SEADRILL LIMITED (Organisation Number: 36832)

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

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”. ______

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.

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

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,

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 5

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,

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

 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. This 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 8

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 Seadrill’s business, operating results or financial condition. Future earnings may be negatively affected by compliance with any such new legislation or regulations.

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

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 equipment 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,

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

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.

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.

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.

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

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.

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

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.

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.

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 21

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.

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.

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.

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

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.

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: 100% (par value) Bond Reference Rate: 3 months NIBOR Margin: 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).

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.

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 Norwegian law been created: 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.

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,

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. Drilling Water depth depth Unit Year of delivery (feet) (feet) Customer

Jack-up rigs West Janus(1) 1984 328 21,000 Vietsovpetro

Drilling Water depth depth Unit Year of delivery (feet) (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

Drilling Water depth depth Unit Year of delivery (feet) (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 32

Drilling Water depth depth Unit Year of delivery (feet) (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:

Contractual Earliest Drilling Unit Contracted Location Customer Daily Rate 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 33

Contractual Earliest Drilling Unit Contracted Location Customer Daily Rate 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 185,000/ June 2013 Suez 155,000 West Cressida Thailand PTTEP 129,500 May 2014

West Mischief Republic of Congo Equion 172,000 October 2012/ ENI 175,000 November 2014

West Callisto Saudi Arabia Saudi 150,000 November 2015 Aramco West Leda Malaysia ExxonMobil 133,500/ April 2014 138,000 West Elara(2) Norway Statoil 366,000 March 2017

West Castor(3) Jurong Shipyard (Singapore) / Saudi Saudi 198,500 August 2016 Arabia Aramco West Telesto(3) Dalian Shipyard (China) / Saudi Arabia Saudi 185,000 April 2016 Aramco West Oberon(3) Dalian Shipyard (China) / Saudi Arabia Saudi 149,500 August 2013 Aramco West Tucana(3) Jurong Shipyard (Singapore) PVEP 160,000 April 2013

AOR-1 (3)(6) Keppel FELS Shipyard (Singapore) Saudi 180,000 June 2016 Aramco 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- 368,000 April 2019 Phillips

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/ March 2013/ 172,000 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/ May 2013/ 127,500 May 2017

Contractual Earliest Drilling Unit Contracted Location Customer Daily Rate Expiration Date

T12 Thailand Chevron 120,000 April 2014

West Vencedor Angola Chevron 210,000 March 2015

West Jaya Trinidad & Tobago BP 165,000/ August 2013/ 173,000 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 Hess 235,000 December 2014 Guinea T18(3) COSCO Shipyard (China) Chevron 127,000 March 2019

Semi- submersible rigs West Alpha(2) Norway ExxonMobil/ 482,000/ July 2014/ ExxonMobil 552,000 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 / July 2014/ 535,000 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/ May 2013/ 625,000 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/ December 2012/ 586,000 June 2014 West Polaris(4) Nigeria ExxonMobil 628,000/ January 2013/ 642,000 January 2018 West Capella Nigeria Total 552,000/ April 2014 627,500 April 2017 West Gemini Angola Total / TBN 447,000/ September 2013 640,000 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)

Contractual Earliest Drilling Unit Contracted Location Customer Daily Rate 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 Principal activities Percent Incorporation 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%

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 100% Alliance, West Berani, West Menang, West Pelaut, T-4, T-7, T-8, T-11 and T-12 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 0% Taurus

Contracting and management companies

North Atlantic Norway Ltd Bermuda Drilling services contracter 73% Seadrill Deepwater Contracting Bermuda Contracting Company 100% Ltd Seadrill Deepwater Crewing Ltd. Bermuda Crewing company 100% Seadrill Servicos de Petroleo Brazil Drilling services contractor 100% Ltda. Seadrill Management Services British Virgin Management company 100% Ltd. Islands Seadrill Asia Ltd. Hong Kong Drilling services contractor, holding 100% company North Atlantic Crew AS Norway Crewing Company 73% 37

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 Singapore Management company 100% Ltd 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 100% services company

Holding Companies Asia Offshore Drilling Ltd Bermuda Holding Company of Asia Offshore vessel 66% owning entities North Atlantic Drilling Ltd Bermuda Holding Company of North Atlantic 73% vessel owning entities 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 100% owning entities Seadrill Capricorn Holdings LLC Marshall Islands Holding Company of Seadrill Partners 88% vessel owning entities Seadrill OPCO Sub LLC Marshall Islands Holding Company of Seadrill Partners 93% vessel owning entities Seadrill Operating LP Marshall Islands Holding Company of Seadrill Partners 93% vessel owning entities Seadrill Partners LLC Marshall Islands Ultimate Holding Company of Seadrill 100% Partners vessel owning entities 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

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.

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.

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 13th Floor, One American Square, 17 Seadrill Management Ltd. Crosswall, London EC3N 2LB, United Kingdom

Per Wullf Chief Operating Officer and Executive 13th Floor, One American Square, 17 Vice President of Seadrill Management Crosswall, London EC3N 2LB, United Ltd. Kingdom

Robert Hingley-Wilson Chief Accounting Officer and Senior Vice 13th Floor, One American Square, 17 President of Seadrill Management Ltd. Crosswall, London EC3N 2LB, United Kingdom

Rune Magnus Lundetræ Chief Financial Officer and Senior Vice 13th Floor, One American Square, 17 President of Seadrill Management Ltd Crosswall, London EC3N 2LB, United Kingdom

Svend Anton Maier Senior Vice President, Africa and Middle- Arenco Building, 18th Floor, Sheik East 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

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.

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.

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.

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.

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:

December December Income statement December 31, 31 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 —

Three months Three months Nine months Nine months ended ended ended ended September September 30, September 30, September 30, Statements of Income 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 —

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:

December December December September Balance sheet 31, 31 31, 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

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)

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 Nine Month Period Ended Period Ended September 30 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

Nine Month Nine Month Period Ended Period Ended September 30 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)

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:

Accumulate d Contrib Other Retain Non- Additional uted Comprehens ed controlli Total Share Paid-in Surplu ive Earnin ng Equit Capital Capital s Income gs Interest y (in US$ millions) 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 (1,44 ) (17) 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

Contr Additiona ibute Accu Retaine Share l d mula d Capit Paid-in Surpl ted Earning Total al Capital us OCI s NCI Equity (in US$ millions) 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,

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;

 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.

9.2 Material contracts

The Company has not entered into any material contracts outside the ordinary course of its business.

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 Incorporated by website: prospectus: reference:

Annual report for 2010 Section 8 and 8.1 Annual Report 2010 http://www.seadrill.com/investor_rel ations/financial_reports

Annual report for 2011 Section 8 and 8.1 Annual Report 2011 http://www.seadrill.com/investor_rel ations/financial_reports

Q3 report 2012 Section 8 and 8.1 Third quarter report for http://www.seadrill.com/investor_rel 2012 ations/financial_reports

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

Appendix 1: Bond Agreement

A60 1

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

Appendix 2: By-laws

A61 16

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

Appendix 3: Third Quarter report for 2012

Page 2

in Seadrill Limited totaled million, million, operating income of

cent cent in the ultra-deepwater semi- illion illion to US$17,181 million mainly US$19,479 million, an increase of he nine months ended September he nine months ended September $3,133 million, operating income of

owing a successful IPO at unit price amounted to US$518 million, which tomillion, which US$518 amounted ed to the previous quarter. cash Net to the previous ed on, down from US$43 million in the om om debt. had vested and are exercisable. had are exercisable. vested and action for the offshore drilling industry et by paid dividends. paid dividends. et by Carina Carina and the second installment for debt debt increased from $10,010 million to illion illion to US$2,896 million largely due to

ing activities was US$325 million o US$989 million, primarily related to US$989 million, primarily o the the funds raised in the offering and 75.7

and cash equivalents. cash . SDLP raised through the offering US$207

associated companies is a US$53 million Limited. loss Archer from o ur 39.9 percent equity associate, Income taxes for the third quarter were US$39 quarter.previous milli Net income for the quarter was US$216 million repre senting basic earnings per share US$0.40. of The Company reports operating US$1,351 million revenues and a of net income of US$3,264 US$1,207 for t 30, 2012. This compares to operating revenues of US US$1,340 million and a net income of US$1,589 for t 30, 2011. Balance sheet As of September 30, 2012, total assets amounted to compared US$545 million to June 30, 2012. Total current assets increased from US$1,972 n millio to US$2,298 million over the course oftherelated quarterto an in increase primarily Total non-current assets increased from US$16,962 m due to payments for the first installment for West Saturn. West Total current liabilities increased from US$2,788 m an debt. in increase current portion of long-term Long-term interest bearing debt fromincreased ,376 US$8 million to US$9,296 million over the course of the quarter and net interest bearing US$10,354 million. Total equity decreased from US$6,715 million to 6,567 US$ million due offs 2012. mainly to The net income decrease is as of September 30, Cash flow cash As and 30, 2012, of cash equivalents September comparmillion to corresponds of increase US$242 an Outstanding shares As of September 30, 469,121,774for our adjusted ofholding tre asury shares. 129,159 In addition,had stock we 2012, the issued options for common 3.9 shares million shares 2.0 million approximately management, out of which outstanding under rious va share incentive programs for Seadrill Partners (SDLP) LLC On October 19 SDLP started trading on the NYSE foll of US$22.0. The listing of SDLP is a landmark trans as it is the first offshore drilling MLP in history million net of transaction fees. Seadrill received percent ownership in SDLP in return for selling ership own stakes in four units. offshore SDLP drilling owns an average of approximately 30 per 49 netcash forwhereas million in theused US$1,3 from was period operating activities t for investingamounted the same period activities for additions financ to newbuildings. used cash Net due fr mainly topayments net proceeds and dividend

Page 1

ement AS, Fredrik Halvorsen $590 million million $590 for the newbuild ultra-deepwater

ic Drilling Ltd. submits its initial US$216 US$216 million and earnings per rigs to SapuraKencana Petroleum Petroleum Bhd (SapuraCrest) and to recording an accounting gain of gular cash dividend of US$0.85 per ent ent quarter. Included in results from shore Drilling to 65.94% and submits

million e raising US$207 NYSE 2012. 2012. or an all-in cost of US$600 million million all-in cost of or an US$600 f US$158 million compared to a gain of of US$574 million US$574 million of )

deepwater semi-submersible for rig US Songa Eclipse deepwater semi-submersible registration statement to the SEC SEC the to statement registration mandatory offer for the remaining sharestheremaining mandatory offerfor seven jack-up rigs, of which five are newbuilds five jack-upareseven rigs, of newbuilds which semi-submersible rig West Mira for operations total revenue potential of US$1.2 billion offsh ore Canada, with an estimated appointed as the new CEO appointed the new as share and also resolves to distribute an d accelerate dividend of US$0.85 per share for thefourthquarter December 2012 2012, in Bhd. for a total consideration of US$2.9 billion for totalbillion Bhd. of a US$2.9 consideration share of US$0.40 A subsidiary of Seadrill signs a Letter of nt Agreeme (LOA) to acquire the ultra- Seadrill`s majority owned subsidiary, North Atlant Seadrill increases its ownership stake in Asia Off Seadrill secures contracts with an estimated ue reven potential of US$820 million for Seadrill secures a five-year commitment with Husky f ordered Seadrill ultra-deepwater drillship new a issued e Seadrill US$1 billion in 2017 unsecured notes du quarter generates Seadrill EBITDA* third 2012 Seadrill announces the potential sale of 18 tender th Partners units Seadrill common its LLC on lists Alf C.Thorkildsen resigns as CEO of Seadrill Manag Seadrill reports third quarter 2012 net income of Seadrill distributes an increased third quarter re

• • • • • • • Seadrill Limited (SDRL) - Thirdmonths 2012 results quarter and nine Highlights • Subsequent events • *) EBITDA is defined as earnings before interest, d epreciation and amortization and amortization.equal to operating fitpro plus depreciation Condensed consolidated income statements Third months quarter and results 2012 nine Consolidated revenues for the in quarterthemillion compared second to US$1,122 third quarter of 2012 amounted to US$1,092 Operating profit for million the quarter was US$413 million quarter.preceding compared to US$483 million in the Net financial items for the quarter showed a loss o US$114 million in the previous quarter, due US$253 largely million related to the merger of SapuraCrest Kencana Petroleum Bhd derivatives (Kencana) and foreign in exchange losses in second the curr quarter 2 012, as well as gains on • • • •

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13 Page 4 Jul 2016 Jul 2017 Aug 2016 Dec 2020 Jun 2016 Aug 2015 Feb 2017 Apr 2014 Jun 2020 Oct 2021 Jan 2017 Mar 2019 Mar 2013 Jan 2013 Jun 2014 Nov 2013 Oct expiry Contract

