10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-13289

Pride International, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	76-0069030 (I.R.S. Employer Identification No.)
5847 San Felipe, Suite 3300
Houston, Texas (Address of principal executive offices)	77057 (Zip Code)

(713) 789-1400
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practical date.

	Outstanding as of
	November 1, 2010
Common Stock, par value $.01 per share	175,726,054

Table of Contents

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements		3
Consolidated Balance Sheets — September 30, 2010 and December 31, 2009		3
Consolidated Statements of Operations — Three and Nine months ended September 30, 2010 and 2009		4
Consolidated Statements of Cash Flows — Nine months ended September 30, 2010 and 2009		6
Notes to Unaudited Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		45
Item 4. Controls and Procedures		46
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		46
Item 1A. Risk Factors		46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		46
Item 6. Exhibits		47
Signatures		48
Exhibit 4.1
Exhibit 4.2
Exhibit 4.3
Exhibit 10.1
Exhibit 12
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Pride International, Inc.

Consolidated Balance Sheets
(In millions, except par value)

	September 30,			December 31,
	2010			2009
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	639.6		$	763.1
Trade receivables, net		201.6			211.9
Deferred income taxes		7.6			21.6
Other current assets		154.3			167.6
Total current assets		1,003.1			1,164.2
PROPERTY AND EQUIPMENT		7,152.3			6,091.0
Less: accumulated depreciation		1,326.4			1,200.7
Property and equipment, net		5,825.9			4,890.3
OTHER ASSETS, NET		90.5			88.4
Total assets	$	6,919.5		$	6,142.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	30.3		$	30.3
Accounts payable		148.1			132.4
Accrued expenses and other current liabilities		274.3			339.7
Total current liabilities		452.7			502.4
OTHER LONG-TERM LIABILITIES		103.9			118.3
LONG-TERM DEBT, NET OF CURRENT PORTION		1,841.3			1,161.7
DEFERRED INCOME TAXES		65.8			102.7
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 50.0 shares authorized; none issued		—			—
Common stock, $0.01 par value; 400.0 shares authorized; 176.8 and 175.5 shares issued; 175.7 and 174.6 shares outstanding		1.8			1.8
Paid-in capital		2,093.9			2,058.7
Treasury stock, at cost; 1.1 and 0.9 shares		(21.6	)		(16.4	)
Retained earnings		2,377.7			2,210.8
Accumulated other comprehensive income		4.0			2.9
Total stockholders’ equity		4,455.8			4,257.8
Total liabilities and stockholders’ equity	$	6,919.5		$	6,142.9

The accompanying notes are an integral part of the consolidated financial statements.

3

Pride International, Inc.

Consolidated Statements of Operations

(Unaudited)
(In millions, except per share amounts)

	Three Months Ended
	September 30,
	2010			2009
REVENUES
Revenues excluding reimbursable revenues	$	337.8		$	379.5
Reimbursable revenues		8.4			6.6
		346.2			386.1
COSTS AND EXPENSES
Operating costs, excluding depreciation and amortization		213.0			210.6
Reimbursable costs		7.5			5.8
Depreciation and amortization		46.7			39.5
General and administrative, excluding depreciation and amortization		22.6			30.2
Loss (gain) on sales of assets, net		0.4			(0.1	)
		290.2			286.0
EARNINGS FROM OPERATIONS		56.0			100.1
OTHER INCOME (EXPENSE), NET
Interest expense, net of amounts capitalized		(6.5	)		—
Refinancing charges		(16.7	)		—
Interest income		1.1			0.6
Other expense, net		(6.1	)		(2.7	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		27.8			98.0
INCOME TAXES		15.0			(18.1	)
INCOME FROM CONTINUING OPERATIONS, NET OF TAX		42.8			79.9
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		(6.3	)		(44.3	)
NET INCOME	$	36.5		$	35.6
BASIC EARNINGS PER SHARE:
Income from continuing operations attributable to common shareholders	$	0.24		$	0.45
Loss from discontinued operations		(0.04	)		(0.26	)
Net income	$	0.20		$	0.19
DILUTED EARNINGS PER SHARE:
Income from continuing operations attributable to common shareholders	$	0.24		$	0.45
Loss from discontinued operations		(0.04	)		(0.25	)
Net income	$	0.20		$	0.20
SHARES USED IN PER SHARE CALCULATIONS
Basic		175.7			173.5
Diluted		176.2			174.0

The accompanying notes are an integral part of the consolidated financial statements.

4

Pride International, Inc.
Consolidated Statements of Operations
(Unaudited)
(In millions, except per share amounts)

	Nine Months Ended
	September 30,
	2010			2009
REVENUES
Revenues excluding reimbursable revenues	$	1,039.2		$	1,253.0
Reimbursable revenues		20.1			24.4
		1,059.3			1,277.4
COSTS AND EXPENSES
Operating costs, excluding depreciation and amortization		631.9			615.9
Reimbursable costs		16.9			21.6
Depreciation and amortization		133.4			118.3
General and administrative, excluding depreciation and amortization		77.7			85.3
Gain on sales of assets, net		(0.1	)		(0.5	)
		859.8			840.6
EARNINGS FROM OPERATIONS		199.5			436.8
OTHER INCOME (EXPENSE), NET
Interest expense, net of amounts capitalized		(6.5	)		(0.1	)
Refinancing charges		(16.7	)		—
Interest income		2.2			2.6
Other income (expense), net		5.6			(3.3	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		184.1			436.0
INCOME TAXES		(2.9	)		(72.5	)
INCOME FROM CONTINUING OPERATIONS, NET OF TAX		181.2			363.5
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		(14.3	)		(44.9	)
NET INCOME	$	166.9		$	318.6
BASIC EARNINGS PER SHARE:
Income from continuing operations attributable to common shareholders	$	1.02		$	2.06
Loss from discontinued operations		(0.08	)		(0.26	)
Net income	$	0.94		$	1.80
DILUTED EARNINGS PER SHARE:
Income from continuing operations attributable to common shareholders	$	1.02		$	2.06
Loss from discontinued operations		(0.08	)		(0.26	)
Net income	$	0.94		$	1.80
SHARES USED IN PER SHARE CALCULATIONS
Basic		175.5			173.4
Diluted		176.0			173.7

The accompanying notes are an integral part of the consolidated financial statements.

5

Pride International, Inc.

Consolidated Statements of Cash Flows

(Unaudited)
(In millions)

	Nine Months Ended
	September 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	166.9		$	318.6
Adjustments to reconcile net income to net cash from operating activities:
Gain on sale of Eastern Hemisphere land rigs		—			(5.4	)
Depreciation and amortization		133.4			155.8
Refinancing charges		12.3			—
Amortization and write-offs of deferred financing costs		5.2			1.6
Amortization of deferred contract liabilities		(40.3	)		(40.3	)
Impairment charges		—			33.4
Gain on sales of assets, net		(0.1	)		(0.5	)
Deferred income taxes		(20.3	)		(23.9	)
Excess tax benefits from stock-based compensation		(2.7	)		(1.0	)
Stock-based compensation		25.0			28.8
Other, net		2.0			0.6
Net effect of changes in operating accounts (See Note 12)		3.0			59.3
Change in deferred gain on asset sales and retirements		—			4.9
Increase in deferred revenue		12.7			0.6
Increase in deferred expense		(31.8	)		(0.4	)
NET CASH FLOWS FROM OPERATING ACTIVITIES		265.3			532.1
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment		(1,049.1	)		(698.6	)
Reduction of cash from spin-off of Seahawk		—			(82.4	)
Proceeds from dispositions of property and equipment		1.3			7.3
Proceeds from the sale of Eastern Hemisphere land rigs, net		—			9.6
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(1,047.8	)		(764.1	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings, including prepayment premiums		(534.6	)		(22.3	)
Proceeds from debt borrowings		1,200.0			498.2
Debt financing costs		(16.6	)		(6.2	)
Net proceeds from employee stock transactions		7.5			6.3
Excess tax benefits from stock-based compensation		2.7			1.0
NET CASH FLOWS FROM FINANCING ACTIVITIES		659.0			477.0
(Decrease) increase in cash and cash equivalents		(123.5	)		245.0
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		763.1			712.5
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	639.6		$	957.5

The accompanying notes are an integral part of the consolidated financial statements.

6

Pride International, Inc.

Notes to Unaudited Consolidated Financial Statements

NOTE 1. GENERAL

Nature of Operations

Pride International, Inc. (“Pride,” “we,” “our,” or “us”) is a leading international provider of offshore contract drilling services. We provide these services to oil and natural gas exploration and production companies through the operation and management of 25 offshore rigs. We also have two deepwater drillships under construction.

Basis of Presentation

Our unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. 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 consolidated 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 consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2009. 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 consolidated 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.

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.

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 or asset groups 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.

During the first and second quarters of 2010, management determined that a triggering event had occurred for the Independent Leg Jackup asset group resulting from current and forecasted operating losses within the asset group. Management performed an undiscounted cash flow analysis for the group’s long-lived assets to determine if there was any impairment of the asset group and, as a result of this analysis, determined that no impairment was required.

Future changes that might occur in our Independent Leg Jackup asset group, such as the stacking of additional rigs, decreases in dayrates and declining utilization, might result in changes to our estimates and assumptions used in our undiscounted cash flow analysis. This could affect whether or not projected undiscounted cash flows continue to exceed the carrying value of the Independent Leg Jackup asset group and could result in a required impairment charge in a future period.

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Fair Value Accounting

We use fair value measurements to record fair value adjustments to certain financial and nonfinancial assets and liabilities and to determine fair value disclosures. Our foreign currency forward contracts are recorded at fair value on a recurring basis. See Note 5 — Fair Value Measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, we use various valuation techniques and assumptions when estimating fair value. For accounting disclosure purposes, a three-level valuation hierarchy of fair value measurements has been established. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded or disclosed at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability. When possible, we look to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, we look to market observable data for similar assets and liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets, and we are required to use alternative valuation techniques to derive an estimated fair value measurement. We adopted new guidance on January 1 and April 1, 2009 regarding disclosure of fair value measurement with no material impact on our consolidated financial statements.

Comprehensive Income

A reconciliation of net income to comprehensive income is as follows:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2010		2009			2010			2009
Net Income	$	36.5	$	35.6		$	166.9		$	318.6
Other comprehensive gains (losses), net of tax
Foreign currency translation		1.9		0.5			1.8			2.2
Foreign currency hedges		0.7		(0.2	)		0.5			0.1
Defined benefit plan		—		—			(1.2	)		—
Comprehensive Income	$	39.1	$	35.9		$	168.0		$	320.9

Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, Improving Disclosures about Fair Value Measurements (“ASU 2010-6”). The update amends FASB Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, (“ASC Topic 820”) to require additional disclosures related to transfers between levels in the hierarchy of fair value measurements. ASU 2010-6 is effective for interim and annual reporting periods beginning after December 15, 2009. We adopted ASU 2010-6 as of January 1, 2010. Because the update did not change how fair values are measured, the update did not have an effect on our consolidated financial position, results of operations or cash flows.

In April 2010, the FASB issued ASU 2010-12, Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts. This update codifies an SEC Staff Announcement relating to accounting for the Health Care and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act. We adopted ASU 2010-12 as of its effective date, April 14, 2010. The effect of the new health care laws on our consolidated financial position, results of operations and cash flows is immaterial.

8

In May 2010, the FASB issued ASU 2010-19, Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The purpose of this update is to codify the SEC Staff Announcement made at the March 18, 2010 meeting of the FASB Emerging Issues Task Force (“EITF”) by the SEC Observer to the EITF. The Staff Announcement provides the SEC staff’s view on certain foreign currency issues related to investments in Venezuela. ASU 2010-19 is effective as of March 18, 2010. We adopted the update as of its effective date. The update had no effect on our consolidated financial position, results of operations or cash flows.

In August 2010, the FASB issued ASU 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules—Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. This ASU amends various SEC paragraphs in the ASC to reflect changes made by the SEC in Final Rulemaking Release No. 33-9026, which was issued in April 2009 and amended SEC requirements in Regulation S-X and Regulation S-K and made changes to financial reporting requirements in response to the FASB’s issuance of Statement of Financial Accounting Standards (“SFAS”) No. 141(R), Business Combinations (FASB ASC Topic 805), and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (FASB ASC Topic 810). ASU 2010-21 is effective upon issuance. We adopted this update on its effective date. The update had no effect on our consolidated financial position, results of operations or cash flows. We previously adopted the guidance originally issued in SFAS 141(R) and SFAS 160 on January 1, 2009.

In August 2010, the FASB issued ASU 2010-22, Accounting for Various Topics—Technical Corrections to SEC Paragraphs. This update amends some of the SEC material in the ASC based on the June 2009 publication of Staff Accounting Bulletin (“SAB”) No. 112, which amended Topic 2, Topic 5, and Topic 6 in the SEC’s Staff Accounting Bulletin series. SAB 112 was issued to bring the SEC’s staff interpretative guidance into alignment with the changes in U.S. GAAP made in SFAS No. 141(R), Business Combinations (FASB ASC Topic 805), and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (FASB ASC Topic 810). ASU 2010-22 is effective upon issuance. We adopted this update on its effective date. The update had no effect on our consolidated financial position, results of operations or cash flows.

Reclassifications

Certain reclassifications have been made to the prior year’s consolidated financial statements to conform with the current year presentation.

NOTE 2. DISCONTINUED OPERATIONS AND OTHER DIVESTITURES

Discontinued Operations

We reclassify, from continuing operations to discontinued operations, for all periods presented, the results of operations for any component either held for sale or disposed of. We define a component as being distinguishable from the rest of our company because it has clearly distinguished operations and cash flows. A component may be a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group. Such reclassifications had no effect on our net income or stockholders’ equity.

Spin-off of Mat-Supported Jackup Business

On August 24, 2009, we completed the spin-off of Seahawk Drilling, Inc., which holds the assets and liabilities that were associated with our mat-supported jackup rig business. In the spin-off, our stockholders received 100% (approximately 11.6 million shares) of the outstanding common stock of Seahawk by way of a pro rata stock dividend. Each of our stockholders of record at the close of business on August 14, 2009 received one share of Seahawk common stock for every 15 shares of our common stock held by such stockholder and cash in lieu of any fractional shares of Seahawk common stock to which such stockholder otherwise would have been entitled.

9

The following table presents selected information regarding the results of operations of our former mat-supported jackup business:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenues	$	—		$	30.8		$	—		$	189.4
Loss before taxes		(0.1	)		(59.5	)		(1.0	)		(65.3	)
Income taxes		(5.9	)		17.5			(5.7	)		18.0
Loss from discontinued operations	$	(6.0	)	$	(42.0	)	$	(6.7	)	$	(47.3	)

In connection with the spin-off, we made a cash contribution to Seahawk of approximately $47.3 million to achieve a targeted working capital for Seahawk as of May 31, 2009 of $85 million. We and Seahawk also agreed to indemnify each other for certain liabilities that may arise or be incurred in the future attributable to our respective businesses. During the third quarter of 2010, we recorded a charge to income tax expense for discontinued operations due to the allocation of additional foreign tax credits to Seahawk stemming from the finalization of our 2009 income tax return. As of September 30, 2010 and December 31, 2009, we had a receivable from Seahawk of $14.1 million and $18.8 million, respectively, which is included in “Other current assets,” pursuant to a transition services agreement and management agreements for the operation of the Pride Wisconsin and the Pride Tennessee in connection with the spin-off.

Other Divestitures

In the third quarter of 2008, we entered into agreements to sell our remaining seven land rigs for $95 million in cash. The sale of all but one rig closed in the fourth quarter of 2008. We leased the remaining rig to the buyer until the sale of that rig closed, which occurred in the second quarter of 2009.

In February 2008, we completed the sale of our fleet of three self-erecting, tender-assist rigs for $213 million in cash. We operated one of the rigs until mid-April 2009, when we transitioned the operations of that rig to the owner.

During the third quarter of 2007, we completed the disposition of our Latin America Land and E&P Services segments for $1.0 billion in cash. The purchase price was subject to certain post-closing adjustments for working capital and other indemnities. In December 2009, we filed suit against the buyer in the federal district court in the Southern District of New York to collect the final amount of the working capital adjustment payable by the buyer to us, plus interest, as determined in accordance with the purchase agreement, and the buyer made various counterclaims in the proceeding. All claims of the parties were settled in the first quarter of 2010, and the federal district court dismissed the claims with prejudice on March 10, 2010. From the closing date of the sale in the third quarter of 2007 through September 30, 2010, we recorded a total gain on disposal of $318.6 million, which included certain valuation adjustments for tax and other indemnities provided to the buyer and selling costs incurred by us. We have indemnified the buyer for certain obligations that may arise or be incurred in the future by the buyer with respect to the business. We believe it is probable that some of these indemnified liabilities will be settled with the buyer in cash. Our total estimated gain on disposal of assets includes an $8.3 million liability, based on our fair value estimates for the indemnities, and a $6.7 million asset for the cash value of tax benefits related to tax overpayments that the buyer will owe us when the benefits are realized. In the first quarter of 2010, we recorded a $6.8 million charge to the gain on disposal in connection with the re-measurement of a remaining indemnity that resulted from a foreign exchange fluctuation. The expected settlement dates for the remaining tax indemnities may vary from within one year to several years. Our final gain may be materially affected by the final resolution of these matters.

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NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	September 30,			December 31,
	2010			2009
Rigs and rig equipment	$	5,130.5		$	4,101.4
Construction-in-progress — newbuild drillships		1,690.6			1,682.4
Construction-in-progress — other		245.9			222.8
Other		85.3			84.4
Property and equipment, cost		7,152.3			6,091.0
Accumulated depreciation and amortization		(1,326.4	)		(1,200.7	)
Property and equipment, net	$	5,825.9		$	4,890.3

NOTE 4. DEBT

Senior Unsecured Revolving Credit Facility

On July 30, 2010, we entered into an amended and restated unsecured revolving credit agreement with a group of banks that increased availability under the facility from $320.0 million to $720.0 million and extended the maturity from December 2011 to July 2013. As a result of this amendment, we recognized a charge of $0.3 million during the third quarter of 2010 related to the write-off of unamortized debt issuance costs associated with the previous facility, which is included in “Refinancing charges” for the three and nine months ended September 30, 2010. On October 28, 2010, pursuant to the credit facility’s accordion feature, we increased the availability under the facility to $750.0 million in the aggregate. Amounts drawn under the credit facility are available in U.S. dollars or euros and bear interest at variable rates based on either LIBOR plus a margin that varies based on our credit rating or the alternative base rate as defined in the agreement.

The credit facility contains a number of covenants restricting, among other things, liens; indebtedness of our subsidiaries; mergers and dispositions of all or substantially all of our or certain of our subsidiaries’ assets; hedging arrangements outside the ordinary course of business; and sale-leaseback transactions. The facility also requires us to maintain certain financial ratios. The facility contains customary events of default, including with respect to a change of control.

Borrowings under the credit facility are available to make investments, acquisitions and capital expenditures, to repay and back-up commercial paper and for other general corporate purposes. We may obtain up to $100 million of letters of credit under the facility. As of September 30, 2010, there were no borrowings or letters of credit outstanding under the facility.

Notes Issuance and Notes Redemption

On August 6, 2010, we completed an offering of $900.0 million aggregate principal amount of our 6 7/8% Senior Notes due 2020 and $300.0 million aggregate principal amount of our 7 7/8% Senior Notes due 2040. The 2020 notes and the 2040 notes bear interest at 6.875% and 7.875%, respectively, per annum, payable semiannually.

The notes contain provisions that limit our ability and the ability of our subsidiaries, with certain exceptions, to engage in sale and leaseback transactions, create liens and consolidate, merge or transfer all or substantially all of our assets. Upon a specified change in control event that results in a ratings decline, we will be required to make an offer to repurchase the notes at a repurchase price of 101% of the principal amount of the notes, plus accrued and unpaid interest through the applicable repurchase date. The notes of each series are subject to redemption, in whole at any time or in part from time to time, at our option, at a redemption price equal to the principal amount of the notes redeemed plus a make-whole premium. We will also pay accrued but unpaid interest to the redemption date.

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On September 5, 2010, we redeemed all of our outstanding 7 3/8% Senior Notes due 2014 with a portion of the proceeds from the issuance of the 2020 notes and 2040 notes. The aggregate principal amount of $500.0 million was redeemed at a price of 102.458% of the principal amount, plus accrued and unpaid interest to the redemption date. As a result of the redemption of the 2014 notes, we recognized a charge of $16.4 million during the third quarter of 2010 related to the prepayment premium and write-off of unamortized debt issuance costs and discount related to the notes, which is included in “Refinancing charges” for the three and nine months ended September 30, 2010.

We have used and expect to use the remaining proceeds from the offering of the 2020 notes and the 2040 notes, net of issuance costs, for general corporate purposes, which have included and may include payments with respect to our drillships under construction and other capital expenditures.

Debt consisted of the following:

	September 30,		December 31,
	2010		2009
Senior unsecured revolving credit facility	$	—	$	—
7 3/8% Senior Notes due 2014, net of uamortized discount of $1.4 million at December 31, 2009		—		498.6
8 1/2% Senior Notes due 2019, net of unamortized discount of $1.6 million and $1.7 million, respectively		498.4		498.3
6 7/8% Senior Notes due 2020		900.0		—
7 7/8% Senior Notes due 2040		300.0		—
MARAD notes, net of unamortized fair value discount of $1.5 million and $1.9 million, respectively		173.2		195.1
Total debt		1,871.6		1,192.0
Less: current portion of long-term debt		30.3		30.3
Long-term debt	$	1,841.3	$	1,161.7

NOTE 5. FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, foreign currency forward contracts and debt. Our cash and cash equivalents, accounts receivable and accounts payable are by their nature short-term. As a result, the carrying value included in the accompanying consolidated balance sheets approximate fair value. The estimated fair value of our debt at September 30, 2010 and December 31, 2009 was $2,082.9 million and $1,307.6 million, respectively, which differs from the carrying amounts of $1,871.6 million and $1,192.0 million, respectively, included in our consolidated balance sheets. The fair value of our debt has been estimated based on quarter- and year-end quoted market prices.

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The following table presents our financial liabilities measured at fair value on a recurring basis at September 30, 2010 and December 31, 2009:

				Quoted Prices		Significant			Significant
				in		Other			Unobservable
				Active Markets		Observable Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
September 30, 2010
Derivative Financial Instruments
Foreign currency forward contracts	$	0.4		$	—	$	0.4		$	—
December 31, 2009
Derivative Financial Instruments
Foreign currency forward contracts	$	(0.1	)	$	—	$	(0.1	)	$	—

The foreign currency forward contracts have been valued using a combined income and market-based valuation methodology based on forward exchange curves and credit. These curves are obtained from independent pricing services reflecting broker market quotes.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy or any changes in the valuation techniques used during the quarter ended September 30, 2010.

NOTE 6. DERIVATIVES AND FINANCIAL INSTRUMENTS

Cash Flow Hedging

We have a foreign currency hedging program to mitigate the change in value of forecasted payroll transactions and related costs denominated in euros. We are hedging a portion of these payroll and related costs using forward contracts. When the U.S. dollar strengthens against the euro, the decline in the value of the forward contracts is offset by lower future payroll costs. Conversely, when the U.S. dollar weakens, the increase in value of forward contracts offsets higher future payroll costs. When effective, these transactions should generate cash flows that directly offset the cash flow effect from changes in the value of our forecasted euro-denominated payroll transactions. The maximum amount of time that we are hedging our exposure to euro-denominated forecasted payroll costs is six months. The aggregate notional amount of these forward contracts, expressed in U.S. dollars, was $5.7 million at September 30, 2010.

All of our foreign currency forward contracts were accounted for as cash flow hedges under ASC Topic 815, Derivatives and Hedging. The fair market value of these derivative instruments is included in other current assets or accrued expenses and other current liabilities, with the cumulative unrealized gain or loss included in accumulated other comprehensive income in our consolidated balance sheet. The payroll and related costs that are being hedged are included in accrued expenses and other current liabilities in our consolidated balance sheet, with the realized gain or loss associated with the revaluation of these liabilities from euros to U.S. dollars included in other income (expense). Amounts recorded in accumulated other comprehensive income associated with the derivative instruments are subsequently reclassed into other income (expense) as earnings are affected by the underlying hedged forecasted transactions. The estimated fair market value of our outstanding foreign currency forward contracts resulted in an asset of approximately $0.4 million at September 30, 2010. Hedge effectiveness is measured quarterly based on the relative cumulative changes in fair value between derivative contracts and the hedged item over time. Any change in fair value resulting from ineffectiveness is recognized immediately in earnings and recorded to other income (expense). We did not recognize a gain or loss due to hedge ineffectiveness in our consolidated statements of operations for the nine months ended September 30, 2010 related to these derivative instruments.

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The balance of the net unrealized gain (loss) related to our foreign currency forward contracts in accumulated other comprehensive income is as follows:

	Nine Months Ended
	September 30,
	2010			2009
Net unrealized gain (loss) at beginning of period	$	(0.1	)	$	0.2
Activity during period:
Settlement of forward contracts outstanding at beginning of period		0.1			(0.2	)
Net unrealized gain on outstanding foreign currency forward contracts		0.4			0.2
Net unrealized gain at end of period	$	0.4		$	0.2

NOTE 7. INCOME TAXES

In accordance with generally accepted accounting principles, we estimate the full-year effective tax rate from continuing operations and apply this rate to our year-to-date income from continuing operations. In addition, we separately calculate the tax impact of unusual items, if any. For the three months ended September 30, 2010 and 2009, our consolidated effective tax rate for continuing operations was (54.0%) and 18.5%, respectively. For the nine months ended September 30, 2010 and 2009, our consolidated effective tax rate for continuing operations was 1.6% and 16.6%, respectively. The lower tax rate for the 2010 period was principally the result of lower income from continuing operations in 2010, tax benefits related to the adjustment of intercompany pricing in the completion of our 2009 tax return during the third quarter of 2010, an increased proportion of income in lower tax jurisdictions, and the catch-up effect of our current lower annual projected tax rate.

