. For general and marine third-party liabilities Seadrill generally maintain up to $25,000 deductible

per occurrence on personal injury liability for crew claims as well as non-crew claims and per occurrence on third-party property damage, except for Seadrill`s drilling units operating in the U.S. GOM where the

deductible is $500,000 per occurrence.

If a significant accident or other event occurs that is not fully covered by Seadrill`s insurance or an enforceable

or recoverable indemnity from a client, the occurrence could adversely affect Seadrill`s consolidated statement of financial position, results of operations or cash flows. The amount of Seadrill`s insurance may also be less

than the related impact on enterprise value after a loss. Seadrill`s insurance coverage will not in all situations provide sufficient funds to protect Seadrill from all liabilities that could result from its drilling operations.

Seadrill`s coverage includes annual aggregate policy limits. As a result, Seadrill retains the risk through self-insurance for any losses in excess of these limits. Any such lack of reimbursement may cause Seadrill to incur

substantial costs. In addition, Seadrill could decide to retain more risk through self-insurance in the future. This

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self-insurance results in a higher risk of losses, which could be material, that are not covered by third party insurance contracts. Specifically, Seadrill have elected to self-insure for physical damage to rigs and equipment

caused by named windstorms in the U.S. GOM due to the substantial costs associated with such coverage. If such windstorms cause significant damage to any rig and equipment Seadrill has in the U.S. GOM, it could

have a material adverse effect on Seadrill`s financial position, results of operations or cash flows. Moreover, no assurance can be made that Seadrill will be able to maintain adequate insurance in the future at rates that

Seadrill consider reasonable, or obtain insurance against certain risks.

1.1.3 An over-supply of drilling units may lead to a reduction in daily rates and therefore may materially

impact Seadrill’s profitability in Seadrill’s offshore drilling segment.

During the recent period of high utilization and high daily rates, industry participants have increased the supply of drilling units by ordering construction of new drilling units. Historically, this has resulted in an over-supply of

drilling units and has caused a subsequent decline in utilization and daily rates when the drilling units have entered the market, sometimes for extended periods of time until the new units have been absorbed into the

active fleet. According to industry sources, the worldwide fleet of ultra-deepwater drilling units as of November 30, 2012 consisted of 127 units, comprised of 65 semi-submersible rigs and 62 drillships. An additional 12

semi-submersible rigs and 70 drillships are under construction or on order, which would bring the total fleet to 209 units. A relatively large number of the drilling units currently under construction have not been contracted

for future work, which may intensify price competition as scheduled delivery dates occur and lead to a

reduction in daily rates as the active fleet grows. Lower utilization and daily rates could adversely affect

Seadrill’s revenues and profitability. Prolonged periods of low utilization and daily rates could also result in the recognition of impairment charges on Seadrill’s drilling units if future cash flow estimates, based upon

information available to management at the time, indicate that the carrying value of these drilling units may not be recoverable.

1.1.4 There may be limits to Seadrill’s ability to mobilize drillships between geographic areas, and the time

and costs of such mobilizations may be material to Seadrill’s business.

The offshore contract drilling market is generally a global market as drilling units may be mobilized from one area to another. However, the ability to mobilize drilling units can be impacted by several factors including, but

not limited to, governmental regulation and customs practices, the significant costs of moving a drilling unit, weather, political instability, civil unrest, military actions and the technical capability of the drilling units to

relocate and operate in various environments. Additionally, while a drillship is being mobilized from one geographic market to another, Seadrill may not be paid by the customer for the time that the drillship is out of

service. In addition, Seadrill may mobilize a drillship to another geographic market without a customer contract, which will result in costs not reimbursable by future customers. Any such impacts of mobilization

could have a material adverse effect on Seadrill’s business, results of operations, cash flows and financial condition.

1.1.5 The market value of Seadrill’s current drilling units and those it acquire in the future may decrease,

which could cause Seadrill to incur losses if it decides to sell them following a decline in their market

values.

If the offshore contract drilling industry suffers adverse developments in the future, the fair market value of Seadrill’s drilling units may decline. The fair market value of the drilling units that Seadrill currently own, or

may acquire in the future, may increase or decrease depending on a number of factors, including:

general economic and market conditions affecting the offshore contract drilling industry,

including competition from other offshore contract drilling companies;

types, sizes and ages of drilling units;

supply and demand for drilling units;

costs of newbuildings;

prevailing level of drilling services contract daily rates;

governmental or other regulations; and

technological advances.

If Seadrill sells any drilling unit at a time when prices for drilling units have fallen, such a sale may result in a

loss. Such a loss could materially and adversely affect Seadrill`s business prospects, financial condition,

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liquidity, results of operations and ability to pay dividends to Seadrill`s shareholders.

1.1.6 Consolidation of suppliers may increase the cost of obtaining supplies, which may have a material

adverse effect on Seadrill’s results of operations and financial condition.

Seadrill rely on certain third parties to provide supplies and services necessary for its offshore drilling

operations, including but not limited to drilling equipment suppliers, catering and machinery suppliers. Recent mergers have reduced the number of available suppliers, resulting in fewer alternatives for sourcing key

supplies. Such consolidation, combined with a high volume of drilling units under construction, may result in a

shortage of supplies and services thereby increasing the cost of supplies and/or potentially inhibiting the ability of suppliers to deliver on time. These cost increases or delays could have a material adverse effect on the

Issuer’s results of operations and result in rig downtime, and delays in the repair and maintenance of its drilling rigs.

1.1.7 Seadrill’s international operations in the offshore drilling sector involve additional risks, which could

adversely affect Seadrill’s business.

Seadrill operates in various regions throughout the world. As a result of its international operations, Seadrill may be exposed to political and other uncertainties, including risks of:

terrorist acts, armed hostilities, war and civil disturbances;

acts of piracy, which have historically affected ocean-going vessels trading in regions of the

world such as the South China Sea and in the Gulf of Aden off the coast of Somalia and which have increased significantly in frequency since 2008, particularly in the Gulf of Aden and off the

west coast of Africa;

significant governmental influence over many aspects of local economies;

seizure, nationalization or expropriation of property or equipment;

repudiation, nullification, modification or renegotiation of contracts;

limitations on insurance coverage, such as war risk coverage, in certain areas;

political unrest;

foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;

the inability to repatriate income or capital;

complications associated with repairing and replacing equipment in remote locations;

import-export quotas, wage and price controls, imposition of trade barriers;

regulatory or financial requirements to comply with foreign bureaucratic actions;

changing taxation policies, including confiscatory taxation;

other forms of government regulation and economic conditions that are beyond Seadrill’s control; and

governmental corruption.

In addition, international contract drilling operations are subject to various laws and regulations of the

countries in which Seadrill operates including laws and regulations relating to:

the equipping and operation of drilling units;

repatriation of foreign earnings;

oil and gas exploration and development;

taxation of offshore earnings and the earnings of expatriate personnel; and

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use and compensation of local employees and suppliers by foreign contractors.

Some foreign governments favor or effectively require (i) the awarding of drilling contracts to local contractors

or to drilling rigs owned by their own citizens, (ii) the use of a local agent or (iii) foreign contractors to employ

citizens of, or purchase supplies from, a particular jurisdiction. These practices may adversely affect Seadrill’s

ability to compete in those regions. It is difficult to predict what governmental regulations may be enacted in the future that could adversely affect the international drilling industry. The actions of foreign governments,

including initiatives by OPEC, may adversely affect Seadrill’s ability to compete. Failure to comply with applicable laws and regulations, including those relating to sanctions and export restrictions, may subject

Seadrill to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets.

1.1.8 If Seadrill enters into drilling contracts or engage in certain other activities with countries or

government-controlled entities that are subject to restrictions imposed by the U.S. or other

governments, or engage in certain other activities, Seadrill’s reputation and the market for Seadrill’s

securities could adversely be affected.

From time to time, Seadrill may operate in countries that are subject to sanctions and embargoes imposed by

the U.S. government and/or identified by the U.S. government as state sponsors of terrorism, such as Cuba,

Iran, Sudan and Syria. The U.S. sanctions and embargo laws and regulations vary in their application, as they

do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. In 2010, the U.S. enacted the

Comprehensive Iran Sanctions Accountability and Divestment Act, or CISADA, which expanded the scope of the Iran Sanctions Act. Among other things, CISADA expanded the application of the prohibitions to additional

activities of companies such as Seadrill, and introduced limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export of refined petroleum

or petroleum products. In 2012, President Obama signed Executive Order 13608 which prohibits foreign persons from violating or attempting to violate, or causing a violation of any sanctions in effect against Iran or

facilitating any deceptive transactions for or on behalf of any person subject to U.S. sanctions. Any persons found to be in violation of Executive Order 13608 will be deemed a foreign sanctions evader and will be banned

from all contacts with the U.S., including conducting business in U.S. dollars. Also in 2012, President Obama

signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012 which created new sanctions and strengthened existing sanctions. Among other things, this act intensifies existing sanctions regarding the

provision of goods, services, infrastructure or technology to Iran’s petroleum or petrochemical sector. Th is act also includes a provision that states in part that, if a person is found transporting crude oil from Iran or

transporting refined petroleum products to Iran, that persons vessels could be barred from landing at U.S. ports for up to two years.

Although Seadrill believes that it is in compliance with all applicable sanctions and embargo laws and regulations, and intends to maintain such compliance, there can be no assurance that Seadrill will be in

compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines or other penalties and could result in some

investors deciding, or being required, to divest their interest, or not to invest, in the Company. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding

securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, Seadrill’s securities may

adversely affect the price at which Seadrill’s securities trade. In addition, Seadrill’s reputation and the market for Seadrill’s securities may be adversely affected if Seadrill engage in certain other activities, such as entering

into drilling contracts with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those

countries pursuant to contracts with third parties that are unrelated to those countries or entities controlled by their governments. Investor perception of the value of Seadrill’s securities may also be adversely affected by

the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

1.1.9 Seadrill’s ability to operate drilling units in the U.S. Gulf of Mexico could be restricted by

governmental regulation.

Hurricanes Ivan, Katrina, Rita, Gustav and Ike caused damage to a number of drilling units unaffiliated to

Seadrill in the Gulf of Mexico (the “GOM”). The Bureau of Ocean Energy Management, Regulation and

Enforcement, BOEMRE, formerly the Minerals Management Service of the U.S. Department of the Interior,

effective October 1, 2011, reorganized into two new organizations, the Bureau of Ocean Energy Management (“BOEM”) and the Bureau of Safety and Environmental Enforcement (“BSEE”) and issued guidelines for tie-

downs on drilling units and permanent equipment and facilities attached to outer continental shelf production platforms, and moored drilling unit fitness that apply through the 2013 hurricane season. These guidelines

effectively impose new requirements on the offshore oil and natural gas industry in an attempt to increase the likelihood of survival of offshore drilling units during a hurricane. The guidelines also provide for enhanced

information and data requirements from oil and natural gas companies that operate properties in the U.S. GOM

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region of the Outer Continental Shelf. BOEM and BSEE may issue similar guidelines for future hurricane seasons and may take other steps that could increase the cost of operations or reduce the area of operations

for Seadrill’s ultra-deepwater drilling units, thereby reducing their marketability. Implementation of new guidelines or regulations that may apply to ultra-deepwater drilling units may subject Seadrill to increased

costs and limit the operational capabilities of its drilling units, although such risks to the extent possible should rest with Seadrill’s clients.

Seadrill currently does not have any jack-up rigs or moored drilling units operating in the U.S. GOM. However, Seadrill has two ultra-deepwater semi-submersible drilling rigs operating in the U.S. GOM, and two ultra-

deepwater drillships contracted for operations in the U.S. GOM that are self-propelled and equipped with thrusters and other machinery, which enable the rig to move between drilling locations and remain in position

while drilling without the need for anchors, Seadrill also has an ultra-deepwater semi-submersible rig operating in the Mexican part of the GOM.

1.1.10 Public health threats could have an adverse effect on Seadrill’s operations and financial results.

Public health threats, such as swine flu, bird flu, Severe Acute Respiratory Syndrome and other highly

communicable diseases, outbreaks of which have already occurred in various parts of the world in which Seadrill operates, could adversely impact Seadrill’s operations, the operations of Seadrill’s customers and the

global economy, including the worldwide demand for oil and gas and, ultimately, the level of demand for

Seadrill’s services. Any of these public health threats could adversely affect Seadrill’s financial results.

1.1.11 Fluctuations in exchange rates and non-convertibility of currencies could result in losses to Seadrill.

As a result of Seadrill’s international operations, Seadrill is exposed to fluctuations in foreign exchange rates due to revenues being received and operating expenses paid in currencies other than U.S. Dollars. Accordingly,

Seadrill may experience currency exchange losses if Seadrill has not fully hedged its exposure to a foreign currency, or if revenues are received in currencies that are not readily convertible. Seadrill may also be unable

to collect revenues because of a shortage of convertible currency available to the country of operation, controls over currency exchange or controls over the repatriation of income or capital.

1.1.12 Governmental laws and regulations, including environmental laws and regulations, may add to

Seadrill’s costs or limit, Seadrill’s drilling activity.

Seadrill’s business in the offshore drilling industry is affected by laws and regulations relating to the energy

industry and the environment in the geographic areas where Seadrill operate. The offshore drilling industry is dependent on demand for services from the oil and gas exploration and production industry, and, accordingly,

Seadrill directly affected by the adoption of laws and regulations that, for economic, environmental or other policy reasons, curtail exploration and development drilling for oil and gas. Seadrill may be required to make

significant capital expenditures to comply with governmental laws and regulations. It is also possible that these laws and regulations may, in the future, add significantly to Seadrill’s operating costs or significantly limit

drilling activity. Seadrill’s ability to compete in international contract drilling markets may be limited by foreign

governmental regulations that favor or require the awarding of contracts to local contractors or by regulations

requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. Governments in some countries are increasingly active in regulating and controlling the ownership of

concessions, the exploration for oil and gas, and other aspects of the oil and gas industries. Offshore drilling in certain areas has been curtailed and, in certain cases, prohibited because of concerns over protection of the

environment. Operations in less developed countries can be subject to legal systems that are not as mature or predictable as those in more developed countries, which can lead to greater uncertainty in legal matters and

proceedings.

To the extent new laws are enacted or other governmental actions are taken that prohibit or restrict offshore

drilling or impose additional environmental protection requirements that result in increased costs to the oil and gas industry, in general, or the offshore drilling industry, in particular, Seadrill’s business or prospects could be

materially adversely affected. The operation of Seadrill’s drilling units will require certain governmental approvals, the number and prerequisites of which cannot be determined until Seadrill identify the jurisdictions

in which Seadrill will operate on securing contracts for the drilling units. Depending on the jurisdiction, these governmental approvals may involve public hearings and costly undertakings on Seadrill’s part. Seadrill may

not obtain such approvals or such approvals may not be obtained in a timely manner. If Seadrill fails to timely

secure the necessary approvals or permits, Seadrill’s customers may have the right to terminate or seek to

renegotiate their drilling contracts to Seadrill’s detriment. The amendment or modification of existing laws and regulations or the adoption of new laws and regulations curtailing or further regulating exploratory or

development drilling and production of oil and gas could have a material adverse effect on Seadril l’s business, operating results or financial condition. Future earnings may be negatively affected by compliance with any

such new legislation or regulations.

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1.1.13 Seadrill is subject to complex laws and regulations, including environmental laws and regulations

that can adversely affect the cost, manner or feasibility of doing business.

Seadrill’s operations are subject to numerous laws and regulations in the form of international conventions and

treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which Seadrill’s drilling units operate or are registered, which can significantly affect the ownership and

operation of Seadrill’s drilling units. These requirements include, but are not limited to, the International Convention for the Prevention of Pollution from Ships, or MARPOL, the International Convention on Civil

Liability for Oil Pollution Damage of 1969, generally referred to as CLC, the International Convention on Civil

Liability for Bunker Oil Pollution Damage, or Bunker Convention, the U.S. Oil Pollution Act of 1990, or OPA, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the U.S. Outer

Continental Shelf Lands Act, and Brazil's National Environmental Policy Law (6938/81), Environmental Crimes Law (9605/98) and Law 9966/2000 relating to pollution in Brazilian waters. Compliance with such laws,

regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lifetime of Seadrill’s drilling units. Seadrill may also incur

additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, including greenhouse gases, the management of ballast waters,

maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of Seadrill’s ability to address pollution incidents. These costs could have

a material adverse effect on Seadrill’s business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal

sanctions or the suspension or termination of Seadrill’s operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject Seadrill to

liability without regard to whether Seadrill was negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are, with limited exceptions, jointly and severally strictly liable for the

discharge of oil in U.S. waters, including the 200-nautical mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties and criminal liability and

remediation costs for natural resource damages under other international and U.S. federal, state and local laws, as well as third-party damages. Seadrill is required to satisfy insurance and financial responsibility

requirements for potential oil (including marine fuel) spills and other pollution incidents and Seadrill’s insurance may not be sufficient to cover all such risks. As a result, claims against Seadrill could result in a material

adverse effect on Seadrill’s business, results of operations, cash flows and financial condition.

Although Seadrill’s drilling units are separately owned by the Company’s subsidiaries, under certain

circumstances a parent company and all of the unit-owning affiliates in a group under common control engaged in a joint venture could be held liable for damages or debts owed by one of the affiliates, including liabilities for

oil spills under OPA or other environmental laws. Therefore, it is possible that Seadrill could be subject to liability upon a judgment against Seadrill or any one of the Company’s subsidiaries.

Seadrill’s drilling units could cause the release of oil or hazardous substances, especially as Seadrill’s drilling units age. Any releases may be large in quantity, above Seadrill’s permitted limits or occur in protected or

sensitive areas where public interest groups or governmental authorities have special interests. Any releases of oil or hazardous substances could result in fines and other costs to Seadrill, such as costs to upgrade Seadrill’s

drilling rigs, clean up the releases, and comply with more stringent requirements in Seadrill’s discharge permits. Moreover, these releases may result in Seadrill’s customers or governmental authorities suspending or

terminating Seadrill’s operations in the affected area, which could have a material adverse effect on Seadrill’s business, results of operation and financial condition.

If Seadrill is able to obtain from its customers some degree of contractual indemnification against pollution and environmental damages in Seadrill’s contracts, such indemnification may not be enforceable in all instances or

the customer may not be financially able to comply with its indemnity obligations in all cases, and Seadrill may not be able to obtain such indemnification agreements in the future.

Seadrill’s insurance coverage may not be available in the future, or Seadrill may not obtain certain insurance coverage. Even if insurance is available and Seadrill has obtained the coverage, it may not be adequate to

cover Seadrill’s liabilities or Seadrill’s insurance underwriters may be unable to pay compensation if a significant claim should occur. Any of these scenarios could have a material adverse effect on Seadrill’s

business, operating results and financial condition.

1.1.14 Climate change and regulation of greenhouse gases could have a negative impact Seadrill`s

business.

Due to concern over the risk of climate change, a number of countries and the United Nations' International

Maritime Organization, or IMO, have adopted, or are considering the adoption of, regulatory frameworks to

reduce greenhouse gas emissions. Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which

entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions. However, in July 2011 the IMO's Maritime Environment

Protection Committee, or MEPC, adopted two new sets of mandatory requirements to address greenhouse gas emissions from ships that will enter into force in January 2013. Currently operating ships will be required to

develop Ship Energy Efficiency Management Plans, and minimum energy efficiency levels per capacity mile will

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apply to new ships. These requirements could cause Seadrill to incur additional compliance costs. The IMO is also considering the development of market-based mechanisms to reduce greenhouse gas emissions from

ships. The European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from marine vessels, including

drilling units, and in January 2012, the European Commission launched a public consultation on possible measures to reduce greenhouse gas emissions from ships. In the United States, the EPA has issued a finding

that greenhouse gases endanger the public health and safety and has adopted regulations to limit greenhouse gas emissions from certain mobile sources and large stationary sources. Although the mobile source emissions

regulations do not apply to greenhouse gas emissions from drilling units, such regulation of drilling units is foreseeable, and the EPA has in recent years received petitions from the California Attorney General and

various environmental groups seeking such regulation.

Compliance with changes in laws, regulations and obligations relating to climate change could increase

Seadrill`s costs related to operating and maintaining its assets, and might also require Seadrill to install new emission controls, acquire allowances or pay taxes related to its greenhouse gas emissions, or administer and

manage a greenhouse gas emissions program.

Additionally, adverse effects upon the oil and gas industry relating to climate change, including growing public

concern about the environmental impact of climate change, may also adversely affect demand for Seadrill`s services. For example, increased regulation of greenhouse gases or other concerns relating to climate change

may reduce the demand for oil and gas in the future or create greater incentives for use of alternative energy sources. Any long-term material adverse effect on the oil and gas industry could have a significant financial

and operational adverse impact on Seadrill`s business.

1.1.15 The aftermath of the moratorium on offshore drilling in the U.S. Gulf of Mexico, and new regulations

adopted as a result of the investigation into the Macondo well blowout could negatively impact

Seadrill.

In the near-term aftermath of the Deepwater Horizon Incident, in which Seadrill was not involved, that led to

the Macondo well blow out situation, the U.S. government on May 30, 2010 imposed a six-month moratorium on certain drilling activities in water deeper than 500 feet in the U.S. GOM and subsequently implemented

Notices to Lessees 2010-N05 and 2010 N-06, providing enhanced safety requirements applicable to all drilling activity in the U.S. GOM, including drilling activities in water shallower than 500 feet. On October 12, 2010, the

U.S. government lifted the moratorium subject to compliance with the requirements set forth in Notices to Lessees 2010-N05 and 2010-N06. Additionally, all drilling in the U.S. GOM must comply with the Interim Final

Rule to Enhance Safety Measures for Energy Development on the Outer Continental Shelf (Drilling Safety Rule) and the Workplace Safety Rule on Safety and Environmental Management Systems, both of which were issued

on September 30, 2010, once they become final. Seadrill continue to evaluate these new measures to ensure that Seadrill’s rigs and equipment are in full compliance, where applicable. Additional requirements could be

forthcoming based on further recommendations by regulatory agencies investigating the Macondo incident. Seadrill is not able to predict the likelihood, nature or extent of additional rulemaking or when the interim

rules, or any future rules, could become final. Nor is Seadrill able to predict when the BSEE will issue drilling permits to Seadrill’s customers. Seadrill is not able to predict the future impact of these events on Seadrill’s

operations. Even with the drilling ban lifted, certain deepwater drilling activities remain suspended until the

BSEE resumes its regular permitting of those activities. The current and future regulatory environment in the

U.S. GOM could impact the demand for drilling units in the U.S. GOM in terms of overall number of rigs in

operations and the technical specification required for offshore rigs to operate in the U.S. GOM. It is possible that short-term potential migration of rigs from the U.S. GOM could adversely impact dayrates levels and fleet

utilization in other regions. Additional governmental regulations concerning licensing, taxation, equipment specifications, training requirements or other matters could increase the costs of Seadrill’s operations, and

escalating costs borne by Seadrill’s customers, along with permitting delays, could reduce exploration and development activity in the U.S. GOM and, therefore, reduce demand for Seadrill’s services. In addition,

insurance costs across the industry are expected to increase as a result of the Macondo incident and, in the future, certain insurance coverage is likely to become more costly, and may become less available or not

available at all. Seadrill cannot predict if the U.S. government will issue new drilling permits in a timely manner, nor can Seadrill predict the potential impact of new regulations that may be forthcoming as the

investigation into the Macondo well incident continues. Nor can Seadrill predict if implementation of additional regulations might subject Seadrill to increased costs of operating and/or a reduction in the area of operation in

the U.S. GOM. As such, Seadrill’s cash flow and financial position could be adversely affected if Seadrill’s two ultra-deepwater drilling rigs in the U.S. GOM were subject to the risks mentioned above.

1.1.16 Seadrill cannot guarantee that the use of Seadrill’s drilling units will not infringe the intellectual

property rights of others.

The majority of the intellectual property rights relating to Seadrill’s drilling units and related equ ipment are owned by Seadrill’s suppliers. In the event that one of Seadrill’s suppliers becomes involved in a dispute over

infringement of intellectual property rights relating to equipment owned by Seadrill, Seadrill’s may lose access

to repair services, replacement parts, or could be required to cease use of some equipment. In addition,

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Seadrill competitors may assert claims for infringement of intellectual property rights related to certain equipment on Seadrill’s drilling units and Seadrill may be required to stop using such equipment and/or pay

damages and royalties for the use of such equipment. The consequences of technology disputes involving Seadrill’s suppliers or competitors could adversely affect Seadrill’s financial results and operations. Seadrill

cannot be assured that these suppliers or competitors will be willing or financially able to honor their indemnity obligations for intellectual property lawsuits, or guarantee that the indemnities will fully protect Seadrill from

the adverse consequences of such technology disputes. Seadrill also have provisions in some of its client contracts to require the client to share some of these risks on a limited basis, but Seadrill cannot provide

assurance that these provisions will fully protect Seadrill from the adverse consequences of such technology disputes.

1.1.17 Seadrill may not be able to keep pace with the continual and rapid technological developments that

characterize the market for its services, and Seadrill’s failure to do so may result in Seadrill’s loss of

market share.

The market for Seadrill’s services is characterized by continual and rapid technological developments that have

resulted in, and will likely continue to result in, substantial improvements in equipment functions and performance. As a result, Seadrill’s future success and profitability will be dependent in part upon its ability to

keep pace with technological developments. If Seadrill is not successful in acquiring new equipment or upgrading its existing equipment in a timely and cost-effective manner in response to technological

developments or changes in standards in its industry, Seadrill could lose business and profits. In addition, current competitors or new market entrants may develop new technologies, services or standards that could

render some of Seadrill’s services or equipment obsolete, which could have a material adverse effect on Seadrill’s operations.

1.1.18 Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties,

drilling contract terminations and an adverse effect on Seadrill’s business.

Seadrill currently operates, and historically have operated, its drilling units in a number of countries throughout

the world, including some with developing economies. Also, the existence of state or government-owned shipbuilding enterprises puts Seadrill in contact with persons who may be considered "foreign officials" under

the U.S. Foreign Corrupt Practices Act of 1977. Seadrill is committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics that is consistent and

in full compliance with the U.S. Foreign Corrupt Practices Act. Seadrill is subject, however, to the risk that it, its affiliated entities or its or their respective officers, directors, employees and agents may take actions

determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of

operations in certain jurisdictions, and might adversely affect Seadrill’s business, results of operations or financial condition. In addition, actual or alleged violations could damage Seadrill’s reputation and ability to do

business. Furthermore, detecting, investigating and resolving actual or alleged violations are expensive and can consume significant time and attention of Seadrill’s senior management.

1.1.19 Acts of terrorism, piracy and political and social unrest could affect the markets for drilling services,

which may have a material adverse effect on Seadrill’s results of operations.

Acts of terrorism, piracy and political and social unrest, brought about by world political events or otherwise, have caused instability in the world's financial and insurance markets in the past and may occur in the future.

Such acts could be directed against companies such as Seadrill. Seadrill’s drilling operations could also be targeted by acts of piracy. In addition, acts of terrorism and social unrest could lead to increased volatility in

prices for crude oil and natural gas and could affect the markets for drilling services and result in lower daily rates. Insurance premiums could increase and coverage may be unavailable in the future. U.S. government

regulations may effectively preclude Seadrill from actively engaging in business activities in certain countries. These regulations could be amended to cover countries where Seadrill currently operate or where Seadrill may

wish to operate in the future. Increased insurance costs or increased cost of compliance with applicable regulations may have a material adverse effect on Seadrill’s results of operations.

1.1.20 Any failure to comply with the complex laws and regulations governing international trade could

adversely affect Seadrill’s operations.

The shipment of goods, services and technology across international borders subjects Seadrill’s offshore drilling segment to extensive trade laws and regulations. Import activities are governed by unique customs laws and

regulations in each of the countries of operation. Moreover, many countries, including the United States,

control the export and re-export of certain goods, services and technology and impose related export recordkeeping and reporting obligations. Governments also may impose economic sanctions against certain

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countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities.

The laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions are complex and constantly changing. These laws and regulations may be enacted,

amended, enforced or interpreted in a manner materially impacting Seadrill’s operations. Shipments can be delayed and denied export or entry for a variety of reasons, some of which are outside Seadrill’s control and

some of which may result from failure to comply with existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled operational downtime. Any failure to comply with applicable legal and

regulatory trading obligations also could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from government contracts, seizure of shipments and loss of import and export

privileges.

1.2 Risks relating to Seadrill

1.2.1 The amount of Seadrill’s debt could limit Seadrill’s liquidity and flexibility in obtaining additional

financing and in pursuing other business opportunities.

As of September 30, 2012, Seadrill had $10.8 billion in principal amount of debt, representing approximately

60% of Seadrill’s total market capitalization. Seadrill’s current indebtedness and future indebtedness that

Seadrill may incur could affect Seadrill’s future operations, as a portion of Seadrill’s cash flow from operations

will be dedicated to the payment of interest and principal on such debt and will not be available for other purposes. Covenants contained in Seadrill’s debt agreements require Seadrill to meet certain financial tests,

which may affect Seadrill’s flexibility in planning for, and reacting to, changes in Seadrill’s business, may limit Seadrill’s ability to dispose of assets or place restrictions on the use of proceeds from such dispositions,

withstand current or future economic or industry downturns and compete with others in Seadrill’s industry for strategic opportunities, and may limit Seadrill’s ability to obtain additional financing for working capital, capital

expenditures, acquisitions, general corporate and other purposes. Seadrill’s ability to meet its debt service obligations and to fund planned expenditures, including construction costs for Seadrill’s newbuilding projects,

will be dependent upon Seadrill’s future performance, which will be subject to general economic conditions, industry cycles and financial, business and other factors affecting Seadrill’s operations, many of which are

beyond Seadrill’s control. Seadrill’s future cash flows may be insufficient to meet all of Seadrill’s debt obligations and contractual commitments, and any insufficiency could negatively impact Seadrill’s business. To

the extent that Seadrill is unable to repay its indebtedness as it becomes due or at maturity, Seadrill may need to refinance its debt, raise new debt, sell assets or repay the debt with the proceeds from equity offerings.

Additional indebtedness or equity financing may not be available to Seadrill in the future for the refinancing or repayment of existing indebtedness, and Seadrill may not be able to complete asset sales in a timely manner

sufficient to make such repayments.

1.2.2 Seadrill may be unable to comply with covenants in its credit facilities or any future financial

obligations that impose operating and financial restrictions on Seadrill.

Seadrill’s credit facilities impose, and future financial obligations may impose, operating and financial

restrictions on Seadrill. These restrictions may prohibit or otherwise limit Seadrill’s ability to, among other

things:

enter into other financing arrangements;

incur additional indebtedness;

create or permit liens on its assets;

sell its drilling units or the shares of its subsidiaries;

make investments;

change the general nature of its business;

pay dividends to its shareholders;

change the management and/or ownership of the drilling units;

make capital expenditures; and

compete effectively to the extent its competitors are subject to less onerous restrictions.

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Seadrill has initiated discussions with certain lenders under existing credit facilities to amend such facilities in order to conform the leverage ratio covenants therein. If Seadrill fail to obtain consent to make such

amendments, Seadrill’s ability to pay dividends may be restricted in the future.

1.2.3 If Seadrill is unable to comply with the restrictions and the financial covenants in the agreements

governing its indebtedness, there could be a default under the terms of these agreements, which

could accelerate repayment of funds that Seadrill has borrowed.

If Seadrill is unable to comply with the restrictions and covenants in the agreements governing its

indebtedness or in current or future debt financing agreements, there could be a default under the terms of those agreements. Seadrill’s ability to comply with these restrictions and covenants, including meeting financial

ratios and tests, is dependent on its future performance and may be affected by events beyond its control. If a default occurs under these agreements, lenders could terminate their commitments to lend or accelerate the

outstanding loans and declare all amounts borrowed due and payable. Seadrill pledges its drilling units as security for its indebtedness. If Seadrill’s lenders were to foreclose their liens on Seadrill’s drilling units in the

event of a default, this would likely impair Seadrill’s ability to continue its operations. As of September 30, 2012, Seadrill had $8.7 billion of indebtedness secured by, among other things, liens on its drilling units. In

addition, all of Seadrill’s loan agreements contain cross-default provisions, meaning that if Seadrill is in default under one of its loan agreements, amounts outstanding under its other loan agreements may also be

accelerated and become due and payable. If any of these events occur, Seadrill cannot guarantee that its assets will be sufficient to repay in full all of Seadrills outstanding indebtedness, and Seadrill may be unable to

find alternative financing. Even if Seadrill could obtain alternative financing, that financing might not be on terms that are favorable or acceptable.

1.2.4 Seadrill rely on a small number of customers.

Seadrill’s contract drilling business is subject to the risks associated with having a limited number of customers

for its services. As of November 30, 2012, Seadrill’s five largest customers accounted for approximately 66 % of its future contracted revenues, or order backlog. Seadrill’s results of operations could be materially

adversely affected if any of its major customers failed to compensate for its services, were to terminate Seadrill’s contracts with or without cause, failed to renew its existing contracts or refused to award new

contracts to Seadrill and Seadrill is unable to enter into contracts with new customers at comparable daily

rates.

1.2.5 Seadrill is exposed to the credit risks of its key customers, including certain affiliated companies, and

certain other third parties, and nonpayment by these customers and other parties could adversely

affect Seadrill’s financial position, results of operations and cash flows.

Seadrill is subject to risks of loss resulting from nonpayment or nonperformance by its customers, including certain companies owned by or associated with Seadrill’s affiliates. Some of these customers and other parties

may be highly leveraged and subject to their own operating and regulatory risks. Any material nonpayment or nonperformance by these entities, other key customers or certain other third parties could adversely affect

Seadrill’s financial position, results of operations and cash flows.

1.2.6 Newbuilding projects and surveys are subject to risks that could cause delays or cost overruns.

As of November 30, 2012, Seadrill had an outstanding newbuilding order book with various yards in South

Korea, Singapore and China for an additional 22 drilling units with corresponding estimated project cost totaling $8.2 billion. These estimated project costs include the contract price agreed with the yard plus certain

additional costs in connection with the delivery to Seadrill and the preparation for employment of the newbuilding drilling units. These construction projects are subject to risks of delay or cost overruns inherent in

any large construction project from numerous factors, including shortages of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, failure

of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain

required permits or approvals, unanticipated cost increases between order and delivery, design or engineering changes and work stoppages and other labor disputes, adverse weather conditions or any other events of force

majeure. Significant cost overruns or delays could adversely affect Seadrill’s financial position, results of

operations and cash flows. Additionally, failure to complete a project on time may result in the delay of

revenue from that rig. New drilling rigs may experience start-up difficulties following delivery or other unexpected operational problems that could result in uncompensated downtime, which also could adversely

affect Seadrill’s financial position, results of operations and cash flows or the cancellation or termination of drilling contracts.

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1.2.7 Failure to secure a drilling contract prior to deployment of the newbuild drilling units could adversely

affect Seadrill’s results of operations.

Seadrill currently has entered into agreements with various shipbuilding yards in Singapore, South Korea and

China for the construction of 22 new drilling units consisting of drillships, semi-submersible rigs, tender barges and jack-up rigs. Seadrill has not yet secured drilling contracts for 8 of these newbuilding rigs. Historically, the

industry has at times experienced prolonged periods of overcapacity, during which many rigs were idle for long periods of time. Seadrill’s failure to secure a drilling contract for any of these newbuilding rigs prior to their

deployment could adversely affect its cash flows and results of operations.

1.2.8 The provisions of the majority of Seadrill’s offshore rig contracts that are term contracts at fixed

daily rates may not permit Seadrill fully to recoup its costs in the event of a rise in its expenses.

The majority of Seadrill’s drilling units have long-term contracts. The average remaining contract length as of November 30, was 37 months for Seadrill’s floaters, 30 months for Seadrill’s tender rigs and 20 months for

Seadrill’s jack-up rigs. The majority of these contracts have daily rates that are fixed over the contract term. In order to mitigate the effects of inflation on revenues from term contracts, most of Seadrill’s long-term

contracts include escalation provisions. These provisions allow Seadrill to adjust the daily rates based on stipulated cost increases including wages, insurance and maintenance cost. However, because these

escalations are normally performed on a semi-annual or annual basis, the timing and amount awarded as a

result of such adjustments may differ from Seadrill’s actual cost increases, which could adversely affect

Seadrill’s financial performance. Shorter term contracts normally do not contain escalation provisions.

1.2.9 Seadrill’s operating and maintenance costs will not necessarily fluctuate in proportion to changes in

operating revenues.

Operating revenues may fluctuate as a function of changes in supply of offshore drilling units and demand for contract drilling services, which in turn, affect daily rates, and the economic utilization and performance of

Seadrill’s fleet of drilling units. However, Seadrill’s operating costs are generally related to the number of units in operation and the cost level in each country or region where the units are located. In addition, equipment

maintenance costs fluctuate depending upon the type of activity that the unit is performing and the age and condition of the equipment. In connection with new assignments, Seadrill might incur expenses relating to

preparation for operations under a new contract. The expenses may vary based on the scope and length of such required preparations and the duration of the firm contractual period over which such expenditures are

amortized. In situations where Seadrill’s drilling units incur idle time between assignments, the opportunity to reduce the size of Seadrill’s crews on those drilling units is limited as the crews will be engaged in preparing

the unit for its next contract. When a unit faces longer idle periods, reductions in costs may not be immediate as some of the crew may be required to prepare drilling units for stacking and maintenance in the stacking

period. Should units be idle for a longer period, Seadrill will seek to redeploy crew members, who are not required to maintain the drilling units, to active rigs to the extent possible. However, there can be no

assurance that Seadrill will be successful in reducing Seadrill’s costs in such cases.

1.2.10 Seadrill may not be able to renew or obtain new and favorable contracts for drilling units whose

contracts are expiring or are terminated, which could adversely affect Seadrill’s revenues and

profitability.

As of November 30, 2012, Seadrill has three contracts that expire in 2012, nine contracts that expire in 2013

and eleven contracts that expire in 2014. In addition, Seadrill has 22 newbuilds under constructions, of which 14 are contracted and 8 remain uncontracted. Furthermore, Seadrill’s jack-up drilling contracts are generally

short-term. Seadrill’s ability to renew existing contracts or obtain new contracts will depend on the prevailing market conditions. Likewise, Sedrill’s customers may reduce their activity levels or seek to terminate or

renegotiate drilling contracts with Seadrill. If Seadrill is not able to obtain new contracts in direct continuation, or if new contracts are entered into at daily rates substantially below the existing daily rates or on terms

otherwise less favorable compared to existing contracts terms, such as contracts on a turnkey basis, Seadrill’s revenues and profitability could be adversely affected.

1.2.11 Seadrill’s future contracted revenue, or backlog, for its fleet of drilling units may not be ultimately

realized.

As of November 30, 2012, Seadrill’s backlog, was approximately $21.3 billion. Seadrill may not be able to

perform under these contracts due to events beyond its control, and its customers may seek to cancel or renegotiate its contracts for various reasons, including adverse conditions, resulting in lower daily rates.

Seadrill’s inability, or the inability of Seadrill’s customers to perform, under Seadrill’s or their contractual obligations may have a material adverse effect on Seadrill’s financial position, results of operations and cash

flows.

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1.2.12 Competition within the oilfield services industry may adversely affect Seadrill’s ability to market its

services.

The oilfield services industry is highly competitive and fragmented and includes several large companies that compete in many of the markets Seadrill serves, as well as numerous small companies that compete with

Seadrill on a local basis. Seadrill believes that the principal competitive factors in the market areas Seadrill serve are price, product and service quality, availability of crews and equipment and technical proficiency.

Seadrill’s operations may be adversely affected if Seadrill’s current competitors or new market entrants

introduce new products or services with better features, performance, prices or other characteristics in comparison to Seadrill’s products and services, or expand into service areas where Seadrill operate.

Competitive pressures or other factors may also result in significant price competition, particularly during industry downturns, which could have a material adverse effect on Seadrill’s results of operations and financial

condition. In addition, competition among oilfield services and equipment providers is affected by each provider's reputation for safety and quality.

1.2.13 An economic downturn could have a material adverse effect on Seadrill’s revenue, profitability and

financial position.

Seadrill depends on its customers' willingness and ability to fund operating and capital expenditures to explore, develop and produce oil and gas, and to purchase drilling and related equipment. There has historically been a

strong link between the development of the world economy and demand for energy, including oil and gas. The world economy is currently facing a number of challenges. This includes uncertainty related to the continuing

discussions in the United States regarding the federal debt ceiling. In addition, turmoil and hostilities in the Middle East, North Africa and other geographic areas and countries are adding to the overall risk picture. An

extended period of adverse development in the outlook for the world economy could reduce the overall demand for oil and gas and for Seadrill’s services. Such changes could adversely affect Seadrill’s results of

operations and cash flows beyond what might be offset by the simultaneous impact of possibly higher oil and gas prices. Seadrill cannot assure investors that its customers will sustain or increase their capital programs

and budgets in response to the recent increase in crude oil prices, which were approximately $110.84 per barrel (Brent Oil Price) as of November 30, 2012.

1.2.14 Failure to obtain or retain highly skilled personnel could adversely affect Seadrill’s operations.

Seadrill requires highly skilled personnel to operate and provide technical services and support for its business. Competition for skilled and other labor required for Seadrill’s drilling operations has increased in recent years

as the number of rigs activated or added to worldwide fleets has increased. The number of rigs in operation is continuing to grow as new units ordered during the period from 2005 to 2008 are being delivered.

Furthermore, additional rigs ordered from September 2010 to date, are expected to increase the future demand for offshore drilling crews. In some regions such as Brazil, limited availability of qualified personnel in

combination with local regulations focusing on crew composition, are expected to further increase demand for qualified offshore drilling crews, which may increase Seadrill’s costs. A continued expansion of the rig fleet,

improved demand for drilling services in general, coupled with shortages of qualified personnel could further

create and intensify upward pressure on wages and make it more difficult for Seadrill to staff and service its

rigs. Such developments could adversely affect Seadrill’s financial results and cash flow. Furthermore, as a result of any increased competition for people and risk for higher turnover, Seadrill may experience a reduction

in the experience level of its personnel, which could lead to higher downtime and more operating incidents. In response to these labor market conditions, Seadrill has increased its efforts related to recruitment, training,

development and retention programs as required to meet its anticipated personnel needs.

1.2.15 Seadrill’s labor costs and the operating restrictions that apply to it could increase as a result of

collective bargaining negotiations and changes in labor laws and regulations.

Some of Seadrill’s employees are represented by collective bargaining agreements. The majority of these employees work in Brazil, Nigeria, Norway and the U.K. In addition, some of Seadrill’s contracted labor works

under collective bargaining agreements. As part of the legal obligations in some of these agreements, Seadrill is required to contribute certain amounts to retirement funds and pension plans and is restricted in its ability to

dismiss employees. In addition, many of these represented individuals are working under agreements that are subject to salary negotiation. These negotiations could result in higher personnel costs, other increased costs

or increased operating restrictions that could adversely affect Seadrill’s financial performance.