Aug 2012 2012 Aug 2012 Jul 2013 Jan 2015 Jun 2011 Aug 2009 Feb 2009 Apr 2009 Jan 2013 Jun 2013 Sep 2012 Mar 2014 Apr 2012 Jan 2009 Jun 2012 Apr 2012 Oct Sep 2010 2010 Sep 2017 Sep 2012 Oct 20 15 Oct Jul 2009 Jul 2015 Jul 2012 Jan 2015 Jan 2010 Aug 2015 Jul 2010 Dec 2014 Dec Contract start Contract Jul 2008 Jul 2019 Jul Jan 2 013 Jan 2015 Jun 2012 Apr 2010 Jul 2016 May 2016 Jul 2011 Nov 2018 Jan 2012 Aug 2009 May 2016 May 20 Nov 2012 Jan 2012 Dec

cluding rig moves our economic f 83 percent in the third quarter economic 88 utilization was percent due to items reported in our second onomic utilization for the quarter was

Norway Norway USA to Norway In transit Shipyard Hyundai – Korea South Mexico Shipyard Jurong – Singapore Brazil Nigeria Norway Shipyard Samsung – Korea South Shipyard Samsung – Korea South Shipyard Samsung – Korea South Shipyard Samsung – Korea South Norway Shipyard Jurong – Singapore Malaysia Kuwait / Arabia Saudi Congo of Republic to transit In Malaysia Angola Angola Kuwait / Arabia Saudi UK UK Norway USA USA Shipyard Samsung – Korea South South Korea – Samsung Shipyard Samsung – Korea South Brunei Kuwait / Arabia Saudi

Shipyard Samsung – Korea South

KJO KJO Total Total ExxonMobil ExxonMobil BP Statoil Husky PEMEX Petrobras Total Shell BP BP Statoil ConocoPhillips Shell KJO/GDF Suez Equion/ENI Talisman Current client client Current location of Area BP BP ExxonMobil ExxonMobil Canada to transit In Oil Tullow Petrobras Ghana Brazil ExxonMobil Nigeria KJO Vietsovpetro Vietnam

rigs Semi-submersible ** West Alpha Capricorn West West Hercules West (NB*) Mira West Pegasus West Rigel (NB*)** West Taurus Capella West ** West Navigator West(NB*) Auriga West (NB*) Vela WestJupiter (NB*) West Carina (NB*) ** West Elara WestLinus (NB*) ** West Courageous Freedom West West Mischief West Vigilant Unit Unit West Sirius Sirius West (NB*) Saturn West HE Jack-up rigs rigs Jack-up HE West Aquarius Aquarius West Eminence West Leo West Petrobras Orion West ** Brazil Phoenix West Total ** Venture West Drillships Statoil West Gemini Polaris West Norway (NB*) Tellus West (NB*) West Neptune ** West Epsilon rigs Jack-up BE Statoil Defender West Intrepid West Shell Resolute West Ariel West main reason behind the decrease in utilization was quarter report, thedowntime 90 on days three -deepwater ultra rigs and Westmoves forrig WestAquarius and rigHercules. Excluding moves our units drilling offshore status Contract 1.0 Table for the quarter.for the Our jack-up rigs averaged an economic utilization o compared to 79 percent in the preceding quarter. Ec hampered by rig moves taking longer than d anticipate and the West Vigilant operation not starting before towards the end of the quarter. Ex utilization quarter.94 for utilization percent was the The tender rigs average economic utilization remain ed high at 98 percent in quarter. the compared the percentsecond to 97 in quarter,

Page 3

cher Limited (Archer) and West Africa, Middle East and urther urther rigs in operation and 3 n 2011. The shared project is h a vehicle will be to focus on ect ect to customary due diligence ender rig businesses provides a ed to SDLP. SDLP. to ed gh a mix of external borrowings, the ultra-deepwater drillship West full tender rig organization for an e rigs already owned jointly with 's shareholders to enhance their s to the SapuraKencana Board of udes US$363 million in remaining source of funds and lower Seadrill’s the debt in the tender rig business, in the Asian markets. markets. Asian the in Varia Perdana). igs) the economic utilization rate in the in Brazil. Furthermore, a shared project y Seadrill rig with a contract length that is is that length contract a with rig Seadrill y DLP DLP has the option to acquire the tender rom our tender rig as organization well as currently currently actively involved in a new tender process Directors (including one alternate). Seadrill’s chairman John Fredriksen is expected to be one of thosemembers. Both seekparties towill theirgro w shared in activities Brazil where we were awarded three PLSV contracts by Petrobras i between Seadrill’s SapuraKencana 39.9 will be percent established. The scope owned of suc subsidiary Ar which which is expected to be approximately US$800 n millio as of December 31, 2012, US$187 million in a sellers note, and US$350 million increase in our ne w shareholding shares from in 6.4 percent SapuraKencana to that appro ximately will 13 percent.consideration The will remaining be funded by SapuraKencana generated internally funds, equity. and throu One of the main objectives of the transaction is to develop a strong leading player Asian in the oil services market Seadrill will and have strengthen the right the to nominate co-ope ration two between member the companies. services Archer’s and wireline developing expanding SapuraKencana through VariaPerdana, as well newbuilds currently as under construction. 10 The ntagreeme f does not include been T16,have committ the T15 which West and Vencedor, tender rigs capital expenditures for the newbuild program, all Closing of the transaction is subject to f approval five Southeast by tender Asia (including owned rigs For our floaters (drillships and semi-submersible r submersible rigs West Aquarius and West Capricorn, West rig Capella, and the semi-tender Vencedor. has SDLP the right offirst refusal on acquiring an greater than or equal to five years. In addition, S rigs T15 and T16. SDLP could provide an additional cost of capital as MLP investors place a closing premium unit price on of cash US$26.58 flow as stability. of Based November on gross represented of US$831 million. value a 23, the 2 012 our ownership stake in SDLP Tender salerig to SapuraKencana Petroleum Bhd (Sap uraKencana) In November, we entered into a non-binding tagreemen regarding the rigs sale of to 18 tender SapuraKencana. The transaction includes fiv Operations Offshore units drilling Seadrill had 48 offshore drilling units Europe, in US operatio n during Gulf the of third Mexico, quarter in Mexico, Northern South Americas, SapuraKencana will acquire the rigs as enterprise well value as of the US$2.9 billion. The amount incl from our customers. The procedures, transaction closing is adjustments, further parties regulatory on the terms subj ls, approva of the sale and and purchase ment agree and other documents. agreement ancillary transaction between the The combination of SapuraKencana's and Seadrill's t position as part of a highly diversified and gleadin offshore services provider globally with tion growth crea multiple potential. and value opportunities strong third quarter averaged 82 percent compared to 88 pe rcent in the second quarter. The strategic platform for SapuraKencana's and Seadrill

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Page 6 had a gross value of US$132 . n operating results have been been made during the last nine pectations of future results. In ation ation on AOD, please see their econd quarter. Contribution from s in the Malaysia - Thailand Joint integrated Malaysian oil service Petronas Carigali. T9 operated for currently own 319,540,802 shares of the cylindrical Sevan design in associated companies under other . However, during the fourth quarter buted US$2 million to net income contributed US$12 million to our third um of the part analysis and remains y y guidance for the third quarter 2012 ed on Oslo Stock Exchange. Sevan

iated companies under other financial Stock Exchange that has three jack-up e price of NOK28.71. The offer periods similar design under construction, with ncome compared to US$0 million in the o evaluate it compared to alternatives to , the tender rig T3 worked for PTTEP in will will basis difference. . www.aodrilling.com www.sevandrilling.com Development Development Area while the Teknik Berkat worked for Thailand and T10 worked for Chevron in Thailand. Th e tender (Carigali PTTEP rig Operating T6 Company) and worked Carigali forHes CPOC Petronas Carigali offshore Malaysia. Varia Perdana quarter earnings compared to US$10 Varia million Perdana in is the reported s as part financial items. of investment in SapuraKencana Bhd.(“SapuraKencana”) Petroleum As reported we have entered into a non-binding agre ement to sale tender the large part rig of our fleet to provider listed SapuraKencana, on the Malaysian which Stock Exchange. We is a fully operational performance. The negative reduced and development the i Board feels that months. good progress has We note from Archer’s publicly available preliminar released November 25, 2012, that Archer during has made the an impairment third of accordance its quarter with own assets US 2012 GAAP we to US$51 have million in impairment during this quarter, presentingre our share of this reduction aligned reflectin our lowered g carryin values ex aftergoodvalue taking account into our historical appropriately, taking The Board of Seadrill sees significant value time. over return in a satisfactory provide confidentthewill thatinvestment Archer a s (“AOD”) Ltd Drilling Offshore Asia AOD is an offshore drilling company listed on Oslo rigs under construction at Keppel FELS Seadrill had in a 33.75 percent ownership . Singapore stake in AOD At the end we of have through acquisition the of 26,376,416 shares thirdin the secondary market quarter, increased our ownership to 65.94 percent. As a result, on r Novembe 9, 2012, we launched a mandatory offer for all the remaining shares in AOD at a shar ends on December 10, 2012. Our shareholding million in based AOD on the closing contributed US$0 share million to our third price quarter net i of 0 NOK28.6 second on quarter. Contribution November from AOD is 23, reported u nder 2012. other financial items AOD as partinvestment of in associated companies. For quarterly separate on report published more inform Sevan Drilling ASA (“Sevan Drilling”) Sevan Drilling is an offshore drilling company list Perdana”) Varia Perdana Bhd.(“Varia We have a 49 percent ownership interest in Varia rdana, Pe which owns and operates five self-erecting tender rigs. During the third quarter Drilling Drilling owns and operates two Brazil. Sevan ultra-deepwater Drilling has two further rig newbuilds of delivery scheduled for fourth quarter 2013 and nd seco quarter 2014. Seadrill has percent a ownership 28.5 stake in Sevan Drilling, represen ting a gross million market based on thevalue closing of share price on US$63 r Novembe 23, 2012. Contribution from Sevan Drilling is reported as part of investment in items. assoc For the third compared to quarter, a loss Sevan of Drilling US$1 million Sevan Drilling as contri in opportunistic and will continue the t second qu arter. We view further grow the Seadrill. For more investment information on n Seva Drilling, in see their separate quarterly report published on

2019 2018 Page 5 Nov 2015 Nov 2012 Dec 2012 Dec 2016 Aug 2016 April 2016 Jun 2013 Jun 2017 May 2018 Apr 2018 May 2015 Jan 2014 Sep 2014 Sep 2014 Aug

. expiry Contract

Nov 2012 Nov 2012 Jul 2012 Jan 2013 Aug 2013 Apr 2013 Jun 2008 Jul 2008 May 2013 Apr 2013 May 2010 Jan 2011 Nov 2011 Aug 2012 Aug Mar 2010 Mar 2015 Mar Contract start Contract Apr 2012 2012 Apr 2015 Mar Nov 2010 Nov 2012 Mar 2014 May 2012 Aug 2014 Apr 2015 Aug 2011 Nov 2011 Apr 2013 Mar 2014 Apr 2012 Apr 2013 Apr e contracts commence. In ed and mobilization costs are www.archerwell.com ove ove control and strengthen the ELS ELS 2013 Jul 2014 Dec financial performance of Archer since nancial items nancial in part as of investment listed on the Oslo Stock Exchange. WeExchange. listed the Stock Oslo on percent of the outstanding shares. shares. the outstanding of percent quarter net income, based on publicly quarteron based publicly net income, total total approximately US$135 million has or the unit, a transaction currently expected to be be to expected currently transaction a unit, the

In transit to Saudi Arabia Arabia Saudi to transit In Vietnam Vietnam Shipyard Dalian – China FELS Keppel - Singapore FELS Keppel - Singapore Thailand Thailand Shipyard COSCO – China Shipyard COSCO – China Malaysia Tobago & Trinidad Malaysia Angola Brunei Brunei Singapore – Jurong Shipyard Shipyard Jurong – Singapore Saudi Arabia / Kuwait Kuwait / Arabia Saudi

FELS Keppel - Singapore Total Total Vietsovpetro Vietsovpetro Aramco Saudi Aramco Saudi Aramco Saudi Chevron Chevron Chevron PTTEP Shell BP Murphy Chevron Current client client Current location of Area PTTEP PTTEP ExxonMobil Thailand Malaysia KJO PVEP Premier Shipyard Jurong – Singapore Shipyard Dalian – China 2013 Jan 2013 Apr 2013 April Chevron Chevron 2013 Aug Thailand Chevron Thailand Chevron Shipyard COSCO – China Chevron Shipyard COSCO – China 2013 Jun Indonesia 2014 Mar Shell Jun Mar completed during the first quarter 2013. 2013. quarter first the during completed Tender rigs rigs Tender Unit Unit West Callisto WestJanus*** West Prospero (NB*) West Castor (NB*) West Telesto AOR-1 (NB*)**** AOR-3 (NB*)**** T4 T11 T15 (NB*) T17 (NB*) Alliance West WestJaya Menang West West Setia