NOTE 8. EARNINGS PER SHARE

The following table is a reconciliation of the numerator and the denominator of our basic and diluted earnings per share from continuing operations:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Income from continuing operations	$	42.8		$	79.9		$	181.2		$	363.5
Income from continuing operations allocated to non-vested share awards (participating securities)		(0.5	)		(1.2	)		(2.1	)		(5.6	)
Income from continuing operations -basic and diluted	$	42.3		$	78.7		$	179.1		$	357.9
Weighted average shares of common stock outstanding — basic		175.7			173.5			175.5			173.4
Stock options		0.4			0.5			0.4			0.3
Restricted stock awards		0.1			—			0.1			—
Weighted average shares of common stock outstanding — diluted		176.2			174.0			176.0			173.7
Income from continuing operations per share:
Basic	$	0.24		$	0.45		$	1.02		$	2.06
Diluted	$	0.24		$	0.45		$	1.02		$	2.06

For the three months ended September 30, 2010 and 2009, the calculation of weighted average shares of common stock outstanding — diluted excludes 0.9 million and 1.4 million, respectively, of shares of common stock issuable pursuant to outstanding stock options and certain restricted stock unit awards because their effect was anti-dilutive. For the nine months ended September 30, 2010 and 2009, the calculation of weighted average shares of common stock outstanding — diluted excludes 0.9 million and 2.6 million, respectively, of shares of common stock issuable pursuant to outstanding stock options and certain restricted stock unit awards because their effect was anti-dilutive.

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NOTE 9. STOCK-BASED COMPENSATION

Our 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. During the three months ended September 30, 2010, we granted 10,449 restricted stock unit awards to employees that vest ratably over three years with a weighted average grant-date fair value per share of $23.79. We did not grant any stock option awards or any restricted stock units with performance and market condition criteria during the three months ended September 30, 2010.

NOTE 10. COMMITMENTS AND CONTINGENCIES

FCPA Investigation

During the course of an internal audit and investigation relating to certain of our Latin American operations, our management and internal audit department received allegations of improper payments to foreign government officials. In February 2006, the Audit Committee of our Board of Directors assumed direct responsibility over the investigation and retained independent outside counsel to investigate the allegations, as well as corresponding accounting entries and internal control issues, and to advise the Audit Committee.

The investigation has found evidence suggesting that payments, which may violate the U.S. Foreign Corrupt Practices Act, were made to government officials in Venezuela and Mexico aggregating less than $1 million. The evidence to date regarding these payments suggests that payments were made beginning in early 2003 through 2005 (a) to vendors with the intent that they would be transferred to government officials for the purpose of extending drilling contracts for two jackup rigs and one semisubmersible rig operating offshore Venezuela; and (b) to one or more government officials, or to vendors with the intent that they would be transferred to government officials, for the purpose of collecting payment for work completed in connection with offshore drilling contracts in Venezuela. In addition, the evidence suggests that other 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.

The Audit Committee, through independent outside counsel, has undertaken a review of our compliance with the FCPA in certain of our other international operations. This review has found evidence suggesting that during the period from 2001 through 2006 payments were made directly or indirectly to government officials in Saudi Arabia, Kazakhstan, Brazil, Nigeria, Libya, Angola and the Republic of the Congo in connection with clearing rigs or equipment through customs or resolving outstanding issues with customs, immigration, tax, licensing or merchant marine authorities in those countries. In addition, this review has found evidence suggesting that in 2003 payments were made to one or more third parties with the intent that they would be transferred to a government official in India for the purpose of resolving a customs dispute related to the importation of one of our jackup rigs. The evidence suggests that the aggregate amount of payments referred to in this paragraph is less than $2.5 million.

The investigation of the matters described above and the Audit Committee’s compliance review are substantially complete. Our management and the Audit Committee of our Board of Directors believe it likely that then members of our senior operations management either were aware, or should have been aware, that improper payments to foreign government officials were made or proposed to be made. Our former Chief Operating Officer resigned as Chief Operating Officer effective on May 31, 2006 and has elected to retire from the company, although he will remain an employee, but not an officer, until the completion of the investigation and related matters to assist us with the investigation and to be available for consultation and to answer questions relating to our business. His retirement benefits will be subject to the determination by our Audit Committee or our Board of Directors that it does not have cause (as defined in his retirement agreement with us) to terminate his employment. Other personnel, including officers, have been terminated or placed on administrative leave or have resigned in connection with the investigation. We have taken and will continue to take disciplinary actions where appropriate and various other corrective action to reinforce our commitment to conducting our business ethically and legally and to instill in our employees our expectation that they uphold the highest levels of honesty, integrity, ethical standards and compliance with the law.

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We voluntarily disclosed information relating to the initial allegations and other information found in the investigation and compliance review to the U.S. Department of Justice and the SEC, and we have cooperated and continue to cooperate with these authorities. For any violations of the FCPA, we may be 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 for 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 have reached agreements with the DOJ and the SEC to settle these matters. We expect that documents reflecting the settlements could be filed by the DOJ and the SEC within a matter of days in the U.S. District Court for the Southern District of Texas, but the settlements require court approval. Under the terms of the contemplated settlement with the DOJ, it is expected that one of our foreign subsidiaries, Pride Forasol S.A.S., will plead guilty to certain FCPA-related charges. In addition, we will enter into a deferred prosecution agreement, under which FCPA-related charges will be deferred for a period of three years. If we remain in compliance with the terms of the deferred prosecution agreement throughout its term, the charges against us will be dismissed with prejudice. Under the agreement with the DOJ, the total contemplated fines are approximately $32.6 million. The terms of the contemplated settlement of civil FCPA charges with the SEC include an injunction against further violations of the FCPA and the payment of disgorgement and prejudgment interest totaling approximately $23.6 million. Neither of the contemplated settlements with the DOJ and SEC include the appointment of a compliance monitor. There can be no assurance that the court will accept the contemplated settlements or that the ultimate resolution of these matters will not involve fines and penalties that exceed our current estimate of $56.2 million, which we accrued in the fourth quarter of 2009.

We could also face fines, sanctions and other penalties from authorities in the relevant foreign jurisdictions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of rigs or other assets. Our customers in those jurisdictions 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, stockholders, debt holders, or other interest holders or constituents of our company. For additional information regarding a stockholder demand letter and derivative cases with respect to these matters, please see the discussion below under “—Demand Letter and Derivative Cases.” 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. While we have made an accrual in anticipation of a possible resolution with the DOJ and SEC as discussed above, no amounts have been accrued related to any potential fines, sanctions, claims or other penalties referenced in this paragraph, which could be material individually or in the aggregate.

We cannot currently predict what actions a court may take regarding the contemplated settlements with the DOJ and the SEC, nor can we predict what, if any, actions may be taken by 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 consolidated financial statements or on our business in the countries at issue and other jurisdictions.

Arbitration Matter

In March 2002, Pride Offshore, Inc. (now Seahawk Drilling, Inc.) entered into contracts with BP America Production Co. to design, engineer, manage construction of and commission, as well as operate the drilling package on, the Mad Dog, a platform owned by BP America in the U.S. Gulf of Mexico. In 2004, the drilling package was accepted by BP America, and Pride Offshore’s work under the operation contract commenced. In September 2008, the drilling package was destroyed and the platform was damaged in Hurricane Ike. In September 2009, BP America and an affiliate, on behalf of itself and its joint venture partners, filed an arbitration notice under the contracts, claiming that Pride Offshore breached its express and implied warranties under the construction contract and is liable for fault and gross fault in performing the contracts. At the time, BP America alleged damages in excess of $10 million, with no further specificity. The parties engaged in mediation of the claims in May 2010. Also in May 2010, BP America claimed damages of $282 million for the loss of the drilling package and $19 million for damage to the platform. BP America also alleged loss of production, without specifying an amount. The parties did not resolve the matter through mediation in May and resumed the arbitration process; however, they have recently stayed the arbitration until November 8, 2010 to again attempt to reach a settlement.

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Under our master separation agreement with Seahawk entered into at the time of the Seahawk spin-off in August 2009, we agreed to assume any obligations arising from the BP America contracts discussed above, which would include potential obligations arising from the construction of the drilling package. Although our insurance underwriters have reserved the right to raise coverage issues, we expect the claims generally to be covered under applicable insurance policies. We believe BP America’s claims will be barred or substantially limited by the limitation of liability and indemnity provisions of the contracts. We intend to continue to defend ourselves vigorously and, based on the information available to us at this time, we do not expect the outcome of this matter 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 matter. As of September 30, 2010, we have an accrual for potential liability related to this matter and a receivable of approximately the same amount under our insurance policies. We believe that the matter has not adversely affected, and is not likely to adversely affect, our relationship with BP America in any material respect.

Environmental Matters

We are currently subject to pending notices of assessment issued from 2002 to 2010 pursuant to which governmental authorities in Brazil are seeking fines in an aggregate amount of approximately $1.4 million, based on exchange rates as of September 30, 2010, for releases of drilling fluids from rigs operating offshore Brazil. We are contesting these notices. We intend to defend ourselves vigorously and, based on the information available to us at this time, we do not expect the outcome of these assessments 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 assessments. As of September 30, 2010, we have an accrual of $1.4 million for potential liability related to these matters.

We are currently subject to a pending administrative proceeding initiated in July 2009 by a governmental authority of Spain pursuant to which such governmental authority is seeking payment in an aggregate amount of approximately $4 million for an alleged environmental spill originating from the Pride North America while it was operating offshore Spain. We expect to be indemnified for any payments resulting from this incident by our client under the terms of the drilling contract. The client has posted guarantees with the Spanish government to cover potential penalties. In addition, a criminal investigation of the incident was initiated by a prosecutor in Tarragona, Spain in July 2010, and the administrative proceedings have been suspended pending the outcome of this investigation.  We do not know at this time what, if any, involvement we may have in this investigation.  We intend to defend ourselves vigorously in the administrative proceeding and any criminal investigation of us and, based on the information available to us at this time, we do not expect the outcome of the proceedings 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 the proceedings.

Demand Letter and Derivative Cases

In June 2009, we received a demand letter from counsel representing Kyle Arnold. The letter states that Mr. Arnold is one of our stockholders and that he believes that certain of our current and former officers and directors violated their fiduciary duties related to the issues described above under “—FCPA Investigation.” The letter requests that our Board of Directors take appropriate action against the individuals in question. In September 2009, in response to this letter, the Board formed a special committee, which retained independent counsel to advise it. The committee commenced an evaluation of the issues raised by the letter in an effort to determine a course of action for the company.

Subsequent to the receipt of the demand letter, on October 14, 2009, Mr. Arnold filed suit in the state court of Harris County, Texas against us and certain of our current and former officers and directors. The lawsuit, like the demand letter, alleged that the individual defendants breached their fiduciary duties to us related to the issues described above under “—FCPA Investigation.” Among other remedies, the lawsuit sought damages in an unspecified amount and equitable relief against the individual defendants, along with an award of attorney fees and other costs and expenses to the plaintiff. On October 16, 2009, the plaintiff dismissed the lawsuit without prejudice, but the demand letter referenced above remains in effect.

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On April 14, 2010, Edward Ferguson, a purported stockholder of Pride, filed a derivative action in the state court of Harris County, Texas against all of our current directors and us, as nominal defendant. The lawsuit alleges that the individual defendants breached their fiduciary duties to us related to the issues described above under “—FCPA Investigation.” Among other remedies, the lawsuit seeks damages in an unspecified amount and equitable relief against the individual defendants, along with an award of attorney fees and other costs and expenses to the plaintiff. On April 15, 2010, Lawrence Dixon, another purported stockholder, filed a substantially similar lawsuit in the state court of Harris County, Texas against the same defendants. These two lawsuits have been consolidated, and the parties agreed on a deferral of the matter of up to 120 days to await further developments in the FCPA investigation. That deferral has now expired. The parties are negotiating a further deferral and plan to report to the state court regarding their positions on such further deferral of the lawsuits.

The special committee of the board is continuing to evaluate the issues raised by the demand letter and derivative suits, with the advice of independent counsel.

Loss of Pride Wyoming

In September 2008, the Pride Wyoming, a 250-foot slot-type jackup rig owned by Seahawk and 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. All proceeds related to the insured value of the rig were received in 2008. Costs for removal of the wreckage have been and are expected to continue to be covered by our insurance. Under the master separation agreement between us and Seahawk, Seahawk will be responsible for any removal costs, legal settlements and legal costs associated with the Pride Wyoming not covered by insurance. At Seahawk’s request, we will be required to finance, on a revolving basis, some or all of the costs for removal of the wreckage and salvage operations until receipt of insurance proceeds. In May 2010, Seahawk requested that we pay an invoice in the amount of $6.8 million for a portion of the removal of the wreckage. We paid the invoice and were reimbursed for the entire amount under our insurance policies in the third quarter of 2010. In September 2010, at Seahawk’s request, we paid another invoice in the amount of $831,000 related to the removal of the wreckage, which we have recorded as a receivable based on a claim of the same amount that we made under our insurance policies.

Seahawk Tax-Related Credit Support

In 2006, 2007 and 2009, Seahawk received tax assessments from the Mexican government related to the operations of certain of Seahawk’s subsidiaries. Seahawk is responsible for these assessments following the spin-off. Pursuant to local statutory requirements, Seahawk has provided and may provide additional surety bonds, letters of credit, or other suitable collateral to contest these assessments. Pursuant to a tax support agreement between us and Seahawk, we have agreed, at Seahawk’s request, to guarantee or indemnify the issuer of any such surety bonds, letters of credit, or other collateral issued for Seahawk’s account in respect of such Mexican tax assessments made prior to the spin-off date. The amount of such collateral could total up to approximately $156.5 million, based on exchange rates as of September 30, 2010. Beginning on July 31, 2012, on each subsequent anniversary thereafter, and on August 24, 2015, Seahawk will be required to provide substitute credit support for a portion of the collateral guaranteed or indemnified by us, so that our obligations are terminated in their entirety by August 24, 2015. Pursuant to the tax support agreement, Seahawk is required to pay us a fee based on the actual credit support provided. On September 15, 2010, Seahawk requested that we provide credit support for four letters of credit issued for the appeals of four of Seahawk’s tax assessments. The amount of the request totaled approximately $48.1 million, based on exchange rates as of September 30, 2010. On October 28, 2010, we provided credit support in satisfaction of this request.

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Former Amethyst Joint Venture Litigation

Prior to March 2001, we had an approximately 30% interest in joint venture companies organized to construct, own and operate four deepwater semisubmersible drilling rigs, later named the Pride Carlos Walter, Pride Brazil, Pride Portland and Pride Rio de Janeiro. In January 2000, the joint venture partner commenced litigation against Petróleo Brasileiro S.A. through various controlled companies, including the four rig-owning joint venture companies, challenging the cancellation of certain drilling contracts related to six rigs, including the four rigs listed above. We acquired our former joint venture partner’s interest in certain of the joint venture companies, including the four rig-owning companies, in separate transactions in March 2001 and November 2006. During this period and at the time of the November 2006 acquisition, we assigned all of our rights and interests in the Petrobras litigation to the joint venture partner, and the joint venture partner agreed (i) to indemnify us for any liability arising from the litigation and (ii) to cause our subsidiaries to be removed from the litigation if, and as soon as, such removal was possible without materially adversely affecting, in the partner’s reasonable opinion, the partner’s profile for recovery of damages under such litigation. In August 2010, we entered into an agreement to transfer for a nominal amount our interests in the four subsidiaries that are parties to the litigation. The transfer of two of the subsidiaries was consummated in September 2010, and the transfer of the remaining two subsidiaries was consummated in November 2010. At the time of transfer, the subsidiaries had no ownership interest in the rigs or any other material assets. After completion of the transfers, we no longer are parties to the litigation. No amounts have been accrued related to the matter. Because the litigation is being pursued by the former joint venture partner and not by us, we believe that it has not adversely affected, and is not likely to adversely affect, our relationship with Petrobras in any material respect. We currently have eight rigs contracted to Petrobras, including the four rigs named above.

Other

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 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.

In the normal course of business with customers, vendors and others, we have entered into letters of credit and surety bonds as security for certain performance obligations that totaled approximately $487.1 million at September 30, 2010. These letters of credit and surety bonds are issued under a number of facilities provided by several banks and other financial institutions.

NOTE 11. SEGMENT AND ENTERPRISE-RELATED INFORMATION

We organize our reportable segments based on water depth operating capabilities of our drilling rigs. Our reportable segments include Deepwater, which consists of our drillships and semisubmersible rigs capable of drilling in water depths of 4,500 feet and greater; Midwater, which consists of our semisubmersible rigs capable of drilling in water depths of 4,499 feet or less; and Independent Leg Jackup, which consists of our jackup rigs capable of operating in water depths up to 300 feet. We also manage the drilling operations for two deepwater rigs, which are included in a non-reported operating segment along with corporate costs and other operations. The accounting policies for our segments are the same as those described in Note 1 of our Consolidated Financial Statements.

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Summarized financial information for our reportable segments are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Deepwater revenues:
Revenues excluding reimbursables	$	212.1		$	189.9		$	649.0		$	634.4
Reimbursable revenues		4.1			1.9			10.6			10.7
Total Deepwater revenues		216.2			191.8			659.6			645.1
Midwater revenues:
Revenues excluding reimbursables		86.1			96.8			269.0			338.9
Reimbursable revenues		0.1			1.4			0.7			4.8
Total Midwater revenues		86.2			98.2			269.7			343.7
Independent Leg Jackups revenues:
Revenues excluding reimbursables		24.5			72.6			76.9			220.7
Reimbursable revenues		0.2			0.2			1.0			0.6
Total Independent Leg Jackups revenues		24.7			72.8			77.9			221.3
Other		19.0			21.7			51.8			65.5
Corporate		0.1			1.6			0.3			1.8
Total revenues	$	346.2		$	386.1		$	1,059.3		$	1,277.4
Earnings (loss) from continuing operations:
Deepwater	$	66.9		$	71.8		$	237.4		$	300.9
Midwater		12.5			25.7			56.1			121.1
Independent Leg Jackups		(0.2	)		32.6			(13.5	)		102.3
Other		2.1			1.6			3.7			3.9
Corporate		(25.3	)		(31.6	)		(84.2	)		(91.4	)
Total	$	56.0		$	100.1		$	199.5		$	436.8
Capital expenditures:
Deepwater	$	360.1		$	195.5		$	949.9		$	620.3
Midwater		24.7			10.5			64.8			25.6
Independent Leg Jackups		3.8			2.5			17.0			9.7
Other		0.8			10.1			1.5			12.1
Corporate		4.3			5.3			15.9			18.3
Discontinued operations		—			—			—			12.6
Total	$	393.7		$	223.9		$	1,049.1		$	698.6
Depreciation and amortization:
Deepwater	$	24.7		$	19.0		$	67.4		$	56.8
Midwater		13.2			11.3			37.7			34.0
Independent Leg Jackups		7.0			7.3			23.0			21.3
Other		0.1			0.1			0.2			0.3
Corporate		1.7			1.8			5.1			5.9
Total	$	46.7		$	39.5		$	133.4		$	118.3

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Segment assets primarily consist of property and equipment. Our total long-lived assets, net, by segment as of September 30, 2010 and December 31, 2009 were as follows:

	September 30,		December 31,
	2010		2009
Total long-lived assets:
Deepwater	$	4,728.0	$	3,836.1
Midwater		720.7		680.5
Independent Leg Jackups		258.1		261.2
Other		16.7		23.1
Corporate		102.4		89.4
Total	$	5,825.9	$	4,890.3

For the three months ended September 30, 2010 and 2009, we derived 93% and 96%, respectively, of our revenues from countries outside of the United States. For the nine months ended September 30, 2010 and 2009, we derived 96% and 97%, respectively, of our revenues from countries outside of the United States.

Significant Customers

Revenues, as a percentage of total consolidated revenues, from our customers for the three months and nine months ended September 30, 2010 and 2009 that contributed more than 10% of total consolidated revenues were as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Petroleos Brasileiro S.A.		40	%		35	%		39	%		30	%
Total S.A.		20	%		16	%		19	%		15	%
BP America and affiliates		11	%		3	%		13	%		3	%

NOTE 12. OTHER SUPPLEMENTAL INFORMATION

Supplemental cash flows and non-cash transactions were as follows:

	Nine Months Ended
	September 30,
	2010			2009
Decrease (increase) in:
Trade receivables	$	10.3		$	47.0
Other current assets		34.6			6.7
Other assets		26.8			(19.5	)
Increase (decrease) in:
Accounts payable		(5.5	)		(30.9	)
Accrued expenses		(46.1	)		50.7
Other liabilities		(17.1	)		5.3
Net effect of changes in operating accounts	$	3.0		$	59.3
Cash paid during the year for:
Interest	$	70.3		$	44.7
Income taxes		32.8			112.0
Change in capital expenditures in accounts payable		21.0			33.2

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NOTE 13. SUBSEQUENT EVENTS

We have evaluated subsequent events through the issuance date of the unaudited consolidated financial statements. No subsequent events have taken place that require disclosure in this filing.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited consolidated financial statements as of September 30, 2010 and for the three and nine months ended September 30, 2010 and 2009 included elsewhere herein, and with our annual report on Form 10-K for the year ended December 31, 2009. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our 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” in Item 1A of our annual report and Item 1A of Part II of our quarterly report on Form 10-Q for the quarter ended June 30, 2010 and elsewhere in this quarterly report. See “Forward-Looking Statements” below.

Overview

We are one of the world’s largest offshore drilling contractors. As of November 3, 2010, we operated a fleet of 25 rigs, consisting of four deepwater drillships, 12 semisubmersible rigs, seven independent leg jackups and two managed deepwater drilling rigs. We also have two deepwater drillships under construction. Our customers include major integrated oil and natural gas companies, state-owned national oil companies and independent oil and natural gas companies. 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 primary strategic focus is on ownership and operation of floating offshore rigs, particularly deepwater rigs. Although crude oil prices have declined from the record levels reached in mid-2008 and the current market for deepwater drilling services remains uncertain in the near term, we believe the long-term prospects for deepwater drilling are positive given that the expected growth in oil consumption from developing nations, limited growth in crude oil supplies and high depletion rates of mature oil fields, together with geologic successes, improving access to promising offshore areas and new, more efficient technologies, including enhanced reservoir recovery techniques, will continue to be catalysts for the long-term exploration and development of deepwater fields. Since 2005, we have invested or committed to invest over $3.8 billion in the expansion of our deepwater fleet, including four new ultra-deepwater drillships, two of which were delivered in the first and third quarters of 2010 and two of which are under construction with expected delivery dates in the first and fourth quarters of 2011. Three of these new drillships have multi-year contracts at favorable rates. Since 2005, we also have disposed of non-core assets, generating $1.6 billion in proceeds, enabling us to increasingly focus our financial and human capital on deepwater drilling. In addition, on August 24, 2009, we completed the spin-off of Seahawk Drilling, Inc., which holds the assets and liabilities that were associated with our mat-supported jackup rig business.

With the tendency for deepwater drilling programs to be more insulated from short-term commodity price fluctuations, we expect that the deepwater market will outperform other offshore drilling market sectors over the long term. In addition, an increasing focus on deepwater prospects by national oil companies, whose activities are less sensitive to general economic factors, serve to provide further stability in the deepwater sector. However, the Deepwater Horizon incident and its consequences, as discussed further below, have increased the near-term uncertainty in the sector. Our contract backlog at September 30, 2010 totaled $6.4 billion and was comprised primarily of contracts for our deepwater rigs awarded by large integrated oil and national oil companies.

Recent Developments

Amendment of Revolving Credit Facility and Issuance and Redemption of Senior Notes

On July 30, 2010, we entered into an amended and restated unsecured revolving credit agreement with a group of banks that increased availability under the facility from $320 million to $720 million and extended the maturity from December 2011 to July 2013. On October 28, 2010, pursuant to the credit facility’s accordion feature, we increased the availability under the facility to $750 million.

On August 6, 2010, we completed an offering of $900 million aggregate principal amount of our 6 7/8% Senior Notes due 2020 and $300 million aggregate principal amount of our 7 7/8% Senior Notes due 2040. We used a portion of the net proceeds from the offering to redeem, on September 5, 2010, our entire outstanding $500 million aggregate principal amount of 7 3/8% Senior Notes due 2014 at a price of 102.458% of the principal amount, plus accrued and unpaid interest to the redemption date. We have used and expect to use the remainder of the net proceeds from the offering for general corporate purposes, which have included and may include payments with respect to our drillships under construction and other capital expenditures.

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Deep Ocean Ascension and Deep Ocean Clarion

On February 28, 2010, we took delivery of the Deep Ocean Ascension, the first of our new ultra-deepwater drillships under construction. The drillship arrived in the U.S. Gulf of Mexico in May 2010 and has completed its acceptance testing with BP Exploration & Production Inc. (“BP E&P”). The rig was originally intended for drilling operations in the U.S. Gulf of Mexico. However, due initially to the moratorium on drilling in the U.S. Gulf of Mexico and more recently to regulatory changes that have created potential delays and uncertainty regarding the resumption of drilling in the U.S. Gulf of Mexico (discussed below under “—U.S. Gulf of Mexico”), BP E&P was unable to commence drilling operations with the Deep Ocean Ascension in the region according to its original schedule. In the third quarter of 2010, BP E&P agreed to place the Deep Ocean Ascension on a special standby dayrate of $360,000. The special standby dayrate is effective from August 23, 2010 until the earlier of April 1, 2011 or the date the rig begins mobilization to its first drilling site, either within or outside the U.S. Gulf of Mexico. BP E&P is considering the relocation of the rig to another operating region outside of the U.S. Gulf of Mexico.

On September 23, 2010, we took delivery of our second new ultra-deepwater drillship, the Deep Ocean Clarion. The Deep Ocean Clarion is currently in the mobilization period to the U. S. Gulf of Mexico where it is expected to commence a five-year contract with BP E&P late in the first quarter of 2011. We are currently working with BP E&P to finalize the acceptance plan for the Deep Ocean Clarion, which is expected to commence in January 2011. The acceptance process primarily involves testing of rig functionality, crew competency and safety features. The contract provides that our right to receive dayrate commences upon satisfactory completion of acceptance testing. The contract does not currently require the acceptance testing to be completed by a specified date, and BP E&P does not have the right to cancel the contract for the failure to meet acceptance criteria by a specified date.

