10-12B/A

As filed with the Securities and Exchange Commission on August 5, 2009

File No. 001-34231

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 5

to

Form 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(B) OR 12(G) OF

THE SECURITIES EXCHANGE ACT OF 1934

SEAHAWK DRILLING, INC.*

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation or organization) 72-1269401
(I.R.S. Employer
Identification No.)

5847 San Felipe, Suite 1600

Houston, Texas 77057

(713) 369-7300

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities to be registered pursuant to Section 12(b) of the Act:

Title of Each Class Registered	Name of Each Exchange on Which Such Class will be Registered
Common Stock, par value $.01 per share	The NASDAQ Stock Market LLC
(including the Preferred Stock Purchase Rights attached thereto)

Securities to be registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o

(Do not check if a smaller reporting company)

* The registrant was formerly named Pride SpinCo, Inc. Effective as of August 4, 2009, the registrant changed its name to Seahawk Drilling, Inc.

INFORMATION INCLUDED IN INFORMATION STATEMENT
AND INCORPORATED BY REFERENCE IN FORM 10

CROSS REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

This Registration Statement on Form 10 (the “Form 10”) incorporates by reference information contained in the information statement filed as Exhibit 99.1 hereto (the “Information Statement”). The cross-reference table below identifies where the items required by Form 10 can be found in the Information Statement.

ITEM 1.   BUSINESS

The information required by this item is contained in the sections entitled “Summary,” “Risk Factors,” “Forward-Looking Information,” “The Spin-Off,” “Capitalization,” “Management’s Discussion and Analysis of Combined Financial Condition and Results of Operations” and “Business” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

ITEM 1A.   RISK FACTORS

The information required by this item is contained in the sections entitled “Risk Factors” and “Forward-Looking Information” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

ITEM 2.   FINANCIAL INFORMATION

The information required by this item is contained in the sections entitled “Summary,” “Capitalization,” “Selected Historical Combined Financial Information,” “Unaudited Pro Forma Combined Financial Information,” and “Management’s Discussion and Analysis of Combined Financial Condition and Results of Operations” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

ITEM 3.   PROPERTIES

The information required by this item is contained in the section entitled “Business — Properties” in the Information Statement, and such section of the Information Statement is incorporated herein by reference.

ITEM 4.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is contained in the section entitled “Management — Security Ownership of Executive Officers and Directors” and “Security Ownership of Certain Beneficial Owners” in the Information Statement, and such section of the Information Statement is incorporated herein by reference.

ITEM 5.   DIRECTORS AND EXECUTIVE OFFICERS

The information required by this item is contained in the sections entitled “Management — Directors and Executive Officers,” “Management — Board Structure” and “Management — Board Committees” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

ITEM 6.   EXECUTIVE COMPENSATION

The information required by this item is contained in the sections entitled “The Spin-Off — Treatment of Stock-Based Awards,” “Management,” and “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Employee Matters Agreement” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

ITEM 7.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is contained in the sections entitled “Management’s Discussion and Analysis of Combined Financial Condition and Results of Operations,” “Management,” and “Certain Relationships and Related Party Transactions” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

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ITEM 8.   LEGAL PROCEEDINGS

The information required by this item is contained in the section entitled “Business — Legal Proceedings” in the Information Statement, and such section of the Information Statement is incorporated herein by reference.

ITEM 9.   MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information required by this item is contained in the sections entitled “Summary,” “The Spin-Off,” “Dividend Policy,” and “Description of Capital Stock,” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

ITEM 10.   RECENT SALES OF UNREGISTERED SECURITIES

None.

ITEM 11.   DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED

The information required by this item is contained in the sections entitled “The Spin-Off,” “Dividend Policy,” and “Description of Capital Stock” in the Information Statement, and such sections of the Information Statement are incorporated herein by reference.

ITEM 12.   INDEMNIFICATION OF DIRECTORS AND OFFICERS

The information required by this item is contained in the section entitled “Indemnification of Directors and Officers” in the Information Statement, and such section of the Information Statement is incorporated herein by reference.

ITEM 13.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is contained in the section entitled “Index to Financial Statements” in the Information Statement, and such section of the Information Statement is incorporated herein by reference.

ITEM 14.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 15.   FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements.  The information required by this item is contained in “Index to Financial Statements,” and such section of the Information Statement is incorporated by reference herein.

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(b) Exhibits.  The following exhibits are furnished as exhibits hereto:

Exhibit
Number			Description
	2	.1**	Form of Master Separation Agreement
	3	.1**	Form of Restated Certificate of Incorporation
	3	.2**	Form of Bylaws
	4	.1**	Form of Rights Agreement
	4	.2*	Form of Credit Agreement
	10	.1**	Form of Transition Services Agreement
	10	.2**	Form of Tax Sharing Agreement
	10	.3**	Form of Employee Matters Agreement
	10	.4†**	Randall D. Stilley Employment Agreement
	10	.5†**	Steven A. Manz Employment Agreement
	10	.6†**	Alejandro Cestero Employment Agreement
	10	.7†**	Oscar A. German Employment Agreement
	10	.8†**	2009 Long-Term Incentive Plan
	10	.9†**	Employee Stock Purchase Plan
	10	.10**	Form of Tax Support Agreement
	21	.1*	List of subsidiaries of the registrant
	99	.1*	Information Statement

*	Filed herewith.
**	Previously filed.
†	Compensatory plan or agreement.

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on August 5, 2009.

SEAHAWK DRILLING, INC.

By:  /s/  Randall D. Stilley

Randall D. Stilley

President and Chief Executive Officer

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INDEX TO EXHIBITS

Exhibit
Number			Description
	2	.1**	Form of Master Separation Agreement
	3	.1**	Form of Restated Certificate of Incorporation
	3	.2**	Form of Bylaws
	4	.1**	Form of Rights Agreement
	4	.2*	Form of Credit Agreement
	10	.1**	Form of Transition Services Agreement
	10	.2**	Form of Tax Sharing Agreement
	10	.3**	Form of Employee Matters Agreement
	10	.4†**	Randall D. Stilley Employment Agreement
	10	.5†**	Steven A. Manz Employment Agreement
	10	.6†**	Alejandro Cestero Employment Agreement
	10	.7†**	Oscar A. German Employment Agreement
	10	.8†**	2009 Long-Term Incentive Plan
	10	.9†**	Employee Stock Purchase Plan
	10	.10**	Form of Tax Support Agreement
	21	.1*	List of subsidiaries of the registrant
	99	.1*	Information Statement

*	Filed herewith.
**	Previously filed.
†	Compensatory plan or agreement.

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EX-4.2

Exhibit 4.2

EXECUTION VERSION

REVOLVING CREDIT AGREEMENT

Dated as of August 4, 2009

among

SEAHAWK DRILLING, INC.

as Borrower,

CERTAIN SUBSIDIARIES THEREOF,

as Guarantors,

THE LENDERS FROM TIME TO TIME PARTY HERETO,

as Lenders,

and

NATIXIS, NEW YORK BRANCH,

as Administrative Agent, Issuing Bank, Lead Arranger and Sole Bookrunner

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		1
Section 1.01 Certain Defined Terms		1
Section 1.02 Computation of Time Periods		35
Section 1.03 Accounting Terms		35
Section 1.04 Types of Revolving Advances		35
Section 1.05 Miscellaneous		35
ARTICLE II THE REVOLVING ADVANCES		36
Section 2.01 The Revolving Advances		36
Section 2.02 Method of Borrowing		36
Section 2.03 Fees		40
Section 2.04 Reduction of the Revolving Commitments		41
Section 2.05 Repayment		42
Section 2.06 Interest		42
Section 2.07 Prepayments		43
Section 2.08 Funding Losses		49
Section 2.09 Increased Costs		49
Section 2.10 Payments and Computations		51
Section 2.11 Taxes		52
Section 2.12 Sharing of Payments, Etc		55
Section 2.13 Applicable Lending Offices		55
Section 2.14 Letters of Credit		55
Section 2.15 Mitigation Obligations; Replacement of Lenders; Removal of Defaulting Lender		61
Section 2.16 Increase in Revolving Commitments		62
ARTICLE III CONDITIONS OF LENDING		64
Section 3.01 Binding Effect; Termination		64
Section 3.02 Initial Conditions Precedent		64
Section 3.03 Conditions Precedent to Each Revolving Advance		69
Section 3.04 Determinations Under Sections 3.02 and 3.03		70

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TABLE OF CONTENTS
(continued)

	Page
ARTICLE IV REPRESENTATIONS AND WARRANTIES		70
Section 4.01 Existence		70
Section 4.02 Power and Authority		70
Section 4.03 Authorization and Approvals		71
Section 4.04 Enforceable Obligations		71
Section 4.05 Financial Statements; No Material Adverse Effect		71
Section 4.06 True and Complete Disclosure		72
Section 4.07 Litigation		72
Section 4.08 Compliance with Laws		73
Section 4.09 No Default		73
Section 4.10 Subsidiaries; Corporate Structure		73
Section 4.11 Liens; Condition of Properties		73
Section 4.12 Environmental Condition		73
Section 4.13 Insurance		74
Section 4.14 Taxes		75
Section 4.15 ERISA Compliance		75
Section 4.16 Security Interests		76
Section 4.17 Bank Accounts		77
Section 4.18 Labor Relations		77
Section 4.19 Intellectual Property		77
Section 4.20 Solvency		77
Section 4.21 Margin Regulations		78
Section 4.22 Investment Company Act		78
Section 4.23 Names and Locations		78
Section 4.24 Citizenship		78
ARTICLE V AFFIRMATIVE COVENANTS		78
Section 5.01 Preservation of Existence, Etc		78
Section 5.02 Compliance with Laws, Etc		79
Section 5.03 Maintenance of Property		79
Section 5.04 Maintenance of Insurance		79

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TABLE OF CONTENTS
(continued)

	Page
Section 5.05 Payment of Taxes, Etc		83
Section 5.06 Reporting Requirements		83
Section 5.07 Other Notices		86
Section 5.08 Books and Records; Inspection		89
Section 5.09 Use of Proceeds		89
Section 5.10 Nature of Business		89
Section 5.11 Operation of Rigs		89
Section 5.12 Additional Mortgaged Vessels		91
Section 5.13 Additional Guarantors		93
Section 5.14 Additional Collateral Requirements		93
Section 5.15 Further Assurances in General		94
Section 5.16 PEMEX Consent		94
ARTICLE VI NEGATIVE COVENANTS		95
Section 6.01 Liens, Etc		95
Section 6.02 Debts, Guaranties and Other Obligations		96
Section 6.03 Merger or Consolidation		97
Section 6.04 Dispositions		98
Section 6.05 Investments; Acquisitions		99
Section 6.06 Restricted Payments		100
Section 6.07 Change in Nature of Business		100
Section 6.08 Transactions With Affiliates		100
Section 6.09 Agreements Restricting Liens and Distributions		101
Section 6.10 Limitation on Accounting Changes or Changes in Fiscal Periods		101
Section 6.11 Limitation on Speculative Hedging		101
Section 6.12 Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities		102
Section 6.13 Operating Leases		102
Section 6.14 Capital Expenditures		102
Section 6.15 Amendment of Material Contracts		102
Section 6.16 Operation of Rigs		102

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TABLE OF CONTENTS
(continued)

	Page
Section 6.17 Financial Covenants		104
ARTICLE VII EVENTS OF DEFAULT		104
Section 7.01 Events of Default		104
Section 7.02 Optional Acceleration of Maturity		106
Section 7.03 Automatic Acceleration of Maturity		106
Section 7.04 Non-exclusivity of Remedies		107
Section 7.05 Right of Set-off		107
Section 7.06 Application of Proceeds		107
ARTICLE VIII THE GUARANTY		108
Section 8.01 Liabilities Guaranteed		108
Section 8.02 Nature of Guaranty		108
Section 8.03 Agent’s Rights		109
Section 8.04 Guarantor’s Waivers		109
Section 8.05 Maturity of Obligations, Payment		110
Section 8.06 Agent’s Expenses		110
Section 8.07 Liability		111
Section 8.08 Events and Circumstances Not Reducing or Discharging any Guarantor’s Obligations		111
Section 8.09 Subordination of All Guarantor Claims		113
Section 8.10 Claims in Bankruptcy		114
Section 8.11 Payments Held in Trust		114
Section 8.12 Benefit of Guaranty		114
Section 8.13 Reinstatement		114
Section 8.14 Liens Subordinate		115
Section 8.15 Guarantor’s Enforcement Rights		115
Section 8.16 Limitation		115
Section 8.17 Contribution Rights		115
Section 8.18 Release of Guarantors		116
ARTICLE IX THE ADMINISTRATIVE AGENT		116
Section 9.01 Appointment and Authority		116

-iv-

TABLE OF CONTENTS
(continued)

	Page
Section 9.02 Rights as a Lender		116
Section 9.03 Exculpatory Provisions		117
Section 9.04 Reliance by the Administrative Agent		118
Section 9.05 Delegation of Duties		118
Section 9.06 Resignation or Removal of the Administrative Agent		118
Section 9.07 Non-Reliance on Administrative Agent and Other Lenders		119
Section 9.08 Indemnification		120
Section 9.09 Collateral and Guaranty Matters		120
Section 9.10 No Other Duties, Etc		122
ARTICLE X MISCELLANEOUS		122
Section 10.01 Amendments, Etc		122
Section 10.02 Notices, Etc		123
Section 10.03 No Waiver; Cumulative Remedies		125
Section 10.04 Costs and Expenses		125
Section 10.05 Indemnification		126
Section 10.06 Successors and Assigns		127
Section 10.07 Confidentiality		130
Section 10.08 Execution in Counterparts		131
Section 10.09 Survival of Representations, Etc		131
Section 10.10 Severability		131
Section 10.11 Interest Rate Limitation		131
Section 10.12 Governing Law		132
Section 10.13 Submission to Jurisdiction		132
Section 10.14 Waiver of Jury		132
Section 10.15 Entire agreement		133

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TABLE OF CONTENTS
(continued)

	Page
EXHIBITS:
Exhibit A — Form of Assignment and Acceptance Agreement
Exhibit B — Form of Assignment of Earnings
Exhibit C — Form of Assignment of Insurance
Exhibit D — Form of Borrowing Base Report
Exhibit E — Form of Compliance Certificate
Exhibit F — Form of Letter of Credit Request
Exhibit G — Form of Note
Exhibit H — Form of Notice of Borrowing
Exhibit I —  Form of Notice of Conversion or Continuation
Exhibit J —  Form of Pledge Agreement
Exhibit K — Form of Rig Mortgage
Exhibit L — Form of Security Agreement
SCHEDULES:
Schedule 1.01(a) —   Guarantors
Schedule 1.01(b) —   Initial Collateral Rigs
Schedule 1.01(c) —   Non-Collateral Rigs
Schedule 1.01(d) —   Consolidated EBITDA Adjustments
Schedule 2.01 —       Revolving Commitments and Pro Rata Shares of the Lenders
Schedule 3.02(f) —   Minimum Capital
Schedule 4.07 —       Litigation
Schedule 4.10 —       Subsidiaries
Schedule 4.13 —       Insurance
Schedule 4.17 —       Bank Accounts
Schedule 4.23 —       Names and Locations
Schedule 5.04(b) —   Rigs Insured Values
Schedule 5.04(d) —   Loss Payable Clause
Schedule 6.01 —       Existing Liens
Schedule 6.05 —       Existing Investments
Schedule 6.09 —       Burdensome Agreements
Schedule 10.02 —     Addresses for Notice

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REVOLVING CREDIT AGREEMENT

     This Revolving Credit Agreement dated as of August 4, 2009 is among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), the Guarantors, the Lenders, and Natixis, New York Branch (“Natixis”), as Administrative Agent for the Lenders and as Issuing Bank.

     The Borrower, the Guarantors, the Lenders, the Administrative Agent and the Issuing Bank agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     Section 1.01 Certain Defined Terms. Any terms used in this Agreement that are defined in Article 9 of the UCC (as hereinafter defined), whether or not therein capitalized, shall have the meanings assigned to those terms by the UCC as of the date of this Agreement. As used in this Agreement, the terms defined above shall have the meanings set forth therein and the following terms shall have the following meanings:

     “Acceptable Credit Support” means a letter of credit issued from (a) a Lender or an Affiliate thereof or (b) a commercial bank organized under the laws of the United States of America or any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, with a credit rating of at least A- as determined by S&P and at least A3 as determined by Moody’s (or if such Person has only one debt rating, such rating is at least A- as determined by S&P or at least A3 as determined by Moody’s), in a form reasonably acceptable to the Administrative Agent and which has the effect of assuring the payment or reimbursement for any monetary obligations of the Account Debtor with respect to a Tier 1 Eligible Receivable.

     “Acceptable Flag Jurisdiction” means each of the United States of America, the Bahamas, the Republic of Liberia, the Marshall Islands, Vanuatu, Panama and any other jurisdiction reasonably acceptable to the Required Lenders.

     “Acceptable Additional Rig” shall mean any Rig now or hereafter acquired; provided that such Rig must (i) have a class certificate reasonably acceptable to the Administrative Agent, (ii) must be of an age and type reasonably acceptable to the Administrative Agent and (iii) be registered in an Acceptable Flag Jurisdiction; provided, however, that (i) the class certificate, age and type of each Non-Collateral Rig that is listed in Schedule 1.01(c) hereto is and, until the Maturity Date, shall be, reasonably acceptable to the Administrative Agent and (ii) the class and type remain the same as in effect on the Closing Date.

     “Acceptable Replacement Rig” shall mean, with respect to a Collateral Rig, any now owned or hereafter acquired Rig with a fair market value, or if more than one now owned or hereafter acquired Rigs, Rigs with an aggregate fair market value, that is comparable to the fair market value of such Collateral Rig (as determined in accordance with the Appraisal Report most recently delivered to the Administrative Agent pursuant to Section 5.06(h) or delivered pursuant

to a Rig Exchange to the Administrative Agent by the Borrower); provided that each such Rig must (a) have a class certificate reasonably acceptable to the Administrative Agent, (b) be of an age and type reasonably acceptable to the Administrative Agent and (c) be registered in an Acceptable Flag Jurisdiction; provided, however, that (i) the class certificate, age and type of each Non-Collateral Rig that is listed in Schedule 1.01(c) hereto is and, until the Maturity Date, shall be, reasonably acceptable to the Administrative Agent and (ii) the class and type remain the same as in effect on the Closing Date.

     “Acceptable Security Interest” in any Property means a Lien which (a) exists in favor of the Administrative Agent, for the ratable benefit of the Secured Parties; (b) is superior to all other Liens except Excepted Liens; (c) secures the Obligations; and (d) is perfected and enforceable against the Loan Party that created such security interest in preference to any rights of any Person therein, other than Excepted Liens.

     “Account Control Agreement” shall mean, if any deposit or securities account of the Borrower or any Loan Party is held with a financial institution that is not the Administrative Agent, an agreement or agreements in form and substance reasonably acceptable to the Administrative Agent between the Administrative Agent and such other financial institution governing any such deposit accounts or securities of the Borrower or such Loan Party.

     “Acquisition” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (a) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise, or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company.

     “Additional Lender” has the meaning set forth in Section 2.16(b).

     “Adjusted Base Rate” means, for any day, a fluctuating rate of interest per annum equal to the highest of the following, in each case, to the extent determinable by the Administrative Agent: (a) the Federal Funds Rate plus one and one-half percent (1.50%), (b) the Daily One Month LIBOR Rate plus one and one-half percent (1.50%), and (c) the Prime Rate.

     “Administrative Agent” means Natixis in its capacity as administrative agent for the Lenders under the Loan Documents and any successor in such capacity appointed pursuant to Section 9.06.

     “Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.

     “Affected Lender” has the meaning set forth in Section 2.07(d).

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     “Affiliate” of any Person, means any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person or any Subsidiary of such Person. The term “control” (including the terms “controlled by” or “under common control with”) means the possession, directly or indirectly, of the power to (a) vote or direct the voting of 10% or more of the outstanding shares of Voting Stock of such Person or (b) direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.

     “Agreement” means this Revolving Credit Agreement dated as of August 4, 2009 among the Borrower, the Guarantors, the Lenders, the Issuing Bank and the Administrative Agent.

     “Applicable Lending Office” means (a) with respect to any Lender, the office, branch, subsidiary, affiliate or correspondent bank of such Lender specified in its Administrative Questionnaire or such other office, branch, subsidiary, affiliate or correspondent bank as such Lender may from time to time specify to the Borrower and the Administrative Agent from time to time and (b) with respect to the Administrative Agent or the Issuing Bank, the address specified for such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such Person in a notice to the other parties.

     “Applicable Margin” means, for any day, (a) with respect to Base Rate Advances, 3.50%, and (b) with respect to Eurodollar Advances, 4.50%.

     “Appraisal Report” has the meaning set forth in Section 5.06(h)(i).

     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

     “Approved Rig Appraiser” means Bassoe Offshore (USA) Inc. or any other rig appraiser selected by the Administrative Agent and reasonably acceptable to the Borrower.

     “Arranger” means Natixis in its capacity as lead arranger and sole bookrunner.

     “Asset Disposition” means any Disposition of any Collateral or Non-Collateral Rigs (other than a Disposition of Non-Collateral Rigs in satisfaction of the Contested Mexican Tax Assessments) by the Borrower or other Loan Party pursuant to Section 6.04(c).

     “Assignment and Acceptance” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06), and accepted by the Administrative Agent, in substantially the form of the attached Exhibit A or any other form approved by the Administrative Agent and, if no Event of Default has occurred and is continuing, the Borrower, each in their reasonable discretion.

     “Assignment of Earnings” means an Assignment of Earnings in substantially the form of the attached Exhibit B among one or more of the Loan Parties and the Administrative Agent, for the ratable benefit of the Secured Parties.

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     “Assignment of Insurance” means an Assignment of Insurance in substantially the form of the attached Exhibit C among one or more of the Loan Parties and the Administrative Agent, for the ratable benefit of the Secured Parties.

     “Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

     “Availability” means, on any date, the excess, if any, of (a) the least of (i) the Revolving Commitments, (ii) the Borrowing Base and the (iii) the Fixed Charge Coverage Cap, in each case, in effect on such date, over (b) the sum of the outstanding principal amount of Revolving Advances and the Letter of Credit Exposure, in each case, on such date.

     “Base Rate Advance” means a Revolving Advance that bears interest at a rate determined by reference to the Adjusted Base Rate.

     “Borrower” has the meaning set forth in the introductory paragraph hereto.

     “Borrowing” means a borrowing consisting of simultaneous Revolving Advances of the same Type made, converted or continued on the same Business Day, and, in the case of Eurodollar Advances, as to which a single Interest Period is in effect.

     “Borrowing Base” means, as of any date of determination, an amount determined in Dollars as of the most immediately preceding Borrowing Base Determination Date, which is equal to the sum of the following:

     (a) 80% of Tier 1 Eligible Receivables; plus

     (b) 60% of Tier 2 Eligible Receivables; plus

     (c) the lesser of (i) 20% of the Orderly Liquidation Value of the Collateral Rigs and (ii) $25,000,000, minus (without duplication)

     (d) 100% of the Discretionary Reserve Amount.

     “Borrowing Base Determination Date” means ten (10) Business Days after the last day of each calendar month.

     “Borrowing Base Report” means a borrowing base report in substantially the form of the attached Exhibit D signed by a Responsible Officer of the Borrower.

     “Borrowing Date” means the date on which any Revolving Advance is made or any Letter of Credit is issued hereunder.

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     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, New York and, if such day relates to any Eurodollar Advance, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

     “Capital Expenditures” means, for any Person for any period, the aggregate of all expenditures in respect of the purchase or other acquisition of , the addition of value to, any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations) which should be capitalized by such Person in accordance with GAAP other than (a) expenditures in respect of Acquisitions and Rig Acquisitions financed with Net Cash Proceeds received upon either (i) the issuance and sale by the Borrower of its Equity Interests for the sole purpose of making such Acquisition or Rig Acquisition or (ii) an Asset Disposition to the extent permitted by Section 2.07(c)(iii), (b) expenditures for which the Borrower or its Subsidiaries will be reimbursed directly or indirectly (including, without limitation, by compensation from a customer or supplier, whether in the form of a lump sum payment, any increase in the day rate for a Rig or otherwise) and (c) Net Cash Proceeds from any Recovery Event or Asset Disposition to the extent applied as set forth in Section 2.07.

     “Capital Lease” of a Person means any lease of any Property by such Person as lessee that would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on the balance sheet of such Person.

     “Cash Equivalents” means:

     (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

     (b) investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, ratings of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s;

     (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that has a combined capital and surplus and undivided profits of not less than $500,000,000;

     (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (c) above;

     (e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (d) above; and

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     (f) demand deposit accounts maintained in the ordinary course of business.

     “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

     “Change of Control” means the occurrence of any of the following events:

     (a) any acquisition pursuant to which any Person or group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) has become the direct or indirect beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than 35% of the Voting Stock of the Borrower;

     (b) the Borrower is merged with or into or consolidated with another Person and, immediately after giving effect to the merger or consolidation, less than a majority of the outstanding voting securities entitled to vote generally in the election of directors or persons who serve similar functions of the surviving or resulting Person are then beneficially owned (within the meaning of Rule 13d-3 of the Exchange Act) in the aggregate by (i) the stockholders of the Borrower immediately prior to such merger or consolidation, or (ii) if the record date has been set to determine the stockholders of the Borrower entitled to vote on such merger or consolidation, the stockholders of the Borrower as of such record date;

     (c) the Borrower, either individually or in conjunction with one or more of its Subsidiaries, sells, conveys, transfers or leases, or its Subsidiaries sell, convey, transfer or lease, all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole (either in one transaction or a series of related transactions), including Equity Interests of its Subsidiaries, to any Person except as otherwise permitted by Section 6.04;

     (d) the liquidation or dissolution of the Borrower; or

     (e) a majority of the individuals who constitute the board of directors of the Borrower are not Continuing Directors.

     “Charter Obligations” means all obligations (other than obligations backed by a cash-secured letter of credit) of any Person with respect to liquidated damages, fees or other liabilities arising under the terms of and incurred in connection with the termination or breach of charters or similar contractual arrangements entered into with respect to the charter or lease of Collateral Rigs, net of any amounts owed by any counterparty to such charter or contractual arrangement, in each case calculated on a probable loss basis in accordance with GAAP.

     “Closing Date” means the date on which the conditions precedent set forth in Section 3.02 shall have been satisfied or waived pursuant to Section 10.01, which date shall not be later than September 30, 2009.

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     “Code” means the United States Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time, and any successor statute and all rules and regulations promulgated thereunder.

     “Collateral” means all the “Collateral” as defined in any Security Document and shall include the Collateral Rigs.

     “Collateral Rigs” means (a) each of the Initial Collateral Rigs and (b) any other Acceptable Additional Rig or Acceptable Replacement Rig now or hereafter acquired by the Borrower or any of its Subsidiaries.

     “Compliance Certificate” means a Compliance Certificate signed by a Financial Officer of the Borrower in substantially the form of the attached Exhibit E.

     “Consolidated Current Assets” shall mean, at any time, the consolidated current assets of the Borrower and its Subsidiaries at such time determined in accordance with GAAP.

     “Consolidated Current Liabilities” shall mean, at any time, the consolidated current liabilities of the Borrower and its Subsidiaries at such time determined in accordance with GAAP minus (a) the current portion of any Debt under this Agreement to the extent otherwise included therein and (b) costs, expenses and related liabilities arising from, related to or in connection with the Pride Wyoming mat-supported jackup rig in 2008 to the extent not covered by Pride’s insurance policies (including any deductibles, premium payments for removal of wreckage claims or retention amounts) and its related liabilities in a net amount not to exceed $3,500,000.

     “Consolidated EBITDA” means, for any period, without duplication, the sum of the following for the Borrower and its Subsidiaries on a consolidated basis, each calculated for such period:

     (a) Consolidated Net Income for such period of determination plus

     (b) to the extent deducted in determining Consolidated Net Income, Consolidated Interest Expense, charges against income for foreign, federal, state, and local taxes (and similar taxes to the extent based on income, revenue or profits), depreciation and amortization expense and extraordinary, unusual or non-recurring expenses, charges or losses (including the cumulative effect of changes in GAAP and impairment charges related to long-lived assets) plus

     (c) certain allocated non-recurring general and administrative expenses as set forth on Schedule 1.01(d) and certain impairment charges as set forth on Schedule 1.01(d), minus

     (d) extraordinary or non-recurring gains for such period minus

     (e) any gain realized upon the sale or other disposition of any assets of the Borrower or any of its Subsidiaries for such period (other than in the ordinary course of business) minus

     (f) the income of any Person (other than Wholly-Owned Subsidiaries of the Borrower) in which the Borrower or a Wholly-Owned Subsidiary of the Borrower has an ownership interest except to the extent such income is received by the Borrower or such Wholly-

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Owned Subsidiary in a cash distribution during such period, all as determined on a consolidated basis in accordance with GAAP, plus the loss or minus

     (g) the income of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, minus

     (h) non-cash gains (other than gains resulting from derivatives to the extent the amount of commodities hedged with such derivatives exceeds the Borrower’s and its Subsidiaries’ commodities sold), losses or adjustments under Statements of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as a result of changes in the fair market value of derivatives;

provided however that, with respect to each quarterly period ending on or after September 30, 2009, Consolidated EBITDA will be determined as follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the product of the Consolidated EBITDA for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009, Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated EBITDA for the two fiscal quarters ending December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated EBITDA for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter, Consolidated EBITDA shall be computed by adding the Consolidated EBITDA for the four fiscal quarters ending on such date.

     “Consolidated Interest Expense” means, for any period, (a) the interest expense of the Borrower and its Subsidiaries calculated on a consolidated basis in accordance with GAAP for such period, minus (b) the interest income of the Borrower and its Subsidiaries calculated on a consolidated basis in accordance with GAAP for such period and the amortization of any deferred financing costs incurred in connection with this Agreement to the extent otherwise included in the calculations thereof; provided however that for the purposes of determining Consolidated Interest Expense, with respect to each quarterly period ending on or after September 30, 2009, Consolidated Interest Expense will be determined as follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest Expense for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the product of the Consolidated Interest Expense for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009, Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest Expense for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest Expense for the two fiscal quarters ending December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest Expense for the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest

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Expense for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter, Consolidated Interest Expense shall be computed by adding the Consolidated Interest Expense for the four fiscal quarters ending on such date.

     “Consolidated Net Income” means, for any period, the net income of the Borrower and its Subsidiaries calculated on a consolidated basis for such period after taxes, as determined in accordance with GAAP.

     “Consolidated Net Worth” shall mean, at any time of determination, with respect to the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, the sum of total assets less total liabilities on their balance sheet as of such date, but excluding any treasury stock, after appropriate deduction for any minority interests in Subsidiaries.

     “Consolidated Tangible Net Worth” shall mean, at any time of determination, with respect to the Borrower, the Consolidated Net Worth of such Person and its Subsidiaries on such date less the amount of all intangible items under GAAP included therein, including, without limitation, goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service marks, brand names and write-ups of assets.

     “Contested Mexican Tax Assessments” means tax assessments, including any ordinary course penalties and interest thereon, from the Servicio de Administración Tributaria, an agency of the Secretaría de Hacienda y Crédito Público of the Republic of Mexico, and any successor entity, related to the operations of certain Subsidiaries of the Borrower that are being contested by the Borrower or such Subsidiaries; and the Dollar equivalent of the approximate amount of the Contested Mexican Tax Assessments as of the Effective Date is no more than $130,000,000.

     “Continue”, “Continuation”, and “Continued” each refers to a continuation of Revolving Advances for an additional Interest Period upon the expiration of the Interest Period then in effect for such Revolving Advances.

     “Continuing Directors” means, as of any date of determination, any member of the board of directors (or Persons, committees or other group performing similar functions) of the Borrower who (a) was a member of such board of directors (or Persons, committees or other group performing similar functions) on the Effective Date or the Closing Date or (b) was nominated for election or elected to such board of directors (or Persons, committees or other group performing similar functions) with the approval of a majority of the Continuing Directors who were members of such board of directors (or Persons, committees or other group performing similar functions) at the time of such nomination or election.

     “Convert”, “Conversion”, and “Converted” each refers to a conversion of Revolving Advances of one Type into Revolving Advances of another Type pursuant to Section 2.02(b).

     “Daily One Month LIBOR Rate” means, for any day, the rate per annum equal to the Eurodollar Rate for a one-month Interest Period in the approximate amount of the Eurodollar Advance being made, continued or converted by the Administrative Agent. The “Daily One Month LIBOR Rate” is a rate reasonably determined by the Administrative Agent based upon such offers or other market indicators of the inter-bank market as the Administrative Agent in its

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discretion deems reasonably appropriate including, but not limited to, the BBA LIBOR (as defined under “Eurodollar Rate” below).

     “Debt,” means, for any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

     (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

     (b) obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

     (c) monetary obligations of such Person as lessee under Capital Leases of such Person;

     (d) all reimbursement obligations of such Person owing under letters of credit, bankers’ acceptances, bank guarantees, surety bonds or similar instruments which are issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable for reimbursement;

     (e) net obligations of such Person under any Swap Contract;

     (f) obligations owing under Off-Balance Sheet Liabilities of such Person;

     (g) obligations of others of the type referred to in clauses (a) through (f), (h) and (i) of this definition secured by a Lien on Property now or hereafter owned or acquired by such Person (including obligations arising under conditional sales or other title retention agreements), whether or not such obligations shall have been assumed by such Person or is limited in recourse (provided, that if such Person has not assumed or otherwise become liable in respect of such Debt, such Debt shall be deemed to be in an amount equal to the lesser of the amount of such Debt and the fair market value of the Property encumbered by such Lien);

     (h) all Charter Obligations owing of such Person;

     (i) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment for the acquisition of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

     (j) obligations of the nature described in the immediately preceding clauses (a) through (i) which are owing to Pride by the Borrower or any Subsidiary; and

     (k) all Guarantees of such Person in respect of any of the foregoing.

     For all purposes hereof, the Debt of any Person shall include the Debt of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Debt is expressly made non-recourse to such Person. The amount of any net obligation under

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any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any Capital Lease or Off-Balance Sheet Liability as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

     “Default” means any event or condition which with the giving of any notice or lapse of time, or both, would, unless cured or waived, become an Event of Default.

     “Defaulting Lender” means any Lender that has, as reasonably determined by the Administrative Agent, (a) failed to fund any portion of its Revolving Advances or participations in the Letter of Credit Obligations on the date required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent, the Issuing Bank or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under any other agreement in which it commits to extend credit, (c) otherwise failed to pay over to the Administrative Agent, the Issuing Bank or any other Lender any other amount required to be paid by it hereunder on the date when due, unless the subject of a good faith dispute, or (d) (i) become or is, or its holding company has become or is, insolvent or (ii) become, or its holding company has become, the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

     “Deposit Accounts” has the meaning set forth in Section 5.14(a).

     “Discretionary Reserve Amount” means, subject to 10 days’ prior written notice from the Administrative Agent, the total amount of reserves in such amounts, and with respect to such matters, as the Administrative Agent in good faith and in its reasonable credit judgment shall deem necessary or appropriate from time to time, against the Borrowing Base, with respect to (a) sums that the Loan Parties are required to pay (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and have failed to pay under any Loan Document, (b) amounts owing by any Loan Party to any Person to the extent secured by a Lien on any of the Collateral which is specifically identified thereon as entitled to have priority over the Liens pursuant to the Security Documents, or which Lien, in its commercially reasonable discretion, the Administrative Agent establishes has a priority superior to the Liens pursuant to the Security Documents (such as Liens in favor of landlords, warehousemen, stevedores, carriers, mechanics, materialmen, laborers, or suppliers, or Liens for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral, and (c) currency fluctuations, provided, however, that the amount of each such reserve shall bear a reasonable relationship to the purpose for which such reserve is being established. Such notice shall be accompanied by a reasonably detailed explanation of the basis or bases by which such Discretionary Reserve Amount was determined.

     “Disposition” or “Dispose” means the sale, transfer, license, lease (as a lessor) or other voluntary disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

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     “Dollars” and “$” means the lawful money of the United States of America.

     “Domestic Subsidiary” means a Subsidiary that is organized or incorporated under the laws of the United States of America or any state thereof or the District of Columbia.

     “Earnings Collateral” means (a) all freights, hire and other moneys earned and to be earned, due or to become due, or paid or payable to, or for the account of, any Loan Party, of whatsoever nature, arising out of or as a result of the use, operation, pooling or chartering by such Loan Party or its agents of any Rig, including, without limitation, all rights arising out of the owner’s lien on cargoes and subfreights thereunder, (b) all moneys and claims for moneys due and to become due to any Loan Party, and all claims for damages, arising out of the breach of any and all present and future drilling contracts, charter parties, pooling arrangements, bills of lading, contracts and other engagements of affreightment or for the carriage or transportation of cargo, and operations of every kind whatsoever of any Rig and in and to any and all claims and causes of action for money, loss or damages that may accrue or belong to any Loan Party, its successors or assigns, arising out of or in any way connected with the present or future use, operation, pooling or chartering of any Rig or arising out of or in any way connected with any and all present and future requisitions, drilling contracts, charter parties, pooling arrangements, bills of lading, contracts and other engagements of affreightment or for the carriage or transportation of cargo, and other operations of any Rig, (c) all moneys and claims due and to become due to any Loan Party, and all claims for damages and all insurances and other proceeds, in respect of the actual or constructive total loss of or requisition of use of or title to any Rig, and (d) any proceeds of any of the foregoing.

     “Effective Date” means August 4, 2009.

     “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other commercial bank or financial institution approved by the Administrative Agent, and, so long as no Event of Default has occurred and is continuing, the Borrower, in either case, such approval not to be unreasonably withheld, delayed or conditioned; provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries or any natural person.

     “Eligible Receivables” means, as at any date of determination, any Account of the Borrower or any other Loan Party; provided, however, that unless otherwise approved by the Administrative Agent, the following Accounts are not Eligible Receivables:

     (a) Accounts that do not arise out of sales, leases, licenses, assignments or other dispositions of goods or rendering of services or for the use or hire of a vessel under a charter or other contract by any Loan Party and that are not true and correct statements of bona fide obligations incurred in the amount of such Account for goods sold, leased, licensed, assigned or otherwise disposed to, or services rendered by, or for the use or hire of a vessel under a charter or other contract to, the applicable Account Debtor;

     (b) Accounts with respect to which the Administrative Agent does not have an Acceptable Security Interest, including, without limitation, Accounts evidenced by an Instrument or Chattel Paper not in the possession of Administrative Agent;

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     (c) (i) except with respect to Accounts owing from PEMEX and its Affiliates, Accounts not denominated in Dollars (but not necessarily payable in Dollars); and (ii) with respect to Accounts owing from PEMEX and its Affiliates, Accounts not denominated in Dollars;

     (d) Accounts that are owing from any Person that is a Loan Party or, if not entered into in compliance with Section 6.08, another Affiliate of the Borrower;

     (e) Accounts for which an invoice has not been sent to the applicable Account Debtor (i) in accordance with the normal and customary billing practices of such Loan Party or (ii) by the 15^th day of the subsequent calendar month in which such Account arose, whichever shall be the shorter period;

     (f) (i) except with respect to Accounts owing from PEMEX and its Affiliates, to the extent that such Account, together with all other Accounts owing by such Account Debtor and its Affiliates as of any date of determination exceed twenty percent (20%) of all Eligible Receivables; and (ii) with respect to Accounts owing from PEMEX and its Affiliates, to the extent that such Account, together with all other Accounts owing by PEMEX and its Affiliates (but not including Accounts arising from the Pride Tennessee or the Pride Wisconsin), as of any date of determination exceed sixty percent (60%) of all Eligible Receivables unless all of the Accounts are owing from PEMEX and its Affiliates, in which case only sixty percent (60%) of such Accounts shall be included for purposes of determining the Borrowing Base;

     (g) Accounts arising from the Pride Tennessee or the Pride Wisconsin;

     (h) Accounts owing from any Person from which an aggregate amount of more than twenty-five percent (25%) of the Accounts owing therefrom are not Eligible Receivables by virtue of non-payment when due (which is (i) with respect to Tier 2 Eligible Receivables, more than ninety (90) days after the original invoice date and (ii) with respect to Tier 1 Eligible Receivables, more than one hundred twenty (120) days after the original invoice date) other than as a result of a bona fide dispute with respect thereto which is not reasonably expected to prejudice payments on other Accounts from such Person;

     (i) Accounts owing from any Account Debtor that (i) has disputed liability for any Account owing from such Account Debtor or (ii) has otherwise asserted any claim, demand or liability against the Borrower or any of its Subsidiaries, whether by action, defense, set-off, suit, counterclaim or otherwise; provided that for purposes of this subclause (h), such Account shall be excluded only to the extent of the amounts being disputed, or claims, demands or liabilities asserted, by such Person at any date of determination;

     (j) Accounts with respect to which the account debtor is any United States Governmental Authority, unless Borrower has, with respect to such Accounts, complied with the Federal Assignment of Claims Act of 1940 as amended (31 U.S.C. Section 3727 et seq.) or any applicable statute or municipal ordinance of similar purpose and effect;

     (k) Accounts with respect to which the Account Debtor is the subject of any bankruptcy or other insolvency proceeding;

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     (l) Accounts with respect to which the Account Debtor’s obligation to pay is not absolute or is contingent upon the fulfillment of any condition whatsoever or if the Account represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer;

     (m) Accounts with respect to which the Account Debtor is located in New Jersey, or any other state denying creditors access to its courts in the absence of a Notice of Business Activities Report or other similar filing or other statutory or legal exemption or exception, unless the applicable Loan Party has either qualified as a foreign corporation authorized to transact business in such state or has filed a Notice of Business Activities Report or similar filing with the applicable state agency for the then current year or has available to it any such other statutory or legal exemption or exception;

     (n) Accounts with respect to which the Account Debtor is a creditor of any Loan Party unless such Person has waived any right of setoff in a manner acceptable to the Administrative Agent; provided, however, that any such Account shall only be ineligible as to that portion of such Account which is less than or equal to the amount owed by such Loan Party to such Person; or

     (o) Subject to 15 days’ prior written notice from the Administrative Agent, Accounts that are otherwise eligible that are deemed to be ineligible for borrowing purposes for other reasons by the Administrative Agent in good faith and in its reasonable credit judgment, which notice shall be accompanied by a reasonably detailed explanation of the basis or bases by which each such Account was deemed ineligible for borrowing purposes.

     “Environmental Claim” means any allegation, notice of violation, action, lawsuit, claim, demand, judgment, order or proceeding by any Governmental Authority or any Person for liability or damage, including, without limitation, personal injury, property damage, contribution, indemnity, direct or consequential damages, damage to the environment, nuisance, pollution, or contamination, or for fines, penalties, fees, costs, expenses or restrictions arising under or otherwise related to an obligation under Environmental Law.

     “Environmental Law” means all former, current and future Federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments, directives, orders (including consent orders), and agreements in each case, relating to protection of the environment, natural resources, human health and safety or the presence, Release of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, recycling or handling of, or the arrangement for such activities with respect to, Hazardous Materials.

     “Environmental Liability” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or

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disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

     “Environmental Permit” means any permit, license, order, approval or other authorization under any Environmental Law.

     “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination, and for the avoidance of doubt, excluding all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests).

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time-to-time, and any successor statute and all rules and regulations promulgated thereunder.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

     “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D.

     “Eurodollar Advance” means a Revolving Advance that bears interest based on the Eurodollar Rate.

     “Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA

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LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as reasonably designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then either (a) the “Eurodollar Rate” for such Interest Period shall be the rate per annum reasonably determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Advance being made, continued or converted by the Administrative Agent and with a term equivalent to such Interest Period would be offered by the Administrative Agent’s London Branch to major banks in the London or other off-shore interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period or (b) for purposes of determining the Daily One Month LIBOR Rate only, the Daily One Month LIBOR Rate shall be equal to the rate per annum for Dollar deposits quoted by the Administrative Agent for the purpose of calculating effective rates of interest for loans making reference to the “Daily One Month LIBOR Rate,” as the inter-bank market offered rate in effect from time to time for delivery of funds one (1) month in amounts approximately equal to the principal amount of such loans.

     “Eurodollar Rate Reserve Percentage” of any Lender for the Interest Period for any Eurodollar Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time-to-time by the Federal Reserve Board for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. The Eurodollar Rate Reserve Percentage shall be adjusted automatically on and as of the effective date of any change by the Federal Reserve Board in any reserve percentage.

     “Events of Default” has the meaning set forth in Section 7.01.

     “Excepted Liens” means:

     (a) Liens pursuant to any Loan Document;

     (b) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and, if necessary, by appropriate proceedings diligently conducted and for which reserves in accordance with, and to the extent required by, GAAP shall have been maintained on the books of the applicable Person, other than the Contested Mexican Tax Assessments;

     (c) Liens imposed by law, or arising by operation of law, or arising in the ordinary course of business, including, without limitation, (i) construction, carriers’, warehousemen’s, landlord’s, mechanics’, materialmen’s, and other similar liens, and (ii) Liens arising out of crew’s wages, repairs, supplies, towage, use of drydock or marine railway or necessaries, and other

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similar maritime liens (other than those described elsewhere in this definition of “Excepted Liens”), in any event, to the extent such Liens (whether or not imposed by, or arising by operation of, law) are not covered under Section 6.01(f) and to the extent such Liens arise in the ordinary course of business and secure payment of obligations not more than 30 days past due or which are being contested in good faith and, if necessary, by appropriate proceedings diligently conducted and for which reserves in accordance with, and to the extent required by, GAAP shall have been maintained on the books of the applicable Person;

     (d) Liens for damages arising from maritime torts which are covered by insurance and any deductible applicable thereto, or in respect of which a bond or other security has been posted on behalf of the relevant Loan Party with the appropriate court or other tribunal to prevent the arrest or secure the release of the Rig from arrest, unless any such Lien is being contested in good faith and by appropriate proceedings or other acts by the relevant Loan Party, and such Loan Party shall have set aside on its books adequate reserves with respect to such Lien and so long as such deferment in payment shall not subject the applicable Rig to sale, forfeiture or loss;

     (e) Liens imposed or incurred and pledges or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social security or other retirement benefits, or similar legislation or statutory requirements, other than any Lien imposed by ERISA;

     (f) Minor defects, irregularities and deficiencies of title to, and easements, rights-of-way, restrictions and other similar encumbrances affecting, real property which, in the aggregate, are not substantial in amount, and which do not materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

     (g) Liens arising out of, or securing, judgments against the Borrower or any of the Subsidiaries in respect of which any of such Persons shall in good faith be prosecuting an appeal or proceedings for review in respect of which there shall be secured a subsisting stay of execution pending such appeal or proceedings; provided, however, that the aggregate amount of all such judgments could not constitute an Event of Default;

     (h) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by any Loan Party in the ordinary course of business;

     (i) licenses of intellectual property granted by any Loan Party in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Loan Parties;

     (j) the filing of UCC financing statements solely as a precautionary measure in connection with operating leases or consignment of goods; and

     (k) rights of set-off of banks and other Persons in the ordinary course of banking and trading arrangements.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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     “Excluded Equity Issuance” means the issuance of Equity Interests by the Borrower to management or employees of a Loan Party under any employee stock option or stock purchase plan or other employee benefits plan in existence from time to time.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank, or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it, by the United States of America, by any state thereof or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its Applicable Lending Office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Lender, any withholding tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party hereto (or designates a new lending office) or is attributable to such Lender’s failure (other than as a result of a Change in Law) to comply with Section 2.11(e), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.11(a).

     “Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such transactions as reasonably determined by the Administrative Agent.

     “Federal Reserve Board” means the Board of Governors of the Federal Reserve System or any of its successors.

     “Fee Letter” means the letter agreement dated as of July 2, 2009 among the Borrower, the Administrative Agent and the Arranger, as amended, restated or otherwise modified by that certain fee letter dated as of the Effective Date.

     “Financial Officer” for any Person means the chief financial officer, treasurer or senior financial officer of such Person.

     “Fixed Charge Coverage Ratio” means, as of the date of determination, the ratio of (a) Consolidated EBITDA for the Borrower and its Subsidiaries on a consolidated basis for the period of the four prior fiscal quarters ending on such date to (b) Fixed Charges for such period; provided, however, that for the purposes of determining the “Consolidated Interest Expense paid in cash” component of Fixed Charges for such period, with respect to each quarterly period ending on or after September 30, 2009, Consolidated Interest Expense paid in cash will be

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determined as follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated Interest Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense paid in cash for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the product of the Consolidated Interest Expense paid in cash for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009, Consolidated Interest Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense paid in cash for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest Expense paid in cash for the two fiscal quarters ending December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated Interest Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense paid in cash for the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest Expense paid in cash for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter, Consolidated Interest Expense paid in cash shall be computed by adding the Consolidated Interest Expense paid in cash for the four fiscal quarters ending on such date.

     “Fixed Charge Coverage Cap” means, as of any date of determination, an amount calculated during each period that commences with the occurrence of the Fixed Charge Coverage Cap Ratio being less than 1.50 to 1.00 as of the end of a fiscal quarter (in this definition, the “reference date”) and ending on the first date thereafter that 100% of the Revolving Commitments are available to the Borrower, which calculations are made in accordance with this definition as follows: an amount equal to the greater of (a) (i) for the first fiscal quarter occurring thereafter, 75% of the Revolving Commitments in effect on the reference date, (ii) for the second fiscal quarter occurring after the reference date, 75% of the amount determined in clause (a)(i) of this definition, and (iii) for each immediately subsequent fiscal quarter, 75% of the amount determined pursuant to this definition for the previous fiscal quarter until such time thereafter as the Fixed Charge Coverage Cap Ratio is greater than or equal to 1.50 to 1.00 as of the end of a fiscal quarter and (b) $35,000,000; provided, however, that when the Fixed Charge Coverage Cap Ratio is greater than or equal to 1.50 to 1.00 as of the end of a fiscal quarter, for purposes of calculating the available Revolving Commitments pursuant to clause (a) above, the amount of available Revolving Commitments shall be increased in subsequent fiscal quarters (so long as the Fixed Charge Coverage Cap Ratio for each such fiscal quarter is equal to or greater than 1.50 to 1.00) by the respective amounts by which such availability was reduced pursuant to this definition in each of the prior fiscal quarters, in the inverse order of such reductions, until the Fixed Charge Coverage Cap equals 100% of the Revolving Commitments then in effect; provided further that, notwithstanding anything herein to the contrary, the Fixed Charge Coverage Cap shall be in effect only during such period when the aggregate amount of the Revolving Commitments is equal to or greater than $40,000,000.

     “Fixed Charge Coverage Cap Ratio” means, as of the date of determination, the ratio of (a) Consolidated EBITDA for the Borrower and its Subsidiaries on a consolidated basis for the fiscal quarter ending on such date to (b) Fixed Charges for such period.

     “Fixed Charges” means the sum (without duplication) of (a) foreign, federal, state, and local taxes (other than such taxes that are treated as components of pre-tax income in the income statement so long as such taxes reduce EBITDA) paid in cash, (b) Consolidated Interest Expense

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paid in cash, and (c) the aggregate amount of all Maintenance Capital Expenditures, in each case, of or by the Borrower and its Subsidiaries on a consolidated basis for such period.

     “Flag Jurisdiction Transfer” shall mean the transfer of the registration and flag of a Collateral Rig from one Acceptable Flag Jurisdiction to another Acceptable Flag Jurisdiction, provided that the following conditions are satisfied with respect to such exchange:

     (a) On each Flag Jurisdiction Transfer Date, the Loan Party which is consummating a Flag Jurisdiction Transfer on such date shall have duly authorized, executed and delivered, and caused to be recorded in the appropriate vessel registry a Rig Mortgage (or such other form as shall be reasonably satisfactory to the Administrative Agent) in the Acceptable Flag Jurisdiction, with respect to the Collateral Rig being transferred (the “Transferred Vessel”) and the Rig Mortgage shall be effective to create in favor of the Administrative Agent and/or the Lenders an Acceptable Security Interest. All filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Administrative Agent to perfect and preserve such security interests shall have been duly effected and the Administrative Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Administrative Agent.

     (b) On each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received from (i) counsel to the Borrower and each Loan Party reasonably satisfactory to the Administrative Agent, an opinion addressed to the Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which shall (A) be in form and substance reasonably acceptable to the Administrative Agent and (B) cover the recordation of the security interests granted pursuant to the Rig Mortgage(s) to be delivered on such date and such other matters incident thereto as the Administrative Agent may reasonably request and (ii) local counsel to the Loan Parties consummating the relevant Flag Jurisdiction Transfer reasonably satisfactory to the Administrative Agent practicing in those jurisdictions in which the Transferred Vessel is registered and/or the Loan Party owning such Transferred Vessel is organized, which opinions shall be addressed to the Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which shall (A) be in form and substance reasonably acceptable to the Administrative Agent and (B) cover the perfection of the security interests granted pursuant to the Rig Mortgage(s) and such other matters incident thereto as the Administrative Agent may reasonably request.

     (c) On each Flag Jurisdiction Transfer Date:

     (i) The Administrative Agent shall have received (A) certificates of ownership or abstracts of title from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of the Transferred Vessel transferred on such date by the relevant Loan Party and (B) the results of maritime registry searches with respect to the Transferred Vessel transferred on such date, indicating no record liens other than Liens in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, and Excepted Liens.

     (ii) The Administrative Agent shall have received from an Insurance Advisor certificates of insurance with respect to the insurance maintained by the Loan Party in

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respect of the Transferred Vessel transferred on such date to the extent required by Section 5.04.

          (d) On or prior to each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received a certificate, dated the Flag Jurisdiction Transfer Date, signed by a Responsible Officer of the Loan Party commencing such Flag Jurisdiction Transfer, certifying that (i) all necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Flag Jurisdiction Transfer being consummated on such date and otherwise referred to herein shall have been obtained and remain in effect, (ii) there exists no judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions upon such Flag Jurisdiction Transfer or the other transactions contemplated by this Agreement and (iii) copies of resolutions approving the Flag Jurisdiction Transfer of such Loan Party and any other matters the Administrative Agent may reasonably request.

     “Flag Jurisdiction Transfer Date” shall mean the date on which a Flag Jurisdiction Transfer occurs.

     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

     “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

     “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

     “GAAP” means United States generally accepted accounting principles applied on a consistent basis.

     “Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

     “Governmental Proceedings” means any action or proceedings by or before any Governmental Authority, including, without limitation, the promulgation, enactment or entry of any Legal Requirement.

     “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the

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payment of such Debt or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Debt or other obligation of the payment or performance of such Debt or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered into for the purpose of assuring in any other manner the owner of such Debt or other obligation of the payment or performance thereof or to protect such owner against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Debt or other obligation of any other Person, whether or not such Debt or other obligation is assumed by such Person; provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

     “Guarantor” means (a) each of the Material Domestic Subsidiaries in existence on the date hereof listed on Schedule 1.01(a), and (b) any other Person that becomes a Material Domestic Subsidiary after the date hereof, and “Guarantors” means all such Guarantors collectively.

     “Guarantor Claims” has the meaning set forth in Section 8.09(a).

     “Guarantor Payment” has the meaning set forth in Section 8.17(a).

     “Hazardous Material” means (a) any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances and (b) any chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

     “Illegality Event” has the meaning set forth in Section 2.07(d).

     “Indemnified Liabilities” has the meaning set forth in Section 10.05.

     “Indemnified Taxes” means any Taxes other than Excluded Taxes.

     “Indemnitee” has the meaning set forth in Section 10.05.

     “Initial Collateral Rigs” means each of the offshore drilling rigs listed on Schedule 1.01(b) hereto. Schedule 1.01(b) sets forth a true and complete listing of the name, registered owner, official number, and jurisdiction of registration of each Collateral Rig as of the Closing Date.

     “Insurance Advisor” means an independent maritime insurance broker selected by the Borrower and reasonably acceptable to the Administrative Agent.

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     “Insurance Collateral” means (a) all Insurance Policies in respect of the Collateral Rigs, whether heretofore, now or hereafter effected, and all renewals of or replacements for the same, (b) all claims, returns of premium and other moneys and claims for moneys due and to become due under or in respect of the Insurance Policies in respect of the Collateral Rigs, (c) all other rights of the Loan Parties under or in respect of the Insurance Policies in respect of the Collateral Rigs and (d) any proceeds of any of the foregoing.

     “Insurance Policies” includes (a) all contracts of insurance (including, without limitation, all certificates of entry in protection and indemnity and war risks associations or clubs) in respect of the Rigs, whether heretofore, now or hereafter effected, and all renewals of or replacements for the same, (b) all claims, returns of premium and other moneys and claims for moneys due and to become due under or in respect of said contracts of insurance, and (c) all other rights of each owner of a Rig under or in respect of said contracts of insurance.

     “Interest Period” means, for each Eurodollar Advance comprising part of a Borrowing, the period commencing on the date of such Eurodollar Advance or the date of the Conversion of any existing Base Rate Advance into such Eurodollar Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.02 and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.02. The duration of each such Interest Period shall be one, two, three, or six months, in each case as the Borrower may select; provided, however, that:

     (a) Interest Periods commencing on the same date for Revolving Advances by each Lender comprising part of the same Borrowing shall be of the same duration;

     (b) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day;

     (c) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month in which it would have ended if there were a numerically corresponding day in such calendar month; and

     (d) no Borrower may select any Interest Period for any Eurodollar Advance which ends after the Maturity Date.

     “Investment” of any Person means any investment of such Person (a) so classified under GAAP, and (b) whether or not so classified, any loan, advance (other than prepayments or deposits made in the ordinary course of business) or extension of credit made by such Person to another Person which constitutes Debt of such other Person or contribution of capital by such Person in another Person; and any stocks, bonds, mutual funds, partnership interests, notes (including structured notes), debentures or other securities owned by such Person (but excluding

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capital expenditures of such Person determined in accordance with GAAP) and issued by another Person.

     “Investment Grade Rating” of a Person means that such Person has a minimum debt rating on its long-term senior unsecured non-credit enhanced debt securities of at least BBB- as determined by S&P and at least Baa3 as determined by Moody’s (or if such Person has only one debt rating on its long-term senior unsecured non-credit enhanced debt securities, such rating is at least BBB- as determined by S&P or at least Baa3 as determined by Moody’s).

     “ISM Code” has the meaning set forth in Section 4.08.

     “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

     “Issuing Bank” means Natixis and any successor Issuing Bank pursuant to Section 2.14(h).

     “LC Cash Collateral Account” means special interest bearing cash collateral accounts pledged by the Borrower to the Administrative Agent, for the ratable benefit of the Secured Parties, containing cash deposited pursuant to Section 2.14(e), 7.02 or 7.03 to be maintained at the Administrative Agent’s office in accordance with Section 2.14(g) and bear interest or be invested in the Administrative Agent’s reasonable discretion.

     “Legal Requirement” means, as to any Person, any law, statute, ordinance, decree, award, requirement, order, writ, judgment, injunction, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority which is binding on such Person.

     “Lenders” means (a) the lenders listed on the signature pages of this Agreement, (b) each Eligible Assignee that has become a party hereto pursuant to an Assignment and Acceptance (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (c) any other Person that has become a party hereto pursuant to a joinder agreement in accordance with Section 2.16.

     “Letter of Credit” means any letter of credit issued hereunder and may be a commercial letter of credit or a standby letter of credit.

     “Letter of Credit Application” means (a) a request for issuance of a Letter of Credit in substantially the form of the attached Exhibit F and (b) an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the Issuing Bank.

     “Letter of Credit Exposure” means, at any time, the sum of (a) the aggregate undrawn maximum face amount of each outstanding Letter of Credit at such time and (b) the aggregate unpaid amount of all Reimbursement Obligations owing with respect to such Letters of Credit at such time.

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     “Letter of Credit Obligations” means any obligations of the Borrower under this Agreement in connection with the Letters of Credit, including the Reimbursement Obligations.

     “Letter of Credit Sublimit” means an amount equal to 75% of the aggregate amount of the Revolving Commitments.

     “Letter of Credit Documents” means, with respect to any Letter of Credit, such Letter of Credit, the related Letter of Credit Application and any agreements, documents, and instruments entered into in connection with or relating to such Letter of Credit.

     “Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien (statutory or other), pledge, assignment, preference, deposit arrangement, encumbrance, charge, security interest, priority or other security or preferential arrangement of any kind or nature whatsoever, whether voluntary or involuntary in or on such asset, which is intended to secure the payment of an obligation, or (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

     “Loan Documents” means this Agreement, any Notes issued pursuant to Section 2.02(g)(iv), the Letter of Credit Documents, the Security Documents, the Fee Letter and each other agreement, instrument or document executed by any Loan Party or any of their respective officers (in their capacity as an officer of such Loan Party) at any time in connection with this Agreement (exclusive, for the avoidance of doubt, any of the Transaction Documents), all as amended, restated, supplemented or modified from time to time.

     “Loan Party” means the Borrower or any Guarantor.

     “Maintenance Capital Expenditures” means, without duplication for any period, the sum of all Capital Expenditures used for the normal maintenance of any existing fixed or capital asset, but excluding Reactivation Capital Expenditures.

     “Master Separation Agreement” means that certain Master Separation Agreement between Pride and the Borrower.

     “Material Adverse Effect” means a material adverse change in, or a material adverse effect on, (a) the operations, business, assets, properties, or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole, (b) the rights and remedies of the Administrative Agent or any Lender upon any Loan Document, or of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party or (c) the legality, validity, binding effect or enforceability against any Loan Party of any of the Loan Documents to which it is a party.

     “Material Domestic Subsidiary” means any Material Subsidiary that is a Domestic Subsidiary.

     “Material Subsidiary” means any Subsidiary of the Borrower that (a) accounts for assets or revenues that constitute more than 5% of the combined GAAP value of the assets or revenues, respectively, of the Borrower and its Subsidiaries on a consolidated basis as of the end of the

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most recent fiscal quarter, (b) accounts for Consolidated EBITDA greater than 5% of the Consolidated EBITDA as of the end of the most recent fiscal quarter, (c) owns Equity Interests in any Subsidiary described in clause (a) or (b) above, and (d) owns any Collateral Rig, and “Material Subsidiaries” means all such Subsidiaries collectively.

     “Maturity Date” means the second anniversary of the Closing Date as confirmed in writing by the Administrative Agent promptly upon the occurrence of the Closing Date.

     “Maximum Rate” means the maximum nonusurious interest rate under applicable law (determined under such laws after giving effect to any items which are required by such laws to be construed as interest in making such determination, including without limitation if required by such laws, certain fees and other costs).

     “Moody’s” means Moody’s Investors Service, Inc., or any successor that is a national credit rating organization.

     “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

     “Natixis” has the meaning set forth in the introductory paragraph hereto.

     “Net Cash Proceeds” means

     (a) with respect to any Asset Disposition or any Recovery Event, proceeds in cash as and when received by the Person making an Asset Disposition and on account of the occurrence of an Recovery Event, net of: (i) in the event of an Asset Disposition, (A) all costs and expenses costs relating to such Asset Disposition, including sales, use or other transaction taxes, legal, title, commissions and other fees and expenses incurred as a result of such Asset Disposition and reserves for indemnity obligations of such Person in connection with such Asset Disposition, but excluding amounts payable to any Loan Party or, if other than as provided in Section 6.08, any Affiliate of a Loan Party, (B) amounts required, by its terms or in order to obtain a necessary consent to such Asset Disposition or by applicable law, to be applied to repay principal, interest and prepayment premiums and penalties on Debt secured by a Lien on the Property which is the subject of such Asset Disposition, and (C) the amount of reserves established by the Borrower or any of its Subsidiaries in good faith and pursuant to commercially reasonable practices for adjustment in respect of the sale price of such asset or assets in accordance with GAAP, provided that if the amount of such reserves exceeds the amounts for which it was reserved, then such excess, upon the determination thereof, shall then constitute Net Cash Proceeds, and (ii) in the event of a Recovery Event, (A) all of the costs and expenses incurred in connection therewith, including the commencement and prosecution of any related actions taken or legal proceedings filed in connection therewith, the enforcement of all related rights and remedies, and the collection of such proceeds, award or other payments, and (B) any amounts retained by or paid to parties having superior rights to such proceeds, awards or other payments; and

     (b) with respect to the sale or issuance of any Equity Interest by the Borrower, the excess of (i) cash received in connection with such transaction over (ii) the underwriting

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discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by the Borrower or such Subsidiary in connection therewith.

     “Non-Collateral Rigs” means each Rig that, at the relevant time of determination, is not a Collateral Rig. The initial Non-Collateral Rigs are listed on Schedule 1.01(c), and Schedule 1.01(c) set forth a true and complete listing of the name, registered owner, official number, and jurisdiction of registration of each Non-Collateral Rig as of the Closing Date.

     “Note” means a promissory note made by the Borrower in favor of a Lender pursuant to Section 2.02(g)(iv) evidencing Revolving Advances made by such Lender in substantially the form of the attached Exhibit G.

     “Notice of Borrowing” means a notice of borrowing in substantially the form of the attached Exhibit H signed by a Responsible Officer of the Borrower.

     “Notice of Conversion or Continuation” means a notice of conversion or continuation in substantially the form of the attached Exhibit I signed by a Responsible Officer of the Borrower.

     “Obligations” means all Revolving Advances to, and other debts, liabilities and payment obligations of, any Loan Party arising under any Loan Document or otherwise with respect to any Revolving Advance, Letter of Credit or, during such times that a Lender is a lender party hereto, any Swap Contract to which a Lender or its Affiliate is a party, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party of any proceeding under any law relating to bankruptcy, insolvency or reorganization or relief of debtors naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) Synthetic Lease Obligations, or (c) any other monetary obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheets of such Person, and, for the avoidance of doubt, excluding any lease that constitutes an Operating Lease; and, for the avoidance of doubt, excluding any surety bonds or similar instruments which are issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable for reimbursement.

     “Omnibus Restructuring Agreement” means that certain Omnibus Restructuring Agreement dated as of August 4, 2009 among Pride, the Borrower and the other parties thereto as in effect on the Effective Date in the form and substance provided in the copy thereto provided to the Lenders on or prior to the Effective Date and without giving any effect to any amendment, supplement or other modification thereto that has not be approved by the Lenders.

     “Operating Lease” of a Person means any lease of Property by such Person as lessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more and is not a Capital Lease.

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     “Orderly Liquidation Value” means, as of any date of determination, with respect to any Collateral Rig, the orderly liquidation value thereof as established by the most recent Appraisal Report delivered to Administrative Agent in accordance with Section 5.06(h) hereof, taking into account any loss or damage to, or any condemnation, seizure or taking of, such Collateral Rig or Asset Disposition that has occurred since the most recent Appraisal Report was delivered with respect to such Collateral. To the extent that any Appraisal Report provides a range of orderly liquidation values for any Rig, then the orderly liquidation value for such Collateral Rig shall be the arithmetical average of the highest and lowest orderly liquidation values given for such Collateral Rig in such Appraisal Report.

     “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

     “PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

     “PEMEX” means Petróleos Mexicanos, the Republic of Mexico’s state-owned petroleum company.

     “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

     “Permitted Liens” has the meaning set forth in Section 6.01.

     “Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof.

     “Plan” means any Pension Plan or any Multiemployer Plan.

     “Pledge Agreement” means the Pledge Agreement in substantially the form of the attached Exhibit J among one or more of the Loan Parties and the Administrative Agent, for the ratable benefit of the Secured Parties.

     “Pride” means Pride International, Inc., a Delaware corporation.

     “Prime Rate” means the rate of interest in effect for such day as publicly announced from time to time by Natixis as its “prime rate.” The “prime rate” is a rate set by Natixis based upon various factors including Natixis’ costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or

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below such announced rate. Any change in the Adjusted Base Rate due to a change in the “prime rate” shall take effect at the opening of business on the day specified in the public announcement of such change.

     “Pro Forma Financial Statements” means the unaudited pro forma consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as of June 30, 2009 and related consolidated statements of income or operations, stockholders’ equity and cash flows for such period, prepared giving effect to the Transactions as if they had occurred on such date, including, without limitation, sufficient information in order determine the results of operations for the Borrower and its Subsidiaries.

     “Pro Rata Share” means, with respect to each Lender at any time, (a) before the Revolving Commitments terminate, the ratio (expressed as a percentage) of such Lender’s Revolving Commitment to the aggregate Revolving Commitments and (b) thereafter, the ratio (expressed as a percentage) of such Lender’s aggregate outstanding Revolving Advances immediately prior to such termination to the aggregate outstanding Revolving Advances of all the Lenders immediately prior to such termination. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption or joinder agreement pursuant to which such Lender becomes a party hereto.

     “Projections” means the Borrower’s forecasted consolidated and consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow statements; and (d) capitalization statements, for the three calendar year period commencing on the Closing Date, together with reasonably appropriate supporting details and a statement of underlying assumptions.

     “Property” of any Person means any interest of such Person in any property or asset (whether real, personal or mixed, tangible or intangible).

     “Reactivation Capital Expenditures” means Capital Expenditures used for either (a) one-time, non-recurring expenditures that are incurred in connection with returning a cold-stacked, non-operating Rig to service, including, without limitation, satisfying certification requirements of the United States Coast Guard, the Minerals Management Service or any other Governmental Authority reasonably necessary for the operation of such Rig or (b) otherwise improving the operational capabilities of any Rig in order to satisfy the requirements of charters or similar contractual arrangements entered into with respect to the charter or lease of such Rig for a term of 12 months or more; provided, however, “Reactivation Capital Expenditures” shall not include Maintenance Capital Expenses or any other Capital Expenditure (i) of such nature incurred in connection with Acquisitions and Rig Acquisitions, (ii) in excess of those typical in the industry for the operation and maintenance of such Rig given its primary design and capabilities, as determined by the Administrative Agent in its reasonable discretion after consultation with an Approved Rig Appraiser, or (iii) required to be performed at the time of and as required in connection with any inspection by the United States Coast Guard or any other Governmental Authority necessary for the operation of such Rig unless such inspection relates to returning a cold-stacked, non-operating Rig to service as described above.

     “Recovery Event” means, with respect to any Collateral owned by the Borrower or its Subsidiaries, any settlement of or payment in respect of any insurance proceeds (excluding any

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claim in respect of business interruption), condemnation award or other compensation paid or payable on account of any loss or damage to, or any condemnation, appropriation, seizure or taking of, such Property for which such Person receives Net Cash Proceeds.

     “Registration Statement” means the registration statement on Form 10 (including the information statement included as an exhibit thereto) filed by the Borrower pursuant to Section 12(b) of the Exchange Act.

     “Regulations T, U, X and D” means Regulations T, U, X, and D, respectively, of the Federal Reserve Board, as the same is from time-to-time in effect, and all official rulings and interpretations thereunder or thereof.

     “Reimbursement Obligations” means all of the obligations of the Borrower to reimburse the Issuing Bank for amounts paid by the Issuing Bank under Letters of Credit as established by the Letter of Credit Applications and Section 2.14(c).

     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

     “Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA.

     “Required Lenders” means, as of any date of determination, (a) before the Revolving Commitments terminate, Lenders holding more than 66²/₃% of the then aggregate Revolving Commitments and (b) thereafter, Lenders holding more than 66²/₃% of the aggregate unpaid principal amount of the Revolving Advances and participation interests in the Letter of Credit Exposure at such time.

     “Responsible Officer” for any Person means, the Chief Executive Officer, President, Chief Financial Officer, any Executive or Senior Vice President, Vice President, Secretary, Treasurer or Assistant Secretary of such Person.

     “Restricted Payment” means: (a) the declaration or making by the Borrower or any Subsidiary of any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest in such Person; or (b) any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, for the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or the exercise of any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary.

     “Revolving Advance” means an advance by a Lender to the Borrower as part of a Borrowing pursuant to Section 2.01 and refers to a Base Rate Advance or a Eurodollar Advance.

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     “Revolving Commitment” means, as of each date of determination in relation to each Lender, its obligation to (a) make Revolving Advances to the Borrower pursuant to Section 2.01, and (b) purchase participation in L/C Obligations pursuant to Section 2.14(b), in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption or joinder agreement pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The initial aggregate amount of the Revolving Commitments is $36,000,000.

     “Revolving Commitment Increase Effective Date” has the meaning set forth in Section 2.16(c).

     “Rig” means, to the extent now owned or hereafter acquired by any Loan Party, any mobile offshore drilling rig owned by any Loan Party and its substructure, engine, braking system, drill pipe, drill collar and related equipment and parts (including spare parts related to such Rig).

     “Rig Acquisition” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries acquires a Rig.

     “Rig Exchange” shall mean the exchange of a Collateral Rig for a Rig which constitutes an Acceptable Replacement Rig, provided that (a) the provisions of Section 5.12 with respect to an Acceptable Replacement Rig are satisfied in connection therewith and (b) the Administrative Agent shall have received a certificate, dated the Rig Exchange Date, signed by a Responsible Officer of the Borrower which certificate shall set forth the calculations required to establish whether the Borrower is in compliance with Section 6.18(b) after giving effect to such Rig Exchange and certifying that the replacement Rig constitutes an Acceptable Replacement Rig and that the provisions of Section 5.12 are satisfied in connection therewith. Upon the occurrence of a Rig Exchange, the Administrative Agent shall, at the request of the Borrower, terminate and release all Liens on the replaced Rig subject to such Rig Exchange.

     “Rig Mortgages” means each of the First Preferred Mortgages (or other ship mortgage, fleet mortgage, naval mortgage or other agreement, document or instrument evidencing a grant of liens in a rig or Rig) in substantially the form of the attached Exhibit K among one or more of the Loan Parties and the Administrative Agent, for the ratable benefit of the Secured Parties, which pledges a Collateral Rig as collateral for all or a portion of the Obligations, in form and substance reasonably acceptable to the Administrative Agent and as required to create an Acceptable Security Interest.

     “S&P” means Standard & Poor’s Rating Agency Group, a division of Mc-Graw Hill Companies, Inc., or any successor that is a national credit rating organization.

     “Sale and Leaseback Transaction” means a transaction or series of transactions pursuant to which the Borrower or any Subsidiary shall sell or transfer to any Person (other than the Borrower or a Subsidiary) any Property, whether now owned or hereafter acquired, and, as part of the same transaction or series of transactions, the Borrower or such Subsidiary shall rent or

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lease as lessee (other than pursuant to a capital lease), or similarly acquire the right to possession or use of, such Property.

     “SEC” means the United States Securities and Exchange Commission, and any successor entity.

     “Secured Parties” means the Administrative Agent, the Lenders, the Issuing Bank, the Swap Counterparties and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document.

     “Security Agreement” means the Security Agreement in substantially the form of the attached Exhibit L among one or more of the Loan Parties and the Administrative Agent, for the ratable benefit of the Secured Parties, and each other document, instrument or agreement executed by any Loan Party in connection therewith in order to comply with the Legal Requirements of any jurisdiction other than the United States of America or any state thereof or the District of Columbia.

     “Security Documents” means the Assignments of Earnings, the Assignments of Insurance, the Rig Mortgages, the Security Agreement, the Pledge Agreement and each other document, instrument or agreement executed by any Loan Party in connection therewith or otherwise creates or purports to create a Lien to secure all or a portion of the Obligations.

     “Security Maintenance Ratio” means, as of any date of determination, the ratio of (a) the Orderly Liquidation Value of the Collateral Rigs as of such date and (b) the sum of the outstanding principal amount of Revolving Advances and the Letter of Credit Exposure, in each case, on such date.

     “Subsidiary” of a Person means any corporation, association, partnership or other business entity of which more than 50% of the outstanding Equity Interests having by the terms thereof ordinary voting power under ordinary circumstances to elect a majority of the board of directors (or Persons, committees or other group performing similar functions or, if there are no such directors or Persons, committees or other group, having general voting power) of such entity (irrespective of whether at the time Equity Interests of any other class or classes of such entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person. Unless otherwise indicated herein, (a) each reference to the term “Subsidiary” shall mean a Subsidiary of the Borrower, and (b) so long as Mexico Offshore Inc., a Delaware corporation merges into the Borrower on, and ceases to exist as of, a date no later than the Business Day immediately following the Effective Date, such Person shall not be considered a Subsidiary of the Borrower for purposes of this Agreement.

     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor

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transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

     “Swap Counterparty” means any Lender or any Affiliate thereof that is party to a Swap Contract with the Borrower or any of its Subsidiaries.

     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as reasonably determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of Property creating obligations that do not appear on the balance sheet of such Person but which, in each case in respect to the foregoing clauses (a) and (b), upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

     “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

     “Tier 1 Eligible Receivables” means each Eligible Receivable, provided, however, that no Eligible Receivable shall be a Tier 1 Eligible Receivable unless (a) the Account Debtor of such Eligible Receivable or any Person guaranteeing such Account Debtor’s obligations under such Eligible Receivable, shall either have an Investment Grade Rating or Acceptable Credit Support and (b) such Eligible Receivable shall not be unpaid more than one hundred twenty (120) days after the original invoice date.

     “Tier 2 Eligible Receivables” means each Eligible Receivable other than a Tier 1 Eligible Receivable; provided, however, that no such Eligible Receivable shall be a Tier 2 Eligible Receivable unless (a) the Account Debtor of such Eligible Receivable shall either be (i) organized or incorporated under the laws of the United States of America or a state thereof or the District of Columbia and such Eligible Receivable shall be denominated and payable in Dollars, or (ii) PEMEX or any of its Affiliates and such Eligible Receivable shall be denominated in

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Dollars (but not necessarily payable in Dollars), and (b) such Eligible Receivable shall not be unpaid more than ninety (90) days after the original invoice date.

     “Total Loss” means (a) the actual, constructive, arranged, agreed, or compromised total loss of any Collateral Rig; (b) the loss, theft or destruction of any Collateral Rig or damage thereto to such extent as shall, as determined by the Insurance Advisor, make repair thereof uneconomical or shall render such Rig permanently unfit for normal use for any reason whatsoever; (c) the requisition for title or other compulsory acquisition or forfeiture of any Collateral Rig otherwise than by requisition for hire; or (d) the capture, condemnation, seizure, arrest, detention or confiscation of any Collateral Rig by any Governmental Authority or by Persons acting or purporting to act on behalf of any Governmental Authority unless such Rig is released from such capture, seizure, arrest, detention or confiscation within one (1) month after the occurrence thereof.

     “Transaction Documents” means each of the following agreements executed by Pride and the Borrower: (a) Master Separation Agreement, (b) the Tax Sharing Agreement, (c) the Employee Matters Agreement, (d) the Omnibus Restructuring Agreement, (e) the Transition Services Agreement between Pride, as service provider, and the Borrower, as service recipient, (f) the Transition Services Agreement between Pride, as service recipient, and the Borrower, as service provider, (g) the Tax Support Agreement, and (h) any other agreement executed by the Borrower in connection with the Transactions.

     “Transactions” means the distribution to the stockholders of Pride of all of the shares of common stock of the Borrower as described in the Registration Statement.

     “Type” has the meaning set forth in Section 1.04.

     “UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time, and any successor statute.

     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

     “Voting Stock” means, with respect to any Person, Equity Interests of such Person of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of members of the board of directors (or Persons, committees or other group performing similar functions) of such Person.

     “Wholly-Owned Subsidiary” of any Person shall mean a subsidiary of such Person of which Equity Interests representing 100% of the Equity Interests of such Person (other than shares required by law to be owned by another Person, including director’s qualifying shares) are, at the time any determination is being made, owned, controlled or held by such Person or one or more Wholly-Owned Subsidiaries of such Person or by such Person and one or more Wholly-Owned Subsidiaries of such Person.

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     “Working Capital Ratio” shall mean, at any date of determination, the ratio of (a) the sum of (i) Consolidated Current Assets on such date plus (ii) the lesser of (A) Availability and (B) $25,000,000 on such date to (b) Consolidated Current Liabilities on such date.

     Section 1.02 Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

     Section 1.03 Accounting Terms.

     (a) For purposes of this Agreement, all accounting terms not otherwise defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time.

     (b) If at any time any Accounting Change (as defined below) would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. “Accounting Changes” means: (A) changes in accounting principles required by GAAP and implemented by the Borrower; and (B) changes in carrying value of the Borrower’s or any of its Subsidiaries’ assets, liabilities or equity accounts resulting from any adjustments that, in each case, were applicable to, but not included in, the Pro Forma Financial Statements.

     (c) In addition, all calculations and defined accounting terms used herein shall, unless expressly provided otherwise, when referring to any Person, refer to such Person on a consolidated basis and mean such Person and its consolidated subsidiaries.

     Section 1.04 Types of Revolving Advances. Revolving Advances are distinguished by “Type”. The “Type” of a Revolving Advance refers to whether such Revolving Advance is a Eurodollar Advance or a Base Rate Advance, each of which constitutes a Type.

     Section 1.05 Miscellaneous. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” The word “or” is not exclusive. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument, schedule or other document herein shall be construed as referring to such agreement, instrument, schedule or other document as from time to time

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amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein) and in effect, (b) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

ARTICLE II

THE REVOLVING ADVANCES

     Section 2.01 The Revolving Advances. Each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Revolving Advances to the Borrower from time-to-time on any Business Day from the Closing Date until the Maturity Date in an aggregate amount up to but not to exceed at any time outstanding the remainder obtained from subtracting (a) such Lender’s Pro Rata Share of the Letter of Credit Exposure from (b) the least of (i) its Revolving Commitment, (ii) its Pro Rata Share of the Borrowing Base and (iii) its Pro Rata Share of the Fixed Charge Coverage Cap; provided however that the aggregate outstanding principal amount of the sum of (x) all Revolving Advances plus (y) the Letter of Credit Exposure shall not at any time exceed the least of (1) aggregate amount of the Revolving Commitments, (2) the Borrowing Base and (3) the Fixed Charge Coverage Cap. Each Borrowing shall be in an aggregate amount not less than $2,500,000 and in integral multiples of $500,000 in excess thereof, or in the amount of the unused Revolving Commitments, and shall consist of Revolving Advances of the same Type made on the same day by the Lenders ratably according to their respective Revolving Commitments. Within the limits of each Lender’s Revolving Commitment, the Borrower may from time-to-time borrow, prepay pursuant to Sections 2.07(b) and (c) and reborrow under this Section 2.01.

     Section 2.02 Method of Borrowing.

     (a) Notice. Each Borrowing shall be made pursuant to a Notice of Borrowing, given in writing or by telecopier or telephone, confirmed promptly in writing, not later than (i) if the Borrowing is comprised of Eurodollar Advances, 12:00 p.m. (New York time) on the third Business Day before the requested Borrowing Date and (ii) if the Borrowing is comprised of Base Rate Advances, 12:00 p.m. (New York time) at least one Business Day in advance of the requested Borrowing Date, in each case to the Administrative Agent’s Applicable Lending Office. The Administrative Agent shall give to each Lender prompt notice on the day of receipt of a timely Notice of Borrowing and of such Lender’s Pro Rata Share thereof. The Notice of Borrowing shall be in writing specifying (A) the Borrowing Date (which shall be a Business Day), (B) the requested Type of Revolving Advances comprising such Borrowing, (C) the aggregate amount of such Borrowing, and (D) if such Borrowing is to be comprised of Eurodollar Advances, the requested Interest Period. If the Borrower fails to specify a Type of

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Revolving Advance in a Notice of Borrowing, then the Revolving Advance shall be made as a Base Rate Advance. In the case of a requested Borrowing comprised of Eurodollar Advances, the Administrative Agent shall promptly notify the Borrower and each Lender of the applicable interest rate under Section 2.06(a)(ii). Each Lender shall make available its Pro Rata Share of such Borrowing before 11:00 a.m. (New York time) on the Borrowing Date in immediately available funds to the Administrative Agent at the Administrative Agent’s Applicable Lending Office. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Section 3.02 (and, if such Revolving Advance is the initial Revolving Advance (unless a Letter of Credit shall have been issued prior to such date), Section 3.01) the Administrative Agent will promptly make such funds available to the Borrower not later than 12:00 p.m. (New York time) at such account as the Borrower shall specify in writing to the Administrative Agent.

     (b) Conversions and Continuations. In order to elect to Convert or Continue a Revolving Advance under this Section, the Borrower shall deliver an irrevocable Notice of Conversion or Continuation to the Administrative Agent at its Applicable Lending Office no later than (i) 12:00 p.m. (New York time) at least one Business Day in advance of such requested Conversion date in the case of a Conversion of a Eurodollar Advance to a Base Rate Advance or (ii) 12:00 p.m. (New York time) at least three Business Days in advance of such requested Conversion date in the case of a Conversion of a Base Rate Advance into, or Continuation of a Eurodollar Advance to, a Eurodollar Advance. Each such Notice of Conversion or Continuation shall be in writing or by telex, telecopier or telephone, confirmed promptly in writing specifying (A) the requested Conversion or Continuation date (which shall be a Business Day), (B) the amount, Type of the Revolving Advance to be Converted or Continued, (C) whether a Conversion or Continuation is requested, and if a Conversion, into what Type of Revolving Advance, and (D) in the case of a Conversion of a Base Rate Advance to, or a Continuation of, a Eurodollar Advance, the requested Interest Period. Promptly after receipt of a Notice of Conversion or Continuation under this paragraph, the Administrative Agent shall provide each Lender with a copy thereof and of such Lender’s Pro Rata Share thereof and, in the case of a Conversion to or a Continuation of a Eurodollar Advance, notify the Borrower and each Lender of the interest rate under Section 2.06(a)(ii). Notwithstanding anything in this Agreement to the contrary, Conversions of Eurodollar Advances may only be made at the end of the applicable Interest Period for such Revolving Advances; provided, however, that Conversions of Base Rate Advances may be made at any time. The portion of Revolving Advances comprising part of the same Borrowing that are converted to Revolving Advances of another Type shall constitute a new Borrowing.

     (c) Certain Limitations. Notwithstanding anything in paragraphs (a) and (b) above:

     (i) at no time shall there be more than five Interest Periods applicable to outstanding Eurodollar Advances;

     (ii) each Lender’s obligations to make a Eurodollar Advance shall, to the extent applicable, be subject to the applicable provisions of Sections 2.07(d) and 2.09(a).

     (iii) if the Required Lenders determine that for any reason in connection with any request for a Borrowing as a Eurodollar Advance that (A) Dollar deposits are not

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being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Advance, (B) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Advance, or (C) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Advance does not adequately and fairly reflect the cost to such Required Lenders of funding such Revolving Advance, the Administrative Agent will promptly so notify the Borrower and each Lender, and thereafter, the obligation of the Lenders to make or maintain any Borrowings as Eurodollar Advances (1) in respect to the applicable amount and Interest Period referred to in the preceding clause (A), or (2) in the circumstances referred to in the preceding clauses (B) and (C), shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice, and upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to, or continuation of, Eurodollar Advances in such amounts and for such corresponding Interest Period or, failing that, will be deemed to have converted such request into a request for a Borrowing of a Base Rate Advance in the amount specified therein;

     (iv) if the Borrower shall request a Revolving Advance of, Conversion of a Base Rate Advance to, or Continuation of, a Eurodollar Advance in any such Notice of Borrowing and shall fail to select the duration or Continuation of any Interest Period for any Eurodollar Advance in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and paragraphs (a) and (b) above, the Borrower shall be deemed to have specified an Interest Period of one month. If the Borrower shall fail to deliver a Notice of Conversion or Continuation, the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Revolving Advances will be made available to the Borrower on the date of such Borrowing as Base Rate Advances or, if such Revolving Advance is an existing Eurodollar Advance, Convert into Base Rate Advances; and

     (v) no Revolving Advance may be Converted or Continued as a Eurodollar Advance at any time when a Default or an Event of Default has occurred and is continuing without the consent of the Required Lenders.

     (d) Notices Irrevocable. Subject to Section 2.02(c), each Notice of Borrowing and each Notice of Conversion or Continuation delivered by the Borrower shall be irrevocable and binding on the Borrower. In the case of the initial Borrowing or any Borrowing which the related Notice of Conversion or Continuation specifies is to be comprised of Eurodollar Advances, the Borrower shall indemnify each Lender against funding losses in accordance with Section 2.08.

     (e) Administrative Agent Reliance. Unless the Administrative Agent shall have received notice from a Lender before the Borrowing Date that such Lender will not make available to the Administrative Agent such Lender’s Pro Rata Share of the Borrowing, the Administrative Agent may assume that such Lender has made its Pro Rata Share of such Borrowing available to the Administrative Agent on the Borrowing Date in accordance with paragraph (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such

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assumption, make available to the Borrower on the Borrowing Date a corresponding amount. If and to the extent that such Lender shall not have so made its Pro Rata Share of such Borrowing available to the Administrative Agent, such Lender and the Borrower severally agree to immediately repay to the Administrative Agent on demand such corresponding amount, together with interest on such amount, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable on such day to Base Rate Advances and (ii) in the case of such Lender, a rate reasonably determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender shall not have been earlier terminated by the Borrower pursuant to Section 2.15, such Lender shall repay to the Administrative Agent such corresponding amount and interest as provided above, such corresponding amount so repaid shall constitute such Lender’s Revolving Advance as part of such Borrowing for purposes of this Agreement even though not made on the same day as the other Revolving Advances comprising such Borrowing. If such Lender’s Revolving Advance as part of such Borrowing is not made available by such Lender within three Business Days of the Borrowing Date, the Borrower shall repay such Lender’s Pro Rata Share of such Borrowing (together with interest thereon at the interest rate applicable during such period to Base Rate Advances) to the Administrative Agent not later than three Business Days after receipt of written notice from the Administrative Agent specifying such Lender’s share of such Borrowing that was not made available to the Administrative Agent.

     (f) Lender Obligations Several. The failure of any Lender to make a Revolving Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, to make its Revolving Advance on the applicable Borrowing Date. No Lender shall be responsible for the failure of any other Lender to make a Revolving Advance to be made by such other Lender on any applicable Borrowing Date.

     (g) Noteless Agreement; Evidence of Indebtedness.

     (i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from the Revolving Advances made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

     (ii) The Administrative Agent shall also maintain accounts in which it will record (A) the amount of each Revolving Advance made hereunder, the Type thereof and the Interest Period with respect thereto, (B) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (C) the amount of any payment received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

     (iii) The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be conclusive evidence of the existence and amounts of the Obligations therein recorded absent manifest error; provided, however, that in the event of a conflict, absent manifest error, the Administrative Agent’s accounts of record shall control and provided further that the failure of the Administrative Agent or any Lender to

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maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

     (iv) Upon written notice to the Borrower (with a copy to the Administrative Agent) at least three Business Days prior to the Closing Date, or at any time thereafter, any Lender may request that the Revolving Advances owing to such Lender be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to the order of such Lender and its registered permitted assigns. Thereafter, the Revolving Advances evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 10.06) be represented by one or more Notes payable to the order of such Lender or any permitted assignee pursuant to Section 10.06, except to the extent that any such Lender or permitted assignee subsequently returns any such Note for cancellation and requests that such Revolving Advances once again be evidenced as described in paragraphs (i) and (ii) above.

     Section 2.03 Fees.

     (a) Revolving Commitment Fees. Subject to Section 2.03(f), the Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender in accordance with its Pro Rata Share, a commitment fee (a “Commitment Fee”) on the average daily amount by which the aggregate Revolving Commitments exceeds the sum of (i) the aggregate principal amount of outstanding Revolving Advances and (ii) the Letter of Credit Exposure, from the Closing Date, in the case of each Lender listed on the signature pages hereto, and from the effective date in the Assignment and Acceptance or joinder agreement pursuant to which it became a Lender in the case of each other Lender, until the Maturity Date at a rate per annum equal to 1.50%. The Commitment Fees payable pursuant to this clause (a) are due quarterly in arrears on the last Business Day of each March, June, September and December commencing September 30, 2009 and on the Maturity Date.

     (b) Agent’s Fees. The Borrower agrees to pay to the Administrative Agent and the Arranger the fees as separately agreed upon by the Borrower, the Administrative Agent and the Arranger in the Fee Letter.

     (c) Ticking Fee. The Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender in accordance with its Pro Rata Share, a ticking fee accruing from the Effective Date to the date on which all conditions set forth in Section 3.02 (other than the condition in Section 3.02(d)) shall have been met, in the amount of 1.50% per annum of the aggregate Revolving Commitments. The foregoing fee shall be due and payable on the Closing Date.

     (d) Letter of Credit Fees. Subject to Section 2.03(f),

     (i) The Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender in accordance with its Pro Rata Share, a letter of credit fee at a per annum rate equal to the Applicable Margin for Eurodollar Advances. Each such fee shall be based on the maximum face amount available to be drawn under such Letter of Credit (it being understood that effect shall be given to any decreases to the maximum face

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amount of any Letter of Credit to the extent that, under the terms of such Letter of Credit, such decreases have become permanently effective and are not susceptible to reinstatement) from the date of issuance of the Letter of Credit until its expiration date and shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, until the earlier of its expiration date or the Maturity Date. All such fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

     (ii) The Borrower agrees to pay to the Issuing Bank, a fronting fee for each Letter of Credit equal to 0.25% per annum of the initial stated amount of such Letter of Credit (or, with respect to any subsequent increase to the stated amount of any such Letter of Credit, such increase in the stated amount). Each such fee shall be based on the maximum face amount available to be drawn under such Letter of Credit (it being understood that effect shall be given to any decreases to the maximum face amount of any Letter of Credit to the extent that, under the terms of such Letter of Credit, such decreases have become permanently effective and are not susceptible to reinstatement) from the date of issuance of the Letter of Credit until its expiration date and shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, until the earlier of its expiration date or the Maturity Date. All such fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

     (iii) In addition, the Borrower agrees to pay to the Issuing Bank all reasonable and customary costs and expenses as set forth in Section 10.04(b).

     (e) Generally. All such fees shall be paid on the dates due, in immediately available Dollars to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the fees payable pursuant to Section 2.03(d)(ii) and (iii) shall be paid directly to the Issuing Bank. Once paid, absent manifest error, none of these fees shall be refundable under any circumstances.

     (f) Defaulting Lenders. The Borrower shall not be obligated to pay the Administrative Agent, and the Defaulting Lender shall not be entitled to the receipt of, any Defaulting Lender’s Pro Rata Share of the fees described in Section 2.03(a) and Section 2.03(d) for the period commencing on the day such Defaulting Lender becomes a Defaulting Lender and continuing for so long as such Lender continues to be a Defaulting Lender, and during all such periods, no such fees shall accrue to or for the benefit of such Defaulting Lender.

     Section 2.04 Reduction of the Revolving Commitments.

     (a) At any time and from time to time, the Borrower shall have the right, upon at least three Business Days’ irrevocable notice to the Administrative Agent, to terminate in whole or reduce in part the unused portion of the Revolving Commitments; provided that each partial reduction of Revolving Commitments shall be in the minimum aggregate amount of $5,000,000 and in integral multiples of $5,000,000 in excess thereof (or such lesser amount as may then be outstanding) and, except as provided in Section 2.15(c), shall be made ratably among the

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Lenders in accordance with their respective Revolving Commitments; and provided further that the aggregate amount of the Revolving Commitments may not be reduced below the sum of the aggregate principal amount of the outstanding Revolving Advances and the Letter of Credit Exposure; and provided further that, for the avoidance of doubt, any termination of Revolving Commitments pursuant to Section 2.15(c) and any reduction to Availability as a result of changes to the Fixed Charge Coverage Cap shall, in each case, not be deemed to be a termination of Revolving Commitments pursuant to this Section 2.04.

     (b) Any reduction or termination of the Revolving Commitments pursuant to this Section 2.04 shall be permanent, with no obligation of the Revolving Lenders to reinstate such Revolving Commitments and the commitment fees provided for in Section 2.03(a) shall thereafter be computed on the basis of the Revolving Commitments as so reduced. The Administrative Agent shall give each Lender prompt notice of any commitment reduction or termination by Borrower.

     Section 2.05 Repayment. The Borrower shall repay on the Maturity Date the aggregate principal amount of the Revolving Advances outstanding on such date.

     Section 2.06 Interest. The Borrower shall pay interest on the unpaid principal amount of each Revolving Advance made by each Lender to it from the date of such Revolving Advance until such principal amount shall be paid in full, at the following rates per annum:

     (a) Revolving Advances.

     (i) Base Rate Advances. If such Revolving Advance is a Base Rate Advance, a rate per annum equal to the Adjusted Base Rate plus the Applicable Margin in respect of Base Rate Advances, payable in arrears on the last Business Day of each March, June, September and December and on the date such Base Rate Advance shall be paid in full.

     (ii) Eurodollar Advances. If such Revolving Advance is a Eurodollar Advance, a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin in respect of Eurodollar Advances, payable in arrears on the last day of such Interest Period, and, in the case of Interest Periods of greater than three months, on each Business Day which occurs at three month intervals from the first day of such Interest Period.

     (b) Additional Interest on Eurodollar Advances. The Borrower shall pay to each Lender, so long as any such Lender shall be required under regulations of the Federal Reserve Board to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities incurred in connection with Borrowings made hereunder in the form of Eurodollar Advances, additional interest on the unpaid principal amount of the Eurodollar Advances of such Lender, from the effective date of such Eurodollar Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Revolving Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Eurodollar Advances for such Interest Period, payable on each date on which interest is payable on such

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Revolving Advance. Such additional interest payable to any Lender shall be determined by such Lender and notified to the Borrower through the Administrative Agent (such notice to include a reasonably detailed calculation of such additional interest, which calculation shall be conclusive absent manifest error, and be accompanied by any evidence indicating the need for such additional interest and certification from such Lender that such Lender is generally requesting such additional interest from other borrowers which such Lender reasonably deems similarly situated to the Borrower.

     (c) Usury Recapture. If during any period a rate of interest contracted for under this Agreement (calculated after giving affect to all items charged which constitute “interest” under applicable laws, including fees and margin amounts, if applicable) is greater than the Maximum Rate for the period of time in which such contracted rate would otherwise be in effect, the unpaid principal amount of the Revolving Advances shall bear interest at the Maximum Rate until the total amount of interest accrued on such principal amount equals the total amount of interest which would accrued on such principal amount if such contract rate of interest had at all times been in effect for such applicable period.

          In the event, upon payment in full of the Revolving Advances, the total amount of interest paid or accrued under the terms of this Agreement and the Revolving Advances is less than the total amount of interest which would have been paid or accrued if the rates of interest set forth in this Agreement had, at all times, been in effect, then the Borrower shall, to the extent permitted by applicable law, pay the Administrative Agent for the account of the Lenders an amount equal to the difference between (i) the lesser of (A) the amount of interest which would have been charged on its Revolving Advances if the Maximum Rate had, at all times, been in effect and (B) the amount of interest which would have accrued on its Revolving Advances if the rates of interest set forth in this Agreement had at all times been in effect and (ii) the amount of interest actually paid under this Agreement on its Revolving Advances.

          In the event the Lenders ever receive, collect or apply as interest any sum in excess of the Maximum Rate, such excess amount shall, to the extent permitted by law, be applied to the reduction of the principal balance of the Revolving Advances, and if no such principal is then outstanding, such excess or part thereof remaining shall be paid to the Borrower.

     (d) Default Interest. If the Borrower shall default in the payment of the principal of or interest on any Revolving Advance or any other amount becoming due hereunder, by acceleration or otherwise, or under any other Loan Document, the Borrower shall on demand from time to time pay interest, to the extent permitted by law, on the outstanding Revolving Advances to but excluding the date of actual payment (after as well as before judgment) (a) in the case of overdue principal, at the rate otherwise applicable to such Revolving Advance pursuant to Section 2.06 plus 2.00% per annum, (b) in the case of Letter of Credit Fees, at a rate per annum equal to the Applicable Margin for Eurodollar Advances plus 2% per annum and (c) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) equal to the rate that would be applicable to a Base Rate Advance plus 2.00%.

     Section 2.07 Prepayments.

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     (a) Right to Prepay. The Borrower shall have no right to prepay any principal amount of any Revolving Advance except as provided in this Section 2.07.

     (b) Optional. At any time and from time to time, the Borrower may elect to prepay, in whole or in part without premium or penalty, any of the Revolving Advances owing by it to the Lenders, after giving prior written notice of such election by (i) 12:00 p.m. (New York time) at least three Business Days before such prepayment date, in the case of Borrowings which are comprised of Eurodollar Advances, and (ii) 12:00 p.m. (New York time) on or before the Business Day of such prepayment, in case of Borrowings which are comprised of Base Rate Advances, in each case to the Administrative Agent stating the proposed date and aggregate principal amount of such prepayment and the Type(s) of Revolving Advances to be prepaid and, if Eurodollar Advances are to prepaid, the Interest Period(s) thereof. If any such notice is given, the Administrative Agent shall give prompt notice thereof to each Lender and of the amount of such Lender’s Pro Rata Share thereof and the Borrower shall prepay on the prepayment date specified therein Revolving Advances comprising part of the same Borrowing in whole or ratably in part in an aggregate principal amount equal to the amount specified in such notice, together with accrued and unpaid interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date; provided, however, that each partial prepayment shall be in an aggregate principal amount not less than $1,000,000 and in integral multiples of $250,000 in excess thereof (or such lesser amount as may then be outstanding).

     (c) Mandatory Prepayments of Revolving Advances.

     (i) Deficiency. On any date on which the aggregate outstanding principal amount of the Revolving Advances plus the Letter of Credit Exposure exceeds the least of (A) the aggregate Revolving Commitments, (B) the Borrowing Base and (C) the Fixed Charge Coverage Cap, the Borrower shall prepay the Revolving Advances, as set forth in Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in the amount of such excess; provided, however, that the Borrower shall not be required to make deposits into the LC Cash Collateral Account until the Revolving Advances have been repaid in full; and provided further, that if any change in the Fixed Charge Coverage Cap causes such excess to occur, then the Borrower shall make such prepayment or deposit within 5 days after a Responsible Officer of the Borrower’s knowledge thereof.

     (ii) Reduction of Revolving Commitments. On the date of each reduction of the aggregate Revolving Commitments pursuant to Section 2.04, the Borrower shall prepay the Revolving Advances or make deposits into the LC Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, to the extent, if any, that the aggregate unpaid principal amount of all Revolving Advances plus the Letter of Credit Exposure exceeds the least of (i) the aggregate Revolving Commitments, (ii) the Borrowing Base and (iii) the Fixed Charge Coverage Cap; provided, however, that the Borrower shall not be required to make deposits into the LC Cash Collateral Account until the Revolving Advances have been repaid in full.

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     (iii) Asset Dispositions; Recovery Event.

     (A) If the Borrower or any of its Subsidiaries shall at any time or from time to time receive Net Cash Proceeds in excess of $2,000,000 from any Asset Disposition or Recovery Event, then (1) the Borrower shall promptly notify Administrative Agent of the amount of such Net Cash Proceeds and (2) except as may otherwise permitted by clauses (B) or (C) of this Section 2.07(c)(iii), and subject to Section 2.07(c)(vii), on the next Business Day following such receipt, the Borrower shall prepay the Revolving Advances, as set forth in Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in an amount equal to the amount of such Net Cash Proceeds; provided, however, that the Borrower shall not be required to make deposits into the LC Cash Collateral Account (x) until the Revolving Advances have been repaid in full and (y) unless and only to the extent that, on such date, the LC Cash Collateral Account contains an amount less than 100% of the Letter of Credit Exposure on such date.

     (B) At the election of the Borrower (and in lieu of clause (C) of this Section 2.07(c)(iii)), and so long as no Default or Event of Default shall have occurred and is continuing, the Borrower, the applicable Subsidiary or other Loan Party (or any combination of the foregoing) may reinvest all or any portion of such Net Cash Proceeds if such reinvestment complies with the following requirements: (1) the Borrower shall deliver to the Administrative Agent a certificate of a Responsible Officer of the Borrower to the effect that the Borrower and/or any such permitted Subsidiary or other Loan Party intends to reinvest all or any portion of such Net Cash Proceeds in accordance with this Section 2.07(c)(iii)(B); (2) the Borrower, the applicable Subsidiary or other Loan Party (or any combination of the foregoing) shall reinvest or commit to reinvest such Net Cash Proceeds to acquire Rigs or other operating assets (including the construction of any such assets and the Acquisition of all of the Equity Interests in one or more Persons owning or constructing any such assets) or to improve, enlarge, develop, re-construct or repair the affected asset, or any combination of the foregoing in each case, within 365 days after the receipt of the applicable Net Cash Proceeds, (3) the Borrower, the applicable Subsidiary or other Loan Party (or any combination of the foregoing) shall take all related actions required by Section 5.12 through Section 5.15, as the case may be, with respect thereto (provided that (y) any Equity Interests purchased with Net Cash Proceeds of Collateral pursuant to this Section 2.07(c)(iii)(B) shall be issued by a Person organized under the laws of the United States of America or any state or political subdivision of thereof or the District of Columbia and (z) solely for purposes of this clause (3), Section 5.12 shall not apply to any Rig purchased, improved, enlarged, developed, re-constructed or repaired, in each case unless such Rig is a Collateral Rig, with Net Cash Proceeds of any Asset Disposition of a Non-Collateral Rig); provided, further, however, that if any Net Cash Proceeds shall not be expended in accordance with this Section 2.07(c)(iii) within such period or if an Event of Default shall subsequently occur and be continuing, the Borrower

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shall prepay the Revolving Advances, as set forth in Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in an amount equal to the amount of such Net Cash Proceeds not expended in accordance with this Section 2.07(c)(iii)(B); provided, however, that the Borrower shall not be required to make deposits into the LC Cash Collateral Account (x) until the Revolving Advances have been repaid in full and (y) unless and only to the extent that, on such date, the LC Cash Collateral Account contains an amount less than 100% of the Letter of Credit Exposure on such date.

     (C) At the election of the Borrower (and in lieu of clause (B) of this Section 2.07(c)(iii)), and so long as no Default or Event of Default shall have occurred and is continuing, the Borrower, the applicable Subsidiary or other Loan Party (or any combination of the foregoing) may, if the property affected by an Asset Disposition or Recovery Event (as the case may be) was a Collateral Rig, substitute one or more Non-Collateral Rigs rather than prepay any related amounts or reinvest all or any portion of such Net Cash Proceeds, if such substitution complies with the following requirements: (1) the Borrower shall deliver to the Administrative Agent a certificate of a Responsible Officer of the Borrower to the effect that the Borrower and/or any such permitted Subsidiary or other Loan Party intends to substitute one or more Non-Collateral Rigs for the affected Collateral Rig; (2) the Non-Collateral Rig(s) proposed for substitution shall each be an Acceptable Replacement Rig; (3) the Borrower, the applicable Subsidiary or other Loan Party (or any combination of the foregoing) shall encumber such theretofore Non-Collateral Rig in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, such that such Rig thereafter becomes a Collateral Rig and shall take all related actions required by Section 5.12 through Section 5.15, as the case may be, with respect thereto; provided, further, however, that if an Event of Default shall subsequently occur and be continuing, the Borrower shall prepay the Revolving Advances, as set forth in Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in an amount not less than all of the applicable Net Cash Proceeds received.

     (D) Pending the application of any such Net Cash Proceeds, the Borrower may (1) reduce outstanding Debt under the Revolving Advances and may, subject to the fulfillment of the applicable conditions set forth in Section 3.02, reborrow such amounts (which amounts, to the extent originally constituting Net Cash Proceeds, shall be deemed to retain their original character as Net Cash Proceeds when so reborrowed) for application as required by this Section 2.07 or (2) invest such Net Cash Proceeds in Cash Equivalents in which the Administrative Agent, for the ratable benefit of the Secured Parties, has an Acceptable Security Interest. With respect to any Asset Disposition or Recovery Event which will result in Net Cash Proceeds in excess of $25,000,000, the Borrower shall notify the Administrative Agent thereof on or prior to the date of

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the applicable Asset Disposition or promptly following the date that the Borrower has actual knowledge that a Recovery Event has occurred.

     (iv) Equity Issuance. Upon the issuance and sale by the Borrower of any of its Equity Interests (other than Excluded Equity Issuances), the Borrower shall, subject to Section 2.07(c)(vii), prepay the Revolving Advances, as set forth in Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in an amount equal to all Net Cash Proceeds received by it therefrom on the next Business Day following receipt thereof by the Borrower; provided, however, that the Borrower shall not be required to make deposits into the LC Cash Collateral Account (x) until the Revolving Advances have been repaid in full and (y) unless and only to the extent that, on such date, the LC Cash Collateral Account contains an amount less than 100% of the Letter of Credit Exposure on such date; provided, further, however, that at the election of the Borrower (as notified by the Borrower to the Administrative Agent on or prior to the date of receipt of such Net Cash Proceeds), and so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may reinvest or commit to reinvest such proceeds in assets and properties of the nature described in clause (2) of Section 2.07(c)(iii)(B) or for other corporate purposes within 365 days of receipt of such Net Cash Proceeds and pending application of such proceeds, the Borrower may apply such proceeds as provided in Section 2.07(c)(iii)(D); and provided, further, however, that if any Net Cash Proceeds shall not be expended in accordance with this Section 2.07(c)(iv) within such period or if an Event of Default shall subsequently occur and be continuing, the Borrower shall prepay the Revolving Advances, as set forth in Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in an amount equal to the remaining Net Cash Proceeds, if any; provided, however, that the Borrower shall not be required to make deposits into the LC Cash Collateral Account (x) until the Revolving Advances have been repaid in full and (y) unless and only to the extent that, on such date, the LC Cash Collateral Account contains an amount less than 100% of the Letter of Credit Exposure on such date.

     (v) Reserved.

     (vi) Application of Prepayments. Each prepayment pursuant to this Section 2.07(c) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date.

     (vii) Notwithstanding any of the other provisions of clauses (iii) through (v) of this Section 2.07(c), so long as no Default under Section 7.01(a) or Section 7.01(e), or Event of Default shall have occurred and be continuing:

     (A) If, on any date on which a prepayment would otherwise be required to be made pursuant to clause (iii), (iv) or (v) of this Section 2.07(c), unless an Event of Default has occurred and is continuing, the aggregate amount of Net Cash Proceeds required by such clause to be applied to prepay Revolving

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Advances on such date is less than or equal to $2,500,000, the Borrower may defer such prepayment until the first date thereafter on which the aggregate amount of Net Cash Proceeds or other amounts otherwise required under clause (iii), (iv) or (v) of this Section 2.07(c) to be applied to prepay Revolving Advances exceeds $2,500,000. During such deferral period, unless an Event of Default has occurred and is continuing, the Borrower may apply all or any part of such aggregate amount to prepay Revolving Advances and may, subject to the fulfillment of the applicable conditions set forth in Section 3.02, reborrow such amounts (which amounts, to the extent originally constituting Net Cash Proceeds, shall be deemed to retain their original character as Net Cash Proceeds when so reborrowed) for application as required by this Section 2.07. Upon the occurrence of a Default under Section 7.01(a) or Section 7.01(e), or an Event of Default during any such deferral period, the Borrower shall immediately prepay the Revolving Advances in the amount of all Net Cash Proceeds received by the Borrower and other amounts, as applicable, that are required to be applied to prepay Revolving Advances under this Section 2.07 (without giving effect to the first and second sentences of this clause (A)) but which have not previously been so applied.

     (B) If, on any date on which a prepayment would otherwise be required to be made pursuant to clause (iii), (iv) or (v) of this Section 2.07(c), unless an Event of Default has occurred and is continuing, the Borrower may, upon prior written notice to the Administrative Agent, elect to defer all or any portion of such required prepayment until the end of one or more Interest Periods immediately following the receipt of such Net Cash Proceeds provided that (1) all of the applicable Net Cash Proceeds not previously applied to prepay the Revolving Advances shall be deposited in a deposit account subject to an Account Control Agreement no later than the one Business Day following receipt of such Net Cash Proceeds and (2) such Net Cash Proceeds are applied to prepay the Revolving Advances at the end of such Interest Period(s), as the case may be or immediately if an Event of Default has occurred and is continuing. The Borrower hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing.