1.2.16 An inability to obtain visas and work permits for Seadrill’s employees on a timely basis could hurt

Seadrill’s operations and have an adverse effect on its business.

Seadrill’s ability to operate worldwide depends on its ability to obtain the necessary visas and work permits for

its personnel to travel in and out of, and to work in, the jurisdictions in which Seadrill operate. Governmental

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actions in some of the jurisdictions in which Seadrill operates may make it difficult for Seadrill to move its personnel in and out of these jurisdictions by delaying or withholding the approval of these permits. If Seadrill

is not able to obtain visas and work permits for the employees it needs for operating its rigs on a timely basis, Seadrill might not be able to perform Seadrill’s obligations under Seadrill’s drilling contracts, which could allow

Seadrill’s customers to cancel the contracts. If Seadrill’s customers cancel some of Seadrill’s contracts, and Seadrill is unable to secure new contracts on a timely basis and on substantially similar terms, it could

adversely affect Seadrill’s financial position, results of operations or cash flows.

1.2.17 The failure to consummate or integrate acquisitions of other businesses and assets in a timely and

cost-effective manner could have an adverse effect on Seadrill’s financial condition and results of

operations.

Acquisition of assets or businesses that expand Seadrill’s drilling operations is an important component of

Seadrill’s business strategy. Seadrill believe that acquisition opportunities may arise from time to time, and any such acquisition could be significant. Any acquisition could involve the payment of a substantial amount of

cash, the incurrence of a substantial amount of debt or the issuance of a substantial amount of equity. Certain acquisition and investment opportunities may not result in the consummation of a transaction. In addition,

Seadrill may not be able to obtain acceptable terms for the required financing for any such acquisition or investment that arises. Seadrill cannot predict the effect, if any, that any announcement or consummation of

an acquisition would have on the trading price of Seadrill’s common stock. Seadrill’s future acquisitions could present a number of risks, including the risk of incorrect assumptions regarding the future results of acquired

operations or assets or expected cost reductions or other synergies expected to be realized as a result of acquiring operations or assets, the risk of failing to successfully and timely integrate the operations or

management of any acquired businesses or assets and the risk of diverting management's attention from existing operations or other priorities. If Seadrill fails to consummate and integrate its acquisitions in a timely

and cost-effective manner, Seadrill’s financial condition and results of operations could be adversely affected.

1.2.18 Seadrill may suffer losses through its investments in other companies in the offshore drilling and oil

services industry.

Seadrill currently hold investments in several other companies in its industry that own and/or operate offshore drilling units with similar characteristics to Seadrill’s fleet of rigs or deliver various other services. These

investments include equity interests in Archer Limited, Varia Perdana, AOD, Sevan, Seabras Sapura Participacoes S/A and Seabras Sapura Holdco Ltd. The market value of Seadrill’s equity interest in these

companies is likely to be volatile and could fluctuate in response to changes in oil and gas prices and activity levels in the offshore oil and gas industry. For example, Seadrill took a $463 million non-cash impairment

charge on its investment in Archer Limited in the fourth quarter of 2011 due to a greater than 50% decline in value of Archer Limited’s stock over a twelve-month period. A future loss in the value of Seadrill’s investments

may require Seadrill to take further impairment charges, which could adversely affect Seadrill’s financial condition and results of operations.

1.2.19 Seadrill may not be able to raise equity or debt financing sufficient to execute its growth strategy

and pay the cost of all of its newbuilding drilling units, which could have a material adverse effect on

Seadrill’s business, financial condition, results of operations and cash flows.

Seadrill’s business is capital intensive and, to the extent Seadrill does not generate sufficient cash from operations, it may need to raise additional funds through public or private debt or equity offerings to execute

its growth strategy and to fund its capital expenditures. Borrowings under Seadrill’s current credit facilities, which are subject to certain conditions, and available cash on hand are not sufficient to pay the remaining

installments related to Seadrill’s estimated project costs, which as of September 30, 2012, were $5.9 billion, excluding the Asia Offshore Drilling rigs. These estimated project costs include the contract price agreed with

the yard plus certain additional costs in connection with the delivery to Seadrill and the preparation for employment of the newbuilding drilling units. Because Seadrill generally secure funding for new drilling units

close to the time of their delivery, substantially all of these commitments are currently unfounded. If Seadrill is not able to borrow additional funds, raise other capital or utilize available cash on hand, Seadrill may not be

able to acquire these drilling units, which could have a material adverse effect on Seadrill’s business, financial condition, results of operations and cash flows. If for any reason Seadrill fail to make a payment when due,

which may result in a default under Seadrill’s newbuilding contracts, or otherwise fail to take delivery of Seadrill’s newbuild units, Seadrill would be prevented from realizing potential revenues from these projects,

Seadrill could also lose all or a portion of Seadrill’s yard payments that were paid by Seadrill, which as of September 30, 2012, amounted to $1.6 billion excluding the Asia Offshore Drililng rigs, and Seadrill could be

liable for penalties and damages under such contracts.

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1.2.20 Interest rate fluctuations could affect Seadrill’s earnings and cash flow.

In order to finance Seadrill’s growth Seadrill has incurred significant amounts of debt. With the exception of some of its bonds and convertible bonds, the large majority of its debt arrangements have floating interest

rates. As such, significant movements in interest rates could have an adverse effect on Seadrill’s earnings and

cash flow. In order to manage Seadrill’s exposure to interest rate fluctuations, Seadrill use interest rate swaps

to effectively fix a part of its floating rate debt obligations. The principal amount covered by interest rate swaps is evaluated continuously and determined based on Seadrill’s debt level, Seadrill’s expectations regarding

future interest rates and Seadrill’s overall financial risk exposure. As of September 30, 2012, Seadrill’s total net floating rate debt amounted to $8.6 billion of which Seadrill had entered into interest rate swap agreements

not qualifying for hedge accounting to fix the interest rate for a principal amount of $4.7 billion. Although Seadrill enter into various interest rate swap transactions to manage exposure to movements in interest rates,

there can be no assurance that Seadrill will be able to continue to do so at a reasonable cost or at all. If Seadrill is unable to effectively manage its interest rate exposure through interest rate swaps, any increase in

market interest rates would increase Seadrill’s interest rate exposure and debt service obligations, which would exacerbate the risks associated with Seadrill’s leveraged capital structure.

1.2.21 Seadrill may be subject to litigation, arbitration and other proceedings that could have an adverse

effect on Seadrill.

Seadrill is currently involved in various litigation matters, including NADL's tax dispute with the Norwegian tax

authorities as further described on page F-21 the Company's annual accounts for 2011 as incorporated by reference to this Prospectus, none of which Seadrill expect to have a material adverse effect. Seadrill anticipate

that it will be involved in litigation matters from time to time in the future. The operating hazards inherent in Seadrill’s business expose Seadrill to litigation, including personal injury litigation, environmental litigation,

contractual litigation with clients, intellectual property litigation, tax or securities litigation, and maritime lawsuits, including the possible arrest of Seadrill’s drilling units. Seadrill cannot predict with certainty the

outcome or effect of any claim or other litigation matter, or a combination of these. If Seadrill is involved in any future litigation, or if Seadrill’s positions concerning current disputes are found to be incorrect, this may

have an adverse effect on Seadrill’s business, financial position, results of operations and ability to pay dividends, because of potential negative outcomes, the costs associated with asserting Seadrill’s claims or

defending such lawsuits, and the diversion of management’s attention to these matters.

1.2.22 A change in tax laws of any country in which Seadrill operates could result in a higher tax expense

or a higher effective tax rate on Seadrill’s worldwide earnings.

Seadrill conducts operations through various subsidiaries in countries throughout the world. Tax laws, regulations and treaties are highly complex and subject to interpretation. Consequently, Seadrill is subject to

changing tax laws, regulations and treaties in and between countries in which the company operates, including treaties between the United States and other nations. Seadrills`s income tax expense is based upon the

company`s interpretation of the tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws, regulations or treaties, including those in and involving the United States,

or in the interpretation thereof, or in the valuation of Seadrill`s deferred tax assets, which is beyond the

Seadrill`s control could result in a materially higher tax expense or a higher effective tax rate on the

company`s worldwide earnings.

1.2.23 A loss of a major tax dispute or a successful tax challenge to Seadrill`s operating structure,

intercompany pricing policies or the taxable presence of its subsidiaries in certain countries could

result in a higher tax rate on Seadrill`s worldwide earnings, which could result in a significant

negative impact on Seadrill`s earnings and cash flows from operations.

Seadrill`s income tax returns are subject to review and examination. Seadrill do not recognize the benefit of income tax positions it believes are more likely than not to be disallowed upon challenge by a tax authority. If

any tax authority successfully challenges Seadrill`s operational structure, intercompany pricing policies or the taxable presence of its subsidiaries in certain countries; or if the terms of certain income tax treaties are

interpreted in a manner that is adverse to Seadrill`s structure; or if Seadrill lose a material tax dispute in any country, Seadrill`s effective tax rate on its worldwide earnings could increase substantially and Seadrill`s

earnings and cash flows from operations could be materially adversely affected.

1.2.24 The Company is incorporated in Bermuda and it may not be possible for investors to enforce U.S.

judgments against the Company.

The Company is incorporated in Bermuda and substantially all its assets are located outside the U.S. In addition, all its directors and all but one of executive officers are non-residents of the U.S., and all or a

substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be

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difficult or impossible for U.S. investors to serve process within the U.S. upon the Company or its directors and executive officers, or to enforce a judgment against the Company for civil liabilities in U.S. courts.

In addition, investors should not assume that courts in the countries in which Seadrill is incorporated or where its assets are located (1) would enforce judgments of U.S. courts obtained in actions against Seadrill based

upon the civil liability provisions of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against Seadrill based on those laws.

1.2.25 Seadrill is dependent on its senior management team, and Seadrill's business could be harmed if

Seadrill is unable to attract and retain personnel necessary for its success.

Seadrill is highly dependent on its senior management, including John Fredriksen, the Company's President and

Chairman. Seadrill's success will depend on its ability to retain senior management. The loss of members of Seadrill's senior management could prevent Seadrill from achieving its objectives of continuing to grow and

could have a material adverse effect on Seadrill's ability to manage its business.

1.2.26 Seadrill depend on directors who are associated with affiliated companies, which may create conflicts

of interest.

Hemen, the Company's principal shareholder, is controlled by trusts established by John Fredriksen, the

Company's President and Chairman, for the benefit of his immediate family. Hemen also has significant shareholdings in two companies affiliated with the Company, Frontline Ltd. (NYSE: FRO) (“Frontline”) and Ship

Finance (NYSE: SFL). In addition, Hemen owns approximately 7.8% of the Company's minority-owned subsidiary Archer Limited (OSE: NO). The Company's Vice-President and director Mr. Tor Olav Trøim is also a

director of Archer Limited and Golar LNG Limited (NASDAQ GS: GLNG), a company affiliated with the Company. One of the Company's other directors, Kate Blankenship, is also a director of Frontline, NADL, Ship

Finance, Golar LNG Limited and Archer Limited. Another of the Company's directors, Kathrine Fredriksen, the daughter of Mr. John Fredriksen, is also a director of Golar LNG Limited. Mr. Fredriksen, Mr. Trøim,

Mrs. Blankenship and Ms. Fredriksen owe fiduciary duties to each of Seadrill, Frontline, Ship Finance, Archer Limited, and Golar LNG Limited, as applicable, and may have conflicts of interest in matters involving or

affecting Seadrill and Seadrill's customers. In addition, they may have conflicts of interest when faced with decisions that could have different implications for Frontline, Archer Limited, Ship Finance, or Golar LNG than

they do for Seadrill. Seadrill cannot assure investors that any of these conflicts of interest will be resolved in

Seadrill's favor.

1.2.27 The Company depend on certain of its affiliates, including Seadrill Management, to assist it in

operating and expanding its business.

Pursuant to a management and administrative services agreement between the Company and Seadrill

Management, Seadrill Management provides the Company with significant management, administrative, financial and other support services. In addition, the Company's other affiliates provide advisory, technical and

financial services and support to Seasdrill and Seadrill's fleet pursuant to various agreements. Seadrill's operational success and ability to execute its growth strategy depends significantly upon the satisfactory

performance of these services. Seadrill's business will be harmed if its affiliates fail to perform these services satisfactorily, if they cancel their agreements with Seadrill or if they stop providing these services to Seadrill.

Please read “Related Party Transactions”.

1.2.28 The Company's largest shareholder may have interests which conflict with those of the Bondholders.

Circumstances may occur in which the interests of Hemen, the Company's largest shareholder, could be in conflict with the interests of the Bondholders. For example, the interests of the Company's largest shareholder

could conflict with Bondholders' interests if the Company faced financial difficulties and were unable to comply with its obligations under the Bond Issue. In addition, Hemen and other equity investors may have an interest

in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their equity investment, even though such transaction might involve risks to Bondholders. Conversely, Hemen or other

minority shareholders may have an interest in not pursuing acquisitions, divestitures and other transactions that could enhance the Company's cash flow and be beneficial to the Bondholders. Further, Seadrill's

commercial loan agreements usually contain a change of control provision which provides the lenders with a right to accelerate the loan if the ownership of Hemen Holding Limited, (or a company controlled more than

50% by the John Fredriksen family and/or trusts established for their benefit), reduces its ultimate ownership in Seadrill below 20%. Hemen currently owns 115,097,583 shares in Seadrill, representing an ownership

interest of 24.6%. In addition, Hemen has Total Return Swap (“TRS”) agreements with underlying exposure to 3,900,000 shares of the Company.

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1.3 Risks Relating to the Bonds and Seadrill’s other indebtedness

1.3.1 Seadrill has a substantial amount of indebtedness, which may adversely affect its cash flow and its

ability to operate its business, remain in compliance with debt covenants of the Bonds and future

and and existing credit facilities and make payments on Seadrill’s debt, including the Bonds

As of September 30, 2012, Seadrill has a total debt of $10.8 billion. Seadrill’s level of debt could have important consequences for investors in the Bonds, including the following:

Seadrill may have difficulty borrowing money in the future for acquisitions, capital expenditures or to meet its operating expenses or other general corporate obligations;

Seadrill will need to use a substantial portion of its cash flows to pay interest on its debt, which will reduce the amount of money Seadrill has for operations, working capital, capital expenditures,

expansion, acquisitions or general corporate or other business activities;

Seadrill may have a higher level of debt than some of its competitors, which may put Seadrill at a

competitive disadvantage;

Seadrill may be more vulnerable to economic downturns and adverse developments in its industry or

the economy in general; and

Seadrill’s debt level, and the financial covenants in Seadrill’s various debt agreements, could limit its

flexibility in planning for, or reacting to, changes in its business and the industry in which it operates.

1.3.2 To service its indebtedness, Seadrill will require a significant amount of cash. Seadrill’s ability to

generate cash depends on many factors beyond its control, and any failure to meet its debt

obligations could harm Seadrillli business, financial condition and results of operations.

Seadrills, ability to make scheduled payments on and to refinance Seadrill’s indebtedness, including the Bonds,

and to fund future capital expenditures will depend on Seadrill’s ability to generate cash from operations in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory

and other factors that are beyond Seadrill’s control. Seadrill cannot assure investors that Seadrill’s business will generate sufficient cash flow from operations in an amount sufficient to enable Seadrill to pay its

indebtedness, including the Bonds, or to fund Seadrill’s other liquidity needs. If Seadrilli’s cash flow and capital resources are insufficient to fund its debt obligations, Seadrill may be forced to sell assets, seek additional

equity or debt capital or restructure Seadrill’s debt. Seadrill cannot assure investors that any of these remedies could, if necessary, be effected on commercially reasonable terms, or at all. In addition, any failure to make

scheduled payments of interest and principal on the Bonds or any other outstanding indebtedness would likely harm Seadrill’s ability to incur additional indebtedness on acceptable terms to Seadrill or at all. Seadrill’s cash

flow and capital resources may be insufficient for payment of interest on and principal of Seadrill’s debt in the future, including payments on the Bonds, and any such alternative measures may be unsuccessful or may not

permit Seadrill to meet scheduled debt service obligations, which could cause Seadrill to default on Seadrillul

obligations and could impair Seadrill’s liquidity.

1.3.3 Despite Seadrill’s indebtedness levels, it may be able to incur substantially more indebtedness,

including secured indebtedness. This could further exacerbate the risks associated with Seadrill’s

substantial indebtedness.

To the extent not otherwise disclosed herein, the agreements governing Seadrill’s existing indebtedness, do not, and the indenture governing the Bonds offered hereby will not, prohibit the Company or its subsidiaries

from incurring additional debt. As of September 30, 2012, the Company and consolidated subsidiaries have $10.8 billion in aggregate principal amount of indebtedness outstanding, of which $8.7 billion would be

secured, which could make such secured indebtedness effectively senior to the notes to the extent of the value of the assets securing such indebtedness. The new indebtedness Seadrill incur may also be in connection with

Seadrill’s purchase of additional drilling units. If new indebtedness is added to Seadrill’s current indebtedness levels, the related risks that Seadrill now face would increase and Seadrill may not be able to meet all its

indebtedness obligations, including the repayment of the Bonds. In addition, the indenture governing Seadrill’s

other bonds does not, and the indenture governing the Bonds will not, prevent Seadrill from incurring

obligations that do not constitute indebtedness as defined therein.

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1.3.4 Seadrill cannot assure investors that Seadrill will be able to refinance its indebtedness, including

without limitation, indebtedness incurred under Seadrill’s credit facilities.

For so long as Seadrill have outstanding indebtedness, including without limitation, indebtedness under

Seadrill’s credit facilities, Seadrill will have to dedicate a portion of Seadrill’s cash flow from operations to pay the principal and interest of this indebtedness. Seadrill cannot assure investors that Seadrill will be able to

generate cash flow in amounts that are sufficient for these purposes. If Seadrill is not able to satisfy these obligations, it may have to undertake alternative financing plans or sell its assets. The actual or perceived

credit quality of Seadrill’s customers, any defaults by them, and the market value of Seadrill’s fleet, among

other things, may materially affect Seadrill’s ability to obtain alternative financing. If Seadrill is not able to find alternative sources of financing on terms that are acceptable to Seadrill or at all, Seadrill’s business, financial

condition, results of operations and cash flows may be materially adversely affected.

1.3.5 The agreements and instruments governing Seadrill’s debt, including the Bonds, contain restrictive

covenants, which may limit Seadrill’s liquidity and corporate activities and prevent proper service of

debt, which could result in the loss of Seadrillt’s drilling units.

Seadrill‘s loan agreements impose significant operating and financial restrictions on Seadrill. These restrictions may limit Seadrill’s ability to:

incur additional indebtedness;

create liens on its assets;

sell capital stock of the Companyal subsidiaries;

make investments;

engage in mergers or acquisitions;

pay dividends or redeem capital stock;

make capital expenditures;

change the registration or management of Seadrill’s drilling units or terminate or materially amend

the management agreement relating to each drilling unit; and

sell its drilling units.

In addition, Seadrill’s loan agreements require compliance with certain maintenance covenants.

The credit agreements of Seadrill’s rig-owning subsidiaries generally prohibit dividends to Seadrill during the

occurrence of an event of default thereunder.

Therefore, Seadrill may need to seek permission from Seadrill’s lenders in order to engage in some corporate

actions. Seadrill i lenders’ interests may be different from Seadrill’s and Seadrill cannot guarantee that Seadrill will be able to obtain Seadrill a lenders’ permission when needed. This may prevent Seadrill from taking actions

that Seadrill believe are in its best interest.

1.3.6 The Company is the sole obligor of the Bonds, and as none of the Company’s subsidiaries will

guarantee the Company’s obligations under the Bond Agreement; the Bonds are structurally

subordinated to all existing and future indebtedness and other liabilities (including trade payables) of

the Company’s subsidiaries.

The Company is a holding company that has no assets other than the capital stock of its subsidiaries and no

operations of its own. The Company depends on those subsidiaries for dividends and other payments to generate the funds necessary to meet the Company’s financial obligations, including the payment of principal

and interest on the Bonds. The ability of the Company’s subsidiaries to make payments to the Company may be restricted by, among other things, their credit facilities and applicable state corporation or similar statutes

and other laws and regulations Currently, there are no significant restrictions on the Company’s ability or the ability of any of the Company t subsidiaries to obtain funds from its subsidiaries by such means as a dividend

or loan. The Company’s subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay amounts due under the Bonds or to make any funds available to pay those amounts,

whether by dividend, distribution, loan or other payments. None of the Company’s subsidiaries guarantee the Bonds. Therefore, the Bonds are structurally subordinated to all existing and future indebtedness and other

liabilities (including trade payables) of the Company’s subsidiaries. The claims of the Company’s subsidiaries’ creditors will be required to be paid before holders of the Bonds have a claim (if any) against the entities and

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their assets. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to the Company’s subsidiaries, investors will participate with all other holders of the Company’s indebtedness in the

assets remaining after the Company’s subsidiaries have paid all of their debt and liabilities. In any of these cases, the Company’s subsidiaries may not have sufficient funds to make payments to the Company, and

investors may receive less, ratably, than the holders of debt of the Company’s subsidiaries and other liabilities.

1.3.7 Investor’s right to receive payments on the Bonds is effectively subordinated in right of payment to

all existing and future secured indebtedness of the Company up to the value of the collateral

securing such indebtedness.

The Bonds will be the Company’s unsecured obligations and will be effectively subordinated to the Company’s

secured indebtedness to the extent of the value of the collateral securing that debt. Although the indenture governing the notes will restrict the Company’s ability to create or incur liens to secure indebtedness, these

restrictions are subject to important limitations and exceptions that will permit Seadrill to secure a substantial amount of additional indebtedness. Accordingly, in the event of a bankruptcy, insolvency, liquidation,

dissolution, reorganization or similar proceeding affecting the Company, investor’s rights to receive payment will be effectively subordinated to those of secured creditors up to the value of the collateral securing such

indebtedness. Holders of the Bonds will participate ratably with all holders of the Company’s unsecured indebtedness that is deemed to be of the same class as the Bonds, and potentially with all of the Company’s

other general creditors, based upon the respective amounts owed to each holder or creditor, in Seadrill’s

remaining assets. In addition, if the secured lenders were to declare a default with respect to their loans and

enforce their rights with respect to their collateral, there can be no assurance that the Company’s remaining assets would be sufficient to satisfy its other obligations, including its obligations with respect to the Bonds. In

any of the foregoing events, the Company cannot assure investors that there will be sufficient assets to pay amounts due on the Bonds. As a result, holders of the Bonds may receive less, ratably, than holders of secured

indebtedness.

1.3.8 If Seadrill default on its obligations to pay its other indebtedness, the Company may not be able to

make payments on the Bonds.

Any default under the agreements governing Seadrill’s indebtedness, including a default under Seadrill’s existing credit facilities, that is not waived by the required lenders or holders of such indebtedness, and the

remedies sought by the holders of such indebtedness, could prevent the Company from paying principal, premium, if any, and interest on the Bonds and substantially decrease the market value of the Bonds. If

Seadrill is unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on its indebtedness, or if it otherwise fail to

comply with the various covenants in any agreement governing Seadrill’s indebtedness, including the covenants contained in Seadrill’s credit facility, Seadrill would be in default under the terms of the agreements

governing such indebtedness. In the event of such default:

the lenders under Seadrill’s credit facility could elect to terminate their commitments thereunder,

declare all the funds borrowed thereunder to be due and payable and, if not promptly paid, institute foreclosure proceedings against Seadrill’s assets;

even if those lenders do not declare a default, they may be able to cause all of Seadrill t available cash to be used to repay their loans; and

such default could cause a cross-default or cross-acceleration under Seadrill’s other indebtedness, including the Bonds. Because of such default and any actions the lenders may take in response

thereto, the Company could be forced into bankruptcy or liquidation.

1.3.9 Seadrill cannot assure investors that an active trading market will develop for the Bonds.

The Bonds will be listed on the Oslo Stock Exchange, but an active trading market may not develop for the Bonds and, even if one develops, such market may not be maintained. If an active trading market for the

Bonds does not develop or is not maintained, the market price and liquidity of the Bonds is likely to be adversely affected and Bondholders may not be able to sell their Bonds at desired times and prices or at all.

The liquidity of the trading market, if any, and future trading prices of the Bonds will depend on many factors,

including, among other things, prevailing interest rates, Seadrill’s operating results, financial performance and prospects, the market for similar securities and the overall securities market, and may be adversely affected by

unfavorable changes in these factors. It is possible that the market for the Bonds will be subject to disruptions that may have a negative effect on the holders of the Bonds, regardless of Seadrill’s operating results, financial

performance or prospects.

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1.3.10 The international nature of Seadrill operations may make the outcome of any bankruptcy

proceedings difficult to predict.

The Company is incorporated under the laws of Bermuda and the Companyed subsidiaries are incorporated

under the laws of Bermuda, the Cayman Islands, Hungary, Liberia, Singapore, British Virgin Islands, Hong Kong, Norway and the United Kingdom, and Seadrill conducts operations in countries around the world.

Consequently, in the event of any bankruptcy, insolvency or similar proceedings involving the Company or one of the Company i subsidiaries, bankruptcy laws other than those of the United States could apply. Seadrill have

limited operations in the United States. If Seadrill become a debtor under the United States bankruptcy laws,

bankruptcy courts in the United States may seek to assert jurisdiction over all of Seadrilla assets, wherever located, including property situated in other countries. There can be no assurance, however, that Seadrill

would become a debtor in the United States or that a United States bankruptcy court would be entitled to, or accept, jurisdiction over such bankruptcy case or that courts in other countries that have jurisdiction over

Seadrill and Seadrillec operations would recognize a United States bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.

1.3.11 Seadrill is subject to certain fraudulent transfer and conveyance statutes, which may adversely

affect holders of the Bonds.

Fraudulent transfer and insolvency laws to which Seadrill may be subject may result in the Bonds being voided,

subordinated or limited.

U.S. Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the Bonds. Under U.S. federal bankruptcy law and comparable provisions of U.S. state fraudulent transfer or conveyance

laws, if any such law would be deemed to apply, which may vary from state to state, the Bonds could be voided as a fraudulent transfer or conveyance if (1) Seadrill issued the Bonds with the intent of hindering,

delaying or defrauding creditors, or (2) Seadrill received less than reasonably equivalent value or fair consideration in return for either issuing the Bonds and, in the case of (2) only, one of the following is also true

at the time thereof:

Seadrill, were insolvent or rendered insolvent by reason of the issuance of the Bonds;

the issuance of the Bonds left Seadrill with an unreasonably small amount of capital to carry on the business;

Seadrill intended to, or believed that Seadrill would incur debts beyond Seadrill’s ability to pay as they

mature; or

Seadrill were a defendant in an action for money damages, or had a judgment for money damages

docketed against Seadrill if, in either case, after final judgment, the judgment is unsatisfied.

If a court were to find that the issuance of the Bonds was a fraudulent transfer or conveyance, the court could

void the payment obligations under the Bonds or further subordinate the Bonds to Seadrill’s presently existing and future indebtedness. In the event of a finding that a fraudulent transfer or conveyance occurred, investors

may not receive any repayment on the Bonds. Further, the voidance of the Bonds could result in an event of

default with respect to the Company and the Company’s subsidiaries’ other debt that could result in

acceleration of such debt.

As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation,

property is transferred or an antecedent debt is secured or satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to

make a dividend payment or otherwise retire or redeem equity securities issued by the debtor.

Seadrill cannot be certain as to the standards a court would use to determine whether Seadrill were solvent at

the relevant time. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; or

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and

mature; or

it could not pay its debts as they become due.

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1.3.12 Seadrill may be unable to raise funds necessary to finance the change of control repurchase offer

required by the Bond Agreement.

Upon the consequence of a Change of Control event, each Bondholder shall have the right of early repayment

of its Bonds at a price equal to 100% of the principal amount of the Bonds, plus any accrued and unpaid interest. The Company may not have sufficient funds to satisfy such cash obligations and, in such

circumstances, may not be able to arrange the necessary financing on favorable terms, or at all. In addition, the Company’s ability to satisfy such cash obligation may be limited by applicable- law or the terms of the

instruments governing its indebtedness. The Company’s failure to pay such obligations would constitute an

event of default under the Bond Agreement governing the Bonds which in turn could constitute an event of default under any of the Company’s outstanding indebtedness, thereby resulting in the acceleration of such

indebtedness and requires prepayment and further restrict the Company’s ability to satisfy such cash obligations.

1.3.13 Transfer of the Bonds will be subject to certain restriction

The Bonds have not been and will not be registered under the U.S. Securities Act or any U.S. state securities

laws. Therefore, Bondholder’s may not offer or sell the bonds in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and

applicable state securities laws, or pursuant to an effective registration statement. The Company has not

undertaken to register the bonds under the U.S. Securities Act or any U.S. state securities laws.

25

2 RESPONSIBILITY FOR THE PROSPECTUS

Seadrill Limited accepts responsibility for the information contained in this Prospectus. Seadrill Limited confirm

that, having taken all reasonable care to ensure that such is the case, the information contained in this

Prospectus is, to the best of our knowledge, in accordance with the facts and contains no omissions likely to

affect its import.

16 January 2013

Seadrill Limited

Kate Blankenship

Director

26

3 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus and the documents incorporated by reference herein contain forward-looking statements. All

statements other than statements of historical facts are statements that could be deemed forward-looking

statements, including statements preceded by, followed by or that include the words “estimate,” “plan,”

project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “think,” “view,” “seek,” “target,” “goal,” or similar expressions; any projections of earnings, revenues, expenses, synergies, margins or other financial

items; any statements of the plans, strategies and objectives of management for future operations, including integration and any potential restructuring plans; any statements concerning proposed new products, services,

developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Such forward-looking statements, whether expressed or implied, are subject to risks and uncertainties which

could cause the actual results of the Issuer to differ materially from those implied by such forward-looking statements, due to a number of factors, many of which are beyond the Company’s control. If any of these risks

or uncertainties materializes or any of these assumptions proves incorrect, results of the Issuer could differ materially from the expectations in these statements. The Issuer does not undertake any obligation to update

these forward-looking statements, except as required by law.

No forward-looking statements contained in this Prospectus should be relied upon as predictions of future

events. No assurance can be given that the expectations expressed in these forward-looking statements will prove to be correct. Actual results could differ materially from expectations expressed in the forward-looking

statements if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized. Some important factors that could cause actual results to differ materially from those in the

forward-looking statements are included in Section 1 “Risk Factors”.

Readers are cautioned not to place undue reliance on the forward-looking statements contained in this Prospectus, which represent the best judgment of the Company’s management as of the date of this

Prospectus. Except as required by applicable law, the Company’s does not undertake responsibility to update these forward-looking statements, whether as a result of new information, future events or otherwise. Readers

are advised, however, to consult any further public disclosures made by the Company, such as filings made with the Oslo Stock Exchange or press releases.

27

4 THE BOND ISSUE

4.1 Use of proceeds

The net proceeds from the Bond Issue are approximately NOK 1,250,000,000. The net proceeds have been used for the Company’s general corporate purposes.

4.2 Terms of the Bonds

The summary below describes the principal terms of the Bonds. Certain of the terms and conditions described below are subject to important limitations and exceptions. The Bond Agreement attached as appendix 1 to this

Prospectus contains the complete terms and conditions of the Bonds.

ISIN: NO 001 063611.1

Common Code: 074391761

The reference name of the Bond Issue: FRN Seadrill Limited Senior Unsecured Bond Issue 2012/ 2014

Issuer: Seadrill Limited

Security type: Bond issue with floating rate

Issue size: NOK 1,250,000,000

Denomination: Each bond has a denomination of NOK 500,000

Securities form: The Bonds are electronically registered in book-entry form with the VPS.

Issue Date: 13 February 2012

Interest bearing from and including: Issue Date

Interest bearing to: Maturity

Maturity: 13 February 2014

Interest Payment Date: 13 May, 13 August, 13 November and 13 February each year and the Maturity Date

Issue Price:

Bond Reference Rate:

Margin:

100% (par value)

3 months NIBOR

3.25% p.a.

Interest rate: Bond Reference Rate plus the Margin

Yield: Dependent on market price

Day count fraction: act/360

Business Day Convention: Modified Following Business Day Convention - If the relevant Interest Payment Date falls on a day that is not a Business Day, that date will

be the first following day that is a Business day unless that day falls in the next calendar month, in which case that date will be the first

preceding day that is a Business Day.

Amortization: The Bonds shall mature in full on the Maturity Date, and shall be

repaid at par (100%) by the Company.

Business Day: Any day on which Norwegian commercial banks are open for general

business, and when Norwegian commercial banks can settle foreign currency transactions.

Change of Control Event: Upon the occurrence of a “Change of Control Event” (which for the

purpose of the Bond Agreement shall mean an event where any person or group (other than Hemen Holding Ltd, and/or companies

controlled directly or indirectly by Mr. John Fredriksen, his direct lineal

descendants, the personal estate of any of them and any trust created

for the benefit of any of the aforementioned persons and their estates), becomes the owner, directly or indirectly, of more than 50%

of the outstanding shares of the Company, each Bondholder shall have a right of early repayment (put option) of its Bonds at a price of

100% of par value plus accrued and unpaid interest during a period of 60 days following the notice of a Change of Control Event).

28

Taxation: The Company shall pay any stamp duty and other public fees accruing in connection with the Bonds, but no in respect of trading in the

secondary market (except to the extent required by applicable laws), and shall deduct at source any applicable withholding tax payable

pursuant to law.

Payment mechanics: Interest and principal due for payment will be credited the bank

account nominated by each Bondholder in connection with its securities account in the Norwegian Central Securities Depository

(“Verdipapirsentralen” or “VPS”).

Ranking of the Bonds: The Bonds are senior debt of the Issuer. The Bonds rank at least pari

passu with all other obligations of the Issuer (save for such claims which are preferred by bankruptcy, insolvency, liquidation or other

similar mandatory laws) and rank ahead of subordinated debt. The Bonds are structurally subordinated to all existing and future debt of

the subsidiaries of the Company and effectively subordinated to all existing and future secured debt of the Company to the extent of the

assets securing such debt.

Covenants: The Company shall ensure that the Group maintains a Market

Adjusted Equity Ratio of at least 30%. Please see the Bond

Agreement, attached hereto as Appendix 1, for further details on the

Company’s covenants.

Listing and admission to trading: The Bond will be listed on the Oslo Stock Exchange.

Listing will take place as soon as possible after the prospectus has been approved by the Norwegian Financial Supervisory Authority.

Purpose: The net proceeds of the Bonds shall be employed by the Company for general corporate purposes.

Approvals: The issuance of the Bonds was made in accordance with the Company’s Board resolutions on January 27, 2012.

Limitation of claims: Claims of interest and principal shall be subject to the time-bar provisions of the Norwegian Act relating to the limitation period for

claims of 18 May 1979 No. 18, p.t. 3 years for interest rates and 10

years for principal.

Bond Agreement: The Bond Agreement, attached hereto as Appendix 1, has been

entered into between the Company and the Trustee. The Bond Agreement sets out the Bondholders’ rights and obligations in the

Bonds. The Trustee have entered into the Bond Agreement on behalf of the Bondholders and been granted authority to act on behalf of the

Bondholders to the extent provided for in section 17 of the Bond Agreement. When Bonds are purchased, the Bondholder is deemed to

have accepted the Bond Agreement and shall be bound by its terms.

Bondholders’ Meeting: The Bondholders’ Meeting represents the supreme authority of the

Bondholders community in all matters relating to the Bonds. If a resolution by the Bondholders is required, such resolution shall be

passed at a Bondholders’ Meeting. Resolutions passed at Bondholders’ Meetings shall be binding upon and prevail for all the Bonds. At the

Bondholders’ meeting each Bondholder shall have one vote for each Bond he owns as at the close of business on the day prior to the date

of the Bondholders’ Meeting in accordance with the records registered in the Verdipapirsentralen. Whoever opens the Bondholders’ Meeting

shall adjudicate any question concerning which Outstanding Bonds shall not count as Voting Bonds, and thus shall not have any voting

rights. In order to form a quorum, at least half (1/2) of the Voting Bonds must be represented at the meeting, see however Clause 16.4.

Even if less than half (1/2) of the Voting Bonds are represented, the Bondholders’ Meeting shall be held and voting completed. In the

following matters, a majority of at least 2/3 of the Voting Bonds

represented at the Bondholders’ Meeting is required: amendment of

the terms of this Bond Agreement regarding the interest rate, the tenor, redemption price and other terms and conditions affecting the

cash flow of the Bonds; transfer of rights and obligations of this Bond Agreement to another issuer, or change of Trustee. For more details,

please see the Bond Agreement Clause 16.

29

NIBOR: The rate for an interest period will be the rate for deposits in Norwegian Kroner for a period as defined under the bond reference

rate which appears on the Reuters Screen NIBR Page as of 12.00 noon, Oslo time, on the day that is two business days preceding that

interest payment date. If such rate does not appear on the Reuters Screen NIBR Page, reference to NIBOR shall be to the NIBOR

Reference Rate.

NIBOR Reference Rate: The NIBOR Reference Rate means that the rate for an interest period

will be determined on the basis of the rates at which deposits in Norwegian Kroner are offered by four large authorised exchange

banks in the Oslo market (the “Reference Banks”) at approximately 12.00 noon, Oslo time, on the day that is two Business Days

preceding that interest payment date to prime banks in the Oslo interbank market for a 3 months period commencing on that interest

payment date and in a representative amount. The Trustee will request the principal Oslo office of each Reference Bank to provide a

quotation of its rate. If at least two such quotations are provided, the rate for that Interest Payment Date shall be the arithmetic mean of

the quotations. If fewer than two quotations are provided as requested, the rate for that interest payment date will be the

arithmetic mean of the rates quoted by major banks in Oslo, selected by the Trustee, at approximately 12.00 noon, Oslo time, on that

interest payment date for loans in Norwegian Kroner to leading European banks for a period as defined under the bond reference rate

commencing on that interest payment date and in a representative amount.

Calculation agent: The Trustee

Availability of the Bond documentation: www.seadrill.com

Trustee: Norsk Tillitsmann ASA, P.O. Box 470 Vika, N-0116 Oslo, Norway

Managers: Nordea Markets, Middelthunsgt. 17, P.O. Box 1166 Sentrum, NO-0107 Oslo, Norway;

Pareto Securities AS, Dronning Mauds gt. 3, NO-0115 Oslo, Norway;

R.S Platou Markets AS, Haakon VII’s gate 10, NO-0116 Oslo, Norway;

and Swedbank First Securities, Filipstad Brygge 1, NO-0115 Oslo, Norway.

Paying Agent: Danske Bank A/S, Søndre Gate 13-15, 7466 Trondheim, Norway

Securities Depository: The Securities Depository in which the Bonds are registered is

Verdipapirsentralen, Biskop Gunnerus’ gate 14A, 0185 Oslo, Norway.

Investors with accounts in Euroclear or Clearstream, Luxembourg may

hold the Bonds in their accounts with such clearing systems and the relevant clearing system will be shown in the records of the VPS as

the holder of the relevant amount of the Bonds.

Market-making: There is no market-making arrangement entered into in connection

with the Bonds.

Legislation under which the Bonds have

been created:

Norwegian law

Transfer restrictions: None of the Bonds have been or will be registered under the U.S.

Securities Act. The Bonds may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction not

subject to, the registration requirements of the U.S. Securities Act and

applicable state securities laws.

Governing Laws: The Bonds and the Bond Agreement are governed by the laws of

Norway, with the District Court of Oslo as sole legal venue.

30

5 COMPANY OVERVIEW

5.1 Incorporation, registered office and registration number

The legal and commercial name of the Company is Seadrill Limited. The Company was incorporated under the

Bermuda Companies Act of 1981 of Bermuda on May 10, 2005 as an exempted company limited by shares with registration number 36832 and is subject to Bermuda law. The Company’s shares of common stock have been

listed under the symbol "SDRL" on the Oslo Stock Exchange since November 2005 and on the New York Stock

Exchange since April 2010. The Company’s principal executive offices are located at Par-la-Ville Place, 4th Floor, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda and the Company's telephone number is +1 (441) 295-

6935.

5.2 Business overview

Seadrill is an offshore drilling contractor providing global offshore drilling services to the oil and gas industry. The Company has a versatile fleet of drilling units that is outfitted to operate in shallow-, mid- and deep-water

areas, in benign and harsh environments. The customers are national, international and independent oil companies. The various types of drilling units in the fleet are as follows:

Jack-Up Rigs

Jack-up rigs are mobile, self-elevating drilling platforms equipped with legs that are lowered to the ocean floor.

A jack-up rig is towed to the drill site with its hull riding in the sea as a vessel and its legs raised. At the drill site, the legs are lowered until they penetrate the sea bed and the hull is elevated until it is above the surface

of the water. After completion of the drilling operations, the hull is lowered until it rests on the water, the legs are raised and the rig can be relocated to another drill site. Jack-ups are generally suitable for water depths of

450 feet or less and operate with crews of 40 to 60 people.

Tender Rigs

Self-erecting tender rigs conduct production drilling from fixed or floating platforms. During drilling operations, the tender rig is moored next to the platform. The modularized drilling package, stored on the deck during

transit, is lifted prior to commencement of operations onto the platform by the rig’s integral crane. To support the operations, the tender rig contains living quarters, helicopter deck, storage for drilling supplies, power

machinery for running the drilling equipment and well completion equipment. There are two types of tender rigs, barge type and semi-submersible (semi-tender) type. Tender barges and semi-tenders are equipped with

similar equipment but the semi-tender’s semi-submersible hull structure allows the unit to operate in rougher weather conditions. Self-erecting tender rigs allow for drilling operations to be performed from platforms

without the need for permanently installed drilling packages. Self-erecting tender rigs generally operate with crews of 60 to 85 people.

Semi-submersible drilling rigs

Semi-submersible drilling rigs consist of an upper working and living quarter’s deck resting on vertical columns

connected to lower hull pontoons. Such rigs operate in a “semi-submerged” floating position, in which the lower hull is below the waterline and the upper deck protrudes above the surface. The rig is situated over a

wellhead location and remains stable for drilling in the semi-submerged floating position, due in part to its wave transparency characteristics at the water line.

There are two types of semi-submersible rigs, moored and dynamically positioned. Moored semi-submersible

rigs are positioned over the wellhead location with anchors, while the dynamically positioned semi-submersible rigs are positioned over the wellhead location by a computer-controlled thruster system. Depending on country

of operation, semi-submersible rigs generally operate with crews of 65 to 100 people.

Drillships

The drillships are self-propelled ships equipped for drilling in deep waters, and are positioned over the well through a computer-controlled thruster system similar to that used on semi-submersible rigs.

Drillships are suitable for drilling in remote locations because of their mobility and large load-carrying capacity. Depending on country of operation, drillships operate with crews of 65 to 100 people.