Due to regulatory changes that have created potential delays and uncertainty regarding the resumption of drilling in the U.S. Gulf of Mexico, BP E&P may be unable to commence drilling operations with the Deep Ocean Clarion in the U.S. Gulf of Mexico according to its original schedule. In such case, and pursuant to the contract, BP E&P may request to change the drilling location to outside of the U.S. Gulf of Mexico or to pay the contractual standby dayrate, which approximates the operating dayrate for the drillship. The contract provides for worldwide use of the rig. BP E&P may also choose to exercise the contract’s termination for convenience clause, under which BP E&P would be required to provide a make-whole payment to us that approximates the present value of the cash margin that would have been earned over the life of the contract.

BP E&P owns a 65% working interest and is the operator of the exploration well associated with the Deepwater Horizon incident discussed below. While we currently expect BP E&P to perform its obligations under the drilling contracts for the Deep Ocean Ascension and the Deep Ocean Clarion, we cannot predict what actions BP E&P might attempt to take under the contracts or whether it ultimately will be able to perform its obligations in light of the incident and resulting spill. Our contracts with BP E&P do not include a written parent company guarantee. If BP E&P fails to perform under the contracts, the drillships could be idle for an extended period of time. In that case, our revenues and profitability could be materially reduced if we are unable to secure new contracts on substantially similar terms, or at all.

U.S. Gulf of Mexico

In response to the April 20, 2010 explosion and fire on the Deepwater Horizon and the resulting oil spill, the Bureau of Ocean Energy Management, Regulation and Enforcement of the U.S. Department of the Interior, at the time known as the Minerals Management Service (“BOEM”), implemented a moratorium on certain drilling activities in the U.S. Gulf of Mexico until November 30, 2010. On October 12, 2010, the Secretary of the Interior directed the BOEM to lift the moratorium subject to certain specified conditions. During the pendency of the moratorium, the BOEM implemented various environmental, technological and safety measures intended to improve offshore safety systems and environmental protection. The newly issued safety regulations require operators to, among other things, submit independent third-party reports on the design and operation of blowout preventers (“BOPs”) and other well control systems, and conduct tests on the functionality of well control systems. Additional regulations address new

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standards for certain equipment involved in the construction of offshore wells, especially BOPs, and require operators to implement and enforce a safety and environmental management system including regular third-party audits of safety procedures and drilling equipment to insure that offshore rig personnel and equipment remain in compliance with the new regulations. Prior to the resumption of drilling following the moratorium, each operator is required to demonstrate that it has in place written and enforceable procedures, pursuant to applicable regulations, that ensure containment in the event of a deepwater blowout. We cannot currently predict the rate at which new well permits will be issued or the rate at which rigs will be allowed to return to work once compliance with the new regulations has been demonstrated. We believe, however, that the process followed by the BOEM to review and approve a well permit application by our clients will be protracted relative to past experience, resulting in significant delays in the resumption of drilling in deepwater U.S. Gulf of Mexico that could persist well into 2011.

The U.S. Gulf of Mexico represents one of three established deepwater drilling basins in the world and currently accounts for more than 20% of the industry’s deepwater rig capacity. The region is a vital contributor to the economy in the United States, providing strong hydrocarbon production growth potential and significant employment opportunities. Despite the economic importance of the region, the deepwater drilling moratorium, and the potential for significant delays in receiving drilling permits following the moratorium, has created significant uncertainty regarding the outlook for the region and possible implications for regions outside of the U.S. Gulf of Mexico. Due to such uncertainty, some contract drillers and operators with floating rigs located in the region may choose to relocate the units to other international drilling areas. Through October 2010, four of the 33 floating rigs operating in the U.S. Gulf of Mexico at the time of the incident have secured new drilling assignments and will relocate to international locations. Should there be significant delays in the issuance of drilling permits or in allowing rigs to operate upon demonstration of compliance with new regulations or should additional regulations and government oversight, operating procedures and the possibility of increased legal liability be viewed by our clients as a significant impairment to expected economic returns on projects in the region, additional floating rigs could depart the U.S. Gulf of Mexico, with fewer clients operating in the region. As a result, a more challenging business environment could develop in the international sector, characterized by increased supply of rig capacity and declining dayrates.

In addition to the various environmental, technological and safety measures implemented during the pendency of the moratorium, we believe the U.S. government is likely to issue additional safety and environmental guidelines or regulations for drilling in the U.S. Gulf of Mexico and may take other steps that could delay operations, increase the cost of operations or reduce the area of operations for drilling rigs. Other governments could take similar actions. Additional governmental regulations concerning licensing, taxation, equipment specifications and crew training and competency requirements could increase the costs of our operations. Generally, we would seek to pass increased operating costs to our customers through cost escalation or change in law provisions in existing contracts or through higher dayrates on new contracts, where appropriate. Additionally, increased costs for our customers’ operations, along with permitting delays, could affect the economics of currently planned and future exploration and development activity, especially in the U.S. Gulf of Mexico, and reduce demand for our services. Furthermore, due to the Deepwater Horizon incident and resulting spill, insurance costs across the industry could increase, and certain insurance may be less available or not available at all, which could apply to our fleet.

The newly issued drilling equipment and safety requirements have imposed higher standards and could reduce the number of floating rigs capable of operating in the U.S. Gulf of Mexico. The operating limitation, if any, should be most evident in the industry’s lower specification units, which possess dated technology and operating equipment. We believe that the advanced technical features and equipment configuration already present in our four newbuild drillships will result in these units being substantially compliant with the newly issued safety requirements and would satisfy any new equipment specification guidelines without significant modifications, which could establish them as a preferred drilling asset by clients.

Except as described above under “Deep Ocean Ascension and Deep Ocean Clarion,” we do not currently have any rigs operating in the U.S. Gulf of Mexico. However, we have been notified by our customer Petrobras that the U.S. Gulf of Mexico is being considered as the initial area of operations for the Deep Ocean Mendocino, our third new ultra-deepwater drillship. The rig is scheduled for delivery from the shipyard in the first quarter of 2011.

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Spin-off of Mat-Supported Jackup Business

On August 24, 2009, we completed the spin-off of Seahawk, which holds the assets and liabilities that were associated with our mat-supported jackup rig business. In the spin-off, our stockholders received 100% (approximately 11.6 million shares) of the outstanding common stock of Seahawk by way of a pro rata stock dividend. Each of our stockholders of record at the close of business on August 14, 2009 received one share of Seahawk common stock for every 15 shares of our common stock held by such stockholder and cash in lieu of any fractional shares of Seahawk common stock to which such stockholder otherwise would have been entitled. In connection with the spin-off, we made a cash contribution to Seahawk of approximately $47.3 million to achieve a targeted working capital for Seahawk as of May 31, 2009 of $85 million. We and Seahawk also agreed to indemnify each other for certain liabilities that may arise or be incurred in the future attributable to our respective businesses.

Investments in Deepwater Fleet

In addition to the Deep Ocean Ascension and Deep Ocean Clarion discussed above, we also have agreements for the construction of two additional ultra-deepwater drillships, the Deep Ocean Mendocino and Deep Ocean Molokai. These rigs have scheduled delivery dates in the first and fourth quarters of 2011, respectively. Including amounts already paid, commissioning and testing, we expect total costs for these two remaining construction projects to be approximately $1.5 billion, excluding capitalized interest. Through September 30, 2010, we have spent approximately $740 million on these two projects. We are scheduled to commence a five-year drilling contract for the Deep Ocean Mendocino following completion of construction, mobilization of the rig to its initial operating location and customer testing and acceptance. Although we currently do not have a drilling contract for the Deep Ocean Molokai, we expect that the long-term demand for deepwater drilling capacity in established and emerging basins should provide us with opportunities to contract the rig prior to its delivery date.

There are risks of delay and cost overruns inherent in any major shipyard project, including those resulting from adverse weather conditions, work stoppages, disputes and financial and other difficulties encountered by the shipyard. In order to mitigate some of these risks, we have selected a high quality shipyard with a reputation for on-time completions. In addition, our construction contracts are based on a fixed fee, backed by a refund guarantee if the unit is ultimately not finished or accepted by us upon completion. Deliveries by the shipyard beyond a certain point in time are subject to penalty payments and cancellation. We also believe that constructing a drilling rig at a single shipyard presents a lower risk profile than projects that call for construction in multiple phases at separate shipyards, although some risks are more concentrated.

FCPA Investigation

During the course of an internal audit and investigation relating to certain of our Latin American operations, our management and internal audit department received allegations of improper payments to foreign government officials. In February 2006, the Audit Committee of our Board of Directors assumed direct responsibility over the investigation and retained independent outside counsel to investigate the allegations, as well as corresponding accounting entries and internal control issues, and to advise the Audit Committee.

The investigation has found evidence suggesting that payments, which may violate the U.S. Foreign Corrupt Practices Act, were made to government officials in Venezuela and Mexico aggregating less than $1 million. The evidence to date regarding these payments suggests that payments were made beginning in early 2003 through 2005 (a) to vendors with the intent that they would be transferred to government officials for the purpose of extending drilling contracts for two jackup rigs and one semisubmersible rig operating offshore Venezuela; and (b) to one or more government officials, or to vendors with the intent that they would be transferred to government officials, for the purpose of collecting payment for work completed in connection with offshore drilling contracts in Venezuela. In addition, the evidence suggests that other 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.

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The Audit Committee, through independent outside counsel, has undertaken a review of our compliance with the FCPA in certain of our other international operations. This review has found evidence suggesting that during the period from 2001 through 2006 payments were made directly or indirectly to government officials in Saudi Arabia, Kazakhstan, Brazil, Nigeria, Libya, Angola and the Republic of the Congo in connection with clearing rigs or equipment through customs or resolving outstanding issues with customs, immigration, tax, licensing or merchant marine authorities in those countries. In addition, this review has found evidence suggesting that in 2003 payments were made to one or more third parties with the intent that they would be transferred to a government official in India for the purpose of resolving a customs dispute related to the importation of one of our jackup rigs. The evidence suggests that the aggregate amount of payments referred to in this paragraph is less than $2.5 million.

The investigation of the matters described above and the Audit Committee’s compliance review are substantially complete. Our management and the Audit Committee of our Board of Directors believe it likely that then members of our senior operations management either were aware, or should have been aware, that improper payments to foreign government officials were made or proposed to be made. Our former Chief Operating Officer resigned as Chief Operating Officer effective on May 31, 2006 and has elected to retire from the company, although he will remain an employee, but not an officer, until the completion of the investigation and related matters to assist us with the investigation and to be available for consultation and to answer questions relating to our business. His retirement benefits will be subject to the determination by our Audit Committee or our Board of Directors that it does not have cause (as defined in his retirement agreement with us) to terminate his employment. Other personnel, including officers, have been terminated or placed on administrative leave or have resigned in connection with the investigation. We have taken and will continue to take disciplinary actions where appropriate and various other corrective action to reinforce our commitment to conducting our business ethically and legally and to instill in our employees our expectation that they uphold the highest levels of honesty, integrity, ethical standards and compliance with the law.

We voluntarily disclosed information relating to the initial allegations and other information found in the investigation and compliance review to the U.S. Department of Justice and the SEC, and we have cooperated and continue to cooperate with these authorities. For any violations of the FCPA, we may be 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 for 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 have reached agreements with the DOJ and the SEC to settle these matters. We expect that documents reflecting the settlements could be filed by the DOJ and the SEC within a matter of days in the U.S. District Court for the Southern District of Texas, but the settlements require court approval. Under the terms of the contemplated settlement with the DOJ, it is expected that one of our foreign subsidiaries, Pride Forasol S.A.S., will plead guilty to certain FCPA-related charges. In addition, we will enter into a deferred prosecution agreement, under which FCPA-related charges will be deferred for a period of three years. If we remain in compliance with the terms of the deferred prosecution agreement throughout its term, the charges against us will be dismissed with prejudice. Under the agreement with the DOJ, the total contemplated fines are approximately $32.6 million. The terms of the contemplated settlement of civil FCPA charges with the SEC include an injunction against further violations of the FCPA and the payment of disgorgement and prejudgment interest totaling approximately $23.6 million. Neither of the contemplated settlements with the DOJ and SEC include the appointment of a compliance monitor. There can be no assurance that the court will accept the contemplated settlements or that the ultimate resolution of these matters will not involve fines and penalties that exceed our current estimate of $56.2 million, which we accrued in the fourth quarter of 2009.

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We could also face fines, sanctions and other penalties from authorities in the relevant foreign jurisdictions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of rigs or other assets. Our customers in those jurisdictions 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, stockholders, debt holders, or other interest holders or constituents of our company. For additional information regarding a stockholder demand letter and derivative cases with respect to these matters, please see the discussion under “—Demand Letter and Derivative Cases” in Note 10 of the Notes to Unaudited Consolidated Financial Statements included in Item 1 of Part I of this quarterly report. 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. While we have made an accrual in anticipation of a possible resolution with the DOJ and SEC as discussed above, no amounts have been accrued related to any potential fines, sanctions, claims or other penalties referenced in this paragraph, which could be material individually or in the aggregate.

We cannot currently predict what actions a court may take regarding the contemplated settlements with the DOJ and the SEC, nor can we predict what, if any, actions may be taken by 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 consolidated financial statements or on our business in the countries at issue and other jurisdictions.

Our Business

We provide contract drilling services to major integrated, government-owned and independent oil and natural gas companies throughout the world. Our drilling fleet competes on a global basis, as offshore rigs generally are highly mobile and may be moved from one region to another in response to demand. While the cost of moving a rig and the availability of rig-moving vessels may cause the supply and demand balance to vary somewhat between regions, significant variations between regions do not tend to persist long-term because of rig mobility. Key factors in determining which qualified contractor is awarded a contract include pricing, safety performance, operations competency and the relationship with the customer. Rig availability, location and technical ability can also be key factors in the determination. Currently, all of our drilling contracts with our customers are on a dayrate basis, where we charge the customer a fixed amount per day regardless of the number of days needed to drill the well. We provide the rigs and drilling crews and are responsible for the payment of rig operating and maintenance expenses. Our customer bears the economic risk and benefit relative to the geologic success of the wells to be drilled.

The markets for our drilling services have historically been highly cyclical. Our operating results are significantly affected by the level of energy industry spending for the exploration and development of crude oil and natural gas reserves. Oil and natural gas companies’ exploration and development drilling programs drive the demand for drilling services. These drilling programs are affected by a number of factors, including oil and natural gas companies’ expectations regarding crude oil and natural gas prices. Some drilling programs are influenced by short-term expectations, such as shallow water drilling programs in various regions, while others, especially deepwater drilling programs, are typically subject to a longer term view of crude oil prices. Other drivers include anticipated production levels, worldwide demand for crude oil and natural gas products and many other factors. Access to quality drilling prospects, exploration success, availability of qualified rigs and operating personnel, relative production costs, availability and lead time requirements for drilling and production equipment, the stage of reservoir development, permitting and political and regulatory environments also affect our customers’ drilling programs. Crude oil and natural gas prices are highly volatile, which has historically led to significant fluctuations in expenditures by our customers for oil and natural gas drilling services. Variations in market conditions during the cycle impact us in different ways depending primarily on the length of drilling contracts in different regions. For example, contracts for jackup rigs in certain shallow water markets are shorter term, so a deterioration or improvement in market conditions tends to quickly impact revenues and cash flows from those operations. Contracts in deepwater and other international offshore markets tend to be longer term, so a change in market conditions tends to have a delayed impact. Accordingly, short-term changes in market conditions may have minimal impact on revenues and cash flows from those operations unless the timing of contract renewals takes place during the short-term changes in the market.

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Our revenues depend principally upon the number of our available rigs, the number of days these rigs are utilized and the contract dayrates received. The number of days our rigs are utilized and the contract dayrates received are largely dependent upon the balance of supply of drilling rigs and demand for drilling services for the different rig classes we operate, as well as our rigs’ operational performance, including mechanical efficiency. The number of rigs we have available may increase or decrease as a result of the acquisition or disposal of rigs, the construction of new rigs, the number of rigs being upgraded or repaired or undergoing standard periodic surveys or routine maintenance at any time and the number of rigs idled during periods of oversupply in the market or when we are unable to contract our rigs at economical rates. In order to improve utilization or realize higher contract dayrates, we may mobilize our rigs from one geographic region to another for which we may receive a mobilization fee from the client. The mobilization fee is intended to cover the cost of moving the rig and, during periods when rigs are in short supply, may provide revenues in excess of the cost to mobilize the unit. Mobilization fees received prior to commencement of the drilling contract are deferred and recognized as revenue over the term of the drilling contract.

We organize our reportable segments based on the water depth operating capabilities of our drilling rigs. Our reportable segments include Deepwater, which consists of our drillships and semisubmersible rigs capable of drilling in water depths of 4,500 feet and greater; Midwater, which consists of our semisubmersible rigs capable of drilling in water depths of 4,499 feet or less; and Independent Leg Jackup, which consists of our jackup rigs capable of operating in water depths up to 300 feet. We also manage the drilling operations for two deepwater drilling and production units owned by two clients, which are included in a non-reported operating segment along with corporate costs and other operations.

Our earnings from operations are primarily affected by revenues, utilization of our fleet and the cost of labor, repairs, insurance and maintenance. Many of our drilling contracts covering multiple years allow us to adjust the dayrates charged to our customer based on changes in operating costs, such as labor costs, maintenance and repair costs and insurance costs. Some of our costs are fixed in nature or do not vary at the same time or to the same degree as changes in revenue. For instance, if a rig is expected to be idle between contracts and earn no revenue, we may maintain our rig crew, which reduces our earnings as we cannot fully offset the impact of the lost revenues with reductions in operating costs. In addition, some drilling contracts provide for the payment of bonus revenues, representing a percentage of the rig’s contract dayrate and based on the rig meeting defined operations performance criteria during a period.

Our industry has traditionally been affected by shortages of, and competition for, skilled rig crew personnel during periods of high levels of activity. Even as overall industry activity declines, we expect these personnel shortages to continue, especially in the Deepwater segment, due to the number of newbuild deepwater rigs expected to be delivered through 2013 and the need for highly skilled personnel to operate these rigs. To better retain and attract skilled rig personnel, we offer competitive compensation programs and have increased our focus on training and management development programs. Following an increase in 2009, labor costs have continued to increase in 2010, especially for skilled personnel in certain geographic locations, such as Brazil, Angola and the United States. An increase in labor costs during 2010 has been most pronounced in the Deepwater segment.

Beginning in 2005, the demand for contract drilling services increased significantly, resulting in increased demand for oilfield equipment and spare parts. This increased demand, when coupled with the consolidation of equipment suppliers, resulted in longer order lead times to obtain critical spare parts and other equipment components essential to our business, along with higher repair and maintenance costs and longer out-of-service time for major repair and upgrade projects. We maintain higher levels of critical spare parts in an effort to minimize unplanned downtime. With the decline in prices for steel and other key inputs that started in 2009 and the slow return in the level of business activity for 2010, we have seen some softening of lead times and pricing for spare parts and equipment during 2010.

Crude oil prices have traded in the range of $65 to $87 per barrel for more than a year, and have averaged approximately $78 per barrel through the first nine months of 2010. Crude oil prices were $34 per barrel in February 2009, which followed the onset of the global financial crisis, deteriorating global economic fundamentals and the resulting drop in crude oil demand in a number of the world’s largest oil consuming nations. These factors had a negative impact on customer demand for offshore rigs throughout 2009. While the initial months of 2010 were characterized by a similar pattern of caution from many operators toward new exploration and production spending commitments, evidence was present that supported increased spending with a number of new drilling programs commencing in 2011 and beyond, largely supported by operators’ increasing confidence in the re-establishment of global economic growth and the sustainability of crude oil prices. However, following the April 20, 2010 Deepwater Horizon incident in the U.S. Gulf of Mexico and the subsequent moratorium on deepwater drilling in the region, a new level of uncertainty has once again developed,

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with operators choosing to delay the commencement of certain projects in the U.S. Gulf of Mexico and other regions pending further clarity on a number of industry issues. Worldwide offshore fleet utilization remained flat at approximately 75% at September 30, 2010 compared to 75% at December 31, 2009 and 75% at September 30, 2009. Utilization for the industry’s deepwater fleet has historically been less sensitive to the extreme fluctuations experienced within the shallow water market even during market downturns. However, the timing of the increased spending is expected to remain uncertain until operators have gained more clarity concerning the long-term implications to our industry of the Deepwater Horizon incident, including an understanding of the impact of new operating regulations and government oversight. Also, operators will need to be confident in stronger oil market fundamentals supported by broadening global economic improvement, leading to increased crude oil demand, especially among member countries of the Organization for Economic Co-operation and Development.

We believe that long-term market conditions for offshore drilling services are supported by sound fundamental factors but that future demand for our rigs in the worldwide market is uncertain in the short-term due to recent events in the U.S. Gulf of Mexico and its consequences. We expect the long-term global demand for deepwater contract drilling services to be driven by growing worldwide demand for crude oil and natural gas as global populations expand and economic growth accelerates, along with an increased focus by oil and natural gas companies on deepwater offshore prospects and increased global participation by national oil companies. Customer requirements for deepwater drilling capacity have grown since 2005 as the successful results in exploration drilling, especially since the late-1990s, have led to numerous prolonged field development programs around the world. This success has contributed to the demand for a number of our deepwater assets by our clients through the next decade, especially those rigs that are capable of operating in water depths of 6,000 feet and greater and that possess advanced well construction features leading to increased drilling efficiencies. Geological successes in exploratory markets, such as the numerous discoveries to date in the pre-salt formation offshore Brazil, the lower tertiary trend in the U.S. Gulf of Mexico and deeper waters offshore Angola, along with the continued development of a number of deepwater projects in each of these regions, are expected to produce long-term growing demand from clients for deepwater rigs. During 2009, operators announced a record 25 deepwater discoveries covering an expanding number of offshore basins, such as Ghana, pre-salt Brazil and Sierra Leone, further supporting the long-term sustainability of deepwater drilling demand. An additional 26 deepwater discoveries have been announced since the beginning of 2010, establishing another record year. Announced discoveries in 2010 include a discovery offshore Mozambique in East Africa, representing the initial deepwater well drilled offshore in this emerging province. Additional exploration drilling opportunities offshore East Africa are expected to develop in the future with client interest being expressed offshore Tanzania and Kenya. In addition, international oil companies are experiencing greater access to other promising areas offshore, such as India, Malaysia, Australia, Sao Tomé, Príncipe, Liberia, Gabon and the Black Sea. We anticipate that the combination of drilling successes, greater access to offshore basins, enhanced hydrocarbon recovery methods and continued advances in offshore drilling technology, which support increased efficiency in field development efforts like parallel drilling activities, will support the long-term outlook for deepwater rig demand. However, the possible increase in the international rig supply resulting in part from the drilling moratorium in the U.S. Gulf of Mexico, as some rigs are relocated to other regions, has created some uncertainty in demand for our deepwater rigs in the short-term.

Our deepwater fleet currently operates in Brazil, West Africa and the Mediterranean Sea. As described above under “Recent Developments,” the Deep Ocean Ascension is currently in the U.S. Gulf of Mexico and has completed its acceptance testing and is currently on the special standby dayrate awaiting instructions from our client regarding an initial drilling location. We took delivery of the Deep Ocean Clarion in September 2010, and the rig is currently in transit to the U.S. Gulf of Mexico where it is expected to commence a five-year contract with BP E&P late in the first quarter of 2011, following customer testing and acceptance. Including rig days for our two remaining drillships currently under construction, based upon their scheduled delivery dates, we currently have 100% of our available rig days in the last quarter of 2010 contracted for our deepwater fleet, with 83% in 2011, 67% in 2012 and 55% in 2013. Since an increase in customer demand for deepwater drilling rigs began in 2005, a high percentage of the industry’s deepwater fleet of 133 units accumulated large contract backlogs and remained under contract through September 30, 2010. This high customer demand led to a steep rise in deepwater rig dayrates, which peaked above $600,000 per day for some multi-year contracts awarded in 2008. Although declines in dayrates have occurred from peak levels, recent contract awards for deepwater rigs capable of drilling in greater than 7,000 feet of water and available in 2010 have remained above $400,000 per day. These dayrates have been supported by strong geologic success, especially in Brazil, West Africa, the U.S. Gulf of Mexico and some of the new and emerging deepwater regions, which have led to a growing number of commercial discoveries.

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In Brazil, exploration drilling in the country’s prolific pre-salt formation has found numerous crude oil deposits of significant size residing more than 185 miles offshore and in up to 7,000 feet of water in the Santos Basin. Results of recent appraisal wells to define the potential size of these fields have confirmed the magnitude of the hydrocarbon complex. The successful drilling results in Brazil and aggressive exploration calendar have resulted in an announced exploration and production spending plan by Petrobras, the national oil company of Brazil, of over $200 billion from 2010 to 2014 to support development of the pre-salt formation and other global interests. The spending plan includes the need for 40 or more incremental deepwater rigs to be deployed in the numerous pre-salt fields discovered to date. Petrobras contracted 12 of the 40 rigs in 2008 from the international market and is currently engaged in a process to acquire up to 28 more rigs through construction of some rigs in Brazil, to be ordered by Petrobras. If Petrobras is not able to meet its need with rigs built in Brazil, the rigs will likely be obtained from the international drilling market. In addition to the successful pre-salt geological trend in the Santos Basin offshore Brazil, a similar pre-salt geologic trend has been identified offshore West Africa, which could lead to increased deepwater drilling in that region over the coming years.

In addition, deepwater drilling economics have been aided in recent years by an expectation of higher average crude oil prices, supported by global population growth and economic expansion and an increased number of deepwater discoveries containing large volumes of hydrocarbons. These improving factors associated with deepwater activity have produced a growing base of development programs requiring multiple years to complete and resulting in long-term contract awards by our customers, especially for projects in the three traditional deepwater basins, and represents a significant portion of our revenue backlog that currently extends into 2017.