     (d) Illegality. If any Lender shall notify the Administrative Agent and the Borrower in writing that any Change in Law makes it unlawful (such unlawfulness being an “Illegality Event”) for such Lender or its Applicable Lending Office (such Lender being an “Affected Lender”) to perform its obligations under this Agreement or to make or maintain Eurodollar Advances then outstanding hereunder, then the Borrower shall, no later than 12:00 p.m. (New York time) (i) (A) if not prohibited by any Legal Requirement applicable to such Affected Lender to maintain such Eurodollar Advances for the duration of the Interest Period, on the last day of the Interest Period for each outstanding Eurodollar Advance or (B) if prohibited by any Legal Requirement applicable to such Affected Lender to maintain such Eurodollar Advances for the duration of the Interest Period, on the third Business Day following its receipt of such notice, prepay all Eurodollar Advances of all of the Lenders then outstanding, together with accrued and unpaid interest on the principal amount prepaid to the date of such prepayment and amounts, if

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any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date, (ii) each Affected Lender shall simultaneously make a Base Rate Advance and each other Lender shall make an Eurodollar Advance, in each case, in an amount equal to the aggregate principal amount of the affected Eurodollar Advances, and (iii) the right of the Borrower to select Eurodollar Advances shall be suspended until the earlier to occur of the date on which (A) such Affected Lender shall notify the Administrative Agent that the Illegality Event no longer exists and (B) such Affected Lender shall be replaced by the Borrower pursuant to Section 2.15(b) with a Person that is not prohibited from performing its obligations under this Agreement or from making or maintaining Eurodollar Advances. Each Lender agrees to (x) promptly notify the Administrative Agent and the Borrower in writing if such Illegality Event ceases to exist and (y) use commercially reasonable efforts (consistent with its internal policies and subject to legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such designation would avoid the effect of this paragraph and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

     (e) Ratable Payments; Effect of Notice. Each payment of any Revolving Advance pursuant to this Section 2.07 or any other provision of this Agreement shall be made in a manner such that all Revolving Advances comprising part of the same Borrowing are paid in whole or ratably in part; provided, however, that the Borrower shall not be obligated to pay the Administrative Agent, and the Defaulting Lender shall not be entitled to receipt of, such Defaulting Lender’s Pro Rata Share of such prepayment until such time as the Borrowings for which such Defaulting Lender shall have failed to fund have either been paid by such Defaulting Lender, including any other amounts owing pursuant thereto, or each Lender (including each Defaulting Lender) is owed its ratable share of all Revolving Commitments then outstanding. All notices given pursuant to this Section 2.07 shall be irrevocable and binding upon the Borrower.

     Section 2.08 Funding Losses. If (a) any payment of principal of any Eurodollar Advance is made other than on the last day of the Interest Period for such Revolving Advance as a result of any payment pursuant to Section 2.07 or the acceleration of the maturity of the Revolving Advances pursuant to Article VII or (b) if the Borrower fails to make a principal or interest payment with respect to any Eurodollar Advance on the date such payment is due and payable, the Borrower shall, within three Business Days of any written demand sent by any Lender to the Borrower through the Administrative Agent, pay to Administrative Agent for the account of such Lender any amounts (without duplication of any other amounts payable in respect of breakage costs) required to compensate such Lender for any additional losses (excluding loss of anticipated profits), out-of-pocket costs or expenses which it may reasonably incur as a result of such payment or nonpayment, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Revolving Advance. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, including reasonably detailed calculations thereof, shall be delivered to the Borrower and shall be conclusive absent manifest error.

     Section 2.09 Increased Costs.

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     (a) Increased Costs Generally. If any Change in Law shall:

     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage), or the Issuing Bank;

     (ii) subject any Lender or the Issuing Bank to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Eurodollar Advance made by it, or change the basis of taxation of payments to such Lender or the Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.11 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Issuing Bank); or

     (iii) impose on any Lender, the Issuing Bank, or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Advances made by such Lender, the Issuing Bank, or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Advance (or of maintaining its obligation to make any such Eurodollar Advance), or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank (whether of principal, interest or any other amount) then, upon request of such Lender or the Issuing Bank, the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

     (b) Capital Requirements. If any Lender or the Issuing Bank determines that any Change in Law affecting such Lender or the Issuing Bank or any Applicable Lending Office of such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Revolving Commitments of such Lender or the Revolving Advances made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

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     (c) Certificates for Reimbursement. A certificate of a Lender or the Issuing Bank setting forth, in reasonable detail, (i) the amount or amounts necessary to compensate such Lender or the Issuing Bank or any of their respective holding companies, as the case may be, as specified in paragraph (a) or (b) of this Section, and (ii) the Change in Law, circumstance or other basis for such compensation, delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. Upon request by the Borrower, a Lender or the Issuing Bank shall also provide a certificate that such Lender or the Issuing Bank is generally requesting such compensation from other borrowers which such Lender or the Issuing Bank reasonably deems similarly situated to the Borrower.

     (d) Delay in Requests. Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

     Section 2.10 Payments and Computations.

     (a) Payment Procedures. The Borrower shall make each payment under this Agreement not later than 1:00 p.m. (New York time) on the day when due to the Administrative Agent at the Administrative Agent’s Applicable Lending Office in immediately available funds. Each Revolving Advance shall be repaid and each payment of interest thereon shall be paid in Dollars. All payments shall be made without setoff, deduction, or counterclaim other than in respect of amounts owed by the Borrower to a Defaulting Lender. The Administrative Agent will promptly thereafter, and in any event prior to the close of business on the day any timely payment is made, cause to be distributed like funds relating to the payment of principal, interest or fees ratably (other than amounts payable solely to the Administrative Agent, or a specific Lender pursuant to Section 2.03(b), 2.03(c), 2.03(d), 2.08, 2.09 or 2.11) to the Lenders in accordance with each Lender’s Pro Rata Share for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Offices, in each case to be applied in accordance with the terms of this Agreement.

     (b) Computations. All computations of interest based on the Prime Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate and of fees shall be made by the Administrative Agent, on the basis of a year of 360 days, in each case for the actual number of days (including the first day, but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Administrative Agent of an interest rate shall be conclusive and binding for all purposes, absent manifest error.

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     (c) Non-Business Day Payments. Whenever any payment shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be.

     (d) Agent Reliance. Unless the Administrative Agent shall have received written notice from the Borrower prior to the date on which any payment is due to the Lenders that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such date an amount equal to the amount then due to such Lender. If and to the extent the Borrower shall not have so made such payment in full to Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender, together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

     (e) Certain Deductions by the Administrative Agent. If any Lender shall fail to make any payment required to be made by it pursuant to Sections 2.01, 2.02(e), 2.10(d), 2.14(b), or 2.14(c) then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid and the Administrative Agent shall promptly provide written notice to the Borrower of any such application of amounts. If at any time prior to the acceleration or maturity of the Revolving Advances, the Administrative Agent shall receive any payment in respect of principal of a Revolving Advance or a reimbursement of Letter of Credit Obligations while one or more Defaulting Lenders shall be party to this Agreement, the Administrative Agent shall apply such payment first to satisfy such Defaulting Lender’s obligations to fund its Pro Rata Share of any Borrowings until such time as such unsatisfied obligations are paid in full or each Lender (including each Defaulting Lender) is owed its Pro Rata Share of all Revolving Advances then outstanding. After acceleration or maturity of the Revolving Advances, all principal will be paid ratably as provided in Section 7.06.

     Section 2.11 Taxes.

     (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if any Loan Party shall be required by any Legal Requirement applicable to such Loan Party to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, such Lender or the Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with such Legal Requirements.

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     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, to the extent such Other Taxes are imposed on the Borrower under applicable law.

     (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including any penalties, interest and reasonable expenses arising therefrom or with respect thereto), except as a result of the gross negligence or willful misconduct of the Administrative Agent, such Lender or the Issuing Bank, as the case may be, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

     (d) Evidence of Payments. As soon as reasonably practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender or the Issuing Bank, at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender or the Issuing Bank is subject to backup withholding or information reporting requirements. Each Lender shall promptly notify the Borrower and the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption of or reduction in withholdings.

          Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the

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Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,

     (ii) duly completed copies of Internal Revenue Service Form W-8ECI,

     (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

     (iv) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made.

     (f) Treatment of Certain Refunds. If the Administrative Agent, a Lender or the Issuing Bank determines, in its reasonable discretion, that it has received a refund, credit or deduction from any taxing authority to which it would not be entitled but for the payment of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section (it being understood that the decision as to whether or not to claim, and if claimed, as to the amount of any such refund, credit or deduction shall be made by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, in its sole discretion), it shall pay to the Borrower an amount equal to such refund, credit or deduction (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out of pocket expenses of the Administrative Agent and Lender or the Issuing Bank, as the case may be, without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent, such Lender or the Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or the Issuing Bank in the event the Administrative Agent, such Lender or the Issuing Bank is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent, any Lender or the Issuing Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

     (g) Delay in Requests. Failure or delay on the part of any Lender or the Issuing Bank to demand reimbursement or indemnification pursuant to this Section shall not constitute a

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waiver of such Lender’s or the Issuing Bank’s right to demand such payment, provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any Indemnified Taxes or Other Taxes incurred more than nine months prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the imposition or assertion thereof.

     Section 2.12 Sharing of Payments, Etc. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Advances or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Revolving Advances and accrued interest thereon or other such obligations greater than its Pro Rata Share, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Revolving Advances and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Advances and other amounts owing them, provided that: (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this paragraph shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolving Advances or participations in Letters of Credit to any permitted assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply). Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation.

     Section 2.13 Applicable Lending Offices. Each Lender may book its Revolving Advances at any Applicable Lending Office selected by such Lender and may change its Applicable Lending Office from time to time. All terms of this Agreement shall apply to any such Applicable Lending Office and the Revolving Advances shall be deemed held by each Lender for the benefit of such Applicable Lending Office. Each Lender may, by written notice to the Administrative Agent and the Borrower designate replacement or additional Applicable Lending Offices through which Revolving Advances will be made by it and for whose account repayments are to be made.

     Section 2.14 Letters of Credit.

     (a) Issuance. Subject to the terms of this Agreement, from time-to-time from the Closing Date until five Business Days before the Maturity Date, at the request of the Borrower, the Issuing Bank shall, on the terms and conditions hereinafter set forth, issue, increase, extend the expiration date of and honor drawings under Letters of Credit for the account of the Borrower or for the account of any Subsidiary of the Borrower (in which case the Borrower and such Subsidiary shall be co-applicants with respect to such Letter of Credit) on any Business Day.

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Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. No Letter of Credit will be issued, increased, or extended:

     (i) if such issuance, increase, or extension would cause the Letter of Credit Exposure to exceed an amount equal to (A) the lesser of (1) the Letter of Credit Sublimit and (2) the least of (a) the aggregate Revolving Commitments, (b) the Borrowing Base and (c) the Fixed Charge Coverage Cap minus (B) the aggregate outstanding principal amount of all Revolving Advances;

     (ii) if such issuance, increase, or extension would cause the applicable portion of the Letter of Credit Exposure to violate Section 5.09;

     (iii) unless such Letter of Credit has an expiration date not later than one year after the date of issuance thereof; provided that, any such Letter of Credit with a one-year tenor may expressly provide that it is automatically renewable for additional one-year periods or less (which shall in no event extend beyond the Maturity Date unless the conditions in Section 2.14(e) are satisfied), provided, further, that such Letter of Credit must permit the Issuing Bank to prevent any such automatic extension once in each twelve-month period by giving at least 30 days’ notice given by the Issuing Bank to the Borrower and the beneficiary of such Letter of Credit;

     (iv) unless such Letter of Credit is in form and substance reasonably acceptable to the Issuing Bank;

     (v) unless the Borrower has delivered to the Issuing Bank a completed and executed Letter of Credit Application;

     (vi) unless (A) such Letter of Credit is governed by the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600 or any successor to such publication, if such Letter of Credit is a commercial Letter of Credit, or (B) such Letter of Credit is governed by the ISP, if such Letter of Credit is a standby Letter of Credit; provided, however, that if the terms of any such publication shall conflict with the terms of this Agreement, the terms of this Agreement shall control; or

     (vii) if a default of any Lender’s obligations to fund under Section 2.14(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the Issuing Bank has entered into arrangements reasonably satisfactory to the Issuing Bank with the Borrower or such Lender to eliminate the Issuing Bank’s risk with respect to such Lender.

     (b) Participations. Upon the date of the issuance or increase of a Letter of Credit occurring on or after the Closing Date, the Issuing Bank shall be deemed to have sold to each other Lender and each other Lender shall have been deemed to have purchased from the Issuing Bank a participation in the related Letter of Credit Obligations equal to such Lender’s Pro Rata Share at such date. In consideration and in furtherance of the foregoing, each Lender hereby

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absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Pro Rata Share of each payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit and not reimbursed by the Borrower (or, if applicable, another party pursuant to its obligations under any other Loan Document) forthwith on the date due as provided in Section 2.14(c). Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic notification, confirmed by fax, to the Administrative Agent and the Borrower of such demand for payment and whether the Issuing Bank has made or will make disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such payment or disbursement. The Administrative Agent shall promptly give each Lender notice thereof.

     (c) Reimbursement. Upon the Issuing Bank’s receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the Issuing Bank shall notify the Borrower and the Administrative Agent thereof. The Borrower hereby agrees to pay on demand to the Issuing Bank in respect of each Letter of Credit issued for either of their account an amount equal to any amount paid by the Issuing Bank under or in respect of such Letter of Credit. In the event the Issuing Bank makes a payment pursuant to a request for draw presented under a Letter of Credit and makes demand of the Borrower for the reimbursement thereof by 12:00 p.m. (New York time) the Borrower shall reimburse the Issuing Bank for such amount paid by the Issuing Bank on the same Business Day; provided, however, that if the Issuing Bank makes demand after such time, the Borrower shall so reimburse the Issuing Bank on the next succeeding Business Day. If such payment is not promptly reimbursed by the Borrower pursuant to the immediately preceding sentence, the Issuing Bank shall give notice of such failure to pay to the Administrative Agent and the Lenders, and each Lender shall promptly reimburse the Issuing Bank for such Lender’s Pro Rata Share of such unreimbursed amount, and such reimbursement shall be deemed for all purposes of this Agreement to constitute a Borrowing comprised of Base Rate Advances to the Borrower from such Lender. If such reimbursement is not made by any Lender to the Issuing Bank on the same day on which the Issuing Bank shall have made payment on any such draw, such Lender shall pay interest thereon to the Issuing Bank at a rate per annum equal to a rate reasonably determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. The Borrower hereby unconditionally and irrevocably authorizes, empowers, and directs the Administrative Agent and the Lenders to record and otherwise treat such payment under a Letter of Credit not immediately reimbursed by the Borrower as a Borrowing comprised of Base Rate Advances.

     (d) Obligations Unconditional. The obligations of the Borrower under this Agreement in respect of each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, notwithstanding the following circumstances:

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     (i) any lack of validity or enforceability of any Letter of Credit Documents, any Loan Document, or any term or provision therein;

     (ii) the existence of any claim, set-off, defense or other right that the Borrower, any other party guaranteeing, or otherwise obligated with, the Borrower, any subsidiary or other Affiliate thereof or any other Person may have at any time against any beneficiary or transferee of such Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Bank, any Lender or any other Person, whether in connection with this Agreement, any other Loan Document, the transactions contemplated in this Agreement or in any Letter of Credit Documents or any unrelated transaction;

     (iii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

     (iv) payment by the Issuing Bank under such Letter of Credit against presentation of a draft or certificate which does not strictly comply with the terms of such Letter of Credit; or

     (v) any other act or omission to act or delay of any kind of the Issuing Bank, the Administrative Agent, the Lenders or any other Person or any other event, circumstance or happening whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder.

Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligation of the Borrower hereunder to reimburse each payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit will not be excused by the gross negligence or willful misconduct of the Issuing Bank.

     (e) Prepayments of Letters of Credit. In the event that any Letters of Credit shall be outstanding or shall be drawn and not reimbursed on the 90^th day prior to the Maturity Date, the Borrower shall pay to the Administrative Agent no later than 90 days prior to the Maturity Date, an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit to be held in the LC Cash Collateral Account and applied in accordance with paragraph (g) below.

     (f) Liability of Issuing Bank. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Bank nor any of its officers or directors shall be liable or responsible for:

     (i) the use which may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith;

     (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged;

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     (iii) payment by the Issuing Bank against presentation of documents which do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the relevant Letter of Credit; or

     (iv) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit (including the Issuing Bank’s own negligence),

except that the Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to, and shall promptly pay to, the Borrower, to the extent of any direct, as opposed to consequential (claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law), damages suffered by the Borrower which the Borrower prove were proximately caused by (i) the Issuing Bank’s willful misconduct or gross negligence in determining whether documents presented under a Letter of Credit strictly comply with the terms of such Letter of Credit and (ii) the Issuing Bank’s willful failure to make payment under a Letter of Credit after the presentation to it of a draft and documents strictly complying with the terms of such Letter of Credit. It is understood that the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (A) the Issuing Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (B) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute willful misconduct or gross negligence of the Issuing Bank.

     (g) LC Cash Collateral Account.

     (i) If the Borrower is required to deposit funds in the LC Cash Collateral Account pursuant to Sections 2.07(c), 2.14(e), 7.02(b) or 7.03(b), then the Borrower and the Administrative Agent shall establish the LC Cash Collateral Account and the Borrower shall execute any documents and agreements, including an assignment of deposit accounts in form and substance reasonably satisfactory to the Administrative Agent, that the Administrative Agent reasonably requests in connection therewith to establish the LC Cash Collateral Account and grant the Administrative Agent an Acceptable Security Interest in such account and the funds therein. The Borrower hereby pledges to the Administrative Agent and grants the Administrative Agent a security interest in the LC Cash Collateral Account, whenever established, all funds held in the LC Cash Collateral Account from time to time and all proceeds thereof as security for the payment of the Obligations.

     (ii) Funds held in the LC Cash Collateral Account shall be held as cash collateral for obligations with respect to Letters of Credit and promptly applied by the

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Administrative Agent at the request of the Issuing Bank to any of the Borrower’s reimbursement or other payment obligations that exist or occur under outstanding Letters of Credit. To the extent that any surplus funds are held in the LC Cash Collateral Account above 105% of the Letter of Credit Exposure during the existence of an Event of Default the Administrative Agent may (A) hold such surplus funds in the LC Cash Collateral Account as cash collateral for the Obligations or (B) apply such surplus funds to any Obligations in any manner directed by the Required Lenders. If no Event of Default has occurred and is continuing, the Administrative Agent shall promptly release to the Borrower at the Borrower’s written request any funds held in the LC Cash Collateral Account above the amounts required by Section 2.14(e).

     (iii) Funds held in the LC Cash Collateral Account shall be invested in Cash Equivalents maintained with, and under the sole dominion and control of, the Administrative Agent or in another investment if mutually agreed upon by the Borrower and the Administrative Agent, but the Administrative Agent shall have no other obligation to make any other investment of the funds therein. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the LC Cash Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords its own property, it being understood that the Administrative Agent shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such funds.

     (h) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign at any time by giving written notice to the Administrative Agent, the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Issuing Bank, or, if no successor Issuing Bank has been appointed, 60 days after the retiring Issuing Bank gives such notice of its intention to resign or receives notice of its removal. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, and provided that no Event of Default has occurred and is continuing, with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), a successor Issuing Bank. If no successor Issuing Bank shall have been so appointed by the Required Lenders within such time period, then the Issuing Bank may appoint, and provided that no Event of Default has occurred and is continuing, with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), a successor Issuing Bank. Subject to the next succeeding sentence, upon the acceptance of any appointment as the Issuing Bank hereunder by a Lender that shall agree to serve as successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to issue additional Letters of Credit hereunder. At the time such resignation shall become effective, the Borrower shall pay all accrued and unpaid fees pursuant to Sections 2.03(d)(ii) and (iii). The acceptance of any appointment as the Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form reasonably satisfactory to the retiring Issuing Bank, the Administrative Agent, and provided that no Event of Default has occurred and is continuing, the Borrower, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Issuing Bank under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term “Issuing Bank” shall be

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deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or removal of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit, until the Letter of Credit Obligations with respect to Letters of Credit issued by such retiring Issuing Bank shall have been paid in full.

     (i) Conflict with Letter of Credit Documents. If any Letter of Credit Document shall conflict with the terms of this Agreement, the terms of this Agreement shall control.

     Section 2.15 Mitigation Obligations; Replacement of Lenders; Removal of Defaulting Lender.

     (a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.09, or requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.11, or if any Lender gives a notice pursuant to Section 2.07(d), then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or substantially reduce amounts payable pursuant to Section 2.09 or 2.11, as the case may be, in the future, or eliminate the need for notice pursuant to Section 2.07(d), as applicable, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

     (b) Replacement of Lenders. If (i) any Lender requests compensation under Section 2.09 or (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.11, (iii) any Lender becomes an Affected Lender as set forth in Section 2.07(d), (iv) if any Lender is a Defaulting Lender or (v) if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse and within three Business Days of such Lender’s receipt of such notice (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that: (i) the Administrative Agent shall have received the assignment fee specified in Section 10.06 (unless such assignee is a Lender or an Affiliate of a Lender); (ii) such Lender shall have received payment of an amount equal to the outstanding principal amount of its Revolving Advances and participations (to the extent such Defaulting Lender actually paid the Administrative Agent for such participations) in Letter of Credit Obligations, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 2.08) from the assignee or the Borrower; (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.09 or payments required to be made pursuant to Section 2.11,

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such assignment will result in a reduction in such compensation or payments required to be made by the Borrower thereafter; and (iv) such assignment does not conflict with Legal Requirements applicable to the Borrower or such assignee. A Lender shall not be required to make any such assignment or delegation if, within such three-Business Day period, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

     (c) Removal of Defaulting Lenders. Upon not less than three Business Days’ prior notice to the Defaulting Lender and the Administrative Agent (which the Administrative Agent will promptly provide to the Lenders and the Issuing Bank), the Borrower shall have the right (i) to remove such Defaulting Lender by terminating such Defaulting Lender’s then Revolving Commitment, or (ii) to terminate the then unused Revolving Commitment of such Defaulting Lender, in each case, after taking into account the aggregate portion of such Revolving Commitment, if any, which theretofore have been, or substantially contemporaneous therewith are being, assigned pursuant to Section 10.06. In connection with the Borrower’s right to remove a Defaulting Lender and, notwithstanding any other provision of any Loan Document to the contrary, without obligation to make ratable prepayments on Obligations to the other Lenders, the Borrower shall pay in full all principal, interest, fees and other amounts owing to such Defaulting Lender through the date of termination, net of amounts owed to the Borrower by such Defaulting Lender as a consequence to the Borrower of such Lender becoming a Defaulting Lender. provided that such removal or termination will not be deemed to be a waiver or release of any claim by the Borrower, the Administrative Agent, the Issuing Bank or any Lender may have against such Defaulting Lender.

     (d) Replacement or Removal Administrative Matters. In order to make all the Lenders’ interests in any outstanding Revolving Advances and Letters of Credit ratable in accordance with any revised Pro Rata Shares after giving effect to the removal or replacement of a Lender, (i) the Lenders shall be deemed to have made a Revolving Advance to the Borrower, the proceeds of which were used by the Borrower to pay or prepay, if necessary, on the effective date thereof, all outstanding Revolving Advances of all Lenders, together with any amounts due under Section 2.08 and (ii) the amount of the unfunded participations held by each Lender in each Letter of Credit then outstanding shall be adjusted such that, after giving effect to such adjustments, the Lenders shall hold its Pro Rata Share, calculated after giving effect to such removal or replacement of a Lender, of unfunded participations in each such Letter of Credit. The Borrower may net any payments required hereunder against any funds being provided by any Lender or Eligible Assignee replacing a terminating Lender. The effect for purposes of this agreement shall be the same as if separate transfers of funds had been made with respect thereto. This Section 2.15 shall supersede any provision in Section 10.01 to the contrary. Notwithstanding anything herein to the contrary, as to each Lender, the sum of (A) all outstanding Revolving Advances owing to such Lender (regardless of whether made or deemed to be made) plus (B) such Lender’s Pro Rata Share of the Letter of Credit Exposure shall, in no event, exceed such Lender’s Revolving Commitment.

     Section 2.16 Increase in Revolving Commitments.

     (a) Request for Increase. Provided that no Default or Event of Default has occurred and is continuing, upon at least 30 days’ prior written notice to the Administrative Agent (which

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shall promptly notify the Lenders and the Issuing Bank), the Borrower may from time to time until the one year anniversary of the Closing Date, elect to increase the aggregate Revolving Commitments by an amount (for all such requests) not exceeding the sum of (i) $14,000,000 plus (ii) the aggregate amount of Revolving Commitments terminated by the Borrower pursuant to Section 2.15(c); provided that (x) any such request for an increase shall be in a minimum amount of $5,000,000 or such lesser amount as may then be available for increases, (y) the Borrower may make a maximum of three such requests and (z) the aggregate Revolving Commitments may not exceed $50,000,000 minus any permanent reductions in the Revolving Commitments made pursuant to Section 2.04.

     (b) Additional Lenders. The Borrower may designate one or more banks or other financial institutions (which may be, but need not be, one or more of the existing Lenders) which at the time agree to, in the case of any Person that is an existing Lender, increase its Revolving Commitment and, in the case of any other such Person (an “Additional Lender”), become a party to this Agreement; provided, however, that any bank or financial institution that is not an existing Lender shall be acceptable to the Administrative Agent and the Issuing Bank, which acceptance shall not be unreasonably withheld, delayed or conditioned. No Lender shall have any obligation whatsoever to agree to increase its Revolving Commitment.

     (c) Conditions to Effectiveness of Increase. An increase in the aggregate Revolving Commitments pursuant to this Section 2.16 shall become effective (the “Revolving Commitment Increase Effective Date”) upon the receipt by the Administrative Agent of (i) a certificate of each Loan Party dated as of the Revolving Commitment Increase Effective Date signed by a Responsible Officer of such Person (A) certifying and attaching the resolutions adopted by such Person approving or consenting to such increase, (B) amendments to Rig Mortgages to reflect the increased aggregate principal amount of the Revolving Commitments, and (C) in the case of the Borrower, certifying that, before and after giving effect to such increase, (1) the representations and warranties contained in Article IV and the other Loan Documents are true and correct in all material respects on and as of the Revolving Commitment Increase Effective Date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties are true and correct in all respects as of such earlier date), and (2) no Event of Default has occurred and is continuing and (ii) a joinder agreement, in form and substance reasonably satisfactory to the Administrative Agent, executed by the Borrower, each Additional Lender and each other Lender whose Revolving Commitment is to be increased.

     (d) Pro Rata Shares. Upon any increase in the aggregate amount of the Revolving Commitments pursuant to this Section 2.16 that is not pro rata among all Lenders, (i) the Borrower, the Administrative Agent and the Lenders shall, as of the Revolving Commitment Increase Effective Date of any such increase, make adjustments to the outstanding principal amount of Revolving Advances (but not any interest accrued thereon or any accrued fees prior to such date), including, subject to the conditions specified in Section 3.02, the borrowing of additional Revolving Advances hereunder and the repayment of Revolving Advances, together with accrued interest to the date of such prepayment on the principal amount prepaid, as shall be

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necessary to provide for Revolving Advances by the Lenders in proportion to their respective Revolving Commitments after giving effect to such increase, and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date, and each Lender shall be deemed to have made an assignment of its outstanding Revolving Advances and Revolving Commitments, and assumed outstanding Revolving Advances and Revolving Commitments of other Lenders as of such Revolving Commitment Increase Effective Date as may be necessary to effect the foregoing, and (ii) effective upon such increase, the amount of the unfunded participations held by each Lender in each Letter of Credit then outstanding shall be adjusted such that, after giving effect to such adjustments, the Lenders shall hold its Pro Rata Share, calculated after giving effect to such increase, of unfunded participations in each such Letter of Credit.

     (e) Conflicting Provisions. This Section shall supersede any provisions in Sections 2.09 or 9.01 to the contrary.

ARTICLE III

CONDITIONS OF LENDING

     Section 3.01 Binding Effect; Termination. This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent, and when the Administrative Agent shall have, as to each Lender, either received a counterpart hereof executed by such Lender or been notified by such Lender that such Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, and each Lender and their respective successors and assigns. If the Closing Date has not occurred on or prior to September 30, 2009, this Agreement shall terminate at 12:01 a.m. on October 1, 2009 without any further action by or notice from any party hereto.

     Section 3.02 Initial Conditions Precedent. The obligation of each Lender to make its initial Revolving Advance as part of the initial Borrowing, or the Issuing Bank to issue the initial Letter of Credit, is subject to each of the following conditions precedent (unless waived, in their respective discretion, by the Administrative Agent, the Issuing Bank and all Lenders):

     (a) Documentation. On or before the earlier to occur of the day on which the initial Borrowing is made or the initial Letter of Credit is issued, the Administrative Agent and the Lenders shall have received the following, each dated on or before such day, duly executed by all the parties thereto, each in form and substance reasonably satisfactory to the Administrative Agent:

     (i) this Agreement executed by all of the other Loan Parties and all attached Exhibits and Schedules;

     (ii) any Note requested by a Lender pursuant to Section 2.02(g) payable to the order of such requesting Lender in the amount of its Revolving Commitment;

     (iii) Rig Mortgage(s) duly authorized, executed and delivered by the applicable Loan Party granting a Lien to the Administrative Agent in each Collateral Rig to secure the Obligations, in appropriate form for recording in the appropriate vessel registry,

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together with any other documents, agreements or instruments reasonably necessary to create an Acceptable Security Interest in such Collateral Rig;

     (iv) an Assignment of Earnings and an Assignment of Insurances, together creating a security interest in each Loan Party’s present and future Earnings Collateral and Insurance Collateral;

     (v) the Security Agreement executed by each of the Loan Parties, together with UCC-1 financing statements and any other documents, agreements or instruments reasonably necessary to create an Acceptable Security Interest in the Collateral described therein;

     (vi) the Pledge Agreement executed by the Borrower and each applicable Subsidiary pledging to the Administrative Agent, for the ratable benefit of the Secured Parties, all of the Equity Interests of the Material Domestic Subsidiaries and 65% of the Equity Interests of Material Subsidiaries that are Foreign Subsidiaries, together with certificates, powers executed in blank, UCC-1 financing statements and any other documents, agreements or instruments reasonably necessary to create an Acceptable Security Interest in such Equity Interests;

     (vii) Account Control Agreement(s) among the Borrower, the Administrative Agent and Citibank, N.A.;

     (viii) a certificate dated as of the Closing Date from a Responsible Officer of the Borrower stating that (A) all representations and warranties of such Person set forth in this Agreement and in the other Loan Documents to which it is a party are true and correct; and (B) no Default or Event of Default has occurred and is continuing;

     (ix) copies of the certificate or articles of incorporation or other equivalent organizational documents, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization;

     (x) a certificate of the Secretary or Assistant Secretary of each Loan Party dated as of the Closing Date and certifying (A) that attached thereto is a true and complete copy of the organizational documents of such Loan Party as in effect on the Effective Date, the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or Persons, committees or other group performing similar functions) of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Loan Party is a party (or in the case of any Loan Party that executed this Agreement as of the Effective Date, ratifying, confirming and adopting all acts, transactions or agreements undertaken on or prior to the Closing Date by such Loan Party in connection with this Agreement and the transactions contemplated hereby) and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation or other organizational documents of such Loan Party have not been amended since the date of

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the last amendment thereto shown on the certified copy thereof furnished pursuant to clause (ix) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document, Notice of Borrowing or any other document delivered in connection herewith on behalf of such Loan Party;

     (xi) a certificate of another officer of each Loan Party as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (x) above;

     (xii) certificates from the appropriate Governmental Authority certifying as to the good standing, existence and authority of each of the Loan Parties in each jurisdiction where such Loan Party is incorporated or organized;

     (xiii) opinions dated as of the Closing Date from (A) Fulbright & Jaworski, L.L.P., counsel to the Loan Parties, (B) Sher & Blackwell, LLP, special maritime counsel to the Loan Parties, and (C) López Velarde, Heftye y Soria, S.C., Mexican counsel to the Loan Parties;

     (xiv) a certificate from a Financial Officer of the Borrower dated as of the Closing Date addressed to the Administrative Agent and each of the Lenders regarding the matters set forth in Section 4.20;

     (xv) a certificate from a Financial Officer addressed to the Administrative Agent and each of the Lenders, certifying that the Projections delivered by the Borrower to the Administrative Agent and the Lenders prior to the Closing Date have been prepared in good faith and are based on reasonable assumptions when made, and there are no statements or conclusions in such Projections which are based upon or include information known to the Borrower on the Closing Date to be misleading in any material respect or which fail to take into account material information known to the Borrower on the Closing Date regarding the matters reported therein and that, as on the Closing Date, the Borrower believes that such Projections are reasonable, it being recognized by the Administrative Agent, the Lenders and the Issuing Bank, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may materially differ from the projected results included in such Projections;

     (xvi) copies of each of the Transaction Documents certified as of the Closing Date by a Responsible Officer or the Secretary or Assistant Secretary of the Borrower (A) as being true and correct copies of such documents as of the Closing Date and (B) as being in full force and effect;

     (xvii) certificates of insurance from an Insurance Advisor to the extent required by Section 5.04.

     (xviii) Appraisal Reports for each Collateral Rig dated not more than 180 days prior to the Closing Date, each issued by an Approved Rig Appraiser;

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     (xix) (A) certificates of ownership or abstracts of title from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of such Collateral Rig by the relevant Loan Party (or its predecessor), (B) valid and current ISM/ISPS Code documentation required with respect to each Collateral Rig pursuant to applicable Legal Requirements and (C) the results of maritime registry searches with respect to such Collateral Rig, indicating no record liens other than Liens in favor of the Administrative Agent and Excepted Liens, in each case, dated not more than 60 days prior to the Closing Date;

     (xx) (A) copies of the Certificates of Inspection, (B) Rig Certificates of Financial Responsibility (Water Pollution) or International Oil Pollution Prevention Certificate, each issued by the United States Coast Guard (or the substantial equivalent in the case of foreign assets if available), (C) Certificates of Classification issued by the American Bureau of Shipping, (D) Certificates of Documentation or Certificates of Registry issued by the United States Coast Guard or foreign equivalent, (E) International Load Line Certificates issued by the American Bureau of Shipping, and (F) Certificate of Financial Responsibility required by the Minerals Management Service or the United States Coast Guard, in each case as applicable and as reasonably requested by the Administrative Agent with respect to the Collateral Rigs, in each case, dated not more than 60 days prior to the Closing Date;

     (xxi) evidence of the class of each Collateral Rig and the classification society with respect to such Collateral Rig;

     (xxii) acknowledgment from CT Corporation System as of the Closing Date with respect to its irrevocable appointment as agent for service of process by each Loan Party pursuant to Section 10.12(b);

     (xxiii) a guaranty trust agreement among the applicable Loan Parties, the Administrative Agent and the Mexican trustee designated by the Loan Parties and acceptable to the Administrative Agent, together with a form of consent to assignment to be executed by PEMEX; all in form and substance reasonably satisfactory to the Administrative Agent and the Borrower; and

     (xxiv) such other documents, governmental certificates and agreements as the Administrative Agent may reasonably request.

     (b) Payment of Fees. On or prior to the Closing Date, the Borrower shall have paid the fees required to be paid to the Administrative Agent, the Arranger, and the Lenders on the Closing Date which have been invoiced to the Borrower on or before the Closing Date, including, without limitation, the fees set forth in the Fee Letter and all other costs and expenses which have been invoiced and are payable pursuant to Section 10.04.

     (c) Due Diligence; Corporate Structure. The Administrative Agent and the Lenders shall have completed a satisfactory due diligence review of the assets, liabilities, business, operations and condition (financial or otherwise) of the Borrower and its Subsidiaries, and all legal, financial, accounting, governmental, tax and regulatory matters, and fiduciary aspects of

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the proposed financing and the terms and conditions of all material obligations of the Loan Parties. The documentation reflecting the ownership, capital, corporate, tax, organizational and legal structure of the Loan Parties shall be acceptable to the Administrative Agent.

     (d) Consummation of the Transaction. The Administrative Agent shall have received evidence that the Transaction shall have occurred on or before the Closing Date in accordance with the terms of the Master Separation Agreement and that the conditions to effectiveness thereof shall have been satisfied or waived in accordance with the terms thereof; provided, however, that any such waiver that is materially adverse to the Lenders shall have received the prior written consent of the Administrative Agent and the Required Lenders, such consent not to be unreasonably withheld, conditioned or delayed.

     (e) Security Documents. The Administrative Agent shall have received evidence that arrangements have been made for the Administrative Agent, for the ratable benefit of Secured Parties, to have an Acceptable Security Interest in the Collateral, including, without limitation, (i) the delivery to the Administrative Agent of such financing statements under the Uniform Commercial Code for filing in the respective jurisdiction of incorporation or organization of each Loan Party, (ii) lien, tax and judgment searches conducted on the Loan Parties reflecting no Liens other than Excepted Liens against any of the Collateral as to which perfection of a Lien is accomplished by the filing of a financing statement and (iii) lien releases with respect to any Collateral currently subject to a Lien other than Excepted Liens.

     (f) Financial Statements. The Administrative Agent and the Lenders shall have received true and correct copies of the Pro Forma Financial Statements and the Projections. The Administrative Agent shall have received evidence satisfactory to the Administrative Agent confirming that the Borrower has (i) as at the date of the declaration of the Transaction had at least the amount of cash, and (ii) as at May 31, 2009 had at least the amount of net working capital, in each case, as set forth in Schedule 3.02(f).

     (g) Authorizations and Approvals. To the extent required by Section 4.03, all Governmental Authorities and Persons shall have approved or consented to the transactions contemplated hereby, and such approvals shall be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or overtly threatened in writing against the Borrower or any of its Subsidiaries that would restrain, prevent or otherwise impose adverse conditions on this Agreement and the actions contemplated hereby and thereby.

     (h) No Proceeding or Litigation; No Injunctive Relief. No action, suit, investigation or other proceeding (including, without limitation, the enactment or promulgation of a statute or rule) by or before any arbitrator or any Governmental Authority shall be overtly threatened in writing or pending and no preliminary or permanent injunction or order by a state or federal court shall have been entered (i) in connection with this Agreement or any of the Transactions or (ii) except as set forth on Schedule 4.07, which, if determined adversely to any Loan Party, could reasonably be expected to cause a Material Adverse Effect, after giving effect to, among other things, related insurance policies to the Borrower and its Subsidiaries.

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     (i) No Default. No Default or Event of Default shall have occurred and be continuing or would result from such Revolving Advance or from the application of the proceeds therefrom.

     (j) Representations and Warranties. The representations and warranties contained in Article IV hereof and in each other Loan Document shall be true and correct immediately before and after giving effect to the Revolving Advances and to the application of the proceeds from such Revolving Advances from the date of the Revolving Advances, as though made on and as of such date.

     (k) No Material Adverse Effect. Since the Effective Date, there has been no material adverse change in the condition (financial or otherwise), results of operations, assets, properties, business or prospects of the Borrower and its Subsidiaries, taken as a whole.

     (l) Additional Information. The Administrative Agent shall have received such additional information which the Administrative Agent shall have reasonably requested, and such information shall be reasonably satisfactory in form and substance to the Administrative Agent.

     Section 3.03 Conditions Precedent to Each Revolving Advance. The obligation of each Lender to make a Revolving Advance on the occasion of each Borrowing (including the initial Borrowing) or Convert or to Continue a Eurodollar Advance and the obligation of the Issuing Bank to issue, extend or increase Letters of Credit shall be subject to the further conditions precedent that on the date of such Revolving Advance or the date of Continuation or Conversion, or issuance, extension or increase date of such Letters of Credit, as applicable, the following statements shall be true (and each of the giving of the applicable Notice of Borrowing or Notice of Conversion or Continuation and the acceptance by the Borrower of the proceeds of such Revolving Advance, the date of such Conversion or Continuation, or the request for the issuance, extension or increase of a Letter of Credit shall constitute a representation and warranty by the Borrower that on the date of such Revolving Advance or the date of such issuance, extension or increase, as applicable, such statements are true):

     (a) the representations and warranties contained in Article IV and in each other Loan Document are true and correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties are true and correct in all respects as of such earlier date), on and as of the date of such Revolving Advance, or the issuance, extension or increase of such Letter of Credit immediately before and after giving effect to such Revolving Advance and to the application of the proceeds from such Revolving Advance or to the issuance, extension or increase of such Letter of Credit, as applicable;

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     (b) no Default or Event of Default has occurred and is continuing or, immediately after giving effect thereto, would result from such Revolving Advance or from the application of the proceeds therefrom or from such issuance, extension or increase of such Letter of Credit;

     (c) the Availability is greater than or equal to zero after giving effect to such Borrowing or the issuance, increase, or extension of such Letter of Credit; and

     (d) no material adverse change has occurred and is continuing with respect to the Collateral when taken as a whole since either the most recently delivered Borrowing Base Certificate or the most recently delivered Appraisal Report pursuant to Section 5.14.

     Section 3.04 Determinations Under Sections 3.02 and 3.03. For purposes of determining compliance with the conditions specified in Sections 3.02 and 3.03, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents and the Borrower shall have received written notice from such Lender prior to the Borrowings hereunder specifying its objection thereto and such Lender shall not have made available to the Administrative Agent such Lender’s ratable portion of such Borrowings.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

     Each Loan Party represents and warrants as follows:

     Section 4.01 Existence. The Borrower and each of its Subsidiaries (a) is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization, (b) has the corporate or equivalent power and authority to own its property and assets and to transact the business in which it is currently engaged and (c) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where its ownership or lease of Property or conduct of its business requires such qualification; except, in the case of clauses (b) and (c), where the failure to have such powers or be so qualified could not reasonably be expected to have a Material Adverse Effect.

     Section 4.02 Power and Authority. Such Loan Party has the requisite corporate or equivalent power and authority and all requisite governmental licenses, authorizations, consents and approvals to execute, deliver and perform the Loan Documents to which it is a party and to perform its obligations thereunder. The execution, delivery, and performance by such Loan Party of this Agreement and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby (a) have been duly authorized by all necessary corporate or equivalent action, (b) do not and will not (i) violate the terms of such Loan Party’s certificate of incorporation, bylaws or other applicable organizational documents, (ii) violate in any material respect any Legal Requirement applicable to such Loan Party, (iii) constitute a default under, or result in any breach of, or creation of, any Lien under (other than the Loan Documents) the provisions of any indenture, loan agreement or other material

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agreement to which such Loan Party is a party or is subject, or by which it, or its Property, is bound or (iv) violate any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject.

     Section 4.03 Authorization and Approvals. No authorization, approval, consent, exemption, or other action by, or notice to or filing with, any Governmental Authority or any other Person is necessary or required to be made or obtained by such Loan Party in connection with (a) the execution, delivery and performance by, or enforcement against, such Loan Party of this Agreement and the other Loan Documents to which it is a party or the consummation of the transactions contemplated hereby or thereby, (b) the grant by such Loan Party of the Liens granted by it pursuant to the Loan Documents, or (c) the perfection or maintenance of such Liens created under the Loan Documents to which it is a party, in each case, other than as have been duly obtained, taken, given or made and as are in full force and effect, except actions by, and notices to or filings with, Governmental Authorities (including, without limitation, the SEC) that may be required in the ordinary course of business from time to time or that may be required to comply with the express requirements of the Loan Documents (including, without limitation, to release existing Liens on the Collateral or to comply with requirements to perfect, and/or maintain the perfection of, Liens created for the ratable benefit of the Secured Parties).

     Section 4.04 Enforceable Obligations. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by such Loan Party that is a party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party that is a party hereto or thereto, as the case may be, enforceable against such Loan Party in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or similar law affecting creditors’ rights generally or general principles of equity.

     Section 4.05 Financial Statements; No Material Adverse Effect.

     (a) The Pro Forma Financial Statements have been prepared in good faith by the Borrower, based on the assumptions stated therein (which assumptions are believed by the Borrower on the date hereof and on the Closing Date to be reasonable in light of the conditions existing when made), are based on the best information available to the Borrower as of the date of delivery thereof, reasonably reflect all material adjustments required to be made to give effect to the Transactions and present fairly, in all material respects, on a pro forma basis the reasonably estimated consolidated financial position of the Borrower and its consolidated Subsidiaries as of such date and for such period, assuming that the Transactions had actually occurred at such date or at the beginning of such period, as the case may be.

     (b) The Projections delivered by the Borrower to the Administrative Agent and the Lenders prior to the Closing Date have been prepared in good faith and are based on reasonable assumptions when made, and there are no statements or conclusions in such Projections which are based upon or include information known to the Borrower on the Closing Date to be misleading in any material respect or which fail to take into account material information known to the Borrower on the Closing Date regarding the matters reported therein. On the Closing Date, the Borrower believes that such Projections are reasonable, it being recognized by the

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Administrative Agent, the Lenders and the Issuing Bank, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may materially differ from the projected results included in such Projections.

     (c) Since the Effective Date, the Borrower has no knowledge of any event or circumstance, either individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect.

     Section 4.06 True and Complete Disclosure. Such Loan Party has disclosed to the Administrative Agent all material agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is a party or by which it is bound, and all other matters known to it, that, individually or in the aggregate, could, if breached or violated by, enforced against, or adversely determined in relation to, the Borrower and its Subsidiaries, taken as a whole, reasonably be expected to result in a Material Adverse Effect. None of (a) the Registration Statement or (c) any other information, report, financial statement, exhibit or schedule furnished by or on behalf of such Loan Party to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading; provided that, with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

     Section 4.07 Litigation. Except as set forth on Schedule 4.07, there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Responsible Officer of a Loan Party after reasonable investigation, overtly threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against such Loan Party or any of their Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document, the Collateral, or the Transaction, or (b) either individually or in the aggregate, if determined adversely to such Loan Party, could reasonably be expected to result in a liability to the extent not covered by insurance policies to the Borrower and its Subsidiaries in excess of $2,500,000. Additionally, there is no pending or, to the knowledge of any Responsible Officer of such Loan Party, threatened action or proceeding instituted against the Borrower or any of its Subsidiaries as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Property. Except as set forth in Schedule 4.07, no regulatory commission having relevant jurisdiction is currently conducting or, to the Borrower’s knowledge, has conducted within the five-year period immediately preceding the date hereof, an investigation of the Borrower or any of its Subsidiaries (or its predecessors in interest with respect to the business conducted and reasonably expected to be conducted by the Borrower and its Subsidiaries), other than an investigation conducted by such regulatory commission in its routine general administrative practice.

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     Section 4.08 Compliance with Laws. None of the Loan Parties or any of the Subsidiaries or any of their respective material Properties, including the Collateral Rigs, is in material violation of, nor will the continued operation of their material Properties, including the Collateral Rigs, as currently conducted violate, in any material respect any Legal Requirement (including any Environmental Law) applicable to such Loan Party or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority. The Borrower and its Subsidiaries are in compliance in all material respects with the International Maritime Organization’s International Management Code for the Safe Operation of Ships and Pollution Prevention (“ISM Code”), to the extent applicable, and have established and implemented a safety management system and such other procedures as required by the ISM Code, to the extent applicable.

     Section 4.09 No Default. None of the Loan Parties or any of its Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has resulted or could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. None of the Borrower or any of its Subsidiaries is in default, or will be in default with the giving of any notice or lapse of time, or both, in any manner under any provision of any indenture or other agreement or instrument evidencing Debt, any Transaction Document or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound. No Default or Event of Default has occurred and is continuing or would result from the consummation of the Transactions or the other transactions contemplated by this Agreement or any other Loan Document.

     Section 4.10 Subsidiaries; Corporate Structure. Schedule 4.10 sets forth as of the Closing Date a list of all Subsidiaries of the Borrower and, as to each such Subsidiary, the jurisdiction of formation and the outstanding Equity Interests therein and the percentage of each class of such Equity Interests owned by the Borrower and its Subsidiaries. The Equity Interests indicated to be owned by the Borrower and its Subsidiaries on Schedule 4.10 are fully paid and non-assessable and are owned by the persons indicated on such Schedule, free and clear of all Liens.

     Section 4.11 Liens; Condition of Properties.

     (a) The Borrower and each of its Subsidiaries has good record and indefeasible title in all its Property reasonably necessary for the ordinary conduct of its business (including all Collateral Rigs), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such Properties and assets for their intended use. None of the Property of the Borrower or any of its Subsidiaries is subject to Liens, other than Permitted Liens.

     (b) Neither the business nor the material Properties (including all Collateral Rigs) of such Loan Party has been affected in any material respect as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo, requisition or taking of Property or cancellation of contracts, permits or concessions by a Governmental Authority, riot, activities of armed forces or acts of God or of any public enemy.

     Section 4.12 Environmental Condition.

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     (a) The Borrower and its Subsidiaries (or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) (i) have obtained all material Environmental Permits necessary for the ownership and operation of their respective material Properties and the conduct of their respective businesses; (ii) are in compliance with all material terms and conditions of such Environmental Permits and with all other material requirements of applicable Environmental Laws; (iii) have not received notice of any unresolved, material violation or alleged violation of any Environmental Law or Environmental Permit which could reasonably be expected to result in liabilities in excess of $2,500,000; and (iv) are not subject to any material actual or contingent Environmental Claim which could reasonably be expected to result in liabilities in excess of $2,500,000.

     (b) There are no facts, circumstances, conditions or occurrences on any Rig owned or operated by the Borrower or any of its Subsidiaries (or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) that is reasonably likely (i) to form the basis of a Environmental Claim against the Borrower or any of its Subsidiaries or any Rig owned by the Borrower or any of its Subsidiaries which could reasonably be expected to result in liabilities in excess of $2,500,000, or (ii) to cause such Rig to be subject to any unreasonable restrictions on its ownership, occupancy, use or transferability under any Environmental Law.

     (c) None of the present or previously owned or operated Properties of the Borrower or any its Subsidiaries (or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) or of any of their present or former Subsidiaries, wherever located, (i) has been placed on or proposed to be placed on the National Priorities List, CERCLIS, or their state or local analogs, nor has the Borrower or any of its Subsidiaries been otherwise notified of the designation, listing or identification of any Property of such Person or any of its present or former Subsidiaries as a potential site for any material removal, remediation, cleanup, closure, restoration, reclamation, or other response activity under any Environmental Laws (except as such activities may be required by permit conditions); (ii) is subject to a Lien, arising under or in connection with any Environmental Laws, that attaches to any revenues or to any Property owned or operated by the Borrower, its Subsidiaries or any of their present or former Subsidiaries, wherever located; or (iii) has been the site of any Release (as defined under any Environmental Law) of Hazardous Material from present or past operations which has caused at the site or at any third-party site any condition that has resulted in or could reasonably be expected to result in the need for a Response (as defined under any Environmental Law), the cost of which would be in excess of $2,500,000 and none of the Borrower, its Subsidiaries or any of their present or former Subsidiaries has generated or transported or has caused to be generated or transported Hazardous Materials to any third party site which could reasonably be expected to result in the need for Response that would reasonably be anticipated to result in a Environmental Claim against the Borrower or its Subsidiaries in excess of $2,500,000.

     Section 4.13 Insurance.

     (a) Schedule 4.13 sets forth a true, complete and correct description of all insurance maintained by the Borrower and its Subsidiaries as of the Closing Date and the Borrower and its Subsidiaries carries the insurance required to be carried under Section 5.04 of this Agreement. As of such date, such insurance is in full force and effect and all premiums required to be paid by such Loan Party have been duly paid.

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     (b) The properties of the Loan Parties are insured with financially sound and reputable insurance companies that are not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Loan Party operates.

     Section 4.14 Taxes. All Federal, state, local and foreign income tax returns, reports and statements required to be filed by the Borrower and its Subsidiaries (or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) have been filed with the appropriate Governmental Authorities in all jurisdictions in which such returns, reports and statements are required to be filed (except (a) where any obligation to so file is being contested in good faith and by appropriate proceedings and after reserves for such items have been made in accordance with, and to the extent required by, GAAP or (b) where a failure to do so could not reasonably be expected to result in liabilities in excess of $2,500,000), and, except for the Contested Mexican Tax Assessments, all income taxes and other impositions due and payable have been timely (taking into account all extensions) paid prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto for non-payment thereof except (x) where contested in good faith and by appropriate proceedings and after providing reserves in accordance with, and to the extent required by, GAAP therefore or (y) where a failure to do so could not reasonably be expected to result in liabilities in excess of $2,500,000. None of the Borrower or any of its Subsidiaries has given, or has been requested to give, a waiver of the statute of limitations relating to the payment of any federal, state, local or foreign income taxes or other impositions. Proper and accurate amounts have been withheld by the Borrower and its Subsidiaries (or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) from their employees for all periods to comply in all material respects with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law, except where a failure to do so could not reasonably be expected to result in liabilities in excess of $2,500,000. Except for the Contested Mexican Tax Assessments, neither the Borrower nor any of its Subsidiaries have received any written notice from any Governmental Authority proposing an income tax assessment against the Borrower or any Subsidiary thereof that would, if made, be reasonably expected to result in liabilities in excess of $2,500,000.

     Section 4.15 ERISA Compliance.

     (a) With respect to all Plans, the Borrower and its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder.

     (b) Each Pension Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Pension Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

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     (c) (i) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in material liability of the Borrower or any of its ERISA Affiliates; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

     Section 4.16 Security Interests.

     (a) The Pledge Agreement is effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Pledged Collateral (as defined in such Pledge Agreement) and, when such Collateral (to the extent such Pledged Collateral constitutes a “certificated security” or an “instrument” under the applicable Uniform Commercial Code) is delivered to such Administrative Agent, such Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the pledgors thereunder in such Pledged Collateral, in each case prior and superior in right to any other person.

     (b) The Security Agreement is effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in such Security Agreement) and, when financing statements in appropriate form are filed in the offices specified on Schedule I to the Security Agreement, such Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such portion of the Collateral in which a security interest may be perfected by the filing of a financing statement under the applicable Uniform Commercial Code, in each case prior and superior in right to any other person, other than Excepted Liens.

     (c) After the execution and delivery of each Rig Mortgage, each Rig Mortgage will be effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in all Collateral (as defined in such Rig Mortgage) and, when appropriate filings or registrations are made in accordance with the laws of the Rig’s flag, such Rig Mortgage shall constitute a first preferred perfected mortgage Lien on all right, title and interest of the applicable Loan Party thereunder in the applicable Rig, prior and superior in right to any other person, other than Excepted Liens, and will constitute a “preferred mortgage” within the meaning of Section 31301(6) of Title 46 of the United States Code, entitled to the benefits accorded a preferred mortgage on a foreign Rig, in the case of Rigs not registered under the laws and flag of the United States of America, and in the case of Rigs registered under the laws and flag of the United States of America, will constitute a “preferred mortgage” within the meaning of Section 31301(6) of Title 46 of the United States Code, entitled to the benefits accorded a preferred mortgage on a registered Rig under the laws and flag of the United States of America.

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     Section 4.17 Bank Accounts. Schedule 4.17 sets forth the account numbers and locations of all bank accounts of the Loan Parties as of the Closing Date.

     Section 4.18 Labor Relations. There (a) is no unfair labor practice complaint pending against the Borrower or any of its Subsidiaries or, to the knowledge of any Responsible Officer of a Borrower or any of its Subsidiaries, threatened against any of them, before the National Labor Relations Board (or any successor United States federal agency that administers the National Labor Relations Act), and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Borrower or any of its Subsidiaries or, to the knowledge of any Responsible Officer of a Borrower or any of the Subsidiaries, threatened against any of them, (b) are no strikes, lockouts, slowdowns or stoppage against the Borrower or any Subsidiary pending or, to the knowledge of any Responsible Officer of a Borrower or any of the Subsidiaries, threatened and (c) no union representation petition existing with respect to the employees of the Borrower or any of its Subsidiaries and no union organizing activities are taking place. The hours worked by and payments made to employees of the Borrower and the Subsidiaries (or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) have not been in violation of the Fair Labor Standards Act or any other applicable federal, state, provincial, local or foreign law dealing with such matters. All payments due from the Borrower or any Subsidiary, or for which any claim may be made against the Borrower or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower or such Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary (or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) is bound.

     Section 4.19 Intellectual Property. The Borrower and each of its Subsidiaries owns or is licensed or otherwise has full legal right to use all of the patents, trademarks, service marks, trade names, copyrights, franchises, authorizations and other rights that are reasonably necessary for the operation of its business, without conflict with the rights of any other Person with respect thereto, in each case, except where the failure to so own or license or any such conflict could not reasonably be expected to have a Material Adverse Effect.

     Section 4.20 Solvency.

     (a) Immediately following the consummation of the Transactions and immediately following the making of each Revolving Advance and after giving effect to the application of the proceeds of each Revolving Advance, (i) the fair value of the assets of such Loan Party (including the right of contribution) will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of such Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) such Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) such Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Closing Date.

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     (b) The Borrower does not intend to, or to permit any of its Subsidiaries to, and does not believe that it or any of its Subsidiaries will, on a consolidated basis, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its Debt or the Debt of such Subsidiary.

     Section 4.21 Margin Regulations. None of the Borrower or any of its Subsidiaries is engaged and will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of any Revolving Advance will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry any margin stock (within the meaning of Regulation U) or to refinance any Debt originally incurred for such purpose, or for any other purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Federal Reserve Board, including Regulation T, U or X.

     Section 4.22 Investment Company Act. None of the Borrower or any of its Subsidiaries is an “investment company” within the meaning of the Investment Company Act of 1940.

     Section 4.23 Names and Locations. As of the Effective Date and as of the Closing Date, Schedule 4.23 sets forth (a) all legal names and all other names (including trade names, fictitious names and business names) under which such Loan Party currently conduct business, or has at any time during the past five years conducted business, and (b) the state or other jurisdiction of organization or incorporation for such Loan Party and sets forth such Loan Party’s organizational identification number or specifically designates that one does not exist.

     Section 4.24 Citizenship. Any such Loan Party that owns a Rig is qualified to own and operate such Rig under the laws of the jurisdiction in which any such Rig is flagged, if such qualification is necessary.

ARTICLE V

AFFIRMATIVE COVENANTS

     So long as the Revolving Advances or any amount under any Loan Document shall remain unpaid, any Lender shall have any Revolving Commitment hereunder, or there shall exist any Letter of Credit Exposure, unless the Required Lenders shall otherwise consent in writing, the Borrower shall, and shall cause each of its Subsidiaries to:

     Section 5.01 Preservation of Existence, Etc. Except as permitted by Section 6.03 and Section 6.04, (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the Legal Requirements of the jurisdiction of its formation, (b) take all reasonable action to obtain, preserve, renew, extend, maintain and keep in full force and effect all rights, privileges, permits, licenses, authorizations and franchises necessary or desirable in the normal conduct of its business, and (c) qualify and remain qualified as a foreign entity in each

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jurisdiction in which qualification is reasonably necessary in view of its business and operations or the ownership of its Properties; except, in the case of clauses (a) (with respect to any Subsidiary), (b) and (c), to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect. Upon receipt of a written request therefor from the Borrower, the Administrative Agent will execute and deliver, at the Borrower’s expense, all documents as may reasonably be requested to effect a release of a guaranty granted in accordance with Article VIII of this Agreement by any Person that ceases to exist in accordance with Section 6.03 or Section 6.04.

     Section 5.02 Compliance with Laws, Etc. (a) Comply in all material respects with all Legal Requirements (including without limitation, all Environmental Laws and ERISA) applicable to it, its business or property now or hereafter owned or operated by the Borrower or any of its Subsidiaries, including, without limitation, the ownership or use of any Rig, except in such instances in which such Legal Requirement is being contested in good faith by appropriate proceedings diligently conducted, (b) pay or cause to be paid within a reasonable time period all costs and expenses incurred in connection with such compliance and (c) keep or cause to be kept all Rigs free and clear of any Liens (other than Permitted Liens) imposed pursuant to Legal Requirements, including without limitation Environmental Laws.

     Section 5.03 Maintenance of Property. Subject to Section 2.07(c), (a) maintain and preserve all Property material to the conduct of its business and keep such Property in good repair, working order and condition, ordinary wear and tear excepted, (b) from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

     Section 5.04 Maintenance of Insurance. With respect to each Rig:

     (a) General.

     (i) Except as otherwise specifically provided below, at their own expense, maintain insurance payable in Dollars in amounts (and with co-insurance and deductibles), against risks and in forms which are substantially equivalent to the coverage customarily carried by Persons engaged in similar businesses and owning similar properties in localities where such Rig is operated and placed through brokers and with financially sound and reputable insurance companies or associations that are reasonably satisfactory to the Administrative Agent;

     (ii) Renew all such insurance, including the Insurance Policies, as they expire and provide evidence of such renewal to the Administrative Agent in accordance with Section 5.06(m);

     (iii) Punctually pay all premiums, calls, contributions or other sums payable in respect of such insurance, including the Insurance Policies, and produce all relevant receipts or other evidence of such payment upon the Administrative Agent’s written request and all such Insurance Policies shall provide that there shall be no recourse

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against the Administrative Agent or any other Secured Party for unpaid premiums, club calls, assessments or advances;

     (iv) Use commercially reasonable efforts to cause their broker (or an authorized agent thereof) of such insurance to agree in writing to mark their records and to advise the Administrative Agent at least seven Business Days prior to the lapse of each policy or contract maintained by such broker by expiration, termination, failure to renew or otherwise for any reason whatsoever and of any default in payment of any premium in respect of any Insurance Policy with respect to any such Rig; provided, that, with respect respect to insurance policies and contracts providing for war risk and terrorism insurance, advance notice of lapse or notice of default shall be governed by the terms of such insurance policies and contracts. The Administrative Agent shall not be deemed to have knowledge of any such lapse of insurance in the absence of receipt of notice from such brokers. If such Insurance Policies are not maintained in full force and effect, then the Administrative Agent, at its option, may procure such insurance at the Borrower’s expense;

     (v) Deliver to the Administrative Agent, upon the written request of the Administrative Agent, copies of all cover notes, binders, policies and certificates of entry in protection and indemnity associations, and all endorsements and riders amendatory thereof, in respect of Insurance Policies maintained in connection with such Rigs;

     (vi) Provide to the Administrative Agent promptly after receiving them copies of any written notices from their insurance broker or agent relating to (A) non-payment of premiums and cancellation of such Insurance Policies; and (B) other material modification of such Insurance Policies; and

     (vii) Do all things reasonably necessary and provide all documents, evidence and information within its power which may be reasonably requested by the Administrative Agent to enable the Administrative Agent to collect or recover any monies which may at any time become due in respect of the Insurance Policies on such Collateral Rigs.

     (b) Terms of Insurance Policies. The Insurance Policies shall include the following terms and conditions:

     (i) each such Rig shall always be covered against marine perils and all risks of loss or damage, including loss, damage, fire and such other perils as are customary in the industry, in accordance with English, American or Norwegian hull clauses, as applicable, with reasonable deductibles;

     (ii) when and while such Rig is laid up, in lieu of hull insurance, port risk insurance may be taken out under forms of policies approved by the Administrative Agent for such Rig;

     (iii) for the purposes of insurance against Total Loss, each such Rig and its equipment and appurtenances shall be insured for and valued at an amount at least equal to the highest of (A) the most recent Orderly Liquidation Value determined in accordance

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with Section 5.06(h), (B) the fair market value thereof from time to time and (C) the insured value for such Rig as set forth on Schedule 5.04(b);

     (iv) except with respect to each such Rig situated in the Gulf of Mexico or Caribbean basin, each such Rig shall be covered against war and terrorist risks (including risks, whether or not regarded as war risks, excluded by the “Free of Capture and Seizure” clauses in the standard form of marine policy) in accordance with the London Institute War Clauses and incorporating protection and indemnity clause and with crew war risk insurance being effected separately, and all Rigs shall be covered for “strikes, riots and civil commotion” risk. Such risks, may, at the option of the Borrower, be insured by entering such Rigs in such war risk association or club reasonably acceptable to the Administrative Agent against all risks covered under the rules of such association or club and with reasonable deductibles provided therein; and

     (v) each such Rig shall also be insured against the risk of pollution unless such risk is fully covered by the entry of such Rigs into an international group protection and indemnity association, in each case in an amount from time to time obtainable for mobile offshore drilling rigs of the same type, size, age and flag as such Rig and carried by, and reflecting coverage customarily carried by Persons engaged in similar businesses and owning similar properties in localities where such Rigs are operated, including excess pollution coverage.

     (c) Mortgagee Interest Insurance. At the Loan Parties’ expense, obtain, for and on behalf of the Administrative Agent, for the ratable benefit of the Secured Parties, mortgagee’s interest insurance and mortgagee’s additional perils (pollution) insurance with respect to each Collateral Rig. Such insurance shall cover marine perils on hull and machinery, and shall be maintained on reasonable commercial terms as reasonably acceptable to the Administrative Agent in the American and British insurance markets or in such other major international markets acceptable to the Administrative Agent.

     (d) Administrative Agent as Additional Insured and Loss Payee.

     (i) In the case of all marine and war risk hull and machinery policies and all protection and indemnity insurances (including insurance against liability for pollution or the spillage or leakage of cargo), the Borrower will cause the Administrative Agent, for the ratable benefit of the Secured Parties, to be named as an additional insured without liability for premiums, club calls, assessment or advance payable under the Insurance Policies on such Collateral Rigs;

     (ii) The Borrower will cause all policies and certificates of entry with respect to insurance required hereby for each such Collateral Rig to contain a loss payable clause which shall be on substantially the terms set forth in Schedule 5.04(d) hereto (or, if such terms are not obtainable, then on such terms as the Administrative Agent shall reasonably request), in the case of all marine and war risk hull and machinery (including excess values) policies and all protection and indemnity and liability and oil pollution liability insurance, and which shall provide for payment to the Borrower or its order unless the payment is to indemnify the Administrative Agent from or reimburse the Administrative

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Agent for any loss, damage or expense incurred by it or unless and until the insurers or associations receive notice from the Administrative Agent that the Borrower is in default hereunder, in which event all payments shall be made to the Administrative Agent, provided, that the insurer may in all events make payments directly to third parties to whom liability has been established in discharge of guaranties issued by the insurer or claims against the Borrower or insurer;

     (iii) In addition, the Borrower will, at its sole cost and expense, (A) assign to the Administrative Agent, by an Assignment of Insurances, all of the Borrower’s right, title and interest in and to each Insurance Policy on such Collateral Rigs (including all entries in protection and indemnity or war risk associations) with respect to the insurance required hereby and furnish, or use its commercially reasonable efforts to cause its brokers to furnish, written notice of such assignment to all insurers, underwriters, clubs and associations with respect to such insurance, and (B) use its commercially reasonable efforts to cause the insurance brokers and club managers to deliver certified copies of all policies, contracts, binders, insurance slips, cover notes and certificates of entry relating to such Collateral Rigs on request and to execute and deliver to the Administrative Agent a letter of undertaking in connection with the above mentioned insurances and entries;

     (iv) With respect to any potential claims under any Insurance Policy on such Collateral Rigs, if an Event of Default has occurred and is continuing, the Administrative Agent may, but shall not be required to, direct the applicable Loan Party to make proof of loss, settle and adjust any claims at the reasonable direction of the Administrative Agent, and the expenses incurred by the Administrative Agent in the adjustment and collection of such proceeds shall be paid by the Borrower. The Administrative Agent shall not be liable or responsible for failure to collect or exercise diligence in the collection of any proceeds, unless proximately caused by its gross negligence or willful misconduct.

     (e) Application of Payments under Insurance Policies. All Net Cash Proceeds received by such Loan Party or the Administrative Agent as a result of a Recovery Event or Asset Disposition shall be applied in accordance with the requirements of, and subject to the minimum threshold amount set forth in, Section 2.07(c)(iii).

     (f) United States Operations. At all times during which one or more such Rigs is operating within the jurisdiction of the United States of America, the Loan Parties shall maintain with respect to such Rigs:

     (i) insurance or post bonds or maintain approved evidence of financial responsibility (including, without limitation, qualification as a “qualified self-insurer” by the United States Coast Guard) with respect to such Rigs to cover the actual cost of removal of discharged oil for which such Loan Party or the Administrative Agent may be held strictly liable (or held liable due to negligence of such Loan Party or any other Person) under the Clean Water Act of 1977, as amended, the Oil Pollution Act 1990 (33 U.S.C. § 2701 et seq.), as amended, or the Outer Continental Shelf Lands Act, as amended, or under any other Legal Requirement, including, without limitation, any Environmental Law, of any Governmental Authority that, now or in the future, may apply to such Rigs or to the Loan Parties, such Rigs or their operations; and

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     (ii) such worker’s compensation or longshoremen’s and harbor workers’ insurance as shall be required by applicable law, including endorsements for foreign and Outer Continental Shelf operations, borrowed servant, voluntary compensation and in rem claims.

     Section 5.05 Payment of Taxes, Etc. Pay and discharge as the same shall become due and payable, all its obligations and liabilities in accordance with their terms, including (a) all Taxes imposed upon it or upon its income, revenue or profits or in respect of its Property, unless the same are being contested in good faith by appropriate proceedings diligently conducted and reserves in accordance with, and to the extent required by, GAAP are being maintained by the Borrower or its applicable Subsidiary, (b) all lawful claims which, if unpaid, would by law become a Lien upon its Property; and (c) all Debt, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Debt, except, in each case, where the failure to so pay or discharge would not cause a Default or an Event of Default under this Agreement.

     Section 5.06 Reporting Requirements. Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Lenders:

     (a) Audited Annual Financials. As soon as available and in any event not later than 90 days after the end of each fiscal year of the Borrower, copies of the audited consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such fiscal year, together with the related audited consolidated statements of income or operations, and cash flows for such fiscal year, and the notes thereto, all in reasonable detail and setting forth in each case in comparative form the audited consolidated figures as of the end of and for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP and accompanied by a report and opinion of KPMG LLP or another independent certified public accountant of nationally recognized standing reasonably acceptable to the Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit and shall state that such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Borrower and its respective Subsidiaries as at the end of such fiscal year and their consolidated results of operations and cash flows for such fiscal year in conformity with GAAP, or words substantially similar to the foregoing, and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards;

     (b) Quarterly Financials. As soon as available and in any event not later than 45 days after the end of each of the first three fiscal quarters in each fiscal year, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and setting forth in comparative form the consolidated figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Financial Officer of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in

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accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

     (c) Compliance Certificates. (i) Concurrently with the delivery of the financial statements referred to in Section 5.06(a), a certificate of its independent certified public accountants rendering the report thereon stating whether, in connection with their audit examination, they obtained knowledge of any Default or Event of Default (which certificate may be limited to the extent required by accounting rules or guidelines) and (ii) concurrently with the delivery of the financial statements referred to in Sections 5.06(a) and (b), a duly completed Compliance Certificate signed by a Financial Officer of the Borrower;

     (d) Borrowing Base Report. On each Borrowing Base Determination Date (i) a Borrowing Base Report as of the last Business Day of the previous calendar month and (ii) a monthly Rig status report of a recent date in scope, form and substance reasonably satisfactory to the Administrative Agent detailing (A) whether a Rig is working, idle or stacked, (B) the then current location of each of Rig, (C) if applicable, the then current term of and parties to any drilling contract of any Rig, (D) for each stacked Rig, the number of days such Rig has been stacked and whether or not such Rig is crewed, and (E) for the previous calendar month, the average day rates and utilization for each such Rig;

     (e) Management Letters. Promptly upon receipt thereof, copies of any detailed audit reports, management letters and any reports as to material inadequacies in accounting controls or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary thereof, or any audit of any of them;

     (f) Budgets. On or before 90 days after the commencement of each fiscal year of the Borrower, (i) a consolidated and consolidating budget of the Borrower and its Subsidiaries which includes consolidated and consolidating income statements, balance sheets and cash flow statements of the Borrower and its Subsidiaries for each of the four fiscal quarters of such fiscal year and (ii) a breakdown of projected revenues, operating expenses, utilizations and capital expenditures for each Rig;

     (g) Projections. On or before 90 days after the commencement of each fiscal year of the Borrower, updated Projections for the two year period commencing as of such fiscal year;

     (h) Appraisal Reports.

     (i) Within 225 days of the Closing Date and within every six months thereafter, an appraisal report prepared by an Approved Rig Appraiser with respect to each of the Rigs, in form, scope and methodology reasonably acceptable to Administrative Agent, setting forth the Orderly Liquidation Value of each of the Rigs as of the date appraised (each an “Appraisal Report”). The cost of each such Appraisal Report shall be paid by the Borrower;

     (ii) Upon the written request of the Administrative Agent or the Required Lenders, no more than two additional Appraisal Reports (in addition to those Appraisal Reports required under Section 5.06(h)(i) above) in any given fiscal year of the

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Borrower, in each case to be delivered within 30 days after receipt of such request; provided, however, that no Loan Party shall be liable for any delay in delivery of such report if the Approved Rig Appraiser requires payment of its costs prior to the delivery thereof and the Lenders shall not have paid such amount pursuant to the immediately succeeding sentence. Unless an Event of Default is in existence at the time of such request, the Lenders shall pay the costs of any Appraisal Reports requested by the Administrative Agent or the Required Lenders, other than those required under Section 5.06(h)(i), during such calendar year;

     (iii) Within 30 days after the occurrence of any loss or damage to, or any condemnation, seizure or taking of, any Rig (if the Net Cash Proceeds with respect thereto could reasonably be expected to exceed $10,000,000) occurring with respect to any Rig, an additional Appraisal Report setting forth the Orderly Liquidation Value of the affected Rig immediately prior to such loss or damage to, or any condemnation, seizure or taking of, such Rig and the Orderly Liquidation Value giving effect to such loss or damage to, or any condemnation, seizure or taking of, such Rig (a “Required Additional Appraisal Report”). The cost of each such Required Additional Appraisal Report shall be paid by the Borrower; and

     (iv) The Borrower may, at its option and expense, provide to the Administrative Agent an additional Appraisal Report setting forth the Orderly Liquidation Value of the Collateral Rigs for the purpose of updating the Borrowing Base for any reason, including as a result of any upgrades, improvements and reconfigurations of Rigs (a “Requested Additional Appraisal Report”, together with a Required Additional Appraisal Report, the “Additional Appraisal Report”.

     (i) Safety Management Manual. Upon written request by the Administrative Agent, a copy of the safety management manual used to describe and implement the Borrower’s safety management system developed, implemented and maintained in compliance with the ISM Code, if applicable;

     (j) Securities Law Filings and other Public Information. Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Exchange Act, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;

     (k) Other Debt. Promptly after the giving or receipt thereof, copies of any material notices given or received by any Loan Party pursuant to the terms of any indenture, loan agreement, credit agreement or similar financing arrangement;

     (l) Collateral Updates. From time to time upon request, statements and schedules further identifying, updating, and describing the Collateral and such other information, reports and evidence concerning the Collateral, as Administrative Agent may reasonably request, all in reasonable detail;

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     (m) Insurance Certificates. Copies of all insurance policies maintained pursuant to Section 5.04 to the Administrative Agent; and prior to the cancellation, modification or nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent) together with evidence reasonably satisfactory to the Administrative Agent of payment of the premium therefor;

     (n) USA Patriot Act. Promptly, following a request by any Lender, all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act; and

     (o) Other Information. Such other information respecting the business, Properties or Collateral, or the condition or operations, financial or otherwise, of the Borrower and its Subsidiaries as the Administrative Agent or any Lender may from time to time reasonably request.

Documents required to be delivered pursuant to Sections 5.06(a), (b) or (j) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered to the relevant parties on the date (i) on which the Borrower posts such documents, or provides a link thereto, on the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted by or on behalf of the Borrower on (A) the SEC’s website accessible through http://www.sec.gov/idea/searchidea/webusers.htm or such successor webpage of the SEC thereto or (B) on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).

     Section 5.07 Other Notices. Deliver to the Administrative Agent and each Lender prompt written notice of the following:

     (a) Defaults. Promptly and in any event within three Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower, the occurrence of any Default or Event of Default or any other Debt of any Loan Party in an outstanding principal amount of at least $2,500,000 being declared when due and payable before its stated maturity date, or any holder of such Debt having the right to declare such Debt due and payable before its stated maturity date, because of the occurrence of any default (or any event which, with notice and/or the lapse of time, shall constitute any default) under such Debt;

     (b) Litigation. Promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower, the filing or commencement of, or any threat or notice of intention of any Person in writing to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrower or any Subsidiary, or any material development in any such action, suit, proceeding, that, if determined adversely, could reasonably be expected to result in a liability of the Borrower or any of its Subsidiaries in an aggregate amount exceeding $2,500,000;

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     (c) ERISA Events. Promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower, the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a liability of the Borrower or any of its Subsidiaries in an aggregate amount exceeding $2,500,000;

     (d) Environmental Notices. In each case promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower, any of the following environmental matters, if such matters could reasonably be anticipated to result in a Environmental Claim or Environmental Liability exceeding in the aggregate $2,500,000: (i) a copy of any form of notice, summons or citation received from any Governmental Authority or any other Person, concerning (A) material violations or alleged violations of Environmental Laws, which seeks to impose liability therefor, (B) any notice of potential responsibility under any Environmental Law, or (C) the filing of a Lien other than a Permitted Lien upon, against or in connection with the Parent or any of its Subsidiaries, or any of the Rigs, (ii) any condition or occurrence on or arising from any Rig that (A) results in noncompliance by any Loan Party with any applicable Environmental Law or (B) could reasonably be expected to form the basis of an Environmental Claim against any Loan Party or any such Rig; (iii) any condition or occurrence on any Rig that could reasonably be expected to cause such Rig to be subject to any unreasonable restrictions on the ownership, occupancy, use or transferability by any Loan Party of such Rig under any Environmental Law; and (iv) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Rig as required by any Environmental Law or any Governmental Authority;

     (e) Collateral.

     (i) any change of its legal name, corporate structure, jurisdiction of organization or formation or its organizational identification number or the creation or acquisition of any Person that will become a Subsidiary of the Borrower, in each event, which is reasonably expected to occur at least 10 Business Days before the occurrence thereof, and in furtherance thereof, the Borrower agrees not to effect or permit any change referred to in Section 5.07(e)(i) unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have, and each Loan Party agrees to take all necessary action to ensure that the Administrative Agent does continue at all times to have, a valid, legal and perfected security interest in all the Collateral; it being understood and agreed that (A) in connection with the merger of the Borrower into Pride SpinCo, Inc., a Delaware corporation, in connection with the consummation of the Transaction, Pride Spinco, Inc. will survive the merger and will change its name to Seahawk Drilling, Inc. and (B) the prior notice required in this clause (i) shall not apply to such merger and the name changes contemplated in the Omnibus Restructuring Agreement;

     (ii) Asset Dispositions pursuant to Section 6.04(c) promptly and within five Business Days after the occurrence thereof or a Total Loss promptly and within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower;

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     (iii) any loss or damage to, or any condemnation, seizure or taking of, any portion of Collateral with a market value in excess of $2,500,000, promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer;

     (iv) any Lien on any Rig imposed by any Governmental Authority and that has not been released or bonded within ten Business Days following the applicable Loan Party’s receipt of notice of such imposition unless such Lien is being contested in good faith and, if necessary, by appropriate proceedings;

     (v) an Account in excess of $1,000,000 or Accounts of a single Account Debtor or an Affiliate group of Account Debtors in excess of $5,000,000 in the aggregate becoming subject to any dispute or claim or other circumstances known to any Loan Party that may impair the validity or collectibility of such accounts, promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower;

     (vi) any correspondence received by any Loan Party from any insurer or classification society with respect to any insurance maintained in accordance with Section 5.04 which advises the Borrower of a materially adverse event affecting the coverage on any Collateral Rig, promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower;

     (vii) the Borrower or any of its Subsidiaries holding or obtaining any Collateral consisting of (A) Chattel Paper, (B) Instrument, or (C) letter of credit, each in excess of $1,000,000 individually and $5,000,000 in the aggregate, promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower;

     (viii) Collateral with value in excess of $1,000,000 at any time being in the possession or control of any warehouse or bailee not previously disclosed, promptly and in any event within five Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower;

     (ix) Collateral with value in excess of $1,000,000 being of a type where a Lien may be registered, recorded or filed under, or notice thereof given under, any federal statute or regulation or any material Collateral constitutes a claim against the United States of America, or any State or municipal government or any department, instrumentality or agency thereof, the assignment of which claim is restricted by law, promptly and in any event within five Business Days of the actual knowledge of a Responsible Officer of the Borrower of the existence thereof;

     (x) any arrest of any Rig for a period of at least three continuous days or the exercise of any Lien remedy on any Rig, in each case, by a Person other than a Secured Party, promptly and in any event within three Business Days of the actual knowledge thereof by a Responsible Officer of the Borrower;

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     (f) Transaction Documents. Promptly and in any event within five Business Days of the actual knowledge thereof by a Responsible Officer of the Borrower, any default of or claim of indemnity pursuant to any of the Transaction Documents;

     (g) Drilling Contracts. Promptly and in any event within five Business Days of the actual knowledge thereof by a Responsible Officer of the Borrower, any notice of default, suspension or cancellation of any drilling contract with a remaining value in excess of $1,000,000; and

     (h) Material Changes. Promptly and in any event within five Business Days of the actual knowledge thereof by a Responsible Officer of the Borrower, the occurrence of any event which has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower have taken and propose to take with respect thereto.

     Section 5.08 Books and Records; Inspection. (a) Keep proper records and books of account in which full, true and correct entries will be made in accordance with GAAP and all Legal Requirements; (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower and its Subsidiaries, as the case may be; and (c) from time-to-time during regular business hours upon reasonable prior notice, (i) permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its Properties, (ii) to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom and (iii) to discuss its affairs, finances and accounts with its Responsible Officers and independent public accountants, all at the reasonable expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the applicable Loan Party or Subsidiary; provided that the Loan Parties shall be responsible for such reasonable expenses not more than one (1) time per year unless an Event of Default has occurred and is continuing, in which case the Loan Parties shall be responsible for all such reasonable expenses.

     Section 5.09 Use of Proceeds. Use the proceeds of (a) the Revolving Advances for Reactivation Capital Expenditures and working capital related to the foregoing types of expenditures and (b) Letters of Credit for general corporate purposes, including the backstop of surety bonds; provided¸ however that Revolving Advances may not be made and Letters of Credit may not be issued to support contingent obligations, assessments and appeal bonds related to Contested Mexican Tax Assessments other than Letters of Credit that in the aggregate principal amount at any one time outstanding do not exceed the lesser of (a) 20% of the Revolving Commitments and (b) $15,000,000.

     Section 5.10 Nature of Business. Maintain and operate such business in substantially the manner in which it is conducted and operated as of the Closing Date or any business reasonably related or incidental thereto.

     Section 5.11 Operation of Rigs. With respect to each Rig:

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     (a) (i) Comply with and satisfy all Legal Requirements of the jurisdiction of such Rig’s home port, now or hereafter from time to time in effect, in order that such Rig shall continue to be documented pursuant to the laws of the jurisdiction of its home port with such endorsements as shall qualify such Rigs for participation in the trades and services to which it may be dedicated from time to time or (ii) not do or allow to be done anything whereby such documentation is or could reasonably be expected be forfeited;

     (b) The Borrower and each other Loan Party which owns or operates, or will own or operate, one or more such Rigs will, at all times while owning or operating such Rigs, be qualified to own and operate such Rigs under the laws of the jurisdiction of such Rig’s registry;

     (c) Subject to Section 2.07(c), keep such Rig in a good and sufficient state of repair consistent with industry standards of ownership and management practice employed by owners of mobile offshore drilling rigs of similar size and type and geographically situated and so as to maintain the present class of such Rig at its current classification by any first-class, recognized rating agency, including, without limitation, the American Bureau of Shipping, free of recommendations affecting class and qualifications and change of class;

     (d) Subject to Section 2.07(c), (i) make or cause to be made all repairs to or replacement of any damaged, worn or lost parts or equipment such that the value of such Rig will not be materially impaired and (ii) except as otherwise contemplated by this Agreement, not remove any material part of, or item of equipment owned by the Loan Parties installed on, such Rig except in the ordinary course of the operation and maintenance of such Rig or unless (A) the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Lien (other than Excepted Liens) in favor of any Person other than the Administrative Agent and becomes, upon installation on such Rig the property of the Loan Parties and subject to the security constituted by the Rig Mortgage or the Security Agreement, if applicable, or (B) the removal will not materially diminish the value of such Rig;

     (e) Submit such Rig to such periodical or other surveys as may be required for classification purposes and, upon the written request of the Administrative Agent supply to the Administrative Agent copies of all survey reports and classification certificates issued in respect thereof;

     (f) Promptly pay and discharge in the ordinary course all debts, damages and liabilities whatsoever which have given or may give rise to maritime or possessory Liens (other than Excepted Liens) on or claims enforceable against such Rig and all tolls, dues, taxes, assessments, governmental charges, fines and penalties that are material in amount and lawfully charged on or in respect of such Rig other than any of the foregoing being contested in good faith and, if necessary, diligently by appropriate proceedings, and, in the event of arrest of any such Rig pursuant to legal process, or in the event of its detention in exercise or purported exercise of any such Lien or claim as aforesaid, procure, if possible, the release of such Rig from such arrest or detention forthwith upon receiving notice thereof by providing bail or otherwise as the circumstances may require;

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     (g) Maintain, or cause to be maintained by the charterer or lessee of any such Rig, a valid Certificate of Financial Responsibility (Oil Pollution) issued by the United States Coast Guard pursuant to the Federal Water Pollution Control Act to the extent that such certificate may be required by applicable Legal Requirements for any such Rig and such other similar certificates as may be required in the course of the operations of any such Rig pursuant to the International Convention on Civil Liability for Oil Pollution Damage of 1969, or other applicable Legal Requirements concerning financial responsibility for liabilities imposed on such Borrower or the Rigs with respect to pollution by any state or nation or political subdivision thereof;

     (h) If the Person operating such Rig is not a Loan Party, promptly remit all earnings received by such Person from such Rig back to the appropriate Loan Party. For the avoidance of doubt, “earnings” does not include operating costs and reasonable management fees as are customary in the industry and which are set forth and supported by a budget for such Rigs which will be delivered to the Administrative Agent on or before such time as the subject Rig begins operations for such Person;

     (i) Cause such Rigs to be managed by the Borrower or one of the Loan Parties, or such other national or international, independent manager of established reputation engaged in the same or similar operation of mobile offshore drilling rigs similar to such Rigs, as consented to by the Administrative Agent acting upon instruction from the Required Lenders;

     (j) Cause such Rig to be registered under the laws and flag of an Acceptable Flag Jurisdiction. Notwithstanding the foregoing, any Loan Party may transfer a Collateral to another Acceptable Flag Jurisdiction pursuant to a Flag Jurisdiction Transfer; and

     (k) Operate such Rigs in accordance with applicable insurance requirements from time to time in effect.

     Section 5.12 Additional Mortgaged Vessels. The Borrower shall cause any Acceptable Additional Rig or Acceptable Replacement Rig and which is owned by the Borrower or any other Loan Party, to become subject to a Rig Mortgage and to become a Collateral Rig hereunder, by delivering to the Administrative Agent the following items:

     (a) a duly authorized, executed and delivered Assignment of Earnings, an Assignment of Insurances, together covering all of such Loan Party’s present and future Earnings Collateral and Insurance Collateral with respect to such Rig, in each case together with:

     (i) UCC-1 financing statements and any other documents, agreements or instruments reasonably necessary to create an Acceptable Security Interest in the Collateral described therein;

     (ii) lien, tax and judgment searches conducted on the applicable Loan Party and Rig reflecting no Liens other than Excepted Liens against any such Rig as to which perfection of a Lien is accomplished by the filing of a financing statement; and

     (iii) evidence that all other actions reasonably necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect and protect the security interests

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purported to be created by the Assignment of Earnings and the Assignment of Insurances and other Security Documents have been taken;

     (b) a duly authorized, executed and delivered Rig Mortgage (or supplement to an existing Rig Mortgage) (or such other form as shall be reasonably satisfactory to the Administrative Agent) with respect to such Rig in appropriate form for recording in the appropriate vessel registry and otherwise effective to create an Acceptable Security Interest.

     (c) all other filings, deliveries of instruments and other actions reasonably necessary or desirable in the reasonable opinion of the Administrative Agent to perfect and preserve such security interests shall have been duly effected and the Administrative Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Administrative Agent;

     (d) with respect to each such Rig:

     (i) certificates of ownership or abstracts of title from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of such Rig by the relevant Loan Party;

     (ii) the results of maritime registry searches with respect to such Rig indicating no record liens other than Liens in favor of the Administrative Agent and Excepted Liens;

     (iii) class certificates from an internationally recognized classification society reasonably acceptable to the Administrative Agent, indicating that such Rig meets the criteria specified in clause (a) of the definition of Acceptable Additional Rig or Acceptable Replacement Rig;

     (iv) if such Rig is being delivered in connection with a Rig Exchange and otherwise if requested by the Administrative Agent, a Appraisal Report; and

     (v) certificates of insurance from an Insurance Advisor in respect of such Rig from an Insurance Advisor to the extent required by Section 5.04;

     (e) opinions from counsel to such Loan Party reasonably satisfactory to the Administrative Agent addressed to the Administrative Agent and each of the Lenders which shall (i) be in form and substance reasonably acceptable to the Administrative Agent and (ii) cover the perfection of the security interests granted pursuant to the relevant Rig Mortgage and other Security Documents and such other matters incident thereto as the Administrative Agent may reasonably request;

     (f) if the Subsidiary owning such Rig is not a Loan Party and is a Domestic Subsidiary, (i) such Subsidiary shall (A) execute and deliver a counterpart of the Security Agreement, taking all actions required pursuant to Section 18(i) of the Security Agreement to become a Grantor thereunder, and taking any other action reasonably requested by the Administrative Agent and (B) execute and deliver a joinder as a Guarantor hereto and (ii) the Borrower shall pledge and deliver, or cause to be pledged and delivered, all of the capital stock of such Subsidiary owned by any Loan Party to the Administrative Agent. Upon satisfaction of

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the requirements of clauses (A) and (B) above, such Subsidiary shall be considered a Guarantor under the Loan Documents; and

     (g) such other documents, certificates and opinions as the Administrative Agent shall have reasonably requested.

     Section 5.13 Additional Guarantors. Promptly after any Person becomes a Material Domestic Subsidiary of the Borrower (and in any event within 30 days thereafter), (a) cause such Person to (i) become a Guarantor by executing and delivering to the Administrative Agent a counterpart of this Agreement or such other document as the Administrative Agent shall deem reasonably appropriate for such purpose, (ii) deliver to the Administrative Agent documents of the types referred to in clauses Section 3.01(a)(vii), (viii), (ix) and (x) and opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (i)), all in form and substance reasonably satisfactory to the Administrative Agent and (iii) execute such other Security Documents as the Administrative Agent or any Lender may reasonably request, in each case to secure the Obligations and (b) cause the stockholder of such Person to execute a Pledge Agreement pledging (i) 100% of its interests in the Equity Interest of such Person to secure the Obligations and such evidence of corporate authority to enter into and such legal opinions in relation to such Pledge Agreement as the Administrative Agent may reasonably request, along with, if such Person has previously issued share certificates, share certificates pledged thereby and appropriately executed stock powers in blank; provided that no new Material Domestic Subsidiary that is restricted by an existing contractual arrangement in existence at the time such Person becomes a Material Domestic Subsidiary and was not created or incurred in anticipation thereof, shall be required to become a Guarantor or enter into any Security Document if such guaranty or the entering into of such Security Documents would violate such existing contractual arrangements.

     Section 5.14 Additional Collateral Requirements.

     (a) Deposit Accounts. Establish deposit accounts (collectively, “Deposit Accounts”) in the name of the Borrower or any of its Subsidiaries with such banks (“Depository Banks”) as are reasonably acceptable to the Administrative Agent (subject to irrevocable instructions reasonably acceptable to Administrative Agent as hereinafter set forth) or with the Administrative Agent and all invoices evidencing accounts shall bear a notice that such invoices are payable to such Deposit Accounts and in which the Borrower or one of its Subsidiaries, as applicable, will immediately deposit all payments made for inventory or other payments constituting proceeds of Collateral, in the case of the Borrower and their Subsidiaries, in the identical form in which such payment was made, whether by cash or check. The Depository Banks shall acknowledge and agree, pursuant to an Account Control Agreement, that all payments made to the Deposit Accounts are for the benefit of the Administrative Agent and the Secured Parties, and that the Depository Banks have no right to setoff against the Deposit Accounts, other than for customary charges of the Depository Bank for depositary services. Upon the occurrence and continuance of an Event of Default, (i) the Borrower and each Subsidiary shall irrevocably instruct each Depository Bank to promptly transfer all payments or deposits (with certain exceptions as agreed to by the Administrative Agent) into the Deposit Accounts into the Administrative Agent’s Account on each Business Day and (ii) if any Loan

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Party shall receive any monies, checks, notes, drafts or any other payments relating to and/or proceeds of accounts or other Collateral, such Person shall hold such instrument or funds in trust for the Administrative Agent, and, immediately upon receipt thereof, shall remit the same or cause the same to be remitted, in kind, to the Administrative Agent at its address set forth in Section 10.02 below.

     (b) Deposit of Earnings. Each Loan Party shall cause the earnings derived from each of the respective Rigs, to the extent constituting Earnings Collateral (as defined in the Assignment of Earnings), to be deposited by the respective Account Debtor in respect of such earnings into one or more of the Deposit Accounts maintained for such Loan Party or the Borrower from time to time, or, if after making commercially reasonable efforts to cause an Account Debtor to make such deposits, an Account Debtor refuses to make such deposits, the applicable Loan Party will immediately, upon receipt of such remittance from such Account Debtor, deposit such amounts in such Deposit Account.

     (c) Bailees. If any Collateral in excess of $1,000,000 shall at any time be in the possession or control of any warehouse or bailee (i) use its commercially reasonable efforts to deliver to the Administrative Agent warehouse or bailee lien waivers reasonably satisfactory to the Administrative Agent, (ii) notify such warehouse, bailee or agent of the Liens in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, and instruct such Person to, upon the occurrence and continuance of an Event of Default, hold all such Collateral for Administrative Agent’s account subject to the Administrative Agent’s instructions, and (iii) use its commercially reasonable efforts to obtain such Person’s (A) acknowledgement that it is holding such Collateral for the Administrative Agent’s benefit and (B) agreement to, upon the occurrence and continuance of an Event of Default, permit the Administrative Agent to access such property in order to exercise its rights against Collateral.

     Section 5.15 Further Assurances in General. Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing or continuation statements or amendments thereto (or similar documents required by any laws of any applicable jurisdiction)), which may be required under any Legal Requirement, or which the Administrative Agent or the Required Lenders may reasonably request, all at the reasonable expense of the Borrower. The Borrower also agrees to provide to the Administrative Agent, from time to time upon reasonable request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.

     Section 5.16 PEMEX Consent. Without limiting the generality of Section 5.15, the Borrower agrees to provide to the Administrative Agent the consent to assignment executed by PEMEX and substantially in the form attached to the guaranty trust agreement discussed in Section 3.02(a)(xxiii) on or prior to date that is 30 days after the Closing Date (or such later date if extended by the Administrative Agent; provided that such later date may not be later than November 30, 2009).

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ARTICLE VI

NEGATIVE COVENANTS

     So long as the Revolving Advances or any amount under any Loan Document shall remain unpaid, any Lender shall have any Revolving Commitment, or there shall exist any Letter of Credit Exposure, unless the Required Lenders otherwise consent in writing, no Loan Party shall:

     Section 6.01 Liens, Etc. Create, assume, incur or permit to exist, any Lien on or in respect of any of its Property whether now owned or hereafter acquired, other than the following (“Permitted Liens”):

     (a) Excepted Liens;

     (b) Liens existing on the Effective Date and described in Schedule 6.01; provided that such Liens shall secure only those obligations which they secure on the date hereof and extensions, renewals and replacements thereof permitted hereunder;

     (c) Liens securing Debt permitted under Section 6.02(d); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Debt, and (ii) if applicable, the principal amount of the Debt secured thereby does not exceed the lesser of the cost or fair market value of the property being acquired on the date of acquisition;

     (d) Liens on the Non-Collateral Rigs to secure contingent or direct obligations, assessments and appeal bonds related to the Contested Mexican Tax Assessments;

     (e) Liens on leasehold interests created by the lessor of the applicable leased premises in favor of a mortgagee of such premises;

     (f) Liens for salvage or general average for amounts which are not delinquent or which are being contested in good faith and, if necessary, by appropriate proceedings diligently conducted, if reserves with respect thereto are maintained on the books of the applicable Person in accordance with, and to the extent required by, GAAP;

     (g) [Reserved]; and

     (h) Liens not otherwise permitted by any other clause of this Section 6.01 which secure obligations, actual or contingent, in an aggregate outstanding principal amount not greater than $2,500,000 at any time;

provided, however, the Borrower shall not, nor shall it permit any of its Subsidiaries to, create, assume, incur or permit to exist, any consensual Lien on or in respect of (i) any of its assets relating to or arising from the Collateral Rigs, whether now owned or hereafter acquired, including, without limitation, any Accounts, Inventory, Equipment and General Intangibles other than Excepted Liens and (ii) the Non-Collateral Rigs, other than Excepted Liens and Permitted Liens permitted by Section 6.01(d).

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     Section 6.02 Debts, Guaranties and Other Obligations. Create, assume, permit to exist or in any manner become or be liable, in respect of any Debt except:

     (a) Debt under the Loan Documents;

     (b) Debt (i) of the Borrower to Guarantors, (ii) of Guarantors to the Borrower and to other Guarantors and (iii) of Subsidiaries to the Borrower or other Subsidiaries; provided that (i) such Debt of any Loan Party is subordinated to the Obligations pursuant to a subordination agreement in form and substance reasonably acceptable to the Administrative Agent; and (ii) any such Debt shall be evidenced by a promissory note pledged to the Administrative Agent, for the ratable benefit of the Secured Parties;

     (c) Guarantees of the Borrower or any Subsidiary in respect of Debt otherwise permitted hereunder of the Borrower or any Subsidiary;

     (d) Debt in respect of Capital Leases and purchase money obligations for fixed or capital assets, and in each case, extensions, renewals and replacements of any such Debt that do not increase the outstanding principal amount thereof except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such extensions, renewals and replacements; provided that the aggregate principal amount of Debt permitted by this paragraph shall not exceed $5,000,000 at any time outstanding plus amounts permitted in the preceding clause;

     (e) obligations (contingent or otherwise) of the Borrower existing or arising under any Swap Contract, provided that (i) such obligations were entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with interest rates under this Agreement, foreign exchange liabilities, commodity expenses or casualty risks held or reasonably anticipated by such Person and not for purposes of speculation or taking a “market view” and (ii) no such Swap Contract requires any Loan Party to put up money, assets or other security (excluding in the case of Swap Contracts with Swap Counterparties, Collateral under the Security Documents) against the event of its nonperformance prior to actual default by such Loan Party in performing its obligations thereunder;

     (f) Debt in connection with any Guarantees in favor of any protection and indemnity or war risk associations to the extent such Guarantees are required in connection with any Insurance Policies;

     (g) Debt in connection with any Liens permitted pursuant to Section 6.01(d);

     (h) (i) Debt consisting of performance, bid and customs bonds, letters of credit, statutory obligations, surety and appeal bonds and other obligations of a like nature incurred in the ordinary course of business in connection with new charter or leases of Rigs entered into after the Effective Date (but not including bonds or other obligations incurred in connection with the Contested Mexican Tax Assessments which the parties hereto acknowledge are covered under the following clause (ii)), and (ii) Debt consisting of appeal bonds and other obligations of a like nature incurred in connection with the Contested Mexican Tax Assessments in an aggregate amount not to exceed $185,000,000 at any time;

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     (i) Debt in respect to insurance premium financing for insurance being acquired by the Borrower or any Subsidiary under customary terms and conditions;

     (j) Debt arising in connection with endorsement of instruments for deposit in the ordinary course of business;

     (k) Debt of the Borrower or any Subsidiary with respect to the payment by Pride or any of its Affiliates of costs, expenses and liabilities arising from, related to or in connection with the salvage operation of the Pride Wyoming mat-supported jackup rig in 2008 in a net amount not to exceed $10,000,000; provided that (i) such Debt may not be secured and (ii) the Borrower or such Subsidiary is entitled to insurance proceeds in connection with Pride Wyoming (under insurance as to which the insurer does not dispute coverage) in an amount at least equal to the full amount of such Debt; and

     (l) unsecured Debt not otherwise permitted by any other clause of this Section 6.02 in an aggregate outstanding principal amount not greater than $1,000,000 at any time outstanding.

     Section 6.03 Merger or Consolidation. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default or Event of Default has occurred and is continuing or would result therefrom:

     (a) any Subsidiary may merge with or dissolve into (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging with or dissolving into another Subsidiary, such Guarantor shall be the continuing or surviving Person or such continuing or surviving Person if not the Guarantor, shall become a Guarantor in accordance with Section 5.12;

     (b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Subsidiary and may thereafter liquidate or dissolve, if applicable; provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a Guarantor;

     (c) the Borrower or any of its Subsidiaries may merge with another Person to effectuate an Acquisition permitted by Section 6.05(e); provided that the Borrower or the applicable Subsidiary is the acquiring or surviving entity (or, with respect to any merger by a Subsidiary of the Borrower, the surviving entity becomes a Subsidiary in the transaction); and provided further that all other conditions of Section 6.05(e) are satisfied;

     (d) the Borrower may merge with Pride SpinCo, Inc., a Delaware corporation, in connection with the consummation of the Transaction as detailed in the Omnibus Restructuring Agreement; and

     (e) Dispositions permitted by Section 6.04.

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     Section 6.04 Dispositions. Make any Disposition or enter into any agreement to make any Disposition, except:

     (a) Dispositions of obsolete, worn-out or surplus assets or assets that are no longer used or useful in the business of the Borrower or any of its Subsidiaries;

     (b) Dispositions of property by the Borrower or any Subsidiary to the Borrower or to a Subsidiary in the ordinary course of business; provided that if the transferor of such property is the Borrower or a Guarantor, the transferee thereof must either be the Borrower or a Guarantor; and

     (c) Dispositions by the Borrower and its Subsidiaries to any Person that is not a Loan Party or a Subsidiary of any Loan Party not otherwise permitted under this Section 6.04; provided that (i) at the time of such Disposition, no Default or Event of Default shall exist or immediately would result from such Disposition, (ii) the aggregate book value of all property Disposed of in reliance on this clause (c) in any fiscal year shall not exceed $1,000,000 (or the equivalent in any other currency) and (iii) the Borrower receives only cash consideration for such Disposition; and

     (d) Dispositions of inventory, Cash Equivalents, charters of vessels and leases of equipment, in each case in the ordinary course of business;

     (e) the Disposition of assets received pursuant to Section 6.05(d);

     (f) the grant in the ordinary course of business of any non-exclusive license of patents, trademarks, registrations therefor and other similar intellectual property;

     (g) any Disposition of assets pursuant to (i) a condemnation, appropriation, seizure or similar taking or proceeding by a Governmental Authority or (ii) the requirement of, or at the direction of, a Governmental Authority;

     (h) the granting of any Lien permitted hereunder and Dispositions of property subject to any such Lien that is transferred to the lienholder or its designee in satisfaction or settlement of such lienholder’s claim;

     (i) Dispositions permitted by Section 6.03, Investments permitted by Section 6.05 and Restricted Payments permitted by Section 6.06;

     (j) Dispositions of Non-Collateral Rigs; provided that the proceeds thereof are used solely to satisfy the Contested Mexican Tax Assessments;

     (k) Dispositions made by the Borrower or any Subsidiary and described in the Omnibus Restructuring Agreement so long as such Dispositions are effected in order to complete the Transactions; and

     (l) Dispositions made by the Borrower to a newly created, wholly owned Subsidiary so long as (i) such Dispositions are made in connection with completing the Transactions and (ii) such new Subsidiary is a Guarantor hereunder on the date of such Disposition and the assets

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involved in such Dispositions continue to be Collateral to the extent such assets constituted Collateral prior to such Disposition.

     Section 6.05 Investments; Acquisitions. Make any Investments or Acquisition except:

     (a) Investments held by any Loan Party in the form of Cash Equivalents;

     (b) Existing Investments in Subsidiaries and other Investments in existence on the Effective Date and described in Schedule 6.05;

     (c) Investments in any Loan Party existing as of the Effective Date;

     (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled customers or suppliers to the extent reasonably necessary in order to prevent or limit loss or received in connection with the bankruptcy or reorganization of its customers or suppliers;

     (e) Investments in newly-formed Subsidiaries;

     (f) Acquisitions and Rig Acquisitions financed with Net Cash Proceeds received upon either (i) the issuance and sale by the Borrower of its Equity Interests for the sole purpose of making such Acquisition or (ii) an Asset Disposition to the extent permitted by Section 2.07(c)(iii); provided that if any Person contemporaneously with the making of such Investment, becomes a Subsidiary, such Person shall become a Guarantor, if it is required to become a Guarantor, pursuant to Section 5.13;

     (g) Investments under Swap Contracts permitted under Section 6.02(f);

     (h) Investments consisting of loans or advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed $500,000 at any time outstanding, for ordinary business purposes;

     (i) (i) Guarantees permitted by Section 6.02 and (ii) Guarantees by the Borrower or any Subsidiary for the performance or payment obligations of the Borrower or any Wholly Owned Subsidiary, which obligations were incurred in the ordinary course of business and do not constitute Debt;

     (j) cash Investments consisting of Capital Expenditures permitted pursuant to Section 6.14;

     (k) Investments consisting of intercompany Debt permitted to be incurred under, and complying with the requirements of, Section 6.02;

     (l) Investments, including Acquisitions or Rig Acquisitions, made or acquired in exchange for the issuance of Equity Interests of the Borrower;

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     (m) Investments in prepaid expenses and deposits provided to others in the ordinary course of business;

     (n) Investments not otherwise permitted by any other clause of this Section 6.05 which do not exceed, in the aggregate, $1,000,000 in the aggregate;

     (o) Investments, if any, made by the Borrower or any Subsidiary and described in the Omnibus Restructuring Agreement so long as such Investments are effected in order to complete the Transactions; and

     (p) Investments made by the Borrower to a newly created, wholly owned Subsidiary so long as (i) such Investments are made in connection with completing the Transactions and (ii) such new Subsidiary is a Guarantor hereunder on the date of such Investment and the assets involved in such Investments continue to be Collateral to the extent such assets constituted Collateral prior to such Investment.

     Section 6.06 Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:

     (a) each Subsidiary of the Borrower may declare and make Restricted Payments to the Borrower, the Guarantors or any of the Borrower’s Wholly-Owned Subsidiaries;

     (b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable to the holders of its Equity Interests solely in the common Equity Interests of such Person;

     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it (i) in exchange for the issuance of, or (ii) with the proceeds received from, the substantially concurrent issue of new shares of its common Equity Interests;

     (d) the repurchase, redemption or other acquisition or retirement of Equity Interests of the Borrower deemed to occur upon the exercise or exchange of stock options, warrants or other similar rights to the extent such Equity Interests represent a portion of the exercise or exchange price of those stock options, and the repurchase, redemption or other acquisition or retirement of Equity Interests of the Borrower made in lieu of withholding taxes resulting from the exercise or exchange of stock options, warrants or other similar rights; and

     (e) the Borrower and each Subsidiary may declare and make the Restricted Payments being described in the Omnibus Restructuring Agreement as being made by such Person so long as such Restricted Payments are effected in order to complete the Transactions

     Section 6.07 Change in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business reasonably related or incidental thereto.

     Section 6.08 Transactions With Affiliates. Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, including, without limitation, any payment by the Borrower or any of its Wholly-Owned Subsidiaries of

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any management, accounting or similar fees to any Affiliate, whether pursuant to a management agreement or otherwise, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate, other than (a) transactions between or among Loan Parties, (b) the Transaction Documents, (c) any Restricted Payment permitted by Section 6.06, (d) Investments permitted under Section 6.05(c), (e) loans and advances permitted under Section 6.05(h) and Guarantees permitted under Section 6.05(i), (f) the performance of employment, equity award, equity option or equity appreciation agreements, plans or other similar compensation or benefit plans or arrangements (including vacation plans, health and insurance plans, deferred compensation plans and retirement or savings plans) entered into by the Borrower or any Subsidiary in the ordinary course of its business with its employees, officers and directors, (g) fees and compensation to, and indemnity provided on behalf of, officers, directors, employees, consultants and advisors of the Borrower or any Subsidiary in their capacity as such, to the extent such fees and compensation are customary and (h) any contract now in effect with respect to the rigs owned by Pride or any of its Affiliates and named Pride Tennessee and Pride Wisconsin.

     Section 6.09 Agreements Restricting Liens and Distributions. Except for restrictions and conditions (a) imposed by Law, (b) existing on the date hereof and described in Schedule 6.09, together with each extension, renewal, amendment or modification to the extent it does not expand the scope of any such restriction or condition or otherwise make the same more restrictive, (c) of a customary nature contained in agreements relating to the Disposition of a Subsidiary otherwise permitted under this Agreement pending such Disposition, provided such restrictions and conditions apply only to the Subsidiary that is to be Disposed of, (d) contained in joint venture agreements or other similar agreements entered into in the ordinary course of business and to the extent permitted hereunder in respect to the Disposition or distribution of assets of such joint venture and (e) contained in any Loan Document, create or otherwise cause or permit to exist any prohibition, encumbrance or restriction which prohibits or otherwise limits the ability (A) of any Subsidiary to make Restricted Payments to any Loan Party or to otherwise transfer property to any Loan Party, (B) of any Subsidiary to Guarantee the Obligations of any Loan Party, or (C) of the Borrower or any Subsidiary to create, incur, assume or permit to exist Liens on property of such Person to secure the Obligations; provided, however, that this clause (C) shall not (1) prohibit any negative pledge incurred or provided in favor of any holder of a Lien permitted by (x) clause (f) in the definition of the term “Excepted Liens”, (y) Sections 6.01(c) or (z) Section 6.01(d), in each case solely to the extent any such negative pledge relates to the Property the subject of such Permitted Lien or (2) apply to customary provisions in leases, licenses and similar contracts restricting the assignment, encumbrance, sub-letting or transfer thereof.

     Section 6.10 Limitation on Accounting Changes or Changes in Fiscal Periods. Make any change in (a) any of its accounting policies affecting the presentation of financial statements or reporting practices, except as required or permitted by GAAP or Legal Requirement applicable to such Person, (b) the fiscal year of the Borrower or any of its Subsidiaries to end on a day other than December 31 or (c) the Borrower’s method of determining fiscal quarters.

     Section 6.11 Limitation on Speculative Hedging. (a) Purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Swap

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Contract for speculative purposes, or (b) be party to or otherwise enter into any Swap Contract which (i) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions or casualty risks related to the Borrower’ or their Subsidiaries’ operations, or (ii) obligates any Loan Party to grant any Liens not permitted under this Agreement.

     Section 6.12 Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities. Enter into or permit to exist any (a) Sale and Leaseback Transaction or (b) any other transaction pursuant to which it incurs or has incurred Off-Balance Sheet Liabilities, except, if applicable, for Swap Contracts permitted to be incurred under the terms of Section 6.02.

     Section 6.13 Operating Leases. Enter into or remain liable upon any Operating Lease other than Operating Leases not exceeding in the aggregate $3,000,000 during any fiscal year of the Borrower.

