Significant Steps Toward a Greater Focus Offshore 1

2006 ANNUAL REPORT Significant Steps Toward a Greater Focus Offshore 1 1 1 12 7 1 3 1 1 1 11 2 3 2 2 3 2 20 3 7 7 1 14 1 1 1 2 1 2 2 2 Drillship 4 (Dynamically Positioned)—2 Semisubmersible 1 5 (Dynamically Positioned)—5 104 1 Semisubmersible 47 (Moored)—7 Jackup Rig—28 Tender-Assisted Ri g— 3 Ba rge—3 Pla tform Rig— 10 Deepwater Drilling Management—5 Land Drilling Ri g—78 Land Workover Rig—136 Marine Fleet of 58 Rigs: Gulf of Mexico, U.S.: Land Fleet of 214 Rigs: West and South Africa: 12 jackup rigs Latin America: 206 rigs 2 deepwater drillships 7 platform rigs Chad: 5 rigs 1 deepwater semisubmersible Gulf of Mexico, Mexico: 2 midwater semisubmersibles Other: 3 rigs 11 jackup rigs 1 jackup rig 1 midwater semisubmersible 3 tender-assisted rigs 3 platform rigs 1 barge rig Mediterranean and the Middle East: South America: 1 deepwater semisubmersible 4 deepwater semisubmersibles 1 midwater semisubmersible 2 midwater semisubmersibles 2 jackup rigs 2 barge rigs India and Southeast Asia: 2 jackup rigs Pride International, Inc. se rves its customers in the world’s la rgest and most active exploration and produc tion areas, with a leading market prese nce in Latin America, W est A frica and the Gulf of Mex ico. Cover and this page: The semisubmersible Pride North America, capable of drilling in water depths of up to 7,500 feet, currently operates off the coast of Egypt in the Eastern Mediterranean. 2006 ANNUAL REPORT 1 Financial Highlights Year Ended December 31, 2006 2005 2004 2003 2002 (In millions, except per share amounts) Revenues $ 2,495.4 $ 2,033.3 $ 1, 712.2 $ 1,565.8 $ 1,180.0 Earnings from operations 544.9 325.2 249.0 218.4 147.7 Income (loss) from continuing operations 295.3 128.3 27.6 48.0 (19.1) Adjusted EBITD A(1) 791.8 556.8 491.1 474.2 354.6 Income (loss) from continuing operations per share: Basic 1.81 0.84 0.20 0.35 (0.15) Diluted 1.71 0.80 0.20 0.35 (0.15) Working capital 293.1 213.8 130.5 70.4 136.6 Property and equipment, net 4,000.1 3,181.7 3,281.8 3,463.3 3,492.3 Total assets 5,097.5 4,086.5 4,042.0 4,377.1 4,400.0 Long-term debt, net of current portion 1,294.7 1,187.3 1,685.9 1,805.1 1,873.9 Stockholders’ equity 2,633.9 2,259.4 1,716.3 1,688.7 1,677.1 (1) Adjusted EBITDA as defined consists of net income (loss) before interest expense (net), income taxes, depreciation and amortization, impairment charges, (gain) loss on sale of assets, refinancing charges, minority interest, pooling and merger costs, and (income) loss from discontinued operations. Please refer to “Reconciliation of Non-GAAP Financial Measures” on the last page of this Annual Report. Revenue s Earnings from Opera - Income (Loss) from Adjusted EBITD A (1) tion s Continuing Operations $2,500 $600 $300 $800 (mm) (mm) (mm) (mm) 2,000 480 240 640 1,500 360 180 480 1.000 240 120 320 500 120 60 160 0 0 0 0 02 03 04 05 06 02 03 04 05 06 02 03 04 05 06 02 03 04 05 06 2 PRIDE INTERNATIONAL P Letter to Shareholders . In 2006, we achieved record financial results while taking significant Louis A. Raspino President and Chief Executive Officer steps toward our strategic focus in the high specification offshore floater sector. he offshore contract drilling industry continued Financial Overview to experience strong business fundamentals Our accomplishments in 2006 were numerous and Tduring 2006, with resilient demand from our included record financial results, a strengthened finan - customers translating into unprecedented rig dayrates cial position, a strategic acquisition, progress toward the throughout most offshore drilling regions. In what many divestiture of non-strategic assets and exceptional safety believe is the best business environment in more than performance. Each of these accomplishments rep resents 30 years, worldwide exploration and production spend - meaningful strides toward our goal of becoming a pre - ing increased 26% in 2006, according to a recent survey mier, world-class offshore drilling company. conducted by Citigroup, following an estimated 19% The Company set a number of records in 2006 per - increase in 2005. Utilization of the industry’s drillships taining to financial results, including record revenues, and semisubmersibles (together referred to as floaters) income from continuing operations, cash flow from and jackup rigs reached 93% in 2006 compared to 90% operations and earnings per share. Revenues for the year in 2005. Crude oil and natural gas prices remained near totaled $2,495 million, a 23% increase compared to historically high levels during the year, supporting explo - revenues of $2,033 million in 2005. Income from con - ration and production drilling programs in established tinuing operations improved to $295 million, more regions such as the U.S. Gulf of Mexico, Brazil, the than twice the level reported in 2005, while earnings North Sea