Industry uncertainty, due in part to the Deepwater Horizon incident and the U.S. government’s response, and its impact on our clients’ long-term planning horizons has resulted in clients delaying decisions on deepwater drilling requirements. These delayed contracting decisions, together with limited charter of rig time between clients, have contributed to a decline in dayrates for deepwater rigs as more units compete for a reduced number of contract opportunities. The lower utilization and dayrate decline are most pronounced among the conventionally moored deepwater semisubmersibles, which generally have the ability to operate in water depths of up to 6,000 feet and employ less sophisticated features. Dayrates for rigs of this technical specification, where eight units in the global fleet are currently idle, have weakened considerably from peak levels experienced during 2008 and could experience further weakness through 2010 and into 2011 as a growing number of rigs complete contracts. Dayrates for the industry’s technologically advanced deepwater rigs have also declined from the peak levels in 2008, including those possessing dynamic positioning technology and more efficient well construction features. However, due to operator preference for the advanced capabilities of these units, it is expected that utilization will remain high over the coming years, but dayrates could adjust lower in the near-term for several reasons, including continued delay by clients of the commencement of offshore programs, especially the large development programs that typically take multiple years to complete. Also, the increase in deepwater drilling capacity, particularly in 2011 when as many as 13 uncommitted new deepwater rigs are expected to complete construction programs and enter the active global fleet, could place dayrates for these rigs under additional pressure. Many of the 13 uncommitted units are currently owned by new entrants to our business, possessing limited industry knowledge, global operational infrastructure and client relationships. We believe these attributes along with higher customer and regulatory standards are important considerations for our clients and will allow us to compete effectively for contract opportunities during this period of increased industry supply. However, we estimate that the Deepwater Horizon incident and resulting regulatory actions related to drilling in the U.S. Gulf of Mexico could continue to drive the relocation of a number of the deepwater rigs in the region to international locations, which would place dayrates and utilization for rigs in these locations under further pressure. As of September 30, 2010, four deepwater rigs in the U.S. Gulf of Mexico have been identified for relocation to other regions with additional relocations possible.

In light of the possible relocation of additional floating rigs out of the U.S. Gulf of Mexico, new deepwater rig capacity additions and increased availability of existing deepwater rigs as current contracts conclude over the next 12 months, dayrates and utilization for all deepwater rigs could have difficulty maintaining current levels until client demand begins to accelerate and there is an increase in multi-year field development projects. An encouraging indicator in the third quarter of 2010 was the existence of several contract awards, along with client tenders and inquiries for deepwater rigs with some project commencement dates in 2011. These projects are located in various areas, including offshore U.S. Gulf of Mexico, Angola and Brazil, where there is a building expectation that Petrobras will seek deepwater rig availability in the near-term to address its growing pre-salt development needs. Should this trend continue, we believe that further weakness in dayrates for the industry’s most sophisticated units is limited.

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Our Midwater segment consists of six semisubmersible rigs. Five of the rigs currently operate offshore Brazil, with one rig, the Pride South Seas, cold stacked in South Africa. We currently have 81% of our available rig days in the final quarter of 2010 contracted for our midwater fleet, with 78% in 2011, 35% in 2012 and 14% in 2013. Utilization of the industry’s midwater fleet was 88% at September 30, 2010, with 14 rigs idle around the world compared to utilization of 85% at the same time in 2009, when 17 rigs were idle. Economic instability and uncertainty in crude oil markets during 2009 resulted in a growing number of inactive midwater rigs in the year, and this reduced level of activity has carried into 2010, contributing to a more challenging dayrate environment. A modest increase in midwater activity through the third quarter of 2010 has been most evident in Australia and in the U.K. and Norwegian sectors of the North Sea as the areas have responded positively to continued price stability for North Sea Brent crude oil, which averaged $77 per barrel in the third quarter of 2010, compared to $68 per barrel in the third quarter of 2009. A developing weakness in the deepwater rig segment for conventionally moored deepwater rigs could bring additional pressure to utilization and dayrates over the balance of 2010 and into 2011, as these more capable rigs are forced to bid reduced dayrates on work programs in shallower water depths in an attempt to remain active, thereby eliminating a contract opportunity that may have otherwise been available to a midwater unit. Also, the number of midwater rigs located in the U.S. Gulf of Mexico has declined significantly over the past 10 years due primarily to the risk of mooring system failures during hurricane season, marginal geologic prospects and more attractive opportunities in other regions, such as Brazil. We expect the worldwide supply of available midwater rigs to exceed client demand for the balance of 2010 and into 2011 with most contract opportunities characterized by short durations of six months or less. In addition, we expect a growing number of idle units as the short contract durations that are expected to persist into 2011 will not support the capital expenditures needed to complete reactivation programs on many of the idle units.

Our Independent Leg Jackup segment, consisting of seven rigs, currently operates in the Middle East. We currently have 17% of our available rig days in the last quarter of 2010 contracted for our independent leg jackup fleet, with 21% contracted in 2011, and 14% contracted in 2012 and 2013. Five of our seven standard independent leg jackup rigs are currently idle, with limited prospects for work through the balance of 2010 and into 2011. Customer demand for jackup rigs declined steadily in 2009 while contract backlogs fell throughout the industry’s existing fleet of rigs and incremental capacity surged. As of September 30, 2010, 91 independent leg jackup rigs were idle in the global fleet out of a total fleet of 405, representing segment utilization of 78%. The addition of new jackup rig capacity in the industry represents a long-term threat to the segment, due in part to the geologic maturity of many shallow water drilling basins around the world, in contrast to the early stages of exploration and development characterized by most of the world’s deepwater basins. Since 2007, 80 jackup rigs have been added to the global fleet, with another 38 rigs expected to be added by the end of 2012. As of September 30, 2010, 24 of the 38 expected incremental jackup rigs were without contracts. Despite the overall decline in jackup fleet utilization since 2009, customer demand for high specification units has shown improvement in 2010, with utilization of these rigs exceeding 85% and dayrates registering modest gains. These units possess advanced features, including greater hook loads, extended cantilever reach and the ability to drill wells with high pressure and temperature characteristics, such as those common in the UK and Norwegian sectors of the North Sea. Conversely, demand for the industry’s standard international-class jackup rigs, which possess dated features and technology, has declined significantly since 2009 and is expected to be flat to lower through the remainder of 2010 and into 2011.

We experienced approximately 150 and 500 out-of-service days for shipyard maintenance and upgrade projects for the three and nine months ended September 30, 2010, respectively, for our existing fleet as compared to approximately 215 and 385 days for the three and nine months ended September 30, 2009. For 2010, we expect the total number of out-of-service days to be approximately 590 as compared to 660 days for 2009. The decline in expected out-of-service days in 2010 is primarily due to a reduction of planned shipyard construction projects in our Deepwater segment, partially offset by an increase of planned projects in our Independent Leg Jackup and Midwater segments.

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Backlog

Our contracted backlog at September 30, 2010 totaled approximately $6.4 billion, with $2.9 billion attributable to our ultra-deepwater drillship construction projects. We expect approximately $1.6 billion of our total backlog at September 30, 2010 to be realized in the next 12 months. Our backlog at December 31, 2009 was approximately $6.9 billion. We calculate our backlog, or future contracted revenue for our offshore 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.

The following table reflects the percentage of rig days committed by year as of September 30, 2010. The percentage of rig days committed is calculated as the ratio of total days committed under firm contracts (as well as scheduled shipyard, survey and mobilization days for 2010) to total available days in the period. Total available days have been calculated based on the expected delivery dates for our two ultra-deepwater rigs under construction.

	For the Years Ending December 31,
	2010(1)			2011			2012			2013
Rig Days Committed
Deepwater		100	%		83	%		67	%		55	%
Midwater		81	%		78	%		35	%		14	%
Independent Leg Jackups		17	%		21	%		14	%		14	%

(1) Represents the three-month period beginning October 1, 2010.

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Segment Review

The following table summarizes our revenues and earnings from continuing operations by our reportable segments:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)						(In millions)
Deepwater revenues:
Revenues excluding reimbursables	$	212.1		$	189.9		$	649.0		$	634.4
Reimbursable revenues		4.1			1.9			10.6			10.7
Total Deepwater revenues		216.2			191.8			659.6			645.1
Midwater revenues:
Revenues excluding reimbursables		86.1			96.8			269.0			338.9
Reimbursable revenues		0.1			1.4			0.7			4.8
Total Midwater revenues		86.2			98.2			269.7			343.7
Independent Leg Jackups revenues:
Revenues excluding reimbursables		24.5			72.6			76.9			220.7
Reimbursable revenues		0.2			0.2			1.0			0.6
Total Independent Leg Jackups revenues		24.7			72.8			77.9			221.3
Other		19.0			21.7			51.8			65.5
Corporate		0.1			1.6			0.3			1.8
Total revenues	$	346.2		$	386.1		$	1,059.3		$	1,277.4
Earnings (loss) from continuing operations:
Deepwater	$	66.9		$	71.8		$	237.4		$	300.9
Midwater		12.5			25.7			56.1			121.1
Independent Leg Jackups		(0.2	)		32.6			(13.5	)		102.3
Other		2.1			1.6			3.7			3.9
Corporate		(25.3	)		(31.6	)		(84.2	)		(91.4	)
Total	$	56.0		$	100.1		$	199.5		$	436.8

The following table summarizes our average daily revenues and utilization percentage by segment:

	Three Months Ended September 30,										Nine Months Ended September 30,
	2010					2009					2010					2009
	Average					Average					Average					Average
	Daily		Utilization			Daily		Utilization			Daily		Utilization			Daily		Utilization
	Revenues (1)		(2)			Revenues (1)		(2)			Revenues (1)		(2)			Revenues (1)		(2)
Deepwater	$	294,800		95	%	$	343,200		76	%	$	322,500		92	%	$	338,600		87	%
Midwater	$	269,800		58	%	$	264,100		67	%	$	268,100		61	%	$	260,900		80	%
Independent Leg Jackups	$	92,400		41	%	$	123,100		92	%	$	97,000		42	%	$	123,100		94	%

(1)	Average daily revenues are based on total revenues for each type of rig divided by actual days worked by all rigs of that type. Average daily revenues will differ from average contract dayrate due to billing adjustments for any non-productive time, mobilization fees, demobilization fees, performance bonuses and charges to the customer for ancillary services.
(2)	Utilization is calculated as the total days worked divided by the total days in the period.

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Deepwater

Revenues for our Deepwater segment increased $24.4 million, or 13%, for the three months ended September 30, 2010 over the comparable period in 2009. The increase in revenues is primarily due to the Deep Ocean Ascension, which BP E&P agreed to place on a special standby dayrate of $360,000 beginning in August 2010, and increased utilization of the Pride Carlos Walter and the Pride Portland, which experienced an increase in the number of days worked of 22 and 24 days, respectively. Together, these factors contributed $28.6 million to the increase in revenues in the third quarter of 2010 over the comparable period in 2009. The Pride North America also contributed an incremental $9.7 million in revenues in the third quarter of 2010 as a result of decreased shipyard time—the rig experienced approximately 79 out-of-service days as a result of a scheduled five-year regulatory inspection and client requested upgrades in the third quarter of 2009—in addition to experiencing a higher dayrate in 2010. However, results for the quarter were negatively affected by an on-going dispute with a client relating to the responsibility for payment of the time required for equipment inspection and maintenance at the specific request of the client on an unscheduled basis. As a result, we did not recognize an estimated $30 million of revenues relating to approximately 60 contracted rig days on the Pride North America due to the dispute pending resolution of the matter. The increase in revenues in the third quarter was also partially offset by the Pride South Pacific, which earned an incremental $12.6 million of revenue in the 2009 period resulting from the recognition of mobilization revenues in addition to experiencing a higher dayrate. Average daily revenues decreased 14% for the three months ended September 30, 2010 over the comparable period in 2009 primarily due to the decreased dayrate for the Pride South Pacific and the impact of the disputed revenue for the Pride North America discussed above, partially offset by the commencement of the special standby dayrate of the Deep Ocean Ascension. Earnings from operations decreased $4.9 million, or 7%, for the three months ended September 30, 2010 over the comparable period in 2009 due to the decline in earnings from the Pride South Pacific, an increase in labor costs for our offshore workforce and start-up costs related to the Deep Ocean Ascension, the Deep Ocean Clarion and the Deep Ocean Mendocino. Utilization increased to 95% for the three months ended September 30, 2010 as compared to 76% for the three months ended September 30, 2009 primarily due to an overall decrease in out-of-service time.

Revenues for our Deepwater segment increased $14.5 million, or 2%, for the nine months ended September 30, 2010 over the comparable period in 2009. The increase in revenues is primarily due to higher utilization of the Pride Brazil, which spent time in the shipyard for contractual upgrades in the second quarter of 2009, the Deep Ocean Ascension, which was placed on a special standby dayrate of $360,000 beginning in August 2010, the Pride North America, which operated at a higher dayrate in the 2010 period and the Pride Africa, which experienced an increase in the number of days working in the first nine months of 2010. These factors contributed to an increase in revenues of $52.9 million over the comparable period in 2009. However, the increase from the Pride North America does not give effect to approximately $30 million of revenue, which we did not recognize during the third quarter 2010, due to the on-going dispute with our customer discussed above. This increase in revenues for the first nine months was also partially offset by the Pride South Pacific, which, after completion of its upgrade, commenced a new contract mid-January 2010 at a substantially lower dayrate than its 2009 dayrate and resulted in a $41.3 million decrease in revenues in the first nine months of 2010 over the comparable period in 2009. Average daily revenues decreased 5% for the nine months ended September 30, 2010 over the comparable period in 2009 primarily due to the decreased dayrate for the Pride South Pacific and the impact of the disputed revenue for the Pride North America, partially offset by the commencement of the special standby dayrate of the Deep Ocean Ascension. Earnings from operations decreased $63.5 million, or 21%, for the nine months ended September 30, 2010 over the comparable period in 2009 due to the decline in earnings from the Pride South Pacific, an increase in labor costs for the offshore workforce, and start-up costs related to the Deep Ocean Ascension, the Deep Ocean Clarion and the Deep Ocean Mendocino. Utilization increased to 92% for the nine months ended September 30, 2010 as compared to 87% for the nine months ended September 30, 2009 primarily due to decreased out-of-service time experienced by the Pride Brazil, the Pride Africa and the Pride Portland, partially offset by the increased out-of-service time for the Pride Carlos Walter and the Pride Rio de Janeiro.

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Midwater

Revenues for our Midwater segment decreased $12.0 million, or 12%, for the three months ended September 30, 2010 over the comparable period in 2009. The decrease in revenues is primarily due to lower utilization of the Pride South Seas, which was idle during the third quarter of 2010, and the Pride South America, which underwent a shipyard project in the third quarter of 2010. These factors contributed to a decrease in revenues of $23.4 million over the comparable period in 2009. This decrease in revenues was partially offset by the Sea Explorer, which operated at a substantially higher dayrate and contributed an incremental $15.7 million of revenues in the third quarter of 2010 over the comparable period in 2009. Earnings from operations decreased $13.2 million, or 51%, for the three months ended September 30, 2010 over the comparable period in 2009 due to decreased revenues and higher repair and maintenance costs for the Pride Venezuela, partially offset by incremental earnings associated with the higher dayrate and utilization of the Sea Explorer. Utilization decreased to 58% for the three months ended September 30, 2010 from 67% for the three months ended September 30, 2009 primarily due to the decreased utilization of the Pride South Seas and the Pride South America, partially offset by the increased utilization of the Sea Explorer.

Revenues for our Midwater segment decreased $74.0 million, or 22%, for the nine months ended September 30, 2010 over the comparable period in 2009. The decrease in revenues is primarily due to lower utilization of the Pride South Seas, which was idle during the entire first nine months of 2010, and the Pride Venezuela, which was in the shipyard for a rig refurbishment project in the first quarter of 2010 that was completed in the third quarter of 2010. These factors contributed to a decrease in revenues of $98.1 million over the comparable period in 2009. This decrease in revenues was partially offset by the Sea Explorer, which operated at a substantially higher dayrate in 2010 over the comparable period in 2009 and contributed an incremental $26.1 million in the first nine months of 2010 over the same period in 2009. Earnings from operations decreased $65.0 million, or 54%, for the nine months ended September 30, 2010 over the comparable period in 2009 primarily due to decreased revenues from the Pride South Seas and the Pride Venezuela, partially offset by incremental earnings associated with the higher dayrate and utilization of the Sea Explorer. Utilization decreased to 61% for the nine months ended September 30, 2010 from 80% for the nine months ended September 30, 2009 primarily due to the decreased utilization of the Pride South Seas, the Pride Venezuela and the Pride South America, partially offset by the increased utilization of the Sea Explorer.

Independent Leg Jackup

Revenues for our Independent Leg Jackup segment decreased $48.1 million, or 66%, for the three months ended September 30, 2010 over the comparable period in 2009. The decrease in revenues is primarily due to the decreased utilization of some of our fleet resulting from a recent decline in the demand for shallow water rigs. The Pride Pennsylvania, the Pride Wisconsin and the Pride Tennessee remained stacked throughout the third quarter of 2010 and the Pride Hawaii was idle. These four rigs accounted for a $44.3 million decline in revenues over the comparable period in 2009, during which period they were substantially utilized. Additionally, the Pride Cabinda operated under a new contract in the third quarter of 2010 at a dayrate substantially lower than its dayrate in the comparable period in 2009. Average daily revenues decreased 25% for the three months ended September 30, 2010 over the comparable period in 2009 primarily due to the Pride Cabinda, which operated at a significantly lower dayrate in the third quarter of 2010 over the comparable period in 2009. Earnings from operations decreased $32.8 million to a loss of $0.2 million for the three months ended September 30, 2010 compared with earnings of $32.6 million for the comparable period in 2009 due to decreased revenues. Utilization decreased to 41% for the three months ended September 30, 2010 from 92% for the three months ended September 30, 2009, primarily due to the rigs that remained stacked or idle during the third quarter of 2010.

Revenues for our Independent Leg Jackup segment decreased $143.4 million, or 65%, for the nine months ended September 30, 2010 over the comparable period in 2009. The decrease in revenues is primarily due to the decreased utilization of some of our fleet resulting from a recent decline in the demand for shallow water rigs. The Pride Pennsylvania and the Pride Wisconsin remained stacked throughout the first nine months of 2010, and the Pride Tennessee was idle for the first quarter of 2010 and then stacked in the second and third quarters. Additionally, the Pride Hawaii was idle for the majority of the second quarter of 2010 and the entire third quarter, the Pride Cabinda experienced approximately 50 out-of-service days in the first quarter of 2010 while awaiting the commencement of a new contract in March 2010, and the Pride Montana commenced a shipyard project in the first quarter of 2010 that was completed in the second quarter and resulted in 44 out-of-service days. These factors influencing revenues in the first nine months of 2010 were in contrast to the comparable period in 2009, during which period all of our rigs were substantially utilized. Average daily revenues decreased 21% for the nine months ended September 30, 2010 over the comparable period in 2009 primarily due to the Pride Cabinda, which operated at a significantly lower dayrate in the first nine months of 2010 over the comparable period in 2009. Earnings from operations decreased $115.8 million to a loss of $13.5 million for the nine months ended September 30, 2010 compared with earnings of $102.3 million for the comparable period in 2009 due to decreased revenues, primarily due to rigs that remained stacked or idle. Utilization decreased to 42% for the nine months ended September 30, 2010 from 94% for the nine months ended September 30, 2009, also primarily due to the rigs that remained stacked or idle during the first nine months of 2010.

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Other Operations

Other operations include our deepwater drilling operations management contracts and other operating activities. Management contracts in 2010 include two contracts which currently expire in 2012 and 2015 (with early termination permitted in certain cases). Management contracts in 2009 also included one management contract that ended in the third quarter of 2009 and one management contract that ended in the fourth quarter of 2009.

Revenues decreased $2.7 million, or 12%, for the three months ended September 30, 2010 over the comparable period in 2009 primarily due to the completion of two management contracts in the third and fourth quarters of 2009, partially offset by increased revenue resulting from the commencement of a new management contract in April 2010 at a significantly higher dayrate. Earnings from operations increased $0.5 million, or 31%, for the three months ended September 30, 2010 over the comparable period in 2009 primarily due to the incremental revenue associated with the new management contract in 2010, partially offset by the decreased earnings associated with the completion of two management contracts in 2009.

Revenues decreased $13.7 million, or 21%, for the nine months ended September 30, 2010 over the comparable period in 2009 primarily due to the completion of two management contracts, in the third and fourth quarters of 2009, partially offset by increased revenue resulting from the commencement of a new management contract in April 2010 at a significantly higher dayrate. Earnings from operations decreased $0.2 million, or 5%, for the nine months ended September 30, 2010 over the comparable period in 2009 primarily due to the factors mentioned above.

Results of Operations

The discussion below relating to significant line items represents our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends and, where possible and practical, have quantified the impact of such items.

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The following table presents selected consolidated financial information for our continuing operations:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)						(In millions)
REVENUES
Revenues excluding reimbursable revenues	$	337.8		$	379.5		$	1,039.2		$	1,253.0
Reimbursable revenues		8.4			6.6			20.1			24.4
		346.2			386.1			1,059.3			1,277.4
COSTS AND EXPENSES
Operating costs, excluding depreciation and amortization		213.0			210.6			631.9			615.9
Reimbursable costs		7.5			5.8			16.9			21.6
Depreciation and amortization		46.7			39.5			133.4			118.3
General and administrative		22.6			30.2			77.7			85.3
Loss (gain) on sales of assets, net		0.4			(0.1	)		(0.1	)		(0.5	)
		290.2			286.0			859.8			840.6
EARNINGS FROM OPERATIONS		56.0			100.1			199.5			436.8
OTHER INCOME (EXPENSE), NET
Interest expense, net of amounts capitalized		(6.5	)		—			(6.5	)		(0.1	)
Refinancing charges		(16.7	)		—			(16.7	)		—
Interest income		1.1			0.6			2.2			2.6
Other income (expense), net		(6.1	)		(2.7	)		5.6			(3.3	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		27.8			98.0			184.1			436.0
INCOME TAXES		15.0			(18.1	)		(2.9	)		(72.5	)
INCOME FROM CONTINUING OPERATIONS, NET OF TAX	$	42.8		$	79.9		$	181.2		$	363.5

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009

Revenues Excluding Reimbursable Revenues. Revenues excluding reimbursable revenues for the three months ended September 30, 2010 decreased $41.7 million, or 11%, over the comparable period in 2009. For additional information about our revenues, please read “— Segment Review” above.

Reimbursable Revenues. Reimbursable revenues for the three months ended September 30, 2010 increased $1.8 million, or 27%, over the comparable period in 2009, primarily due to increased reimbursable revenue related to the Deep Ocean Ascension, the Pride Africa and the Pride Angola, partially offset by decreased reimbursable revenue related to the Sea Explorer.

Operating Costs. Operating costs for the three months ended September 30, 2010 increased $2.4 million, or 1%, over the comparable period in 2009. The increase is largely attributable to our Deepwater segment, which experienced higher labor costs, increased operating costs resulting from the Deep Ocean Ascension, which went on a special standby dayrate in August 2010, and increased startup costs for the Deep Ocean Clarion. Partially offsetting these increases were reductions in labor costs due to lower activity in our Midwater and Independent Leg Jackup segments and due to completion of a managed rig contract in our Other segment.

Reimbursable Costs. Reimbursable costs for the three months ended September 30, 2010 increased $1.7 million, or 29%, over the comparable period in 2009 primarily due to higher reimbursable costs in our Deepwater and Other Segments, partially offset by lower reimbursable costs related to the Sea Explorer.

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Depreciation and Amortization. Depreciation expense for the three months ended September 30, 2010 increased $7.2 million, or 18%, over the comparable period in 2009. This increase relates generally to the capital additions in our Deepwater and Midwater segments, including the commencement of depreciation on the Deep Ocean Ascension in August 2010.

General and Administrative. General and administrative expenses for the three months ended September 30, 2010 decreased $7.6 million, or 25%, over the comparable period in 2009 primarily due to (1) $4.8 million associated with lower employee costs, of which $1.5 million related to lower contract labor costs and $3.3 million related to lower employee benefits and termination costs, (2) $1.0 million of lower expenses related to the investigation described under “—FCPA Investigation,” (3) $1.0 million of lower audit and professional service expenses, and (4) $0.6 million of lower corporate facility expenses and travel expenses resulting from our recently implemented cost cutting initiatives.

Loss (Gain) on Sale of Assets, Net. We had a loss on sales of assets of $0.4 million for the three months ended September 30, 2010, and a net gain on sales of assets of $0.1 million for the three months ended September 30, 2009 million, primarily due to the sale of scrap equipment.

Interest Expense. We had $6.5 million of interest expense for the three months ended September 30, 2010 and no interest expense for the three months ended September 30, 2009, due to the incremental interest associated with the issuance of additional long-term debt in 2010, which was partially offset by the capitalization of interest, which totaled $27.7 million and $23.2 million for the three months ended September 30, 2010 and 2009, respectively.

Refinancing Charges. Refinancing charges for the three months ended September 30, 2010 were $16.7 million and primarily included a $12.3 million make-whole premium and $4.1 million write-off of unamortized debt discount and unamortized debt issuance costs upon redemption of our 7 3/8% Senior Notes in September 2010. There were no refinancing charges for the three months ended September 30, 2009.

Other Expense, Net. Other expense, net for the three months ended September 30, 2010 increased $3.4 million to $6.1 million for the first three months of 2010 from $2.7 million for the comparable period in 2009 primarily due to a $3.5 million increase in our foreign exchange loss.

Income Taxes. Our consolidated effective income tax rate for continuing operations for the three months ended September 30, 2010 was (54.0%) compared with 18.5% for the three months ended September 30, 2009. The lower tax rate for the 2010 period was principally the result of lower income from continuing operations in 2010, tax benefits related to the adjustment of intercompany pricing in the completion of our 2009 income tax return during the third quarter of 2010, the catch-up effect of our current lower annual projected tax rate, and an increased proportion of income in lower tax jurisdictions.

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

Revenues Excluding Reimbursable Revenues. Revenues excluding reimbursable revenues for the nine months ended September 30, 2010 decreased $213.8 million, or 17%, over the comparable period in 2009. For additional information about our revenues, please read “— Segment Review” above.

Reimbursable Revenues. Reimbursable revenues for the nine months ended September 30, 2010 decreased $4.3 million, or 18%, over the comparable period in 2009, primarily due to lower activity in our Midwater segment.