     Section 6.14 Capital Expenditures. Make or become legally obligated to make any Capital Expenditure (including Maintenance Capital Expenditures and Reactivation Capital Expenditures), except for Capital Expenditures in the aggregate for the Borrower and its Subsidiaries not to exceed $20,000,000 during the life of this Agreement; provided, however that such Capital Expenditures may be used for Maintenance Capital Expenditures and Reactivation Capital Expenditures in the approximate amounts and for each of the Rigs as proposed by the Borrower and agreed to by the Administrative Agent (or the Required Lenders if such approximate amounts are inconsistent with those set forth in the Projections delivered by the Borrower to the Administrative Agent and the Lenders prior to the Closing Date) (referred to herein, as “Permitted Reactivation Capital Expenditures”), and (c) if the Fixed Charge Coverage Ratio is greater than 1.50 to 1.00 as of the end of the most recently ended fiscal quarter, or greater than 2.00 to 1.00 as of the end of the most recently ended fiscal quarter if required by Section 6.17(a), then the Permitted Reactivation Capital Expenditures may be increased by the amount of Consolidated EBITDA for such quarter in excess of the Minimum Consolidated EBITDA (as defined below) for such quarter, so long as such additional Permitted Reactivation Capital Expenditures are applied as proposed by the Borrower and agreed to by the Administrative Agent or the Required Lenders, as the case may be. For purposes of this Section 6.14, “Minimum Consolidated EBITDA Amount” means the Consolidated EBITDA necessary in order for Fixed Charge Coverage Ratio for the applicable quarter to be greater than 1.50 to 1.00 (or 2.00 to 1.00 if Section 6.17(a) is applicable).

     Section 6.15 Amendment of Material Contracts. Amend, modify, supplement, terminate or waive any provision of (a) any Loan Party’s organizational documents or (b) the Transaction Documents, in each case, other than any such amendment or other modification (i) made solely in connection with a transaction that is otherwise permitted under this Agreement or (ii) that would not reasonably be expected to have a Material Adverse Effect.

     Section 6.16 Operation of Rigs. With respect to the Rigs:

     (a) make any modification to any such Rig which would materially adversely alter the structure, type or performance characteristics of such Rig or which would materially reduce the value of such Rig;

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     (b) if an Event of Default has occurred and is continuing and unless such upgrades or improvements are not subject to an in force contractual arrangement that was not entered into in breach of this Agreement and which is for a term of 12 months or more, undertake or commence upgrades or improvements on any such Rig without the previous consent of the Required Lenders and delivery to the Administrative Agent of a written waiver or subordination of its Liens or its equivalent, such waiver or subordination to be in form and substance reasonably satisfactory to the Administrative Agent and executed by the Person providing such upgrades or improvements;

     (c) charter any such Rig to, or permit such Rig to serve under any contract with, a Person (i) or engage in any transaction, which will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, or (ii) described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (iii) that engages or will engage in any dealings or transactions, or is or will be otherwise associated, with any such Person, if such transaction or violation would (A) expose the Administrative Agent or any Secured Party to any penalty, sanction or investigation or (B) jeopardize the Lien created by the Rig Mortgages or (C) reasonably be expected to have a material adverse effect on the Loan Parties or the operation of such Rigs, or any Loan Party’s ability to load or discharge cargo or to effect repairs on such Rigs;

     (d) cause or permit any such Rig to be operated in any manner contrary to law applicable to it and its operations (except where the failure to operate in compliance with any such law would not have a material adverse effect on the Loan Parties, such Rig or the Lien created by the applicable Rig Mortgage);

     (e) abandon any such Rig in a port outside the United States of America;

     (f) engage in any unlawful trade or violate any law or carry any cargo that shall expose any such Rig to forfeiture or capture;

     (g) operate any such Rig in any jurisdiction or in any manner which could cause the Lien created by the applicable Rig Mortgage to be rendered unenforceable or the Administrative Agent’s foreclosure or enforcement rights to be materially impaired or hindered;

     (h) without giving prior written notice thereof to the Administrative Agent, change the registered owner, name, flag, official or patent number, as the case may be, the home port or class of any such Rig;

     (i) any act by which any Insurance Policy or entry required by Section 5.04 may be suspended, impaired or cancelled, and permit or allow any Rig to undertake any voyage or run any risk or transport any cargo which may not be permitted by the Insurance Policies in force, without having previously insured such Rig by additional coverage to extend to such voyages, risks or cargoes; or

     (j) cause or permit any Rig to operate or undertake a voyage to or to sail in any area which has been declared a war area by the relevant underwriters and insurance companies and

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has been included in the list of exclusions from time to time in effect attached to the war risks insurance policies in the form of the war risks trading warranties, without first notifying thereof the Administrative Agent and the war risks underwriters of such Rig and paying any additional insurance premiums required.

     Section 6.17 Financial Covenants.

     (a) Minimum Fixed Charge Coverage Ratio. If, at any time when Revolving Advances or Letters of Credit are outstanding, the sum of the Availability plus unrestricted cash and Cash Equivalents is less than $25,000,000 as of the end of the immediately preceding fiscal quarter, permit the Fixed Charge Coverage Ratio as of the end of the fiscal quarter immediately following such occurrence of the Borrower, beginning with the fiscal quarter ending September 30, 2009, to be less than 2.00 to 1.00.

     (b) Security Maintenance Ratio. Permit the Security Maintenance Ratio at any time to be less than 3.00 to 1.00.

     (c) Minimum Working Capital Ratio. Permit the Working Capital Ratio as of the end of each fiscal quarter of the Borrower, beginning with the fiscal quarter ending September 30, 2009, to be less than 1.20 to 1.00.

     (d) Minimum Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth as of the end of each fiscal quarter of the Borrower, beginning with the fiscal quarter ending September 30, 2009, to be less than an amount equal to the sum of (i) $320,000,000, plus (ii) 50% of the Borrower’s Consolidated Net Income for each fiscal quarter in which such Consolidated Net Income is greater than $0, commencing with the fiscal quarter ending December 31, 2009 and ending on such date of determination plus (iii) an amount equal to 100% of the aggregate Net Cash Proceeds received by the Borrower from issuances of its Equity Interests after the Closing Date.

ARTICLE VII

EVENTS OF DEFAULT

     Section 7.01 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”:

     (a) Payment. The Borrower shall fail to pay (i) any principal of any Revolving Advance (other than as set forth in clause (iii) below) or reimburse any drawing under any Letter of Credit when the same becomes due and payable, (ii) any interest on the Revolving Advances, any fees, reimbursements, indemnifications, or other amounts payable in connection with the Obligations, this Agreement or under any other Loan Document within three Business Days after the same becomes due and payable or (iii) any mandatory prepayment required by Section 2.07 within ten days after the earlier of (A) the Borrower’s receipt of written notice thereof by the Administrative Agent or the Required Lenders or (B) a Responsible Officer’s knowledge thereof;

     (b) Representation and Warranties. Any representation or statement made or deemed to be made by the Borrower or any other Loan Party (or any of their respective officers in such

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capacity) in this Agreement, in any other Loan Document, or in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect when made or deemed to be made;

     (c) Covenant Breaches. Any Loan Party shall (i) fail to perform or observe any covenant contained in Section 5.01 (with respect to the Borrower), Sections 5.04, 5.06, 5.07, 5.09, 5.12, 5.13, 5.14, 5.15 and Article VI of this Agreement or (ii) fail to perform or observe any other term or covenant set forth in this Agreement or in any other Loan Document which is not covered by clause (i) above or any other provision of this Section 7.01 if such failure shall remain unremedied for 30 days after the earlier of (A) the Borrower’s receipt of written notice thereof by the Administrative Agent or (B) a Loan Party’s Responsible Officer’s knowledge thereof;

     (d) Cross-Default. (i) Any Loan Party shall fail to pay any principal of or premium or interest on any of its Debt which, individually or in the aggregate, is outstanding in a principal amount of at least $2,500,000 (or the equivalent in any other currency) (but excluding Debt evidenced by the Revolving Advances) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), or (ii) any other event shall occur or condition shall exist under any agreement or instrument governing Debt which, individually or in the aggregate, is outstanding in a principal amount of at least $2,500,000 (or the equivalent in any other currency) (but excluding Debt evidenced by the Revolving Advances), if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt;

     (e) Insolvency. (i) Any Loan Party shall generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against the Borrower or any Guarantor seeking to adjudicate it as a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against such Person, either such proceeding shall remain undismissed for a period of 60 days or an order for relief granting any of the actions sought in such proceeding shall occur; or such Person shall take any action to authorize any of the actions set forth above in this paragraph (e) or any analogous procedure or step is taken in any jurisdiction.

     (f) Judgments. Any judgment or order for the payment of money shall be rendered against any Loan Party in an amount in excess of $2,500,000 (or the equivalent in any other currency), to the extent not covered by insurance as to which the insurer does not dispute coverage, and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

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     (g) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of a Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $2,500,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $100,000; or

     (h) Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

     (i) Security Documents. The Administrative Agent and the Lenders shall fail to have an Acceptable Security Interest in any of the Collateral Rigs; or

     (j) Change in Control. A Change of Control shall occur.

     Section 7.02 Optional Acceleration of Maturity. If any Event of Default (other than an Event of Default pursuant to paragraph (e)(ii) of Section 7.01 with respect to the Borrower) shall have occurred and be continuing, then, and in any such event:

     (a) the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Revolving Commitments and the obligation of each Lender and the Issuing Bank to make extensions of credit hereunder, including making Revolving Advances and issuing Letters of Credit, to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare all principal, interest, fees, reimbursements, indemnifications, and all other amounts accrued and payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon all such amounts shall become and be forthwith due and payable in full;

     (b) to the extent that the LC Cash Collateral Account does not contain an amount equal to 105% of the outstanding Letter of Credit Exposure on such date and on demand of the Administrative Agent at the request or with the consent of the Required Lenders, the Borrower shall deposit with the Administrative Agent into the LC Cash Collateral Account an amount of cash in Dollars equal to such deficit as security for the Obligations to the extent the Letter of Credit Obligations are not otherwise paid at such time; and

     (c) the Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security Documents, this Agreement, and any other Loan Document for the ratable benefit of the Secured Parties by appropriate proceedings.

     Section 7.03 Automatic Acceleration of Maturity. If any Event of Default pursuant to paragraph (e)(ii) of Section 7.01 and with respect to the Borrower shall occur:

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     (a) (i) the Revolving Commitments and the obligation of each Lender and the Issuing Bank to make extensions of credit hereunder, including making Revolving Advances and issuing Letters of Credit, shall terminate, and (ii) all principal, interest, fees, reimbursements, indemnifications, and all other amounts payable under this Agreement and the other Loan Documents shall become and be forthwith due and payable in full;

     (b) to the extent the LC Cash Collateral Account does not contain an amount equal to 105% of the outstanding Letter of Credit Exposure on such date and on demand of the Administrative Agent at the request or with the consent of the Required Lenders, the Borrower shall deposit with the Administrative Agent into the LC Cash Collateral Account an amount of cash in Dollars equal to such deficit as security for the Obligations to the extent the Letter of Credit Obligations are not otherwise paid at such time; and

     (c) the Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security Documents, this Agreement, and any other Loan Document for the ratable benefit of the Secured Parties by appropriate proceedings.

     Section 7.04 Non-exclusivity of Remedies. No remedy conferred upon the Administrative Agent, the Issuing Bank and the Lenders is intended to be exclusive of any other remedy, and each remedy shall be cumulative of all other remedies existing by contract, at law, in equity, by statute or otherwise.

     Section 7.05 Right of Set-off. If an Event of Default has occurred and is continuing, each Lender, the Issuing Bank, and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Bank or any such Affiliate to or for the credit or the account of any Loan Party against any and all of the obligations of such Loan Party then owing by such Loan Party under this Agreement or any other Loan Document to such Lender or the Issuing Bank, irrespective of whether or not such Lender or the Issuing Bank shall have made any demand under this Agreement or any other Loan Document or are owed to a branch or office of such Lender or the Issuing Bank different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Bank or their respective Affiliates may have. Each Lender and the Issuing Bank agrees to notify the Borrower, the applicable Loan Party and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

     Section 7.06 Application of Proceeds. For so long as an Event of Default shall have occurred and be continuing, any monies or property actually received by the Administrative Agent pursuant to this Agreement or any other Loan Document, the exercise of any rights or remedies under any Security Document or any other Loan Document with any Loan Party which secures any of the Obligations, shall be applied in the following order:

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     (a) First, to payment of the reasonable expenses, liabilities, losses, costs, duties, fees, charges or other moneys whatsoever (together with interest payable thereon) as may have been paid or incurred in, about or incidental to any sale or other realization of Collateral, including reasonable compensation to the Administrative Agent and its agents and counsel, and to the ratable payment of any other unreimbursed reasonable expenses and indemnities for which the Administrative Agent or any Secured Party is to be reimbursed pursuant to this Agreement or any other Loan Document, in each case that are then due and payable;

     (b) Second, to the ratable payment of accrued but unpaid fees of the Administrative Agent, commitment fees, letter of credit fees, and fronting fees owing to the Administrative Agent, the Issuing Bank, and the Lenders, as applicable, in respect of the Revolving Advances and Letters of Credit under this Agreement;

     (c) Third, to the ratable payment of accrued but unpaid interest on the Revolving Advances then due and payable under this Agreement;

     (d) Fourth, ratably, according to the then unpaid amounts thereof, without preference or priority of any kind among them, to the ratable payment of all other Obligations then due and payable which relate to Revolving Advances and Letters of Credit and which are owing to the Administrative Agent, the Issuing Bank and the Lenders, and the application as cash collateral into the LC Cash Collateral Account for the Letter of Credit Exposure;

     (e) Fifth, ratably, according to the unpaid termination amounts thereof, to the payment of all obligations of the Borrower or its Subsidiaries owing to any Swap Counterparty under any Swap Contract, if any, then due and payable;

     (f) Sixth, to the ratable payment of any other outstanding Obligations then due and payable; and

     (g) Seventh, any excess after payment in full of all Obligations shall be paid in a commercially reasonable time to the Borrower or any other Loan Party as appropriate or to such other Person who may be lawfully entitled to receive such excess.

ARTICLE VIII

THE GUARANTY

     Section 8.01 Liabilities Guaranteed. Each Guarantor hereby, joint and severally, irrevocably and unconditionally guarantees the prompt payment at maturity of the Obligations.

     Section 8.02 Nature of Guaranty. This guaranty is an absolute, irrevocable, completed and continuing guaranty of payment and not a guaranty of collection, and no notice of the Obligations or any extension of credit already or hereafter contracted by or extended to the Borrower need be given to any Guarantor. This guaranty may not be revoked by any Guarantor and shall continue to be effective with respect to the Obligations arising or created after any attempted revocation by such Guarantor and shall remain in full force and effect until the

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Obligations are paid in full and the Revolving Commitments are terminated, notwithstanding that from time to time prior thereto no Obligations may be outstanding. The Borrower and the Secured Parties may modify, alter, rearrange, extend for any period and/or renew from time to time, the Obligations, and the Lenders may waive any Default or Events of Default without notice to any Guarantor and in such event each Guarantor will remain fully bound hereunder on the Obligations. This guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of the Obligations is rescinded or must otherwise be returned by any of the Secured Parties upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made. This guaranty may be enforced by the Administrative Agent and any subsequent permitted holder of any of the Obligations and shall not be discharged by the permitted assignment or negotiation of all or part of the Obligations. Each Guarantor hereby expressly waives presentment, demand, notice of non-payment, protest and notice of protest and dishonor, notice of Default or Event of Default, and also notice of acceptance of this guaranty, acceptance on the part of the Secured Parties being conclusively presumed by the Secured Parties’ request for this guaranty and the Guarantors’ being party to this Agreement.

     Section 8.03 Agent’s Rights. Each Guarantor authorizes the Administrative Agent, without notice or demand and without affecting any Guarantor’s liability hereunder, to take and hold security for the payment of its obligations under this Article VIII and/or the Obligations, and exchange, enforce, waive and release any such security; and to apply such security and direct the order or manner of sale thereof as the Administrative Agent in its discretion may determine, and to obtain a guaranty of the Obligations from any one or more Persons and at any time or times to enforce, waive, rearrange, modify, limit or release any of such other Persons from their obligations under such guaranties.

     Section 8.04 Guarantor’s Waivers.

     (a) General. Each Guarantor waives any right to require any of the Secured Parties to (i) proceed against the Borrower or any other person liable on the Obligations, (ii) enforce any of their rights against any other guarantor of the Obligations, (iii) proceed or enforce any of their rights against or exhaust any security given to secure the Obligations, (iv) have the Borrower joined with any Guarantor in any suit arising out of this Article VIII and/or the Obligations, or (v) pursue any other remedy in the Secured Parties’ powers whatsoever. It is agreed between the Guarantors and the Secured Parties that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for this Guaranty and such waivers, the Secured Parties would not extend or continue to extend credit under this Agreement. The Secured Parties shall not be required to mitigate damages or take any action to reduce, collect or enforce the Obligations. Each Guarantor waives any defense arising by reason of any disability, lack of corporate authority or power, or other defense of the Borrower or any other guarantor of the Obligations, and shall remain liable hereon regardless of whether the Borrower or any other guarantor shall be found not liable thereon for any reason. Whether and when to exercise any of the remedies of Secured Parties under any of the Loan Documents shall be in the sole and absolute discretion of the Administrative Agent, and no delay by the Administrative Agent in enforcing any remedy, including delay in conducting a foreclosure sale, shall be a defense to any Guarantor’s liability under this Article VIII.

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     (b) In addition to the waivers contained in Section 8.04(a) hereof, each Guarantor waives, and agrees that it shall not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshaling of assets or redemption laws, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by it of its obligations under, or the enforcement by the Administrative Agent or the Secured Parties of, this Guaranty. Each Guarantor hereby waives diligence, presentment and demand (whether for nonpayment or protest or of acceptance, maturity, extension of time, change in nature or form of the Obligations, acceptance of further security, release of further security, composition or agreement arrived at as to the amount of, or the terms of, the Obligations, notice of adverse change in the Borrower’s financial condition or any other fact which might materially increase the risk to it) with respect to any of the Obligations or all other demands whatsoever and waives, to the fullest extent permitted by law, the benefit of all provisions of law which are or might be in conflict with the terms of this Article VIII. Each Guarantor represents, warrants and agrees that, as of the date of this Guaranty, its obligations under this Guaranty are not subject to any offsets or defenses of any kind against the Administrative Agent, the Secured Parties, the Borrower or any other Person that executes a Loan Document. Each Guarantor further agrees that its obligations under this Guaranty shall not be subject to any counterclaims, offsets or defenses of any kind which may arise in the future against the Administrative Agent, the Secured Parties, the Borrower or any other Person that executes a Loan Document.

     (c) Subrogation. Until the Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge) have been paid in full, each Guarantor waives all rights of subrogation or reimbursement against the Borrower, whether arising by contract or operation of law (including, without limitation, any collateral right arising under any federal, state or other applicable bankruptcy or insolvency laws) and waives any right to enforce any remedy which the Secured Parties now have or may hereafter have against the Borrower, and waives any benefit or any right to participate in any security now or hereafter held by the Administrative Agent or any Secured Party.

     Section 8.05 Maturity of Obligations, Payment. Each Guarantor agrees that if the maturity of any of the Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this Article VIII without demand or notice to any Guarantor. Each Guarantor will, forthwith upon notice from the Administrative Agent, jointly and severally pay to the Administrative Agent the amount due and unpaid by the Borrower and guaranteed hereby. The failure of the Administrative Agent to give this notice shall not in any way release any Guarantor hereunder.

     Section 8.06 Agent’s Expenses. If any Guarantor fails to pay the Obligations after notice from the Administrative Agent of the Borrower’s failure to pay any Obligations at maturity (and any Obligations remain unpaid), and if the Administrative Agent obtains the services of an attorney for collection of amounts owing by any Guarantor hereunder, or obtaining advice of counsel in respect of any of their rights under this Article VIII, or if suit is filed to enforce this Article VIII, or if proceedings are had in any bankruptcy, probate, receivership or other judicial proceedings for the establishment or collection of any amount owing by any Guarantor hereunder, or if any amount owing by any Guarantor hereunder is collected through

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such proceedings, each Guarantor jointly and severally agrees to pay to the Administrative Agent the Administrative Agent’s reasonable attorneys’ fees.

     Section 8.07 Liability. It is expressly agreed that the liability of each Guarantor for the payment of the Obligations guaranteed hereby shall be primary and not secondary.

     Section 8.08 Events and Circumstances Not Reducing or Discharging any Guarantor’s Obligations. Each Guarantor hereby consents and agrees to each of the following to the fullest extent permitted by law, and agrees that each Guarantor’s obligations under this Article VIII shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any rights (including without limitation rights to notice) which each Guarantor might otherwise have as a result of or in connection with any of the following:

     (a) Modifications, etc. Any renewal, extension, modification, increase, decrease, alteration or rearrangement of all or any part of the Obligations, or this Agreement or any instrument executed in connection therewith, or any contract or understanding between the Borrower and any of the Secured Parties, or any other Person, pertaining to the Obligations, or the waiver or consent by the Administrative Agent or the Secured Parties with respect to any of the provisions hereof or thereof, or any modification or termination of the terms of any intercreditor or subordination agreement pursuant to which claims of other creditors against any Guarantor or Borrower are subordinated to the claims of the Secured Parties or pursuant to which the Obligations are subordinated to claims of other creditors;

     (b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise that might be granted or given by any of the Secured Parties to the Borrower or any Guarantor or any Person liable on the Obligations;

     (c) Condition of the Borrower or any Guarantor. The insolvency, bankruptcy arrangement, adjustment, composition, liquidation, disability, dissolution, death or lack of power of the Borrower or any other Guarantor or any other Person at any time liable for the payment of all or part of the Obligations; or any dissolution of the Borrower or any other Guarantor, or any sale, lease or transfer of any or all of the assets of the Borrower or any other Guarantor, or any changes in the shareholders, partners, or members of the Borrower or any other Guarantor; or any reorganization of the Borrower or any other Guarantor;

     (d) Invalidity of Obligations. The invalidity, illegality or unenforceability of all or any part of the Obligations, or any document or agreement executed in connection with the Obligations, for any reason whatsoever, including without limitation the fact that the Obligations, or any part thereof, exceed the amount permitted by law, the act of creating the Obligations or any part thereof is ultra vires, the officers or representatives executing the documents or otherwise creating the Obligations acted in excess of their authority, the Obligations violate applicable usury laws, the Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Obligations wholly or partially uncollectible from the Borrower, the creation, performance or repayment of the Obligations (or the execution, delivery and performance of any document or instrument representing part of the Obligations or executed in connection with the Obligations, or given to secure the repayment of the Obligations) is illegal, uncollectible, legally impossible or unenforceable, or this Agreement

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or other documents or instruments pertaining to the Obligations have been forged or otherwise are irregular or not genuine or authentic;

     (e) Release of Obligors. Any full or partial release of the liability of the Borrower on the Obligations or any part thereof, of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Obligations or any part thereof, it being recognized, acknowledged and agreed by each Guarantor that such Guarantor may be required to pay the Obligations in full without assistance or support of any other Person, and no Guarantor has been induced to enter into this Article VIII on the basis of a contemplation, belief, understanding or agreement that other parties other than the Borrower will be liable to perform the Obligations, or the Secured Parties will look to other parties to perform the Obligations;

     (f) Other Security. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Obligations;

     (g) Release of Collateral, etc. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security, at any time existing in connection with, or assuring or securing payment of, all or any part of the Obligations;

     (h) Care and Diligence. The failure of the Secured Parties or any other Person to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, property or security;

     (i) Status of Liens. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by each Guarantor that no Guarantor is entering into this Article VIII in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of the collateral for the Obligations;

     (j) Payments Rescinded. Any payment by the Borrower to the Secured Parties is held to constitute a preference under the bankruptcy laws, or for any reason the Secured Parties are required to refund such payment or pay such amount to the Borrower or someone else; or

     (k) Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to this Agreement, the Obligations, or the security and collateral therefor, whether or not such action or omission prejudices any Guarantor or increases the likelihood that any Guarantor will be required to pay the Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of each Guarantor that each Guarantor shall be obligated to joint and severally pay the Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, except for the full and final payment and satisfaction of the Obligations.

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     Section 8.09 Subordination of All Guarantor Claims.

     (a) As used herein, the term “Guarantor Claims” shall mean all debts and liabilities of the Borrower or any Subsidiary of the Borrower to any Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligation of the Borrower or such Subsidiary thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by any Guarantor. The Guarantor Claims shall include without limitation all rights and claims of any Guarantor against the Borrower or any Subsidiary of the Borrower arising as a result of subrogation or otherwise as a result of such Guarantor’s payment of all or a portion of the Obligations. Until the Obligations shall be paid and satisfied in full (other than contingent indemnification obligations of which no Secured Party has knowledge) and each Guarantor shall have performed all of its obligations hereunder, no Guarantor shall receive or collect, directly or indirectly, from the Borrower or any Subsidiary of the Borrower or any other party any amount upon the Guarantor Claims.

     (b) The Borrower and each Guarantor hereby (i) authorizes the Administrative Agent and the Secured Parties to demand specific performance of the terms of this Section 8.09, whether or not the Borrower or any Guarantor shall have complied with any of the provisions hereof applicable to it, at any time when it shall have failed to comply with any provisions of this Section 8.09 which are applicable to it and (ii) irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance.

     (c) Upon any distribution of assets of any Loan Party in any dissolution, winding up, liquidation or reorganization (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise):

     (i) The Secured Parties shall first be entitled to receive payment in full in cash of the Obligations before the Borrower or any Guarantor is entitled to receive any payment on account of the Guarantor Claims.

     (ii) Any payment or distribution of assets of any Loan Party of any kind or character, whether in cash, property or securities, to which the Borrower or any Guarantor would be entitled except for the provisions of this Section 8.09(c), shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the Secured Parties, to the extent necessary to make payment in full of all Obligations remaining unpaid after giving effect to any concurrent payment or distribution or provisions therefor to the Secured Parties.

     (d) No right of the Secured Parties or any other present or future permitted holders of any Obligations to enforce the subordination provisions herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Loan Party or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Borrower or any

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Guarantor with the terms hereof, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.

     Section 8.10 Claims in Bankruptcy. In the event of receivership, bankruptcy, reorganization, arrangement, debtor’s relief, or other insolvency proceedings involving the Borrower or any Guarantor, as debtor, the Secured Parties shall have the right to prove their claim in any proceeding, so as to establish their rights hereunder and receive directly from the receiver, trustee or other court custodian, dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor hereby assigns such dividends and payments to the Secured Parties. Should the Administrative Agent or any Secured Party receive, for application upon the Obligations, any such dividend or payment which is otherwise payable to any Guarantor, and which, as between the Borrower or any Subsidiary of the Borrower and any Guarantor, shall constitute a credit upon the Guarantor Claims, then upon payment in full of the Obligations, such Guarantor shall become subrogated to the rights of the Secured Parties to the extent that such payments to the Secured Parties on the Guarantor Claims have contributed toward the liquidation of the Obligations, and such subrogation shall be with respect to that proportion of the Obligations which would have been unpaid if the Administrative Agent or a Secured Party had not received dividends or payments upon the Guarantor Claims.

     Section 8.11 Payments Held in Trust. In the event that notwithstanding Sections 8.09 and 8.10 above, any Guarantor should receive any funds, payments, claims or distributions which are prohibited by such Sections, such Guarantor agrees to hold in trust for the Secured Parties an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions except to pay them promptly to the Administrative Agent, and each Guarantor covenants promptly to pay the same to the Administrative Agent.

     Section 8.12 Benefit of Guaranty. The provisions of this Article VIII are for the benefit of the Secured Parties, their successors, and their permitted transferees, endorsees and assigns. In the event all or any part of the Obligations are transferred, endorsed or assigned by the Secured Parties, as the case may be, to any Person or Persons in accordance with the terms of this Agreement, any reference to the “Secured Parties” herein, as the case may be, shall be deemed to refer equally to such Person or Persons.

     Section 8.13 Reinstatement. This Article VIII shall remain in full force and effect and continue to be effective in the event any petition is filed by or against the Borrower, any Guarantor or any other Loan Party for liquidation or reorganization, in the event that any of them becomes insolvent or makes an assignment for the benefit of creditors or in the event a receiver, trustee or similar Person is appointed for all or any significant part of any of their assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Secured Parties, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

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     Section 8.14 Liens Subordinate. Each Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon the Borrower’s or any Subsidiary of the Borrower’s assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon the Borrower’s or any Subsidiary of the Borrower’s assets securing payment of the Obligations, regardless of whether such encumbrances in favor of any Guarantor, the Administrative Agent or the Secured Parties presently exist or are hereafter created or attach.

     Section 8.15 Guarantor’s Enforcement Rights. Without the prior written consent of the Required Lenders, until the Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge) have been paid in full, no Guarantor shall (a) exercise or enforce any creditor’s right it may have against the Borrower or any Subsidiary of the Borrower, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding (judicial or otherwise, including without limitation the commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any lien, mortgages, deeds of trust, security interest, collateral rights, judgments or other encumbrances on assets of the Borrower or any Subsidiary of the Borrower held by such Guarantor.

     Section 8.16 Limitation. It is the intention of each of the Guarantors and each Secured Party that the amount of the Obligations guaranteed by each Guarantor shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and similar Legal Requirement applicable to such Guarantor. Accordingly, notwithstanding anything to the contrary contained in this Article VIII or in any other agreement or instrument executed in connection with the payment of any of the Obligations guaranteed hereby, the amount of the Obligations guaranteed by each Guarantor under this Article VIII shall be limited to an aggregate amount equal to the largest amount that would not render such Guarantor’s obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

     Section 8.17 Contribution Rights.

     (a) To the extent that any payment is made under this Guaranty (a “Guarantor Payment”), by a Guarantor, which Guarantor Payment, taking into account all other Guarantor Payments then previously or concurrently made by all other Guarantors, exceeds the amount which such Guarantor would otherwise have paid if each Guarantor had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Guarantor’s Allocable Amount (as defined below) (in effect immediately prior to the most recent such Guarantor Payment) bore to the aggregate Allocable Amounts of all of the Guarantors in effect immediately prior to the making of the most recent such Guarantor Payment, then, following the date on which the Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge) shall be paid in full and each Guarantor shall have performed all of its obligations hereunder, such Guarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each of the other Guarantors for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

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     (b) As of any date of determination, the “Allocable Amount” of any Guarantor shall be equal to the maximum amount of the claim which could then be recovered from such Guarantor under this Guaranty without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy Code or any other applicable law.

     (c) This Section 8.17 is intended only to define the relative rights of the Guarantors and nothing set forth in this Section 8.17 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Guaranty.

     (d) The rights of the parties under this Section 8.17 shall be exercisable upon the date the Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge) shall be paid in full and each Guarantor shall have performed all of its obligations hereunder.

     (e) The parties hereto acknowledge that the right of contribution and indemnification hereunder shall constitute assets of any Guarantor to which such contribution and indemnification is owing.

     Section 8.18 Release of Guarantors. Upon the sale or disposition of any Guarantor pursuant to the terms of this Agreement to any Person other than the Borrower or any other Guarantor or if any Guarantor is released pursuant to Section 10.01(i), the Administrative Agent shall, at the Borrower’ expense, promptly execute and deliver to the Borrower and such Guarantor such documents as the Borrower and such Guarantor shall reasonably request and take any other actions necessary or reasonably requested to evidence or effect the release of such Guarantor from this Agreement and the other Loan Documents.

ARTICLE IX

THE ADMINISTRATIVE AGENT

     Section 9.01 Appointment and Authority. Each of the Lenders and the Issuing Bank hereby irrevocably appoints Natixis to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto, including but not limited to the execution of Security Documents on behalf of the Secured Parties. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and no Loan Party shall have rights as a third party beneficiary of any of such provisions. Each of the Secured Parties hereby acknowledges and confirms their agreement that the Administrative Agent is subject to certain Security Documents as trustee for and on behalf of the Lenders or the terms of the declaration of trust and other terms and conditions set forth in the applicable Security Documents.

     Section 9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender”

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or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include any Lender serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

     Section 9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:

     (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing;

     (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

     (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default or an Event of Default unless and until notice describing such Default or Event of Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Bank.

     The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to it and that such items are in form and substance reasonably satisfactory to it.

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     Section 9.04 Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Revolving Advance, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Revolving Advance or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for a Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

     Section 9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Administrative Agent.

     Section 9.06 Resignation or Removal of the Administrative Agent.

     (a) The Administrative Agent may resign from the performance of all of its functions and duties hereunder and under the other Loan Documents at any time by giving 30 days’ prior written notice of its resignation to the Lenders, the Issuing Bank and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, and provided that no Event of Default has occurred and is continuing, with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), to appoint a successor, which shall be a Lender with an office in New York, or an Affiliate of any such Lender with an office in New York. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 60 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above provided and consented to by the Borrower (provided that no Event of Default has occurred and is continuing and which consent shall not be unreasonably withheld or delayed). If the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment within such 60-day period, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent,

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for the ratable benefit of the Secured Parties, under any of the Loan Documents, the retiring Administrative Agent, for the ratable benefit of the Secured Parties, shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) the Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and under any other Loan Document and all payments, communications and determinations provided to be made by, to or through such Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, as applicable, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while such replaced Administrative Agent was acting as Administrative Agent to the extent provided therein.

     (b) If either (i) the Administrative Agent is a Lender and is a Defaulting Lender or (ii) the Administrative Agent is not a Lender and is a Defaulting Lender due to the circumstances described in clause (d) of the definition of Defaulting Lender, the Required Lenders shall have the right to appoint a successor Administrative Agent which shall be a commercial bank or trust company that is, if no Event of Default has occurred and is continuing, reasonably acceptable to the Borrower. If no successor Administrative Agent has been so appointed and shall have accepted such appointment by the 20th Business Day after the date the Administrative Agent became a Defaulting Lender, the Administrative Agent shall be deemed to have been replaced and the Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and under any other Loan Document and all payments, communications and determinations provided to be made by, to or through such Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, as applicable, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above. After the Administrative Agent is replaced in accordance with this clause (b), the provisions of this Article IX, Section 10.04 and Section 10.05 shall continue in effect for the benefit of such replaced Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while such replaced Administrative Agent was acting as Administrative Agent to the extent provided therein.

     Section 9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to

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time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

     Section 9.08 Indemnification. Whether or not the transactions contemplated hereby are consummated, the Lenders severally agree to indemnify upon demand the Administrative Agent, the Issuing Bank and each Related Party of any and all Indemnified Liabilities (to the extent not reimbursed by the Loan Parties), according to their respective Pro Rata Shares, and hold harmless such Indemnitee from and against any and all Indemnified Liabilities in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of any Related Party; provided, however, that no Lender shall be liable for the payment to any Related Party for any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Related Party’s own gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent and the Issuing Bank promptly upon demand for its ratable share of any out-of-pocket expenses (including all fees, expenses and disbursements of any law firm or other external counsel) incurred by the Administrative Agent or the Issuing Bank in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document, to the extent that the Administrative Agent or the Issuing Bank is not reimbursed for such by the Loan Parties. The undertaking in this Section shall survive termination of this Agreement, termination of the Revolving Commitments, the payment of all other Obligations and the resignation of the Administrative Agent.

     Section 9.09 Collateral and Guaranty Matters.

     (a) Each of the Secured Parties irrevocably authorizes the Administrative Agent, at its option and in its discretion, without the necessity of any notice to or further consent from any Secured Party:

     (i) to release any Lien on any property granted to or held by the Administrative Agent under any Security Document (i) upon termination of the Revolving Commitments and payment in full of all Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge), the termination or expiration of all Letters of Credit (other than Letters of Credit as to which the Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit or as to which other arrangements satisfactory to the Issuing Bank have been made), and the termination of all obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, the

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termination of all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable Swap Counterparty has advised the Administrative Agent in writing that it has received other collateral satisfactory to it), (ii) that is sold or to be sold as part of or in connection with any Disposition permitted hereunder or under any other Loan Document, or (iii) subject to Section 10.01, if approved, authorized or ratified in writing by the Required Lenders;

     (ii) to take any actions with respect to any Collateral or Security Documents which may be necessary to perfect and maintain Acceptable Security Interests in and Liens upon the Collateral granted pursuant to the Security Documents; and

     (iii) to take any action in exigent circumstances as may be reasonably necessary to preserve any rights or privileges of the Secured Parties under the Loan Documents or applicable Legal Requirements.

     (b) Upon the request of the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section 9.09; provided, however, that receipt of such confirmation shall not be a condition precedent to the effectiveness or validity of any such release and that the failure of any Lender to confirm such authority shall not limit the Administrative Agent’s authority to provide such release.

     (c) Each Loan Party hereby irrevocably appoints the Administrative Agent as such Loan Party’s attorney-in-fact, with full authority to, after the occurrence and during the continuance of an Event of Default, act for such Loan Party and in the name of such Loan Party to, in the Administrative Agent’s discretion upon the occurrence and during the continuance of an Event of Default, (i) file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of such Loan Party where permitted by law, (ii) to receive, endorse, and collect any drafts or other instruments, documents, and chattel paper which are part of the Collateral, (iii) to ask, demand, collect, sue for, recover, compromise, receive, and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (iv) to file any claims or take any action or institute any proceedings which the Administrative Agent may reasonably deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent with respect to any of the Collateral and (v) if any Loan Party fails to perform any covenant contained in this Agreement or the other Security Documents after the expiration of any applicable grace periods, the Administrative Agent may itself perform, or cause performance of, such covenant, and such Loan Party shall pay for the reasonable expenses of the Administrative Agent incurred in connection therewith in accordance with Section 10.04. The power of attorney granted hereby is coupled with an interest and is irrevocable.

     (d) The powers conferred on the Administrative Agent under this Agreement and the other Security Documents are solely to protect its interest, for the ratable benefit of the Secured Parties, in the Collateral and shall not impose any duty upon it to exercise any such powers unless expressly set forth herein or therein. Beyond the safe custody thereof, the Administrative Agent and each Lender shall have no duty with respect to any Collateral in its possession or control (or in the possession or

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control of any agent or bailee) or with respect to any income thereon or the preservation of rights against prior parties or any other rights pertaining thereto. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property. Neither the Administrative Agent nor any Lender shall be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehouseman, carrier, forwarding agency, consignee, broker or other agent or bailee selected by Borrower or selected by the Administrative Agent in good faith.

     (e) Notwithstanding anything contained in any of the Loan Documents to the contrary, the Loan Parties, the Administrative Agent, and each Secured Party hereby agree that no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranties, it being understood and agreed that all powers, rights and remedies hereunder and under the Security Documents may be exercised solely by Administrative Agent on behalf of the Secured Parties in accordance with the terms hereof and the other Loan Documents. By accepting the benefit of the Liens granted pursuant to the Security Documents, each Secured Party not party hereto hereby agrees to the terms of this paragraph (e).

     Section 9.10 No Other Duties, Etc. Anything herein to the contrary notwithstanding, the Arranger shall have no powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Bank.

ARTICLE X

MISCELLANEOUS

     Section 10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document (other than the Fee Letter), and no consent to any departure by the Borrower or any other Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall:

     (a) waive any condition set forth in Article III without the written consent of each Lender;

     (b) extend or increase the Revolving Commitment of any Lender (or reinstate any Revolving Commitment terminated pursuant to Section 7.02) without the written consent of such Lender;

     (c) postpone any date fixed by this Agreement for any mandatory reduction of the Revolving Commitments without the written consent of each Lender;

     (d) postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the

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Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

     (e) reduce the principal of, or the rate of interest specified herein on, any Revolving Advance or Reimbursement Obligation, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the prior written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to waive any obligation of the Borrower to pay interest at the Default Rate;

     (f) change Section 2.12 or any other provision of this Agreement in a manner that would alter the pro rata sharing of payments and any other right or obligation of the Lenders required by this Agreement without the written consent of each Lender;

     (g) change any provision of this Section, or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender directly affected thereby;

     (h) change the definition of “Borrowing Base”, “Fixed Charge Coverage Cap”, “Fixed Charge Coverage Cap Ratio”, the components thereof or the application thereof without the written consent of each Lender; or

     (i) release any Guarantor from the Guaranty or all or any material portion of the Collateral without the written consent of each Lender; provided, however, that any Guarantor or Collateral may be released if they are Disposed of as permitted hereunder;

and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Lenders required above, affect the rights or duties of the Issuing Bank under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iii) Section 10.06(g) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Revolving Advances are being funded by a SPC at the time of such amendment, waiver or other modification; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto; and provided, further, however, that the Revolving Commitment and outstanding Revolving Advances of, and participation interests in the Letter of Credit Exposure held or deemed held by, a Defaulting Lender, shall be disregarded for all purposes of any determination of whether the requisite Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 10.01); provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which by its terms affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

     Section 10.02 Notices, Etc.

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     (a) General. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (c) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail, sent by telecopier or (subject to subsection (c) below) electronic mail address as follows:

     (i) if to the Borrower or any other Loan Party, the Administrative Agent or the Issuing Bank, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and

     (ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Administrative Agent and the Borrower.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent and confirmed received. Notices delivered through electronic communications to the extent provided in paragraph (c) below, shall be effective as provided in said paragraph (c). In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder.

     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Legal Requirements, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent, the Lenders and the Issuing Bank. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

     (c) Limited Use of Electronic Mail. Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent in its sole discretion, provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Article II if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent and the Borrower that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by them, provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such

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notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

     (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Notices of Borrowing) given by or on behalf of a Loan Party even if such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

     Section 10.03 No Waiver; Cumulative Remedies. No failure on the part of any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided in this Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

     Section 10.04 Costs and Expenses. The Borrower shall pay (a) all reasonable out-of-pocket expenses incurred by the Administrative Agent (including the reasonable fees, charges and disbursements of one external primary counsel for the Administrative Agent and of one local counsel in each jurisdiction, if necessary (it being understood that the local counsel for any such jurisdiction shall, if reasonably acceptable to the Administrative Agent, be limited to any local counsel previously engaged by the Borrower in such jurisdiction, if applicable), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof, (b) all reasonable and customary out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (c) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Bank (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Bank), and shall pay all fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender or the Issuing Bank, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Revolving Advances made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or similar negotiations in respect of such Revolving Advances or Letters of Credit. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 10.04 shall be payable

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within 30 days after demand in writing therefor. The agreements in this Section shall survive the termination of this Agreement, the termination of the Revolving Commitments and repayment of all other Obligations.

     Section 10.05 Indemnification. The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses, or disbursements (including the reasonable fees, charges and disbursements of one external primary counsel and of one local counsel in each jurisdiction, if necessary (it being understood that the local counsel for any such jurisdiction shall, if reasonably acceptable to the Person to whom such Indemnitee is a Related Party, be limited to any local counsel previously engaged by the Borrower in such jurisdiction, if applicable) unless an Event of Default has occurred and is continuing, in which case, it shall include all fees, expenses and disbursements of any law firm or other external counsel and, without duplication, the allocated cost of internal legal services and all expenses and disbursements of internal counsel) of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against any Indemnitee in any way arising out of or in connection with (a) the execution, delivery, enforcement, performance, or administration of this Agreement, any Loan Document, or any other agreement, letter or instrument delivered by the Loan Parties in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Revolving Commitment, Revolving Advance or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (c) any action taken or omitted by the Administrative Agent or the Issuing Bank under this Agreement or any other Loan Document (including the Administrative Agent’s and the Issuing Bank’s own negligence), (d) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by the Borrower, any Subsidiary or any other Loan Party, or any Environmental Liability related in any way to the Borrower, any Subsidiary or any other Loan Party, or (e) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have been proximately caused by such Indemnitee’s own bad faith, gross negligence, willful misconduct, violation of law, or by reason of a claim by one or more other

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Indemnified Parties or equity interest owners of any Indemnified Party, so long as not proximately caused by any Loan Party or any Affiliate thereof.

     To the fullest extent permitted by applicable law, no party hereto or Indemnitee shall assert, and each party hereto and each Indemnitee hereby waives, any claim against any other party or Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Revolving Advance or Letter of Credit or the use of the proceeds thereof. No party hereto or any Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

     All amounts due under this Section 10.05 shall be payable within thirty days after written demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Revolving Commitments and the repayment, satisfaction or discharge of all the other Obligations.

     Section 10.06 Successors and Assigns.

     (a) Generally. The terms and provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lenders (unless otherwise expressly permitted herein) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) or (i) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (h) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. Notwithstanding anything herein to the contrary, the Borrower shall be permitted to assign is rights and obligations hereunder to Pride SpinCo, Inc., a Delaware corporation, in connection with the merger of Borrower into Pride SpinCo, Inc., in connection with the consummation of the Transaction, without the prior written consent of the Lenders.

     (b) Assignments by Lenders. Any Lender may assign to one or more Eligible Assignees all or any portion of its rights and obligations under this Agreement (including,

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without limitation, all or a portion of its Revolving Commitments, the Revolving Advances owing to it, and participations in Letter of Credit Obligations) at the time owing to it; provided, however, that:

     (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment and the Revolving Advances owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this Section) with respect to a Lender, the aggregate amount of the Revolving Commitments and Revolving Advances of such Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall not be less than $5,000,000, and, after giving effect thereto, the assigning Lender shall have Revolving Commitments and of at least $5,000,000, in each case unless otherwise agreed to by the Borrower and the Administrative Agent;

     (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance; and

     (iii) each Eligible Assignee (other than an Eligible Assignee that is a Lender or an Affiliate of a Lender) shall pay to the Administrative Agent a $3,500 processing and recording fee. Any such assignment need not be ratable as among the Facilities.

Upon satisfaction of clauses (i) – (iii) above, the Administrative Agent shall accept and record such Assignment and Assumption pursuant to paragraph (c) of this Section, and from and after the effective date specified in such Assignment and Acceptance, (A) the Eligible Assignee thereunder shall be a party hereto for all purposes and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (B) such assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of such Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.09, 2.11, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

     (c) Register. The Administrative Agent shall maintain at its Applicable Lending Office a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Revolving Commitments of, and principal amount of the Revolving Advances owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and each of the Loan Parties, the Administrative Agent, the Issuing Bank, and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by

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the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

     (d) Participations. Any Lender may at any time, without the consent of or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Revolving Commitment and/or the Revolving Advances (including such Lender’s participations in Letter of Credit Obligations) owing to it; provided that (i) such Lender’s obligations under this Agreement (including its Revolving Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that directly affects such Participant, in each case, to the extent subject to such participation. Subject to subsection (e) of this Section, the Borrower agree that each Participant shall be entitled to the benefits of Sections 2.08, 2.09, 2.11, 10.04 and 10.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 7.05 as though it were a Lender, to the extent of such participation, provided such Participant agrees to be subject to Section 2.12 as though it were a Lender.

     (e) A Participant shall not be entitled to receive any greater payment under Section 2.09 or 2.11 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’ prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.11 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.11(e) as though it were a Lender.

     (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender to a Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Board; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder (including its Revolving Commitment to the Borrower hereunder) or substitute any such pledgee or assignee for such Lender as a party hereto.

     (g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of any Advance that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall

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constitute a commitment by any SPC to fund any Advance, and (ii) if a SPC elects not to exercise such option or otherwise fails to make all or any part of such Revolving Advance, the Granting Lender shall be obligated to make such Revolving Advance pursuant to the terms hereof. Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement, (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Revolving Advance by a SPC hereunder shall utilize the Revolving Commitment of the Granting Lender to the same extent, and as if, such Revolving Advance were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or any portion of its right to receive payment with respect to any Advance to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Revolving Advances to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.

     (h) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Revolving Advances owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 10.06, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

     Section 10.07 Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any permitted assignee of or Participant in, or any prospective assignee of or

130

Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the prior written consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, “Information” means all information received from any Loan Party relating to any Loan Party or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party, provided that, in the case of information received from a Loan Party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

     Section 10.08 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

     Section 10.09 Survival of Representations, Etc. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Revolving Advance, and shall continue in full force and effect as long as any Revolving Advance or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

     Section 10.10 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     Section 10.11 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the Maximum Rate. If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Revolving Advances or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as

131

an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

     Section 10.12 Governing Law. This Agreement and each of the other Loan Documents shall be governed by and construed in accordance with the laws of the State of New York and the applicable laws of the United States of America.

     Section 10.13 Submission to Jurisdiction.

     (a) Any legal action or proceeding with respect to this Agreement or any other Loan Document may be brought in the courts of the state of New York sitting in New York City or of the United States of America for the Southern District of such state, and by execution and delivery of this Agreement, each of the Borrower, the Administrative Agent, each Lender and the Issuing Bank consents, for itself and in respect of its Property, to the non-exclusive jurisdiction of those courts. Each of the Borrower, the Administrative Agent, each Lender and the Issuing Bank irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of any Loan Document or other document related thereto. Each of the Borrower, the Administrative Agent, each Lender and the Issuing Bank waives personal service of any summons, complaint or other process, which may be made by any other means permitted by the law of such state.

     (b) Each Loan Party has, or will have on or prior to the Closing Date, irrevocably appointed CT Corporation System (the “Process Agent”), with an office on the date hereof at 111 Eighth Ave., New York, New York, 10011, as its agent to receive on its behalf and on behalf of its property service of copies of any summons or complaint or any other process which may be served in any action arising under any Loan Document. Such service may be made by mailing or delivering a copy of such process to such Loan Party in care of the Process Agent at the Process Agent’s above address, and each Loan Party hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. Each party hereto irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to it at the address specified for it on the signature pages of this Agreement.

     (c) Nothing in this Section 10.13 shall affect the right of any party hereto to serve legal process in any other manner permitted by law or affect the right of the parties hereto to bring any action or proceeding against any other party in the courts of any other jurisdiction.

     Section 10.14 Waiver of Jury. Each party to this Agreement hereby expressly and irrevocably waives any right to trial by jury of any claim, demand, action or cause of action arising under any Loan Document or in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to any Loan Document, or the transactions related thereto, in each case whether now existing or hereafter arising, and whether founded in

132

contract or tort or otherwise; and each party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that any party to this Agreement may file an original counterpart or a copy of this section with any court as written evidence of the consent of the signatories hereto to the waiver of their right to trial by jury.

     Section 10.15 Entire agreement . This Agreement and the other Loan Documents represent the final agreement among the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements among the parties.

[Remainder of this page intentionally left blank. Signature pages follow.]

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     EXECUTED as of the date first above written.

BORROWER:
SEAHAWK DRILLING, INC.
By: Name:	/s/ Randall D. Stilley Randall D. Stilley
Title:	President and CEO
PENINSULA DRILLING LLC
By: Name:	/s/ Steven A. Manz Steven A. Manz
Title:	Vice President
SEAHAWK DRILLING DE MEXICO LLC
By: Name:	/s/ Steven A. Manz Steven A. Manz
Title:	Vice President

Signature page to Revolving Credit Agreement
(Seahawk Drilling, Inc.)

ADMINISTRATIVE AGENT:
NATIXIS, NEW YORK BRANCH, as Administrative Agent
By: Name:	/s/ Carlos Quinteros Carlos Quinteros
Title:	Director
By: Name:	/s/ Donovan C. Broussard Donovan C. Broussard
Title:	Managing Director
LENDERS:
NATIXIS, NEW YORK BRANCH
By: Name:	/s/ Carlos Quinteros Carlos Quinteros
Title:	Director
By: Name:	/s/ Donovan C. Broussard Donovan C. Broussard
Title:	Managing Director

Signature page to Revolving Credit Agreement
(Seahawk Drilling, Inc.)

CITIBANK, INC.
By:	/s/ Robert Malleck
	Robert Malleck
	Director

Signature page to Revolving Credit Agreement
(Seahawk Drilling, Inc.)

UBS LOAN FINANCE LLC
By: Name:	/s/ Marie Haddad Marie Haddad
Title:	Associate Director
By: Name:	/s/ Irja R. Otsa Irja R. Otsa
Title:	Associate Director

Signature page to Revolving Credit Agreement
(Seahawk Drilling, Inc.)

ENCORE BANK, N.A.
By: Name:	/s/ J David Webster J David Webster
Title:	Senior Vice President

Signature page to Revolving Credit Agreement
(Seahawk Drilling, Inc.)

EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]¹ Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]² Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] ³ hereunder are several and not joint.] ⁴ Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the facility identified below (including without limitation any letters of credit and guarantees included in such facility) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly

1	For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.
2	For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.
3	Select as appropriate.
4	Include bracketed language if there are either multiple Assignors or multiple Assignees.

Exhibit A — Form of Assignment and Acceptance
Page 1 of 7

provided in this Assignment and Acceptance, without representation or warranty by [the][any] Assignor.

1.	Assignor[s]:
2.	Assignee[s]:
	[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]
3.	Borrower:	SEAHAWK DRILLING, INC.
4.	Administrative Agent:	NATIXIS, NEW YORK BRANCH, as the administrative agent under the Credit Agreement
5.	Credit Agreement:	Revolving Credit Agreement dated August __, 2009 among Borrower, certain Subsidiaries thereof, as Guarantors, the Lenders party thereto from time to time, and Natixis, New York Branch, as Administrative Agent.
6.	Assigned Interest[s]:

				Percentage
		Aggregate Amount of		Assigned of
		Revolving	Amount of Revolving	Revolving
		Commitments /	Commitment /	Commitment /
		Revolving Advances	Revolving Advances	Revolving		CUSIP
Assignor[s]	Assignee[s]	for all Lenders	Assigned5	Advances6		Number
		$	$		%
		$	$		%
		$	$		%

5	Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
6	Set forth, to at least 9 decimals, as a percentage of the Revolving Commitment / Revolving Advances of all Lenders thereunder.

Exhibit A — Form of Assignment and Acceptance
Page 2 of 7

7. Trade Date: ⁷

Effective Date: ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

⁷ To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

Exhibit A — Form of Assignment and Acceptance
Page 3 of 7

The terms set forth in this Assignment and Acceptance are hereby agreed to:

ASSIGNOR[S]⁸
[NAME OF ASSIGNOR]

By:

Name:

Title:

[NAME OF ASSIGNOR]

By:

Name:

Title:

ASSIGNEE[S]
[NAME OF ASSIGNEE]

By:

Name:

Title:

[NAME OF ASSIGNEE]

By:

Name:

Title:

⁸ Add additional signature blocks as needed.

Exhibit A — Form of Assignment and Acceptance
Page 4 of 7

[Consented to and] ⁹ Accepted:

NATIXIS, NEW YORK BRANCH, as Administrative Agent

By:

Name:

Title:

[Consented to:] ¹⁰

SEAHAWK DRILLING, INC.

By:

Name:

Title:

9	To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.
10	To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

Exhibit A — Form of Assignment and Acceptance
Page 5 of 7

Annex 1
To Exhibit A — Assignment and Acceptance

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE

1. Representations and Warranties.

1.1 Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, or its respective Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, its Subsidiaries or Affiliates or any other Person of any of its obligations under any Loan Document.

1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06 of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06 of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.06(a) or Section 5.06(b) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, and (vii) if it is not incorporated under the laws of the United States of America or a state thereof, attached to the Assignment and Acceptance is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan

Exhibit A — Form of Assignment and Acceptance
Page 6 of 7

Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or after the Effective Date. The Assignor[s] and the Assignee[s] shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.

3. General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.

Exhibit A — Form of Assignment and Acceptance
Page 7 of 7

EXHIBIT B
FORM OF ASSIGNMENT OF EARNINGS
(this “Assignment”)

     Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), the owner of the vessels listed on Schedule I attached hereto (the “Vessels”), in consideration of One Dollar and No/100 ($1.00) in lawful money of the United States of America and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, (a) has sold, assigned, transferred and set over, and by this instrument does sell, assign, transfer and set over unto Natixis, New York Branch, as administrative agent (in such capacity as administrative agent, the “Assignee”) under that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc. a Delaware corporation (the “Borrower”), as borrower, certain of its Subsidiaries as Guarantors, including the Assignor (collectively with the Borrower, the “Loan Parties”), the Assignee, as administrative agent, and the Lenders, and unto the Assignee’s successors and permitted assigns, to its and its successors’ and permitted assigns’ own proper use and benefit and (b) does hereby grant to the Assignee a security interest in, in each case for the ratable benefit of the Secured Parties (as defined under the Credit Agreement) and as collateral security for the payment of the Obligations and the performance and observance of all agreements, covenants and provisions contained in this Assignment, the other Loan Documents and any Swap Contracts with any Swap Counterparty (as defined in the Credit Agreement), all the right, title, interest, claim and demand of the Assignor in and to (i) all freights, hire and other moneys earned and to be earned, due or to become due, or paid or payable to, or for the account of, the Assignor, of whatsoever nature, arising out of or as a result of the use, operation, pooling or chartering by the Assignor or its agents of the Vessels, including, without limitation, all rights arising out of the owner’s lien on cargoes and subfreights thereunder, (ii) all moneys and claims for moneys due and to become due to the Assignor, and all claims for damages, arising out of the breach of any and all present and future drilling contracts, charter parties, pooling arrangements, bills of lading, contracts and other engagements of affreightment or for the carriage or transportation of cargo, and operations of every kind whatsoever of any Vessel and in and to any and all claims and causes of action for money, loss or damages that may accrue or belong to the Assignor, its successors or assigns, arising out of or in any way connected with the present or future use, operation, pooling or chartering of any Vessel or arising out of or in any way connected with any and all present and future requisitions, drilling contracts, charter parties, pooling arrangements, bills of lading, contracts and other engagements of affreightment or for the carriage or transportation of cargo, and other operations of any Vessel, (iii) all moneys and claims due and to become due to the Assignor, and all claims for damages and all insurances and other proceeds, in respect of the actual or constructive total loss of or requisition of use of or title to any Vessel, and (iv) any proceeds of any of the foregoing and all interest and earnings from the investment of any of the foregoing and the proceeds thereof. Capitalized terms used herein and not otherwise defined shall be used herein as defined in the Credit Agreement.

     Section 1. Representations and Warranties. The Assignor hereby represents and warrants to the Assignee, as an inducement to the Assignee to accept this Assignment, that neither the whole nor any part of the right, title and interest hereby assigned is the subject of any

present assignment, security interest or pledge other than any assignments for the benefit of the Assignee and Excepted Liens.

     Section 2. Covenants. The Assignor hereby covenants to the Assignee that:

          (a) If an Event of Default shall have occurred and be continuing under the Credit Agreement and without derogation of the rights of the Assignee under Section 4 hereof to issue instructions to the charterers and other obligors directly, the Assignor shall specifically authorize and direct each charterer or other obligor to make payment of all of the freights, hire and other moneys hereby assigned and becoming due and payable during such period directly to the Assignee in accordance with the Loan Documents, and shall deliver to the Assignee the written acknowledgment of such charterer or other obligor of such instructions. Notwithstanding anything to the contrary, the Assignor and the Assignee hereby agree that so long as no Event of Default shall have occurred and be continuing, the Assignor shall be entitled to receive and retain any and all moneys otherwise assigned hereunder.

     (b) (i) The Assignor shall notify the Assignee promptly of any and all bareboat charter parties, time charter parties or series of successive voyage charter parties, drilling contracts, contracts of affreightment or pooling arrangements entered into by the Assignor respecting any Vessel having an indicated duration of at least three months (including any exercised optional extensions or renewals) and, upon the Assignee’s request, any other charter party or any such other agreement. The Assignor shall also provide the Assignee with a true and complete copy of such agreements specified in this paragraph (b) upon the Assignee’s request.

          (ii) In connection with any charter party having an indicated duration of at least six months (including any optional extensions or renewals) the Assignor shall, at its own cost and expense, promptly and duly execute and deliver to the Assignee a charter assignment in respect of such charter party substantially in the form attached hereto as Exhibit A (the “Charter Assignment”), and will use commercially reasonable efforts to cause the charterer under such charter party to execute and deliver to the Assignee a consent to the Charter Assignment substantially in the form attached hereto as Exhibit B. In addition to the Charter Assignment, the Assignor shall execute any further assignments of its rights, titles and interests pursuant to any and all agreements referred to in paragraphs (i) and (ii) of this Section 2(b), as the Assignee may reasonably require.

          (iii) The Assignor will grant the Assignee an assignment, substantially in the form of the Charter Assignment, mutatis mutandis, respecting each contract of affreightment, pooling arrangement, or drilling contract it enters into having an indicated duration of at least six months (including any optional renewals or extensions), and will use commercially reasonable efforts to cause the obligor under such contract of affreightment, pooling arrangement, or drilling contract to execute and deliver to the Assignee a consent to such assignment substantially in the form attached hereto as Exhibit B.

     (c) So long as this Assignment is in effect, the Assignor shall not assign, grant a security interest in or pledge the whole or any part of the right, title and interest hereby

assigned to anyone other than the Assignee, its successors, endorsees and/or permitted assigns without the prior written consent of the Assignee and the Assignor shall not take or omit to take any action, the taking or omission of which might result in any material alteration or impairment of this Assignment or any of the rights created by this Assignment.

     (d) The Assignor covenants and agrees with the Assignee that the Assignor will (i) duly perform and observe all of the terms and provisions of any drilling contract, charter, contract of affreightment or pooling arrangement on the part of such Assignor to be performed or observed; and (ii) clearly record on the books and records of the Assignor notations of this Assignment.

     (e) At any time and from time to time, upon the written request of the Assignee, the Assignor shall promptly and duly execute and deliver any and all such further instruments and documents as the Assignee may reasonably request in order to obtain the full benefits of this Assignment and the rights and powers herein granted.

     (f) Whenever requested by the Administrative Agent, the Assignor shall promptly deliver letters to each of its agents and representatives into whose hands or control may come any earnings, moneys and property hereby assigned, informing each such addressee of this Assignment, and if any Event of Default has occurred and is continuing, instructing such addressee to remit or deliver promptly to the Assignee all earnings, moneys and property hereby assigned which become due and payable during such period may come into the addressee’s hands or control and to continue to make such remittances or delivery until such time as the addressee may receive written notice or instructions to the contrary direct from the Assignee. Each such addressee shall acknowledge directly to the Assignee receipt of the Assignor’s letter of notification and instructions.

     (g) The Assignor will receive substantial, direct and indirect, benefits through the extension of credit to the Borrower under the terms of the Credit Agreement and related documents and such transactions and documents are necessary or convenient to the conduct, promotion or attainment of the Assignor’s business.

     Section 3. Freedom of Assignee from Obligations. It is hereby expressly agreed that anything herein contained to the contrary notwithstanding, the Assignee shall have no obligation or liability under any drilling contract, charter, contract of affreightment or pooling arrangement by reason of or arising out of this Assignment, nor shall the Assignee be required or obligated in any manner to perform or to fulfill any obligations of the Assignor under or pursuant to any drilling contract, charter, contract of affreightment or pooling arrangement nor to make any payment, nor to make any inquiry as to the nature or sufficiency of any payment received by the Assignee or to present or file any claim, or to take any other action to collect or enforce the payment of any amounts which may have been assigned to it or which it may be entitled to hereunder at any time or times.

     Section 4. Payment Directions to Charterers; Power of Attorney; Financing Statements. Upon the occurrence and during the continuance of an Event of Default, the Assignee shall be entitled to direct the charterers and other obligors to pay all moneys assigned hereunder to such bank account in New York City or elsewhere as the Assignee may from time

to time designate. Any payments made to the Assignee pursuant to the terms of this Assignment shall be applied in accordance with the provisions of the Credit Agreement. Upon request of the Assignor, the Assignee shall furnish the Assignor with information from time to time as to the accounts into which moneys assigned hereunder are paid, the amounts and sources of such payments and the amounts and application of moneys withdrawn therefrom. The Assignee, its successors and permitted assigns, are hereby constituted lawful attorneys of the Assignor, irrevocably and coupled with an interest, with full power (in the name of the Assignor or otherwise), to ask, require, demand, receive, compound and give acquittance for any and all moneys, claims, property and rights hereby assigned, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Assignee may deem to be necessary or advisable in the premises, in each case during the continuance of an Event of Default. During the continuance of a Default or Event of Default, any action or proceeding brought by the Assignee pursuant to any of the provisions hereof or of any drilling contract, charter, contract of affreightment, pooling arrangement or otherwise, and any claim made by the Assignee hereunder or under any drilling contract, charter, contract of affreightment or pooling arrangement, may be compromised, withdrawn or otherwise dealt with by the Assignee without any notice to, or approval of, the Assignor. The Assignor hereby irrevocably authorizes the Assignee to file, at any time and from time to time, at the Assignor’s expense, such financing and continuation statements or papers of similar purpose or effect relating to this Assignment, without the Assignor’s signature, as the Assignee at its option may deem appropriate and appoints the Assignee as the Assignor’s attorney-in-fact to execute any such statements in the Assignor’s name and to perform all other acts which the Assignee may deem appropriate to perfect and continue the security interest conferred hereby.

     Section 5. Irrevocable Assignment. The powers and authority granted to the Assignee herein have been given for a valuable consideration and are hereby declared to be irrevocable and may not be amended or waived except by an instrument in writing signed by the party against whom enforcement is sought.

     Section 6. Governing Law; Waiver of Jury Trial.

          (a) This Assignment shall be construed in accordance with and governed by the laws of the State of New York, United States of America without regard to its conflict of laws rules (other than Section 5-1401 of the New York General Obligations Law). Each of the Assignor and the Assignee hereby irrevocably submits itself to the non-exclusive jurisdiction of any court of the state of New York sitting in New York City or of the United States of America for the Southern District of such state, and any appellate court from any thereof, for the purposes of (and solely for the purposes of) any suit, action or other proceeding arising out of, or relating to, this Assignment or any of the transactions contemplated hereby, hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard in such New York State or Federal court and hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason whatsoever, that such suit, action or proceeding is brought in an inconvenient forum, or that the venue of such suit, action or proceeding is improper, or that this Assignment or the subject matter hereof may not be enforced in or by such courts. Each of the Assignor and the Assignee irrevocably consents to the service

of any and all process in any suit, action or proceeding arising out of or relating to any other Loan Document to which such Person is a party by the mailing of copies of such process to such Person at its address specified in Section 10.02 of the Credit Agreement. Each of the Assignor and the Assignee agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this paragraph shall affect the right of the Assignee or the Assignor to serve legal process in any other manner permitted by law or affect the right of such Person to bring any action or proceeding against the Assignor or the Assignee, as the case may be, or any of its property in the courts of any other jurisdiction.

          (b) BY ITS SIGNATURE BELOW WRITTEN EACH OF THE ASSIGNOR AND THE ASSIGNEE HEREBY IRREVOCABLY WAIVES UNDER APPLICABLE LAW ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS ASSIGNMENT, THE CREDIT AGREEMENT, THAT CERTAIN FIRST PREFERRED FLEET MORTGAGE EFFECTIVE AS OF [DATE], IN RESPECT OF THE VESSEL (THE “MORTGAGE”), OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     Section 7. Notices. All notices and other communications hereunder shall be in writing and shall be mailed, sent or delivered in accordance with Section 10.02 of the Credit Agreement.

     Section 8. Headings. The division of this Assignment into sections and the insertion of headings are for convenience of reference only and shall not affect the interpretation or construction of this Assignment.

     Section 9. Termination. This Assignment shall create a continuing security interest and shall (a) remain in full force and effect until the payment in full in cash of the Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge), the termination or expiration of all Letters of Credit (other than Letters of Credit as to which the Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit or as to which other arrangements satisfactory to the Issuing Bank have been made), and the termination of all obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, the termination of all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable Swap Counterparty has advised the Assignee in writing that it has received other collateral satisfactory to it), and the termination or expiration of the Revolving Commitments, at which time this Assignment shall automatically terminate and be of no further force or effect, without any further action by any party, (b) be binding upon the Assignor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Assignee hereunder, to the benefit of and be binding upon, the Assignee and the Lenders and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause, when any Secured Party assigns or otherwise transfers any interest held by it under the Credit Agreement or other Loan Document to any other Person pursuant to the terms of the Credit Agreement or such other Loan Document, that other Person shall thereupon become vested with all the benefits held by such Secured Party under this Assignment.

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     IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed this ___day of                                          .

SEAHAWK DRILLING, LLC

By:

Name:

Title:

The terms and conditions of this Assignment are hereby

ACCEPTED BY:

NATIXIS, NEW YORK BRANCH, as Administrative Agent

By:

Name:

Title:

By:

Name:

Title:

SCHEDULE I

Description of Vessels

OWNER	VESSEL	OFF. NO	FLAG OF DOCUMENTATION
Seahawk Drilling, LLC	Seahawk 2000	1520	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2001	1542	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2002	1521	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2004	1463	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2005	1489	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2007	1721	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2501	1826	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2503	1828	Republic of Vanuatu
Seahawk Drilling LLC	Seahawk 2504	567686	United States
Seahawk Drilling, LLC	Seahawk 2505	1829	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2600	1488	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2601	1827	Republic of Vanuatu
Seahawk Drilling LLC	Seahawk 2602	652045	United States
Seahawk Drilling, LLC	Seahawk 3000	1830	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 800	1831	Republic of Vanuatu

Exhibit A

ASSIGNMENT OF [TIME] CHARTER
(this “Assignment”)

[Vessel Name]

     Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), in consideration of One Dollar and No/100 ($1.00) in lawful money of the United States of America and for other good and valuable consideration, the receipt of which is hereby acknowledged, has sold, assigned, transferred and set over, and does hereby sell, assign, transfer and set over unto Natixis, New York Branch as administrative agent (in such capacity as administrative agent, the “Assignee”), for the ratable benefit of the Secured Parties defined under that certain Revolving Credit Agreement dated as of August ___, 2009 (as such agreement may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower, certain of its Subsidiaries as Guarantors, including the Assignor (collectively, with the Assignor, the “Loan Parties”), the Assignee, as Administrative Agent, and the Lenders, unto the Assignee’s successors and permitted assigns, to its and its successors’ and permitted assigns’ own proper use and benefit for all as collateral security for the payment of the Obligations (as defined in the Credit Agreement), and to secure as well the performance and observance of all agreements, covenants and provisions contained in this Assignment, the other Loan Documents, and any Swap Contracts with any Swap Counterparty (as defined in the Credit Agreement), all the right, title and interest of the Assignor in and to: (i) that certain [Time] Charter Party dated                     , ___, between the Assignor and [Charterer], a [state of organization] company, as charterer (the “Charterer”), with respect to the Assignor’s [                    ] flag vessel [vessel name] (said vessel or any vessel hereafter substituted therefor under said [Time] Charter Party being herein called the “Vessel”), as said [Time] Charter Party may heretofore or hereafter be amended from time to time or extended or renewed (said [Time] Charter Party as heretofore or hereafter amended or extended or renewed being hereinafter called the “Charter”), including, without limitation, within such assignment the right to receive all moneys due and to become due under the Charter and all rights arising out of the owner’s lien on cargoes and subfreights thereunder, all claims for damages arising out of the breach thereof and the right of the Assignor to terminate the Charter, to perform thereunder and to compel performance of the terms thereof; and (ii) all moneys and claims for moneys due and to become due to the Assignor, and all claims for damages and all insurance and other proceeds in respect of, the actual or constructive loss of, or the requisition (whether of title or use), condemnation, sequestration, seizure, forfeiture or other taking of, the Vessel.

     It is expressly agreed that anything herein contained to the contrary notwithstanding, (i) the Assignor shall remain liable under the Charter to perform all the obligations assumed by it thereunder, (ii) the obligations of the Assignor under the Charter may be performed by the Assignee or its nominee or other permitted assignee from the Assignee without releasing the Assignor therefrom and (iii) the Assignee shall have no obligation or liability under the Charter by reason of, or arising out of, this Assignment and shall not be obligated to perform any of the obligations of the Assignor under the Charter, or to make any payment or to make any inquiry of

the sufficiency of any payment received by it, or to present or file any claim or to take any other action to collect or enforce any payment assigned hereunder.

     While this Assignment is in effect, the Assignor does hereby constitute the Assignee, its successors and permitted assigns, the Assignor’s true and lawful attorney, irrevocably and coupled with an interest, with full power (in the name of the Assignor or otherwise) to, during the period when an Event of Default is continuing, ask, require, demand, receive, compound and give acquittance for any and all moneys and claims for money due and to become due under, or arising out of, the Charter or otherwise assigned hereunder, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings in connection therewith all as and to the extent permitted in the Credit Agreement.

     Notwithstanding anything to the contrary, so long as no Event of Default shall have occurred and be continuing under the Credit Agreement, the Assignor shall be entitled to receive and retain any and all moneys otherwise assigned hereunder. If an Event of Default shall have occurred and has not been cured or waived, the Assignor shall specifically authorize and direct the Charterer or other obligor to make payment of all of the moneys hereby assigned directly to the Assignee in accordance with the Credit Agreement and the other Loan Documents, and shall use commercially reasonable efforts to deliver to the Assignee the written acknowledgment of the Charterer or obligor of such instructions.

     The Assignor agrees that at any time and from time to time, upon the written request of the Assignee, the Assignor will promptly and duly execute and deliver any and all such further instruments and documents as the Assignee may reasonably request or as shall be necessary for the Assignee to obtain the full benefits of this Assignment and of the rights and powers herein granted, including, without limitation, the execution and delivery of such Uniform Commercial Code financing and continuation statements and the filing thereof in such jurisdictions as shall be appropriate. To the extent permitted by applicable law, the Assignor hereby authorizes the Assignee to execute and file any such financing or continuation statements without necessity of the signature of the Assignor.

     The Assignor does hereby represent and warrant that the Charter is in full force and effect and is enforceable in accordance with the terms thereof, that the Assignor is not in default thereunder and that to Assignor’s knowledge, the Charterer has no claims against the Assignor thereunder. The Assignor does hereby further represent and warrant that at present there is not in effect any assignment or pledge of, and hereby covenants that the Assignor will not assign, pledge, or (other than Excepted Liens) suffer to exist any lien, charge, security interest, or encumbrance, or any other type of preferential arrangement, upon or with respect to, so long as this instrument of Assignment shall remain in effect, the whole or any part of the rights hereby assigned, to anyone other than the Assignee, its successors or permitted assigns.

     This Assignment shall create a continuing security interest and shall (a) remain in full force and effect until the earlier to occur of (i) the date prior to or upon which all of the following shall have occurred: (A) payment in full in cash of the Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge), (B) the termination or expiration of all Letters of Credit and the termination of all obligations of the Issuing Bank and

the Lenders in respect of Letters of Credit, (C) the termination of all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap Contracts, and (D) the termination or expiration of the Revolving Commitments, and (ii) the termination of the Charter, at which time this Assignment shall automatically terminate, and be of no further force or effect, without any further action by any party, (b) be binding upon the Assignor and its successors, transferees and assigns that are permitted pursuant tot the terms of the Credit Agreement, and (c) inure, together with the rights and remedies of the Assignee hereunder, to the benefit of and be binding upon, the Assignee and the Lenders and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause, when any Secured Party assigns or otherwise transfers any interest held by it under the Credit Agreement or other Loan Document to any other Person pursuant to the terms of the Credit Agreement or such other Loan Document, that other Person shall thereupon become vested with all the benefits held by such Secured Party under this Assignment.

     This Assignment and the Agreement and Consent to Assignment annexed hereto may be executed by the Assignor and the Charterer under the Charter in separate counterparts without in any way adversely affecting the validity of said Agreement and Consent to Assignment. Prior to entering into the Charter, the Assignor has caused the Charterer to execute and deliver to the Assignee such Agreement and Consent to Assignment.

     This Assignment shall be governed by and construed in accordance with the laws of the State of New York and the United States of America, without regard to its conflict of laws rules (other than Section 5-1401 of the New York General Obligations Law). Each of the Assignor and the Assignee hereby irrevocably submits itself to the non-exclusive jurisdiction of any New York State or Federal court sitting in New York County and any appellate court from any thereof, for the purposes of (and solely for the purposes of) any suit, action or other proceeding arising out of, or relating to, this Assignment or any of the transactions contemplated hereby. The Assignor irrevocably agrees that all claims in respect of such action or proceeding may be heard in such New York State or Federal court and hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason whatsoever, that such suit, action or proceeding is brought in an inconvenient forum, or that the venue of such suit, action or proceeding is improper, or that this Assignment or the subject matter hereof may not be enforced in or by such courts. Each of the Assignor and Assignee irrevocably consents to the service of any and all process in any suit, action or proceeding arising out of or relating to any other Loan Document to which such Person is a party by the mailing of copies of such process to such Person at its address specified in the Credit Agreement. Each of the Assignor and the Assignee agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this paragraph shall affect the right of the Assignee or the Assigneor to serve legal process in any other manner permitted by law or affect the right of such Person to bring any action or proceeding against the Assignor or the Assignee, as the case may be, or its property in the courts of any other jurisdiction.

     Capitalized terms used herein and not otherwise defined shall be used herein as defined in the Credit Agreement.

     BY ITS SIGNATURE BELOW WRITTEN EACH OF THE ASSIGNOR AND THE ASSIGNEE HEREBY IRREVOCABLY WAIVES UNDER APPLICABLE LAW ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS ASSIGNMENT, THE CREDIT AGREEMENT, THE MORTGAGE, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

[Remainder of page intentionally left blank]

     IN WITNESS WHEREOF, the Assignor has caused this instrument of Assignment to be duly executed as of the [                    ] day of [                    ], 20_.

SEAHAWK DRILLING, LLC

By:

Name:

Title:

Exhibit B

Notice of Assignment of [Time] Charter

and

AGREEMENT AND CONSENT TO ASSIGNMENT

To: [Charterer]

[VESSEL NAME]

We refer to the [time] charter party dated                     ,                     , as amended, made between us, Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), and you, [Charterer], by which we agreed to let and you agreed to take on [time] charter for the period and on the terms and conditions set out in the Charter the [Vessel Name] of about [                    ] net tons and [                    ] gross tons registered in our name under the [                    ] flag.

We hereby give you notice of the following, and you by your execution and delivery of this Agreement and Consent to Assignment hereby agree to the following:

1.	By an assignment (the “Assignment”, the defined terms therein being used herein as therein defined) dated                      (a copy of which is attached hereto) made between us and the Administrative Agent referred to therein, we have, as collateral security for the payment and performance of certain obligations from time to time owned and owing to the Administrative Agent and certain other entities, sold, assigned, transferred and set over unto the Administrative Agent all our right, title and interest in and to the Charter (as such term is defined in the attached Assignment) and in and to certain moneys and claims for moneys due and to become due to us (all as more fully described in the Assignment).
2.	You are hereby irrevocably authorized and instructed, upon your receipt of written notice from the Administrative Agent an Event of Default is continuing, to pay, and agree that you will make payment of, all such moneys payable by you under the Charter to such place as the Administrative Agent may from time to time direct.
3.	We shall remain liable to perform all our obligations under the Charter and the Administrative Agent shall not be under any obligation under the Charter, but should the Administrative Agent exercise its right to perform, or cause performance by its designee of, our obligations under the Charter, you agree, without thereby releasing us from our obligations under the Charter, to accept such performance.
4.	You consent to such assignment, and agree that, upon receipt of written notice from the Administrative Agent, you will make payment of all moneys due and to become due under the Charter, without setoff or deduction for any claim not arising under the Charter, direct to the account specified by the Administrative Agent at such address as the Administrative Agent shall request the undersigned in writing until receipt of written notice from the Administrative Agent that all obligations of the Assignor to it have been paid in full. You agree that you shall not seek the recovery of any payment actually made

by you to the Administrative Agent pursuant to this Agreement and Consent to Assignment once such payment has been made. You hereby waive the right to assert against the Administrative Agent, as assignee of the Assignor, any claim, defense, counterclaim or setoff that you could assert against the Assignor under the Charter. This provision shall not be construed to relieve the Assignor of any liability to the Charterer.

5. You agree that the Administrative Agent shall be entitled to exercise any and all rights and remedies of the Assignor under the Charter in accordance with the terms of the Assignment and under the First Preferred Fleet Mortgage dated                     , ___, 2009 (the “Mortgage”) by the Assignor to Natixis, New York Branch, as Administrative Agent, and you shall comply in all respects with such exercise. You agree that the Charter, including, without limitation, all of your liens thereunder, shall be subordinated in all respects to the lien of the Mortgage in favor of the Administrative Agent and or trustee on the Vessel, and, at the option of the Administrative Agent, foreclosure under the Mortgage shall terminate such Charter and such liens and divest you and your subcharterers of all right, title and interest in and to the Vessel. You agree that each subcharter of the Vessel shall be subordinate in all respects to the lien of the Mortgage.

6. You hereby agree that, so long as the Obligations shall be outstanding:

(a)	Upon the request of the Administrative Agent from time to time, you shall provide to the Administrative Agent such information as the Administrative Agent may reasonably request regarding the Vessel and its use, including but not limited to the terms of each subcharter thereof, the subcharter party, the routes plied and to be plied by such Vessel and its scheduled arrival and departure from each port on such route.
(b)	You covenant and agree with the Administrative Agent that you will (i) duly perform and observe all of the terms and provisions of any charter or contract of affreightment on your part to be performed or observed; and (ii) clearly record on your books and records notations of the Assignment.
(c)	At any time and from time to time, upon the written request of the Administrative Agent, you shall promptly and duly execute and deliver any and all such further instruments and documents as the Administrative Agent may reasonably request in order to carry out the terms of the Assignment.
(d)	Whenever requested by the Administrative Agent, you shall deliver letters to each of your agents and representatives into whose hands or control may come any earnings, moneys and property assigned by the Assignment, informing each such addressee of such assignments and, if you have been notified by Administrative Agent that any Event of Default has occurred, instructing such addressee to remit or deliver promptly to the Administrative Agent all earnings, moneys and property hereby assigned which may come into the addressee’s hands or control and to continue to make such remittances or delivery until such time as the addressee may receive written notice or instructions to the contrary directly from the Administrative Agent. You shall instruct each such addressee to acknowledge

directly to the Administrative Agent receipt of your letter of notification and instructions.

7.

Your acknowledgement and consent hereunder, and your agreements herein contained, are for the benefit of the Administrative Agent and the Secured Parties and shall be enforceable by the Administrative Agent for its benefit and the benefit of the Secured Parties.

8.

This Assignment shall create a continuing security interest and shall (a) remain in full force and effect until the earlier to occur of (i) notification to you from the Administrative Agent that the payment in full in cash of the Obligations, the termination or expiration of all Letters of Credit that are not fully secured in such amounts as may be required by the Credit Agreement and the termination or expiration of the Revolving Commitments, and (ii) the termination of the Charter, at which time the Assignment shall automatically terminate, and be of no further force or effect, without any further action by any party, (b) be binding upon the Assignor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Assignee hereunder, to the benefit of and be binding upon, the Assignee and the Lenders and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause, when any Secured Party assigns or otherwise transfers any interest held by it under the Credit Agreement or other Loan Document to any other Person pursuant to the terms of the Credit Agreement or such other Loan Document, that other Person shall thereupon become vested with all the benefits held by such Secured Party under this Assignment.

The authorizations and instructions by us in this Agreement and Consent to Assignment cannot be revoked or varied by us without the Administrative Agent’s prior written consent.

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]

For and on behalf of:

SEAHAWK DRILLING, LLC

By:

Name:

Title:

Dated:

To: SEAHAWK DRILLING,LLC AND NATIXIS, NEW YORK BRANCH

In consideration of the [Time] Charter, and for other good and valuable consideration, the receipt of which is hereby acknowledged, we hereby agree to the terms set out above and consent to, and agree to be bound by, the Assignment.

For and on behalf of

[CHARTERER]

By:

Name:

Title:

Dated:

EXHIBIT C
FORM OF ASSIGNMENT OF INSURANCE
(this “Assignment”)

     Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), the owner of the vessels listed on Schedule I attached hereto (the “Vessels”), in consideration of One Dollar and no/100 ($1.00) in lawful money of the United States of America and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, has sold, assigned, transferred and set over, and by this instrument does sell, assign, transfer and set over unto Natixis, New York Branch, as administrative agent (in such capacity as administrative agent, the “Assignee”), for the ratable benefit of the Secured Parties defined under that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower, certain of its Subsidiaries as Guarantors, including the Assignor (collectively with the Borrower, the “Loan Parties”), the Assignee, as Administrative Agent, and the Lenders (as defined therein), and unto the Assignee’s successors and permitted assigns, to its and its successors’ and permitted assigns’ own proper use and benefit, and, as security for the payment of the Obligations (as defined in the Credit Agreement), and to secure as well the performance and observance of all agreements, covenants and provisions contained in this Assignment, the other Loan Documents and any Swap Contracts with any Swap Counterparty (as defined in the Credit Agreement), all right, title and interest of the Assignor under, in and to (i) all insurance policies and contracts of insurance in respect of the Vessels, whether heretofore, now or hereafter effected, and all renewals of or replacements for the same (the “Insurances”), (ii) all claims, returns of premium and other moneys and claims for moneys due and to become due under or in respect of the Insurances, (iii) all other rights of the Assignor under or in respect of the Insurances to the extent transferable and (iv) any proceeds of any of the foregoing, save and except from the scope of the preceding clauses (i) through (iii), any of the same that does not constitute Collateral as defined in the Security Agreement, and as so defined, herein so used. Capitalized terms used herein and not otherwise defined are used herein as defined in the Credit Agreement.

     Section 1. Representations, Warranties and Covenants. The Assignor covenants and agrees that it will receive substantial, direct and indirect, benefits through the extension of credit to the Borrower under the terms of the Credit Agreement and related documents and that such transactions and documents are necessary or convenient to the conduct, promotion or attainment of the Assignor’s business. The Assignor hereby warrants and represents that each of the Insurances is in full force and effect and is enforceable in accordance with its terms, and that the Assignor is not in default thereunder. The Assignor hereby further warrants and represents that it has not assigned, pledged or in any way created or (other than Excepted Liens) suffered to be created any security interest in the whole or any part of the right, title and interest hereby assigned, except for the assignment to the Assignee. The Assignor hereby covenants that, without the prior written consent thereto of the Assignee, so long as this Assignment shall remain in effect, it will not assign or pledge the whole or any part of the right, title and interest hereby assigned to anyone other than the Assignee, its successors or permitted assigns, and it will not take or omit to take any action, the taking or omission of which might result in an alteration or

Exhibit C — Form of Assignment of Insurance
Page 1 of 8

impairment of the Insurances in any material respect, or of this Assignment or of any of the rights created by the Insurances or this Assignment.

     The Assignor hereby further covenants and agrees to procure that notice of this Assignment shall be duly given to all underwriters and insurers and that where the consent of any underwriter is required pursuant to any of the Insurances assigned hereby the Assignor shall obtain such consent and evidence thereof, which evidence shall be given to the Assignee, or, in the alternative, that in the case of protection and indemnity coverage the Assignor shall obtain, with the Assignee’s approval (which approval shall not be unreasonably withheld), a letter of undertaking by the underwriters or clubs, and that there shall be duly endorsed upon all slips, cover notes, policies, certificates of entry or other instruments issued or to be issued in connection with the Insurances assigned hereby such clauses as to additional assured or loss payees as the Assignee may reasonably require or approve. In all cases (except in the case of protection and indemnity coverage), unless otherwise agreed in writing by the Assignee (which agreement shall not be unreasonably withheld), Assignor shall cause such slips, cover notes, notices, certificates of entry or other instruments to show the Assignee as additional assured and Assignor shall cause such policies to provide that there will be no recourse against the Assignee for payment of premiums, calls or assessments.

     The Assignor agrees that at any time and from time to time, upon the written request of the Assignee, its successors and permitted assigns, the Assignor will promptly and duly execute and deliver any and all such further instruments and documents as the Assignee, its successors and permitted assigns may reasonably request in order to obtain the full benefits of this Assignment and of the rights and powers herein granted.

     Any payments made pursuant to the terms hereof shall be made to such account as may, from time to time, be designated by the Assignee and shall be applied in accordance with the provisions of the Credit Agreement.

     Section 2. Freedom of Assignee from Obligations. It is hereby expressly agreed that anything herein contained to the contrary notwithstanding, the Assignor shall remain liable under the Insurances to perform all of the obligations assumed by it thereunder and the Assignee shall have no obligation or liability (including, without limitation, any obligation or liability with respect to the payment of premiums, calls or assessments) under the Insurances by reason of or arising out of this Assignment, nor shall the Assignee be required or obligated in any manner to perform or fulfill any obligations of the Assignor under or pursuant to the Insurances or to make any payment or to make any inquiry as to the nature or sufficiency of any payment received by the Assignee or to present or file any claim, or to take any other action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled hereunder at any time or times.

     Section 3. Power of Attorney; Financing Statements. The Assignee, its successors and permitted assigns, are hereby constituted lawful attorneys, irrevocably and coupled with an interest, with full power (in the name of the Assignor or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of the Insurances, to endorse any check or other instruments or orders in connection therewith and to file any claims or take any action or institute any

Exhibit C — Form of Assignment of Insurance
Page 2 of 8

proceedings which the Assignee may deem to be necessary or advisable in the premises, subject, where applicable, to the terms of Section 5.04(d)(iv) of the Credit Agreement. Any action or proceeding brought by the Assignee pursuant to any of the provisions hereof or of the Insurances or otherwise, and any claim made by the Assignee hereunder or under the Insurances, may be compromised, withdrawn or otherwise dealt with by the Assignee without any notice to, or approval of the Assignor if an Event of Default has occurred and is continuing. The Assignor hereby irrevocably authorizes the Assignee, at the Assignor’s expense, to file, at any time and from time to time, such financing and continuation statements or papers of similar purpose or effect relating to this Assignment, without the Assignor’s signature, as the Assignee at its option may deem appropriate and appoints the Assignee as the Assignor’s attorney-in-fact to execute any such statements in the Assignor’s name and to perform all other acts which the Assignee may deem appropriate to perfect and continue the security interests conferred hereby.

     Section 4. Irrevocable Assignment. The powers and authority granted to the Assignee herein have been given for a valuable consideration and are hereby declared to be irrevocable and may not be amended or waived except by an instrument in writing signed by the party against whom enforcement is sought.

     Section 5. Conditions of Assignment. Unless and until an Event of Default shall have occurred and be continuing under the Credit Agreement, the Assignor shall be entitled to exercise all its rights under the Insurances (subject to the provisions of this Assignment) in all respects as if this Assignment had not been made.

     Section 6. Governing Law.

          (a) This Assignment shall be construed in accordance with and governed by the laws of the State of New York, United States of America, without regard to its conflict of laws rules (other than Section 5-1401 of the New York General Obligations Law). Each of the Assignor and the Assignee hereby irrevocably submits itself to the non-exclusive jurisdiction of any court of the state of New York sitting in New York City or of the United States of America for the Southern district of such state, and any appellate court from any thereof, for the purposes of (and solely for the purposes of) any suit, action or other proceeding arising out of, or relating to, this Assignment or any of the transactions contemplated hereby, hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard in such New York State or Federal court and hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason whatsoever, that such suit, action or proceeding is brought in an inconvenient forum, or that the venue of such suit, action or proceeding is improper, or that this Assignment or the subject matter hereof may not be enforced in or by such courts. Each of the Assignor and the Assignee irrevocably consents to the service of any and all process in any such suit, action or proceeding by the mailing of copies of such process to such Person at its address specified in Section 10.02 of the Credit Agreement. Each of the Assignor and Assignee agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this paragraph shall affect the right of the Assignee or the Assignor to serve legal process in any other manner permitted by law or affect the right of

Exhibit C — Form of Assignment of Insurance
Page 3 of 8

such Person to bring any action or proceeding against the Assignor or the Assignee, as the case may be, or its property in the courts of any other jurisdiction.

          (b) BY ITS SIGNATURE BELOW WRITTEN THE ASSIGNOR HEREBY IRREVOCABLY WAIVES UNDER APPLICABLE LAW ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS ASSIGNMENT, THE CREDIT AGREEMENT OR THE MORTGAGES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     Section 7. Notices. All notices and other communications hereunder shall be in writing and shall be mailed, sent or delivered in accordance with Section 10.02 of the Credit Agreement.

     Section 8. Headings. The division of this Assignment into sections and the insertion of headings are for convenience of reference only and shall not affect the interpretation or construction of this Assignment.

     Section 9. Termination. This Assignment shall create a continuing security interest and shall (a) remain in full force and effect until the payment in full in cash of the Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge), the termination or expiration of all Letters of Credit (other than Letters of Credit as to which the Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit or as to which other arrangements satisfactory to the Issuing Bank have been made), and the termination of all obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, the termination of all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable Swap Counterparty has advised the Assignee in writing that it has received other collateral satisfactory to it), and the termination or expiration of the Revolving Commitments, at which time this Assignment shall automatically terminate, and be of no further force or effect, without any further action by any party, (b) be binding upon the Assignor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Assignee hereunder, to the benefit of and be binding upon, the Assignee and the Lenders and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause, when any Secured Party assigns or otherwise transfers any interest held by it under the Credit Agreement or other Loan Document to any other Person pursuant to the terms of the Credit Agreement or such other Loan Document, that other Person shall thereupon become vested with all the benefits held by such Secured Party under this Assignment.

[Remainder of page intentionally left blank]

Exhibit C — Form of Assignment of Insurance
Page 4 of 8

     IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed this ___day of                     , 20_.

SEAHAWK DRILLING, LLC

By:

Name:

Title:

The terms and conditions of this Assignment are hereby

ACCEPTED BY:

NATIXIS, NEW YORK BRANCH, as Administrative Agent

By:

Name:

Title:

By:

Name:

Title:

Exhibit C — Form of Assignment of Insurance
Page 5 of 8

SCHEDULE I

Description of Vessels

OWNER	VESSEL	OFF. NO	FLAG OF DOCUMENTATION
Seahawk Drilling, LLC	Seahawk 2000	1520	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2001	1542	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2002	1521	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2004	1463	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2005	1489	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2007	1721	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2501	1826	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2503	1828	Republic of Vanuatu
Seahawk Drilling LLC	Seahawk 2504	567686	United States
Seahawk Drilling, LLC	Seahawk 2505	1829	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2600	1488	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 2601	1827	Republic of Vanuatu
Seahawk Drilling LLC	Seahawk 2602	652045	United States
Seahawk Drilling, LLC	Seahawk 3000	1830	Republic of Vanuatu
Seahawk Drilling, LLC	Seahawk 800	1831	Republic of Vanuatu

Exhibit C — Form of Assignment of Insurance
Page 6 of 8

NOTICE OF ASSIGNMENT

To Whom It May Concern:

     Seahawk Drilling, LLC, a Delaware limited liability company, (the “Owner”), owner of the vessels listed on Schedule I attached hereto (the “Vessels”), HEREBY GIVES NOTICE that by an Assignment of Insurance dated August ___, 2009 and made by the Owner to Natixis, New York Branch as administrative agent (in such capacity as administrative agent, the “Assignee”), pursuant to, and for the ratable benefit of the Secured Parties as defined under, that certain Revolving Credit Agreement dated as of August ___, 2009 (and as such agreement may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower, certain of its Subsidiaries as Guarantors, including the Owner, the Assignee, as Administrative Agent, and the Lenders, the Owner assigned to the Assignee all of the Owner’s right, title and interest in and to all insurances and the benefit of all insurances heretofore, now or hereafter taken out in respect of the Vessels. This Notice and the attached Loss Payable Clause are to be endorsed on all policies and certificates of entry evidencing such insurances. Capitalized terms used herein and not otherwise defined are used herein as defined in the Credit Agreement.

SEAHAWK DRILLING, LLC

By:

Name:

Title:

Exhibit C — Form of Assignment of Insurance
Page 7 of 8

LOSS PAYABLE CLAUSES¹

     Loss, if any, payable to Natixis, New York Branch, in its capacity as Administrative Agent (in such capacity as administrative agent, the “Assignee”), pursuant to, and for the ratable benefit of the Secured Parties (as defined under that certain Revolving Credit Agreement dated as of August ___, 2009 (as such agreement may be amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc., a Delaware corporation (“the Borrower”), certain of its Subsidiaries as Guarantors, including Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), the Lenders party thereto from time to time, and the Assignee, as Administrative Agent for distribution by it first to the Assignee in its capacity as Administrative Agent and then to the Assignor, except that, unless the underwriters receive written notice from the Administrative Agent that an Event of Default has occurred and is continuing, in the case of any loss involving any damage to any Vessel or liability of any Vessel, the underwriters may pay directly for the repair, salvage, liability or other charges involved or, if the Assignor shall have first fully repaired the damage and paid the cost thereof, or discharged the liability or paid all of the salvage or other charges, then the underwriters may pay the Assignor as reimbursement therefor, provided, however, that if such damage involves a loss in excess of U.S. $50,000,000.00 or its equivalent the underwriters shall not make such payment without first obtaining the written consent thereto of the Assignee.

     In the event of an actual or constructive total loss or a compromised or arranged total loss or requisition of title, all insurance payments therefor shall be paid to the Assignee, for distribution by it in accordance with the terms of the Credit Agreement.

     Capitalized terms used herein and not otherwise defined are used herein as defined in the Credit Agreement.

¹ Subject to review by insurance broker.

Exhibit C — Form of Assignment of Insurance
Page 8 of 8

EXHIBIT D
FORM OF BORROWING BASE REPORT

[For Month Ended                                         ]

     This certificate dated as of                                         ,                      is prepared pursuant to the Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), certain of its Subsidiaries as Guarantors, the lenders party thereto (the “Lenders”), and Natixis, New York Branch, as administrative agent for such Lenders (in such capacity, the “Administrative Agent”). Unless otherwise defined in this certificate, capitalized terms that are used herein shall have the meanings assigned to them by the Credit Agreement.

     The Borrower hereby certifies that as of the date hereof (a) no Default or Event of Default has occurred and is continuing, (b) the representations and warranties contained in Article IV of the Credit Agreement and in each other Loan Document are true and correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties are true and correct in all respects as of such earlier date), and (c) the following amounts and calculations were true and correct:

A. Eligible Receivables
1. Accounts of the Loan Parties	$
2. minus:
a. Accounts that are not valid, bona fide accounts receivable and contract receivables	$
b. Accounts with respect to which the Administrative Agent does not have an Acceptable Security Interest	$
c. (i) except with respect to Accounts owing from PEMEX and its Affiliates, Accounts not denominated in Dollars (but not necessarily payable in Dollars), (ii) with respect to Accounts owing from PEMEX and its Affiliates, Accounts not denominated in Dollars	$

Exhibit D — Form of Borrowing Base Report
Page 1 of 6

d. Accounts that are owing from any Person that is a Loan Party or, if not entered into in compliance with Section 6.08 of the Credit Agreement, another Affiliate of the Borrower	$
e. Accounts with respect to which an invoice has not been sent to the applicable Account Debtor in accordance with the normal and customary billing practices of such Loan Party and in any event no later than the 15th day of the subsequent calendar month in which such Account arose	$
f. except with respect to accounts owing from PEMEX and its Affiliates, to the extent that such Account, together with all other Accounts owing by such Account Debtor and its Affiliates as of any date of determination exceed twenty percent (20%) of all Eligible Receivables	$
g. with respect to accounts owing from PEMEX and its Affiliates, to the extent that such Account, together with all other Accounts owing by PEMEX and its Affiliates (but not including Accounts arising from the Pride Tennessee or the Pride Wisconsin) as of any date of determination exceed sixty percent (60%) of all Eligible Receivables unless all of the Accounts are owing from PEMEX and its Affiliates, in which case only sixty percent (60%) of such Accounts shall be included	$
h. Accounts arising from the Pride Tennessee or the Pride Wisconsin	$
i. Accounts owing from any Person from which an aggregate amount of more than twenty-five percent (25%) of the Accounts owing therefrom are not Eligible Receivables, by virtue of non-payment when due other than as a result of a bona fide dispute with respect thereto which is not reasonably expected to prejudice payments on other Accounts from such Person	$

Exhibit D — Form of Borrowing Base Report
Page 2 of 6

j. Accounts with respect to which there is any potential offset or counterclaim or unresolved dispute with the respective Account Debtor (but only to the extent of such potential offset or counterclaim or unresolved dispute)	$
k. Accounts with respect to which the account debtor is any United States Governmental Authority, unless Borrower has, with respect to such Accounts, complied with the Federal Assignment of Claims Act of 1940 or any applicable statute or municipal ordinance of similar purpose and effect	$
l. Accounts with respect to which the Account Debtor is the subject of any bankruptcy or other insolvency proceeding	$
m. Accounts with respect to which the Account Debtor’s obligation to pay is not absolute or is contingent up on the fulfillment of any condition whatsoever or if Account represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer	$
n. Accounts with respect to which the Account Debtor is located in New Jersey, or any other state denying creditors access to its courts in the absence of a Notice of Business Activities Report or other similar filing, unless the applicable Loan Party has either qualified as a foreign corporation authorized to transact business in such state or has filed a Notice of Business Activities Report or similar filing with the applicable state agency for the then current year or has available to it any such other statutory or legal exemption or exception	$
o. Accounts with respect to which the Account Debtor is a creditor of any Loan Party unless such Person has waived any right of setoff in a manner acceptable to the Administrative

Exhibit D — Form of Borrowing Base Report
Page 3 of 6

Agent; provided, however, that any such Account shall only be ineligible as to that portion of such Account which is less than or equal to the amount owed by such Loan Party to such Person	$
p. Accounts deemed to be ineligible by the Administrative Agent in good faith and in its reasonable credit judgment for which the Borrower has received written notice	$
3. Eligible Receivables	$
B. Tier 1 Eligible Receivables
1. Eligible Receivables for which either
a. the applicable Account Debtor has, or any Person guaranteeing such Account Debtor’s obligations under such Eligible Receivable, an Investment Grade Rating	$
b. Acceptable Credit Support from an Acceptable Credit Support Provider exists	$
2. minus
a. Eligible Receivables that are unpaid more than one hundred twenty (120) days after the original invoice date	$
3. Tier 1 Eligible Receivables	$
C. Tier 2 Eligible Receivables
1. Eligible Receivables denominated in Dollars and for which the Account Debtor is either
a. organized or incorporated under the laws of the United States or a State thereof and the Eligible Receivable is denominated and payable in Dollars	$
b. PEMEX or any of its Affiliates and the Eligible Receivable shall be denominated in Dollars (but not necessarily payable in Dollars)	$
2. minus

Exhibit D — Form of Borrowing Base Report
Page 4 of 6

a. Tier 1 Eligible Receivables	$
b. Eligible Receivables that are unpaid more than ninety (90) days after the original invoice date	$
3. Tier 2 Eligible Receivables	$
D. Borrowing Base
1. 80% of Tier 1 Eligible Receivables (80% of B.3)	$
2. 60% of Tier 2 Eligible Receivables (60% of C.3)	$
3. the lesser of (i) 20% of the Orderly Liquidation Value of the Collateral Rigs (20% of Orderly Liquidation Value of the Collateral Rigs as set forth on Schedule I) and (ii) 25,000,000	$
4. 100% of the Discretionary Reserve Amount	$
5. Borrowing Base equals D.1 + D.2 + D.3 - D.4	$
E. Availability
1. Borrowing Base (D.5)	$
2. the Revolving Commitments	$
3. the Fixed Charge Coverage Cap, if applicable	$
4. the sum of the outstanding principal amount of Revolving Advances and the Letter of Credit Exposure	$
5. Availability equals (the lesser of E.1, E.2 and E.3)/E.4	$

     IN WITNESS WHEREOF, I have hereto signed my name to this Borrowing Base Report as of                     ,                     .

SEAHAWK DRILLING, INC.

By:

Name:

Title:

Exhibit D — Form of Borrowing Base Report
Page 5 of 6

SCHEDULE II

To the Form of Borrowing Base
($ in the 000’s)

Orderly Liquidation Value of the Collateral Rigs
(in accordance with the definition of Orderly Liquidation Value
as set forth in the Credit Agreement)

		Casualty Event or	Orderly
	Value (establishd by	Asset Disposition since	Liquidation Value
	most recent Appraisal	most recent Appraisal	(Colum 2)-
Name of Rig	Report)	Report	Colum 3)
Seahawk 2000
Seahawk 2001
Seahawk 2002
Seahawk 2004
Seahawk 2005
Seahawk 2007
Seahawk 2501
Seahawk 2503
Seahawk 2504
Seahawk 2505
Seahawk 2600
Seahawk 2601
Seahawk 2602
Seahawk 3000
Seahawk 800

Orderly Liquidation Value of Collateral Rigs (Sum of Amounts in Column 4):                                        

Exhibit D — Form of Borrowing Base Report
Page 6 of 6

EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE

[For Fiscal Quarter Ended                      ]
[For Fiscal Year Ended                      ] (“Calculation Period”)

     This certificate dated as of                     , ___is prepared pursuant to the Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc., a Delaware corporation ( the “Borrower”), certain of its Subsidiaries as Guarantors, the Lenders, and Natixis, New York Branch, as Administrative Agent. Unless otherwise defined in this certificate, capitalized terms that are used herein shall have the meanings assigned to them by the Credit Agreement.

     The Borrower hereby certifies that as of the date hereof (a) no Default or Event of Default has occurred and is continuing, (b) the representations and warranties contained in Article IV of the Credit Agreement and in each other Loan Document are true and correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties are true and correct in all respects as of such earlier date), and (c) as of the end of the previous fiscal quarter (the “Subject Date”), the following amounts and calculations were true and correct:

A. Section 6.14 — Maximum Capital Expenditures

1.	Capital Expenditures made or legally obligated
	to be made to date during this fiscal year in
	respect of the purchase or other acquisition of
	any fixed or capital asset (excluding normal
	replacements, improvements and maintenance
	which are properly charged to current operations):	$
2.	Maximum permitted during the term of the
	Credit Agreement:	$20,000,0001
	Compliance	Yes      No

B. Section 6.17(a) — Minimum Fixed Charge Coverage Ratio²

1	Subject to increase pursuant to Section 6.14 of the Credit Agreement.
2	To be tested only if at any time Revolving Advances or Letters of Credit are outstanding and the sum of the Availability plus unrestricted cash is less than $25,000,000.

Exhibit E — Form of Compliance Certificate
Page 1 of 10

1.	Consolidated EBITDA of the Borrower and its Subsidiaries as of the Subject Date (as set forth on Schedule I hereto):	$
2.	Foreign, federal, state and local income taxes of the Borrower and its Subsidiaries on a consolidated basis paid in cash during such period:	$
3.	Consolidated Interest Expense, paid in cash3, of the Borrower and its Subsidiaries on a consolidated basis for such period:	$
4.	All Maintenance Capital Expenditures of the Borrower and its Subsidiaries on a consolidated basis during such period:	$
5.	Fixed Charge Coverage Ratio (Line 1 ÷ (Line 2 + Line 3 + Line 4)):
6.	Minimum required:	2.00 to 1.00
	Compliance	Yes       No

C. Section 6.17(b) — Minimum Security Maintenance Ratio

1.	Orderly Liquidation Value of the Collateral Rigs as of the Subject Date (set forth on Schedule II hereto):	$
2.	The sum of the outstanding principal amount of Revolving Advances and the Letter of Credit Exposure, in each case, as of the Subject Date:	$

³ with respect to each quarterly period ending on or after September 30, 2009, Consolidated Interest Expense paid in cash will be determined as follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated Interest Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense paid in cash for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the product of the Consolidated Interest Expense paid in cash for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009, Consolidated Interest Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense paid in cash for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest Expense paid in cash for the two fiscal quarters ending December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated Interest Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense paid in cash for the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest Expense paid in cash for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter, Consolidated Interest Expense paid in cash shall be computed by adding the Consolidated Interest Expense paid in cash for the four fiscal quarters ending on such date

Exhibit E — Form of Compliance Certificate
Page 2 of 10

3.	Security Maintenance Ratio (Line 1 ÷ Line 2):
4.	Minimum required:	3.00 to 1.00
	Compliance	Yes       No

D. Section 6.17(c) — Minimum Working Capital Ratio

	1.	Consolidated Current Assets of the Borrower on the Subject Date:	$
	2.	The lesser of (a) the Availability of the Borrower and (b) $25,000,000, as of the Subject Date:	$
	3.	Consolidated current liabilities of the Borrower and its Subsidiaries as of the Subject Date:	$
	4.	Current portion of any Debt under the Credit Agreement otherwise included in the calculation of Line 3:	$
	5.	Costs, expenses and related liabilities arising from, related to or in connection with the loss of the Pride Wyoming mat-supported jackup rig in 2008 to the extent not covered by Pride’s insurance policies (including any deductibles, premium payments for removal of wreckage claims or retention amounts) and its related liabilities in a net amount not to exceed $3,500,000:	$
	6.	Working Capitial Ratio (Line 1 + Line 2) ÷ (Line 3 — Line 4 — Line 5):
		Minimum required:	1.20 to 1.00
		Compliance	Yes       No
E. Section 6.17(d) — Minimum Consolidated Tangible Net Worth
	1.	Consolidated Tangible Net Worth Floor:	$320,000,000
	2.	50% of the Borrower’s Consolidated Net Income for each fiscal quarter in which such Consolidated Net Income is greater than $0, commencing with the fiscal quarter ending December 31, 2009 and ending on such date of determination:	$

Exhibit E — Form of Compliance Certificate
Page 3 of 10

3.	100% of the aggregate Net Cash Proceeds received by the Borrower from issuances of its Equity Interests after the Closing Date:	$
	Minimum Required Consolidated Tangible Net Worth on Subject Date (Line 1 + Line 2 + Line 3):	$
	Compliance	Yes       No

Exhibit E — Form of Compliance Certificate
Page 4 of 10

IN WITNESS WHEREOF, executed as of                     , ___.

SEAHAWK DRILLING, INC.

By:

Name:

Title:

Exhibit E — Form of Compliance Certificate
Page 5 of 10

SCHEDULE I

to the Compliance Certificate
($ in 000’s)

Consolidated EBITDA of the Borrower and its Subsidiaries
(in accordance with the definition of Consolidated EBITDA
as set forth in the Credit Agreement)

					Four Fiscal
					Quarters
					Most
Consolidated	Quarter	Quarter	Quarter	Quarter	Recently
EBITDA	Ended	Ended	Ended	Ended	Ended
Consolidated
Net Income
+ Consolidated Interest Expense (interest expense of the Borrower and its Subsidiaries calculated on a consolidated basis minus interest income of the Borrower and its Subsidiaries calculated on a consolidated basis and the amortization of any deferred financing costs incurred in connection with the Credit Agreement otherwise included in the calculations thereof)4

⁴ With respect to each quarterly period ending on or after September 30, 2009, Consolidated Interest Expense will be determined as follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest Expense for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the product of the Consolidated Interest Expense for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009, Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest Expense for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest Expense for the two fiscal quarters ending December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest Expense for the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated Interest Expense for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter, Consolidated Interest Expense shall be computed by adding the Consolidated Interest Expense for the four fiscal quarters ending on such date.

Exhibit E — Form of Compliance Certificate
Page 6 of 10

					Four Fiscal
					Quarters
					Most
Consolidated	Quarter	Quarter	Quarter	Quarter	Recently
EBITDA	Ended	Ended	Ended	Ended	Ended
+ foreign, federal, state and local income taxes
+ depreciation expense
+ amortization expense
+ extraordinary, unusual or non-recurring expenses, charges or losses
+ certain allocated non-recurring general and administrative expenses as set forth on Schedule 1.01(d) of the Credit Agreement and certain impairment charges as set forth on Schedule 1.01(d) of the Credit Agreement
- extraordinary or non-recurring gains
- any gain realized upon the sale or other disposition of any assets

Exhibit E — Form of Compliance Certificate
Page 7 of 10

					Four Fiscal
					Quarters
					Most
Consolidated	Quarter	Quarter	Quarter	Quarter	Recently
EBITDA	Ended	Ended	Ended	Ended	Ended
- income of any other Person (other than Wholly-Owned Subsidiaries of the Borrower) in which the Borrower or a Wholly-Owned Subsidiary of the Borrower has an ownership interest except to the extent such income is received by the Borrower or such Wholly-Owned Subsidiary in a cash distribution
+/- the income of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries

Exhibit E — Form of Compliance Certificate
Page 8 of 10

					Four Fiscal
					Quarters
					Most
Consolidated	Quarter	Quarter	Quarter	Quarter	Recently
EBITDA	Ended	Ended	Ended	Ended	Ended
- non-cash gains (other than gains resulting from derivatives to the extent the amount of commodities hedged with such derivatives exceeds the Borrower’s and its Subsidiaries’ commodities sold), losses or adjustments under FASB Statement 133 as a result of changes in the fair market value of derivatives
= Consolidated EBITDA5

⁵ With respect to each quarterly period ending on or after September 30, 2009, Consolidated EBITDA will be determined as follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the product of the Consolidated EBITDA for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009, Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated EBITDA for the two fiscal quarters ending December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period plus (B) the Consolidated EBITDA for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter, Consolidated EBITDA shall be computed by adding the Consolidated EBITDA for the four fiscal quarters ending on such date.