Segments

Information regarding revenues, segment operating profit or loss and total assets attributable to each

operating segment for the last three fiscal years is presented in Note 3 to the attached Consolidated Financial Statements included in this prospectus. Information regarding the operating revenues and identifiable assets

attributable to each of the geographic areas of operations for the last three fiscal years is also presented in Note 3 to the attached Consolidated Financial Statements.

In response to a significant growth in operations through acquisitions of new rigs, newbuilding orders and the deconsolidation of Archer Limited (formerly Seawell Limited) in early 2011, a review of the internal structure,

31

including the operating and reporting business segments, resulted in a change to the reporting segments with effect from the first quarter of 2011.

With effect from the first quarter of 2011, the Company has reported the business in the following operating segments:

Floaters: The Company offer services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to semi-submersible rigs and drillships

for harsh and benign environments in mid-, deep- and ultra-deep waters.

Jack-up rigs: The Company offer services encompassing drilling, completion and maintenance of

offshore exploration and production wells. The drilling contracts relate to jack-up rigs for operations in harsh and benign environments.

Tender Rigs: The Company operates self-erecting tender barges and semi-submersible tender rigs, which are used for production drilling and well maintenance in benign environments.

Well Services: The Company provides services using platform drilling, facility engineering, modular rig, well intervention and oilfield technologies. However, this segment is only applicable for the

period up to and including February 2011 when Archer was deconsolidated.

Business Strategy

The primary objective is to profitably grow the business to increase long-term distributable cash flow per share to the Company’s shareholders through the following principal strategies:

Continue to provide excellent service to the customers

The Company is a leading offshore deepwater drilling company and the mission is to continue to be the

preferred offshore drilling contractor and to deliver excellent performance to the clients by consistently fulfilling their expectations for performance and safety standards.

Growth through targeted alliances, purchases of newbuildings, mergers and acquisitions

The Company has grown the fleet significantly since the formation in 2005. See “Management’s Discussion and

Analysis of Financial Condition and Results of Operations—Fleet Development.” The strategy is focused on developing a fleet of new premium offshore drilling units through newbuild orders and targeted acquisitions of

modern assets. In line with this strategy, the Company has invested significantly in new rigs with enhanced technical capabilities since October 2010 by adding six ultra-deepwater units, one drillship, six jack-up rigs and

four tender rigs to the fleet, a 65.95% equity interest in AOD, a 28.50% equity interest in Sevan, and a 6.4% equity interest in Sapurakencana. These investments have been undertaken in consideration of the favorable

market view for the industry in general and the anticipated favorable development demand for new and

modern assets in particular. In addition, consistent with the goal to operate the most technologically advanced drilling unit fleet and the commitment to safety, in the future, the Company may sell certain assets from time

to time to replenish and grow the fleet.

Capitalize on favorable market developments

The Company believes the market outlook for offshore drilling remains favorable as contracting activities have increased for all types of offshore drilling units. This has been driven by increases in spending on exploration

and development activities by the customers because of the historically high levels of oil prices, the strong

demand for energy and the successful exploration and appraisal activities of oil companies in existing and new

geographical areas. The Company continues to see strong demand for new and modern units that offer superior technical capabilities, operational flexibility and reliability, and the Company believe, based on the

proven track record of operating these types of units and diverse fleet composition, the Company will be able to benefit from the growing focus on modern equipment.

The Company believes that consolidation in the offshore drilling rig industry would improve the pricing and earnings visibility for the services. Accordingly, the Company actively look for growth opportunities and intend

to take part in the future consolidation of the industry if the Company determine that potential transactions are in the best interest of the shareholders. Such opportunities may be in the form of transactions for specific

offshore drilling units or companies.

5.3 The Fleet

The Company believes that they have one of the most modern fleets in the offshore drilling industry with the majority of the units built after 2008. This results in improved utilization rates and the daily rates obtainable

for the drilling units. The following table sets forth the units that the Company owns or has contracted for

delivery as of November 30, 2012.

Unit

Year of delivery

Water depth

(feet)

Drilling depth

(feet)

Customer

Jack-up rigs

West Janus(1) 1984 328 21,000 Vietsovpetro

32

Unit

Year of delivery

Water depth

(feet)

Drilling depth

(feet)

Customer

West Epsilon(2) 1993 400 30,000 Statoil

West Courageous 2007 350 30,000 Shell West Defender 2007 350 30,000 Shell

West Resolute 2007 350 30,000 KJO West Prospero 2007 400 30,000 Vietsovpetro

West Intrepid 2008 350 30,000 KJO West Vigilant 2008 350 30,000 Talisman

West Ariel 2008 400 30,000 Vietsovpetro West Triton 2008 375 30,000 KJO

West Freedom 2009 350 30,000 KJO / GDF Suez West Cressida 2009 375 30,000 PTTEP

West Mischief 2010 350 30,000 ENI West Callisto 2010 400 30,000 Saudi Aramco

West Leda 2010 375 30,000 ExxonMobil West Elara(2) 2011 450 40,000 Statoil

West Castor(3) 2013 400 30,000 Saudi Aramco West Telesto(3) 2012 400 30,000 Saudi Aramco

West Oberon(3) 2013 400 30,000 Premier West Tucana(3) 2012 400 30,000 PVEP

West Linus(2)(3) 2013 450 40,000 ConocoPhillips AOR-1 (3)(6) 2013 400 20,000 Saudi Aramco

AOR-2 (3)(6) 2013 n/a(5) AOR-3 (3)(6) 2013 n/a(5)

Tender rigs

T4 1981 410 20,000 Chevron T7 1983 410 20,000 Chevron

West Pelaut 1994 6,500 30,000 Shell West Menang 1999 6,500 30,000 Murphy

West Alliance 2001 6,500 30,000 Shell West Setia 2005 6,500 30,000 Chevron

West Berani 2006 6,500 30,000 Chevron T11 2008 6,500 30,000 Chevron

T12 2010 6,500 30,000 Chevron West Vencedor 2010 6,500 30,000 Chevron

West Jaya 2011 6,500 30,000 BP T15(3) 2012 6,500 30,000 Chevron

T16(3) 2013 6,500 30,000 Chevron T17(3) 2013 6,500 30,000 PTTEP

West Esperanza(3) 2013 6,500 30,000 Hess T18(3) 2013 6,500 30,000 Chevron

Unit

Year of delivery

Water depth (feet)

Drilling

depth (feet)

Customer

Semi-submersible

rigs West Alpha(2) 1986 2,000 23,000 ExxonMobil

West Venture(2) 2000 2,600 30,000 Statoil West Phoenix(2) 2008 10,000 30,000 Total

West Hercules(2)(4) 2008 10,000 35,000 Husky / Statoil West Sirius 2008 10,000 35,000 BP

West Taurus(4) 2008 10,000 35,000 Petrobras West Eminence 2009 10,000 30,000 Petrobras

West Aquarius 2009 10,000 35,000 ExxonMobil

West Orion 2010 10,000 35,000 Petrobras West Pegasus 2011 10,000 35,000 PEMEX

West Leo 2012 10,000 35,000 Tullow Oil West Capricorn 2011 10,000 35,000 BP

West Mira(3) 2015 10,000 40,000 Husky West Rigel(2)(3) 2015 10,000 40,000 n/a(5)

Drillships

33

Unit

Year of delivery

Water depth

(feet)

Drilling depth

(feet)

Customer

West Navigator(2) 2000 7,500 35,000 Shell

West Polaris(4) 2008 10,000 35,000 ExxonMobil West Capella 2008 10,000 35,000 Total

West Gemini 2010 10,000 35,000 Total / TBN West Auriga(3) 2013 12,000 40,000 BP

West Vela(3) 2013 12,000 40,000 BP West Tellus(3) 2013 12,000 40,000 n/a(5)

West Neptune(3) 2014 12,000 40,000 n/a(5) West Jupiter (3) 2014 12,000 40,000 n/a(5)

West Saturn(3) 2014 12,000 40,000 n/a(5) West Carina (3) 2014 12,000 40,000 n/a(5)

(1) Seadrill has entered into an agreement to sell the unit and expect to complete the transaction in the

first quarter of 2013.

(2) Owned by the Company's subsidiary, NADL, in which the Company own 73% of the outstanding

shares.

(3) Newbuilding under construction or in transit to first drilling assignment.

(4) Unit owned by a subsidiary of Ship Finance International Limited (“Ship Finance”) (see Note 33 to audited consolidated financial statements).

(5) Currently uncontracted.

(6) Owned by the Company's subsidiary, Asia Offshore Drilling, in which the Company own 66% of the

outstanding shares.

5.4 Management of the Company

Overall responsibility for the management of the Company's and its subsidiaries rests with its Board. The Board

has organized the provision of management services through a subsidiary incorporated in Norway, Seadrill Management AS. The Board has defined the scope and terms of the services to be provided by Seadrill

Management authorizing it to run day-to-day operations. The Board must be consulted on all matters of material importance and/or of an unusual nature and, for such matters, will provide specific authorization to

personnel in Seadrill Management to act on its behalf.

5.5 Contract Status

Most of Seadrill’s drilling units are contracted to customers for periods between one and seven years, and

Seadrill’s future contracted revenue, or backlog, as of November, 30, 2012, which is calculated from September 30, 2012, totaled approximately $21.3 billion, with $15.7 billion of this amount attributable to

Seadrill’s semi-submersible rigs and drillships. Seadrill expect approximately $2.3 billion of Seadrill’s backlog to be realized during the next six months. Backlog for Seadrill’s drilling fleet is calculated as the contract daily

rate multiplied by the number of days remaining on the contract, assuming full utilization (but excluding any contract extensions). Backlog excludes revenues for mobilization and demobilization, contract preparation, and

customer reimbursables. The amount of actual revenues earned and the actual periods during which revenues are earned will be different from the backlog projections due to various factors. Downtime, caused by

unscheduled repairs, maintenance, weather and other operating factors, may result in lower applicable daily rates than the full contractual operating daily rate.

The actual amounts of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods shown in the table below due to, for example, shipyard and maintenance

projects, downtime and other factors that result in lower revenues than Seadrill’s average contract backlog per day.

The firm commitments that comprise Seadrill’s contract backlog as of November 30, 2012 are as follows:

Drilling Unit

Contracted Location

Customer

Contractual

Daily Rate

Earliest

Expiration Date

Jack-up rigs West Janus(1)

Vietnam Vietsovpetro 118,500 December 2012

West Epsilon(2)

Norway Statoil 289,000 December 2014

West Courageous Malaysia Shell 134,500 January 2013

34

Drilling Unit

Contracted Location

Customer

Contractual

Daily Rate

Earliest

Expiration Date

West Defender

Brunei Shell 133,000 May 2016

West Resolute

Saudi Arabia / Kuwait KJO 140,000 October 2015

West Prospero

Vietnam Vietsovpetro 129,000 December 2012

West Intrepid Saudi Arabia / Kuwait KJO 180,000 November 2013

West Vigilant

Malaysia

Talisman

146,000

October 2013

West Ariel

Vietnam Vietsovpetro 129,000 December 2012

West Triton

Saudi Arabia / Kuwait KJO 145,000 August 2015

West Freedom

Saudi Arabia / Kuwait / Quatar KJO/ GDF Suez

185,000/ 155,000

June 2013

West Cressida

Thailand PTTEP 129,500 May 2014

West Mischief

Republic of Congo Equion ENI

172,000 175,000

October 2012/ November 2014

West Callisto

Saudi Arabia Saudi

Aramco

150,000 November 2015

West Leda Malaysia ExxonMobil 133,500/

138,000

April 2014

West Elara(2)

Norway Statoil 366,000 March 2017

West Castor(3)

Jurong Shipyard (Singapore) / Saudi

Arabia

Saudi

Aramco

198,500

August 2016

West Telesto(3)

Dalian Shipyard (China) / Saudi Arabia Saudi

Aramco

185,000 April 2016

West Oberon(3)

Dalian Shipyard (China) / Saudi Arabia Saudi

Aramco

149,500 August 2013

West Tucana(3)

Jurong Shipyard (Singapore) PVEP 160,000 April 2013

AOR-1 (3)(6) Keppel FELS Shipyard (Singapore) Saudi Aramco

180,000 June 2016

AOR-2 (3)(6) Keppel FELS Shipyard (Singapore) n/a AOR-3 (3)(6) Keppel FELS Shipyard (Singapore) n/a

West Linus(2)(3)

Jurong Shipyard (Singapore)/ Norway Conoco-

Phillips

368,000 April 2019

Tender rigs

T4

Thailand Chevron 104,500 June 2013

T7

Thailand Chevron 88,000 March 2013

West Pelaut

Brunei Shell 120,000 March 2015

West Menang

Malaysia Murphy 160,000/ 172,000

March 2013/ September 2014

West Alliance

Malaysia Shell 171,000 January 2015

West Setia

Angola Chevron 223,000 August 2014

West Berani

Indonesia Chevron 170,000 April 2013

T11 Thailand Chevron 135,000/ 127,500

May 2013/ May 2017

35

Drilling Unit

Contracted Location

Customer

Contractual Daily Rate

Earliest Expiration Date

T12

Thailand Chevron 120,000 April 2014

West Vencedor

Angola Chevron 210,000 March 2015

West Jaya Trinidad & Tobago BP 165,000/ 173,000

August 2013/ September 2014

T15(3)

COSCO Shipyard (China) Chevron 115,500 March 2018

T16(3)

COSCO Shipyard (China) Chevron 115,500 June 2018

T17(3)

COSCO Shipyard (China) PTTEP 118,000 May 2018

West Esperanza(3) Keppel FELS (Singapore) / Equatorial Guinea

Hess 235,000 December 2014

T18(3)

COSCO Shipyard (China) Chevron 127,000 March 2019

Semi-

submersible rigs

West Alpha(2) Norway ExxonMobil/

ExxonMobil

482,000/

552,000

July 2014/

July 2016 West Venture(2)

Norway Statoil 440,000 July 2015

West Phoenix(2)

UK Total 453,000 January 2015

West Hercules(4)

Norway Statoil 501,000 December 2016

West Sirius

Gulf of Mexico (USA) BP 474,000 /

535,000

July 2014/

July 2019 West Taurus(4)

Brazil Petrobras 648,000 February 2015

West Eminence

Brazil Petrobras 616,000 July 2015

West Aquarius

Canada ExxonMobil 530,000 June 2015

West Orion

Brazil Petrobras 616,000 July 2016

West Pegasus

Gulf of Mexico (Mexico) PEMEX 465,000 August 2016

West Leo Ghana Tullow Oil 525,000/ 625,000

May 2013/ May 2016

West Capricorn

Gulf of Mexico (USA) BP 487,000 August 2017

West Mira(3)

Hyundai Shipyard (South Korea) Husky 590,000 June 2020

West Rigel(2)(3)

Jurong Shipyard (Singapore) n/a(5)

Drillships

West Navigator(2) Norway Shell 620,000/ 586,000

December 2012/ June 2014

West Polaris(4) Nigeria ExxonMobil 628,000/ 642,000

January 2013/ January 2018

West Capella Nigeria Total 552,000/ 627,500

April 2014 April 2017

West Gemini Angola Total / TBN 447,000/ 640,000

September 2013 September 2017

West Auriga(3)

Samsung Shipyard (South Korea) BP 565,000 October 2020

West Vela(3)

Samsung Shipyard (South Korea) BP 565,000 January 2021

West Tellus(3)

Samsung Shipyard (South Korea) n/a(5)

West Neptune(3)

Samsung Shipyard (South Korea) n/a(5)

West Jupiter(3)

Samsung Shipyard (South Korea) n/a(5)

36

Drilling Unit

Contracted Location

Customer

Contractual Daily Rate

Earliest Expiration Date

West Saturn(3)

Samsung Shipyard (South Korea) n/a(5)

West Carina(3)

Samsung Shipyard (South Korea) n/a(5)

(1) Seadril has entered into an agreement to sell the unit and expect to complete the transaction in the

fourth quarter of 2012.

(2) Owned by the Company’s subsidiary, NADL, in which the Company own 73% of the outstanding

shares.

(3) Newbuilding under construction or in transit to its first drilling assignment.

(4) Unit owned by a subsidiary of Ship Finance (see Note 33 to audited consolidated financial statements).

(5) Currently uncontracted.

The following table shows the percentage of rig days committed by year as of June 30, 2012. The percentage

of rig days committed is calculated as the ratio of total days committed under contracts to total available days in the period. Total available days for Seadrill’s units under construction are based on their expected delivery

dates.

(6) Owned by the Company’s subsidiary, Asia Offshore Drilling, in which the Company own 66% of the

outstanding shares.

% of rig-days committed Year ending December 31,

2012

2013

2014

Jack-up rigs 90% 66% 47%

Semi-submersible rigs 100% 100% 100%

Drillships 100% 93% 59%

Tender rigs 100% 92% 82%

5.6 Organizational structure

The Company is an exempt company limited by shares organized under the laws of Bermuda.

It is a holding company and its main function is to provide financing to the other entities in the Seadrill group by way of equity or shareholder loans. The Company’s assets and operation are organized in direct and indirect

subsidiaries incorporated in jurisdictions providing the tax and legislative framework which best suits the Company’s overall needs.

The following table sets forth the Company’s significant subsidiaries as of the date of this Prospectus.

Name of company Country of Incorporation

Principal activities Percent owned

Drilling unit owning

companies

Asia Offshore Rig 1 Ltd Bermuda Owner of AOR-1 66% Asia Offshore Rig 2 Ltd Bermuda Owner of AOR-2 66%

Asia Offshore Rig 3 Ltd Bermuda Owner of AOR-3 66% North Atlantic Alpha Ltd Bermuda Owner of West Alpha 73%

North Atlantic Elara Ltd Bermuda Owner of West Elara 73% North Atlantic Epsilon Ltd Bermuda Owner of West Epsilon 73%

North Atlantic Linus Ltd Bermuda Owner of West Linus 73% North Atlantic Navigator Ltd Bermuda Owner of West Navigator 73%

North Atlantic Phoenix Ltd Bermuda Owner of West Phoenix 73% North Atlantic Rigel Ltd Bermuda Owner of West Rigel 73%

37

North Atlantic Venture Ltd Bermuda Owner of West Venture 73% Scorpion Courageous Ltd. Bermuda Owner of Offshore Courageous 100%

Scorpion Defender Ltd. Bermuda Owner of Offshore Defender 100% Scorpion Freedom Ltd. Bermuda Owner of Offshore Freedom 100%

Scorpion Intrepid Ltd. Bermuda Owner of Offshore Intrepid 100% Scorpion Resolute Ltd. Bermuda Owner of Offshore Resolute 100%

Scorpion Rigs Ltd. Bermuda Owner of Offshore Mischief 100% Scorpion Vigilant Ltd. Bermuda Owner of Offshore Vigilant 100%

Seadrill Auriga Ltd. Bermuda Owner of West Auriga 100% Seadrill Carina Ltd. Bermuda Owner of West Carina 100%

Seadrill Castor Ltd. Bermuda Owner of West Castor 100% Seadrill Cressida Ltd. Bermuda Owner of West Cressida 100%

Seadrill Eminence Ltd Bermuda Owner of West Eminence 100% Seadrill Esperanza Ltd Bermuda Owner of West Esperanza 100%

Seadrill Gemini Ltd Bermuda Owner of West Gemini 100% Seadrill Indonesia Ltd Bermuda Owner of West Callisto and West Leda 100%

Seadrill Janus Ltd. Bermuda Owner of West Janus 100% Seadrill Jaya Ltd. Bermuda Owner of West Jaya 100%

Seadrill Jupiter Ltd Bermuda Owner of West Jupiter 100% Seadrill Leo Ltd. Bermuda Owner of West Leo 100%

Seadrill Mira Ltd. Bermuda Owner of West Mira 100%

Seadrill Neptune Ltd. Bermuda Owner of West Neptune 100%

Seadrill Oberon Ltd. Bermuda Owner of West Oberon 100% Seadrill Orion Ltd. Bermuda Owner of West Orion 100%

Seadrill Telesto Ltd. Bermuda Owner of West Telesto 100% Seadrill Prospero Ltd Bermuda Owner of West Prospero 100%

Seadrill Tellus Ltd. Bermuda Owner of West Tellus 100% Seadrill Tender Rig Ltd. Bermuda Holding company and owner of West

Alliance, West Berani, West Menang, West Pelaut, T-4, T-7, T-8, T-11 and

T-12

100%

Seadrill Triton Ltd. Bermuda Owner of West Triton 100% Seadrill Tucana Ltd. Bermuda Owner of West Tucana 100%

Seadrill T15 Ltd. Bermuda Owner of T15 100% Seadrill T16 Ltd. Bermuda Owner of T16 100%

Seadrill T17 Ltd Bermuda Owner of T17 100% Seadrill T18 Ltd Bermuda Owner of T18 100%

Seadrill Saturn Ltd Bermuda Owner of West Saturn 100% Seadrill Vela Ltd. Bermuda Owner of West Vela 100%

Seadrill Vencedor Ltd. Bermuda Owner of West Vencedor 100% Seadrill Deepwater Drillship Ltd. Cayman Islands Owner of West Capella 100%

Seabras Rig Holdco Kft. Hungary Owner of West Capricorn 88% Seadrill Hungary Kft. Hungary Owner of West Sirius 100%

Seadrill Ariel Ltd. Liberia Owner of West Ariel 100% Seadrill China Operations Ltd. Luxembourg Owner of West Aquarius 100%

Seadrill Pegasus Pte Ltd. Singapore Owner of West Pegasus 100%

Seadrill Tender Rigs Pte. Ltd. Singapore Owner of West Setia 100%

Drilling units under sale leaseback

SFL Polaris Ltd. * Bermuda Owner of West Polaris 0% SFL Deepwater Ltd. * Bermuda Owner of West Hercules and West

Taurus 0%

Contracting and

management companies

North Atlantic Norway Ltd Bermuda Drilling services contracter 73% Seadrill Deepwater Contracting

Ltd

Bermuda Contracting Company 100%

Seadrill Deepwater Crewing Ltd. Bermuda Crewing company 100%

Seadrill Servicos de Petroleo Ltda.

Brazil Drilling services contractor 100%

Seadrill Management Services Ltd.

British Virgin Islands

Management company 100%

Seadrill Asia Ltd. Hong Kong Drilling services contractor, holding company

100%

North Atlantic Crew AS Norway Crewing Company 73%

38

North Atlantic Management AS Norway Management company 73% Seadrill Offshore AS Norway Drilling services contractor 100% Seadrill Management AS Norway Management company 100%

Seadrill Management (S) Pte

Ltd

Singapore Management company 100%

Seadrill Offshore Singapore Ltd. Singapore Management company 100% North Atlantic Drilling UK Ltd UK Drilling services contracter 73%

Seadrill Americas Inc. USA Drilling services contractor and technical services company

100%

Holding Companies

Asia Offshore Drilling Ltd Bermuda Holding Company of Asia Offshore vessel owning entities

66%

North Atlantic Drilling Ltd Bermuda Holding Company of North Atlantic vessel owning entities

73%

Seadrill Common Holdings Ltd Bermuda Holding Company 100% Seadrill Deepwater Holdings Ltd Bermuda Holding Company for deepwater rigs 100%

Seadrill Jack Up Holding Ltd Bermuda Holding Company for Scorpion vessel owning entities

100%

Seadrill Capricorn Holdings LLC Marshall Islands Holding Company of Seadrill Partners vessel owning entities

88%

Seadrill OPCO Sub LLC Marshall Islands Holding Company of Seadrill Partners vessel owning entities

93%

Seadrill Operating LP Marshall Islands Holding Company of Seadrill Partners

vessel owning entities

93%

Seadrill Partners LLC Marshall Islands Ultimate Holding Company of Seadrill

Partners vessel owning entities

100%

Seadrill UK Ltd United Kingdom Holding Company 100%

* Fully consolidated Variable interest entities

5.7 Competitive position

The statements in this section or in any other section in the Prospectus regarding competitive position is made by Seadrill based on won assessment of the industry and the competition.

The Company believes that its competitive strengths include:

Leader among offshore drilling contractors

Since the inception in 2005, the Company have developed into one of the world’s largest international offshore

drilling contractors. The Company own and operate a fleet of 65 offshore drilling units, which consists of 14 semi-submersible rigs, 11 drillships, 24 jack-up rigs and 16 tender rigs, including 22 units currently under

construction. In addition, (i) the Company operate five tender rigs in association with Varia Perdana; and (ii) the Company hold investments in several other companies in the industry that own and/or operate offshore

drilling units with similar characteristics to its own fleet of drilling units or deliver various oil services. The Company maintain the second largest fleet of ultra-deepwater units, the most modern fleet of jack-up rigs and

the largest fleet of tender rigs.

Technologically advanced and ultra deep water geared fleet

The drilling units are among the most technologically advanced in the world and are geared towards the fast-growing ultra deep-water segment. The majority of the rigs were built after 2008, which is among the lowest

average fleet age in the industry. The Company continue to see strong demand for new and modern units that offer superior technical capabilities, operational flexibility and reliability, and the Company believe, based on

the Company’s proven track record of operating these types of units and diverse fleet composition, the Company will be able to benefit from the growing focus on modern equipment.

Robust industry fundamentals

The Company believes the market outlook for offshore drilling remains favorable as contracting activities have

increased for all types of offshore drilling units. This has been driven by increases in spending on exploration and development activities by its customers because of the historically high levels of oil prices, the strong

demand for energy and the successful exploration and appraisal activities of oil companies in existing and new geographical areas. The customers’ increased spending on exploration and development activities has focussed

on the offshore segment and particularly deep and ultra-deep water.

Experienced management team

The management team has significant experience in operating offshore drilling units and expertise in all aspects of commercial, technical, operational and financial areas of the business, promoting a focused

marketing effort, tight quality and cost controls, and effective operations and safety monitoring. Under their

39

leadership, the Company have increased its fleet from five drilling units to 65 drilling units and the total operating revenues from $27 million to $4.2 billion from the fiscal year ended December 31, 2005, to the fiscal

year ended December 31, 2011.

Strong and diverse customer relationships

The Company have strong relationships with its customers that the Company believe are based on the operational performance, operational track record and quality of the fleet. The customers are oil and gas

exploration and production companies, including major integrated oil companies, independent oil and gas producers and government-owned oil and gas companies. Among the largest customers in terms of revenue

and contract backlog, Petròleo Brasileiro S.A. (“Petrobras”), Statoil ASA (“Statoil”), Total S.A. Group (“Total”), Royal Dutch Shell (“Shell”), Exxon Mobil Corp (“ExxonMobil”), British Petroleum (“BP”), and Chevron

Corporation (“Chevron”), including certain of their subsidiaries.

Commitment to safety and the environment

The Company believe that the combination of its quality drilling units and experienced and skilled employees allows Seadrill to provide the customers with safe and effective operations, to establish, develop and maintain

a position as a preferred provider of offshore drilling services for the customers and to facilitate the procurement of term contracts and premium daily rates.

40

6 BOARD OF DIRECTORS AND MANAGEMENT

6.1 Board of Directors

Overall responsibility for the management of the Company and its subsidiaries rests with the Company’s board of directors (the “Board”). The Board has organized the provision of management services through a

subsidiary incorporated in Norway, Seadrill Management AS, or Seadrill Management. The board has defined the scope and terms of the services to be provided by Seadrill Management authorizing it to run day-to-day

operations. The Board must be consulted on all matters of material importance and/or of an unusual nature

and, for such matters, will provide specific authorization to personnel in Seadrill Management to act on the Company's behalf.

Seadrill’s business address at Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda, serves as c/o address for the members of the Board in relation to their directorships in Seadrill.

Composition of the Board: Name Position

John Fredriksen Chairman

Tor Olav Trøim Vice chairman

Kate Blankenship Board member

Kathrine Fredriksen Board member

Carl Erik Steen Board member

John Fredriksen | Chairman

John Fredriksen has served as Chairman of the Board, President and a director of the Company since its

inception in May 2005. Mr. Fredriksen has established trusts for the benefit of his immediate family which control Hemen, the largest shareholder. Mr. Fredriksen is Chairman, President, Chief Executive Officer and a

director of a related party Frontline, a Bermuda company listed on the NYSE, the Oslo Stock Exchange and the London Stock Exchange. He is also a director of a related party, Golar LNG Limited, or Golar, a Bermuda

company listed on the Nasdaq Global Market and the Oslo Stock Exchange whose principal shareholder is World Shipholding Limited, a company indirectly influenced by trusts established by Mr. John Fredriksen for the

benefit of his immediate family. He is also a director of a related party Golden Ocean Group Limited, or Golden Ocean, a Bermuda company publicly listed on the Oslo Stock Exchange and on the Singapore stock exchange,

whose principal shareholder is Hemen, and has served as a director of Frontline 2012 Ltd since December 2011,

Tor Olav Trøim | Vice Chairman

Tor Olav Trøim has served as Vice-President and a director of the Company since its inception in May 2005. Mr

Trøim graduated as M.Sc. Naval Architect from the University of Trondheim, Norway in 1985. His careers include Equity Portfolio Manager with Storebrand ASA (1987-1990) and Chief Executive Officer for

the Norwegian Oil Company DNO AS (1992-1995). Mr Trøim has also been a director of Archer Limited since its incorporation in 2007. Mr Trøim is also a director of Golar, Golar LNG Partners LP (listed on the Nasdaq Global

Market), Golden Ocean (also listed on the Singapore Stock Exchange), Aktiv Kapital ASA and Marine Harvest ASA. He served as a director of Frontline from November 1997 until February 2008 and has served as a

director of Frontline 2012 Ltd since December 2011.

Kate Blankenship | Board member

Kate Blankenship has served as a director of the Company since its inception in May 2005. Mrs Blankenship has also served as a director of Frontline since 2003. Mrs. Blankenship joined Frontline in 1994 and served as

its Chief Accounting Officer and Secretary until October 2005.

Mrs Blankenship has been a director of Ship Finance since October 2003, North Atantic Drilling Ltd., since

February 2011, Independent Tankers Corporation Limited since February 2008, Golar since July 2003, Golar

LNG Partners LP since September 2007. Golden Ocean since November 2004, Archer Limited since its incorporation in 2007 and Frontline 2012 Ltd since December 2011 and Seadrill Partners LLP since 2012. She is

a member of the Institute of Chartered Accountants of England and Wales.

41

Kathrine Fredriksen | Board member

Ms. Fredriksen has served as a director of the Company since September 2008. Ms Fredriksen has also served

as a director of Golar since February 2008. She graduated from Wang Handels Gymnas in Norway and studied

at the European Business School in London. Ms Fredriksen is the daughter of Mr John Fredriksen, the President

and Chairman.

Carl Erik Steen | Board member

Carl Erik Steen has served as a director of the Company since February 2011. Mr. Steen graduated in 1975 from ETH Zurich Switzerland with a M.Sc. in Industrial and Management Engineering. He then worked as a

consultant in various Norwegian companies before joining I.M.Skaugen as a Director in 1978. In 1983, Mr Steen moved to Christiania Bank Luxembourg and in 1987 returned to Norway to establish the international

shipping desk of Christiania Bank. In 1992, Mr Steen was appointed Executive Vice President with the responsibility of Christiania Bank's Shipping, Offshore and International activities. From January 2001 until

February 2011, Mr Steen was head of Nordea Bank's Shipping, Oil Services & International Division. Mr. Steen is also a board member of Eksportfinans (the Norwegian export credit institution for Export Financing), and

Eitzen Chemical ASA, Wilhelm Wilhelmsen Holding ASA and RS Platou ASA.

6.2 Executive Management team

The following table sets forth information regarding the officers and key employees within the Company’s operating subsidiaries, who are responsible for overseeing the management of the Company’s business:

Name Position Business address:

Fredrik Halvorsen Chief Executive Officer and President of Seadrill Management Ltd.

13th Floor, One American Square, 17 Crosswall, London EC3N 2LB, United

Kingdom

Per Wullf Chief Operating Officer and Executive

Vice President of Seadrill Management Ltd.

13th Floor, One American Square, 17

Crosswall, London EC3N 2LB, United Kingdom

Robert Hingley-Wilson Chief Accounting Officer and Senior Vice President of Seadrill Management Ltd.

13th Floor, One American Square, 17 Crosswall, London EC3N 2LB, United

Kingdom

Rune Magnus Lundetræ Chief Financial Officer and Senior Vice

President of Seadrill Management Ltd

13th Floor, One American Square, 17

Crosswall, London EC3N 2LB, United Kingdom

Svend Anton Maier Senior Vice President, Africa and Middle-East

Arenco Building, 18th Floor, Sheik Zayed Road, Media City, Dubai, U.A.E.

Alf Ragnar Løvdal Senior Vice President, Europe Finnestadveien 28, 4029 Stavanger, Norway

Raphael Siri Senior Vice President Asia Pacific 10 Hoe Chiang Road, #18-01 Keppel Towers, Singapore 089315

Iain Hope Senior Vice President Americas 11025 Equity Drive, Suite 150, Houston, Texas 77041, USA

Derek Massie Senior Vice President HR Avenida Repùblica do Chile No. 230, 21st and 22nd floors, zip code 20031-

170, Centra Rio de Janeiro – RJ, Brazil

Eduardo Antonello Senior Vice President Brazil Par-la-Ville Place, 14 Par-la-Ville Road,

Hamilton 08, Bermuda

Georgina Sousa Company Secretary 13th Floor, One American Square, 17

Crosswall, London EC3N 2LB, United Kingdom

42

Fredrik Halvorsen | Chief Executive Officer and President of Seadrill Management

Fredrik Halvorsen was appointed CEO and President in October 2012. Mr Halvorsen works for Frontline

Corporate Services Ltd and is a Director of Deep Sea Supply Plc., where he has served since October 2010. He

has been a Director of Archer since 2010, stepping in as interim CEO of Archer in January 2012. He is also a

Director of Deep Sea Supply and Aktiv Kapital. Prior to this, Mr Halvorsen held various roles including CEO of Tandberg ASA, and senior positions at Cisco Systems Inc as well as McKinsey & Company. Mr Halvorsen is a

Norwegian citizen, resident in the UK

Per Wullf | Chief Operating Officer and Executive Vice President of Seadrill Management AS

Mr. Wullf has served as the Chief Operating Officer and Executive Vice President of Seadrill Management AS since February 2009. Mr. Wullf has more than 28 years of experience in the international offshore and onshore

drilling industry with A.P. Moller - Maersk A/S, serving as Managing Director for Maersk Drilling Norge AS from 2006 to 2009.

Robert Hingley-Wilson | Chief Accounting Officer and Senior Vice President of Seadrill Management AS

Mr. Hingley-Wilson was appointed Chief Accounting Officer, and Senior Vice President of Seadrill Management

AS, in February 2012. Mr. Hingley-Wilson has served as Group Chief Accountant to a group of related

companies since 2010 as an employee of Frontline Corporate Services UK Ltd. Mr. Hingley-Wilson has an extensive background in M&A and complex accounting with both Frontline Ltd and its associated companies

and in PricewaterhouseCoopers in New York City and London, where Mr. Hingley-Wilson worked from 1996 until joining Frontline in 2010. Mr. Hingley-Wilson has a law degree and trained as a Solicitor in the United

Kingdom, and has been a member of the Institute of Chartered Accountants in England and Wales since 1998.

Rune Magnus Lundetræ | Chief Financial Officer and Senior Vice President

Mr. Lundetræ was appointed designated Chief Financial Officer and Senior Vice President of Seadrill Management in February 2012 and sole Chief Financial Officer and Senior Vice President of Seadrill

Management in May 2012. Before his current position Mr. Lundetræ was Finance Director for Seadrill Americas and Commercial Director for Seadrill Europe (now North Atlantic Drilling Limited). He also served as Chief

Financial Officer for Scorpion Offshore Ltd after Seadrill acquired a majority stake in the company in July 2010 and up to delisting the company in November 2010. Prior to joining Seadrill Mr. Lundetræ worked as an auditor

for KPMG and PricewaterhouseCoopers in Stavanger, Norway from 2001 until 2007. Mr. Lundetræ graduated as MSc in Management from the London School of Economics in 2001 and as MSc in Accounting and Auditing from

the Norwegian School of Business Administration (NHH) in 2004. He registered as a Certified Public Accountant

(CPA) in Norway in 2005.

Svend Anton Maier | Senior Vice President, Africa and Middle-East

Mr. Maier has served as Senior Vice President, Africa and Middle-East since January 2011. Mr. Maier joined the Company in February 2007 as Vice President, Deepwater Eastern Hemisphere. Mr. Maier has more than 20

years of experience in the offshore drilling industry. Prior to joining Seadrill, Mr. Maier held several senior positions in Transocean Ltd., including operations manager in Egypt, Equatorial Guinea and Gabon. Mr. Maier

graduated from the Maritime Institute of Tønsberg with a degree in marine engineering.

Alf Ragnar Løvdal | Senior Vice President, Europe

Mr. Løvdal has served as the Senior Vice President, Europe since 2013. Mr. Løvdal previously held the position as Senior Vice President Asia Pacific from January 2011. From April 2009, Mr. Løvdal held the position of

Senior Vice President, Tender Rigs. He was previously Chief Executive Officer in Seawell Management AS. Mr. Løvdal has 30 years of experience in the oil and gas industry, including two years as Chief Executive Officer in

Seawell management AS, 20 years responsibility for the well services business in the drilling contractor Smedvig and five years of offshore field experience with Schlumberger. He has a degree in mechanical

engineering from Horten Engineering Academy in Norway.

Raphael Siri | Senior Vice President Asia Pacific

Mr. Siri was appointed Senior Vice President Asia Pacific in January 2013. Mr. Siri has more than fifteen years of international experience in the drilling industry. He has served as Director of Operations Preparation for the

Asia Pacific region from September 2011 to December 2012. Prior to joining Seadrill, Mr. Siri held several senior positions in Pride International including Senior Manager, Drilling systems, and Operations Manager. He

has a masters degree in Applied Mathematics from the Science University in Nice and an Engineering degree from the Ecole Nationale Supéieure de Techniques Avancèes (ENSTA) in Paris.

43

Iain Hope | Senior Vice President Americas

Mr. Hope joined Seadrill in 2009 and has served as Senior Vice President Americas since January 2011. Mr.

Hope has 20 years of experience in the drilling industry, most recently as director of operations excellence for

Seadrill Americas. Prior to joining Seadrill, Mr. Hope held several senior positions at Transocean including

division manager South America, director of deepwater marketing, operation manager North America and rig manager in Brazil, West Africa and North Sea. He has a bachelor degree in Electrical and Electronic Engineering

from Robert Gordon's, Aberdeen and completed postgraduate studies in Drilling Engineering prior to entering the industry.

Derek Massie | Senior Vice President HR

Mr Massie was appointed Senior Vice President HR in August 2010. Prior to joining Seadrill he worked for

Acergy MS Ltd, initially as HR Director, Asia Middle East Region, and latterly as HR Director, Corporate and

Offshore, based in London. Mr Massie has also held a number of senior HR roles including European HR

Director in Aggreko, and Geo-market HR manager Scandinavia with Schlumberger, based in Stavanger. He

holds a Masters degree in Business Administration from the Aberdeen Business School, and is a Fellow of the

Chartered Institute of People Development. Mr Massie is a UK citizen and resides in Stavanger, Norway.

Eduardo Antonello | Senior Vice President Brazil

Mr Antonello was appointed Senior Vice President of Seadrill Brazil, in May 2012. Mr Antonello has served as

Latin America Area Manager since the establishment of the company in the country in 2008, with extensive

knowledge of the local industry, authorities and regulations. Mr Antonello has previous international

background in business development activities, operations management, well services and drilling engineering,

having worked for Schlumberger in the Middle East, United States, England and most recently as country

manager in Brazil. He has a degree in mechanical engineering from the Mackenzie University of São Paulo. Mr

Antonello holds dual citzenship as Brazilian and Italian, and currently resides in Rio de Janeiro, Brazil.

Georgina Sousa | Company Secretary

Georgina Sousa has served as Company Secretary of the Company since February 2006. She is currently Head

of Corporate Administration for Frontline. Until January 2007, she was Vice-President-Corporate Services of Consolidated Services Limited, a Bermuda Management Company, having joined the firm in 1993 as Manager

of Corporate Administration. From 1976 to 1982 she was employed by the Bermuda law firm of Appleby, Spurling & Kempe as a Company Secretary and from 1982 to 1993 she was employed by the Bermuda law firm

of Cox & Wilkinson as Senior Company Secretary.

6.3 Conflict of interests

Hemen, the Company’s principal shareholder, is controlled by trusts established by John Fredriksen, Seadrill’s President and Chairman, for the benefit of his immediate family. Hemen also has significant shareholdings in

two companies affiliated with Seadrill, Frontline Ltd. (NYSE: FRO) and Ship Finance (NYSE: SFL). In addition, Hemen owns approximately 7.8% of Seadrill’s minority-owned subsidiary Archer Limited (OSE: NO). Seadrill’s

Vice-President and director Mr. Tor Olav Trøim is also a director of Archer Limited and Golar LNG Limited (NASDAQ GS: GLNG), a company affiliated with Seadrill. One of Seadrill’s other directors, Kate Blankenship, is

also a director of Frontline, NADL, Ship Finance, Golar LNG Limited, Seadrill Partners LLP and Archer Limited. Another of Seadrill’s directors, Kathrine Fredriksen, the daughter of Mr. John Fredriksen, is also a director of

Golar LNG Limited. Mr. Fredriksen, Mr. Trøim, Mrs. Blankenship and Ms. Fredriksen owe fiduciary duties to each of Seadrill, Frontline, Ship Finance, Archer Limited, Seadrill Partners LLP and Golar LNG Limited, as applicable,

and may have conflicts of interest in matters involving or affecting Seadrill and Seadrill’s customers. Seadrill’s CEO, Fredrik Halvorsen, is also the CEO of Archer Limited. In addition, they may have conflicts of interest when

faced with decisions that could have different implications for Frontline, Archer Limited, Ship Finance, or Golar LNG than they do for Seadrill. Seadrill cannot assure potential investors that any of these conflicts of interest

will be resolved in Seadrill favor.

To the Company's knowledge, there are currently no other actual or pending conflicts of interest between

Seadrill and members of the Company's senior management or board members.

44

7 MAJOR SHAREHOLDERS

The following table presents certain information as at 16 January 2013, regarding ownership of common shares of the Company with respect to each shareholder whom the Company knows beneficially own more than five

percent of the Company’s outstanding common shares:

Shareholder Number of Shares %

1 Hemen Holding Ltd. 115,097,583 24.53%

The Company’s major shareholders have the same right as other shareholders. No shareholder owns more

than 50% of the Company’s outstanding common shares. The Company is not aware of any arrangements, the operation of which may at a subsequent date result in a change in control of the Company.

45

8 FINANCIAL INFORMATION

8.1 Introduction

The following tables represent Seadrill’s selected Financial Statements for the years ended December 31, 2009,

2010 and 2011 (the “Full-Year Consolidated Financial Statements”) and the Company’s Financial Statements for the three and nine months ended September 30, 2011 and 2012 (the “Interim Consolidated

Financial Statements”).