Operating Costs. Operating costs for the nine months ended September 30, 2010 increased $16.0 million, or 3%, over the comparable period in 2009. The increase is largely attributable to our Deepwater segment, which experienced higher labor costs, increased startup and operating costs resulting from the Deep Ocean Ascension, which went on a special standby dayrate in August 2010, and increased startup costs for the Deep Ocean Clarion. Partially offsetting these increases were reductions in labor costs in our Midwater and Independent Leg Jackup segments due to lower activity and due to completion of managed rig contracts in our Other segment.

Reimbursable Costs. Reimbursable costs for the nine months ended September 30, 2010 decreased $4.7 million, or 22%, over the comparable period in 2009 primarily due to lower activity across our fleet.

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Depreciation and Amortization. Depreciation expense for the nine months ended September 30, 2010 increased $15.1 million, or 13%, over the comparable period in 2009. This increase relates to capital additions primarily in our Deepwater and Midwater segments, including the commencement of depreciation on the Deep Ocean Ascension in August 2010.

General and Administrative. General and administrative expenses for the nine months ended September 30, 2010 decreased $7.6 million, or 9%, over the comparable period in 2009, primarily due to (1) $4.1 million of lower employee benefits and termination costs, (2) $2.4 million of lower contract labor costs, and (3) $0.9 million of lower expenses related to the investigation described under “—FCPA Investigation.”

Gain on Sale of Assets, Net. We had net gain on sales of assets of $0.1 million for the nine months ended September 30, 2010 and $0.5 million for the nine months ended September 30, 2009, primarily due to the sale of scrap equipment.

Interest Expense. We had $6.5 million of interest expense for the nine months ended September 30, 2010 and $0.1 million for the nine months ended September 30, 2009, primarily due to the incremental interest associated with the issuance of additional long-term debt in 2009 and 2010, which was partially offset by the capitalization of interest, which totaled $73.6 million and $51.7 million for the nine months ended September 30, 2010 and 2009, respectively.

Refinancing Charges. Refinancing charges for the nine months ended September 30, 2010 were $16.7 million and primarily included a $12.3 million make-whole premium and $4.1 million write-off of unamortized debt discount and unamortized debt issuance costs upon redemption of our 7 3/8% Senior Notes in September 2010. There were no refinancing charges for the nine months ended September 30, 2009.

Other Income (Expense), Net. Other income, net for the nine months ended September 30, 2010 increased $8.9 million to $5.6 million for the first nine months of 2010 from an expense of $3.3 million for the comparable period in 2009 primarily due to a $9.0 million increase in our foreign exchange gain.

Income Taxes. Our consolidated effective income tax rate for continuing operations for the nine months ended September 30, 2010 was 1.6% compared with 16.6% for the nine months ended September 30, 2009. The lower tax rate for the 2010 period was principally the result of tax benefits related to the adjustment of intercompany pricing in the completion of our 2009 income tax return during the third quarter of 2010, lower income from continuing operations in 2010, and an increased proportion of income in lower tax jurisdictions.

Liquidity and Capital Resources

Our objective in financing our business is to maintain both adequate financial resources and access to additional liquidity. Our $750 million senior unsecured revolving credit facility provides back-up liquidity to meet our on-going working capital needs. Total long-term debt including the current portion at September 30, 2010 was $1.9 billion, and stockholders’ equity was $4.5 billion, resulting in a debt-to-total-capital ratio of 30%.

During the three months ended September 30, 2010, we used cash on hand, cash flows generated from operations, and net proceeds from our August 2010 $1.2 billion senior notes offering as our primary source of liquidity for funding our working capital needs, debt repayment and capital expenditures. We believe that our cash on hand, including the remaining net proceeds from the August 2010 notes offering, cash flows from operations and availability under our revolving credit facility will provide sufficient liquidity through 2011 to fund our working capital needs and scheduled debt repayments. We expect to fund our remaining commitments under our drillship construction program using some combination of cash on hand, cash flow from operations and, if needed, borrowings under our revolving credit facility. In addition, we will continue to pursue opportunities to expand or upgrade our fleet, which could result in additional capital investment. We may also in the future elect to return capital to our stockholders by share repurchases or the payment of dividends.

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We may review from time to time possible expansion and acquisition opportunities relating to our business, which may include the construction or acquisition of rigs or acquisitions of other businesses in addition to those described in this quarterly report. Any determination to construct or acquire additional rigs for our fleet will be based on market conditions and opportunities existing at the time, including the availability of long-term contracts with attractive dayrates and the relative costs of building or acquiring new rigs with advanced capabilities compared with the costs of retrofitting or converting existing rigs to provide similar capabilities. The timing, size or success of any additional acquisition or construction effort and the associated potential capital commitments are unpredictable. We may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances. Debt or equity financing may not, however, be available to us at that time due to a variety of events, including, among others, credit rating agency downgrades of our debt, industry conditions, general economic conditions, market conditions and market perceptions of us and our industry. In addition, we also review from time to time the possible disposition of assets that we do not consider core to our strategic long-term business plan.

Sources and Uses of Cash

Cash flows from operating activities

Cash flows from operating activities were $265.3 million for the nine months ended September 30, 2010 compared with $532.1 million for the comparable period in 2009. The decrease of $266.8 million was primarily due to a reduction of income from continuing operations.

Cash flows used in investing activities

Cash flows used in investing activities were $1,047.8 million for the nine months ended September 30, 2010 compared with $764.1 million for the comparable period in 2009, an increase of $283.7 million. The increase is primarily attributable to an increase in expenditures incurred towards the construction of our ultra-deepwater drillships.

Cash flows from financing activities

Cash flows from financing activities were $659.0 million for the nine months ended September 30, 2010 compared with $477.0 million for the comparable period in 2009, an increase of $182.0 million. The increase in cash flows from financing activities was primarily due to the issuance in August 2010 of our 6 7/8% Senior Notes due 2020 and our 7 7/8% Notes due 2040, which resulted in net proceeds of $1.2 billion. We also redeemed our 7 3/8% Notes due 2014 at a price of 102.458% of the $500.0 million principal amount, plus accrued and unpaid interest to the redemption date, which resulted in total cash paid of $517.4 million. In June 2009, we issued our 8 1/2% Senior Notes due 2019, which resulted in net proceeds of $492.4 million. Cash used for scheduled debt repayments totaled $22.3 million for the nine months ended September 30, 2010 and 2009. We also received proceeds of $7.5 million and $6.3 million from employee stock transactions in the nine months ended September 30, 2010 and 2009, respectively.

Working Capital

As of September 30, 2010, we had working capital of $550.4 million compared with $661.8 million as of December 31, 2009. The decrease in working capital is primarily due to expenditures of approximately $815 million incurred towards the construction of our four ultra-deepwater drillships, partially offset by the net proceeds from the issuance of our 6 7/8% Senior Notes and our 7 7/8% Senior Notes and the redemption of our 7 3/8% Senior Notes in the third quarter of 2010.

Available Credit Facility

On July 30, 2010, we entered into an amended and restated unsecured revolving credit agreement with a group of banks that increased availability under the facility from $320 million to $720 million and extended the maturity from December 2011 to July 2013. On October 28, 2010, pursuant to the credit facility’s accordion feature, we increased the availability under the facility to $750 million. Amounts drawn under the credit facility are available in U.S. dollars or euros and bear interest at variable rates based on either LIBOR plus a margin that varies based on our credit rating or the alternative base rate as defined in the agreement.

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The credit facility contains a number of covenants restricting, among other things, liens; indebtedness of our subsidiaries; mergers and dispositions of all or substantially all of our or certain of our subsidiaries’ assets; hedging arrangements outside the ordinary course of business; and sale-leaseback transactions. The facility also requires us to maintain certain financial ratios. The facility contains customary events of default, including with respect to a change of control.

Borrowings under the credit facility are available to make investments, acquisitions and capital expenditures, to repay and back-up commercial paper and for other general corporate purposes. We may obtain up to $100 million of letters of credit under the facility. As of September 30, 2010, there were no borrowings or letters of credit outstanding under the facility.

Other Outstanding Debt

On August 6, 2010, we completed an offering of $900 million aggregate principal amount of our 6 7/8% Senior Notes due 2020 and $300 million aggregate principal amount of our 7 7/8% Senior Notes due 2040. The 2020 notes and the 2040 notes bear interest at 6.875% and 7.875%, respectively, per annum, payable semiannually.

The notes contain provisions that limit our ability and the ability of our subsidiaries, with certain exceptions, to engage in sale and leaseback transactions, create liens and consolidate, merge or transfer all or substantially all of our assets. Upon a specified change in control event that results in a ratings decline, we will be required to make an offer to repurchase the notes at a repurchase price of 101% of the principal amount of the notes, plus accrued and unpaid interest through the applicable repurchase date. The notes of each series are subject to redemption, in whole at any time or in part from time to time, at our option, at a redemption price equal to the principal amount of the notes redeemed plus a make-whole premium. We will also pay accrued but unpaid interest to the redemption date.

On September 5, 2010, we redeemed all of our outstanding 7 3/8% Senior Notes due 2014 with a portion of the proceeds from the issuance of the 2020 notes and 2040 notes. The aggregate principal amount of the 2014 notes of $500 million was redeemed at a price of 102.458% of the principal amount, plus accrued and unpaid interest to the redemption date.

We have used and expect to use the remaining proceeds from the offering of the 2020 notes and the 2040 notes, net of issuance costs, for general corporate purposes, which have included and may include payments with respect to our drillships under construction and other capital expenditures.

As of September 30, 2010, in addition to our credit facility, we had the following long-term debt, including current maturities, outstanding:

• $500.0 million principal amount of 8 1/2% senior notes due 2019;

• $900.0 million principal amount of 6 7/8% senior notes due 2020;

• $300.0 million principal amount of 7 7/8% senior notes due 2040; and

• $174.7 million principal amount of notes guaranteed by the United States Maritime Administration.

Other Sources and Uses of Cash

We expect our purchases of property and equipment for 2010, excluding our commitments related to our drillship construction projects, to be approximately $285 million, of which we have spent approximately $235 million in the first nine months. These purchases have been and are expected to be used primarily for various rig upgrades in connection with new contracts as contracts expire during the year along with other sustaining capital projects. With respect to our drillship construction projects, we made payments of $687 million in the first nine months of 2010, with the total remaining costs estimated to be approximately $810 million. We anticipate making additional payments for the construction of our drillships of approximately $45 million for the remainder of 2010, and approximately $765 million in 2011. These costs exclude rig mobilization costs, capital spares and other start-up costs. We expect to fund our remaining commitments under our newbuild program using some combination of cash on hand, including the net proceeds from our notes offering in August 2010, cash flow from operations, and, if needed, borrowings under our revolving credit facility.

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We anticipate making income tax payments of approximately $37 million to $42 million in 2010, of which $32.8 million has been paid through September 30, 2010.

We may redeploy additional assets to more active regions if we have the opportunity to do so on attractive terms. We frequently bid for or negotiate with customers regarding multi-year contracts that could require significant capital expenditures and mobilization costs. We expect to fund project opportunities primarily through a combination of working capital, cash flow from operations and borrowings under our revolving credit facility.

In addition to the matters described in this “— Liquidity and Capital Resources” section, please read “— FCPA Investigation,” “— Our Business” and “— Segment Review” for additional matters that may have a material impact on our liquidity.

Letters of Credit

We are contingently liable as of September 30, 2010 in the aggregate amount of $487.1 million under certain performance, bid and custom bonds and letters of credit. As of September 30, 2010, we had not been required to make any collateral deposits with respect to these agreements.

Contractual Obligations

For additional information about our contractual obligations as of December 31, 2009, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Contractual Obligations” in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2009. As of September 30, 2010, except with respect to the issuance in August 2010 of $900 million aggregate principal amount of 6 7/8% Senior Notes due 2020 and $300 million aggregate principal amount of 7 7/8% Senior Notes due 2040, and the redemption of $500 million aggregate principal amount of 7 3/8% Senior Notes due 2014, there were no material changes to this disclosure regarding our contractual obligations made in the annual report.

Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, Improving Disclosures about Fair Value Measurements (“ASU 2010-6”). The update amends FASB Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, (“ASC Topic 820”) to require additional disclosures related to transfers between levels in the hierarchy of fair value measurements. ASU 2010-6 is effective for interim and annual reporting periods beginning after December 15, 2009. We adopted ASU 2010-6 as of January 1, 2010. Because the update did not change how fair values are measured, the update did not have an effect on our consolidated financial position, results of operations or cash flows.

In April 2010, the FASB issued ASU 2010-12, Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts. This update codifies an SEC Staff Announcement relating to accounting for the Health Care and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act. We adopted ASU 2010-12 as of its effective date, April 14, 2010. The effect of the new health care laws on our consolidated financial position, results of operations and cash flows is immaterial.

In May 2010, the FASB issued ASU 2010-19, Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The purpose of this update is to codify the SEC Staff Announcement made at the March 18, 2010 meeting of the FASB Emerging Issues Task Force (“EITF”) by the SEC Observer to the EITF. The Staff Announcement provides the SEC staff’s view on certain foreign currency issues related to investments in Venezuela. ASU 2010-19 is effective as of March 18, 2010. We adopted the update as of its effective date. The update had no effect on our consolidated financial position, results of operations or cash flows.

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In August 2010, the FASB issued ASU 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules—Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. This ASU amends various SEC paragraphs in the ASC to reflect changes made by the SEC in Final Rulemaking Release No. 33-9026, which was issued in April 2009 and amended SEC requirements in Regulation S-X and Regulation S-K and made changes to financial reporting requirements in response to the FASB’s issuance of Statement of Financial Accounting Standards (“SFAS”) No. 141(R), Business Combinations (FASB ASC Topic 805), and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (FASB ASC Topic 810). ASU 2010-21 is effective upon issuance. We adopted this update on its effective date. The update had no effect on our consolidated financial position, results of operations or cash flows. We previously adopted the guidance originally issued in SFAS 141(R) and SFAS 160 on January 1, 2009.

In August 2010, the FASB issued ASU 2010-22, Accounting for Various Topics—Technical Corrections to SEC Paragraphs. This update amends some of the SEC material in the ASC based on the June 2009 publication of Staff Accounting Bulletin (“SAB”) No. 112, which amended Topic 2, Topic 5, and Topic 6 in the SEC’s Staff Accounting Bulletin series. SAB 112 was issued to bring the SEC’s staff interpretative guidance into alignment with the changes in U.S. GAAP made in SFAS No. 141(R), Business Combinations (FASB ASC Topic 805), and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (FASB ASC Topic 810). ASU 2010-22 is effective upon issuance. We adopted this update on its effective date. The update had no effect on our consolidated financial position, results of operations or cash flows.

Forward-Looking Statements

This quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included in this quarterly report 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 and the economy in general;

• the recent Deepwater Horizon incident in the U.S. Gulf of Mexico and its consequences, including actions that may be taken by the U.S. government, other governments or our customers;

• our ability to enter into new contracts for our rigs, commencement dates for rigs and future utilization rates and contract rates for rigs;

• customer requirements for drilling capacity and customer drilling plans;

• contract backlog and the amounts expected to be realized within one year;

• future capital expenditures and investments in the construction, acquisition, refurbishment and repair of rigs (including the amount and nature thereof and the timing of completion and delivery thereof);

• future asset sales;

• adequacy of funds for capital expenditures, working capital and debt service requirements;

• future income tax payments and the utilization of net operating loss and foreign tax credit carryforwards;

• business strategies;

• expansion and growth of operations;

• future exposure to currency devaluations or exchange rate fluctuations;

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• expected or future indemnification under our drilling contracts;

• expected outcomes of legal, tax and administrative proceedings, including our ongoing investigation into improper payments to foreign government officials, and their expected effects on our financial position, results of operations and cash flows;

• future operating results and financial condition; and

• the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

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. These statements are subject to a number of assumptions, risks and uncertainties, including those described under “— FCPA Investigation” above, in “Risk Factors” in Item 1A of our annual report on Form 10-K for the year ended December 31, 2009 and Item 1A of Part II of our quarterly report on Form 10-Q for the quarter ended June 30, 2010 and the following:

• general economic and business conditions, including conditions in the credit markets;

• prices of crude oil and natural gas 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;

• the business opportunities (or lack thereof) that may be presented to and pursued by us;

• cancellation or renegotiation of our drilling contracts or payment or other delays, including acceptance delays, or defaults by our customers;

• unplanned downtime and repairs on our rigs, particularly due to the age of some of the rigs in our fleet;

• changes in laws and regulations; and

• the validity of the assumptions used in the design of our disclosure controls and procedures.

Most of these factors are beyond our control. We caution you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in these statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposure to interest rate risks, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of our annual report on Form 10-K for the year ended December 31, 2009. There have been no material changes to the disclosure regarding our exposure to certain market risks made in the annual report.

For additional information regarding our long-term debt, see Note 4 of our Notes to Unaudited Consolidated Financial Statements included in Item 1 of Part I of this quarterly report.

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Item 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this quarterly report. Based upon that evaluation, our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2010 were effective with respect to the recording, processing, summarizing and reporting, within the time periods specified in the SEC’s rules and forms, of information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

There were no changes in our internal control over financial reporting that occurred during the third quarter of 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth in Note 10 of our Notes to Unaudited Consolidated Financial Statements included in Item 1 of Part I of this quarterly report is incorporated by reference in response to this item.

Item 1A. Risk Factors

For additional information about our risk factors, see Item 1A of our annual report on Form 10-K for the year ended December 31, 2009 and Item 1A of Part II of our quarterly report for the quarter ended June 30, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information regarding our repurchases of shares of our common stock on a monthly basis during the third quarter of 2010:

					Total
					Number of		Maximum
					Shares		Number of
					Purchased as		Shares That
					Part of a		May Yet Be
	Total Number		Average		Publicly		Purchased
	of Shares		Price Paid		Announced		Under the
Period	Purchased(1)		Per Share		Plan (2)		Plan (2)
July 1-31, 2010		454	$	22.71		N/A		N/A
August 1-31, 2010		—	$	—		N/A		N/A
September 1-30, 2010		—	$	—		N/A		N/A
Total		454	$	22.71		N/A		N/A

(1)	Represents the surrender of shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees under our stockholder-approved long-term incentive plan.
(2)	We did not have at any time during the quarter, and currently do not have, a share repurchase program in place.

In addition, in May 2010, we acquired 2,660 shares of common stock in payment of the exercise price of options exercised by one of our directors. Under the applicable option award agreement, the shares were valued at $27.49, the closing stock price on the NYSE on the exercise date.

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Item 6. Exhibits***

4.1*	Amended and Restated Revolving Credit Agreement dated as of July 30, 2010 among Pride, the lenders from time to time parties thereto, Citibank, N.A., as administrative agent for the lenders, Natixis and Wells Fargo Bank, National Association, as syndications agent for the lenders, Bank of America, N.A., as documentation agent for the lenders, and Citibank, N.A., Natixis and Wells Fargo Bank, National Association, as issuing banks of the letters of credit thereunder.
4.2*	Joinder Agreement dated as of October 28, 2010 among Pride, Citibank, N.A., as administrative agent, and NIBC Bank N.V.
4.3*	Third Supplemental Indenture dated as of August 6, 2010 by and between Pride and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as Trustee.
10.1*†	First Amendment to Pride International, Inc. 2007 Long-Term Incentive Plan (as amended and restated).
12*	Computation of Ratio of Earnings to Fixed Charges.
31.1*	Certification of Chief Executive Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification of the Chief Executive and Chief Financial Officer of Pride pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase

*	Filed herewith.
**	Furnished herewith.
***	Pride and its subsidiaries are parties to several debt instruments that have not been filed with the SEC under which the total amount of securities authorized does not exceed 10% of the total assets of Pride and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii) (A) of Item 601(b) of Regulation S-K, Pride agrees to furnish a copy of such instruments to the SEC upon request.
†	Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRIDE INTERNATIONAL, INC.
By:	/s/ BRIAN C. VOEGELE
	Brian C. Voegele
	Senior Vice President and Chief Financial Officer

Date: November 4, 2010

By:	/s/ LEONARD E. TRAVIS
	Leonard E. Travis
	Vice President and Chief Accounting Officer

Date: November 4, 2010

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INDEX TO EXHIBITS

4.1*	Amended and Restated Revolving Credit Agreement dated as of July 30, 2010 among Pride, the lenders from time to time parties thereto, Citibank, N.A., as administrative agent for the lenders, Natixis and Wells Fargo Bank, National Association, as syndications agent for the lenders, Bank of America, N.A., as documentation agent for the lenders, and Citibank, N.A., Natixis and Wells Fargo Bank, National Association, as issuing banks of the letters of credit thereunder.
4.2*	Joinder Agreement dated as of October 28, 2010 among Pride, Citibank, N.A., as administrative agent, and NIBC Bank N.V.
4.3*	Third Supplemental Indenture dated as of August 6, 2010 by and between Pride and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as Trustee.
10.1*†	First Amendment to Pride International, Inc. 2007 Long-Term Incentive Plan (as amended and restated).
12*	Computation of Ratio of Earnings to Fixed Charges.
31.1*	Certification of Chief Executive Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer of Pride pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification of the Chief Executive and Chief Financial Officer of Pride pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase

*	Filed herewith.
**	Furnished herewith.
†	Management contract or compensatory plan or arrangement.

49

EX-4.1

Execution Version Exhibit 4.1

U.S. $720,000,000

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

DATED AS OF JULY 30, 2010

AMONG

PRIDE INTERNATIONAL, INC. AND PRIDE INTERNATIONAL LTD.

AS BORROWERS

AND

THE LENDERS NAMED HEREIN

AND

CITIBANK, N.A.

AS ADMINISTRATIVE AGENT

AND

NATIXIS AND WELLS FARGO BANK, NATIONAL ASSOCIATION

AS SYNDICATION AGENTS

AND

BANK OF AMERICA, N.A.

AS DOCUMENTATION AGENT

AND

CITIBANK, N.A., NATIXIS AND WELLS FARGO BANK, NATIONAL ASSOCIATION

AS ISSUING BANKS

JOINT LEAD ARRANGERS AND JOINT BOOK RUNNERS:

CITIGROUP GLOBAL MARKETS INC., NATIXIS AND
WELLS FARGO SECURITIES, LLC

AND ING BANK N.V. AS JOINT LEAD ARRANGER

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.01	Certain Defined Terms		1
Section 1.02	Computation of Time Periods		23
Section 1.03	Accounting Terms		23
Section 1.04	Miscellaneous		23
ARTICLE II AMOUNT AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT
Section 2.01	The Advances		23
Section 2.02	Making the Advances		23
Section 2.03	Fees		25
Section 2.04	Repayments of Advances		26
Section 2.05	Interest		27
Section 2.06	Additional Interest on LIBOR Advances		27
Section 2.07	Interest Rate Determination and Protection		28
Section 2.08	Conversion of Advances; Continuation		29
Section 2.09	Optional Prepayments		30
Section 2.10	Increased Costs; Capital Adequacy, Etc		30
Section 2.11	Illegality and Defaulting Lenders		31
Section 2.12	Payments and Computations		33
Section 2.13	Taxes		35
Section 2.14	Sharing of Payments, Etc		37
Section 2.15	Ratable Reduction or Termination of the Commitments; Effect of Termination		37
Section 2.16	Increase of Commitments; Additional Lenders		38
Section 2.17	Replacement of Lender		39
Section 2.18	Certificates of Lenders		40
Section 2.19	Letters of Credit		40
Section 2.20	Reallocation of Defaulting Lender Commitment, Etc		43
Section 2.21	Right to Give Drawdown Notices		44
Section 2.22	Termination of Defaulting Lender Commitment		45

-i-

TABLE OF CONTENTS
(continued)

		Page
ARTICLE III CONDITIONS
Section 3.01	Initial Conditions Precedent		45
Section 3.02	Additional Conditions Precedent to Each Advance		46
Section 3.03	Conditions Precedent to Each Letter of Credit		47
Section 3.04	Conditions Precedent to Each Commitment Increase		48
Section 3.05	Determinations Under Article III		49
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01	Representations and Warranties		49
ARTICLE V COVENANTS
Section 5.01	Affirmative Covenants		53
Section 5.02	Negative Covenants		59
ARTICLE VI EVENTS OF DEFAULT
Section 6.01	Events of Default		67
Section 6.02	L/C Cash Collateral Accounts		70
Section 6.03	Application of Amounts Received Following the Occurrence of an Event of Default		71
ARTICLE VII THE ADMINISTRATIVE AGENT AND THE ISSUING BANKS
Section 7.01	Authorization and Action		72
Section 7.02	Administrative Agent’s Reliance, Etc		73
Section 7.03	Administrative Agent and Its Affiliates		74
Section 7.04	Lender Credit Decision		74
Section 7.05	Certain Rights of the Administrative Agent		75
Section 7.06	Holders		75
Section 7.07	Indemnification		75
Section 7.08	Resignation by the Administrative Agent		76
Section 7.09	Resignation by an Issuing Bank		77
Section 7.10	Issuing Banks’ Reliance, Etc		78

-ii-

TABLE OF CONTENTS
(continued)

		Page
Section 7.11	Issuing Banks and Their Affiliates		78
Section 7.12	No Other Duties, etc		79
Section 7.13	Cure of Defaulting Lender		79
Section 7.14	Removal of Administrative Agent		79
ARTICLE VIII MISCELLANEOUS
Section 8.01	Amendments, Etc		79
Section 8.02	Notices, Etc		80
Section 8.03	No Waiver; Remedies		83
Section 8.04	Costs, Expenses and Indemnity		83
Section 8.05	Right of Set-Off		84
Section 8.06	Assignments and Participations		84
Section 8.07	Governing Law; Entire Agreement		87
Section 8.08	Interest		87
Section 8.09	Confidentiality		88
Section 8.10	Execution in Counterparts		89
Section 8.11	Domicile of Loans		89
Section 8.12	Binding Effect		89
Section 8.13	WAIVER OF JURY TRIAL		89
Section 8.14	Severability		89
Section 8.15	FORUM SELECTION AND CONSENT TO JURISDICTION		89
Section 8.16	DAMAGES		90
Section 8.17	Patriot Act Notice		91
Section 8.18	Survival of Agreements, Representations and Warranties, Etc		91
Section 8.19	Judgment Currency		91
Section 8.20	Currency Conversion		91
Section 8.21	Determination and Notice of Exchange Rates		92
Section 8.22	Substitution of Currency		92
ARTICLE IX GUARANTY
Section 9.01	Guaranty		93

-iii-

TABLE OF CONTENTS
(continued)

		Page
Section 9.02	Limit of Liability		93
Section 9.03	Guaranty Absolute		93
Section 9.04	Waiver of Notice and Other Remedies		95
Section 9.05	Deferral of Subrogation, Etc.		95
Section 9.06	Reinstatement		96
Section 9.07	Exercise of Remedies		96
Section 9.08	Continuing Guaranty; Assignments		96

-iv-

TABLE OF CONTENTS

SCHEDULES:
Schedule I	Applicable Lending Offices and Commitments
Schedule 4.01(r)	Existing Debt
Schedule 4.01(s)	Existing Liens
Schedule 5.01(c)	Insurance Threshold

EXHIBITS:
Exhibit A-1	Form of Note to be issued by Pride
Exhibit A-2	Form of Note to be issued by BVI Borrower
Exhibit B	Form of Notice of Borrowing
Exhibit C	Form of Notice of Letter of Credit
Exhibit D	Form of Opinion of Baker Botts L.L.P., Special Counsel to Pride
Exhibit D-1	Form of Opinion of Maples & Calder, Special Counsel to BVI Borrower
Exhibit E	Form of Opinion of the General Counsel of Pride
Exhibit F	Form of Transfer Agreement
Exhibit G	Form of Subsidiary Guaranty
Exhibit H	Form of Joinder Agreement

-v-

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of July 30, 2010, among PRIDE INTERNATIONAL, INC., a Delaware corporation (“Pride”), PRIDE INTERNATIONAL LTD., a British Virgin Islands company (“BVI Borrower”), the lenders from time to time parties hereto (each a “Lender” and collectively, the “Lenders”), CITIBANK, N.A., as administrative agent for the Lenders, NATIXIS and WELLS FARGO BANK, NATIONAL ASSOCIATION, as syndication agents for the Lenders (in such capacity, the “Syndication Agents”), Bank of America, N.A., as documentation agent for the Lenders (in such capacity, the “Documentation Agent”), and CITIBANK, N.A., NATIXIS and WELLS FARGO BANK, NATIONAL ASSOCIATION, as issuing banks of the Letters of Credit hereunder (together with any other Lender that agrees (in its sole discretion) to issue a Letter of Credit hereunder, in such capacity, each an “Issuing Bank”).