Exhibit E — Form of Compliance Certificate
Page 9 of 10

SCHEDULE II

To the Compliance Certificate
($ in the 000’s)

Orderly Liquidation Value of the Collateral Rigs
(in accordance with the definition of Orderly Liquidation Value
as set forth in the Credit Agreement)

		Casualty Event or	Orderly
	Value (established by	Asset Disposition since	Liquidation Value
	most recent Appraisal	most recent Appraisal	(Column 2 -
Name of Rig	Report)	Report	Column 3)
Seahawk 2000
Seahawk 2001
Seahawk 2002
Seahawk 2004
Seahawk 2005
Seahawk 2007
Seahawk 2501
Seahawk 2503
Seahawk 2504
Seahawk 2505
Seahawk 2600
Seahawk 2601
Seahawk 2602
Seahawk 3000
Seahawk 800

Exhibit E — Form of Compliance Certificate
Page 10 of 10

EXHIBIT F
LETTER OF CREDIT REQUEST

[Date]

Natixis, New York Branch, as Administrative Agent
1251 Avenue of the Americas, 34th Floor
New York, New York 10020

Attention: [          ]

Ladies and Gentlemen:

Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), certain of its Subsidiaries as Guarantors, the lenders from time to time party thereto (the “Lenders”), and Natixis, New York Branch, as administrative agent for the Lenders (the “Administrative Agent”), are parties to that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified and in effect from time-to-time, the “Credit Agreement”), the defined terms of which are used in this Letter of Credit Request unless otherwise defined in this Letter of Credit Request. The undersigned hereby gives you irrevocable notice pursuant to Section 2.14(a) of the Credit Agreement that the undersigned hereby requests a Letter of Credit, and in connection with that request sets forth below the information relating to such Letter of Credit (the “Proposed Issuance”) as required by Section 2.14(a)(iv) of the Credit Agreement:

(a)	The Borrower requests an [issuance] [increase] [extension] of a Letter of Credit. [The Letter of Credit to be [increased before giving effect to the increase] [extended] is in the face amount of $                     and evidenced by Letter of Credit number ___.]
(b)	The beneficiary is                                         .
(c)	[The face amount of the Letter of Credit being [issued] [increased after giving effect to the increase] is $                    .]
(d)	The Business Day of the Proposed Issuance is                     .
(e)	[The expiration date of the Letter of Credit as [issued] [extended] is                     .]
(f)	The form of the proposed Letter of Credit is attached as Exhibit A.

The Borrower hereby certifies that the following statements are true and correct on the date hereof, and will be true and correct on the date of the Proposed Issuance:

Exhibit F — Form of Letter of Credit Request
Page 1 of 3

(i)	the representations and warranties contained in Article IV of the Credit Agreement and in each other Loan Document are true and correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties are true and correct in all respects as of such earlier date), on and as of the date of such Proposed Issuance, immediately before and after giving effect to such Proposed Issuance;
(ii)	no Default or Event of Default has occurred and is continuing or would result immediately after giving effect to such Proposed Issuance or the application of the proceeds therefrom;
(iii)	the Availability is greater than or equal to zero immediately after giving effect to such Proposed Issuance; and
(iv)	no material adverse change has occurred and is continuing with respect to the Collateral when taken as a whole since either the most recently delivered Borrowing Base Certificate or the most recently delivered Appraisal Report pursuant to Section 5.14 of the Credit Agreement.

Very truly yours,

SEAHAWK DRILLING, INC.

By:

Name:

Title:

Exhibit F — Form of Letter of Credit Request
Page 2 of 3

EXHIBIT A
TO LETTER OF CREDIT REQUEST

Form of Proposed Letter of Credit

See attached.

Exhibit F — Form of Letter of Credit Request
Page 3 of 3

EXHIBIT G
FORM OF NOTE

$                                                                                 , 20   

For value received, the undersigned SEAHAWK DRILLING, INC., a Delaware corporation (the “Borrower”), hereby promises to pay to the order of                                          (“Payee”) the principal amount of                                          Dollars ($                    ) or, if less, the aggregate outstanding principal amount of the Revolving Advances (as defined in the Credit Agreement referred to below) made by the Payee under the Credit Agreement, together with interest on the unpaid principal amount of the Revolving Advances from the date of such Revolving Advances until such principal amount is paid in full, at such interest rates, and at such times, as are specified in the Credit Agreement.

This Note is one of the Notes referred to in, and is entitled to the benefits of, and is subject to the terms of, the Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement”), among the Borrower, certain of its Subsidiaries as Guarantors, the lenders party thereto (the “Lenders”), and Natixis, New York Branch, as administrative agent for the Lenders (the “Administrative Agent”). Capitalized terms used in this Note that are defined in the Credit Agreement and not otherwise defined in this Note have the meanings assigned to such terms in the Credit Agreement. The Credit Agreement, among other things, (a) provides for the making of the Revolving Advances by the Payee to the Borrower in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Revolving Advance being evidenced by this Note, and (b) contains provisions for acceleration of the maturity of this Note upon the happening of certain events stated in the Credit Agreement and for prepayments of outstanding principal amounts prior to the maturity of this Note upon the terms and conditions specified in the Credit Agreement.

Both principal and interest are payable in lawful money of the United States of America to the Administrative Agent at the location or address specified in writing by the Administrative Agent to the Borrower in same day funds. The Payee shall record payments of principal made under this Note, but no failure of the Payee to make such recordings shall affect the Borrower’s repayment obligations under this Note.

This Note is secured by the Security Documents.

Except as specifically provided in the Credit Agreement, the Borrower hereby waives presentment, demand, protest, notice of intent to accelerate, notice of acceleration, and any other notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder of this Note shall operate as a waiver of such rights.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.

THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY

Exhibit G — Form of Note
Page 1 of 3

EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Remainder of Page Intentionally Left Bank; Signature Page Follows]

SEAHAWK DRILLING, INC.

a Delaware corporation

By:

Name:

Title:

Exhibit G — Form of Note
Page 3 of 3

EXHIBIT H
FORM OF NOTICE OF BORROWING

[Date]

NATIXIS, NEW YORK BRANCH, as Administrative Agent
1251 Avenue of the Americas, 34^th Floor
New York, New York 10020
Attention: [          ]
Telephone: [          ]
Telecopier: [          ]
Electronic Mail: [          ]

Ladies and Gentlemen:

The undersigned, Seahawk Drilling, Inc., a Delaware corporation (“Borrower”), certain of its Subsidiaries as Guarantors, the lenders from time to time party thereto (the “Lenders”), and Natixis, New York Branch, as Administrative Agent for the Lenders, are parties to that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified and in effect from time-to-time, the “Credit Agreement”, the defined terms of which are used in this Notice of Borrowing unless otherwise defined in this Notice of Borrowing). The undersigned gives you irrevocable notice pursuant to Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a Borrowing, and in connection with that request sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement:

(a)	The Business Day of the Proposed Borrowing is                     ,           .
(b)	The Type of the Revolving Advances is [Eurodollar Advance] [Base Rate Advance].
(c)	The aggregate amount of the Proposed Borrowing is $                    .
(d)	[The Interest Period for each Eurodollar Advance made as part of the Proposed Borrowing is ___ month[s] and will end on [date].]

The Borrower hereby certifies that the following statements are true and correct on the date hereof, and will be true and correct on the date of the Proposed Borrowing:

(i) the representations and warranties contained in Article IV of the Credit Agreement and in each other Loan Document are true and correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties shall be true and correct in all respects), except to the extent that such representations and

Exhibit H — Form of Notice of Borrowing
Page 1 of 2

	warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties are true and correct in all respects as of such earlier date), on and as of the date of such Proposed Borrowing, immediately before and after giving effect to such Proposed Borrowing, and to the application of the proceeds from such Proposed Borrowing, as applicable;
(ii)	no Default or Event of Default has occurred and is continuing or, immediately after giving effect thereto, would result from such Proposed Borrowing or from the application of the proceeds therefrom;
(iii)	the Availability is greater than or equal to zero immediately after giving effect to such Proposed Borrowing; and
(iv)	no material adverse change has occurred and is continuing with respect to the Collateral when taken as a whole since either the most recently delivered Borrowing Base Certificate or the most recently delivered Appraisal Report pursuant to Section 5.14 of the Credit Agreement.

Very truly yours,

SEAHAWK DRILLING, INC.

By:

Name:

Title:

Exhibit H — Form of Notice of Borrowing
Page 2 of 2

EXHIBIT I
FORM OF NOTICE OF CONVERSION OR CONTINUATION

[Date]

NATIXIS, NEW YORK BRANCH
1251 Avenue of the Americas, 34^th Floor
New York, New York 10020
Attention: [          ]
Telephone: [          ]
Telecopier: [          ]
Electronic Mail: [          ]

Ladies and Gentlemen:

The undersigned, Seahawk Drilling, Inc., a Delaware corporation (“Borrower”), certain of its Subsidiaries as Guarantors, the lenders from time to time party thereto (the “Lenders”), and Natixis, New York Branch, as Administrative Agent for the Lenders, are parties to that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified and in effect from time-to-time, the “Credit Agreement”, the defined terms of which are used in this Notice of Conversion or Continuation unless otherwise defined in this Notice of Conversion or Continuation). The undersigned gives you irrevocable notice pursuant to Section 2.02(b) of the Credit Agreement that the undersigned hereby requests a Conversion or Continuation of an outstanding Borrowing, and in connection with that request sets forth below the information relating to such Conversion or Continuation (the “Proposed Election”) as required by Section 2.02(b) of the Credit Agreement:

(a) The Business Day of the Proposed Election is                     , 20___.

(b) The amount and Type of Revolving Advance to be Converted or Continued pursuant to this Proposed Election consists of $               [Base Rate Advances][Eurodollar Advances].

(c) The requested Proposed Election is a [Conversion][Continuation] [and if the Proposed Election is a Conversion, the Conversion shall be made to a [Base Rate Advance][a Eurodollar Advance]].

(d) [If a Conversion to, or Continuation of, a Eurodollar Advance, the Interest Period shall be ___ month[s] and will end on [date].]

The Borrower hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Election:

(i) the representations and warranties contained in Article IV of the Credit Agreement and in each other Loan Document are true and correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties shall be true and correct in all respects), except to the extent that such representations and

Exhibit I — Form of Notice of Conversion or Continuation
Page 1 of 2

warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date (other than those representations and warranties that are subject to a materiality qualifier, in which case such representations and warranties are true and correct in all respects as of such earlier date), on and as of the date of such Proposed Election, immediately before and after giving effect to such Proposed Election;

(ii)	no Default or Event of Default has occurred and is continuing or, immediately after giving effect thereto, would result from such Proposed Borrowing or from the application of the proceeds therefrom;
(iii)	the Availability is greater than or equal to zero immediately after giving effect to such Proposed Borrowing; and
(iv)	no material adverse change has occurred and is continuing with respect to the Collateral when taken as a whole since either the most recently delivered Borrowing Base Certificate or the most recently delivered Appraisal Report pursuant to Section 5.14 of the Credit Agreement.

Very truly yours,

SEAHAWK DRILLING, INC.

By:

Name:

Title:

Exhibit I — Form of Notice of Conversion or Continuation
Page 2 of 2

EXHIBIT J
FORM OF PLEDGE AGREEMENT

     THIS PLEDGE AGREEMENT dated as of August [___], 2009 (this “Pledge Agreement”), is entered into by and among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), each of the undersigned other than the Borrower and Administrative Agent (as herein defined) (and together with the Borrower, collectively, the “Pledgors” and, individually, a “Pledgor”) and Natixis, New York Branch, as administrative agent (in such capacity, the “Administrative Agent”), for the ratable benefit of the Secured Parties (as defined in the Credit Agreement described below).

RECITALS

     A. This Pledge Agreement is entered into in connection with that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, certain Subsidiaries thereof as Guarantors, the lenders party thereto from time to time (individually, a “Lender” and collectively, the “Lenders”), and Natixis, New York Branch, as Administrative Agent for such Lenders and as Issuing Bank (as defined therein).

     B. Each Pledgor will derive substantial direct or indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) and (ii) Swap Contracts (as defined in the Credit Agreement) entered into by any Loan Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit Agreement), and such transactions and documents are necessary or convenient to the conduct, promotion or attainment of such Pledgor’s business.

     C. It is a requirement under the Credit Agreement that the Pledgors secure the due payment and performance of all Obligations (as defined in the Credit Agreement) by entering into this Pledge Agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby agrees with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows:

     Section 1. Definitions; Interpretations. All capitalized terms not otherwise defined in this Pledge Agreement that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement. Any terms used in this Pledge Agreement that are defined in the UCC (as defined below) and not otherwise defined herein or in the Credit Agreement shall have the meanings assigned to those terms by the UCC. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning

Exhibit J — Form of Pledge Agreement
Page 1 of 26

and effect as the word “shall.” The word “or” is not exclusive. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument, schedule or other document herein shall be construed as referring to such agreement, instrument, schedule or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein) and in effect, (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Pledge Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Pledge Agreement, (v) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. For purposes of this Pledge Agreement, “UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time thereafter, and any successor statute; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the security interest in any Pledged Collateral (as defined below) is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

     Section 2. Pledge.

     2.01. Grant of Pledge.

     (a) As collateral security for the prompt and complete payment and performance when due of all Secured Obligations, each Pledgor hereby pledges, charges and grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security interest in, the Pledged Collateral, as defined in Section 2.02 below. This Pledge Agreement shall secure all Obligations now or hereafter existing, including any extensions, modifications, substitutions, amendments, and renewals thereof, whether for principal, interest, fees, expenses, indemnifications or otherwise. All such obligations shall be referred to in this Pledge Agreement as the “Secured Obligations”.

     (b) Notwithstanding anything contained herein to the contrary, it is the intention of each Pledgor, the Administrative Agent and the other Secured Parties that the amount of the Secured Obligation secured by each Pledgor’s interests in any of its Property shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other similar Legal Requirement pplicable to such Pledgor. Accordingly, notwithstanding anything to the contrary contained in this Pledge Agreement or in any other agreement or instrument executed in connection with the payment of any of the Secured Obligations, the amount of the Secured Obligations secured by each Pledgor’s interests in any of its Property pursuant to this Pledge Agreement shall be limited to an aggregate amount equal to the largest amount that

Exhibit J — Form of Pledge Agreement
Page 2 of 26

would not render such Pledgor’s obligations hereunder or the liens and security interest granted to the Administrative Agent hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

     2.02. Pledged Collateral. “Pledged Collateral” shall mean all of each Pledgor’s right, title, and interest in the following, whether now owned or hereafter acquired:

     (a) (i) all of the membership interests issued by a Domestic Subsidiary to such Pledgor listed in the attached Schedule 2.02(a) and all additional membership interests of such issuer hereafter acquired by such Pledgor (the “Domestic Membership Interests”), (ii) all of the membership interests issued to such Pledgor by a Foreign Subsidiary that is directly held by such Pledgor and listed in the attached Schedule 2.02(a) and 65% of all additional membership interests of such issuer hereafter acquired by such Pledgor (the “Foreign Membership Interests”; and together with the Domestic Membership Interests, the “Membership Interests”), (iii) the certificates representing the Membership Interests, if any, and (iv) all rights to money or Property which such Pledgor now has or hereafter acquires in respect of the Membership Interests, including, without limitation, (A) any proceeds from a sale by or on behalf of such Pledgor of any of the Membership Interests, and (B) any distributions, dividends, cash, instruments and other property from time-to-time received or otherwise distributed in respect of the Membership Interests, whether regular, special or made in connection with the partial or total liquidation of the issuer and whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Membership Interests or the ownership thereof (collectively, the “Membership Interests Distributions”);

     (b) (i) all of the general and limited partnership interests issued by a Domestic Subsidiary to such Pledgor listed in the attached Schedule 2.02(b) and all additional general and limited partnership interests of such issuer hereafter acquired by such Pledgor (the “Domestic Partnership Interests”), (ii) all of the general and limited partnership interests issued to such Pledgor by a Foreign Subsidiary that is directly held by such Pledgor and listed in the attached Schedule 2.02(b) and 65% of all additional general and limited partnership interests of such issuer hereafter acquired by such Pledgor (the “Foreign Partnership Interests”; and together with the Domestic Partnership Interests, the “Partnership Interests”), and (iii) all rights to money or Property which such Pledgor now has or hereafter acquires in respect of the Partnership Interests, including, without limitation, (A) any proceeds from a sale by or on behalf of such Pledgor of any of the Partnership Interests, and (B) any distributions, dividends, cash, instruments and other property from time-to-time received or otherwise distributed in respect of the Partnership Interests, whether regular, special or made in connection with the partial or total liquidation of the issuer and whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Partnership Interests or the ownership thereof (collectively, the “Partnership Interests Distributions”);

     (c) (i) all of the shares of stock issued by a Domestic Subsidiary to such Pledgor listed in the attached Schedule 2.02(c) and all additional shares of stock of such issuer hereafter acquired by such Pledgor (the “Domestic Shares”), (ii) all of the shares of

Exhibit J — Form of Pledge Agreement
Page 3 of 26

stock issued to such Pledgor by a Foreign Subsidiary that is directly held by such Pledgor and listed in the attached Schedule 2.02(c) and 65% of all additional shares of stock of such issuer hereafter acquired by such Pledgor (the “Foreign Shares”; and together with the Domestic Shares, the “Pledged Shares”), (iii) the certificates representing the Pledged Shares, and (iv) all rights to money or Property which such Pledgor now has or hereafter acquires in respect of the Pledged Shares, including, without limitation, (A) any proceeds from a sale by or on behalf of such Pledgor of any of the Pledged Shares, and (B) any distributions, dividends, cash, instruments and other property from time-to-time received or otherwise distributed in respect of the Pledged Shares, whether regular, special or made in connection with the partial or total liquidation of the issuer and whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Pledged Shares or the ownership thereof (collectively, the “Pledged Shares Distributions”; together with the Membership Interests Distributions and the Partnership Interest Distributions, the “Distributions”); and

     (d) all proceeds from the Pledged Collateral described in paragraphs (a), (b) and (c) of this Section 2.02.

     2.03. Delivery of Pledged Collateral. All certificates or instruments, if any, representing the Pledged Collateral shall be delivered to the Administrative Agent and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Administrative Agent. After the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right, upon prior written notice to the applicable Pledgor, to transfer to or to register in the name of the Administrative Agent or any of its nominees any of the Pledged Collateral, subject to the rights specified in Section 2.04. In addition, after the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right at any time to exchange the certificates or instruments representing the Pledged Collateral for certificates or instruments of smaller or larger denominations.

     2.04. Rights Retained by Pledgor. Notwithstanding the pledge in Section 2.01,

     (a) unless an Event of Default shall have occurred and is continuing, (i) each Pledgor shall be entitled to receive and retain any dividends and other Distributions paid on or in respect of its Pledged Collateral and the proceeds of any sale of its Pledged Collateral as permitted by the Credit Agreement; and (ii) each Pledgor shall be entitled to exercise any voting and other consensual rights pertaining to its Pledged Collateral for any purpose not inconsistent with the terms of this Pledge Agreement or the Credit Agreement; provided, however, that no Pledgor shall exercise nor shall it refrain from exercising any such right if such action or inaction, as applicable, would have a material adverse effect on the value of the Pledged Collateral; and

     (b) if an Event of Default shall have occurred and is continuing,

     (i) until such time thereafter as the Administrative Agent gives written notice of its election to exercise such voting and other consensual rights pursuant

Exhibit J — Form of Pledge Agreement
Page 4 of 26

and in accordance with Section 5 hereof, each Pledgor shall have the rights set forth in Section 2.04(a) subject to the limitations thereof; and

     (ii) at and after such time as the Administrative Agent gives written notice of its election to exercise such voting and other consensual rights pursuant to and in accordance with Section 5 hereof, each Pledgor shall execute and deliver (or cause to be executed and delivered) to the Administrative Agent all proxies and other instruments as the Administrative Agent may reasonably request to enable the Administrative Agent to (A) exercise the voting and other rights which such Pledgor is entitled to exercise pursuant to paragraph (a)(ii) or paragraph (b)(i) of this Section 2.04, and (B) receive any Distributions and proceeds of sale of the Pledged Collateral which such Pledgor is authorized to receive and retain pursuant to paragraph (a)(i) of this Section 2.04.

     Section 3. Representations and Warranties. Each Pledgor represents and warrants to the Administrative Agent and the other Secured Parties as follows:

     (a) The Pledged Collateral applicable to such Pledgor listed on the attached Schedules 2.02(a), 2.02(b) and 2.02(c) have been duly authorized and validly issued to such Pledgor and are fully paid and nonassessable.

     (b) Such Pledgor is the legal and beneficial owner of the Pledged Collateral free and clear of any Lien, except for (i) the security interest created by this Pledge Agreement and (ii) the Excepted Liens.

     (c) No authorization, authentication, approval, or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required to be made or obtained by any Loan Party either (i) for the pledge by such Pledgor of the Pledged Collateral pursuant to this Pledge Agreement or for the execution, delivery, or performance of this Pledge Agreement by such Pledgor or (ii) for the exercise by the Administrative Agent or any Secured Party of the voting or other rights provided for in this Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant to this Pledge Agreement (except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally).

     (d) Such Pledgor has the requisite corporate (or equivalent), power and authority to deliver, pledge, assign and transfer the Pledged Collateral to the Administrative Agent.

     (e) As of the date of this Pledge Agreement (and as of each date that this Pledge Agreement is supplemented), the Membership Interests listed on the attached Schedule 2.02(a) constitute (i) the percentage of the issued and outstanding membership interests of the respective issuer thereof set forth on Schedule 2.02(a), (ii) with respect to any Domestic Subsidiary, all of the membership interests of such issuer in which such Pledgor has any ownership interest, and (iii) with respect to any Foreign Subsidiary, at least 65% of the membership interests of such issuer in which such Pledgor has any ownership interest.

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     (f) As of the date of this Pledge Agreement (and as of each date that this Pledge Agreement is supplemented), the Partnership Interests listed on the attached Schedule 2.02(b) constitute (i) the percentage of the issued and outstanding general and limited partnership interests of the respective issuer thereof set forth on Schedule 2.02(b), (ii) with respect to any Domestic Subsidiary, all of the partnership interests of such issuer in which such Pledgor has any ownership interest, and (iii) with respect to any Foreign Subsidiary, at least 65% of the partnership interests of such issuer in which such Pledgor has any ownership interest.

     (g) As of the date of this Pledge Agreement (and as of each date that this Pledge Agreement is supplemented), the Pledged Shares listed on the attached Schedule 2.02(c) constitute (i) the percentage of the issued and outstanding shares of capital stock of the respective issuer thereof set forth on Schedule 2.02(c), (ii) with respect to any Domestic Subsidiary, all of the shares of stock of such issuer in which such Pledgor has any ownership interest, and (iii) with respect to any Foreign Subsidiary, at least 65% of the             shares of stock of such issuer in which such Pledgor has any ownership interest.

     (h) As of the date of this Pledge Agreement (and as of each date that this Pledge Agreement is supplemented), Schedule 3 sets forth its sole jurisdiction of formation, type of organization, federal tax identification number, the organizational number, and all names under which it has conducted business during the last five years prior to the date of this Pledge Agreement (or the date of any supplement to this Pledge Agreement).

     Section 4. Pledgor’s Covenants. Until (a) the payment in full in cash of the Secured Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge), (b) the termination or expiration of all Letters of Credit (other than Letters of Credit as to which the Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit or as to which other arrangements satisfactory to the Issuing Bank have been made), and the termination of all obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of Credit , (c) the termination of all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable Swap Counterparty has advised the Administrative Agent in writing that it has received other collateral satisfactory to it), and (d) the termination or expiration of the Revolving Commitments (the date on or prior to which all of the preceding shall have occurred being the “Security Termination Date”), each Pledgor covenants and agrees with the Administrative Agent that:

     4.01. Protect Collateral; Further Assurances. Each Pledgor will warrant and defend the rights and title herein granted unto the Administrative Agent, for the ratable benefit of the Secured Parties, in and to such Pledgor’s Pledged Collateral (and all right, title, and interest represented by such Pledged Collateral) against the claims and demands of all Persons whomsoever. Each Pledgor agrees that, at the expense of such Pledgor, such Pledgor will promptly execute and deliver all further instruments and documents and take all further action, that may be reasonably necessary and that the Administrative Agent or any Secured Party may reasonably request, in order to perfect and protect any security interest granted or charged or

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purported to be granted or charged hereby or to enable the Administrative Agent or any Secured Party to exercise and enforce its rights and remedies hereunder with respect to any of such Pledgor’s Pledged Collateral. Each Pledgor hereby authorizes the Administrative Agent to file any financing statements, amendments or continuations without the signature of such Pledgor to the extent permitted by applicable law in order to perfect or maintain the perfection of any security interest granted under this Pledge Agreement, including financing statements containing an “all assets” or “all personal property” collateral description.

     4.02. Additional Shares. Each Pledgor agrees that it will pledge hereunder, promptly upon its acquisition (directly or indirectly) thereof, any additional Equity Interests of an issuer of the Pledged Collateral; provided that, no Pledgor is required to pledge more than 65% of the Equity Interests issued by any individual issuer that is a Foreign Subsidiary.

     4.03. Jurisdiction of Formation; Name Change. Each Pledgor shall give the Administrative Agent at least 10 Business Days prior written notice before it (i) in the case of any Pledgor that is not a “registered organization” (as such term is defined in Section 9-102 of the UCC), changes the location of its principal place of business and chief executive office, (ii) changes the location of its jurisdiction of formation or organization, or (iii) changes its legal name or uses a trade name other than its current name used on the such Pledgor enters into this Pledge Agreement; provided that, such Pledgor shall not effect or permit any such change unless all filings have been made under the UCC or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have, and each Pledgor agrees to take all necessary action to ensure that the Administrative Agent does continue at all times to have, a valid, legal and perfected security interest in all the Pledged Collateral. Each Pledgor represents and warrants that, as to Membership Interests and Partnership Interests, (a) such Pledged Collateral does not constitute “securities” as defined in Section 8.102 and 8.03 of the UCC and (b) the limited liability company agreement or the partnership agreement, as applicable, of the issuer thereof does not expressly “opt in” to “security” status in accordance with Section 8-103 of the UCC. Other than as permitted by Section 6.15 of the Credit Agreement but subject to the terms of this Section 4.03, no Grantor shall amend, supplement, modify or restate its articles or certificate of incorporation, bylaws, limited liability company agreements, or other equivalent organizational documents, nor amend its name or change its jurisdiction of incorporation, organization or formation without the prior written consent of the Administrative Agent.

     Section 5. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default:

     5.01. UCC Remedies. To the extent permitted by law, the Administrative Agent may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for in this Pledge Agreement or otherwise available to it, all the rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Pledged Collateral).

     5.02. Dividends and Other Rights.

     (a) All rights of the Pledgors to exercise the voting and other consensual rights which they would otherwise be entitled to exercise pursuant to Section 2.04(a) may

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be exercised by the Administrative Agent if the Administrative Agent so elects and gives written notice of such election to the affected Pledgor and all rights of the Pledgors to receive any Distributions on or in respect of the Pledged Collateral and the proceeds of sale of the Pledged Collateral that they would otherwise be authorized to receive and retain pursuant to Section 2.04(b) shall cease.

     (b) All Distributions on or in respect of the Pledged Collateral and the proceeds of sale of the Pledged Collateral which are received by any Pledgor shall be received in trust for the benefit of the Administrative Agent, for the ratable benefit of the Secured Parties, shall be segregated from other funds of such Pledgor, and shall be promptly paid over to the Administrative Agent, for the ratable benefit of the Secured Parties, as Pledged Collateral in the same form as so received (with any necessary endorsement).

     5.03. Sale of Pledged Collateral. Subject to the mandatory requirements of applicable law, the Administrative Agent may sell all or part of the Pledged Collateral at public or private sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on credit, or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable in accordance with applicable laws. Each Pledgor agrees that to the extent permitted by law such sales may be made without notice. If notice is required by law, each Pledgor hereby deems 10 days’ advance notice of the time and place of any public sale or the time after which any private sale is to be made reasonable notification, recognizing that if the Pledged Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market shorter notice may be reasonable. The Administrative Agent shall not be obligated to make any sale of the Pledged Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time-to-time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Pledgor shall fully cooperate with Administrative Agent in selling or realizing upon all or any part of the Pledged Collateral. In addition, each Pledgor shall fully comply with the securities laws of the United States, the State of New York, and other states, and take such actions as may be necessary to permit Administrative Agent to sell or otherwise dispose of any securities representing the Pledged Collateral in compliance with such laws.

     5.04. Exempt Sale. If, in the opinion of the Administrative Agent, there is any question that a public or semipublic sale or distribution of any Pledged Collateral will violate any state, federal, or other applicable securities law, the Administrative Agent in its reasonable discretion (a) may offer and sell securities privately to purchasers who will agree to take them for investment purposes and not with a view to distribution and who will agree to imposition of restrictive legends on the certificates representing the security, or (b) may sell such securities in an intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as amended, and no sale so made in good faith by the Administrative Agent shall be deemed to be not “commercially reasonable” solely because so made. Each Pledgor shall cooperate fully with the Administrative Agent in all reasonable respects in selling or realizing upon all or any part of the Pledged Collateral.

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     5.05. Application of Collateral. The proceeds of any sale, or other realization upon all or any part of the Pledged Collateral by the Administrative Agent or any other Secured Party shall be applied by the Administrative Agent or such Secured Party as set forth in Section 7.06 of the Credit Agreement. Notwithstanding the foregoing, nothing contained herein shall contradict the terms of Section 9.09(e) of the Credit Agreement which provides that only the Administrative Agent may exercise all rights, remedies and powers as the secured party of the liens granted herein.

     5.06. Cumulative Remedies. Each right, power and remedy herein specifically granted to the Administrative Agent or otherwise available to it shall be cumulative, and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity, or otherwise, and each such right, power and remedy, whether specifically granted herein or otherwise existing, may be exercised at any time and from time-to-time as often and in such order as may be deemed expedient by the Administrative Agent in its sole discretion. No failure on the part of the Administrative Agent to exercise, and no delay in exercising, and no course of dealing with respect to, any such right, power or remedy, shall operate as a waiver thereof, nor shall any single or partial exercise of any such rights, power or remedy preclude any other or further exercise thereof or the exercise of any other right.

     Section 6. Administrative Agent as Attorney-in-Fact for Pledgor.

     6.01. Attorney-in-Fact. Each Pledgor hereby constitutes and irrevocably appoints the Administrative Agent, acting for and on behalf of the Secured Parties and each successor or assign of the Administrative Agent and the Secured Parties, the true and lawful attorney-in-fact of such Pledgor, with full power and authority in the place and stead of such Pledgor and in the name of such Pledgor, the Administrative Agent or otherwise to take any action and execute any instrument at the written direction of the Secured Parties and enforce all rights, interests and remedies of such Pledgor with respect to the Pledged Collateral, including the right:

     (i) to ask, require, demand, receive and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of any of the other Pledged Collateral;

     (ii) to elect remedies thereunder and to endorse any checks or other instruments or orders in connection therewith;

     (iii) to file any claims or take any action or institute any proceedings in connection therewith which the Administrative Agent may deem to be necessary or advisable;

     (iv) to pay, settle or compromise all bills and claims which may be or become liens or security interests against any or all of the Pledged Collateral, or any part thereof, unless a bond or other security satisfactory to the Administrative Agent has been provided;

     (v) upon foreclosure, to do any and every act which any Pledgor may do on its behalf with respect to the Pledged Collateral or any part thereof and to exercise any or all of such Pledgor’s rights and remedies under any or all of the Pledged Collateral; and

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     (vi) to receive, indorse, and collect all instruments made payable to such Pledgor representing any dividend, or the proceeds of the sale of the Pledged Collateral, or other distribution in respect of the Pledged Collateral and to give full discharge for the same;

provided, however, that the Administrative Agent shall not exercise any such rights or take any such actions except after the occurrence and during the continuation of an Event of Default. This power of attorney is a power coupled with an interest and shall be irrevocable.

     6.02. Administrative Agent May Perform. The Administrative Agent may from time-to-time perform any act which any Pledgor has agreed hereunder to perform and which such Pledgor shall fail to perform after being requested in writing so to perform (it being understood that no such request need be given after the occurrence and during the continuance of any Event of Default and after notice thereof by the Administrative Agent to any Pledgor) and the Administrative Agent may from time-to-time take any other action which the Administrative Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Pledged Collateral or of its security interest therein, and the reasonable expenses of the Administrative Agent incurred in connection therewith shall be part of the Secured Obligations and shall be secured hereby. The Administrative Agent shall endeavor to provide notice to the affected Pledgor of any action taken hereunder; provided however, the failure to provide such notice shall not be construed as a waiver of any rights of the Administrative Agent provided under this Pledge Agreement or under applicable law.

     6.03. Administrative Agent Has No Duty. The powers conferred on the Administrative Agent hereunder are solely to protect its interest as a secured party in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Pledged Collateral or responsibility for taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Collateral.

     6.04. Reasonable Care. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, it being understood that the Administrative Agent shall have no responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders, or other matters relative to any Pledged Collateral, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral.

     Section 7. Miscellaneous.

     7.01. Expenses. Each Pledgor will upon demand pay to the Administrative Agent for its benefit and the benefit of the Secured Parties the amount of (i) any reasonable out-of-pocket expenses, including the reasonable fees, charges and disbursements of experts and one external primary counsel for the Administrative Agent and of one local counsel in each jurisdiction, if necessary (it being understood that the local counsel for any such jurisdiction shall, if reasonably acceptable to the Administrative Agent, be limited to any local counsel previously engaged by a

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Loan Party in such jurisdiction, if applicable), in any case, which the Administrative Agent and the Secured Parties may incur in connection with the custody, preservation, use, or operation of, any Pledged Collateral, and (ii) any out-of-pocket expenses, including the fees and disbursements of its counsels and of any experts, which the Administrative Agent and the Secured Parties may incur in connection with (A) the sale, collection, or other realization of, any of the Pledged Collateral, (B) the exercise or enforcement of any of the rights of the Administrative Agent or any Secured Party hereunder, and (C) the failure by any Pledgor to perform or observe any of the provisions hereof.

     7.02. Amendments, Etc. No amendment or waiver of any provision of this Pledge Agreement nor consent to any departure by any Pledgor herefrom shall be effective unless the same shall comply with Section 10.01 of the Credit Agreement, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

     7.03. Addresses for Notices. All notices and other communications provided for hereunder shall be made in the manner and to the addresses set forth in Section 10.02 of the Credit Agreement or on the signatures hereof.

     7.04. Continuing Security Interest; Transfer of Interest.

     (a) This Pledge Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until the Security Termination Date, (b) be binding upon each Pledgor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of and be binding upon, the Administrative Agent and the Lenders and their respective successors, permitted transferees, and permitted assigns, and to the benefit of and be binding upon, the Swap Counterparties, and each of their respective successors, transferees, and assigns to the extent such successors, transferees, and assigns of a Swap Counterparty is a Lender or an Affiliate of a Lender. Without limiting the generality of the foregoing clause, when any Lender assigns or otherwise transfers any interest held by it under the Credit Agreement or other Loan Document to any other Person pursuant to the terms of the Credit Agreement, that other Person shall thereupon become vested with all the benefits held by such Lender under this Pledge Agreement.

     (b) Upon the occurrence of the Security Termination Date, the security interest granted hereby shall automatically terminate without any further action by any party, and all rights to the Pledged Collateral shall revert to the applicable Pledgor to the extent such Pledged Collateral has not been sold or otherwise applied pursuant to the terms hereof. Upon any such termination or if authorized under Section 9.09 of the Credit Agreement, the Administrative Agent will, at the Pledgors’ expense, deliver all Pledged Collateral to the applicable Pledgor, execute and deliver to the applicable Pledgor such documents as such Pledgor shall reasonably request and take any other actions reasonably requested to evidence or effect such termination.

     7.05. Waivers. Each Pledgor hereby waives:

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     (a) promptness, diligence, notice of acceptance, and any other notice (other than as set forth herein) with respect to any of the Secured Obligations and this Pledge Agreement;

     (b) any requirement that the Administrative Agent or any Secured Party protect (other than as required herein), secure, perfect, or insure any Lien or any Property subject thereto or exhaust any right or take any action against any Pledgor, any Guarantor, or any other Person or any collateral; and

     (c) any duty on the part of the Administrative Agent to disclose to any Pledgor any matter, fact, or thing relating to the business, operation, or condition of any Pledgor, any Guarantor, or any other Person and their respective assets now known or hereafter known by such Person.

     7.06. Severability. If any provision of this Pledge Agreement is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Pledge Agreement shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     7.07. CHOICE OF LAW. This Pledge Agreement shall be governed by and construed in accordance with the laws of the State of New York and the applicable laws of the United States of America.

     7.08. Counterparts. This Pledge Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart signature page by facsimile or other electronic transmission is as effective as executing and delivering this Pledge Agreement in the presence of the other parties to this Pledge Agreement. In proving this Pledge Agreement, a party must produce or account only for the executed counterpart of the party to be charged.

     7.09. Reinstatement. If, at any time after payment in full of all Secured Obligations and termination of the Administrative Agent’s security interest granted herein, any payments on the Secured Obligations previously made must be disgorged by the Administrative Agent for any reason whatsoever, including, without limitation, the insolvency, bankruptcy or reorganization of any Grantor or any other Person, this Pledge Agreement and the Administrative Agent’s security interests herein shall be reinstated as to all disgorged payments as though such payments had not been made, and each Grantor shall sign and deliver to the Administrative Agent all documents, and shall do such other acts and things, as may be necessary to reinstate and perfect the Administrative Agent’s security interest. EACH GRANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED PARTY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7.09 (INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ONE EXTERNAL PRIMARY COUNSEL AND OF ONE LOCAL COUNSEL IN EACH

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JURISDICTION, IF NECESSARY (IT BEING UNDERSTOOD THAT THE LOCAL COUNSEL FOR ANY SUCH JURISDICTION SHALL, IF REASONABLY ACCEPTABLE TO THE PERSON TO WHOM SUCH SECURED PARTY IS A RELATED PARTY, BE LIMITED TO ANY LOCAL COUNSEL PREVIOUSLY ENGAGED BY THE BORROWER IN SUCH JURISDICTION, IF APPLICABLE) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED SECURED PARTY’S OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE BEEN PROXIMATELY CAUSED BY SUCH SECURED PARTY’S OWN BAD FAITH, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, VIOLATION OF LAW OR BY REASON OF A CLAIM BY ONE OR MORE OTHER SECURED PARTIES OR EQUITY INTEREST OWNERS OF ANY SECURED PARTY, SO LONG AS NOT PROXIMATELY CAUSED BY ANY GRANTOR OR ANY AFFILIATE THEREOF.

     7.10. Conflicts. In the event of any explicit or implicit conflict between any provisions of this Pledge Agreement and any provision of the Credit Agreement, the terms of the Credit Agreement shall be controlling.

     7.11. Additional Pledgors. Pursuant to the Credit Agreement, the Borrower is required to cause each holder of an Equity Interest in a Material Subsidiary that did not own any such Equity Interest on the date of the Credit Agreement is required to enter into this Pledge Agreement as a Pledgor within 30 days of such Subsidiary becoming a Material Subsidiary. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become a Pledgor hereunder with the same force and effect as if originally named as a Pledgor herein. The execution and delivery of any instrument adding an additional Pledgor as a party to this Pledge Agreement shall not require the consent of any other Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Pledgor as a party to this Pledge Agreement.

     7.12. Submission to Jurisdiction.

     (a) Any legal action or proceeding with respect to this Pledge Agreement may be brought in the courts of the state of New York sitting in New York City or of the United States of America for the Southern District of such state, and by execution and delivery of this Pledge Agreement, each party to this Pledge Agreement consents, for itself and in respect of its Property, to the non-exclusive jurisdiction of those courts. Each party to this Pledge Agreement irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this Pledge Agreement or other document related hereto. Each party to this Pledge Agreement waives personal service of any summons, complaint

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or other process, which may be made by any other means permitted by the law of such state.

     (b) Nothing in the immediately preceding clause (i) shall affect the right of any party hereto to serve legal process in any other manner permitted by law or affect the right of any party hereto to bring any action or proceeding against any other party in the courts of any other jurisdiction.

     7.13. Waiver of Jury. Each party to this Pledge Agreement hereby expressly and irrevocably waives any right to trial by jury of any claim, demand, action or cause of action arising under this Pledge Agreement or in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to this Pledge Agreement, or the transactions related hereto, in each case whether now existing or hereafter arising, and whether founded in contract or tort or otherwise; and each party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that any party to this Pledge Agreement may file an original counterpart or a copy of this section with any court as written evidence of the consent of the signatories hereto to the waiver of their right to trial by jury.

     7.14. Integration. This Pledge Agreement and the other Loan Documents represent the final agreement among the parties with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties. There are no oral agreements among the parties hereto.

[SIGNATURE PAGES FOLLOW]

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     The parties hereto have caused this Pledge Agreement to be duly executed as of the date first above written.

PLEDGORS:
[BORROWER] [PERSONS OWNING EQUITY OF MATERIAL SUBSIDIARIES]
By:
	[Name]
	[Title]

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ADMINISTRATIVE AGENT:

NATIXIS, NEW YORK BRANCH, as
Administrative Agent

By:

Name:

Title:

By:

Name:

Title:

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SCHEDULE 2.02(A)

MEMBERSHIP INTERESTS

		Type of
	Issuer	Membership	% of Membership
Pledgor	(Domestic/Foreign)	Interest	Interest Owned

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SCHEDULE 2.02(B)

PARTNERSHIP INTERESTS

	Issuer	Type of Partnership	% of Partnership
Pledgor	(Domestic/Foreign)	Interest	Interest Owned

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SCHEDULE 2.02(C)

PLEDGED SHARES

	Issuer	Type of	Number of	% of Shares	Certificate
Pledgor	(Domestic/Foreign)	Shares	Shares	Owned	No.

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SCHEDULE 3

ORGANIZATIONAL INFORMATION

Pledgor:

Sole Jurisdiction of Formation / Filing:

Type of Organization:

Organizational Number:

Federal Tax Identification Number:

Prior Names:

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Annex 1 to the
Pledge Agreement

     SUPPLEMENT NO.                      dated as of                     , 20___(the “Supplement”), to the Pledge Agreement dated as of August [___], 2009 (this “Pledge Agreement”), by and among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), each of the undersigned other than the Borrower and the Administrative Agent (as herein defined) (and together with the Borrower, collectively, the “Pledgors” and, individually, a “Pledgor”) and Natixis, New York Branch, as administrative agent (the “Administrative Agent”), for the ratable benefit of the Secured Parties (as defined in the Credit Agreement described below)

RECITALS

     A. Reference is made to that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among the Borrower, certain Subsidiaries of the Borrower as Guarantors, the lenders party thereto from time to time (the “Lenders”), and Natixis, New York Branch, as Administrative Agent for such Lenders and as Issuing Bank (as defined therein).

     B. The Pledgors entered into the Pledge Agreement in order to induce the Lenders to make Revolving Advances and the Issuing Bank to issue, extend and renew Letters of Credit under the Credit Agreement. Pursuant to the Credit Agreement, the Borrower is required to cause each holder of an Equity Interest in a Material Subsidiary that did not own any such Equity Interest on the date of the Credit Agreement is required to enter into this Pledge Agreement as a Pledgor within 30 days of such Subsidiary becoming a Material Subsidiary. Section 7.11 of the Pledge Agreement provides that such holder may become a Pledgor under the Pledge Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned (the “New Pledgor”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Pledgor under the Pledge Agreement in order to induce the Lenders to make additional Revolving Advances and for the Issuing Bank to make, extend, and renew Letters of Credit under the Credit Agreement, and as consideration for Revolving Advances previously made and Letters of Credit previously issued thereunder.

     C. The New Pledgor is an Affiliate of the Borrower and will derive substantial direct or indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) and (ii) Swap Contracts (as defined in the Credit Agreement) entered into by any Loan Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit Agreement), and such transactions and documents are necessary or convenient to the conduct, promotion or attainment of such New Pledgor’s business.

     D. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Pledge Agreement and the Credit Agreement.

     Accordingly, the Administrative Agent and the New Pledgor agree as follows:

Exhibit J — Form of Pledge Agreement
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     SECTION 1. In accordance with Section 7.11 of the Pledge Agreement, the New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement with the same force and effect as if originally named therein as a Pledgor and the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it as a Pledgor thereunder are true and correct on and as of the date hereof in all material respects. In furtherance of the foregoing, the New Pledgor, as security for the payment and performance in full of the Secured Obligations, does hereby create and grant to the Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security interest in and lien on all of the New Pledgor’s right, title and interest in and to the Pledged Collateral of the New Pledgor. Each reference to a “Pledgor” in the Pledge Agreement shall be deemed to include the New Pledgor. The Pledge Agreement is hereby incorporated herein by reference.

     SECTION 2. The New Pledgor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or similar laws affecting creditors’ rights generally or general principles of equity.

     SECTION 3. This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart signature page by facsimile or other electronic transmission is as effective as executing and delivering this Supplement in the presence of the other parties to this Supplement. In proving this Supplement, a party must produce or account only for the executed counterpart of the party to be charged. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Pledgor and the Administrative Agent.

     SECTION 4. The New Pledgor hereby represents and warrants that, as of the date of this Supplement, (a) set forth on Schedules 2.02(a), 2.02(b), and 2.02(c) attached hereto are true and correct schedules of all its Membership Interests, Partnership Interests and Pledged Shares, as each term is defined in the Pledge Agreement, and (b) set forth on Schedule 3 attached hereto are its sole jurisdiction of formation, type of organization, its federal tax identification number and the organizational number, if applicable, and all names under which it has conducted business during the last five years prior to the date of this Supplement.

     SECTION 5. Except as expressly supplemented hereby, the Pledge Agreement shall remain in full force and effect.

     SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

     SECTION 7. If any provision of this Supplement is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this

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Supplement shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     SECTION 8. All communications and notices hereunder shall be in writing and given as provided in the Pledge Agreement. All communications and notices hereunder to the New Pledgor shall be given to it at the address set forth under its signature hereto or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by the New Pledgor in a notice to the Administrative Agent.

     SECTION 9. The New Pledgor agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

     SECTION 10. This Supplement, the Pledge Agreement and the other Loan Documents, represent the final agreement among the parties with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties. There are no oral agreements among the parties hereto.

[SIGNATURES PAGES FOLLOW]

Exhibit J — Form of Pledge Agreement
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     IN WITNESS WHEREOF, the New Pledgor and the Administrative Agent have duly executed this Supplement to the Pledge Agreement as of the day and year first above written.

	NEW PLEDGOR:
[			]
	By:
		Name:
		Title:

ADMINISTRATIVE AGENT:

NATIXIS, NEW YORK BRANCH, as

Administrative Agent

By:

Name:

Title:

By:

Name:

Title:

Exhibit J — Form of Pledge Agreement
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Schedules

Supplement No. ____
to the Pledge Agreement

Pledged Collateral of the New Pledgor

SCHEDULE 2.02(A)

MEMBERSHIP INTERESTS

		Type of
	Issuer	Membership	% of Membership
Pledgor	(Domestic/Foreign)	Interest	Interest Owned

SCHEDULE 2.02(B)

PARTNERSHIP INTERESTS

	Issuer	Type of Partnership	% of Partnership
Pledgor	(Domestic/Foreign)	Interest	Interest Owned

SCHEDULE 2.02(C)

PLEDGED SHARES

	Issuer	Type of	Number of	% of Shares	Certificate
Pledgor	(Domestic/Foreign)	Shares	Shares	Owned	No.

SCHEDULE 3

ORGANIZATIONAL INFORMATION

New Pledgor:	[PLEDGOR]
Sole Jurisdiction of Formation / Filing:	[STATE]
Type of Organization:	[ENTITY TYPE]
Organizational Number:

Exhibit J — Form of Pledge Agreement
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Federal Tax Identification Number:

Prior Names:

Exhibit J — Form of Pledge Agreement
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EXHIBIT K
FORM OF RIG MORTGAGE

FIRST PREFERRED FLEET MORTGAGE

by

SEAHAWK DRILLING, LLC,

to

NATIXIS, NEW YORK BRANCH,
as
Administrative Agent

Dated [                       __], 2009 and effective [                       __], 2009

Vanuatu Vessels

[Seahawk 2000, Seahawk 2001, Seahawk 2002, Seahawk 2004, Seahawk 2005, Seahawk 2007,
Seahawk 2501, Seahawk 2503, Seahawk 2505, Seahawk 2600, Seahawk 2601, Seahawk 3000,
Seahawk 800]

Exhibit K — Form of Rig Mortgage
Page 1 of 18

     This FIRST PREFERRED FLEET MORTGAGE (this “Mortgage”) is made this the [___] day of [                    ], 2009 and is effective the [___] date of [                    ], 2009, by SEAHAWK DRILLING, LLC, a Delaware limited liability company (the “Shipowner”), with an address at: 5847 San Felipe, Suite 1600, Houston, Texas 77057, to NATIXIS, NEW YORK BRANCH, with an address at 9 West 57th Street, 35th Floor, New York, NY 10019, as Administrative Agent (together with its successors and permitted assigns as such, the “Mortgagee”).

     WHEREAS:

     1. The Shipowner is party to the Revolving Credit Agreement dated as of August [___], 2009 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower, certain of its Subsidiaries as Guarantors, including the Shipowner, NATIXIS, NEW YORK BRANCH, as administrative agent, and the lenders party thereto (the “Lenders”), pursuant to which the Lenders have agreed from time to time to extend credit and/or issue letters of credit for the benefit of the Borrower and its subsidiaries, including the Shipowner, in an aggregate amount up to thirty-six million United States Dollars (US$36,000,000.00), which amount is the principal amount of this Mortgage. Capitalized terms used herein and not otherwise defined are used herein as defined in the Credit Agreement, a copy of a form of which, including certain exhibits, is annexed hereto as Exhibit A and made a part hereof.

     2. The Shipowner will receive substantial, direct and indirect, benefits through the extension of credit under the terms of the Credit Agreement, and related documents; and in consideration of such benefit and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Shipowner has executed this Mortgage.

     3. The Shipowner is the sole owner of the whole of the Vanuatu flag vessels described on Schedule I attached hereto, which are duly documented in the name of the Shipowner under the laws and flag of the Republic of Vanuatu, qualified to engage in the trade specified, which vessels are further described on Schedule I attached hereto and made a part hereof; and

     4. The Shipowner, in order to secure its debts, liabilities, and obligations, covenants and duties arising under the Credit Agreement and the other Loan Documents or otherwise with respect to any Revolving Advance, Letter of Credit or a Swap Contract to which a Lender or its Affiliate is a party, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party of any proceeding under any law relating to bankruptcy, insolvency or reorganization or relief of debtors naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, including, without limitation, the payment of all sums of money (whether for principal, premium, if any, interest, fees, expenses, indemnities or otherwise) from time to time payable by the Shipowner under the Credit Agreement, this Mortgage (including, without limitation, the costs, expenses and other amounts payable by Shipowner hereunder pursuant to Section 3.9 in connection with Mortgagee’s enforcing its rights and remedies pursuant to this Mortgage), and to secure the performance and observance of all agreements, covenants and provisions contained in the Credit Agreement, this Mortgage and the other Loan

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Documents (collectively, the “Secured Obligations”), has duly authorized the execution and delivery of this Mortgage.

     NOW, THEREFORE, to secure the prompt payment of the Secured Obligations and the performance and observance of all agreements, covenants and provisions of the Shipowner contained in the Credit Agreement, this Mortgage, the Guaranty and the other Loan Documents, the Shipowner has granted, conveyed, mortgaged, pledged, confirmed, assigned, transferred and set over, and by these presents does grant, convey, mortgage, pledge, confirm, assign, transfer and set over unto the Mortgagee the whole of each of the vessels (as more specifically described on Schedule I), together with all of the boilers, engines, generators, drilling machinery and equipment, pumps and pumping equipment, machinery, masts, spars, sails, boats, anchors, cables, chains, rigging, tackle, outfit, apparel, furniture, fittings, equipment, spares, fuel, stores and all other appurtenances thereunto appertaining or belonging, and also any and all additions, improvements and replacements hereafter made in or to such vessel, or any part thereof, or in or to her equipment and appurtenances aforesaid for each such vessel (collectively, the “Vessels” and each, a “Vessel”);

     TO HAVE AND TO HOLD all and singular the Vessels unto the Mortgagee and its successors and permitted assigns, to its and its successors’ and permitted assigns’ own use, benefit and behove forever, subject to the rights of the Shipowner therein as herein provided;

     PROVIDED, HOWEVER, and these presents are upon the condition that, upon the occurrence of certain conditions and/or payment of certain obligations in accordance with Section 3.12 of this Mortgage, the liens, estate and rights hereby granted shall be subject to termination and release in accordance with the terms of such Section 3.12 of this Mortgage.

     IT IS HEREBY COVENANTED, DECLARED AND AGREED that each of the Vessels is to be held subject to the further covenants, conditions, provisions, terms and uses hereinafter set forth.

ARTICLE I
COVENANTS OF THE SHIPOWNER

     The Shipowner covenants and agrees with the Mortgagee as follows:

     SECTION 1.1 The Shipowner will pay when due all Secured Obligations from time to time payable by the Shipowner under the Credit Agreement and the other Loan Documents and will observe, perform and comply with the covenants, terms and conditions herein and in the Credit Agreement and the other Loan Documents, on its part to be observed, performed or complied with.

     SECTION 1.2 The Shipowner is and shall remain duly qualified to own, document and operate each of the Vessels under the applicable laws and regulations of the Republic of Vanuatu. Each of the Vessels is duly documented in the name of the Shipowner as owner under the laws of the Republic of Vanuatu.

     SECTION 1.3 The Shipowner lawfully owns and is lawfully possessed of each of the Vessels free from any Lien, charge or encumbrance whatsoever (except for this Mortgage

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and the Excepted Liens), and will warrant and defend the title and possession thereto and to every part thereof for the benefit of the Mortgagee against the claims and demands of all persons whomsoever.

     SECTION 1.4 The Shipowner has caused this Mortgage to be duly filed and will cause it to be duly recorded and will comply with and satisfy all of the provisions and requirements of Chapter 5, Section 55 of the Vanuatu Maritime Act Cap. 131 (as amended) (hereinafter called the “Vanuatu Maritime Law”) and will otherwise comply with and satisfy all of the other applicable provisions of the Vanuatu Maritime Law in order to establish, perfect and maintain this Mortgage as a valid, enforceable and duly perfected first preferred mortgage lien thereunder upon each of the Vessels and upon all renewals, replacements and improvements made in or to the same for the amount of the Secured Obligations.

     SECTION 1.5 For each of the Vessels, the Shipowner will not (a) cause or permit such Vessel to be operated in any manner contrary to law, (b) engage in any unlawful trade or violate any law, (c) carry any cargo that will expose such Vessel to penalty, confiscation, forfeiture, capture or condemnation, or (d) do, or suffer or permit to be done, anything which can or may injuriously affect the registration or enrollment of such Vessel under the laws and regulations of the Republic of Vanuatu. The Shipowner will at all times keep each Vessel duly documented as a Vanuatu flag vessel.

     SECTION 1.6 Neither the Shipowner, any charterer, the master of any of the Vessels nor any other person has or shall have any right, power or authority to create, incur or permit to be placed or imposed or continued upon any of the Vessels any Lien whatsoever other than this Mortgage and other Excepted Liens.

     SECTION 1.7 For each of the Vessels, the Shipowner will place, and at all times and places will retain, a properly certified copy of this Mortgage on board such Vessel with her papers and will cause such certified copy and such Vessel’s marine document to be exhibited to any and all persons having business therewith which might give rise to any lien thereon other than Excepted Liens, and to any representative of the Mortgagee; and the Shipowner will place and keep prominently displayed in the chart room and in the master’s cabin of such Vessel, or in the case of a rig, in a prominent place aboard the rig, or in such location as the rig’s papers are kept, a framed printed notice in plain type reading as follows:

“NOTICE OF MORTGAGE

This Vessel is covered by a First Preferred Fleet Mortgage to NATIXIS, NEW YORK BRANCH, as Administrative Agent, under authority of the Vanuatu Maritime Law, 1981, as amended. Under the terms of said Mortgage, neither the Shipowner, any charterer, the master of this Vessel nor any other person has any right, power or authority to create, incur or permit to be imposed upon this Vessel any lien whatsoever other than Excepted Liens (as defined in the Credit Agreement attached as an exhibit to the First Preferred Fleet Mortgage).”

     SECTION 1.8 Except for this Mortgage and the other Excepted Liens, for each of the Vessels, Shipowner will pay or cause to be discharged or make adequate provision for the

Exhibit K — Form of Rig Mortgage
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satisfaction or discharge of all claims or demands (except to the extent that the same shall concurrently be contested by the Shipowner in good faith by appropriate proceedings that shall not affect the continued release of the relevant Vessel), or will cause such Vessel to be released or discharged from any Lien, encumbrance or charge therefor.

     SECTION 1.9 For each of the Vessels,

     (a) if a libel or complaint be filed against such Vessel or such Vessel be otherwise attached, arrested, levied upon or taken into custody by any Governmental Authority or any person that purports to be acting on behalf of a Governmental Authority for any cause whatsoever, the Shipowner will promptly notify the Mortgagee by facsimile, confirmed by letter, at its address as specified in this Mortgage, and within thirty (30) consecutive days will cause such Vessel to be released and all Liens thereon other than this Mortgage and other Excepted Liens to be discharged (except to the extent that the claim giving rise to such lien shall concurrently be contested by the Shipowner in good faith by appropriate proceedings that shall not affect the release of such Vessel) and will promptly notify the Mortgagee thereof in the manner aforesaid; and

     (b) if the Shipowner shall fail or neglect to furnish proper security or otherwise to release such Vessel from libel, arrest, levy, seizure or attachment within the time period required by Section 1.9(a) above, the Mortgagee or any person acting on behalf of the Mortgagee may furnish security to release such Vessel and by so doing shall not be deemed to cure the default of the Shipowner unless and until the Shipowner shall have reimbursed the Mortgagee from all costs and expenses (including reasonable attorney’s fees) incurred by the Mortgagee or such third party acting at the direction of the Mortgagee in procuring such release, including for any security so furnished.

     SECTION 1.10 For each of the Vessels,

     (a) except while such Vessel is undergoing repairs, maintenance or is in lay up cold-stacked, warm-stacked or similar suspensions of use or operation, the Shipowner will at all times and without cost or expense to the Mortgagee maintain and preserve, or cause to be maintained and preserved, such Vessel (i) in good running order and repair so that such Vessel shall be, insofar as due diligence can make her so, tight, staunch, strong and well and sufficiently tackled, apparelled, furnished, equipped and in every respect seaworthy and (ii) in at least as good a working order and condition as when this Mortgage was executed, ordinary wear and tear excepted; and will keep such Vessel, or cause her to be kept, in such condition as will entitle her to such classification rating with the American Bureau of Shipping or other classification society of like standing reasonably acceptable to the Mortgagee, (each, a “Classification Society”) that companies engaged in the operation of vessels of the same type, size, age and flag as such Vessel maintain respecting their vessels with such Classification Society. Notwithstanding the foregoing, if such Vessel is affected by any loss or damage or any condemnation or taking of such Vessel or a portion or component thereof, the Shipowner shall make all necessary repairs and replacements to such Vessel to the extent and as permitted by the terms of the Credit Agreement;

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     (b) such Vessel shall, and the Shipowner covenants that it will, at all times comply with all applicable laws, rules and regulations to the extent set forth in the Credit Agreement, and such Vessel shall have on board as and when required thereby certificates showing compliance therewith;

     (c) the Shipowner will not make, or permit to be made, any substantial change in the structure, type or speed of such Vessel or change in the rig of such Vessel; and

     (d) the Shipowner may, in the ordinary course of maintenance, repair or overhaul of such Vessel, remove any item of property constituting a part of such Vessel, provided such item of property is replaced to the extent necessary to maintain such Vessel in the condition required herein or in the Credit Agreement. Any such replacement item of property shall, without necessity of further act hereunder, become part of such Vessel and subject to this Mortgage.

     SECTION 1.11 The Shipowner will not transfer or change the flag or port of documentation of any of the Vessels except as set forth in the Credit Agreement.

     SECTION 1.12 The Shipowner will not sell, mortgage or transfer any of the Vessels except in accordance with the applicable provisions of the Credit Agreement. The Shipowner will not charter any of the Vessels on a demise or bareboat basis for a charter period of more than six (6) months without the prior written consent of the Mortgagee, which consent will not be unreasonably withheld, conditioned or delayed. To the extent the Shipowner demise or bareboat charters such Vessel, or enters into time charter parties or a series of successive voyage charter parties, drilling contract, contracts of affreightment or pooling arrangements respecting any Vessel having an indicated duration of at least six months (including any exercised optional extensions or renewals) it will: (a) provide Mortgagee a copy of any such charter and all related documents, (b) maintain in favor of Mortgagee a first priority perfected security interest in and Lien upon the charter agreement and all related rights and the proceeds thereof subject to Excepted Liens, and (c) cause any such charter and the rights of the Shipowner thereunder to be freely assignable to Mortgagee and/or its designee.

     SECTION 1.13 The Shipowner agrees that, if the Shipowner fails to perform covenants or obligations under this Mortgage, including, without limitation, its obligations with respect to insurance, the discharging of Liens, taxes, dues, assessments, governmental charges, fines, penalties lawfully imposed, repairs, reasonable attorneys’ fees, and other obligations that are not Excepted Liens, the Mortgagee may, but shall not be obligated to, perform the Shipowner’s obligations under this Mortgage, and any reasonable expenses incurred by the Mortgagee in performing the Shipowner’s obligations shall be paid by the Shipowner within ten (10) Business Days of demand. Any such performance by the Mortgagee may be made by the Mortgagee in reasonable reliance on any statement, invoice or claim, without inquiry into the validity or accuracy thereof. The amount and nature of any expense of the Mortgagee hereunder shall be conclusively established by a certificate of any officer of the Mortgagee absent manifest error, and such amount shall be included in the Secured Obligations, secured by this Mortgage.

     SECTION 1.14 In the event that at any time and from time to time this Mortgage or any provisions hereof shall be deemed invalidated in whole or in part by reason of any present or future law or any decision of any Governmental Authority, then the Shipowner, forthwith

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upon the request of the Mortgagee, will execute such other and further assurances and documents as are reasonably requested by the Mortgagee to accomplish the purposes of this Agreement.

     SECTION 1.15 In the event of the requisition (whether of title or use), condemnation, sequestration, seizure or forfeiture of any of the Vessels by any Governmental Authority or by anyone else, the Shipowner will give prompt written notice thereof to the Mortgagee, and any payments in respect thereof shall be paid to the Shipowner, and the Shipowner shall cause any such payment to be applied to the Secured Obligations to the extent required, and in accordance with, the terms of the Credit Agreement.

ARTICLE II
EVENTS OF DEFAULT AND REMEDIES

     SECTION 2.1 If an Event of Default shall have occurred and be continuing, then, in each and every such case the Mortgagee shall have the right to:

     (a) in accordance with the Credit Agreement, declare immediately due and payable all of the Secured Obligations (in which case all of the same shall be immediately due), and bring suit at law, in equity or in admiralty, as it may be advised, to recover judgment for the Secured Obligations and satisfy the same out of the Vessels;

     (b) exercise all of the rights and remedies in foreclosure with respect to any of the Vessels and otherwise given to mortgagees by the provisions of Legal Requirement, including but not limited to, the provisions of the Vanuatu Maritime Law and the regulations in effect thereunder from time to time, as amended;

     (c) take and enter into possession of any of the Vessels, at any time, wherever the same may be, without court decision or other legal process and without being responsible for loss or damage, and the Shipowner or other person in possession forthwith upon demand of the Mortgagee shall surrender to the Mortgagee possession of such Vessel and the Mortgagee may, without being responsible for loss or damage (except to the extent caused by the Mortgagee’s gross negligence or willful misconduct), hold, lay up, lease, charter, operate or otherwise use such Vessel for such time and upon such terms as it may deem to be for its best advantage, and demand, collect and retain all hire, freights, earnings, issues, revenues, income, profits, return premiums, salvage awards or recoveries, recoveries in general average, and all other sums due or to become due in respect of such Vessel or in respect of any insurance thereon from any person whomsoever, accounting only for the net profits, if any, arising from such use of such Vessel and charging upon all receipts from the use of such Vessel or from the sale thereof by court proceedings or pursuant to Section 2.1(e) below, all costs, expenses, charges, damages or losses by reason of such use (including reasonable attorney’s fees); and if at any time the Mortgagee shall avail itself of the right herein given it to take possession of such Vessel, the Mortgagee shall have the right to dock such Vessel for a reasonable time at any dock, pier or other premises of the Shipowner without charge, or to dock them at any other place at the cost and expense of the Shipowner, and the Mortgagee shall have the right to require the Shipowner to deliver, and the Shipowner shall on demand, at its own cost and expense, deliver to the Mortgagee such Vessel as demanded; and the Shipowner hereby irrevocably instructs the masters of such Vessel so long as this Mortgage is outstanding to deliver such Vessel to the Mortgagee as demanded;

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     (d) inspect and make copies of all original class records held by the Classification Society relating to such Vessel; and/or

     (e) without being responsible for loss or damage, other than loss or damage due to its own gross negligence or willful misconduct, sell such Vessel, at any place and at such time as the Mortgagee may specify and in such manner and such place (whether by public or private sale) as the Mortgagee may deem advisable (without necessity of bringing such Vessel to the place designated for such sale), free from any claim by the Shipowner in admiralty, in equity, at law or by statute, after first giving notice of the time and place of any public sale with a general description of the property in the following manner:

     (i) by publishing such notice for 10 consecutive days in a daily newspaper of general circulation published in New York City;

     (ii) if the place of sale should not be New York City, then also by publication of a similar notice in a daily newspaper, if any, published at the place of sale; and

     (iii) by mailing a similar notice to the Shipowner at its last known address on the day of first publication;

and notice of the time and place of any private sale by mailing such notice to the Shipowner at its last known address.

     SECTION 2.2 Any sale of any of the Vessels or any interest therein made by the Mortgagee after the occurrence and during the continuance of an Event of Default in pursuance of this Mortgage and in accordance with applicable law, whether under the power of sale hereby granted or any judicial proceedings, shall, to the extent not restricted by applicable law, operate to divest all right, title and interest of any nature whatsoever of the Shipowner in and to such Vessel or such interest therein sold, as the case may be, and shall bar any claim from the Shipowner, its successors and assigns, and all persons claiming by, through or under them. No purchaser shall be bound to inquire whether notice has been given, or whether any default has occurred, or as to the propriety of the sale, or as to the application of the proceeds thereof. In the case of any such sale, the Mortgagee shall be entitled, to apply the proceeds to the Secured Obligations in accordance with Section 7.06 of the Credit Agreement. At any such sale, the Mortgagee may bid for and purchase such property and upon compliance with the terms of sale may hold, retain and dispose of such property without further accountability therefor.

     SECTION 2.3 The Mortgagee is hereby appointed attorney-in-fact of the Shipowner to execute and deliver to any purchaser referred to in Section 2.2, and is hereby vested with full power and authority to make, after the occurrence and during the continuation of an Event of Default, in the name and on behalf of the Shipowner, a good conveyance of the title to such Vessel so sold. In the event of any sale of any of the Vessels under any power herein contained, the Shipowner will, if and when required by the Mortgagee, execute such form of conveyance of such Vessel and other related documents as the Mortgagee may specify. The powers and authority granted to the Mortgagee herein have been given for a valuable consideration and are hereby declared to be irrevocable.

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     SECTION 2.4 The Mortgagee is hereby appointed attorney-in-fact of the Shipowner in the name of the Shipowner to, after the occurrence and during the continuation of an Event of Default, demand, collect, receive, compromise and sue for, so far as may be permitted by law, all freights, hire, earnings, issues, revenues, income and profits of each of the Vessels and all amounts due from underwriters under any insurance thereon as payments of losses or as return premiums or otherwise, salvage awards and recoveries of each of the Vessels, recoveries in general average or otherwise in respect of each of the Vessels, and all other sums in respect of each of the Vessels, due or to become due at the time of the occurrence and during the continuation of any Event of Default, or in respect of any insurance thereon, from any person whomsoever, and to make, give and execute in the name of the Shipowner acquittances, receipts, releases or other discharges for the same, whether under seal or otherwise, and to endorse and accept in the name of the Shipowner all checks, notes, drafts, warrants, agreements and other instruments in writing with respect to the foregoing. The powers and authority granted to the Mortgagee herein have been given for a valuable consideration and are hereby declared to be irrevocable.

     SECTION 2.5 Whenever any right to enter and take possession of any of the Vessels accrues to the Mortgagee, it may require the Shipowner to deliver, and the Shipowner shall on demand, at its own cost and expense, deliver to the Mortgagee such Vessel as demanded. If any legal proceedings shall be taken to enforce any right under this Mortgage, the Mortgagee shall be entitled as a matter of right to the appointment of a receiver of such Vessel and of the freights, hire, earnings, issues, revenues, income and profits due or to become due and arising from the operation thereof.

     SECTION 2.6 The Shipowner authorizes and empowers the Mortgagee or its appointees or any of them to, after the occurrence and during the continuation of an Event of Default, appear in the name of the Shipowner, its successors and assigns, in any court of any country or nation of the world where a suit is pending against any of the Vessels because of or on account of an alleged lien against such Vessel from which such Vessel has not been released and to take such proceedings as any of them may deem necessary towards the defense of such suit and the purchase or discharge of such lien, and all reasonable expenditures made or incurred by them or any of them for the purpose of such defense or purchase or discharge shall be a debt due from the Shipowner, its successors and assigns, to the Mortgagee, and shall be secured by the lien of this Mortgage in like manner and extent as if the amount and description thereof were written herein.

     SECTION 2.7 The Shipowner covenants that at any time that any Secured Obligations shall be due and payable (whether by acceleration or otherwise), the same shall be paid in accordance with the Credit Agreement and other Loan Documents; and in case the Shipowner shall fail to pay the same when due and payable in accordance with the Credit Agreement and other Loan Documents, and that failure constitutes an Event of Default, the Mortgagee shall be entitled to recover judgment for the whole amount so due and unpaid, together with such further amounts as shall be provided by the Credit Agreement, other Loan Documents and applicable law. All moneys collected by the Mortgagee under this Section 2.7 shall be applied by the Mortgagee in accordance with the terms of the Credit Agreement.

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     SECTION 2.8 Each and every power and remedy herein given to the Mortgagee shall be cumulative and shall be in addition to every other power and remedy herein given or now or hereafter existing at law, in equity, in admiralty, by statute or under any Loan Document or other agreement, and each and every power and remedy whether herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Mortgagee, and the exercise or the beginning of the exercise of any power or remedy by the Mortgagee shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other power or remedy. No delay or omission by the Mortgagee in the exercise of any right or power or in the pursuance of any remedy accruing upon the occurrence and during the continuance of any Event of Default shall impair any such right, power or remedy or be construed to be a waiver of any such right, power or remedy; nor shall the acceptance by the Mortgagee of any security or of any payment of or on account of the Secured Obligations be construed to be a waiver of any right that the Mortgagee may have hereunder after the occurrence and during the continuance of such Event of Default or any other Event of Default, including any subsequent Event of Default of the same or a different nature.

     SECTION 2.9 If at any time prior to any sale of or consummation of foreclosure proceedings on any of the Vessels by the Mortgagee after the occurrence and during the continuance of an Event of Default in accordance herewith, the Shipowner offers to cure such Event of Default and to pay all expenses, advances, fees and damages to the Mortgagee arising from such Events of Default to the extent provided for in the Credit Agreement or other Loan Documents, including all costs and expenses incurred by the Mortgagee upon the exercise by the Mortgagee of its rights hereunder as a result of such Event of Default, then the Mortgagee may, but shall be under no obligation to, accept such offer, cure and payment and restore the Shipowner to its former position, but such action shall not affect any rights which the Mortgagee may have hereunder after the occurrence and during the continuance of any subsequent Event of Default or impair any rights consequent thereon.

     SECTION 2.10 In case the Mortgagee shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Mortgagee, then and in every such case the Shipowner and the Mortgagee shall be restored to their former positions and rights hereunder with respect to the property subject or intended to be subject to this Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as if no such proceedings had been taken.

     SECTION 2.11 Unless otherwise specified herein or in the Credit Agreement, any cash proceeds received by the Mortgagee from the sale of, collection of, or other realization upon any part of any of the Vessels or related collateral or any other amounts received by the Mortgagee hereunder, including the net earnings of any charter operation or other use of the Vessel by the Mortgagee under any of the powers specified in Article I and/or Article II of this Mortgage, may be, at the reasonable discretion of the Mortgagee (a) held by the Mortgagee in one or more cash collateral accounts as cash collateral for the Secured Obligations under the terms of the Security Agreement or (b) applied to the Secured Obligations. Amounts applied to the Secured Obligations shall be applied to the payment of the Secured Obligations in the order set forth in Section 7.06 of the Credit Agreement. Any surplus cash collateral or cash proceeds

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held by the Mortgagee after payment in full of the Secured Obligations shall be paid over to the Shipowner or to whomever may be lawfully entitled to receive such surplus.

     SECTION 2.12 Unless and until one or more Events of Default shall occur and be continuing, the Shipowner (a) shall be suffered and permitted to retain actual possession and use of each of the Vessels and (b) to the extent permitted by Section 2.07(c)(iii) of the Credit Agreement shall have the right, from time to time, in its discretion, and without application to the Mortgagee, and without obtaining a release thereof by the Mortgagee, to dispose of, free from the lien hereof, any boilers, engines, generators, pumps and pumping equipment, machinery, masts, spars, sails, rigging, boats, anchors, cables, chains, tackle, out fit, apparel, furniture, fittings, equipment, spares, fuel, stores or any other appurtenances of each of the Vessels, provided such item of property is replaced and such Vessel is maintained in the condition required herein and in the Credit Agreement, and such replacement item, if any, shall forthwith become subject to the lien of this Mortgage as a first preferred mortgage thereon.

     SECTION 2.13 Notwithstanding anything to the contrary in this Mortgage, the amount of any Secured Obligations that are secured by the Shipowner’s rights in the Vessels or any related collateral or subject to a Lien in favor of the Mortgagee hereunder or under any other Security Document shall be limited to the extent, if any, required so that the Liens granted under this Mortgage shall not be subject to avoidance under Section 548 of the bankruptcy code of the United States or to being set aside or annulled under any applicable law relating to fraud on creditors. In determining the limitations, if any, on the amount of any Secured Obligations that are subject to the Lien on the Vessels and related collateral hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation or contribution which such Shipowner may have under the Loan Documents, any other agreement or applicable Law shall be taken into account.

ARTICLE III
SUNDRY PROVISIONS

     SECTION 3.1 The maximum principal amount that may be outstanding under this Mortgage at any time is thirty six million United States Dollars (US$36,000,000.00), and for purposes of recording this Mortgage as required by the Vanuatu Maritime Law, the total amount of this Mortgage is thirty six million United States Dollars (US$36,000,000.00), premium (if any) and interest and performance of mortgage covenants. The maturity date is August [___], 2011. There is no separate discharge amount for each Vessel.

     SECTION 3.2 All of the covenants, promises, stipulations and agreements of the Shipowner in this Mortgage contained shall bind the Shipowner and its successors and permitted assigns and shall be binding on and inure to the benefit of the Mortgagee and its successors and permitted assigns. In the event of any assignment of this Mortgage by the Mortgagee in accordance with the applicable provisions of the Credit Agreement and Vanuatu Maritime Law, the term “Mortgagee” as used in this Mortgage shall be deemed to mean any such successor or permitted assignee.

     SECTION 3.3 Wherever and whenever herein any right, power or authority is granted or given to the Mortgagee, such right, power or authority may be exercised in all cases

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by the Mortgagee or such agent or agents as it may appoint, and the act or acts of such agent or agents when taken shall constitute the act of the Mortgagee hereunder.

     SECTION 3.4 (a) In the event that this Mortgage or any provisions hereof shall be deemed invalidated in whole or in part by reason of any present or future law or any decision of any Governmental Authority, the validity and enforceability of any other provision hereof shall not be affected thereby. Any such invalidity or unenforceability of any provision of this Mortgage in any jurisdiction or nation shall not render such provision invalid or unenforceable under the laws of any other jurisdiction or nation and the Shipowner, forthwith upon the request of the Mortgagee, will execute such other and further assurances and documents as are reasonably requested by the Mortgagee to accomplish the purposes of this Agreement.

     (b) Anything herein to the contrary notwithstanding, it is intended that nothing herein shall waive the preferred status of this Mortgage and that, if any provision of this Mortgage or portion thereof shall be construed to waive the preferred status of this Mortgage, then such provision to such extent shall be void and of no effect and shall cease to be a part of this Mortgage, without affecting the remaining provisions, which shall remain in full force and effect.

     (c) For property other than a Vessel, if any should be determined to be covered by the Mortgage, the discharge amount is 0.01% of the total amount of the outstanding principal amount under the Credit Agreement.

     SECTION 3.5 ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS MORTGAGE OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS MORTGAGE, EACH OF THE SHIPOWNER AND THE MORTGAGEE CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE SHIPOWNER AND THE MORTGAGEE IRREVOCABLY WAIVES ANY OBJECTION INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH OF THE SHIPOWNER AND THE MORTGAGEE WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

     SECTION 3.6 Nothing in Section 3.5 shall affect the right of any the Administrative Agent or any other Lender to serve legal process in any other manner permitted by law or affect the right of the Administrative Agent or any Lender to bring any action or proceeding against the Shipowner in the courts of any other jurisdiction.

     SECTION 3.7 This Mortgage may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

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     SECTION 3.8 The term “Dollars” or the symbol “$” as used herein shall mean Dollars in any coin or currency of the United States of America which at the time of payment shall be legal tender for public and private debts.

     SECTION 3.9 Enforcement Expenses; Indemnification.

          (a) Costs and Expenses. The Shipowner shall pay all out-of-pocket expenses incurred by the Mortgagee, any Lender or the Issuing Bank (including the fees, charges and disbursements of any counsel for the Mortgagee, any Lender or the Issuing Bank) in connection with the enforcement or protection of (i) its rights in connection with this Mortgage and (ii) its rights against the Shipowner in connection with the Credit Agreement and the other Loan Documents, including its rights under this Section, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Revolving Advances or Letters of Credit.

          (b) INDEMNIFICATION BY SHIPOWNER. THE SHIPOWNER SHALL INDEMNIFY THE MORTGAGEE (AND ANY SUB-AGENT THEREOF), EACH LENDER AND THE ISSUING BANK, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE) INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY SHIPOWNER OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS MORTGAGE, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR, IN THE CASE OF THE MORTGAGEE (AND ANY SUB-AGENT THEREOF) AND ITS RELATED PARTIES ONLY, THE ADMINISTRATION OF THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS, (II) ANY LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY ANY LOAN PARTY OR ANY LOAN PARTY’S SUBSIDIARY, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO ANY LOAN PARTY OR ANY LOAN PARTY’S SUBSIDIARY, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE SHIPOWNER OR ANY OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL

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CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY SHIPOWNER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF SUCH SHIPOWNER OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

          (c) All amounts due under this Section 3.9 shall be Secured Obligations and shall be payable not later than ten (10) Business Days after demand therefor. The agreements in this Section shall survive repayment of the other Secured Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.

     SECTION 3.10 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS MORTGAGE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     SECTION 3.11 All notices and other communications hereunder shall be in writing and shall be mailed, sent or delivered in accordance with Section 10.02 of the Credit Agreement.

     SECTION 3.12 Upon (a) the payment in full in cash of the Secured Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge), (b) the termination or expiration of all Letters of Credit (other than Letters of Credit as to which the Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit or as to which other arrangements satisfactory to the Issuing Bank have been made), and the termination of all obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, (c) the termination of all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable

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Swap Counterparty has advised the Administrative Agent in writing that it has received other collateral satisfactory to it), and (d) the termination or expiration of the Revolving Commitments, the liens, estates and rights hereby granted shall terminate and all rights to the Vessels shall revert to the Shipowner to the extent Vessels have not been sold or otherwise applied pursuant to the terms hereof. In connection with any termination or release pursuant to this Section 3.12 or if termination or release is authorized under Section 9.09 of the Credit Agreement, the Administrative Agent shall promptly, and without the necessity of any notice to or further consent from any other Secured Party, at the Shipowner’s expense, execute and deliver all further instruments and documents (including without limitation, release of mortgages), and take all further action that the Shipowner may reasonably request to evidence such termination or release.

     SECTION 3.13 None of the terms or provisions of this Mortgage may be waived, amended, supplemented or otherwise modified except in accordance with Section 10.01 of the Credit Agreement. No consent of any Swap Counterparty (except in such Person’s capacity as a Lender, if applicable) shall be required for any waiver, amendment, supplement or other modification to this Mortgage.

     SECTION 3.14 Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Shipowner shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Mortgage, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Mortgage or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

     SECTION 3.15 In the event of a direct conflict between this Mortgage and the Credit Agreement, the Credit Agreement shall control; provided, however, the parties understand and agree that this Mortgage sets forth additional covenants, obligations and rights and the parties will use all reasonable efforts to construe the provisions and covenants in this Mortgage as not being in direct conflict with the Credit Agreement, and, provided further, this Mortgage shall be governed by and construed in accordance with, Vanuatu Maritime Law.

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     IN WITNESS WHEREOF, the Shipowner has executed this Mortgage on the day and year first above written.

SEAHAWK DRILLING, LLC

By:

Name:

Title:

STATE OF Texas	)
	)	ss. :
COUNTY OF HARRIS	)

     On this ___day of [___], 2009, before me personally appeared [Name], to me known, who being by me duly sworn, did depose and say that he resides at                     ; that he the duly elected and acting                      of SEAHAWK DRILLING, LLC, the company described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said company and that said instrument is the act and deed of said company.

Notary Public

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EXHIBIT A
TO
FIRST PREFERRED FLEET MORTGAGE

[Copy of the Credit Agreement with certain exhibits]

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SCHEDULE I
TO
FIRST PREFERRED MORTGAGE

DESCRIPTION OF THE VESSEL

(including the current classification)

		Name of Class Society /
Vessel Name	Official Number	Vessel Classification
Seahawk 2000	1520	ABS
Seahawk 2001	1542	ABS
Seahawk 2002	1521	ABS
Seahawk 2004	1463	ABS
Seahawk 2005	1489	ABS
Seahawk 2007	1721	ABS
Seahawk 2501	1826	ABS
Seahawk 2503	1828	ABS
Seahawk 2505	1829	ABS
Seahawk 2600	1488	ABS
Seahawk 2601	1827	ABS
Seahawk 3000	1830	ABS
Seahawk 800	1831	ABS

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EXHIBIT L
FORM OF SECURITY AGREEMENT

     THIS SECURITY AGREEMENT dated as of August [___], 2009 (this “Security Agreement”), is entered by and among SEAHAWK DRILLING, INC., a Delaware corporation (the “Borrower”), the Guarantors (as defined in the Credit Agreement described below, and, together with the Borrower, the “Grantors” and, individually, each a “Grantor”) and NATIXIS, NEW YORK BRANCH, as administrative agent (in such capacity, the “Administrative Agent”), for the ratable benefit of the Secured Parties (as defined in the Credit Agreement described below).

RECITALS

     A. This Security Agreement is entered into in connection with that certain Revolving Credit Agreement dated as of August ___, 2009 (as it has been or may be amended, supplemented, restated or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the Guarantors, the lenders party thereto from time to time (individually, a “Lender” and collectively, the “Lenders”), and Natixis, New York Branch, as Administrative Agent for such Lenders and as Issuing Bank (as defined in the Credit Agreement).

     B. Each Grantor will derive substantial direct or indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) and (ii) Swap Contracts (as defined in the Credit Agreement) entered into by any Loan Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit Agreement), and such transactions and documents are necessary or convenient to the conduct, promotion or attainment of such Guarantor’s business.

     C. It is a requirement under the Credit Agreement that the Grantors secure the due payment and performance of all Obligations (as defined in the Credit Agreement) by entering into this Security Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor hereby agrees with the Administrative Agent for the benefit of the Secured Parties as follows:

     Section 1. Definitions; Interpretation. (a) All capitalized terms not otherwise defined in this Security Agreement that are defined in the Credit Agreement shall have the meanings assigned to such terms in the Credit Agreement. Any terms used in this Security Agreement that are defined in the UCC (as defined below) and not otherwise defined herein or in the Credit Agreement shall have the meanings assigned to those terms by the UCC. The following terms shall have the meanings specified below:

“Accounts” means an “account” as defined in the UCC, including, without limitation, all of any Grantor’s rights to payment for goods sold or leased, services performed, or

otherwise, whether now in existence or arising from time to time hereafter, including, without limitation, rights arising under any Contract or evidenced by an account, note, contract, security agreement, Chattel Paper (including, without limitation, tangible Chattel Paper and electronic Chattel Paper), Contract Document or other evidence of indebtedness or security, together with all of the right, title and interest of any Grantor in and to (i) all security pledged, assigned, hypothecated or granted to or held by any Grantor to secure the foregoing, (ii) all of any Grantor’s right, title and interest in and to any goods or services, the sale of which gave rise thereto, (iii) all guarantees, endorsements and indemnifications on, or of, any of the foregoing, (iv) all books, correspondence, credit files, records, ledger cards, invoices, and other papers relating thereto, including without limitation all similar information stored on a magnetic medium or other similar storage device and other papers and documents in the possession or under the control of any Grantor or any computer bureau from time to time acting for any Grantor, (v) all evidences of the filing of financing statements and other statements granted to any Grantor and the registration of other instruments in connection therewith and amendments thereto, notices to other creditors or secured parties, and certificates from filing or other registration officers, (vi) all credit information, reports and memoranda relating thereto, and (vii) all other writings related in any way to the foregoing.

“Cash Collateral” means all amounts from time to time held in any checking, savings, deposit or other account of such Grantor, all monies, proceeds or sums due or to become due therefrom or thereon and all documents (including, but not limited to passbooks, certificates and receipts) evidencing all funds and investments held in such accounts.

“Chattel Paper” has the meaning set forth in the UCC.

“Collateral” has the meaning set forth in Section 2 of this Security Agreement.

“Contract” means any contract to which any Grantor now is, or hereafter will be bound, or to which such Grantor is or hereafter will be a party, beneficiary or assignee, including any Insurance Contract, and all exhibits, schedules and other attachments to such contract, as the same may be amended, supplemented or otherwise modified or replaced from time to time.

“Contract Documents” means all Instruments, Chattel Paper, letters of credit, bonds, guarantees or similar documents evidencing, representing, arising from or existing in respect of, relating to, securing or otherwise supporting the payment of, the Contract Rights.

“Contract Rights” means (i) all (A) of any Grantor’s rights to payment under any Contract or Contract Document and (B) payments due and to become due to any Grantor under any Contract or Contract Document, in each case whether as contractual obligations, damages or otherwise; (ii) all of any Grantor’s claims, rights, powers, or privileges and remedies under any Contract or Contract Document; and (iii) all of any Grantor’s rights under any Contract or Contract Document to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or

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receive any notice, consent, waiver or approval together with full power and authority with respect to any Contract or Contract Document to demand, receive, enforce or collect any of the foregoing rights or any property which is the subject of any Contract or Contract Document, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action which, in the opinion of the Administrative Agent, may be necessary or advisable in connection with any of the foregoing in the case of clauses (i) – (iii) hereof.

“Deposit Account” has the meaning set forth in the UCC.

“Document” means a bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.

“Equipment” means any equipment now or hereafter owned or leased by any Grantor, or in which any Grantor holds or acquires any other right, title or interest, constituting “equipment” under the UCC, including, without limitation, all machinery, equipment, facilities, supplies, or other tangible personal property, including engines, valves, fittings, tools, machinery and parts, communication systems, and other equipment used by any Grantor for the provision of services, and any manuals, instructions, blueprints, computer software (including software that is imbedded in and part of the equipment) and similar items which relate to the above, and any and all additions, substitutions and replacements of any of the foregoing, wherever located together with all improvements thereon and all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

“Excluded Contract Collateral” has the meaning set forth in Section 2(b)(i) of this Security Agreement.

“Excluded Deposit Account” has the meaning set forth in Section 2(b)(iii) of this Security Agreement.

“Excluded Equipment” has the meaning set forth in Section 2(b)(ii) of this Security Agreement.

“Excluded Equity” has the meaning set forth in Section 2(b)(iv) of this Security Agreement.

“Excluded Insurance Proceeds” has the meaning set forth in Section 2(b)(v) of this Security Agreement.

“Fixtures” means any fixtures now or hereafter owned or leased by any Grantor, or in which any Grantor holds or acquires any other right, title or interest, constituting “fixtures” under the UCC, including without limitation any and all additions, substitutions and replacements of any of the foregoing, wherever located together with all improvements thereon and all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

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“General Intangibles” means all general intangibles now or hereafter owned by any Grantor, or in which any Grantor holds or acquires any other right, title or interest, constituting “general intangibles” or “payment intangibles” under the UCC, including, but not limited to, all trademarks, trademark applications, trademark registrations, tradenames, fictitious business names, business names, company names, business identifiers, prints, labels, trade styles and service marks (whether or not registered), trade dress, including logos and/or designs, copyrights, patents, patent applications, goodwill of any Grantor’s business symbolized by any of the foregoing, trade secrets, license rights, license agreements, permits, franchises, and any rights to tax refunds to which any Grantor is now or hereafter may be entitled.

“Instrument” means an “instrument” as defined in the UCC, including, without limitation, any Negotiable Instrument, or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in the ordinary course of business transferred by delivery with any necessary endorsement or assignment (other than Instruments constituting Chattel Paper).

“Insurance Contracts” means all contracts and policies of insurance and re-insurance maintained or required to be maintained by or on behalf of any Grantor under the Loan Documents.

“Inventory” means all of the inventory of any Grantor, or in which any Grantor holds or acquires any right, title or interest, of every type or description, now owned or hereafter acquired and wherever located, whether raw, in process or finished, and all materials usable in processing the same and all documents of title covering any inventory, including, without limitation, work in process, materials used or consumed in any Grantor’s business, now owned or hereafter acquired or manufactured by any Grantor and held for sale in the ordinary course of its business, all present and future substitutions therefor, parts and accessories thereof and all additions thereto, all Proceeds thereof and products of such inventory in any form whatsoever, and any other item constituting “inventory” under the UCC.

“Inventory Records” means all books, records, other similar property, and General Intangibles at any time relating to Inventory.

“Investment Property” means “investment property” as defined in the UCC, including, without limitation, all securities (whether certificated or uncertificated), security entitlements, securities accounts, commodity contracts, and commodity accounts.

“Negotiable Instrument” means a “negotiable instrument” as defined in the UCC.

“Proceeds” means all proceeds (as defined in the UCC) of any or all of the Collateral, including without limitation (i) any and all proceeds of, all claims for, and all rights of any Grantor to receive the return of any premiums for, any insurance, indemnity, warranty or guaranty payable from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture

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of all or any part of the Collateral by any Governmental Authority (or any Person acting under color of any Governmental Authority), (iii) all proceeds received or receivable when any or all of the Collateral is sold, exchanged or otherwise disposed, whether voluntarily, involuntarily, in foreclosure or otherwise, (iv) all claims of any Grantor for damages arising out of, or for breach of or default under, any Collateral, (v) all rights of any Grantor to terminate, amend, supplement, modify or waive performance under any Contracts, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder, and (vi) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

“Secured Obligations” means all Obligations now or hereafter existing, including any extensions, modifications, substitutions, amendments and renewals thereof, whether for principal, interest, fees, expenses, indemnification, or otherwise.

“Security Agreement” means this Security Agreement, as the same may be modified, supplemented or amended from time to time in accordance with its terms.

“Security Termination Date” means the date on or prior to which all of the following shall have occurred: (a) the payment in full in cash of the Secured Obligations (other than contingent indemnification obligations of which no Secured Party has knowledge), (b) the termination or expiration of all Letters of Credit (other than Letters of Credit as to which the Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit or as to which other arrangements satisfactory to the Issuing Bank have been made), and the termination of all obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, (c) the termination of all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable Swap Counterparty has advised the Administrative Agent in writing that it has received other collateral satisfactory to it), and (d) the termination or expiration of the Revolving Commitments.

“Swap Contract” has the meaning set forth in the Credit Agreement.

“UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time thereafter, and any successor statute; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

     (b) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will”

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shall be construed to have the same meaning and effect as the word “shall.” The word “or” is not exclusive. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument, schedule or other document herein shall be construed as referring to such agreement, instrument, schedule or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein) and in effect, (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Security Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Security Agreement, (v) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

     Section 2. Assignment, Pledge and Grant of Security Interest.

     (a) As collateral security for the prompt and complete payment and performance when due of all Secured Obligations, each Grantor hereby assigns, pledges, charges, and grants to the Administrative Agent for the ratable benefit of the Secured Parties a lien on and continuing security interest in all of such Grantor’s right, title and interest in, to and under, all items described in this Section 2, whether now owned or hereafter acquired by such Grantor and wherever located and whether now owned or hereafter existing or arising (collectively, the “Collateral”):

(i)	all Contracts, all Contract Rights, Contract Documents and Accounts associated with such Contracts and each and every document granting security to such Grantor under any such Contract;
(ii)	all Accounts (other than Excluded Accounts);
(iii)	all Inventory;
(iv)	all Equipment (other than Excluded Equipment);
(v)	all General Intangibles;
(vi)	all Investment Property (other than Excluded Equity);
(vii)	all Fixtures;
(viii)	all checking, savings, deposit or other account of such Grantor and all other accounts held in the name of such Grantor (other than Excluded Deposit Accounts);
(ix)	all Cash Collateral;

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(x)	any right to receive a payment under any Swap Contract in connection with a termination thereof;
(xi)	(A) all policies of insurance and Insurance Contracts now or hereafter held by or on behalf of such Grantor, including casualty and liability, business interruption, and any title insurance, (B) all Proceeds of insurance (other than Excluded Insurance Proceeds), and (C) all rights, now or hereafter held by such Grantor to any warranties of any manufacturer or contractor of any other Person;
(xii)	any and all liens and security interests (together with the documents evidencing such security interests) granted to such Grantor by an obligor to secure such obligor’s obligations owing under any Instrument, Chattel Paper, or Contract that is pledged hereunder or with respect to which a security interest in such Grantor’s rights in such Instrument, Chattel Paper, or Contract is granted hereunder;
(xiii)	any and all guaranties given by any Person for the benefit of such Grantor which guarantees the obligations of an obligor under any Instrument, Chattel Paper or Contract, which are pledged hereunder;
(xiv)	without limiting the generality of the foregoing, all other goods, Instruments, Chattel Paper, Documents, and Fixtures of such Grantor whether now existing or hereafter acquired from time to time; and
(xv)	any and all additions, accessions and improvements to, all substitutions and replacements for, and all products and Proceeds of or derived from, all of the items described above in this Section 2.

     (b) Notwithstanding anything to the contrary contained in Section 2(a) and other than to the extent set forth in this Section 2(b), the following property shall be excluded from the lien and security interest granted hereunder (and shall, as applicable, not be included as “Collateral”, “Contracts”, “Contract Rights”, “Contract Documents”, “Accounts”, “Inventory”, “Equipment”, “General Intangibles”, “Investment Property”, “Fixtures”, “Insurance Contracts”, “Proceeds”, “Instruments”, or “Chattel Paper” for the purposes hereof):

     (i) any Contract, Contract Document or other document (and any Contract Rights arising thereunder and Collateral related thereto) to which any of the Grantors is a party on the date hereof or any license or permit issued by a Governmental Authority and held by a Grantor (but excluding any Contract and Contract Rights arising thereunder related to a Collateral Rig but including any Contract with PEMEX and all Contract Rights and Collateral related thereto), in any case to the extent (but only to the extent) that the granting of a security interest therein would constitute or result in (A) the abandonment, invalidation or unenforceability of any material right, title or interest of any Grantor therein, (B) a material violation by any Grantor of any law to which it is subject or (C) in a breach or termination pursuant to the terms of, or a default under, any such Contract, Contract Document, document, license or permit, the result of which

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would be the loss of such asset or any material right, title or interest of any Grantor therein (all such Contracts, Contract Documents, Contract Rights, documents, licenses, permits and related Collateral being the “Excluded Contract Collateral”); provided, however, that (x) the exclusion from the lien and security interest granted by such Grantor hereunder of any Excluded Contract Collateral shall not limit, restrict or impair the grant by such Grantor of the lien and security interest in any accounts or receivables arising under any such Excluded Contract Collateral or any payments due or to become due thereunder, (y) to the extent severable, if a security interest in a portion of any Excluded Contract Collateral would not result in any of the consequences specified in clauses (A), (B) and (C) above, then such portion shall not be included as Excluded Contract Collateral and the lien and security interest granted hereby shall attach automatically and immediately to such portion and such portion shall automatically and immediately be subject to the terms of this Security Agreement as “Collateral”, and (z) any Excluded Contract Collateral or any portion thereof shall automatically and immediately cease to be excluded from this Section 2(b) and shall automatically and immediately be subject to the terms of this Security Agreement as “Collateral” (and the lien and security interest granted hereby shall automatically and immediately attach thereto), to the extent that (1) any condition or consequence described in clause (A), (B) or (C) above is remedied or is ineffective or is subsequently rendered ineffective under Sections 9.406, 9.407, 9.408 or 9.409 of the UCC or under any other Legal Requirement or under any principles of equity or is otherwise no longer in effect, or (2) the applicable Grantor has obtained the requisite consents related to such Excluded Contract Collateral to the creation of a lien and security interest in, such Excluded Contract;

     (ii) any Equipment of a Grantor (A) that is subject to a Lien securing purchase money debt or obligations under a Capital Lease to the extent (and only to the extent) that (1) such Lien and such Debt are permitted under the terms of the Credit Agreement, and (2) the documents relating to such Debt prohibits the granting of a Lien in such Equipment, (B) that is used exclusively on a Non-Collateral Rig, or (C) to the extent a security interest encumbering such Equipment could not be perfected by the filing of a financing statement (collectively, the “Excluded Equipment”);

     (iii) any checking, savings, deposit or other account of such Grantor (A) exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Grantor’s employees or (B) exclusively holding deposits made by any purchasers of Equipment in contemplation of a sale thereof which is not prohibited by the Credit Agreement (collectively, the “Excluded Deposit Accounts”);

     (iv) 35% of all Equity Interest directly held by any Grantor in a Foreign Subsidiary (collectively, the “Excluded Equity”);

     (v) any Proceeds of an Insurance Contract to the extent (and only to the extent) that such Proceeds results from damages to a Non-Collateral Rig (collectively, the “Excluded Insurance Proceeds”); and

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     (vi) any Account arising from the use or operation of the vessels the Pride Tennessee and the Pride Wisconsin, and all Proceeds thereof (collectively, the “Excluded Accounts”);

provided, however, that any Proceeds received by any Grantor from the sale, transfer or other disposition of any Excluded Contract Collateral, Excluded Deposit Account, Excluded Equipment, Excluded Equity, Excluded Insurance Proceeds, Excluded Accounts or any other property excluded under clauses (i) through (v) above shall constitute Collateral unless any assets or property constituting such Proceeds are themselves subject to the exclusions set forth in clauses (i) through (v) above. Furthermore, notwithstanding anything to the contrary contained herein, as to any Grantor, the “Collateral” as defined above shall not include any “Pledged Collateral” as defined in the Pledge Agreement as defined in the Credit Agreement (but only to the extent such Grantor has pledged such Pledged Collateral under such Pledge Agreement).

     (c) Notwithstanding anything contained herein to the contrary, it is the intention of each Grantor, the Administrative Agent and the other Secured Parties that the amount of the Secured Obligation secured by each Grantor’s interests in any of its Property shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other similar Legal Requirement applicable to such Grantor. Accordingly, notwithstanding anything to the contrary contained in this Security Agreement or in any other agreement or instrument executed in connection with the payment of any of the Secured Obligations, the amount of the Secured Obligations secured by each Grantor’s interests in any of its Property pursuant to this Security Agreement shall be limited to an aggregate amount equal to the largest amount that would not render such Grantor’s obligations hereunder or the liens and security interest granted to the Administrative Agent hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

     Section 3. Representations and Warranties. Each Grantor hereby represents and warrants the following to the Administrative Agent and the other Secured Parties:

     (a) Records. As of the date hereof (i) such Grantor’s sole jurisdiction of formation and type of organization are as set forth in Schedule 1 attached hereto, (ii) all records concerning the Accounts, General Intangibles, or any other Collateral applicable to such Grantor are located at the address for such Grantor on such Schedule 1, and (iii) none of the Accounts are evidenced by a promissory note or other instrument.

     (b) Other Liens. Such Grantor is, and will be the record, legal, and beneficial owner of all of the Collateral pledged by such Grantor free and clear of any Lien, except for the Excepted Liens. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is, or will be, on file in any recording office, except such as may be filed in connection with this Security Agreement or in connection with other Permitted Liens or for which satisfactory releases have been received by the Administrative Agent.

     (c) Lien Priority and Perfection.

          (i) Subject only to Excepted Liens, this Security Agreement creates valid and continuing security interests in the Collateral, securing the payment and performance of all the

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Secured Obligations. Upon the filing of financing statements with the jurisdiction listed in Schedule 1, the security interests granted to the Administrative Agent hereunder will constitute valid first-priority perfected security interests in all Collateral with respect to which a security interest can be perfected by the filing of a financing statement, subject only to Excepted Liens.

          (ii) No consent of any other Person and no authorization, approval, or other action by, and no notice to or filing with any Governmental Authority is required to be made or obtained by any Loan Party (A) for the grant by such Grantor of the pledge, assignment, and security interest granted hereby or for the execution, delivery, or performance of this Security Agreement by such Grantor, (B) for the validity, perfection, or maintenance of the pledge, assignment, lien, and security interest created hereby (including the first-priority (subject to Excepted Liens) nature thereof), except for security interests that cannot be perfected by filing under the UCC, or (C) for the exercise by the Administrative Agent of the rights provided for in this Security Agreement or the remedies in respect of the Collateral pursuant to this Security Agreement, except (1) those consents to assignment of licenses, permits, approvals, powers, and other rights that are as a matter of law not assignable, (2) those consents, approvals, authorizations, actions, notices or filings which have been duly obtained or made and, in the case of the maintenance of perfection, the filing of continuation statements under the UCC, and (3) those filings and actions described in Section 3(c)(i).

     (d) Tax Identification Number and Organizational Number. The federal tax identification number of such Grantor and, if applicable, the organizational number of such Grantor are as set forth in Schedule 1.

     (e) Tradenames; Prior Names. Except as set forth on Schedule 1, as of the date hereof, such Grantor has not conducted business under any name other than its current name during the last five years prior to the date of this Security Agreement.

     (f) Exclusive Control. Such Grantor has exclusive possession and control of its respective Equipment and Inventory other than Collateral with a value equal to or less than $1,000,000 in the aggregate.

     Section 4. Covenants.

     (a) Further Assurances.

          (i) Each Grantor agrees that from time to time, at its expense, such Grantor shall promptly execute and deliver all instruments and documents, and take all action, that may be reasonably necessary or desirable, or that the Administrative Agent may reasonably request, in order to perfect, preserve and protect any pledge, charge, assignment, or security interest granted or intended to be granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor (A) at the request of Administrative Agent, shall execute such instruments, endorsements or notices, as may be reasonably necessary or as the Administrative Agent may reasonably request, in order to perfect and preserve the assignments and security interests granted or purported to be granted hereby, (B) shall, at the reasonable request of the Administrative Agent, mark conspicuously each document included in the

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Collateral, each Chattel Paper included in the Accounts, and each of its records pertaining to the Collateral, in each case, with a value in excess of $250,000 individually (or $1,000,000 in the aggregate), but in any event any Collateral that is included in determining the then effective Borrowing Base (regardless of value) with a legend, in form and substance reasonably satisfactory to the Administrative Agent, indicating that such document, Chattel Paper, or record is subject to the pledge, assignment, and security interest granted hereby, (C) shall, if any Collateral shall be evidenced by a promissory note or other instrument or chattel paper, deliver and pledge to the Administrative Agent hereunder such note or instrument or chattel paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to the Administrative Agent, and (D) authorizes the Administrative Agent to file any financing statements, amendments or continuations without the signature of such Grantor to the extent permitted by applicable law in order to perfect or maintain the perfection of any security interest granted under this Security Agreement (including, without limitation, financing statements using an “all assets” or “all personal property” collateral description).

          (ii) Each Grantor shall pay all filing, registration and recording fees and all refiling, re-registration and re-recording fees, and all other reasonable expenses incident to the execution and acknowledgment of this Security Agreement, any assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imports, assessments and charges arising out of or in connection with the execution and delivery of this Security Agreement, any agreement supplemental hereto, any financing statements, and any instruments of further assurance.

          (iii) Each Grantor shall promptly provide to the Administrative Agent all information and evidence the Administrative Agent may reasonably request concerning the Collateral to enable the Administrative Agent to enforce the provisions of this Security Agreement.

     Section 5. Change of Name; State of Formation. Each Grantor shall give the Administrative Agent at least 10 Business Days prior written notice before it (i) in the case of any Grantor that is not a “registered organization” (as such term is defined in Section 9-102 of the UCC), changes the location of its principal place of business and chief executive office, (ii) changes the location of its jurisdiction of formation or organization, (iii) changes the location of the Equipment, Inventory, or original copies of any Chattel Paper evidencing Accounts, in each case, with a value in excess of $250,000 individually (or $1,000,000 in the aggregate) but in any event any such Collateral that is included in determining the then effective Borrowing Base (regardless of value), or (iv) changes its legal name or uses a trade name other than its current name used on the date such Grantor entered into this Pledge Agreement; provided that, such Grantor shall not effect or permit any such change unless all filings have been made under the UCC or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have, and each Grantor agrees to take all necessary action to ensure that the Administrative Agent does continue at all times to have, a valid, legal and perfected security interest in all the Collateral. Other than as permitted by Section 6.15 of the Credit Agreement but subject to the terms of this Section 5, no Grantor shall amend, supplement, modify or restate its articles or certificate of incorporation, bylaws, limited liability company agreements, or other equivalent organizational documents, nor amend its name or change its

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jurisdiction of incorporation, organization or formation without the prior written consent of the Administrative Agent.

     (a) Right of Inspection. Each Grantor shall hold and preserve, at its own cost and expense complete records of the Collateral in the ordinary course of business, including, but not limited to, Instruments, Chattel Paper, Contracts, and records with respect to the Accounts, and will permit representatives of the Administrative Agent, upon reasonable advance notice, at any time during normal business hours to inspect the Collateral, copy records pertaining thereto, and if applicable, copy such Collateral. At the Administrative Agent’s reasonable written request (which may be delivered by electronic mail so long as such electronic mail is delivered to the corporate secretary of the applicable Grantor), each Grantor shall promptly deliver copies of any and all such records to the Administrative Agent.

     (b) Liability Under Contracts and Accounts. Notwithstanding anything in this Security Agreement to the contrary, (i) the execution of this Security Agreement shall not release any Grantor from its obligations and duties under any Contract Document, or any other contract or instrument which are part of the Collateral and Accounts included in the Collateral, (ii) the exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any Contract Documents, or any other Contract or Instrument which are part of the Collateral and Accounts included in the Collateral, and (iii) the Administrative Agent shall not have any obligation or liability under any Contract Documents, or any other contract or instrument which are part of the Collateral and Accounts included in the Collateral by reason of the execution and delivery of this Security Agreement, nor shall the Administrative Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

     (c) Accounts. Each Grantor agrees that it will use commercially reasonable efforts to ensure that each Account (i) is and will be, in all material respects, the genuine, legal, valid, and binding obligations of the account debtor in respect thereof, (ii) is and will be, in all material respects, enforceable in accordance with its terms, is not and will not be subject to any setoffs, defenses, taxes, counterclaims, except in the ordinary course of business, (iii) is and will be, in all material respects, in compliance with all applicable laws, whether federal, state, local or foreign, and (iv) which if evidenced by Chattel Paper in excess of $1,000,000 individually or $2,000,000 in the aggregate (when aggregated with all other Collateral constituting Chattel Paper, Instrument or letter of credit), will not require the consent of the account debtor in respect thereof in connection with its assignment hereunder.

     (d) Negotiable Instrument. If any Grantor shall at any time hold or acquire any Negotiable Instruments in respect of any Collateral or which constitutes Collateral, including promissory notes, with a value in excess of $250,000 individually or $1,000,000 in the aggregate (but in any event any such Collateral that is included in determining the then effective Borrowing Base (regardless of value)), such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.

     (e) Other Covenants of Grantor. Each Grantor agrees that (i) upon the occurrence and during the continuance of an Event of Default, any action or proceeding to enforce this

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Security Agreement may be taken by the Administrative Agent either in such Grantor’s name or in the Administrative Agent’s name, as the Administrative Agent may deem necessary, and (ii) such Grantor will, until the Security Termination Date, warrant and defend its title to the Collateral and the interest of the Administrative Agent in the Collateral against any claim or demand of any Persons (other than Excepted Liens) which could reasonably be expected to materially and adversely affect such Grantor’s title to, or the Administrative Agent’s right or interest in, such Collateral.

     Section 6. Termination of Security Interest. Upon the occurrence of the Security Termination Date, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantor to the extent such Collateral has not been sold or otherwise applied pursuant to the terms hereof. Upon any such termination or if otherwise authorized under Section 9.09 of the Credit Agreement, the Administrative Agent will, at the Grantors’ expense, execute and deliver to the applicable Grantor such documents (including, without limitation, UCC-3 termination statements) as such Grantor shall reasonably request to evidence such termination.

     Section 7. Reinstatement. If, at any time after payment in full of all Secured Obligations and termination of the Administrative Agent’s security interest granted herein, any payments on the Secured Obligations previously made must be disgorged by the Administrative Agent for any reason whatsoever, including, without limitation, the insolvency, bankruptcy or reorganization of any Grantor or any other Person, this Security Agreement and the Administrative Agent’s security interests herein shall be reinstated as to all disgorged payments as though such payments had not been made, and each Grantor shall sign and deliver to the Administrative Agent all documents, and shall do such other acts and things, as may be necessary to reinstate and perfect the Administrative Agent’s security interest. EACH GRANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED PARTY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7 (INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ONE EXTERNAL PRIMARY COUNSEL AND OF ONE LOCAL COUNSEL IN EACH JURISDICTION, IF NECESSARY (IT BEING UNDERSTOOD THAT THE LOCAL COUNSEL FOR ANY SUCH JURISDICTION SHALL, IF REASONABLY ACCEPTABLE TO THE PERSON TO WHOM SUCH SECURED PARTY IS A RELATED PARTY, BE LIMITED TO ANY LOCAL COUNSEL PREVIOUSLY ENGAGED BY THE BORROWER IN SUCH JURISDICTION, IF APPLICABLE) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED SECURED PARTY’S OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE BEEN PROXIMATELY CAUSED BY SUCH SECURED PARTY’S OWN BAD FAITH, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, VIOLATION OF LAW OR BY REASON OF A CLAIM BY ONE OR MORE OTHER SECURED PARTIES OR EQUITY INTEREST OWNERS OF ANY SECURED PARTY, SO LONG AS NOT PROXIMATELY CAUSED BY ANY GRANTOR OR ANY AFFILIATE THEREOF.