Significant accounting policies are described in Note 2 to the consolidated financial statements, as included by reference in Section 10.6. The consolidated financial statements have been prepared in accordance with

USGAAP. Please see the annual report for 2011 for the Company’s accounting policies Section 10.6.

The financial statements as of December 31, 2011 and 2010 and for each of the three years in the period

ended December 31, 2011, incorporated into this Prospectus with reference, and the effectiveness of internal control over financial reporting as of December 31, 2011 have been audited by PricewaterhouseCoopers AS, an

independent registered public accounting firm, as stated in the report incorporated hereto with reference in section 10.6. The Interim Consolidated Financial Statements and related notes thereto included in this

Prospectus as Appendix 3 have not been reviewed by the Independent Auditor. This following section is only a summary and investors should read this selected historical consolidated financial data as included by reference

in section 10.6.

46

8.2 Consolidated statements of income

The table below sets out a summary of the audited Full-Year Consolidated Financial Statements of income, and

the unaudited interim Consolidated Financial Statements of income:

Income statement December 31,

December

31

December

31, 2011 2010 2009

USGAAP USGAAP USGAAP (in US$ millions, except per share data) Audited Audited Audited

Operating revenues Contract revenues 4,095 3,823 3,045

Reimbursables 96 192 166 Other revenues 1 26 43

Total operating revenues 4,192 4,041 3,254

Gain on sale of assets 22 26 71

Operating expenses Vessel and rig operating expenses 1,585 1,605 1,253

Reimbursable expenses 90 179 155 Depreciation and amortization 563 480 396

General and administrative expenses 202 178 149 Total operating expenses 2,440 2,442 1,953

Net operating income 1,774 1,625 1,372

Financial items

Interest income 21 42 78 Interest expense (295) (312) (228)

Share in results from associated companies (loss)/gain (420) 48 92 Impairment loss on marketable securities (10) (15) —

(Loss)/gain on derivative financial instruments (346) (92) 130 Gain on re-measurement of previously held equity interest — 111 —

Gain on bargain purchase — 56 — Loss on debt extinguishment — (145) —

Foreign exchange (loss) (18) (26) (25) Gain on loss of control in subsidiary 540 — —

Gain on realization of marketable securities 416 — — Other financial items 9 39 54

Total financial items (103) (294) 101

Income before income taxes 1,671 1,331 1,473

Income taxes (189) (159) (120) Net income 1,482 1,172 1,353

Net income attributable to the non-controlling interest 81 55 92

Net income attributable to the parent 1,401 1,117 1,261

Basic earnings per share (US dollar) 3.05 2.73 3.16 Diluted earnings per share (US dollar) 2.96 2.73 3.00

Declared regular dividend per share (US dollar) 3.06 2.535 1.05 Declared extraordinary dividend per share (US dollar) — 0.20 —

47

Statements of Income

Three months ended

September 30,

Three months ended

September 30,

Nine months ended

September 30,

Nine months ended

September 30,

2012 2011 2012 2011 USGAAP USGAAP USGAAP USGAAP

(in millions of US$, except per share data) Unaudited Unaudited Unaudited Unaudited

Operating revenues

Contract revenues 1,056 1,007 3,168 3,055 Reimbursables 33 24 95 74

Other revenues 2 (2) 1 4

Total operating revenues 1,092 1,029 3,264 3,133

Gain on sale of assets 0 23 0 23

Operating expenses Vessel and rig operating expenses 423 367 1,207 1,178

Reimbursable expenses 30 22 88 69 Depreciation and amortization 161 132 452 423

General and administrative expenses 65 51 166 146

Total operating expenses 679 572 1,913 1,816

Net operating income 413 480 1,351 1,340

Financial items Interest income 5 5 14 17

Interest expenses (102) (64) (249) (221) Share in results from associated companies

(38) 26 (5) 62

Gain/(loss) on derivative financial instruments 20 (330) 15 (379)

Foreign exchange (loss) (43) (4) (51) (32) Gain on loss of control in subsidiary 0 0 0 540

Gain on realization of marketable securities 0 0 85 416

Gain on decline in ownership interest 0 0 169 0 Other financial items 0 (6) 3 (6)

Total financial items (158)

(372)

(20)

397

(Loss)/income before income taxes 255 108 1,331 1,737

Income taxes (39) (50) (124) (148)

Net (loss)/income 216 58 1,207 1,589

Net (loss)/income attributable to the parent 189 35 1,129 1,529

Net income attributable to the non-controlling interest 27 23 78 60

Basic earnings per share (US$) 0.40 0.07 2.41 3.36 Diluted earnings per share (US$) 0.40 0.07 2.36 3.21

Declared regular dividend per share (US$) 0.85 0.76 2.51 2.26

Declared extraordinary dividend per share (US$) 0.85 — 1.00 —

48

8.3 Consolidated balance sheet

The table below sets out a summary of the audited Full-Year Consolidated Financial Statements balance sheets,

and the unaudited Interim Consolidated Financial Statements balance sheets:

Balance sheet

December

31,

December

31

December

31,

September

30, 2011 2010 2009 2012

USGAAP USGAAP USGAAP USGAAP (in millions of US$) Audited Audited Audited Unaudited

ASSETS

Current assets Cash and cash equivalents 483 755 460 518

Restricted cash 232 155 142 151 Marketable securities 24 598 742 246

Accounts receivables, net 720 828 452 835 Amount due from related party 185 140 138 213

Other current assets 323 407 327 335 Total current assets 1,967 2,883 2,261 2,298

Non-current assets Investment in associated companies 721 205 321 658

Newbuildings 2,531 1,247 1,431 1,629 Drilling units 11,223 10,795 7,514 12,956

Goodwill 1,320 1,676 1,596 1,320 Other intangible assets 0 57 24 0

Restricted cash 250 305 371 231 Deferred tax assets 33 30 13 31

Equipment 25 158 115 38 Other non-current assets 234 141 185 318

Total non-current assets 16,337 14,614 11,570 17,181 Total assets 18,304 17,497 13,831 19,479

LIABILITIES AND EQUITY

Current liabilities Current portion of long-term debt 1,419 981 774 1,523

Trade accounts payable 38 95 85 62 Other current liabilities 1,314 1,438 1,175 1,311

Total current liabilities 2,771 2,514 2,034 2,896 Non-current liabilities

Long-term interest bearing debt 8,574 8,176 6,622 9,296 Long-term debt due to related parties 435 435 0 435

Deferred taxes 34 181 125 19 Other non-current liabilities 188 254 238 266

Total non-current liabilities 9,231 9,046 6,984 10,016

Commitments and contingencies - - -

Equity Common shares of par value US$2.00 per share:

800,000,000 shares authorized 469,121,774

outstanding at September, 2012 (December, 31 2011: 467,772,174 December, 31 2010:

443,125,691) 935 886 798 938 Additional paid in capital 2,097 1,217 164 2,194

Contributed surplus 1,956 1,956 1,955 1,956 Accumulated other comprehensive (loss)/ income (5) 323 360 124

Accumulated earnings 994 1,016 902 905 Non-controlling interest 325 539 634 450

Total equity 6,302 5,937 4,813 6,567 Total liabilities and equity 18,304 17,497 13,831 19,479

49

8.4 Consolidated statement of cash flows

The table below sets out a summary of the Full-Year Consolidated Financial Statements cash flow for the years

ended December 31, 2009, 2010, 2011, and the unaudited interim Consolidated Financial Statements cash

flow for the nine months ended September 30, 2011 and 2012:

Cash flow statement Year Year Year

2011 2010 2009

USGAAP USGAAP USGAAP

(in million of US$) Audited Audited Audited

Cash Flows from Operating Activities

Net income 1,482 1,172 1,353 Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization 563 480 396

Amortization of deferred loan charges 31 43 23

Amortization of unfavorable contracts (24) (39) (43)

Amortization of favorable contracts 23 13 -

Amortization of mobilization revenue (96) (86) (50)

Impairment loss on marketable securities 10 15 -

Share of results from associated companies loss/ (gain) 420 (48) (92)

Share-based compensation expense 10 11 16

Gain on disposal of fixed assets (22) (26) (71)

Unrealized (gain)/loss related to derivative financial instruments 261 97 (153)

Non cash gain recognized related to realization of marketable securities (416) (43) (16)

Non cash gain recognized related to loss of control (540) - -

Dividend received from associated company 57 61 41

Deferred income tax expense (9) 110 2 Unrealized foreign exchange loss/ (gain) on long term interest bearing

debt (5) (4) 28

Non-cash loss recognized on extinguishment of convertible debt - 48 -

Non-cash gains recognized on acquisition of subsidiaries - (167) - Changes in operating assets and liabilities, net of effect of

acquisitions

Unrecognized mobilization fees received from customers 58 109 166

Trade accounts receivable (52) (163) (111)

Trade accounts payable (35) (15) (35)

Prepaid expenses/accrued revenue 79 (107) (71)

Other, net 21 (161) 69

Net cash provided by operating activities 1,816 1,300 1,452

Cash Flows from Investing Activities

Additions to newbuilding (2,381) (2,006) (1,153)

Additions to rigs and equipment (162) (362) (216)

Sale of rigs and equipment 245 55 393

Investment in subsidiaries, net of cash acquired (26) (152) -

Cash deconsolidated upon loss of control in subsidiary (127) - -

Change in margin calls and other restricted cash (43) 51 344

Investment in associated companies (287 (13) (33)

Proceed from repayment of short term loan to related parties - 90 115

Short-term loan granted to related parties - (160) (170)

Purchase of marketable securities (13) (15) (263)

Proceeds from realization of marketable securities 161 215 59

Net cash used in investing activities (2,633) (2,297 (924)

Cash Flows from Financing Activities

Proceeds from debt 5,929 3,902 2,407

Repayments of debt (4,116) (1,870) (2,491)

Debt fees paid (49) (33) (43)

Change in current liability related to share forward contracts - (12) (68)

Paid to non-controlling interests (95) (292) (68)

50

Contribution from non-controlling interests 418 289 -

Purchase of treasury shares (130) (42) -

Proceeds from sale of treasury shares 21 23 9

Dividends paid (1,440) (990) (199)

Proceeds from issuance of equity - 318 -

Net cash provided by/(used in) financing activities 538 1,293 (453)

Effect of exchange rate changes on cash and cash equivalents 7 (1) 9

Net (decrease)/ increase in cash and cash equivalents (272) 295 84

Cash and cash equivalents at beginning of the period 755 460 376

Cash and cash equivalents at the end of period 483 755 460

Supplementary disclosure of cash flow information

Interest paid 282 284 231

Taxes paid 188 134 138

Nine Month

Period Ended September 30

Nine Month

Period Ended June 30,

(in US$ millions) 2012 2011 Unaudited Unaudited

Cash Flows from Operating Activities

Net income/(loss) 1,207 1,589 Adjustments to reconcile net income to net cash provided by operating

activities: Depreciation and amortization 452 423

Amortization of deferred loan charges 22 25 Amortization of unfavorable contracts 0 (21)

Amortization of favorable contracts 9 18 Amortization of mobilization revenue (115) (68)

Share of results from associated companies 5 (62) Share-based compensation expense 4 8

Unrealized (gain)/loss related to derivative financial instruments 8 310 Dividend received from associated company 17 38

Deferred income tax expense 0 55 Unrealized foreign exchange loss (gain) on long term interest bearing debt 4 2

Gain on disposal of fixed assets 0 (23) Gain on disposal of other investments (86) 0

Non cash gain recognized related to realization of marketable securities 0 (416) Non cash gain recognized related to loss of control in subsidiary 0 (540)

Gain on decline in ownership interest (169) 0 Changes in operating assets and liabilities, net of effect of acquisitions

Unrecognized mobilization fees received from customers 203 37 Trade accounts receivable (115) (16)

Trade accounts payable 24 (39) Prepaid expenses/accrued revenue (9) 104

Other, net (112) (35)

Net cash provided by operating activities 1,349 1,389

51

Nine Month

Period Ended

September 30

Nine Month

Period Ended

September 30,

(in US$ millions) 2012 2011 Unaudited Unaudited

Cash Flows from Investing Activities Additions to newbuildings (1,091) (1,843)

Additions to rigs and equipment (243) (133) Sale of rigs and equipment 0 245

Settlement of disputes with ship yard 38 0 Change in margin calls and other restricted cash 116 (68)

Purchase of marketable securities (19) 0 Investment in subsidiaries, net of cash acquired 0 (26)

Cash deconsolidated upon loss of control in subsidiary 0 (127)

Investment in associated companies (74) 0 (221) Disposal of associated companies 65 0

Long term loan granted to related parties (20) 0 Repayment of loan granted to related parties 20 0

Proceeds from realization of marketable securities 219 141

Net cash used in investing activities (989) (2,032)

Cash Flows from Financing Activities

Proceeds from debt 3,160 4,946 Repayments of debt (2,365) (3,716)

Debt fees paid (29) (34) Proceeds from debt to related party 487 0

Repayments of debt to related party (487) 0 Contribution (to)/from non-controlling interests (36) (71)

Contribution from non-controlling interests related to private placement 147 418 Purchase of treasury shares 0 (130)

Proceeds from sale of treasury shares 15 12 Dividends paid (1,217) (1,080)

Net cash used by financing activities (325) 345

Effect of exchange rate changes on cash and cash equivalents 0 7

Net increase/(decrease) in cash and cash equivalents 35 (291) Cash and cash equivalents at beginning of the year 483 755

Cash and cash equivalents at the end of period 518 464

Supplementary disclosure of cash flow information

Interest paid, net of capitalized interest (245) (202) Taxes paid (127) (97)

52

8.5 Consolidated statement of invested equity

The table below sets out a summary of the Full-Year Consolidated Financial Statements of equity for the years

ended December 31, 2009, 2010, and 2011, and the audited interim Financial Statements of equity for the

nine months ended September 30, 2012:

(in US$ millions)

Share Capital

Additional

Paid-in Capital

Contributed

Surplus

Accumulated

Other Comprehens

ive Income

Retained

Earnings

Non-controlli

ng Interest

Total

Equity

Balance at December 31, 2008 797 35 1,956 1 (160) 593 3,222

Sale of treasury shares 1 8 9 Employee stock options issued 16 16

Convertible loan-equity portion 105 105 Unrealized gain on marketable

securities 317 317 Foreign exchange differences 29 1 30

Changes in actuarial gain relating to pension 12 1 13

Change in unrealized gain on interest rate swaps in VIEs 15 15 Net paid to non-controlling interest (68) (68)

Dividend paid (199) (199) Net income 1,261 92 1,353

Balance at December 31, 2009 798 164 1,956 359 902 634 4,813 Sale of treasury shares 3 20 23

Purchase of treasury shares (4) (38) (42) Issuance of shares 27 292 289 608

Induced conversion of convertible bonds

62 647 709

Employee stock options issued 11 11

Convertible loan-equity portion 121 121 Unrealized gain on marketable

securities 18 18 Realized gain/loss on marketable

securities (43) (43) Foreign exchange differences 16 11 27

Changes in actuarial gain/losses relating to pension (26) (6) (32) Change in unrealized gain/loss on

interest rate swaps in VIEs (11) (11) Change in unrealized gain/loss on

interest rate swaps in subsidiaries (1) (1) (2) Step-up acquisition of Scorpion (13) 13 0

Contribution by non-controlling interest 282 282

Paid to non-controlling interest in Scorpion (292) (292) Dividend paid to non-controlling

interest in VIE (435) (435) Dividend paid (990) (990)

Net income 1,117 55 1,172 Balance at December 31, 2010 886 1,217 1,956 323 1,016 539 5,937

Sale of treasury shares 1 20 21 Purchase of treasury shares (5) (120) (5) (130)

Employee stock options issued 10 10 Change in actuarial gain/losses relating to pension (3) (3)

Private placement in subsidiary 307 118 425 Costs related to capital increase in

subsidiary (7) (7) (Un)realized gain/loss on

marketable securities (291) (291) Foreign exchange differences 28 10 38

Change in unrealized loss on interest rate swaps in VIEs 20 20

Change in unrealized loss on interest rate swaps in subsidiaries 1 1 Dividend payment

(1,423

) (17)

(1,44

0) Dividend paid to Non-controlling

interest in VIE (23) (23) Shares purchased from non

controlling interests (4) (68) (72) Deconsolidation of subsidiaries (63) (330) (393)

Induced conversion of convertible 53 674 727

53

(in US$ millions)

Share Capital

Additional

Paid-in Capital

Contributed

Surplus

Accumulated

Other Comprehens

ive Income

Retained

Earnings

Non-controlli

ng Interest

Total

Equity

bonds

Net income 1,401 81 1,482 Balance at December 31, 2011 935 2,097 1,956 (5) 994 325 6,302

(in US$ millions)

Share Capit

al

Additiona

l Paid-in

Capital

Contribute

d Surpl

us

Accu

mulated

OCI

Retaine

d Earning

s

NCI

Total

Equity

Balance at December 31, 2011 935 2,097 1,956 (5) 994 325 6,302

Sale of treasury shares 3 12 15 Purchase of treasury shares 0

Employee stock options issued 4 4 Private placement in subsidiary 84 66 150

Costs related to capital increase in subsidiary (3) (3)

Other comprehensive income 129 17 146 Dividend payment (1,217) (36) (1,253)

Dividend paid to Non-controlling interests in VIE 0

Shares purchased from non controlling interests 0

Deconsolidation of subsidiaries 0

Induced conversion of convertible bonds 0

Net income 1,129 78 1,207

Balance at September 30, 2012

938 2,194 1,956 124 905 450 6,567

8.6 Legal and arbitration proceedings

The Company is not involved in any governmental, legal or arbitration proceedings which may have, or have

had in the recent past, significant adverse effects on the Company and/or the Seadrill group’s financial position

or profitability. The Issuer is not aware that any such proceedings are pending or threatened, nor has the

Issuer been involved in any such proceeding during the last 12 months.

8.7 Significant change in the Company’s financial or trading position

Seadrill is not aware of any significant change in the financial or trading position of the Seadrill Group which has occurred since the end of the last financial period for which either audited financial information or interim

financial information have been published or any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on Seadrill’s prospects for the current financial other than the

changes described below. In the period after the balance sheet date of September 30, 2012, Seadrill has completed the following transactions.

• On October 3, 2012, the Company announced plans to implement a new management structure, by

moving its corporate headquarters and naming a new CEO. Fredrik Halvorsen, the CEO of Archer

Limited, was appointed by the Board to succeed Alf C. Thorkildsen.

• On October 19, 2012, the Company announced Seadrill Partners LLC had priced its initial public

offering. Seadrill owns 14,752,525 common units and all of the subordinated units, representing

a 75.7% limited liability company interest in Seadrill Partners.

• On October 26, 2012, Seadrill announced that after close of trading on Oslo Børs on 25 October

2012 it acquired 12,190,858 shares of Asia Offshore Drilling Limited (the "Company", OSE:

AOD). The shares were acquired at a price of US$5.0 per share. Following this acquisition,

54

Seadrill will be the owner of 25,690,958 shares in the Company, corresponding to 64.23% of

the total number of outstanding shares in the Company. As a consequence, Seadrill will proceed

with the launch of a mandatory cash offer for the remaining shares in the Company. In the

period from October 26, 2012 to November 28, 2012, Seadrill has acquired an additional

688,572 shares of Asia Offshore Drilling. Following these transactions Seadrill is the owner of

26,379,530 shares in Asia Offshore Drilling, corresponding to 65.95 of the total number of

outstanding shares in the Company. On December 11, 2012, Seadrill announced that the result

of the mandatory offer of all outstanding shares in Asia Offshore Drilling was acceptance for a

total of 83,520 shares. This will, together with the shares already owned by Seadrill, take

Seadrill’s holding of Asia Offshore Drilling shares to 26,463,050, representing approximately

66.16% of all of the issued shares in the Company.

• On November 5, 2012, the Company announced that SapuraKencana Petroleum Berhad

("SapuraKencana") and Seadrill Limited ("Seadrill") have entered into a non-binding

memorandum of understanding ("MOU") to combine and integrate both companies' tender rig

businesses. The enlarged tender rig business under SapuraKencana will comprise, 16 tender rigs

in operation and an additional 3 units currently under construction, which are expected to be

delivered in 2013. SapuraKencana will take over the rigs including the full tender rig

organization for an enterprise value of US$ 2.9 billion. The total enterprise value includes US$

363 million in remaining capital expenditures linked to the newbuilds program and all the debt

in the tender rig business including existing bank facilities that are expected to be

approximately US$ 800 million as of December 31st 2012. Seadrill will, to support this position,

receive a minimum of US$ 350 million in new shares of SapuraKencana. This comes in addition

to the 6.4% stake that Seadrill presently owns in SapuraKencana. Seadrill will further have the

right to nominate two members to the SapuraKencana board of directors (including one

alternate). Seadrill's chairman John Fredriksen is expected to be one of those members. The

remaining consideration will be funded by SapuraKencana through a mix of external borrowings,

a seller's note of up to US$ 187 million, internally generated funds and equity.

• On November 16, 2012, the Company announced that a subsidiary of Seadrill had entered into

an agreement with Songa Offshore to acquire the ultra-deepwater semi-submersible rig Songa

Ecplipse for a consideration of $590 million. The rig was delivered from the Jurong Shipyard in

Singapore in 2011, and is currently operating for Total offshore Angola on a fixed contract

ending in December 2013. In addition Total has three one-year options to further extend the

contract. Seadrill took delivery of the rig January 3, 2013 after which it will have an immediate

impact on Seadrill’s cash flow and financial results.

• On December 12, 2012, the Company announced that North Atlantic Drilling Ltd. (NADL), a

majority owned subsidiary of Seadrill Limited, filed its registration statements with the US

Securities and Exchange Commission (SEC) on Tuesday, December 11, 2012. The initial public

offering of NADL's common shares is expected to commence after the SEC completes its review

process.

Other than this, there has been no significant change in the financial or trading position of Seadrill that has

occurred since September 30, 2012.

9 TREND INFORMATION

9.1 Material factors affecting Seadrill’s prospects

Business environment

The offshore contract drilling industry is cyclical and volatile. The business in the offshore drilling sector

depends on the level of activity in oil and gas exploration, development and production in offshore areas worldwide. The availability of quality drilling prospects, exploration success, relative production costs, the stage

of reservoir development and political and regulatory environments affect customers’ drilling programs. Oil and gas prices and market expectations of potential changes in these prices also significantly affect this level of

activity and demand for drilling units.

Oil and gas prices are extremely volatile and are affected by numerous factors beyond Seadrill’s control,

including the following:

worldwide production and demand for oil and gas;

the cost of exploring for, developing, producing and delivering oil and gas;

55

expectations regarding future energy prices;

advances in exploration, development and production technology;

the ability of the Organization of Petroleum Exporting Countries (“OPEC”), to set and maintain levels and pricing;

the level of production in non-OPEC countries;

government regulations;

local and international political, economic and weather conditions;

domestic and foreign tax policies;

development and exploitation of alternative fuels;

the policies of various governments regarding exploration and development of their oil and gas

reserves; and

the worldwide political and military environment, including uncertainty or instability resulting from an

escalation or additional outbreak of armed hostilities or other crises in the Middle East or other geographic areas or further acts of terrorism in the United States, or elsewhere.

Utilization of personnel and equipment

The majority of The Company’s contracts for the provision of drilling services are daily rate contracts, of which

the revenues depend on the utilization rate of The Company’s drilling units. The utilization rate is dependent on the type of operations the drilling units perform. If a drilling unit is not performing according to the contract it

does not earn a daily rate. The majority of The Company’s contracts have daily rates that are fixed over the contract term, most of Seadrill’s long-term contracts include escalation provisions. These provisions allow

Seadrill to adjust the daily rates based on stipulated cost increases including wages, insurance and maintenance cost. However, because these escalations are normally performed on a semi-annual or annual

basis, the timing and amount awarded as a result of such adjustments may differ from Seadrill’s actual cost increases, which could adversely affect Seadrill’s financial performance. Shorter-term contracts normally do not

contain escalation provisions.

Political, economical and other uncertainties

The Company's operations are subject to political, economic and other uncertainties. The Company’s foreign operations are often subject to uncertainties of such nature that are not encountered in domestic operations,

such as arbitrary taxation policies, onerous customs restrictions, unstable currencies, exchange rate fluctuations and the risk of asset expropriation due to foreign sovereignty over operating areas. Many aspects

of The Company’s operations are subject to governmental regulation in the areas of equipping and operating

vessels, drilling practices and methods, and taxation. In addition many of the countries in which The Company operate have regulations relating to environmental protection and pollution control. The Company could

become liable for damages resulting from pollution of offshore waters and may have to document financial responsibility in this regard.

The Company considers itself to be in compliance in all material respects with the health, safety and environmental regulations affecting its operations in the countries and jurisdictions in which The Company

operates.

Regulatory compliance has not materially affected capital expenditures, earnings or competitive position to

date, although such measures do increase costs of operations and may adversely affect operations. Further regulations may reasonably be anticipated, but any effects on The Company’s operations cannot be accurately

predicted.

In addition to the domestic and foreign regulations that directly affect The Company’s operations, regulations

associated with the production and transportation of oil and gas affect the operations of the Company’s customers and thereby could potentially impact demand for The Company’s services.

Other than this, there has been no material adverse change in the prospects of Seadrill since the date of the last published audited financial statements, December 31, 2011.

56

9.2 Material contracts

The Company has not entered into any material contracts outside the ordinary course of its business.

57

10 ADDITIONAL INFORMATION

10.1 Third party information

The information in this Prospectus that has been sourced from third parties has been accurately reproduced and, as far as the Company is aware and able to ascertain from information published by those third parties,

no facts have been omitted which would render the reproduced information inaccurate or misleading.

10.2 Documents on Display

Copies of the following documents will be available for inspection at Seadrill’s registered office during normal

business hours from Monday to Friday each week (except public holidays) for a period of 12 months from the date of this Prospectus:

a) articles of incorporation and articles of association of the Issuer;

b) By-laws;

c) all reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the Company’s request any part of which is included or referred to in the

Prospectus;

d) the historical financial information of the Company and its subsidiary for each of the two financial

years preceding the publication of the Prospectus.

10.3 Statutory auditors

PricewaterhouseCoopers AS has been the Company’s auditor since the Company’s incorporation and up to the date of this prospectus. PricewaterhouseCoopers AS is a member of The Norwegian Institute of Public

Accountants (Den Norske Revisor Forening). The auditor’s address is Dronning Eufemiasgate 8, 0106 Oslo, Norway.

10.4 Advisors

The following Managers have acted as financial advisors to the Company in connection with the Bond Issue.

Nordea Markets, Middelthunsgate 17, P.O. Box 1166 Sentrum, N-0107 Oslo, Norway

Pareto Securities, Dronning Mauds gate 3, P.O. Box 1411 Vika, N-0115 Oslo, Norway

RS Platou Markets AS, P.O. Box 1476 Vika, N-0116 Oslo, Norway

Swedbank First Securities, P.O. Box -1441 Vika, N-0250 Oslo, Norway

Advokatfirmaet Wiersholm AS has acted as legal advisor to the Company with respect to Norwegian law.

10.5 Expenses

The Company estimates the expenses associated with the listing of the Bonds to be approximately NOK 9.5

million. In addition costs related to fees to Oslo Børs and the FSA were borne by the Company.

10.6 Documents incorporated by references

The below listed documents are incorporated by reference and are available at the Company’s website, www.seadrill.com:

Reference: Chapter in

prospectus:

Incorporated by

reference:

website:

Annual report for 2010 Section 8 and 8.1 Annual Report 2010 http://www.seadrill.com/investor_relations/financial_reports

Annual report for 2011 Section 8 and 8.1 Annual Report 2011 http://www.seadrill.com/investor_relations/financial_reports

58

Q3 report 2012 Section 8 and 8.1 Third quarter report for 2012

http://www.seadrill.com/investor_relations/financial_reports

59

11 DEFINITIONS AND GLOSSARY OF TERMS

Board of Directors or Board: ............................ The Board of Directors of the Seadrill Limited

Bondholders: ................................................. Any holders of Bonds from time to time

Bond Issue: ................................................... FRN Seadrill Limited Senior Unsecured Bond Issue 2010/

2015

Bonds: ......................................................... The total amount of outstanding bonds issued pursuant to

the Bond Agreement.

Company: .................................................... Seadrill Limited

EFSF: ........................................................... The European Financial Stability Facility

EFSM: .......................................................... The European Financial Stability Mechanism

ESM: ........................................................... The European Stability Mechanism as established by the European Council in March 2011

FSA: ............................................................ The Financial Supervisory Authority of Norway.

Full-Year Consolidated Financial Statements: .... Seadrill’s selected Financial Statements for the years

ended December 31, 2009, 2010 and 2011

Independent Auditor: ..................................... PricewaterhouseCoopers AS

Interim Consolidated Financial Statements: ...... the Company’s Financial Statements for the three months ended June 30, 2011 and 2012

Managers: .................................................... Nordea Markets, Pareto Securities AS, RS Platou Markets

AS and Swedbank First Securities

NOK: ........................................................... Norwegian Kroner, the legal currency of the Kingdom of

Norway

Oslo Børs: .................................................... Oslo Børs ASA

Prospectus: .................................................. This prospectus dated 16 January 2013.

Seadrill: ....................................................... Seadrill Limited and its consolidated subsidiaries

Trustee: ....................................................... Norsk Tillitsmann ASA

USD: ........................................................... United States Dollars, the legal currency of the United

States of America

US Securities Act: ......................................... the United States Securities Act of 1933, as amended

VPS: ............................................................ Verdipapirsentralen (the Norwegian Central Securities Depository)

Q3: .............................................................. Third quarter

A 1

60

Appendix 1: Bond Agreement

A 2

A 3

A 4

A 5

A 6

A 7

A 8

A 9

A 10

A 11

A 12

A 13

A 14

A 15

A 16

61

Appendix 2: By-laws

A 17

A 18

A 19

A 20

A 21

A 22

A 23

A 24

A 25

A 26

A 27

A 28

A 29

A 30

A 31

A 32

A 33

A 34

A 35

A 36

A 37

A 38

A 39

62

Appendix 3: Third Quarter report for 2012

P

ag

e 2

associa

ted c

om

panie

s i

s a

US

$53 m

illio

n l

oss f

rom

our

39.9

perc

ent

eq

uity

associa

te,

Arc

her

Lim

ited.

Incom

e t

axe

s f

or

the t

hird q

uart

er

were

US

$39 m

illio

n,

dow

n f

rom

US

$43 m

illio

n i

n t

he

pre

vious q

uart

er.

N

et

incom

e f

or

the q

uart

er

was U

S$216 m

illio

n r

epre

senting

basic

earn

ing

s p

er

share

of

US

$0.4

0.

The

Com

pany

report

s

opera

ting

re

venues

of

US

$3,2

64

mill

ion,

opera

ting

in

com

e

of

US

$1,3

51 m

illio

n a

nd a

net

incom

e o

f U

S$1,2

07 f

or

the n

ine m

onth

s e

nded S

epte

mber

30,

2012.

This

com

pare

s t

o o

pera

ting

reve

nues o

f U

S$3,1

33 m

illio

n,

opera

ting

incom

e o

f U

S$1,3

40 m

illio

n a

nd a

net

incom

e o

f U

S$1,5

89 f

or

the n

ine m

onth

s e

nded S

epte

mber

30,

2011.

Bala

nce s

heet

As o

f S

epte

mber

30,

2012,

tota

l assets

am

ounte

d t

o U

S$19,4

79 m

illio

n,

an i

ncre

ase o

f U

S$545 m

illio

n c

om

pare

d t

o J

une 3

0,

2012.

Tota

l curr

ent

ass

ets

incre

ased f

rom

US

$1,9

72 m

illio

n t

o U

S$2,2

98 m

illio

n o

ver

the c

ours

e

of

the q

uart

er

prim

arily

rela

ted t

o a

n incr

ease in c

ash a

nd c

ash e

quiv

ale

nts

.

Tota

l non-c

urr

ent

ass

ets

incre

ased f

rom

US

$16,9

62 m

illio

n t

o U

S$17,1

81 m

illio

n m

ain

ly

due t

o p

aym

ents

for

the f

irst

inst

allm

ent

for

West

Carina a

nd t

he s

econd i

nsta

llment

for

West

Satu

rn.

Tota

l curr

ent

liabili

ties incre

ased f

rom

US

$2,7

88 m

illio

n t

o U

S$2,8

96 m

illio

n larg

ely

due t

o

an incre

ase in c

urr

ent port

ion o

f lo

ng

-term

debt.

Long-t

erm

inte

rest

bearing

debt

incre

ased f

rom

US

$8,3

76 m

illio

n t

o U

S$

9,2

96 m

illio

n o

ver

the c

ours

e o

f th

e q

uart

er

and n

et

inte

rest

bearing

debt

incre

ased f

rom

$10,0

10 m

illio

n t

o

US

$10,3

54 m

illio

n.

T

ota

l eq

uity

decre

ased f

rom

US

$6,7

15 m

illio

n t

o U

S$6,5

67 m

illio

n a

s o

f S

epte

mber

30,

2012. T

he d

ecre

ase is m

ain

ly d

ue t

o n

et in

com

e o

ffset

by

paid

div

idends.

C

ash f

low

A

s o

f S

epte

mber

30, 2012,

cash a

nd c

ash e

quiv

ale

nts

am

ounte

d to U

S$518 m

illio

n,

whic

h

corr

esponds to a

n incre

ase o

f U

S$242 m

illio

n c

om

pare

d t

o t

he p

revi

ous q

uart

er.

Net cash

from

opera

ting

activi

ties for

the p

eriod w

as U

S$1,3

49 m

illio

n w

here

as n

et cash u

sed in

inve

sting

activi

ties f

or

the s

am

e p

eriod a

mounte

d t

o U

S$989 m

illio

n,

prim

arily

rela

ted t

o

additio

ns t

o n

ew

build

ing

s.

Net

cash u

sed f

or

financi

ng

activi

ties w

as U

S$325 m

illio

n

main

ly d

ue t

o d

ivid

end p

aym

ents

and n

et pro

ceeds fro

m d

ebt.

Outs

tandin

g s

hare

s

As

of

Septe

mber

30,

2012,

the

issued

com

mon

share

s

in

Seadrill

Lim

ited

tota

led

469,1

21,7

74 a

dju

sted for

our

hold

ing o

f 129,1

59 tre

asury

share

s. In

additio

n,

we h

ad s

tock

options fo

r 3.9

m

illio

n share

s outs

tandin

g under

various share

in

centive

pro

gra

ms fo

r m

anag

em

ent, o

ut

of

whic

h a

ppro

xim

ate

ly 2

.0 m

illio

n h

ad v

este

d a

nd a

re e

xerc

isable

.

Se

ad

rill P

art

ne

rs L

LC

(S

DL

P)

On O

ctober

19 S

DLP

sta

rted t

radin

g o

n t

he N

YS

E f

ollo

win

g a

successfu

l IP

O a

t unit p

rice

of

US

$22.0

. T

he lis

ting

of

SD

LP

is a

landm

ark

tra

nsaction f

or

the o

ffshore

drilli

ng

industr

y as i

t is

the f

irst

offshore

drilli

ng

MLP

in h

isto

ry.

SD

LP

rais

ed t

hro

ug

h t

he o

ffering U

S$207

mill

ion n

et

of

transact

ion f

ees.

Seadrill

receiv

ed t

he f

unds r

ais

ed i

n t

he o

ffering

and 7

5.7

perc

ent

ow

ners

hip

in S

DLP

in r

etu

rn f

or

selli

ng o

wners

hip

sta

kes i

n f

our

off

shore

drilli

ng

units.

SD

LP

ow

ns a

n a

vera

ge o

f appro

xim

ate

ly 3

0 p

erc

ent

in t

he u

ltra

-deepw

ate

r sem

i-

Pag

e 1

Sead

rill

L

imit

ed

(S

DR

L)

- T

hir

d q

uart

er

an

d n

ine

mo

nth

s 2

012 r

esu

lts

Hig

hli

gh

ts

•

Seadrill

genera

tes

third q

uart

er

2012 E

BIT

DA

*) of U

S$574 m

illio

n

•

Seadrill

report

s t

hird q

uart

er

2012 n

et

incom

e o

f U

S$216 m

illio

n a

nd

earn

ing

s p

er

share

of

US

$0.4

0

•

Seadrill

dis

trib

ute

s a

n i

ncre

ased t

hird q

uart

er

reg

ula

r cash d

ivid

end o

f U

S$0.8

5 p

er

share

and a

lso r

esolv

es t

o d

istr

ibute

an a

ccele

rate

d d

ivid

end o

f U

S$0.8

5 p

er

share

for

the fourt

h q

uart

er

2012,

in D

ecem

ber

2012

•

Seadrill

ord

ere

d a

new

ultra

-deepw

ate

r drills

hip

for

an a

ll-in

cost of

US

$600 m

illio

n

•

Seadrill

issued U

S$1 b

illio

n in u

nsecure

d n

ote

s d

ue 2

017

Su

bs

eq

ue

nt

eve

nts

•

Seadrill

announces t

he p

ote

ntial

sale

of

18 t

ender

rig

s t

o S

apura

Kencana P

etr

ole

um

B

hd. fo

r a tota

l consid

era

tion o

f U

S$2.9

bill

ion

•

Seadrill

Part

ners

LLC

lis

ts its

com

mon u

nits o

n the N

YS

E r

ais

ing U

S$207 m

illio

n

•

Alf C

.Thork

ildsen re

sig

ns as C

EO

of

Seadrill

Manag

em

ent

AS

, F

redrik H

alv

ors

en

appoin

ted a

s th

e n

ew

CE

O

•

Seadrill

secure

s a

fiv

e-y

ear

com

mitm

ent

with H

usky

for

the n

ew

build

ultra

-deepw

ate

r sem

i-subm

ers

ible

rig

West

Mira f

or

opera

tions o

ffshore

Canada,

with a

n e

stim

ate

d

tota

l reve

nue p

ote

ntial of

US

$1.2

bill

ion

•

Seadrill

secure

s c

ontr

act

s w

ith a

n e

stim

ate

d r

eve

nue p

ote

ntial

of

US

$820 m

illio

n f

or

seve

n jack

-up r

igs,

of

whic

h f

ive a

re n

ew

build

s

•

Seadrill

incre

ases its

ow

ners

hip

sta

ke in A

sia

Off

shore

Drilli

ng

to 6

5.9

4%

and s

ubm

its

mandato

ry o

ffer

for

the r

em

ain

ing s

hare

s

•

Seadrill`

s

majo

rity

ow

ned

subsid

iary

, N

ort

h

Atla

ntic

Drilli

ng

Ltd

. subm

its

its

initia

l re

gis

tration s

tate

ment to

the S

EC

•

A

subsid

iary

of

Seadrill

sig

ns

a

Lett

er

of

Ag

reem

ent

(LO

A)

to

acq

uire

the

ultra

-deepw

ate

r sem

i-subm

ers

ible

rig

Song

a E

clip

se for

US

$590 m

illio

n

*) E

BIT

DA

is

defined a

s e

arn

ings

befo

re i

nte

rest

, depre

cia

tion a

nd a

mort

ization e

qual

to o

pera

ting p

rofit

plu

s d

epre

cia

tion

and a

mort

ization.

C

on

de

ns

ed

co

ns

olid

ate

d i

nc

om

e s

tate

men

ts

Third q

uart

er

and n

ine m

onth

s 2

012 r

esults

Consolid

ate

d

reve

nues

for

the

third

quart

er

of

2012

am

ounte

d

to

US

$1,0

92

mill

ion

com

pare

d t

o U

S$1,1

22 m

illio

n in t

he s

econd q

uart

er

2012.

O

pera

ting

pro

fit

for

the q

uart

er

was U

S$413 m

illio

n c

om

pare

d t

o U

S$4

83 m

illio

n i

n t

he

pre

cedin

g q

uart

er.

N

et

financia

l item

s f

or

the q

uart

er

show

ed a

loss o

f U

S$158 m

illio

n c

om

pare

d t

o a

gain

of

US

$114 m

illio

n i

n t

he p

revi

ous q

uart

er,

due l

arg

ely

to r

ecord

ing

an a

ccounting g

ain

of

US

$253 m

illio

n r

ela

ted t

o t

he m

erg

er

of

Sapura

Cre

st

Petr

ole

um

Bhd (

Sapura

Cre

st)

and

Kencana

Petr

ole

um

B

hd

(Kencana)

in

second

quart

er

2012,

as

well

as

gain

s

on

deriva

tive

s a

nd f

ore

ign e

xchang

e l

osses i

n t

he c

urr

ent

quart

er.

Inclu

ded i

n r

esults f

rom

A 40

P

ag

e 4

main

reason b

ehin

d t

he d

ecre

ase i

n u

tiliz

ation w

as d

ue

to i

tem

s r

eport

ed i

n o

ur

second

quart

er

report

, th

e 9

0 d

ays

do

wntim

e o

n t

hre

e u

ltra-d

eepw

ate

r rig

s a

nd r

ig m

ove

s f

or

West

A

quarius a

nd W

est

Herc

ule

s.

Exc

ludin

g r

ig m

ove

s o

ur

econom

ic u

tiliz

atio

n w

as 8

8 p

erc

ent

for

the q

uart

er.

O

ur

jack

-up rig

s ave

rag

ed an econom

ic utiliz

ation of

83 perc

ent

in th

e th

ird q

uart

er

com

pare

d t

o 7

9 p

erc

ent

in t

he p

recedin

g q

uart

er.

Econom

ic u

tiliz

ation f

or

the q

uart

er

was

ham

pere

d b

y rig

move

s t

akin

g l

ong

er

than a

nticip

ate

d a

nd t

he W

est

Vig

ilant

not

start

ing

opera

tion befo

re to

ward

s th

e end of

the q

uart

er.

E

xclu

din

g rig

m

ove

s our

econom

ic

utiliz

ation w

as 9

4 p

erc

ent fo

r th

e q

uart

er.

T

he t

ender

rigs a

vera

ge e

conom

ic u

tiliz

ation

rem

ain

ed h

igh a

t 98 p

erc

ent

in t

he q

uart

er,

com

pare

d t

o 9

7 p

erc

ent

in t

he s

econd q

uart

er.