WITNESSETH:

WHEREAS, the Borrowers have requested that the Lenders establish in their favor a revolving credit facility in the aggregate principal amount of U.S. $720,000,000 (as such amount may increase or decrease in accordance with the terms hereof), pursuant to which facility revolving loans would be made to the Borrowers at their election and letters of credit would be issued for the account of Pride and its Subsidiaries; and

WHEREAS, the Lenders are willing to make such revolving credit facility available to the Borrowers on the terms and subject to the conditions and requirements hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined):

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

“Administrative Agent” means Citibank, N.A. in its capacity as Administrative Agent pursuant to Article VII and any successor in such capacity pursuant to Section 7.08.

“Advance” means (i) a Base Rate Advance or (ii) a LIBOR Advance, as the case may be, and “Advances” means two or more of any such Advance.

“Affected Issuing Bank” has the meaning specified in Section 2.11(a).

“Affected Lender” has the meaning specified in Section 2.11(a).

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “controls” (including the terms “controlled by” or “under common control with”) includes the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of Equity Interests, by contract or otherwise.

“Agents” means, collectively, the Administrative Agent, the Documentation Agent and the Syndication Agents.

“Agreement” means this Amended and Restated Credit Agreement, as amended, supplemented or modified from time to time.

“Alternative Base Rate” means, for any day, a fluctuating interest rate per annum as shall be in effect on such day, which rate per annum shall be equal to the highest of:

(i) the fluctuating commercial loan rate announced by the Administrative Agent from time to time at its New York, NY office (or other corresponding office, in the case of any successor Administrative Agent) as its prime rate or base rate for U.S. Dollar loans in the United States of America in effect on such day (which base rate may not be the lowest rate charged by such Lender on loans to any of its customers);

(ii) the sum of (x) the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) 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 next business day, provided that (A) if such day is not a business day, the rate on such transactions on the immediately preceding business day as so published on the next business day shall apply, and (B) if no such rate is published on such next business day, the rate for such day shall be the average of the offered rates quoted to the Administrative Agent on such day for such transactions by three (3) federal funds brokers of recognized standing as selected by the Administrative Agent, plus (y) a percentage per annum equal to one-half of one percent (¹/2%); and

(iii) the sum of (x) the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the LIBO Market Index Rate in effect on such day, plus (y) one percent (1.0%).

Any change in the Alternative Base Rate due to a change in the prime rate, federal funds rate or the LIBO Market Index specified in clauses (i) through (iii) above, shall be effective on the effective date of such change in the prime rate, federal funds rate or the LIBO Market Index Rate, as applicable.

-2-

“Applicable Commitment Fee Rate” means, for any day, at such times as a Credit Rating is in effect, the percentage per annum set forth below opposite the Credit Rating in effect on such day:

Credit Rating
S&P/Moody’s	Applicable Commitment Fee Rate
Level 1 BBB+/Baa1 or above		0.250	%
Level 2 BBB/Baa2		0.350	%
Level 3 BBB-/Baa3		0.500	%
Level 4 BB+/Ba1		0.625	%
Level 5 Lower than Level 4		0.750	%

For purposes of the foregoing, (i) if either S&P or Moody’s shall have issued more than one Credit Rating, the lowest such Credit Rating issued by such rating agency shall apply; (ii) if only one of S&P and Moody’s shall have in effect a Credit Rating, the available Credit Rating shall apply; (iii) if the Credit Ratings established by S&P and Moody’s shall fall within different levels, the higher Credit Rating shall apply unless such Credit Ratings differ by two or more levels, in which case the applicable level will be deemed to be one level above the lower of such levels; (iv) if any Credit Rating established by S&P or Moody’s shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (v) if S&P or Moody’s shall change the basis on which ratings are established, each reference to the Credit Rating announced by S&P or Moody’s, as the case may be, shall refer to the then equivalent rating by S&P or Moody’s, as the case may be. Notwithstanding the foregoing, if Pride shall at any time fail to have in effect a Credit Rating, Pride shall seek and obtain (if not already in effect), within thirty (30) days after such Credit Rating first ceases to be in effect, a corporate credit rating or a bank loan rating from S&P and/or Moody’s (or, if neither S&P nor Moody’s issues such types of ratings or ratings comparable thereto, from another nationally recognized rating agency approved by each of Pride and the Administrative Agent), and from and after the date on which such corporate credit rating or bank loan rating is obtained until such time (if any) that a Credit Rating becomes effective again, the Applicable Commitment Fee Rate shall be based on such corporate credit or bank loan rating or ratings in the same manner as provided herein with respect to the Credit Rating (with Level 5 being the Applicable Commitment Fee Rate in effect from the time the Credit Rating ceases to be in effect until the earlier of (x) the date on which any such corporate credit rating or bank loan rating is obtained and (y) the date on which a Credit Rating becomes effective again).

“Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurodollar Lending Office in the case of a LIBOR Advance.

“Applicable Margin” means, for any day, at such times as a Credit Rating is in effect, the percentage per annum set forth below opposite the Credit Rating in effect on such day:

-3-

Credit Rating
S&P/Moody’s	Applicable Margin
Level 1 BBB+/Baa1 or above		2.00	%
Level 2 BBB/Baa2		2.25	%
Level 3 BBB-/Baa3		2.50	%
Level 4 BB+/Ba1		2.75	%
Level 5 Lower than Level 4		3.00	%

For purposes of the foregoing, (i) if either S&P or Moody’s shall have issued more than one Credit Rating, the lowest such Credit Rating issued by such rating agency shall apply; (ii) if only one of S&P and Moody’s shall have in effect a Credit Rating, the available Credit Rating shall apply; (iii) if the Credit Ratings established by S&P and Moody’s shall fall within different levels, the higher Credit Rating shall apply unless such Credit Ratings differ by two or more levels, in which case the applicable level will be deemed to be one level above the lower of such levels; (iv) if any Credit Rating established by S&P or Moody’s shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (v) if S&P or Moody’s shall change the basis on which ratings are established, each reference to the Credit Rating announced by S&P or Moody’s, as the case may be, shall refer to the then equivalent rating by S&P or Moody’s, as the case may be. Notwithstanding the foregoing, if Pride shall at any time fail to have in effect a Credit Rating, Pride shall seek and obtain (if not already in effect), within thirty (30) days after such Credit Rating first ceases to be in effect, a corporate credit rating or a bank loan rating from S&P and/or Moody’s (or, if neither S&P nor Moody’s issues such types of ratings or ratings comparable thereto, from another nationally recognized rating agency approved by each of Pride and the Administrative Agent), and from and after the date on which such corporate credit rating or bank loan rating is obtained until such time (if any) that a Credit Rating becomes effective again, the Applicable Margin shall be based on such corporate credit or bank loan rating or ratings in the same manner as provided herein with respect to the Credit Rating (with Level 5 being the Applicable Margin in effect from the time the Credit Rating ceases to be in effect until the earlier of (x) the date on which any such corporate credit rating or bank loan rating is obtained and (y) the date on which a Credit Rating becomes effective again).

“Arrangers” means Citigroup Global Markets Inc., Natixis and Wells Fargo Securities, LLC.

“Bankruptcy Code” means Title 11 of the United States Code, as now or hereafter in effect, or any successor thereto.

“Base Rate Advance” means an Advance which bears interest as provided in Section 2.05(a) (or, if Section 2.05(c) applies, that bears interest at 2% per annum above the rate provided in Section 2.05(a)).

-4-

“Borrowers” means Pride and BVI Borrower, and “Borrower” means either of the foregoing.

“Borrowing” means (i) any extension of credit of the same Type made by the Lenders on the same date by way of Advances having, in the case of a Borrowing comprised of LIBOR Advances, a single Interest Period, including any Borrowing advanced, continued or converted, or (ii) the issuance, increase or extension of a Letter of Credit. A Borrowing is “advanced” on the day the Lenders advance funds comprising such Borrowing to a Borrower or a Letter of Credit is issued, increased or extended, is “continued” (in the case of a Borrowing comprised of LIBOR Advances) on the date a new Interest Period commences for such Borrowing, and is “converted” (in the case of a Borrowing comprised of LIBOR Advances or Base Rate Advances) when such Borrowing is changed from one Type of Advances to the other.

“Borrowing Minimum” means (a) in the case of a Borrowing comprised of LIBOR Advances denominated in Dollars, $5,000,000, (b) in the case of a Borrowing comprised of LIBOR Advances denominated in Euros, the smallest amount of Euros that has a Dollar Equivalent equal to or in excess of $5,000,000 and (c) in the case of a Borrowing comprised of Base Rate Advances, $1,000,000.

“Borrowing Multiple” means, for any Borrowing, (i) in the case of a Borrowing denominated in Dollars, $1,000,000 and (ii) in the case of a Borrowing denominated in Euros, €1,000,000.

“Brazilian Litigation” means that certain litigation concerning the cancellation of certain drilling contracts related to four deepwater semisubmersible drilling rigs — the Pride Carlos Walter, Pride Brazil, Pride Portland and Pride Rio de Janeiro, as is more fully described in Pride’s Form 10-Q filing for the quarterly period ended March 31, 2010.

“Business Day” means (a) any day of the year except Saturday, Sunday and any day on which Lenders are required or authorized to close in New York City or Houston, Texas and (b) if the applicable Business Day relates to the advance or continuation of, conversion into, or payment on a LIBOR Borrowing (i) in a currency other than Euros, any day referred to in clause (a) on which banks are dealing in Dollar deposits in the interbank eurocurrency market in London, England, and (ii) in Euros, any day referred to in clause (a) on which the TARGET payment system is open for the settlement of payments in Euros.

“BVI Borrower Obligations” means all Obligations owed by BVI Borrower.

“Calculation Date” means (a) with respect to any Advance, each of the following: (i) each date of a Borrowing of a LIBOR Advance denominated in Euros, (ii) each date of a continuation of a LIBOR Advance denominated in Euros and (iii) such additional dates as the Administrative Agent shall reasonably determine or the Majority Lenders shall reasonably require; (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in Euros, (ii) each date of an amendment of any such Letter of Credit denominated in Euros having the effect of increasing the amount thereof (solely with respect to the increased amount), and (iii) each date of any payment by the Issuing Bank under any Letter of Credit denominated in Euros; and (c) the last Business Day of each calendar quarter.

-5-

“Capital Lease Obligations” means, with respect to any capital lease, all lease obligations that under GAAP are required to be capitalized in respect of such capital lease on the books of the lessee at the time of determination, in each case taken at the amount thereof accounted for as indebtedness (net of interest expense) in accordance with GAAP.

“Cash Collateralize” means, in respect of securing an obligation, to provide and pledge to the Administrative Agent, for the benefit of the Lender Parties, cash collateral in Dollars, which cash collateral shall be deposited into a blocked deposit account established and maintained at the office of the Administrative Agent and in the name of the Administrative Agent, as collateral security for such obligation (and “Cash Collateralization” and “Cash Collateral” shall have corresponding meanings).

“Change in Control” means an event by which (a) any Person or group of Persons acting in concert (as such terms are used in Rule 13d-5 under the Exchange Act), acquires directly or indirectly 30% or more of the combined voting power of all outstanding securities of Pride entitled to vote in the election of directors, other than securities having such power only by reason of the happening of a contingency; and (b) during any period of twelve (12) consecutive months following an event described in clause (a) of this definition, a majority of the members of the board of directors of Pride ceases to be composed of individuals (i) who were members of that board on the first day of such period, (ii) whose election or nomination to that board was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or (iii) whose election or nomination to that board was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any Person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors).

“Code” means the Internal Revenue Code of 1986 as amended from time to time, or any successor Federal tax code, and any reference to any statutory provision of the Code shall be deemed to be a reference to any successor provision or provisions.

“Collateral Account” means an interest-bearing deposit account of Pride (i) with the Administrative Agent or one of its Affiliates, (ii) over which neither Pride nor any of its Affiliates has control, and (iii) in which the Administrative Agent has a first priority perfected security interest securing the relevant Obligations.

“Commitment” means, relative to any Lender, such Lender’s obligations to make Advances and participate in Letters of Credit pursuant to Sections 2.01 and 2.19, initially in the amount and percentage set forth on Schedule I hereto or the Transfer Agreement pursuant to which such Lender shall have assumed its Commitment, as applicable, as such obligations may be reduced or increased from time to time as expressly provided pursuant to this Agreement. The initial aggregate amount of the Lenders’ Commitments is $720,000,000.

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

-6-

“Commitment Termination Date” means the earliest of (i) the Maturity Date, (ii) the date on which the Commitments are terminated in full or reduced to zero pursuant to Section 2.15, and (iii) the occurrence of any Event of Default described in Section 6.01 (f) or (g) or the occurrence and continuance of any other Event of Default and either (x) the declaration of the Advances to be due and payable pursuant to Section 6.01, or (y) in the absence of such declaration, the giving of written notice by the Administrative Agent, acting at the direction of the Majority Lenders, to Pride pursuant to Section 6.01 that the Commitments have been terminated.

“Consolidated” refers to the consolidation of the accounts of Pride and its Subsidiaries in accordance with GAAP.

“Consolidated Debt” means all Debt of Pride and its Subsidiaries (other than SPV’s) that would be reflected on a consolidated balance sheet of such Persons prepared in accordance with GAAP.

“Consolidated Debt to Total Tangible Capitalization Ratio” means, at any time, the ratio of Consolidated Debt at such time to Total Tangible Capitalization at such time.

“Consolidated EBITDA” means, for any period, the sum, determined on a consolidated basis, of (i) revenues after operating costs and selling, general and administrative expenses (but, for the avoidance of doubt, before taxes and interest), plus (ii) to the extent included in such costs and expenses, (a) depreciation expense, (b) amortization expense and (c) other non-cash expense (including, without limitation, impairment of goodwill), in each case of Pride and its Subsidiaries (other than SPV’s) determined in accordance with GAAP for such period.

“Consolidated Interest Expense” means, for any period, the consolidated cash interest expense (excluding, for the avoidance of doubt, write-offs or amortization of deferred financing costs) on indebtedness of Pride and its Subsidiaries (other than SPV’s) determined in accordance with GAAP for such period.

“Consolidated Tangible Net Worth” means, as of any date of determination, consolidated shareholders equity of Pride and its Subsidiaries determined in accordance with GAAP (excluding the effect on shareholders equity of cumulative foreign exchange translation adjustments, impairment charges and the amortization of intangible assets) less the net book amount of all assets of Pride and its Subsidiaries that would be classified as intangible assets on the consolidated balance sheet of Pride and its Subsidiaries as of such date prepared in accordance with GAAP. For purposes of this definition, SPV’s shall be accounted for pursuant to the equity method of accounting and any mark-to-market non-cash adjustments in respect of convertible securities shall be excluded.

“Convert”, “Conversion” and “Converted” each refers to a conversion of Advances of one Type into Advances of another Type, as the case may be, pursuant to Section 2.05(a), Section 2.07, Section 2.08, or Section 2.11.

“Credit Documents” means this Agreement, each Note, each Notice of Borrowing, each Notice of Letter of Credit, each Letter of Credit, any Subsidiary Guaranties in effect from time to time and each other document or instrument executed and delivered in connection with this Agreement.

-7-

“Credit Parties” means, collectively, the Borrowers and each Guarantor, and “Credit Party” means, individually, each such Person.

“Credit Rating” means the debt rating (either express or implied) by S&P or Moody’s in respect of Pride’s non-credit enhanced senior unsecured long-term debt.

“Debt” means, for any Person, the following obligations of such Person, without duplication: (i) obligations of such Person for borrowed money; (ii) obligations of such Person representing the deferred purchase price of property or services other than accounts payable and accrued liabilities arising in the ordinary course of business and other than amounts which are being contested in good faith and for which reserves in conformity with GAAP have been provided; (iii) obligations of such Person evidenced by bonds, notes, bankers acceptances, debentures or other similar instruments of such Person or arising, whether absolute or contingent, out of drawn letters of credit issued for such Person’s account or pursuant to such Person’s application securing Debt; (iv) obligations of other Persons, whether or not assumed, secured by liens (other than Permitted Liens) upon property or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, but only to the extent of such property’s fair market value; (v) Capital Lease Obligations of such Person; (vi) net obligations under interest rate protection agreements that have been cancelled or otherwise terminated before their scheduled expiration or are otherwise due and payable; and (vii) obligations of such Person pursuant to a Guaranty of any of the foregoing of another Person; provided, however, Debt shall exclude Non-Recourse Debt (other than Pre-Completion Guaranties). Debt of any Person shall include the Debt of any partnership or joint venture to the extent holders of such Debt have recourse to such Person.

“Default” means an event which, with the giving of notice or lapse of time or both, would constitute an Event of Default.

“Defaulting Lender” means, at any time, a Lender as to which the Administrative Agent has notified Pride that (i) such Lender has failed for at least three Business Days to comply with its obligations under this Agreement to make an Advance or make a payment to any Issuing Bank in respect of a Letter of Credit reimbursement obligation (each a “funding obligation”), provided that, if such Lender has failed for at least five Business Days to comply with any funding obligation, Pride may declare such Lender to be a Defaulting Lender in a written notice to the Administrative Agent, (ii) such Lender has notified the Administrative Agent, or has stated publicly, that it will not comply with any such funding obligation hereunder, or has failed for at least five Business Days to comply with its funding obligations under any other loan agreement or credit agreement or other similar financing agreement, (iii) such Lender has, for at least three Business Days, failed to confirm in writing to the Administrative Agent, in response to a written request of the Administrative Agent, that it will comply with its funding obligations hereunder, or (iv) a Lender Insolvency Event has occurred and is continuing with respect to such Lender (provided that neither the reallocation of funding obligations provided for in Section 2.20 as a result of a Lender’s being a Defaulting Lender nor the performance by Non-Defaulting Lenders of such reallocated funding obligations will by themselves cause the relevant Defaulting Lender to become a Non-Defaulting Lender). Any determination that a Lender is a Defaulting Lender under clauses (i) through (iv) above will be made by the Administrative Agent in its reasonable discretion acting in good faith, except as set forth in the proviso of clause (i) above. The Administrative Agent will promptly send to all Lenders a copy of any notice to Pride (or, in the case of a declaration under the proviso to clause (i) above, from Pride) provided for in this definition.

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“Demand Loan” has the meaning specified in Section 2.19(c).

“Documentation Agent” has the meaning specified in the first paragraph hereof.

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

“Dollar Equivalent” means, on any date of determination (i) with respect to any amount in Dollars, such amount, and (ii) with respect to any amount in Euros, the equivalent in Dollars of such amount, determined by the Administrative Agent using the applicable Exchange Rate in effect at such time.

“Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or in the Transfer Agreement pursuant to which it became a Lender or such other office of such Lender as such Lender may from time to time specify to Pride and the Administrative Agent.

“Effective Date” has the meaning specified in Section 3.01.

“Eligible Assignee” means (i) any Lender, (ii) with the consent of the Issuing Banks (which consent will not be unreasonably withheld), any Affiliate of any Lender, and (iii) with the consent of the Administrative Agent, the Issuing Banks and, if no Event of Default has occurred and is continuing, Pride (which consent will not be unreasonably withheld; provided that Pride shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent (which may be transmitted by electronic mail) within seven (7) Business Days after receiving a written request for its consent to such assignment), any other commercial bank or financial institution not covered by clause (i) or (ii) of this definition; provided that neither Pride nor any Subsidiary or Affiliate of Pride shall be an Eligible Assignee.

“EMU Legislation” means the legislative measures of the European Union for the introduction of, changeover to or operation of the Euro in one or more member states.

“Environment” shall have the meaning set forth in 42 U.S.C. § 9601(8) as defined on the date of this Agreement, and “Environmental” means pertaining or relating to the Environment.

“Environmental Law” means any law, statute, ordinance, rule, regulation, order, decision, decree, judgment, permit, license, authorization or other agreement or Governmental Requirement arising from, in connection with or relating to the pollution, protection or regulation of the Environment or the protection or regulation of health or safety, whether the foregoing are required or promulgated by any government or agency or other authority of or in the United States (whether local, state, or federal) or any foreign country or subdivision thereof, including those relating to the disposal, removal, remediation, production, storing, refining, handling, transferring, processing, recycling or transporting of or exposure to any material or substance, wherever located.

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“EPA” means the United States Environmental Protection Agency or any successor thereto.

“Equity Interest” means as to any Person, any capital stock, partnership interest, joint venture interest, company interest, membership interest or other equity interest in such Person, or any warrant, option or other right to acquire any Equity Interest in such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute, together with the regulations thereunder, as in effect from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) which is a member of a group of which Pride is a member and which is under common control within the meaning of the regulations under Section 414 of the Code.

“ERISA Liabilities” means at any time the minimum liability with respect to Plans which would be required to be reflected at such time as a liability on the Consolidated balance sheet of Pride under paragraphs 36 and 70 of Statement of Financial Accounting Standards No. 87, as such Statement may from time to time be amended, modified or supplemented, or under any successor statement issued in replacement thereof.

“Euro” or “€” means the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation for the introduction of, changeover to or operation of the Euro in one or more member states.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Federal Reserve Board, as in effect from time to time.

“Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule I hereto or in the Transfer Agreement pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office) or such other office of such Lender as such Lender may from time to time specify to Pride and the Administrative Agent.

“Eurodollar Rate Reserve Percentage” of any Lender for any Interest Period with respect to any LIBOR 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 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.

“Events of Default” has the meaning specified in Section 6.01.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute.

“Exchange Rate” means at any date of determination, with respect to the conversion of Dollars into Euros or the conversion of Euros into Dollars, the spot rate of exchange in London that appears at approximately 11:00 A.M., London time, on such day on the display page applicable to the relevant currency on the Bloomberg Service (or such other page as may replace such page on such service for the purpose of displaying the spot rate of exchange in London for the conversion of Dollars into Euros or the conversion of Euros into Dollars, as applicable). In the event such spot rate of exchange does not appear on the applicable page of such service, the Exchange Rate shall be determined by reference to such other publicly available services for displaying currency spot exchange rates as may be agreed upon by the Administrative Agent, the Issuing Banks, and Pride, or, in the absence of such agreement, such Exchange Rate shall instead be determined by the Administrative Agent or the applicable Issuing Bank, as applicable, based on current market spot rates in accordance with the provisions of Section 8.20; provided that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent or the applicable Issuing Bank, as applicable, after consultation with Pride, may use any reasonable method it deems appropriate to determine such rate, and such determination shall be prima facie evidence thereof.

“Existing Credit Facility” means the credit facility provided under the Credit Agreement dated as of December 9, 2008 among Pride, the lenders party thereto, Citibank, N.A., as administrative agent and issuing bank, Natixis, as syndication agent, and Citigroup Global Markets Inc. and Natixis as co-lead arrangers and joint book runners, as amended.

“Expiration Date” means, for any Letter of Credit, the later of (i) the Stated Expiry Date of such Letter of Credit or such earlier date, if any, on which such Letter of Credit is permanently cancelled in writing by the applicable Borrower, the beneficiary thereof and each transferee, if any, thereof, (ii) if any Extension Event referred to in clause (i) of the definition herein of Extension Event shall occur in respect of such Letter of Credit, the date on which the Issuing Bank shall receive an opinion from its counsel to the effect that a final and nonappealable judgment or order has been rendered or issued either terminating the order, injunction or other process or decree restraining the Issuing Bank from paying under such Letter of Credit or permanently enjoining the Issuing Bank from paying under such Letter of Credit, and (iii) if any Extension Event referred to in clause (ii) of the definition herein of Extension Event shall occur in respect of such Letter of Credit, the date on which the Issuing Bank shall receive an opinion from its counsel to the effect that the Issuing Bank has no further liability under such Letter of Credit.