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     Section 8. Remedies upon Event of Default. If any Event of Default has occurred and is continuing, the Administrative Agent may (and shall at the written request of the Required Lenders), (i) proceed to protect and enforce the rights vested in it by this Security Agreement or otherwise available to it, including but not limited to, the right to cause all revenues and other moneys pledged hereby as Collateral to be paid directly to it, and to enforce its rights hereunder to such payments and all other rights hereunder by such appropriate judicial proceedings as it shall deem most effective to protect and enforce any of such rights, either at law or in equity or otherwise, whether for specific enforcement of any covenant or agreement contained in any of the Contract Documents, or in aid of the exercise of any power therein or herein granted, or for any foreclosure hereunder and sale under a judgment or decree in any judicial proceeding, or to enforce any other legal or equitable right vested in it by this Security Agreement or by law; (ii) cause any action at law or suit in equity or other proceeding to be instituted and prosecuted and enforce any rights hereunder or included in the Collateral, subject to the provisions and requirements thereof; (iii) subject to the mandatory requirements of applicable law, sell or otherwise dispose of any or all of the Collateral or cause the Collateral to be sold or otherwise disposed of in one or more sales or transactions, at such prices and in such manner as may be commercially reasonable, and for cash or on credit or for future delivery, without assumption of any credit risk, at public or private sale, without demand of performance or notice of intention to sell or of time or place of sale (except such notice as is required by applicable statute and cannot be waived), it being agreed that the Administrative Agent may be a purchaser on behalf of the Secured Parties at any such sale and that the Administrative Agent, any other Secured Party, or any other Person who may be a bona fide purchaser for value and without notice of any claims of any or all of the Collateral so sold shall thereafter hold the same absolutely free from any claim or right of whatsoever kind, including any equity of redemption of any Grantor, any such demand, notice or right and equity being hereby expressly waived and released to the extent permitted by law; (iv) incur reasonable expenses, including reasonable attorneys’ fees, reasonable consultants’ fees, and other costs appropriate to the exercise of any right or power under this Security Agreement; (v) perform any obligation of any Grantor hereunder and make payments, purchase, contest or compromise any encumbrance, charge or lien, and pay taxes and expenses, without, however, any obligation to do so; (vi) in connection with any acceleration and foreclosure, take possession of the Collateral and render it usable and repair and renovate the same, without, however, any obligation to do so, and enter upon any location where the Collateral may be located for that purpose, control, manage, operate, rent and lease the Collateral, collect all rents and income from the Collateral and apply the same to in accordance with Section 12; (vii) secure the appointment of a receiver for the Collateral or any part thereof; (viii) require any Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place and time to be designated by the Administrative Agent which is reasonably convenient to both parties; (ix) exercise any other or additional rights or remedies granted to a secured party under the UCC; or (x) occupy any premises owned or, to the extent lawful and permitted, leased by any Grantor where the Collateral or any part thereof is assembled for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to any Grantor in respect of such occupation. If, pursuant to applicable law, prior notice of sale of the Collateral under this Section is required to be given to any Grantor, each Grantor hereby acknowledges that the minimum time required by such applicable law, or if no minimum time is specified, 10 days

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shall be deemed a reasonable notice period. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

     Section 9. Remedies Cumulative; Delay Not Waiver.

     (a) No right, power or remedy herein conferred upon or reserved to the Administrative Agent is intended to be exclusive of any other right, power or remedy and every such right, power and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right, power and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder or otherwise shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all security now or hereafter held by the Administrative Agent may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken nonjudicial proceedings, or both.

     (b) No delay or omission of the Administrative Agent to exercise any right or power accruing upon the occurrence and during the continuance of any Event of Default as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and every power and remedy given by this Security Agreement may be exercised from time to time, in accordance with and subject to the terms hereof and as often as shall be deemed expedient, by the Administrative Agent.

     Section 10. Contract Rights. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may exercise any of the Contract Rights that are included in or related to Collateral and remedies of any Grantor under or in connection with the Instruments, Chattel Paper, or Contracts, the General Intangibles, or which otherwise relate to the Collateral, including, without limitation, any rights of any Grantor to demand or otherwise require payment of any amount under, or performance of any provisions of, the Instruments, Chattel Paper, or Contracts, or the General Intangibles.

     Section 11. Accounts.

     (a) the Administrative Agent may, or may direct any Grantor to, to the extent reasonably necessary to perfect, preserve or protect the security interests granted hereby, notify the account debtors or obligors under any Accounts of the collateral assignment of such Accounts to the Administrative Agent. Upon the occurrence and during the continuation of an Event of Default, the Administrative Agent may direct such account debtors or obligors to make payment of all amounts due or to become due directly to the Administrative Agent. Upon such notification and direction, and at the expense of the Grantors, the Administrative Agent may enforce collection of any such Accounts, and adjust, settle, or compromise the amount or payment thereof in the same manner and to the same extent as any Grantor might have done.

     (b) After receipt by any Grantor of the notice referred to in Section 11(a) above that an Event of Default has occurred and is continuing, all amounts and proceeds (including

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instruments) received by such Grantor in respect of the Accounts shall be received in trust for the benefit of the Administrative Agent, for the ratable benefit of the Secured Parties, hereunder, shall be segregated from other funds of such Grantor, and shall promptly be paid over to the Administrative Agent, for the ratable benefit of the Secured Parties, in the same form as so received (with any necessary endorsement) to be held as Collateral. No Grantor shall adjust, settle, or compromise the amount or payment of any Account, nor release wholly or partly any account debtor or obligor thereof, nor allow any credit or discount thereon.

     Section 12. Application of Collateral. The proceeds of any sale, or other realization upon all or any part of the Collateral by the Administrative Agent or any other Secured Party shall be applied by the Administrative Agent or such Secured Party as set forth in Section 7.06 of the Credit Agreement. Notwithstanding the foregoing, nothing contained herein shall contradict the terms of Section 9.09(e) of the Credit Agreement which provides that only the Administrative Agent may exercise all rights, remedies and powers as the secured party of the liens granted herein.

     Section 13. Administrative Agent as Attorney-in-Fact for Grantor. Each Grantor hereby constitutes and irrevocably appoints the Administrative Agent, acting for and on behalf of itself and the Secured Parties and each successor or assign of the Administrative Agent and the Secured Parties, the true and lawful attorney-in-fact of such Grantor, with full power and authority in the place and stead of such Grantor and in the name of such Grantor, the Administrative Agent or otherwise to take any action and execute any instrument at the written direction of the Secured Parties and enforce all rights, interests and remedies of such Grantor with respect to the Collateral, including the right:

     (a) to ask, require, demand, receive and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of any of the other Collateral, including without limitation, any Insurance Contracts;

     (b) to elect remedies thereunder and to endorse any checks or other instruments or orders in connection therewith;

     (c) to file any claims or take any action or institute any proceedings in connection therewith which the Administrative Agent may deem to be necessary or advisable;

     (d) to pay, settle or compromise all bills and claims which may be or become liens or security interests against any or all of the Collateral, or any part thereof, unless a bond or other security satisfactory to the Administrative Agent has been provided; and

     (e) upon foreclosure, to do any and every act which any Grantor may do on its behalf with respect to the Collateral or any part thereof and to exercise any or all of such Grantor’s rights and remedies under any or all of the Collateral;

provided, however, that the Administrative Agent shall not exercise any such rights or take any such actions except after the occurrence and during the continuation of an Event of Default. This power of attorney is a power coupled with an interest and shall be irrevocable.

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     Section 14. Administrative Agent May Perform. The Administrative Agent may from time-to-time perform any act which any Grantor has agreed hereunder to perform and which such Grantor shall fail to perform after being requested in writing so to perform (it being understood that no such request need be given after the occurrence and during the continuance of any Event of Default and after notice thereof by the Administrative Agent to any Grantor) and the Administrative Agent may from time-to-time take any other action which the Administrative Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein, and the reasonable expenses of the Administrative Agent incurred in connection therewith shall be part of the Secured Obligations and shall be secured hereby. The Administrative Agent shall endeavor to provide notice to the affected Grantor of any action taken hereunder; provided however, the failure to provide such notice shall not be construed as a waiver of any rights of the Administrative Agent provided under this Security Agreement or under applicable law.

     Section 15. Administrative Agent Has No Duty. The powers conferred on the Administrative Agent hereunder are solely to protect its interest, as the secured party, in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Collateral or responsibility for taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

     Section 16. Reasonable Care. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own Property.

     Section 17. Payments Held in Trust. During the continuance of an Event of Default, all payments received by any Grantor under or in connection with any Collateral shall be received in trust for the benefit of the Administrative Agent, for the ratable benefit of the Secured Parties, and shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Administrative Agent, for the ratable benefit of the Secured Parties, in the same form as received (with any necessary endorsement).

     Section 18. Miscellaneous.

     (a) Expenses. Each Grantor will upon demand pay to the Administrative Agent for its benefit and the benefit of the Secured Parties the amount of (i) any reasonable out-of-pocket expenses, including the reasonable fees, charges and disbursements of experts and one external primary counsel for the Administrative Agent and of one local counsel in each jurisdiction, if necessary (it being understood that the local counsel for any such jurisdiction shall, if reasonably acceptable to the Administrative Agent, be limited to any local counsel previously engaged by a Loan Party in such jurisdiction, if applicable), in any case, which the Administrative Agent and the Secured Parties may incur in connection with the custody, preservation, use, or operation of, any Pledged Collateral, and (ii) any out-of-pocket expenses, including the fees and disbursements of its counsels and of any experts, which the Administrative Agent and the Secured Parties may incur in connection with (A) the sale, collection, or other realization of, any

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of the Collateral, (B) the exercise or enforcement of any of the rights of the Administrative Agent or any Secured Party hereunder, and (C) the failure by any Grantor to perform or observe any of the provisions hereof.

     (b) Amendments; Etc. No amendment or waiver of any provision of this Security Agreement nor consent to any departure by any Grantor herefrom shall be effective unless the same shall comply with Section 10.01 of the Credit Agreement, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

     (c) Addresses for Notices. All notices and other communications provided for hereunder shall be made in the manner and to the addresses set forth in Section 10.02 of the Credit Agreement.

     (d) Continuing Security Interest; Transfer of Interest. This Security Agreement shall create a continuing security interest in the Collateral and shall (a)  remain in full force and effect until the Security Termination Date, (b) be binding upon each Grantor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of and be binding upon, the Administrative Agent and the Lenders and their respective successors, permitted transferees, and permitted assigns, and to the benefit of and be binding upon, the Swap Counterparties, and each of their respective successors, transferees, and assigns to the extent such successors, transferees, and assigns of a Swap Counterparty is a Lender or an Affiliate of a Lender. Without limiting the generality of the foregoing clause, when any Lender assigns or otherwise transfers any interest held by it under the Credit Agreement or other Loan Document to any other Person pursuant to the terms of the Credit Agreement or such other Loan Document, that other Person shall thereupon become vested with all the benefits held by such Lender under this Security Agreement.

     (e) Severability. If any provision of this Security Agreement is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Security Agreement shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     (f) Choice of Law. This Security Agreement shall be governed by and construed in accordance with the laws of the State of New York and the applicable laws of the United States of America.

     (g) Counterparts. This Security Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart signature page by facsimile or other electronic transmission is as effective as executing and delivering this Security Agreement in the presence of the other parties to this Security Agreement. In proving this Security Agreement, a party must produce or account only for the executed counterpart of the party to be charged.

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     (h) Conflicts. In the event of any explicit or implicit conflict between any provision of this Security Agreement and any provision of the Credit Agreement, the terms of the Credit Agreement shall be controlling.

     (i) Additional Grantors. Pursuant to the Credit Agreement, each Material Domestic Subsidiary that was not in existence on the date of the Credit Agreement is required to enter into this Security Agreement as a Grantor promptly upon (but in an event within 30 days after) becoming a Material Domestic Subsidiary. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of Annex 1, such Material Domestic Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.

     (j) Submission to Jurisdiction.

          (i) Any legal action or proceeding with respect to this Security Agreement may be brought in the courts of the state of New York sitting in New York City or of the United States of America for the Southern District of such state, and by execution and delivery of this Security Agreement, each party to this Security Agreement consents, for itself and in respect of its Property, to the non-exclusive jurisdiction of those courts. Each party to this Security Agreement irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this Security Agreement or other document related hereto. Each party to this Security Agreement waives personal service of any summons, complaint or other process, which may be made by any other means permitted by the law of such state.

          (ii) Nothing in the immediately preceding clause (i) shall affect the right of any party hereto to serve legal process in any other manner permitted by law or affect the right of any party hereto to bring any action or proceeding against any other party in the courts of any other jurisdiction.

     (k) Waiver of Jury. Each party to this Security Agreement hereby expressly and irrevocably waives any right to trial by jury of any claim, demand, action or cause of action arising under this Security Agreement or in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to this Security Agreement, or the transactions related hereto, in each case whether now existing or hereafter arising, and whether founded in contract or tort or otherwise; and each party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that any party to this Security Agreement may file an original counterpart or a copy of this section with any

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court as written evidence of the consent of the signatories hereto to the waiver of their right to trial by jury.

     (l) Integration. This Security Agreement and the other Loan Documents represent the final agreement among the parties with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties. There are no oral agreements among the parties hereto.

[SIGNATURE PAGES FOLLOW]

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     The parties hereto have caused this Security Agreement to be duly executed as of the date first above written.

GRANTORS:

[BORROWER]

[MATERIAL DOMESTIC SUBSIDIARIES]

By:

Name:

Title:

ADMINISTRATIVE AGENT:

NATIXIS, NEW YORK BRANCH,
as Administrative Agent

By:

Name:

Title:

By:

Name:

Title:

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SCHEDULE 1

to Security Agreement

[FOR BORROWER AND EACH MATERIAL DOMESTIC SUBSIDIARY]

Grantor:

Jurisdiction of Formation / Filing:

Type of Organization:

Address where records for
Collateral are kept:

Organizational Number (if applicable):

Federal Tax Identification Number:

Prior Names:

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Annex 1 to the
Security Agreement

     SUPPLEMENT NO. ___dated as of                     , 20___(the “Supplement”), to the Security Agreement dated as of August [___], 2009 (as amended, supplemented, restated or otherwise modified from time to time, the “Security Agreement”), by and among SEAHAWK DRILLING, INC., a Delaware corporation (the “Borrower”), the Guarantors (as defined in the Credit Agreement described below, and, together with the Borrower, the “Grantors” and, individually, each a “Grantor”) and NATIXIS, NEW YORK BRANCH, as administrative agent (the “Administrative Agent”), for the ratable benefit of the Secured Parties (as defined in the Credit Agreement described below).

     A. Reference is made to that certain Revolving Credit Agreement dated as of August [___], 2009 by and among the Borrower, the Guarantors, the lenders party thereto from time to time (individually, a “Lender” and collectively, the “Lenders”), and Natixis, New York Branch, as administrative agent (in such capacity, the “Administrative Agent”) for such Lenders (as amended, restated, supplemented or otherwise modified from time-to-time, the “Credit Agreement”).

     B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Credit Agreement.

     C. The Grantors have entered into the Security Agreement in order to induce the Lenders to make Revolving Advances and the Issuing Bank to issue, extend, and renew Letters of Credit under the Credit Agreement. Pursuant to the Credit Agreement, each Material Domestic Subsidiary that was not in existence on the date of the Credit Agreement is required to enter into the Security Agreement as a Grantor, within 30 days of becoming a Material Domestic Subsidiary. Section 18(i) of the Security Agreement provides that additional Material Domestic Subsidiaries may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned (the “New Grantor”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement in order to induce the Lenders to make additional Revolving Advances and for the Issuing Bank to issue, extend, and renew Letters of Credit under the Credit Agreement, and as consideration for Revolving Advances previously made and Letters of Credit previously issued thereunder.

     D. The New Grantor is a Material Domestic Subsidiary and will derive substantial direct or indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) and (ii) Swap Contracts (as defined in the Credit Agreement) entered into by any Loan Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit Agreement), and such transactions and documents are necessary or convenient to the conduct, promotion or attainment of such Guarantor’s business.

     Accordingly, the Administrative Agent and the New Grantor agree as follows:

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     SECTION 1. In accordance with Section 18(j) of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby agrees (a) to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof in all material respects. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Secured Obligations (as defined in the Security Agreement), does hereby create and grant to the Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.

     SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or similar laws affecting creditors’ rights generally or general principles of equity.

     SECTION 3. This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart signature page by facsimile or other electronic transmission is as effective as executing and delivering this Supplement in the presence of the other parties to this Supplement. In proving this Supplement, a party must produce or account only for the executed counterpart of the party to be charged. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Administrative Agent.

     SECTION 4. The New Grantor hereby represents and warrants that set forth on Schedule 1 attached hereto are, as of the date hereof, (a) its sole jurisdiction of formation and type of organization, (b) the location of all records concerning its Accounts, General Intangibles, or any other Collateral, (c) its federal tax identification number and the organizational number, if applicable, and (d) all names used by it during the last five years prior to the date of this Supplement.

     SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

     SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

     SECTION 7. If any provision of this Supplement is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this

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Supplement shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     SECTION 8. All communications and notices hereunder shall be in writing and given as provided in the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature hereto or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by the New Grantor in a notice to the Administrative Agent.

     SECTION 9. The New Grantor agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

     SECTION 10. This Supplement, the Security Agreement and the other Loan Documents, represent the final agreement among the parties with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties. There are no oral agreements among the parties hereto.

     IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

[Name of New Grantor],

By:

Name:

Title:

Address:

NATIXIS, NEW YORK BRANCH,
as Administrative Agent

By:

Name:

Title:

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Schedule 1
Supplement No. ____
to the Security Agreement

New Grantor:	[GRANTOR]
Jurisdiction of Formation / Filing:	[STATE]
Type of Organization:	[ENTITY TYPE]
Address where records for Collateral are kept:	[ADDRESS] [ADDRESS]
Organizational Number (if applicable):
Federal Tax Identification Number:
Prior Names:

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EX-21.1

Exhibit 21.1

Seahawk Drilling, Inc. Subsidiaries

Company Name	Jurisdiction
Gulf of Mexico Personnel Services, S. de R. L. de C. V.	Mexico
Mexico Drilling Limited LLC	Delaware
Mexico Offshore Management, S. de R. L. de C. V.	Mexico
Central America Drilling LLC	Delaware
Peninsula Drilling LLC	Delaware
Seahawk Drilling de Mexico LLC	Delaware
Seahawk Mexico Holdings LLC	Delaware
Redfish Holdings, S. de R. L. de C. V.	Mexico
Seahawk Drilling Management LLC	Delaware
Seahawk Offshore Management LLC	Delaware
Energy Supply International LLC	Delaware
Seahawk Drilling LLC	Delaware
Seahawk Global Holdings LLC	Delaware

EX-99.1

EXHIBIT 99.1

August 5, 2009

To Stockholders of Pride International, Inc.:

We are pleased to inform you that on August 4, 2009 the board of directors of Pride International, Inc. approved the spin-off of Seahawk Drilling, Inc., a wholly owned subsidiary of Pride, to Pride stockholders through a stock distribution. At the time of the spin-off, Seahawk will hold the assets and liabilities associated with Pride’s mat-supported jackup rig business. After completing the spin-off, Pride stockholders will own 100% of the outstanding common stock of Seahawk. We believe that the spin-off has the potential to facilitate Pride’s growth strategies and reduce its cost of capital, and to allow Pride to refine its focus and further enhance its reputation as a provider of premium deepwater drilling services.

The distribution of Seahawk common stock is expected to occur on August 24, 2009 by way of a pro rata stock dividend to Pride stockholders. Each Pride stockholder will receive 1/15 of a share of Seahawk common stock with respect to each share of Pride common stock held by such stockholder at the close of business on August 14, 2009, the record date of the spin-off. The distribution, which is subject to certain customary conditions, will be issued in book-entry form only, which means that no physical stock certificates will be issued. If you own your shares through a broker, your brokerage account will be credited with the shares of Seahawk. If you own your shares of Pride stock directly (either in book-entry form through an account with Pride’s transfer agent and/or if you hold physical stock certificates), the shares of Seahawk will be credited to you by way of direct registration to a book-entry account.

Stockholder approval of the spin-off is not required, nor are you required to take any action to receive your Seahawk common stock. Following the spin-off, if you are a Pride stockholder on the record date, you will own shares in each of Pride and Seahawk.

We have received a private letter ruling from the Internal Revenue Service and will seek an opinion from Baker Botts L.L.P. that, for U.S. federal income tax purposes, the spin-off will qualify for tax-free treatment. However, any cash that you receive in lieu of fractional shares generally will be taxable to you. It is a condition to completing the spin-off that we receive the opinion of Baker Botts L.L.P. confirming the spin-off’s tax-free status. The spin-off is also subject to other conditions, including necessary regulatory approvals.

Seahawk’s common stock has been authorized for listing on the NASDAQ Global Select Market under the symbol “HAWK.” Pride common stock will continue to trade on the New York Stock Exchange under the symbol “PDE.”

The enclosed information statement, which is being mailed to all Pride stockholders, describes the spin-off in detail and contains important information about Seahawk. We urge you to read this information statement carefully.

We want to thank you for your continued support of Pride, and we look forward to your support of Seahawk in the future.

Sincerely,

LOUIS A. RASPINO

President and Chief Executive Officer

Pride International, Inc.

August 5, 2009

Dear Seahawk Drilling, Inc. Stockholder:

It is our great pleasure to welcome you as a stockholder of Seahawk, which will become an independent publicly traded company on August 24, 2009 as a result of the spin-off from Pride International, Inc.

Our strategy as an independent company will be to improve the profitability, efficiency and reputation of our core business of providing jackup drilling services to the exploration and production industry in the Gulf of Mexico. We believe that our strengths, including our large jackup fleet in the Gulf of Mexico, our existing relationships with our customers and our experienced management team, will enable us to achieve our goals. As an independent company, we believe we can more effectively focus on our operations and growth strategies, and thus bring more value to you as a stockholder than we could as a subsidiary of Pride.

Our common stock has been authorized for listing on the NASDAQ Global Select Market under the symbol “HAWK” in connection with the spin-off.

We thank you in advance for your support as a holder of Seahawk common stock, and invite you to learn more about Seahawk by reviewing the enclosed information statement.

Sincerely,

RANDALL D. STILLEY

President and Chief Executive Officer
Seahawk Drilling, Inc.

INFORMATION STATEMENT

Seahawk Drilling, Inc.

Common Stock

This information statement is being furnished in connection with the spin-off by Pride International, Inc. (“Pride”) to its stockholders of Seahawk Drilling, Inc. (“Seahawk”), a wholly owned subsidiary of Pride that will hold directly or indirectly the assets and liabilities associated with Pride’s mat-supported jackup rig business. To implement the spin-off, Pride will distribute all of its shares of Seahawk common stock on a pro rata basis to the holders of Pride common stock. Each of you, as a holder of Pride common stock, will receive 1/15 of a share of Seahawk common stock with respect to each share of Pride common stock that you held at the close of business on August 14, 2009, the record date for the spin-off. The spin-off will be effective as of August 24, 2009. Immediately after the spin-off is completed, Seahawk will be an independent publicly traded company. As discussed more fully in this information statement, if you sell shares of Pride common stock in the “regular way” market after the record date and before the spin-off date, you will be selling your right to receive shares of Seahawk common stock in the spin-off. See “The Spin-Off — Trading Between the Record Date and Spin-Off Date.”

No vote of Pride stockholders is required in connection with this spin-off.  You are not required to send us a proxy card. Pride stockholders will not be required to pay any consideration for the shares of Seahawk common stock they receive in the spin-off, and they will not be required to surrender or exchange shares of their Pride common stock or take any other action in connection with the spin-off.

At the time of the spin-off, each share of Seahawk common stock will have attached to it one preferred stock purchase right, the principal terms of which are described under “Description of Capital Stock — Stockholder Rights Plan.” Where appropriate, references in this information statement to Seahawk common stock include the associated rights.

All of the outstanding shares of Seahawk common stock are currently owned by Pride. Accordingly, there currently is no public trading market for Seahawk common stock. Seahawk’s common stock has been authorized for listing under the ticker symbol “HAWK” on the NASDAQ Global Select Market. We anticipate that a limited market, commonly known as a “when-issued” trading market, for Seahawk common stock will develop on or shortly before the record date for the spin-off and will continue up to and including the spin-off date, and we anticipate that “regular-way” trading of Seahawk common stock will begin on the first trading day following the spin-off date.

In reviewing this information statement, you should carefully consider the matters described in the section entitled “Risk Factors” beginning on page 16 of this information statement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of any of the securities of Seahawk or determined whether this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this information statement is August 5, 2009.

Table of Contents

	Page
Summary		1
Risk Factors		16
Forward-Looking Information		34
The Spin-Off		36
Capitalization		45
Dividend Policy		45
Selected Historical Combined Financial Information		46
Unaudited Pro Forma Combined Financial Information		47
Management’s Discussion and Analysis of Combined Financial Condition and Results of Operations		52
Business		69
Management		79
Security Ownership of Certain Beneficial Owners		104
Certain Relationships and Related Party Transactions		106
Description of Capital Stock		113
Description of Credit Facility		118
Indemnification of Directors And Officers		120
Where You Can Find More Information		121
Index to Financial Statements		F-1

This information statement is being furnished solely to provide information to Pride stockholders who will receive shares of our common stock in the spin-off. It is not and is not to be construed as an inducement or encouragement to buy or sell any of our securities or any securities of Pride. This information statement describes our business, the relationship between Pride and us, and how the spin-off affects Pride and its stockholders, and provides other information to assist you in evaluating the benefits and risks of holding or disposing of our common stock that you will receive in the spin-off. You should be aware of certain risks relating to the spin-off, our business and ownership of our common stock, which are described under the heading “Risk Factors.”

You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations and practices.

In this information statement, we rely on and refer to information and statistics regarding the contract drilling industry. We obtained this information from independent publications or other publicly available information. Although we believe these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information.

All industry and statistical information included in this information statement, other than information derived from our financial and accounting records, is presented as of March 31, 2009 unless otherwise indicated. Unless otherwise indicated, financial information and information derived from our accounting records which are presented as “current” are as of March 31, 2009.

SUMMARY

This summary highlights selected information contained elsewhere in this information statement. This summary is not complete and does not contain all of the information that may be important to you. You should read carefully the entire information statement, including the risk factors, financial information and financial statements included herein. Unless the context requires otherwise or we specifically indicate otherwise, the terms “Seahawk,” “our company,” “we,” “our,” “ours” and “us” refer to Seahawk Drilling, Inc., a company incorporated under the laws of the state of Delaware, and its subsidiaries; and the term “Pride” refers to Pride International, Inc., a publicly traded Delaware corporation, and its subsidiaries (excluding us and any of our subsidiaries). The term “Gulf of Mexico Business” refers to Pride’s historical Gulf of Mexico operations reflected in the historical combined financial statements discussed herein and included elsewhere in this information statement. The Gulf of Mexico Business reflects the effects of certain assets and operations that will not be held by Seahawk.

We describe in this information statement the mat-supported jackup rig business to be held by us after the spin-off as if it were our business for all historical periods described. However, we are an entity that will not have independently conducted any operations before the spin-off. References in this document to our historical assets, liabilities, products, business or activities generally refer to the historical assets, liabilities, products, business or activities of the Gulf of Mexico Business as it was conducted as part of Pride and its subsidiaries before the spin-off. Our historical combined financial results as part of Pride contained in this information statement may not be indicative of our financial results in the future as an independent company or reflect what our financial results would have been had we been an independent company during the periods presented.

Our Company

Seahawk Drilling, Inc. operates a jackup rig business that provides contract drilling services to the oil and natural gas exploration and production industry in the Gulf of Mexico. Our fleet of mobile offshore drilling rigs consists of 20 mat-supported jackup rigs that are capable of operating in maximum water depths of up to 300 feet and drilling to depths of up to 25,000 feet. We have the second largest fleet of jackup rigs operating in the Gulf of Mexico. We contract with our customers on a dayrate basis to provide rigs and drilling crews, and we are responsible for the payment of operating and maintenance expenses. Our customers primarily consist of various independent oil and natural gas producers, drilling service providers and the national oil company in Mexico, and our competitors range from large international companies offering a wide range of drilling services to smaller companies focused on more specific geographic or technological areas.

Jackup rigs are mobile, self-elevating drilling platforms equipped with legs that can be lowered to the ocean floor until a foundation is established to support the drilling platform. Once a foundation is established, the drilling platform is jacked further up the legs so that the platform is above the highest expected waves. The rig hull includes the drilling rig, jackup system, crew quarters, loading and unloading facilities, storage areas for bulk and liquid materials, helicopter landing deck and other related equipment. All of our rigs have a lower hull referred to as a “mat.” This mat is attached to the lower portion of the legs in order to provide a more stable foundation in soft bottom areas, like those encountered in certain of the shallow-water areas of the Gulf of Mexico, where independent leg rigs are prone to excessive penetration and are subject to leg damage. After the rig is towed to the drilling location, its legs are lowered until the mat contacts the seabed and the upper hull is jacked to the desired elevation above sea level. Mat-supported rigs generally are able to more quickly position themselves on the worksite and more easily move on and off location than independent leg rigs.

There are several factors that determine the type of rig most suitable for a particular job, the most significant of which include the water depth and bottom conditions at the proposed drilling location, whether the drilling is being done over a platform or other structure, and the intended well depth. Fourteen of our jackup rigs have a cantilever design that permits the drilling platform to be extended out from the hull to perform drilling or workover operations over some types of preexisting platforms or structures. Six of our

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jackup rigs have a slot-type design, which requires drilling operations to take place through a slot in the hull. Historically, jackup rigs with a cantilever design have maintained higher levels of utilization than rigs with a slot-type design. Our jackup rigs generally operate with crews of 15 to 40 persons and can accommodate between 48 and 88 persons when operating.

Our Rig Fleet

The following table contains information regarding our rig fleet as of July 29, 2009. All of our rigs are mat-supported jackup rigs and are currently located in the Gulf of Mexico.

						Drilling
				Water		Depth
Seahawk	Former		Built/	Depth		Rating			Contracted
Rig Name	Rig Name	Type	Upgraded	Rating		(In Feet)		Status	Until
USA
Seahawk 2601	Pride Kansas	Cantilever	1976/1999		250		25,000	Idle	N/A
Seahawk 2600	Pride Alaska	Cantilever	1982/2002		250		20,000	Working	September 2009
Seahawk 2500	Pride Arizona	Slot	1981/1996		250		20,000	Stacked	N/A
Seahawk 2502	Pride Georgia	Slot	1981/1995		250		20,000	Stacked	N/A
Seahawk 2504	Pride Michigan	Slot	1975/2002		250		20,000	Idle	N/A
Seahawk 2602	Pride Missouri	Cantilever	1982		250		20,000	Working	August 2009
Seahawk 2000	Pride Alabama	Cantilever	1982		200		20,000	Stacked	N/A
Seahawk 2001	Pride Arkansas	Cantilever	1982		200		20,000	Stacked	N/A
Seahawk 2002	Pride Colorado	Cantilever	1982		200		20,000	Stacked	N/A
Seahawk 2003	Pride Florida	Cantilever	1981		200		20,000	Stacked	N/A
Seahawk 2004	Pride Mississippi	Cantilever	1981/2002		200		20,000	Idle	N/A
Seahawk 2005	Pride Nebraska	Cantilever	1981/2002		200		20,000	Stacked	N/A
Seahawk 2006	Pride Nevada	Cantilever	1981/2002		200		20,000	Stacked	N/A
Seahawk 2007	Pride New Mexico	Cantilever	1982		200		20,000	Idle	N/A
Seahawk 2008	Pride South Carolina	Cantilever	1980/2002		200		20,000	Stacked	N/A
Seahawk 800	Pride Utah	Cantilever	1978/2002		80		15,000	Stacked	N/A
Mexico
Seahawk 3000	Pride Texas	Cantilever	1974/1999		300		25,000	Working	September 2009
Seahawk 2501	Pride California	Slot	1975/2002		250		20,000	Working	October 2009
Seahawk 2503	Pride Louisiana	Slot	1981/2002		250		20,000	Working	September 2009
Seahawk 2505	Pride Oklahoma	Slot	1975/2002		250		20,000	Working	September 2009

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Summary Recent Combined Financial Information

The following table shows summary combined financial data of the Gulf of Mexico Business for the periods and as of the dates indicated. The data for the six months ended June 30, 2009 and 2008 is derived from the unaudited historical financial statements of the Gulf of Mexico Business. In the opinion of our management, the unaudited combined financial statements have been prepared on the same basis as the audited combined financial statements and include all adjustments necessary to present fairly the information set forth therein. Interim results are not necessarily indicative of full year results.

							Six Months Ended
	Three Months Ended June 30,						June 30,
	2009			2008			2009			2008
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Statement of Operations Information:
Revenue	$	77.1		$	172.1		$	192.8		$	365.7
Operating costs, excluding depreciation and amortization		66.4			79.3			140.9			178.1
Depreciation and amortization		16.3			15.8			31.8			31.8
General and administrative, excluding depreciation and amortization		4.7			6.1			10.6			12.6
Loss (gain) on sale of fixed assets		0.1			0.1			0.2			—
Earnings (loss) from operations		(10.4	)		70.8			9.3			143.2
Other income and (expense), net		0.7			0.2			1.4			0.6
Income from continuing operations before income taxes		(9.7	)		71.0			10.7			143.8
Income taxes		1.9			(25.0	)		(5.4	)		(50.6	)
Income (loss) from continuing operations, net of tax	$	(7.8	)	$	46.0		$	5.3		$	93.2

	As of June 30, 2009		As of December 31, 2008
	(Unaudited)		(Audited)
Balance Sheet Information:
Working capital	$	47.2	$	82.0
Property and equipment, net		596.1		612.0
Total assets		742.1		805.4
Net parent funding		505.0		551.6

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Operating Information

The following table sets forth operating information for the Gulf of Mexico Business for the periods shown.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Mat-Supported Jackup Rig Operations:
Operating Days		635			1,649			1,538			3,244
Available days		1,820			1,911			3,620			3,822
Utilization(1)		35	%		86	%		42	%		85	%
Average daily revenues(2)	$	88,300		$	87,700		$	95,200		$	90,500
Average marketed rigs(3)		10.0			19.3			11.2			19.7
Other Rig Operations:
Operating Days		206			177			376			632
Available days		256			182			436			637
Utilization(1)		80	%		97	%		86	%		99	%
Average daily revenues(2)	$	100,300		$	154,700		$	123,400		$	113,700
Average marketed rigs(3)		2.0			2.0			2.0			3.5

(1) Utilization is calculated as the total number of days our rigs were under contract, known as operating days, divided by the total days in the period of determination, known as available days.

(2) Average daily revenues are based on total revenues divided by the total number of operating days in the period. Average daily revenues will differ from average contract dayrate due to billing adjustments for any non-productive time, mobilization fees, performance bonuses and charges to the customer for ancillary services.

(3) Average marketed rigs is the number of total rigs owned or managed, excluding rigs that are undergoing a shipyard life enhancement or maintenance project or have been “stacked” (i.e., minimally crewed with little or no scheduled maintenance being performed).

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Questions and Answers About Seahawk and the Spin-Off

Why am I receiving this document? Pride is delivering this document to you because you were a holder of Pride common stock on the record date for the spin-off. Accordingly, you are entitled to receive 1/15 of a share of our common stock with respect to every share of Pride common stock that you held on the record date. No action is required for you to participate in the spin-off.

What is the spin-off?	The spin-off is the overall transaction of separating our company from Pride. As of the spin-off, assets and liabilities consisting primarily of Pride’s mat-supported jackup rig business will be held by us. Pride will then distribute pro rata to its stockholders shares of our common stock. As a result of the spin-off, we will become a separate public company.
What is Seahawk and why is Pride separating Seahawk’s business and distributing its stock?	We are a new company that will own the mat-supported jackup rig operations conducted by Pride. The separation of Seahawk from Pride results in two separate companies that can each focus on maximizing opportunities for its distinct business. We believe this separation will present the opportunity for enhanced performance of each of the two companies.
	Pride’s board of directors has determined that separating our business from Pride is in the best interests of Pride and its stockholders. For an explanation of the reasons for the spin-off and more information about our business, see “The Spin-Off — Reasons for the Spin-Off” and “Business.”

What is being distributed in the spin-off? Approximately 11.6 million shares of our common stock will be distributed in the spin-off, based upon the number of shares of Pride common stock outstanding on August 3, 2009. The shares of our common stock to be distributed by Pride will constitute all of the issued and outstanding shares of our common stock. At the time of the spin-off, each share of our common stock will have attached to it one preferred stock purchase right. For more information on the shares and rights being distributed in the spin-off, see “Description of Capital Stock.”

When will the spin-off occur? We expect that Pride will distribute the shares of Seahawk common stock on August 24, 2009 to holders of record of Pride common stock on August 14, 2009, the record date for the spin-off.

What do stockholders need to do to participate in the spin-off?

Nothing, but we urge you to read this information statement carefully. Stockholders who hold Pride common stock as of the record date will not be required to take any action to receive Seahawk common stock in the spin-off. No stockholder approval of the spin-off is required or sought. We are not asking you for a vote, and we are not requesting you to send us a proxy card. You will not be required to make any payment, surrender or exchange of your shares of Pride common stock or to take any other action to receive your shares of Seahawk common stock.

If you own Pride common stock as of the close of business on the record date, Pride, with the assistance of BNY Mellon Shareowner Services, the distribution agent, will electronically issue shares of Seahawk common stock to you or to your brokerage firm on your

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	behalf by way of direct registration in book-entry form. Seahawk will not issue paper stock certificates. If you are a registered stockholder (meaning you own your stock directly either through an account with Pride’s transfer agent and/or if you hold physical stock certificates), BNY Mellon Shareowner Services will mail you a book-entry account statement that reflects the number of Seahawk shares you own. If you own your Pride shares through a bank or brokerage account, your bank or brokerage firm will credit your account with the Seahawk shares.
	Following the spin-off, stockholders whose shares are held at the transfer agent may request that their shares of either Pride or Seahawk be transferred to a brokerage or other account at any time. You should consult your broker if you wish to transfer your shares.
Are there conditions to the consummation of the spin-off?	Yes. The spin-off is subject to the satisfaction or waiver of certain conditions. For more information, see the section entitled “The Spin-Off — Conditions to the Spin-Off” included elsewhere in this information statement. However, even if all of the conditions are satisfied, Pride has the right to terminate the spin-off if at any time the board of directors of Pride determines that the spin-off is not in the best interests of Pride and its stockholders.
Does Seahawk plan to pay dividends?	We do not currently plan to pay a regular dividend on our common stock following the spin-off. The declaration and amount of future dividends, if any, will be determined by our Board of Directors and will depend on our financial condition, earnings, capital requirements, financial covenants, industry practice and other factors our Board of Directors deems relevant. For more information about our dividend policy, see “Dividend Policy.”
Will Seahawk have any debt?	We will not have any long-term debt at the time of the spin-off. We have entered into a two-year $36 million revolving credit facility that will not have any outstanding borrowings at that time.
	For information relating to our planned financing arrangements, see the section entitled “Description of Credit Facility” included elsewhere in this information statement.
What are the U.S. federal income tax consequences of the spin-off to Pride stockholders?	Pride has received a private letter ruling from the Internal Revenue Service (“IRS”) and intends to obtain an opinion of Baker Botts L.L.P., in each case, substantially to the effect that for U.S. federal income tax purposes, the spin-off and certain related transactions will qualify under Sections 355 and/or 368 of the Internal Revenue Code of 1986, as amended (the “Code”). The private letter ruling is, and the tax opinion will be, subject to certain qualifications and limitations.
	Assuming the spin-off so qualifies, for U.S. federal income tax purposes, no gain or loss will be recognized by you, and no amount will be included in your income (other than with respect to cash received in lieu of fractional shares), upon the receipt of shares of Seahawk common stock pursuant to the spin-off. For more information regarding the private letter ruling, the tax opinion and the potential consequences to you of the spin-off, see the section entitled “The Spin-Off — Certain U.S. Federal Income Tax

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	Consequences of the Spin-Off” included elsewhere in this information statement.
How will I determine the tax basis I will have in the Seahawk shares I receive in the spin-off?	Generally, your aggregate basis in the stock you hold in Pride and the new Seahawk shares received in the spin-off will equal the aggregate basis of Pride common stock held by you immediately before the spin-off. This aggregate basis should be allocated between your Pride common stock and the Seahawk common stock you receive in the spin-off in proportion to the relative fair market value of each on the date of the distribution. See the section entitled “The Spin-Off — Certain U.S. Federal Income Tax Consequences of the Spin-Off” included elsewhere in this information statement for more information.
	You should consult your tax advisor about how this allocation will work in your situation (including a situation where you have purchased Pride shares at different times or for different amounts) and regarding any particular consequences of the spin-off to you, including the application of state, local and foreign tax laws.
What are the U.S. federal income tax consequences of the spin-off to our ability to engage in strategic transactions?	We will be prohibited from taking or failing to take any action that prevents the spin-off and/or certain related transactions from being tax-free. Such actions would include, but not be limited to, any of the following actions within the two-year period following the effective time of the spin-off: (i) selling or transferring all or substantially all of the assets that constitute our mat-supported jackup rig business, (ii) issuing stock of us or any affiliate (or any instrument that is convertible or exchangeable into any such stock) except in certain permitted cases relating to employee compensation, (iii) facilitating or otherwise participating in any acquisition (or deemed acquisition) of our stock that would result in any shareholder or certain groups of shareholders owning or being deemed to own 40% or more (by vote or value) of our outstanding stock, and (iv) redeeming or otherwise repurchasing any of our stock. The foregoing actions contain exceptions for certain permitted cases, including certain transfers among us and our wholly owned subsidiaries, and in some cases allow for actions that do not exceed permitted limits.
	These restrictions may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that may maximize the value of our business. For more information, see the sections entitled “The Spin-Off — Certain U.S. Federal Income Tax Consequences of the Spin-Off” and “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Tax Sharing Agreement” included elsewhere in this information statement.
What will the relationships between Pride and Seahawk be following the spin-off?	We have entered into a master separation agreement and several other agreements with Pride to effect the separation and distribution and provide a framework for our relationships with Pride. These agreements govern the relationships between Seahawk and Pride subsequent to the completion of the spin-off and provide for the allocation between Seahawk and Pride of Pride’s assets, liabilities and obligations attributable to periods prior to the spin-off. We

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cannot assure you that these agreements are on terms as favorable to us as agreements with unaffiliated third parties. For more information, see the section entitled “Certain Relationships and Related Party Transactions” included elsewhere in this information statement.

What if I want to sell my Pride common stock or my Seahawk common stock?	You should consult with your financial advisors, such as your stockbroker, bank or tax advisor. Neither Pride nor Seahawk makes any recommendations on the purchase, retention or sale of shares of Pride common stock or the Seahawk common stock to be distributed.
	If you decide to sell any shares after the record date, but before the spin-off, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your Pride common stock, the Seahawk common stock you will receive in the spin-off, or both. If you sell your Pride stock before the record date, you will not receive shares of Seahawk in the spin-off.

Where will I be able to trade shares of Seahawk common stock? There is not currently a public market for Seahawk common stock. Seahawk common stock has been authorized for listing on the NASDAQ Global Select Market under the symbol “HAWK.” We anticipate that limited trading in shares of Seahawk common stock will begin on a “when-issued” basis on or shortly before the record date and will continue up to and including through the spin-off date and that “regular-way” trading in shares of Seahawk common stock will begin on the first trading day following the spin-off date. The “when-issued” trading market will be a market for shares of Seahawk common stock that will be distributed to Pride stockholders on the spin-off date. If you owned shares of Pride common stock at the close of business on the record date, you would be entitled to shares of our common stock distributed pursuant to the spin-off. You may trade this entitlement to shares of Seahawk common stock, without the shares of Pride common stock you own, on the “when-issued” market.

	We cannot predict the trading prices for Pride or Seahawk common stock before, on or after the spin-off date.
What will happen to the listing of Pride common stock?	Nothing. It is expected that, after the spin-off of our company, Pride common stock will continue to be traded on the NYSE under the symbol “PDE.” The number of shares of Pride common stock you own will not change.

Will the spin-off affect the market price of my Pride shares? As a result of the spin-off, we expect the trading price of shares of Pride common stock following the spin-off to be lower than prior to the spin-off because the trading price will no longer reflect the value of the mat-supported jackup rig business. Furthermore, until the market has fully analyzed the value of Pride without the mat-supported jackup rig business, the price of Pride shares may experience more stock price volatility. There can be no assurance that the trading price of a share of Pride common stock after the spin-off plus the trading price of the 1/15 of a share of Seahawk common stock distributed for each share of Pride common stock will not, in the aggregate, be less than the trading price of a share of Pride common stock before the spin-off.

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Are there risks to owning Seahawk common stock?	Yes. Our business is subject to both general and specific risks, including risks related to the spin-off, our relationship with Pride and our being a separate, publicly traded company. These risks are described in the section entitled “Risk Factors.” We encourage you to read that section carefully.
Do I have appraisal rights?	No. Holders of Pride common stock have no appraisal rights in connection with the spin-off.
Where can Pride stockholders get more information?	Before the spin-off, if you have any questions relating to the spin-off, you should contact:
	Pride International, Inc. Investor Relations 5847 San Felipe, Suite 3300 Houston, Texas 77057 Tel: (713) 917-2020 Fax: (713) 784-7302
	After the spin-off, if you have any questions relating to us or the distribution of our shares, you should contact:
	Seahawk Drilling, Inc. Investor Relations 5847 San Felipe, Suite 1600 Houston, Texas 77057 Tel: (713) 369-7300 Fax: (713) 369-7301

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Summary of the Spin-Off

Distributing Company	Pride International, Inc. After the spin-off, Pride will not own any shares of Seahawk common stock.
Distributed Company	Seahawk Drilling, Inc. Currently, Seahawk is a Delaware corporation and is a wholly owned subsidiary of Pride that will hold directly or indirectly all of the assets and liabilities of Pride’s mat-supported jackup rig business. After the spin-off, Seahawk will be an independent, publicly traded company.

Distribution Ratio Each holder of Pride common stock will receive 1/15 of a share of Seahawk common stock for each share of Pride common stock they own as of the record date.

Distributed Securities Pride will distribute all of the shares of Seahawk common stock owned by Pride, which will be 100% of our common stock outstanding. At the time of the spin-off, each share of our common stock will have attached to it one preferred stock purchase right. Based on the approximately 173.7 million shares of Pride common stock outstanding on August 3, 2009, and applying the distribution ratio of 1/15 of a share of Seahawk common stock for each share of Pride common stock, approximately 11.6 million shares of Seahawk common stock will be distributed to holders of Pride common stock as of the record date.

Fractional Shares Fractional shares of our common stock will not be issued. If you would be entitled to receive a fractional share of our common stock in the distribution, you will instead receive a cash payment with respect to the fractional share.

Record Date The record date for the spin-off is 5:00 p.m., Houston time, on August 14, 2009.

Distribution Method Seahawk common stock will be issued only in book-entry form. No paper stock certificates will be issued.

Spin-Off Date The spin-off date is August 24, 2009.

Conditions to the Spin-Off	The spin-off is subject to the satisfaction or waiver by Pride of the following conditions, among other conditions described in this information statement:
	•  Pride will have received an opinion of counsel from Baker Botts L.L.P. satisfactory to Pride substantially to the effect that for U.S. federal income tax purposes the spin-off and certain related transactions will qualify under Sections 355 and/or 368 of the Code;

•  the private letter ruling issued to Pride by the IRS regarding the tax-free status of the distribution and certain related transactions shall remain effective;

•  the registration statement of which this information statement is a part will have become effective under the Securities Exchange Act of 1934 (the “Exchange Act”);

•  the actions and filings necessary or appropriate to comply with federal and state securities laws will have been taken;

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•  the NASDAQ Global Select Market will have approved for listing the shares of our common stock to be issued in the spin-off, subject to official notice of issuance;

•  the separation of our business from Pride’s and the distribution of Seahawk shares in the spin-off will not violate or result in a breach of any law or any material agreements of Pride;

•  no court or other order or other legal or regulatory restraint will exist that prevents, or materially limits the benefits of, completion of the separation or spin-off;

•  all consents and governmental or other regulatory approvals required in connection with the transactions contemplated by the master separation agreement will have been received and will remain in full force and effect;

•  each of the ancillary agreements related to the separation and the distribution will have been entered into before the spin-off and will not have been materially breached by the parties; and

•  the spin-off will not violate the terms of any Pride debt agreement.

The fulfillment of the foregoing conditions does not create any obligations on Pride’s part to effect the spin-off, and the Pride board of directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the spin-off, including by accelerating or delaying the timing of the consummation of the spin-off, at any time prior to the spin-off date.

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Summary Historical Combined Financial and Operating Information

The following tables present summary historical combined financial information and operating information of the Gulf of Mexico Business. The term “Gulf of Mexico Business” refers to Pride’s historical Gulf of Mexico operations reflected in the historical combined financial statements discussed herein and included elsewhere in this information statement. The Gulf of Mexico Business reflects the effects of certain assets and operations that will not be held by Seahawk, including operations related to two independent leg jackup rigs, two semi-submersible rigs and deepwater drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs. See “Unaudited Pro Forma Combined Financial Information” for further description of the assets of Pride that will not be held by Seahawk but are reflected in the historical combined financial statements of the Gulf of Mexico Business.

We derived the historical combined statement of operations information for each of the years in the three-year period ended December 31, 2008, and the balance sheet information as of December 31, 2007 and 2008, from the audited combined financial statements of the Gulf of Mexico Business included elsewhere in this information statement. We derived the balance sheet information as of December 31, 2006 and the historical combined statement of operations information for the year ended December 31, 2005 from audited combined financial statements of the Gulf of Mexico Business not included in this information statement. We derived the historical combined statement of operations information for the Gulf of Mexico Business for the year ended December 31, 2004 and the balance sheet information as of December 31, 2004 and 2005 and March 31, 2008 from unaudited combined financial statements of the Gulf of Mexico Business. We derived the historical combined statement of operations information for the three months ended March 31, 2009 and 2008 and the balance sheet information as of March 31, 2009 from the unaudited combined financial statements of the Gulf of Mexico Business included elsewhere in this information statement.

The summary historical combined financial information and operating information presented below should be read in conjunction with the combined financial statements of the Gulf of Mexico Business and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this information statement. The financial information may not be indicative of our future performance and does not necessarily reflect what the financial position and results of operations would have been had we operated as a separate, stand-alone entity during the periods presented, including changes that will occur in our operations as a result of our spin-off from Pride (amounts in millions).

	Three Months Ended March 31,						Year Ended December 31,
	2009			2008			2008			2007			2006			2005			2004
	(Unaudited)			(Unaudited)															(Unaudited)
Statement of Operations Information:
Revenue	$	115.7		$	193.6		$	681.8		$	707.2		$	639.5		$	423.0		$	326.1
Operating costs, excluding depreciation and amortization		74.5			98.8			343.3			349.9			299.3			257.9			200.4
Depreciation and amortization		15.5			16.0			62.5			62.8			54.7			51.3			53.6
General and administrative, excluding depreciation and amortization		5.9			6.5			36.7			25.7			17.7			13.9			9.9
Impairment expense		—			—			—			—			—			—			3.6
(Gain) loss on sale of fixed assets		0.1			(0.1	)		0.1			(0.4	)		(0.4	)		(2.1	)		—
Earnings from operations		19.7			72.4			239.2			269.2			268.2			102.0			58.6
Other income and (expense), net		0.7			0.4			(2.6	)		(0.8	)		(1.6	)		0.8			9.2
Income from continuing operations before income taxes		20.4			72.8			236.6			268.4			266.6			102.8			67.8
Income taxes		(7.3	)		(25.6	)		(82.9	)		(94.9	)		(95.7	)		(36.6	)		(24.3	)
Income (loss) from continuing operations, net of tax	$	13.1		$	47.2		$	153.7		$	173.5		$	170.9		$	66.2		$	43.5

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	As of March 31,				As of December 31,
	2009		2008		2008		2007		2006		2005		2004
	(Unaudited)		(Unaudited)								(Unaudited)		(Unaudited)
Balance Sheet Information:
Working capital	$	73.7	$	125.2	$	82.0	$	80.6	$	54.5	$	95.8	$	46.4
Property and equipment, net		610.1		698.9		612.0		711.5		670.9		579.3		628.7
Total assets		781.2		898.7		805.4		893.1		823.4		725.4		727.1
Net parent funding		540.2		677.2		551.6		644.5		579.7		560.2		595.0

Operating Information

The following table sets forth operating information for the Gulf of Mexico Business for the periods shown.

	Three Months Ended
	March 31,						Year Ended December 31,
	2009			2008			2008			2007			2006
Mat-Supported Jackup Rig Operations:
Operating Days		903			1,595			6,125			5,900			6,327
Available days		1,800			1,911			7,577			7,665			7,653
Utilization(1)		50	%		83	%		81	%		77	%		83	%
Average daily revenues(2)	$	99,600		$	93,500		$	90,400		$	93,600		$	86,500
Average marketed rigs(3)		12.3			20.0			17.4			19.2			18.8
Other Rig Operations(4):
Operating Days		170			455			998			1,711			1,806
Available days		180			455			1,005			1,910			2,190
Utilization(1)		94	%		100	%		99	%		90	%		82	%
Average daily revenues(2)	$	151,400		$	97,800		$	128,600		$	90,600		$	51,000
Average marketed rigs(3)		2.0			5.0			2.7			4.8			5.0

(1)	Utilization is calculated as the total number of days our rigs were under contract, known as operating days, divided by the total days in the period of determination, known as available days.
(2)	Average daily revenues are based on total revenues divided by the total number of operating days in the period. Average daily revenues will differ from average contract dayrate due to billing adjustments for any non-productive time, mobilization fees, performance bonuses and charges to the customer for ancillary services.
(3)	Average marketed rigs is the number of total rigs owned or managed, excluding rigs that are undergoing a shipyard life enhancement or maintenance project or have been “stacked” (i.e., minimally crewed with little or no scheduled maintenance being performed).
(4)	Other Rig Operations include two independent leg rigs, three deepwater drilling management contracts and one semisubmersible rig operated by the GOM business that will be retained by Pride after the spin-off. Management of the three deepwater drilling management contracts was transferred to another division of Pride in April 2008 and the management of the semisubmersible rig was transferred to another division of Pride in April 2007.

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Summary Unaudited Pro Forma Combined Financial Information

We derived the following summary unaudited pro forma combined financial information from our unaudited pro forma combined financial statements included elsewhere in this information statement. The unaudited pro forma combined statements of operations for the year ended December 31, 2008 and the three months ended March 31, 2009 include adjustments to give effect to the deemed transfer of certain assets and operations that will not be held by Seahawk as if such transfers occurred on January 1, 2008. The unaudited pro forma combined balance sheet information includes adjustments to give effect to the deemed transfer of certain assets and operations that will not be held by Seahawk as if such transfers occurred on March 31, 2009.

The unaudited pro forma financial information below adjusts the financial position and results of operations of the Gulf of Mexico Business to give effect to the following:

•  The elimination of operations related to our drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs, all of which were managed by the Gulf of Mexico Business until April 2008 but will be retained by Pride.

•  The elimination of operations related to two independent leg jackup rigs, the Pride Tennessee and Pride Wisconsin, which were managed by the Gulf of Mexico Business but will be retained by Pride.

•  The tax effect of the aforementioned adjustments using the applicable tax rate.

The unaudited pro forma, as adjusted financial information below is further adjusted to give effect to the following transactions relating to the spin-off of Seahawk to Pride stockholders:

•  The issuance by us to Pride, in connection with certain transactions relating to the spin-off, of 11,580,249 shares of our common stock, and the distribution of such shares to the holders of Pride common stock.

•  An estimated cash contribution by Pride to Seahawk to achieve the targeted working capital (defined as total current assets less total current liabilities) of $85 million as set forth in the master separation agreement, as though the working capital adjustment were effected at March 31, 2009.

•  The transfer by Pride to Seahawk of certain capital spares under the master separation agreement.

•  The effect of certain alternative minimum tax credits generated by Seahawk’s business to which Seahawk will be entitled after the spin-off.

The pro forma combined balance sheet does not reflect contingent obligations relating to tax assessments from the Mexican government. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates — Income Taxes” for more information about these tax assessments, including the amounts assessed to date and anticipated potential assessments.

There are no differences between the pro forma statement of operations information and the pro forma, as adjusted statement of operations information, except with respect to earnings per share. To avoid redundancy, only the pro forma, as adjusted statement of operations information is presented below.

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We present the unaudited pro forma combined financial information for informational purposes only. It does not purport to represent what our financial position or results of operations would actually have been had the pro forma adjustments in fact occurred on the assumed dates or to project our financial position at any future date or results of operations for any future period. The following information should be read in conjunction with “Selected Historical Combined Financial Information,” “Unaudited Pro Forma Combined Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements and related notes included elsewhere in this information statement (amounts in millions).

	Seahawk Pro Forma
	as Adjusted
	Three Months			Year
	Ended			Ended
	March 31,			December 31,
	2009			2008
Statement of Operations Information:
Revenue	$	90.0		$	553.6
Operating costs, excluding depreciation and amortization		66.8			302.7
Depreciation and amortization		14.2			56.9
General and administrative, excluding depreciation and amortization		5.3			32.7
(Gain) loss on sale of fixed assets		0.1			0.1
Earnings from operations		3.6			161.2
Other income and (expense), net		0.7			(2.7	)
Income from continuing operations before income taxes		4.3			158.5
Income taxes		(1.7	)		(55.5	)
Income from continuing operations, net of tax	$	2.6		$	103.0
Pro forma earnings per share:
Basic	$	0.22		$	8.90
Diluted	$	0.22		$	8.90
Weighted average shares used in calculated earnings per share:
Basic		11.6			11.6
Diluted		11.6			11.6

			Seahawk Pro Forma
	Seahawk Pro Forma		as Adjusted
	March 31,		March 31,
	2009		2009
Balance Sheet Information:
Working capital	$	56.0	$	82.2
Property and equipment, net		529.5		540.8
Total assets		682.0		721.7
Net parent funding/stockholders’ equity		459.0		537.9

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RISK FACTORS

You should carefully consider each of the following risks and all of the information set forth in this information statement. If any of the following risks and uncertainties develop into actual events, our business, financial condition, results of operations or cash flows could be materially adversely affected.

Risks Related to Our Business

A material or extended decline in expenditures by oil and natural gas companies due to a decline or volatility in crude oil and natural gas prices, a decrease in demand for crude oil and natural gas or other factors may reduce demand for our services and substantially reduce our profitability or result in our incurring losses.

The profitability of our operations depends upon conditions in the oil and natural gas industry, and particularly the level of natural gas exploration, development and production activity in the shallow waters of the Gulf of Mexico. Crude oil and natural gas prices and market expectations regarding potential changes in these prices significantly affect this level of activity. However, higher commodity prices do not necessarily translate into increased drilling activity because our customers’ expectations of future commodity prices typically drive demand for our rigs. Crude oil and natural gas prices are volatile. Commodity prices in the Gulf of Mexico are directly influenced by many factors beyond our control, including:

•  the demand for crude oil and natural gas;

•  the cost of exploring for, developing, producing and delivering crude oil and natural gas in the Gulf of Mexico, and the relative cost of onshore production or importation of natural gas;

•  expectations regarding future energy prices;

•  advances in exploration, development and production technology;

•  government regulations;

•  local and international political, economic and weather conditions;

•  the ability of OPEC to set and maintain production levels and prices;

•  the level of production in non-OPEC countries;

•  domestic and foreign tax policies;

•  the development and exploitation of alternative fuels and the competitive position of natural gas as a source of energy compared with other energy sources;

•  the policies of various governments regarding exploration and development of their oil and natural gas reserves;

•  acts of terrorism in the United States or elsewhere; and

•  the worldwide military and political environment and uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East and other oil and natural gas producing regions.

In addition, continued hostilities in the Middle East and the occurrence or threat of terrorist attacks against the United States or other countries could have a negative impact on the economies of the United States and those of other countries. The ongoing slowdown in economic activity has reduced worldwide demand for energy and could result in an extended period of lower crude oil and natural gas prices. Lower crude oil and natural gas prices combined with the inability of our customers to obtain financing for drilling projects has depressed the levels of exploration, development and production activity. Even during periods of high commodity prices, customers may cancel or curtail their drilling programs, or reduce their levels of capital expenditures for exploration and production for a variety of reasons, including their lack of success in exploration efforts. These factors could cause our revenues and margins to decline, decrease daily rates and

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utilization of our rigs and limit our future growth prospects. Any significant decrease in daily rates or utilization of our rigs could materially reduce our revenues and profitability. In addition, these risks could increase instability in the financial and insurance markets and make it more difficult for us to access capital and to obtain insurance coverages that we consider adequate or are otherwise required by our contracts.

The global financial crisis may have impacts on our business and financial condition that we currently cannot predict.

The recent worldwide financial and credit crisis has reduced the availability of liquidity and credit to fund the continuation and expansion of industrial business operations worldwide. The shortage of liquidity and credit combined with recent substantial losses in worldwide equity markets could lead to an extended worldwide economic recession or depression. This credit crisis and the related instability in the global financial system has had, and may continue to have, an impact on our business and our financial condition. We may face significant challenges if conditions in the financial markets do not improve. Our ability to access the capital markets may be severely restricted at a time when we would like, or need, to access such markets, which could have an impact on our flexibility to react to changing economic and business conditions. The financial and credit crisis could have an impact on the lenders under our revolving credit facility, on our customers or on our vendors, causing them to fail to meet their obligations to us.

Certain customers account for a significant portion of our revenues. The loss of a significant customer could have a material adverse impact on our financial condition and results of operations.

Our contract drilling business is subject to the usual risks associated with having a limited number of customers for our services. In Mexico, our only customer is PEMEX Exploración y Producción (“PEMEX”), a unit of the state-owned national company that owns all oil reserves in Mexico. PEMEX accounted for 58%, 56% and 31% of our total pro forma revenue for the years ended December 31, 2008, 2007 and 2006, respectively, and PEMEX accounted for 54% of our total pro forma revenue for the three months ended March 31, 2009, compared to 65% for the three months ended March 31, 2008. In addition to PEMEX, Applied Drilling Technology, Inc. (“ADTI”) accounted for 13%, 4%, 12% and 12% of our total pro forma revenue for the years ended December 31, 2008, 2007 and 2006 and the three months ended March 31, 2009, respectively. We currently have no master agreements with PEMEX or ADTI; rather, PEMEX and ADTI contract for our services on a rig-by-rig basis. Our results of operations could be materially adversely affected if any of our major customers terminates its contracts with us, fails to renew its existing contracts or refuses to award new contracts to us and we are unable to enter into contracts with new customers at comparable dayrates.

PEMEX has indicated an increased emphasis on rigs with a water depth rating of 250 feet or greater; as a result, the contracting opportunities in Mexico for our ten rigs with water depth ratings of 200 feet or less could diminish.

Recently, PEMEX has indicated a shifting focus toward geologic prospects in deeper water and therefore an increased emphasis on rigs with a water depth rating of 250 feet or greater, especially independent leg cantilever rigs. As PEMEX changes its focus toward new field exploration and development prospects that increasingly require the use of rigs with greater water depth capability, it is possible that demand in Mexico for our ten rigs with water depth ratings of 200 feet or less could decline and the future contracting opportunities for such rigs in Mexico could diminish.

We have moved seven rigs out of Mexico since late 2007; all of these rigs had water depth ratings of 200 feet or less. All of our remaining rigs in Mexico have water depth ratings of at least 250 feet and are currently working. All of the seven rigs that have been relocated to the U.S. are stacked. Our financial condition and results of operations could be materially adversely affected if we are unable to contract our lower water depth rigs with new customers at comparable dayrates.

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In the U.S., we provide drilling services primarily to independent oil and natural gas producers and drilling service providers pursuant to short-term contracts, resulting in potential instability in our customer base and contract status in that region.

Our customer base in the U.S. primarily consists of independent oil and natural gas producers and drilling service providers, and contracts in the U.S. tend to be short-term or well-to-well contracts. As a result, our U.S. customer base is subject to frequent turnover, and the contracted status of our rigs in that region changes rapidly. Additionally, our customers in the U.S. generally have less capital resources available to perform their obligations owed to us relative to larger oil and gas companies or state-owned entities.

Rig upgrade, refurbishment and repair are subject to risks, including delays and cost overruns, which could have an adverse impact on our available cash resources and results of operations.

We make significant upgrade, refurbishment and repair expenditures for our rigs from time to time, particularly in light of the aging nature of our rigs. Some of these expenditures are unplanned. The average age of our rigs is over 28 years. In 2009, we expect our capital expenditures for our rigs and equipment to be approximately $20 million. All of these projects are subject to the risks of delay or cost overruns, including costs or delays resulting from the following:

•  unexpectedly long delivery times for or shortages of key equipment, parts and materials;

•  shortages of skilled labor and other shipyard personnel necessary to perform the work;

•  failure or delay of third-party equipment vendors or service providers;

•  unforeseen increases in the cost of equipment, labor and raw materials, particularly steel;

•  unanticipated actual or purported change orders;

•  client acceptance delays;

•  disputes with shipyards and suppliers;

•  work stoppages and other labor disputes;

•  latent damages or deterioration to equipment and machinery in excess of engineering estimates and assumptions;

•  financial or other difficulties at shipyards;

•  adverse weather conditions; and

•  inability to obtain required permits or approvals.

Significant cost overruns or delays could materially affect our financial condition and results of operations. Delays in the delivery of rigs undergoing upgrade, refurbishment or repair may, in many cases, result in delay in contract commencement, resulting in a loss of revenue to us, and may also cause our customer to renegotiate the drilling contract for the rig or terminate or shorten the term of the contract under applicable late delivery clauses. In the event of termination of one of these contracts, we may not be able to secure a replacement contract on as favorable terms. Additionally, capital expenditures for rig upgrade and refurbishment projects could materially exceed our planned capital expenditures. Moreover, our rigs undergoing upgrade, refurbishment and repair may not earn a dayrate during the period they are out of service.

Our rigs are at a relative disadvantage to higher specification jackup rigs. These higher specification rigs may be more likely to obtain contracts than our rigs, particularly during market downturns.

Some of our competitors have jackup fleets with generally higher specification rigs than those in our fleet. Particularly during market downturns when there is decreased rig demand, higher specification rigs may be more likely to obtain contracts than lower specification rigs. Some of our significant customers may also begin to require higher specification rigs for the types of projects that currently utilize our lower specification rigs, which could materially affect the utilization of these rigs. Particularly, PEMEX has indicated an increased

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emphasis on field exploration and development prospects that require the use of rigs with a water depth rating of 250 feet or greater; as a result, it is possible that demand in Mexico could decline and the future contracting opportunities in Mexico could diminish. In the past, our rigs have been stacked earlier in the cycle of decreased rig demand than our competitors’ higher specification rigs and have been reactivated later in the cycle, which has adversely impacted our business and could be repeated in the future. In addition, higher specification rigs may be more adaptable to different operating conditions and have greater flexibility to move to areas of demand in response to changes in market conditions. Furthermore, in recent years, an increasing amount of exploration and production expenditures have been concentrated in deeper water drilling programs and deeper formations, including deep natural gas prospects, requiring higher specification rigs. This trend is expected to continue and could result in a material decline in demand for the rigs in our fleet. Under the terms of the noncompetition covenant in the master separation agreement with Pride, we will generally not be permitted to own or operate any rig with a water depth rating of more than 500 feet for three years following the consummation of the spin-off.

An oversupply of comparable or higher specification jackup rigs in the Gulf of Mexico could depress the demand and contract prices for our rigs and materially reduce our revenues and profitability.

Demand and contract prices customers pay for our rigs also are affected by the total supply of comparable rigs available for service in the shallow waters of the Gulf of Mexico. During prior periods of high utilization and dayrates, industry participants have increased the supply of rigs by ordering the construction of new units. This has often created an oversupply of drilling units and has caused a decline in utilization and dayrates when the rigs enter the market, sometimes for extended periods of time as rigs have been absorbed into the active fleet. Approximately 65 newbuild jackups are currently under construction or on order worldwide, seven of which are being built in shipyards in the Gulf of Mexico region, and accordingly, would have relatively low mobilization costs to operate in the Gulf of Mexico. All of these rigs are considered to be of a higher specification than our rigs, because generally they are larger, have greater deckloads, have water depth ratings of 250 feet or greater and have an independent leg design, as opposed to being mat-supported. Independent leg rigs are better suited for use in stronger currents or uneven seabed conditions. As discussed in the immediately preceding risk factor, PEMEX has indicated an increased emphasis on prospects requiring the use of rigs with water depth ratings of 250 feet or greater, such as the anticipated newbuilds. Most of the new rigs available in the second half of 2009 and beyond are currently without contracts, which may intensify price competition as scheduled delivery dates occur. In addition, our competitors’ stacked rigs may re-enter the market. The entry into service of newly constructed, upgraded or reactivated units will increase market supply and could reduce, or curtail a strengthening of, our dayrates in the affected markets as rigs are absorbed into the active fleet. Any further increase in construction of new drilling units may negatively affect utilization and dayrates. In addition, the new construction of high specification rigs, as well as changes in our competitors’ drilling rig fleets, could require us to make material additional capital investments to keep our rig fleet competitive.

Our ability to move some of our rigs to other regions is limited.

Most jackup rigs can be moved from one region to another, and in this sense the contract drilling market is a global market. The supply and demand balance for jackup rigs may vary somewhat from region to region, and because the cost to move a rig is significant, there is limited availability of rig-moving vessels and some rigs are designed to work in specific regions. However, significant variations between regions tend not to exist on a long-term basis due to the ability to move rigs. Our rigs, which are mat-supported, are less capable than independent leg jackup rigs of managing variable sea floor conditions found in most areas outside the Gulf of Mexico. As a result, our ability to move these rigs to other regions in response to changes in market conditions is limited.

Our industry is highly competitive and cyclical, with intense price competition.

Our industry is highly competitive. Our contracts are traditionally awarded on a competitive bid basis. Pricing, safety record and technical expertise are key factors in determining which qualified contractor is awarded a job. Rig availability, location and specifications also can be significant factors in the determination.

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Some of our competitors in the drilling industry are larger than we are and have rigs with generally higher specifications, and greater resources than we have. In addition, recent mergers within the oil and natural gas industry have reduced the number of available customers, resulting in increased competition for projects. We may not be able to maintain our competitive position, and we believe that competition for contracts will continue to be intense in the foreseeable future. Our inability to compete successfully may reduce our revenues and profitability.

Historically, the offshore service industry has been highly cyclical, with periods of high demand, limited rig supply and high dayrates often followed by periods of low demand, excess rig supply and low dayrates. Periods of low demand and excess rig supply intensify the competition in the industry and often result in rigs, particularly lower specification rigs like ours, being idle for long periods of time. We may be required to stack rigs or enter into lower dayrate contracts in response to market conditions. Due to the short-term nature of most of our drilling contracts, changes in market conditions can quickly affect our business. As a result of the cyclical nature of our industry, our results of operations have been volatile, and we expect this volatility to continue. Prolonged periods of low utilization and dayrates could result in the recognition of impairment charges if future cash flow estimates, based upon information available to management at the time, indicate that our rigs’ carrying value may not be recoverable.

Our business is conducted in the shallow-water Gulf of Mexico, a mature region that could result in less drilling activity in the area and thereby reduce demand for our services.

The shallow-water region of the Gulf of Mexico is a mature oil and natural gas production region that has experienced substantial seismic survey and exploration activity for many years. Because a large number of oil and natural gas prospects in this region have already been drilled, additional prospects of sufficient size and quality could be more difficult to identify. According to the U.S. Energy Information Administration, the average size of Gulf of Mexico discoveries has declined significantly since the early 1990s. In addition, the amount of natural gas production in the shallow-water region of the Gulf of Mexico has declined over the last several years. As a result of the diminished discovery potential, oil and natural gas companies may be unable to obtain acceptable financing necessary to drill prospects in this region. The decrease in the size of oil and natural gas prospects, the decrease in production or the failure to obtain such financing may result in reduced drilling activity in the shallow-water region of the Gulf of Mexico and reduced demand for our services. Further, U.S. demand for natural gas is also supplied by onshore natural gas exploration and development and importation of liquefied natural gas. Significant onshore discoveries of natural gas, increased onshore production or development of new, or expansion of existing, liquefied natural gas facilities in the U.S. could also reduce demand for our offshore natural gas drilling services.

Consolidation of suppliers may limit our ability to obtain supplies and services at an acceptable cost, on our schedule or at all.

We rely on certain third parties to provide supplies and services necessary for our operations. Recent mergers have reduced the number of available suppliers, resulting in fewer alternatives for sourcing of key supplies. We may not be able to obtain supplies and services at an acceptable cost, at the times we need them or at all. These cost increases or delays could have a material adverse affect on our results of operations and financial position.

Failure to attract and retain skilled personnel or an increase in labor costs could hurt our operations.

We require highly skilled personnel to operate and provide technical services and support for our business. Competition for the skilled and other labor required for our operations intensifies as the number of rigs activated or added to worldwide fleets or under construction increases, creating upward pressure on wages. Additionally, in the master separation agreement we entered into with Pride, we have agreed to refrain from directly soliciting, recruiting or hiring employees of Pride without Pride’s consent for one year after the spin-off. The shortages of qualified personnel or the inability to obtain and retain qualified personnel could negatively affect the quality, safety and timeliness of our work. We plan to implement recruiting and training programs in an effort to meet our anticipated personnel needs. These efforts may be unsuccessful, and

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competition for skilled personnel could materially impact our business by limiting or affecting the quality and safety of our operations or further increasing our costs.

Our operations in Mexico expose us to possible currency exchange losses and involve additional risks not generally associated with domestic operations, which may hurt our operations materially.

We derived 58% of our pro forma revenues for the year ended December 31, 2008, and 54% of our pro forma revenues for the three months ended March 31, 2009, from our operations in Mexico. Our operations in Mexico are subject to the following risks, among others:

•  foreign currency fluctuations and devaluations;

•  political, social and economic instability;

•  unexpected changes in regulatory requirements;

•  work stoppages;

•  wage and price controls; and

•  other forms of government regulation and economic conditions that are beyond our control.

We may experience currency exchange losses to the extent we do not take protective measures against exposure to the Mexican peso. Our contracts in Mexico generally provide for payment in Mexican pesos based on U.S. dollar equivalents, but we are exposed to exchange rate fluctuations for operating costs, assets and liabilities denominated or payable in Mexican pesos. Additionally, PEMEX could seek to eliminate its obligation to pay us in U.S. dollar equivalents in future contracts with us. This exposure to foreign currency fluctuations could cause our results of operations, financial condition and cash flows to deteriorate materially.

The shipment of goods, services and technology across international borders subjects us to extensive trade laws and regulations.

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 our operations. Shipments can be delayed and denied export or entry for a variety of reasons, some of which are outside our 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.

Although we implement policies and procedures designed to promote compliance with the laws of the jurisdictions in which we operate, our employees, contractors and agents may take actions in violation of our policies and such laws. Any such violation, even if prohibited by our policies, could materially and adversely affect our business.

Pride is conducting an investigation into allegations of improper payments to foreign government officials, as well as corresponding accounting entries and internal control issues. The outcome and impact of this investigation are unknown at this time.

The audit committee of Pride’s board of directors, through independent outside counsel, has undertaken an investigation of potential violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) in several of its international operations. With respect to our operations, this investigation has found evidence suggesting that payments, which may violate the FCPA, were made to government officials in Mexico aggregating less than

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$150,000. The evidence to date regarding these payments suggests that payments were made beginning in 2002 through early 2006 (a) to one or more government officials in Mexico in connection with the clearing of a jackup rig and equipment through customs, the movement of personnel through immigration or the acceptance of a jackup rig under a drilling contract; and (b) with respect to the potentially improper entertainment of government officials in Mexico.

Pride has voluntarily disclosed information found in the investigation to the Department of Justice and the Securities and Exchange Commission (“SEC”), and Pride has cooperated and is continuing to cooperate with these authorities.

For any violations of the FCPA, we may be liable for or subject to fines, civil and criminal penalties, equitable remedies, including profit disgorgement, and injunctive relief. Civil penalties under the antibribery provisions of the FCPA could range up to $10,000 per violation, with a criminal fine up to the greater of $2 million per violation or twice the gross pecuniary gain to us or twice the gross pecuniary loss to others, if larger. Civil penalties under the accounting provisions of the FCPA can range up to $500,000 per violation, and a company that knowingly commits a violation can be fined up to $25 million per violation. In addition, both the SEC and the DOJ could assert that conduct extending over a period of time may constitute multiple violations for purposes of assessing the penalty amounts. Often, dispositions of these types of matters result in modifications to business practices and compliance programs and possibly a monitor being appointed to review future business and practices with the goal of ensuring compliance with the FCPA. Pursuant to the master separation agreement, we will be responsible for any liabilities, costs or expenses related to, arising out of or resulting from Pride’s current FCPA investigation to the extent related to Pride’s and our operations in Mexico (subject to certain exceptions), except that we will not be responsible for any fine, penalty or profit disgorgement payable to the United States government in excess of $1 million, and we will not be allocated any fees or expenses of third party advisors retained by Pride. In the event that a disposition includes the appointment of a compliance monitor or consultant or any similar remedy for our company, we will be responsible for the costs associated with such monitor, consultant or similar remedy.

We could also face fines, sanctions, and other penalties from authorities in Mexico, including prohibition of our participating in or curtailment of business operations and the seizure of rigs or other assets. Our customer in Mexico could seek to impose penalties or take other actions adverse to our interests. We could also face other third-party claims by directors, officers, employees, affiliates, advisors, attorneys, agents, security or other interest holders or constituents of our company. In addition, disclosure of the subject matter of the investigation could adversely affect our reputation and our ability to obtain new business or retain existing business from our current clients and potential clients, to attract and retain employees, and to access the capital markets.

Pride has commenced discussions with the DOJ and SEC regarding a negotiated resolution for these matters, which could be settled during 2009. There can be no assurance that these discussions will result in a final settlement of any or all of these issues or, if a settlement is reached, the timing of any such settlement or that the terms of any such settlement would not have a material adverse effect on us. No amounts have been accrued related to any potential fines, sanctions, claims or other penalties, which could be material individually or in the aggregate, but an accrual could be made as early as the third quarter of 2009. We cannot currently predict what, if any, actions may be taken by the DOJ, the SEC, any other applicable government or other authorities or our customers or other third parties or the effect the actions may have on our results of operations, financial condition or cash flows, on our combined financial statements or on our business, except that our responsibility for fines, penalties or profit disgorgement payable to the United States government will not exceed $1 million as described above.

We have received and are contesting tax assessments from the Mexican government and we could receive additional assessments in the future.

In 2006 and 2007, Pride received tax assessments from the Mexican government related to the operations of certain of our entities for the tax years 2001 through 2003. Pursuant to local statutory requirements, Pride has provided bonds in the amount of approximately 560 million Mexican pesos, or approximately $39 million

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as of March 31, 2009, to contest these assessments. In February 2009, Pride received additional tax assessments for the tax years 2003 and 2004 in the amount of 1,097 million Mexican pesos, or approximately $76 million, and Pride has contested these assessments. We anticipate that bonds or other suitable collateral will be required no earlier than the fourth quarter of 2009 in connection with Pride’s contest of these assessments. These assessments contest Pride’s right to claim certain deductions in its tax returns for those years. We anticipate that the Mexican government will make additional assessments contesting similar deductions for other tax years. If the Mexican tax authorities were to apply a similar methodology on the primary issue in the dispute to remaining open tax years, the total amount of future tax assessments (inclusive of related penalties and interest) could be approximately $100 million as of March 31, 2009. In addition, we recently received unrelated observation letters from the Mexican government for other tax periods that could ultimately result in additional assessments. While we intend to contest these assessments vigorously, we cannot predict or provide assurance as to the ultimate outcome, which may take several years. Additional security will be required to be provided to the extent assessments are contested.

We expect to post the additional bonds or other collateral when due, which we anticipate to be no earlier than the fourth quarter of 2009. Pursuant to a tax support agreement we entered into with Pride, Pride has agreed to guarantee or indemnify the issuer of any such surety bonds or other collateral issued for our account in respect of Mexican tax assessments made prior to the date of the spin-off. Beginning on the third anniversary of the spin-off, and on each subsequent anniversary thereafter, we will be required to provide substitute credit support for a portion of the collateral guaranteed or indemnified by Pride, so that Pride’s obligations are terminated in their entirety by the sixth anniversary of the spin-off. Seahawk will pay Pride a fee based on the credit support provided.

Our tax support agreement with Pride does not obligate Pride to guarantee or indemnify the issuer of any surety bonds or other collateral issued in respect of future tax assessments. If we are not able to obtain additional security for future tax assessments, if any, we will not be permitted to contest those assessments and the full amount assessed will become due and payable. Additionally, if we are not able to provide substitute credit support for the collateral guaranteed or indemnified by Pride beginning on the third anniversary of the spin-off (as described above), we may lose our ability to continue our pending contests of the existing assessments. We could also be in default under the tax support agreement, which may constitute a cross-default under our bank credit facility and could trigger cash collateralization requirements to Pride. If any of these events were to occur, our liquidity and results of operations could be materially affected.

Our customers may seek to cancel or renegotiate some of our drilling contracts during periods of depressed market conditions or if we experience downtime, operational difficulties, or safety-related issues.

All our contracts with major customers are dayrate contracts, where we charge a fixed charge per day regardless of the number of days needed to drill the well. During depressed market conditions, a customer may no longer need a rig that is currently under contract or may be able to obtain a comparable rig at a lower daily rate. As a result, customers may seek to renegotiate the terms of their existing drilling contracts or avoid their obligations under those contracts. In addition, our customers may have the right to terminate, or may seek to renegotiate, existing contracts if we experience downtime, operational problems above the contractual limit or safety-related issues, if the rig is a total loss, if the rig is not delivered to the customer within the period specified in the contract or in other specified circumstances, which include events beyond the control of either party. Some of our contracts with our customers include terms allowing them to terminate contracts without cause, with little or no prior notice and without penalty or early termination payments. In addition, we could be required to pay penalties, which could be material, if some of our contracts with our customers are terminated due to downtime, operational problems or failure to deliver. Some of our other contracts with customers may be cancelable at the option of the customer upon payment of a penalty, which may not fully compensate us for the loss of the contract. Early termination of a contract may result in a rig being idle for an extended period of time. The likelihood that a customer may seek to terminate a contract is increased during periods of market weakness. If our customers cancel some of our significant contracts and we are unable to secure new contracts on substantially similar terms, our revenues and profitability could be materially reduced.

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We can provide no assurance that our current backlog of contract drilling revenue will be ultimately realized.

As of March 31, 2009, our pro forma contract drilling backlog was approximately $92.8 million for future revenues under firm commitments, all of which is expected to be realized during the remainder of 2009. We may not be able to perform under these contracts due to events beyond our control, and our customers may seek to cancel or renegotiate our contracts for various reasons, including those described above or in connection with the ongoing financial crisis. Our inability or the inability of our customers to perform under our or their contractual obligations may have a material adverse effect on our financial position, results of operations and cash flows.

Our credit agreement imposes significant operating and financial restrictions, which may prevent us from capitalizing on business opportunities and taking some actions.

We have entered into a two-year, $36 million revolving credit facility that will not have any outstanding borrowings at the time of the spin-off. Borrowings under the credit facility may only be used to fund reactivation capital expenditures and for related working capital purposes. The credit agreement imposes significant operating and financial restrictions on us, including limitations on our ability to:

•  make investments and other restricted payments, including dividends and other distributions;

•  incur additional indebtedness;

•  create liens;

•  restrict dividend or other payments by our subsidiaries to us;

•  sell our assets or consolidate or merge with or into other companies;

•  engage in transactions with affiliates; and

•  make capital expenditures.

Our credit agreement also requires us to maintain minimum ratios with respect to our financial condition. These covenants may adversely affect our ability to finance our future operations and capital needs and to pursue available business opportunities. A breach of any of these covenants would result in a default in respect of the related debt. If a default were to occur, the relevant lenders could elect to declare the debt, together with accrued interest and other fees, immediately due and payable and proceed against any collateral securing that debt.

In order to execute our growth strategy, we may require additional capital in the future, which may not be available to us.

Our business is capital-intensive and, to the extent we do not generate sufficient cash from operations, we may need to raise additional funds through public or private debt or equity financings to execute our growth strategy and to fund capital expenditures. Adequate sources of capital funding may not be available when needed or may not be available on favorable terms. If we raise additional funds by issuing equity securities, dilution to the holdings of existing stockholders may result. If funding is insufficient at any time in the future, we may be unable to fund maintenance requirements and acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Our acquisition strategy may be unsuccessful if we incorrectly predict operating results, are unable to identify and complete future acquisitions, or fail to successfully integrate acquired assets or businesses we acquire.

The acquisition of assets or businesses that are complementary to our operations is an important component of our business strategy. We believe that attractive acquisition opportunities may arise from time to time, and any such acquisition could be significant. At any given time, discussions with one or more potential sellers may be at different stages. However, any such discussions may not result in the consummation of an

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acquisition transaction, and we may not be able to identify or complete any acquisitions. In addition, we cannot predict the effect, if any, that any announcement or consummation of an acquisition would have on the trading price of our common stock.

Any 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 integrate the operations or management of any acquired operations or assets successfully and timely; and

•  the risk of diversion of management’s attention from existing operations or other priorities.

If we are unsuccessful in completing acquisitions of other operations or assets, our financial condition could be adversely affected and we may be unable to implement an important component of our business strategy successfully. In addition, if we are unsuccessful in integrating our acquisitions in a timely and cost-effective manner, our financial condition and results of operations could be adversely affected.

We are subject to a number of operating hazards, including those specific to marine operations. We may not have insurance to cover all these hazards.

Our 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, punchthroughs, craterings, fires, explosions and pollution. Contract drilling requires the use of heavy equipment and exposure to hazardous conditions, which may subject us 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. Our 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. We customarily provide contract indemnity to our customers for:

•  claims that could be asserted by us relating to damage to or loss of our equipment, including rigs;

•  claims that could be asserted by our employees relating to personal injury or loss of life; and

•  pollution emanating from the rigs we operate.

Certain areas in and near the Gulf of Mexico are subject to hurricanes and other extreme weather conditions on a relatively frequent basis. Our drilling rigs may be located in areas that could cause them to be susceptible to damage or total loss by these storms. For example, in September 2008, a mat-supported jackup rig operating in the U.S., the Pride Wyoming, was lost as a result of Hurricane Ike. In addition, damage caused by high winds and turbulent seas to our rigs, our shorebases and our corporate infrastructure could potentially cause us to curtail operations for significant periods of time until the damages can be repaired.

We maintain insurance for injuries to our employees, damage to or loss of our equipment and other insurance coverage for normal business risks, including general liability insurance. For at least the first year following the date of the spin-off, rigs operating in the U.S. Gulf of Mexico will not have coverage for physical damage due to named windstorms. Our marine package policy, which provides coverage for physical damage to our rigs and for various marine liabilities, has a $10 million per-occurrence deductible for non-windstorm events. Other deductibles may apply depending on the nature and circumstances of the liability.

Any insurance protection may not be sufficient or effective under all circumstances or against all hazards to which we may be subject. For example, in addition to our lack of coverage for physical damage caused by named windstorms in the U.S., pollution, reservoir damage and environmental risks generally may not be fully

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insurable. We do not expect to maintain business interruption or loss of hire insurance. In addition, some of our primary insurance policies will have substantial deductibles.

The oil and natural gas industry in the Gulf of Mexico suffered extensive damage in recent years due to hurricanes. As a result, insurance costs and deductibles have increased significantly. There also have been significant changes made to the scope and terms of various insurance coverages. There can be no assurance that costs, deductibles and coverage terms will not continue to be adversely affected.

The occurrence of a significant event against which we are not fully insured, or of a number of lesser events against which we are insured but are subject to substantial deductibles, aggregate limits, and/or self-insured amounts, could materially increase our costs and impair our profitability and financial condition. We may not be able to maintain adequate insurance at rates or on terms that we consider reasonable or acceptable or be able to obtain insurance against certain risks.

Public health threats could have a material adverse effect on our operations and our financial results.

Public health threats, such as influenza, Severe Acute Respiratory Syndrome (SARS) and other highly communicable diseases, could adversely impact our operations, the operations of our clients and the global economy in general, including the worldwide demand for crude oil and natural gas and the level of demand for our services. Any quarantine of personnel or inability to access our offices or rigs could adversely affect our operations. Travel restrictions or operational problems in the United States or Mexico, or any reduction in the demand for drilling services caused by public health threats in the future, may materially impact operations and adversely affect our financial results.

We are responsible for costs and awards relating to the loss of the Pride Wyoming that are not covered by Pride’s insurance.

In September 2008, the Pride Wyoming, a 250-foot slot-type jackup rig operating in the U.S., was deemed a total loss for insurance purposes after it was severely damaged and sank as a result of Hurricane Ike. We expect to incur costs of approximately $53 million for removal of the wreckage and salvage operations, not including any costs arising from damage to offshore structures owned by third parties. These costs for removal of the wreckage are expected to be covered by Pride’s insurance. Pride has agreed to advance the costs of removal of the wreckage and salvage operations until receipt of insurance proceeds, but we will be responsible for payment of the $1 million retention, $2.5 million in premium payments for a removal of wreckage claim and for any costs not covered by Pride’s insurance.

Four owners of facilities in the Gulf of Mexico on which parts of the Pride Wyoming settled or may have settled have requested that Pride pay for all costs, expenses and other losses associated with the damage, including loss of revenue. These owners have claimed damages in excess of $120 million in the aggregate. Other pieces of the rig may have also caused damage to certain other offshore structures. In October 2008, Pride filed a complaint in U.S. Federal District Court pursuant to the Limitation of Liability Act, which has the potential to statutorily limit our exposure for claims arising out of third party damages caused by the loss of the Pride Wyoming. We will be responsible for any insurance deductibles or awards not covered by Pride’s insurance.

We may not be able to maintain or replace our rigs as they age.

The capital associated with the repair and maintenance of our fleet increases with age. We may not be able to maintain our fleet of existing rigs to compete effectively in the market, and our financial resources may not be sufficient to enable us to make expenditures necessary for these purposes or to acquire or build replacement rigs. The Seahawk 2000 (formerly known as Pride Alabama) and the Seahawk 2002 (f/k/a Pride Colorado), which are currently stacked, would require additional capital expenditures in order to be class certified.

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New technologies may cause our current drilling methods to become obsolete, resulting in an adverse effect on our business.

The offshore contract drilling industry is subject to the introduction of new drilling techniques and services using new technologies, some of which may be subject to patent protection. As competitors and others use or develop new technologies, we may be placed at a competitive disadvantage and competitive pressures may force us to implement new technologies at substantial cost. In addition, competitors may have greater financial, technical and personnel resources that allow them to benefit from technological advantages and implement new technologies before we can. We may not be able to implement technologies on a timely basis or at a cost that is acceptable to us.

Our customers may be unable or unwilling to indemnify us.

Consistent with standard industry practice, our customers generally assume, and indemnify us against, well control and subsurface risks under dayrate contracts. These risks are those associated with the loss of control of a well, such as blowout or cratering, the cost to regain control or redrill the well and associated pollution. There can be no assurance, however, that these customers will necessarily be willing or financially able to indemnify us against all these risks. Also, we may choose not to enforce these indemnities because of the nature of our relationship with some of our larger customers.

We are subject to numerous governmental laws and regulations, including those that may impose significant costs and liability on us for environmental and natural resource damages.

Many aspects of our operations are affected by governmental laws and regulations that may relate directly or indirectly to the contract drilling industry, including those requiring us to obtain and maintain specified permits or other governmental approvals and to control the discharge of oil and other contaminants into the environment or otherwise relating to environmental protection. Our operations and activities in the United States are subject to numerous environmental laws and regulations, including the Oil Pollution Act of 1990, the Outer Continental Shelf Lands Act, the Comprehensive Environmental Response, Compensation and Liability Act and the International Convention for the Prevention of Pollution from Ships. Additionally, Mexico has adopted, and could in the future adopt additional, environmental laws and regulations covering the discharge of oil and other contaminants and protection of the environment that could be applicable to our operations. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and even criminal penalties, the imposition of remedial obligations, the denial or revocation of permits or other authorizations and the issuance of injunctions that may limit or prohibit our operations. Laws and regulations protecting the environment have become more stringent in recent years and may in certain circumstances impose strict liability, rendering us liable for environmental and natural resource damages without regard to negligence or fault on our part. These laws and regulations may expose us to liability for the conduct of, or conditions caused by, others or for acts that were in compliance with all applicable laws at the time the acts were performed. The application of these requirements, the modification of existing laws or regulations or the adoption of new laws or regulations curtailing exploratory or development drilling for oil and natural gas could materially limit future contract drilling opportunities or materially increase our costs or both. In addition, we may be required to make significant capital expenditures to comply with laws and regulations or materially increase our costs or both.

Our ability to operate our rigs could be restricted or made more costly by government regulation.

Hurricanes Katrina and Rita in 2005 and Hurricanes Gustav and Ike in 2008 caused damage to a number of rigs in the Gulf of Mexico. Rigs that were moved off location by the storms damaged platforms, pipelines, wellheads and other drilling rigs. In May 2006 and April 2007, the Minerals Management Service of the U.S. Department of the Interior (“MMS”) issued interim guidelines for jackup rig fitness requirements for the 2006 and 2007 hurricane seasons, effectively imposing new requirements on the offshore oil and natural gas industry in an attempt to increase the likelihood of survival of jackup rigs and other offshore drilling units during a hurricane. Effective June 2008, the MMS issued longer-term guidelines, generally consistent with the interim guidelines, for jackup rig fitness requirements during hurricane seasons. The June 2008 guidelines are

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scheduled to be effective through the 2013 hurricane season. As a result of these MMS guidelines, our jackup rigs operating in the U.S. are being required to operate with a higher air gap (the space between the water level and the bottom of the rig’s hull) during the hurricane season, effectively reducing the water depth in which they can operate. The guidelines also provide for enhanced information and data requirements from oil and natural gas companies operating properties in the U.S. Gulf of Mexico. The MMS may take other steps that could increase the cost of operations or reduce the area of operations for our rigs, thus reducing their marketability. Implementation of the MMS guidelines or regulations may subject us to increased costs and limit the operational capabilities of our rigs.

Unionization efforts and labor regulations in the U.S. or Mexico could materially increase our costs or limit our flexibility.

Our Mexican national employees are represented by a labor union and work under collective bargaining or similar agreements, which are subject to periodic renegotiation. In addition, our business has been affected by strikes or work stoppages and other labor disruptions. Although our domestic employees are not covered by a collective bargaining agreement, the marine services industry has been targeted by maritime labor unions in an effort to organize U.S. employees. A significant increase in the wages paid by competing employers or the unionization of our U.S. employees could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both. If either of these events were to occur, our capacity and profitability could be diminished and our growth potential could be impaired. Additional unionization efforts, new collective bargaining agreements or work stoppages, whether foreign or domestic, could materially increase our costs, reduce our revenues or limit our flexibility.

Certain legal obligations require us to contribute certain amounts to retirement funds and restrict our ability to dismiss employees. Future regulations or court interpretations established in the countries in which we conduct our operations could increase our costs and materially adversely affect our business, financial condition and results of operation.

Risks Related to Our Separation from Pride

We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from Pride.

As a stand-alone, independent public company, we believe that we will be able to more effectively focus on our operations and growth strategies, and thus bring more value to our stockholders, than we could as a subsidiary of Pride. However, by separating from Pride there is a risk that we may be more susceptible to market fluctuations and other adverse events than we would have been were we still a part of the current Pride. As part of Pride we are able to enjoy certain benefits from Pride’s operating diversity, purchasing and borrowing leverage, and available capital for investments. We may not be able to achieve some or all of the benefits that we expect to achieve as a stand-alone, independent company.

We do not have a history of operating as a stand-alone company, we may encounter difficulties in making the changes necessary to operate as a stand-alone company, and we may incur greater costs as a stand-alone company that may adversely affect our results.

Pride has historically performed various corporate functions for us, including:

•  accounting;

•  human resource services such as payroll and benefit plan administration;

•  information technology and communications;

•  legal (including compliance with the Sarbanes-Oxley Act of 2002 and with the periodic reporting obligations of the Exchange Act);

•  purchasing and logistics;

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•  quality, safety, health and environment;

•  risk management;

•  tax; and

•  treasury and corporate finance.

Following our separation from Pride, Pride will have no obligation to provide these functions to us other than the interim services that will be provided by Pride under a transition services agreement, which is described in “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Transition Services Agreement.” We are in the process of creating, or engaging third parties to provide, our own systems and business functions to replace many of the systems and business functions Pride provides, and we may incur difficulties in the replacement process. We may also incur higher costs for these functions than the amounts we were allocated as segments of Pride. If we do not have in place our own systems and business functions or if we do not have agreements with other providers of these services once our transition services agreement with Pride expires, we may operate our business less efficiently and our results may suffer.

Our designated executive team has not previously worked together and some members of our executive team do not have extensive experience operating our assets.

While the persons expected to be our executive officers have significant industry experience, some do not have extensive operating experience with the rigs in our fleet, and they have not all worked together previously as a team. As a separate company, we will have substantially fewer resources than Pride. Our success will depend, in part, on the ability of our executives to work effectively as a team in the new environment. The loss of any of our executive officers could adversely impact our performance.

The historical and pro forma combined financial information in this information statement may not permit you to predict our future performance, and the estimates and assumptions used in preparing our pro forma combined financial information may be materially different from our actual experience as a separate independent company.

The historical combined financial information we have included in this information statement may not reflect what our results of operations, financial position and cash flows would have been had we been an independent company during the periods presented or be indicative of what our results of operations, financial position and cash flows may be in the future when we are an independent company. This is primarily a result of the following factors:

•  the historical combined financial information reflects the effects of certain assets and operations that will not be held by Seahawk, including operations related to two independent leg jackup rigs, two semi-submersible rigs and deepwater drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs;

•  our historical combined financial information reflects allocations for services historically provided by Pride, and we expect these allocations to be different from the costs we will incur for these services in the future as a smaller independent company, including with respect to services provided by Pride under the transition services agreement. We expect that, in some instances, the costs incurred for these services as a smaller independent company will be higher than the share of total Pride expenses allocated to us historically; and

•  the historical combined financial information does not reflect the increased costs associated with being an independent company, including changes that we expect in our cost structure, personnel needs, financing and operations of our business as a result of the spin-off and from reduced economies of scale.

In preparing the pro forma combined financial information in this information statement, we have made adjustments to the historical combined financial information of Pride based upon currently available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma

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basis, the impact of the transactions contemplated by the separation. These and other estimates and assumptions used in the calculation of the pro forma financial information in this information statement may be materially different from our actual experience as a separate, independent company. The pro forma combined financial information in this information statement does not purport to represent what our results of operations would actually have been had we operated as a separate, independent company during the periods presented, nor does the pro forma information give effect to any events other than those discussed in the unaudited pro forma combined financial information and related notes. See “Unaudited Pro Forma Combined Financial Information.”

We may be required to record an impairment loss to our rig fleet as a result of the spin-off.

We currently value our rig fleet at historical cost in our financial statements as required by U.S. generally accepted accounting principles. We periodically evaluate our property and equipment for impairment whenever events or circumstances indicate the carrying value of such long-lived assets may not be recoverable. Asset impairment valuations for held and used assets are based on estimated future undiscounted cash flows of the assets being evaluated to determine the recoverability of the carrying amounts. These evaluations of our rig fleet have not resulted in impairment losses in the past. However, we will be required as a result of the spin-off to perform an assessment of the fair value of our rig fleet as compared to its carrying value. To the extent that the carrying value exceeds the assessed fair value, we will recognize an impairment loss. Pride has conducted a preliminary fair value assessment of our rig fleet, and as a result we currently expect to record an impairment loss of between $25 million and $45 million as a result of the spin-off. Our new revolving credit facility contains a covenant that requires us to maintain a minimum tangible net worth as of the end of each fiscal quarter equal to the sum of $320 million, plus 50% of our net income and 100% of the proceeds of any equity offerings. Although an impairment loss would reduce our tangible net worth, we expect to remain in compliance with that covenant despite the expected impairment loss. See “Management’s Discussion and Analysis of Combined Financial Condition and Results of Operations — Critical Accounting Estimates — Property and Equipment.”

The requirements of being a public company may strain our resources.

As a public company, we will be subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports, proxy statements and other information. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight will be required. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. This may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. We expect to incur additional annual expenses related to these steps and, among other things, directors and officers liability insurance, director fees, SEC reporting, transfer agent fees, hiring additional accounting and administrative personnel, increased auditing and legal fees and similar expenses, which expenses may be significant. In addition, we may not be able to implement these changes in a timely fashion.

The spin-off could result in substantial tax liability.

Pride has received a private letter ruling from the IRS and intends to obtain an opinion from Baker Botts L.L.P., in each case, substantially to the effect that for U.S. federal income tax purposes, the spin-off and certain related transactions will qualify under Sections 355 and/or 368 of the Code. Pride has advised us that it does not intend to complete the spin-off if the IRS private letter ruling does not remain effective or if Pride has not obtained the opinion from Baker Botts L.L.P. The IRS private letter ruling relies on, and the opinion will rely on, certain representations, assumptions and undertakings, including those relating to the past and future conduct of our business, and neither the IRS private letter ruling nor the opinion would be valid if such representations, assumptions and undertakings were incorrect. Moreover, the IRS private letter ruling does not

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address all the issues that are relevant to determining whether the distribution will qualify for tax-free treatment. For more information regarding the tax opinion and the private letter ruling, see the section entitled “The Spin-Off — Certain U.S. Federal Income Tax Consequences of the Spin-Off” included elsewhere in this information statement.

If the distribution fails to qualify for tax-free treatment, Pride would be treated as if it had sold the common stock of our company in a taxable sale for its fair market value, and our initial public stockholders may be treated as if they had received a taxable distribution from Pride in an amount equal to the fair market value of our common stock that was distributed to them. In addition, if such related transactions fail to qualify for tax-free treatment, we would be treated as if we had sold all or part of our assets (including certain assets that will be retained by Pride, the value of which may be in excess of the assets we will hold immediately after the spin-off) in a taxable sale for fair market value. Under the terms of the tax sharing agreement we entered into with Pride, in the event that the spin-off and/or certain related transactions were to fail to qualify for tax-free treatment, we would generally be responsible for 50% of the tax resulting from such failure. However, if the spin-off and/or certain related transactions were to fail to qualify for tax-free treatment because of certain actions or failures to act by us or by Pride, the party taking or failing to take such actions would be responsible for all of the tax resulting from such failure. For a more detailed discussion, see the section entitled “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Tax Sharing Agreement” included elsewhere in this information statement. Our indemnification obligations to Pride and its subsidiaries, officers and directors are not limited by any maximum amount. If we are required to indemnify Pride or such other persons under the circumstances set forth in the tax sharing agreement, our financial condition could be materially adversely affected.

We might not be able to engage in desirable strategic transactions and equity issuances following the spin-off.

Under the tax sharing agreement that we entered into with Pride, we are prohibited from taking or failing to take any action that prevents the spin-off and related transactions from being tax-free. Such actions would include, but not be limited to, any of the following actions within the two-year period following the effective time of the spin-off: (i) selling or transferring all or substantially all of the assets that constitute our mat-supported jackup rig business, (ii) issuing stock of us or any affiliate (or any instrument that is convertible or exchangeable into any such stock) except in certain permitted cases relating to employee compensation, (iii) facilitating or otherwise participating in any acquisition (or deemed acquisition) of our stock that would result in any shareholder or certain groups of shareholders owning or being deemed to own 40% or more (by vote or value) of our outstanding stock, and (iv) redeeming or otherwise repurchasing any of our stock. The foregoing actions contain exceptions for certain permitted cases, including certain transfers among us and our wholly owned subsidiaries, and in some cases allow for actions that do not exceed permitted limits.

These restrictions, to the extent they remain in effect and apply to particular transactions we may seek to undertake, may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that may maximize the value of our business. For more information, see the sections entitled “The Spin-Off — Certain U.S. Federal Income Tax Consequences of the Spin-Off” and “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Tax Sharing Agreement” included elsewhere in this information statement.

The terms of our separation from Pride, the related agreements and other transactions with Pride were determined in the context of a parent-subsidiary relationship and thus may be less favorable to us than the terms we could have obtained from an unaffiliated third party.

Transactions and agreements entered into with Pride on or before the closing of the spin-off present conflicts between our interests and those of Pride. These transactions and agreements include the following:

•  agreements related to the separation of our business from Pride that provide for, among other things, the assumption by us of liabilities related to our business or subsidiaries, the assumption by Pride of liabilities unrelated to our business, our agreement not to compete with Pride in certain respects for

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three years following the spin-off, the transfer to us of a target working capital amount, our respective rights, responsibilities and obligations with respect to taxes and tax benefits and the terms of our various interim and ongoing relationships, as described under “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride;” and

•  administrative support services provided by Pride to us and other transactions with Pride, as described under “Certain Relationships and Related Party Transactions.”

Because the terms of our separation from Pride and these transactions and agreements were entered into in the context of a parent-subsidiary relationship, their terms may be less favorable to us than the terms we could have obtained from an unaffiliated third party. In addition, while we are controlled by Pride, it is possible for Pride to cause us to amend these agreements on terms that may be less favorable to us than the current terms of the agreements. We may not be able to resolve any potential conflict, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party. See “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride.”

In connection with our separation from Pride, Pride will indemnify us for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that Pride’s ability to satisfy its indemnification obligation will not be impaired in the future.

Pursuant to the master separation agreement, Pride has agreed to indemnify us from certain liabilities. However, third parties could seek to hold us responsible for any of the liabilities that Pride has agreed to retain, and there can be no assurance that the indemnity from Pride will be sufficient to protect us against the full amount of such liabilities, or that Pride will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Pride any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could adversely affect our business, results of operations and financial condition.

Risks Related to the Securities Markets and Ownership of Our Common Shares

Substantial sales of our common shares could cause our share price to decline and issuances by us may dilute your ownership interest in our company.

Any sales of substantial amounts of our common shares in the public market after the spin-off, or the perception that these sales might occur, could lower the market price of our common shares and impede our ability to raise capital through the issuance of equity securities. Although we have no actual knowledge of any plan or intention on the part of any 5% or greater stockholder to sell our common stock following the spin-off, it is possible that some Pride stockholders, including possibly some of Pride’s large stockholders and index fund investors, will sell the shares of our common stock they receive in the spin-off for various reasons (for example, if our business profile or market capitalization as an independent company does not fit their investment objectives). Further, if we issue additional equity securities to raise additional capital, your ownership interest in our company will be diluted and the value of your investment may be reduced.

The price of our common stock may be volatile.

We have not and will not set an initial price for our common stock. The price for our common stock will be established by the public market. We are unable to predict whether large amounts of our common stock will be sold in the open market following the spin-off. We are also unable to predict the number of buyers that will be in the market at any time. Our smaller size and different investment characteristics may not appeal to the current investor base of Pride. There is no assurance that there will be sufficient buying interest to offset any sales, and, accordingly, the price of our common stock could be depressed by those sales or be more volatile. Neither we nor Pride can assure you that the trading price of a share of Pride common stock after the spin-off plus the trading price of the 1/15 of a share of Seahawk common stock distributed for each share of Pride common stock will not, in the aggregate, be less than the trading price of a share of Pride common stock before the spin-off.

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We have no plans to pay regular dividends on our common shares, so you may not receive funds without selling your common shares.

We have no current intent to pay a regular dividend. Our new revolving credit facility includes restrictions on our ability to pay dividends. Our board of directors will determine the payment of future dividends on our common stock, if any, and the amount of any dividends in light of applicable law, contractual restrictions limiting our ability to pay dividends, our earnings and cash flows, our capital requirements, our financial condition, and other factors our board of directors deems relevant. Accordingly, you may have to sell some or all of your common shares in order to generate cash flow from your investment.

Provisions in our certificate of incorporation and by-laws and in our rights plan, and provisions of Delaware law, may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.

Our certificate of incorporation, by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include, among others:

•  our board of directors fixes the number of members on the board;

•  our board of directors is divided into three classes with staggered terms;

•  elimination of the rights of our stockholders to act by written consent and call stockholder meetings;

•  rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings;

•  the right of our board of directors to issue preferred stock without stockholder approval;

•  supermajority vote requirements for certain amendments to our certificate of incorporation and by-laws;

•  anti-takeover provisions of Delaware law which may prevent us from engaging in a business combination with an interested stockholder; and

•  limitations on the right of stockholders to remove directors.

In addition, we have adopted a stockholder rights plan which provides that in the event of an acquisition of or tender offer for 15% of our outstanding common stock, our stockholders shall be granted rights to purchase our common stock at a specified price. The rights plan could make it more difficult for a third-party to acquire our common stock without the approval of our board of directors.

Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. For more information, see the section entitled “Description of Capital Stock — Delaware Anti-Takeover Law” included elsewhere in this information statement. We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our board and by providing our board with more time to assess any acquisition proposal. These provisions are not intended to make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board determines is not in the best interests of our company and our stockholders.

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FORWARD-LOOKING INFORMATION

This information statement contains forward-looking statements. All statements, other than statements of historical fact, included in this information statement that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These include such matters as:

•  market conditions, expansion and other development trends in the contract drilling industry;

•  our ability to enter into new contracts for our rigs and future utilization rates and contract rates for rigs;

•  customer requirements for drilling capacity and customer drilling plans;

•  future capital expenditures and investments in the refurbishment and upgrading of rigs (including the amount and nature thereof and the timing of completion and delivery thereof);

•  future income tax payments;

•  business strategies;

•  expansion and growth of operations;

•  future payment of dividends;

•  expected outcomes of legal, tax and administrative proceedings, including Pride’s ongoing FCPA investigation, pending tax assessments by the Mexican government and potential claims resulting from the loss of the Pride Wyoming, and their expected effects on our financial position, results of operations and cash flows;

•  future operating results and financial condition;

•  the correlation between demand for our services and our earnings and customers’ expectations of future energy prices;

•  expected general and administrative expenses;

•  future impairment losses related to our rig fleet;

•  contract backlog and the amounts expected to be realized;

•  future exposure to currency devaluations or exchange rate fluctuations;

•  sufficiency of funds for required capital expenditures, working capital and debt service; and

•  liabilities under laws and regulations protecting the environment.

We have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. Although it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause actual future results to differ materially are the risks and uncertainties described under “Risk Factors” above and the following:

•  general economic and business conditions;

•  prices of oil and natural gas, particularly prices for natural gas in the U.S. and Mexico, and industry expectations about future prices;

•  ability to adequately staff our rigs;

•  foreign exchange controls and currency fluctuations;

•  political stability in the countries in which we operate;

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•  the business opportunities (or lack thereof) that may be presented to and pursued by us;

•  cancellation or renegotiation of our drilling contracts;

•  changes in laws or regulations;

•  changes in interest and tax rates;

•  demand for our rigs;

•  our ability to enter into and the terms of future contracts;

•  our ability to realize expected benefits from the spin-off;

•  a determination by the IRS that the spin-off should be treated as a taxable transaction;

•  our different capital structure as an independent company, including our access to capital, credit ratings, indebtedness and ability to raise additional financing;

•  the adequacy of sources of liquidity;

•  competition and market conditions in the contract drilling industry;

•  labor relations and work stoppages;

•  operating hazards, war, terrorism and cancellation or unavailability of insurance coverage;

•  severe weather; and

•  the effect of litigation and contingencies.

Most of these factors are beyond our ability to control or predict. Any of these factors, or a combination of these factors, could materially affect our future financial condition or results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. In addition, each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.