West Cressida Cressida West Leda West Triton West (NB*) Tucana West West (NB*) Oberon (NB*)**** AOR-2 T7 T12 (NB*) T16 (NB*) T18 Berani West (NB*) Esperanza West Hess Amerada F Keppel - Singapore Pelaut West Vencedor West Chevron Angola *** *** sell to agreement an into entered has Seadrill During the third quarter we had in total two floate rs and seven jack-ups in transit between contracts for the whole or part of the quarter. In will be received accordance with as US GAAP mobilization mobilization future over deferred periods. recognized and revenue payments receiv when thes companies associated in Operations Archer Limited (“Archer”) companyArcher oilfield is an service international of US$178 million represe nting146,238,446 gross value shares a own in currently Archer, mber Our Nove Archer 23, position 2012. based of theNOK6.95 closing share on price on tomillion contributed our third of a US$53.3 loss in quarter. preliminary information,tothe secondmillion available compared US$3 fi Contribution from is reported under other Archer report,refertotheir quarterly more r we information on associatedArche For companies. be on released and will which November 28 published on The Board is disappointed with the operational and 2010. Certain actions have been implemented to impr * ** assignment. drilling first its to mobilization in or construction under Newbuild shares. outstanding the of p ercent 73 own we which in NADL subsidiary our by Owned **** 66 own we which in AOD subsidiary our by Owned

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Page 8 $650,000 $650,000 range, depending on y y to capitalize on the continued production targets and maintain when when the age and specifications of how how strength with extremely limited growth and selective acquisition. growth and selective ation ation equipment operated by highly f of Mexico it is estimated that more ent ent fixture of a five-year term for the reserves and develop previous finds er er loadpath capacities and we expect opportunities in both the benign and keep pace with production declines in ses of the past few years to similarly newbuild 1250 ton units in 2013 and ith solid long-term coverage and no other he increased spend in this area. We have

development within the development within industry. ft Ultra-deepwater(>7,500 floaters water) The ultra-deepwater market shows demand in continued Africa and the strengthGulf of Mexico. In driven the Gul primarily than 50% of reserves are in water depths greater th an 5000 ft and as a result designs well by increasing involve more technically demanding well constructio n techniques. both drive the demand These towards newer rigs with great characteristics this trend to put further pressure on the supply 2014. of Contracting and tendering activity for modern ultra -deepwater solid units pace has continued with at a daily rates in the US$550,000 to US in in order to meet ever increasing global demand and maturefields. History has demonstrated incremental rigdue todemand the number n eeded ofto wells a delineate theseand develop clear correlation finds. We with expect the significant e xploration exploration succes success translate followed into by increased rig development demand drilling as projects oil in s’ companie reserve ratios. replacement an work attempt to to clear meet the backlog of The trend towards increasingly complex and demanding wells continues to benefit drilling contractors who can provide access to high specific competent crews and we remain bullish on our abilit location and contract duration. Seadrill, with nine construction, is well positioned ultra-deepwater to capitalize on t newbuild units under contracted three of our nine newbuilds and are already receiving interest from customers regarding units available in 2014 and 2015. Our rec West Mira which will be delivered in early 2015, dicates in willing to secure modernhigh gspecification drillin units well in advance of thatdelivery in order oil & gas companies are to gain the benefits that these plans. assets can bring to their exploration and development The harsh environment floater market continues to s capacity available in 2014 and 2015, and even less units are considered. We are for contracts newbuildings. our open very confident that we will be able to secure attractive Seadrill have been the most aggressive player in th e newbuilding market since 2010. We continue to see this as a unique opportunity as lows , long-term rates g lon is close to historic highs as, w yard prices remains at historic The market fundamentals in the offshore drilling dustry in remain classes strong as oil companies across continue to all search for new asset aggressively. acts competitor We will continue to seek out additional investment harsh environment deepwater through harshsectors organic deepwater environment The target is to financialimproper risk. or operational aggressively continue to build drills Sea modern fleet without water)ft (>350 Premium rigs jack-up taking development Market

Page 7 ions ions offshore Canada and and US$180,000, respectively. ld ld program includes seven ultra- ges to daily rates and duration Talisman for operations offshore and contract durations including ly ly rate of US$590,000 excluding 5 sung shipyard in South Korea. The og as of November 23, 2012, is ersible ersible rigs, one harsh-environment commitments commitments with a total estimated up rigs, one semi-tender rig, and four had a gross value of US$298 million months at a ratedaily of US$149,500 ruction is from the fourth quarter 2012 iveries iveries in 2013 and 2014. The total please please see Note 9 and Note 18 to our Republic Republic of Congo at an agreed daily the following new followingcommitments: the new ards in pre-delivery installments.ards in pre-delivery er six drillships we currently have under uarter uarter 2014. ll be outfitted with a second 6-ram BOP at sapurakencana.com.

Greenland. The five-year contract has an agreed dai percent in bonus potential. In addition, the rig wi cost to Seadrill. rigsreceived jack-up For have in operation we our West Vigilant has secured a Malaysia at one-year an agreed contract daily rate with of US$146,000, and the two-year contractWest from Mischief ENI for has operations received offshore a Premier Oil hasWest contracted the forOberon four For further information on our newbuilding program based on a closing share price of SapuraKencana MYR2.85 is treated as on marketable security erand Novemb is marked-to-market 23, with no equity 2012. Our ownership pick-up. in For more information on on published www. SapuraKencana, see their separate quarterly report billion. US$21.3 approximately In November 2012, we received a deepwater Letter of Award semi-submersible fro m Husky for rig the newbuild ultra- West Mira for operat rate of US$175,000. thecontracts:following re have ceived new rigs jack-up Forwe under construction, our West Castor, West Telesto, and AOR-1 have secured a three-year Aramco contracts with Saudi with a daily rate of US$198,500, US$185,000 for operations offshore rate 160,000.at US$ daily agreed an of employment PVEP with Vietnam, and the West Tucana has secured three-month to the first quarter 2015, remaining yard installments with for our newbuilds are a pproximately the US$5.9 billion, excluding majority of to they AOD.billion In total has paid US$1.6 been del financial statements. equivalent equivalent to a 6.4 percent ownership stake, which New contracts and contract extensions Subsequent to the filing of our following second new quarter contracts 2012 and received report, the we following have revenue entered potential into the of US$2 billion: Total orderbackl For more detailed information escalation, regarding currency daily adjustment rates or profiles, other minor see chan www.seadrill.com our fleet status Newbuilding program report or In September, we ordered a news new drillship at the Sam relea ses drillship will be of equal specification on as the oth construction at the same yard. The expected total p roject the price is estimated to be US$600 our foris scheduled fourthq million, and the delivery website We now have 22 units under construction. The deepwater newbui drillships, two ultra-deepwater semi-subm jack-up rig, seven premium benign environment jack- tender rigs. The new building program rding progress acco to schedule with respect to cost with only minor delays for some of the jack-ups. In total 12 of the 22 been already long-term contracts. chartered out on new buildings have The delivery schedule for the newbuilds under const

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Page 10 evaluates evaluates the prospects of these ssued unsecured bond, which is port Credit Agencies (ECA) for port (ECA) our Credit Agencies un-tapped. The bond was heavily S$1.7 billion and demonstrate billion S$1.7 ed to increase the regular quarterly o new contracts with a total revenue the time we reportforthquarter thetime we our ed next year. The average contract is is 49 months for our ultra-deepwater t is the first U.S. bond issued by the the third quarter results evaluated the which will be available in 2015. The n these investments is approximately n the SapuraKencana transaction. The transaction. n the SapuraKencana apuraKencana. forExcept our strategic all all our future jack-up capacity has been onal equity. These predictions excludes These onal equity. predictions excludes log from US$19.9 billion to a record high encing that both daily rates and duration en achieved with financing respect en with to achieved of nder rigs have secured employment, and Seadrill PartnersOctoberSeadrill in creates while we in 2014 have open positions for tra-deepwater fleet we still have the West long-term for the Company. long-term current dividend level and prospects and has resolv investments in Archer and SapuraKencana, the Board investments basis. continuous a on At current market prices, the total cash US$670 million. invested i Quarterly Cash Dividend The Board has in connection with the disclosure of Revenue backlog We have since our second quarter report entered int Investments Other Significant We hold various ownership companies. Our portfolio includes a 39.9 positions percent ho lding in Archer Limited, a 28.5 percent in other listed in Sevan Drilling ASA, and 6.4 percent holding in S offshore drillers and oil service potential of US$2 increasing billion, our orderback November as23, 2012. of of billion US$21.3 Our orderbacklog provides commitment for future visibility our for dividend future capacity. For our earnings ul as well as generating length for our jack-ups is 22 months. All of our te the average contract length is employees who 25 have been involved months. in securing this The o rderbacklog for Board a very professional and solid job. wants to give credit to all the flexibility Financial Substantial progress has been made on Seadrill fina ncing September during we the recent raised quarter. US$1.0 In billion through unrated and bears a interest of 5.625 U.S. percent per ann um i and matures in September 2017. This marks a landmark transaction for Seadrill as i Company, which opens up a new avenue for the toCompany raise futuredebtfinancing in a market with substantial size oversubscribed and that have traded well was in the previously after ma rket demonstrating the creditthemarket. Seadrill in has strength that and from banks Ex firm Wecommitments received have to December from in the2012 d delivery thatDecember newbuilds perio scheduled have to received totalsome U 2013. The date commitments progress financialalso results.be has Substantial theforin 2014 that The the and Boardconfident all 2015. delivery is newbuildings financed newbuilidngs canwithout raising additi be touse i of the proceed released of expected any be in thefinancial flexibility significant short and Tellus available at a very attractive slot in 2013, all of our ultra-deepwater rigs and the West Rigel, firmed up through recent contracting activity, evid are increasing in the premium contract, jack-up both of segment. which We are newbuilds n ow to have be only deliver two rigs without fromfinancial rt Seadrill´s continuing relationshipleading institutions. strong suppo and to by received are expected Furtherbe commitments thesuccessful bond together with issue listing of average contract duration, including our newbuilds fleet. With regards to our shallow water capacity, nearly

Page 9 ng interest in newer higher high specification jack-ups to our strategy with the ordering a n fleet of highly advanced drilling tions of modern assets. We are fleets units and gain efficiency and ket with fixtures in the region of ract durations. Jack-up utilizations average average more than 2 jack-ups have pproximately pproximately US$1.6 billion of the could could also drive further acquisition development economics with clear from customers and recognize the ition ition of the Songa Eclipse, which is a ince mid 2011. ince number of rigs will have reached 35 22 newbuilds under construction at a est est in our remaining available jack-up including West Africa and Australia / US$590 million. The purchase of the during the past 5 years, almost 70% of ig due to more technically demanding s old. While approximately 90 units are wells wells being drilled are deeper and more Our customers are demonstrating a clear being delivered between 2012 and 2015 this rig. with with the majority of deliveries been paid. project costs already have in 2013 and 2014. A rates have remained above 90% since early 2011, on preference towards jack-ups that are improve worker safety and drilling younger efficiency. The in age with complex, on average, which enhanced also requires the sed increa capabilities capacity that higher specification that units provide. With fewer wells being drilled per programs r we expect the continue. current demand strength for Despite the addition of 90 premium class jack-ups, the currently contracted fleet is more than 30 year market as having further room provide advantages for in fixed growth platform, TLP, and and spar pment. develo enhancements over the standard platform-drilling pa ckage Tender plus the ability to work in water rigs continue to ft. depths to 6500 up total all-in cost of US$7.5 billion, excluding AOD, The The demand for premium jack-ups continues to streng then as evidenced by simultaneous increases in contract lead times, dayrates and cont Corporate strategy, anddividend outlook Investments Growth and We have in-line with our strategy developed a moder been reactivated, scrapped or converted per month been or converted s reactivated, scrapped Demand for high specification jack-ups continues to be Middle driven primarily in East Asia and the but specification more units from customers in recently other markets we New Zealand have as oil companies seek to seen replace aging increasi safety benefits of and newer more efficient units. currently under construction, almost international market and at a the same time, an equal third of the se will not fleet planned newbuilds and expect toour currently absorbed be intoeffectively the market enter the competitive at rates durations. attractive and In line with what we demand outstripping have supply at communicatedleast into 2013 in and e xpect the the positive jack-up recen t market development to in quartersshow a the we quarters continue to players. newbuild among activity the speculative come. to This see rigsTender We see a continued interest in our tender rig fleet units through newbuild orders currently and in selective a acquisi strong US$600,000 per cycle day and for have proceeded according ultra-deepwater to mar seventh drillship at Samsung and the pending acquis 2011 built ultra-deepwater semi-submersible rig for Songa Eclipse through a subsidiary is expected to b e finalized mid-December 2012. finance attractive several received offers to have We The transfer of most of our solution to ensure tender that the tender rig rigs division con tinues to grow. to The cash released in ncana SapuraKe the is transaction an will enable us to invest further attractive in b oth the ultra-deepwater and premium operational jack- up segments. Our current investment increase program our dividend will capacity. We en able currently have us to grow future earnings years years of age by the end of 2014. We see solid inter