T

ab

le 1

.0 C

on

tract sta

tus o

ffsho

re d

rilli

ng

un

its

Un

it

Cu

rre

nt

cli

en

t A

rea

of

loc

ati

on

C

on

tra

ct

sta

rt

Co

ntr

ac

t e

xp

iry

S

em

i-s

ub

me

rsib

le r

igs

West

Alp

ha *

* E

xxo

nM

ob

il N

orw

ay

Au

g 2

01

2

Ju

l 20

16

West

Aq

ua

riu

s

Exx

on

Mo

bil

In t

ransit

to C

an

ad

a

Ja

n 2

01

3

Ju

n 2

01

5

West

Cap

rico

rn

BP

U

SA

Ju

l 20

12

A

ug

201

7

West

Em

ine

nce

P

etr

ob

ras

Bra

zil

Ju

l 20

09

Ju

l 20

15

West

He

rcule

s

Sta

toil

In t

ransit

to N

orw

ay

Ja

n 2

01

3

De

c 2

01

6

West

Le

o

Tu

llow

Oil

Gh

an

a

Ap

r 2

012

M

ay

20

16

West

Mir

a (

NB

*)

Hu

sky

So

uth

Ko

rea

– H

yun

da

i Sh

ipya

rd

Ju

n 2

01

5

Ju

n 2

02

0

West

Orio

n

Pe

tro

bra

s

Bra

zil

Ju

l 20

10

Ju

l 20

16

West

Pe

gasu

s

PE

ME

X

Me

xico

A

ug

201

1

Au

g 2

01

6

West

Ph

oe

nix

**

To

tal

UK

Ja

n 2

01

2

Ja

n 2

01

5

West

Rig

el (

NB

*)**

Sin

ga

po

re –

Ju

ron

g S

hip

yard

West

Sir

ius

BP

U

SA

Ju

l 20

08

Ju

l 20

19

West

Ta

uru

s

Pe

tro

bra

s

Bra

zil

Fe

b 2

00

9

Fe

b 2

01

5

West

Ve

ntu

re *

* S

tato

il N

orw

ay

Au

g 2

01

0

Ju

l 20

15

Dri

lls

hip

s

West

Cap

ella

T

ota

l

Nig

eri

a

Ap

r 2

009

A

pr

20

17

West

Gem

ini

To

tal

An

go

la

Se

p 2

01

0

Se

p 2

01

7

West

Na

vig

ato

r **

S

he

ll N

orw

ay

Ja

n 2

00

9

Ju

n 2

01

4

West

Po

laris

Exx

on

Mo

bil

Nig

eri

a

No

v 2

01

1

Ja

n 2

01

8

West

Au

rig

a (

NB

*)

BP

S

ou

th K

ore

a –

Sa

msu

ng

Sh

ipya

rd

Ju

n 2

01

3

Oct

20

20

West

Te

llus (

NB

*)

S

ou

th K

ore

a –

Sa

msu

ng

Sh

ipya

rd

West

Ve

la (

NB

*)

BP

S

ou

th K

ore

a –

Sa

msu

ng

Sh

ipya

rd

Se

p 2

01

3

Ja

n 2

02

1

West

Nep

tune

(N

B*)

So

uth

Ko

rea

– S

am

su

ng

Sh

ipya

rd

West

Ju

pite

r (N

B*)

So

uth

Ko

rea

– S

am

su

ng

Sh

ipya

rd

West

Sa

turn

(N

B*)

So

uth

Ko

rea

– S

am

su

ng

Sh

ipya

rd

West

Ca

rin

a (

NB

*)

S

ou

th K

ore

a –

Sa

msu

ng

Sh

ipya

rd

HE

Ja

ck

-up

rig

s

West

Ela

ra **

S

tato

il N

orw

ay

Ma

r 2

01

2

Ma

r 2

01

7

West

Ep

silo

n *

* S

tato

il N

orw

ay

De

c 2

01

0

De

c 2

01

4

West

Lin

us (

NB

*) *

* C

on

oco

Ph

illip

s

Sin

ga

po

re –

Ju

ron

g S

hip

yard

A

pr

20

14

M

ar

20

19

BE

Ja

ck

-up

rig

s

West

Cou

rage

ous

Sh

ell

Ma

lays

ia

Ja

n 2

01

2

Ja

n 2

01

3

West

Defe

nde

r S

he

ll B

run

ei

Au

g 2

01

2

Ma

y 2

01

6

West

Fre

edo

m

KJO

/GD

F S

ue

z S

au

di A

rab

ia /

Ku

wa

it

Ju

n 2

00

9

Ju

n 2

01

3

West

In

trep

id

KJO

S

au

di A

rab

ia /

Ku

wa

it

Ma

y 2

00

9

No

v 2

01

3

West

Mis

chie

f E

qu

ion/E

NI

In t

ransit

to R

ep

ub

lic o

f C

ong

o

Ap

r 2

012

N

ov

20

14

West

Resolu

te

KJO

S

au

di A

rab

ia /

Ku

wa

it

Oct

20

12

O

ct

20

15

West

Vig

ilan

t T

alis

man

M

ala

ysia

O

ct

20

12

O

ct

20

13

West

Arie

l V

iets

ovp

etr

o

Vie

tnam

Ja

n 2

01

2

De

c 2

01

2

P

ag

e 3

subm

ers

ible

rig

s W

est

Aq

uarius a

nd W

est

Capricorn

, th

e u

ltra

-deepw

ate

r drills

hip

West

C

apella

, and t

he s

em

i-te

nder

rig W

est

Vencedor.

S

DLP

has t

he r

ight

of

firs

t re

fusal on a

cquirin

g a

ny

Seadrill

rig

with a

contr

act

length

that

is

gre

ate

r th

an o

r eq

ual to

fiv

e y

ears

. In

additio

n,

SD

LP

has t

he o

ption t

o a

cq

uire t

he t

ender

rig

s T

15 a

nd T

16.

SD

LP

could

pro

vide a

n a

dditio

nal

sourc

e o

f fu

nds a

nd l

ow

er

Seadrill’

s

cost

of

capital

as M

LP

inve

sto

rs p

lace a

pre

miu

m o

n c

ash f

low

sta

bili

ty.

Based o

n t

he

clo

sin

g u

nit p

rice o

f U

S$26.5

8 a

s o

f N

ove

mber

23,

2012 o

ur

ow

ners

hip

sta

ke i

n S

DLP

re

pre

sente

d a

gro

ss v

alu

e o

f U

S$831 m

illio

n.

T

en

de

r ri

g s

ale

to

Sap

ura

Ke

nc

an

a P

etr

ole

um

Bh

d (

Sa

pu

raK

en

ca

na

) In

Nove

mber,

we e

nte

red i

nto

a n

on-b

indin

g a

gre

em

ent

reg

ard

ing

the s

ale

of

18 t

ender

rig

s to

S

apura

Kencana.

The tr

ansaction in

clu

des five

rig

s already

ow

ned jo

intly

with

Sapura

Kencana th

roug

h V

ariaP

erd

ana,

as w

ell

as 10 fu

rther

rig

s in

opera

tion and 3

new

bu

ilds c

urr

ently

und

er

constr

uction.

The a

gre

em

ent

does n

ot

inclu

de t

he t

ender

rigs

West

Vencedor,

T15 a

nd T

16, w

hic

h h

ave

been c

om

mitt

ed t

o S

DLP

.

Sapura

Kencana w

ill acq

uire t

he rig

s as w

ell

as th

e f

ull

tender

rig

org

aniz

ation fo

r an

ente

rprise va

lue of

US

$2.9

bill

ion.

The am

ount

inclu

des U

S$363 m

illio

n in

re

main

ing

capital

exp

enditure

s f

or

the n

ew

build

pro

gra

m,

all

the d

ebt

in t

he t

ender

rig

busin

ess,

w

hic

h is e

xpecte

d t

o b

e a

ppro

xim

ate

ly U

S$800 m

illio

n a

s o

f D

ecem

ber

31,

2012,

US

$187

mill

ion i

n a

selle

rs n

ote

, and U

S$350 m

illio

n i

n n

ew

share

s i

n S

apura

Kencana t

hat

will

in

cre

ase o

ur

share

hold

ing

fro

m 6

.4 p

erc

ent

to a

ppro

xim

ate

ly 1

3 p

erc

ent.

The r

em

ain

ing

consid

era

tion w

ill b

e f

unded b

y S

apura

Kencana t

hro

ug

h a

mix

of

ext

ern

al

borr

ow

ing

s,

inte

rnally

genera

ted funds,

and e

quity.

O

ne o

f th

e m

ain

obje

ctiv

es o

f th

e t

ransaction i

s t

o d

eve

lop a

str

ong

leadin

g p

laye

r in

the

Asia

n

oil

serv

ices

mark

et

and

stre

ngth

en

the

co-o

pera

tion

betw

een

the

com

panie

s.

Seadrill

will

ha

ve t

he r

ight

to n

om

inate

tw

o m

em

bers

to t

he S

apura

Kencana B

oard

of

Directo

rs (

inclu

din

g o

ne a

ltern

ate

). S

eadrill’

s c

hair

man J

ohn F

redriksen i

s exp

ecte

d t

o b

e

one o

f th

ose m

em

bers

. B

oth

part

ies w

ill s

eek t

o g

row

their s

hare

d a

ctivi

ties in B

razi

l w

here

w

e w

ere

a

ward

ed th

ree P

LS

V contr

acts

by

Pe

trobra

s in

2011.

The sh

are

d pro

ject

is

curr

ently

active

ly in

volv

ed in a

new

tender

pro

cess

in B

razi

l. F

urt

herm

ore

, a s

hare

d p

roje

ct

betw

een

Seadrill’

s

39.9

perc

ent

ow

ned

subsid

iary

A

rcher

Lim

ited

(Arc

her)

and

Sapura

Kencana w

ill be

esta

blis

hed.

The sco

pe of

such

a ve

hic

le w

ill be to

fo

cus on

deve

lopin

g a

nd e

xpandin

g A

rcher’s w

irelin

e s

erv

ices in t

he A

sia

n m

ark

ets

. C

losin

g o

f th

e t

ransact

ion is s

ubje

ct t

o a

ppro

val fr

om

our

tender

rig

org

aniz

ation a

s w

ell

as

from

our

cust

om

ers

. T

he

transaction

is

furt

her

subje

ct

to

cust

om

ary

due

dili

gence

pro

cedure

s,

clo

sin

g

adju

stm

ents

, re

gula

tory

appro

vals

, and

agre

em

ent

betw

een

the

part

ies o

n t

he t

erm

s o

f th

e s

ale

and p

urc

hase a

gre

em

ent

and o

ther

ancill

ary

tra

nsaction

docum

ents

.

The com

bin

ation of

Sapura

Kencana's

and S

eadrill'

s te

nder

rig

busin

esses pro

vides a

str

ate

gic

pla

tform

fo

r S

apura

Kencana's

and

Seadrill'

s

share

hold

ers

to

enhance

their

positio

n a

s p

art

of

a h

ighly

div

ers

ifie

d a

nd leadin

g o

ffshore

serv

ices p

rovi

der

glo

bally

with

multip

le g

row

th o

pport

unitie

s a

nd s

trong v

alu

e c

reation p

ote

ntial.

Op

era

tio

ns

O

ffshore

drilli

ng u

nits

Seadrill

had 4

8 o

ffshore

drilli

ng

units i

n o

pera

tion d

uring

the t

hird q

uart

er

in N

ort

hern

E

uro

pe,

US

G

ulf

of

Mexi

co,

Me

xico,

South

A

mericas,

W

est

A

fric

a,

Mid

dle

E

ast

and

South

east A

sia

(in

clu

din

g f

ive t

ender

rig

s ow

ned b

y V

aria P

erd

ana).

F

or

our

floate

rs (

drills

hip

s a

nd s

em

i-su

bm

ers

ible

rig

s) t

he e

conom

ic u

tiliz

ation r

ate

in t

he

third q

uart

er

ave

rag

ed 8

2 p

erc

ent

com

pare

d t

o 8

8 p

erc

ent

in t

he s

econd q

uart

er.

The

A 41

P

ag

e 6

opera

tional

perf

orm

ance

. T

he

neg

ative

deve

lopm

ent

in

opera

ting

re

sults

have

been

reduced a

nd t

he B

oard

feels

that

good p

rog

ress h

as b

een m

ade d

uring

the l

ast

nin

e

month

s.

We n

ote

fro

m A

rcher’s p

ublic

ly a

vaila

ble

pre

limin

ary

guid

ance f

or

the t

hird q

uart

er

2012

rele

ased N

ove

mber

25,

2012,

that

Arc

her

has

made a

n i

mpairm

ent

of

its o

wn a

ssets

during

th

e

third

quart

er

2012

to

reflect

low

ere

d

exp

ecta

tions

of

futu

re

results.

In

accord

ance w

ith U

S G

AA

P w

e ha

ve alig

ned our

carr

ying

va

lues appro

priate

ly,

takin

g

US

$51 m

illio

n in im

pairm

ent

during

this

quart

er,

repre

senting

our

share

of

this

reduction in

valu

e a

fter

takin

g into

acc

ount

our

his

torical g

oodw

ill b

asis

diffe

rence.

T

he B

oard

of

Seadrill

sees s

ignific

ant

valu

e i

n a

sum

of

the p

art

analy

sis

and r

em

ain

s confident th

at th

e A

rcher

inve

stm

ent w

ill p

rovi

de a

satisf

acto

ry r

etu

rn o

ver

tim

e.

Asia

Offshore

Drilli

ng L

td (

“AO

D”)

A

OD

is a

n o

ffshore

drilli

ng

com

pany

liste

d o

n O

slo S

tock E

xchang

e t

hat

has t

hre

e jack

-up

rig

s under

constr

uct

ion a

t K

eppel

FE

LS

in S

ing

apore

. A

t th

e e

nd o

f th

e t

hird q

uart

er,

S

eadrill

had a

33.7

5 p

erc

ent

ow

ners

hip

sta

ke in A

OD

. H

ow

eve

r, d

uring

the f

ourt

h q

uart

er

we h

ave

thro

ug

h a

cquis

itio

n o

f 26,3

76,4

16 s

hare

s in t

he s

econdary

mark

et

incre

ased o

ur

ow

ners

hip

to 6

5.9

4 p

erc

ent.

As a

result,

on N

ove

mber

9,

2012,

we launched a

mandato

ry

off

er

for

all

the r

em

ain

ing

share

s in A

OD

at

a s

hare

price o

f N

OK

28.7

1.

The o

ffer

periods

ends o

n D

ecem

ber

10,

2012.

Our

share

hold

ing i

n A

OD

had a

gro

ss v

alu

e o

f U

S$132

mill

ion based on th

e clo

sin

g share

price of

NO

K28.6

0 on N

ove

mber

23,

2012.

AO

D

contr

ibute

d U

S$0 m

illio

n t

o o

ur

third q

uart

er

net

incom

e c

om

pare

d t

o U

S$0 m

illio

n i

n t

he

second q

uart

er.

Contr

ibution f

rom

AO

D i

s r

eport

ed u

nder

oth

er

financia

l item

s a

s p

art

of

inve

stm

ent

in associa

ted com

panie

s.

For

more

in

form

ation on A

OD

, ple

ase see th

eir

separa

te q

uart

erly

report

publis

hed o

n w

ww

.aodrilli

ng

.com

.

Sevan D

rilli

ng A

SA

(“S

evan D

rilli

ng

”)

Seva

n D

rilli

ng

is

an off

shore

drilli

ng

com

pany

liste

d on O

slo

S

tock E

xchang

e.

Seva

n

Drilli

ng

o

wns and opera

tes tw

o ultra

-deepw

ate

r rig

of

the cyl

indrical

Seva

n desig

n in

B

razi

l. S

eva

n D

rilli

ng

has t

wo f

urt

her

new

build

s o

f sim

ilar

desig

n u

nder

constr

uct

ion,

with

deliv

ery

schedule

d f

or

fourt

h q

uart

er

2013 a

nd s

econd q

uart

er

2014.

Seadrill

has a

28.5

perc

ent

ow

ners

hip

sta

ke i

n S

eva

n D

rilli

ng

, re

pre

senting a

gro

ss m

ark

et

valu

e o

f U

S$63

mill

ion b

ased o

n t

he c

losin

g s

hare

price o

n N

ove

mber

23,

2012.

Contr

ibution f

rom

Seva

n

Drilli

ng

is r

eport

ed a

s p

art

of

inve

stm

ent

in a

sso

cia

ted c

om

panie

s u

nder

oth

er

financia

l item

s.

For

the

third

quart

er,

S

eva

n

Drilli

ng

contr

ibute

d

US

$2

mill

ion

to

net

incom

e

com

pare

d t

o a

loss o

f U

S$1 m

illio

n i

n t

he s

econd q

uart

er.

We v

iew

the i

nve

stm

ent

in

Seva

n D

rilli

ng

as o

pport

unis

tic a

nd w

ill c

ontinue t

o e

valu

ate

it

com

pare

d t

o a

ltern

ative

s t

o

furt

her

gro

w S

eadrill.

Fo

r m

ore

info

rmation o

n S

eva

n D

rilli

ng

, see t

heir s

epara

te q

uart

erly

report

publis

hed o

n w

ww

.seva

ndrilli

ng

.com

.

Varia P

erd

ana B

hd.(

“Varia P

erd

ana

”)

We h

ave

a 4

9 p

erc

ent

ow

ners

hip

inte

rest

in V

aria P

erd

ana,

whic

h o

wns a

nd o

pera

tes f

ive

self-e

rect

ing

tender

rig

s. D

uring t

he t

hird q

uart

er,

the t

ender

rig

T3 w

ork

ed f

or

PT

TE

P i

n

Thaila

nd a

nd T

10 w

ork

ed f

or

Chevr

on i

n T

haila

nd.

The t

ender

rig

T6 w

ork

ed f

or

CP

OC

(C

arig

ali

PT

TE

P O

pera

ting

Com

pany)

and C

arigali

Hess i

n t

he M

ala

ysia

- T

haila

nd J

oin

t D

eve

lopm

ent

Are

a w

hile

the T

eknik

Berk

at

work

ed f

or

Petr

onas C

arig

ali.

T9 o

pera

ted f

or

Petr

onas C

arig

ali

off

shore

Mala

ysia

. V

aria

Perd

ana c

ontr

ibute

d U

S$12 m

illio

n t

o o

ur

third

quart

er

earn

ing

s com

pare

d to

U

S$10 m

illio

n in

th

e second q

uart

er.

C

ontr

ibution fr

om

V

aria P

erd

ana i

s r

eport

ed a

s p

art

of

inve

stm

ent

in a

ssocia

ted c

om

panie

s u

nder

oth

er

financia

l item

s.

Sapura

Kencana P

etr

ole

um

Bhd.(

“Sapura

Kencana

”)

As r

eport

ed w

e h

ave

en

tere

d i

nto

a n

on-b

indin

g a

gre

em

ent

to s

ale

the l

arg

e p

art

of

our

tender

rig

fleet

to

Sapura

Kencana,

whic

h

is

a

fully

in

teg

rate

d

Mala

ysia

n

oil

serv

ice

pro

vider

liste

d o

n t

he M

ala

ysia

n S

tock E

xchange.

We c

urr

ently

ow

n 3

19,5

40,8

02 s

hare

s

Pag

e 5

Un

it

Cu

rre

nt

cli

en

t A

rea

of

loc

ati

on

C

on

tra

ct

sta

rt

Co

ntr

ac

t e

xp

iry

W

est

Calli

sto

T

ota

l

In t

ransit

to S

au

di A

rab

ia

No

v 2

01

2

No

v 2

01

5

West

Cre

ssi

da

P

TT

EP

T

ha

ilan

d

No

v 2

01

0

Ma

y 2

01

4

West

Ja

nu

s**

* V

iets

ovp

etr

o

Vie

tnam

Ju

l 20

12

D

ec 2

01

2

West

Le

da

E

xxo

nM

ob

il M

ala

ysia

M

ar

20

12

A

pr

20

14

West

Pro

spe

ro

Vie

tso

vpe

tro

V

ietn

am

Ja

n 2

01

2

De

c 2

01

2

West

Tri

ton

K

JO

S

au

di A

rab

ia /

Ku

wa

it

Au

g 2

01

2

Au

g 2

01

5

West

Casto

r (N

B*)

S

au

di A

ram

co

S

ing

ap

ore

– J

uro

ng S

hip

yard

A

ug

201

3

Au

g 2

01

6

West

Tu

can

a (

NB

*)

PV

EP

S

ing

apo

re –

Ju

ron

g S

hip

yard

Ja

n 2

01

3

Ap

ril 20

13

West

Te

lesto

(N

B*)

S

au

di A

ram

co

C

hin

a –

Da

lian

Ship

yard

A

pr

20

13

A

pri

l 20

16

West

Obe

ron

(N

B*)

P

rem

ier

Ch

ina

– D

alia

n S

hip

yard

A

pr

20

13

A

ug

201

3

AO

R-1

(N

B*)

****

S

au

di A

ram

co

S

ing

apo

re -

Ke

pp

el F

EL

S

Ju

n 2

01

3

Ju

n 2

01

6

AO

R-2

(N

B*)

****

Sin

ga

po

re -

Ke

pp

el F

EL

S

AO

R-3

(N

B*)

****

Sin

ga

po

re -

Ke

pp

el F

EL

S

Te

nd

er

rig

s

T4

C

he

vro

n

Th

aila

nd

Ju

l 20

08

Ju

n 2

01

3

T7

C

he

vro

n

Th

aila

nd

N

ov

20

11

M

ar

20

13

T1

1

Ch

evr

on

T

ha

ilan

d

Ma

y 2

00

8

Ma

y 2

01

7

T1

2

Ch

evr

on

T

ha

ilan

d

Ap

r 2

011

A

pr

20

14

T1

5 (

NB

*)

Ch

evr

on

C

hin

a –

CO

SC

O S

hip

yard

A

pr

20

13

A

pr

20

18

T1

6 (

NB

*)

Ch

evr

on

C

hin

a –

CO

SC

O S

hip

yard

Ju

n 2

01

3

Ju

n 2

01

8

T1

7 (

NB

*)

PT

TE

P

Ch

ina

– C

OS

CO

Sh

ipya

rd

Ma

y 2

01

3

Ma

y 2

01

8

T1

8 (

NB

*)

Ch

evr

on

C

hin

a –

CO

SC

O S

hip

yard

M

ar

20

14

M

ar

20

19

West

Alli

an

ce

Sh

ell

Ma

lays

ia

Ja

n 2

01

0

Ja

n 2

01

5

West

Be

ran

i C

he

vro

n

Ind

one

sia

A

pr

20

12

A

pr

20

13

West

Ja

ya

BP

T

rin

ida

d &

To

bag

o

No

v 2

01

1

Se

p 2

01

4

West

Esp

era

nza

(N

B*)

A

me

rada

He

ss

Sin

ga

po

re -

Ke

pp

el F

EL

S

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l 20

13

D

ec 2

01

4

West

Me

na

ng

M

urp

hy

Ma

lays

ia

Au

g 2

01

1

Se

p 2

01

4

West

Pe

laut

Sh

ell

Bru

ne

i A

pr

20

12

M

ar

20

15

West

Se

tia

C

he

vro

n

An

go

la

Au

g 2

01

2

Au

g 2

01

4

West

Ve

nce

do

r C

he

vro

n

An

go

la

Ma

r 2

01

0

Ma

r 2

01

5

*

N

ew

bu

ild u

nde

r co

nstr

uct

ion

or

in m

ob

iliza

tion

to

its

first

drilli

ng

assig

nm

en

t.

**

Ow

ne

d b

y o

ur

su

bsid

iary

NA

DL

in

wh

ich w

e o

wn

73

pe

rce

nt o

f th

e o

uts

tand

ing

sh

are

s.

***

S

ea

drill

ha

s e

nte

red

into

an

agre

em

en

t to

sell

the

un

it, a

tra

nsa

ctio

n c

urr

en

tly

exp

ecte

d t

o b

e

co

mp

lete

d d

uri

ng

th

e f

irst

qu

art

er

20

13

. **

**

Ow

ne

d b

y o

ur

su

bsid

iary

AO

D in

wh

ich

we

ow

n 6

6 p

erc

en

t of

the

ou

tsta

ndin

g s

ha

res.

D

uring

the t

hird q

uart

er

we

had in

tota

l tw

o f

loate

rs a

nd s

eve

n jack-u

ps in t

ransit b

etw

een

contr

act

s f

or

the w

hole

or

part

of

the q

uart

er.

In t

ota

l appro

xim

ate

ly U

S$1

35 m

illio

n h

as o

r w

ill

be

receiv

ed

as

mobili

zation

pa

yments

w

hen

these

contr

act

s

com

mence.

In

accord

ance w

ith U

S G

AA

P m

obili

zation re

venue re

ceiv

ed and m

obili

zation costs

are

defe

rred a

nd r

ecog

niz

ed o

ver

futu

re p

eriods.

Op

era

tio

ns

in

ass

oc

iate

d c

om

pa

nie

s

Arc

her

Lim

ited (

“Arc

her”

) A

rcher

is a

n inte

rnational oilf

ield

serv

ice c

om

pany

liste

d o

n t

he O

slo

Sto

ck E

xchang

e. W

e

curr

ently

ow

n 1

46,2

38,4

46 s

hare

s in

Arc

her,

repre

senting a

gro

ss

valu

e o

f U

S$178 m

illio

n

based o

n the c

losin

g s

hare

price o

f N

OK

6.9

5 o

n N

ove

mber

23, 2012. O

ur

Arc

her

positio

n

contr

ibute

d a

loss

of

US

$53.3

mill

ion t

o o

ur

third q

uart

er

net

incom

e, based o

n p

ublic

ly

ava

ilable

pre

limin

ary

info

rmation, com

pare

d to U

S$3 m

illio

n in t

he s

econd q

uart

er.

C

ontr

ibution fro

m A

rcher

is r

eport

ed u

nder

oth

er

financia

l item

s a

s part

of

inve

stm

ent in

associa

ted c

om

panie

s. F

or

more

info

rmation o

n A

rcher

we r

efe

r to

their q

uart

erly

report

, w

hic

h w

ill b

e r

ele

ased o

n N

ove

mber

28 a

nd p

ublis

hed o

n w

ww

.arc

herw

ell.

com

.

The B

oard

is d

isappoin

ted w

ith t

he o

pera

tional and f

inancia

l perf

orm

ance o

f A

rcher

sin

ce

2010.

Cert

ain

act

ions have

been im

ple

mente

d to

im

pro

ve contr

ol

and str

ength

en th

e

A 42

P

ag

e 8

Ma

rke

t d

eve

lop

me

nt

The m

ark

et

fundam

enta

ls i

n t

he o

ffsh

ore

drilli

ng

industr

y re

main

str

ong

acro

ss a

ll asset

cla

sses a

s o

il com

panie

s c

ontinue t

o s

earc

h f

or

new

reserv

es a

nd d

eve

lop p

revi

ous f

inds

in o

rder

to m

eet

eve

r in

creasin

g g

lobal dem

and a

nd k

eep p

ace w

ith p

roduction d

eclin

es in

matu

re f

ield

s.

His

tory

has

dem

onstr

ate

d

a

cle

ar

corr

ela

tion

with

exp

lora

tion

success

follo

wed

by

incre

menta

l rig

dem

and d

ue t

o t

he n

um

ber

of

wells

needed t

o d

elin

eate

and d

eve

lop t

hese

finds.

We e

xpect

the s

ignific

ant

exp

lora

tion s

uccesses o

f th

e p

ast

few

years

to s

imila

rly

transla

te

into

in

cre

ased

rig

dem

and

as

oil

com

panie

s’

work

to

cle

ar

the

back

log

of

deve

lopm

ent

drilli

ng

pro

jects

in

an

att

em

pt

to

meet

pro

duction

targ

ets

and

main

tain

re

serv

e r

epla

cem

ent ra

tios.

The t

rend t

ow

ard

s incre

asin

gly

com

ple

x and d

em

andin

g w

ells

continues t

o b

enefit

drilli

ng

contr

act

ors

who c

an p

rovi

de a

ccess t

o h

igh s

pecific

ation e

quip

ment

opera

ted b

y hig

hly

com

pete

nt

cre

ws and w

e re

main

bulli

sh on o

ur

abili

ty to

capitaliz

e o

n th

e continued

deve

lopm

ent

within

the industr

y.

Ultra

-deepw

ate

r floate

rs (

>7,5

00 ft w

ate

r)

The

ultra

-deepw

ate

r m

ark

et

show

s

continued

str

eng

th

drive

n

prim

arily

b

y in

cre

asin

g

dem

and i

n A

fric

a a

nd t

he G

ulf o

f M

exi

co.

In t

he G

ulf

of

Me

xico i

t is

estim

ate

d t

hat

more

th

an 5

0%

of

reserv

es a

re in w

ate

r depth

s g

reate

r th

an 5

000 f

t and a

s a

result w

ell

desig

ns

invo

lve m

ore

technic

ally

dem

andin

g w

ell

constr

uction t

echniq

ues.

These

chara

cte

ristics

both

drive

the d

em

and t

ow

ard

s n

ew

er

rig

s w

ith g

reate

r lo

adpath

capacitie

s a

nd w

e e

xpect

this

tre

nd t

o p

ut

furt

her

pre

ssure

on t

he s

upply

of

new

build

1250 t

on u

nits i

n 2

013 a

nd

2014.

C

ontr

act

ing

and t

endering

activi

ty f

or

modern

ultra

-deepw

ate

r units h

as

continued a

t a

solid

pace

with

daily

ra

tes

in

the

US

$550,0

00

to

US

$650,0

00

range,

dependin

g

on

location a

nd c

ontr

act

dura

tion.

Seadrill,

with n

ine u

ltra

-deepw

ate

r new

build

units u

nder

constr

uction,

is w

ell

positio

ned t

o c

apita

lize o

n t

he incre

ased s

pend in t

his

are

a.

We h

ave

contr

act

ed t

hre

e o

f our

nin

e n

ew

build

s a

nd a

re a

lready

receiv

ing

inte

rest

fro

m c

ust

om

ers

re

gard

ing

units

ava

ilable

in 2

014 a

nd 2

015.

Our

rece

nt

fixt

ure

of

a f

ive-y

ear

term

for

the

West

Mira w

hic

h w

ill b

e d

eliv

ere

d i

n e

arl

y 2015,

indic

ate

s t

hat

oil

& g

as c

om

panie

s a

re

will

ing

to s

ecure

modern

hig

h s

pecific

ation d

rilli

ng

units w

ell

in a

dva

nce o

f deliv

ery

in o

rder

to g

ain

the benefits

that

these assets

can bring

to

their exp

lora

tion and deve

lopm

ent

pla

ns.

T

he h

ars

h e

nvi

ronm

ent

floate

r m

ark

et

continues

to s

how

str

eng

th w

ith e

xtre

mely

lim

ited

capacity

ava

ilab

le i

n 2

014 a

nd 2

015,

and e

ven l

ess w

hen t

he a

ge a

nd s

pecific

ations o

f units are

consid

ere

d.

We are

ve

ry confident

that

we w

ill be ab

le to

secure

attra

ctiv

e

contr

act

s fo

r our

open n

ew

bu

ildin

gs.

Seadrill

have

been t

he m

ost

agg

ressiv

e p

laye

r in

the n

ew

build

ing

mark

et

sin

ce 2

010.

We

continue t

o s

ee t

his

as a

uniq

ue o

pport

unity

as l

ong

as,

yard

prices r

em

ain

s a

t his

toric

low

s ,

long

-term

rate

s is c

lose t

o h

isto

ric h

ighs w

ith s

olid

long

-term

cove

rag

e a

nd n

o o

ther

com

petit

or

acts

agg

ressiv

ely

.

W

e w

ill c

ontinue t

o s

ee

k o

ut

additio

nal

inve

stm

ent

opport

uniti

es i

n b

oth

the b

enig

n a

nd

hars

h e

nvi

ronm

ent

deepw

ate

r secto

rs thro

ug

h o

rganic

gro

wth

and s

ele

ctive

acq

uis

itio

n.

The

targ

et

is

to

aggre

ssiv

ely

continue

to

bu

ild

Seadrills

m

odern

fleet

without

takin

g

impro

per

financia

l or

opera

tional risk

.

Pre

miu

m jack-u

p r

igs (

>350 ft w

ate

r)

P

ag

e 7

eq

uiv

ale

nt

to a

6.4

perc

ent

ow

ners

hip

sta

ke,

whic

h h

ad a

gro

ss v

alu

e o

f U

S$298 m

illio

n

based o

n a

clo

sin

g s

hare

price o

f M

YR

2.8

5 o

n N

ove

mber

23,

2012.

Our

ow

ners

hip

in

Sapura

Kencana is t

reate

d a

s m

ark

eta

ble

security

and is m

ark

ed-t

o-m

ark

et

with n

o e

quity

pic

k-u

p.

For

more

in

form

ation on S

apura

Kenca

na,

see th

eir separa

te q

uart

erly

report

publis

hed o

n w

ww

. sapura

kencana.c

om

.

New

co

ntr

ac

ts a

nd

co

ntr

ac

t e

xte

nsio

ns

S

ubseq

uent

to t

he f

iling o

f our

second q

uart

er

2012 r

eport

, w

e h

ave

ente

red i

nto

the

follo

win

g n

ew

contr

acts

and r

eceiv

ed t

he f

ollo

win

g c

om

mitm

ents

with a

tota

l estim

ate

d

reve

nue

pote

ntial

of

US

$2

bill

ion:

Tota

l ord

erb

acklo

g

as

of

Nove

mber

23,

2012,

is

appro

xim

ate

ly U

S$21.3

bill

ion.

In N

ove

mber

2012,

we r

eceiv

ed a

Lett

er

of

Aw

ard

fro

m H

usk

y fo

r th

e n

ew

build

ultra

-deepw

ate

r sem

i-subm

ers

ible

rig

W

est

Mira

for

opera

tions

off

shore

C

anada

and

Gre

enla

nd.

The f

ive-y

ear

contr

act

has a

n a

gre

ed d

aily

rate

of

US

$590,0

00 e

xclu

din

g 5

perc

ent

in b

onus p

ote

ntia

l. I

n a

dditio

n,

the r

ig w

ill b

e o

utf

itted w

ith a

second 6

-ram

BO

P a

t cost to

Seadrill.

F

or

our

jack

-up r

igs

in o

pera

tion w

e h

ave

receiv

ed t

he f

ollo

win

g n

ew

com

mitm

ents

:

West

V

igila

nt

has secure

d a one-y

ear

contr

act

w

ith T

alis

man fo

r opera

tions off

shore

M

ala

ysia

at

an a

gre

ed d

aily

rate

of

US

$146,0

00,

and t

he W

est

Mis

chie

f has r

eceiv

ed a

tw

o-y

ear

contr

act

fro

m E

NI

for

opera

tions o

ffsh

ore

Republic

of

Cong

o a

t an a

gre

ed d

aily

ra

te o

f U

S$175,0

00.

For

our

jack

-up r

igs

under

const

ruction, w

e h

ave

receiv

ed t

he f

ollo

win

g n

ew

contr

acts

:

West

Casto

r, W

est

Tele

sto

, and A

OR

-1 h

ave

secure

d a

thre

e-y

ear

contr

acts

with S

aud

i A

ram

co w

ith a daily

ra

te of

US

$198,5

00,

US

$185,0

00 and U

S$180,0

00,

respective

ly.

Pre

mie

r O

il has c

ontr

act

ed t

he W

est

Obero

n f

or

four

month

s a

t a d

aily

rate

of

US

$149,5

00

for

opera

tions

off

shore

V

ietn

am

, and

the

West

Tucana

has

secure

d

thre

e-m

onth

em

plo

yment

with P

VE

P a

t an a

gre

ed d

aily

rate

of U

S$160,0

00.

For

more

deta

iled

info

rmation

reg

ard

ing

daily

ra

tes

and

contr

act

dura

tions

inclu

din

g

escala

tion,

curr

ency

adju

stm

ent

or

oth

er

min

or

chang

es

to

daily

ra

tes

and

dura

tion

pro

file

s,

see

our

fleet

statu

s re

port

or

new

s

rele

ases

on

the

our

website

ww

w.s

ead

rill.c

om

New

bu

ild

ing

pro

gra

m

In S

epte

mber,

we o

rdere

d a

ne

w d

rills

hip

at

the S

am

sung

ship

yard

in S

outh

Kore

a.

The

drills

hip

will

be o

f eq

ual

specific

ation a

s t

he o

ther

six

dri

llship

s w

e c

urr

ently

ha

ve u

nder

constr

uction a

t th

e s

am

e y

ard

. T

he e

xpecte

d t

ota

l pro

ject

price is e

stim

ate

d t

o b

e U

S$600

mill

ion,

and d

eliv

ery

is s

chedule

d f

or

the f

ourt

h q

uart

er

2014.

W

e n

ow

have

22 u

nits u

nder

constr

uct

ion.

The n

ew

build

pro

gra

m i

nclu

des s

eve

n u

ltra

-deepw

ate

r drills

hip

s,

two u

ltra

-deepw

ate

r sem

i-subm

ers

ible

rig

s,

one h

ars

h-e

nvi

ronm

ent

jack

-up r

ig,

seve

n p

rem

ium

benig

n e

nvi

ronm

ent

jack-u

p r

igs,

one s

em

i-te

nder

rig

, and f

our

tender

rig

s. T

he n

ew

build

ing

pro

gra

m p

rog

ress a

ccord

ing t

o s

chedule

with r

espect

to c

ost

w

ith o

nly

min

or

dela

ys f

or

som

e o

f th

e j

ack

-ups.

In t

ota

l 12 o

f th

e 2

2 n

ew

build

ing

s h

ave

already

been c

hart

ere

d o

ut

on long-t

erm

contr

act

s.

The d

eliv

ery

schedule

for

the n

ew

build

s u

nder

constr

uct

ion is f

rom

the f

ourt

h q

uart

er

2012

to th

e firs

t q

uart

er

2015,

with th

e m

ajo

rity

of

deliv

eries in

2013 and 2014.

The to

tal

rem

ain

ing

yard

insta

llments

for

our

new

build

s a

re a

ppro

xim

ate

ly U

S$5.9

bill

ion,

exc

lud

ing

AO

D. In

tota

l U

S$1.6

bill

ion h

as b

een p

aid

to the y

ard

s in p

re-d

eliv

ery

insta

llments

.

For

furt

her

info

rmation o

n o

ur

new

build

ing

pro

gra

m p

lease s

ee N

ote

9 a

nd N

ote

18 t

o o

ur

financia

l st

ate

ments

.

A 43

P

ag

e 1

0

Reven

ue b

acklo

g

We h

ave

sin

ce o

ur

second q

uart

er

report

ente

red i

nto

new

contr

acts

with a

tota

l re

venue

pote

ntial of

US

$2 b

illio

n,

incre

asin

g o

ur

ord

erb

ack

log

fro

m U

S$19.9

bill

ion t

o a

record

hig

h

of

US

$21.3

bill

ion a

s o

f N

ove

mber

23, 2012.

Our

ord

erb

ack

log

pro

vides com

mitm

ent

for

our

futu

re earn

ing

s as w

ell

as g

enera

ting

futu

re v

isib

ility

for

div

ide

nd c

apacity.

For

our

ultra

-deepw

ate

r fleet

we s

till

ha

ve t

he W

est

Tellu

s a

vaila

ble

at

a v

ery

att

ract

ive s

lot

in 2

013,

wh

ile w

e in 2

014 h

ave

open p

ositio

ns f

or

all

of

our

ultr

a-d

eepw

ate

r rig

s a

nd t

he W

est

Rig

el, w

hic

h w

ill b

e a

vaila

ble

in 2

015.

The

ave

rag

e c

ontr

act

dura

tion,

inclu

din

g o

ur

new

bu

ilds i

s 4

9 m

onth

s f

or

our

ultra

-deepw

ate

r fleet.

W

ith r

eg

ard

s to

our

shallo

w w

ate

r capacity,

nearly

all

our

futu

re jack

-up c

apacity

has b

een

firm

ed u

p t

hro

ug

h r

ecent

contr

act

ing

act

ivity,

evid

encin

g t

hat

both

daily

rate

s a

nd d

ura

tion

are

in

cre

asin

g in

th

e pre

miu

m ja

ck-u

p segm

ent.

W

e now

have

only

tw

o rig

s w

ithout

contr

act

, both

of

whic

h a

re n

ew

build

s t

o b

e d

eliv

ere

d n

ext

year.

The a

vera

ge c

ontr

act

le

ng

th f

or

our

jack

-ups is 2

2 m

onth

s.

All

of

our

tender

rig

s h

ave

secure

d e

mplo

yment,

and

the ave

rag

e contr

act

le

ngth

is

25 m

onth

s. T

he B

oard

w

ants

to

g

ive cre

dit to

all

the

em

plo

yees w

ho h

ave

be

en i

nvo

lved i

n s

ecuring

this

ord

erb

ack

log

for

a v

ery

pro

fessio

nal

and s

olid

job.

Fin

an

cia

l fl

exib

ilit

y

Substa

ntial

pro

gre

ss h

as b

een m

ade o

n S

eadrill

financin

g d

uring

the r

ecent

quart

er.

In

Septe

mber

we ra

ised U

S$1.0

bill

ion th

roug

h a U

.S.

issued unsecure

d b

ond,

whic

h is

unra

ted a

nd b

ears

inte

rest

of

5.6

25 p

erc

ent

per

annum

and m

atu

res i

n S

epte

mber

2017.

This

mark

s a l

andm

ark

tra

nsact

ion f

or

Seadrill

as i

t is

the f

irst

U.S

. bond i

ssued b

y th

e

Com

pany,

wh

ich o

pens u

p a

ne

w a

venue f

or

the C

om

pany

to r

ais

e f

utu

re d

ebt financin

g in

a m

ark

et

with substa

ntia

l siz

e th

at

was pre

vio

usly

un-t

apped.

The bond w

as hea

vily

ove

rsubscribed a

nd h

ave

tra

ded w

ell

in t

he a

fter

mark

et

dem

onst

rating t

he s

trength

that

Seadrill

cre

dit h

as

in the m

ark

et.

We h

ave

receiv

ed f

irm

com

mitm

ents

fro

m b

anks a

nd E

xport

Cre

dit

Ag

encie

s (

EC

A)

for

our

new

bu

ilds t

hat

have

schedule

d d

eliv

ery

in t

he p

eriod fro

m D

ecem

ber

2012 t

o D

ecem

ber

2013. T

he c

om

mitm

ents

receiv

ed t

o d

ate

tota

l som

e U

S$1.7

bill

ion a

nd d

em

onstr

ate

S

eadrill´

s c

ontinuin

g s

trong r

ela

tionship

and s

upport

fro

m leadin

g f

inancia

l in

stitu

tions.

Furt

her

com

mitm

ents

are

exp

ecte

d to b

e r

eceiv

ed b

y th

e tim

e w

e r

eport

our

fort

h q

uart

er

financia

l results.

Subst

antial pro

gre

ss h

as

als

o b

een a

chie

ved w

ith r

espect to

fin

ancin

g o

f th

e n

ew

build

ing

s f

or

deliv

ery

in 2

014 a

nd 2

015. T

he B

oard

is

confident th

at th

e a

ll new

bu

ilidng

s c

an b

e f

inanced w

ithout

rais

ing

additi

onal eq

uity

. T

hese p

redic

tions e

xclu

des

use o

f any

of

the p

roceed e

xpecte

d to b

e r

ele

ased in

the S

apura

Kencana tra

nsact

ion. T

he

successf

ul b

ond issue t

og

eth

er

with t

he lis

ting

of S

eadrill

Part

ners

in O

cto

ber

create

s sig

nific

ant financia

l fle

xibili

ty in t

he s

hort

and long-t

erm

for

the C

om

pany.