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THE SPIN-OFF

General

On August 4, 2009 the board of directors of Pride approved a plan to separate Pride into two independent, publicly traded companies. As approved, the separation will occur through the distribution to Pride stockholders of all of the shares of common stock of a subsidiary of Pride that would hold, directly or indirectly, the assets and liabilities of Pride’s mat-supported jackup rig business.

On August 24, 2009, the spin-off date, subject to certain customary conditions, each Pride stockholder will receive 1/15 of a share of our common stock with respect to each share of Pride common stock held by such stockholder at the close of business on the record date, as described below. Following the spin-off, Pride stockholders will own 100% of our common stock. Pride stockholders will not be required to make any payment, surrender or exchange of shares of Pride common stock or take any other action to receive their shares of Seahawk common stock.

The spin-off as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see the caption entitled “— Conditions to the Spin-Off” included elsewhere in this section.

Reasons for the Spin-Off

Pride’s board of directors has determined that separating our business from Pride is in the best interests of Pride and its stockholders. The board of directors of Pride considered the following potential benefits in making its determination to effect the spin-off:

•  facilitating Pride’s external acquisition growth strategy for its premium deepwater drilling operations by meaningfully increasing the relative value and attractiveness of the shares of stock which Pride will have available to offer as acquisition currency and thereby decreasing Pride’s overall cost of capital;

•  facilitating the growth and acquisition strategies for the mat-supported jackup rig business to be held by us, which would be inconsistent with Pride’s general business strategy;

•  permitting our management (i) to focus exclusively on the operation and management of the mat-supported jackup rig business and the opportunities, challenges and risks unique to that business, and (ii) to modify the manner in which the business is conducted in order to increase its profitability; and

•  allowing Pride to refine its focus and further enhance its reputation as a provider of technically advanced contract drilling services primarily in deepwater by separating from the mat-supported jackup rig business and focusing on its premium deepwater drilling operations.

Neither we nor Pride can assure you that, following the spin-off, any of these benefits will be realized to the extent anticipated or at all.

The Pride board of directors also considered a number of potentially negative factors in evaluating the spin-off, including the potential loss of synergies from operating as one company and potential increased costs, potential loss of joint purchasing power, potential disruptions to the businesses as a result of the spin-off, the limitations placed on our company as a result of the tax sharing agreement and other agreements it entered into with Pride in connection with the spin-off, risks of being unable to achieve the benefits expected to be achieved by the spin-off, risks related to loss of the opportunity to train Pride personnel on the mat-supported jackup rigs, the risk that reducing infrastructure in Mexico may reduce Pride’s ability to compete for deepwater contracts in Mexico, the risk that the spin-off might not be completed, the one-time, ongoing costs of the spin-off and the risk that the trading price of a share of Pride common stock after the spin-off plus the trading price of the 1/15 of a share of Seahawk common stock distributed for each share of Pride common stock will, in the aggregate, be less than the trading price of a share of Pride common stock before the spin-off. The Pride board of directors concluded that the potential benefits of the spin-off outweighed these factors.

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In view of the wide variety of factors considered in connection with the evaluation of the spin-off and the complexity of these matters, the Pride board of directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to the factors considered. The individual members of the Pride board of directors likely may have given different weights to different factors.

The Number of Shares You Will Receive

For each share of Pride common stock that you owned at the close of business on August 14, 2009, the record date, and not subsequently sold in the “regular way” market, you will receive 1/15 of a share of Seahawk common stock on the spin-off date.

Treatment of Fractional Shares

The transfer agent will not deliver any fractional shares of our common stock in connection with the spin-off. Instead, the transfer agent will aggregate all fractional shares and sell them on behalf of those holders who otherwise would be entitled to receive a fractional share. We anticipate that these sales will occur as soon as practicable after the distribution date. Those holders will then receive a taxable cash payment in the form of a check in an amount equal to their pro rata share of the total net proceeds of those sales. If you own your shares of Pride stock directly (either in book-entry form through an account with Pride’s transfer agent and/or if you hold physical stock certificates), your check for any cash that you may be entitled to receive instead of fractional shares of our common stock will be mailed to you separately. It is expected that all fractional shares held in street name will be aggregated and sold by brokers or other nominees according to their standard procedures. You should contact your broker or other nominee for additional details.

None of Pride, our company or the transfer agent will guarantee any minimum sale price for the fractional shares of our common stock. Neither we nor Pride will pay any interest on the proceeds from the sale of fractional shares. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient stockholders. See “— Material U.S. Federal Income Tax Consequences of the Spin-Off.”

Treatment of Stock-Based Awards

In recent years, employees of Pride (including certain of our executive officers) have been eligible to participate in Pride’s 1998 Long-Term Incentive Plan and Pride’s 2007 Long-Term Incentive Plan. Under these plans, Pride’s Compensation Committee has granted certain stock-based awards, including restricted stock units, shares of restricted stock and stock options, to employees who are remaining with Pride (“Remaining Employees”) and employees who are transferring to Seahawk (“Transferring Employees”). The outstanding stock-based awards held by Remaining Employees and Transferring Employees at the time of the spin-off will be treated as set forth below. We expect to issue approximately 200,000 restricted stock units to our employees to replace unvested Pride stock-based awards being forfeited by them. The expected equity ownership of our named executive officers after the spin-off is described in “Management — Security Ownership of Executive Officers and Directors.” The equity ownership of our other employees is expected to be less than 1% in the aggregate of our outstanding shares of common stock after the spin-off.

Restricted Stock Units Granted in 2009

Pride restricted stock units granted in 2009 and held by Remaining Employees generally will remain subject to the vesting schedule and other terms of such awards following the spin-off, except that the number of restricted stock units granted in 2009 and held by the Remaining Employees will be increased by a number of additional units equal to (x) the value of the Seahawk common stock (calculated using the volume-weighted average price on the date of the spin-off) that would have been distributed in the spin-off to a holder of a number of shares of Pride common stock equal to the number of restricted stock units granted in 2009 and held by the employee on the record date, divided by (y) the value of a share of Pride common stock (calculated using the volume-weighted average price on the date of the spin-off). Remaining Employees will not otherwise receive any distribution in the spin-off in respect of restricted stock units granted in 2009.

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Transferring Employees likewise will not receive any distribution in the spin-off in respect of restricted stock units granted in 2009. Pride restricted stock units granted in 2009 and held by Transferring Employees will be forfeited as a result of the termination of their employment with Pride. However, such Transferring Employees will be granted a replacement award of Seahawk restricted stock units, with the number of such Seahawk restricted stock units equal to (x) divided by (y) plus (z), where (x) is the volume-weighted average price of Pride common stock on the date of the spin-off multiplied by the number of shares of Pride common stock subject to the forfeited restricted stock units, (y) is the volume-weighted average price of Seahawk common stock on the date of the spin-off, and (z) is the number of shares of Seahawk common stock that would have been distributed in the spin-off with respect to the number of shares of Pride common stock covered by the forfeited restricted stock units. Such replacement awards will be subject to a vesting schedule that corresponds to the remaining vesting schedule of the forfeited award on the date of the spin-off.

Restricted Stock Units Granted Prior to 2009

Pride restricted stock units granted prior to 2009 and held by Remaining Employees will remain unchanged by the spin-off and will continue to be subject to the vesting schedule and other terms of such awards. In connection with the spin-off, Remaining Employees will not receive Seahawk common stock but will receive a cash payment equal to the value of the Seahawk common stock (calculated using the volume-weighted average price on the date of the spin-off) that would have been distributed in the spin-off to a holder of a number of shares of Pride common stock equal to the number of restricted stock units granted prior to 2009 and held by the employee on the record date.

Transferring Employees likewise will receive the same cash payment in the spin-off as Remaining Employees. Pride restricted stock units granted prior to 2009 and held by Transferring Employees will thereafter be forfeited as a result of the termination of their employment with Pride. However, such Transferring Employees will be granted a replacement award of Seahawk restricted stock units, with the number of such Seahawk restricted stock units equal to (x) the volume-weighted average price of Pride common stock on the date of the spin-off multiplied by the number of shares of Pride common stock subject to the forfeited Pride restricted stock units, divided by (y) the volume-weighted average price of Seahawk common stock on the date of the spin-off. Such replacement awards will be subject to a vesting schedule that corresponds to the remaining vesting schedule of the forfeited award on the date of the spin-off.

Restricted Stock

Pride restricted stock held by Remaining Employees will remain unchanged by the spin-off and will continue to be subject to the vesting schedule and other terms of such awards. Remaining Employees will receive a distribution in the spin-off of 1/15 of a fully vested share of Seahawk common stock for each share of Pride restricted stock they own on the record date.

Transferring Employees likewise will receive a distribution in the spin-off of 1/15 of a fully vested share of Seahawk common stock for each share of Pride restricted stock they own on the record date. The Pride restricted stock they hold will thereafter be forfeited as a result of the termination of their employment with Pride. However, such Transferring Employees will be granted replacement awards of Seahawk restricted stock units, with the number of such Seahawk restricted stock units equal to (x) the volume-weighted average price of Pride common stock on the date of the spin-off multiplied by the number of forfeited shares of Pride restricted stock, divided by (y) the volume-weighted average price of Seahawk common stock on the date of the spin-off. Such replacement awards will be subject to a vesting schedule that corresponds to the remaining vesting schedule of the forfeited award on the date of the spin-off.

Stock Options

All Pride stock options outstanding at the time of the spin-off will remain stock options to purchase Pride’s common stock, subject to the terms of the grant of such options, but Pride’s compensation committee has adjusted the number of shares subject to, and the exercise price of, each stock option using a formula so

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as to preserve the intrinsic value of each option to the holder, taking into account any change in the value of shares of Pride’s common stock resulting from the spin-off.

This formula requires adjustments to the exercise price and number of underlying option shares such that for each option:

•  on a share-by-share comparison, the pre-spin-off ratio of the exercise price to the fair market value of the Pride shares subject to the option immediately before the spin-off will be equal to the post-spin-off ratio of the exercise price to the fair market value of the Pride shares subject to the option immediately after the spin-off, and

•  the pre-spin-off spread, defined as the difference between the aggregate fair market value of the Pride shares subject to the option immediately before the spin-off and the aggregate exercise price, will be equal to the post-spin-off spread, defined as the difference between the aggregate fair market value of the Pride shares subject to the option immediately after the spin-off over the aggregate exercise price.

To illustrate the operation of this formula, assume an employee holds an option to acquire 1,000 shares of Pride stock at an exercise price of $50 per share. Further assume that immediately prior to the spin-off, the market price of a share of Pride stock (including the value of the distribution of Seahawk stock for that share) is $100, and that immediately after the spin-off the market price of a share of Pride stock is $80 (these hypothetical stock prices are provided for ease of computation and are not indicative of expected stock prices before or after the spin-off). In this example, the pre-spin-off ratio is 0.5, calculated as $50 / $100, and the pre-spin-off spread is $50,000, calculated as (1,000 * $100) – (1,000 * $50). In order to preserve the pre-spin-off ratio, the exercise price must be reduced to $40, calculated by multiplying the post-spin-off market price of Pride stock by the ratio ($80 * 0.5). In order to preserve the pre-spin-off spread, the number of Pride shares subject to the option must be increased to 1,250, calculated by dividing the spread ($50,000) by the difference between the post-spin-off market price of Pride stock and the new post-spin-off exercise price ($80 – $40).

With respect to Transferring Employees, all such options are already vested. Options awards held by Transferring Employees will expire according to the terms of the grant of such options because the Transferring Employees are terminating their employment with Pride. The option grants generally provide that expiration will occur 60 days after termination of employment with Pride. The Seahawk board of directors may, in its discretion, make new or replacement awards with respect to such forfeited options.

When and How You Will Receive the Distribution

Pride will distribute the shares of our common stock on August 24, 2009, the spin-off date. BNY Mellon Shareowner Services will serve as transfer agent and registrar for the Seahawk common stock and as distribution agent in connection with the distribution of Seahawk common stock.

If you own Pride common stock as of the close of business on the record date, the shares of Seahawk common stock that you are entitled to receive in the spin-off will be issued electronically, as of the spin-off date, to your account as follows:

•  Registered Stockholders.  If you own your shares of Pride stock directly (either in book-entry form through an account at Pride’s transfer agent, and/or if you hold physical paper stock certificates), you will receive your shares of Seahawk common stock by way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording stock ownership when no physical paper share certificates are issued to stockholders, as is the case in this spin-off.

Commencing on or shortly after the spin-off date, if you are a registered holder of Pride shares, the distribution agent will mail to you an account statement that indicates the number of shares of Seahawk common stock that have been registered in book-entry form in your name.

•  Beneficial Stockholders.  Most Pride stockholders hold their shares of Pride common stock beneficially through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the stock in “street name” and ownership would be recorded on the bank or brokerage firm’s books. If you hold your Pride common stock through a bank or brokerage firm, your bank or brokerage firm will

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credit your account for the shares of Seahawk common stock that you are entitled to receive in the spin-off. If you have any questions concerning the mechanics of having shares of our common stock held in “street name,” we encourage you to contact your bank or brokerage firm.

If any stockholder of Pride on the record date sells shares of Pride common stock on the “regular way” market after the record date but on or before the spin-off date, the buyer of those shares, and not the seller, will become entitled to receive the shares of our common stock issuable in respect of the shares sold. See “— Trading Between the Record Date and Spin-Off Date” below for more information.

Trading Between the Record Date and Spin-Off Date

Beginning on or shortly before the record date and continuing up to and including through the spin-off date, we expect that there will be two markets in Pride common stock: a “regular-way” market and an “ex-distribution” market. Shares of Pride common stock that trade on the regular way market will trade with an entitlement to shares of Seahawk common stock distributed pursuant to the spin-off. Shares that trade on the ex-distribution market will trade without an entitlement to shares of Seahawk common stock distributed pursuant to the spin-off. Therefore, if you sell shares of Pride common stock in the “regular-way” market up to and including through the spin-off date, you will be selling your right to receive shares of Seahawk common stock in the spin-off. If you own shares of Pride common stock at the close of business on the record date and sell those shares on the “ex-distribution” market, up to and including the spin-off date, you will still receive the shares of Seahawk common stock that you would be entitled to receive pursuant to your ownership of the shares of Pride common stock.

Furthermore, beginning on or shortly before the record date and continuing up to and including the spin-off date, we expect that there will be a “when-issued” market in our common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for shares of Seahawk common stock that will be distributed to Pride stockholders on the spin-off date. If you owned shares of Pride common stock at the close of business on the record date, you would be entitled to shares of our common stock distributed pursuant to the spin-off. You may trade this entitlement to shares of Seahawk common stock, without the shares of Pride common stock you own, on the “when-issued” market. On the first trading day following the spin-off date, “when-issued” trading with respect to our common stock will end and “regular-way” trading will begin.

Conditions to the Spin-Off

We expect that the spin-off will be effective on August 24, 2009, the spin-off date, assuming that certain conditions described in this information statement have been satisfied or waived by Pride. See “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Master Separation Agreement — The Spin-Off” for a description of these conditions.

Separation Costs

In connection with the consummation of the spin-off, Pride will allocate to us certain one-time, nonrecurring pre-tax separation costs, of which approximately $2.2 million have been incurred by Pride and accrued and expensed by us as of March 31, 2009. These one-time costs are expected to consist of, among other things: non-income tax costs and regulatory fees incurred as part of the separation of our business from Pride’s other businesses; costs for building and/or reconfiguring the required information systems to run the stand-alone companies; other various costs for branding the new company, stock exchange listing fees, investor and other stakeholder communications, fees of the distribution agent, employee recruiting fees and incentive compensation. In addition, Pride also expects to incur other one-time, non-recurring costs in respect of certain financial, legal, accounting and other advisory fees, as well as printing fees and upfront fees associated with our new credit facility. These costs will be borne by Pride and will not be charged to us.

After the spin-off, to the extent additional one-time costs are incurred by our company in connection with the separation, they will be the direct responsibility of Seahawk. However, such costs are not currently estimable. In addition, the costs to operate our business as an independent public entity may exceed the

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historical allocations of expenses related to areas that include, but are not limited to, litigation and other legal matters, compliance with the Sarbanes-Oxley Act and other corporate compliance matters, insurance and claims management and the related cost of insurance, as well as general overall purchasing power. These costs will be our responsibility and are as discussed elsewhere in this information statement in the section entitled “Unaudited Pro Forma Combined Financial Information.”

Results of the Spin-Off

After the spin-off, we will be a separate publicly traded company. Immediately following the spin-off, we expect to have approximately 1,530 stockholders of record, based on the number of registered stockholders of Pride common stock on August 3, 2009, and approximately 11.6 million shares of Seahawk common stock outstanding.

We entered into a master separation agreement and several other agreements with Pride to effect the separation and provide a framework for our relationships with Pride after the separation. These agreements will govern the relationships between Seahawk and Pride subsequent to the completion of the spin-off and provide for the allocation between Seahawk and Pride of Pride’s assets, liabilities and obligations attributable to periods prior to the spin-off. For a more detailed description of these agreements, see the section entitled “Certain Relationships and Related Party Transactions” included elsewhere in this information statement.

The spin-off will not affect the number of outstanding shares of Pride common stock or any rights of Pride stockholders, although it will affect the market value of the outstanding Pride common stock.

Market for Common Stock

There is currently no public market for Seahawk common stock. However, we expect that a limited market, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the spin-off, and we expect regular way trading of our common stock will begin on the first trading day after the completion of the spin-off. Neither we nor Pride can assure you as to the trading price of our common stock after the spin-off or as to whether the trading price of a share of Pride common stock after the spin-off plus the trading price of the 1/15 of a share of Seahawk common stock distributed for each share of Pride common stock will not, in the aggregate, be less than the trading price of a share of Pride common stock before the spin-off. See “Risk Factors — Risks Related to the Securities Markets and Ownership of Our Common Shares.” The trading price of our common stock is likely to fluctuate significantly, particularly until an orderly market develops.

A condition to the spin-off is the listing on the NASDAQ Global Select Market of our common stock. Seahawk common stock has been authorized for listing on the NASDAQ Global Select Market under the symbol “HAWK.”

After the spin-off, we will have approximately 11.6 million shares of our common stock outstanding. The shares of our common stock distributed to Pride’s stockholders will be freely transferable, except for shares received by individuals who are our affiliates. Individuals who may be considered our affiliates after the spin-off include individuals who control, are controlled by or are under common control with us, as those terms generally are interpreted for federal securities law purposes. This may include some or all of our executive officers and directors. Individuals who are our affiliates will be permitted to sell their shares of our common stock only pursuant to an effective registration statement under the Securities Act of 1933 (the “Securities Act”) or an exemption from the registration requirements of the Securities Act, such as the exemptions afforded by Section 4(1) of the Securities Act or Rule 144 thereunder.

Certain U.S. Federal Income Tax Consequences of the Spin-Off

The following is a summary of certain material U.S. federal income tax consequences relating to the spin-off by Pride. This summary is based on the Code, the U.S. Treasury regulations promulgated thereunder, and interpretations of the Code and the U.S. Treasury regulations by the courts and the IRS, in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. This summary does not

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discuss all the tax considerations that may be relevant to Pride stockholders in light of their particular circumstances, nor does it address the consequences to Pride stockholders subject to special treatment under the U.S. federal income tax laws (such as non-U.S. persons, insurance companies, dealers or brokers in securities or currencies, tax-exempt organizations, financial institutions, mutual funds, pass-through entities and investors in such entities, holders who hold their shares as a hedge or as part of a hedging, straddle, conversion, synthetic security, integrated investment or other risk-reduction transaction or who are subject to alternative minimum tax or holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation). In addition, this summary does not address the U.S. federal income tax consequences to those Pride stockholders who do not hold their Pride common stock as a capital asset. Finally, this summary does not address any state, local or foreign tax consequences. PRIDE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE SPIN-OFF TO THEM.

The spin-off is conditioned upon the continued effectiveness of a private letter ruling from the IRS and Pride’s receipt of an opinion from Baker Botts L.L.P. (which opinion will rely, in part, upon the continued effectiveness of such private letter ruling), in each case substantially to the effect that (i) the spin-off and certain related transactions will qualify under Sections 355 and/or 368 of the Code, and (ii) the spin-off and certain related transactions will further qualify for tax-free treatment to Pride and to us. In keeping with the IRS’s ruling practice, however, the private letter ruling does not cover certain matters which are relevant to the tax-free treatment of Pride, its stockholders and us. These matters will be covered in the opinion of Baker Botts L.L.P.

Assuming the spin-off and such related transactions meet the conditions described above:

•  the spin-off and certain related transactions will not result in any taxable income, gain or loss to Pride or to us, other than with respect to any intercompany items or excess loss accounts required to be taken into account under Treasury regulations relating to consolidated returns;

•  no gain or loss will be recognized by (and no amount will be included in the income of) Pride common stockholders upon their receipt of shares of Seahawk common stock in the spin-off;

•  the holding period of the Seahawk common stock received by each Pride common stockholder will include the holding period at the time of the spin-off for the Pride common stock on which the spin-off is made;

•  the tax basis of the Pride common stock held by each Pride common stockholder immediately before the spin-off will be allocated between that Pride common stock and the Seahawk common stock received, including any fractional share of Seahawk stock deemed received in the spin-off, in proportion to the relative fair market value of each on the date of the spin-off; and

•  a Pride common stockholder who receives cash for a fractional share of Seahawk common stock will generally recognize capital gain or loss measured by the difference between the amount of cash received and the basis of the fractional share interest in Seahawk common stock to which the stockholder would otherwise be entitled.

United States Treasury Regulations also generally provide that if a Pride common stockholder holds different blocks of Pride common stock (generally shares of Pride common stock purchased or acquired on different dates or at different prices), the aggregate basis for each block of Pride common stock purchased or acquired on the same date and at the same price will be allocated, to the greatest extent possible, between the shares of Seahawk common stock received in the spin-off in respect of such block of Pride common stock and such block of Pride common stock, in proportion to their respective fair market values, and the holding period of the shares of Seahawk common stock received in the spin-off in respect of such block of Pride common stock will include the holding period of such block of Pride common stock. If a Pride common stockholder is not able to identify which particular shares of Seahawk common stock are received in the spin-off with respect to a particular block of Pride common stock, for purposes of applying the rules described above, the stockholder may designate which shares of Seahawk common stock are received in the spin-off in respect of a particular block of Pride common stock, provided that such designation is consistent with the terms of the

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spin-off. Holders of Pride common stock are urged to consult their own tax advisors regarding the application of these rules to their particular circumstances.

Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment of Pride and its stockholders under Section 355 of the Code. Rather, the ruling is based upon representations by Pride that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. In addition to the continued effectiveness of the ruling from the IRS, Pride has made it a condition to the spin-off that Pride obtain an opinion of Baker Botts L.L.P. substantially to the effect that (i) the spin-off and certain related transactions will qualify under Sections 355 and/or 368 of the Code, and (ii) the spin-off and certain related transactions will further qualify for tax-free treatment to Pride and to us. The opinion will rely on the ruling as to matters covered by the ruling. In addition, the opinion will be based on, among other things, certain assumptions and representations made by Pride and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the IRS or the courts and will be subject to other qualifications and limitations.

Notwithstanding receipt by Pride of the ruling and opinion of counsel, the IRS could assert that the spin-off and/or certain related transactions do not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, we, our initial public stockholders, and Pride could be subject to significant U.S. federal income tax liability. In general, (i) with respect to the spin-off, Pride would be treated as if it had sold the common stock of our company in a taxable sale for its fair market value and our initial public stockholders could be treated as if they had received a taxable distribution from Pride in an amount equal to the fair market value of our common stock that was distributed to them, and (ii) with respect to certain related transactions, we would be treated as if we had sold all or part of our assets (including certain assets that will be retained by Pride, the value of which may be in excess of the assets we will hold immediately after the spin-off) in a taxable sale for fair market value. In addition, even if the spin-off were otherwise to qualify under Section 355 of the Code, both it and certain related transactions may be taxable to us and to Pride (but not to Pride’s stockholders) under Sections 355(e) and 355(f) of the Code, if the spin-off were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50% or greater interest in Pride or us. For this purpose, any acquisitions of Pride stock or of our common stock within the period beginning two years before the spin-off and ending two years after the spin-off are presumed to be part of such a plan, although we or Pride may be able to rebut that presumption.

In connection with the spin-off, we and Pride entered into a tax sharing agreement pursuant to which we have agreed to be responsible for certain liabilities and obligations following the spin-off. In general, under the terms of the tax sharing agreement, in the event that the spin-off and/or certain related transactions were to fail to qualify for tax-free treatment, we would generally be responsible for 50% of the tax resulting from such failure. However, if the spin-off and/or certain related transactions were to fail to qualify for tax-free treatment because of certain actions or failures to act by us or by Pride, the party taking or failing to take such actions would be responsible for all of the tax resulting from such failure. For a more detailed discussion, see “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Tax Sharing Agreement.” Our indemnification obligations to Pride for taxes under the tax sharing agreement are not limited in amount or subject to any cap. If we are required to indemnify Pride under the circumstances set forth in the tax sharing agreement, we may be subject to substantial liabilities.

Pride may incur some tax cost in connection with the spin-off (as a result of certain intercompany transactions or as a result of certain differences between federal, on the one hand, and foreign or state tax rules, on the other), whether or not the spin-off and certain related transactions qualify under Sections 355 and/or 368 of the Code.

Under U.S. Treasury regulations, each Pride stockholder who, immediately before the distribution, owns at least 5% of the total outstanding stock of Pride must attach to the stockholder’s U.S. federal income tax

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return for the year in which the spin-off occurs a statement setting forth certain information relating to the spin-off. In addition, all stockholders are required to retain permanent records relating to the amount, basis, and fair market value of the Seahawk stock which they receive and to make those records available to the IRS upon request of the IRS.

THE FOREGOING IS A SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF UNDER CURRENT LAW AND IS FOR GENERAL INFORMATION ONLY. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF STOCKHOLDERS. EACH PRIDE STOCKHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE SPIN-OFF TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

Reason for Furnishing this Information Statement

This information statement is being furnished solely to provide information to Pride stockholders who are entitled to receive shares of our common stock in the spin-off. The information statement is not, and is not to be construed as an inducement or encouragement to buy, hold or sell any of our securities. We believe that the information in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither Pride nor we undertake any obligation to update such information except in the normal course of our respective public disclosure obligations.

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CAPITALIZATION

The following table sets forth our capitalization on a historical combined basis as of March 31, 2009 and on a pro forma combined basis, as adjusted to give effect to the deemed transfer of certain assets and operations of the Gulf of Mexico Business that will not be held by Seahawk and the spin-off (in millions, except share numbers).

This table should be read in conjunction with “Selected Historical Combined Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Combined Financial Information” and our unaudited combined financial statements and corresponding notes included elsewhere in this information statement.

	March 31, 2009
	Historical		Pro Forma
Liabilities:
Long-term debt	$	—	$	—
Net parent funding (stockholders’ equity)
Preferred stock, $.01 par value; 10,000,000 shares authorized pro forma; no shares issued and outstanding pro forma		—		—
Common stock, $.01 par value; 75,000,000 shares authorized pro forma; 11,580,249 shares issued and outstanding pro forma		—		0.1	(1)
Paid-in capital		—		511.6	(2)(3)
Net parent funding		540.2		—	(3)
Total net parent funding/stockholders’ equity		540.2		511.7
Total capitalization	$	540.2	$	511.7

(1) Represents the expected distribution of approximately 11,580,249 shares of our common stock to holders of Pride common stock based on the number of shares of Pride common stock outstanding at August 3, 2009.

(2) Pride will conduct, as of the date of the spin-off, a fair value assessment of our long-lived assets to determine whether an impairment loss should be recognized. We will recognize an impairment loss if the carrying value of our assets exceeds their fair value as determined in the assessment. This impairment loss would result in a reduction to our total assets and a corresponding reduction to net parent funding (which will be converted to paid-in capital in connection with the spin-off). Pride has conducted a preliminary fair value assessment of our rig fleet, and as a result we currently expect to record an impairment loss of between $25 million and $45 million as a result of the spin-off.

(3) Represents the elimination of Pride’s net investment in us to paid-in capital less the aggregate par value and the shares of our common stock distributed in the spin-off.

DIVIDEND POLICY

We do not currently plan to pay a regular dividend on our common stock following the spin-off. The declaration of any future cash dividends and, if declared, the amount of any such dividends, will be subject to our financial condition, earnings, capital requirements, financial covenants and other contractual restrictions and to the discretion of our board of directors. Our new revolving credit facility includes restrictions on our ability to pay dividends. Our board of directors may take into account such matters as general business conditions, industry practice, our prospects, applicable law and such other factors as our board of directors may deem relevant.

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SELECTED HISTORICAL COMBINED FINANCIAL INFORMATION

The following tables present selected historical combined financial information of the Gulf of Mexico Business. The term “Gulf of Mexico Business” refers to Pride’s historical Gulf of Mexico operations reflected in the historical combined financial statements discussed herein and included elsewhere in this information statement. The Gulf of Mexico Business reflects the effects of certain assets and operations that will not be held by Seahawk, including operations related to two independent leg jackup rigs, two semi-submersible rigs and deepwater drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs. See “Unaudited Pro Forma Combined Financial Information” for further description of the assets of Pride that will not be held by Seahawk but are reflected in the historical combined financial statements of the Gulf of Mexico Business.

We derived the historical combined statement of operations information for each of the years in the three-year period ended December 31, 2008, and the balance sheet information as of December 31, 2007 and 2008 from the audited combined financial statements of the Gulf of Mexico Business included elsewhere in this information statement. We derived the balance sheet information as of December 31, 2006 and the historical combined statement of operations information for the year ended December 31, 2005 from audited combined financial statements of the Gulf of Mexico Business not included in this information statement. We derived the historical combined statement of operations information for the Gulf of Mexico Business for year ended December 31, 2004 and the balance sheet information as of December 31, 2004 and 2005 and March 31, 2008 from unaudited combined financial statements of the Gulf of Mexico Business. We derived the historical combined statement of operations information for the three months ended March 31, 2009 and 2008 and the balance sheet information as of March 31, 2009 from the unaudited combined financial statements of the Gulf of Mexico Business included elsewhere in this information statement.

The selected historical combined financial information presented below should be read in conjunction with the combined financial statements of the Gulf of Mexico Business and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this information statement. The financial information may not be indicative of our future performance and does not necessarily reflect what the financial position and results of operations would have been had we operated as a separate, stand-alone entity during the periods presented, including changes that will occur in our operations as a result of our spin-off from Pride (amounts in millions).

	Three Months Ended March 31,						Year Ended December 31,
	2009			2008			2008			2007			2006			2005			2004
	(Unaudited)			(Unaudited)															(Unaudited)
Statement of Operations Information:
Revenue	$	115.7		$	193.6		$	681.8		$	707.2		$	639.5		$	423.0		$	326.1
Operating costs, excluding depreciation and amortization		74.5			98.8			343.3			349.9			299.3			257.9			200.4
Depreciation and amortization		15.5			16.0			62.5			62.8			54.7			51.3			53.6
General and administrative, excluding depreciation and amortization		5.9			6.5			36.7			25.7			17.7			13.9			9.9
Impairment expense		—			—			—			—			—			—			3.6
(Gain) loss on sale of fixed assets		0.1			(0.1	)		0.1			(0.4	)		(0.4	)		(2.1	)		—
Earnings from operations		19.7			72.4			239.2			269.2			268.2			102.0			58.6
Other income and (expense), net		0.7			0.4			(2.6	)		(0.8	)		(1.6	)		0.8			9.2
Income from continuing operations before income taxes		20.4			72.8			236.6			268.4			266.6			102.8			67.8
Income taxes		(7.3	)		(25.6	)		(82.9	)		(94.9	)		(95.7	)		(36.6	)		(24.3	)
Income (loss) from continuing operations, net of tax	$	13.1		$	47.2		$	153.7		$	173.5		$	170.9		$	66.2		$	43.5

	As of March 31,				As of December 31,
	2009		2008		2008		2007		2006		2005		2004
	(Unaudited)		(Unaudited)								(Unaudited)		(Unaudited)
Balance Sheet Information:
Working capital	$	73.7	$	125.2	$	82.0	$	80.6	$	54.5	$	95.8	$	46.4
Property and equipment, net		610.1		698.9		612.0		711.5		670.9		579.3		628.7
Total assets		781.2		898.7		805.4		893.1		823.4		725.4		727.1
Net parent funding		540.2		677.2		551.6		644.5		579.7		560.2		595.0

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UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined balance sheet as of March 31, 2009 and the unaudited pro forma combined statement of operations for the three months ended March 31, 2009 and the year ended December 31, 2008 are based on the historical combined financial statements of the Gulf of Mexico Business. See “Selected Historical Combined Financial Information.” The operations of our Gulf of Mexico platform rigs that were sold in May 2008 have been reclassified to discontinued operations and are not included in income from continuing operations. This unaudited pro forma combined financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements of the Gulf of Mexico Business and the notes to those statements included elsewhere in this information statement.

Our unaudited pro forma combined statements of operations for the year ended December 31, 2008 and the three months ended March 31, 2009 include adjustments to give effect to the deemed transfer of certain assets and operations that will not be held by Seahawk as if such transfers occurred on January 1, 2008. The unaudited pro forma combined balance sheet information includes adjustments to give effect to the deemed transfer of certain assets and operations that will not be held by Seahawk as if such transfers occurred on March 31, 2009.

The unaudited pro forma combined statements of operations and balance sheet give effect to the following:

•  The elimination of operations related to our drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs, all of which were managed by the Gulf of Mexico Business until April 2008 but will be retained by Pride.

•  The elimination of operations related to two independent leg jackup rigs, the Pride Tennessee and Pride Wisconsin, which were managed by the Gulf of Mexico Business but will be retained by Pride.

•  The tax effect of the aforementioned adjustments using the applicable tax rate.

The unaudited pro forma, as adjusted combined statements of operations and balance sheet are further adjusted to give effect to the following transactions relating to the spin-off of Seahawk to Pride stockholders:

•  The issuance by us to Pride, in connection with certain transactions relating to the spin-off, of 11,580,249 shares of our common stock, and the distribution of such shares to the holders of Pride common stock.

•  An estimated cash contribution by Pride to Seahawk to achieve the targeted working capital (defined as total current assets less total current liabilities) of $85 million as set forth in the master separation agreement, as though the working capital adjustment were effected at March 31, 2009.

•  The transfer by Pride to Seahawk of certain capital spares under the master separation agreement.

•  The effect of certain alternative minimum tax credits generated by Seahawk’s business to which Seahawk will be entitled after the spin-off.

The pro forma combined balance sheet does not reflect contingent obligations relating to tax assessments from the Mexican government. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates — Income Taxes” for more information about these tax assessments, including the amounts assessed to date and anticipated potential assessments.

There are no differences between the pro forma statement of operations and the pro forma, as adjusted statement of operations, except with respect to earnings per share. To avoid redundancy, only the pro forma, as adjusted statement of operations is presented below.

The unaudited pro forma combined financial information set forth below is based upon available information and assumptions that we believe are reasonable. The information has been prepared on a combined basis from Pride’s financial statements using the historical results of operations and bases of assets and liabilities of Pride and includes allocations of expenses from Pride to us. The costs to operate our business as an independent public entity may exceed the historical allocations of expenses related to areas that include, but are not limited to, litigation and other legal matters, compliance with the Sarbanes-Oxley Act and other corporate compliance matters, insurance and claims management and the related cost of insurance, as well as general overall purchasing power. These possible increased costs are not included in the unaudited pro forma combined financial information as their impact on our results of operations cannot be reasonably estimated. The unaudited pro forma combined financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had the spin-off occurred on the dates indicated. The unaudited pro forma combined financial information also should not be considered representative of our future financial condition or results of operations.

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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2009

	Gulf of			Operations			Seahawk
	Mexico			Retained			Pro Forma
	Business			by Pride			as Adjusted
	(In millions)
Revenue	$	115.7		$	(25.7	)	$	90.0
Operating costs, excluding depreciation and amortization		74.5			(7.7	)		66.8
Depreciation and amortization		15.5			(1.3	)		14.2
General and administrative, excluding depreciation and amortization		5.9			(0.6	)		5.3
Loss on sale of fixed assets		0.1			—			0.1
Earnings from operations		19.7			(16.1	)		3.6
Other income and (expense), net		0.7			—			0.7
Income from continuing operations before income taxes		20.4			(16.1	)		4.3
Income taxes		(7.3	)		5.6			(1.7	)
Income from continuing operations, net of tax	$	13.1		$	(10.5	)	$	2.6
Pro forma earnings per share:
Basic							$	0.22	(c)
Diluted							$	0.22	(d)
Weighted average shares used in calculating earnings per share:
Basic								11.6	(c)
Diluted								11.6	(d)

See accompanying notes to Unaudited Pro Forma Combined Financial Statements.

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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2008

	Gulf of			Operations			Seahawk
	Mexico			Retained			Pro Forma
	Business			by Pride			as Adjusted
	(In millions)
Revenue	$	681.8		$	(128.2	)(a)	$	553.6
Operating costs, excluding depreciation and amortization		343.3			(40.6	)(a)		302.7
Depreciation and amortization		62.5			(5.6	)(a)		56.9
General and administrative, excluding depreciation and amortization		36.7			(4.0	)(a)		32.7
(Gain) loss on sale of fixed assets		0.1			—			0.1
Earnings from operations		239.2			(78.0	)		161.2
Other income and (expense), net		(2.6	)		(0.1	)(a)		(2.7	)
Income from continuing operations before income taxes		236.6			(78.1	)		158.5
Income taxes		(82.9	)		27.4	(b)		(55.5	)
Income from continuing operations, net of tax	$	153.7		$	(50.7	)	$	103.0
Pro forma earnings per share:
Basic							$	8.90	(c)
Diluted							$	8.90	(d)
Weighted average shares used in calculating earnings per share:
Basic								11.6	(c)
Diluted								11.6	(d)

See accompanying notes to Unaudited Pro Forma Combined Financial Statements.

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UNAUDITED PRO FORMA COMBINED BALANCE SHEET

As of March 31, 2009

			Assets/
	Gulf of		Liabilities								Seahawk
	Mexico		Retained			Seahawk		Adjustments			Pro Forma
	Business		by Pride			Pro Forma		for Spin-off			as Adjusted
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	23.2	$	—		$	23.2	$	28.4	(f)	$	51.6
Trade receivables, net		79.1		(17.9	)(e)		61.2		—			61.2
Deferred income taxes		1.0		—			1.0		—			1.0
Prepaid expenses and other current assets		62.7		(0.6	)(e)		62.1		—			62.1
Total current assets		166.0		(18.5	)		147.5		28.4			175.9
Property and equipment, net		610.1		(80.6	)(e)		529.5		11.3	(i)		540.8
Goodwill		1.2		—			1.2		—			1.2
Other assets		3.9		(0.1	)(e)		3.8		—			3.8
Total assets	$	781.2	$	(99.2	)	$	682.0	$	39.7		$	721.7
LIABILITIES AND NET PARENT FUNDING/STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14.3	$	(0.2	)(e)	$	14.1	$	2.2	(g)	$	16.3
Accrued expenses and other current liabilities		75.2		(0.6	)(e)		74.6		—			74.6
Income taxes payable		2.8		—			2.8		—			2.8
Total current liabilities		92.3		(0.8	)		91.5		2.2			93.7
Other long-term liabilities		3.8		—			3.8		—			3.8
Deferred income taxes		144.9		(17.2	)(e)		127.7		(41.4	)(j)		86.3
Total liabilities		241.0		(18.0	)		223.0		(39.2	)		183.8
Net Parent Funding/Stockholders’ equity:
Preferred stock		—		—			—		—			—
Common stock		—		—			—		0.1	(h)		0.1
Net parent funding/Retained earnings		540.2		(81.2	)(e)		459.0		(459.0	)(h)		—
Paid-in capital		—		—			—		537.8	(h)		537.8
Total net parent funding/stockholders’ equity		540.2		(81.2	)		459.0		78.9			537.9
Total liabilities and net parent funding/stockholders’ equity	$	781.2	$	(99.2	)	$	682.0	$	39.7		$	721.7

See accompanying notes to Unaudited Pro Forma Combined Financial Statements.

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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

As of the effective date of the spin off, Seahawk will hold selected assets, selected liabilities and parent funding as reported related to its mat-supported jackup rig business. The amounts of the assets and liabilities in the pro forma combined balance sheet have been based upon the unaudited March 31, 2009 carrying values.

Statements of Operations

(a) Reflects revenues and related expenses associated with certain assets that will not be held by Seahawk but are included in the historical combined results of operations of the Gulf of Mexico Business based upon management responsibility. These assets include:

•  The Pride Tennessee and Pride Wisconsin, two independent-leg jackup rigs that will remain assets of Pride. The current customer contracts applicable to these rigs will remain with the Seahawk subsidiary that is party to such contracts. Pursuant to an agreement we entered into with Pride, all benefits and risks of these customer contracts will be passed through to Pride until their completion, which we expect to occur in August 2009 for the Pride Wisconsin and March 2010 for the Pride Tennessee; and

•  The deepwater drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs that were performed by the Gulf of Mexico Business through April 2008 when management of such contracts was transferred to another Pride division and will remain with Pride after the spin-off.

(b) Reflects the income tax impact on adjustments described in (a) above using the applicable tax rate.

(c) The number of shares used to compute basic earnings per share is 11,580,249, which is the number of shares of Seahawk common stock assumed to be outstanding on the distribution date, based on a distribution ratio of 1/15 of a share of Seahawk common stock for each share of Pride common stock outstanding.

(d) The number of shares used to compute diluted earnings per share is based on the number of shares of Seahawk common stock assumed to be outstanding on the distribution date. Prior to the completion of this spin-off, there will be no outstanding restricted stock awards or options to purchase shares of our common stock. Transferring employees, executive officers and directors will be awarded share-based equity grants, but the number of awards to be granted and the determination of the dilutive effect of those awards are not determinable at this time.

Balance Sheet

(e) Reflects the assets and liabilities associated with the assets described in note (a) that will not be held by Seahawk.

(f) Reflects the estimated cash contribution by Pride to Seahawk necessary to achieve the targeted working capital (defined as total current assets less total current liabilities, subject to adjustments for certain noncash items) of $85 million as set forth in the master separation agreement, as though the working capital adjustment were effected at March 31, 2009. The actual cash amount to be contributed at or prior to the date of distribution, which is expected to be approximately $47.3 million, was calculated by subtracting our working capital as of May 31, 2009 from the targeted working capital of $85 million.

(g) Reflects certain estimated non-recurring expenses of $2.2 million incurred in connection with the transaction, which have been reflected in the unaudited pro forma, as adjusted combined balance sheet as of March 31, 2009. These expenses have not been reflected in the unaudited pro forma combined statement of operations for the three months ended March 31, 2009 and for the year ended December 31, 2008.

(h) Reflects the expected distribution of approximately 11,580,249 million shares of Seahawk common stock to holders of Pride common stock and the elimination of Pride’s investment in us to common stock in an amount equal to the aggregate par value of the shares of our common stock to be distributed in the spin-off, and the remainder to paid-in capital.

Pride will conduct, as of the date of the spin-off, a fair value assessment of our long-lived assets to determine whether an impairment loss should be recognized. We will recognize an impairment loss if the carrying value of our assets exceeds their fair value as determined in the assessment. This impairment loss would result in a reduction to our total assets and a corresponding reduction to net parent funding (which will be converted to paid-in capital in connection with the spin-off). Pride has conducted a preliminary fair value assessment of our rig fleet, and as a result we currently expect to record an impairment loss of between $25 million and $45 million as a result of the spin-off.

(i) Reflects certain capital spares to be transferred by Pride to Seahawk under the master separation agreement.

(j) Reflects certain alternative minimum tax credits as well as foreign tax credits generated by Seahawk’s business to which Seahawk will be entitled after the spin-off.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
COMBINED FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the combined financial condition and results of operations should be read in conjunction with “Selected Historical Combined Financial Information,” “Unaudited Pro Forma Combined Financial Information” and the combined financial statements and notes thereto appearing elsewhere in this information statement. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” and elsewhere in this information statement. See “Forward-Looking Information.” Unless the context requires otherwise or we specifically indicate otherwise, when used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, the terms “we,” “our,” “ours” and “us” refer to the Gulf of Mexico Business. The financial information for the Gulf of Mexico Business referred to below reflects the effects of, among other things, certain assets and operations that will not be held by Seahawk. See “Unaudited Pro Forma Combined Financial Information” for a description of the assets of Pride that will not be held by Seahawk but are reflected in the historical combined financial statements of the Gulf of Mexico Business.

Separation from Pride

On August 4, 2009, the board of directors of Pride approved a plan to separate Pride into two independent, publicly traded companies. As approved, the separation will occur through the distribution to Pride stockholders of all of the shares of common stock of a subsidiary of Pride that would hold, directly or indirectly, the assets and liabilities of Pride’s mat-supported jackup rig business. We will not have any long-term debt at the time of the spin-off. On August 24, 2009, the spin-off date, subject to certain customary conditions, each Pride stockholder will receive 1/15 of a share of our common stock and preferred stock purchase rights for each share of Pride common stock held at the close of business on the record date. Following the spin-off, Pride stockholders will own 100% of our common stock. Pride stockholders will not be required to make any payment, surrender or exchange of shares of Pride common stock or take any other action to receive their shares of Seahawk common stock.

Historically, we have used the operating and corporate functions of Pride for a variety of services including engineering, training and quality control, environmental, health and safety, accounting, corporate finance, human resource management (such as payroll and benefit plan administration), information technology and communications, legal, purchasing and inventory management, risk management, tax and treasury. We were allocated operating expenses of $3.6 million in the first three months of 2009, $5.9 million in the first three months of 2008, $13.7 million in 2008, $10.9 million in 2007 and $5.0 million in 2006. We were allocated general and administrative expenses of $5.9 million in the first three months of 2009, $6.5 million in the first three months of 2008, $36.6 million in 2008, $25.6 million in 2007 and $17.4 million in 2006. Management believes the assumptions and methodologies underlying the allocation of these expenses from Pride are reasonable. However, such expenses may not be indicative of the actual level of expense that would have been or will be incurred by us if we were to operate as an independent, publicly traded company. We entered into a transition services agreement with Pride which provides for continuation of some of these services in exchange for fees specified in the agreement. See “Certain Relationships and Related Party Transactions — Agreements Between Us and Pride — Transition Services Agreement.” The terms and prices in the transition services agreement may be different than the terms and prices in effect prior to the spin-off. We will also incur additional costs associated with being an independent, publicly traded company. These anticipated incremental costs, which are described in more detail in this information statement in the section entitled “Unaudited Pro Forma Combined Financial Information,” are not reflected in our historical combined financial statements.

Overview

We operate a jackup rig business that provides contract drilling services to the oil and natural gas exploration and production industry in the Gulf of Mexico. Our fleet of mobile offshore drilling rigs consists of 20 mat-supported jackup rigs that are capable of operating in maximum water depths of up to 300 feet and

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drilling to depths of up to 25,000 feet. We have the second largest fleet of jackup rigs operating in the Gulf of Mexico. We contract with our customers on a dayrate basis to provide rigs and drilling crews, and we are responsible for the payment of operating and maintenance expenses. Our customers primarily consist of various independent oil and natural gas producers, drilling service providers and the national oil company in Mexico, and our competitors range from large international companies offering a wide range of drilling services to smaller companies focused on more specific geographic or technological areas.

Our rig fleet operates in the United States and Mexico. In the United States, customer expectations of future natural gas prices strongly influence their drilling activity. Generally, our customers accelerate their drilling programs in higher natural gas price environments and delay or curtail their drilling programs when natural gas prices decline. In Mexico, all crude oil and natural gas basins are owned by the Mexican government and operated and developed by PEMEX, the national oil company. Revenues from exported crude oil are a critical source of funding for Mexico’s government. PEMEX’s demand for drilling services is subject to governmental approval and intervention, including agreements with OPEC to manage the global supply of crude oil, and also is affected by declining production in established fields such as Cantarell and shifting of spending to newer and often deeper offshore fields.

PEMEX has indicated an increased emphasis on field exploration and development prospects that increasingly require the use of rigs with a water depth rating of 250 feet or greater, especially independent leg cantilever rigs. As PEMEX changes its focus toward new field exploration and development prospects that increasingly require the use of rigs with greater water depth capability, we believe demand in Mexico could increase for our ten rigs with water depth ratings of 250 feet or greater. However, it is possible that demand in Mexico for our ten rigs with water depth ratings of 200 feet or less could decline and the future contracting opportunities for such rigs in Mexico could diminish. PEMEX has indicated the need for between five and seven incremental jackups in 2009 to maintain its production. While the PEMEX incremental requirements are generally for independent leg rigs with water depth ratings of 250 feet or greater, we believe there will continue to be opportunities for PEMEX to use mat-supported rigs as well. In addition to the rigs we currently have in Mexico, we will seek additional opportunities to mobilize our 250 foot rigs from the United States to Mexico.

Following the onset of the global financial crisis in late 2008, the declining prices of crude oil and natural gas and deteriorating worldwide economic conditions, the demand for drilling services has declined. Lower crude oil and natural gas prices combined with the inability of our customers to obtain financing for drilling projects have had a negative impact on 2009 offshore drilling activity in the United States as our customers reduced their planned expenditures in response to these factors. We anticipate that 2009 could be the sharpest downturn for jackup activity in over 20 years. As of August 4, 2009, there were only 18 jackups under contract in the U.S. Gulf of Mexico, out of the marketed supply of 41 rigs, or 44% marketed utilization. Activity may decline even further based on the lack of new drilling plans and permits outstanding. We do not expect drilling activity to recover until natural gas prices increase from current levels or drilling costs are further reduced. Additionally, our average dayrates may decline due to the onset of hurricane season and the expiration of contracts with relatively higher pricing that were entered into before the global financial crisis. Longer term, fleet utilization and dayrates in the U.S. Gulf of Mexico will largely depend upon expectations regarding natural gas prices, access to capital for small to medium sized exploration and production companies and other drilling service providers, seasonality in the market driven by the risk of hurricanes, and the number and timing of rigs moving from the U.S. Gulf of Mexico to Mexico and other international markets.

In the current environment, we intend to work a smaller number of rigs at reasonable dayrates and to stack rigs with no near-term prospects. Based on current demand, we have stacked ten rigs and intend to stack additional rigs as necessary. In late February 2009, we reduced our U.S. rig-based workforce by approximately 40%. We have continued to reduce our workforce as we stack rigs, and since April 15, 2009, we have reduced our headcount an additional 15%. Through most of 2008, our jackup fleet operating in the United States benefited from high commodity prices for oil and natural gas, which enabled smaller, independent producers to take advantage of increases in spot price markets and consequently increased demand for our rigs. Additionally, the industry-wide supply of rigs in the U.S. Gulf of Mexico reduced considerably in 2008 due to rig movement to international markets and the permanent loss of several rigs during the active hurricane

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seasons of 2005 through 2008, including three rigs lost (one of which was the Pride Wyoming) and one significantly damaged in 2008. We believe that a number of our competitors are continuing to market jackup rigs that have previously operated or are currently operating in the U.S. Gulf of Mexico to other markets, and we believe the rig supply will continue to contract.

Additionally, we could be impacted by the potential negative effect on our dayrates due to worldwide newbuild rig fleet additions. Historically, during prior periods of high utilization and dayrates, industry participants have increased the supply of rigs by ordering the construction of new speculative units. This has often created an oversupply of drilling units and has caused a decline in utilization and dayrates when the rigs enter the market, sometimes for extended periods of time as rigs have been absorbed into the active fleet. Approximately 65 newbuild jackup rigs are currently under construction or on order worldwide, seven of which are being built in shipyards in the Gulf of Mexico region and would have a relatively low mobilization cost to operate in the Gulf of Mexico. All of these rigs are considered to be of a higher specification than our rigs, because generally they are larger, have greater deckloads, have water depth ratings of 250 feet or greater and have an independent leg design, as opposed to being mat-supported. Independent leg rigs are better suited for use in stronger currents or uneven seabed conditions. As discussed above, PEMEX has indicated an increased emphasis on prospects requiring the use of rigs with water depth ratings of 250 feet or greater, such as the anticipated newbuilds. However, any negative effect on our dayrates due to newbuild rig fleet additions could be mitigated by current insurance restrictions applicable in the U.S. Gulf of Mexico, which were a result of industry loss from Hurricanes Katrina and Rita in 2005. As a result of these storms, insurance companies have raised their premiums and the deductibles, and imposed restrictions on windstorm damage, and many rig owners have not been able to insure the full replacement cost of their new rigs operating in the U.S. Gulf of Mexico. This is especially true for smaller owners that are dependent on debt to finance their rig construction projects. As a result, most of the new jackups that have recently been built in the U.S. Gulf of Mexico have been mobilized to other regions. Although we believe the damage from Hurricanes Gustav and Ike was less costly than from the storms in 2005, we believe that the inability of rig owners to obtain full windstorm damage coverage could continue indefinitely.

Recent Developments

Pride’s FCPA Investigation

The audit committee of Pride’s board of directors, through independent outside counsel, has undertaken an investigation of potential violations of the U.S. Foreign Corrupt Practices Act in several of its international operations. With respect to our operations, this investigation has found evidence suggesting that payments, which may violate the FCPA, were made to government officials in Mexico aggregating less than $150,000. The evidence to date regarding these payments suggests that payments were made beginning in 2002 through early 2006 (a) to one or more government officials in Mexico in connection with the clearing of a jackup rig and equipment through customs, the movement of personnel through immigration or the acceptance of a jackup rig under a drilling contract; and (b) with respect to the potentially improper entertainment of government officials in Mexico.

Pride has voluntarily disclosed information found in the investigation to the Department of Justice and the SEC, and Pride has cooperated and is continuing to cooperate with these authorities.

For any violations of the FCPA, we may be liable for or subject to fines, civil and criminal penalties, equitable remedies, including profit disgorgement, and injunctive relief. Civil penalties under the antibribery provisions of the FCPA could range up to $10,000 per violation, with a criminal fine up to the greater of $2 million per violation or twice the gross pecuniary gain to us or twice the gross pecuniary loss to others, if larger. Civil penalties under the accounting provisions of the FCPA can range up to $500,000 per violation, and a company that knowingly commits a violation can be fined up to $25 million per violation. In addition, both the SEC and the DOJ could assert that conduct extending over a period of time may constitute multiple violations for purposes of assessing the penalty amounts. Often, dispositions of these types of matters result in modifications to business practices and compliance programs and possibly a monitor being appointed to review future business and practices with the goal of ensuring compliance with the FCPA. Pursuant to the master

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separation agreement, we will be responsible for any liabilities, costs or expenses related to, arising out of or resulting from Pride’s current FCPA investigation to the extent related to Pride’s and our operations in Mexico (subject to certain exceptions), except that we will not be responsible for any fine, penalty or profit disgorgement payable to the United States government in excess of $1 million, and we will not be allocated any fees or expenses of third party advisors retained by Pride. In the event that a disposition includes the appointment of a compliance monitor or consultant or any similar remedy for our company, we will be responsible for the costs associated with such monitor, consultant or similar remedy.

We could also face fines, sanctions, and other penalties from authorities in Mexico, including prohibition of our participating in or curtailment of business operations and the seizure of rigs or other assets. Our customer in Mexico could seek to impose penalties or take other actions adverse to our interests. We could also face other third-party claims by directors, officers, employees, affiliates, advisors, attorneys, agents, security or other interest holders or constituents of our company. In addition, disclosure of the subject matter of the investigation could adversely affect our reputation and our ability to obtain new business or retain existing business from our current clients and potential clients, to attract and retain employees, and to access the capital markets.

Pride has commenced discussions with the DOJ and SEC regarding a negotiated resolution for these matters, which could be settled during 2009. There can be no assurance that these discussions will result in a final settlement of any or all of these issues or, if a settlement is reached, the timing of any such settlement or that the terms of any such settlement would not have a material adverse effect on us. No amounts have been accrued related to any potential fines, sanctions, claims or other penalties, which could be material individually or in the aggregate, but an accrual could be made as early as the third quarter of 2009. We cannot currently predict what, if any, actions may be taken by the DOJ, the SEC, any other applicable government or other authorities or our customers or other third parties or the effect the actions may have on our results of operations, financial condition or cash flows, on our combined financial statements or on our business, except that our responsibility for fines, penalties or profit disgorgement payable to the United States government will not exceed $1 million as described above.

Loss of Pride Wyoming

In September 2008, the Pride Wyoming, a 250-foot slot-type jackup rig operating in the U.S., was deemed a total loss for insurance purposes after it was severely damaged and sank as a result of Hurricane Ike. The rig had a net book value of approximately $14 million and was insured for $45 million. We expect to incur costs of approximately $53 million for removal of the wreckage and salvage operations, not including any costs arising from damage to offshore structures owned by third parties. These costs for removal of the wreckage are expected to be covered by Pride’s insurance. Pride has agreed to advance the costs of removal of the wreckage and salvage operations until receipt of insurance proceeds, but we will be responsible for payment of the $1 million retention, $2.5 million in premium payments for a removal of wreckage claim and for any costs not covered by Pride’s insurance. Pride has collected a total of $39 million from underwriters through June 2009 for the insured value of the rig and removal of the wreckage, which is net of deductibles of $20 million and $1 million, respectively. The Pride Wyoming accounted for $16.8 million, or approximately 3%, of our pro forma revenues in 2008. We did not carry loss of hire or business interruption insurance for the Pride Wyoming.

Four owners of facilities in the Gulf of Mexico on which parts of the Pride Wyoming settled or may have settled have requested that Pride pay for all costs, expenses and other losses associated with the damage, including loss of revenue. These owners have claimed damages in excess of $120 million in the aggregate. Other pieces of the rig may have also caused damage to certain other offshore structures. In October 2008, Pride filed a complaint in U.S. Federal District Court pursuant to the Limitation of Liability Act, which has the potential to statutorily limit our exposure for claims arising out of third party damages caused by the loss of the Pride Wyoming. Pride will retain the right after the spin-off to control any claims, litigation or settlements arising out of the loss of the Pride Wyoming. Based on the information available to us at this time, we do not expect the outcome of these claims to have a material adverse effect on our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these

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claims. Although we believe Pride has adequate insurance, we will be responsible for any deductibles or awards not covered by Pride’s insurance.

Backlog

Our contract drilling backlog as of March 31, 2009 totaled approximately $118.8 million for future revenues and firm commitments. We expect the full amount of our total backlog to be realized during the remainder of 2009. We calculate our backlog, or future contracted revenue for our fleet, as the contract dayrate multiplied by the number of days remaining on the contract, assuming full utilization. Backlog excludes revenues for mobilization, demobilization, contract preparation, customer reimbursables and performance bonuses. The amount of actual revenues earned and the actual periods during which revenues are earned will be different than the amount disclosed or expected due to various factors. Downtime due to various operating factors, including unscheduled repairs, maintenance, weather and other factors, may result in lower applicable dayrates than the full contractual operating dayrate, as well as the ability of our customers to terminate contracts under certain circumstances.

Critical Accounting Estimates

The preparation of our combined financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and assumptions that are believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as additional information is obtained, as more experience is acquired, as our operating environment changes and as new events occur.

The critical accounting estimates of Pride used in preparing our combined financial statements are described below, and we expect to adopt substantially similar critical accounting estimates. Such critical accounting estimates are important to the portrayal of both our financial condition and results of operations and require us to make difficult, subjective or complex assumptions or estimates about matters that are uncertain. We would report different amounts in our combined financial statements, which could be material, if we used different assumptions or estimates. We will discuss the development and selection of our critical accounting estimates with the audit committee of our board of directors. During the past three fiscal years, Pride has not made any material changes in accounting methodology used to establish the critical accounting estimates for revenue recognition, property and equipment, income taxes and contingent liabilities discussed below.

We believe that the following are the critical accounting estimates used in the preparation of our combined financial statements. In addition, there are other items within our combined financial statements that require estimation.

Revenue Recognition

We recognize revenue as services are performed based upon contracted dayrates and the number of operating days during the period. Mobilization fees received and costs incurred in connection with a customer contract to mobilize a rig from one geographic area to another are deferred and recognized on a straight-line basis over the term of such contract, excluding any option periods. Costs incurred to mobilize a rig without a contract are expensed as incurred. Fees received for capital improvements to rigs are deferred and recognized on a straight-line basis over the period of the related drilling contract. The costs of such capital improvements are capitalized and depreciated over the useful lives of the assets.

Property and Equipment

Property and equipment comprise a significant amount of our total assets. We determine the carrying value of these assets based on property and equipment policies that incorporate our estimates, assumptions and judgments relative to the carrying value, remaining useful lives and salvage value of our rigs and other assets.

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We depreciate our property and equipment over their estimated useful lives using the straight-line method. The assumptions and judgments we use in determining the estimated useful lives of our rigs reflect both historical experience and expectations regarding future operations, utilization and performance. The use of different estimates, assumptions and judgments in the establishment of estimated useful lives, especially those involving our rigs, would likely result in materially different net book values of our property and equipment and results of operations.

Useful lives of rigs and related equipment are difficult to estimate due to a variety of factors, including technological advances that impact the methods or cost of oil and natural gas exploration and development, changes in market or economic conditions and changes in laws or regulations affecting the drilling industry. We evaluate the remaining useful lives of our rigs when certain events occur that directly impact our assessment of the remaining useful lives of the rig and include changes in operating condition, functional capability and market and economic factors. We also consider major capital upgrades required to perform certain contracts and the long-term impact of those upgrades on the future marketability when assessing the useful lives of individual rigs. During 2007, we completed a technical evaluation of our fleet, and as a result of this evaluation, we increased our estimates of the remaining lives of certain rigs in our fleet between four and eight years and updated our estimated salvage value for our entire fleet to 10% of the historical cost of the rigs. The effect of these changes in estimates was a reduction to depreciation expense of approximately $11.7 million for 2007. In the first quarter of 2008 following the completion of a shipyard project, we increased the remaining useful life of one rig which reduced depreciation expense by $0.5 million. As of March 31, 2009, the remaining depreciable lives of our rigs range from 1.2 years to 13.7 years.

We evaluate our property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of such long-lived assets may not be recoverable. Indicators of possible impairment include (i) extended periods of idle time and/or an inability to contract specific assets or groups of assets, (ii) a significant adverse change in business climate, such as a decline in our market value or fleet utilization, or (iii) an adverse change in the manner of use or physical condition of a group of assets or a specific asset. However, the drilling industry is highly cyclical and it is not unusual to find that assets that were idle, under-utilized or contracted at sub-economic rates for significant periods of time resume activity at economic rates when market conditions improve.

Asset impairment evaluations are based on estimated future undiscounted cash flows of the assets being evaluated to determine the recoverability of carrying amounts. In general, analyses are based on expected costs, utilization and dayrates for the estimated remaining useful lives of the asset or group of assets being assessed. An impairment loss is recorded in the period in which it is determined that the aggregate carrying amount is not recoverable.

Asset impairment evaluations are, by nature, highly subjective. They involve expectations about future cash flows generated by our assets, and reflect management’s assumptions and judgments regarding future industry conditions and their effect on future utilization levels, dayrates and costs. The use of different estimates and assumptions could result in materially different carrying values of our assets and could materially affect our results of operations.

The recent economic downturn has resulted in the stacking of a substantial portion of our rig fleet, and we may be required to stack more rigs or enter into lower dayrate contracts in response to market conditions. We believe that the recent declines in dayrates and utilization which have resulted in the stacking of rigs during the fourth quarter of 2008 and first quarter of 2009 constitute events that may indicate that the carrying value of our mat-supported jackup fleet may not be recoverable. We therefore performed projected undiscounted future cash flow analyses to determine the recoverability of the recorded asset value of our mat-supported jackup fleet and, as a result of these analyses, determined that no impairment was required as of December 31, 2008 and March 31, 2009. Our analysis of projected undiscounted cash flows as of March 31, 2009 assumed a continuation of current natural gas prices in the $3.00/MMBtu to $4.00/MMBtu (million British thermal units) range for the remainder of 2009, which we assumed would result in further reductions in drilling activity, along with a continued deterioration of utilization and dayrates in the U.S. Gulf of Mexico. The analysis reflected management’s view that natural gas prices in 2010, however, would increase over time

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to $7.00/MMBtu to $8.00/MMBtu by the end of the year, which we assumed would result in an increase in drilling activity to a level where equilibrium is reached between rig supply and demand. Should gas prices, drilling activity and resulting utilization and dayrates continue at current depressed levels for an extended period, we could be required to recognize impairment losses to the extent future cash flow estimates, based on information available to management at the time, indicate that the carrying value of these rigs may not be recoverable.

Pride will conduct, as of the date of the spin-off, a fair value assessment of our long-lived assets to determine whether an impairment loss should be recognized. We will recognize an impairment loss if the carrying value of our assets exceeds their fair value as determined in the assessment. This impairment loss would result in a reduction to our total assets and a corresponding reduction to net parent funding (which will be converted to paid-in capital in connection with the spin-off). Pride has conducted a preliminary fair value assessment of our rig fleet, and as a result we currently expect to record an impairment loss of between $25 million and $45 million as a result of the spin-off.

Income Taxes

The provision for income taxes has been computed as if we were a stand-alone entity and filed separate tax returns. The provision for income taxes was impacted by Pride’s tax structure and strategies, which were designed to optimize an overall tax position and not that of the Gulf of Mexico Business. To the extent we provide any U.S. tax expense or benefit, any related tax payable or receivable to Pride is reclassified to net parent funding in the same period.

Our income tax expense is based on our income, statutory tax rates and tax planning opportunities available to us in the two jurisdictions in which we operate. We provide for income taxes based on the tax laws and rates in effect in the countries in which operations are conducted and income is earned. The determination and evaluation of our annual income tax provision involves the interpretation of tax laws in the jurisdictions in which we operate and requires significant judgment and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of income, deductions and tax credits. Changes in tax laws, regulations, agreements, treaties, foreign currency exchange restrictions or our levels of operations or profitability in each jurisdiction may impact our tax liability in any given year. While our annual tax provision is based on the information available to us at the time, a number of years may elapse before the ultimate tax liabilities in certain tax jurisdictions are determined.

Current income tax expense reflects an estimate of our income tax liability for the current year, withholding taxes, changes in prior year tax estimates as returns are filed, or from tax audit adjustments. Our deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reflected on the balance sheet. Valuation allowances are determined to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. To determine the amount of deferred tax assets and liabilities, as well as of the valuation allowances, we must make estimates and certain assumptions regarding future taxable income, including where the rigs are expected to be deployed, as well as other assumptions related to our future tax position. A change in such estimates and assumptions, along with any changes in tax laws, could require us to adjust the deferred tax assets, liabilities, or valuation allowances as discussed below.

We have Mexican net operating loss (“NOL”) carryforwards, and we have recognized a full valuation allowance on all of these Mexican NOL carryforwards. Our Mexican NOL carryforwards could expire starting in 2012 through 2017.

As required by law, we file periodic tax returns that are subject to review and examination by various tax authorities within the jurisdictions in which we operate. We are currently contesting several tax assessments and may contest future assessments where we believe the assessments are in error. We cannot predict or provide assurance as to the ultimate outcome of existing or future tax assessments; however, we believe the ultimate resolution of outstanding tax assessments will not have a material adverse effect on our combined financial statements.

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In 2006 and 2007, Pride received tax assessments from the Mexican government related to the operations of certain of our entities for the tax years 2001 through 2003. Pursuant to local statutory requirements, Pride has provided bonds in the amount of approximately 560 million Mexican pesos, or approximately $39 million as of March 31, 2009, to contest these assessments. In February 2009, Pride received additional tax assessments for the tax years 2003 and 2004 in the amount of 1,097 million Mexican pesos, or approximately $76 million, and Pride has contested these assessments. We anticipate that bonds or other suitable collateral will be required no earlier than the fourth quarter of 2009 in connection with Pride’s contest of these assessments. These assessments contest Pride’s right to claim certain deductions in its tax returns for those years. We anticipate that the Mexican government will make additional assessments contesting similar deductions for other tax years. If the Mexican tax authorities were to apply a similar methodology on the primary issue in the dispute to remaining open tax years, the total amount of future tax assessments (inclusive of related penalties and interest) could be approximately $100 million as of March 31, 2009. In addition, we recently received unrelated observation letters from the Mexican government for other tax periods that could ultimately result in additional assessments. While we intend to contest these assessments vigorously, we cannot predict or provide assurance as to the ultimate outcome, which may take several years. Additional security will be required to be provided to the extent assessments are contested.

We expect to post the additional bonds or other collateral when due, which we anticipate to be no earlier than the fourth quarter of 2009. Pursuant to a tax support agreement we entered into with Pride, Pride has agreed to guarantee or indemnify the issuer of any such surety bonds or other collateral issued for our account in respect of Mexican tax assessments made prior to the date of the spin-off. Beginning on the third anniversary of the spin-off, and on each subsequent anniversary thereafter, we will be required to provide substitute credit support for a portion of the collateral guaranteed or indemnified by Pride, so that Pride’s obligations are terminated in their entirety by the sixth anniversary of the spin-off. Seahawk will pay Pride a fee based on the credit support provided.

We do not believe that it is possible to reasonably estimate the potential impact of changes to the assumptions and estimates identified because the resulting change to our tax liability, if any, is dependent on numerous underlying factors which cannot be reasonably estimated. These include, among other things, the amount and nature of additional taxes potentially asserted by local tax authorities; the willingness of local tax authorities to negotiate a fair settlement through an administrative process; the impartiality of the local courts; and the potential for changes in the tax paid to one country to either produce, or fail to produce, an offsetting tax change in other countries. Our experience has been that the estimates and assumptions we have used to provide for future tax assessments have been appropriate; however, past experience is only a guide and the tax resulting from the resolution of current and potential future tax controversies may have a material adverse effect on our combined financial statements.

Contingent Liabilities

We establish reserves for estimated loss contingencies when we believe a loss is probable and the amount of the loss can be reasonably estimated. Our contingent liability reserves relate primarily to litigation, personal injury claims and potential income and other tax assessments (see also “Income Taxes” above). Revisions to contingent liability reserves are reflected in income in the period in which different facts or information become known or circumstances change that affect our previous assumptions with respect to the likelihood or amount of loss. Reserves for contingent liabilities are based upon our assumptions and estimates regarding the probable outcome of the matter. Should the outcome differ from our assumptions and estimates or other events result in a material adjustment to the accrued estimated reserves, revisions to the estimated reserves for contingent liabilities would be required and would be recognized in the period the new information becomes known.

Results of Operations

As a part of Pride, the Gulf of Mexico Business has not operated on a stand alone basis. We provide offshore contract drilling services to oil and gas production and developmental companies in the Gulf of

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Mexico. We manage our operations based upon the geographic location of where the services are performed. We have two reportable segments: U.S. and Mexico.

Combined Operations

For the three months ended March 31, 2009, our combined revenues were $115.7 million, a decline of $77.9 million, or 40%, from the comparable period in 2008. The decline in 2009 revenue is attributable to PEMEX’s declining demand for mat-supported jackup rigs with water depth ratings of 200 feet or less, which accounted for approximately $40.1 million of the decline in revenues, and a significant decline in operating days and utilization in the United States due to lower U.S. natural gas prices and the credit crisis. Our combined earnings from operations for the three months ended March 31, 2009 were $19.7 million, a decline of $52.7 million, or 73%, from the comparable period in 2008. The decline in earnings from operations was largely due to the decline in revenues. Our income from continuing operations, net of tax for the three months ended March 31, 2009 was $13.1 million, a decline of $34.1 million, or 72%, from the comparable period in 2008. The decline in income from continuing operations was largely due to the effect of the decline in revenues.

For the year ended December 31, 2008, our combined revenues were $681.8 million, a decline of $25.4 million, or 4%, from 2007. The decline in 2008 revenue was due to lower revenues in the U.S. resulting from the transfer in 2008 of management of the drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs to another Pride division effective April 2008, partially offset by higher dayrates in Mexico. Our combined earnings from operations for 2008 were $239.2 million, a decline of $30.0 million, or 11%, as compared to 2007. The decline in earnings from operations was largely due to the decline in revenues and an $11.0 million increase in general and administrative costs allocated to us by Pride. Our combined income from continuing operations, net of tax for 2008 was $153.7 million, a decline of $19.8 million, or 11%, as compared to 2007. The decline in income from continuing operations was attributable to the transfer of management of drilling services management contracts in 2008 and the increase in the general and administrative allocation from Pride to us.

For the year ended December 31, 2007, our combined revenues were $707.2 million, an increase of $67.7 million, or 11%, from 2006. The increase in revenues was due to a $196.6 million increase in revenues in Mexico as our marketed rigs earned substantially higher dayrates in 2007, partially offset by declining dayrates and utilization in the U.S. Our combined earnings from operations for 2007 were $269.2 million, an increase of $1.0 million, or less than 1%, as compared to 2006. The slight increase in earnings from operations was due to the higher revenues generating increased earnings, offset by higher labor costs, higher depreciation and amortization and allocations from Pride. Our combined income from continuing operations, net of tax for 2007 was $173.5 million, an increase of $2.6 million, or 2%, from the comparable period in 2006. The increase in income from continuing operations was due to the slight increase in earnings from operations.

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The following tables present selected combined financial and operational information for our continuing operations for each segment:

U.S. Operations

	Three Months Ended
	March 31,						Year Ended December 31,
	2009			2008			2008			2007			2006
	(In millions)
Revenues	$	41.0		$	68.1		$	249.0		$	307.4		$	436.3
Costs and expenses
Operating costs, excluding depreciation and amortization		36.7			49.3			156.1		$	184.7		$	180.9
Depreciation and amortization		5.4			5.9			22.8			25.2			25.2
General and administrative excluding depreciation and amortization		2.7			3.4			16.8			13.4			10.4
(Gain) loss on sales of assets, net		—			(0.1	)		0.1			(0.4	)		(0.7	)
		44.8			58.5			195.8			222.9			215.8
Earnings (loss) from operations	$	(3.8	)	$	9.6		$	53.2		$	84.5		$	220.5
U.S. Mat-Supported Jackup Rigs
Operating days		464			699			3,145			2,860			3,633
Available days		1,260			967			4,006			4,097			4,368
Utilization		37	%		72	%		79	%		70	%		83	%
Average daily revenues	$	88,200		$	73,800		$	73,900		$	84,800		$	104,500
Average marketed rigs		6.3			9.9			8.7			10.2			10.9
U.S. Other Rigs
Operating days		—			273			273			1,064			1,082
Available days		—			273			273			1,064			1,340
Utilization		—			100	%		100	%		100	%		81	%
Average daily revenues	$	—		$	60,400		$	60,400		$	60,900		$	52,600
Average marketed rigs		—			3.0			0.7			2.9			3.0

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Revenues decreased $27.1 million, or 40%, for the three months ended March 31, 2009 from the comparable period in 2008 due to a 34% decline in operating days for mat-supported rigs and $16.5 million in revenues in first quarter 2008 related to the deepwater drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs, management of which was transferred to another division of Pride in April 2008. Utilization for the mat-supported rigs declined due to the reduction in U.S. natural gas prices and the credit crisis in 2009, resulting in sharply lower demand for drilling services. The decline of 3.6 average marketed mat-supported rigs was the result of the loss of the Pride Wyoming and of stacking rigs, including stacking three additional rigs in the first quarter of 2009, due to weak demand for rig services. Average daily revenues for our U.S. mat-supported jackup rigs increased by $14,400, or 20%, due to higher dayrates for several of our rigs in the first quarter of 2009 under contracts that were entered into before the global financial crisis decreased demand for drilling services.

Operating costs decreased $12.6 million, or 26%, for the three months ended March 31, 2009 over the comparable period in 2008, primarily due to a 52% reduction in rig operating days resulting from weak demand for drilling services and the transfer of the management of the deepwater drilling services management contracts to another division of Pride in April 2008. Due to the declining market environment, we stacked an additional three rigs in the first quarter of 2009 and laid off approximately 270 rig crew personnel, which resulted in $1.4 million of severance costs in March 2009. Operating costs as a percentage of revenues were 90% and 72% for the three months ended March 31, 2009 and 2008, respectively.

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Depreciation and amortization decreased $0.5 million, or 8%, for the three months ended March 31, 2009 over the comparable period in 2008 due to the total loss of the Pride Wyoming in September 2008 as a result of Hurricane Ike.

General and administrative costs decreased $0.7 million, or 21%, for the three months ended March 31, 2009 over the comparable period in 2008. Substantially all of these costs were allocated to us by Pride.

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Revenues decreased $58.4 million, or 19%, in 2008 over 2007 primarily due to the decline in average marketed rigs, resulting from the transfer of management of the deepwater drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs to another Pride division as of April 2008. The transfer of management of the management contracts resulted in a decline of 2.2 average marketed rigs for 2008. Average marketed mat-supported jackup rigs also declined by 1.5 in 2008 from 2007 due to the stacking of the Seahawk 800 (f/k/a Pride Utah) in October 2007, the 2008 shipyard project for the Seahawk 2602 (f/k/a Pride Missouri) and the loss of the Pride Wyoming in September 2008. In addition, average daily revenues for our U.S. mat-supported jackup rigs decreased by $10,900, or 13%, due to lower dayrates across the fleet.

Operating costs decreased $28.6 million, or 15%, in 2008 over 2007, primarily due to the 791-day reduction in other rig operating days resulting from the transfer of management of the deepwater drilling services management contracts to another Pride division as of April 2008 and a decrease in costs resulting from lower activity as a result of the stacking of one rig in 2007 and two rigs in 2008. Operating costs as a percentage of revenues were 63% and 60% for 2008 and 2007, respectively.

Depreciation and amortization decreased $2.4 million, or 10%, in 2008 over 2007 due to a $4.0 million reduction in depreciation expense for 2008 as a result of the change in useful life estimates in 2007 for several of our rigs and a $0.8 million reduction in expense as compared to 2007 due the loss of the Pride Wyoming, partially offset by incremental expense in 2008 from completed capital projects.

General and administrative costs increased $3.4 million, or 25%, in 2008 over 2007. Substantially all of these costs were allocated to us by Pride.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Revenues decreased $128.9 million, or 30%, in 2007 over 2006 primarily due to the decrease of $19,700, or 19%, in average daily revenues for our U.S. mat-supported jackups and fewer operating days, both due to lower demand for drilling services. The decline in operating days was the result of our decision to stack the Seahawk 800 (f/k/a Pride Utah) in October 2007 and to mobilize two rigs to Mexico for higher dayrate contracts.

Operating costs increased $3.8 million, or 2%, in 2007 over the comparable period in 2006, primarily due to repair projects and down time for the Seahawk 2003 (f/k/a Pride Florida) and Seahawk 2602 (f/k/a Pride Missouri) in 2007, the return of the Seahawk 2505 (f/k/a Pride Oklahoma) to work in 2007 after a shipyard project, labor costs for maintaining rig crews while the rigs were not operating, and costs for merit increases, retention programs designed to retain key personnel and incremental training costs, offset by lower activity-based cost due to a 17% decline in operating days. Operating costs as a percentage of revenues were 60% and 41% for 2007 and 2006, respectively.

Depreciation and amortization remained at $25.2 million in 2007, unchanged compared with 2006, due to a $4.0 million reduction in depreciation expense for 2007 as a result of the change in useful life estimates for several of our rigs, offset by incremental expense from the completion of capital projects in 2007, including for the Seahawk 2007 (f/k/a Pride New Mexico), which increased the book value being depreciated.

General and administrative costs increased $3.0 million, or 29%, in 2007 compared with 2006. Substantially all of these costs were allocated to us by Pride.

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Mexico Operations

	Three Months Ended
	March 31,						Year Ended December 31,
	2009			2008			2008			2007			2006
	(In millions)
Revenues	$	74.7		$	125.5		$	432.8		$	399.8		$	203.2
Costs and expenses
Operating costs, excluding depreciation and amortization		37.8			49.5		$	187.2		$	165.2		$	118.4
Depreciation and amortization		10.1			10.1			39.7			37.6			29.5
General and administrative excluding depreciation and amortization		3.2			3.1			19.9			12.3			7.3
(Gain) loss on sales of assets, net		0.1			—			—			—			0.3
		51.2			62.7			246.8			215.1			155.5
Earnings from operations	$	23.5		$	62.8		$	186.0		$	184.7		$	47.7
Mexico Mat-Supported Jackup Rigs
Operating days		439			896			2,980			3,041			2,694
Available days		540			944			3,571			3,568			3,285
Utilization		81	%		95	%		83	%		85	%		82	%
Average daily revenues	$	111,700		$	108,900		$	107,800		$	101,900		$	62,300
Average marketed rigs		6.0			10.1			8.7			9.0			7.9
Mexico Other Rigs
Operating days		170			182			725			647			724
Available days		180			182			732			846			850
Utilization		94	%		100	%		99	%		76	%		85	%
Average daily revenues	$	151,400		$	154,000		$	154,300		$	139,400		$	48,500
Average marketed rigs		2.0			2.0			2.0			1.9			2.0

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Revenues decreased $50.8 million, or 40%, for the three months ended March 31, 2009 over the comparable period in 2008, of which approximately $40.1 million was the result of PEMEX’s declining demand for mat-supported jackup rigs with water depth ratings of 200 feet or less. Utilization was lower due to idle time for the Seahawk 2001 (f/k/a Pride Arkansas) after the completion of its contract in January 2009 and unplanned maintenance downtime for the Seahawk 2501 (f/k/a Pride California). Average daily revenues for our Mexico mat-supported jackup fleet for the three months ended March 31, 2009 increased by $2,800, or 3%, over the comparable period in 2008, due to the dayrate for the Seahawk 3000 (f/k/a Pride Texas) having a greater effect on the calculation due to decline in average marketed rigs over the same period.

Operating costs decreased by $11.7 million, or 24%, for the three months of 2009 from the comparable period in 2008 primarily due to the decline in available days from the lower number of marketed rigs in Mexico. Operating costs as a percentage of revenues were 51% and 39% for the three months ended March 31, 2009 and 2008, respectively.

Depreciation and amortization remained at $10.1 million for the three months ended March 31, 2009, unchanged over the comparable period in 2008.

General and administrative costs increased $0.1 million, or 3%, for the three months ended March 31, 2009 over the comparable period in 2008. Substantially all of these costs were allocated to us by Pride.

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Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Revenues increased $33.0 million, or 8%, in 2008 over 2007 due to increased dayrates for several of our rigs. Utilization for Mexico other rigs was higher due to increased operating days for the Seahawk 3000 (f/k/a Pride Texas), Pride Tennessee and Pride Wisconsin. Operating days for our Mexico mat-supported jackup rigs decreased by 61 days, or 2%, primarily due to demobilizations of five rigs from Mexico after the completion of their contracts. Average daily revenues for our Mexico mat-supported jackup fleet for 2008 increased by $5,900, or 6%, over 2007, due to higher dayrates for several of our rigs.

Operating costs increased by $22.0 million, or 13%, in 2008 over 2007 due to an increase in labor costs and a $14.8 million increase in costs to demobilize mat-supported jackup rigs out of Mexico. Utilization for our Mexico mat-supported jackup fleet declined to 83% for 2008 as compared to 85% for 2007 due to the demobilization of rigs out of Mexico and idle time between contracts for certain rigs. Operating costs as a percentage of revenues were 43% and 41% for 2008 and 2007, respectively.

Depreciation and amortization increased $2.1 million, or 6%, in 2008 over 2007 due to $9.6 million of additional depreciation expense from completed capital projects in 2007, partially offset by a $7.7 million reduction in depreciation expense as a result of the change in useful life estimates for several of our rigs.

General and administrative costs increased $7.6 million, or 62%, in 2008 over 2007. Substantially all of these costs were allocated to us by Pride.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Revenues increased $196.6 million, or 97%, in 2007 over 2006 due to dayrate increases in Mexico, along with an increase of 1.1, or 14%, in average marketed rigs for our Mexico mat-supported jackups. The increase in average marketed rigs was due to the relocation of two rigs to Mexico in the third quarter of 2007 due to increased customer demand for rigs along with higher dayrate contract opportunities in Mexico relative to the U.S. Operating days for our Mexico mat-supported jackup fleet increased by 347 days, or 13%, over 2006. Average daily revenue for our Mexico mat-supported jackup fleet in 2007 increased $39,600, or 64%, over 2006 as our rigs in Mexico recontracted at higher dayrates.

Operating costs increased $46.8 million, or 40%, in 2007 compared with 2006 primarily due to the corresponding increase of 347, or 13%, in operating days for our Mexico mat-supported jackup fleet primarily due to increased utilization for several of our rigs. Included in the increased operating costs were higher labor costs for rig crew and shore-based personnel attributable to the increase in operating days and general cost inflation. Operating costs as a percentage of revenues were 41% and 58% for 2007 and 2006, respectively.

Depreciation and amortization increased $8.1 million, or 27%, in 2007 compared with 2006. This increase relates to additional depreciation expense resulting from the incremental depreciation from completion of capital projects for the Pride Tennessee, Seahawk 2001 (f/k/a Pride Arkansas) and Seahawk 2503 (f/k/a Pride Louisiana) in 2007, partially offset by a $7.7 million reduction in depreciation expense for 2007 as a result of the change in useful life estimates for several of our rigs.

General and administrative costs increased $5.0 million, or 68%, in 2007 compared with 2006. Substantially all of these costs were allocated to us by Pride.

Other Items — Combined

	Three Months Ended
	March 31,				Year Ended December 31,
	2009		2008		2008			2007			2006
	(In millions)
Other income (expense), net	$	0.7	$	0.4	$	(2.6	)	$	(0.8	)	$	(1.6	)
Income taxes		7.3		25.6		82.9			94.9			95.7

Other income (expense), net.  Other income (expense), net for the three months ended March 31, 2009, increased by $0.3 million over the comparable period in 2008 primarily due to a $0.6 million foreign exchange

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gain for our Mexico operations for the three months ended March 31, 2009, as compared to a $0.3 million foreign exchange gain for our Mexico operations for the comparable period in 2008. Other income (expense), net for 2008, decreased by $1.8 million over 2007 primarily due to a $3.0 million foreign exchange loss for our Mexico operations for 2008, as compared to a $1.3 million foreign exchange loss for our Mexico operations for 2007. Other income (expense), net for 2007 increased by $0.8 million compared with 2006 primarily due to a $1.3 million foreign exchange loss in 2007 compared to a $1.6 million foreign exchange loss in 2006 for our Mexico operations.

Income taxes.  Our combined effective income tax rate from continuing operations did not fluctuate materially from period to period, and averages approximately 35% to 36% for all periods presented.

Liquidity and Capital Resources

We require capital to fund ongoing operations, organic growth initiatives and acquisitions. Our working capital requirements and funding for capital expenditures, strategic investments and acquisitions have historically been part of the corporate-wide cash management program of Pride. As a part of such program, Pride has periodically swept all available cash from our operating accounts. After our separation from Pride, we will be solely responsible for the provision of funds to finance our working capital and other cash requirements.

Historical Gulf of Mexico Business Financial Resources and Liquidity

	Three Months Ended
	March 31,						Year Ended December 31,
	2009			2008			2008			2007			2006
	(In millions)
Cash flows provided by (used in) continuing operations:
Operating activities	$	18.9		$	32.0		$	240.7		$	243.7		$	269.2
Investing activities		(7.7	)		(22.1	)		(9.5	)		(160.2	)		(123.3	)
Financing activities		(29.1	)		(14.1	)		(214.7	)		(61.1	)		(145.9	)
Capital expenditures, property and equipment for continuing operations	$	7.7		$	22.2		$	34.7		$	161.1		$	124.3

Sources and Uses of Cash

Our cash flow from continuing operations is directly related to the level of our business activity and our earnings from operations in the regions in which we operate. Decreases in working capital, including deferred income taxes and payments to third parties, also contributed to the decrease in our cash flows from operations in 2007 as compared to 2006.

Our cash used in continuing investing activities primarily consist of investments in capital projects for our rig fleet. The decline in cash used in investing activities for the quarter ended March 31, 2009 is due to the lower spending resulting from the decline in demand for drilling services. In 2008, these uses of cash were partially offset by $25.0 million in insurance proceeds related to the loss of the Pride Wyoming. In 2007, four of our rigs including the Pride Wisconsin, which will be retained by Pride, underwent life enhancement or upgrade projects for approximately $95.0 million. In 2006, four other rigs including the Pride Tennessee, which will be also retained by Pride, underwent life enhancement or upgrade projects for approximately $105.0 million.

Cash flows used in continuing financing activities represent the parent contributions of its net investment after giving effect to the net income of the Gulf of Mexico Business.

We expect our capital expenditures for our rigs and equipment for 2009 to be approximately $20 million. These expenditures are expected to be used primarily for sustaining capital projects. We expect to fund these projects through cash flow from operations.

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Cash flow from discontinued operations

Our discontinued platform rig operations were part of Pride’s centralized cash management and would distribute available cash to Pride. Net cash flows provided by (used in) our discontinued platform rig business prior to the change in net parent funding were $(1.6) million and $4.2 million for the three months ended March 31, 2009 and 2008, respectively, and were $(10.0) million (excluding net proceeds of $64.2 million from sale in May 2008), $7.2 million and $6.6 million for the years ended December 31, 2008, 2007 and 2006, respectively.

We do not believe that the loss of the cash flows from our discontinued operations will significantly affect our liquidity or ability to fund our capital expenditures.

Contractual Obligations

In the table below, we set forth our contractual obligations as of December 31, 2008. Some of the figures we include in this table are based on our estimates and assumptions about these obligations, including their duration and other factors. The contractual obligations we will actually pay in future periods may vary from those reflected in the table because the estimates and assumptions are subjective.

			Less than						After
	Total		1 Year		1-3 Years		4-5 Years		5 Years
					(In millions)
Recorded contractual obligations:
Trade payables	$	18.7	$	18.7	$	—	$	—	$	—
Other long-term liabilities(1)		0.2		0.2		—		—		—
		18.9		18.9		—		—		—
Unrecorded contractual obligations:
Operating lease obligations(2)		1.3		1.2		0.1		—		—
Purchase obligations(3)		20.1		20.1		—		—		—
		21.4		21.3		0.1		—		—
Total	$	40.3	$	40.2	$	0.1	$	—	$	—

(1)	Amounts represent other long-term liabilities, including current portion, related to severance and termination benefits.
(2)	We enter into operating leases in the normal course of business. Some lease agreements provide us with the option to renew the leases. Our future operating lease payments would change if we exercised these renewal options and if we entered into additional operating lease agreements.
(3)	A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms. These amounts are primarily comprised of open purchase order commitments to vendors and subcontractors.

As of December 31, 2008, we had approximately $3.6 million of unrecognized tax benefits, including penalties and interest. Due to the high degree of uncertainty regarding the timing of future cash outflows associated with the liabilities recognized in this balance, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities.

Off Balance Sheet Arrangements

As of December 31, 2008, our business was contingently liable for $184.7 million in the aggregate for certain performance, bid and customs bonds and letters of credit, including $40.3 million related to contested tax assessments in Mexico and $43.2 million related to assets that will not be held by us. Some of these bonds and letters of credit have been issued on Pride’s account. Neither Pride nor we have been required to make any collateral deposits with respect to these agreements. In connection with our separation from Pride, we

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expect to replace, to the extent practicable, all of the bonds and letters of credit related to our business which were issued on Pride’s account.

Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, which is an amendment of Accounting Research Bulletin No. 51. SFAS No. 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. In addition, SFAS No. 160 requires expanded disclosures in the consolidated financial statements that clearly identify and distinguish between the interests of the parent’s owners and the interests of the noncontrolling owners of a subsidiary. This statement is effective for the fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We adopted SFAS No. 160 on January 1, 2009 but its adoption did not have a material impact on our combined financial statements.

On January 1, 2009, we adopted the provisions of SFAS No. 141 (Revised 2007), Business Combinations, which retains the underlying concepts of SFAS No. 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but changes the method of applying the acquisition method in a number of ways. Acquisition costs are no longer considered part of the fair value of an acquisition and will generally be expensed as incurred, noncontrolling interests are valued at fair value at the acquisition date, in-process research and development is recorded at fair value as an indefinite-lived intangible asset at the acquisition date, restructuring costs associated with a business combination are generally expensed subsequent to the acquisition date, and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.

In April 2009, the FASB issued FASB Staff Position (“FSP”) SFAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, which amends the guidance in SFAS No. 141(R) to require contingent assets acquired and liabilities assumed in a business combination to be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the measurement period. If fair value cannot be reasonably estimated during the measurement period, the contingent asset or liability would be recognized in accordance with SFAS No. 5, Accounting for Contingencies, and FASB Interpretation No. 14, Reasonable Estimation of the Amount of a Loss. Further, this FSP eliminated the specific subsequent accounting guidance for contingent assets and liabilities from SFAS No. 141(R), without significantly revising the guidance in SFAS No. 141. However, contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination would still be initially and subsequently measured at fair value in accordance with SFAS No. 141(R). This FSP is effective for all business acquisitions occurring on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted the provisions of SFAS No. 141(R) and FSP SFAS 141(R)-1 for business combinations with an acquisition date on or after January 1, 2009.

In April 2009, the FASB issued FSP SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. This FSP re-emphasizes that regardless of market conditions the fair value measurement is an exit price concept as defined in SFAS No. 157. This FSP clarifies and includes additional factors to consider in determining whether there has been a significant decrease in market activity for an asset or liability and provides additional clarification on estimating fair value when the market activity for an asset or liability has declined significantly. The scope of this FSP does not include assets and liabilities measured under level 1 inputs. FSP SFAS 157-4 is applied prospectively to all fair value measurements where appropriate and will be effective for interim and annual periods ending after June 15, 2009. We will adopt the provisions of FSP SFAS 157-4 effective April 1, 2009, which we do not expect to have a material impact on our combined financial statements.

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In April 2009, the FASB issued FSP SFAS 107-1 and Accounting Principles Board (“APB”) 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require publicly-traded companies, as defined in APB Opinion No. 28, Interim Financial Reporting, to provide disclosures on the fair value of financial instruments in interim financial statements. FSP SFAS 107-1 and APB 28-1 is effective for interim periods ending after June 15, 2009. We will adopt the new disclosure requirements in our second quarter 2009 combined financial statements.

Quantitative and Qualitative Disclosures About Market Risk

We have not previously entered into any forward exchange or option contracts with respect to foreign currencies; however, we may elect to enter into contracts in the future as we continue to monitor our exposure to foreign currency exchange risk. We do not hold or issue foreign currency forward contracts, option contracts or other derivative financial instruments for speculative purposes.

We operate in Mexico and are involved in transactions denominated in Mexican pesos, which expose us to foreign currency exchange rate risk, and we may in the future enter into contracts denominated in other currencies. We have not entered into any material contracts denominated in Mexican pesos, and generally the contracts that are denominated in Mexican pesos (generally short-term arrangements settled in the ordinary course of business) provide for payment based on U.S. dollar equivalents. We are exposed to exchange rate fluctuations for operating costs, assets and liabilities denominated or payable in Mexican pesos, but we do not view this risk as material to our operations or financial condition.

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BUSINESS

Overview

We operate a jackup rig business that provides contract drilling services to the oil and natural gas exploration and production industry in the Gulf of Mexico. Our fleet of mobile offshore drilling rigs consists of 20 mat-supported jackup rigs that are capable of operating in maximum water depths of up to 300 feet and drilling to depths of up to 25,000 feet. We have the second largest fleet of jackup rigs operating in the Gulf of Mexico. We contract with our customers on a dayrate basis to provide rigs and drilling crews, and we are responsible for the payment of operating and maintenance expenses. Our customers primarily consist of various independent oil and natural gas producers, drilling service providers and the national oil company in Mexico, and our competitors range from large international companies offering a wide range of drilling services to smaller companies focused on more specific geographic or technological areas.

Jackup rigs are mobile, self-elevating drilling platforms equipped with legs that can be lowered to the ocean floor until a foundation is established to support the drilling platform. Once a foundation is established, the drilling platform is jacked further up the legs so that the platform is above the highest expected waves. The rig hull includes the drilling rig, jackup system, crew quarters, loading and unloading facilities, storage areas for bulk and liquid materials, helicopter landing deck and other related equipment. All of our rigs have a lower hull referred to as a “mat.” This mat is attached to the lower portion of the legs in order to provide a more stable foundation in soft bottom areas, like those encountered in certain of the shallow-water areas of the Gulf of Mexico, where independent leg rigs are prone to excessive penetration and are subject to leg damage. After the rig is towed to the drilling location, its legs are lowered until the mat contacts the seabed and the upper hull is jacked to the desired elevation above sea level. Mat-supported rigs generally are able to more quickly position themselves on the worksite and more easily move on and off location than independent leg rigs.

There are several factors that determine the type of rig most suitable for a particular job, the most significant of which include the water depth and bottom conditions at the proposed drilling location, whether the drilling is being done over a platform or other structure, and the intended well depth. Fourteen of our jackup rigs have a cantilever design that permits the drilling platform to be extended out from the hull to perform drilling or workover operations over some types of preexisting platforms or structures. Six of our jackup rigs have a slot-type design, which requires drilling operations to take place through a slot in the hull. Historically, jackup rigs with a cantilever design have maintained higher levels of utilization than rigs with a slot-type design. Our jackup rigs generally operate with crews of 15 to 40 persons and can accommodate between 48 and 88 persons when operating.

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Our Rig Fleet

The following table contains information regarding our rig fleet as of July 29, 2009. All of our rigs are mat-supported jackup rigs and are currently located in the Gulf of Mexico.

						Drilling
				Water		Depth
Seahawk	Former		Built/	Depth		Rating			Contracted
Rig Name	Rig Name	Type	Upgraded	Rating		(In Feet)		Status	Until
USA
Seahawk 2601	Pride Kansas	Cantilever	1976/1999		250		25,000	Idle	N/A
Seahawk 2600	Pride Alaska	Cantilever	1982/2002		250		20,000	Working	September 2009
Seahawk 2500	Pride Arizona	Slot	1981/1996		250		20,000	Stacked	N/A
Seahawk 2502	Pride Georgia	Slot	1981/1995		250		20,000	Stacked	N/A
Seahawk 2504	Pride Michigan	Slot	1975/2002		250		20,000	Idle	N/A
Seahawk 2602	Pride Missouri	Cantilever	1982		250		20,000	Working	August 2009
Seahawk 2000	Pride Alabama	Cantilever	1982		200		20,000	Stacked	N/A
Seahawk 2001	Pride Arkansas	Cantilever	1982		200		20,000	Stacked	N/A
Seahawk 2002	Pride Colorado	Cantilever	1982		200		20,000	Stacked	N/A
Seahawk 2003	Pride Florida	Cantilever	1981		200		20,000	Stacked	N/A
Seahawk 2004	Pride Mississippi	Cantilever	1981/2002		200		20,000	Idle	N/A
Seahawk 2005	Pride Nebraska	Cantilever	1981/2002		200		20,000	Stacked	N/A
Seahawk 2006	Pride Nevada	Cantilever	1981/2002		200		20,000	Stacked	N/A
Seahawk 2007	Pride New Mexico	Cantilever	1982		200		20,000	Idle	N/A
Seahawk 2008	Pride South Carolina	Cantilever	1980/2002		200		20,000	Stacked	N/A
Seahawk 800	Pride Utah	Cantilever	1978/2002		80		15,000	Stacked	N/A
Mexico
Seahawk 3000	Pride Texas	Cantilever	1974/1999		300		25,000	Working	September 2009
Seahawk 2501	Pride California	Slot	1975/2002		250		20,000	Working	October 2009
Seahawk 2503	Pride Louisiana	Slot	1981/2002		250		20,000	Working	September 2009
Seahawk 2505	Pride Oklahoma	Slot	1975/2002		250		20,000	Working	September 2009

Since 2005, we have invested approximately $190 million on various refurbishment and upgrade projects on our rigs, including refurbishment of major equipment, steel replacement, leg repairs, upgrade of accommodations, electrical work and repair of mat damage. We experienced approximately 100 days of shipyard maintenance and upgrade projects for the year ended December 31, 2008 for our fleet. Our shipyard projects may be subject to delays.

Our Strengths

We believe that we are well-positioned to execute our business strategies successfully based on the following strengths:

Leading Presence in the Gulf of Mexico.  We have the second largest jackup rig fleet in the Gulf of Mexico. Our leading presence and geographic focus provide us with logistical advantages in servicing our customers, including reduced mobilization times and costs and increased flexibility of rig and crew deployment. Our size also generates economies of scale and helps us attract, train and retain qualified crew personnel.

Strong Relationships with Our Customer Base.  Our customer base primarily consists of various independent oil and natural gas producers, drilling service providers and PEMEX. This customer base provides exposure to the spending patterns of a major state-owned company, which is more stable, and of independent exploration and production companies and drilling service providers, which are more commodity-driven and subject to wider fluctuations. We benefit from our management’s long-standing relationships with many of our customers, and in some instances, we have developed preferred service provider relationships with our clients.

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Strong Capital Structure.  We will have no outstanding long-term debt at the time of the spin-off. We have entered into a two-year $36 million revolving credit facility for funding reactivation capital expenditures and for related working capital purposes that will not have any outstanding borrowings at the time of the spin-off. In addition, we expect to have in excess of $65 million in cash on hand upon the closing of the spin-off, including the estimated $47.3 million cash contribution we will receive from Pride. We believe this strong balance sheet should enable us to take advantage of opportunities for growth as the market improves and to respond effectively to market downturns.

Experienced and Incentivized Management Team.  Our management has extensive experience across multiple lines of business in oil and gas exploration and production services. Our senior and operations level management team has extensive knowledge of the customer base, job requirements and working conditions in the Gulf of Mexico. We believe that their considerable knowledge of and experience in our industry enhances our ability to operate effectively throughout industry cycles. Our incentive compensation plans are designed to align our management’s interests with our operating, financial and safety performance.

Our Strategies

We are a leading provider of jackup drilling services in the Gulf of Mexico. This leading position is driven by our experienced workforce, technical expertise and operational relationships with our customers. We intend to improve our margins and cash flows in our Gulf of Mexico markets. We believe our strengths and strategies will allow us to develop mutually beneficial, long-term customer relationships. We intend to accomplish our goal by capitalizing on our strengths and executing our strategy based on the following objectives:

Focus on Drilling Services in the Gulf of Mexico Utilizing Our Jackup Fleet.  We view our core business as providing jackup drilling services to the oil and gas exploration and production industry. As one of the largest operators of jackup rigs in the Gulf of Mexico, we believe we are well-positioned to compete effectively in this market. We also believe that our focus on this region offers logistical advantages, including reduced mobilization costs and flexibility of crew deployment, both of which reduce operating costs. Finally, we believe our focus on a particular asset type, mat-supported jackup rigs, will position us as an efficient service provider with specialized operational expertise.

Expand Our Leading Market Position in the Gulf of Mexico.  Our market is the U.S. and Mexican sectors of the Gulf of Mexico, treated as a whole, and we intend to reassign, upgrade and expand our fleet to meet customer needs in this market in a way that improves returns for our customers and us. We intend to satisfy market demands for additional services by expanding our jackup fleet through asset purchases and opportunistic market consolidation transactions. Growth in the Gulf of Mexico will depend on available client opportunities and will be focused towards opportunities that will maintain or incrementally improve our market, margin and cash flow objectives.

Perform as an Efficient, Low-Cost Service Provider.  We strive to develop an organizational structure and asset base that allows us to be an efficient, low-cost service provider in the industry. We believe that by being an efficient, low-cost contractor, we can maintain significant operating flexibility and maximize our earnings and cash flow over the entire business cycle. Because of the smaller rig and crew sizes required to operate our fleet as compared to higher specification assets, we believe our rigs have an operating and capital cost advantage.

Maintain a Conservative Capital Structure and Disciplined Approach to Capital Spending.  We believe that our capital structure will continue to be conservative and allow us to pursue opportunities to grow our business. Because our industry is cyclical and subject to substantial fluctuations in demand, pricing and profitability, we believe that it is important to maintain a conservative balance sheet and consider the return performance of any investment throughout the entire business cycle. We expect that our cash flow and available borrowings will provide sufficient capital to fund our near-term growth plans and to meet our customers’ increased demand for our services. We intend to continue to evaluate investment opportunities, including potential acquisitions that meet our targeted returns on invested capital and allow us to respond to changes in our industry, and we will also consider the payment of dividends with excess cash to the extent attractive investments are not available and to the extent permitted by our debt agreements and regulatory requirements.

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Recent Industry Trends

Our rig fleet operates in the United States and Mexico. In the United States, customer expectations of future natural gas prices strongly influence their drilling activity. Generally, our customers accelerate their drilling programs in higher natural gas price environments and delay or curtail their drilling programs when natural gas prices decline. In Mexico, all crude oil and natural gas basins are owned by the Mexican government and operated and developed by PEMEX, the national oil company. Revenues from exported crude oil are a critical source of funding for Mexico’s government. PEMEX’s demand for drilling services is subject to governmental approval and intervention, including agreements with OPEC to manage the global supply of crude oil, and also is affected by declining production in established fields such as Cantarell and shifting of spending to newer and often deeper offshore fields.

PEMEX has indicated an increased emphasis on field exploration and development prospects that increasingly require the use of rigs with a water depth rating of 250 feet or greater, especially independent leg cantilever rigs. As PEMEX changes its focus toward new field exploration and development prospects that increasingly require the use of rigs with greater water depth capability, we believe demand in Mexico could increase for our ten rigs with water depth ratings of 250 feet or greater. However, it is possible that demand in Mexico for our ten rigs with water depth ratings of 200 feet or less could decline and the future contracting opportunities for such rigs in Mexico could diminish. PEMEX has indicated the need for between five and seven incremental jackups in 2009 to maintain its production. While the PEMEX incremental requirements are generally for independent leg rigs with water depth ratings of 250 feet or greater, we believe there will continue to be opportunities for PEMEX to use mat-supported rigs as well. In addition to the rigs we currently have in Mexico, we will seek additional opportunities to mobilize our 250 foot rigs from the United States to Mexico.

Following the onset of the global financial crisis in late 2008, the declining prices of crude oil and natural gas and deteriorating worldwide economic conditions, the demand for drilling services has declined. Lower crude oil and natural gas prices combined with the inability of our customers to obtain financing for drilling projects have had a negative impact on 2009 offshore drilling activity in the United States as our customers reduced their planned expenditures in response to these factors. We anticipate that 2009 could be the sharpest downturn for jackup activity in over 20 years. As of August 4, 2009, there were only 18 jackups under contract in the U.S. Gulf of Mexico, out of the marketed supply of 41 rigs, or 44% marketed utilization. Activity may decline even further based on the lack of new drilling plans and permits outstanding. We do not expect drilling activity to recover until natural gas prices increase from current levels or drilling costs are further reduced. Additionally, our average dayrates may decline due to the onset of hurricane season and the expiration of contracts with relatively higher pricing that were entered into before the global financial crisis. Longer term, fleet utilization and dayrates in the U.S. Gulf of Mexico will largely depend upon expectations regarding natural gas prices, access to capital for small to medium sized exploration and production companies and other drilling service providers, seasonality in the market driven by the risk of hurricanes, and the number and timing of rigs moving from the U.S. Gulf of Mexico to Mexico and other international markets.

In the current environment, we intend to work a smaller number of rigs at reasonable dayrates and to stack rigs with no near-term prospects. Based on current demand, we have stacked ten rigs and intend to stack additional rigs as necessary. In late February 2009, we reduced our U.S. rig-based workforce by approximately 40%. We have continued to reduce our workforce as we stack rigs, and since April 15, 2009, we have reduced our headcount an additional 15%. Through most of 2008, our jackup fleet operating in the United States benefited from high commodity prices for oil and natural gas, which enabled smaller, independent producers to take advantage of increases in spot price markets and consequently increased demand for our rigs. Additionally, the industry-wide supply of rigs in the U.S. Gulf of Mexico reduced considerably in 2008 due to rig movement to international markets and the permanent loss of several rigs during the active hurricane seasons of 2005 through 2008, including three rigs lost (one of which was the Pride Wyoming) and one significantly damaged in 2008. We believe that a number of our competitors are continuing to market jackup rigs that have previously operated or are currently operating in the U.S. Gulf of Mexico to other markets, and we believe the rig supply will continue to contract.

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Additionally, we could be impacted by the potential negative effect on our dayrates due to worldwide newbuild rig fleet additions. Historically, during prior periods of high utilization and dayrates, industry participants have increased the supply of rigs by ordering the construction of new speculative units. This has often created an oversupply of drilling units and has caused a decline in utilization and dayrates when the rigs enter the market, sometimes for extended periods of time as rigs have been absorbed into the active fleet. Approximately 65 newbuild jackup rigs are currently under construction or on order worldwide, seven of which are being built in shipyards in the Gulf of Mexico region and would have a relatively low mobilization cost to operate in the Gulf of Mexico. All of these rigs are considered to be of a higher specification than our rigs, because generally they are larger, have greater deckloads, have water depth ratings of 250 feet or greater and have an independent leg design, as opposed to being mat-supported. Independent leg rigs are better suited for use in stronger currents or uneven seabed conditions. As discussed above, PEMEX has indicated an increased emphasis on prospects requiring the use of rigs with water depth ratings of 250 feet or greater, such as the anticipated newbuilds. However, any negative effect on our dayrates due to newbuild rig fleet additions could be mitigated by current insurance restrictions applicable in the U.S. Gulf of Mexico, which were a result of industry loss from Hurricanes Katrina and Rita in 2005. As a result of these storms, insurance companies have raised their premiums and the deductibles, and imposed restrictions on windstorm damage, and many rig owners have not been able to insure the full replacement cost of their new rigs operating in the U.S. Gulf of Mexico. This is especially true for smaller owners that are dependent on debt to finance their rig construction projects. As a result, most of the new jackups that have recently been built in the U.S. Gulf of Mexico have been mobilized to other regions. Although we believe the damage from Hurricanes Gustav and Ike was less costly than from the storms in 2005, we believe that the inability of rig owners to obtain full windstorm damage coverage could continue indefinitely.

Competition

The contract drilling industry is highly competitive. Demand for contract drilling and related services is influenced by a number of factors, including the current and expected prices of oil and natural gas and the expenditures of oil and natural gas companies for exploration and development of oil and natural gas. Demand in the U.S. Gulf of Mexico is particularly driven by natural gas demand and natural gas prices. Offshore natural gas drilling in the shallow waters of the Gulf of Mexico will face competition from new supply that could be developed to meet North America’s natural gas demand, including from existing producing basins in the United States and Mexico, frontier basins in offshore deepwater, and imported liquefied natural gas. In addition, demand for energy currently met by natural gas could alternatively be met by other energy forms such as coal, hydroelectric, oil, wind, solar and nuclear energy.

Demand for drilling services also remains dependent on a variety of political and economic factors beyond our control, including worldwide demand for oil and natural gas, the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing, the level of production of non-OPEC countries and the policies of the various governments regarding exploration and development of their oil and natural gas reserves.

Drilling contracts are generally awarded on a competitive bid basis. Pricing, safety record and technical expertise are key factors in determining which qualified contractor is awarded a job. Rig availability, location and specifications also can be significant factors in the determination. Operators also may consider crew experience and efficiency. Some of our contracts are on a negotiated basis. We believe that the market for drilling contracts will continue to be highly competitive for the foreseeable future. Certain competitors may have greater financial resources than we do, which may better enable them to withstand periods of low utilization, compete more effectively on the basis of price, build new rigs or acquire existing rigs.