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esident enior Vice President enior Vice President xii) xii) and other important factors rcules and West rcules to new and Aquarius ions; ions; (v) changes in economical occurred in the third quarter. Thisoccurred quarter. in the third AS represented by: AS represented by: Company is positioned, and the is Company positioned, and mance so far in the fourth quarter,far the fourth mance so in expect solid expect operating solid results and and some of the time will be be will time the of some and ained ained in this report are the following: (i) th the United States Security Exchange ii) changes of the spending plan of our approximately 346 days for Westfor 346 approximately days our fourth quarter results our 2012 and formaceThisthethird quarter. in is view, could cause actual results to differ oaters, which to a large degree was to was degree large oaters, which a eadrill eadrill to obtain financing for the newbuilds

or existing assets on favorable terms or at all; (v customers; (viii) changes in insurance; Seadrill’s operating (x) e xpenses dry-docking; including (xi) comply crew repairs wages; with and (ix) nance; mainte delivery (xii) schedules failure on of a shipyards timely to (“SEC”) Stock Exchange. the Oslo Commission and basis; ( November 26, 2012 Directors of Board The LimitedSeadrill Hamilton, Bermuda Management to Questions directed should Seadrill be Fredrik Halvorsen: Rune Magnus Lundetræ: Chief Officer S Financial and Officer Chief Pr Executive and conditions or political events; (vi) inability of S mentioned from time to time in our reports filed wi This report contains forward-looking statements. Th ese statements are based on various assumptions, many of which are ratingtrends. ofmanagement’s Seadrill ope examination historical based, in turn, upon further Including among assumptions, others, factors that, in Seadrill’s including materially from the forward looking statements cont the competitive nature of technological developments; the (iv) offshore government drilling regulat ustry; ind (ii) oil and gas prices; (iii) high dividend payment in the years to highthe paymentyears come. in dividend r newbuildings commence roperation commence results furthe expects as improvements continued newbuildings in in the – 2013 2015. period the confident The the way remains very Board about opportunities The ahead shareholders of should us. The Board is not satisfied with the with The per operational Boardnot satisfied is linkedfl ofmainly for to the 90 our off-hire days further The failures equ results the are on ipment. created subsea manufacturing by West He decision to move weakened thecommercial by classification tofive-year go through opportunity this use time same the at and markets, Total work. time drilling between to be is expected West 164 Hercules have days and Aquarius, of which The compensated the perfor operator. operational by theeriencedthird quarter, still being while the in is exp by trending issues impacted subsea fourthfleetquarterforfar op erating thein the back Downtime so to normal. deepwater and West commenced pro 41 has Alpha longed toyard its stay 2012 days. is estimated be Theanticipates a Thirteenoccurred was in OctoberOctober. of zero Board rate days 19. significantin the operating results improvement in Forward-Looking Statements time includes transit, upgrade work and timedrydocking, transit, and upgrade work includes

Page 11 t Seadrill’s improved financial share. The ex. Dividend date has is is also set to US$0.85. The total he dividend payment for the fourth er to move from Stavanger to to Stavanger from move to er resigned as Chief Executive Officer resignedExecutive Chief as igns of improving with increasing increasing with improving of igns avanger to London. This relocation avanger to London. is opportunities for our employees. Thefor employees. opportunities our hip stake in AOD. We the believe hip stake in AOD. eserving Seadrill’s dynamic dynamic Seadrill’s eserving sive growth through investments in growth through sive investments under construction. We already have under construction. the to improve ways onitoring shareholders. The Board is pleased The is Board pleased shareholders. shareholder base may be subject to ogether with the third quarter dividend. in the short-term, general in and the short-term, or growing the Company further. growing the SDLP Company or the Company does not harm the not does the Company regional competence centers to close regional centers competence ial fleet, sale ial of tender will rig our we pecially as to pecially of the close percent 70 t such an organization will be t suchable to organization an used to support used to either support investments, rocess through which the company was the company rocess was through which acts. In October, we increased our October,increased acts. we In s based on the existing asset and the s asset based and existing on f costs during the management costs themanagement transition during f ety record get cost increased and ety to limit the size of the corporate corporate the of size the limit to with the establishment of SDLP as a future source f source future a as SDLP of establishment the with The AS and his of had responsibilities. Fredrik Halvorsen assumed Management Seadrill managethe sure and that Board will the is utmost he in confidence has Mr.Halvorsen throughThemade the the growth successfully pha se. also Company has current Board from ManagementSt decision torelocate AS Seadrill dividend dividend payment due will therefore be US$1,70 per been set to December 4, 2012, record date is er Decemb 6, 2012, and payment date is on or about December 21, 2012. dividend payment, no In additional dividend payment ca n be expected view prior to declaration of of the first a in quarter2013. dividend accelera tion of the fourth quarter 2012 Near-term prospects unitstotals Our 22 now current investment program rates daily the recent and duration contr in longer owners investmentthis increasing by our in segment continuefurther, market jack-upto improve es will fleetjack-up thanworldwide older years is 25 Our payout dividend and a strategy aggres with high our modern returns to assets delivered has superior as the lowering the lerated paceat an canCompany well togrow a acce as act as vehicle The for current of capital Seadrill. see cost Board goodforgrowingin contracttob e the thefastest one MLPs of portfolio opportunities SDLP fivenext three years.to ThorkildsenOctober had that We in Alf announced C expected time. to reap cost benefits However, over entreprenurial making direct spirit and p decision targetsOnebuilt.thetherelocationmain of of is in the ngthen theexcellence and organization and to build continueinstead stre operational We in building regional offices.much believe very The thetha Board anticipates operating activities. stimulate control, tighter have rvice, worka our customers,better se better with provide operational leadership offer more work and dynamic ership own thetender structure rigs of the new development SDLP, of and NADL, Seabras, this The exemplifies m Boardcontinuously model. is flexibility flexibility and the current strong market as ced eviden by noticed recent fixtures. thatThe Board a has significant part increased dividend of taxation for Seadrill’s 2013, U.S. pending certain view changes in of the this, U.S. the tax Board code. In has quarter 2012 decided such that a dividend can be paid to out t accelerate t This advanced dividend for the fourth quarter 2012 Withfor of these rigs. secured 14 contracts potent distributed funds futoestimatedof as receive These nds billion. be US$1.2 are not likely but extraordinary more to be dividends, likely are segment. rig jack-up premium or ter or in through either M&A the ultra-deepwa newbuilds s strong segment The rig jack-up is premium showing increase cost administrative related to one-of will off accepted process.an management have senior All 2013.London during early pr move as thisThe important sees step in Boardan thatof and organization the size increased ensure thesaf operationalfurther strengthen efficiency,, future. the in segmentation furthe corporate r might include efficiency.opportunities Such dividend dividend by US$0.01 to US$0.85. The increase reflec

A 44

- 4 0 74 23 69 17 62 60 (6) 423 146 540 416 397 (32) 3.36 3.21 2.26 2011 (221) (379) (148) 3,055 3,133 1,178 1,816 1,340 1,737 1,589 1,529

1 0 0 3 95 88 14 15 85 78 (5) 452 166 169 (51) (20) 2.41 2.36 2.51 1.00 2012 (249) (124) 3,168 3,264 1,207 1,913 1,351 1,331 1,207 1,129 ended Sep 30, 30, Sep ended Nine month period period month Nine

- 5 0 0 0 23 22 51 26 58 35 23 (4) (6) 367 132 572 480 108 (64) (50) 0.07 0.07 0.76 (2) 2011 (330) (372) 1,007 1,029 24

2 0 5 0 0 0 0 33 30 65 27 20 423 161 679 413 255 216 189 (38) (43) (39) 0.85 0.85 0.40 0.40 2012 (102) (158) 1,056 1,092 ended Sep 30, 30, Sep ended ended September 30, 2012 and 2011 2011 and 2012 30, September ended Three month period period month Three

2 rest Seadrill Limited (In US$ millions) millions) US$ (In of tax s s UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS OPERATIONS OF STATEMENTS CONSOLIDATED UNAUDITED for the three month periods and nine months periods months nine and periods month three the for Gain on realization of marketable securities securities marketable of realization on Gain

Operating revenues Contract revenues Reimbursables Other revenues Totaloperating revenues Gain on saleof assets Operating expenses Vessel and rig operating expenses Reimbursable expenses amortization and Depreciation expenses administrative and General expenses operating Total Net operatingincome Financial items income Interest expenses Interest Share in results from associated companies net instrument financial derivative on (loss) Gain/ Foreign exchange (loss) Gain onloss of controlin subsidiary Gain on decline in ownership interest Other financial items Totalfinancial items (Loss)/income before incometaxes Income taxes Net (loss)/income Net incomeattributable to the parent Net incomeattributable tothe non-controlling inte Basicearnings per share (US$) Dilutedearnings shareper (US$) Declared share per (US$)regular dividend shareper Declared(US$) extraordinarydividend

Page 2 Page 3 Page 4 Page 5 Page 7 Page Page 8 Page Income for the er 30, 2012 and and 2012 er 30, reholders’ Equity the nine months 2011 2011 the three and nine

1 Seadrill Limited Limited Seadrill INDEX TO UNAUDITED FINANCIAL STATEMENTS STATEMENTS FINANCIAL UNAUDITED TO INDEX months ended September 30, 2012 and 2011 2011 and 2012 30, September ended months 2011 31, December 2012 30, September ended months nine the for Unaudited Consolidated Statements of Operations for Unaudited Consolidated Statements of Comprehensive Comprehensive of Statements Consolidated Unaudited three and nine months ended September 30, 2012 and Unaudited Consolidated Balance Sheets as of Septemb for Flows Cash of Statements Consolidated Unaudited 2011 and 2012 30, September ended Sha in Changes of Statements Consolidated Unaudited Statements Financial Unaudited to Notes

A 45

0 24 33 25 38 10 19 34 (5) 483 232 720 185 323 721 250 234 435 188 935 994 325 1,967 1,967 2,531 1,320 1,419 1,285 2,771 8,574 9,231 2,097 1,956 6,302 5,977 11,223 11,223 16,337 18,304 18,304 December 31, 2011 31, December

0 6 31 38 62 14 19 518 151 246 835 213 335 658 231 318 435 266 938 124 905 450 2,298 2,298 1,629 1,320 1,523 1,291 2,896 9,296 2,194 1,956 6,117 6,567 12,956 17,181 19,479 10,016 19,479 September 30, 2012 30, September

Seadrill Limited (In US$ millions) US$ (In UNAUDITED CONSOLIDATED BALANCE SHEET BALANCE CONSOLIDATED UNAUDITED 469,121,774 outstanding at September 30, 2012 2012 30, September at outstanding 469,121,774 ) 467,772,174 2011: 31 (December,

Cash and cash equivalents equivalents cash and Cash ASSETS ASSETS Current assets Restricted cash Marketable securities net receivables, Accounts party related from due Amount Other current assets Total currentassets Non-current assets companies associated in Investment Newbuildings units Drilling Goodwill Restricted cash Deferred tax assets Equipment party related from due Amount assets non-current Other Total non-currentassets Total assets EQUITY AND LIABILITIES Current liabilities debt long-term of portion Current Trade accountspayable taxes deferred Short-term party related to debt Short-term Other current liabilities Total currentliabilities Non-current liabilities debt bearing interest Long-term party related to debt Long-term taxes Deferred liabilities non-current Other Total non-currentliabilities Equity share: per US$2.00 value par of shares Common authorized shares 800,000,000 capital in paid Additional surplus Contributed Accumulated other comprehensive income earnings Accumulated Equity attributableto the parent interest Non-controlling Total equity Total liabilities and equity

1 33 13 83 (63) 2011 (292) (308) 1,589 1,281 1,198

0 12 17 68 (1) 118 146 2012 1,207 1,353 1,285 September30,

Nine month period ended ended period month Nine

5 0 0 5 9 58 67 28 39 (1) 2011 INCOME

6 0 3 6 12 20 37 (1) 216 25 247 2012 September 30, Three month period ended ended period month Three these Consolidated Financial Statements. Financial Consolidated these

3 lling interest ent ent es Seadrill Limited securities (In US$ millions) millions) US$ (In ension ension ate swaps in VIEs er 30, 2012 and 2011 2011 and 2012 30, er Septemb ended periods month nine and three the for UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE COMPREHENSIVE OF STATEMENTS CONSOLIDATED UNAUDITED Net (loss)/income tax: of net (loss), income/ comprehensive Other on marketable (loss) gain/ unrealized in Change differenc exchange foreign unrealized in Change Change in unrealized gain/(loss) relating to p subsidiaries of Deconsolidation Change in unrealized gain/(loss) on interestr Other comprehensiveincome/ (loss): Totalcomprehensive (loss)/incomefor the period non-contro the to attributable income Comprehensive Comprehensive(loss)/income attributableto the par

See accompanying notes that are an integral part of

A 46

0 0 0 0 0 0 0 7 12

245 141 418 345 755 464 (68) (26) (34) (71) (97) 2011 (133) (127) (221) (130) (291) (202) 4,946 (1,843) (2,032) (3,716) (1,080)

0 0 0 0 0 38 65 20 15 35 116 219 487 147 483 518 (19) (74) (20) (29) (36) 2012 (243) (989) (487) (325) (245) (127) 3,160 (1,091) (2,365) (1,217)

these Consolidated Financial Statements.