O

ther

Sig

nif

ican

t In

vestm

en

ts

We

hold

va

rious

ow

ners

hip

positio

ns

in

oth

er

liste

d

off

shore

drille

rs

and

oil

serv

ice

com

panie

s.

Our

port

folio

inclu

des a

39.9

perc

ent

hold

ing

in A

rcher

Lim

ited,

a 2

8.5

perc

ent

in S

eva

n D

rilli

ng

AS

A,

and 6

.4 p

erc

ent

hold

ing

in S

apura

Kencana.

Exc

ept fo

r our

str

ate

gic

in

vestm

ents

in A

rcher

and S

apura

Kencana,

the B

oard

eva

luate

s t

he p

rospects

of

these

inve

stm

ents

on a

continuous b

asis

.

At

curr

ent

mark

et

prices,

the t

ota

l cash i

nve

ste

d i

n t

hese i

nve

stm

ents

is a

ppro

xim

ate

ly

US

$670 m

illio

n.

Q

uart

erl

y C

ash

Div

iden

d

The B

oard

has in c

onnection w

ith t

he d

isclo

sure

of

the t

hird q

uart

er

results

eva

luate

d t

he

curr

ent

div

idend l

eve

l a

nd p

rospects

and h

as r

esolv

ed t

o i

ncre

ase t

he r

eg

ula

r q

uart

erly

P

ag

e 9

The d

em

and f

or

pre

miu

m jack

-ups c

ontinues t

o s

trength

en a

s evi

denced b

y sim

ultaneous

incre

ases in

contr

act

le

ad tim

es,

dayr

ate

s and contr

act

dura

tions.

Jack

-up utiliz

ations

rate

s have

rem

ain

ed a

bove

90%

sin

ce e

arly

2011,

on a

vera

ge m

ore

than 2

jack

-ups

have

been r

eact

ivate

d,

scra

pped o

r conve

rted p

er

month

sin

ce m

id 2

011.

Dem

and f

or

hig

h s

pecific

ation j

ack

-ups

continues t

o b

e d

rive

n p

rim

arily

in A

sia

and t

he

Mid

dle

E

ast

but

more

re

cently

we

have

se

en

incre

asin

g

inte

rest

in

new

er

hig

her

specific

ation u

nits f

rom

custo

mers

in o

ther

mark

ets

inclu

din

g W

est

Afr

ica a

nd A

ustr

alia

/

New

Zeala

nd a

s o

il com

panie

s s

eek t

o r

epla

ce a

gin

g f

leets

units

and g

ain

eff

icie

ncy

and

safe

ty b

enefits

of

new

er

and m

ore

eff

icie

nt

units. O

ur

custo

mers

are

dem

onstr

ating a

cle

ar

pre

fere

nce to

ward

s ja

ck-u

ps th

at

are

yo

ung

er

in ag

e w

ith enhanced capabili

ties th

at

impro

ve w

ork

er

safe

ty a

nd d

rilli

ng

eff

icie

ncy.

The w

ells

bein

g d

rille

d a

re d

eeper

and m

ore

com

ple

x, o

n a

vera

ge,

whic

h a

lso r

eq

uires t

he incre

ased c

apacity

that

hig

her

specific

ation

units p

rovi

de.

With

few

er

wells

bein

g d

rille

d p

er

rig

due t

o m

ore

technic

ally

dem

andin

g

pro

gra

ms

we

exp

ect

the

curr

ent

dem

and

str

ength

fo

r hig

h

specific

atio

n

jack-u

ps

to

continue.

Despite t

he a

dditio

n o

f 90 p

rem

ium

cla

ss jack

-ups,

during

the p

ast

5 y

ears

, alm

ost

70%

of

the c

urr

ently

contr

act

ed f

leet

is m

ore

than 3

0 y

ears

old

. W

hile

appro

xim

ate

ly 9

0 u

nits a

re

curr

ently

under

constr

uction,

alm

ost

a

third

of

these

will

not

ente

r th

e

com

petitive

in

tern

ational

mark

et

and a

t th

e s

am

e t

ime,

an e

qual

num

ber

of

rig

s w

ill h

ave

reached 3

5

years

of

ag

e b

y th

e e

nd o

f 2014.

We s

ee s

olid

in

tere

st in o

ur

rem

ain

ing

ava

ilable

jack-u

p

fleet

and e

xpect

our

curr

ently

pla

nned n

ew

build

s t

o b

e e

ffect

ively

absorb

ed into

the m

ark

et

at

attra

ctive

rate

s a

nd d

ura

tions.

In lin

e w

ith w

hat

we h

ave

com

munic

ate

d in

th

e re

cent

quart

ers

w

e continue to

see

dem

and o

uts

trip

pin

g s

upply

at

least

into

2013 a

nd e

xpect

the j

ack

-up m

ark

et

to s

how

a

positiv

e d

eve

lopm

ent

in t

he q

uart

ers

to c

om

e.

This

could

als

o d

rive

furt

her

acquis

itio

n

activi

ty a

mong t

he s

pecula

tive

ne

wbuild

pla

yers

. T

ender

rigs

We s

ee a

continued i

nte

rest

in o

ur

tender

rig

fle

et

from

cust

om

ers

and r

ecog

niz

e t

he

mark

et

as havi

ng

fu

rther

room

fo

r gro

wth

and deve

lopm

ent.

T

ender

rig

s continue to

pro

vide a

dva

nta

ges i

n f

ixed p

latf

orm

, T

LP

, and s

par

deve

lopm

ent

econom

ics w

ith c

lear

enhancem

ents

ove

r th

e s

tandard

pla

tform

-drilli

ng

packag

e p

lus t

he a

bili

ty t

o w

ork

in w

ate

r depth

s u

p t

o 6

500 ft.

C

orp

ora

te s

tra

teg

y,

div

ide

nd

an

d o

utl

oo

k

Gro

wth

an

d In

vestm

en

ts

We h

ave

in-lin

e w

ith o

ur

str

ate

gy

deve

loped a

modern

fle

et

of

hig

hly

adva

nced d

rilli

ng

units

thro

ug

h

new

build

ord

ers

and

sele

ctive

acq

uis

itio

ns

of

modern

assets

. W

e

are

curr

ently

in

a

str

ong

cy

cle

fo

r ultra

-deepw

ate

r m

ark

et

with

fixt

ure

s

in

the

reg

ion

of

US

$600,0

00 p

er

day a

nd h

ave

pro

ceeded a

ccord

ing

to o

ur

str

ate

gy

with t

he o

rdering

a

seve

nth

drills

hip

at

Sam

sung

and t

he p

endin

g a

cquis

itio

n o

f th

e S

ong

a E

clip

se,

wh

ich is a

2011 b

uilt

ultra

-deepw

ate

r sem

i-subm

ers

ible

rig

for

US

$590 m

illio

n.

The p

urc

hase o

f th

e

Song

a E

clip

se t

hro

ug

h a

subsid

iary

is e

xpecte

d t

o b

e f

inaliz

ed m

id-D

ecem

ber

2012.

We

have

receiv

ed s

eve

ral attra

ctive

off

ers

to f

inance this

rig

. T

he t

ransf

er

of

most

of

our

tender

rig

s t

o S

apura

Kencana i

s a

n a

ttra

ctive

opera

tional

solu

tion t

o e

nsure

that

the t

ender

rig

div

isio

n c

ontinues t

o g

row

. T

he c

ash

rele

ased in t

he

transact

ion

will

enable

us t

o inve

st

furt

her

in b

oth

the u

ltra

-deepw

ate

r and p

rem

ium

jack

-up segm

ents

. O

ur

curr

ent

inve

stm

ent

pro

gra

m w

ill enab

le us to

g

row

fu

ture

earn

ings

incre

ase o

ur

div

idend c

apacity.

W

e c

urr

ently

have

22 n

ew

bu

ilds u

nder

constr

uct

ion a

t a

tota

l all-

in c

ost

of

US

$7.5

bill

ion,

exc

lud

ing

AO

D,

bein

g d

eliv

ere

d b

etw

ee

n 2

012 a

nd 2

015

with th

e m

ajo

rity

of

deliv

eries in

2013 and 201

4.

Appro

xim

ate

ly U

S$1.6

bill

ion of

the

pro

ject

costs

have

already

been p

aid

.

A 44

P

ag

e 1

2

The B

oard

is

not satisf

ied w

ith t

he o

pera

tional perf

orm

ace in the third q

uart

er.

This

is

main

ly lin

ked t

o t

he 9

0 d

ays

of

off

-hire for

our

floate

rs,

whic

h t

o a

larg

e d

eg

ree w

as

cre

ate

d b

y m

anufa

ctu

ring f

ailu

res

on the s

ubsea e

quip

ment. T

he r

esults

are

furt

her

weakened b

y th

e c

om

merc

ial decis

ion t

o m

ove

West

Herc

ule

s a

nd W

est

Aq

uarius t

o n

ew

m

ark

ets

, and a

t th

e s

am

e t

ime u

se t

his

opport

unity

to g

o t

hro

ug

h fiv

e-y

ear

cla

ssific

ation

work

. T

ota

l tim

e b

etw

een d

rilli

ng

is e

xpecte

d t

o b

e a

ppro

xim

ate

ly 3

46 d

ays

for

West

H

erc

ule

s a

nd W

est

Aq

uarius,

of

whic

h 1

64 d

ays

have

occurr

ed in t

he t

hird q

uart

er.

This

tim

e inclu

des

transit, upgra

de w

ork

and d

rydock

ing,

and s

om

e o

f th

e tim

e w

ill b

e

com

pensate

d b

y th

e o

pera

tor.

The o

pera

tional perf

orm

ance s

o f

ar

in the fourt

h q

uart

er,

w

hile

still

bein

g im

pact

ed b

y th

e s

ubsea issues

exp

erienced in the third q

uart

er,

is tre

ndin

g

back t

o n

orm

al.

Dow

ntim

e f

or

the d

eepw

ate

r fleet opera

ting

so far

in t

he f

ourt

h q

uart

er

2012 is e

stim

ate

d to b

e 4

1 d

ays

. W

est

Alp

ha h

as

pro

long

ed its

yard

sta

y and c

om

menced

Octo

ber

19. T

hirte

en d

ays

of

zero

rate

was o

ccurr

ed in O

cto

ber.

The B

oard

anticip

ate

s a

sig

nific

ant im

pro

vem

ent in

the o

pera

ting r

esults in o

ur

fourt

h q

uart

er

2012 r

esults a

nd

exp

ects

continued im

pro

vem

ents

in r

esults

as furt

her

new

build

ing

s c

om

mence o

pera

tion

in t

he p

eriod 2

013 –

2015.

The B

oard

rem

ain

s v

ery

confident

about th

e w

ay

the C

om

pany

is p

ositio

ned,

and t

he

opport

unitie

s ahead o

f us. T

he s

hare

hold

ers

should

exp

ect

solid

opera

ting r

esults

and

hig

h d

ivid

end p

aym

ent

in t

he y

ears

to c

om

e.

Fo

rward

-Lo

ok

ing

Sta

tem

en

ts

This

report

conta

ins f

orw

ard

-lookin

g s

tate

ments

. T

hese s

tate

ments

are

based o

n v

arious

assum

ptions,

many

of

wh

ich are

based,

in tu

rn,

upon fu

rther

assum

ptions,

inclu

din

g

Seadrill

managem

ent’s e

xam

ination o

f his

torical opera

ting

tre

nds.

Inclu

din

g a

mong

oth

ers

, fa

cto

rs t

hat,

in S

eadrill’

s v

iew

, could

cause a

ctu

al re

sults t

o d

iffer

mate

rially

fro

m t

he f

orw

ard

lookin

g s

tate

ments

conta

ined in t

his

report

are

the f

ollo

win

g:

(i)

the

com

petitive

natu

re

of

the

off

shore

drilli

ng

in

dust

ry;

(ii)

oil

and

gas

prices;

(iii)

te

chnolo

gic

al

deve

lopm

ents

; (iv)

g

ove

rnm

ent

reg

ula

tions;

(v

) chang

es

in

econom

ical

conditio

ns o

r polit

ical

eve

nts

; (v

i) i

nabili

ty o

f S

eadrill

to o

bta

in f

inancin

g f

or

the n

ew

build

s or

exi

sting

assets

on f

avo

rable

term

s o

r at

all;

(vi

i) c

hang

es o

f th

e s

pendin

g p

lan o

f our

custo

mers

; (v

iii)

chang

es

in

Seadrill’

s

opera

ting

exp

enses

inclu

din

g

crew

w

ag

es;

(ix)

in

sura

nce;

(x)

dry

-dock

ing;

(xi)

repairs

and

main

tenance;

(xii)

fa

ilure

of

ship

yard

s

to

com

ply

w

ith

deliv

ery

schedule

s

on

a

tim

ely

basis

; (x

ii)

and

oth

er

import

ant

fact

ors

m

entioned f

rom

tim

e t

o t

ime in o

ur

report

s f

iled w

ith t

he U

nited S

tate

s S

ecurity

Exc

hang

e

Com

mis

sio

n (

“SE

C”)

and t

he O

slo

Sto

ck E

xchange.

Nove

mber

26, 2012

The B

oard

of

Directo

rs

Seadrill

Lim

ited

Ham

ilton,

Berm

uda

Questions

should

be d

irecte

d to S

eadrill

Manag

em

ent A

S r

epre

sente

d b

y:

Fre

drik H

alv

ors

en:

C

hie

f E

xecutive

Off

icer

and P

resid

ent

Rune M

ag

nus L

undetr

æ:

Chie

f F

inancia

l O

ffic

er

and S

enio

r V

ice P

resid

ent

P

ag

e 1

1

div

idend

by

US

$0.0

1

to

US

$0.8

5.

The

incre

ase

reflect

S

eadrill’

s

impro

ved

financia

l flexi

bili

ty a

nd t

he c

urr

ent

stro

ng m

ark

et

as

evi

denced b

y re

cent

fixt

ure

s. T

he B

oard

has

noticed th

at

a sig

nific

ant

part

of

Seadrill’

s U

.S.

share

hold

er

base m

ay

be

subje

ct

to

incre

ased d

ivid

end t

axa

tion f

or

2013,

pendin

g c

ert

ain

chang

es

in t

he U

.S.

tax

code.

In

vie

w o

f th

is,

the B

oard

has d

ecid

ed t

o a

ccele

rate

the d

ivid

end p

aym

ent

for

the f

ourt

h

quart

er

2012 s

uch t

hat

a d

ivid

end c

an

be p

aid

ou

t to

geth

er

with t

he t

hird q

uart

er

div

idend.

This

adva

nced div

idend

fo

r th

e f

ourt

h q

uart

er

2012 is

als

o set

to U

S$0.8

5.

The to

tal

div

idend p

aym

ent

due w

ill t

here

fore

be U

S$1,7

0 p

er

share

. T

he e

x. D

ivid

end d

ate

has

been s

et

to D

ecem

ber

4,

2012,

record

date

is D

ecem

ber

6,

2012,

and p

aym

ent

date

is o

n

or

about

Decem

ber

21,

2012.

In vi

ew

of

the accele

ration of

the fo

urt

h q

uart

er

2012

div

idend p

aym

ent,

no a

dditio

nal div

idend p

aym

ent

can b

e e

xpecte

d p

rior

to d

ecla

ration o

f a f

irst

quart

er

div

idend in 2

013.

Near-

term

pro

sp

ects

O

ur

curr

ent in

vestm

ent

pro

gra

m n

ow

tota

ls 2

2 u

nits u

nder

constr

uction. W

e h

ave

already

secure

d c

ontr

acts

for

14 o

f th

ese r

igs. W

ith p

ote

ntia

l sale

of

our

tender

rig fle

et,

we w

ill

receiv

e e

stim

ate

d funds o

f U

S$1.2

bill

ion.

These funds a

re n

ot

likely

to b

e d

istr

ibute

d a

s

ext

raord

inary

div

idends,

but

are

more

lik

ely

to b

e u

sed t

o s

upport

in

vestm

ents

, either

thro

ug

h n

ew

build

s o

r M

&A

in e

ither

the u

ltra-d

eepw

ate

r or

pre

miu

m jack

-up r

ig s

egm

ent.

The p

rem

ium

jack

-up r

ig s

egm

ent is

show

ing

str

ong s

igns o

f im

pro

ving

with incre

asin

g

daily

rate

s and long

er

dura

tion in the r

ecent

contr

acts

. In

Octo

ber,

we incre

ased o

ur

inve

stm

ent

in this

segm

ent

by

incre

asin

g o

ur

ow

ners

hip

sta

ke in A

OD

. W

e b

elie

ve t

he

jack

-up m

ark

et

will

continue t

o im

pro

ve furt

her,

especia

lly a

s c

lose to 7

0 p

erc

ent of

the

world

wid

e jack

-up f

leet

is o

lder

than 2

5 y

ears

O

ur

str

ate

gy

with a

hig

h d

ivid

end p

ayo

ut

and a

ggre

ssiv

e g

row

th t

hro

ug

h in

vestm

ents

in

modern

assets

has

deliv

ere

d s

uperior

retu

rns

to o

ur

share

hold

ers

. T

he B

oard

is p

leased

with t

he e

sta

blis

hm

ent of

SD

LP

as a

futu

re s

ourc

e f

or

gro

win

g t

he C

om

pany

furt

her.

SD

LP

can a

ct as

a v

ehic

le t

o g

row

the C

om

pany

at an a

ccele

rate

d p

ace a

s w

ell

as low

ering

the

curr

ent

cost of

capital f

or

Seadrill.

The B

oard

sees b

ased o

n the e

xisting a

sset

and

contr

act

port

folio

good o

pport

unitie

s fo

r S

DLP

to b

e o

ne o

f th

e fast

est g

row

ing

MLP

s in t

he

next

thre

e t

o f

ive y

ears

. W

e a

nnounced in O

cto

ber

that A

lf C

Thork

ildsen h

ad r

esig

ned a

s C

hie

f E

xecutive

Off

icer

of

Seadrill

Manag

em

ent A

S a

nd F

redrik H

alv

ors

en h

ad a

ssum

ed h

is r

esponsib

ilities.

The

Board

has

the u

tmost

confidence in M

r.H

alv

ors

en a

nd is s

ure

that

he w

ill m

anag

e the

Com

pany

successf

ully

thro

ug

h the c

urr

ent gro

wth

phase. T

he B

oard

has

als

o m

ade t

he

decis

ion t

o r

elo

cate

Seadrill

Manag

em

ent

AS

fro

m S

tava

ng

er

to L

ondon. T

his

relo

cation is

exp

ecte

d t

o r

eap c

ost benefits

ove

r tim

e.

How

eve

r, in t

he s

hort

-term

, g

enera

l and

adm

inis

trative

cost

will

in

cre

ase r

ela

ted t

o o

ne-o

ff c

osts

during

the m

anag

em

ent tr

ansitio

n

pro

cess.

All

senio

r m

anag

em

ent have

accepte

d a

n o

ffer

to m

ove

fro

m S

tava

ng

er

to

London d

uring

early

2013.

T

he B

oard

sees this

move

as a

n im

port

ant

step in p

reserv

ing

Seadrill’

s d

ynam

ic

org

aniz

ation a

nd e

nsure

that th

e incre

ased s

ize o

f th

e C

om

pany

does

not harm

the

entr

epre

nurial spirit

and d

irect d

ecis

ion m

akin

g p

rocess

thro

ug

h w

hic

h t

he c

om

pany

was

built

. O

ne o

f th

e m

ain

targ

ets

of th

e r

elo

cation is

to lim

it the s

ize o

f th

e c

orp

ora

te

org

aniz

ation a

nd inste

ad c

ontinue to b

uild

and s

trength

en the o

pera

tional e

xcelle

nce in t

he

reg

ional off

ices.

We v

ery

much b

elie

ve in b

uild

ing

reg

ional com

pete

nce c

ente

rs c

lose to

the o

pera

ting

activi

ties. T

he B

oard

anticip

ate

s th

at such a

n o

rganiz

ation w

ill b

e a

ble

to

work

bett

er

with o

ur

custo

mers

, pro

vide a

better

serv

ice,

have

tig

hte

r contr

ol, s

timula

te

opera

tional le

aders

hip

and o

ffer

more

dyn

am

ic w

ork

opport

unitie

s fo

r our

em

plo

yees. T

he

deve

lopm

ent

of

NA

DL,

Seabra

s, S

DLP

, and t

he n

ew

ow

ners

hip

str

uct

ure

of th

e tender

rig

s exe

mplif

ies this

model. T

he B

oard

is

continuously

monitoring

ways

to im

pro

ve t

he

opera

tional eff

icie

ncy,

, fu

rther

stre

ngth

en the s

afe

ty r

ecord

and g

et in

cre

ase

d c

ost

eff

icie

ncy.

Such o

pport

unitie

s m

ight in

clu

de f

urt

her

corp

ora

te s

egm

enta

tion in t

he f

utu

re.

A 45

2

Sea

dri

ll L

imit

ed

UN

AU

DIT

ED

CO

NS

OL

IDA

TE

D S

TA

TE

ME

NT

S O

F O

PE

RA

TIO

NS

fo

r th

e th

ree

mo

nth

per

iod

s a

nd

nin

e m

on

ths

per

iod

s en

ded

Sep

tem

ber

30

, 2

01

2 a

nd

201

1

(In

US

$ m

illi

on

s)

Thre

e mon

th p

erio

d

ende

d Se

p 30

, Ni

ne m

onth

per

iod

en

ded

Sep

30,

20

12

2011

20

12

2011

Ope

ratin

g re

venu

es

C

ontra

ct re

venu

es

1,05

6 1,

007

3,16

8 3,

055

R

eimbu

rsabl

es

33

24

95

74

Oth

er re

venu

es

2 (

2)

1 4

Tota

l ope

ratin

g rev

enue

s 1,

092

1,02

9 3,

264

3,13

3

Gai

n on

sale

of as

sets

0 23

0

23

O

pera

ting

expe

nses

Ves

sel a

nd ri

g ope

ratin

g exp

ense

s 42

3 36

7 1,

207

1,17

8

Reim

bursa

ble e

xpen

ses

30

22

88

69

D

epre

ciatio

n and

amor

tizati

on

161

132

452

423

G

ener

al an

d adm

inist

rativ

e exp

ense

s 65

51

16

6 14

6 To

tal o

pera

ting e

xpen

ses

679

572

1,91

3 1,

816

Ne

t ope

ratin

g inc

ome

413

480

1,35

1 1,

340

Fi

nanc

ial i

tem

s

Inter

est i

ncom

e 5

5 14

17

Inter

est e

xpen

ses

(102

) (6

4)

(249

) (2

21)

S

hare

in re

sults

from

asso

ciated

com

pani

es n

et of

tax

(38)

26

(5

) 62

Gain

/ (lo

ss) o

n de

rivati

ve fi

nanc

ial in

strum

ents

20

(330

) 15

(3

79)

F

oreig

n ex

chan

ge (l

oss)

(43)

(4

) (5

1)

(32)

Gain

on lo

ss of

cont

rol i

n su

bsid

iary

0 0

0 54

0

Gain

on re

aliza

tion o

f mar

ketab

le se

curit

ies

0 0

85

416

G

ain on

dec

line i

n own

ersh

ip in

teres

t 0

0 16

9 0

O

ther

fina

ncial

item

s 0

(6)

3 (6

) To

tal f

inan

cial i

tem

s (1

58)

(372

) (2

0)

397

(L

oss)/

inco

me b

efor

e inc

ome t

axes

25

5 10

8 1,

331

1,73

7

In

com

e tax

es

(39)

(5

0)

(124

) (1

48)

Net (

loss

)/inc

ome

216

58

1,20

7 1,

589

Ne

t inc

ome a

ttrib

utab

le to

the p

aren

t 18

9 35

1,

129

1,52

9 Ne

t inc

ome a

ttrib

utab

le to

the n

on-c

ontr

ollin

g int

eres

t 27

23

78

60

Basic

earn

ings

per

shar

e (US

$)

0.40

0.

07

2.41

3.

36

Dilu

ted

earn

ings

per

shar

e (US

$)

0.40

0.

07

2.36

3.

21

Decla

red

regu

lar d

ivid

end

per s

hare

(US$

) 0.

85

0.76

2.

51

2.26

De

clare

d ex

trao

rdin

ary

divi

dend

per

shar

e (US

$)

0.85

-

1.00

-

1 Se

adril

l Lim

ited

IN

DEX

TO U

NAUD

ITED

FIN

ANCI

AL S

TATE

MEN

TS

Unau

dited

Con

solid

ated S

tatem

ents

of O

pera

tions

for t

he th

ree a

nd n

ine

mon

ths e

nded

Sep

tembe

r 30,

2012

and 2

011

Pa

ge 2

Unau

dited

Con

solid

ated S

tatem

ents

of C

ompr

ehen

sive I

ncom

e for

the

thre

e and

nin

e mon

ths e

nded

Sep

tembe

r 30,

2012

and 2

011

Pa

ge 3

Unau

dited

Con

solid

ated B

alanc

e She

ets as

of S

eptem

ber 3

0, 20

12 an

d De

cem

ber 3

1, 20

11

Page

4

Unau

dited

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solid

ated S

tatem

ents

of C

ash F

lows

for t

he ni

ne m

onth

s en

ded

Sept

embe

r 30,

2012

and 2

011

Page

5

Unau

dited

Con

solid

ated S

tatem

ents

of C

hang

es in

Sha

reho

lder

s’ Eq

uity

fo

r the

nine

mon

ths e

nded

Sep

tembe

r 30,

2012

Pa

ge 7

Notes

to U

naud

ited F

inan

cial S

tatem

ents

Pa

ge 8

A 46

4

Sead

rill L

imite

d U

NA

UD

ITE

D C

ON

SO

LID

AT

ED

BA

LA

NC

E S

HE

ET

(In

US

$ m

illi

on

s)

ASSE

TS

Sept

embe

r 30,

2012

De

cem

ber 3

1, 20

11

Curr

ent a

sset

s

Cas

h an

d cas

h eq

uiva

lents

518

483

Res

tricte

d cas

h 15

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2

M

arke

table

secu

rities

24

6 24

Acc

ount

s rec

eivab

les, n

et 83

5 72

0

A

mou

nt d

ue fr

om re

lated

party

21

3 18

5

O

ther

curre

nt as

sets

335

323

To

tal c

urre

nt as

sets

2,29

8 1,

967

Non-

curr

ent a

sset

s

Inve

stmen

t in

asso

ciated

com

pani

es

658

721

New

build

ings

1,

629

2,53

1

Dril

ling u

nits

12

,956

11

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dwill

1,

320

1,32

0

Res

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h 23

1 25

0

D

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sets

31

33

E

quip

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25

Am

ount

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from

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0 0

O

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non

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4

Tota

l non

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16

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To

tal a

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18

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LI

ABIL

ITIE

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of lo

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Tra

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hort-

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14

19

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43

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5

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19

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266

188

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Com

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:

800,

000,0

00 sh

ares

auth

orize

d

46

9,12

1,774

outst

andi

ng at

Sep

tembe

r 30,

2012

(D

ecem

ber,

31 20

11: 4

67,7

72,17

4 )

938

935

Add

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7 6,

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19

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e mon

th p

erio

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ded

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ptem

ber 3

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Nine

mon

th p

erio

d en

ded

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ptem

ber 3

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20

12

2011

20

12

2011

Net (

loss

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com

e 21

6 58

1,2

07

1,589

Othe

r com

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(loss

), ne

t of t

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C

hang

e in

unre

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loss

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mar

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le se

curit

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20

(1)

118

(292

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Cha

nge i

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fore

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exch

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12

5 12

33

Cha

nge i

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(1)

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lidati

on o

f sub

sidiar

ies

0 0

0 (6

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unre

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in/ (

loss

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inter

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6 5

17

13

Oth

er co

mpr

ehen

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e/ (lo

ss):

37

9 14

6 (3

08)

To

tal c

ompr

ehen

sive (

loss

)/inc

ome f

or th

e per

iod

253

67

1,353

1,2

81

Co

mpr

ehen

sive i

ncom

e attr

ibut

able

to th

e non

-con

trol

ling

inte

rest

6 28

68

83

Co

mpr

ehen

sive (

loss

)/inc

ome a

ttrib

utab

le to

the p

aren

t 24

7 39

1,2

85

1,198

See a

ccom

pany

ing n

otes

that

are a

n int

egra

l par

t of t

hese

Con

solid

ated F

inan

cial S

tatem

ents.

A 47

6

Sea

dri

ll L

imit

ed

UN

AU

DIT

ED

CO

NS

OL

IDA

TE

D S

TA

TE

ME

NT

OF

CA

SH

FL

OW

S

for

the

nin

e m

on

th p

erio

ds

end

ed S

epte

mb

er 3

0, 2

012

an

d 2

01

1

(In

US

$ m

illi

on

s)

20

12

2011

Ca

sh F

lows

from

Inve

sting

Act

iviti

es

A

dditi

ons t

o ne

wbui

ldin

gs

(1,0

91)

(1,8

43)

A

dditi

ons t

o rig

s and

equi

pmen

t (2

43)

(133

)

Sale

of ri

gs an

d eq

uipm

ent

0 24

5

Sett

lemen

t of d

isput

es w

ith sh

ip ya

rd

38

0

Cha

nge i

n m

argi

n call

s and

othe

r res

tricte

d ca

sh

116

(68)

Pur

chas

e of m

arke

table

secu

rities

(1

9)

0

Inve

stmen

t in

subs

idiar

ies, n

et of

cash

acqu

ired

0 (2

6)

C

ash

deco

nsol

idate

d upo

n lo

ss of

cont

rol i

n su

bsid

iary

0 (1

27)

In

vestm

ent i

n as

socia

ted co

mpa

nies

(7

4)

(221

)

Disp

osal

of as

socia

ted co

mpa

nies

65

0

L

ong t

erm

loan

gran

ted to

relat

ed p

artie

s (2

0)

0

Rep

aym

ent o

f loa

n gr

anted

to re

lated

parti

es

20

0

Pro

ceed

s fro

m re

aliza

tion o

f mar

ketab

le se

curit

ies

219

141

Net c

ash

used

in in

vesti

ng a

ctiv

ities

(9

89)

(2,0

32)

Ca

sh F

lows

from

Fin

ancin

g Act

iviti

es

P

roce

eds f

rom

deb

t 3,

160

4,94

6

Rep

aym

ents

of d

ebt

(2,3

65)

(3,7

16)

D

ebt f

ees p

aid

(29)

(3

4)

P

roce

eds f

rom

deb

t to r

elated

party

48

7 0

R

epay

men

ts of

deb

t to

relat

ed p

arty

(4

87)

0

Con

tribu

tion

(to) /

from

non

-con

trolli

ng in

teres

ts (3

6)

(71)

Con

tribu

tion

from

non-

cont

rolli

ng in

teres

ts re

lated

to pr

ivate

plac

emen

t 14

7 41

8

Pur

chas

e of t

reas

ury s

hare

s 0

(130

)

Pro

ceed

s fro

m sa

le of

trea

sury

shar

es

15

12

D

ivid

ends

paid

(1

,217

) (1

,080

) Ne

t cas

h us

ed b

y fin

ancin

g ac

tiviti

es

(325

) 34

5

Effe

ct of

exch

ange

rate

chan

ges o

n ca

sh an

d cas

h eq

uiva

lents

0 7

Ne

t inc

reas

e / (d

ecre

ase)

in ca

sh a

nd ca

sh eq

uiva

lents

35

(2

91)

Cash

and c

ash

equi

valen

ts at

begi

nnin

g of t

he y

ear

483

755

Cash

and

cash

equi

valen

ts at

the e

nd of

per

iod

518

464

Su

pplem

enta

ry d

isclo

sure

of c

ash

flow

info

rmat

ion

In

teres

t paid

, net

of ca

pital

ized i

nter

est

(245

) (2

02)

T

axes

paid

(1

27)

(97)

S

ee a

ccom

pa

nyi

ng n

ote

s th

at

are

an i

nte

gra

l part

of

thes

e C

onso

lid

ate

d F

ina

nci

al

Sta

tem

ents

.

5

S

ead

rill

Lim

ited

UN

AU

DIT

ED

CO

NS

OL

IDA

TE

D S

TA

TE

ME

NT

OF

CA

SH

FL

OW

S

for

the

nin

e m

on

th p

erio

ds

end

ed S

epte

mb

er 3

0, 2

012

an

d 2

01

1

(In

US

$ m

illi

on

s)

Ni

ne m

onth

per

iod

ende

d Se

ptem

ber 3

0,

20

12

2011

Ca

sh F

lows

from

Ope

ratin

g Ac

tiviti

es

Net

inco

me/

(loss

) 1,

207

1,58

9 Ad

justm

ents

to re

conc

ile n

et in

com

e to n

et ca

sh pr

ovid

ed b

y op

erati

ng

ac

tiviti

es:

D

epre

ciatio

n and

amor

tizati

on

452

423

A

mor

tizati

on of

def

erre

d lo

an ch

arge

s 22

25

Am

ortiz

ation

of u

nfav

orab

le co

ntra

cts

0 (2

1)

A

mor

tizati

on of

favo

rabl

e con

tracts

9

18

A

mor

tizati

on of

mob

iliza

tion r

even

ue

(115

) (6

8)

S

hare

of re

sults

from

asso

ciate

d com

pani

es

5 (6

2)

S

hare

-bas

ed co

mpe

nsati

on ex

pens

e 4

8

Unr

ealiz

ed (g

ain)/

loss

relat

ed to

der

ivati

ve fi

nanc

ial in

strum

ents

8 31

0

Div

iden

d rec

eived

from

asso

ciated

com

pany

17

38

Def

erre

d in

com

e tax

expe

nse

0 55

Unr

ealiz

ed fo

reig

n ex

chan

ge lo

ss (g

ain) o

n lo

ng te

rm in

teres

t bea

ring d

ebt

4 2

G

ain on

disp

osal

of fi

xed

asse

ts 0

(23)

Gain

on di

spos

al of

othe

r inv

estm

ents

(86)

0

N

on ca

sh ga

in re

cogn

ized

relat

ed to

reali

zatio

n of m

arke

table

secu

rities

0

(416

)

Non

cash

gain

reco

gnize

d re

lated

to lo

ss of

cont

rol i

n sub

sidiar

y 0

(540

)

Gain

on d

eclin

e in o

wner

ship

inter

est

(169

) 0

Chan

ges i

n op

erat

ing

asse

ts an

d lia

bilit

ies, n

et of

effe

ct of

acq

uisit

ions

Unr

ecog

nize

d m

obili

zatio

n fe

es re

ceiv

ed fr

om cu

stom

ers

203

37

T

rade

acco

unts

rece

ivab

le

(115

) (1

6)

T

rade

acco

unts

paya

ble

24

(39)

Pre

paid

expe

nses

/accr

ued r

even

ue

(9)

104

O

ther

, net

(112

) (3

5)

Net c

ash

prov

ided

by

oper

atin

g ac

tiviti

es

1,34

9 1,

389

A 48

8

Note

1- G

ener

al in

form

atio

n Se

adril

l Lim

ited

(“we

”, “th

e Com

pany

”, or

“our

”) is

a pu

blicl

y lis

ted co

mpa

ny o

n th

e New

Yor

k St

ock

Exch

ange

and

the O

slo S

tock

Exc

hang

e. W

e wer

e inc

orpo

rated

in B

erm

uda i

n M

ay 2

005.

As

sisted

by

the

acqu

isitio

n of

oth

er c

ompa

nies

and

inv

estm

ent

in n

ewbu

ildin

gs,

we h

ave

deve

lope

d in

to an

inter

natio

nal o

ffsho

re d

rillin

g co

ntra

ctor p

rovi

ding

serv

ices w

ithin

dril

ling

and

well

serv

ices,

and

as o

f Sep

tembe

r 30,

2012

we

owne

d an

d op

erate

d 43

offs

hore

dril

ling

units

, an

d ha

ve ad

ditio

nally

19

units

und

er c

onstr

uctio

n. Ou

r ver

satil

e flee

t con

sists

of d

rillsh

ips,

jack-

up ri

gs, s

emi-s

ubm

ersib

le rig

s and

tend

er ri

gs fo

r ope

ratio

ns in

shall

ow a

nd d

eepw

ater a

reas

, as

well

as b

enig

n and

harsh

envi

ronm

ents.

As

used

here

in, a

nd un

less o

ther

wise

requ

ired b

y the

cont

ext,

the t

erm

“Sea

drill

” ref

ers t

o Se

adril

l Li

mite

d an

d th

e ter

ms

“Com

pany

”, “w

e”, “

Grou

p”, “

our”

and

wor

ds o

f sim

ilar i

mpo

rt re

fer t

o Se

adril

l and

its c

onso

lidate

d co

mpa

nies

. The

use

her

ein o

f suc

h ter

ms a

s gro

up, o

rgan

izatio

n, we

, us

, our

and

its,

or re

fere

nces

to s

pecif

ic en

tities

, is

not i

nten

ded

to b

e a

prec

ise d

escr

iptio

n of

co

rpor

ate re

latio

nshi

ps.

Basis

of p

rese

ntat

ion

The

unau

dited

inter

im c

onso

lidate

d fin

ancia

l stat

emen

ts ar

e sta

ted in

acc

orda

nce

with

gen

erall

y ac

cept

ed a

ccou

ntin

g pr

incip

les in

the

Unite

d St

ates

of A

mer

ica (

US G

AAP)

. The

una

udite

d in

terim

con

solid

ated

finan

cial

statem

ents

do n

ot i

nclu

de a

ll of

the

disc

losu

res

requ

ired

in

com

plete

ann

ual

finan

cial

statem

ents.

The

se i

nter

im f

inan

cial

statem

ents

shou

ld b

e re

ad i

n co

njun

ction

with

our

fin

ancia

l stat

emen

ts as

at D

ecem

ber

31, 2

011.

The

year

-end

con

dens

ed

balan

ce s

heet

data

that

was

deriv

ed f

rom

aud

ited

finan

cial

statem

ents

does

not

inc

lude

all

disc

losu

res r

equi

red

by ac

coun

ting

prin

ciples

gen

erall

y ac

cept

ed in

the U

nited

Stat

es o

f Am

erica

. In

the o

pini

on o

f man

agem

ent,

all ad

justm

ents

(con

sistin

g of n

orm

al re

curri

ng ac

cruals

) con

sider

ed

nece

ssar

y for

a fai

r stat

emen

t hav

e bee

n inc

lude

d. Si

gnifi

cant

acco

untin

g pol

icies

Th

e ac

coun

ting

polic

ies a

dopt

ed in

the

prep

arati

on o

f the

una

udite

d in

terim

fina

ncial

state

men

ts ar

e co

nsist

ent

with

tho

se f

ollo

wed

in t

he p

repa

ratio

n of

our

ann

ual

cons

olid

ated

finan

cial

statem

ents

and a

ccom

pany

ing n

otes

for t

he ye

ar en

ded D

ecem

ber 3

1, 20

11.

7

Sead

rill L

imite

d

UN

AU

DIT

ED

CO

NS

OL

IDA

TE

D S

TA

TE

ME

NT

OF

CH

AN

GE

S I

N E

QU

ITY

fo

r th

e n

ine

mo

nth

s en

ded

Sep

tem

ber

30

, 2

01

2

(In

US

$ m

illi

on

s)

Sh

are

Capi

tal

Addi

tiona

l pa

id-in

ca

pita

l Co

ntrib

uted

su

rplu

s Ac

cum

ulat

ed

OCI

Re

tain

ed

earn

ings

NC

I To

tal

equi

ty

Balan

ce at

Dec

embe

r 31,

201

1 93

5 2,

097

1,95

6 (5

) 99

4 32

5

6,30

2 Sa

le of

trea

sury

shar

es

3 12

15

Pu

rcha

se of

trea

sury

shar

es

0 Em

ploy

ee st

ock

optio

ns is

sued

4

4

Priv

ate pl

acem

ent i

n sub

sidiar

y

84

66

15

0 Co

sts re

lated

to ca

pital

incr

ease

in su

bsid

iary

(3

)

(3

)

Othe

r com

preh

ensiv

e inc

ome

12

9

17

146

Divi

dend

paym

ent

(1,21

7)

(36)

(1

,253)

Di

vide

nd p

aid t

o No

n-co

ntro

lling

int

eres

ts in

VI

E

0

Shar

es pu

rcha

sed

from

non

cont

rolli

ng in

teres

ts

0

Deco

nsol

idati

on o

f sub

sidiar

ies

0 In

duce

d co

nver

sion

of co

nver

tible

bond

s

0

Net i

ncom

e

1,

129

78

1,20

7 Ba

lanc

e at S

epte

mbe

r 30,

2012

93

8 2,

194

1,95

6 12

4 90

5 45

0 6,

567

U

NA

UD

ITE

D C

ON

SO

LID

AT

ED

ST

AT

EM

EN

T O

F C

HA

NG

ES

IN

EQ

UIT

Y

for

the

nin

e m

on

ths

end

ed S

epte

mb

er 3

0, 2

01

1

(In

mil

lio

ns

of

US

$)

Sh

are

Capi

tal

Addi

tiona

l pa

id-in

ca

pita

l Co

ntrib

uted

su

rplu

s Ac

cum

ulat

ed

OCI

Re

tain

ed

earn

ings

NC

I To

tal

equi

ty

Balan

ce at

Dec

embe

r 31,

201

0 88

6

1,21

7 1,

956

323

1,016

53

9 5,

937

Sale

of tr

easu

ry sh

ares

1

11

12

Pu

rcha

se of

trea

sury

shar

es

(6)

(119

)

(5)

(130

) Em

ploy

ee st

ock

optio

ns is

sued

8

8

Priv

ate pl

acem

ent i

n sub

sidiar

y

307

11

8 42

5 Co

sts re

lated

to ca

pital

incr

ease

in su

bsid

iary

(7

)

(7

) (U

n)re

alize

d ga

in/(l

oss)

on m

arke

table

secu

rities

(292

)

(2

92)

Fore

ign

exch

ange

diff

eren

ces

23

10

33

Chan

ge in

unr

ealiz

ed (l

oss)

on in

teres

t rate

swap

s in

VIE

s

13

13

Chan

ge in

unr

ealiz

ed (l

oss)

on in

teres

t rate

swap

s in

subs

idiar

ies

1

1 Di

vide

nd pa

ymen

t

(1

,071

) (9

) (1

,080)

Di

vide

nd pa

id to

Non

-con

trolli

ng in

teres

ts in

VIE

(23)

(2

3)

Paid

to N

on-c

ontro

lling

inter

est i

n VIE

(4)

(4

4)

(48)

De

cons

olid

ation

of s

ubsid

iary

(6

3)

(3

30)

(393

) In

duce

d co

nver

sion

of co

nver

tible

bond

s 53

67

4

72

7 Ne

t inc

ome

1,529

60

1,

589

Bala

nce a

t Sep

tem

ber 3

0, 20

11

934

2,

087

1,95

6 (8

) 1,4

74

329

6,77

2 S

ee a

ccom

pa

nyi

ng n

ote

s th

at

are

an i

nte

gra

l part

of

thes

e C

onso

lid

ate

d F

ina

nci

al

Sta

tem

ents

.