“Extension Event” means, in respect of any Letter of Credit, that at any time either (i) the Issuing Bank shall have been served with or otherwise be subjected to a court order, injunction or other process or decree restraining or seeking to restrain the Issuing Bank from paying any amount under such Letter of Credit and either (a) there has been a drawing under such Letter of Credit which the Issuing Bank would otherwise be obligated to pay or (b) the Stated Expiry Date of such Letter of Credit has occurred but the right of the beneficiary or transferee to draw under such Letter of Credit has been extended past such date in connection with the pendency of

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the related court action or proceeding; or (ii) the beneficiary or transferee shall have made a demand, on or prior to the Stated Expiry Date of such Letter of Credit, to the effect that the Stated Expiry Date be extended or that the value of such Letter of Credit be held for the account of the beneficiary or transferee, in either case under circumstances in which the Issuing Bank may incur liability or loss if the Issuing Bank does not comply with such demand, and either (a) the applicable Borrower shall have failed to authorize the Issuing Bank to so extend the Stated Expiry Date within three banking days after the Issuing Bank shall have notified such Borrower of such demand or (b) the Issuing Bank shall in its sole discretion decline to extend such Stated Expiry Date.

“FCPA Investigation” means any investigation being conducted by Pride or its representatives, the U.S. Department of Justice, or the U.S. Securities and Exchange Commission into possible payments to non-U.S. government officials, whether directly or indirectly, as well as corresponding accounting entries and internal control issues, which may violate the U.S. Foreign Corrupt Practices Act, as is more fully described in Pride’s Form 10-Q filing for the quarterly period ended March 31, 2010.

“FDIC” means the Federal Deposit Insurance Corporation, or any federal agency or authority of the United States from time to time succeeding to its function.

“Federal Funds Rate” means, for any day, a fluctuating interest rate per annum equal for such day to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any federal agency or authority of the United States from time to time succeeding to its function.

“Fiscal Year” means the fiscal year of Pride and its Subsidiaries ending on December 31 of each calendar year. For purposes of this Agreement, any particular Fiscal Year may be designated by reference to the calendar year in which such Fiscal Year ends.

“Foreign Subsidiary” means each Subsidiary organized and existing under the law of a jurisdiction other than the United States, any state or territory thereof, the District of Columbia or any political subdivision of the United States, any state or territory thereof or the District of Columbia.

“GAAP” means generally accepted accounting principles from time to time in effect as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board or in such other statements, opinions and pronouncements by such other entity as may be approved by a significant segment of the U.S. accounting profession. All calculations for purposes of determining compliance with the financial covenants set forth in Sections 5.02(a) and 5.02(b), however, shall be adjusted to reflect GAAP accounting principles and policies consistent with those in effect on December 31, 2009.

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“Governmental Requirements” means all judgments, orders, writs, injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules, franchises, permits, certificates, licenses, authorizations and the like and any other requirements of any government or any commission, board, court, agency, instrumentality or political subdivision thereof.

“Guarantor” means any Subsidiary of Pride required to execute and deliver a Subsidiary Guaranty hereunder pursuant to Section 5.02(d)(xi), unless and until the relevant Subsidiary Guaranty is released pursuant to Section 5.02(d)(xi).

“Guaranty”, by any Person, means all contractual obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business) of such Person guaranteeing any Debt of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Debt, or to purchase any property or assets constituting security therefor, primarily for the purpose of assuring the owner of such Debt of the ability of the primary obligor to make payment of such Debt; or (ii) to advance or supply funds (x) for the purchase or payment of such Debt, or (y) to maintain working capital or other balance sheet condition, or otherwise to advance or make available funds for the purchase or payment of such Debt, in each case primarily for the purpose of assuring the owner of such Debt of the ability of the primary obligor to make payment of such Debt; or (iii) to lease property, or to purchase securities or other property or services, of the primary obligor, primarily for the purpose of assuring the owner of such Debt of the ability of the primary obligor to make payment of such Debt; or (iv) otherwise to assure the owner of such Debt of the primary obligor against loss in respect thereof. For computational purposes, the amount of a Guaranty in respect of any Debt shall be deemed to be equal to the amount that would apply if such Debt was the direct obligation of such Person rather than the primary obligor or, if less, the maximum aggregate potential liability of such Person under the terms of the Guaranty.

“Hazardous Materials” means (i) any substance or material identified as a hazardous substance pursuant to any Environmental Law, (ii) any substance or material regulated as a hazardous or solid waste pursuant to any Environmental Law, (iii) any other material or substance regulated under any Environmental Law and (iv) pollutants, contaminants, toxic substances, radioactive materials, refined products, natural gas liquids, crude oil, petroleum and petroleum products, polychlorinated biphenyls and asbestos.

“Hedging Agreement” means any swap, collar, cap, option, any combination of the foregoing or any other hedge relating to any commodity, interest rates, currency, gas, electricity or other product or service.

“Illegality Event” has the meaning specified in Section 2.11.

“Indemnified Parties” has the meaning specified in Section 8.04(c).

“Information” has the meaning specified in Section 8.09.

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“Insufficiency” means, with respect to any Plan, the amount, if any, by which the present value of the accrued benefits under such Plan exceeds the fair market value of the assets of such Plan allocable to such benefits.

“Interest Coverage Ratio” means, for any period, the ratio of (i) Consolidated EBITDA for such period to (ii) Consolidated Interest Expense for such period.

“Interest Period” means, with respect to each LIBOR Advance, in each case comprising part of the same Borrowing, the period commencing on the date of such Advance or the date of the Conversion of any Advance into such Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below 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. The duration of each such Interest Period shall be one, two, three or six months (or, with the consent of each Lender making a LIBOR Advance as part of such Borrowing, any other period), in each case as the Borrower may, upon notice received by the Administrative Agent not later than 12:00 P.M. (New York City time) (x) on the third Business Day prior to the first day of such Interest Period with respect to LIBOR Advances funded in Dollars and (y) on the fourth Business Day prior to the first day of such Interest Period with respect to LIBOR Advances funded in Euros, select; provided that:

(i) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration;

(ii) 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;

(iii) 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 such Interest Period would have ended if there were a numerically corresponding day in such calendar month;

(iv) no Interest Period for any Advance may end after the Maturity Date; and

(v) the Borrower may not select any Interest Period if any Event of Default exists.

“Investment Grade Rating” means (a) a debt rating of BBB- (or better) by S&P or (b) a debt rating of Baa3 (or better) by Moody’s.

“Issuing Bank Exchange Rate” has the meaning assigned to such term in Section 8.21.

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“Issuing Banks” has the meaning specified in the first paragraph hereof.

“Joinder Agreement” means an agreement in substantially the form of Exhibit H signed by Borrowers, by each Additional Lender and by each other Lender whose Commitment is to be increased, setting forth the new Commitments of such Lenders and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof.

“Lender Insolvency Event” means, with respect to any Lender, that (i) such Lender or its Parent Company is insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, or (ii) such Lender or its Parent Company is the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Lender or its Parent Company, or such Lender or its Parent Company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment.

“Lender Parties” means the Administrative Agent, the Issuing Banks, the Lenders and the Arrangers.

“Lender” has the meaning specified in the first paragraph hereof.

“Letter of Credit” means each letter of credit issued by an Issuing Bank pursuant to Section 2.19, as extended or otherwise modified by an Issuing Bank from time to time.

“Letter of Credit Liabilities” means the maximum aggregate amount of all undrawn portions of Letters of Credit (after giving effect to any step up provision or other mechanism for increases, if any, and assuming compliance with all conditions to drawing) plus the aggregate amount of all drawings under Letters of Credit which are unpaid.

“L/C Cash Collateral Account” has the meaning specified in Section 6.02.

“L/C Related Documents” has the meaning specified in Section 2.19(d).

“LIBO Market Index Rate” means, for any day, with respect to any interest calculation for Base Rate Advances, (a) the rate per annum (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) appearing at Reuters Reference LIBOR01 page (or on any successor thereto or substitute therefor provided by Reuters, providing rate quotations comparable to those currently provided on such page, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time for such day (or, if such day is not a Business Day, the immediately preceding Business Day) as the rate for dollar deposits with a one-month maturity; (b) if for any reason the rate specified in clause (a) of this definition does not so appear at Reuters Reference LIBOR01 page (or any successor thereto or substitute page therefor provided by Reuters), the rate per annum (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) appearing on Bloomberg Financial Markets Service (or any successor thereto) as the London interbank offered rate for deposits in dollars at approximately 11:00 a.m., London

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time for such day (or, if such day is not a Business Day, the immediately preceding Business Day) as the rate for dollar deposits with a one-month maturity; and (c) if the rate specified in clause (a) of this definition does not so appear at Reuters Reference LIBOR01 page (or any successor thereto or substitute therefor provided by Reuters) and if no rate specified in clause (b) of this definition so appears on Bloomberg Financial Markets Service (or any successor thereto), the average (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) of the respective rates per annum at which dollar deposits are offered by the principal offices of each Reference Bank in London, England in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, for such day, with a one-month maturity and in an amount substantially equal to such Reference Bank’s Base Rate Advances outstanding on such day; provided, however, if a Reference Bank does not supply a quotation by such specified time, the applicable LIBO Market Index Rate shall be determined on the basis of the quotations of the remaining Reference Banks.

“LIBO Rate” means, for any Interest Period for each LIBOR Advance comprising part of the same Borrowing, (a) the rate per annum (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) appearing at Reuters Reference LIBOR01 page (or on any successor thereto or substitute therefor provided by Reuters, providing rate quotations comparable to those currently provided on such page, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period; (b) if for any reason the rate specified in clause (a) of this definition does not so appear at Reuters Reference LIBOR01 page (or any successor thereto or substitute page therefor provided by Reuters), the rate per annum (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) appearing on Bloomberg Financial Markets Service (or any successor thereto) as the London interbank offered rate for deposits in dollars at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period for a maturity comparable to such Interest Period; and (c) if the rate specified in clause (a) of this definition does not so appear at Reuters Reference LIBOR01 page (or any successor thereto or substitute therefor provided by Reuters) and if no rate specified in clause (b) of this definition so appears on Bloomberg Financial Markets Service (or any successor thereto), the average (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) of the respective rates per annum at which dollar deposits are offered by the principal offices of each Reference Bank in London, England in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, in an amount substantially equal to such Reference Bank’s LIBOR Advances to be outstanding during such Interest Period and for a period equal to such Interest Period; provided, however, if a Reference Bank does not supply a quotation by such specified time, the applicable LIBO Market Index Rate shall be determined on the basis of the quotations of the remaining Reference Banks.

“LIBOR Advance” means an Advance which bears interest as provided in Section 2.05(b) (or, if Section 2.05(c) applies, that bears interest at 2% per annum above the rate provided in Section 2.05(b)).

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“LIBOR Borrowing” means a Borrowing comprised of LIBOR Advances.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien, claim or charge of any kind (including any production payment, advance payment or similar arrangement with respect to minerals, any agreement to grant any Lien, any conditional sale or other title retention agreement and the interest of a lessor under a capital lease), whether or not filed, recorded or otherwise perfected under applicable law. For the avoidance of doubt, an agreement to refrain from granting a Lien shall not constitute a Lien.

“Losses” has the meaning specified in Section 8.04(c).

“Majority Lenders” means at any time Lenders holding more than 50% of the sum of the then aggregate unpaid principal amount of the Advances held by the Lenders at such time plus the amount of Letter of Credit Liabilities at such time plus the then unused Commitments (in each case determined on the basis of the Dollar Equivalent of any amounts denominated in Euros). For purposes of this definition, Letter of Credit Liabilities shall be considered held by the respective Lenders in accordance with the respective amounts of their participations therein pursuant to Section 2.19, with the Lender that is the Issuing Bank holding the balance thereof after taking into account such participations.

“Material Adverse Effect” means a material adverse effect on (i) the business, assets, operations, properties or condition (financial or otherwise) of Pride and its Subsidiaries, taken as a whole, (ii) the ability of the Borrowers and the Guarantors, taken as a whole, to perform their obligations under the Credit Documents, (iii) the rights of or benefits or remedies available to any Lender under the Credit Documents or (iv) the legality, validity, binding effect or enforceability of the Credit Documents.

“Maturity Date” means July 26, 2013.

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which Pride, or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

“Multiple Employer Plan” means an employee benefit plan, other than a Multiemployer Plan, subject to Title IV of ERISA to which Pride, or any ERISA Affiliate, and one or more employers other than Pride, or an ERISA Affiliate, is making or accruing an obligation to make contributions or, in the event that any such plan has been terminated, to which Pride, or any ERISA Affiliate made or accrued an obligation to make contributions during any of the five plan years preceding the date of termination of such plan.

“Near-Investment Grade Rating” means (a) a debt rating of BB+ by S&P or (b) a debt rating of Ba1 by Moody’s.

“Non-Consenting Lender” has the meaning specified in Section 2.17.

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“Non-Core Assets” means any assets of Pride or any of its Subsidiaries (including equity interests in any Subsidiaries of Pride), the sale, transfer or other disposition of which would not reasonably be expected to result in a Material Adverse Effect and, in any event, includes the independent leg jack-up rigs and the mid-water semisubmersible rigs of Pride and its Subsidiaries and other assets incidental thereto or arising therefrom.

“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting Lender.

“Non-Recourse Debt” means, (i) with respect to any Person other than an SPV, the obligations of such Person against which the obligee has no recourse, except (A) as to certain named or described present or future assets or interests of such Person, (B) pursuant to Performance Guaranties provided by Pride or any Subsidiary or (C) pursuant to Pre-Completion Guaranties provided by Pride or any Subsidiary, and (ii) the obligations of any SPV to the extent the obligee thereof has no recourse to Pride or any of its Subsidiaries, except as to certain specified present or future assets or interests of such SPV.

“Note” means a promissory note of any Borrower payable to the order of any Lender, in substantially the form of Exhibit A-1 or Exhibit A-2, as applicable, evidencing the aggregate indebtedness of such Borrower to such Lender resulting from Advances made to such Borrower and owed to such Lender.

“Notice of Borrowing” has the meaning specified in Section 2.02.

“Notice of Letter of Credit” has the meaning specified in Section 2.19(a).

“Obligations” means all obligations (liquidated, contingent or otherwise) from time to time owed by Pride or any Subsidiary pursuant to, as a result of or in connection with any of the Credit Documents, including all principal of and interest on the Advances, all obligations to reimburse the Issuing Banks for any payment under any Letter of Credit and all obligations to pay fees, costs, expenses, indemnities and other amounts under any Credit Document.

“Other Participations” has the meaning specified in Section 2.14(a).

“Other Taxes” has the meaning specified in Section 2.13(c).

“Parent Company” means, with respect to a Lender, the bank holding company (as defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or any Person owning, beneficially or of record, directly or indirectly, a majority of the shares of such Lender.

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107-56, signed into law October 26, 2001.

“Payment Office” means the office of the Administrative Agent located at 399 Park Avenue, New York, New York 10043 or such other office as the Administrative Agent may designate by written notice to the other parties hereto.

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“PBGC” means the Pension Benefit Guaranty Corporation, or any federal agency or authority of the United States from time to time succeeding to its function.

“Performance Guaranty” means any guaranty (other than a Pre-Completion Guaranty) by any Person of performance (other than the payment of Debt or Non-Recourse Debt) of another Person delivered in connection with the financing of drill ships, offshore mobile drilling units or offshore drilling rigs of such other Person.

“Permitted Liens” shall have the meaning set forth in Section 5.02(c).

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, firm or other entity, or a government or any political subdivision or agency, department or instrumentality thereof.

“Plan” means an employee benefit plan (other than a Multiemployer Plan) which is (or, in the event that any such plan has been terminated within five years after a transaction described in Section 4069 of ERISA, was) maintained for employees of Pride or any ERISA Affiliate and covered by Title IV of ERISA.

“Pre-Completion Guaranty”, by any Person, means any guaranty of such Person guaranteeing (a) Non-Recourse Debt incurred by another Person for the purpose of financing the construction of, or any upgrade to, any drill ship, offshore mobile drilling unit or offshore drilling rig of such other Person or (b) the obligations of a SPV under bareboat charters for any drillship, offshore mobile drilling unit or offshore drilling rig owned or operated by such SPV; provided that any such guaranty shall be deemed to be a Pre-Completion Guaranty until such time as such guaranty is no longer in effect.

“Prescribed Forms” shall mean such duly executed forms or statements, and in such number of copies, which may, from time to time, be prescribed by law and which, pursuant to applicable provisions of (a) an income tax treaty between the United States and the country of residence of the Lender providing the forms or statements, (b) the Code, or (c) any applicable rule or regulation under the Code, permit the Borrowers to make payments hereunder for the account of such Lender free of deduction or withholding of income or similar taxes (except for any deduction or withholding of income or similar taxes as a result of any change in or in the interpretation of any such treaty, the Code or any such rule or regulation).

“Project Finance Subsidiary” means any Subsidiary of Pride whose principal purpose is to incur indebtedness or to become an owner of interests in a Person created to conduct the business activities for which such indebtedness was incurred, and substantially all the fixed assets of which Subsidiary or Person are those fixed assets being financed (or to be financed) in whole or in part by such indebtedness.

“property” or “asset” (in either case, whether or not capitalized) means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

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“Ratable Percentage” means, as to any Lender at any date, the amount (expressed as a percentage) obtained (i) by dividing (a) such Lender’s Commitment at such date by (b) the aggregate amount at such date of all Commitments of all the Lenders, or (ii) if no Commitments exist on such date, by dividing (a) such Lender’s Commitment immediately prior to the termination of the Commitments by (b) the aggregate amount of all Commitments of all of the Lenders immediately prior to such termination.

“Reference Banks” means Citibank, N.A., Natixis and Wells Fargo Bank, National Association, or if any such Lender assigns all of its Commitment and the Advances owing to it in accordance with Section 8.06, such other Lender as may be designated by the Administrative Agent and approved by Pride (such approval not to be unreasonably withheld).

“Register” has the meaning specified in Section 8.06(c).

“Regulation U” means Regulation U of the Federal Reserve Board, as the same is from time to time in effect.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and such Person’s, and such Person’s Affiliates, respective managers, administrators, trustees, partners, directors, officers, employees, agents and advisors.

“Reset Date” has the meaning assigned to such term in Section 8.21.

“Responsible Officer” means the Chief Executive Officer, President, Chief Financial Officer, any Executive or Senior Vice President, or the Treasurer of Pride.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum at such time, without duplication, of (i) such Lender’s Ratable Percentage of the Dollar Equivalent of the aggregate principal amount of the outstanding Advances at such time, and (ii) such Lender’s Ratable Percentage of the Dollar Equivalent of the aggregate outstanding Letter of Credit Liabilities at such time.

“Sale Leaseback Transaction” of any Person means any arrangement entered into by such Person or any Subsidiary of such Person, directly or indirectly, whereby such Person or any Subsidiary of such Person shall sell or transfer any property, whether now owned or hereafter acquired, to any other Person (a “Transferee”), and whereby such first Person or any Subsidiary of such first Person shall then or thereafter rent or lease as lessee such property or any part thereof or rent or lease as lessee from such Transferee or any other Person other property which such first Person or any Subsidiary of such first Person intends to use for substantially the same purpose or purposes as the property sold or transferred.

“SEC” means the United States Securities and Exchange Commission, or any governmental authority succeeding to the functions of said Commission.

“Securities Act” means the Securities Act of 1933, as amended, and any successor statute.

“Significant Subsidiary” has the meaning ascribed to such term under Regulation S-X promulgated under the Exchange Act. For purposes of this Agreement, BVI Borrower and each Guarantor is a Significant Subsidiary of Pride. Unless otherwise specified, all references herein to a Significant Subsidiary or Significant Subsidiaries shall refer to a Significant Subsidiary or Significant Subsidiaries of Pride.

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“S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., and any successor thereto.

“SPV” means any Person that is designated by Pride as a special purpose vehicle, provided that Pride shall not designate as a SPV any Subsidiary that owns, directly or indirectly, any other Subsidiary that has total assets (including assets of any Subsidiaries of such other Subsidiary, but excluding any assets that would be eliminated in consolidation with Pride and its Subsidiaries) which equates to at least five percent (5%) of Pride’s total assets, or that had net income (including net income of any Subsidiaries of such other Subsidiary, all before discontinued operations and income or loss resulting from extraordinary items, but excluding revenues and expenses that would be eliminated in consolidation with Pride and its Subsidiaries and excluding any loss or gain resulting from the early extinguishment of Debt) during the most recently completed Fiscal Year of Pride in excess of the greater of (i) $1,000,000, and (ii) fifteen percent (15%) of the net income (before discontinued operations and income or loss resulting from extraordinary items and excluding any loss or gain resulting from the early extinguishment of Debt) for Pride and its Subsidiaries, all as determined on a consolidated basis in accordance with GAAP during such Fiscal Year of Pride. Pride may elect to treat any Subsidiary as a SPV (provided such Subsidiary would otherwise qualify as such), and may rescind any such prior election, by giving written notice thereof to the Administrative Agent specifying the name of such Subsidiary or SPV, as the case may be, and the effective date of such election, which shall be a date within sixty (60) days after the date such notice is given. The election to treat a particular Person as a SPV may only be made once.

“Stated Expiry Date” means the original expiration date stated on the face of any Letter of Credit, or such other date, if any, to which the Issuing Bank extends the expiration of such Letter of Credit at the request of the applicable Borrower.

“Subsidiary” of any Person means a corporation, partnership, joint venture, limited liability company or other business entity (other than, except in the context of financial statements, a SPV) of which more than fifty percent (50%) of the outstanding stock or comparable equity interests having ordinary voting power for the election of the board of directors or similar governing body (irrespective of whether or not at the time stock or other equity interests of any other class or classes of such corporation, partnership, joint venture, limited liability company or other business entity shall have or might have voting power by reason of the happening of any contingency), is at the time directly or indirectly owned by such Person or by one or more of its Subsidiaries. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Pride.

“Subsidiary Debt Basket Amount” has the meaning specified in Section 5.02(d)(x).

“Subsidiary Guaranty” means any Guaranty of any Subsidiary delivered pursuant to Section 5.02(d)(xi).

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“Supermajority Lenders” means at any time Lenders holding more than 90% of the sum of the then aggregate unpaid principal amount of the Advances held by the Lenders at such time plus the then existing amount of Letter of Credit Liabilities at such time plus the then unused Commitments (in each case determined on the basis of the Dollar Equivalent of any amounts denominated in Euros). For purposes of this definition, Letter of Credit Liabilities shall be considered held by the respective Lenders in accordance with the respective amounts of their participations therein pursuant to Section 2.19, with the Lender that is the Issuing Bank holding the balance thereof after taking into account such participations.

“Syndication Agents” has the meaning specified in the first paragraph hereof.

“TARGET” means the Trans-European Automated Real-Time Gross Settlement Express Transfer system.

“Taxes” has the meaning specified in Section 2.13(a).

“Termination Event” means (a) a “reportable event”, as such term is described in Section 4043 of ERISA (other than a “reportable event” not subject to the provision for 30-day notice to the PBGC), or an event described in Section 4062(e) of ERISA, or (b) the withdrawal of Pride or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a “substantial employer”, as such term is defined in Section 4001(a)(2) of ERISA, or the incurrence of liability by Pride or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or (c) the treatment of a Plan amendment as a termination under Section 4041(b) of ERISA, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, or (d) the distribution of a notice of intent to terminate a Plan pursuant to Section 4041(c) of ERISA or the termination of a Plan under Section 4041(c) of ERISA, or (e) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or (f) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

“Total Tangible Capitalization” shall mean, as of any date of determination, the sum of Consolidated Debt plus Consolidated Tangible Net Worth as of such date.

“Transfer Agreement” means a transfer agreement entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit F.

“Type”, when used in reference to any Advance or Borrowing, refers to whether the rate of interest on such Advance, or on the Advances comprising such Borrowing, is determined by reference to the LIBO Rate or the Alternative Base Rate.

“Wholly-Owned Subsidiary” of any Person means any Subsidiary of such Person all of the Equity Interests (other than shares required by law to be owned by another Person, director’s qualifying shares and other immaterial interests) in which are owned by such Person and/or one or more other Wholly-Owned Subsidiaries of such Person.

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“Withdrawal Liability” shall have the meaning given such term under Part I of Subtitle E of Title IV of ERISA.

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”. Unless otherwise indicated, all references to a particular time are references to New York City time.

Section 1.03 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP.

Section 1.04 Miscellaneous. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section, Schedule and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified. The term “including” shall mean “including, without limitation,”, the term “include” shall mean “include, without limitation,” and the term “includes” shall mean “includes, without limitation,”. Unless otherwise specified, all references in this Agreement to an amount of currency shall mean the Dollar Equivalent of such amount.

ARTICLE II
AMOUNT AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

Section 2.01 The Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make one or more Advances to the Borrowers from time to time on any Business Day prior to the Commitment Termination Date in an aggregate amount not to exceed (i) the amount of such Lender’s Commitment minus (ii) such Lender’s Revolving Credit Exposure (after giving effect to any Advances to be made on such Business Day); provided that no Advance shall be required to be made except as part of a Borrowing that is in an aggregate amount that is an integral multiple of the Borrowing Multiple and is not less than the Borrowing Minimum, and each Borrowing shall consist of Advances of the same Type having (in the case of a Borrowing comprised of LIBOR Advances) the same Interest Period, made on the same day by the Lenders ratably according to their respective Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Advances. Funding of any Advances shall be in any combination of U.S. Dollars or Euros as specified by the requesting Borrower as set forth in Section 2.02; provided that any Advances funded in Euros may only be outstanding as LIBOR Advances. Each Lender may, at its option, make any Advance available to BVI Borrower by causing any foreign or domestic branch or affiliate of such Lender to make such Advance; provided that any exercise of such option shall not affect the obligation of the Borrowers and if applicable, the Guarantors, to repay such Advance in accordance with the terms of the Credit Documents.