6 nts uivalents Seadrill Limited US$(In millions) ies atedto private placement sts d and 2011 2011 and 2012 30, September ended periods month nine the for UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FLOWS CASH OF STATEMENT CONSOLIDATED UNAUDITED CashFlows fromInvesting Activities newbuildings to Additions equipment and rigs to Additions equipment and rigs of Sale yard ship with disputes of Settlement Change in margincalls and otherrestricted cas h securities marketable of Purchase acquire cash of net subsidiaries, in Investment sidiarysub in control of loss upon deconsolidated Cash companies associated in Investment companies associated of Disposal parties related to granted loan term Long parties related to granted loan of Repayment Proceeds fromrealization of marketable securit Net cash usedin investing activities CashFlows fromFinancing Activities debt from Proceeds debt of Repayments paid fees Debt Proceeds from debt to related party party related to debt of Repayments Contribution / (to) from non-controlling intere Contribution fromnon-controlling interests rel Purchase oftreasury shares shares treasury of sale from Proceeds paid Dividends Net cash usedby financing activities Effect of exchange rate changeson cash andcash eq Net increase/ (decrease) in cash and cash equivale year the of beginning at equivalents cash and Cash Cashand cashequivalents at the endof period Supplementary disclosure ofcashflow information interest capitalized of net paid, Interest Taxes paid of part integral an are that notes accompanying See

8 2 0 0 25 18 38 55 37 423 310 104 (21) (68) (62) (23) (16) (39) (35) (416) (540) 1,589 1,389 2011 2011

0 9 5 4 8 0 4 0 0 0 22 17 24 (9) 452 203 (86) (115) (169) (115) (112) 1,207 1,349 September 30, 2012 2012 Nine month period ended ended period month Nine

5 vided by operating operating by vided eadrill Limited stomers effect of acquisitions term interest bearing debt debt bearing interest term (In US$ millions) millions) US$ (In trol in subsidiary subsidiary in trol of marketable securities securities marketable of inancial instruments

and 2011 2011 and 2012 30, September ended periods month nine the for UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FLOWS CASH OF STATEMENT CONSOLIDATED UNAUDITED

Adjustments to reconcile net incometo net cash pro Depreciation and amortization and Depreciation charges loan deferred of Amortization Netincome/ (loss) contracts unfavorable of Amortization contracts favorable of Amortization revenue mobilization of Amortization Share of results from associatedcompanies expense compensation Share-based f derivative to related loss (gain)/ Unrealized Dividend received from associated company expense tax income Deferred long on (gain) loss exchange foreign Unrealized Gain disposalon of fixed assets investments other of disposal on Gain Non cash gainrecognized related to realization Non cash gain recognized related to loss of con Gain on decline in ownership interest Changesin operating assetsand liabilities, netof cu from received fees mobilization Unrecognized Trade accounts receivable Trade accounts payable Prepaid expenses/accruedrevenue Other, net Net cash providedby operating activities

CashFlows fromOperating Activities activities:

A 47 investment investment in newbuildings, we have nancial nancial statements does not include all d and operated 43 offshore drilling units, financial statements should be read in on of our annual consolidated financial ember ember 31, 2011. The year-end condensed of America (US GAAP). The unaudited ents ents are stated in accordance with generally a listed on publicly company the New York of of the unaudited interim financial statements rein of such terms as group, organization, we, isting isting of normal recurring accruals) considered ally accepted in the ally of United States America. Our Our versatile fleet consists of drillships, jack- operations operations in shallow and deepwater areas, as , is not intended to be a precise description of 8

up rigs, semi-submersible rigs and tender rigs for environments. harsh and as benign well to Seadrill refers “Seadrill” term the thcontext, e by required otherwise unless and herein, As used Limited and the terms “Company”, “we”, “Group”, r” “ou and words of similar import The use he companies. and Seadrill its consolidated refer to information General 1- Note Seadrill Limited (“we”, “the Company”, or “our”) is Stock Exchange and the Oslo Stock Exchange. We were in incorporated Bermuda in May 2005. Assisted by the acquisition developed of into an providing services c ontractor offshore drilling drilling within international and other companies and well services, and as of September 30, 2012 we owne and have additionally 19 units under construction. us, our and its, or references to specific entities relationships. corporate presentation of Basis The unaudited interim consolidated financial statem accepted accounting principles in the United interim States consolidated financial complete statements annual do financial statements. not These in clude conjunction interim with all our financial of statements as the at balance disclosures Dec sheet required data in that was derived from audited fi included. been have statement fair for a necessary policies accounting Significant disclosures required by accounting principles gener principles accounting required by disclosures In the opinion of management, all adjustments (cons The accounting policies adopted in the preparation are consistent with those d December ende the year 31, for notes 2011. accompanying followed and statements in the preparati

0 4 0 0 0 0 8 1

15 12 33 13 (3) (7) 150 146 425 727 (23) (48) (130) (292) (393) 6,302 6,302 1,207 6,567 5,937 1,589 6,772 Total Total (1,253) (1,080) equity Total Total equity equity

10 13 60 (5) (9) 539 118 329 66 17 78 (23) (44) (330) 325 450 (36)

994 905 1,016 1,016 1,529 1,474 1,129 (1,071) (1,217) earnings NCI Retained

earnings NCI Retained

23 (8) 323 (63) (5) (292) 129 124 OCI TY TY OCI Accumulated Accumulated

Accumulated

1,956 1,956 1,956 1,956 1,956 1,956 surplus surplus Contributed

Contributed

11 4 (7) (4) 307 674 12 84 (3) (119) 1,217 1,217 2,087 2,097 2,097 2,194 capital paid-in paid-in capital capital paid-in Additional these Consolidated Financial Statements.

Additional

53 (6) 3 7 886 934 935 938 Share Capital Share Capital Seadrill Limited (In US$ millions) millions) US$ (In (In millions of US$) US$) of millions (In for the nine months ended September 30, 2011 30, September ended months nine the for for the nine months ended September 30, 2012 30, September ended months nine the for UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUI IN CHANGES OF STATEMENT CONSOLIDATED UNAUDITED UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUI IN CHANGES OF STATEMENT CONSOLIDATED UNAUDITED Balance at December 31, 2011 31, December at Balance

Balance at December 31, 2010 31, December at Balance

Saleof treasury shares Purchase oftreasury shares issued options stock Employee Privateplacement in subsidiary Costsrelated to capital increasein subsidiary income comprehensive Other payment Dividend Dividend paid to Non-controlling VIE interests in interests controlling non from purchased Shares Deconsolidation of subsidiaries bonds convertible of conversion Induced Net income 2012 30, September at Balance Saleof treasury shares Purchase oftreasury shares issued options stock Employee Privateplacement in subsidiary Costsrelated to capital increasein subsidiary securities marketable on gain/(loss) (Un)realized Foreign exchange differences Change in unrealized (loss) on interest rate swaps in VIEs Change in unrealized (loss) on interest rate swaps insubsidiaries payment Dividend VIE in interests Non-controlling to paid Dividend VIE in interest Non-controlling to Paid Deconsolidation of subsidiary bonds convertible of conversion Induced Net income 2011 30, September at Balance

of part integral an are that notes accompanying See

A 48

7 5 51 582 409 127 263 102 423 184 149 397 (148) 1,937 3,055 1,002 1,340 1,589 2011 2011 2011

- - - 42 588 530 302 107 452 946 173 233 (20) (124) 2,049 3,168 1,351 1,207 September30, September30, September30, Nine months ended ended months Nine ended months Nine ended months Nine 2012 2012 2012

0 0 0 89 31 12 71 60 58 673 188 146 132 349 480 (50) ments ments (372) 1,007 2011 2011 2011

- - - 39 15 47 84 674 203 178 107 161 282 413 216 (39) (158) 1,056 September 30, 30, September 30, September 30, September g, g, completion and maintenance of offshore Three months ended Three months ended Three months ended ts. 2012 2012 2012 2012 10 Notes tothe unaudited consolidated financial state

Tender Tender rigs: We offer services encompassing drillin to relate contracts drilling The Americas. the and Africa West Asia, Southeast in wells production er tend rigs. semi-submersible and rigs tender self-erecting below is given and the profit, on information ting the basis of are opera results evaluated Segment based on information used for internal reporting. T he accounting principles for the segments are statemen financial consolidated our for as same the revenues Contract (In US$ millions ) millions US$ (In Floaters Jack-uprigs Tender rigs Well Services * Total * Represents the activity up to the time of deconso lidation in February 2011. Depreciation and amortization ) millions US$ (In Floaters Jack-uprigs Tender rigs Well Services* Total * Represents the activity up to the time of deconso lidation in February 2011. Operating income - net income ) millions US$ (In Floaters Jack-uprigs Tender rigs Well Services* Operating income Unallocated items: Totalfinancial items Income taxes Net income * Represents the activity up to the time of deconso lidation in February 2011. ments ments ructure ructure and reporting, economic we we adopted the accounting standards ot ot required in the months nine ended opt opt the accounting standards update that completion completion and maintenance of offshore mpairment mpairment test is The required. update is effect on the disclosures contained in our ect on our condensed consolidated financial ect financial on consolidated our condensed requirements requirements by giving an entity the option 2012, we adopted the accounting standards racts racts relate to jack-up rigs for operations in instruments and derivative instruments that tract tract structure. We currently operate in the ng, completion and maintenance of offshore ing of assets and liabilities related to certain or or annual and interim periods beginning after s. condensed our on effect material a have will n ts in mid-, deep- and ultra-deep waters. waters. ultra-deep and deep- in mid-, ts ive information about the unobservable inputs, about ive inputs, the information unobservable ir ir value measurements that involve significant racts relate to semi-submersible The update requires disclosures The update to disclosures requires present both interim and annual periods beginning on or after after on or beginning periods annual and interim n not the unit that value of a ssis fair reporting le 9 offset, an enforceable master netting arrangement arrangement netting master enforceable an offset, Notes tothe unaudited consolidated financial state

perating segments segments perating Note 2 — Recent Accounting Pronouncements Pronouncements Accounting Recent — 2 Note exploration and production wells. The drilling cont drilling The wells. production and exploration environmen benign and harsh for drillships and rigs Jack-up rigs: We offer services encompassing drilli Recently Adopted Accounting Standards 1, and January Intangibles-goodwill other—Effective update that amends the goodwill impairment testing to assess first qualitative factors to determine ether wh the existence of events or circumstances leads to a determination that it is more likely tha than its carrying amount and whether the two-step i effective for goodwill impairment tests performed f Our did not 15, adoption have an 2011. eff December statements because a goodwill impairment 2012. 30, September test was n Fair value measurements—Effective 1, January 2012, update that requires additional disclosure about fa additional quantitat inputs, including unobservable a description of valuation techniques used, and a evaluation of q ualitative the of sensitivity these Our measurements. adoption did not have a material statement financial consolidated condensed to notes Recently Issued Accounting Standards Balance sheet—Effective January 1, 2013, we will expands the ad disclosure requirements for the offsett financial and instruments instruments. derivative gross information and net information for financial of right a to due presentation net for eligible are for iseffective update The agreement. or similar adoptio our that expect not do We 2013. 1, January consolidated balance sheet or the disclosures ined conta in our notes to condensed statements. consolidated financial Note 3– Segment information O been organized has Our business industry. gas an d the oil to services drilling offshore We provide into segments based on differences in management st characteristics, characteristics, customer base, asset class and con segments: three following Floaters: We offer services encompassing drilling, exploration and production wells. The drilling cont environment. benign and harsh

A 49

------2 1 30 50 52 50 (4) 1 234 148 (80) (87) 8.5% 46.3%

2011 2011 2011 Nine month Threemonth period ended Threemonth periodended period ended September 30, September 30, September September 30, September

------2 9 5 2 % % 23 14 39 37 39 110 124 9.3 15.3

2012 2012 2012 ments ments Ninemonth Three month Three Three month month Three period ended period ended period ended period ended period ended September 30,September September 30,September September 30,September

in several jurisdictions based on its rig income tax rate of 0 % as follows: some jurisdictions even though it might have 12

Notes tothe unaudited consolidated financial state

Note 5 – Taxation Taxation – 5 Note following: the of consist taxes Income an overall loss at the consolidated level. level. consolidated the at loss overall an The income taxes for the three and nine months d ende statutory the applying by September computed amount the from 30, 2012 and 2011 differed Current expense: tax Bermuda Foreign Deferredexpense: tax Bermuda Foreign thetaxesduring year Deferred acquired Tax related to internal sale of purposes group assets in ary, subsidi amortized for provision Total taxrateEffective (In millions of US dollar) Current expense: tax Bermuda Foreign Deferredexpense: tax Bermuda Foreign thetaxesduring year Deferred acquired Tax related to internal sale of purposes group assets in ary, subsidi amortized for provision Total taxrateEffective The Company, including its subsidiaries, is operations. taxable A loss in one tax within pay may the Company Thus, jurisdiction. jurisdiction may not be o ffset against taxable income in another (In millions of US dollar) rate Incomestatutory taxes at Effect of transfers to new tax jurisdictions taxableEffect currency ofin change incomeinEffect ofvarioustaxable countries Total (In millions of US dollar)

2 40 32 455 455 489 2011 2011 1,529 1,569 2011

1 28 20 468 468 489 1,129 1,157 September30, September30,

Nine months ended ended months Nine ended months Nine 2012 2012 2012 4,200 1,504 12,600 18,304

9 2 35 44 18 467 467 487 ments ments 2011 2011 December31,

2011 2011 2011 2011

4,232 4,232 1,587 9 1 19,479 13,660 20 189 490 198 2012 2012 2012 September 30, September 30, 2012 2012 is based on the weighted average number of of number average the weighted is based on of basic and diluted EPS are as follows: on of basic and diluted EPS are as follows: ncludes ncludes the effect of the assumed conversion Three months ended ended months Three ended months Three September 30,