A 49

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

10

Tend

er ri

gs: W

e of

fer s

ervi

ces e

ncom

pass

ing

drill

ing,

com

pleti

on a

nd m

ainten

ance

of o

ffsho

re

prod

uctio

n we

lls in

Sou

thea

st As

ia, W

est A

frica

and

the A

mer

icas.

The d

rillin

g con

tracts

relat

e to

self-

erec

ting t

ende

r rig

s and

sem

i-sub

mer

sible

tende

r rig

s. Se

gmen

t res

ults

are e

valu

ated

on th

e bas

is of

ope

ratin

g pr

ofit,

and

the i

nfor

mati

on g

iven

belo

w is

base

d on

info

rmati

on u

sed

for i

nter

nal r

epor

ting.

The a

ccou

ntin

g pr

incip

les fo

r the

segm

ents

are

the s

ame a

s for

our

cons

olid

ated f

inan

cial s

tatem

ents.

C

on

tra

ct r

even

ues

(In

US

$ m

illi

on

s )

Thre

e mon

ths e

nded

Se

ptem

ber 3

0,

Nine

mon

ths e

nded

Se

ptem

ber 3

0,

2012

2011

201

2

201

1 Fl

oater

s 67

4 67

3 2,

049

1,937

Ja

ck-u

p rig

s 20

3 18

8 58

8 58

2 Te

nder

rigs

17

8 14

6 53

0 40

9 W

ell S

ervi

ces *

-

0 -

127

Total

1,0

56

1,00

7 3,

168

3,055

* R

epre

sent

s the

activ

ity u

p to t

he ti

me o

f dec

onso

lidati

on in

Feb

ruar

y 201

1. D

epre

cia

tion

an

d a

mo

rtiz

ati

on

(In

US

$ m

illi

on

s )

Thre

e mon

ths e

nded

Se

ptem

ber 3

0,

Nine

mon

ths e

nded

Se

ptem

ber 3

0,

2012

2011

201

2

201

1 Fl

oater

s 10

7 89

30

2 26

3 Ja

ck-u

p rig

s 39

31

10

7 10

2 Te

nder

rigs

15

12

42

51

W

ell S

ervi

ces*

-

0 -

7 To

tal

161

132

452

423

* Rep

rese

nts t

he ac

tivity

up t

o the

tim

e of d

econ

solid

ation

in F

ebru

ary 2

011.

Op

era

tin

g i

nco

me

- n

et i

nco

me

(In

US

$ m

illi

on

s )

Thre

e mon

ths e

nded

Se

ptem

ber 3

0,

Nine

mon

ths e

nded

Se

ptem

ber 3

0,

2012

2011

201

2

201

1 Fl

oater

s 28

2 34

9 94

6 1,0

02

Jack

-up r

igs

47

71

173

184

Tend

er ri

gs

84

60

233

149

Well

Ser

vice

s*

- 0

- 5

Oper

ating

inco

me

413

480

1,35

1 1,3

40

U

na

llo

cate

d i

tem

s:

Total

fina

ncial

item

s (1

58)

(372

) (2

0)

397

Inco

me t

axes

(3

9)

(50)

(1

24)

(148

) Ne

t inc

ome

216

58

1,20

7 1,5

89

* Rep

rese

nts t

he ac

tivity

up t

o the

tim

e of d

econ

solid

ation

in F

ebru

ary 2

011.

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

9

Note

2 —

Rec

ent A

ccou

ntin

g Pro

noun

cem

ents

R

ecen

tly

Ad

opte

d A

cco

un

tin

g S

tan

dard

s In

tangi

bles

-goo

dwill

and

othe

r—Ef

fecti

ve Ja

nuar

y 1, 2

012,

we ad

opted

the a

ccou

ntin

g sta

ndar

ds

upda

te th

at am

ends

the

good

will

impa

irmen

t tes

ting

requ

irem

ents

by g

ivin

g an

ent

ity th

e op

tion

to fi

rst as

sess

qua

litati

ve fa

ctors

to d

eterm

ine

wheth

er th

e ex

isten

ce o

f eve

nts

or c

ircum

stanc

es

leads

to a

deter

min

ation

that

it is

mor

e lik

ely th

an n

ot th

at th

e fair

valu

e of a

repo

rting

uni

t is l

ess

than

its

carry

ing

amou

nt a

nd w

heth

er th

e tw

o-ste

p im

pairm

ent t

est i

s re

quire

d. T

he u

pdate

is

effe

ctive

for g

oodw

ill im

pairm

ent t

ests

perfo

rmed

for a

nnua

l and

inter

im p

erio

ds b

egin

ning

after

De

cem

ber 1

5, 20

11. O

ur ad

optio

n di

d no

t hav

e an

effe

ct on

our

cond

ense

d co

nsol

idate

d fin

ancia

l sta

temen

ts be

caus

e a

good

will

impa

irmen

t tes

t wa

s no

t re

quire

d in

the

nin

e mon

ths

ende

d Se

ptem

ber 3

0, 20

12.

Fair

valu

e m

easu

rem

ents—

Effe

ctive

Jan

uary

1,

2012

, we

ado

pted

the

acc

ount

ing

stand

ards

up

date

that

requ

ires a

dditi

onal

disc

losu

re a

bout

fair

valu

e m

easu

rem

ents

that

invo

lve

signi

fican

t un

obse

rvab

le in

puts,

inclu

ding

addi

tiona

l qua

ntita

tive i

nfor

mati

on ab

out t

he u

nobs

erva

ble i

nput

s, a d

escr

iptio

n of

valu

ation

tech

niqu

es u

sed,

and

a qua

litati

ve ev

aluati

on o

f the

sens

itivi

ty o

f the

se

mea

sure

men

ts. O

ur a

dopt

ion

did

not h

ave

a m

ateria

l effe

ct on

the

disc

losu

res c

ontai

ned

in o

ur

notes

to co

nden

sed c

onso

lidate

d fin

ancia

l stat

emen

ts.

Rec

entl

y Is

sued

Acc

ou

nti

ng

Sta

ndard

s Ba

lance

she

et—Ef

fecti

ve J

anua

ry 1

, 201

3, we

will

ado

pt th

e ac

coun

ting

stand

ards

upd

ate th

at ex

pand

s the

disc

losu

re re

quire

men

ts fo

r the

offs

ettin

g of

ass

ets a

nd li

abili

ties r

elated

to c

ertai

n fin

ancia

l ins

trum

ents

and

deriv

ative

instr

umen

ts. T

he u

pdate

requ

ires d

isclo

sure

s to

pres

ent b

oth

gros

s in

form

ation

and

net

info

rmati

on fo

r fin

ancia

l ins

trum

ents

and

deriv

ative

instr

umen

ts th

at ar

e elig

ible

for n

et pr

esen

tatio

n due

to a

right

of of

fset,

an en

forc

eabl

e mas

ter ne

tting

arra

ngem

ent

or si

mila

r agr

eem

ent.

The

upda

te is

effe

ctive

for i

nter

im an

d an

nual

perio

ds b

egin

ning

on

or af

ter

Janu

ary 1

, 201

3. W

e do

not e

xpec

t tha

t our

adop

tion w

ill ha

ve a

mate

rial e

ffect

on ou

r con

dens

ed

cons

olid

ated

balan

ce s

heet

or th

e di

sclo

sure

s con

taine

d in

our

not

es to

con

dens

ed c

onso

lidate

d fin

ancia

l stat

emen

ts.

Note

3– S

egm

ent i

nfor

mat

ion

Op

era

tin

g s

egm

ents

W

e pro

vide

offsh

ore d

rillin

g ser

vice

s to t

he oi

l and

gas i

ndus

try. O

ur b

usin

ess h

as be

en or

gani

zed

into

seg

men

ts ba

sed

on

diffe

renc

es

in

man

agem

ent

struc

ture

an

d re

porti

ng,

econ

omic

char

acter

istics

, cus

tom

er b

ase,

asse

t clas

s an

d co

ntra

ct str

uctu

re. W

e cu

rrent

ly o

pera

te in

the

follo

wing

thre

e seg

men

ts:

Floa

ters:

We

offe

r se

rvice

s en

com

pass

ing

drill

ing,

com

pleti

on a

nd m

ainten

ance

of

offsh

ore

expl

orati

on an

d pro

ducti

on w

ells.

The d

rillin

g con

tracts

relat

e to s

emi-s

ubm

ersib

le rig

s and

drill

ship

s for

harsh

and b

enig

n env

ironm

ents

in m

id-,

deep

- and

ultra

-dee

p wa

ters.

Jack

-up

rigs:

We

offe

r ser

vice

s enc

ompa

ssin

g dr

illin

g, co

mpl

etion

and

main

tenan

ce o

f offs

hore

ex

plor

ation

and

pro

ducti

on w

ells.

The

drill

ing

cont

racts

relat

e to

jack

-up

rigs

for o

pera

tions

in

harsh

and b

enig

n env

ironm

ent.

A 50

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

12

Note

5 – T

axat

ion

Inco

me t

axes

cons

ist of

the f

ollo

wing

:

(In m

illi

on

s of

US

doll

ar)

Thre

e mon

th

perio

d en

ded

Sept

embe

r 30,

20

12

Thre

e mon

th

perio

d en

ded

Se

ptem

ber 3

0,

2011

Cu

rrent

tax e

xpen

se:

Ber

mud

a

-

- F

oreig

n

23

52

Defe

rred

tax ex

pens

e:

B

erm

uda

-

-

For

eign

14

(4)

Def

erre

d tax

es ac

quire

d dur

ing

the y

ear

Tax

rela

ted t

o in

terna

l sa

le of

ass

ets i

n su

bsid

iary,

am

ortiz

ed f

or

grou

p pu

rpos

es

2

2

Total

pro

visio

n

39

50

Ef

fecti

ve ta

x rate

15.3

%

46

.3%

(In m

illi

on

s of

US

doll

ar)

Nine

mon

th

perio

d en

ded

Se

ptem

ber 3

0,

2012

Nine

mon

th

perio

d en

ded

Se

ptem

ber 3

0,

2011

Cu

rrent

tax e

xpen

se:

Ber

mud

a

-

- F

oreig

n

110

23

4

Defe

rred

tax ex

pens

e:

Ber

mud

a

-

- F

oreig

n

9

1

Def

erre

d tax

es ac

quire

d dur

ing

the y

ear

Tax

rela

ted t

o in

terna

l sa

le of

ass

ets i

n su

bsid

iary,

am

ortiz

ed f

or

grou

p pu

rpos

es

5

(8

7)

Total

pro

visio

n

124

14

8 Ef

fecti

ve ta

x rate

9.3 %

8.5%

Th

e Co

mpa

ny, i

nclu

ding

its

subs

idiar

ies, i

s tax

able

in s

ever

al ju

risdi

ction

s ba

sed

on i

ts rig

op

erati

ons.

A lo

ss i

n on

e ju

risdi

ction

may

not

be

offse

t ag

ainst

taxab

le in

com

e in

ano

ther

ju

risdi

ction

. Thu

s, th

e Com

pany

may

pay

tax

with

in so

me j

urisd

ictio

ns ev

en th

ough

it m

ight

have

an

ove

rall

loss

at th

e con

solid

ated l

evel.

Th

e in

com

e tax

es fo

r the

thre

e an

d ni

ne m

onth

s en

ded

Sept

embe

r 30,

2012

and

201

1 di

ffere

d fro

m th

e am

ount

com

puted

by a

pply

ing t

he st

atuto

ry in

com

e tax

rate

of 0

% as

follo

ws:

(In m

illi

on

s of

US

doll

ar)

Thre

e mon

th

perio

d en

ded

Sept

embe

r 30,

20

12

Thre

e mon

th

perio

d en

ded

Sept

embe

r 30,

20

11

Inco

me t

axes

at st

atuto

ry ra

te

-

- Ef

fect

of tr

ansfe

rs to

new

tax

juris

dicti

ons

2

(8

0)

Effe

ct of

chan

ge in

taxa

ble c

urre

ncy

-

-

Effe

ct of

taxa

ble i

ncom

e in

vario

us co

untri

es

37

130

Total

39

50

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

11

Tota

l A

sset

s

(In

US

$ m

illi

on

s )

Sept

embe

r 30,

20

12

Dece

mbe

r 31,

2

011

Floa

ters

13,6

60

12,6

00

Jack

-up r

igs

4,23

2 4,

200

Tend

er ri

gs

1,58

7 1,

504

Total

19

,479

18

,304

No

te 4

– Ear

ning

s per

shar

e Th

e com

putat

ion

of b

asic

earn

ings

per

shar

e (“E

PS”)

is b

ased

on th

e weig

hted

aver

age n

umbe

r of

shar

es o

utsta

ndin

g du

ring

the p

erio

d. Di

luted

EPS

inclu

des t

he ef

fect

of th

e ass

umed

conv

ersio

n of

pot

entia

lly d

ilutiv

e ins

trum

ents.

Th

e com

pone

nts o

f the

num

erato

r for

the c

alcul

ation

of b

asic

and d

iluted

EPS

are a

s fol

lows

: (I

n U

S$

mil

lio

ns)

Th

ree m

onth

s end

ed

Sept

embe

r 30,

Ni

ne m

onth

s end

ed

Sept

embe

r 30,

2012

201

1

2012

2011

Ne

t (lo

ss)/

inco

me a

vaila

ble t

o sto

ckho

lder

s 18

9 35

1,

129

1,529

Effe

ct of

dilu

tion

9 9

28

40

Dilu

ted n

et (lo

ss)/

inco

me a

vaila

ble t

o sto

ckho

lder

s 19

8 44

1,

157

1,569

Th

e com

pone

nts o

f the

deno

min

ator f

or th

e calc

ulati

on o

f bas

ic an

d dilu

ted E

PS ar

e as f

ollo

ws:

(In

nu

mb

er o

f sh

are

s)

Thre

e mon

ths e

nded

Se

ptem

ber 3

0,

Nine

mon

ths e

nded

Se

ptem

ber 3

0,

20

12

201

1

2012

20

11

Ba

sic

earn

ing

s p

er s

ha

re:

Weig

hted

aver

age n

umbe

r of c

omm

on sh

ares

outst

andi

ng

469

467

468

455

Dil

ute

d e

arn

ing

s p

er s

ha

re:

Weig

hted

aver

age n

umbe

r of c

omm

on sh

ares

outst

andi

ng

469

467

468

455

Effe

ct of

dilu

tive s

hare

optio

ns

1 2

1 2

Effe

ct of

dilu

tive c

onve

rtibl

e bon

ds

20

18

20

32

49

0 48

7 48

9 48

9

A 51

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

14

Net

def

erre

d t

axe

s a

re c

lass

ifie

d a

s fo

llo

ws:

(I

n U

S$ m

illi

ons)

Sep

tem

ber 3

0,

201

2 De

cem

ber 3

1,

2011

Shor

t-ter

m d

efer

red t

ax as

set

-

10

Long

-term

def

erre

d tax

asse

t

31

33

Shor

t-ter

m d

efer

red t

ax li

abili

ty

6

10

Long

-term

def

erre

d tax

liab

ility

19

34

Net d

efer

red t

ax

6

1

Futu

re ta

xabl

e in

com

e ju

stifie

s the

inclu

sion

of ta

x lo

ss c

arry

-forw

ard

in th

e ca

lculat

ion

of n

et de

ferre

d tax

es.

Tax

issu

e re

late

d t

o r

elo

cati

on o

f ri

gs

and f

un

ctio

nal

curr

ency

Th

ere h

ave b

een n

o dev

elopm

ents

durin

g thi

rd q

uarte

r rela

ted to

thes

e iss

ues.

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

13

(In m

illi

on

s of

US

doll

ar)

Nine

mon

th

perio

d en

ded

Sept

embe

r 30,

20

12

Nine

mon

th

perio

d en

ded

Sept

embe

r 30,

20

11

Inco

me t

axes

at st

atuto

ry ra

te

-

- Ef

fect

of tr

ansfe

rs to

new

tax

juris

dicti

ons

5

(8

9 )

Effe

ct of

chan

ge in

taxa

ble c

urre

ncy

-

-

Effe

ct of

taxa

ble i

ncom

e in

vario

us co

untri

es

11

9

237

Total

124

14

8 De

ferr

ed In

com

e Tax

es

Defe

rred

inco

me

taxes

refle

ct th

e im

pact

of te

mpo

rary

diff

eren

ces b

etwee

n th

e am

ount

of a

ssets

an

d lia

bilit

ies re

cogn

ized

for f

inan

cial r

epor

ting

purp

oses

and

suc

h am

ount

s rec

ogni

zed

for t

ax

purp

oses

. The

net

defe

rred t

ax as

sets

(liab

ilitie

s) co

nsist

of t

he fo

llowi

ng:

Def

erre

d T

ax

Ass

ets:

(I

n U

S$ m

illi

ons)

Sep

tem

ber 3

0,

2

012

D

ecem

ber 3

1 ,

2

011

Pens

ion

6

11Pr

ovisi

ons

8

15Pr

oper

ty, p

lant a

nd eq

uipm

ent

12

9Ot

her

5

8Gr

oss d

efer

red t

ax as

set

31

43 D

efer

red T

ax

Lia

bil

ity:

(I

n U

S$ m

illi

ons)

S

epte

mbe

r 30,

20

12De

cem

ber 3

1,

2011

Prop

erty

, plan

t and

equi

pmen

t

12

-

Gain

from

sale

of fi

xed

asse

ts

11

31

Othe

r

2

13

Gros

s def

erre

d tax

liab

ility

25

44

Net d

efer

red t

ax

6

(1)

A 52

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

16

Note

7 - I

mpa

irmen

t los

s on

inve

stmen

ts in

ass

ocia

ted

com

pani

es

On N

ovem

ber 2

5th

our a

ssoc

iated

com

pany

Arc

her m

ade

publ

ic ce

rtain

pre

limin

ary

guid

ance

pe

rtain

ing

to w

ritin

g of

f a

total

of

US$3

38 m

illio

n of

their

goo

dwill

, int

angi

ble

and

tangi

ble

asse

ts as

of S

eptem

ber 3

0, 20

12. S

eadr

ill o

wns 3

9.9%

of A

rche

r and

ther

efor

e our

pre

dicte

d sha

re

of th

is im

pairm

ent w

ould

amou

nt to

US$

135

mill

ion.

Howe

ver w

e hav

e an

hist

orica

l und

erlyi

ng

basis

diff

eren

ce r

elated

to

good

will,

and

we

have

onl

y re

cogn

ized

US$5

1 m

illio

n of

the

se

impa

irmen

t los

ses.

No

te 8

– G

ain/

(los

s) on

der

ivat

ive f

inan

cial i

nstr

umen

ts Th

e yea

r to d

ate ga

in o

f US$

15m

illio

n in o

ur S

tatem

ent o

f Ope

ratio

ns co

nsist

s of t

he fo

llowi

ng:

Tota

l R

eturn

Sw

aps

(TR

S):

We h

ave

a TRS

agre

emen

t with

2,00

0,000

Sea

drill

Lim

ited

shar

es as

und

erly

ing

secu

rity,

with

a re

fere

nce

price

of

NOK

242.7

9 an

d ex

piry

on

Dece

mbe

r 6,

2012

. Th

e to

tal r

ealiz

ed a

nd

unre

alize

d ga

in re

lated

to th

e TR

S ag

reem

ents

amou

nted

to U

S$9

mill

ion

for t

he n

ine

mon

ths

ende

d Se

ptem

ber 3

0, 20

12.

Inte

rest

-ra

te s

wap a

gre

emen

ts a

nd f

orw

ard

exc

ha

ng

e co

ntr

act

s:

Total

rea

lized

and

unr

ealiz

ed l

oss

on i

nter

est-r

ate s

wap

agre

emen

ts, n

ot q

ualif

ied f

or h

edge

ac

coun

ting,

and

for

ward

exc

hang

e co

ntra

cts a

mou

nted

to U

S$92

mill

ion

for

the

nine

mon

ths

ende

d Se

ptem

ber 3

0, 20

12.

Oth

er d

eriv

ati

ve i

nst

rum

ents

: To

tal re

alize

d an

d un

reali

zed

gain

on

othe

r der

ivati

ve in

strum

ents

amou

nted

to U

S$98

mill

ion

for

the

nine

mon

ths e

nded

Sep

tembe

r 30,

2012

, main

ly d

ue to

reali

zed

gain

on

our E

nsco

forw

ards

co

ntra

cts in

the f

irst q

uarte

r (US

$63 m

illio

n).

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

15

Note

6 – M

arke

tabl

e sec

uriti

es

The

histo

ric c

ost

of m

arke

table

secu

rities

is

mar

ked

to m

arke

t, wi

th c

hang

es i

n fa

ir va

lue

reco

gnize

d as “

Othe

r com

preh

ensiv

e inc

ome”

. M

arke

table

secu

rities

held

by

us i

nclu

de n

ow 8

1.1%

of

the

parti

ally

rede

emed

Petr

omen

a NO

K2,0

00

mill

ion

bond

(“

Petro

men

a”)

and

6.38%

of

Sa

pura

Kenc

ana

Petro

leum

Bh

d (“

Sapu

raKe

ncan

a”).

At

the e

nd o

f Q1

2012

Sea

drill

own

ed a

23.5

9% sh

are i

n Sa

pura

Cres

t Petr

oleu

m B

hd ,

which

was

ac

coun

ted fo

r usin

g th

e eq

uity

meth

od w

ith in

com

e pi

ckup

on

quar

ter in

arre

ars.

On M

ay 1

7, 20

12 S

apur

aCre

st Pe

troleu

m B

hd a

nd K

enca

na P

etrol

eum

Bhd

mer

ged

resu

lting

in d

ilutio

n of

Se

adril

l sha

reho

ldin

gs fr

om 2

3.59

% to

11.7

7% re

cogn

izing

a g

ain o

f US$

169

mill

ion

pres

ented

in

the

statem

ent o

f ope

ratio

ns. T

he in

vestm

ent w

as c

onse

quen

tly tr

ansfe

rred

from

Inve

stmen

t in

asso

ciated

com

pani

es t

o an

inv

estm

ent

acco

unted

for

at

fair

valu

e as

an

avail

able-

for-s

ale

secu

rity.

The

inve

stmen

t is

mar

ked-

to-m

arke

t eac

h qu

arter

with

the

diffe

renc

e be

twee

n bo

ok

valu

e and

mar

ket v

alue o

f the

inve

stmen

t rec

ogni

zed i

n OCI

.

In th

e per

iod

betw

een

May

23

and

29 w

e pur

chas

ed a

total

of 3

0.1 m

illio

n sh

ares

in S

apur

aKen

cana

. On

May

30,

201

2 Se

adril

l sol

d 30

0 m

illio

n sh

ares

for a

total

cons

ider

ation

of a

ppro

xim

ately

US$

200

mill

ion

in S

apur

aKen

cana

rec

ogni

zing

a ga

in o

f US

$84

mill

ion

pres

ented

in

the

statem

ent

of

oper

ation

s. Af

ter th

is tra

nsac

tion

Sead

rill o

wns s

hare

s in

Sapu

raKe

ncan

a co

nstit

utin

g 6.

38%

of t

he

com

pany

. M

arke

table

secu

rities

and c

hang

es in

their

carry

ing v

alue a

re as

follo

ws:

(In

US

$ m

illi

on

s)

Petr

omen

a Sa

pura

Ken

cana

G

olde

n Cl

ose

Ensc

o To

tal

Histo

ric co

st at

Dece

mbe

r 31,

2011

4

- 15

5

24

Fair

Mar

ket v

alue a

djus

tmen

ts re

cogn

ized

via O

CI or

P&

L as

of D

ecem

ber 3

1, 20

11

- -

1 (1

) -

Net b

ook v

alue a

t Dec

embe

r 31,

2011

4

- 16

4

24

Addi

tions

237

- -

237

Fair

mar

ket v

alue a

djus

tmen

ts re

cogn

ized

via O

CI

- 84

-

- 84

Relea

se of

OCI

into

pro

fit &

loss

-

(84)

(1

) -

(85)

Re

aliza

tion o

f hist

oric

cost

- (1

13)

(15)

(4

) (

132)

Ot

her t

han t

empo

rary

impa

irmen

ts -

- -

- -

Histo

ric co

st at

Sept

embe

r 30,

2012

4

124

- -

128

Fair

Mar

ket v

alue a

djus

tmen

ts re

cogn

ized

via O

CI as

of S

eptem

ber

30, 2

012

- 11

8 -

- 11

8 Fa

ir M

arke

t valu

e adj

ustm

ents

reco

gnize

d vi

a P&

L -

- -

- -

Net b

ook v

alue a

t Sep

tembe

r 30,

201

2 4

242

- -

246

A 53

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

18

Note

10 –

Dril

ling u

nits

(In

US

$ m

illi

on

s)

Sept

embe

r 30,

20

12

Dece

mbe

r 31,

201

1 Co

st

1

5,07

8

12,89

8 Ac

cum

ulate

d de

prec

iatio

n

(2,1

22)

(

1,67

5)

Net b

ook v

alue

12,

956

11

,223

The

incr

ease

in c

ost i

s mos

tly re

lated

to th

e tra

nsfe

r of W

est C

apric

orn

and

Wes

t Leo

from

the

Newb

uild

ings

in Q

2 and

Wes

t Elar

a in Q

1. De

prec

iatio

n ex

pens

e was

US$

447

mill

ion

and

US$4

09 m

illio

n fo

r the

nin

e mon

ths,

and

US$1

59

mill

ion

and

US$1

30 m

illio

n fo

r th

e th

ree

mon

ths

ende

d Se

ptem

ber

30,

2012

and

201

1, re

spec

tively

. No

te 1

1– E

quip

men

t Eq

uipm

ent c

onsis

ts of

IT an

d of

fice e

quip

men

t, fu

rnitu

re an

d fitt

ings

.

(In

US

$ m

illi

on

s)

Sept

embe

r 30,

20

12

Dece

mbe

r 31,

201

1 Co

st

58

40

Accu

mul

ated

depr

eciat

ion

(20

) (1

5)

Net b

ook v

alue

38

25

Depr

eciat

ion

expe

nse

was

US$5

mill

ion

and

US$1

4 m

illio

n fo

r th

e ni

ne m

onth

s, an

d US

$2

mill

ion a

nd U

S$2 m

illio

n for

the t

hree

mon

ths e

nded

Sep

tembe

r 30,

2012

and 2

011,

resp

ectiv

ely.

Note

12 –

Goo

dwill

In

the t

hree

and

nine

mon

ths p

erio

ds en

ded

Sept

embe

r 30,

2012

ther

e wer

e no

impa

irmen

t los

ses.

Good

will

balan

ce an

d cha

nges

in th

e car

ryin

g am

ount

of go

odwi

ll ar

e as f

ollo

ws:

(In

US

$ m

illi

on

s)

Perio

d en

ded

Se

ptem

ber 3

0, 20

12

Year

ende

d De

cem

ber 3

1, 20

11

Net b

ook b

alanc

e at b

egin

ning

of p

erio

d 1,

320

1,676

Go

odwi

ll ac

quire

d du

ring t

he p

erio

d -

- Go

odwi

ll de

reco

gnize

d re

lated

to lo

ss of

cont

rol i

n su

bsid

iary

- (3

56)

Impa

irmen

t los

ses

- -

Curre

ncy a

djus

tmen

ts -

- Ne

t boo

k bala

nce a

t end

of p

erio

d 1,

320

1,320

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

17

Note

9 – N

ewbu

ildin

gs

(In

US

$ m

illi

on

s )

Op

enin

g bala

nce a

t Dec

embe

r 31,

2011

2,

531

Addi

tions

1,

091

Re-c

lassif

ied as

dril

ling u

nits

(1,99

2)

Clos

ing b

alanc

e at S

eptem

ber 3

0, 2

012

1,62

9 Th

ere h

ave b

een n

o rec

lassif

icatio

ns fr

om N

ewbu

ildin

gs to

Dril

ling u

nits

in Q

3. T

he ad

ditio

ns ar

e m

ostly

relat

ed to

first

insta

lmen

ts on

Wes

t Car

ina a

nd se

cond

insta

lmen

t on W

est S

aturn

In

201

2, a

dditi

ons

to n

ewbu

ildin

gs a

re p

rincip

ally

relat

ed t

o ac

quisi

tion

of r

igs

and

yard

in

stalm

ents,

but a

lso in

clude

capi

talize

d int

eres

t exp

ense

s am

ount

ing t

o US$

59 m

illio

n. Ne

wbui

ldin

gs as

at S

eptem

ber 3

0, 20

12, a

re as

follo

ws:

Drill

ing u

nit

Yard

De

liver

y da

te

Book

Val

ue as

of S

epte

mbe

r 30

, 201

2 Es

timat

ed to

tal

proj

ect p

rice

In

US$

mill

ions

In

US$

mill

ions

Ja

ck-u

p rig

s

W

est T

elesto

Da

lian

1Q20

13

24

190

Wes

t Tuc

ana

Juro

ng

1Q 20

13

44

200

Wes

t Cas

tor

Juro

ng

1Q 20

13

41

200

Wes

t Obe

ron

Dalia

n 1Q

2013

22

19

0 W

est L

inus

Ju

rong

3Q

2013

12

0 53

0 Te

nder

rigs

T-

15

Nant

ong

4Q 20

12

43

113

T-16

Na

nton

g 1Q

2013

38

11

3 T-

17

Nant

ong

1Q 20

13

36

115

T-18

Na

nton

g 4Q

2013

19

13

5 W

est E

sper

anza

Ke

ppel

2Q 20

13

51

200

Sem

i-sub

mer

sible

rigs

Wes

t Mira

Hy

unda

i 4Q

2014

58

65

0 W

est R

igel

Juro

ng

1Q 20

15

118

650

Drill

ship

s

W

est A

urig

a Sa

msu

ng

2Q 20

13

157

600

Wes

t Vela

Sa

msu

ng

2Q 20

13

147

600

Wes

t Tell

us

Sam

sung

3Q

2013

14

5 60

0 W

est N

eptu

ne

Sam

sung

2Q

2014

16

2 60

0 W

est J

upite

r Sa

msu

ng

3Q 20

14

162

600

Wes

t Satu

rn

Sam

sung

2Q

2014

16

0 60

0 W

est C

arin

a Sa

msu

ng

4Q 20

14

78

600

Total

1,

629

7,48

6 Re

fer a

lso n

ote 1

8 (co

mm

itmen

ts an

d con

tinge

ncies

) for

an o

verv

iew o

f the

matu

rity s

ched

ule f

or

rem

ainin

g yar

d in

stallm

ents.

A 54

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

20

On Ju

ly 1

1, 2

012

we re

finan

ced

the

US$5

85 m

illio

n Te

nder

Rig

facil

ity a

nd e

nter

ed in

to a

new

US

$900

mill

ion

facil

ity w

ith m

aturit

y in

Jul

y 20

17. T

he f

acili

ty b

ears

inter

est

at LI

BOR

+ m

argi

n.

On S

eptem

ber 1

4, 2

012

we h

ave

succ

essfu

lly c

ompl

eted

a US

$1,00

0 m

illio

n se

nior

uns

ecur

ed

bond

issu

e wi

th m

aturit

y in

Sep

tembe

r 201

7. Th

e ne

t pro

ceed

s fro

m th

e bo

nd is

sue

will

be u

sed

to re

pay e

xisti

ng in

debt

ness

. C

ove

na

nts

- C

redit

fa

cili

ties

: W

e ha

ve v

ario

us c

oven

ants

relat

ing

to it

s cr

edit

facil

ities

. The

se m

ainly

con

sist o

f m

inim

um

liqui

dity

requ

irem

ents,

inter

est c

over

age

ratio

, cur

rent

ratio

, equ

ity ra

tio a

nd le

vera

ge ra

tio -

for

mor

e deta

ils se

e our

Ann

ual R

epor

t 201

1. No

te 1

4 – E

quity

Sept

embe

r 30,

2012

De

cem

ber 3

1, 20

11

All

sh

are

s a

re c

om

mo

n s

ha

res

of

US

$2

.00

pa

r va

lue

each

Sh

ares

US

$ mill

ions

Sh

ares

US

$ m

illio

ns

Auth

orize

d sh

are c

apita

l 80

0,000

,000

1,6

00

800,0

00,0

00

1,600

Issue

d an

d ful

ly p

aid sh

are c

apita

l 46

9,250

,933

93

8 46

9,250

,933

93

8 Tr

easu

ry sh

ares

held

by

Com

pany

(1

29,1

59 )

0 (1

,478,

759)

(3

) Sh

ares

issu

ed an

d ou

tstan

ding

46

9,121

,774

93

8 46

7,772

,174

93

5 No

te 1

5 – O

ther

com

preh

ensiv

e inc

ome

Acc

um

ula

ted o

ther

co

mp

rehen

sive

in

com

e a

s per

Sep

tem

ber

30,

20

12 a

nd D

ecem

ber

31,

20

11

:

Sept

embe

r 30,

De

cem

ber 3

1,

20

12

2011

Th

e tot

al ba

lance

of a

ccum

ulate

d ot

her c

ompr

ehen

sive i

ncom

e is m

ade

up as

follo

ws:

Unre

alize

d ga

in on

mar

ketab

le se

curit

ies

119

1

Unre

alize

d ga

in on

fore

ign

exch

ange

66

54

Ac

tuar

ial ga

in re

latin

g to

pens

ion

(1

2)

(11)

Un

reali

zed

gain

/ (lo

ss) o

n in

teres

t rate

swap

s in

subs

idiar

ies

0 0

Un

reali

zed

gain

/ (lo

ss) o

n in

teres

t rate

swap

s in

VIEs

(4

9)

(49)

Ac

cum

ulat

ed ot

her c

ompr

ehen

sive i

ncom

e 12

4 (5

) No

te: A

ll ite

ms o

f oth

er co

mpr

ehen

sive i

ncom

e/ (lo

ss) a

re st

ated

net o

f tax

. Th

e ap

plica

ble

amou

nt o

f inc

ome

taxes

ass

ociat

ed w

ith e

ach

com

pone

nt o

f oth

er c

ompr

ehen

sive

inco

me

is $0

due

to

the f

act t

hat t

he it

ems r

elate

to co

mpa

nies

dom

iciled

in n

on-ta

xabl

e jur

isdict

ions

.

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

19

Note

13 –

Lon

g-te

rm in

tere

st be

arin

g de

bt a

nd in

tere

st ex

pens

es

(I

n U

S$

mil

lio

ns)

Se

ptem

ber

30, 2

012

Dece

mbe

r 31

, 201

1

Cr

edit

facil

ities

:

US

$800

facil

ity

239

272

US$5

85 fa

cility

* 0

337

US$9

00 fa

cility

75

0 -

US$1

00 fa

cility

70

74

US

$1,5

00 fa

cility

92

6 1,

059

US$1

,200

facil

ity

900

1,00

0 US

$700

facil

ity

577

630

US$1

,121

facil

ity

936

985

US$2

,000

facil

ity (N

orth

Atla

ntic

Drill

ing)

1,7

92

1,91

7 US

$170

facil

ity

85

92

US$5

50 fa

cility

50

9 55

0 US

$400

facil

ity

370

400

Total

Ban

k Lo

ans +

oth

er

7,154

7,

316

De

bt re

cord

ed in

cons

olid

ated

VIE’

s:

US

$700

facil

ity

412

470

US$1

,400

facil

ity

851

939

Total

Shi

p Fin

ance

Fac

ilitie

s 1,2

63

1,40

9

Bond

s and

conv

ertib

le bo

nds:

Bond

s 1,5

62

425

Conv

ertib

le bo

nds

557

545

Total

bond

s 2,1

19

970

Ot

her c

redi

t fac

ilitie

s with

corre

spon

ding

restr

icted

cash

dep

osits

: 28

2 29

8

Total

inter

est b

earin

g deb

t 10

,818

9,99

3 Le

ss: c

urre

nt po

rtion

(

1,52

3)

(1

,419

) L

ong-

term

porti

on of

inter

est b

earin

g deb

t 9,2

96

8,57

4 * R

epaid

whe

n ref

inan

cing t

he ne

w 90

0 fac

ility

Th

e out

stand

ing

debt

as o

f Sep

tembe

r 30,

2012

is re

paya

ble a

s fol

lows

: (

In U

S$

mil

lio

ns)

Year

endi

ng D

ecem

ber 3

1

2012

27

9 20

13

2,39

9 20

14

1,67

5 20

15

1,84

5 20

16 an

d the

reaf

ter

4,71

4 Ef

fect

of am

ortiz

ation

of co

nver

tible

bond

(9

4)

Total

deb

t 10

,818

A 55

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

22

a ris

k th

at cu

rrenc

y an

d in

teres

t rate

fluc

tuati

ons w

ill h

ave

a ne

gativ

e ef

fect

on th

e va

lue

of th

e Co

mpa

ny's

cash

flow

s. In

tere

st ra

te ri

sk m

anag

emen

t Th

e Co

mpa

ny's

expo

sure

to in

teres

t rate

risk

relat

es m

ainly

to it

s flo

ating

inter

est r

ate d

ebt a

nd

balan

ces o

f sur

plus

fund

s plac

ed w

ith fi

nanc

ial in

stitu

tions

. Thi

s exp

osur

e is m

anag

ed th

roug

h the

us

e of i

nter

est r

ate sw

aps a

nd ot

her d

eriv

ative

arra

ngem

ents.

The

Com

pany

's am

bitio

n is t

o obt

ain

the

mos

t fav

orab

le in

teres

t ra

te bo

rrowi

ngs

avail

able

with

out i

ncre

asin

g its

for

eign

curre

ncy

expo

sure

. Su

rplu

s fu

nds

are

gene

rally

plac

ed i

n fix

ed d

epos

its w

ith r

eput

able

finan

cial

insti

tutio

ns,

yield

ing

high

er r

eturn

s th

an a

re a

vaila

ble

on o

vern

ight

dep

osits

in

bank

s. Su

ch

depo

sits g

ener

ally

have

shor

t-ter

m m

aturit

ies, i

n or

der t

o pr

ovid

e the

Com

pany

with

flex

ibili

ty to

m

eet

all r

equi

rem

ents

for

work

ing

capi

tal a

nd c

apita

l in

vestm

ents.

The

ext

ent

to w

hich

the

Co

mpa

ny u

tilize

s in

teres

t rate

swa

ps a

nd o

ther

der

ivati

ves

to m

anag

e its

inter

est r

ate r

isk is

de

term

ined

by t

he n

et de

bt ex

posu

re an

d its

view

s on f

utur

e int

eres

t rate

s. In

tere

st ra

te sw

ap ag

reem

ents

not q

ualif

ied a

s hed

ge ac

coun

ting

At S

eptem

ber 3

0, 20

12, t

he C

ompa

ny h

ad in

teres

t rate

swa

p ag

reem

ents

with

an

outst

andi

ng

prin

cipal

of U

S$4,7

20 m

illio

n (De

cem

ber 3

1, 20

11: U

S$4,7

38 m

illio

n). I

n add

ition

, the

Com

pany

ha

d ou

tstan

ding

cros

s cur

renc

y int

eres

t rate

swap

s at S

eptem

ber 3

0, 2

012

with

a pr

incip

al am

ount

of U

S$21

6 m

illio

n (D

ecem

ber 3

1, 20

11: U

S$34

mill

ion)

. The

se a

gree

men

ts do

not

qua

lify

for

hedg

e ac

coun

ting,

and

acco

rdin

gly

any

chan

ges

in th

e fa

ir va

lues

of t

he s

wap

agre

emen

ts ar

e in

clude

d in

the

Cons

olid

ated

State

men

t of O

pera

tions

und

er "G

ain/(l

oss)

on d

eriv

ative

fina

ncial

in

strum

ents"

. The

com

bine

d to

tal fa

ir va

lue o

f the

inter

est r

ate sw

aps a

nd cr

oss c

urre

ncy

inter

est

swap

s out

stand

ing

Sept

embe

r 30,

2012

amou

nted

to m

inus

US$

400

mill

ion

(Dec

embe

r 31,

2011

: m

inus

US$

345

mill

ion)

. The

fair

valu

e of

the

inter

est r

ate s

waps

and

cro

ss c

urre

ncy

inter

est

swap

s are

clas

sified

as o

ther

curre

nt li

abili

ties i

n the

bala

nce s

heet.

Du

ring f

irst q

uarte

r 201

2 the

Com

pany

has

enter

ed in

to o

ne ne

w cr

oss c

urre

ncy i

nter

est r

ate sw

ap

in c

onne

ction

with

the

NOK

1,250

mill

ion

bond

. In

Sept

embe

r 201

2 on

e cr

oss c

urre

ncy

inter

est

rate

swap

agre

emen

t exp

ired.

In ad

ditio

n to

this

the o

nly

chan

ge to

the n

otio

nal a

mou

nts o

n th

ese

agre

emen

ts fro

m D

ecem

ber 3

1, 2

011

is th

e am

ortiz

ation

of t

he n

otio

nal a

mou

nt o

n on

e in

teres

t ra

te sw

ap; o

utsta

ndin

g pr

incip

al ch

ange

d fro

m U

S$88

mill

ion

as p

er D

ecem

ber

31, 2

011

to

US$7

1 m

illio

n as

per

Sep

tembe

r 30

, 20

12 .

The

table

belo

w re

flects

the

abo

ve m

entio

ned

chan

ges.

For a

com

plete

ove

rview

of t

he in

teres

t rate

swap

agr

eem

ents

plea

se re

fer t

o th

e 20

11

20-F

.

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

21

Note

16 –

Rela

ted

part

y tra

nsac

tions

W

e ha

ve e

nter

ed in

to s

ale a

nd le

aseb

ack

cont

racts

for s

ever

al dr

illin

g un

its w

ith S

hip

Fina

nce

Inter

natio

nal L

imite

d (“

Ship

Fin

ance

”), a

com

pany

in w

hich

our

prin

cipal

shar

ehol

ders

Hem

en

Hold

ing

Ltd

and

Fara

head

Inv

estm

ents

Inc

(her

eafte

r jo

intly

ref

erre

d to

as

“Hem

en”)

and

co

mpa

nies

ass

ociat

ed w

ith H

emen

hav

e a

signi

fican

t int

eres

t. He

men

is c

ontro

lled

by t

rusts

es

tablis

hed

by th

e Com

pany

’s Pr

esid

ent a

nd C

hairm

an M

r. Jo

hn F

redr

ikse

n fo

r the

ben

efit

of h

is im

med

iate

fam

ily. W

e ha

ve d

eterm

ined

that

the

Ship

Fin

ance

subs

idiar

ies, w

hich

own

the

units

, ar

e va

riabl

e in

teres

t ent

ities

(VIE

s), a

nd th

at we

are

the

prim

ary

bene

ficiar

y of

the

risks

and

re

ward

s con

necte

d wi

th th

e ow

nersh

ip o

f the

uni

ts an

d th

e ch

arter

con

tracts

. Acc

ordi

ngly

, the

se

VIEs

are f

ully

cons

olid

ated

in o

ur co

nsol

idate

d ac

coun

ts. T

he eq

uity

attri

butab

le to

Shi

p Fi

nanc

e in

the V

IEs i

s inc

lude

d in n

on-c

ontro

lling

inter

ests

in ou

r con

solid

ated a

ccou

nts.