Our competition ranges from large international companies to smaller, locally owned companies. We believe we are competitive in terms of safety, pricing, performance, equipment, availability of equipment to meet customer needs and availability of experienced, skilled personnel; however, industry-wide shortages of supplies, services, skilled personnel and equipment necessary to conduct our business can occur. Demand for our rigs will typically be correlated to our customer’s expectations of future natural gas and oil prices, particularly natural gas prices. Competition for offshore rigs is usually on a global basis, as these rigs are

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highly mobile and may be moved, at a cost that is sometimes substantial, from one region to another in response to demand. However, our mat-supported jackup rigs are less capable than independent leg jackup rigs of managing variable sea floor conditions found in most areas outside the Gulf of Mexico. As a result, our ability to move our rigs to other regions in response to changes in market conditions is limited. Additionally, a number of our competitors have jackup fleets with generally higher specification rigs than those in our fleet. Particularly during market downturns when there is decreased rig demand, higher specification rigs may be more likely to obtain contracts than lower specification rigs. Under the terms of the noncompetition covenant in the master separation agreement with Pride, we will generally not be permitted to own or operate any rig with a water depth rating of more than 500 feet for three years following the consummation of the spin-off. Please read “Risk Factors — Our rigs are at a relative disadvantage to higher specification jackup rigs. These higher specification rigs may be more likely to obtain contracts than our rigs, particularly during market downturns.” We are also obligated to comply with noncompetition covenants between Pride and third parties that restrict our ability to operate self-erecting platform rigs of 2,000 horsepower or less.

Customers

We provide contract drilling and related services to a customer base that primarily consists of various independent oil and natural gas producers, drilling service providers and the national oil company in Mexico, PEMEX. PEMEX accounted for 58%, 56% and 31% of our total pro forma revenue for the years ended December 31, 2008, 2007 and 2006, respectively, and PEMEX accounted for 54% of our total pro forma revenue for the three months ended March 31, 2009, compared to 65% for the three months ended March 31, 2008. Recently, PEMEX has indicated a shifting focus toward geologic prospects in deeper water and therefore an increased emphasis on rigs with a water depth rating of 250 feet or greater, especially independent leg cantilever rigs. As PEMEX changes its focus toward new field exploration and development prospects that increasingly require the use of rigs with greater water depth capability, it is possible that demand in Mexico for our ten rigs with water depth ratings or 200 feet or less could decline and the future contracting opportunities for such rigs in Mexico could diminish.

We have moved seven rigs out of Mexico since late 2007; all of these rigs had water depth ratings of 200 feet or less. All of our remaining rigs in Mexico have water depth ratings of at least 250 feet and are currently working. All of the seven rigs that have been relocated to the U.S. are stacked. Our financial condition and results of operations could be materially adversely affected if we are unable to contract our lower water depth rigs with new customers at comparable dayrates.

ADTI accounted for 13% of our total pro forma revenue for the year ended December 31, 2008. For the three months ended March 31, 2009, ADTI and Stone Energy accounted for 12% and 10%, respectively, of our total pro forma revenue. Besides these customers and PEMEX, no other customer represented 10% or more of our total pro forma revenue for these periods.

Drilling Contracts

Our drilling contracts are awarded through competitive bidding or on a negotiated basis. The contract terms and rates vary depending on competitive conditions, geographical area, geological formation to be drilled, equipment and services to be supplied, on-site drilling conditions and anticipated duration of the work to be performed. Contracts in the U.S. Gulf of Mexico tend to be short-term or well-to-well contracts, whereas contracts in Mexico tend to be on a longer-term basis of one to two years.

Currently, all of our drilling services contracts are on a dayrate basis. Under dayrate contracts, we charge the customer a fixed amount per day regardless of the number of days needed to drill the well. In addition, dayrate contracts usually provide for a reduced dayrate (or lump-sum amount) for mobilizing the rig to the well location or when drilling operations are interrupted or restricted by equipment breakdowns, adverse weather conditions or other conditions beyond our control. A dayrate drilling contract generally covers either the drilling of a single well or group of wells or has a stated term. These contracts may generally be terminated by the customer in the event the drilling unit is destroyed or lost or, in some instances, if drilling operations are suspended for a period of time as a result of a breakdown of equipment or, in some cases, due

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to other events beyond the control of either party. In addition, drilling contracts with PEMEX are cancelable, without cause, upon little or no prior notice and without penalty or early termination payments, other than reimbursement of nonrecoverable expenses. In some instances, the dayrate contract term may be extended by the customer exercising options for the drilling of additional wells or for an additional length of time at fixed or mutually agreed terms, including dayrates. If we were to engage in work pursuant to footage or turnkey contracts, rather than dayrate contracts, in the future, it would result in a higher degree of risk to us.

Our customers, in some instances, may have the right to terminate, or may seek to renegotiate, existing contracts if we experience downtime or operational problems above a contractual limit, if the rig is a total loss or in other specified circumstances. Our contracts also generally include cost escalation provisions that allow us to increase the amounts billed to our customers when certain stated operating costs increase. A customer is more likely to seek to cancel or renegotiate its contract during periods of depressed market conditions. We, in some instances, could be required to pay penalties if some of our contracts with our customers are canceled due to downtime or operational problems. Suspension of drilling contracts results in the reduction in or loss of dayrates for the period of the suspension. If our customers cancel some of our significant contracts and we are unable to secure new contracts on substantially similar terms, or if contracts are suspended for an extended period of time, our financial condition and results of operations could be adversely affected.

Employees

As of August 3, 2009, we employed approximately 900 personnel. Rig crews constitute the vast majority of our employees. None of our U.S. employees are represented by a collective bargaining agreement. Our employees in Mexico are subject to collective labor agreements.

Seasonality

Our rigs are subject to severe weather during certain periods of the year, particularly hurricane season, which extends from June through November, which could halt operations for prolonged periods or limit contract opportunities during that period. In addition, regulatory requirements during hurricane season could increase the cost or reduce the area of operation of our rigs. Otherwise, our business activities are not significantly affected by seasonal fluctuations.

Insurance

Our operations are subject to hazards inherent in the drilling of oil and natural gas wells, including blowouts and well fires, which could cause personal injury, suspend drilling operations, or seriously damage or destroy the equipment involved. Offshore drilling operations are also subject to hazards particular to marine operations including capsizing, grounding, collision and loss or damage from severe weather. Our marine package policy provides insurance coverage for physical damage to our rigs and other loss events; however, for at least the first year following the date of the spin-off, rigs operating in the U.S. Gulf of Mexico will not have coverage for physical damage due to named windstorms. This insurance policy has a $10 million per-occurrence deductible for non-windstorm events. Other deductibles may apply depending on the nature and circumstances of the liability. We also maintain insurance coverage for cargo, non-owned aviation, personal injury and similar liabilities. Those policies have significantly lower deductibles than the marine package policy.

Environmental and Other Regulatory Matters

Our operations include activities that are subject to numerous international, federal, state and local laws and regulations, including the U.S. Oil Pollution Act of 1990, the U.S. Outer Continental Shelf Lands Act, the Comprehensive Environmental Response, Compensation and Liability Act and the International Convention for the Prevention of Pollution from Ships, governing the discharge of materials into the environment or otherwise relating to environmental protection. In certain circumstances, these laws may impose strict liability, rendering us liable for environmental and natural resource damages without regard to negligence or fault on our part. Numerous governmental agencies issue regulations to implement and enforce such laws, which often require

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difficult and costly compliance measures that carry substantial administrative, civil and criminal penalties or may result in injunctive relief for failure to comply. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent and costly compliance or limit contract drilling opportunities could adversely affect our results of operation or financial condition. While we believe that we are in substantial compliance with the current laws and regulations, there is no assurance that compliance can be maintained in the future. We do not currently anticipate that compliance with currently applicable environmental laws and regulations will have a material adverse effect on our results of operation or financial condition during 2009.

The Minerals Management Service of the U.S. Department of the Interior (“MMS”) has issued guidelines for jackup rig fitness requirements in the U.S. Gulf of Mexico for future hurricane seasons through 2013 and may take other steps that could increase the cost of operations or reduce the area of operations for our rigs, thus reducing their marketability. Implementation of new MMS guidelines or regulations may subject us to increased costs or limit the operational capabilities of our rigs and could materially and adversely affect our results of operation or financial condition. Please read “Risk Factors — Our ability to operate our rigs in the U.S. Gulf of Mexico could be restricted or made more costly by government regulation.”

The United States Clean Water Act prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in the form of penalties for unauthorized discharges. Pursuant to regulations promulgated by the EPA in the early 1970s, the discharge of sewage from vessels and effluent from properly functioning marine engines was exempted from the permit requirements of the National Pollution Discharge Elimination System. This exemption allowed vessels in U.S. waters to discharge certain substances incidental to the normal operation of a vessel, including ballast water, without obtaining a permit to do so. In September 2006, in response to a challenge by certain environmental groups and U.S. states, a U.S. District Court issued an order invalidating the exemption. As a result of this ruling, as of December 19, 2008, EPA requires a permit for such discharges. EPA issued a general permit available to vessel owners to cover the discharges, which includes effluent limits, specific corrective actions, inspections and monitoring, recordkeeping and reporting requirements. As a result, like others in our industry, we are subject to this new permit requirement. However, we do not currently anticipate that compliance with this requirement will have a material adverse effect on our results of operation or financial condition.

Our Mexican operations are subject to various laws and regulations, including laws and regulations relating to the importation of and operation of drilling rigs and equipment, currency conversions and repatriation, oil and natural gas exploration and development, environmental protection, taxation of offshore earnings and earnings of expatriate personnel, the use of local employees and suppliers by foreign contractors and duties on the importation and exportation of drilling rigs and other equipment. New environmental or safety laws and regulations could be enacted, which could adversely affect our ability to operate in Mexico.

Properties

Our property consists of mat-supported jackup drilling rigs and related support equipment. The capital associated with the repair and maintenance of our fleet increases with age. The Seahawk 2000 (f/k/a Pride Alabama) and the Seahawk 2002 (f/k/a Pride Colorado), which are currently stacked, would require additional capital expenditures in order to be class certified and thus able to operate.

The Pride Tennessee and Pride Wisconsin are two independent-leg jackup rigs that will remain assets of Pride. The current customer contracts applicable to these rigs will remain with the Seahawk subsidiary that is party to such contracts. Pursuant to an agreement we entered into with Pride, all benefits and risks of these customer contracts will be passed through to Pride until their completion, which we expect to occur in August 2009 for the Pride Wisconsin and March 2010 for the Pride Tennessee.

We lease office and/or operating facilities in Houston, Texas, Rosharon, Texas, Houma, Louisiana and Ciudad del Carmen, Campeche, Mexico.

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Legal Proceedings

FCPA Investigation.  The audit committee of Pride’s board of directors, through independent outside counsel, has undertaken an investigation of potential violations of the U.S. Foreign Corrupt Practices Act in several of its international operations. With respect to our operations, this investigation has found evidence suggesting that payments, which may violate the FCPA, were made to government officials in Mexico aggregating less than $150,000. The evidence to date regarding these payments suggests that payments were made beginning in 2002 through early 2006 (a) to one or more government officials in Mexico in connection with the clearing of a jackup rig and equipment through customs, the movement of personnel through immigration or the acceptance of a jackup rig under a drilling contract; and (b) with respect to the potentially improper entertainment of government officials in Mexico.

Pride has voluntarily disclosed information found in the investigation to the Department of Justice and the SEC, and Pride has cooperated and is continuing to cooperate with these authorities.

For any violations of the FCPA, we may be liable for or subject to fines, civil and criminal penalties, equitable remedies, including profit disgorgement, and injunctive relief. Civil penalties under the antibribery provisions of the FCPA could range up to $10,000 per violation, with a criminal fine up to the greater of $2 million per violation or twice the gross pecuniary gain to us or twice the gross pecuniary loss to others, if larger. Civil penalties under the accounting provisions of the FCPA can range up to $500,000 per violation, and a company that knowingly commits a violation can be fined up to $25 million per violation. In addition, both the SEC and the DOJ could assert that conduct extending over a period of time may constitute multiple violations for purposes of assessing the penalty amounts. Often, dispositions of these types of matters result in modifications to business practices and compliance programs and possibly a monitor being appointed to review future business and practices with the goal of ensuring compliance with the FCPA. Pursuant to the master separation agreement, we will be responsible for any liabilities, costs or expenses related to, arising out of or resulting from Pride’s current FCPA investigation to the extent related to Pride’s and our operations in Mexico (subject to certain exceptions), except that we will not be responsible for any fine, penalty or profit disgorgement payable to the United States government in excess of $1 million, and we will not be allocated any fees or expenses of third party advisors retained by Pride. In the event that a disposition includes the appointment of a compliance monitor or consultant or any similar remedy for our company, we will be responsible for the costs associated with such monitor, consultant or similar remedy.

We could also face fines, sanctions, and other penalties from authorities in Mexico, including prohibition of our participating in or curtailment of business operations and the seizure of rigs or other assets. Our customer in Mexico could seek to impose penalties or take other actions adverse to our interests. We could also face other third-party claims by directors, officers, employees, affiliates, advisors, attorneys, agents, security or other interest holders or constituents of our company. In addition, disclosure of the subject matter of the investigation could adversely affect our reputation and our ability to obtain new business or retain existing business from our current clients and potential clients, to attract and retain employees and to access the capital markets.

Pride has commenced discussions with the DOJ and SEC regarding a negotiated resolution for these matters, which could be settled during 2009. There can be no assurance that these discussions will result in a final settlement of any or all of these issues or, if a settlement is reached, the timing of any such settlement or that the terms of any such settlement would not have a material adverse effect on us. No amounts have been accrued related to any potential fines, sanctions, claims or other penalties, which could be material individually or in the aggregate, but an accrual could be made as early as the third quarter of 2009. We cannot currently predict what, if any, actions may be taken by the DOJ, the SEC, any other applicable government or other authorities or our customers or other third parties or the effect the actions may have on our results of operations, financial condition or cash flows, on our combined financial statements or on our business, except that our responsibility for fines, penalties or profit disgorgement payable to the United States government will not exceed $1 million as described above.

Tax Assessments by Mexican Government.  In 2006 and 2007, Pride received tax assessments from the Mexican government related to the operations of certain of our entities for the tax years 2001 through 2003.

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Pursuant to local statutory requirements, Pride has provided bonds in the amount of approximately 560 million Mexican pesos, or approximately $39 million as of March 31, 2009, to contest these assessments. In February 2009, Pride received additional tax assessments for the tax years 2003 and 2004 in the amount of 1,097 million Mexican pesos, or approximately $76 million, and Pride has contested these assessments. We anticipate that bonds or other suitable collateral will be required no earlier than the fourth quarter of 2009 in connection with Pride’s contest of these assessments. These assessments contest Pride’s right to claim certain deductions in its tax returns for those years. We anticipate that the Mexican government will make additional assessments contesting similar deductions for other tax years. In addition, we recently received unrelated observation letters from the Mexican government for other tax periods that could ultimately result in additional assessments. While we intend to contest these assessments vigorously, we cannot predict or provide assurance as to the ultimate outcome, which may take several years. Additional security will be required to be provided to the extent assessments are contested.

We expect to post the additional bonds or other collateral when due, which we anticipate to be no earlier than the fourth quarter of 2009. Pursuant to a tax support agreement we entered into with Pride, Pride has agreed to guarantee or indemnify the issuer of any such surety bonds or other collateral issued for our account in respect of Mexican tax assessments made prior to the date of the spin-off. Beginning on the third anniversary of the spin-off, and on each subsequent anniversary thereafter, we will be required to provide substitute credit support for a portion of the collateral guaranteed or indemnified by Pride, so that Pride’s obligations are terminated in their entirety by the sixth anniversary of the spin-off. Seahawk will pay Pride a fee based on the credit support provided.

Pride Wyoming.  In September 2008, the Pride Wyoming, a 250-foot slot-type jackup rig operating in the U.S., was deemed a total loss for insurance purposes after it was severely damaged and sank as a result of Hurricane Ike. Four owners of facilities in the Gulf of Mexico on which parts of the Pride Wyoming settled or may have settled have requested that Pride pay for all costs, expenses and other losses associated with the damage, including loss of revenue. These owners have claimed damages in excess of $120 million in the aggregate. Other pieces of the rig may have also caused damage to certain other offshore structures. In October 2008, Pride filed a complaint in U.S. Federal District Court pursuant to the Limitation of Liability Act, which has the potential to statutorily limit our exposure for claims arising out of third party damages caused by the loss of the Pride Wyoming. Pride will retain the right after the spin-off to control any claims, litigation or settlements arising out of the loss of the Pride Wyoming. Based on the information available to us at this time, we do not expect the outcome of these claims to have a material adverse effect on our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these claims. Although we believe Pride has adequate insurance, we will be responsible for any deductibles or awards not covered by Pride’s insurance.

We are routinely involved in other litigation, claims and disputes incidental to our business, which at times involve claims for significant monetary amounts, some of which would not be covered by insurance. In the opinion of management, none of the other existing litigation will have a material adverse effect on our financial position, results of operations or cash flows. However, a substantial settlement payment or judgment in excess of our accruals could have a material adverse effect on our financial position, results of operations or cash flows.

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MANAGEMENT

Directors and Executive Officers

The following table sets forth information as of July 1, 2009 regarding individuals who are expected to serve as our directors and executive officers, including their positions after the spin-off.

Director nominees will be presented to our sole stockholder, Pride, for election effective prior to the spin-off date. After the spin-off, none of the following individuals will be employees of Pride.

Name	Age	Position
Randall D. Stilley	55	President, Chief Executive Officer and Director
Steven A. Manz	43	Senior Vice President and Chief Financial Officer
Alejandro Cestero	34	Senior Vice President, General Counsel, Chief Compliance Officer and Secretary
Oscar A. German	43	Senior Vice President — Human Resources and Administration
Stephen A. Snider	61	Nominee, Chairman of the Board of Directors
Richard J. Alario	54	Director Nominee
Mark E. Baldwin	56	Director Nominee
Franklin Myers	56	Director Nominee
John T. Nesser, III	60	Director Nominee
Edmund P. Segner, III	55	Director Nominee

Randall D. Stilley has served as Pride’s Chief Executive Officer — Mat Jackup Division since September 2008. Prior to joining Pride, from October 2004 to June 2008, Mr. Stilley was President and Chief Executive Officer of Hercules Offshore, Inc., an oilfield services company. From January 2004 to October 2004, Mr. Stilley was Chief Executive Officer of Seitel, Inc., an oilfield services company. From June 2008 to September 2008 and from 2000 until January 2004, Mr. Stilley was an independent business consultant and managed private investments. From 1997 until 2000, Mr. Stilley was President of the Oilfield Services Division at Weatherford International, Inc., an oilfield services company. Prior to joining Weatherford in 1997, Mr. Stilley served in a variety of positions at Halliburton Company, an oilfield services company. He is a registered professional engineer in the state of Texas and a member of the Society of Petroleum Engineers. Mr. Stilley holds a Bachelor of Science degree in Aerospace Engineering from the University of Texas at Austin.

Steven A. Manz has served as Pride’s Vice President and Chief Financial Officer — Mat Jackup Division since October 2008. Mr. Manz was most recently a Director of Research for the investment bank Simmons & Company International from April until August 2008. From January 2005 to September 2007, he was with Hercules Offshore, Inc., where he served as Senior Vice President of Corporate Development and Planning from March 2007 to September 2007 and as Chief Financial Officer from January 2005 to March 2007. From May 1995 to December 2004, Mr. Manz was with Noble Corporation, where he served in a variety of management roles including Managing Director-Noble Technology Services Division from April 2003 to December 2004, Vice President of Strategic Planning from August 2000 to April 2003, and Director of Accounting and Investor Relations from March 1997 to August 2000. During September 2008 and from September 2007 until April 2008 Mr. Manz was not employed. Mr. Manz holds a Bachelor of Business Administration in Finance from the University of Texas at Austin.

Alejandro (Alex) Cestero has served as Pride’s Vice President and General Counsel — Mat Jackup Division since October 2008. Prior to his appointment Mr. Cestero had been serving as Deputy General Counsel, Business Affairs and Assistant Secretary for Pride since January 2007. Mr. Cestero joined Pride in April 2002 as Senior Counsel. In January 2004 he was named Assistant General Counsel and Assistant Secretary and served in this position until December 2006. Mr. Cestero has been responsible for legal oversight of the operational, commercial and general legal affairs of Pride’s worldwide operating divisions, as well as legal oversight of Pride’s strategic and business development transactions. Prior to joining Pride, he

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was with Bracewell & Giuliani LLP and Vinson & Elkins LLP. Mr. Cestero earned his Juris Doctor from Stanford Law School, and a Master of Business Administration and Bachelor of Arts from Rice University.

Oscar A. German has served as Pride’s Vice President, Human Resources — Mat Jackup Division since November 2008. Prior to his appointment Mr. German served as International Human Resources Director — Western Hemisphere, for Pride and has been with Pride in that position since March 2006. Mr. German has been responsible in leading Human Resources in the areas of organizational effectiveness, employee and industrial relations, compensation and benefits, and performance and change management. Mr. German has over 15 years of international human resources experience. Prior to joining Pride, Mr. German performed human resources consulting work as an independent contractor from September 2005 to February 2006. Mr. German was employed by Coca-Cola Corporation during the month of August 2005 as Corporate Human Resources Director. Mr. German was also previously with BHP Billiton from January 2001 to June 2005, where he most recently served as Regional Vice President Human Resources Base Metals — South America from July 2002 to June 2005 based out of Santiago, Chile. During July 2005 Mr. German was not employed. Mr. German has a Bachelor of Business Administration in Finance from the University of Houston-Downtown.

Stephen A. Snider has held the position of Chief Executive Officer and director of Exterran Holdings, Inc., a global natural gas compression services company, and Chief Executive Officer and director for the general partner of Exterran Partners, L.P., a domestic natural gas contract compression services business, in each case since the completion of the merger between Hanover Compressor Company and Universal Compression Holdings, Inc. in 2007. Exterran Holdings and Exterran Partners are publicly traded and headquartered in Houston, Texas. Until the merger in 2007, Mr. Snider held the position of Chairman, President and Chief Executive Officer of Universal Compression Holdings, Inc. and Universal Compression Partners, L.P., since their inception in 1998 and 2006, respectively. Mr. Snider also serves on the Board of Energen Corporation. Mr. Snider has over 30 years of experience in senior management of operating companies. Mr. Snider holds a Bachelor of Science in Civil Engineering from the University of Detroit and a Master of Business Administration the University of Colorado at Denver.

Richard J. Alario has served as the Chief Executive Officer of Key Energy Services, Inc., a publicly traded provider of rig-based well services, since May 1, 2004 and as Chairman of its board of directors since August 25, 2004. Mr. Alario joined Key Energy Services as President and Chief Operating Officer effective January 1, 2004 and has been a member of the board of Key Energy Services since May 2004. Prior to joining Key Energy Services, Mr. Alario was employed by BJ Services Company, where he served as Vice President from May 2002 after OSCA, Inc. was acquired by BJ Services. Prior to joining BJ Services, Mr. Alario had over 21 years of service in various capacities with OSCA, an oilfield services company, most recently serving as its Executive Vice President. He currently serves as director and chairman of the Health, Safety, Security and Environmental Committee of the National Ocean Industries Association. Mr. Alario holds a Bachelor of Arts from Louisiana State University.

Mark E. Baldwin has served as the Executive Vice President and Chief Financial Officer of Dresser-Rand Group Inc., a publicly traded supplier of custom-engineered rotating equipment solutions, since August 2007. Prior to that, he served as the Executive Vice President, Chief Financial Officer and Treasurer of Veritas DGC Inc., a public energy service company from August 2004 until February 2007. From April 2003 to July 2004 he was an Operating Partner at First Reserve Corporation. Mr. Baldwin was not employed from March 2007 to July 2007. Other previous experience includes four years as Chairman and Chief Executive Officer for Pentacon Inc. and 17 years with Keystone International Inc. in a variety of finance and operations positions, including Treasurer, Chief Financial Officer, and President of the Industrial Valves and Controls Group. Mr. Baldwin has a Bachelor of Science in Mechanical Engineering from Duke University and a Master of Business Administration from Tulane University.

Franklin Myers served as the Senior Advisor to Cameron International Corporation, a publicly traded provider of flow equipment products, systems and services, from April 2008 through March 2009. Before April 2008, Mr. Myers was the Senior Vice President and Chief Financial Officer of Cameron. Mr. Myers became Senior Vice President of Cameron in 1995, and served as General Counsel and Corporate Secretary of Cameron from 1995 to 1999, as well as President of its Cooper Energy Services Division from 1998 until

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2001. Prior to joining Cameron, he was Senior Vice President and General Counsel of Baker Hughes Incorporated, an oilfield services and equipment provider, and an attorney and partner with the law firm of Fulbright & Jaworski L.L.P. in Houston, Texas. Mr. Myers currently serves on the Board of Directors of Comfort Systems, Inc., a NYSE-listed provider of heating, ventilation and air conditioning services. Mr. Myers also serves on the Board of Directors of ION Geophysical Corporation, a company that provides advanced seismic data acquisition equipment, seismic software, and seismic planning, processing and interpretation services. He holds a Bachelor of Science degree in Industrial Engineering from Mississippi State University and a Juris Doctor degree with Honors from the University of Mississippi.

John T. Nesser, III, has served as the Executive Vice President and Chief Operating Officer of J. Ray McDermott, S.A., a subsidiary of McDermott International, Inc., a publicly traded engineering and construction company, since October 2008. Previously, he served as McDermott International’s Executive Vice President, Chief Administrative and Legal Officer from January 2007 to September 2008; Executive Vice President and General Counsel from January 2006 to January 2007; Executive Vice President, General Counsel and Corporate Secretary from February 2001 to January 2006; Senior Vice President, General Counsel and Corporate Secretary from January 2000 to February 2001; Vice President and Associate General Counsel from June 1999 to January 2000; and Associate General Counsel from October 1998 to June 1999. Prior to joining McDermott International, he served as a managing partner of Nesser, King & LeBlanc, a New Orleans law firm, which he co-founded in 1985. Mr. Nesser holds a Bachelor of Arts in Finance and Commercial Banking and a Juris Doctor degree from Louisiana State University.

Edmund P. Segner, III, is currently a Professor in the Practice of Civil Engineering Management at Rice University in Houston, Texas, a position he has held since July 2006 and full time since July 2007. From July 2007 through his transition to retirement in November 2008, he served as Vice President of EOG Resources, Inc., a publicly traded independent oil and gas company. Mr. Segner served as Senior Executive Vice President and Chief of Staff and Director of EOG from February 2007 through June 2007. From August 1999 to February 2007 he served as President and Chief of Staff and Director of EOG, and from March 2003 through June 2007 he also served as the principal financial officer of EOG. Mr. Segner serves on the Board of Directors of Exterran Partners, L.P. Mr. Segner holds a Bachelor of Science in Civil Engineering from Rice University and a Master of Arts in Economics from the University of Houston, and he is also a Certified Public Accountant.

There are no family relationships between any of our executive officers or directors.

There are no contractual obligations regarding the election of our executive officers or directors.

Board Structure

Upon completion of the spin-off, our board will be comprised of seven directors, six of whom we expect to satisfy the independence requirements of NASDAQ and the SEC. We expect that membership on the audit committee, compensation committee and nominating and governance committee will be limited to independent, non-employee directors as required by NASDAQ and the SEC.

Upon completion of the spin-off, our directors will be divided into three classes serving staggered three-year terms. Class I directors will have an initial term expiring in 2010, Class II directors will have an initial term expiring in 2011 and Class III directors will have an initial term expiring in 2012. Class I will be comprised of Messrs. Snider and Stilley, Class II will be comprised of Messrs. Alario and Baldwin, and Class III will be comprised of Messrs. Myers, Nesser and Segner.

At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This classification of our board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. Following this classification of the board, in general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors.

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Board Committees

Our board of directors will have an audit committee, a compensation committee and a nominating and governance committee immediately following the spin-off.

The audit committee is expected to consist of Messrs. Segner (Chairman), Baldwin and Myers. The board of directors is expected to determine that Mr. Segner is an audit committee financial expert as defined by applicable SEC rules. The committee’s purpose will be to assist the board of directors in overseeing (a) the integrity of our financial statements, (b) our compliance with legal and regulatory requirements, (c) the independence, qualifications and performance of our independent auditors and (d) the performance of our internal audit function.

The compensation committee is expected to consist of Messrs. Alario (Chairman), Myers and Nesser. The committee’s purpose will be (a) to review and approve the compensation of our executive officers and other key employees, (b) to administer and make recommendations to the board of directors with respect to our incentive compensation plans, equity-based plans and other compensation benefit plans and (c) to produce a compensation committee report and assist management with the preparation of the compensation discussion and analysis as required by the SEC for inclusion in our annual proxy statement or annual report on Form 10-K.

The nominating and corporate governance committee is expected to consist of Messrs. Nesser (Chairman), Snider and Alario. The committee will be responsible for (a) identifying qualified individuals to become directors of the company, (b) recommending candidates to fill vacancies on the board of directors and for election by the stockholders, (c) recommending committee assignments for directors to the board of directors, (d) monitoring and assessing the performance of the board of directors and individual non-employee directors, (e) reviewing compensation received by directors for service on the board of directors and its committees and (f) developing and recommending to the board of directors appropriate corporate governance policies, practices and procedures for us.

In assessing the qualifications of prospective nominees to the board of directors, the nominating and corporate governance committee is expected to consider each nominee’s personal and professional integrity, experience, skills, ability and willingness to devote the time and effort necessary to be an effective board member, and commitment to acting in the best interests of our company and our stockholders. It is expected that consideration will be given to the board having an appropriate mix of backgrounds and skills when considering prospective nominees.

The nominating and corporate governance committee is expected to consider director candidates recommended by stockholders. If a stockholder wishes to recommend a director for nomination by the committee, the stockholder should submit the recommendation in writing to the Chairman, Nominating and Corporate Governance Committee, in care of the Secretary, Seahawk Drilling, Inc., 5847 San Felipe, Suite 1600, Houston, Texas 77057. The recommendation should contain the following information:

•  the name, age, business address and residence address of the nominee and the name and address of the stockholder making the nomination;

•  the principal occupation or employment of the nominee;

•  the number of shares of each class or series of our capital stock beneficially owned by the nominee and the stockholder and the period for which those shares have been owned; and

•  any other information the stockholder may deem relevant to the committee’s evaluation.

Candidates recommended by stockholders are evaluated on the same basis as candidates recommended by our directors, executive officers, third-party search firms or other sources.

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Compensation Committee Interlocks and Insider Participation

None of our executive officers have served as members of a compensation committee (or if no committee performs that function, the board of directors) of any other entity that has an executive officer serving as a member of our board of directors.

Security Ownership of Executive Officers and Directors

We are currently wholly owned by Pride. Immediately following the spin-off, Pride will not own any of our common stock. None of our officers or directors own any shares of our common stock, but those who own unrestricted shares of Pride common stock will be treated the same as any other holder of Pride common stock in any distribution by Pride and, accordingly, will receive shares of our common stock in the spin-off. As described below under ‘‘— Treatment of Stock-Based Awards,” our executive officers and directors will receive restricted stock units in respect of our common stock following the closing of the spin-off. Restricted stock and restricted stock units held by Messrs. Cestero and German will be treated as described below in “Treatment of Stock-Based Awards.”

The following table sets forth the Pride common stock, restricted stock units and restricted stock held by director nominees and our executive officers, as of August 4, and the number of shares of our common stock and rights to acquire our common stock that will be held by our director nominees and our executive officers immediately upon completion of the spin-off, assuming there are no changes in each person’s holdings of Pride securities since August 4 and based on our estimates as of August 4 using the distribution ratio of 1/15 of a share of our common stock for every share of Pride common stock, with no fractional shares:

			Restricted		Shares of
			Stock Units and		Seahawk
	Shares of Pride		Restricted		Common
Name	Common Stock Owned(1)		Stock Owned		Stock(2)
Randall D. Stilley		—		—		—
Steven A. Manz		4,500		—		300
Alejandro Cestero		107		16,682		16,822
Oscar A. German		5,368		9,375		9,807
Stephen A. Snider		—		—		—
Richard J. Alario		—		—		—
Mark E. Baldwin		—		—		—
Franklin Myers		—		—		—
John T. Nesser, III		—		—		—
Edmund P. Segner, III		—		—		—
All directors and executive officers (10 individuals)		9,975		26,057		26,629

(1)

Each executive officer holds less than 1% of Pride’s outstanding common stock.

(2)

The number of Seahawk shares listed in the table reflects the issuance of Seahawk stock in the spin-off in respect of shares of Pride restricted stock, and replacement awards of Seahawk restricted stock units in respect of Pride restricted stock units and restricted stock, in each case as described in “— Treatment of Stock-Based Awards” below. The number of Seahawk shares listed in the table does not reflect the initial equity grant pursuant to each executive officer’s employment agreement (see “— Employment Agreements with Executive Officers” below), which grant will be based on a dollar value provided in the agreement.

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis should be read in conjunction with “Executive Compensation” below.

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Executive Compensation Philosophy

Our executive compensation program has been designed to achieve three objectives. First, it is designed to align the interests of our executives with those of our stockholders. Second, it is designed to retain and motivate executives who serve our stockholders’ interests. Third, it is designed to attract talented external candidates when vacancies arise.

Alignment of Interests

Our executive compensation program is based on the principle that an employee is likeliest to serve the interests of our stockholders when his or her own interests are aligned with our stockholders’ interests. Our hiring practices are designed to identify candidates who have a demonstrated ability and desire to serve the interests of our stockholders. Our executive compensation program, however, acknowledges that hiring talented candidates is not sufficient to maximize the performance of those candidates. Rather, employees, including executives, should have financial incentives to serve the interests of our stockholders. We believe that the most effective way to unify the interests of our executives and our stockholders is to pay a significant amount of total compensation through annual incentive awards, which create incentives for meeting annual performance targets, and long-term stock-based incentive compensation, which focuses executives on the longer-term performance of our company.

Retention

Our executive compensation program is also based on the principle that executives who are serving the interests of our stockholders should be retained and incentivized to continue serving those interests. Given their qualifications, experience and professionalism, our executives, as well as the non-executive members of our management team who may be candidates for executive positions in the future, are highly marketable. Opportunities for alternative employment frequently arise, and our executive compensation program is designed to retain our executives in light of these other opportunities.

Attracting Candidates

Finally, our executive compensation program is based on the principle that highly qualified candidates seek the best available opportunities, from both a professional and a financial standpoint. Our program seeks to provide compensation that is competitive in relation to alternatives in the markets in which we compete for executives.

Administration of Executive Compensation Program

Our executive compensation program has been initially designed by the compensation committee of Pride’s board of directors. Following the spin-off our executive compensation program will be administered by the compensation committee of our board of directors. The specific duties and responsibilities of the compensation committee are described in “— Board Committees” above. In designing our executive compensation program, Pride’s compensation committee engaged an outside consultant, Frederic W. Cook & Co., Inc., the primary role of whom was to provide to the compensation committee with market data and information regarding compensation trends in our industry and to make recommendations regarding the design of our incentive program. Pride’s and our management did not direct or oversee the retention or activities of the compensation consultant with respect to our executive compensation program and has not engaged Frederic W. Cook in any other capacity.

Following the spin-off, we expect that our senior management will support our compensation committee in performing its role with respect to administering the compensation program. We expect that the compensation committee, with input from the other non-management directors, will conduct performance evaluations of Mr. Stilley, and Mr. Stilley will conduct performance evaluations of our other executive officers and make recommendations to the compensation committee regarding all aspects of their compensation. No executive has the authority to establish or modify executive officer compensation, except with respect to certain perquisites as described below.

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Overview of Compensation

Our executive compensation program generally consists of five principal components:

•  base salary;

•  annual cash incentive compensation;

•  long-term stock-based incentive compensation;

•  severance and change in control arrangements; and

•  limited perquisites.

Annually, on the basis of the performance evaluations discussed above, our compensation committee will conduct a review of each of base salary, annual cash incentive compensation and long-term stock-based incentive compensation, which we refer to as total direct compensation, with respect to each executive and will make adjustments, if any, to the preceding year’s levels. In determining initial compensation levels, Pride’s compensation committee sought to position each element of each executive officer’s total direct compensation at a competitive level in relation to similar compensation paid to the executive’s peers, as described below. We expect our compensation committee to adopt a similar approach going forward.

For use in determining compensation for 2008, Pride’s compensation committee selected eight companies against which to compare our executive compensation program. The following eight companies were selected because they either directly compete with us or have operations that are comparable to our operations: Atwood Oceanics, Inc., Global Industries, Ltd., Gulf Island Fabrication, Inc., Gulfmark Offshore, Inc., Hercules Offshore, Inc., Horizon Offshore, Inc., Hornbeck Offshore Services, Inc. and Parker Drilling Company. We refer to this group of companies collectively as our comparator group. Our compensation committee may elect to modify the group for future periods to reflect best practices in executive compensation or changes in our business or the business of other companies, in and outside the comparator group.

The compensation consultant engaged by Pride also used nationally recognized executive compensation surveys. Data were provided by Frederic W. Cook & Co., Inc. and consisted of industry-specific data from two proprietary surveys, and general industry data from one proprietary survey. The first industry-specific survey covered 200 organizations in all energy-related segments, including (but not limited to) drilling, exploration and production, and services and equipment. Compensation data for companies with revenues of between $300 million and $1.2 billion were used, with median revenues of approximately $650 million. The second industry-specific survey covered 60 energy-related organizations in the oilfield manufacturing and service industries. Compensation data for all companies in the survey (median revenues $1.2 billion) were used, as well as data for a subset of companies in the survey limited to those with revenues of less than $800 million (median revenues of $400 million). The general industry survey consisted of approximately 400 companies across all industries, excluding energy and financial service organizations. For this survey, compensation data for companies with revenues of less than $1 billion were used, with median revenues of $750 million. These surveys included information regarding compensation of officers with similar roles and responsibilities as our officers.

As part of Pride’s compensation committee’s review and determination of appropriate and competitive initial levels of compensation, they utilized a summary of our competitive posture for each component of compensation. The summary was prepared by the compensation consultant and derived from the two data sources described below. The median revenues for each source were comparable to our pro forma revenues.

•  The compensation consultant used the compensation information provided in the proxy statements of the members of our comparator group to develop market compensation levels for our most highly compensated officers. The compensation consultant then compared the compensation of the named executive officers in our comparator group to our executive pay levels based on position and pay rank.

•  The compensation consultant also utilized data from the compensation surveys described above (using a subset of the companies whose median revenues were comparable to our pro forma revenues) to develop marketplace compensation levels for our executive officers.

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The comparator group compensation data, together with the compensation survey data, each as described above, are collectively referred to as the “compensation data.” We expect that our compensation committee will use comparable summaries in future reviews and determinations of compensation levels for our executives.

Our compensation committee’s annual review of each executive’s total direct compensation will also seek to ensure that each component of that compensation is appropriate in view of the performance of the executive and our company, based on the annual performance evaluation discussed above. The review will vary with the compensation component for which the evaluation is being performed, as described in greater detail below. Because each component will be reviewed separately and compensation within each component will be based on individual and company performance, the percentage of total direct compensation that each component comprises may vary by executive and by year.

Similar to his peers in the comparator group, Mr. Stilley, our President and Chief Executive Officer, has a significantly broader scope of responsibilities at our company than the other named executive officers. The difference in compensation for Mr. Stilley described below primarily reflects these differing responsibilities as valued by the companies in the comparator group and, except as described below, does not result from the application of different policies or decisions with respect to Mr. Stilley.

Base Salary

The first component of the executive compensation program is base salary. Pride’s compensation committee sought to, and we expect our compensation committee will continue to, position each executive around the 50th percentile of the individual’s peers based on the compensation data. The compensation committee identified the 50th percentile as the average of the medians of each of the data sets that comprise the compensation data. Pride’s and our compensation committees believe that this target percentile provides our executives with a competitive market rate for salaries paid to executives in our comparator group. For future compensation determinations, the extent to which an executive’s base salary falls short of, or exceeds, the 50th percentile will be determined subjectively by our compensation committee based on tenure, experience, prior base salary, the results of the annual evaluation and other factors. We expect that executives, other than the Chief Executive Officer, will be evaluated on the following criteria: leadership; initiative; relationship and team building; business sense; communication; vision and perspective; supervision; organizational savvy; ethical practices; and fiscal responsibility. We expect that the Chief Executive Officer will be evaluated on similar criteria, with emphasis on ethical practices, relations with our board of directors, vision, strategy, leadership and professional skills.

Our named executive officers are being paid the following base salaries:

Name	Base Salary
Mr. Stilley	$	625,000
Mr. Manz	$	300,000
Mr. Cestero	$	285,000
Mr. German	$	240,000

Annual Cash Incentive Compensation

The second component of the program is annual cash incentive compensation. The annual cash incentive will be based on the achievement of company-wide objectives and personal objectives during the year, which are described in greater detail below. Messrs. Stilley and Manz have received guaranteed prorated bonuses for 2008, and will participate in Pride’s incentive plan beginning in 2009. The 2008 guaranteed bonuses were agreed as part of the arms-length negotiations of Messrs. Stilley’s and Manz’s respective employment agreements prior to the time they joined us. The Pride compensation committee established a “target bonus” for each executive around the 50th percentile of the compensation data. We expect that our compensation committee will adopt a similar approach going forward. Pride’s compensation committee believes this target percentile provides our executives with a competitive market rate for bonuses paid to executives in our comparator group. These target bonus percentages also take into account differing levels of experience and

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responsibility of our executive officers and their prior level of compensation. The target bonus percentage is applied to the annual base earnings to determine the total target bonus dollar opportunity for that executive. The bonus is to be paid upon the achievement of specified performance-based goals during the applicable year. For 2009, our President and Chief Executive Officer set his personal goals with the President and Chief Executive Officer of Pride, and each executive officer other than the President and Chief Executive Officer set his own personal goals with the President and Chief Executive Officer. The extent to which the executive achieves those goals is itself a metric on which part of the bonus is based. For 2009, target bonuses for the named executive officers will be as follows:

	Target
	Bonus
Name	Percentage
Mr. Stilley		100	%
Mr. Manz		75	%
Mr. Cestero		50	%
Mr. German		50	%

Following the spin-off, at the beginning of each calendar year, we expect our compensation committee will analyze our corporate objectives and, on that basis, determine the metrics by which the executive’s bonuses will be calculated for that year. Each metric will be weighted by the compensation committee to reflect its relative importance for the year in question. In addition, the Chief Executive Officer will set his personal goals with the compensation committee, and each executive other than the Chief Executive Officer will set his own personal goals with the Chief Executive Officer, which will then be subject to approval by our compensation committee. The extent to which the executive achieves those goals will itself be a metric on which part of the bonus is based. To allow time for the compensation committee to complete its annual review of executive performance evaluations and compensation, and in light of other company-wide reporting and accounting obligations during the first quarter of each year, we expect that the target bonus percentages will be established by our compensation committee during the second quarter of each year. However, the compensation committee will establish target bonus percentages without regard to company performance during the period of the year prior to action by the compensation committee, and bonuses will be paid based on the achievement of the metrics for the entire calendar year.

Each metric is assigned a minimum threshold result, below which no amount of the bonus would be awarded with respect to that metric, a target result and a maximum result, at which the amount of the bonus awarded with respect to that metric would be 100% of the target bonus with respect to Messrs. Cestero and German, 150% of the target bonus with respect to Mr. Manz and 200% of the target bonus with respect to Mr. Stilley.

All bonuses paid under the program, while expected to be based on the guidelines established by the compensation committee, are at all times subject to our compensation committee’s discretion. The compensation committee may exercise this discretion to increase or decrease the bonus amounts, possibly by significant amounts.

Long-Term Stock-Based Incentive Compensation

The third component of our executive compensation program is long-term stock-based incentive compensation. Specifically, our executives will be eligible to participate in Seahawk’s 2009 Long-Term Incentive Plan. Under the plan, our compensation committee will be authorized to grant stock options, shares of restricted stock, restricted stock units, stock appreciation rights, other stock-based awards and cash awards to executives.

Each of our named executive officers is entitled to an initial equity award as of the effective date of the spin-off pursuant to the terms of his employment agreement. See “— Employment Agreements with Executive Officers” below. At the end of each calendar year, we expect that our compensation committee will determine an aggregate value of stock-based incentive awards to grant to each executive for the following year that generally would position the executive’s stock-based incentive compensation between the 50th and 75th percentile of the individual’s peers based on the compensation data. In so doing, the compensation committee will be

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seeking to tie an appropriate percentage of the executive’s total compensation to the long-term performance of our company. The amount of an executive’s stock-based incentive award will be determined subjectively by the compensation committee following a recommendation from the Chief Executive Officer (or, with respect to the Chief Executive Officer, by the board of directors following a recommendation by the compensation committee), based in part on the executive’s performance. For purposes of valuing options in the determination of the aggregate value of stock-based incentive awards to be granted, the compensation committee will use the binomial method, which is the method recommended and used by the compensation consultant. For accounting purposes, we use the Black-Scholes method to value options in our financial statements.

We expect that our compensation committee generally will grant long-term incentive compensation to executives during the first quarter of each calendar year. The compensation committee will approve the grant of options at committee meetings and does not intend to grant options by written consent. We will not time the release of material nonpublic information for the purpose of affecting the value of executive compensation, and we will not grant options with a grant date prior to the date of compensation committee approval of the grant. The exercise price of options will be equal to the closing market price of our common stock on NASDAQ on the grant date.

Long-term incentive compensation is designed to achieve all of the objectives under our executive compensation program. First, it is a mechanism through which executives become (or can become) stockholders, either through the ownership of shares of restricted stock, restricted stock units or options to purchase stock. Second, the vesting provisions of each award generally require continued employment for the awards to vest, thereby incentivizing the executive to remain in our employment. Third, we use long-term incentive compensation to attract external candidates, who, by resigning from their prior employer to accept employment with us, may be surrendering unvested equity and other compensation.

Severance and Change in Control Arrangements

The fourth component of the executive compensation program is severance and change in control arrangements. Each of our named executive officers has entered into an employment agreement with us, which provides severance and change in control protections to the executive.

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The table below provides a brief summary of some of the benefits due to the executives in the event of termination or change in control under their employment agreements and award agreements.

Event	Stilley	Manz	Cestero	German
Involuntary termination (for any reason other than cause) or	•   Two years of base salary	•   One year of base salary	•   One year of base salary	•   One year of base salary
constructive termination or disability	•   Two times target bonus	•   One times target bonus	•   One times target bonus	•   One times target bonus
	•   Two years of insurance	•   One year of insurance	•   One year of insurance	•   One year of insurance
	•   Awards vest	•   Awards vest	•   Awards vest	•   Awards vest
	•   Options exercisable for 60 days after termination	•   Options exercisable for 60 days after termination	•   Options exercisable for 60 days after termination	•   Options exercisable for 60 days after termination
	•   If disability, options exercisable for one year	•   If disability, options exercisable for one year	•   If disability, options exercisable for one year	•   If disability, options exercisable for one year
Death	•   No severance payments under employment agreement	•   No severance payments under employment agreement	•   No severance payments under employment agreement	•   No severance payments under employment agreement
	•   Awards vest	•   Awards vest	•   Awards vest	•   Awards vest
	•   Options exercisable for one year	•   Options exercisable for one year	•   Options exercisable for one year	•   Options exercisable for one year
Change in control	•   Awards vest	•   Awards vest	•   Awards vest	•   Awards vest
Involuntary termination or constructive termination within two	•   Three years of base salary	•   Two years of base salary	•   Two years of base salary	•   Two years of base salary
years, for Mr. Stilley, or one year, for Messrs. Manz, Cestero and	•   Three times target bonus	•   Two times target bonus	•   Two times target bonus	•   Two times target bonus
German, following change in control	•   Three years insurance	•   Two years insurance	•   Two years insurance	•   Two years insurance
	•   Options exercisable for 60 days after termination	•   Options exercisable for 60 days after termination	•   Options exercisable for 60 days after termination	•   Options exercisable for 60 days after termination
	•   Potential for reimbursement for Code Section 4999 excise taxes incurred as a result of payments subject to Code Section 280G following a change in control	•   Cap imposed on amount payable if cap minimizes adverse after-tax consequences due to imposition of Code Section 4999 excise taxes.	•   Cap imposed on amount payable if cap minimizes adverse after-tax consequences due to imposition of Code Section 4999 excise taxes.	•   Cap imposed on amount payable if cap minimizes adverse after-tax consequences due to imposition of Code Section 4999 excise taxes.
Termination for cause	•   All options and unvested restricted stock expire immediately	•   All options and unvested restricted stock expire immediately	•   All options and unvested restricted stock expire immediately	•   All options and unvested restricted stock expire immediately
	•   Right to earned and accrued compensation	•   Right to earned and accrued compensation	•   Right to earned and accrued compensation	•   Right to earned and accrued compensation
	•   No severance benefits	•   No severance benefits	•   No severance benefits	•   No severance benefits
Retirement on or after age 62 without change in control	•   Full vesting of awards	•   Full vesting of awards	•   Full vesting of awards	•   Full vesting of awards
	•   All options exercisable for one year after retirement	•   All options exercisable for one year after retirement	•   All options exercisable for one year after retirement	•   All options exercisable for one year after retirement
	•   No severance benefits under the employment agreement.	•   No severance benefits under the employment agreement.	•   No severance benefits under the employment agreement.	•   No severance benefits under the employment agreement.

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The change in control protections described above were agreed as part of the arms-length negotiations of our named executive officers’ respective employment agreements. Pride’s and our compensation committees believe that these protections provide the named executive officers, whose jobs would generally be at the greatest risk in a change in control, with a greater level of financial security in the event of a change in control. The compensation committees believe that this additional level of security is effective and necessary to ensure that these executives remain focused on our performance and the creation of stockholder value through the successful execution of any change in control transaction rather than on the potential uncertainties associated with their own employment. The compensation committees believe that our severance and change in control arrangements are competitive and are generally representative of typical executive severance pay packages.

Perquisites

In addition to the compensation described above, we expect that our compensation committee will provide each of our named executive officers with limited perquisites, including a car allowance and reimbursement of reasonable expenses for personal financial planning.

Other Benefits

Executives are eligible, with all employees, for various benefit plans, including the 401(k) plan and the Employee Stock Purchase Plan, among others.

Accounting and Tax Matters

Section 162(m) of the Internal Revenue Code denies a compensation deduction for federal income tax purposes for certain compensation in excess of $1 million paid to specified individuals. “Performance based” compensation meeting specified standards is deductible without regard to the $1 million cap. None of the compensation paid to our officers or employees in 2008 was subject to Section 162(m). Certain compensation payable to our officers under the employment agreements currently in effect and future payments of compensation approved by our compensation committee may be in excess of what is deductible under Section 162(m), and our compensation committee reserves the right to structure future compensation of our executive officers without regard for whether such compensation is fully deductible if, in the committee’s judgment, it is in the best interests of our company and our stockholders to do so.

Section 409A of the Internal Revenue Code generally provides that any deferred compensation arrangement which does not meet specific requirements regarding (i) timing of payouts, (ii) advance election of deferrals and (iii) restrictions on acceleration of payouts will result in immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. In addition, tax on the amounts included in income as a result of not complying with Section 409A will be increased by an interest component as specified by statute, and the amount included in income will also be subject to a 20% excise tax. In general, to avoid a Section 409A violation, amounts deferred may only be paid out on separation from service, disability, death, a specified time, a change-in-control (as defined by the Treasury Department) or an unforeseen emergency. Furthermore, the election to defer generally must be made in the calendar year prior to performance of services, and any provision for accelerated payout other than for reasons specified by the Treasury Department may cause the amounts deferred to be subject to early taxation and to the imposition of the excise tax.

Section 409A is broadly applicable to any form of deferred compensation other than tax-qualified retirement plans and bona fide vacation, sick leave, compensatory time, disability pay or death benefits, and may apply to certain awards under our long-term incentive plans. For example, restricted stock units and stock options may be classified as deferred compensation for this purpose.

The Treasury Department and Internal Revenue Service have issued final regulations implementing Section 409A, which are generally effective January 1, 2009. Based on these regulations, we intend to structure all of our compensation arrangements in a manner that complies with or is exempt from Section 409A.

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Executive Compensation

The following tables provide information regarding the compensation awarded to or earned by our named executive officers during the year ended December 31, 2008 as employees of Pride or us, and information regarding compensation awarded to or earned by Messrs. Cestero and German during the year ended December 31, 2007, as they are the only named executive officers of Seahawk that were employees of Pride during that year. All of the information included in these tables reflects compensation earned by the individuals for service with Pride. All references in the following tables to stock relate to awards of stock granted by Pride. Such amounts do not necessarily reflect the compensation such persons will receive following the spin-off, which could be higher or lower, because historical compensation was determined by Pride and future compensation levels will be determined based on the compensation policies, programs and procedures to be established by our compensation committee.

Summary Compensation Table

											Non-Equity
							Stock		Option		Incentive Plan		All Other
Name and Principal			Salary		Bonus(2)		Awards(3)		Awards(4)		Compensation(5)		Compensation(6)		Total
Position	Year(1)		($)		($)		($)		($)		($)		($)		($)
Randall D. Stilley		2008	$	151,442	$	—	$	—	$	—	$	163,297	$	5,769	$	320,508
President and Chief Executive Officer — Mat Jackup Division
Steven A. Manz		2008	$	42,692	$	—	$	—	$	—	$	34,526	$	1,385	$	78,603
Vice President and Chief Financial Officer — Mat Jackup Division
Alejandro Cestero		2008	$	230,427	$	7,112	$	127,565	$	—	$	142,234	$	13,800	$	521,138
Vice President and		2007	$	207,700	$	50,000	$	127,565	$	10,588	$	135,030	$	102,943	$	633,826
General Counsel — Mat Jackup Division
Oscar A. German		2008	$	196,225	$	—	$	78,570	$	—	$	118,057	$	14,211	$	407,063
Vice President,		2007	$	180,250	$	—	$	78,570	$	—	$	94,335	$	13,500	$	366,655
Human Resources — Mat Jackup Division

(1)	For named executive officers employed by Pride for less than a full year, amounts reflect the portion of the year such named executive officer was employed by Pride. For 2008, Mr. Stilley commenced employment with Pride on September 24, 2008 and Mr. Manz commenced employment with Pride on October 30, 2008. Messrs. Cestero and German commenced employment with Pride in April 2002 and March 2006, respectively.
(2)	Amounts in this column include discretionary bonuses paid to Mr. Cestero.
(3)	Amounts in this column represent the dollar amount recognized for financial statement reporting purposes with respect to the year for restricted stock awards granted in 2007 and 2006, in accordance with SFAS No. 123(R). Under SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. The grant date fair value of equity awards is calculated using the closing price of Pride’s common stock on the date of grant. The grant date fair values per share were $31.60, $28.68, $32.16 and $33.63 on April 3, 2006, January 3, 2007, December 14, 2007 and January 15, 2008, respectively.
(4)	Amounts in this column represent the dollar amount recognized for financial statement reporting purposes with respect to 2007 for stock options granted in 2007 and prior years, in accordance with SFAS No. 123(R). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures

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related to service-based vesting conditions. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted assumptions:

	2005
Dividend yield	0%
Expected volatility	30.9%
Risk-free interest rate	3.7%
Expected life	5.0 years
Weighted average grant-date fair value of stock options granted	$6.84

(5)

Amounts in this column reflect cash bonuses paid pursuant to performance metrics under Pride’s annual cash incentive plan for 2008 and 2007, including a 30% company-wide increase in bonuses paid in 2007 under Pride’s Annual Incentive Plan. In February 2008, Pride’s compensation committee increased the annual cash incentive bonuses for 2007 to all participating employees, including the named executive officers listed above, by 30% to recognize the implementation of its new focus on deepwater and other high specification drilling solutions and the completion of certain transactions. The 30% increase was also intended to more closely align Pride’s bonus payouts with trends in bonuses paid by other companies within Pride’s comparator group.

(6)

The amounts shown in this column reflect matching contributions under Pride’s 401(k) plan and for Mr. Cestero in 2007, $53,723 for education reimbursement and a tax gross-up of $35,720 for this education reimbursement.

Grants of Plan-Based Awards

The table below reports all grants of plan-based awards made by Pride to our named executive officers during 2008.

								All Other Stock
		Estimated Possible Payouts Under Non-Equity						Awards: Number of		Grant Date Fair
		Incentive Plan Awards(1)						Shares of Stock or		Value of Stock and
Name	Grant Date	Threshold ($)		Target ($)		Maximum ($)		Units(2)(3)		Option Awards(4)
Randall D. Stilley		$	37,861	$	151,442	$	302,884		—		—
Steven A. Manz		$	8,005	$	32,019	$	64,038		—		—
Alejandro Cestero		$	28,803	$	115,211	$	230,427		—		—
	1/15/08		—		—		—		7,800	$	262,314
Oscar A. German		$	24,528	$	98,113	$	196,225		—		—
	1/15/08		—		—		—		5,500	$	184,965

(1)	These columns represent awards under Pride’s annual cash incentive plan.
(2)	All awards in this column were made pursuant to Pride’s 1998 Long-Term Incentive Plan.
(3)	This column consists of restricted stock units, which vest in four equal annual installments beginning on the first anniversary of the grant date.
(4)	These amounts represent the full fair value of restricted stock granted to each executive during 2008 as calculated under SFAS No. 123(R).

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Outstanding Equity Awards at Fiscal Year-End

The following table shows unvested Pride restricted stock awards assuming a market value equal to the closing price of Pride common stock on December 31, 2008 of $15.98 per share. None of our executive officers held options to acquire Pride stock as of December 31, 2008.

	Stock Awards
			Number of Shares or		Market Value of Shares
			Units of Stock That Have		or Units of Stock That
Name	Grant Date		Not Vested (#)(1)		Have Not Vested ($)(2)
Alejandro Cestero		4/3/06		4,000	$	63,920
		1/3/07		6,300	$	100,674
		12/14/07		4,632	$	74,019
		1/15/08		7,800	$	124,644
Oscar A. German		4/3/06		2,250	$	35,955
		1/3/07		4,500	$	71,910
		1/15/08		5,500	$	87,890

(1)	This column consists of restricted stock awards, which vest in four equal annual installments beginning on the first anniversary of the grant date.
(2)	This column represents the closing price of Pride’s common stock on December 31, 2008 multiplied by the number of shares subject to restricted stock awards.

Option Exercises and Stock Vested

The following table sets forth certain information regarding Pride restricted stock vested during 2008. No stock options were exercised by our named executive officers in 2008.

	Stock Awards:
	Number of Shares
	Acquired on Vesting		Value Realized on
Name	(#)		Vesting ($)(2)
Alejandro Cestero		5,643	$	169,105
Oscar A. German		2,625	$	91,665

(1)	Represents the difference between the sale price of Pride’s common stock at exercise and the exercise price of the options.
(2)	Represents the value of shares on the vesting date based on the closing price of Pride’s common stock on such date.

Compensation of Directors

All of our directors in 2008 were employees of Pride and were not separately compensated for their service on our board. Directors who are also full-time officers or employees of our company or officers or employees of us will receive no additional compensation for serving as directors. We expect that all other directors will receive an annual retainer and a fee for each board or committee meeting attended, plus incurred expenses where appropriate. Such directors may also receive stock-based awards.

Our New Employee Benefit Plans

Employee Stock Purchase Plan.

We intend to adopt an employee stock purchase plan, which is expected to be approved by Pride as our sole stockholder before the spin-off and which will be compliant with the requirements of Internal Revenue Code Section 423. The following is a general description of the plan.

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Objectives.  The purpose of the plan will be to furnish eligible employees with an incentive to advance our best interests by providing a structured program through which such employees may voluntarily purchase shares of our common stock at a favorable price and upon favorable terms.

Eligibility.  Only employees of Seahawk Drilling, Inc. and our designated subsidiaries will be eligible to participate in the plan.

Administration.  The plan will be administered by our compensation committee.

How the Plan Operates.  Employees who wish to participate in the plan must elect to make payroll contributions during each purchase period under the plan. Purchase periods under the plan will be the six month periods beginning each January 1 and July 1 of each calendar year, or such other periods as designated by the committee. The first purchase period under the plan will commence on January 1, 2010. Enrollment in the plan constitutes a grant of the right to purchase common stock under the plan. At the end of each purchase period, participant payroll contributions will be used to purchase common stock at a price equal to 85% of the lower of the fair market value (as defined in the plan) (i) as of the first day of the purchase period or (ii) as of the last day of the purchase period. Only whole shares of common stock may be purchase under the plan. To the extent a participant’s contributions relate to fractional shares of common stock, such contributions will be carried forward to the next purchase period if the participant participates in such purchase period, or otherwise will be refunded to the participant.

Shares Available.  There will be 400,000 shares of common stock reserved for purchase under the plan. If the number of shares available are less than the number of shares that participants are scheduled to purchase at the end of a purchase period, participant purchases will be reduced proportionately so that the shares available for purchase under the plan are not exceeded.

Termination of Participation.  A participant may terminate their participation in the plan at any time. Upon such termination, the participant may choose to withdraw their payroll contributions made during the relevant purchase period or leave such contributions in the plan, in which case the contribution will be used to purchase shares at the end of the relevant purchase period.

The foregoing description of the plan does not purport to be complete and is qualified by reference to the plan.

Long-Term Incentive Plan.

We intend to adopt a 2009 long-term incentive plan, which is expected to be approved by Pride as our sole stockholder before the spin-off. The following is a general description of the plan.

Objectives.  The plan will be designed to attract and retain our officers and employees, to encourage the sense of proprietorship of such officers and employees and to stimulate the active interest of such persons in our development and financial success. These objectives are to be accomplished by making awards under the plan and thereby providing participants with a proprietary interest in our growth and performance.

Eligibility.  All of our employees and directors will be eligible for awards under the plan. The compensation committee will select the participants from time to time by the grant of awards.

Shares Available for Awards.  Thirteen percent of the issued and outstanding shares of common stock on the date of the spin-off will be available for awards granted, wholly or in part, in common stock (including rights or options which may be exercised for or settled in common stock) under the plan. All of the shares of common stock available for awards granted under the plan shall be available for awards of incentive stock options. No employee participant may be granted awards exercisable for more than 1 million shares of common stock or awarded cash pursuant to cash awards in excess of $2 million during any calendar year.

The board of directors may make certain adjustments in the event of any subdivision or consolidation of outstanding shares of common stock or declaration of a dividend payable in shares of common stock or capital reorganization or reclassification or other transaction involving an increase or reduction in the number of outstanding shares of common stock, our consolidation or merger with another corporation or entity or our

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adoption of a plan of exchange affecting the common stock or any distribution to holders of common stock of securities or property (other than normal cash dividends or dividends payable in common stock).

Administration.  The plan will be administered by our compensation committee. The committee and the board of directors will have full and exclusive power to interpret the plan and to adopt such rules, regulations and guidelines for carrying out the plan as they may deem necessary or proper, all of which powers shall be exercised in our best interests and in keeping with the objectives of the plan. Any decisions of the committee and the board of directors in the interpretation and administration of the plan will lie within their sole and absolute discretion and will be final, conclusive and binding on all parties concerned. The committee may delegate to our senior officers certain duties under the plan.

Awards.  At the discretion of the committee, awards may be in the form of (1) incentive stock options or nonqualified stock options, representing rights to purchase a specified number of shares of common stock at a specified price, (2) stock appreciation rights, representing rights to receive a payment, in cash or common stock, equal to the excess of the fair market value or other specified value of a number of shares of common stock on the rights’ exercise date over a specified strike price, (3) grants of common stock, (4) grants of restricted stock units denominated in common stock, (5) grants denominated in cash and (6) grants of awards subject to the attainment of one or more performance goals. The committee will determine the type or types of awards to be made to each participant under the plan and the terms, conditions and limitations applicable to each such award. Each award will be embodied in an award agreement containing such terms, conditions and limitations as determined by the committee in its sole discretion. An award agreement may include provisions for the repurchase by us of common stock acquired pursuant to the plan and the repurchase of a participant’s option rights under the plan.

The following is a brief description of these awards:

Stock Options.  An award may consist of a right to purchase a specified number of shares of common stock at a price specified by the committee in the award agreement or otherwise. A stock option may be in the form of an incentive stock option to a participant who is an employee, which in addition to being subject to applicable terms, conditions and limitations established by the committee, complies with Section 422 of the Internal Revenue Code of 1986, or, in the case of participants who are employees or directors, in the form of a non-qualified option. The term of an option may not extend more than ten years, and options may not include provisions that “reload” the option upon exercise. The plan authorizes the committee to specify the manner of payment of the option price. The option price will not be less than the fair market value of our common stock on the date of grant. Payment may be made in cash or shares of common stock, or by surrendering all or part of that or any other award, valued at fair market value (as defined in the plan) on the date of exercise, or any combination thereof. The committee is authorized to permit payment to be made by successive exercises by the participant. Certain restrictions may apply in the event shares of restricted stock are tendered as consideration for the exercise of a stock option.

Stock Appreciation Rights.  A stock appreciation right, or SAR, consists of a right to receive a payment, in cash or common stock, equal to the excess of the fair market value or other specified valuation of a specified number of shares of common stock on the date the SAR is exercised over a specified strike price as set forth in the award agreement. The strike price will not be less than the fair market value of our common stock on the date of grant. The exercise period for an SAR may not extend more than ten years, and an SAR may not include provisions that “reload” the option upon exercise. The committee is authorized to determine the terms and conditions of SAR grants, subject to certain limitations.

Stock Awards.  A stock award consists of common stock which is subject to transfer restrictions. All or part of any stock award may be subject to further conditions established by the committee and set forth in the award agreement. Any certificates evidencing shares of common stock issued in connection with a stock award may contain appropriate legends and restrictions describing the terms and conditions of the restrictions applicable thereto. Any stock award that is not subject to performance criteria will have a minimum restriction period of three years from the date of grant, and any award that is subject to performance criteria will have a minimum restriction period of one year from the date of grant. However, the Committee may provide (1) for earlier vesting upon a participant’s termination of employment by reason of death, disability or retirement, (2) that the three-

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year or one-year minimum restriction period, as applicable, will not apply to a stock award that is granted in lieu of salary or bonus to new employees to replace forfeited awards from a prior employer, or (3) that vesting of a stock award may occur incrementally over the three-year or one-year minimum restriction period, as applicable. Holders of stock awards will have rights to dividends paid on the common stock.

Restricted Stock Unit Awards.  Restricted stock unit awards consist of restricted grants of units denominated in common stock. A restricted stock unit is a unit evidencing the right to receive in specified circumstances one share of common stock or equivalent value in cash that is restricted or subject to forfeiture provisions. All or part of any restricted stock unit award may be subject to conditions established by the Committee and set forth in the award agreement. Any restricted stock unit award that is not subject to performance criteria will have a minimum restriction period of three years from the date of grant, and any award that is subject to performance criteria will have a minimum restriction period of one year from the date of grant. However, the Committee may provide (1) for earlier vesting upon a participant’s termination of employment by reason of death, disability or retirement, (2) that the three-year or one-year minimum restriction period, as applicable, will not apply to a stock award that is granted in lieu of salary or bonus to new employees to replace forfeited awards from a prior employer, or (3) that vesting of a stock award may occur incrementally over the three-year or one-year minimum restriction period, as applicable. The Committee may permit dividend equivalents with respect to restricted stock units.

Cash Awards.  The committee may also provide for cash awards, with the amount of the eventual payment subject to future service and such other restrictions and conditions as may be established by the committee and set forth in the award agreement.

Performance Awards.  A performance award consists of a right to receive an option, SAR, stock award, restricted stock unit award or cash award subject to the attainment of one or more performance goals. Performance awards may be qualified or unqualified under the Internal Revenue Code. The performance goals for qualified awards are set forth in the plan and may include one or more of the following:

•  stock price measures (including, among others, growth measures and total stockholder return);

•  earnings per share (actual or targeted growth);

•  earnings before interest, taxes, depreciation, and amortization, or EBITDA;

•  economic value added;

•  net income measures (including, among others, income after capital costs and income before or after taxes);

•  operating income;

•  cash flow measures;

•  return measures (including, among others, return on capital employed, return on equity, return on investment and return on assets);

•  operating measures (including, among others, productivity, efficiency, and scheduling measures);

•  expense targets (including, among others, finding and development costs and general and administrative expenses);

•  margins;

•  revenue or sales; and

•  corporate values measures (including, among others, diversity commitment, ethics compliance, environmental, and safety).

Payment of Awards; Deferral.  Generally, payment of awards may be made in the form of cash or common stock or combinations thereof and may include such restrictions as the committee determines including, in the case of common stock, restrictions on transfer and forfeiture provisions. The committee may,

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in its discretion, permit selected participants to elect to defer payments (i.e., in the form of installment payments or a future lump sum payment) of some or all types of awards in accordance with Section 409A of the Internal Revenue Code and procedures established by the committee. The committee may also permit the exercise or purchase of awards by use of the proceeds to be received from the sale of common stock issuable pursuant to an award.

Tax Withholding.  We have the right to deduct applicable taxes from any award payment and withhold, at the time of delivery or vesting of cash or shares of common stock, an appropriate amount of cash or number of shares of common stock or a combination thereof for payment of taxes or to take any such other action as may be necessary in our opinion to satisfy all obligations for withholding of such taxes. The committee may also permit withholding to be satisfied by the transfer to us of shares of common stock.

Assignability.  Generally, no award may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by a participant other than by will or the laws of descent and distribution, and during the lifetime of a participant, any award shall be exercisable only by him. Nevertheless, subject to the approval by the committee in its sole discretion, all or a portion of the awards granted to a participant under the plan that are not intended to be incentive stock options may be transferable by the participant, to the extent specified in such approval, to (1) the children or grandchildren of the participant, (2) a trust or trusts for the exclusive benefit of such immediate family members or (3) a partnership or partnerships in which such immediate family members have at least 99% of the equity, profit and loss interests; provided that the award agreement pursuant to which such awards are granted must expressly provide for transferability in a manner consistent with the plan.

Change in Control.  The occurrence of a “change in control” of us may result in acceleration of the vesting and exercisability of, and lapse of restrictions with respect to, all awards granted under the plan. For purposes of this provision, a “change in control” means, and will be deemed to have occurred on the date of the first to occur of, any of the following after the effective date of the spin-off:

•  any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes a beneficial owner, directly or indirectly, of securities of us representing 30% or more of the combined voting power of our then outstanding securities;

•  during any period of twelve consecutive months, individuals who constitute the members of our board of directors (the “Incumbent Directors”) as of the effective date of the spin-off cease for any reason other than due to death or disability to constitute at least a majority of the members of our board of directors, provided that any director who was nominated for election or was elected with the approval of at least a majority of the members of the board of directors who are at the time Incumbent Directors will be considered an Incumbent Director;

•  the consummation of any transaction (including any merger, amalgamation, consolidation or scheme of arrangement), the result of which is that less than 50% of the total voting power of the surviving corporation is represented by shares held by former shareholders of us prior to such transaction; or

•  we have sold, transferred or exchanged all or substantially all of our assets to another corporation or other entity or person.

Notwithstanding the above, the acceleration of vesting and exercisability of unmatured awards is limited to the extent necessary to avoid imposition of the golden parachute excise tax under Section 4999 of the Internal Revenue Code, unless contrary provisions are contained in the related award agreement or in any other agreement with the participant.

Section 409A of the Internal Revenue Code.  The plan and awards under the plan are intended to be exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code. To the extent that a plan provision or award would result in additional tax under Section 409A of the Internal Revenue Code, such provision or award shall be reformed and no action taken to be exempt from or comply with Section 409A of the Internal Revenue Code will be deemed to adversely affect a participant’s rights. Awards under the plan will be paid within the short-term deferral exception under Section 409A of the Internal

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Revenue Code or such other time as does not result in additional tax under Section 409A of the Internal Revenue Code.

Amendment.  The board of directors may amend, modify, suspend or terminate the plan for the purpose of meeting or addressing any changes in legal requirements or for any other lawful purpose, except that (1) no amendment or alteration that would impair the rights of any participant under any award previously granted to such participant may be made without such participant’s consent and (2) no amendment or alteration will be effective prior to approval by our stockholders to the extent such approval is determined by the board to be required by applicable laws, regulations or stock exchange requirements.

Effective Date; Term.  The plan will become effective as of the date of the approval of the board of directors. The plan may be terminated at any time by the board of directors by a majority vote.

The foregoing description of the plan does not purport to be complete and is qualified by reference to the plan.

Employment Agreements with Executive Officers

We are a party to the following employment agreements with our named executive officers: Mr. Stilley for a term ending October 29, 2011; Messrs. Cestero and Manz for terms ending October 30, 2010; and Mr. German for a term ending November 1, 2010. Each agreement is subject to automatic renewals for successive one-year terms until either party terminates the contract effective upon the anniversary date of the respective agreement, with at least one year’s advance notice. Our executives can be terminated by us at anytime for any reason and their rights to benefits upon such termination are summarized below.

Each executive’s employment agreement provides for an initial equity award as of the effective date of the spin-off comprised of restricted stock units of our common stock and options to purchase shares of our common stock. The beginning value of the initial equity award is $4,800,000 for Mr. Stilley, $1,000,000 for Mr. Manz, $690,000 for Mr. Cestero and $575,000 for Mr. German. This beginning value is adjusted up or down to reflect performance of a peer group of companies comprised of Hercules Offshore, Inc., Rowan Companies Inc., Nabors Industries Ltd., Patterson-UTI Energy Inc., Helmerich & Payne Inc., and Superior Energy Services, Inc., or any successor to the foregoing from October 28, 2008 through the effective date of the spin-off, such that the final value is as much as 40% more than the beginning value but no less than 75% of the beginning value. If the effective date of the spin-off had been July 31, 2009, based on the performance of the peer group through such date, the final value of the initial equity award to each executive would have been 25.8% higher than the beginning value noted above.

The eight companies used to set executive pay levels are different from the list of six peer companies listed above which were used to adjust long-term incentive compensation values in each executive’s employment agreement. The peer companies used to set pay levels are generally comparable to us in revenue size. The employment agreement peers, on the other hand, are generally much larger than our company, but are used for this purpose because the stock price performance of these companies is expected to be similar to that of our company based on direct similarities in their businesses and ours.

The initial equity award will be divided such that 50% of the initial equity award is in the form of stock options and 50% of the initial equity award is in the form of restricted stock units. For purposes of dividing the initial equity award, the stock options will be valued by the board of directors using a binomial option pricing model based on the volatility of the peer group and an exercise price equal to the volume-weighted average price of the common stock on the effective date of the spin-off, and the restricted stock units will be valued using the volume-weighted average price of the common stock on the effective date of the spin-off. Restricted stock units will vest, and the stock options will become exercisable:

•  in three installments of one-third of the underlying shares on the effective date of the spin-off and one-third of the underlying shares on each of the next two anniversaries of the effective date of the spin-off, provided that the executive continues to be employed by Seahawk on the vesting dates;

•  in full on a change in control of Seahawk;

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•  in full upon termination of the executive’s employment with Seahawk by reason of death or disability; and

•  in full on an involuntary or constructive termination of the executive.

The stock options will be subject to expiration on the earlier of (1) the tenth anniversary of the date of grant, (2) 60 days after the executive’s termination of employment other than due to cause or death, (3) one year after the executive’s termination of employment due to death, or (4) the date of termination of employment for cause.

Each executive’s employment agreement provides benefits to each executive upon termination or change in control, as described below. The severance payments described are subject to the requirement that the executive timely execute a release of claims against us.

Mr. Stilley

Involuntary Termination.  Pursuant to Mr. Stilley’s employment agreement, if he is terminated involuntarily for reasons not associated with a change in control and not due to cause, he will receive:

•  two full years of base salary at the rate in effect as of the termination;

•  an amount equal to two times the target award for our annual incentive compensation plan (if a target award is not specified for such year, the prior year’s target will be used, and, if none, the target will be 100% of base salary);

•  two years of health insurance benefits for himself and his immediate family; and

•  immediate vesting of his initial equity award.

The employment agreement treats specified constructive terminations as an involuntary termination of Mr. Stilley.

Change in Control.  The employment agreement also provides Mr. Stilley protection in the event of a change in control. A “change in control” is generally defined to include the acquisition by a person of 30% or more of our voting power, specified changes in a majority of the board of directors, a merger resulting in existing stockholders having less than 50% of the voting power in the surviving company and sale or liquidation of our company.

If Mr. Stilley has an involuntary termination of employment with us within two years after a change in control, he will be entitled to receive in a lump sum payment:

•  three full years of base salary;

•  three times the target bonus award for the year of termination (if a target award is not specified for such year, the prior year’s target will be used, and, if none, the target will be 100% of base salary);

•  health insurance continuation for himself and his immediate family for three years or until his reemployment, whichever is earlier; and

•  immediate vesting of his initial equity award.

The employment agreement also provided that we will reimburse Mr. Stilley for Code Section 4999 excise taxes incurred by him as a result of payments subject to Code Section 280G following a change in control. However, such payments to Mr. Stilley would instead be capped to prevent any Section 4999 excise taxes, if the cap would not reduce the payments to Mr. Stilley by 10% or more.

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Messrs. Manz, Cestero and German

Pursuant to their employment agreements, Messrs. Manz, Cestero and German generally will receive the same benefits as Mr. Stilley with the following exceptions:

•  In the event of involuntary termination not associated with a change in control and not due to cause, the executive will receive (a) one full year of base salary, (b) one times the target award for our annual incentive compensation (if a target award is not specified for the year of termination, the prior year’s target will be used, and, if none, the target will be 75% of base salary for Mr. Manz and 50% of base salary for Messrs. Cestero and German) and (c) one year of health insurance for himself and his immediate family.

•  In the event of an involuntary termination within one year after a change in control, the executive will receive (a) two full years of base salary, (b) a bonus equal to two times the target award for the year of termination (if a target award is not specified for such year, the prior year’s target will be used, and, if none, the target will be 75% of base salary for Mr. Manz and 50% of base salary for Messrs. Cestero and German) and (c) health insurance for himself and his immediate family for two years or until reemployment.

•  The executive will not be reimbursed for any taxes incurred by him as a result of payments following a change in control.

Covenants

In addition, the employment agreements provide a noncompete and non-solicitation clause for two years for Mr. Stilley and one year for Messrs. Manz, Cestero and German after termination (voluntary or involuntary) assuming that it was not due to a change in control. In the event of a change in control, the noncompete and non-solicitation clause does not apply. The employment agreements bind each executive to an indefinite confidentiality clause with respect to our confidential information. The employment agreements obligate each executive to assist us with future legal proceedings for up to two years after termination of employment.

Potential Payments Table

The information below describes and quantifies certain compensation that would become payable if the named executive’s employment were terminated on December 31, 2008, assuming the spin-off had been effected prior to that date. The following forward-looking table includes disclosure about our named executive officers’ rights under plans and employment agreements approved for such named executive officers following the spin-off and the other assumptions described in the table and footnotes below. In the table below, accelerated stock options, accelerated restricted stock, severance payments and tax gross-up payments are expressed as a lump sum payment; medical coverage is expressed as the present value of future payments expected to be made over the number of years such named executive is entitled to coverage; and disability benefits are expressed as the first annual payment amount following termination. These benefits are in addition to benefits available generally to salaried employees, such as distributions under our 401(k) savings plan, disability benefits and accrued vacation pay. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different than the estimates presented in the table. Factors that could affect these amounts include the timing during the year of any such event and the executive’s age. For additional information about benefits due to executives in

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the event of termination or change in control, see “Compensation Discussion and Analysis — Overview of Compensation — Severance and Change in Control Arrangements.”

Event	Stilley		Manz		Cestero		German
Involuntary Termination Not for Cause and Constructive Termination
Accelerated equity awards(1)	$	2,400,000	$	500,000	$	345,000	$	287,500
Medical Coverage	$	18,000	$	13,190	$	13,213	$	13,190
Severance Payments	$	2,500,000	$	525,000	$	427,500	$	360,000
Death
Accelerated equity awards(1)	$	2,400,000	$	500,000	$	345,000	$	287,500
Disability
Accelerated equity awards(1)	$	2,400,000	$	500,000	$	345,000	$	287,500
Medical coverage	$	18,000	$	13,190	$	13,213	$	13,190
Disability benefits(2)	$	120,000	$	120,000	$	120,000	$	120,000
Termination for Cause
Additional Benefits		N/A		N/A		N/A		N/A
Change in Control
Accelerated equity awards(1)	$	2,400,000	$	500,000	$	345,000	$	287,500
Change in Control with Involuntary Termination or Constructive Termination
Accelerated equity awards(1)	$	2,400,000	$	500,000	$	345,000	$	287,500
Medical coverage	$	27,300	$	26,756	$	26,804	$	26,756
Severance payments(3)	$	3,750,000	$	1,050,000	$	855,000	$	720,000
Tax gross-up payments (280G calculation)	$	2,549,851		N/A		N/A		N/A

(1) Amounts for accelerated equity awards reflect only the beginning value of the initial award of restricted stock units as of the effective date of the spin-off, as described in “— Employment Agreements with Executive Officers” above. Messrs. Cestero and German are expected to hold additional Seahawk restricted stock units as a result of their pre-spin-off ownership of Pride restricted stock and restricted stock units. If the Pride restricted stock and restricted stock units held by these executives had been accelerated on December 31, 2008, the value of such acceleration would have been $195,755 for Mr. Cestero and $363,257 for Mr. German (based on Pride’s December 31, 2008 closing stock price of $15.98 per share).

(2)	Disability benefits consist of long-term disability coverage of 60% of monthly pay after 90 days of disability, up to $10,000 a month.
(3)	Compensation payable to Messrs. Manz, Cestero and German upon involuntary termination or constructive termination after a Change in Control would be reduced from the amount shown if the reduction minimizes adverse after-tax consequences due to imposition of Code Section 4999 excise taxes.

Treatment of Stock-Based Awards

In recent years, employees of Pride (including certain of our executive officers) have been eligible to participate in Pride’s 1998 Long-Term Incentive Plan and Pride’s 2007 Long-Term Incentive Plan. Under these plans, Pride’s Compensation Committee has granted certain stock-based awards, including restricted stock units, shares of restricted stock and stock options, to Remaining Employees and Transferring Employees. The outstanding stock-based awards held by Remaining Employees and Transferring Employees at the time of the spin-off will be treated as set forth below. We expect to issue approximately 200,000 restricted stock units to our employees to replace unvested Pride stock-based awards being forfeited by them. The expected equity ownership of our named executive officers after the spin-off is described in “Management — Security Ownership of Executive Officers and Directors.” The equity ownership of our other employees is expected to be less than 1% in the aggregate of our outstanding shares of common stock after the spin-off.

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Restricted Stock Units Granted in 2009

Pride restricted stock units granted in 2009 and held by Remaining Employees will remain subject to the vesting schedule and other terms of such awards following the spin-off, except that the number of restricted stock units granted in 2009 and held by the Remaining Employees will be increased by a number of additional units equal to (x) the value of the Seahawk common stock (calculated using the volume-weighted average price on the date of the spin-off) that would have been distributed in the spin-off to a holder of a number of shares of Pride common stock equal to the number of restricted stock units granted in 2009 and held by the employee on the record date, divided by (y) the value of a share of Pride common stock (calculated using the volume-weighted average price on the date of the spin-off). Remaining Employees will not otherwise receive any distribution in the spin-off in respect of restricted stock units granted in 2009.

Transferring Employees likewise will not receive any distribution in the spin-off in respect of restricted stock units granted in 2009. Pride restricted stock units granted in 2009 and held by Transferring Employees will be forfeited as a result of the termination of their employment with Pride. However, such Transferring Employees will be granted a replacement award of Seahawk restricted stock units, with the number of such Seahawk restricted stock units equal to (x) divided by (y) plus (z), where (x) is the volume-weighted average price of Pride common stock on the date of the spin-off multiplied by the number of shares of Pride common stock subject to the forfeited restricted stock units, (y) is the volume-weighted average price of Seahawk common stock on the date of the spin-off, and (z) is the number of shares of Seahawk common stock that would have been distributed in the spin-off with respect to the number of shares of Pride common stock covered by the forfeited restricted stock units. Such replacement awards will be subject to a vesting schedule that corresponds to the remaining vesting schedule of the forfeited award on the date of the spin-off.

Restricted Stock Units Granted Prior to 2009

Pride restricted stock units granted prior to 2009 and held by Remaining Employees generally will remain unchanged by the spin-off and will continue to be subject to the vesting schedule and other terms of such awards. In connection with the spin-off, Remaining Employees will not receive Seahawk common stock but will receive a cash payment equal to the value of the Seahawk common stock (calculated using the volume-weighted average price on the date of the spin-off) that would have been distributed in the spin-off to a holder of a number of shares of Pride common stock equal to the number of restricted stock units granted prior to 2009 and held by the employee on the record date.

Transferring Employees likewise will receive the same cash payment in the spin-off as Remaining Employees. Pride restricted stock units granted prior to 2009 and held by Transferring Employees will thereafter be forfeited as a result of the termination of their employment with Pride. However, such Transferring Employees will be granted a replacement award of Seahawk restricted stock units, with the number of such Seahawk restricted stock units equal to (x) the volume-weighted average price of Pride common stock on the date of the spin-off multiplied by the number of shares of Pride common stock subject to the forfeited Pride restricted stock units, divided by (y) the volume-weighted average price of Seahawk common stock on the date of the spin-off. Such replacement awards will be subject to a vesting schedule that corresponds to the remaining vesting schedule of the forfeited award on the date of the spin-off.

Restricted Stock

Pride restricted stock held by Remaining Employees will remain unchanged by the spin-off and will continue to be subject to the vesting schedule and other terms of such awards. Remaining Employees will receive a distribution in the spin-off of 1/15 of a fully vested share of Seahawk common stock for each share of Pride restricted stock they own on the record date.

Transferring Employees likewise will receive a distribution in the spin-off of 1/15 of a fully vested share of Seahawk common stock for each share of Pride restricted stock they own on the record date. The Pride restricted stock they hold will thereafter be forfeited as a result of the termination of their employment with Pride. However, such Transferring Employees will be granted replacement awards of Seahawk restricted stock units, with the number of such Seahawk restricted stock units equal to (x) the volume-weighted average price

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of Pride common stock on the date of the spin-off multiplied by the number of forfeited shares of Pride restricted stock, divided by (y) the volume-weighted average price of Seahawk common stock on the date of the spin-off. Such replacement awards will be subject to a vesting schedule that corresponds to the remaining vesting schedule of the forfeited award on the date of the spin-off.

Stock Options

All Pride stock options outstanding at the time of the spin-off will remain stock options to purchase Pride’s common stock, subject to the terms of the grant of such options, but Pride’s compensation committee has adjusted the number of shares subject to, and the exercise price of, each stock option using a formula so as to preserve the intrinsic value of each option to the holder, taking into account any change in the value of shares of Pride’s common stock resulting from the spin-off. This formula requires adjustments to the exercise price and number of underlying option shares such that for each option:

•  on a share-by-share comparison, the pre-spin-off ratio of the exercise price to the fair market value of the Pride shares subject to the option immediately before the spin-off will be equal to the post-spin-off ratio of the exercise price to the fair market value of the Pride shares subject to the option immediately after the spin-off, and

•  the pre-spin-off spread, defined as the difference between the aggregate fair market value of the Pride shares subject to the option immediately before the spin-off and the aggregate exercise price, will be equal to the post-spin-off spread, defined as the difference between the aggregate fair market value of the Pride shares subject to the option immediately after the spin-off over the aggregate exercise price.

To illustrate the operation of this formula, assume an employee holds an option to acquire 1,000 shares of Pride stock at an exercise price of $50 per share. Further assume that immediately prior to the spin-off, the market price of a share of Pride stock (including the value of the distribution of Seahawk stock for that share) is $100, and that immediately after the spin-off the market price of a share of Pride stock is $80 (these hypothetical stock prices are provided for ease of computation and are not indicative of expected stock prices before or after the spin-off). In this example, the pre-spin-off ratio is 0.5, calculated as $50 / $100, and the pre-spin-off spread is $50,000, calculated as (1,000 * $100) — (1,000 * $50). In order to preserve the pre-spin-off ratio, the exercise price must be reduced to $40, calculated by multiplying the post-spin-off market price of Pride stock by the ratio ($80 * 0.5). In order to preserve the pre-spin-off spread, the number of Pride shares subject to the option must be increased to 1,250, calculated by dividing the spread ($50,000) by the difference between the post-spin-off market price of Pride stock and the new post-spin-off exercise price ($80 - $40).

With respect to Transferring Employees, all such options are already vested. Option awards held by Transferring Employees will expire according to the terms of the grant of such options because the Transferring Employees are terminating their employment with Pride. The option grants generally provide that expiration will occur 60 days after termination of employment with Pride. The Seahawk board of directors may, in its discretion, make new or replacement awards with respect to such forfeited options.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Before the spin-off, all of the outstanding shares of our common stock are and will be owned beneficially and of record by Pride. The following table sets forth information with respect to the expected beneficial ownership of our common stock immediately following completion of the spin-off (based on beneficial ownership of Pride common stock as of August 4, 2009 and assuming that 1/15 of a share of Seahawk common stock is distributed for each share of Pride common stock) by (1) each person who, to our knowledge, will beneficially own more than 5% of our common stock, (2) our directors and director nominees and the persons named in the “Summary Compensation Table” above and (3) all of our current executive officers and directors as a group. Unless otherwise indicated, all of such stock will be owned directly, and the indicated person or entity will have sole voting and investment power.

	Number of Shares
Name and Address of Beneficial Owner	Beneficially Owned		Percent of Class
Seadrill Limited(1)		1,100,000		9.5	%
P.O. Box HM 1593 Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road Hamilton HM 08 Bermuda
MHR Fund Management LLC(2)		855,466		7.4	%
40 West 57th Street, 24th Floor New York, New York 10019
FMR LLC(3)		702,124		6.1	%
82 Devonshire Street Boston, Massachusetts 02109
Randall D. Stilley		—			*
Steven A. Manz		300			*
Alejandro Cestero		2,140			*
Oscar A. German		1,557			*
Stephen A. Snider		—			*
Richard J. Alario		—			*
Mark E. Baldwin		—			*
Franklin Myers		—			*
John T. Nesser, III		—			*
Edmund P. Segner, III		—			*
All directors and executive officers (10 individuals)		3,997			*

*  Less than 1% of issued and outstanding shares of our common stock.

(1) Based solely on a Schedule 13D filed on account of ownership of Pride common stock with the SEC on July 30, 2009 by Seadrill Limited, Hemen Holding Limited, the principal shareholder of Seadrill, and John Fredriksen, who indirectly controls Hemen and is the Chairman, President and a Director of Seadrill. The Schedule 13D reports that (1) on July 15, 2009, Seadrill terminated a forward contract with Nordea Bank Finland Plc, whereby Seadrill had agreed to purchase 8,229,200 shares of Pride common stock from Nordea on July 18, 2009, for a purchase price of $285.6 million; (2) on July 15, 2009, Seadrill entered into a new forward contract with Nordea, whereby Seadrill agreed to purchase 8,229,200 shares of Pride common stock from Nordea on July 20, 2009, for a purchase price of $201.6 million; (3) on July 16, 2009, Seadrill terminated an additional forward contract, whereby Seadrill had agreed to purchase 8,070,800 shares of Pride common stock from DnB NOR Bank ASA on July 20, 2009, for a purchase price of $291.4 million; (4) on July 15, 2009, Seadrill entered into an additional new forward contract, whereby Seadrill agreed to purchase 8,070,800 shares of Pride common stock from DnB NOR on September 3, 2009, for a purchase price of $203.8 million; and (5) Seadrill directly held 200,000 shares of Pride common stock. In the Schedule 13D, the reporting persons report shared voting and dispositive power of all 16,500,000 Pride shares beneficially owned by them. The beneficial ownership noted in the table

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assumes that the terms of the forward contracts entitle Seadrill to a distribution of shares of Seahawk common stock in the spin-off.

(2) Based solely on a Schedule 13G/A filed on account of ownership of Pride common stock with the SEC on February 13, 2009 by MHR Institutional Partners III LP (“Institutional Partners III”), MHR Institutional Advisors III LLC (“Institutional Advisors III”), MHR Fund Management LLC (“Fund Management”) and Mark H. Rachesky, M.D. (“Dr. Rachesky”) relating to an aggregate of 12,832,000 Pride shares held for the accounts of MHR Capital Partners Master Account LP (“Master Account”), MHR Capital Partners (100) (“Capital Partners”) LP and Institutional Partners III. MHR Advisors LLC (“Advisors”) is the general partner of each of Master Account and Capital Partners and, in such capacity, may be deemed to beneficially own the shares of Pride common stock held for the accounts of each of Master Account (609,626 Pride shares) and Capital Partners (73,120 Pride shares). Institutional Advisors III is the general partner of Institutional Partners III and, in such capacity, may be deemed to beneficially own the shares of Pride common stock held for the account of Institutional Partners III (12,149,254 Pride shares). Fund Management is an affiliate of and has an investment management agreement with Master Account, Capital Partners and Institutional Partners III and other affiliated entities, pursuant to which it has the power to vote or direct the vote and to dispose or to direct the disposition of the shares of Pride common stock and, accordingly, Fund Management may be deemed to beneficially own the shares of Pride common stock held for the account of each of Master Account, Capital Partners and Institutional Partners III (an aggregate of 12,832,000 Pride shares). Dr. Rachesky is the managing member of Advisors, Institutional Advisors III and Fund Management and, in such capacity, may be deemed to beneficially own the shares of Pride common stock held for the accounts of each of Master Account, Capital Partners and Institutional Partners III (an aggregate of 12,832,000 Pride shares).

(3) Based solely on an amendment to Schedule 13G/A filed on account of ownership of Pride common stock with the SEC on February 17, 2009 by FMR LLC, on behalf of itself and Mr. Edward C. Johnson III, chairman of FMR LLC. Includes 8,896,563 Pride shares beneficially owned by Fidelity Management & Research Company (“Fidelity”), a wholly owned subsidiary of FMR LLC, which acts as an investment adviser to various registered investment companies (the “Fidelity Funds”), 417,700 Pride shares beneficially owned by Pyramis Global Advisors Trust Company (“PGATC”), a wholly owned subsidiary of FMR LLC, which acts as an investment manager of institutional accounts owning such shares, and 1,217,600 Pride shares beneficially owned by Fidelity International Limited (“FIL”). Each of Mr. Johnson and FMR LLC, through his or its control of Fidelity, and the Fidelity Funds has sole dispositive power with respect to 8,896,563 Pride shares and, through the control of PGATC, has sole dispositive power with respect to 417,700 Pride shares and sole voting power with respect to 366,300 Pride shares. Each of the Fidelity Funds’ boards of trustees has sole voting power over the shares held by each fund. Members of Mr. Johnson’s family, who together own approximately 49% of the voting power of FMR LLC and are party to a shareholders’ agreement, may be deemed to be part of a controlling group with respect to FMR LLC. Partnerships controlled by members of Mr. Johnson’s family or trusts for their benefit, which together own approximately 47% of the voting power of FIL, may be deemed to be part of a controlling group with respect to FIL. FMR LLC and FIL are of the view that they are not acting as a “group” for purposes of Section 13(d) under the Exchange Act and that their Pride shares need not be aggregated for purposes of Section 13(d).

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

For a description of certain risks related to the transactions with Pride described below, see “Risk Factors — Risks Related to Our Separation from Pride.” The terms of our separation from Pride, the related agreements and other transactions with Pride were determined in the context of a parent-subsidiary relationship and thus may be less favorable to us than the terms we could have obtained from an unaffiliated third party.

Agreements Between Us and Pride

We entered into various agreements with Pride that will effect our separation from Pride and govern the relationship between Pride and our company after the spin-off. We have provided below a summary description of the material terms and conditions of the master separation agreement and several other important agreements we entered into, including a transition services agreement, tax sharing agreement and employee matters agreement. We encourage you to read the full text of these agreements, which have been filed with the SEC as exhibits to the registration statement of which this information statement is a part.

Master Separation Agreement

The master separation agreement between us and Pride governs our acquisition of Pride’s mat-supported jackup rig business, the subsequent distribution of our shares to Pride stockholders and other matters related to Pride’s relationship with us.

The Separation.  To effect the separation, Pride will effect a series of transactions which will cause us to succeed to the assets of its mat-supported jackup rig business as described in this information statement (which assets may include stock or other equity interests of Pride subsidiaries). We will also succeed to, and have agreed to perform and fulfill, the liabilities described below. In particular, the master separation agreement generally provides that, upon completion of the separation:

•  we will directly or indirectly hold:

•  all 20 of Pride’s mat-supported jackup rigs,

•  all of the assets owned by Pride or any of its subsidiaries which are reflected on our most recent pro forma combined balance sheet set forth in this information statement, or subsequently-acquired or created assets that would have been reflected on a later-dated balance sheet, and

•  all other assets held by us, Pride, or any of our respective subsidiaries used primarily in or that primarily relate to our business on or prior to the date of the spin-off, subject to certain exceptions;

•  we will be subject to:

•  all liabilities to the extent relating to, arising out of or resulting from Pride’s operations in the Gulf of Mexico (including the U.S. and Mexico regions of the Gulf of Mexico) and all liabilities of Seahawk Drilling, Inc. (and the subsidiaries of Seahawk Drilling, Inc. after giving effect to the transfers of subsidiaries undertaken in connection with the separation, which generally consist of the entities in which Pride’s operations in the Gulf of Mexico historically have been conducted); other than, in each case, (A) liabilities arising out of any operations of Pride conducted after the spin-off, (B) liabilities associated with the Pride Tennessee and Pride Wisconsin to the extent relating to, arising out of or resulting from operations after December 31, 2008, and (C) liabilities associated with the deepwater drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs,

•  all outstanding liabilities reflected on our most recent pro forma, as adjusted combined balance sheet set forth in this information statement, or subsequently-incurred or accrued liabilities that would have been reflected on a later-dated balance sheet,

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•  liabilities to the extent relating to, arising out of or resulting from our post-spin-off operations, or any assets owned by us or our subsidiaries as of or after the spin-off, and

•  liabilities under the master separation agreement and other ancillary agreements.

We will also be responsible for any liabilities, costs or expenses related to, arising out of or resulting from Pride’s current FCPA investigation to the extent related to Pride’s and our operations in Mexico (subject to certain exceptions), except that we will not be liable for any fine, penalty or profit disgorgement payable to the United States government in excess of $1 million, and we will not be allocated any fees or expenses of third party advisors retained by Pride. We will be responsible for all costs and expenses resulting from the appointment of a compliance monitor or consultant or any similar remedy for our company.

The master separation agreement contemplates that the amount of our current assets less current liabilities as of May 31, 2009 will be determined prior to the date of the spin-off, and if such amount is less than $85 million, Pride will pay us the difference. If such amount exceeds $85 million, we will pay Pride the difference. Our current assets less current liabilities as of May 31, 2009 has been agreed, and as a result of the adjustment described above, Pride will pay us approximately $47.3 million in cash before the closing of the spin-off.

The master separation agreement provides that capital stock, assets or liabilities that cannot legally be transferred or assumed prior to the spin-off will be transferred or assumed as soon as practicable following receipt of all necessary consents of third parties and regulatory approvals. In any such case, the master separation agreement provides that the party retaining such capital stock, assets or liabilities will hold the capital stock or assets in trust for the use and benefit of, or retain the liabilities for the account of, the party entitled to the capital stock, assets or liabilities (at the expense of that party), until the transfer or assumption can be completed. The party retaining the capital stock, assets or liabilities will also take any action reasonably requested by the other party in order to place the other party in the same position as would have existed if the transfer or assumption had been completed.

Except as set forth in the master separation agreement, no party is making any representation or warranty as to the companies, capital stock, assets or liabilities transferred or assumed as a part of the separation and any assets that may be transferred will be transferred on an “as is, where is” basis. As a result, we and Pride each have agreed to bear the economic and legal risks that any conveyances of capital stock or assets are insufficient to vest good and marketable title to such capital stock or assets, as the case may be, in the party who should have title under the master separation agreement.

The Spin-Off.  The master separation agreement provides that the separation and distribution are subject to several conditions that must be satisfied or waived by Pride, in its sole discretion, including:

•  Pride will have received an opinion of counsel from Baker Botts L.L.P. satisfactory to Pride substantially to the effect that for U.S. federal income tax purposes, the spin-off and certain related transactions will qualify under Sections 355 and/or 368 of the Code;

•  the private letter ruling issued to Pride by the IRS regarding the tax-free status of the distribution and certain related transactions shall remain effective;

•  the registration statement of which this information statement is a part will have become effective under the Exchange Act;

•  the actions and filings necessary or appropriate to comply with federal and state securities laws will have been taken;

•  the NASDAQ Global Select Market will have approved for listing the shares of our common stock to be issued in the spin-off, subject to official notice of issuance;

•  the separation of our business from Pride’s and the distribution of Seahawk shares in the spin-off will not violate or result in a breach of any law or any material agreements of Pride;

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•  no court or other order or other legal or regulatory restraint will exist that prevents, or materially limits the benefits of, completion of the separation or distribution;

•  all consents and governmental or other regulatory approvals required in connection with the transactions contemplated by the master separation agreement shall have been received and shall remain in full force and effect;

•  each of the ancillary agreements shall have been entered into before the spin-off and shall not have been materially breached by the parties; and

•  the spin-off will not violate the terms of any Pride debt agreement.

Surety Instruments and Guarantees.  The master separation agreement requires that we and Pride use our commercially reasonable efforts to terminate (or have us or one of our subsidiaries substituted for Pride, or Pride or one of its subsidiaries substituted for us, as applicable, under) all existing guarantees by one party of obligations relating to the business of the other party, including financial, performance and other guarantee obligations. We also have agreed with Pride that each party will use its commercially reasonable efforts to have the other party substituted under letters of credit or other surety instruments issued by third parties for the account of either party or any of its subsidiaries issued on behalf of the other party’s business. In the event Seahawk is unable to be substituted under existing surety instruments or issue replacement surety instruments, Seahawk will otherwise reach agreement with Pride prior to the spin-off to satisfy any requirements for surety instruments and will indemnify Pride for the value of the applicable instruments.

Insurance.  The master separation agreement provides that, to the extent permitted by the terms of the applicable policy, we and our directors, officers and employees will continue to have (as successors-in-interest) all rights we and they had immediately prior to the spin-off, with respect to events that occurred prior to the spin-off, as a subsidiary, affiliate, division, director, officer or employee of Pride under any Pride insurance policy with a third-party carrier. Pride will have no liability if any insurance policy is terminated, is not renewed or extended, or is insufficient or unavailable.

Intellectual Property.  In connection with the separation, we will assign to Pride all intellectual property rights to the extent not exclusively used in our business, and Pride will grant us a perpetual, nonexclusive, royalty-free license in all such intellectual property. We will retain all rights in our trademarks, and in intellectual property exclusively used in our business and other specified intellectual property.

Access to Information.  Subject to applicable confidentiality provisions and other restrictions, we and Pride will each give each other any information in that company’s possession that the requesting party reasonably needs (1) to comply with requirements imposed on the requesting party by a governmental authority, (2) for use in any proceeding to satisfy audit, accounting, insurance claims, regulatory, litigation or other similar requirements, (3) to comply with its obligations under the master separation agreement and other ancillary agreements or (4) for any other significant business need as mutually determined in good faith by the parties.

Non-Compete.  Under the terms of the master separation agreement, we will generally not be permitted to own or operate any rig with a water depth rating of more than 500 feet, subject to certain exceptions. These provisions remain in effect until the third anniversary of the consummation of the spin-off.

Nonsolicitation of Employees.  In the master separation agreement we have agreed to refrain from directly soliciting, recruiting or hiring employees of Pride without Pride’s consent for one year after the spin-off. This prohibition will not apply to general recruitment efforts carried out through public or general solicitation.

Indemnification and Release.  In general, under the master separation agreement, we have agreed to indemnify Pride and its representatives and affiliates against certain liabilities from third party claims to the extent relating to, arising out of or resulting from:

•  our failure to discharge any of our liabilities or any of our agreements;

•  the operation of our business, whether before or after the spin-off;

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•  any untrue statement or alleged untrue statement of a material fact or material omission or alleged material omission in the registration statement of which this information statement is a part, other than certain information relating to Pride.

In general, under the master separation agreement, Pride has agreed to indemnify us and our representatives and affiliates against certain liabilities from third party claims to the extent relating to, arising out of or resulting from:

•  the failure of Pride to discharge any liability of Pride or any Pride agreement that is not transferred to us;

•  the operation of Pride’s business (other than our business), whether before or after the spin-off;

•  any untrue statement or alleged untrue statement of a material fact or material omission or alleged material omission in the registration statement of which this information statement is part, only for certain information relating to Pride.

Under the master separation agreement, we generally release Pride and its affiliates, agents, successors and assigns, and Pride generally releases us and our affiliates, agents, successors and assigns, from any liabilities between us or our subsidiaries on the one hand, and Pride or its subsidiaries on the other hand, arising from acts or events occurring on or before the spin-off, including acts or events occurring in connection with the separation or distribution. The general release does not apply to obligations under the master separation agreement or any ancillary agreement or to specified ongoing contractual arrangements.

Termination.  The master separation agreement provides that it may be terminated at any time before the spin-off by Pride in its sole discretion.

Transition Services Agreement

We have entered into a transition services agreement with Pride. Under the agreement, Pride will provide us with specified support services during a transitional period of up to two years following the spin-off. Pride may provide specified accounting, treasury, hotline, human resources, information technology and systems, purchasing and supply vessel services and office and yard space access in exchange for agreed fees set forth in the transition services agreement. We may generally terminate the service on 30 days advance notice, subject to payment of any increased or stranded costs associated with early termination.

The Pride Tennessee and Pride Wisconsin are two independent-leg jackup rigs that will remain assets of Pride. The current customer contracts applicable to these rigs will remain with the Seahawk subsidiary that is party to such contracts. Pursuant to an agreement we entered into with Pride, all benefits and risks of these customer contracts will be passed through to Pride until their completion, which we expect to occur in August 2009 for the Pride Wisconsin and March 2010 for the Pride Tennessee. These contracts may be extended, renewed or replaced at Pride’s request.

Only in limited circumstances will Pride be liable to us with respect to the provision of services under the transition services agreement.

Tax Sharing Agreement

We entered into a tax sharing agreement with Pride that governs Pride’s and our respective rights, responsibilities and obligations with respect to taxes and tax benefits, the filing of tax returns, the control of audits, and other tax matters. References in this summary description of the tax sharing agreement to the terms “tax” or “taxes” mean taxes as well as any interest, penalties, additions to tax or additional amounts in respect of such taxes.

We and our eligible subsidiaries currently join with Pride in the filing of a consolidated return for U.S. federal income tax purposes and also join with Pride in the filing of certain consolidated, combined, and unitary returns for state, local, and foreign tax purposes. However, for periods (or portions thereof) beginning

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after the spin-off, we will not join with Pride in the filing of any federal, state, local or foreign consolidated, combined or unitary tax returns.

Under the tax sharing agreement, for tax periods (or portions thereof):

•  ending prior to January 1, 2009, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s operations in the Gulf of Mexico and our and our predecessor’s operations wherever conducted (other than income taxes associated with certain deepwater drilling services contracts), and Pride will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s other businesses;

•  beginning on or after January 1, 2009 and ending on or prior to the date of the spin-off, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to the mat-supported jackup rig business, and Pride will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s businesses other than the mat-supported jackup rig business; and

•  beginning after the date of the spin-off, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to us and our subsidiaries.

Generally, we must reimburse Pride, and Pride must reimburse us, for the use by one party of tax benefits allocated (under rules consistent with how taxes are allocated) to the other party. However, we will have no obligation to reimburse Pride, and Pride will have no obligation to reimburse us, for tax benefits arising in and used during tax periods beginning prior to the date of the spin-off, unless (i) such tax benefits result from a tax proceeding resolved after the date of the spin-off and (ii) the use of such tax benefits does not reduce or defer the use of the other party’s other tax benefits or result in an increase in the other party’s taxes.

Notwithstanding the tax sharing agreement, under U.S. Treasury Regulations, each member of a consolidated group is severally liable for the U.S. federal income tax liability of each other member of the consolidated group. Accordingly, with respect to periods in which we (or our subsidiaries) have been included in Pride’s consolidated group, we (or our subsidiaries) could be liable to the U.S. government for any U.S. federal income tax liability incurred, but not discharged, by any other member of such consolidated group. However, if any such liability were imposed, we would generally be entitled to be indemnified by Pride for tax liabilities allocated to Pride under the tax sharing agreement.

We will be responsible for preparing and filing all tax returns that include us or one of our subsidiaries, other than any consolidated, combined or unitary income tax return that includes us or one of our subsidiaries, on the one hand, and Pride or one of its subsidiaries (other than us or any of our subsidiaries), on the other hand, except for certain Mexican tax returns, and we will have the authority to respond to and conduct all tax proceedings, including tax audits, involving any taxes or any deemed adjustment to taxes reported on such tax returns. Pride will be responsible for preparing and filing all consolidated, combined or unitary income tax returns that include us or one of our subsidiaries, on the one hand, and Pride or one of its subsidiaries (other than us or any of our subsidiaries), on the other hand, except for certain Mexican tax returns, and Pride will have the authority to respond to and conduct all tax proceedings, including tax audits, relating to taxes or any deemed adjustment to taxes reported on such tax returns. To the extent legally permitted, we will be required to carry tax benefits forward rather than back to a tax year that begins prior to the date of the spin-off. Pride must generally pay to us any refunds it receives on the use of our carried back tax benefits, except to the extent that Pride’s use of such tax benefit reduces or defers the use of Pride’s other tax benefits or results in an increase in Pride’s taxes. We will be entitled to participate in any tax proceeding involving any taxes or deemed adjustment to taxes for which we are liable under the tax sharing agreement. The tax sharing agreement further provides for cooperation between us and Pride with respect to tax matters, the exchange of information and the retention of records that may affect the tax liabilities of the parties to the agreement.

To the extent permitted by applicable tax law, we and Pride will treat any payments made under the tax sharing agreement as a capital contribution or distribution (as applicable) immediately prior to the spin-off, and accordingly, as not includible in the taxable income of the recipient. However, if any payment by us

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results from the spin-off and/or certain related transactions failing to qualify for tax-free treatment and causes, directly or indirectly, an increase in the taxable income of Pride (or its affiliates), our payment obligation will be grossed up to take into account the deemed taxes owed by Pride (or its affiliates).

Finally, the tax sharing agreement requires that neither we nor any of our subsidiaries take or fail to take any action that would be inconsistent with or prohibit the spin-off and certain related transactions from qualifying under Sections 355 and/or 368 of the Code. Such actions include but are not limited to any of the following actions within the two-year period following the effective time of the spin-off: (i) selling all or substantially all of the assets that constitute our mat-supported jackup rig business to any person (other than to us or to an entity which is and will be wholly owned, directly or indirectly, by us), (ii) transferring any of our or any of our affiliates’ assets in certain transactions described in Section 368(a)(1) of the Code to another entity (other than to us or to an entity which is and will be wholly owned, directly or indirectly, by us), (iii) transferring all or substantially all of the assets that constitute our mat-supported jackup rig business in a transaction described in Sections 351 or 721 of the Code (other than to a corporation or partnership which is and will be wholly owned, directly or indirectly, by us), (iv) issuing stock of us or any affiliate (or any instrument that is convertible or exchangeable into any such stock) except in certain permitted cases relating to employee compensation, (v) facilitating or otherwise participating in any acquisition (or deemed acquisition) of our stock that would result in any shareholder or certain groups of shareholders owning or being deemed to own 40% or more (by vote or value) of our outstanding stock, and (vi) redeeming or otherwise repurchasing any of our stock except in certain permitted cases and subject to certain limits. However, we will be permitted to take one or more of the foregoing actions if (i) we obtain from counsel an opinion which is reasonably satisfactory to Pride that such action will not adversely affect the tax consequences of the spin-off and certain related transactions or (ii) we provide Pride with suitable financial security sufficient to cover any and all taxes that may arise from taking such action.

Moreover, in the event that the spin-off and/or certain related transactions were to fail to qualify for tax-free treatment, we would generally be responsible for 50% of the tax resulting from such failure. However, if the spin-off and/or certain related transactions were to fail to qualify for tax-free treatment because of certain actions or failures to act by us or by Pride, the party taking or failing to take such actions would be responsible for all of the tax resulting from such failure.

This summary is qualified by reference to the full text of the tax sharing agreement, a form of which has been filed as an exhibit to the Form 10 registration statement of which this information statement is a part.