11 s s Notes tothe unaudited consolidated financial state

Total Assets Assets Total Net (loss)/ income available to stockholders stockholders to available income (loss)/ Net (In US$ millions ) ) millions US$ (In Jack-uprigs Tender rigs Total Note 4 – Earnings per share (“EPS”) per share earnings basic of The computation millions) US$ (In Effect of dilution Diluted net (loss)/income available to stockholder calculati the for denominator the of components The shares) of number (In Diluted earningsper share: g outstandin shares common of number average Weighted Effect of dilutive share options bonds convertible dilutive of Effect 469 shares outstanding shares during outstanding the period. Diluted EPS i instruments. dilutive potentially of calculation the for numerator the of components The Floaters Floaters g g outstandin shares common of number average Weighted 469 Basicearnings pershare:

A 50

1 10 33 10 34 31, 31, 2011 December

- 6 6 31 19

30,September 2012

ments ments nal nal currency 14

Notes tothe unaudited consolidated financial state

Net deferred taxes are classified as follows: as classified are taxes deferred Net (In US$ millions) asset tax deferred Short-term Future taxable income justifies the inclusion of ta x loss carry-forward in the taxes. calculation deferred of net Tax issue related to relocation of rigs and functio issues. these to related r quarte third during developments no been have There Long-term deferred tax asset Long-term tax asset deferred liability tax deferred Short-term Long-term deferredtax liability taxNetdeferred

, 9 8

- ) 11 15 43 31 13 44 (1 31, 2011

- - ) 237 148 (89 December

31 December 2011

6 8 5 2 6 12 31 12 11 25 2011 2012 Nine month periodended September 30, September

- - 5 119 124

September 30, 2012

30,September

2012 ments ments Ninemonth period ended period ended September 30,September

purposes purposes and such amounts recognized for tax consist of the following: 13 Notes tothe unaudited consolidated financial state

(In millions of US dollar) rate Incomestatutory taxes at Effect of transfers to new tax jurisdictions taxableEffect currency ofin change incomeinEffect ofvarioustaxable countries Total Deferred Income Taxes Deferred income taxes reflect the impact of ry tempora differences between the amount of assets and liabilities recognized for financial reporting purposes. The net deferred tax assets (liabilities) Deferred Tax Assets: (In US$ millions) Pension Provisions plant equipment Property, and Other taxGrossasset deferred Deferred Tax Liability: (In US$ millions) plant equipment Property, and Gain saleassets of fixed from Other Gross deferredtax liability taxNetdeferred

A 51 ments ments to US$92 million for the nine months ited ited shares as security, underlying with a ted ted to US$9 million for the nine months However However we have an historical underlying ed companies companies ed contracts: contracts: of their goodwill, intangible and tangible ent of Operations consists of the following: ruments ive instruments amounted to US$98 million for for million US$98 to amounted ive instruments 16

: Notes tothe unaudited consolidated financial state Note 7 - Impairment loss on investments in associat in investments on loss Impairment - 7 Note On November 25th our associated company Archer made public pertaining certain to preliminary guidance writing off a total of % of 39.9 owns Archer Seadrill 2012. 30, and US$338 September of as thereforeassets our predicted million share of this impairment would amount to US$135 million. basis difference related to goodwill, losses. impairment and we have o nly recognized US$51 million of these Note 8 – Gain/ (loss) on derivative financial inst The year to date gain of US$15million in our Statem Total Return Swaps (TRS) We have a TRS agreement with 2,000,000 Seadrill Lim reference price of NOK 242.79 unrealized gain related and to the TRS expiry agreements amoun on r 2012. 30, Decembe September ended 6, 2012. The total realized and Interest-rate swap agreements and forward exchange Total realized and unrealized loss on accounting, interest-rate and swap forward exchange agreements, contracts not amounted qualified 2012. for 30, September ended hedge Other derivative instruments: derivat on other gain and unrealized realized Total the nine months ended September 30, 2012, mainly du e to realized gain on our Ensco forwards contracts in the first quarter (US$63 million).

- 24 24 128 Total Total - - - - 84 - 246 - 237 - - 118 - Ensco ments ments ------1 1 (1) 16 4 15 5 (1) - (85) Golden Close

of of the partially redeemed Petromena at fair value as an available-for-sale izing izing a gain of US$169 million presented total total of 30.1 in million shares SapuraKencana. d to market, with changes in fair value in SapuraCrest Petroleum Bhd , which was - - - - - 84 consequently consequently transferred from Investment in in OCI. OCI. in 124 242 237 118 (84) (113) (113) (15) (4) (132) ares ares in SapuraKencana constituting 6.38% of the value are as follows: 15 SapuraKencana

------4 4 Petromena

Notes tothe unaudited consolidated financial state via via OCI or P&Las of December 31,2011 Fair Market value adjustments recognized recognized adjustments value Market Fair Other than temporary impairments impairments temporary than Other 2012 30, September at cost Historic Realizationof historic cost ReleaseofOCI into profit & loss accounted accounted for using the equity method with income p ickup on quarter 2012 in SapuraCrest Petroleum arrears. Bhd On and May Kencana 17, m Petroleu Bhd merged resulting in Seadrill dilution shareholdings of from 23.59% to 11.77% recogn security. The investment is marked-to-market each recognized q uarter investment the of value market and value with the difference between book recognized as “Other comprehensive income”. Marketable securities held by us NOK2,000 include now million 81.1% bond (“SapuraKencana”). (“Petromena”) and 6.38% of share a 23.59% owned Seadrill Q1 end 2012 of At the puraKencana Sa Petroleum Bhd in the statement of operations. The investment was associated companies to an investment accounted for Note 6 – Marketable securities securities Marketable – 6 Note The historic cost of marketable securities is marke

r a total consideration of approximately US$200 US$200 On 30, May 2012 sold r of a approximately 300 shares Seadrill fo million total consideration million in SapuraKencana recognizing a operations. After gain this transaction Seadrill owns of sh 4 US$8 million company. presented in the statement of carrying their in changes and securities Marketable Fair marketvalue adjustments recognized via OCI recognized adjustments value Market Fair P&L via 2012 30, September at value book Net 4 In In the period May between 23 and 29 we purchased a (In US$ millions) Additions recognized adjustments value Market Fair 2012 30, September of as OCI via Net book value at December 31, 2011 2011 31, December at value book Net 4 Historic cost at December 31, 2011 31, December at cost Historic

A 52

- - - 40 25 (15) (356) (356) 1,676 1,676 1,320 1,320 2011 2011 December 31,

Year ended December 31, 31, December

December 31, 2011 31, December (2,122) (2,122) (1,675) - - - - 38 2012 2012 (20) 1,320 1,320 1,320 1,320 12,956 11,223 15,078 12,898 September30, 2012 2012 ments ments September 30, 30, September 58 Periodended September 30, 2012 30, September lion lion for the nine months, and US$2 million for the nine months, and US$159 and US$159 for the million nine months, of goodwill are as follows: fer fer of West Capricorn and West Leo from the 18 subsidiary subsidiary Notes tothe unaudited consolidated financial state

Cost Accumulated depreciation Note 10 – Drilling units million and US$2 million for the respectively. three 2011, and months 2012 30, ended September Note 12 – Goodwill losses. r impairment 30, there no 2012 were the ended Septembe In periods three and nine months Goodwill balance and changes in the carrying amount (In US$ millions) US$ (In The increase in cost is mostly related to the trans millions) US$ (In Depreciation expense was US$5 million and US$14 mil millions) US$ (In period of beginning at balance book Net period the during acquired Goodwill Newbuildings in Q2 and West Elara in Q1. and US$409 million was US$447 expense Depreciation million and US$130 million respectively. for the three months ed end September 30, Note 11– Equipment 2012 and 2011, Equipment consists of IT and office equipment, furniture and fittings. Cost Accumulated depreciation value book Net Net book value value book Net Impairmentlosses Goodwill derecognized related to loss of control in control of loss to related derecognized Goodwill Currency adjustments adjustments Currency Net book balance at end of period period of end at balance book Net 190 200 200 190 530 113 113 115 135 200 650 650 600 600 600 600 600 600 600 7,486 7,486 In US$ millions projectprice Estimated total

ments ments 24 44 41 22 43 38 36 19 51 58 78 120 118 157 147 145 162 162 160 1,629 1,629 2,531 2,531 1,091 1,629 1,629 (1,992) 30, 2012 30, In US$ millions related related to acquisition of rigs and yard

Book Value as of September September of as Value Book for for an overview of the maturity schedule for ngs to Drilling units in Q3. The additions are are additions The Q3. in units to Drilling ngs

and and second instalment on West Saturn expenses amounting to US$59 million. 17

1Q2013 1Q2013 1Q 2013 2013 1Q 2013 1Q 2013 1Q 2013 3Q 2Q 2013 2013 2Q 1Q 2015 2015 1Q Delivery date

Yard Jurong Jurong Jurong

Nantong Nantong Nantong Nantong 2013 1Q 2013 1Q 2013 4Q Nantong 2012 4Q Jurong Jurong Hyundai 2014 4Q

Samsung Samsung Samsung 2013 2Q Samsung 2013 3Q Samsung 2014 2Q 2014 4Q Notes tothe unaudited consolidated financial state West Tucana Tucana West Castor West Oberon West Linus West Jurong Dalian West Telesto Telesto West Dalian T-16 T-16 T-17 T-18 Esperanza West Keppel T-15 T-15 West Rigel Rigel West West Mira Mira West West Auriga Auriga West Samsung 2013 2Q West Vela Vela West Tellus West Neptune West Jupiter West Saturn West Samsung Carina West Samsung 2014 2Q 2014 3Q Drillingunit Total Jack-uprigs Tender rigs Semi-submersible rigs Drillships Note 9 – Newbuildings remaining yard installments. (In US$ millions ) ) millions US$ (In 2012 30, September at balance Closing Newbuildi from reclassifications no been have There contingencies) and (commitments 18 note also Refer mostly related to first instalments on West Carina interest capitalized include also but instalments, In 2012, additions to newbuildings are principally ws: as follo are 2012, 30, at September as Newbuildings Additions Additions Re-classified as drilling units Opening balance at December 31, 2011 31, December at balance Opening

A 53 US$ $0 due to millions

1 0 54 (5) (11) (49) 000 000 1,600 2011 2011 72,174 72,174 935 Shares December 31, 2011 31, December December31,

0 66

119 124 (12) (49) 0 (1,478,759) (3) ments ments 938 467,7 938 469,250,933 938 1,600 1,600 800,000, 2012 2012 September30, US$millions The facility bears interest at LIBOR + mber 30, 2012 and December 31, 2011: 2011: 31, December and 2012 30, mber proceeds from the bond issue will be used cilities. cilities. These mainly consist of minimum Shares September 30, 2012 30, September (129,159 ) (129,159 20 469,121,774 469,121,774 800,000,000 800,000,000 469,250,933 469,250,933 th each component of income other comprehensive is e income is made s) are stated net of tax. tax. of net stated are s) IEs ed in non-taxable jurisdictions. jurisdictions. non-taxable in ed

Notes tothe unaudited consolidated financial state Shares issued and outstanding outstanding and issued Shares Authorized share capital capital share Authorized value par US$2.00 of shares common are shares All each capital share paid fully and Issued Company by held shares Treasury The total balance of accumulated other comprehensiv up follows:as Unrealized gainon marketablesecurities exchange foreign on gain Unrealized Actuarial gainrelating to pension Unrealized gain/ (loss) oninterest rateswaps in s ubsidiaries Unrealized gain/ (loss) oninterest rateswaps in V Accumulatedother comprehensiveincome

On July 11, 2012 we refinanced the US$585 million T ender Rig facility and entered into a new US$900 million facility with maturity in margin. July 2017. On September 14, 2012 we have successfully d complete a US$1,000 million senior bond unsecured issue with maturity in September 2017. The net indebtness. existing repay to facilities: Credit Covenants- We have various covenants relating to its credit liquidity requirements, interest fa coverage ratio, cu rrent ratio, equity ratio and leverage ratio - for more details see our Annual Report 2011. Note 14 – Equity income comprehensive Other – 15 Note Accumulated other comprehensive income as per Septe Note: Allitems of other comprehensive income/ (los The applicable amount of income taxes associated wi thefact thatthe items relate to companies domicil

- 74 92 272 337 630 985 550 400 470 939 425 545 970 298 279 (94) (94) 1,059 1,059 1,000 1,917 7,316 1,409 9,993 8,574 2,399 1,675 1,845 4,714 10,818 10,818 31, 2011 31, December (1,419)

0 70 85 239 750 926 900 577 936 509 370 412 851 557 282 1,792 1,792 7,154 1,263 1,562 2,119 9,296 10,818 10,818 30, 2012 30, September (1,523) (1,523) ments ments payable as follows: follows: as payable 19 ed ed cash deposits: Notes tothe unaudited consolidated financial state US$800 facility facility* US$585 US$900 facility US$100 facility US$1,500facility US$1,200facility US$700 facility US$1,121facility US$2,000facility (NorthAtlantic Drilling) US$170 facility US$550 facility US$400 facility US$700 facility US$1,400facility Bonds bonds Convertible In US$ millions) millions) US$ In Note 13 – Long-term interest bearing debt and inter expenses est Credit facilities: + other Loans Bank Total VIE’s: consolidated in recorded Debt TotalShip Finance Facilities bonds: convertible and Bonds bonds Total Other credit facilities with corresponding restrict Totalinterest bearingdebt portion current Less: debt bearing interest of portion Long-term facility 900 new the refinancing when Repaid * The outstanding debt as of September 30, 2012 is re millions) US$ (In Yearending December 31 2012 2013 2014 2015 thereafter and 2016 bond convertible of amortization of Effect debt Total (