In th

e ni

ne m

onth

per

iod

ende

d Se

ptem

ber 3

0, 2

012,

we in

curre

d th

e fo

llowi

ng le

ase

costs

on

units

leas

ed b

ack f

rom

Shi

p Fin

ance

subs

idiar

ies:

Rig

W

est P

olar

is 90

W

est H

ercu

les

56

Wes

t Tau

rus

85

Tota

l 23

1 Th

ese l

ease

costs

are e

limin

ated a

t con

solid

ation

. On

Jul

y 1,

201

1, th

e VI

E co

mpa

nies

SFL

Dee

pwate

r an

d SF

L Po

laris

decla

red

and

paid

a

divi

dend

of

US$2

90 m

illio

n an

d US

$145

mill

ion

resp

ectiv

ely t

o Sh

ip F

inan

ce I

nter

natio

nal

Lim

ited

(SFI

L). S

FIL

simul

taneo

usly

gra

nted

loan

s to

SFL

Dee

pwate

r and

SFL

Pol

aris

of th

e sa

me a

mou

nts w

ith an

inter

est r

ate of

4.5%

. The

se lo

ans a

re pr

esen

ted as

long

term

debt

to re

lated

pa

rties

in ou

r bala

nce s

heet

on S

eptem

ber 3

0, 20

12 an

d Dec

embe

r 31,

2011

. On

May

15,

2012

we

obtai

ned

a sh

ort t

erm

uns

ecur

ed c

redi

t fac

ility

of

US$5

0 m

illio

n fro

m

Metr

ogas

. The

prin

cipal

plus

inter

est w

as re

paid

in Ju

ly 2

012.

On

June

7, 2

012

we o

btain

ed a

long

term

uns

ecur

ed c

redi

t fac

ility

of N

OK 1

,200

mill

ion

from

M

etrog

as. T

his l

oan

agre

emen

t was

amen

ded

on Ju

ne 1

4 an

d Ju

ne 2

7 in

crea

sing

the l

oan

amou

nt

to a

total

of N

OK 2

,100

mill

ion

(US$

352

mill

ion)

. The

prin

cipal

plus

inter

est w

as r

epaid

in

Sept

embe

r 201

2. On

June

27,

2012

the

Com

pany

gra

nted

Arc

her a

long

term

uns

ecur

ed c

redi

t fac

ility

of U

S$20

m

illio

n. Th

e prin

cipal

plus

inter

est w

as re

paid

in Ju

ly 2

012.

Note

17 –

Risk

man

agem

ent a

nd fi

nanc

ial i

nstr

umen

ts Th

e m

ajorit

y of

our

gro

ss e

arni

ngs

from

rigs

and

ves

sels

are

rece

ivab

le in

US

dolla

rs an

d th

e m

ajorit

y of

our

oth

er t

rans

actio

ns,

asse

ts an

d lia

bilit

ies a

re d

enom

inate

d in

US

dolla

rs, t

he

func

tiona

l cur

renc

y of

the

Com

pany

. How

ever

, the

Com

pany

has

ope

ratio

ns a

nd a

ssets

in a

nu

mbe

r of c

ount

ries

world

wide

and

incu

rs ex

pend

iture

s in

oth

er c

urre

ncies

, cau

sing

its re

sults

fro

m o

pera

tions

to b

e affe

cted

by fl

uctu

ation

s in c

urre

ncy e

xcha

nge r

ates,

prim

arily

relat

ive t

o the

US

dol

lar. T

he C

ompa

ny is

also

expo

sed

to ch

ange

s in

inter

est r

ates o

n flo

ating

inter

est r

ate d

ebt,

and

to th

e im

pact

of ch

ange

s in c

urre

ncy e

xcha

nge r

ates o

n NOK

den

omin

ated d

ebt.

Ther

e is t

hus

A 56

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

24

Fair

valu

es o

f fin

ancia

l ins

trum

ents

The c

arry

ing

valu

e and

estim

ated

fair

valu

e of t

he C

ompa

ny's

finan

cial i

nstru

men

ts at

Sept

embe

r 30

, 201

2 and

Dec

embe

r 31,

2011

are a

s fol

lows

:

Se

ptem

ber 3

0, 2

012

Dece

mbe

r 31,

2011

(In U

S$ m

illio

ns)

Fa

ir va

lue

Carr

ying

valu

e

F air

valu

e

Carry

ing

valu

e

Ca

sh an

d ca

sh eq

uiva

lents

518

518

483

483

Re

strict

ed ca

sh

382

382

482

482

Cu

rrent

por

tion

of lo

ng-te

rm de

bt

1,52

3

1,

523

1,41

9

1,

419

Lo

ng-te

rm p

ortio

n of f

loati

ng ra

te de

bt

6,94

5

6,

945

7,71

1

7,

711

Lo

ng te

rm p

ortio

n of

fixe

d ra

te CI

RR lo

ans

231

231

250

250

Fi

xed

inter

est c

onve

rtibl

e bon

ds

8 92

557

735

545

Fi

xed

inter

est b

onds

1

,387

1

,342

333

350

Fl

oatin

g int

eres

t bon

ds

220

2

20

75

75

The c

arry

ing

valu

e of c

ash

and

cash

equi

valen

ts an

d re

strict

ed ca

sh, w

hich

are h

ighl

y liq

uid,

is a

reas

onab

le es

timate

of

fair

valu

e an

d ca

tegor

ized

at lev

el 1

on t

he f

air v

alue

mea

sure

men

t hi

erar

chy.

The f

air va

lue o

f the

curre

nt an

d lo

ng-te

rm po

rtion

of f

loati

ng ra

te de

bt is

estim

ated

to b

e equ

al to

th

e car

ryin

g va

lue s

ince

it b

ears

varia

ble i

nter

est r

ates,

which

are

rese

t on

a qua

rterly

bas

is. T

his

debt

is n

ot fr

eely

trad

able

and

cann

ot b

e pu

rcha

sed

by th

e Co

mpa

ny a

t pric

es o

ther

than

the

outst

andi

ng b

alanc

e pl

us a

ccru

ed in

teres

t. W

e ha

ve c

atego

rized

this

at lev

el 2

on th

e fa

ir va

lue

mea

sure

men

t hier

arch

y. Th

e fair

valu

e of t

he lo

ng-te

rm p

ortio

n of

the f

ixed

rate

CIRR

loan

s is e

qual

to th

e car

ryin

g valu

e, as

they

are m

atche

d wi

th eq

ual b

alanc

es o

f res

tricte

d ca

sh. W

e hav

e cate

goriz

ed th

is at

level

2 on

th

e fair

valu

e mea

sure

men

t hier

arch

y. Th

e co

nver

tible

bond

s are

free

ly tr

adab

le an

d th

eir fa

ir va

lue

has b

een

set e

qual

to th

e pr

ice a

t wh

ich th

ey w

ere t

rade

d at

on S

eptem

ber 3

0, 20

12 an

d De

cem

ber 3

1, 20

11. W

e hav

e cate

goriz

ed

this

at lev

el 1 o

n the

fair

valu

e mea

sure

men

t hier

arch

y.

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

23

Out

st and

ing

prin

cipal

Re

ceiv

e rat

e

Pay

rate

Le

ngth

of c

ontr

act

(In U

S$ m

illio

ns)

79

6

mon

th L

IBOR

3.

83%

M

ar 2

008

- Sep

201

621

6 (N

OK 1,

250 m

ill)

3m

onth

NIB

OR+3

.2%

3

mon

th L

IBOR

+3.

8 %

Feb

2012

– F

eb 20

1 4

In

tere

st ra

te h

edge

acc

ount

ing

Two

of th

e Sh

ip F

inan

ce su

bsid

iaries

con

solid

ated

by th

e Co

mpa

ny a

s VIE

's ha

ve e

nter

ed in

to

inter

est r

ate sw

aps i

n or

der t

o m

itiga

te th

e Co

mpa

ny's

expo

sure

to v

ariab

ility

in c

ash

flows

for

futu

re in

teres

t pay

men

ts on

the

loan

s tak

en o

ut to

fina

nce

the

acqu

isitio

n of

Wes

t Pol

aris

and

Wes

t Tau

rus.

The

se in

teres

t rate

swap

s qua

lify f

or he

dge a

ccou

ntin

g and

any c

hang

es in

their

fair

valu

e ar

e in

clude

d in

"Oth

er c

ompr

ehen

sive

inco

me/l

oss"

. Belo

w is

a su

mm

ary

of th

e no

tiona

l am

ount

s, fix

ed in

teres

t rate

s pay

able

and d

urati

ons o

f the

se in

teres

t rate

swap

s. O

utsta

ndin

g pr

incip

al

Rece

ive r

ate

Pay

rate

Le

ngth

of c

ontr

act

(In U

S$ m

illio

ns)

47

0 (W

est

Po

lari

s )

1 m

onth

LIB

OR

3.89

%Ju

ly 2

008

- Oct

2012

518

(Wes

t T

au

rus)

1 m

onth

LIB

OR

2.19

%De

c 200

8 - A

ug 2

013

In th

e nin

e mon

th p

erio

d en

ded

Sept

embe

r 30,

2012

the a

bove

two

VIE

Ship

Fin

ance

subs

idiar

ies

reco

rded

fair

valu

e ga

ins o

f $17

mill

ion

on th

eir in

teres

t rate

swap

s. Th

ese

gain

s wer

e rec

orde

d by

thos

e VI

Es a

s "O

ther

com

preh

ensiv

e in

com

e" b

ut d

ue to

their

own

ersh

ip b

y Sh

ip F

inan

ce

thes

e los

ses a

re al

loca

ted to

"Non

-con

trolli

ng in

teres

t" in

our

equi

ty sta

temen

t. An

y ch

ange

in

fair

valu

e re

sulti

ng f

rom

hed

ge in

effe

ctive

ness

is r

ecog

nize

d im

med

iately

in

earn

ings

. The

two

VIEs

and

ther

efor

e th

e Co

mpa

ny, d

id n

ot re

cogn

ize a

ny g

ain o

r los

s du

e to

he

dge i

neffe

ctive

ness

in th

e con

solid

ated f

inan

cial s

tatem

ents

durin

g the

nine

mon

th p

erio

d end

ed

Sept

embe

r 30,

2012

and

2011

relat

ing t

o de

rivati

ve fi

nanc

ial in

strum

ents.

Fo

reig

n cu

rren

cy ri

sk m

anag

emen

t Th

e Co

mpa

ny u

ses

fore

ign

curre

ncy

forw

ard

cont

racts

and

oth

er d

eriv

ative

s to

man

age

its

expo

sure

to fo

reig

n cu

rrenc

y ris

k on

certa

in as

sets,

liab

ilitie

s and

futu

re an

ticip

ated

trans

actio

ns.

Such

der

ivati

ve c

ontra

cts d

o no

t qua

lify

for h

edge

acc

ount

ing

treatm

ent a

nd a

re re

cord

ed in

the

balan

ce s

heet

unde

r rec

eivab

les if

the

cont

racts

hav

e a

net p

ositi

ve fa

ir va

lue,

and

unde

r oth

er

shor

t-ter

m li

abili

ties i

f the

con

tracts

hav

e a

net n

egati

ve fa

ir va

lue.

At S

eptem

ber 3

0, 20

12, t

he

Com

pany

had

for

ward

con

tracts

and

cro

ss c

urre

ncy

inter

est r

ate s

waps

to s

ell a

ppro

xim

ately

US

$381

mill

ion

betw

een

Octo

ber

2012

and

Jan

uary

201

3 at

exch

ange

rate

s ra

ngin

g fro

m

NOK5

.70

to N

OK6.

10 p

er U

S do

llar.

The

total

fair

valu

e of

cur

renc

y fo

rwar

d co

ntra

cts

Sept

embe

r 30,

2012

amou

nted

to U

S$5 m

illio

n (Se

ptem

ber 3

0, 20

11: m

inus

US$

11 m

illio

n).

Tota

l Ret

urn

Swap

Agr

eem

ents

In S

eptem

ber 2

012,

the C

ompa

ny en

tered

into

a TR

S ag

reem

ent w

ith 2

,000

,000

Sead

rill L

imite

d sh

ares

as un

derly

ing s

ecur

ity. T

his a

gree

men

t exp

ires i

n De

cem

ber 2

012

and t

he ag

reed

refe

renc

e pr

ice w

as N

OK 2

42.80

per

shar

e. Th

e to

tal re

alize

d an

d un

reali

zed

gain

relat

ing

to T

RS a

gree

men

ts in

201

2 am

ount

ed to

US$

9 m

illio

n (Se

ptem

ber 3

0, 20

11 U

S$7 m

illio

n).

A 57

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

26

ASC

Topi

c 82

0 Fa

ir Va

lue

Mea

sure

men

t and

Disc

losu

res (

form

erly

FAS

157

) em

phas

izes t

hat

fair

valu

e is

a m

arke

t-bas

ed m

easu

rem

ent,

not a

n en

tity-

spec

ific

mea

sure

men

t, an

d sh

ould

be

deter

min

ed b

ased

on

the

assu

mpt

ions

that

mar

ket p

artic

ipan

ts wo

uld

use

in p

ricin

g th

e as

set o

r lia

bilit

y. As

a b

asis

for c

onsid

erin

g m

arke

t par

ticip

ant a

ssum

ptio

ns in

fair

valu

e m

easu

rem

ents,

AS

C To

pic

820

estab

lishe

s a fa

ir va

lue

hier

arch

y th

at di

sting

uish

es b

etwee

n m

arke

t par

ticip

ant

assu

mpt

ions

bas

ed o

n m

arke

t data

obt

ained

fro

m s

ourc

es in

depe

nden

t of

the

repo

rting

ent

ity

(obs

erva

ble i

nput

s tha

t are

clas

sified

with

in le

vels

one a

nd tw

o of

the h

ierar

chy)

and

the r

epor

ting

entit

y's o

wn a

ssum

ptio

ns a

bout

mar

ket p

artic

ipan

t ass

umpt

ions

(uno

bser

vabl

e in

puts

class

ified

wi

thin

leve

l thr

ee o

f the

hier

arch

y).

Leve

l on

e in

put

utili

zes

unad

juste

d qu

oted

pric

es i

n ac

tive

mar

kets

for

iden

tical

asse

ts or

lia

bilit

ies th

at th

e Co

mpa

ny h

as th

e ab

ility

to a

cces

s. Le

vel t

wo in

puts

are

inpu

ts ot

her

than

qu

oted

pric

es in

clude

d in

leve

l one

that

are o

bser

vabl

e for

the a

sset

or li

abili

ty, e

ither

dire

ctly

or

indi

rectl

y. Le

vel t

wo in

puts

may

inclu

de q

uoted

pric

es fo

r sim

ilar a

ssets

and

liab

ilitie

s in

activ

e m

arke

ts, a

s well

as i

nput

s tha

t are

obs

erva

ble

for t

he a

sset

or li

abili

ty, o

ther

than

quo

ted p

rices

, su

ch a

s int

eres

t rate

s, fo

reig

n ex

chan

ge ra

tes a

nd y

ield

curv

es th

at ar

e ob

serv

able

at co

mm

only

qu

oted

inter

vals.

Lev

el th

ree

inpu

ts ar

e un

obse

rvab

le in

puts

for t

he a

sset

or li

abili

ty, w

hich

are

ty

pica

lly b

ased

on

an en

tity's

own

assu

mpt

ions

, as t

here

is li

ttle,

if an

y, re

lated

mar

ket a

ctivi

ty. I

n in

stanc

es w

here

the d

eterm

inati

on o

f the

fair

valu

e mea

sure

men

t is b

ased

on in

puts

from

diff

eren

t lev

els o

f the

fair

valu

e hier

arch

y, th

e lev

el in

the f

air v

alue h

ierar

chy

with

in w

hich

the e

ntire

fair

valu

e m

easu

rem

ent f

alls

is ba

sed

on th

e lo

west

level

inpu

t tha

t is

signi

fican

t to

the

fair

valu

e m

easu

rem

ent i

n its

entir

ety. T

he C

ompa

ny's

asse

ssm

ent o

f the

sign

ifica

nce o

f a p

artic

ular

inpu

t to

the f

air v

alue m

easu

rem

ent i

n its

entir

ety re

quire

s jud

gmen

t, an

d co

nsid

ers f

acto

rs sp

ecifi

c to

the

asse

t or l

iabili

ty.

Note

18 –

Com

mitm

ents

and

cont

inge

ncies

Pu

rcha

se C

omm

itmen

ts At

Sep

tembe

r 30,

201

2, we

had

nin

eteen

cont

ractu

al co

mm

itmen

ts un

der n

ewbu

ildin

g co

ntra

cts.

The c

ontra

cts ar

e for

the c

onstr

uctio

n of

two

sem

i-sub

mer

sible

rigs,

seve

n dr

illsh

ips,

five j

ack-

up

rigs,

and

five t

ende

r rig

s. Th

e uni

ts ar

e sc

hedu

led to

be d

elive

red

in 2

012,

2013

, 201

4 an

d 20

15.

As o

f Sep

tembe

r 30,

we h

ave p

aid $

1,629

mill

ion

relat

ed to

thes

e rig

s, in

cludi

ng p

aym

ents

to th

e co

nstru

ction

yar

ds a

nd o

ther

pay

men

ts, a

nd a

re c

omm

itted

to m

ake

furth

er p

aym

ents

amou

ntin

g to

$5,8

37 m

illio

n. Th

ese

amou

nts

inclu

de c

ontra

ct va

riatio

n or

ders,

spa

res,

accr

ued

inter

est

expe

nses

, con

struc

tion s

uper

visio

n, op

erati

on pr

epar

ation

and m

obili

zatio

n.

The m

aturit

y sch

edul

e for

the r

emain

ing p

aym

ents

is as

follo

ws:

Mat

urity

sche

dule

for r

emai

ning

new

build

pay

men

ts as

of S

epte

mbe

r 30,

2012

(I

n U

S$

mil

lio

ns)

2012

39

2

2013

2,

505

2014

2,

428

2015

53

2 To

tal

5,85

7

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

25

Fina

ncial

instr

umen

ts th

at ar

e mea

sure

d at f

air va

lue o

n a re

curri

ng b

asis:

Fair

valu

e

Fair

valu

e mea

sure

men

ts at

repo

rtin

g da

te u

sing

Quo

ted

Price

s in

Activ

e M

arke

ts fo

r Id

entic

al

Asse

ts

Sign

ifica

nt

Oth

er

Obs

erva

ble

Inpu

ts

Sign

ifica

nt

Unob

serv

able

Inpu

ts

(In U

S$ m

illio

ns)

Sept

embe

r30

, 201

2(L

evel

1)(L

evel

2)(L

evel

3)

Asse

ts:

M

arke

table

secu

rities

246

24

2

-

4

Ot

her

deriv

ative

in

strum

ents

– sh

ort

term

re

ceiv

able

22

-

22

-

Total

asse

ts

2 68

24

2

22

4

Liab

ilitie

s:

Inter

est r

ate sw

ap co

ntra

cts –

shor

t ter

m p

ayab

le

407

-

407

- Ot

her d

eriv

ative

instr

umen

ts – s

hort

term

pay

able

-

-

Total

liab

ilitie

s

407

-

407

-

Fair

valu

e

Fair

valu

e mea

sure

men

ts at

repo

rtin

g da

te u

sing

Quo

ted

Price

s in

Activ

e M

arke

ts fo

r Id

entic

al

Asse

ts

Sign

ifica

nt

Oth

er

Obs

erva

ble

Inpu

ts

Sign

ifica

nt

Unob

serv

able

Inpu

ts

(In

mil

lio

ns

of

US

doll

ar)

De

cem

ber

31, 2

011

(Lev

el 1)

(Lev

el 2)

(Lev

el 3)

As

sets:

M

arke

table

secu

rities

24

4

-

20

TR

S eq

uity

swap

cont

racts

11

-

11

-

Othe

r de

rivati

ve

instr

umen

ts –

shor

t ter

m

rece

ivab

le

3

1

2

-

Total

asse

ts

38

5

13

20

Li

abili

ties:

In

teres

t rate

swap

cont

racts

– sh

ort t

erm

pay

able

37

2

-

372

- Cu

rrenc

y for

ward

cont

racts

– sh

ort t

erm

pay

able

3

3

Othe

r der

ivati

ve in

trum

ents

– sho

rt ter

m p

ayab

le

39

39

To

tal li

abili

ties

41

4

41

4

-

Roll

forw

ard

of fa

ir va

lue m

easu

rem

ents

usin

g uno

bser

vabl

e inp

uts (

Leve

l 3):

(In

US$

mill

ions

)

Begi

nnin

g bala

nce J

anua

ry 1

, 201

2

20

Reali

zatio

n

-16

Purc

hase

- Ch

ange

s in

fair

valu

e of b

onds

-

Clos

ing

balan

ce S

eptem

ber

30, 2

012

4

A 58

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

28

2012

2013

2014

2015

2016

Ba

se L

IBOR

In

teres

t Rate

(In U

S$

thou

sand

s)

(In U

S$

thou

sand

s)

(In U

S$

thou

sand

s)

(In U

S$

thou

sand

s)

(In U

S$

thou

sand

s)

Wes

t P

ola

ris

2.

85%

32

3.5*

22

3.3

176.5

17

5.4

170.0

Wes

t T

au

rus

4.

25%

31

1.9*

31

6.2*

320.7

16

5.0

158.8

Wes

t H

ercu

les

4.

25%

25

0.0

250.

0

23

8.5

180.

0

17

2.5

*

For a

per

iod

the

inter

est r

ates f

or W

est

Pola

ris

and

Wes

t T

au

rus h

ave

been

fixe

d at

3.89%

and

2.1

7%,

resp

ectiv

ely, a

nd th

e ba

rebo

at ch

arter

rate

for t

hese

two

units

is fi

xed

rega

rdles

s of m

ovem

ents

in L

IBOR

in

teres

t rate

s. Th

ese f

ixed

char

ter ra

tes ar

e ref

lected

in th

e abo

ve ta

ble.

Th

e ass

ets an

d lia

bilit

ies in

the s

tatut

ory a

ccou

nts o

f the

VIE

s as a

t Sep

tembe

r 30,

2012

and

as at

De

cem

ber 3

1, 20

11 ar

e as f

ollo

ws:

Sept

embe

r 30,

2012

D

ecem

ber 3

1, 2

011

(In U

S$ m

illio

ns)

SFL

Wes

t Po

laris

Li

mite

d

SFL

Deep

wate

r Lt

d.

SFL

Wes

t Po

laris

Li

mite

d SF

L De

epwa

ter

Ltd.

Nam

e of u

nit

W

est

Po

lari

s

Wes

t T

au

rus

Wes

t H

ercu

les

Wes

t Po

laris

Wes

t Ta

urus

Wes

t

Her

cules

In

vestm

ent i

n fin

ance

leas

e

54

8

1,15

161

11,

240

Othe

r ass

ets

11

2012

23

Total

asse

ts

55

9

1,17

162

31,

263

Long

term

deb

t

0

73

139

882

2 Ot

her l

iabili

ties

436

29

817

432

6 To

tal li

abili

ties

436

1,

029

572

1,14

8 Eq

uity

71

14

251

115

Book

va

lue

of

units

in

th

e Co

mpa

ny's

cons

olid

ated

acco

unts

601

1,

026

614

1,02

1 No

te 2

0 – S

ubse

quen

t Eve

nts

On O

ctobe

r 15

, Se

adril

l Pa

rtner

s LL

C ("S

eadr

ill P

artn

ers"

), a

whol

ly-o

wned

sub

sidiar

y of

Se

adril

l Li

mite

d an

noun

ced

that

it ha

s co

mm

ence

d an

ini

tial

publ

ic of

ferin

g of

8,7

50,0

00

com

mon

uni

ts, r

epre

sent

ing

limite

d lia

bilit

y co

mpa

ny i

nter

ests,

pur

suan

t to

a r

egist

ratio

n sta

temen

t on

Form

F-1

(in

cludi

ng a

pro

spec

tus)

prev

ious

ly fi

led w

ith th

e U.

S. S

ecur

ities

and

Ex

chan

ge C

omm

issio

n. Se

adril

l Pa

rtner

s wa

s fo

rmed

to

own,

ope

rate

and

acqu

ire o

ffsho

re

drill

ing

rigs

unde

r lon

g-ter

m c

ontra

cts.

Sead

rill P

artn

ers'

initi

al fle

et wi

ll co

nsist

of t

wo s

emi-

subm

ersib

le rig

s (W

est C

apric

orn

and

Wes

t Aqu

ariu

s), o

ne d

rillsh

ip (

Wes

t Cap

ella)

and

one

ten

der r

ig (W

est V

ence

dor).

On

Octo

ber

18, S

eadr

ill P

artn

ers

LLC

anno

unce

d th

at it

price

d its

initi

al pu

blic

offe

ring

of

8,75

0,000

com

mon

uni

ts at

a pric

e of $

22.0

0 per

uni

t. Se

adril

l Par

tner

s gra

nted

the u

nder

write

rs a

30-d

ay o

ver-a

llotm

ent o

ptio

n to

pur

chas

e up

to 1

,312,5

00 a

dditi

onal

com

mon

uni

ts, a

t the

sam

e pr

ice p

er u

nit,

to co

ver o

ver-a

llotm

ents.

The

com

mon

uni

ts we

re o

ffere

d to

the p

ublic

and

bega

n tra

ding

on O

ctobe

r 19,

on th

e New

Yor

k Sto

ck E

xcha

nge u

nder

the s

ymbo

l "SD

LP".

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

27

Lega

l Pro

ceed

ings

W

e are

a pa

rty, a

s plai

ntiff

or d

efen

dant

, to

a few

laws

uits

in v

ario

us ju

risdi

ction

s for

dem

urra

ge,

dam

ages

, off-

hire

and

oth

er c

laim

s an

d co

mm

ercia

l disp

utes

aris

ing

from

the

cons

tructi

on o

r op

erati

on o

f ou

r dr

illin

g un

its, i

n th

e or

dina

ry c

ourse

of

busin

ess

or in

con

necti

on w

ith o

ur

acqu

isitio

n ac

tiviti

es.

We

belie

ve th

at th

e re

solu

tion

of s

uch

claim

s wi

ll no

t hav

e a

mate

rial

impa

ct in

divi

dual

or in

the

aggr

egate

on

our o

pera

tions

or f

inan

cial c

ondi

tion.

Our b

est e

stim

ate

of t

he o

utco

me

of t

he v

ario

us d

isput

es h

as b

een

refle

cted

in o

ur f

inan

cial

statem

ents

as o

f Se

ptem

ber 3

0, 20

12.

Note

19 –

Var

iabl

e Int

eres

t Ent

ities

(VIE

s) As

of S

eptem

ber 3

0, 20

12, t

he C

ompa

ny le

ased

a d

rillsh

ip a

nd tw

o se

mi-s

ubm

ersib

le rig

s fro

m

VIEs

und

er fi

nanc

e lea

ses.

Each

of t

he u

nits

had

been

sol

d by

the

Com

pany

to s

ingl

e pu

rpos

e su

bsid

iaries

of S

hip

Fina

nce

Ltd

and

simul

taneo

usly

leas

ed b

ack

by th

e Co

mpa

ny o

n ba

rebo

at ch

arter

cont

racts

for a

term

of 1

5 ye

ars.

The C

ompa

ny h

as se

vera

l opt

ions

to re

purc

hase

the u

nits

durin

g th

e ch

arter

per

iods

, and

obl

igati

ons t

o pu

rcha

se th

e as

sets

at th

e en

d of

the

15 y

ear l

ease

pe

riod.

The

follo

wing

tabl

e gi

ves

a su

mm

ary

of th

e sa

le an

d lea

seba

ck a

rrang

emen

ts, a

s of

Se

ptem

ber 3

0, 20

12:

Unit

Effe

ctive

fro

m

Sa

le va

lue

(In U

S$ m

illio

ns)

First

re

purc

hase

op

tion

(In U

S$ m

illio

ns)

Mon

th o

f firs

t re

purc

hase

op

tion

Last

re

purc

hase

op

tion

* (In

US$

mill

ions

)

Mon

th o

f las

t re

purc

hase

Optio

n *

Wes

t P

ola

ris

July

200

8

850

548

Se

ptem

ber

2012

17

8 Ju

ne 20

23

Wes

t T

au

rus

Nov

2008

850

418

Feb

ruar

y 201

5

149

Nov

2023

W

est

Her

cule

s Oc

t 20

08

85

0

58

0

Augu

st 20

11

135

Aug

2023

* Fo

r the

uni

t Wes

t P

ola

ris,

Shi

p Fi

nanc

e ha

s a

put o

ptio

n ex

ercis

able

at th

e en

d of

the

lease

term

s by

wh

ich th

e ve

ssel

may

be

sold

to S

eadr

ill f

or a

fix

ed p

rice

of $

75 m

illio

n. F

or W

est

Tau

rus

and

Wes

t H

ercu

les r

epur

chas

e ob

ligati

ons a

t the

end

of t

he le

ase

term

s hav

e be

en a

gree

d, a

t $14

9 m

illio

n an

d $1

35

mill

ion,

resp

ectiv

ely.

The

Com

pany

has

dete

rmin

ed t

hat

the

Ship

Fin

ance

sub

sidiar

ies,

which

own

the

uni

ts, a

re

varia

ble i

nter

est e

ntiti

es (V

IEs),

and

that

the C

ompa

ny is

the p

rimar

y ben

efici

ary

of th

e risk

s and

re

ward

s con

necte

d wi

th th

e ow

nersh

ip o

f the

uni

ts an

d th

e ch

arter

con

tracts

. Acc

ordi

ngly

, the

se

VIEs

are

ful

ly c

onso

lidate

d in

the

Com

pany

's co

nsol

idate

d ac

coun

ts. T

he C

ompa

ny d

id n

ot

reco

rd a

ny g

ains

from

the

sale

of th

e un

its, a

s th

ey c

ontin

ued

to b

e re

porte

d as

ass

ets a

t the

ir or

igin

al co

st in

the

Com

pany

's ba

lance

she

et at

the

time

of e

ach

trans

actio

n. Th

e eq

uity

att

ribut

able

to S

hip

Fina

nce i

n th

e VIE

s is i

nclu

ded

in n

on-c

ontro

lling

inter

ests

in th

e Com

pany

's co

nsol

idate

d ac

coun

ts. A

t Sep

tembe

r 30,

2012

(as

well

as a

t Dec

embe

r 31,

2011

) the

uni

ts ar

e re

porte

d und

er dr

illin

g uni

ts in

the C

ompa

ny's

balan

ce sh

eet.

The

bare

boat

char

ter ra

tes a

re se

t on

the

basis

of a

Bas

e LI

BOR

Inter

est R

ate fo

r eac

h ba

rebo

at ch

arter

cont

ract,

and t

here

after

are a

djus

ted fo

r diff

eren

ces b

etwee

n the

LIB

OR fi

xing

each

mon

th

and

the B

ase L

IBOR

Inter

est R

ate fo

r eac

h co

ntra

ct. A

sum

mar

y of t

he b

areb

oat c

harte

r rate

s per

da

y for

each

uni

t is g

iven

belo

w. T

he am

ount

s sho

wn ar

e bas

ed o

n the

Bas

e LIB

OR In

teres

t Rate

, an

d ref

lect a

vera

ge ra

tes fo

r the

year

.

A 59

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

30

As o

f Nov

embe

r 9, w

e ow

n 26

,376

,516

sha

res

in A

OD, c

orre

spon

ding

to 6

5,94%

of t

he to

tal

num

ber o

f out

stand

ing s

hare

s in t

he co

mpa

ny.

On N

ovem

ber 1

2, we

rece

ived

a L

etter

of A

ward

from

Hus

ky O

il Op

erati

ons L

imite

d fo

r a n

ew

five-

year

con

tract

for

the

newb

uild

har

sh e

nviro

nmen

t se

mi-s

ubm

ersib

le rig

Wes

t M

ira f

or

oper

ation

s in

Cana

da an

d Gr

eenl

and.

Total

estim

ated

reve

nue p

oten

tial f

or th

e con

tract,

inclu

ding

m

obili

zatio

n an

d pe

rform

ance

bon

us is

app

roxi

mate

ly US

$1.1

8 bi

llion

for t

he fi

ve fi

rm y

ears.

Th

e W

est M

ira is

cur

rent

ly u

nder

con

struc

tion

at th

e Hy

unda

i Sam

ho S

hipy

ard

in S

outh

Kor

ea

and

deliv

ery

is sc

hedu

led fo

r Q4

2014

with

esti

mate

d sta

rt-up

of o

pera

tions

dur

ing

Q2 2

015.

On

Nov

embe

r 12,

we gr

anted

Arc

her a

shor

t ter

m u

nsec

ured

cred

it fa

cility

of U

S$50

mill

ion.

The

loan

is re

paya

ble D

ecem

ber 1

0, 20

12 an

d bea

rs an

inter

est o

f 3 m

onth

s LIB

OR +

5%.

On N

ovem

ber 1

6, a

sub

sidiar

y of

Sea

drill

ent

ered

into

an

agre

emen

t with

Son

ga O

ffsho

re to

ac

quire

the

ultra

-dee

pwate

r sem

i-sub

mer

sible

rig S

onga

Ecli

pse

for a

con

sider

ation

of U

S$59

0 m

illio

n. Th

e rig

was

deli

vere

d fro

m th

e Ju

rong

Shi

pyar

d in

Sin

gapo

re in

201

1, an

d is

curre

ntly

op

erati

ng fo

r Tot

al of

fshor

e An

gola

on a

fixe

d co

ntra

ct en

ding

in D

ecem

ber 2

013.

In a

dditi

on

Total

has

thre

e one

-yea

r opt

ions

to fu

rther

exten

d th

e con

tract.

Sea

drill

inten

ds to

take

deli

very

of

the

rig d

urin

g De

cem

ber

2012

. The

pur

chas

e of

the

Son

ga E

clips

e wi

ll be

acc

ount

ed f

or a

bu

sines

s com

bina

tion.

No

tes

to t

he

un

audit

ed c

onso

lid

ate

d f

inan

cial

sta

tem

ents

29

On O

ctobe

r 24

, 20

12,

the

Com

pany

sol

d 10

,062,5

00 C

omm

on U

nits

in t

he I

PO, i

nclu

ding

1,

312,5

00 C

omm

on U

nits

that

were

rede

emed

from

Sea

drill

Lim

ited

upon

the f

ull e

xerc

ise o

f the

op

tion

which

Co

mpa

ny

gran

ted

to

the

unde

rwrit

ers

to

purc

hase

ad

ditio

nal

Com

mon

Un

its. F

ollo

wing

the

closin

g of

the

offe

ring,

Sead

rill L

imite

d ow

n 14

,752

,525

Com

mon

Uni

ts an

d 16

,543

,350

Sub

Uni

ts, co

llecti

vely

repr

esen

ting

a 75.7

% li

mite

d lia

bilit

y com

pany

inter

est i

n th

e Com

pany

. Th

e Com

mon

Uni

ts we

re re

giste

red u

nder

the E

xcha

nge A

ct on

Octo

ber 1

8, 20

12.

After

clo

se o

f tra

ding

on

Oslo

Bør

s on

Octo

ber

25 w

e ac

quire

d 12

,190

,858

sha

res

of A

sia

Offsh

ore

Drill

ing

Lim

ited)

("AO

D").

The

shar

es w

ere

acqu

ired

at a

price

of U

S$5.0

per

sha

re

(equ

als N

OK28

.71 b

ased

on

the U

SD/N

OK ex

chan

ge ra

te se

t by t

he N

orwe

gian

Cen

tral B

ank

on

Octo

ber

25).

Follo

wing

th

is ac

quisi

tion,

we

own

25,6

90,9

58

shar

es

in

the

com

pany

, co

rresp

ondi

ng to

64.2

3% o

f the

total

num

ber o

f out

stand

ing s

hare

s in

the c

ompa

ny.

On N

ovem

ber 5

, Sap

uraK

enca

na P

etrol

eum

Ber

had (

"Sap

uraK

enca

na")

and S

eadr

ill L

imite

d en

tered

into

a no

n-bi

ndin

g mem

oran

dum

of u

nder

stand

ing (

"MOU

") to

com

bine

and

integ

rate

both

com

pani

es' te

nder

rig b

usin

esse

s. Th

e enl

arge

d ten

der r

ig bu

sines

s und

er S

apur

aKen

cana

wi

ll co

mpr

ise, 1

6 ten

der r

igs i

n ope

ratio

n (in

cludi

ng th

e KM

1 rig

curre

ntly

own

ed b

y Sa

pura

Kenc

ana)

, 5 o

f whi

ch ar

e alre

ady 5

1%-o

wned

and

man

aged

thro

ugh i

ts ex

istin

g joi

nt-

vent

ure w

ith S

eadr

ill in

Var

ia Pe

rdan

a Sdn

Bhd

and T

iom

an D

rillin

g Com

pany

Sdn

Bhd

, and

an

addi

tiona

l 5 u

nits

curre

ntly

und

er co

nstru

ction

, 3 o

f whi

ch w

ill be

acqu

ired t

hrou

gh th

is tra

nsac

tion a

nd ar

e exp

ected

to b

e deli

vere

d in

2013

. In a

dditi

on S

apur

aKen

cana

will

also

be

offe

red t

he ri

ght t

o be t

he m

anag

er fo

r thr

ee fu

rther

tend

er ri

gs w

hich

are n

ot p

art o

f the

tra

nsac

tion.

Thes

e rig

s, W

est V

ence

dor,

T-15

and T

-16,

are t

oday

eith

er o

wned

or p

lanne

d to b

e ow

ned

by S

eadr

ill P

artn

ers L

LC an

d ar

e the

refo

re n

ot in

clude

d in t

he tr

ansa

ction

. Sa

pura

Kenc

ana w

ill ta

ke ov

er th

e rig

s inc

ludi

ng th

e ful

l ten

der r

ig or

gani

zatio

n for

an en

terpr

ise

valu

e of U

S$ 2.

9 bill

ion.

The o

rgan

izatio

n will

cont

inue

to op

erate

from

the e

xisti

ng pr

emise

s in

Sing

apor

e. Th

e tot

al en

terpr

ise va

lue i

nclu

des U

S$ 3

63 m

illio

n in r

emain

ing c

apita

l exp

endi

ture

s lin

ked t

o the

new

build

s pro

gram

and a

ll th

e deb

t in t

he te

nder

rig b

usin

ess i

nclu

ding

exist

ing b

ank

facil

ities

that

are e

xpec

ted to

be ap

prox

imate

ly U

S$ 80

0 m

illio

n as o

f Dec

embe

r 31s

t 201

2.

One o

f the

main

obj

ectiv

es of

the t

rans

actio

n is t

o dev

elop a

stro

ng le

adin

g play

er in

the F

ar E

ast

mar

ket.

Sead

rill w

ill, t

o sup

port

this

posit

ion,

rece

ive a

min

imum

of U

S$ 35

0 mill

ion i

n ne

w sh

ares

of S

apur

aKen

cana

. Thi

s com

es in

addi

tion t

o the

6.4%

stak

e tha

t Sea

drill

pres

ently

own

s in

Sap

uraK

enca

na. S

eadr

ill w

ill fu

rther

have

the r

ight

to no

min

ate tw

o m

embe

rs to

the

Sapu

raKe

ncan

a boa

rd o

f dire

ctors

(inclu

ding

one

alter

nate)

. Se

adril

l's ch

airm

an Jo

hn F

redr

ikse

n is

expe

cted t

o be o

ne o

f tho

se m

embe

rs. T

he re

main

ing c

onsid

erati

on w

ill b

e fun

ded

by

Sapu

raKe

ncan

a thr

ough

a m

ix o

f ext

erna

l bor

rowi

ngs,

a sell

er's

note

of u

p to U

S$ 1

87 m

illio

n, in

terna

lly ge

nera

ted fu

nds a

nd eq

uity

. Th

e MOU

furth

er st

ipul

ates t

hat t

he p

artie

s will

seek

to gr

ow th

eir jo

int v

entu

re ac

tiviti

es in

Br

azil

wher

e the

y wer

e awa

rded

3 P

LSV

cont

racts

by P

etrob

ras i

n 201

1. Th

e par

ties a

lso ag

ree t

o es

tablis

h a jo

int v

entu

re b

etwee

n Se

adril

l's 4

0 % ow

ned s

ubsid

iary A

rche

r Lim

ited

and

Sapu

raKe

ncan

a. Th

e sco

pe o

f suc

h ven

ture

will

be t

o foc

us o

n dev

elopi

ng an

d exp

andi

ng A

rche

r Li

mite

d's w

irelin

e ser

vice

s in

the F

ar E

ast A

sian m

arke

ts.

On N

ovem

ber 9

, we r

esol

ved t

o lau

nch a

n unc

ondi

tiona

l man

dato

ry o

ffer f

or al

l the

issu

ed an

d ou

tstan

ding

shar

es o

f Asia

Offs

hore

Dril

ling L

imite

d ("A

OD")

at a p

rice o

f NOK

28.7

1 per

AOD

sh

are.

The o

ffer p

erio

d in t

he M

anda

tory

Offe

r run

s fro

m an

d inc

ludi

ng N

ovem

ber 1

2 to 1

6:30

ho

urs (

CET)

on 1

0 Dec

embe

r 201

2, an

d may

be e

xten

ded b

y up t

o two

wee

ks. I

n th

e per

iod

betw

een O

ctobe

r 25 a

nd N

ovem

ber 9

, we h

ave a

cqui

red 6

85,5

58 sh

ares

in th

e com

pany

, co

rresp

ondi

ng to

1.71

% o

f the

total

num

ber o

f out

stand

ing s

hare

s.

63

Seadrill Limited Par-la-Ville Place

14 Par-la-Ville Road Hamilton HM 08

Bermuda

Nordea Markets Middelthunsgt. 17

P.O. Box 1166 Sentrum NO-0107 Oslo

Norway

Telephone: +47 22 48 50 00 Fax: +47 22 69 08 88

www.nordea.no

Pareto Securities AS Dronning Mauds gate 3

P.O. Box 1411 Vika NO-0115 Oslo

Norway

Telephone: +47 22 87 87 00 Fax: +47 22 87 87 10

www.paretosec.no

RS Platou Markets AS Haakon VII’s gt. 10 P.O. Box 1474 Vika

0116 Oslo Norway

Telephone: +47 22 01 63 00

Fax: +47 22 01 63 10 www.platou.com

Swedbank First Securities Filipstad Brygge 1

Postboks 1441 Vika 0115 Oslo Norway

Telephone: +47 23 23 80 00

Fax: +47 23 23 80 01 www.swedbank.no