and West Africa, as well as several emerging per diluted share grew to $1.71, compared to $0.80 in regions, including the Eastern Mediterranean, the Black 2005. Cash flow from operations grew to $612 million, Sea, Pakistan and Eastern Canada. In addition, increased from $322 million in 2005. involvement by national oil companies such as Petrobras The strong financial performance was evident in each of Brazil, Oil and Natural Gas Company (ONGC) of of our business segments, but was most pronounced India and China National Offshore Oil Corporation in the Offshore business segment. In this segment, com - (CNOOC) has contributed to the burgeoning demand prising 42 mobile offshore drilling units and 16 tender- for offshore rigs, especially those with deepwater drilling assisted, barge and platform rigs, revenues totaled capabilities. The high level of drilling activity resulted in $1,589 million, up 27% from $1,256 million in 2005, exceptional contracting opportunities for our fleet of and reflected significant improvement in dayrates mobile offshore drilling rigs and allowed us to close the throughout our fleet. This was especially true for the year with a best-ever revenue backlog of approximately Company’s jackup rigs, which saw average daily revenue $5.8 billion, up from $2.8 billion at the end of 2005. for the year improve to $79,100, up 70% from $46,400 2006 ANNUAL REPORT 3 in 2005, despite weakening U.S. Gulf of Mexico jackup planning and execution, our out-of-service days are rig dayrates beginning in June 2006. Average daily rev - expected to decline to 1,100. These projects, which will enue for our midwater semisubmersibles improved to account for the majority of the $400 million in expected $102,500, up 23% from $83,400 in 2005. As customers capital expenditures in 2007, will help our fleet to meet further define their global exploration and development the increasing demands of our industry while reducing activity, rigs are being contracted at attractive dayrates the risk of operational downtime. By the close of 2007, for longer durations, placing a number of our high speci - over half of our mobile offshore drilling fleet will have fication floating rigs under contract beyond 2010. In undergone a special periodic survey and/or life enhance - November 2006, we announced contract awards from ment since the beginning of 2006. Therefore we expect BP and Petrobras totaling 23 rig years for five of our shipyard activity levels and capital expenditures in 2008 semisubmersibles, with possible aggregate revenues of to decrease significantly. approximately $2 billion over the contract period, In our Latin America Land business segment, which excluding revenues from performance bonus opportuni - spans six countries and includes 206 drilling and ties. The awards include a three-year contract extension workover rigs, revenues in 2006 improved to $608 mil - for the deepwater semisubmersible Pride North America lion, up 23% from 2005. The segment has experienced beginning in early 2008 at a dayrate of $443,000 for the a 15% compound average growth rate in revenues initial two years of the contract, compared to a current since 2003. Revenues per day for the land drilling and contract dayrate of $188,000. Also included are con - workover rig fleets improved to $15,300 and $6,100 in tracts for the deepwater semisubmersibles Pride Brazil 2006, compared to $12,600 and $4,900, respectively, and Pri2de Carlos Walter and midwater semisubmersibles in 2005. In Latin America, we possess a strong business Pride South Atlantic and Pride South America , all at franchise and significant infrastructure, and we have significantly improved contract dayrates. We expect to developed an understanding over the years of the needs secureOadditional long-term contracts, espDecially for our and plans of our customers, including major, independent deepwater floater fleet, as our customers obtain greater and state-owned petroleum companies. With the majority clarity in their drilling plans and move to secure addi - of the segment’s business in Argentina, Venezuela and tional rig availability for longer terms. Colombia, three Latin American countries with growing Our record financial performance in 2006 was energy needs, future business opportunities continue to achieved despite an active year for shipyard projects improve as these countries work to reverse declining representing approximately 1,700 days of out-of-service production profiles. Capacity requirements in these time. During the year, we commenced 13 projects for countries, as well as expanding needs in countries like special periodic surveys, life enhancements and mainte - Peru and Brazil, represent significant opportunities for nance, and completed ten of these projects involving revenue and margin growth in the future.

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