A 54 ments ments ed deposits with reputable financial e swap agreements with an outstanding nus US$400 million (December 31, 2011: 31, nus (December 2011: US$400 million on on of the notional amount on one interest al al investments. The extent to which the st st rate swaps and cross currency interest e accounting e accounting vatives to manage its interest rate risk is S$4,738 million). In addition, the Company Company the addition, In million). S$4,738 le le without increasing its foreign currency s s under "Gain/(loss) on derivative financial nto one new cross currency interest rate swap swap rate interest currency cross one new nto lable lable on overnight deposits in banks. Such interest interest rate swaps and cross currency interest at September 30, 2012 with a principal amount amount a with principal 2012 30, at September e only e to change the on only amounts these notional rder to provide the Company with flexibility rder to to the with provide Company flexibility titutions. This exposure is managed through the the through is managed exposure This titutions. will have a negative effect on the value of the angements. The Company's ambition is to obtain obtain is to ambition Company's The angements. 22 n the balance sheet. Notes tothe unaudited consolidated financial state

At September 30, 2012, the Company had U 2011: 31, (December interest million US$4,720 of principal rat rate swaps interest currency cross had outstanding of US$216 million (December 31, 2011: US$34 ). million These agreements do not qualify hedge for accounting, and accordingly any changes in e th fair values included in of the Consolidated the Statement of Operation swap agreements are instruments". The combined total fair value of the 30, to 2012 September mi outstanding amounted swaps minus US$345 million). The fair value i of liabilities current other as classified are the swaps intere determined by the net debtexposure and its views o n future interest rates. hedg as qualified not agreements swap rate Interest a risk that currency and interest rate fluctuations flows. cash Company's management risk rate Interest The Company's exposure to interest rate risk s relate mainly to its floating interest rate debt and ins financial with placed funds surplus of balances arr derivative other and swaps rate interest of use the most favorable interest rate borrowings exposure. availab Surplus funds institutions, are yielding higher generally returns placed than are in have maturities, o short-term generally deposits in avai fix meet all requirements for working capital Company and utilizes interest capit rate swaps and other deri i has entered Company the 2012 quarter first During in connection with the NOK 1,250 million bond. In S eptember 2012 one cross currency interest In to addition expired. rate ththis agreement swap agreements from December 31, 2011 is the amortizati rate swap; outstanding principal changed from US$88 US$71 million million as as per per December 31, September 2011 30, changes. For to a complete 2012 overview of the . interest te ra swap agreements The please refer to the table 2011 below 20-F. reflects the above mentioned

90 56 85 231

ments ments d SFL Polaris declared and paid a credit credit facility of US$50 million from

jointly referred to as “Hemen”) and interest. interest. Hemen is controlled by trusts term term unsecured credit facility of US$20 we we incurred the following lease costs on es es in other currencies, causing its results o SFL Deepwater and SFL Polaris of the Finance Finance subsidiaries, which own the units, ssels are receivable in US dollars and the n which our principal shareholders Hemen or or several drilling units with Ship Finance n interest rates on floating interest rate debt, nd nd the charter contracts. Accordingly, these ates on NOK denominated debt. There is thus is thus There debt. denominated NOK on ates are are the primary beneficiary of the risks and oans are presented as long term debt to related related to debt term long as are presented oans and December 31, 2011. July 2012. s in our consolidated accounts. accounts. consolidated our in s July 2012. 2012. July 21 Notes tothe unaudited consolidated financial state units leased back from Ship Finance subsidiaries: subsidiaries: Finance Ship from back leased units established by established the President Company’s and Chairman Mr. John for Fredriksen the benefit of his immediate family. We have determined that the Ship are variable interest entities (VIEs), and that we rewards connected with the ownership of the units a VIEs are in consolidated fully our ounts. The attributable acc equity to consolidated Ship Finance in the VIEs is included in non-controlling interest In the nine month period ended September 30, 2012, companies companies associated with Hemen have a significant Holding Holding Ltd and Farahead Investments Inc (hereafter Note 16 – Related party transactions transactions party Related – 16 Note We have entered into sale and leaseback contracts f International Limited (“Ship Finance”), a company i same amounts with an interest rate of 4.5%. These l These 4.5%. of rate interest an with amounts same 2012 30, on September sheet balance our in parties dividend dividend of US$290 million and US$145 Limited (SFIL). million SFIL simultaneously ctively respe granted loans to t Ship Finance International in repaid was interest plus principal The Metrogas. On June 7, 2012 we obtained a long term unsecured c redit facility of NOK 1,200 This million Metrogas. loan was amended agreement on June 1 4 from and June 27 the increasing loan amount to a total of NOK 2,100 million (US$352 September 2012. million). T he principal plus interest was repaid in On June 27, 2012 the Company granted Archer a long million. The principal plus interest was repaid in Note 17 – Risk management and financial instruments majority of our other transactions, assets functional currency and of ilities liab the are Company. However, denominated the number of Co mpany in countries has worldwide and US operations incurs expenditur and dollars, the to assets relative primarily rates, exchange c urrency in the in fluctuations by affected be to operations from a i to changes is also exposed The Company US dollar. r exchange in currency of changes impact the and to Rig Polaris West West Hercules WestTaurus Total These lease costs are eliminated at consolidation. On July 1, 2011, the VIE companies SFL Deepwater an On May 15, 2012 we obtained a short term unsecured The majority of our gross earnings from rigs and ve

A 55

75 483 482 250 545 350

value 1,419 7,711 Carrying

75 483 482 250 735 333

1,419 7,711 December2011 31, airvalue

557 557 518 382 231 220 ments ments 1,523 1,523 6,945 value 1,342 Carrying

92 518 231 220 1,523 1,523 December 31, 2011. We have categorized t level 1 on the fair value measurement by the Company at prices other than the categorized categorized this at level 2 on the fair value September 30,2012 es, which are reset on a quarterly basis. This fair value has been set equal to the price at

Company's financial instruments at September financial at instruments September Company's Fair value Fair of floating rate debt is estimated to be equal to ed cash. We have categorized this this at ed cash. We level 2 categorized on have 382 6,945 1,387 8 d rate CIRR loans is equal to the carrying value, value, carrying the to is equal loans CIRR d rate

24 Notes tothe unaudited consolidated financial state carrying carrying value since it bears variable interest rat

(In millions)US$ Cashand cash equivalents Restricted cash Current portion long-termof debt debt rate floating of portion Long-term Long term portion of fixed rate CIRR loans bonds convertible interest Fixed bonds interest Fixed Floating interest bonds instruments financial of values Fair hierarchy. hierarchy. portion long-term and current the of value The fair the The value carrying and fair estimated value of the The carrying value of cash and cash equivalents and restricted cash, which are liquid, highly is a reasonable estimate of fair value and categorized a 30, 2012 and December 31, 2011 are as follows: follows: as are 2011 31, December and 2012 30, as they are as of restrict they matched with equal balances debt debt is not freely tradable and cannot be outstanding purchased balance plus accrued interest. We have hierarchy. measurement The fair value of the long-term portion of the fixe hierarchy. measurement value fair the The convertible bonds are freely tradable and their which they were traded at on September 30, 2012 and this at level 1 on the fair value measurement hierarchy. 4 Sep 2016 Sep Oct 2012 Length Length ofcontract Mar 2008 - 2008 Mar 201 – Feb 2012 Feb Length of Length contract July 2008 - 2008 July Dec 2008 - Aug 2013 Aug - 2008 Dec

ments ments % %

% %

3.83 3.89 2.19 lue lue of currency forward contracts Pay rate Pay

Pay rate

and other derivatives to manage its

ber 30, 2011: minus US$11 million). million). US$11 minus 2011: 30, ber ectiveness ectiveness is recognized immediately in greement greement with Seadrill 2,000,000 Limited oss". oss". Below is a summary of the notional y y the Company as VIE's have entered into he above two VIE Ship Finance subsidiaries subsidiaries VIE Ship Finance two above he y's y's exposure to variability in cash flows for finance finance the acquisition of West Polaris and accounting accounting treatment and are recorded in the financial instruments. instruments. financial TRS agreements in 2012 amounted to US$9 es in December 2012 and the agreed reference reference the agreed and 2012 December in es nterest nterest rate swaps. These gains recorded were , liabilities and future anticipated transactions. hedge accounting and any changes in their fair fair in their changes any and accounting hedge of these interest rate swaps. swaps. rate interest these of statements during the nine month period ended ended period month nine the during statements

rest" in our equity statement. statement. equity in our rest" +3.8 LIBOR 3 month negative negative fair value. At September 30, 2012, the

th LIBOR Receive rate 1 mon 1 month LIBOR 1 month Receive rate

6 month LIBOR month 6 3month NIBOR+3.2% 3month Notes tothe unaudited consolidated financial state

) ) anding principal West Polaris West Taurus West 470 ( 470 79

Agreements Swap Return Total In September 2012, the entered Company into a TRS a expir This agreement security. as shares underlying share. per 242.80 NOK was price The total realized and unrealized gain relating to million (September 30, 2011 US$7 million). exposure exposure to foreign currency risk on certain assets Such derivative contracts do not qualify for hedge balance sheet under receivables if the contracts ha ve a net positive fair short-term liabilities value, if and the contracts under have other a net Company had forward contracts and cross currency US$381 terest in rate million swaps to between sell October approximately 2012 NOK5.70 and to January 201 3 NOK6.10 (Septem million US$5 at to amounted 2012 30, perSeptember exchange US rates dollar. ranging from The total fair va interest interest rate swaps in order to mitigate the Compan future interest payments on the loans taken out for to qualify swaps rate interest These Taurus. West value are included in "Other comprehensive income/l durations and payable rates interest fixed amounts, recorded fair value gains of $17 million on their i by those VIEs as "Other comprehensive income" but d ue these to losses are allocated their to "Non-controlling ownership inte by Ship Finance earnings. The two VIEs and therefore the Company, d id not recognize financial any consolidated in the gain ineffectiveness hedge or loss due to September 30, 2012 and 2011 relating to derivative management risk currency Foreign The Company uses foreign currency forward contracts Outst (In US$ millions) mill) 1,250 (NOK 216 accounting hedge rate Interest Two of the Ship Finance subsidiaries consolidated b Outstanding principal (In US$ millions) ( 518 t 30, 2012 September ended period the In nine month Any change in fair value resulting from hedge ineff

A 56

n 392 532 2,505 2,505 2,428 5,857

ments ments s s (formerly FAS 157) emphasizes that ces ces independent of the reporting entity ariation ariation orders, spares, accrued interest n active markets for identical assets or itted itted to make further payments amounting ticipants ticipants would use in pricing the asset or commitments commitments under newbuilding contracts. ssumptions ssumptions (unobservable inputs classified nt of the significance of a particular input to at distinguishes between market participant ated to these rigs, including ated to to these payments the rigs, including as follows: ces ces for similar assets and liabilities in active le le inputs for the asset or liability, which are ration and mobilization. mobilization. and ration yield yield curves that are observable at commonly able able for the asset or liability, either or directly submersible rigs, seven drillships, five jack-up there is little, if any, related market activity. I activity. market related any, if little, is there the the asset or liability, other than quoted prices, ipant ipant assumptions in fair value measurements, judgment, and judgment, factors considers to specific the s one and two of the hierarchy) and the reporting reporting and the hierarchy) the of and two s one e fair value within hierarchy which the entire fair 26 s of September 30, 2012 30, September of s Notes tothe unaudited consolidated financial state

ASC ASC Topic 820 establishes a fair value hierarchy th level within classified are that inputs (observable entity's own assumptions about market participant a liability. liability. As a basis for considering market partic assumptions based on market data obtained from sour hierarchy). the of three level within Level one input utilizes unadjusted liabilities that quoted the prices Company has i the ability to quoted prices included in level one acc ess.that are observ Level two inputs are indirectly. Level two inputsinputs may include quoted pri other than markets, as well as inputs that are observable for such as interest rates, foreign exchange rates and quoted intervals. Level three inputs are unobservab as own assumptions, based an on entity's typically construction yards and other payments, and are comm to $5,837 million. These amounts prepa operation supervision, construction include expenses, contract v fair fair value is a market-based measurement, not an determined tity-specific en based measurement, on the and assumptions that should market par be asset or liability. Note 18 – Commitments and contingencies Commitments Purchase At September 30, 2012, we had nineteen contractual rigs, and five tender rigs. The units are scheduled to be delivered in 2012, 2013, 2014 and 2015. As of 30, we September have paid rel $1,629 million The maturity schedule for the remaining payments is ASC ASC Topic 820 Fair Value Measurement and Disclosure different from inputs on is based measurement value the fair of determination the where instances levels of the fair value the hierarchy, level in th value measurement falls is based on the lowest l leve assessme Company's The input in entirety. its measurement that is significant to the fair value the fair in value measurement its requires entirety The contracts are for the construction of two semi- Maturity schedule for remaining newbuildpayments a millions) US$ (In 2012 2013 2014 2015 Total