Employee Matters Agreement

We entered into an employee matters agreement with Pride to allocate responsibilities relating to our employees and their participation in certain benefit plans maintained by Pride or a subsidiary of Pride.

Our employees immediately following the spin-off will, as a general rule, continue to participate in employee benefit plans, which will provide substantially comparable benefits as those provided to those employees under Pride’s employee benefit plans before the spin-off. From the date of the spin-off until no later than December 31, 2009, Seahawk employees will be eligible to continue to participate in certain of the Pride health and welfare plans in which they participated prior to the spin-off. Seahawk employees who are hired or re-hired after the date of the spin-off will not be eligible to participate in Pride health and welfare plans, but are expected to be eligible to participate in comparable plans to be established by Seahawk. Pride will not be obligated to provide any retiree medical or paid time off benefits to Seahawk employees, though Seahawk will administer its own paid time off policy so that credit is given for Seahawk employees’ pre-spin-off service to Pride in 2009.

The employee matters agreement also provides for the adjustments and replacement awards to be made with respect to Pride restricted stock units, restricted stock and stock options held by Seahawk employees, as described in “Management — Treatment of Stock-Based Awards.”

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Tax Support Agreement

In 2006 and 2007, Pride received tax assessments from the Mexican government related to the operations of certain of our entities for the tax years 2001 through 2003. Pursuant to local statutory requirements, Pride has provided bonds in the amount of approximately 560 million Mexican pesos, or approximately $39 million as of March 31, 2009, to contest these assessments. In February 2009, Pride received additional tax assessments for the tax years 2003 and 2004 in the amount of 1,097 million Mexican pesos, or approximately $76 million, and Pride has contested these assessments. We anticipate that bonds or other suitable collateral will be required no earlier than the fourth quarter of 2009 in connection with Pride’s contest of these assessments. These assessments contest Pride’s right to claim certain deductions in its tax returns for those years.

We expect to post the additional bonds or other collateral when due, which we anticipate to be no earlier than the fourth quarter of 2009. Pursuant to a tax support agreement we entered into with Pride, Pride has agreed to guarantee or indemnify the issuer of any such surety bonds or other collateral issued for our account in respect of Mexican tax assessments made prior to the date of the spin-off. Beginning on the third anniversary of the spin-off, and on each subsequent anniversary thereafter, we will be required to provide substitute credit support for a portion of the collateral guaranteed or indemnified by Pride, so that Pride’s obligations are terminated in their entirety by the sixth anniversary of the spin-off. Seahawk will pay Pride a fee based on the credit support provided.

Conflicts of Interest and Related Person Transactions

Pursuant to our Code of Business Conduct and Ethical Practices, employees, officers and directors must not engage, or give the appearance of engaging, in any activity involving a conflict of interest, or a reasonably foreseeable conflict of interest, between their personal interests and our interests. The Code requires that any employee, officer or director who is uncertain whether a particular set of circumstances constitutes a conflict of interest seek appropriate, before-the-fact guidance from our Chief Compliance Officer.

Further, our Corporate Governance Guidelines provide that where an actual or potential conflict of interest involving a director develops, the director should report the matter immediately to the chairman of the Nominating and Corporate Governance Committee for evaluation. A significant and potentially ongoing conflict must be resolved or the director should resign. Also, if a director has a personal or business interest in a matter that is before the board of directors, the director must disclose the interest to the chairman of the board and, if appropriate, recuse himself from participation in the related deliberations and abstain from voting on the matter.

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DESCRIPTION OF CAPITAL STOCK

General

The following description of our common stock, preferred stock, certificate of incorporation and bylaws is a summary only and reflects our certificate of incorporation and bylaws that will be in effect at the time of the spin-off, the rights agreement we expect to enter into with BNY Mellon Shareowner Services, as rights agent, and of the Delaware General Corporation Law. We have filed forms of our certificate of incorporation and bylaws and the rights agreement as exhibits to our registration statement on Form 10 of which this information statement is a part.

Immediately following the spin-off, our authorized capital stock will consist of (1) 75 million shares of common stock, par value $.01 per share, and (2) 10 million shares of preferred stock, par value $.01 per share. Immediately following the spin-off, approximately 11.6 million shares of our common stock will be outstanding and there will be no outstanding shares of preferred stock.

Common Stock

The holders of our common stock are entitled to one vote per share on all matters to be voted on by stockholders generally, including the election of directors. There are no cumulative voting rights, meaning that the holders of a majority of the shares voting for the election of directors can elect all of the directors standing for election.

Our common stock carries no preemptive or other subscription rights to purchase shares of our stock and is not convertible, redeemable or assessable or entitled to the benefits of any sinking fund. Holders of our common stock will be entitled to dividends in the amounts and at the times declared by our board of directors out of funds legally available for the payment of dividends.

If we are liquidated, dissolved or wound up, the holders of our common stock will share pro rata in our assets after satisfaction of all of our liabilities and the prior rights of any outstanding class of our preferred stock.

Preferred Stock

Our board of directors has the authority, without stockholder approval, to issue shares of preferred stock in one or more series and to fix the number of shares and terms of each series. The board may determine the designation and other terms of each series, including, among others:

•  dividend rights;

•  voting powers;

•  preemptive rights;

•  conversion rights;

•  redemption rights; and

•  liquidation preferences.

The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could reduce the relative voting power of holders of our common stock. It also could affect the likelihood that holders of our common stock will receive dividend payments and payments upon liquidation.

For purposes of the rights plan described below, our board of directors has designated 750,000 shares of preferred stock to constitute the Series A Junior Participating Preferred Stock. For a description of the rights plan, please read “— Stockholder Rights Plan.”

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Anti-Takeover Provisions of Our Certificate of Incorporation and Bylaws

Our certificate of incorporation and bylaws contain provisions that could delay or make more difficult the acquisition of control of us through a hostile tender offer, open market purchases, proxy contest, merger or other takeover attempt that a stockholder might consider to be in his or her best interest, including those attempts that might result in a premium over the market price of our common stock.

Authorized but Unissued Stock

We have 75 million authorized shares of common stock and 10 million authorized shares of preferred stock. One of the consequences of our authorized but unissued common stock and undesignated preferred stock may be to enable our board of directors to make more difficult or to discourage an attempt to obtain control of us. If, in the exercise of its fiduciary obligations, our board of directors determined that a takeover proposal was not in our best interest, the board could authorize the issuance of those shares without stockholder approval. The shares could be issued in one or more transactions that might prevent or make the completion of a proposed change of control transaction more difficult or costly by:

•  diluting the voting or other rights of the proposed acquiror or insurgent stockholder group;

•  creating a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent board; or

•  effecting an acquisition that might complicate or preclude the takeover.

In this regard, our certificate of incorporation grants our board of directors broad power to establish the rights and preferences of the authorized and unissued preferred stock. Our board could establish one or more series of preferred stock that entitle holders to:

•  vote separately as a class on any proposed merger or consolidation;

•  cast a proportionately larger vote together with our common stock on any transaction or for all purposes;

•  elect directors having terms of office or voting rights greater than those of other directors;

•  convert preferred stock into a greater number of shares of our common stock or other securities;

•  demand redemption at a specified price under prescribed circumstances related to a change of control of our company; or

•  exercise other rights designed to impede a takeover.

Stockholder Action by Written Consent; Special Meetings of Stockholders

Our certificate of incorporation provides that no action that is required or permitted to be taken by our stockholders at any annual or special meeting may be taken by written consent of stockholders in lieu of a meeting, and that special meetings of stockholders may be called only by the board of directors, the chairman of the board or the president. These provisions of the certificate of incorporation may only be amended or repealed by a vote of 80% of the voting power of our outstanding common stock.

Amendment of the Bylaws

Under Delaware law, the power to adopt, amend or repeal bylaws is conferred upon the stockholders. A corporation may, however, in its certificate of incorporation also confer upon the board of directors the power to adopt, amend or repeal its bylaws. Our certificate of incorporation and bylaws grant our board of directors the power to adopt, amend and repeal our bylaws with the affirmative vote of a majority of the directors then in office. Our stockholders may also adopt, amend or repeal our bylaws by a vote of a majority of the voting power of our outstanding voting stock.

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Election and Removal of Directors

Directors may be removed only with cause or upon a board determination (as such terms are defined in our certificate of incorporation) and, in either case, by a vote of at least 80% of the voting power of our outstanding voting stock. A vacancy on our board of directors may be filled by a vote of a majority of the directors in office, and a director appointed to fill a vacancy serves for the remainder of the term of the class of directors in which the vacancy occurred.

Upon completion of the spin-off, our directors will be divided into three classes serving staggered three-year terms, with only one class being elected each year by our stockholders. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. The number of directors on the board generally will be fixed exclusively by, and may be increased or decreased exclusively by, the board of directors. This system of electing and removing directors may discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors.

Advance Notice Procedure for Director Nominations and Stockholder Proposals

Our bylaws provide the manner in which stockholders may give notice of business to be brought before an annual meeting. In order for an item to be properly brought before the meeting by a stockholder, the stockholder must be a holder of record at the time of the giving of notice and must be entitled to vote at the annual meeting. The item to be brought before the meeting must be a proper subject for stockholder action, and the stockholder must have given timely advance written notice of the item. For notice to be timely, it must be delivered to, or mailed and received at, our principal office not less than 90 days prior to the scheduled annual meeting date (regardless of any postponements of the annual meeting to a later date). If the date of the scheduled annual meeting differs by more than 30 days from the date of the previous year’s annual meeting, and if we give less than 100 days’ prior notice or public disclosure of the scheduled annual meeting date, then notice of an item to be brought before the annual meeting may be timely if it is delivered or received not later than the close of business on the 10th day following the earlier of notice to the stockholders or public disclosure of the scheduled annual meeting date.

The notice must set forth, as to each item to be brought before the annual meeting, a description of the proposal and the reasons for conducting such business at the annual meeting, the name and address, as they appear on our books, of the stockholder proposing the item and any other stockholders known by the stockholder to be in favor of the proposal, the number of shares of each class or series of capital stock beneficially owned by the stockholder as of the date of the notice (including derivatives, hedged positions and other economic and/or voting interests), and any interest of the stockholder in the proposal.

These procedures may limit the ability of stockholders to bring business before a stockholders meeting, including the nomination of directors and the consideration of any transaction that could result in a change in control and that may result in a premium to our stockholders.

Stockholder Rights Plan

We have adopted a preferred share purchase rights plan. Under the plan, each share of our common stock will include one right to purchase preferred stock. The rights will separate from the common stock and become exercisable (1) ten days after public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% of our outstanding common stock or (2) ten business days following the start of a tender offer or exchange offer that would result in a person’s acquiring beneficial ownership of 15% of our outstanding common stock. A 15% beneficial owner is referred to as an “acquiring person” under the plan.

Our board of directors can elect to delay the separation of the rights from the common stock beyond the ten-day periods referred to above. The plan also confers on our board the discretion to increase or decrease the level of ownership that causes a person to become an acquiring person. Until the rights are separately

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distributed, the rights will be evidenced by the common stock certificates and will be transferred with and only with the common stock certificates.

After the rights are separately distributed, each right will entitle the holder to purchase from us one one-hundredth of a share of Series A Junior Participating Preferred Stock for a purchase price of $180. The rights will expire at the close of business on August 4, 2019, unless we redeem or exchange them earlier as described below.

If a person becomes an acquiring person, the rights will become rights to purchase shares of our common stock for one-half the current market price, as defined in the rights agreement, of the common stock. This occurrence is referred to as a “flip-in event” under the plan. After any flip-in event, all rights that are beneficially owned by an acquiring person, or by certain related parties, will be null and void. Our board of directors will have the power to decide that a particular tender or exchange offer for all outstanding shares of our common stock is fair to and otherwise in the best interests of our stockholders. If the board makes this determination, the purchase of shares under the offer will not be a flip-in event.

If, after there is an acquiring person, we are acquired in a merger or other business combination transaction or 50% or more of our assets, earning power or cash flow are sold or transferred, each holder of a right will have the right to purchase shares of the common stock of the acquiring company at a price of one-half the current market price of that stock. This occurrence is referred to as a “flip-over event” under the plan. An acquiring person will not be entitled to exercise its rights, which will have become void.

Until ten days after the announcement that a person has become an acquiring person, our board of directors may decide to redeem the rights at a price of $.01 per right, payable in cash, shares of our common stock or other consideration. The rights will not be exercisable after a flip-in event until the rights are no longer redeemable.

At any time after a flip-in event and prior to either a person’s becoming the beneficial owner of 50% or more of the shares of our common stock or a flip-over event, our board of directors may decide to exchange the rights for shares of our common stock on a one-for-one basis. Rights owned by an acquiring person, which will have become void, will not be exchanged.

Other than provisions relating to the redemption price of the rights, the rights agreement may be amended by our board of directors at any time that the rights are redeemable. Thereafter, the provisions of the rights agreement other than the redemption price may be amended by the board of directors to cure any ambiguity, defect or inconsistency, to make changes that do not materially adversely affect the interests of holders of rights (excluding the interests of any acquiring person), or to shorten or lengthen any time period under the rights agreement. No amendment to lengthen the time period for redemption may be made if the rights are not redeemable at that time.

The rights have certain anti-takeover effects. The rights will cause substantial dilution to any person or group that attempts to acquire us without the approval of our board of directors. As a result, the overall effect of the rights may be to render more difficult or discourage any attempt to acquire us even if the acquisition may be favorable to the interests of our stockholders. Because the board of directors can redeem the rights or approve a tender or exchange offer, the rights should not interfere with a merger or other business combination approved by the board.

Limitation of Liability of Directors

Our directors will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except, if required by Delaware law, for liability:

•  for any breach of the duty of loyalty to us or our stockholders;

•  for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law;

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•  for unlawful payment of a dividend or unlawful stock purchases or redemptions; and

•  for any transaction from which the director derived an improper personal benefit.

As a result, neither we nor our stockholders have the right, through stockholders’ derivative suits on our behalf, to recover monetary damages against a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior, except in the situations described above.

Delaware Anti-Takeover Law

We are a Delaware corporation subject to Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions. Section 203 prevents an “interested stockholder,” which is defined generally as a person owning 15% or more of a corporation’s voting stock, or any affiliate or associate of that person, from engaging in a broad range of “business combinations” with the corporation for three years after becoming an interested stockholder unless:

•  the board of directors of the corporation had previously approved either the business combination or the transaction that resulted in the stockholder’s becoming an interested stockholder;

•  upon completion of the transaction that resulted in the stockholder’s becoming an interested stockholder, that person owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and shares owned in employee stock plans in which participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

•  following the transaction in which that person became an interested stockholder, the business combination is approved by the board of directors of the corporation and holders of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.

Under Section 203, the restrictions described above also do not apply to specific business combinations proposed by an interested stockholder following the announcement or notification of designated extraordinary transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of the corporation’s directors, if such extraordinary transaction is approved or not opposed by a majority of the directors who were directors prior to any person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors.

Section 203 may make it more difficult for a person who would be an interested stockholder to effect various business combinations with a corporation for a three-year period.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be BNY Mellon Shareowner Services.

Market Information

Our shares of common stock have been authorized for listing on the NASDAQ Global Select Market under the symbol “HAWK.”

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DESCRIPTION OF CREDIT FACILITY

We have entered into a two-year, $36 million revolving credit facility. No borrowings under the credit facility, however, will be outstanding at the time of the spin-off. Advances under the credit facility will be available to us upon satisfaction of certain conditions on or before September 30, 2009, subject to limited exceptions. Borrowings under the credit facility may only be used to fund reactivation capital expenditures and for related working capital purposes. Up to $27 million of availability under the credit facility may be used to issue letters of credit, subject to specified sublimits. We are currently in discussions with various financial institutions regarding their making a commitment under our credit facility or increasing their existing commitments. We may request that the credit facility be increased to up to $50 million by adding additional lenders or requesting that the existing lenders increase their commitments. The credit facility matures on the second anniversary of the date on which we satisfy the conditions referred to above. We do not expect to have any other material indebtedness at the closing of the spin-off.

The outstanding principal balance of loans and the face amount of letters of credit under the credit facility may not exceed the borrowing base, calculated using discounted values for our accounts receivable and a portion of the liquidation value of our rigs. The borrowing base will be redetermined on a monthly basis. If our ratio of EBITDA to fixed charges is less than 1.5 to 1.0 for any fiscal quarter and the aggregate commitments under the facility are $40 million or more, then the outstanding principal balance of loans and the face amount of all letters of credit under the credit facility may not exceed the greater of

•  $35 million, or

•  the lender commitments then in effect reduced by 25% for each fiscal quarter until the ratio of EBITDA to fixed charges is greater than or equal to 1.5 to 1.0.

Guarantors and Collateral

The credit facility will be guaranteed by our existing and future material subsidiaries, with certain customary exceptions where adverse tax consequences would result or where a subsidiary is not eligible to make guarantees by an existing contractual arrangement. We and each of the guarantors under the new senior secured credit facility will pledge as collateral 15 of our rigs (all of our rigs except the Seahawk 2500 (f/k/a Pride Arizona), Seahawk 2003 (f/k/a Pride Florida), Seahawk 2502 (f/k/a Pride Georgia), Seahawk 2006 (f/k/a Pride Nevada) and Seahawk 2008 (f/k/a Pride South Carolina) and our accounts receivable, inventories, and certain cash accounts and cash equivalents, subject to customary exceptions. In addition, we will pledge the stock of our material subsidiaries, and agree not to pledge our other unencumbered assets (other than pledges to certain tax authorities or sureties on the unpledged rigs named above), in each case, subject to customary exceptions.

Interest and Fees

We may elect that borrowings bear interest at an annual rate of either the Base Rate in effect from time to time plus a margin of 3.5%, or the LIBOR rate as defined in the agreement plus a margin of 4.5%. The “Base Rate” is a fluctuating rate equal to the highest of the prime rate, one-month LIBOR plus 1.5%, or the Federal Funds Rate plus 1.5%.

The credit facility also includes a commitment fee of 1.5% per annum on the average daily unused portion of the facility. Letter of credit fees will accrue at a rate of 4.5% per annum on the aggregate available face amount of outstanding letters of credit, plus a fronting fee of 0.25% per annum for the issuing lender.

Covenants

The credit facility requires us to comply with affirmative, negative and financial covenants. Set forth below is a brief description of these covenants, all of which are subject to customary exceptions and qualifications.

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Affirmative Covenants.  The affirmative covenants in the credit facility require, among other things: delivery of financial statements, reports and other information; payment of other obligations; continuation of business and maintenance of existence and material rights and privileges; compliance with material laws and material contractual obligations; maintenance of property and insurance; maintenance of books and records; rights of the lenders to inspect property and books and records; notices of defaults, litigation and other material events; and compliance with environmental laws and other further assurances.

Negative Covenants.  The negative covenants include restrictions with respect to indebtedness; liens; guarantee obligations; mergers, consolidations, liquidations and dissolutions; sales of assets; leases; dividends and other payments and distributions in respect of capital stock and subordinated debt; capital expenditures; investments, loans and advances; transactions with affiliates; sale and leasebacks; changes in fiscal year; negative pledge clauses; changes in lines of business; and unhedged currency risk.

Financial Covenants.  The credit facility includes financial covenants, which, among other things, require us to maintain specified ratios or conditions as follows:

•  an EBITDA to fixed charges ratio of at least 2.0 to 1.0, to be tested at the end of any fiscal quarter in which advances or letters of credit are outstanding and the sum of the unused availability under the credit facility plus unrestricted cash is less than $25 million;

•  a ratio of the liquidation value of the 15 pledged rigs to the amount of loans made and letters of credit issued under the credit facility of not less than 3.0 to 1.0 at all times;

•  a current ratio of not less than 1.2 to 1.0, to be tested at each fiscal quarter end; and

•  minimum tangible net worth of not less than the sum of $320 million, plus 50% of our net income for each fiscal quarter commencing with the fiscal quarter ending December 31, 2009 and 100% of the net cash proceeds of any equity offerings.

Events of Default

The credit facility provides for customary events of default (subject to customary exceptions, thresholds, grace periods and similar qualifications), including nonpayment of principal or interest when due, outstanding advances in excess of the borrowing base, material inaccuracy of representations and warranties, violation of covenants, cross-default, bankruptcy events, certain ERISA events, material judgments, actual or asserted invalidity by us or certain of our subsidiaries of any guarantee or security interest, and a change of control.

If any default of payment of principal, interest, commitment fees or letter of credit fees is continuing, then each applicable margin shall be increased by 2.00% per annum, and all interest will be payable on demand.

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INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law empowers a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Similar indemnity is authorized for such persons against expenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of any such threatened, pending or completed action or suit if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and provided further that (unless a court of competent jurisdiction otherwise provides) such person shall not have been adjudged liable to the corporation. Any such indemnification may be made only as authorized in each specific case upon a determination by the stockholders or disinterested directors or by independent legal counsel in a written opinion that indemnification is proper because the indemnitee has met the applicable standard of conduct.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145. We expect to maintain policies insuring our and our subsidiaries’ officers and directors against certain liabilities for actions taken in such capacities, including liabilities under the Securities Act.

Article Seventh of our certificate of incorporation eliminates the personal liability of each of our directors to us and our stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that such provision does not eliminate or limit the liability of a director (i) for any breach of such director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Title 8, Section 174 of the Delaware General Corporation Law, as the same exists or as such provision may hereafter be amended, supplemented or replaced, or (iv) for any transactions from which such director derived an improper personal benefit.

Our bylaws provide that we will indemnify and hold harmless, to the fullest extent permitted by applicable law in effect as of the date of the adoption of the bylaws and to such greater extent as applicable law may thereafter permit, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer or other designated legal representative of (i) Seahawk, (ii) any predecessor of Seahawk, (iii) any subsidiary of Seahawk or (vii) any other corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise which the person is or was serving at our request (“corporate status”) against any and all losses, liabilities, costs, claims, damages and expenses actually and reasonably incurred by him or on his behalf by reason of his corporate status.

Our bylaws further provide that we will pay the expenses reasonably incurred in defending any proceeding in advance of its final disposition; provided, however, that the payment of expenses will be made only upon receipt of (i) a written undertaking executed by or on behalf of the person to be indemnified to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified by us and (ii) satisfactory evidence as to the amount of such expenses.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form 10 with the SEC with respect to the shares of our common stock that Pride stockholders will receive in the spin-off. This information statement is a part of that registration statement and, as allowed by SEC rules, does not include all of the information you can find in the registration statement or the exhibits to the registration statement. For additional information relating to our company and the spin-off, reference is made to the registration statement and the exhibits to the registration statement. Statements contained in this information statement as to the contents of any contract or document referred to are not necessarily complete and in each instance, if the contract or document is filed as an exhibit to the registration statement, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each such statement is qualified in all respects by reference to the applicable document.

After the SEC declares the registration statement effective, we will file annual, quarterly and special reports, proxy statements and other information with the SEC. We intend to furnish our stockholders with annual reports containing combined financial statements audited by an independent registered public accounting firm. The registration statement is, and any of these future filings with the SEC will be, available to the public over the Internet on the SEC’s web site at http://www.sec.gov. You may read and copy any filed document at the SEC’s public reference rooms in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information.

We maintain an Internet site at http://www.seahawkdrilling.com. Our web site and the information contained on that site, or connected to that site, are not incorporated into this information statement or the registration statement on Form 10.

We intend to furnish holders of our common stock with annual reports containing financial statements prepared in accordance with U.S. generally accepted accounting principles and audited and reported on, with an opinion expressed, by an independent registered public accounting firm.

You should rely only on the information contained in this information statement or to which we have referred you. We have not authorized any person to provide you with different information or to make any representation not contained in this information statement.

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INDEX TO FINANCIAL STATEMENTS

	Page
Audited Financial Statement of Seahawk Drilling, Inc. (formerly known as Pride SpinCo, Inc.):
Report of Independent Registered Public Accounting Firm		F-2
Balance Sheet as of December 31, 2008		F-3
Notes to Balance Sheet		F-4
Unaudited Financial Statements of Seahawk Drilling, Inc. (formerly known as Pride SpinCo, Inc.):
Balance Sheets as of March 31, 2009 and December 31, 2008		F-7
Notes to Unaudited Balance Sheets		F-8
Audited Combined Financial Statements of Gulf of Mexico Business:
Report of Independent Registered Public Accounting Firm		F-13
Combined Balance Sheets as of December 31, 2008 and 2007		F-14
Combined Statements of Operations for the years ended December 31, 2008, 2007 and 2006		F-15
Combined Statements of Net Parent Funding for the years ended December 31, 2008, 2007 and 2006		F-16
Combined Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006		F-17
Notes to Combined Financial Statements		F-18
Unaudited Combined Financial Statements of Gulf of Mexico Business:
Combined Balance Sheets as of March 31, 2009 and December 31, 2008		F-34
Combined Statements of Operations for the three months ended March 31, 2009 and 2008		F-35
Combined Statements of Cash Flows for the three month ended March 31, 2009 and 2008		F-36
Notes to Unaudited Combined Financial Statements		F-37

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of Pride International, Inc. and

Stockholder of Seahawk Drilling, Inc.:

We have audited the accompanying balance sheet of Seahawk Drilling, Inc. (formerly known as Pride SpinCo, Inc. and a wholly-owned subsidiary of Pride International, Inc.) as of December 31, 2008. This financial statement is the responsibility of Seahawk Drilling, Inc.’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Seahawk Drilling, Inc. as of December 31, 2008, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Houston, Texas

April 9, 2009

F-2

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

BALANCE SHEET

At December 31, 2008

(In thousands)

ASSETS
Current assets:
Cash and cash equivalents	$	—
Total assets	$	—
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accrued liabilities — related parties	$	4,506
Total current liabilities		4,506
Stockholder’s equity (deficit):
Common stock; $.01 par value, 1000 shares authorized and issued		—
Retained deficit		(4,506	)
Total stockholder’s equity (deficit)		(4,506	)
Total liabilities and stockholder’s equity	$	—

The accompanying notes are an integral part of the financial statement.

F-3

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO BALANCE SHEET

NOTE 1.   NATURE OF BUSINESS

Seahawk Drilling, Inc. (formerly known as Pride SpinCo, Inc.) (“Seahawk”) is a Delaware corporation and a wholly-owned subsidiary of Pride International, Inc. (“Pride”) that was incorporated and nominally capitalized with an initial capital contribution of $10 on December 15, 2008 to operate and control the business and affairs of Pride’s 20 mat-supported jackup rig fleet following the spin-off. Pride will distribute all of the shares of Seahawk common stock owned by Pride, which will be 100% of our common stock outstanding immediately prior to the spin-off. At the time of the spin-off, each share of our common stock will have attached to it one preferred stock purchase right. The number of shares of Seahawk common stock to be issued to Pride common stock holders will be based upon an exchange ratio to be determined at the date of distribution. After the spin-off is complete, we will be independent from Pride.

Seahawk has not conducted any operations. All activities to date relate to the information statement and all costs have been incurred by Pride, which will be repaid by Seahawk after the spin-off. In connection with the consummation of the spin-off, Pride expects to allocate to Seahawk all of its one-time, non-recurring pre-tax separation costs, of which $4.5 million has been incurred by Pride and expensed by us as of December 31, 2008. These one-time costs are expected to consist of, among other things: financial, legal, tax, accounting and other advisory fees; non-income tax costs and regulatory fees incurred as part of the separation of our business from Pride’s other businesses; costs for building and/or reconfiguring the required information systems to run the stand-alone companies; other various costs for branding the new company, stock exchange listing fees, investor and other stakeholder communications, printing costs, fees of the distribution agent, and employee recruiting fees and incentive compensation, among other things. After the spin-off, to the extent additional one-time costs are incurred by us in connection with the separation, they will be the direct responsibility of Seahawk.

NOTE 2.   SEPARATION FROM PRIDE

Before our separation from Pride, we will enter into a master separation agreement and several other agreements with Pride to effect the separation and distribution of our common stock to Pride stockholders and provide a framework for our relationships with Pride. These agreements will govern the relationships between Seahawk and Pride subsequent to the completion of the spin-off and provide for the allocation between Seahawk and Pride of Pride’s assets, liabilities and obligations attributable to periods prior to the spin-off. We cannot assure that these agreements will be on terms as favorable to us as agreements with unaffiliated third parties.

Master separation agreement

The master separation agreement between us and Pride will govern our acquisition of Pride’s mat-supported jackup rig business, the subsequent distribution of our shares to Pride stockholders and other matters related to Pride’s relationship with us. Under the master separation agreement, we will generally release Pride and its affiliates, agents, successors and assigns, and Pride will generally release us and our affiliates, agents, successors and assigns, from any liabilities between us or our subsidiaries on the one hand, and Pride or its subsidiaries on the other hand, arising from acts or events occurring on or before the spin-off, including acts or events occurring in connection with the separation or distribution. Under the terms of the master separation agreement, we will generally not be permitted to own or operate any rig with a water depth rating of more

F-4

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO BALANCE SHEET — (Continued)

than 500 feet, subject to certain exceptions. These provisions remain in effect until the third anniversary of the consummation of the spin-off.

Tax sharing agreement

Under the tax sharing agreement, for tax periods (or portions thereof):

•  ending prior to January 1, 2009, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s operations in the Gulf of Mexico and our and our predecessor’s operations wherever conducted (other than income taxes associated with certain deepwater drilling services contracts), and Pride will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s other businesses;

•  beginning on or after January 1, 2009 and ending on or prior to the date of the spin-off, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to the mat-supported jackup rig business, and Pride will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s businesses other than the mat-supported jackup rig business; and

•  beginning after the date of the spin-off, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to us and our subsidiaries.

Generally, we must reimburse Pride, and Pride must reimburse us, for the use by one party of tax benefits allocated (under rules consistent with how taxes are allocated) to the other party. However, we will have no obligation to reimburse Pride, and Pride will have no obligation to reimburse us, for tax benefits arising in and used during tax periods beginning prior to the date of the spin-off, unless (i) such tax benefits result from a tax proceeding resolved after the date of the spin-off and (ii) the use of such tax benefits does not reduce or defer the use of the other party’s other tax benefits or result in an increase in the other party’s taxes.

Transition services agreement

We will enter into a transition services agreement with Pride. Under the agreement, Pride will provide us with specified support services during a transitional period of up to two years following the spin-off. Pride may provide specified accounting, treasury, hotline, human resources, information technology and systems and purchasing services and office and yard space access in exchange for agreed fees set forth in the transition services agreement. We may generally terminate the service on 30 days advance notice, subject to payment of any increased or stranded costs associated with early termination.

The Pride Tennessee and Pride Wisconsin are two independent-leg jackup rigs that will remain assets of Pride. The current customer contracts applicable to these rigs will remain with the Seahawk subsidiary that is party to such contracts. Pursuant to an agreement we will enter into with Pride, all benefits and risks of these customer contracts will be passed through to Pride until their completion, which we expect to occur in August 2009 for the Pride Wisconsin and March 2010 for the Pride Tennessee. These contracts may be extended, renewed or replaced at Pride’s request.

Only in limited circumstances will Pride be liable to us with respect to the provision of services under the transition services agreement.

F-5

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO BALANCE SHEET — (Continued)

NOTE 3.   SIGNIFICANT ACCOUNTING POLICIES

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid debt instruments having maturities of three months or less at the date of purchase to be cash equivalents.

Income Taxes

The provision for income taxes has been computed as if Seahawk were a stand-alone entity and filed separate tax returns. We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the asset is recovered or the liability is settled. A valuation allowance for deferred tax assets is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

At December 31, 2008, we had a deferred tax asset of $1.6 million related to the separation costs that have been accrued by Seahawk that for income tax purposes may be amortized when and if we begin an active trade or business. We have recognized a full valuation allowance for the entire amount of the deferred tax asset due to the uncertainty that we will realize a tax benefit from future amortization of these costs. Our ability to realize the benefit of our deferred tax asset requires that we achieve certain future earnings from an active trade or business such that we have sufficient taxable income to realize the tax benefit from the amortization of these accrued separation costs.

F-6

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

BALANCE SHEETS

	March 31,			December 31,
	2009			2008
	(unaudited)			(audited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—
Total assets	$	—		$	—
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accrued liabilities — related parties	$	2,217		$	4,506
Total current liabilities		2,217			4,506
Stockholder’s equity (deficit):
Common stock; $.01 par value, 1000 shares authorized and issued		—			—
Retained deficit		(2,217	)		(4,506	)
Total stockholder’s equity (deficit)		(2,217	)		(4,506	)
Total liabilities and stockholder’s equity	$	—		$	—

The accompanying notes are an integral part of the financial statements.

F-7

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO UNAUDITED BALANCE SHEET

NOTE 1.   NATURE OF BUSINESS

Seahawk Drilling, Inc. (formerly known as Pride SpinCo, Inc.) (“Seahawk”) is a Delaware corporation and a wholly-owned subsidiary of Pride International, Inc. (“Pride”) that was incorporated and nominally capitalized with an initial capital contribution of $10 on December 15, 2008 to operate and control the business and affairs of Pride’s 20 mat-supported jackup rig fleet following the spin-off. Pride will distribute all of the shares of Seahawk common stock owned by Pride, which will be 100% of our common stock outstanding immediately prior to the spin-off. At the time of the spin-off, each share of our common stock will have attached to it one preferred stock purchase right. The number of shares of Seahawk common stock to be issued to Pride common stock holders will be based upon an exchange ratio to be determined at the date of distribution. After the spin-off is complete, we will be independent from Pride.

We have not conducted any operations. All activities to date relate to the information statement and preparation for the spin-off. In connection with the consummation of the spin-off, Pride will allocate to us certain one-time, nonrecurring pre-tax separation costs, of which approximately $2.2 million have been incurred by Pride and accrued and expensed by us as of March 31, 2009. As of December 31, 2008, approximately $4.5 million of such costs had been incurred by Pride and accrued and expensed by us. The accrued liability – related parties was adjusted in the first quarter of 2009 as a result of ongoing discussions between Pride and us as to which separation costs will be allocated. These one-time costs are expected to consist of, among other things: non-income tax costs and regulatory fees incurred as part of the separation of our business from Pride’s other businesses; costs for building and/or reconfiguring the required information systems to run the stand-alone companies; other various costs for branding the new company, stock exchange listing fees, investor and other stakeholder communications, fees of the distribution agent, employee recruiting fees and incentive compensation. In addition, Pride also expects to incur other one-time, non-recurring costs in respect of certain financial, legal, accounting and other advisory fees, as well as printing fees and upfront fees associated with our new credit facility. These costs will be borne by Pride and will not be charged to us.

After the spin-off, to the extent additional one-time costs are incurred by us in connection with the separation, they will be our direct responsibility.

NOTE 2.   SEPARATION FROM PRIDE

Before our separation from Pride, we will enter into a master separation agreement and several other agreements with Pride to effect the separation and distribution of our common stock to Pride stockholders and provide a framework for our relationships with Pride. These agreements will govern the relationships between Seahawk and Pride subsequent to the completion of the spin-off and provide for the allocation between Seahawk and Pride of Pride’s assets, liabilities and obligations attributable to periods prior to the spin-off. We cannot assure that these agreements will be on terms as favorable to us as agreements with unaffiliated third parties.

Master separation agreement

The master separation agreement between us and Pride will govern our acquisition of Pride’s mat-supported jackup rig business, the subsequent distribution of our shares to Pride stockholders and other matters related to Pride’s relationship with us. Under the master separation agreement, we will generally release Pride and its affiliates, agents, successors and assigns, and Pride will generally release us and our affiliates, agents, successors and assigns, from any liabilities between us or our subsidiaries on the one hand, and Pride or its subsidiaries on the other hand, arising from acts or events occurring on or before the spin-off, including acts or events occurring in connection with the separation or distribution. Under the terms of the master separation agreement, we will generally not be permitted to own or operate any rig with a water depth rating of more

F-8

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO UNAUDITED BALANCE SHEET — (Continued)

than 500 feet, subject to certain exceptions. These provisions remain in effect until the third anniversary of the consummation of the spin-off.

Tax sharing agreement

Under the tax sharing agreement, for tax periods (or portions thereof):

•  ending prior to January 1, 2009, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s operations in the Gulf of Mexico and our and our predecessor’s operations wherever conducted (other than income taxes associated with certain deepwater drilling services contracts), and Pride will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s other businesses;

•  beginning on or after January 1, 2009 and ending on or prior to the date of the spin-off, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to the mat-supported jackup rig business, and Pride will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to Pride’s businesses other than the mat-supported jackup rig business; and

•  beginning after the date of the spin-off, we will be responsible for paying all U.S. federal, state, local and foreign income taxes that are attributable to us and our subsidiaries.

Generally, we must reimburse Pride, and Pride must reimburse us, for the use by one party of tax benefits allocated (under rules consistent with how taxes are allocated) to the other party. However, we will have no obligation to reimburse Pride, and Pride will have no obligation to reimburse us, for tax benefits arising in and used during tax periods beginning prior to the date of the spin-off, unless (i) such tax benefits result from a tax proceeding resolved after the date of the spin-off and (ii) the use of such tax benefits does not reduce or defer the use of the other party’s other tax benefits or result in an increase in the other party’s taxes.

Transition services agreement

We will enter into a transition services agreement with Pride. Under the agreement, Pride will provide us with specified support services during a transitional period of up to two years following the spin-off. Pride may provide specified accounting, treasury, hotline, human resources, information technology and systems and purchasing services and office and yard space access in exchange for agreed fees set forth in the transition services agreement. We may generally terminate the service on 30 days advance notice, subject to payment of any increased or stranded costs associated with early termination.

The Pride Tennessee and Pride Wisconsin are two independent-leg jackup rigs that will remain assets of Pride. The current customer contracts applicable to these rigs will remain with the Seahawk subsidiary that is party to such contracts. Pursuant to an agreement we will enter into with Pride, all benefits and risks of these customer contracts will be passed through to Pride until their completion, which we expect to occur in August 2009 for the Pride Wisconsin and March 2010 for the Pride Tennessee. These contracts may be extended, renewed or replaced at Pride’s request.

Only in limited circumstances will Pride be liable to us with respect to the provision of services under the transition services agreement.

F-9

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO UNAUDITED BALANCE SHEET — (Continued)

NOTE 3.   SIGNIFICANT ACCOUNTING POLICIES

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid debt instruments having maturities of three months or less at the date of purchase to be cash equivalents.

Income Taxes

The provision for income taxes has been computed as if Seahawk were a stand-alone entity and filed separate tax returns. We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the asset is recovered or the liability is settled. A valuation allowance for deferred tax assets is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

At March 31, 2009, we had a deferred tax asset of $776 thousand related to the separation costs that have been accrued by Seahawk that for income tax purposes may be amortized when and if we begin an active trade or business. We have recognized a full valuation allowance for the entire amount of the deferred tax asset due to the uncertainty that we will realize a tax benefit from future amortization of these costs. Our ability to realize the benefit of our deferred tax asset requires that we achieve certain future earnings from an active trade or business such that we have sufficient taxable income to realize the tax benefit from the amortization of these accrued separation costs.

NOTE 4.   SUBSEQUENT EVENTS

Spin-off and Reorganization of Seahawk

On August 4, 2009, the board of directors of Pride approved a plan to distribute the common stock of Seahawk to Pride’s shareholders. Each Pride stockholder will receive 1/15 of a share of Seahawk common stock with respect to each share of Pride common stock held by such stockholder at the close of business on August 14, 2009, the record date. Approximately 11.6 million shares of Seahawk common stock will be distributed in the spin-off. Following this distribution Pride will no longer retain any ownership interest in Seahawk, and Seahawk will become a separately traded public company.

As a result of a reorganization of entities under common control, effective August 4, 2009, Seahawk merged with Pride Spinco, Inc. and became the successor company operating the Gulf of Mexico Business of Pride International, Inc. The reorganization was recorded using the carryover basis of accounting. Simultaneously, Pride distributed to other Pride affiliates the operations of two independent leg jackup rigs known as the Pride Tennessee and the Pride Wisconsin, and drilling services management contracts for the Thunderhorse, Mad Dog and Holstein rigs, which Pride will retain after the spin-off of Seahawk. At the distribution date, Pride will contribute approximately $47.3 million in additional cash to Seahawk for working capital.

F-10

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO UNAUDITED BALANCE SHEET — (Continued)

Execution of agreements with Pride

Effective August 4, 2009, Seahawk and Pride executed the master separation agreement, the tax sharing agreement, and the transition services agreement, consistent with the terms described in Note 2. In addition, effective August 4, 2009, Seahawk and Pride have also executed a tax support agreement to post collateral necessary for us to contest tax assessments in Mexico related to the Gulf of Mexico Business of Pride International, Inc.

Pride has provided bonds totaling 560 million pesos, or approximately $39 million as of March 31, 2009, and we anticipate that we will have to post additional bonds to contest current and anticipated future tax assessments in Mexico. Pursuant to the tax support agreement, Pride has agreed to guarantee or indemnify the issuer of any such surety bonds or other collateral issued for our account in respect of Mexican tax assessments made prior to the date of the spin-off. Beginning on the third anniversary of the spin-off, and on each subsequent anniversary thereafter, we will be required to provide substitute credit support for a portion of the collateral guaranteed or indemnified by Pride, so that Pride’s obligations are terminated in their entirety by the sixth anniversary of the spin-off. We will pay Pride a fee based on the credit support provided.

Adoption of Stock Plan

Effective August 4, 2009, Pride, as our sole stockholder, adopted the Seahawk 2009 Long-Term Incentive Plan (the “2009 Plan”) under which employees and directors will be eligible for stock-based compensation awards, as selected by the compensation committee. In addition to awards granted under the 2009 Plan, we expect to issue approximately 200,000 shares of restricted stock awards to replace unvested Pride stock-based awards being forfeited by transferring employees.

The 2009 Plan provides for the granting or awarding of stock options, restricted stock units, stock appreciation rights, other stock-based awards and cash awards to directors, officers and employees. The 2009 Plan allows for up to 13 percent of our issued and outstanding common shares to be used for equity-based awards, after giving effect to the equity awards.

Potential Impairment of Property, Plant and Equipment

In conjunction with the planned spin-off, Pride conducted a preliminary valuation of the mat-supported jackup rig fleet which constitutes Seahawk’s operating assets. This valuation was prepared under the guidelines established by SFAS 157, “Fair Value Measurements”. Pride’s valuation included three components: (1) valuations provided by an independent rig broker, (2) valuations provided by independent sell side analysts and (3) Pride’s discounted cash flow analysis. Pride then applied a weighted average to the three components to obtain a reasonable estimate of the fair market value of the rig fleet. Based on this valuation analysis, Pride currently believes that these rigs have a fair market value that is approximately $25.0 million to $45.0 million less than their carrying value of approximately $510.0 million as of July 31, 2009. Therefore, we expect to record an impairment charge of approximately $25.0 million to $45.0 million as of the spin-off date.

Secured Revolving Credit Facility

On August 4, 2009, we entered into a revolving credit facility with a syndicate of lenders (the “Lenders”) that matures on the second anniversary of the date on which we satisfy certain conditions to the initial funding. The revolving credit facility has an initial facility amount of up to $36 million (the “Commitments”), subject to availability and a borrowing base, as defined. Up to $27 million of the revolving credit facility will be available to issue letters of credit, and up to $36 million of the revolving credit facility will be available for revolving credit loans. Seahawk may, on one or more occasions for up to one year increase the total Commitments to the revolving credit facility amount by adding one or more banks, financial institutions or

F-11

SEAHAWK DRILLING, INC.
(formerly known as Pride SpinCo, Inc.)

NOTES TO UNAUDITED BALANCE SHEET — (Continued)

other lender parties as lenders or by allowing one or more Lenders to increase their respective Commitments. Total Commitments cannot exceed an amount equal to $50 million. Loans made and letters of credit issued under the revolving credit facility may be used by Seahawk only to fund reactivation capital expenditures and for related working capital purposes. The facility is secured by 15 of our rigs, accounts receivables, spare parts and certain cash and cash equivalents.

Interest on the revolving credit facility is calculated based on outstanding loans and letters of credit as well as commitment fees for any unused portion of the revolving credit facility. Amounts drawn on the revolving credit facility bear interest at variable rates based on LIBOR plus a margin or the alternative base rate as defined in the agreement. The Company shall pay a per annum letter of credit fee equal to the applicable LIBOR Margin. Commitment fees for the unused portion of the revolving credit facility shall be 150 basis points per annum on the average daily unused portion of the revolving credit facility. Under the Master Separation Agreement, Pride is responsible for all origination costs for this facility.

The revolving credit facility contains a number of covenants restricting, among other things, investments; payment of dividends; indebtedness; liens; guarantee obligations; mergers, consolidations, liquidations and dissolutions; sales of assets; leases; dividends and other payments and distributions in respect of capital stock and subordinated debt; capital expenditures; investments, loans and advances; optional payments and modifications of subordinated and other debt instruments; transactions with affiliates; sale and leasebacks; changes in fiscal year; negative pledge clauses; changes in lines of business; and speculative hedging. The revolving credit facility also requires us to maintain certain minimum ratios with respect to our financial condition, including current assets to current liabilities; liquidation value of the collateralized rigs; tangible net worth; and adjusted earnings before interest, taxes, depreciation and amortization to fixed charges.

F-12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

Pride International, Inc.:

We have audited the accompanying combined balance sheets of the Gulf of Mexico Business of Pride International, Inc. (the Business) as of December 31, 2008 and 2007, and the related combined statements of operations, net parent funding, and cash flows for each of the years in the three-year period ended December 31, 2008. These combined financial statements are the responsibility of the Business’ management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in note 1 to the combined financial statements, the accompanying combined financial statements have been prepared from the separate records maintained by the Business and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Business had been operated as an unaffiliated entity. As discussed in note 5 to the combined financial statements, in 2007 the Business adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Gulf of Mexico Business of Pride International, Inc. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Houston, Texas

April 9, 2009

F-13

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Combined Balance Sheets

	December 31,
	2008		2007
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	41.1	$	24.6
Trade receivables, net		83.3		117.6
Deferred income taxes		1.0		1.2
Prepaid expenses and other current assets		62.4		29.1
Total current assets		187.8		172.5
Property and equipment, net		612.0		711.5
Goodwill		1.2		1.5
Other assets		4.4		7.6
Total assets	$	805.4	$	893.1
LIABILITIES AND NET PARENT FUNDING
Current liabilities:
Accounts payable	$	18.7	$	21.1
Accrued expenses and other current liabilities		84.6		60.8
Income taxes payable		2.5		10.0
Total current liabilities		105.8		91.9
Other long-term liabilities		3.6		6.9
Deferred income taxes		144.4		149.8
Total liabilities		253.8		248.6
Net parent funding		551.6		644.5
Total liabilities and net parent funding	$	805.4	$	893.1

The accompanying notes are an integral part of the combined financial statements.

F-14

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Combined Statements of Operations

	Year Ended December 31,
	2008			2007			2006
	(In millions)
Revenues	$	681.8		$	707.2		$	639.5
Costs and expenses:
Operating costs, excluding depreciation and amortization		343.3			349.9			299.3
Depreciation and amortization		62.5			62.8			54.7
General and administrative, excluding depreciation and amortization		36.7			25.7			17.7
(Gain) loss on sales of assets, net		0.1			(0.4	)		(0.4	)
Earnings from operations		239.2			269.2			268.2
Other income (expense), net		(2.6	)		(0.8	)		(1.6	)
Income before income taxes		236.6			268.4			266.6
Income taxes		(82.9	)		(94.9	)		(95.7	)
Income from continuing operations, net of tax		153.7			173.5			170.9
Income (loss) from discontinued operations, net of tax		22.3			2.1			(1.8	)
Net income	$	176.0		$	175.6		$	169.1

The accompanying notes are an integral part of the combined financial statements.

F-15

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Combined Statements of Net Parent Funding

	Net Parent
	Funding
	(In millions)
Net parent funding — December 31, 2005	$	560.2
Net income		169.1
Net change in parent funding		(149.6	)
Net parent funding — December 31, 2006		579.7
Net income		175.6
Net change in parent funding		(110.8	)
Net parent funding — December 31, 2007		644.5
Net income		176.0
Net change in parent funding		(268.9	)
Net parent funding — December 31, 2008	$	551.6

The accompanying notes are an integral part of the combined financial statements.

F-16

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Combined Statements of Cash Flows

	Year Ended December 31,
	2008			2007			2006
	(In millions)
Cash flows from operating activities:
Net income	$	176.0		$	175.6		$	169.1
Adjustments to reconcile net income to net cash from continuing operations:
(Income) loss from discontinued operations		(22.3	)		(2.1	)		1.8
Depreciation and amortization		62.5			62.8			54.7
(Gain) loss on sale of assets		0.1			(0.4	)		(0.4	)
Deferred income taxes		4.0			4.1			33.2
Changes in assets and liabilities:
Trade receivables		34.4			(0.9	)		8.0
Prepaid expenses and other current assets		9.1			(2.4	)		(6.9	)
Accounts payable		10.7			(11.4	)		11.8
Accrued expenses		(10.9	)		12.6			(9.1	)
Income taxes payable		(7.4	)		7.4			2.4
Other liabilities		(0.2	)		(0.5	)		2.0
Deferred gain on asset retirement		(7.4	)		—			—
Increase (decrease) in deferred revenues		(16.7	)		3.1			11.7
(Increase) decrease in deferred expenses		8.8			(4.2	)		(9.1	)
Net cash from (used in) operating activities — continuing operations		240.7			243.7			269.2
Net cash from (used in) operating activities — discontinued operations		(9.3	)		8.0			9.1
Net cash flows from operating activities		231.4			251.7			278.3
Cash flows from investing activities:
Purchases of property and equipment		(34.7	)		(161.1	)		(124.3	)
Proceeds from dispositions of property and equipment		0.2			0.9			1.0
Proceeds from hurricane insurance		25.0			—			—
Net cash from (used in) investing activities — continuing operations		(9.5	)		(160.2	)		(123.3	)
Net cash from (used in) investing activities — discontinued operations		63.5			(0.8	)		(2.5	)
Net cash flows from (used in) investing activities		54.0			(161.0	)		(125.8	)
Cash flows from financing activities:
Net change in parent funding		(214.7	)		(61.1	)		(145.9	)
Net cash used in financing activities — continuing operations		(214.7	)		(61.1	)		(145.9	)
Net cash used in financing activities — discontinued operations		(54.2	)		(7.2	)		(6.6	)
Net cash flows used in financing activities		(268.9	)		(68.3	)		(152.5	)
Increase (decrease) in cash and cash equivalents		16.5			22.4			—
Cash and cash equivalents, beginning of year		24.6			2.2			2.2
Cash and cash equivalents, end of year	$	41.1		$	24.6		$	2.2

The accompanying notes are an integral part of the combined financial statements.

F-17

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements

NOTE 1.   NATURE OF BUSINESS AND PRINCIPLES OF COMBINATION

The Gulf of Mexico Business (“we” or “GOM”) of Pride International, Inc. (“Pride”) provides drilling services in the U.S. Gulf of Mexico and offshore Mexico. The accompanying financial statements have been prepared in anticipation for a potential transaction to separate GOM from Pride.

Historically, financial statements have not been prepared for GOM, as it was not operated as a separate business. These financial statements reflect the combined financial position and the related results of operations, cash flows, and net parent funding in a manner consistent with how Pride managed the business and as though GOM had been a stand-alone company for all periods presented. As a result, the financial statements include all offshore rigs operating in the Gulf of Mexico (including the operations of two semisubmersible rigs that are no longer part of the GOM), platform rig operations that were sold in May 2008, and rig management services provided for three deepwater drilling rigs owned by a third party, which were managed by us until April 2008 but will be retained by Pride. The platform rig operations have been classified as discontinued operations in the combined statements of operations for all periods presented (see note 3). The combined financial statements include the accounts of GOM and have been prepared in accordance with accounting principles generally accepted in the United States of America. These financial statements have been prepared using Pride’s historical basis in the assets and liabilities of GOM and the historical results of operations relating to GOM. All significant intercompany transactions and balances within GOM have been eliminated in preparing the combined accounts. The combined financial statements of GOM have been prepared from the separate records maintained by Pride and may not necessarily be indicative of the conditions that would have existed or the results of operations if GOM had operated as a stand-alone entity.

Because GOM has operated within Pride’s corporate cash management program for all periods, funding requirements and related transactions between GOM, on one hand, and Pride and its other affiliates, on the other hand, have been summarized and reflected on the balance sheet as net parent funding without regard to whether the funding represents a receivable, liability or equity. Transactions between GOM and Pride and its affiliates which are not included in GOM, have been identified as related party transactions. It is possible that the terms of the transactions with other divisions of Pride are not the same as those that would result from transactions among unrelated parties. Additionally, the combined financial statements for GOM include allocations of costs for certain support functions (see note 6). In the opinion of Pride’s management, all adjustments have been reflected that are necessary for a fair presentation of the combined financial statements.

In preparing the GOM unaudited combined financial statements for the three months ended March 31, 2009, we discovered certain expenses recorded in the current period which related to prior periods. The identified expenses were for certain contract services incurred but not recorded at December 31, 2008. The result of the misstatements was an overstatement of net income from continuing operations of $1.6 million, comprised of an understatement of revenue of $0.5 million, an understatement of operating costs, excluding depreciation and amortization of $2.9 million and a corresponding overstatement in income taxes of $0.8 million for the year ended December 31, 2008. The related effect of these misstatements on the balance sheet as of December 31, 2008 was an understatement of trade receivables of $0.5 million, an understatement of accounts payable of $2.9 million and an overstatement of net parent funding of $2.4 million. The combined balance sheet, statement of operations, statement of net parent funding, statement of cash flows, and related footnotes for the year ended December 31, 2008, have been adjusted to reflect the correction of these misstatements, which are immaterial to the 2008 combined financial statements.

The effect of the misstatements on the previously reported combined balance sheet as of, and the combined statement of operations for the nine month period ending, September 30, 2008 was an overstatement of net income from continuing operations of $0.6 million, comprised of an understatement of operating costs, excluding depreciation and amortization of $0.9 million and a corresponding overstatement in income taxes of $0.3 million. The related effect of these misstatements on the balance sheet as of September 30, 2008 was an understatement of accounts payable of $0.9 million and an overstatement of net parent funding of $0.9 million.

F-18

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

These misstatements are immaterial to the previously reported unaudited combined financial statements as of and for the nine month period ending September 30, 2008.

In May 2008, Pride completed the sale of our platform rig operations. The results of operations, for all periods presented, of the assets disposed of in this transaction have been reclassified to income from discontinued operations. Except where noted, the discussions in the following notes relate to our continuing operations only (see note 3).

NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Conditions Affecting Ongoing Operations

Our current business and operations are substantially dependent upon conditions in the oil and natural gas industry and, specifically, the exploration and production expenditures of oil and natural gas companies. The demand for contract drilling and related services is influenced by, among other things, oil and natural gas prices, expectations about future prices, the cost of producing and delivering oil and natural gas, government regulations and local and international political and economic conditions. There can be no assurance that current levels of exploration and production expenditures of oil and natural gas companies will be maintained or that demand for our services will reflect the level of such activities.

Fair Value Accounting

On January 1, 2008, we adopted, without any impact on our combined financial statements, the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurement. In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) No. 157-2, Effective Date of FASB Statement No. 157, which delays the effective date for non-financial assets and non-financial liabilities to fiscal years beginning after November 15, 2008, except for items that are measured at fair value in the financial statements on a recurring basis at least annually. Beginning January 1, 2009, we will adopt the provisions for nonfinancial assets and nonfinancial liabilities that are not required or permitted to be measured at fair value on a recurring basis. We do not expect the provisions of SFAS No. 157 related to these items to have a material effect on our combined financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning on or after January 1, 2008. The adoption of the provisions of SFAS No. 159 did not have a material impact on our combined financial statements.

Dollar Amounts

All dollar amounts (except per share amounts) presented in the tabulations within the notes to our combined financial statements are stated in millions of dollars, unless otherwise indicated.

F-19

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

Revenue Recognition

We recognize revenue as services are performed based upon contracted dayrates and the number of operating days during the period. We record all taxes imposed directly on revenue-producing transactions on a net basis. Mobilization fees received and costs incurred in connection with a customer contract to mobilize a rig from one geographic area to another are deferred and recognized on a straight-line basis over the term of such contract, excluding any option periods. Costs incurred to mobilize a rig without a contract are expensed as incurred. Fees received for capital improvements to rigs are deferred and recognized on a straight-line basis over the period of the related drilling contract. The costs of such capital improvements are capitalized and depreciated over the useful lives of the assets.

Cash and Cash Equivalents

We consider all highly liquid debt instruments having maturities of three months or less at the date of purchase to be cash equivalents.

Property and Equipment

Property and equipment are carried at original cost or adjusted net realizable value, as applicable. Major renewals and improvements are capitalized and depreciated over the respective asset’s remaining useful life. Maintenance and repair costs are charged to expense as incurred. When assets are sold or retired, the remaining costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in results of operations.

For financial reporting purposes, depreciation of property and equipment is provided using the straight-line method based upon expected useful lives of each class of assets. Expected original useful lives of the assets for financial reporting purposes are as follows:

	Years
Rigs and rig equipment	5-25
Transportation equipment	3-7
Buildings and improvements	10-20
Furniture and fixtures	5

We evaluate our estimates of remaining useful lives and salvage value for our rigs when changes in market or economic conditions occur that may impact our estimates of the carrying value of these assets. During 2007, we completed a technical evaluation of our offshore fleet. As a result of this evaluation, remaining useful lives and estimated salvage values were adjusted on certain rigs in the fleet. These changes were primarily a result of changing market conditions, the significant capital investment in certain rigs and revisions to, and standardization of, maintenance practices. As a result of our evaluation, we increased our estimates of the remaining lives of certain jackup rigs in our fleet between four and eight years and updated our estimated salvage value for all of our offshore drilling rig fleet to 10% of the historical cost of the rigs. The effect of these changes in estimates was a reduction to depreciation expense of approximately $11.7 million for 2007. In the first quarter of 2008, we extended the remaining useful life of one rig, which reduced depreciation expense by $0.5 million. The remaining useful lives of our rigs at December 31, 2008 ranged from 1.5 to 14.0 years.

Property and equipment comprise a significant amount of our total assets. We determine the carrying value of these assets based on property and equipment policies that incorporate our estimates, assumptions and judgments relative to the carrying value, remaining useful lives and salvage value of our rigs and other assets.

We evaluate our property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. Asset impairment evaluations are, by nature,

F-20

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

highly subjective. They involve expectations about future cash flows generated by our assets, and reflect management’s assumptions and judgments regarding future industry conditions and their effect on future utilization levels, dayrates and costs. The use of different estimates and assumptions could result in materially different carrying values of our assets and could materially affect our results of operations.

The recent economic downturn has resulted in stacking additional rigs, and we may be required to stack more rigs or enter into lower dayrate contracts in response to current market conditions. Prolonged periods of low utilization and dayrates could result in the recognition of impairment charges on certain of our rigs if future cash flow estimates, based upon information available to management at the time, indicate that the carrying value of these rigs may not be recoverable. Due to the stacking of additional rigs during the period and recent impairment announcements by other companies in our industry, we evaluated the recorded asset values of our mat-supported jackup fleet and determined that no impairment was required.

In 2008 and 2007, we recognized no impairment charges. In 2006, we recognized an impairment charge of $0.5 million related to the decision to scrap two platform rigs, which has been reclassified to discontinued operations.

Goodwill

Goodwill is not amortized. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we perform an annual impairment test of goodwill as of December 31, or more frequently if circumstances indicate that impairment may exist. Impairment assessments are performed using a variety of methodologies, including cash flows analysis and estimates of market value. There were no impairments in 2008, 2007 or 2006.

Rig Certifications

We are required to obtain certifications from various regulatory bodies in order to operate our offshore drilling rigs and must maintain such certifications through periodic inspections and surveys. The costs associated with obtaining and maintaining such certifications, including inspections and surveys, and drydock costs to the rigs are deferred and amortized over the corresponding certification periods.

We expended $0.9 million, $1.8 million and $6.8 million during 2008, 2007 and 2006, respectively, in obtaining and maintaining such certifications. As of December 31, 2008 and 2007, the deferred and unamortized portion of such costs on our balance sheet was $6.4 million and $7.7 million, respectively. The portion of the costs that are expected to be amortized in the 12 month periods following each balance sheet date are included in other current assets on the balance sheet and the costs expected to be amortized after more than 12 months from each balance sheet date are included in other assets. The costs are amortized on a straight-line basis over the period of validity of the certifications obtained. These certifications are typically for five years, but in some cases are for shorter periods. Accordingly, these deferred costs are generally amortized over a five year period.

Income Taxes

The provision for income taxes has been computed as if GOM were a stand-alone entity and filed separate tax returns. The provision for income taxes was impacted by Pride’s tax structure and strategies, which were designed to optimize an overall tax position and not that of GOM. To the extent we provide any U.S. tax expense or benefit, any related tax payable or receivable to Pride is reclassified to net parent funding in the same period.

We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and the tax basis of assets and liabilities using enacted

F-21

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

tax rates in effect for the year in which the asset is recovered or the liability is settled. A valuation allowance for deferred tax assets is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Foreign Currency Translation

We have designated the U.S. dollar as the functional currency for our international operations because we contract with customers, purchase equipment and finance capital using or indexed to the U.S. dollar. In accordance with SFAS No. 52, Foreign Currency Translation, when the U.S. dollar is designated as the functional currency, certain assets and liabilities of international operations are translated at historical exchange rates, revenues and expenses in these countries are translated at the average rate of exchange for the period, and all translation gains or losses are reflected in the period’s results of operations.

Major Customers and Concentration of Credit Risk

Our customers consist of various independent oil and natural gas producers, drilling service providers and the national oil company in Mexico. The capital expenditures of our customers are generally dependent on their views of future oil and gas prices and successful offshore drilling activity. We perform ongoing credit evaluations of our customers and provide allowances for probable credit losses when necessary. In Mexico, Pemex Exploración y Producción (“PEMEX”) is our only customer. PEMEX accounted for 64%, 56% and 32% of our total revenue for the years ended December 31, 2008, 2007 and 2006, respectively.

Stock-Based Compensation

We recognize compensation expense for awards of Pride’s equity instruments granted to GOM employees based on the grant date fair value of those awards. We recognize these compensation costs net of an estimated forfeiture rate, and recognize compensation cots for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term. SFAS No. 123(R), Share-Based Payment, also requires that companies measure the cost of liability-classified awards based on current fair value. The fair value of these awards will be remeasured at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation cost over that period.

Accounting Pronouncements

In December 2007, the FASB issued the revised SFAS No. 141(R), Business Combinations. Under SFAS No. 141(R), all business combinations will be accounted for by applying the acquisition method and an acquirer is required to be identified for each business combination. SFAS No. 141(R) defines the acquirer as the entity that obtains control of one or more businesses in the business combination, establishes the acquisition date as the date that the acquirer achieves control and requires the acquirer to recognize the assets acquired, liabilities assumed and any noncontrolling interest at their fair values as of the acquisition date. SFAS No. 141(R) also requires transaction costs and restructuring charges to be expensed. Effective January 1, 2009, we will begin applying this statement to any business combination completed by us.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, which is an amendment of Accounting Research Bulletin No. 51. SFAS No. 160 requires all entities to report minority interests in subsidiaries as equity in the consolidated financial statements and requires that transactions between entities and non-controlling interests be treated as equity. SFAS No. 160 requires a company to clearly identify and present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section but separate from the company’s equity. This statement is effective for the fiscal years, and interim periods within those fiscal years,

F-22

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

beginning on or after December 15, 2008. We adopted SFAS No. 160 on January 1, 2009, but its adoption did not have any effect on our results of operations and financial position.

NOTE 3.   DISCONTINUED OPERATIONS

We report discontinued operations in accordance with the guidance of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. For the disposition of any asset group accounted for as discontinued operations under SFAS No. 144, we have reclassified the results of operations as discontinued operations for all periods presented. Such reclassifications had no effect on our net income or net parent funding.

Sale of Platform Rig Operations.  In May 2008, Pride completed the sale of our platform rigs for $66 million in cash. In connection with the sale, we entered into lease agreements with the buyer to operate two platform rigs until their current contracts are completed, which is expected to occur in the second quarter of 2009. The leases require us to pay to the buyer all revenues from the operation of the rigs, less operating costs and a small per day management fee, which we retain. In the second quarter of 2008, we recorded a gain on the sale of the assets of $18.0 million, excluding a deferred gain of approximately $10.9 million for the two rigs that we will operate until the completion of their current drilling contracts. At December 31, 2008, the remaining balance of the unamortized deferred gain was $4.9 million. The following table presents selected information regarding the results of these operations:

	Year Ended December 31,
	2008			2007			2006
Revenues	$	54.7		$	70.5		$	60.6
Income (loss) before taxes		8.6			3.2			(2.8	)
Income (tax) benefit		(2.7	)		(1.1	)		1.0
Gain on disposal of assets, net of tax		16.4			—			—
Income (loss) from discontinued operations	$	22.3		$	2.1		$	(1.8	)

NOTE 4.   PROPERTY AND EQUIPMENT

Property and equipment at December 31 consisted of the following:

	2008			2007
Rigs and rig equipment	$	1,080.2		$	1,128.8
Transportation equipment		1.5			2.1
Buildings		0.2			6.5
Construction-in-progress		7.4			77.1
Land		—			0.8
Other		0.9			2.4
Property and equipment, cost		1,090.2			1,217.7
Accumulated depreciation and amortization		(478.2	)		(506.2	)
Property and equipment, net	$	612.0		$	711.5

Depreciation and amortization expense of property and equipment for 2008, 2007 and 2006 was $62.5 million, $62.8 million and $54.7 million, respectively.

During 2008, 2007 and 2006, maintenance and repair costs included in operating costs on the accompanying combined statements of operations were $55.7 million, $50.9 million and $39.0 million, respectively.

F-23

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

Pride capitalizes interest applicable to the construction of significant additions to property and equipment. For 2008, 2007 and 2006, Pride recorded capitalized interest of none, $1.8 million and $1.6 million, respectively, which has been recorded by GOM as part of net parent funding since no interest expense has been carved-out to GOM.

Rig transfer

In 2007, Pride transferred management of the Pride Mexico semisubmersible rig, which had a net book value of $42.5 million, from GOM to another division of Pride. The transfer was recorded at the historical net book value of the rig.

NOTE 5.   INCOME TAXES

The income tax provision from continuing operations has been computed on a separate return basis. To the extent we provide any U.S. tax expense or benefit, any related tax payable or receivable to Pride is reclassified to net parent funding in the same period.

The components of the income tax provision are comprised of the following for the years ended December 31:

	2008		2007		2006
U.S.:
Current	$	41.5	$	62.4	$	53.5
Deferred		4.0		4.1		33.2
Total U.S.		45.5		66.5		86.7
Foreign:
Current		37.4		28.4		9.0
Income taxes	$	82.9	$	94.9	$	95.7

A reconciliation of the differences between our income taxes computed at the U.S. statutory rate and our income taxes from continuing operations as reported in our combined statements of operations is summarized as follows for the years ended December 31:

	2008						2007						2006
	Amount			Rate (%)			Amount			Rate (%)			Amount		Rate (%)
U.S. statutory rate	$	82.9			35.0		$	93.9			35.0		$	93.3		35.0
Taxes on foreign earnings at greater than the U.S. statutory rate		—			—			0.5			0.2			0.8		0.3
Change in unrecognized tax benefits		0.3			0.1			(0.1	)		(0.0	)		1.2		0.4
Other		(0.3	)		(0.1	)		0.6			0.2			0.4		0.2
Income taxes	$	82.9			35.0		$	94.9			35.4		$	95.7		35.9

The domestic and foreign components of income from continuing operations before income taxes were as follows for the years ended December 31:

	2008		2007			2006
U.S.	$	235.7	$	268.5		$	266.0
Foreign		0.9		(0.1	)		0.6
Income from continuing operations before income taxes	$	236.6	$	268.4		$	266.6

F-24

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities and deferred tax assets were as follows at December 31:

	2008			2007
Deferred tax assets:
Operating loss carryforwards	$	22.7		$	28.9
Other		4.6			4.2
Subtotal		27.3			33.1
Valuation allowance		(22.7	)		(28.9	)
Total		4.6			4.2
Deferred tax liabilities:
Depreciation		146.5			151.4
Other		1.5			1.4
Total		148.0			152.8
Net deferred tax liability	$	143.4		$	148.6

As of December 31, 2008, we had deferred tax assets of $22.7 million relating to $81.2 million of foreign net operating loss (“NOL”) carryforwards. The NOL carryforwards can be used to reduce our foreign income taxes payable in future years. The NOL carryforwards could expire starting in 2012 through 2017. We have recognized a full valuation allowance on all of these foreign NOL carryforwards due to the uncertainty of realizing the tax benefit. A valuation allowance for deferred tax assets is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our ability to realize the benefit of our deferred tax assets requires that we achieve certain future earnings prior to the expiration of the carryforwards. We could be required to record an additional valuation allowance against certain or all of our remaining deferred tax assets if market conditions deteriorate or future earnings are below current estimates.

Uncertain Tax Positions

We have adopted and account for uncertainty in income taxes under the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). Under this interpretation, if we determine that a position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50 percent likely of being realized upon settlement. We presume that all tax positions will be examined by a taxing authority with full knowledge of all relevant information. We regularly monitor our tax positions and FIN 48 tax liabilities. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit, or derecognize a previously recorded tax benefit, when (i) there is a completion of a tax audit, (ii) there is a change in applicable tax law including a tax case or legislative guidance, or (iii) there is an expiration of the statute of limitations. Significant judgment is required in accounting for tax reserves. Although we believe that we have adequately provided for liabilities resulting from tax assessments by taxing authorities, positions taken by tax authorities could have a material impact on our effective tax rate in future periods.

As of December 31, 2008, we have approximately $3.6 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2008, we have approximately $3.3 million of accrued interest and penalties related to uncertain tax positions on the consolidated balance sheet. During 2008, we recorded interest and penalties of $0.3 million through the combined statement of operations.

F-25

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

For Mexico, tax years 2003 through 2008 remain open to examination by the major taxing jurisdictions. For the United States, tax years 2006 through 2008 remain open to examination.

The following table presents the reconciliation of the total amounts of unrecognized tax benefits from January 1, 2008 to December 31, 2008:

Beginning balance, January 1, 2008	$	3.3
Increase related to prior period tax positions		0.3
Increase related to current period tax positions		—
Statute expirations		—
Settlements		—
Other		—
Ending balance, December 31, 2008	$	3.6

From time to time, our periodic tax returns are subject to review and examination by various tax authorities within the jurisdictions in which we operate. We are currently contesting several tax assessments and may contest future assessments where we believe the assessments are in error. We cannot predict or provide assurance as to the ultimate outcome of existing or future tax assessments; however, we believe the ultimate resolution of outstanding tax assessments will not have a material adverse effect on our combined financial statements.

In 2006 and 2007, we received tax assessments from the Mexican government related to the operations of certain of our entities for the tax years 2001 through 2003. These assessments contest our right to claim certain deductions in our tax returns for those years. We anticipate that the Mexican government will make additional assessments contesting similar deductions for other tax years. While we intend to contest these assessments vigorously, we cannot predict or provide assurance as to the ultimate outcome, which may take several years. However, we do not believe that the ultimate outcome of these assessments will have a material impact on our combined financial statements. Pursuant to local statutory requirements, Pride has provided bonds in the amount of approximately 555 million Mexican pesos, or approximately $40 million as of December 31, 2008, to contest these assessments (see note 12).

NOTE 6.   RELATED PARTY TRANSACTIONS

The following summarizes our related party transactions for years ended December 31:

	2008		2007		2006
Operating expenses:
Direct charges from Pride affiliates	$	43.0	$	35.3	$	28.7
Allocated Pride Corporate expense		13.7		10.9		5.0
General and administrative expenses:
Allocated Pride Corporate expense		36.6		25.6		17.4

Pride carries out purchasing services for GOM relating to materials, supplies, maintenance and other items. There is no mark-up on these items, as the costs are included in the Pride Corporate allocations.

Relationship with Pride

GOM has an extensive and ongoing relationship with Pride and its affiliates. Pride provides operational support services to GOM. Pride also allocates costs for (i) engineering services, (ii) training and quality control services, (iii) purchasing and inventory management services, (iv) environmental, health and safety services, and (v) human resources management to GOM. In addition, Pride also allocates to GOM certain

F-26

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

general and administrative costs including (i) accounting, treasury, internal audit, and other financial services, (ii) legal and related services, (iii) information systems networking and communication services, (iv) employee benefit services and (v) executive management and related services. The allocation of costs to GOM is based on a pro rata allocation of Pride’s worldwide costs to provide such services to GOM. These costs allocations are not necessarily indicative of the costs that GOM could obtain such services on a stand-alone basis.

Net Parent Funding

The net parent funding represents Pride’s combined ownership interest and investments in the operations managed by GOM. GOM does not have its own credit facility, and its cash balances have been swept to Pride as a part of Pride’s cash management program. GOM is dependent on Pride for funding for capital expenditures and working capital requirements. All transactions between Pride and GOM are shown as net parent funding in the combined financial statements. Changes in net parent funding consist primarily of earnings and expenses of operations, including costs allocations from the parent, advances from Pride to GOM to fund operations, transfers of assets between Pride and GOM, and net effect of cash transfers between Pride and GOM, including the sweeping of cash by Pride.

Pledged Assets

At December 31, 2007, substantially all of GOM’s rigs and accounts receivable were pledged as collateral to secure the obligations of the guarantors under Pride’s senior secured credit facility that was terminated in December 2008. Under Pride’s new unsecured credit facility, our assets are no longer pledged as collateral.

NOTE 7.   LEASES

Operating leases

At December 31, 2008, we had entered into long-term noncancelable operating leases covering certain facilities. The total minimum amounts of rental commitments are as follows for the years ended December 31:

	Amount
2009		1.2
2010		0.1
2011		—
	$	1.3

Rental expense for 2008, 2007 and 2006 was $16.8 million, $16.6 million and $18.7 million, respectively.

NOTE 8.   EMPLOYEE STOCK PLANS

Pride’s employee stock-based compensation plans provide for the granting or awarding of stock options, restricted stock, restricted stock units, stock appreciation rights, other stock-based awards and cash awards to directors, officers and other key employees of Pride, including employees of GOM. As of December 31, 2008, only one of Pride’s plans had shares available for future option grants or other awards to employees of GOM. Pride’s 2007 Long-Term Incentive Plan allows for up to eight million shares to be awarded to Pride’s employees, including employees of GOM. The maximum number of shares of common stock that may be issued with respect to awards other than options and stock appreciation rights is four million shares. As of December 31, 2008, no awards had been granted to employees of GOM under the 2007 plan.

F-27

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

Stock-based compensation expense related to stock options, restricted stock and the Pride Employee Stock Purchase Plan (“ESPP”) for GOM employees was allocated within our combined statement of operations as follows:

	2008
Operating costs, excluding depreciation and amortization	$	1.0
General and administrative, excluding depreciation and amortization		—
Stock-based compensation expense before income taxes		1.0
Income tax benefit		(0.4	)
Total stock-based compensation expense after income taxes	$	0.6

No Pride stock options were granted to any employee of GOM in 2008, 2007 and 2006.

The following table summarizes our activity in stock option awards:

				Weighted		Weighted
				Average		Average
				Exercise		Remaining		Aggregate
	Number of			Price per		Contractual		Intrinsic
	Shares			Share		Term		Value
	(In thousands)					(In years)
Outstanding as of December 31, 2007		99		$	17.49
Granted		—			—
Exercised		(73	)		41.00
Forfeited		—			—
Cancellations/Transferred to other Pride affiliates		(23	)		17.55
Outstanding as of December 31, 2008		3			17.98		5.0	$	0.01
Exercisable as of December 31, 2008		3			17.98		5.0	$	0.01

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between our closing stock price on the last trading day of the year and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the stock option holders had all the holders exercised their stock options on the last day of the year. This amount changes based on the fair market value of Pride’s common stock.

The exercise price of stock options is equal to the fair market value of Pride’s common stock on the option grant date. The stock options generally vest over periods ranging from two years to four years and have a contractual term of 10 years. Vested options may be exercised in whole or in part at any time prior to the expiration date of the grant. Awards of restricted stock and of restricted stock units consist of awards of Pride’s common stock, or awards denominated in Pride’s common stock, that are subject to restrictions on transferability. Such awards are subject to forfeiture if employment terminates in certain circumstances prior to the release of the restrictions and vest two to four years from the date of grant.

Other information pertaining to option activity was as follows:

	2008		2007		2006
Total fair value of stock options vested	$	—	$	0.1	$	0.6
Total intrinsic value of stock options exercised	$	1.7	$	1.5	$	10.4

Pride awarded restricted stock and restricted stock units (collectively, “restricted stock awards”) to certain key employees of GOM. Pride records unearned compensation as a reduction of its stockholders equity based

F-28

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

on the closing price of Pride’s common stock on the date of grant. The unearned compensation is charged to GOM over the applicable vesting period. The following table summarizes the restricted stock awarded during the years ended December 31:

	2008		2007		2006
Number of restricted stock awards (in thousands)		78.8		77.5		54.1
Fair value of restricted stock awards at date of grant	$	2.7	$	2.4	$	1.7

The following table summarizes activity in nonvested restricted stock awards granted to GOM employees:

				Weighted
				Average
				Grant Date
	Number of			Fair Value
	Shares			per Share
	(In thousands)
Nonvested at December 31, 2007		89		$	30.96
Granted		79			33.63
Vested		(23	)		30.87
Forfeited/Transferred to other Pride affiliates		(65	)		32.43
Nonvested at December 31, 2008		80			32.43

As of December 31, 2008, there was $2.6 million of unrecognized stock-based compensation expense related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted average period of 2.2 years.

Pride’s ESPP permits eligible employees to purchase shares of its common stock at a price equal to 85% of the lower of the closing price of its common stock on the first or last trading day of the calendar year. A total of 0.2 million shares remained available for issuance under the ESPP as of December 31, 2008. Employees of GOM purchased approximately 8,500, 17,800 and 9,200 shares in 2008, 2007 and 2006, respectively.

The fair value of stock-based ESPP awards is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2008
Dividend yield	0.0%
Expected volatility	35.1%
Risk-free interest rate	3.3%
Expected life	1.0 year
Weighted average grant-date fair value of stock option granted	$12.92

NOTE 9.   COMMITMENTS AND CONTINGENCIES

We are routinely involved in litigation, claims and disputes incidental to our business, which at times involves claims for significant monetary amounts, some of which would not be covered by insurance. In the opinion of management, none of the existing litigation will have a material adverse effect on our financial position, results of operations or cash flows. However, a substantial settlement payment or judgment in excess of the accruals recorded by us could have a material adverse effect on the financial position, results of operations or cash flows.

F-29

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

Pride’s FCPA Investigation

The Audit Committee of Pride’s Board of Directors, through independent outside counsel, has undertaken an investigation of potential violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) in several of its international operations. With respect to the Mexico operations included in these combined financial statements, this investigation has found evidence suggesting that payments, which may violate the FCPA, were made to government officials in Mexico aggregating less than $150,000. The evidence to date regarding these payments suggests that payments were made beginning in 2002 through early 2006 (a) to one or more government officials in Mexico in connection with the clearing of a jackup rig and equipment through customs, the movement of personnel through immigration or the acceptance of a jackup rig under a drilling contract; and (b) with respect to the potentially improper entertainment of government officials in Mexico.

Pride has voluntarily disclosed information found in the investigation to the Department of Justice and the Securities and Exchange Commission. Pride is continuing to cooperate with these authorities as the investigation and FCPA compliance reviews continue.

If violations of the FCPA occurred, we could be liable for or subject to fines, civil and criminal penalties, equitable remedies, including profit disgorgement, and injunctive relief. Civil penalties under the antibribery provisions of the FCPA could range up to $10,000 per violation, with a criminal fine up to the greater of $2 million per violation or twice the gross pecuniary gain to us or twice the gross pecuniary loss to others, if larger. Civil penalties under the accounting provisions of the FCPA can range up to $500,000 per violation, and a company that knowingly commits a violation can be fined up to $25 million per violation. In addition, both the SEC and the DOJ could assert that conduct extending over a period of time may constitute multiple violations for purposes of assessing the penalty amounts. Often, dispositions of these types of matters result in modifications to business practices and compliance programs and possibly a monitor being appointed to review future business and practices with the goal of ensuring compliance with the FCPA.

We could also face fines, sanctions, and other penalties from authorities in Mexico, including prohibition of our participating in or curtailment of business operations and the seizure of rigs or other assets. Our customer in Mexico could seek to impose penalties or take other actions adverse to our interests. We could also face other third-party claims by directors, officers, employees, affiliates, advisors, attorneys, agents, security or other interest holders or constituents of our company. In addition, disclosure of the subject matter of the investigation could adversely affect our reputation and our ability to obtain new business or retain existing business from our current clients and potential clients, to attract and retain employees, and to access the capital markets.

Pride has commenced discussions with the DOJ and SEC regarding a negotiated resolution for these matters, which could be settled during 2009. No amounts have been accrued related to any potential fines, sanctions, claims or other penalties, which could be material individually or in the aggregate, but an accrual could be made as early as the second or third quarter of 2009. We cannot currently predict what, if any, actions may be taken by the DOJ, the SEC, any other applicable government or other authorities or our customers or other third parties or the effect the actions may have on our results of operations, financial condition or cash flows, on our combined financial statements or on our business, except that our responsibility for fines, penalties or profit disgorgement payable to the United States government will not exceed $1 million.

Loss of Pride Wyoming

In September 2008, the Pride Wyoming, a 250-foot slot-type jackup rig operating in the U.S., was deemed a total loss for insurance purposes after it was severely damaged and sank as a result of Hurricane Ike. The rig had a net book value of approximately $14 million, and Pride has collected a total of $25 million for the insured value of the rig. We expect to incur costs of approximately $48.6 million for removal of the wreckage and salvage operations, not including any costs arising from damage to offshore structures owned by third

F-30

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

parties. These costs for removal of the wreckage and salvage operations in excess of a $1 million retention are expected to be covered by Pride’s insurance. Pride has agreed to advance the costs of removal of the wreckage and salvage operations until receipt of insurance proceeds, but we will be responsible for payment of the $1 million retention, $2.5 million in premium payments for a removal of wreckage claim and for any costs not covered by Pride’s insurance.

The owners of two pipelines on which parts of the Pride Wyoming settled have requested that Pride pay for all costs, expenses and other losses associated with the damage, including loss of revenue. Each owner has claimed damages in excess of $40 million. Other pieces of the rig may have also caused damage to certain other offshore structures. In October 2008, Pride filed a complaint in U.S. Federal District Court pursuant to the Limitation of Liability Act, which has the potential to statutorily limit our exposure for claims arising out of third party damages caused by the loss of the Pride Wyoming. Pride will retain the right after the spin-off to control any claims, litigation or settlements arising out of the loss of the Pride Wyoming. Based on the information available to us at this time, we do not expect the outcome of this potential claim to have a material adverse effect on our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of this potential claim. Although we believe Pride has adequate insurance, we will be responsible for any deductibles or awards not covered by Pride’s insurance.

NOTE 10.   SEGMENT AND GEOGRAPHIC INFORMATION

As a part of Pride, GOM historically has not operated on a stand-alone basis. We provide offshore contract drilling services to oil and gas production and development companies in the Gulf of Mexico. We manage our operations based upon the geographic location of where the services are performed. We have two reportable segments: U.S. Gulf of Mexico and Mexico.

The accounting policies for our segments are the same as those described in Note 2. We evaluate the performance of our business units based on earnings from operations. Summarized financial information for GOM by segment is shown in the following table for the years ended December 31:

	U.S.		Mexico		Total
2008
Revenues	$	249.0	$	432.8	$	681.8
Earnings from operations		53.2		186.0		239.2
Total assets		367.3		438.1		805.4
Capital expenditures		19.3		15.4		34.7
Depreciation and amortization		22.8		39.7		62.5
2007
Revenues	$	307.4	$	399.8	$	707.2
Earnings from operations		84.5		184.7		269.2
Total assets		274.2		618.9		893.1
Capital expenditures		56.5		104.6		161.1
Depreciation and amortization		25.2		37.6		62.8
2006
Revenues	$	436.3	$	203.2	$	639.5
Earnings from operations		220.5		47.7		268.2
Total assets		339.4		484.0		823.4
Capital expenditures		41.9		82.4		124.3
Depreciation and amortization		25.2		29.5		54.7

F-31

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

All of our revenues and earnings from operations in Mexico are derived from PEMEX. PEMEX accounted for 64%, 56% and 32% of our combined revenues for the years ended December 31, 2008, 2007, and 2006, respectively. Additionally, Applied Drilling Technology, Inc. accounted for 11% of our combined revenues for the years ended December 31, 2008 and 2006. We are exposed to the risk of changes in social, political and economic conditions in Mexico. Policy changes by PEMEX or the Mexican government could also adversely affect our financial condition and results of operations.

PEMEX has indicated a shifting focus toward geologic prospects to deeper water and therefore an increased emphasis on rigs with a water depth rating of 250 feet or greater. As PEMEX changes its focus toward new field exploration and development prospects that increasingly require the use of rigs with greater water depth capability, we believe demand in Mexico for our ten rigs with water depth ratings of 200 feet or less is likely to decline and the future contracting opportunities for such rigs in Mexico will likely diminish. One of our rigs with a water depth rating of 200 feet or less is currently working in the Mexican sector of the Gulf of Mexico.

Long-lived assets, net which include property and equipment and goodwill, by geographic area is presented in the following table and were attributed to the countries based on the physical location of the assets. A substantial portion of our assets are mobile. Asset locations at the end of the period are not necessarily indicative of the geographic distribution of such assets during the periods presented.

	2008		2007
Mexico	$	340.8	$	495.6
United States		272.4		217.4
Total	$	613.2	$	713.0

NOTE 11.   SUPPLEMENTAL FINANCIAL INFORMATION

Prepaid expenses and other current assets consisted of the following at December 31:

	2008		2007
Deferred mobilization and inspection costs	$	7.5	$	13.7
Prepaid expenses		4.6		13.2
Insurance receivables		49.8		1.1
Other		0.5		1.1
Total	$	62.4	$	29.1

Accrued expenses and other current liabilities consisted of the following at December 31:

	2008		2007
Deferred mobilization revenues	$	10.7	$	20.5
Salvage costs		41.2		—
Taxes other than income		13.3		18.2
Capital expenditures		—		7.9
Payroll and benefits		3.1		7.3
Deferred gain		7.4		—
Other		8.9		6.9
Total	$	84.6	$	60.8

F-32

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Combined Financial Statements — (Continued)

Other income (expense), net consisted of the following for the years ended December 31:

	2008			2007			2006
Foreign exchange gain (loss)	$	(3.0	)	$	(1.3	)	$	(1.6	)
Other income (expense)		—			0.5			—
Interest income		0.4			0.1			—
Interest expense		—			(0.1	)		—
Total	$	(2.6	)	$	(0.8	)	$	(1.6	)

Supplemental cash flows and non-cash transactions were as follows for the years ended December 31:

	2008			2007		2006
Cash paid during the year for:
Income taxes — U.S., net	$	0.4		$	0.5	$	—
Income taxes — foreign, net		44.6			20.1		5.4
Change in capital expenditures in accounts payable		(13.2	)		1.0		8.9
Non-cash transfer of property and equipment with affiliates		—			42.5		(2.9	)

NOTE 12.   SUBSEQUENT EVENT (Unaudited)

In February 2009, we received additional tax assessments from the Mexican government related to the operations of certain entities for the tax years 2003 and 2004 in the amount of 1,097 million Mexican pesos, or approximately $74 million, and Pride has contested these assessments. Bonds or other suitable collateral will be required no earlier than the third quarter of 2009 in connection with Pride’s contest of these assessments. We anticipate that the Mexican government will make additional assessments contesting similar deductions for other tax years or entities. Additional bonds or other suitable collateral will need to be provided to the extent assessments are contested.

F-33

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Combined Balance Sheets

	March 31,		December 31,
	2009		2008
	(Unaudited)		(Audited)
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	23.2	$	41.1
Trade receivables, net		79.1		83.3
Deferred income taxes		1.0		1.0
Prepaid expenses and other current assets		62.7		62.4
Total current assets		166.0		187.8
Property and equipment, net		610.1		612.0
Goodwill		1.2		1.2
Other assets		3.9		4.4
Total assets	$	781.2	$	805.4
LIABILITIES AND NET PARENT FUNDING
Current liabilities:
Accounts payable	$	14.3	$	18.7
Accrued expenses and other current liabilities		75.2		84.6
Income taxes payable		2.8		2.5
Total current liabilities		92.3		105.8
Other long-term liabilities		3.8		3.6
Deferred income taxes		144.9		144.4
Total liabilities		241.0		253.8
Net parent funding		540.2		551.6
Total liabilities and net parent funding	$	781.2	$	805.4

The accompanying notes are an integral part of the combined financial statements.

F-34

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Combined Statements of Operations

	Three Months Ended
	March 31,
	2009			2008
	(Unaudited)
	(In millions)
Revenues	$	115.7		$	193.6
Costs and expenses:
Operating costs, excluding depreciation and amortization		74.5			98.8
Depreciation and amortization		15.5			16.0
General and administrative, excluding depreciation and amortization		5.9			6.5
(Gain) loss on sales of assets, net		0.1			(0.1	)
Earnings from operations		19.7			72.4
Other income (expense), net		0.7			0.4
Income before income taxes		20.4			72.8
Income taxes		(7.3	)		(25.6	)
Income from continuing operations, net of tax		13.1			47.2
Income from discontinued operations, net of tax		2.8			3.7
Net income	$	15.9		$	50.9

The accompanying notes are an integral part of the combined financial statements.

F-35

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Combined Statements of Cash Flows

	Three Months Ended
	March 31,
	2009			2008
	(Unaudited)
	(In millions)
Cash flows from operating activities:
Net income	$	15.9		$	50.9
Adjustments to reconcile net income to net cash from continuing operations:
(Income) loss from discontinued operations		(2.8	)		(3.7	)
Depreciation and amortization		15.5			16.0
(Gain) loss on sale of assets		0.1			(0.1	)
Deferred income taxes		0.6			0.1
Changes in assets and liabilities:
Trade receivables		4.1			(33.1	)
Prepaid expenses and other current assets		(2.5	)		6.3
Other assets		(0.1	)		—
Accounts payable		(9.7	)		11.8
Accrued expenses		(2.8	)		(3.1	)
Income taxes payable		0.3			(7.1	)
Other liabilities		0.2			(0.4	)
Increase (decrease) in deferred revenues		(2.7	)		(9.5	)
(Increase) decrease in deferred expenses		2.8			3.9
Net cash flows from operating activities — continuing operations		18.9			32.0
Net cash from (used in) operating activities — discontinued operations		(1.6	)		4.5
Net cash flows from operating activities		17.3			36.5
Cash flows from investing activities:
Purchases of property and equipment		(7.7	)		(22.2	)
Proceeds from dispositions of property and equipment		—			0.1
Net cash used in investing activities — continuing operations		(7.7	)		(22.1	)
Net cash used in investing activities — discontinued operations		—			(0.3	)
Net cash flows used in investing activities		(7.7	)		(22.4	)
Cash flows from financing activities:
Net change in parent funding		(29.1	)		(14.1	)
Net cash used in financing activities — continuing operations		(29.1	)		(14.1	)
Net cash from (used in) financing activities — discontinued operations		1.6			(4.2	)
Net cash flows used in financing activities		(27.5	)		(18.3	)
Decrease in cash and cash equivalents		(17.9	)		(4.2	)
Cash and cash equivalents, beginning of period		41.1			24.6
Cash and cash equivalents, end of period	$	23.2		$	20.4

The accompanying notes are an integral part of the combined financial statements.

F-36

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements

NOTE 1.   NATURE OF BUSINESS AND PRINCIPLES OF COMBINATION

The Gulf of Mexico Business (“we” or “GOM”) of Pride International, Inc. (“Pride”) provides shallow water drilling services in the U.S. Gulf of Mexico and offshore Mexico. The accompanying financial statements have been prepared in anticipation for a potential transaction to separate GOM from Pride.

Historically, financial statements have not been prepared for GOM, as it was not operated as a separate business. These financial statements reflect the combined financial position and the related results of operations, cash flows, and net parent funding in a manner consistent with how Pride managed the business and as though GOM had been a stand-alone company for all periods presented. As a result, the financial statements include all offshore rigs operating in the Gulf of Mexico and through April 2008 rig management services provided for three deepwater drilling rigs owned by a third party. The combined financial statements include the accounts of GOM and have been prepared in accordance with accounting principles generally accepted in the United States of America. These financial statements have been prepared using Pride’s historical basis in the assets and liabilities of GOM and the historical results of operations relating to GOM. All significant intercompany transactions and balances within GOM have been eliminated in preparing the combined accounts. The combined financial statements of GOM have been prepared from the separate records maintained by Pride and may not necessarily be indicative of the conditions that would have existed or the results of operations if GOM had operated as a stand-alone entity.

Because GOM has operated within Pride’s corporate cash management program for all periods, funding requirements and related transactions between GOM, on one hand, and Pride and its other affiliates, on the other hand, have been summarized and reflected on the balance sheet as net parent funding without regard to whether the funding represents a receivable, liability or equity. Transactions between GOM and Pride and its affiliates which are not included in GOM, have been identified as related party transactions. It is possible that the terms of the transactions with other divisions of Pride are not the same as those that would result from transactions among unrelated parties. Additionally, the combined financial statements for GOM include allocations of costs for certain support functions (see note 5). In the opinion of Pride’s management, all adjustments have been reflected that are necessary for a fair presentation of the combined financial statements.

In May 2008, Pride completed the sale of our platform rig operations. The results of operations, for all periods presented, of the assets disposed of in this transaction have been reclassified to income from discontinued operations. Except where noted, the discussions in the following notes relate to our continuing operations only (see note 3).

Our unaudited combined financial statements included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. We believe that the presentation and disclosures herein are adequate to make the information not misleading. In the opinion of management, the unaudited combined financial information included herein reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. These unaudited combined financial statements should be read in conjunction with our audited combined financial statements and notes thereto included elsewhere in this information statement for the year ended December 31, 2008. The results of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for a full year or any other interim period.

In the notes to the unaudited combined financial statements, all dollar and share amounts, other than per share amounts, in tabulations are in millions of dollars and shares, respectively, unless otherwise noted.

F-37

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Conditions Affecting Ongoing Operations

Our current business and operations are substantially dependent upon conditions in the oil and natural gas industry and, specifically, the exploration and production expenditures of oil and natural gas companies. The demand for contract drilling and related services is influenced by, among other things, oil and natural gas prices, expectations about future prices, the cost of producing and delivering oil and natural gas, government regulations and local and international political and economic conditions. There can be no assurance that current levels of exploration and production expenditures of oil and natural gas companies will be maintained or that demand for our services will reflect the level of such activities.

Property and Equipment

Property and equipment comprise a significant amount of our total assets. We determine the carrying value of these assets based on property and equipment policies that incorporate our estimates, assumptions and judgments relative to the carrying value, remaining useful lives and salvage value of our rigs and other assets.

We evaluate our property and equipment for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. Asset impairment evaluations are, by nature, highly subjective. They involve expectations about future cash flows generated by our assets, and reflect management’s assumptions and judgments regarding future industry conditions and their effect on future utilization levels, dayrates and costs. The use of different estimates and assumptions could result in materially different carrying values of our assets and could materially affect our results of operations.

The recent economic downturn has resulted in stacking additional rigs, and we may be required to stack more rigs or enter into lower dayrate contracts in response to current market conditions. Prolonged periods of low utilization and dayrates could result in the recognition of impairment charges on certain of our rigs if future cash flow estimates, based upon information available to management at the time, indicate that the carrying value of these rigs may not be recoverable. Due to the stacking of additional rigs during the period and recent impairment announcements by other companies in our industry, we evaluated the recorded asset values of our mat-supported jackup fleet and determined that no impairment was required.

Goodwill

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we are required to test for the impairment of goodwill and other intangible assets with indefinite lives on at least an annual basis. Goodwill impairment evaluations are, by nature, highly subjective. Recoverability of goodwill is evaluated using a two-step process. The first step involves a comparison of the fair value of each of the reporting units with its carrying amount (including goodwill). If a reporting unit’s carrying amount exceeds its fair value, the second step is performed. The second step involves a comparison of the implied fair value and carrying value of that reporting unit’s goodwill. To the extent that a reporting unit’s goodwill carrying amount exceeds the implied fair value of its goodwill, an impairment loss is recognized. Fair value is estimated using discounted cash flows of the reporting unit and other market-related valuation models, including earnings multiples and comparable asset market values. In making an assessment of fair value, we rely on current and past experience

F-38

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

concerning our industry cycles which historically have proven to be extremely volatile. In addition, we make future assumptions based on a number of factors including future operating performance, as discussed above in Property and Equipment, expected economic conditions and actions we expect to take. Rates used to discount future cash flows are dependent upon interest rates and the cost of capital at a point in time. There are inherent uncertainties related to these factors and our judgment in applying them to the analysis of goodwill impairment.

Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. SFAS No. 157, Fair Value Measurement includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy consists of the following three levels:

Level 1 Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table sets forth by level within the fair value hierarchy goodwill, net as of March 31, 2009:

	March 31, 2009
			Fair Value Measurement
			Significant
	Quoted		Other		Significant
	Prices in		Observable		Unobservable
	Active Markets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
			(In millions)
Goodwill, net	$	—	$	—	$	1.2	$	1.2

We performed an annual impairment assessment as of December 31, 2008, which indicated that goodwill was not impaired as of that date. However, due to the continued decline in dayrates and utilization for the mat-supported jackup rigs during the first quarter of 2009, as previously discussed, required interim testing was performed as of March 31, 2009. Based on this analysis, it was determined that no impairment of goodwill was required.

Fair Value Accounting

On January 1, 2008, we adopted, without any impact on our combined financial statements, the provisions of SFAS No. 157, Fair Value Measurement.

In February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB Statement No. 157, which delayed the effective date for nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008, except for items that are measured at fair value in the financial statements on a recurring basis at least annually. Effective January 2009, we adopted the provisions for nonfinancial assets and nonfinancial liabilities that are not required or permitted to be measured at fair value on a recurring basis. The adoption of SFAS No. 157 did not have a material effect on our combined financial statements.

In April 2009, the FASB issued FSP SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which provides additional guidance for estimating fair value in accordance with SFAS No. 157 when

F-39

GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

the volume and level of activity for the asset or liability have significantly decreased. This FSP re-emphasizes that regardless of market conditions the fair value measurement is an exit price concept as defined in SFAS No. 157. This FSP clarifies and includes additional factors to consider in determining whether there has been a significant decrease in market activity for an asset or liability and provides additional clarification on estimating fair value when the market activity for an asset or liability has declined significantly. The scope of this FSP does not include assets and liabilities measured under level 1 inputs. FSP SFAS 157-4 is applied prospectively to all fair value measurements where appropriate and will be effective for interim and annual periods ending after June 15, 2009. We will adopt the provisions of FSP SFAS 157-4 effective April 1, 2009, which we do not expect to have a material impact on our combined financial statements.

In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP which amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require publicly-traded companies, as defined in APB Opinion No. 28, Interim Financial Reporting, to provide disclosures on the fair value of financial instruments in interim financial statements. FSP SFAS 107-1 and APB 28-1 is effective for interim periods ending after June 15, 2009. We will adopt the new disclosure requirements in our June 30, 2009 combined financial statements.

Accounting Pronouncements

On January 1, 2009, we adopted the provisions of SFAS No. 141 (Revised 2007), Business Combinations, which retains the underlying concepts of SFAS No. 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but changes the method of applying the acquisition method in a number of ways. Acquisition costs are no longer considered part of the fair value of an acquisition and will generally be expensed as incurred, noncontrolling interests are valued at fair value at the acquisition date, in-process research and development is recorded at fair value as an indefinite-lived intangible asset at the acquisition date, restructuring costs associated with a business combination are generally expensed subsequent to the acquisition date, and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.

In April 2009, the FASB issued FSP SFAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, which amends the guidance in SFAS No. 141(R) to require contingent assets acquired and liabilities assumed in a business combination to be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the measurement period. If fair value cannot be reasonably estimated during the measurement period, the contingent asset or liability would be recognized in accordance with SFAS No. 5, Accounting for Contingencies, and FASB Interpretation No. 14, Reasonable Estimation of the Amount of a Loss. Further, this FSP eliminated the specific subsequent accounting guidance for contingent assets and liabilities from SFAS No. 141(R), without significantly revising the guidance in SFAS No. 141. However, contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination would still be initially and subsequently measured at fair value in accordance with SFAS No. 141(R). This FSP is effective for all business acquisitions occurring on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted the provisions of SFAS No. 141(R) and FSP SFAS 141(R)-1 for business combinations with an acquisition date on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, which is an amendment of Accounting Research Bulletin No. 51. SFAS No. 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. In addition, SFAS No. 160 requires expanded disclosures in the consolidated financial statements that clearly identify and distinguish between the interests of the parent’s owners and the interests of the noncontrolling owners of a

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GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

subsidiary. This statement is effective for the fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We adopted SFAS No. 160 on January 1, 2009 but its adoption did not have a material impact on our combined financial statements.

NOTE 3.   DISCONTINUED OPERATIONS

We report discontinued operations in accordance with the guidance of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. For the disposition of any asset group accounted for as discontinued operations under SFAS No. 144, we have reclassified the results of operations as discontinued operations for all periods presented. Such reclassifications had no effect on our net income or net parent funding.

Sale of Platform Rig Operations.  In May 2008, we sold our entire fleet of platform rigs and related land, buildings and equipment for $66 million in cash. In connection with the sale, we entered into lease agreements with the buyer to operate two platform rigs until their existing contracts are completed. In March 2009, the contract for one of these rigs was cancelled and the remaining deferred gain of $2.8 million related to the sale of the rig was recognized. At March 31, 2009, the balance of the unamortized deferred gain was $0.5 million, which will be recognized in April 2009 at the completion of the remaining contract.

The following table presents selected information regard the results of these operations.

	Three Months Ended
	March 31,
	2009			2008
Revenues	$	7.1		$	22.6
Income (loss) before taxes, excluding gain on disposal	$	(0.1	)	$	5.7
Income (taxes) benefit		—			(2.0	)
Gain on disposal of assets, net of tax		2.9			—
Income (loss) from discontinued operations	$	2.8		$	3.7

NOTE 4.   PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	March 31,			December 31,
	2009			2008
Rigs and rig equipment	$	1,084.3		$	1,080.2
Transportation equipment		1.5			1.5
Buildings		0.1			0.2
Construction-in-progress		16.7			7.4
Land		—			—
Other		0.9			0.9
Property and equipment, cost		1,103.5			1,090.2
Accumulated depreciation and amortization		(493.4	)		(478.2	)
Property and equipment, net	$	610.1		$	612.0

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GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

NOTE 5.   RELATED PARTY TRANSACTIONS

GOM has an extensive and ongoing relationship with Pride and its affiliates. The following summarizes our related party transactions for three month periods ended March 31:

	Three Months Ended
	March 31,
	2009		2008
Operating expenses:
Direct charges from Pride affiliates	$	10.7	$	10.6
Allocated Pride Corporate expense		3.6		5.9
General and administrative expenses:
Allocated Pride Corporate expense		5.9		6.5

Pride carries out purchasing services for GOM relating to materials, supplies, maintenance and other items. There is no mark-up on these items, as the costs are included in the Pride Corporate allocations.

NOTE 6.   EMPLOYEE STOCK PLANS

During the three months ended March 31, 2009, GOM employees were granted approximately 104,535 restricted stock awards with a weighted average grant-date fair value per share of $16.12.

NOTE 7.   COMMITMENTS AND CONTINGENCIES

Pride’s FCPA Investigation

The Audit Committee of Pride’s Board of Directors, through independent outside counsel, has undertaken an investigation of potential violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) in several of its international operations. With respect to the Mexico operations included in these combined financial statements, this investigation has found evidence suggesting that payments, which may violate the FCPA, were made to government officials in Mexico aggregating less than $150,000. The evidence to date regarding these payments suggests that payments were made beginning in 2002 through early 2006 (a) to one or more government officials in Mexico in connection with the clearing of a jackup rig and equipment through customs, the movement of personnel through immigration or the acceptance of a jackup rig under a drilling contract; and (b) with respect to the potentially improper entertainment of government officials in Mexico.

Pride has voluntarily disclosed information found in the investigation to the Department of Justice and the Securities and Exchange Commission. Pride is continuing to cooperate with these authorities as the investigation and FCPA compliance reviews continue.

If violations of the FCPA occurred, we could be liable for or subject to fines, civil and criminal penalties, equitable remedies, including profit disgorgement, and injunctive relief. Civil penalties under the antibribery provisions of the FCPA could range up to $10,000 per violation, with a criminal fine up to the greater of $2 million per violation or twice the gross pecuniary gain to us or twice the gross pecuniary loss to others, if larger. Civil penalties under the accounting provisions of the FCPA can range up to $500,000 per violation, and a company that knowingly commits a violation can be fined up to $25 million per violation. In addition, both the SEC and the DOJ could assert that conduct extending over a period of time may constitute multiple violations for purposes of assessing the penalty amounts. Often, dispositions of these types of matters result in modifications to business practices and compliance programs and possibly a monitor being appointed to review future business and practices with the goal of ensuring compliance with the FCPA. Pursuant to the master separation agreement, we will be responsible for any liabilities, costs or expenses related to, arising out of or resulting from Pride’s current FCPA investigation to the extent related to Pride’s and our operations in Mexico

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GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

(subject to certain exceptions), except that we will not be responsible for any fine, penalty or profit disgorgement payable to the United States government in excess of $1 million, and we will not be allocated any fees or expenses of third party advisors retained by Pride. In the event that a disposition includes the appointment of a compliance monitor or consultant or any similar remedy for our company, we will be responsible for the costs associated with such monitor, consultant or similar remedy.

We could also face fines, sanctions, and other penalties from authorities in Mexico, including prohibition of our participating in or curtailment of business operations and the seizure of rigs or other assets. Our customer in Mexico could seek to impose penalties or take other actions adverse to our interests. In addition, disclosure of the subject matter of the investigation could adversely affect our reputation and our ability to obtain new business or retain existing business from our current clients and potential clients, to attract and retain employees, and to access the capital markets.

Pride has commenced discussions with the DOJ and SEC regarding a negotiated resolution for these matters, which could be settled during 2009. No amounts have been accrued related to any potential fines, sanctions or other penalties, which could be material individually or in the aggregate, but an accrual could be made as early as the second or third quarter of 2009. We cannot currently predict what, if any, actions may be taken by the DOJ, the SEC, any other applicable government or other authorities or our customers or the effect the actions may have on our results of operations, financial condition or cash flows, on our combined financial statements or on our business, except that our responsibility for fines, penalties or profit disgorgement payable to the United States government will not exceed $1 million as described above.

Litigation

We are routinely involved in litigation, claims and disputes incidental to our business, which at times involve claims for significant monetary amounts, some of which would not be covered by insurance. In the opinion of management, none of the existing litigation will have a material adverse effect on our financial position, results of operations or cash flows. However, a substantial settlement payment or judgment in excess of our recorded accruals could have a material adverse effect on our financial position, results of operations or cash flows.

Loss of Pride Wyoming

In September 2008, the Pride Wyoming, a 250-foot slot-type jackup rig operating in the U.S. Gulf of Mexico, was deemed a total loss for insurance purposes after it was severely damaged and sank as a result of Hurricane Ike. The rig had a net book value of approximately $14 million and was insured for $45 million. Pride has collected a total of $25 million through March 2009 for the insured value of the rig, which is net of the deductibles of $20 million. We expect to incur costs of approximately $52.9 million for removal of the wreckage and salvage operations, not including any costs arising from damage to offshore structures owned by third parties. These costs for removal of the wreckage and salvage operations in excess of a $1 million retention are expected to be covered by Pride’s insurance. Pride has agreed to advance the costs of removal of the wreckage and salvage operations until receipt of insurance proceeds, but we will be responsible for payment of the $1 million retention, $2.5 million in premium payments for a removal of wreckage claim and for any costs not covered by Pride’s insurance.

The owners of three pipelines on which parts of the Pride Wyoming settled have requested that Pride pay for all costs, expenses and other losses associated with the damage, including loss of revenue. Two owners have claimed damages in excess of $40 million, and the third has claimed damages in excess of $7 million. Other pieces of the rig may have also caused damage to certain other offshore structures. In October 2008, we filed a complaint in the U.S. Federal District Court pursuant to the Limitation of Liability Act, which has the potential to statutorily limit our exposure for claims arising out of third-party damages caused by the loss of the Pride Wyoming. Pride will retain the right after the spin-off to control any claims, litigation or settlements

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GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

arising out of the loss of the Pride Wyoming. Based on information available to us at this time, we do not expect the outcome of these claims to have a material adverse effect on our financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these claims. Although we believe Pride has adequate insurance, we will be responsible for any deductibles or awards not covered by Pride’s insurance.

NOTE 8.   SEGMENT AND ENTERPRISE-RELATED INFORMATION

As a part of Pride, GOM historically has not operated on a stand-alone basis. We provide offshore contract drilling services to oil and gas production and development companies in the Gulf of Mexico. We manage our operations based upon the geographic location of where the services are performed. We have two reportable segments: U.S. Gulf of Mexico and Mexico.

The accounting policies for our segments are the same as those described in Note 2. We evaluate the performance of our business units based on earnings from operations. Summarized financial information for GOM by segment is shown in the following table for the three months ended March 31, 2009 and 2008:

	U.S.			Mexico		Total
Three Months Ended March 31, 2009
Revenues	$	41.0		$	74.7	$	115.7
Earnings (loss) from operations		(3.8	)		23.5		19.7
Total assets		356.9			424.3		781.2
Capital expenditures		6.1			1.6		7.7
Depreciation and amortization		5.4			10.1		15.5
Three Months Ended March 31, 2008
Revenues	$	68.1		$	125.5	$	193.6
Earnings from operations		9.6			62.8		72.4
Total assets		270.3			628.4		898.7
Capital expenditures		13.4			8.8		22.2
Depreciation and amortization		5.9			10.1		16.0

All of our revenues and earnings from operations in Mexico are derived from Pemex Exploración y Producción (“PEMEX”). PEMEX accounts for 64% and 65% of our combined revenues for the three month periods ended March 31, 2009 and 2008, respectively. We are exposed to the risk of changes in social, political and economic conditions in Mexico. Policy changes by PEMEX or the Mexican government could also adversely affect our financial condition and results of operations.

PEMEX has indicated a shifting focus toward geologic prospects to deeper water and therefore an increased emphasis on rigs with a water depth rating of 250 feet or greater. As PEMEX changes its focus toward new field exploration and development prospects that increasingly require the use of rigs with greater water depth capability, we believe demand in Mexico for our ten rigs with water depth ratings or 200 feet or less is likely to decline and the future contracting opportunities for such rigs in Mexico will likely diminish.

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GULF OF MEXICO BUSINESS OF PRIDE INTERNATIONAL, INC.

Notes to Unaudited Combined Financial Statements — (Continued)

NOTE 9.   OTHER SUPPLEMENTAL INFORMATION

Prepaid expenses and other current assets consisted of the following at March 31, 2009 and December 31, 2008:

	March 31,		December 31,
	2009		2008
Deferred mobilization and inspection costs	$	5.3	$	7.5
Prepaid expenses		2.8		4.6
Insurance receivables		54.0		49.8
Other		0.6		0.5
Total	$	62.7	$	62.4

Supplemental cash flows and non-cash transactions were as follows:

	Three Months
	Ended
	March 31,
	2009		2008
Cash paid during the year for:
Income taxes — U.S., net	$	—	$	0.1
Income taxes — foreign, net		5.4		16.1
Change in capital expenditures in accounts payable		5.2		(11.8	)

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