- - - -

- - - 4 4 Inputs Inputs (Level3) Significant

Significant

- Unobservable -

20 20

Unobservable

- 2 3

11 13 39

- - 372 414 22 22 Other Other Inputs 20 -16 4

Other Other (Level 2) (Level 3) Inputs

Significant (Level2) Observable Significant Observable

407 407

at reporting date using atreporting dateusing d

Fair valueFair measurements

Fair valueFair measurements - - Assets Active Quote ments ments Assets Prices inPrices Active (Level1) Identical Quoted Prices in in Prices (Level 1) Identical Marketsfor 242 242 - - -

Marketsfor 4 1 5

- 3 3 22 68 24 11 38 39 246 2 407 407 372 414 30, 2012 30, 31, 2011 31, Fairvalue ue on a recurring basis: basis: recurring a on ue September December Fair value Fair

ervable inputs (Level 3):

short term short term Notes tothe unaudited consolidated financial state

(In millions of US dollar) Assets: Marketablesecurities contracts swap equity TRS Other derivative receivable instruments Total – assets Liabilities: short term –Interestswaprate payable contracts forward short termCurrency – payable contracts short term payable derivative Otherintruments – liabilities Total Realization Purchase Changes in fair value ofbonds 2012 30, September balance Closing (In US$ millions) Beginning balance January 1, 2012 1, January balance Beginning Financial instruments that are measured at fair val

(In US$ millions) Assets: Marketablesecurities Other derivative receivable instruments assets Total – Liabilities: payable term short – contracts swap rate Interest short term derivativeOtherinstruments– payable liabilities Total Roll forward of fair value measurementsusing unobs

A 57

23 822 BOR 1,240 1,263 1,148 1,021

SFL West West Taurus

170.0 170.0 172.5 2016 (In US$ US$ (In Ltd. Deepwater Hercules

thousands) thousands) 158.8 12 398 572 614

SFL

West West Polaris Polaris Polaris December 31,2011 Limited

r r 20 731 298 174142 51 326 115 175.4 175.4 180.0 1,151 611 1,171 623 1,029 1,026 Ltd. SFL 2015 West West (In US$ Taurus thousands) thousands) 165.0 Hercules

ments ments

Deepwate

have been fixed at 3.89% and 2.17%,

176.5 176.5 238.5

2014 0 (In US$ (In initial public offering of 8,750,000 11 71 o own, operate and acquire offshore thousands) thousands) it priced its initial public offering of 320.7 tners"), tners"), a wholly-owned subsidiary of 548 559 436 436 601 , one drillship (West Capella) and one September 30,2012 30,2012 September y y interests, pursuant to a registration SFL West

West

iously filed with the U.S. Securities and

Polaris Polaris Polaris

Limited

t. Seadrill Partners granted the underwriters a a underwriters the granted Partners t. Seadrill on on units were offered to the public and began

West Taurus Partners' Partners' initial fleet will consist of two semi- s s of the VIEs as 30, at 2012 September and as at

28 223.3 223.3 250.0 2013 and se two units is fixed regardless of movements in LI (In US$ thousands) thousands) 316.2*

West Polaris 250.0 250.0 323.5* 323.5* 2012 (In US$ (In thousands) thousands) 311.9*

% % %

Notes tothe unaudited consolidated financial state 2.85 4.25 Base LIBOR Rate Interest 4.25

For For a period the interest rates for West Taurus West * Other liabilities respectively, respectively, and the bareboat charter rate for the table. the in above refle rates cted are interest charter These fixed rates. trading on October 19, on the New York Stock Exchange under the symbol "SDLP". tender rig (West Vencedor). Vencedor). (West rig tender On October 18, Seadrill Partners LLC announced that 30-day over-allotment option to purchase up to 2,500 1,31 additional common units, at the same price per The unit, comm to cover over-allotments. West Polaris West Hercules The in and account assets liabilities the statutory December 31, 2011 are as follows: millions) US$ (In unit of Name lease finance in Investment Other assets Totalassets debt term Long liabilities Total Equity Book value of accounts units in the Company's consolidated Note 20 – Subsequent Events On October 15, Seadrill Partners LLC ("Seadrill Par common units, representing limited statement on liability Form F-1 compan (including a prospectus) prev Exchange Seadrill Commission. Partners was formed drilling rigs t under long-term contracts. Seadrill submersible rigs (West Capricorn and West Aquarius) 8,750,000 common units at a price of $22.00 per uni Seadrill Seadrill Limited announced that it has commenced an

West last Option * Option Month of of Month and repurchase

Nov 2023

149 149 Last option * * option d of the lease terms by West Taurus repurchase 178 2023 June 135 2023 Aug (In US$ millions) US$ (In ments ments 2012 September September option August 2011 August repurchase Month firstof February 2015 February

sale sale and leaseback arrangements, as of idated idated accounts. The Company did not lected lected in our financial statements as of lship lship and two semi-submersible rigs from leased back by the Company on bareboat en en sold by the Company to single purpose ms have been agreed, at $149 million and $135 nd nd the charter contracts. Accordingly, these A summary of A summary the rates charter per bareboat y y continued to be reported as assets at their ions ions or financial condition. Our best estimate tion tion of such claims will not have a material hase hase the assets at the end of the 15 year lease nce sheet. a Base LIBOR Interest Rate for each bareboat d in non-controlling interests d in interests in the non-controlling Company's pany is pany of beneficiary the primary the risks and 418 418 lawsuits in various jurisdictions for demurrage, for demurrage, in jurisdictions lawsuits various First ifferences between the LIBOR fixing each month month each fixing LIBOR the between ifferences option option 27 repurchase

(In US$ millions) US$ (In 548 580

850 850 Salevalue Ship Finance has a put option exercisable at the en

(In US$ millions) US$ (In

Notes tothe unaudited consolidated financial state from from Effective

Nov 2008 West Polaris, 2008 Oct 850 2008 July 850

repurchase obligations at the end of the lease ter * For the unit which the vessel may be sold to Hercules Seadrill for a d fixe price of $75 million, respectively. million. For Legal Proceedings Proceedings Legal We are a as party, or to plaintiff defendant, a few damages, off-hire and other claims and commercial d isputes operation arising of from our the drilling construction units, or in the acquisition ordinary activities. We co urse believe of that business the or resolu in impact individual or connection in the aggregate on with our operat our of the outcome of the 2012. various 30, September disputes has been ref September 30, 2012: 2012: 30, September VIEs under finance leases. Each of the units subsidiaries of had Ship be Finance Ltd and simultaneously for charter contracts a of 15 term the ny has Theto options units several repurchase Compa years. during the charter periods, and obligations to purc period. The following table gives a summary of the rewards connected with the ownership of the units a VIEs are fully consolidated in the record Company's any gains consol from the sale of the units, as original the cost in the to attributable Company's Ship Finance in the VIEs is include balance sheet at consolidated the accounts. At September 30, time 2012 (as llwe of as at each December 31,reported transaction. under drilling2011) units in the Company's the The bala units are equity The bareboat charter rates are set on the basis of d for adjusted are thereafter and contract, charter Rate, Interest Base LIBOR the on based are shown The amounts below. is given unit each for day the year. for rates average reflect and Note 19 – Variable Interest Entities (VIEs) As of September 30, 2012, the Company leased a dril Unit West Polaris Taurus West WestHercules The Company has determined that the (VIEs), and interest variable entities that the Com Ship Finance bsidiaries, su which own the units, are and the Base Rate for Interest LIBOR each contract.

A 58 ments ments corresponding to 65,94% of the total Husky Husky Oil Operations Limited for a new US$1.18 billion for the five firm years. d start-up of operations during Q2 2015. cured credit facility of US$50 million. The The million. of US$50 facility credit cured ract ract ending in December 2013. In addition nga nga Eclipse for a consideration of US$590 yard in Singapore in 2011, and is currently revenue potential for the contract, including including the contract, for potential revenue the contract. Seadrill intends to take delivery of delivery take to intends Seadrill the contract. 30 Notes tothe unaudited consolidated financial state terest of 3 months LIBOR + 5%. 5%. + LIBOR months 3 of terest in an bears and 2012 10, December repayable is loan On November 16, a subsidiary of Seadrill entered to in acquire the an ultra-deepwater semi-submersible agreement rig So with Songa Offshore to million. The rig was delivered from the Jurong Ship operating for Total offshore Angola on a fixed cont the rig during December 2012. The combination. business purchase of the S onga Eclipse will be accounted for a unse term a short Archer granted 12, we November On extend to options further has three one-year Total five-year five-year contract for the newbuild Total estimated Greenland. in and Canada operations harsh nt environme semi-submersible rig West mobilization and Mira performance bonus is for approximately The West Mira is currently under construction at e th Hyundai Samho Shipyard in South Korea and delivery is scheduled for Q4 2014 with estimate As of November 9, we own company. 26,376,516 the in shares outstanding of number shares in AOD, On November 12, we received a Letter of Award from ments ments 690,958 690,958 shares in the company, mmon Units in the IPO, including e acquired 12,190,858 shares of Asia uraKencana") and Seadrill Limited Limited Seadrill and uraKencana") r r the Exchange Act on October 18, 2012. 685,558 shares in the company, company, the in shares 685,558 acquired at a price of US$5.0 per share d managed through its existing joint- ing ("MOU") to combine and integrate al mandatory offer for all the issued and and issued the all for offer al mandatory a seller's note of up to US$ 187 million, Petrobras in 2011. The parties also agree to focus on developing and expanding Archer Archer expanding and developing on focus t t included in the transaction. ng consideration will be funded by 16, are today either owned orplanned to be Tioman Drilling Company Sdn Bhd, and an an and Bhd, Sdn Company Drilling Tioman the 6.4% stake that Seadrill presently owns owns presently Seadrill that stake 6.4% the tanding shares in the company. company. in the shares tanding a 75.7% limited liability company interest a company in 75.7% limited liability Fredriksen John chairman Seadrill's ernate). rill rill Limited own 14,752,525 Common Units anding shares. shares. anding from and including November 12 to 16:30 363 million in remaining capital expenditures tinue to operate from the existing premises in arkets. ght to nominate two members to the in activities venture joint their grow to ek develop a strong leading player in the Far East East Far in the player leading strong a develop ng the KM1 rig currently owned by by owned currently rig KM1 the ng of which will be acquired through this ceive a minimum of US$ 350 million in new in new million 350 US$ of minimum a ceive 29 Notes tothe unaudited consolidated financial state venture with Seadrill in Varia Perdana Sdn Bhd and 3 construction, under currently units 5 additional transaction and are expected to be delivered in 201 3. In addition SapuraKencana will also be offered the right to be the manager for three furth er tender rigs which are not part of the transaction. These rigs, West Vencedor, T-15 and T- no therefore are and LLC Partners Seadrill by owned SapuraKencana), 5 of which are already 51%-owned an 51%-owned already are which of 5 SapuraKencana), entered into a non-binding memorandum of understand both companies' tender rig businesses. SapuraKencana Theunder business enlarged rig tender will comprise, 16 tender rigs in operation (includi SapuraKencana will take over theenterprise an rigs for including organization rig thetender full value of US$ 2.9 billion. The organization will con Singapore. The total enterprise value includes US$ linked to the newbuilds programbank existing and all including the business rig debttender in the US $ 800 million approximately be asto of Decemberexpected are that 31stfacilities 2012. One of the main objectives of the transaction is to market. Seadrill will, to support this position, re rill Limited upon Limited Units Sead rill the exercise Common from that were of full 1,312,500 redeemed the option which Company Following Units. the closing of the granted Sead offering, to representing and Sub Units, collectively 16,543,350 the underwriters the Company. The Common Units were registered unde to purchase additional Common Offshore Drilling Limited) ("AOD"). The shares were rate (equals NOK28.71 based on the exchange USD/NOK set the by Central Bank on Norwegian October 25). of outs number Following total the of 64.23% to corresponding this acquisition, we own ("Sap Berhad Petroleum SapuraKencana 5, November 25, On to in addition comes This SapuraKencana. of shares in SapuraKencana. Seadrill will further have the ri SapuraKencana board of directors (including one alt is expected to be one of those members. The remaini borrowings, external of mix a through SapuraKencana internally generated funds and equity. The MOU further stipulates that the parties will se by contracts PLSV 3 awarded were they where Brazil and Limited Archer subsidiary o wned % 40 Seadrill's between venture joint a establish to be will venture such of scope The SapuraKencana. Limited's wireline services in the Far East Asian m On November 9, we resolved to launch an uncondition AOD per 28.71 NOK of price a at d ("AOD") Limite Drilling Offshore Asia of shares outstanding runs Offer Mandatory the in period offer The share. d by extende upbe to twomay and 2012, weeks. December In 10 the on period(CET) hours acquired have we 9, November and 25 October between outst of number total the of 1.71% to corresponding On October 24, 2012, the Company sold 10,062,500 Co After close of trading on Oslo Børs on October 25 w

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