Section 2.02 Making the Advances. (a) Each Borrowing shall be made on notice, given not later than (x) in the case of a proposed Borrowing comprised of LIBOR Advances to be funded in U.S. Dollars, 12:00 Noon (New York City time) at least three Business Days prior to the date of the proposed Borrowing, (y) in the case of a proposed Borrowing comprised of LIBOR Advances to be funded in Euros, 12:00 Noon (New York City time) at least four Business Days prior to the date of the proposed Borrowing and

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(z) in the case of a proposed Borrowing comprised of Base Rate Advances, 4:00 P.M. (New York City time) at least two Business Days prior to the date of the proposed Borrowing, by any Borrower to the Administrative Agent, which shall give prompt notice thereof by telecopy to each Lender. Each such notice of a Borrowing (a “Notice of Borrowing”) shall be by telecopy or by telephone, confirmed promptly in writing. Each written Notice of Borrowing shall be substantially in the form of Exhibit B, and each written and each telephonic Notice of Borrowing shall specify therein (i) the date of the requested Borrowing, (ii) the Type of Advances comprising such Borrowing, (iii) the aggregate amount of such Borrowing, (iv) the identity of the Borrower requesting such Borrowing, (v) in the case of a Borrowing comprised of LIBOR Advances, whether such Advances are to be made in Dollars or Euros and the initial Interest Period for each such Advance, provided that there shall not at any time be more than a total of ten (10) Borrowings comprised of LIBOR Advances outstanding; and (vi) the location and number of the account of the requesting Borrower to which funds are to be disbursed. If no election as to the Type of Advances comprising a requested Borrowing is specified in a Notice of Borrowing, then the requested Borrowing shall be comprised of Base Rate Advances. If no Interest Period with respect to any requested Eurodollar Borrowing is specified in a Notice of Borrowing, then the requesting Borrower shall be deemed to have selected an Interest Period of one month’s duration. If no currency with respect to any requested Eurodollar Borrowing is specified in a Notice of Borrowing, then the requesting Borrower shall be deemed to have requested that the Advances comprising such Borrowing be made in Dollars. Promptly following receipt of a Notice of Borrowing in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Advance to be made as part of the requested Borrowing.

(b) On the proposed date of a Borrowing, each Lender shall, before 11:00 A.M. (New York City time) with respect to Borrowings comprised of LIBOR Advances funded in U.S. Dollars, before 2:00 P.M. (London time) with respect to LIBOR Advances funded in Euros and before 2:00 P.M. (New York City time) with respect to Borrowings comprised of Base Rate Advances, make available for the account of its Applicable Lending Office to the Administrative Agent at its Payment Office, in same day funds, such Lender’s Ratable Percentage of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the requesting Borrower by promptly crediting the amounts so received in like funds to the account designated by such Borrower in the applicable Notice of Borrowing or, if no such account is specified in such Notice of Borrowing, the Administrative Agent will make such funds available to such Borrower at the Administrative Agent’s Payment Office.

(c) Each Notice of Borrowing shall be irrevocable and binding on the requesting Borrower. The requesting Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

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(d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (b) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the requesting Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and such Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of such Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement. If such Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to such Borrower the amount of such interest paid by such Borrower for such period. Any payment by such Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(e) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

(f) Any Lender may request that Advances made by it be evidenced by a Note in the principal amount of such Lender’s Commitment. In such event, each Borrower shall prepare, execute and deliver to each such Lender a Note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and substantially in the form of Note attached hereto as Exhibit A-1 in the case of a Note to be made by Pride and Exhibit A-2 in the case of a Note to be made by BVI Borrower. In addition, if a Lender holding a Note increases its Commitment under Section 2.16 hereof, and such Lender requests a new Note evidencing such increased Commitment, each Borrower shall prepare, execute and deliver to such Lender a replacement Note in exchange for such Lender’s existing Note, payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and substantially in the form of Note attached hereto as Exhibit A.

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Section 2.03 Fees. (a) Commitment Fee. Subject to Section 2.11(b)(i), Pride agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Applicable Commitment Fee Rate on the daily unused amount of such Lender’s Commitment, from the date hereof, in the case of each Lender listed on the signature pages hereof, and from the effective date specified in the Transfer Agreement pursuant to which it became a Lender, in the case of each other Lender, until the Commitment Termination Date; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then such commitment fee shall continue to accrue on the daily amount of such Lender’s Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure. Accrued commitment fees shall be payable quarterly in arrears on the 7^th day of each January, April, July and October, commencing October 7, 2010, on the Commitment Termination Date, and if the immediately preceding proviso is applicable, on the date(s) the Lenders shall have no further Revolving Credit Exposure. The commitment fee shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) Other Fees. Pride shall pay to the Administrative Agent and the Arrangers such fees as may be separately agreed to by Pride and the Administrative Agent or the Arrangers, as applicable, in writing.

Section 2.04 Repayments of Advances. (a) Each Borrower shall repay the principal of all of the Advances and Demand Loans made to such Borrower on the Commitment Termination Date. Additionally, if at any time the sum of (i) the Dollar Equivalent of the aggregate principal amount of all Advances owed to any Lender plus (ii) such Lender’s Ratable Percentage of the Dollar Equivalent of the aggregate outstanding Letter of Credit Liabilities exceeds such Lender’s Commitment, each Borrower shall repay to the Lenders the Advances made to such Borrower in an amount necessary so that no Lender is owed a Dollar Equivalent principal amount of Advances that exceeds the sum of (y) such Lender’s Commitment minus (z) such Lender’s Ratable Percentage of the Dollar Equivalent of the outstanding Letter of Credit Liabilities. If any Borrower determines that any such payment is required, such Borrower shall notify the Administrative Agent promptly, and shall make such payments within two Business Days of such determination of such required payment and of the identity of the particular Advances being paid by such Borrower. If the Administrative Agent shall notify Pride that the Administrative Agent has determined that any payments are required under this Section 2.04, Pride and/or BVI Borrower shall make such payments no later than the second Business Day following Pride’s receipt of such notice. Any mandatory payment of Advances pursuant hereto shall not be limited by the notice provision for prepayments set forth in Section 2.09.

(b) At the time of each payment pursuant to this Section 2.04, each Borrower shall also pay accrued interest to the date of such payment on the principal amount paid by such Borrower. If any Borrower pays any LIBOR Advance on any day other than the last day of an Interest Period therefor, such Borrower shall compensate the Lenders pursuant to Section 8.04(b). Each payment made by any Borrower pursuant to this Section 2.04 shall be applied ratably to all of the Advances and Demand Loans made to such Borrower.

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(c) To the extent that any amount would be required hereunder to be paid and applied to an Advance or a Demand Loan but for the fact that no Advance or Demand Loan remains outstanding, the applicable Borrower will pay such amount (but not in excess of the Dollar Equivalent of the amount of Letter of Credit Liabilities of such Borrower at such time) and cause such amount to be deposited in a Collateral Account to be applied against Letter of Credit Liabilities as they arise.

Section 2.05 Interest. Each Borrower shall pay interest on the unpaid principal amount of each Advance made to such Borrower from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

(a) Base Rate Advances. During such periods as such Advance is a Base Rate Advance, a rate per annum equal to the Alternative Base Rate in effect from time to time, payable quarterly on the 7^th day of each January, April, July and October during such periods, on each other date provided herein and on the date such Base Rate Advance shall be Converted.

(b) LIBOR Advances. During such periods as such Advance is a LIBOR Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of the LIBO Rate for such Interest Period for such Advance plus the Applicable Margin in effect from time to time, payable on the last day of such Interest Period, on each other date provided herein and, if such Interest Period has a duration of more than three months, on the day which occurs during such Interest Period three months from the first day of such Interest Period.

(c) Default Interest. Each Borrower shall pay interest on (i) all principal of any Advance made to such Borrower that is not paid when due (whether at stated maturity, by acceleration or otherwise), payable in arrears on demand, at a rate per annum equal to 2% per annum above the rate per annum required to be paid on such Advance pursuant to Section 2.05(a) or 2.05(b), as the case may be, and (ii) to the fullest extent permitted by law, the amount of any interest, commitment fee, Letter of Credit fee, other fee or other amount payable hereunder, in each case to the extent payable by such Borrower, that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to Section 2.05(a).

(d) Interest Payment Currency. Payments of interest with respect to each Advance or Demand Loan made hereunder shall be made in the same currency as such Advance or Demand Loan.

Section 2.06 Additional Interest on LIBOR Advances. Each Borrower shall pay to each Lender additional interest on the unpaid principal amount of each LIBOR Advance made to such Borrower by such Lender, for each Interest Period with respect to such Advance, from the date of such 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 (a) the LIBO Rate for such Interest Period for such Advance from (b) the rate obtained by dividing such LIBO Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional interest shall be determined by

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such Lender and notified to the applicable Borrower through the Administrative Agent. Each Lender requesting payment of additional interest pursuant to this Section 2.06 shall deliver to the applicable Borrower and the Administrative Agent a certificate as to the amount of such additional interest (setting forth in reasonable detail the calculation thereof), and such certificate shall be conclusive and binding (absent manifest error) for all purposes.

Section 2.07 Interest Rate Determination and Protection. (a) The Administrative Agent shall determine the applicable rates of interest hereunder, and such determinations shall be conclusive and binding absent manifest error.

(b) The Administrative Agent shall give prompt notice to the applicable Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.05(b).

(c) If the Administrative Agent is unable to obtain timely information for determining the LIBO Rate for any LIBOR Advance,

(i) the Administrative Agent shall forthwith notify Pride, the Lenders and, if applicable, BVI Borrower that the interest rate cannot be determined for such LIBOR Advance,

(ii) each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

(iii) the obligation of the Lenders to make, or to continue or to Convert Advances into, LIBOR Advances shall be suspended until the Administrative Agent shall notify Pride and the Lenders that the circumstances causing such suspension no longer exist.

(d) If the Majority Lenders notify the Administrative Agent that either (A) the applicable interest rate for any Interest Period for any LIBOR Advance will not adequately reflect the cost to such Lenders of making, funding or maintaining their respective LIBOR Advances for such Interest Period, or (B) Dollar deposits in the amounts of their respective Advances for such Interest Period are not available to them in the London interbank market, the Administrative Agent shall forthwith so notify Pride, the Lenders and, if applicable, BVI Borrower, whereupon

(i) each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance in U.S. Dollars (or, if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance in U.S. Dollars), and

(ii) the obligation of the Lenders to fund Advances in Euro or to make, continue or Convert Advances into LIBOR Advances shall be suspended until the Administrative Agent shall notify Pride and the Lenders that the circumstances causing such suspension no longer exist.

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(e) If any Borrower shall fail to select the duration of any Interest Period for any LIBOR Advances made or to be made to such Borrower in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Administrative Agent will forthwith so notify such Borrower and the Lenders, and such Advances will automatically have an Interest Period of one month.

(f) At the end of the relevant Interest Period following the date on which the Dollar Equivalent of the aggregate unpaid principal amount of LIBOR Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such LIBOR Advances shall automatically Convert into Base Rate Advances, and on and after such date the right of the applicable Borrower to Convert such Advances into LIBOR Advances shall terminate.

Section 2.08 Conversion of Advances; Continuation. (a) The applicable Borrower may on any Business Day, upon notice given to the Administrative Agent not later than (x) in the case of a Conversion of Base Rate Advances into LIBOR Advances funded in U.S. Dollars, 12:00 Noon (New York City time) on the third Business Day prior to the date of the proposed Conversion (y) in the case of a Conversion of Base Rate Advances into LIBOR Advances funded in Euros, 12:00 Noon (New York City time) on the fourth Business Day prior to the date of the proposed Conversion and (z) in the case of a Conversion of LIBOR Advances into Base Rate Advances, 4:00 P.M. (New York City time) on the second Business Day prior to the date of the proposed Conversion, and subject to the limitations in Section 2.02(a) as to the number of permitted Interest Periods and subject to the provisions of Sections 2.07, 2.08(c) and 2.11, Convert all Advances of one Type comprising the same Borrowing into Advances of the other Type; provided that any Conversion of any LIBOR Advances shall be made on, and only on, the last day of an Interest Period for such LIBOR Advances, and any Conversion of Base Rate Advances into LIBOR Advances shall be in an amount equal to the Borrowing Minimum or an integral multiple of the Borrowing Multiple in excess thereof. Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is into LIBOR Advances, (x) whether such Advances are to be in Dollars or Euros and (y) the duration of the Interest Period for each such LIBOR Advance.

(b) The applicable Borrower may continue any LIBOR Advances comprising the same Borrowing for an additional Interest Period that complies with the requirements set forth in the definition herein of “Interest Period,” by giving notice of such Interest Period as set forth in such definition, subject to the limitations in Section 2.02(a) as to the number of permitted Interest Periods and subject to the provisions of Sections 2.07, 2.08(c) and 2.11.

(c) All Borrowings, Conversions and continuations under this Agreement shall be effected in a manner that treats all Lenders ratably. Notwithstanding any other provision hereof, during the continuance of any Event of Default (x) the Borrowers may not continue any LIBOR Advance for an additional Interest Period or Convert any Advance into a LIBOR Advance, (y) if an Event of Default exists on the last day of an Interest Period for a LIBOR Advance, such Advance shall automatically Convert to a Base Rate Advance on such day and (z) the obligation of the Lenders to fund Advances in Euros and to make LIBOR Advances shall be suspended.

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Section 2.09 Optional Prepayments. Each Borrower may, (i) with respect to prepayments of Borrowings comprised of LIBOR Advances made to such Borrower, upon notice by 10:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed prepayment and (ii) with respect to prepayments of Borrowings comprised of Base Rate Advances made to such Borrower, upon notice by 12:00 Noon (New York City time) on the second Business Day prior to the date of the proposed prepayment, to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment and the Types of Advances to be prepaid, and the specific Borrowing or Borrowings to be prepaid in whole or in part, and if such notice is given, such Borrower shall prepay the outstanding principal amounts of Advances made to such Borrower comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid without premium or penalty; provided that each partial prepayment shall be in an aggregate principal amount not less than the Borrowing Minimum (or such lesser amount as needed to prepay such LIBOR Advances or Base Rate Advances in full), and provided further that if any Borrower prepays any LIBOR Advance on any day other than the last day of an Interest Period therefor, such Borrower shall compensate the Lenders pursuant to Section 8.04(b).

Section 2.10 Increased Costs; Capital Adequacy, Etc. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or (ii) the compliance with any guideline or request from any governmental authority, central bank or comparable agency (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining LIBOR Advances made to any Borrower, then such Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost.

(b) If any Lender shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its lending office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has the effect of increasing the amount of capital required or expected to be maintained as a result of its Commitment hereunder or the existence of any Letter of Credit, such Lender shall have the right to give prompt written notice and demand for payment thereof to Pride with a copy to the Administrative Agent, although the failure to give any such notice shall not release or diminish any of Pride’s obligations to pay additional amounts pursuant to this Section 2.10(b), and Pride shall pay such additional amounts; provided, however, for purposes of this Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, guidelines or directives in connection therewith are deemed to have gone into effect and adopted after the date of this Agreement

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(c) Each Lender shall use commercially reasonable efforts (consistent with its internal policies and legal and regulatory restrictions) to select a jurisdiction for its Applicable Lending Office or change the jurisdiction of its Applicable Lending Office, as the case may be, so as to avoid the imposition of any increased costs under this Section 2.10 or to eliminate the amount of any such increased cost which may thereafter accrue; provided that no such selection or change of the jurisdiction for its Applicable Lending Office shall be made if, in the reasonable judgment of such Lender, such selection or change would be disadvantageous to such Lender.

(d) No Lender shall be entitled to recover increased costs pursuant to this Section 2.10 incurred or accruing more than 90 days prior to the date on which such Lender sent to Pride written notice and demand for payment as specified in this Section 2.10.

(e) Without prejudice to the survival of any other agreement hereunder, the agreements and obligations of the Borrowers contained in this Section 2.10 shall survive the payment in full of all Obligations.

Section 2.11 Illegality and Defaulting Lenders. (a) Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful, or any governmental authority, central bank or comparable agency shall assert that it is unlawful (such unlawfulness or such assertion of unlawfulness being an “Illegality Event”), (x) for any Lender or its Eurodollar Lending Office (such Lender being an “Affected Lender”) (I) to perform its obligations hereunder to make LIBOR Advances, or to continue to fund or maintain LIBOR Advances hereunder, or (II) to fund any Advances in Euros, or (y) for any Issuing Bank to issue any Letter of Credit or to provide payment under any Letter of Credit in Euros (such Issuing Bank being an “Affected Issuing Bank”), then the following provisions shall apply:

(i) In the case of an Illegality Event described in clause (x)(I) above, on notice thereof and demand therefor by the applicable Affected Lender to Pride through the Administrative Agent, (a) the obligation of the Lenders to make, continue or Convert Advances into LIBOR Advances shall be suspended until the time set forth in the next succeeding sentence, and (b) the Borrowers shall forthwith Convert all LIBOR Advances of all Lenders then outstanding into Base Rate Advances in accordance with Section 2.08. The suspension of the obligations of the Lenders to make, continue or Convert Advances into LIBOR Advances as set forth in the preceding sentence shall terminate upon the earlier of (A) the withdrawal by each Affected Lender of its notice and demand with respect to the Illegality Event referenced in this Section 2.11(a)(i) and (B) the replacement by the Borrowers of each Affected Lender pursuant to Section 2.17(a) hereof with an Eligible Assignee that is not an Affected Lender. If an Illegality Event described in clause (x)(I) above ceases to exist with respect to an

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Affected Lender that has given notice and demand with respect to such Illegality Event pursuant to this Section 2.11(a)(i), such Lender shall promptly withdraw such notice and demand by giving written notice of withdrawal to the Administrative Agent and Pride. Upon termination of a suspension of the obligations of the Lenders to make, continue or Convert Advances into LIBOR Advances as provided in this Section 2.11(a)(i), the Administrative Agent shall notify each Lender of such termination, and the Lenders shall thereupon again be obligated to make, continue or Convert Advances into LIBOR Advances in accordance with and to the extent provided in this Agreement;

(ii) In the case of an Illegality Event described in clause (x)(II) above, on notice thereof and demand therefor by the applicable Affected Lender to Pride through the Administrative Agent, the obligation of the Lenders to make Advances denominated in Euros shall be suspended until the earlier of (A) the withdrawal by each Affected Lender of its notice and demand with respect to such Illegality Event and (B) the replacement by the Borrowers of each Affected Lender pursuant to Section 2.17(a) hereof with an Eligible Assignee that is not an Affected Lender. If an Illegality Event described in clause (x)(II) above ceases to exist with respect to an Affected Lender that has given notice and demand with respect to such Illegality Event pursuant to this Section 2.11(a)(ii), such Lender shall promptly withdraw such notice and demand by giving written notice of withdrawal to the Administrative Agent and Pride. Upon termination of a suspension of the obligations of the Lenders to make Advances denominated in Euros as provided in this Section 2.11(a)(ii), the Administrative Agent shall notify each Lender of such termination, and the Lenders shall thereupon again be obligated to make Advances denominated in Euros in accordance with and to the extent provided in this Agreement; and

(iii) In the case of an Illegality Event described in clause (y) above, on notice thereof and demand therefor by the applicable Affected Issuing Bank to Pride through the Administrative Agent, the obligation of the Affected Issuing Bank to issue Letters of Credit or to provide payment under any Letter of Credit in Euros, as applicable, shall be suspended until the withdrawal by such Affected Issuing Bank of its notice and demand with respect to such Illegality Event. If an Illegality Event described in clause (y) above ceases to exist with respect to an Affected Issuing Bank that has given notice and demand with respect to such Illegality Event pursuant to this Section 2.11(a)(iii), such Issuing Bank shall promptly withdraw such notice and demand by giving written notice of withdrawal to the Administrative Agent and Pride. Upon termination of a suspension of the obligations of an Affected Issuing Bank to issue Letters of Credit or to provide payment under any Letter of Credit in Euros, as applicable, as provided in this Section 2.11(a)(iii), such Issuing Bank shall thereupon again be obligated to issue Letters of Credit or to provide payment under any Letter of Credit in Euros, as applicable, in accordance with and to the extent provided in this Agreement.

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(b) Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Defaulting Lender is a Defaulting Lender:

(i) If such Lender is a Defaulting Lender due to (A) its failure to fund any Advance required to be funded by it hereunder, commitment fees shall cease to accrue pursuant to Section 2.03(a) on the portion of such Lender’s Commitment equal to the amount of such defaulted Advance, and (B) any other circumstance described in the definition of Defaulting Lender, commitment fees shall cease to accrue pursuant to Section 2.03(a) on the entire Commitment of such Lender (in each case, without prejudice to the rights of the Lenders other than Defaulting Lenders in respect of such fees).

(ii) The Commitment and outstanding Advances of such 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 8.01); 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.

(iii) Subject to Section 2.17, no Commitment of any Lender shall be increased or otherwise affected solely as a result of the operation of this Section 2.11(b) and, except as otherwise expressly provided in this Section 2.11(b), performance by the Borrowers of their obligations hereunder and the other Credit Documents shall not be excused or otherwise modified solely as a result of the existence of any Defaulting Lender or the operation of this Section 2.11(b).

(iv) The rights and remedies against a Defaulting Lender under this Section 2.11(b) are in addition to other rights and remedies which the Administrative Agent, any other Lender or the Borrowers may have against such Defaulting Lender.

Section 2.12 Payments and Computations. (a) The Borrowers shall make each payment under any Credit Document not later than 4:00 P.M. (New York City time), or in the case of payment in Euros, not later than 11:00 A.M. (New York City time), on the day when due to the Administrative Agent at its Payment Office (or to an Issuing Bank, in the case of payments to an Issuing Bank under Section 2.19) in same day funds, free and clear of any defenses, set-offs, counterclaims, or withholdings or deductions for taxes as set forth in Section 2.13. The Administrative Agent will promptly thereafter cause to be distributed (i) like funds relating to the payment of principal of or interest on Advances, commitment fees or commissions on Letters of Credit as contemplated by Section 2.19(b) ratably (other than amounts payable pursuant to Section 2.06 or 2.17) to the Lenders (decreased, as to any Lender, for any taxes withheld in respect of such Lender as contemplated by Section 2.13(b)) for the account of their respective Applicable Lending Offices and (ii) like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of a Transfer

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Agreement and recording of the information contained therein in the Register pursuant to Section 8.06(d), from and after the effective date specified in such Transfer Agreement, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Transfer Agreement shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. At the time of each payment of any principal of or interest on any Borrowing to the Administrative Agent, the applicable Borrower shall notify the Administrative Agent of the Borrowing to which such payment shall apply. In the absence of such notice, the Administrative Agent may specify the Borrowing to which such payment shall apply and with respect to voluntary prepayments, will apply such payments first to Base Rate Advances and second to LIBOR Advances (in the order of shortest to longest Interest Period). If a payment is due in Euros and the applicable Borrower does not, or is unable for any reason to, effect payment to the Lenders in Euros or if the applicable Borrower shall default in the payment when due of any payment in Euros, the Lenders may, at their option, require such payment to be made to the Lenders in Dollars in an amount equal to the Dollar Equivalent of the amount of Euros then due. With respect to any amount due and payable in Euros by any Borrower, such Borrower agrees to hold the Lenders harmless from any losses, if any, that are incurred by the Lenders arising from any change in the value of Dollars in relation to Euros between the date such payment became due and the date of payment thereof.

(b) All computations of interest based on the Alternative Base Rate (except during such times as the Alternative Base Rate is determined pursuant to clause (ii) and (iii) of the definition thereof) 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 commitment fees and of interest based on the LIBO Rate, the Federal Funds Rate or, during such times as the Alternative Base Rate is determined pursuant to clause (ii) or (iii) of the definition thereof, shall be made by the Administrative Agent, and all computations of interest pursuant to Section 2.06 shall be made by a Lender, 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 commitment fees are payable. Each determination by the Administrative Agent (or, in the case of Section 2.06, by a Lender) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(c) Whenever any payment hereunder or under the Notes 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 commitment fees, as the case may be; provided that if such extension would cause payment of interest on or principal of LIBOR Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(d) Unless the Administrative Agent shall have received notice from any Borrower prior to the date on which any payment is due from such Borrower to any Lender hereunder that such Borrower will not make such payment in full, the Administrative Agent may assume that such 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 such Lender on such due date an

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amount equal to the amount then due such Lender. If and to the extent such Borrower shall not have so made such payment in full to the 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 the Federal Funds Rate.

Section 2.13 Taxes. (a) Any and all payments by the Borrowers hereunder or under the other Credit Documents shall be made, in accordance with Section 2.12, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges, fees, duties or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and any other Lender Party, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or Lender Party (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender’s Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, fees, duties, withholdings and liabilities being hereinafter referred to as “Taxes”). If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any other Credit Document to any Lender or other Lender Party, (i) the sum payable by such Borrower shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.13) such Lender or other Lender Party (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

(b) Notwithstanding anything to the contrary contained in this Agreement, each of the Borrowers and the Administrative Agent shall be entitled, to the extent it is required to do so by law, to deduct or withhold income or other similar taxes imposed by the United States of America from interest, fees or other amounts payable hereunder for the account of any Lender Party (without the payment by the Borrowers of increased amounts to such Lender Party pursuant to clause (a) above) other than a Lender Party (i) which is a domestic corporation (as such term is defined in Section 7701 of the Code) for federal income tax purposes or (ii) which has the Prescribed Forms on file with Pride and the Administrative Agent for the applicable year, provided that if any Borrower shall so deduct or withhold any such taxes, it shall provide a statement to the Administrative Agent and such Lender Party, setting forth the amount of such taxes so deducted or withheld, the applicable rate and any other information or documentation which such Lender Party may reasonably request for assisting such Lender Party to obtain any allowable credits or deductions for the taxes so deducted or withheld in the jurisdiction or jurisdictions in which such Lender is subject to tax.

(c) In addition, each Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made by such Borrower hereunder or under any other Credit Document or from such Borrower’s execution and delivery of, or the registration of, or otherwise with respect to, this Agreement or the any other Credit Document (hereinafter referred to as “Other Taxes”).

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(d) Except as otherwise provided by Section 2.13(b), each Borrower will indemnify each Lender and each other Lender Party for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.13) paid by such Lender or other Lender Party (as the case may be) attributable to payments made by such Borrower and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto except as a result of the gross negligence or willful misconduct of such Lender or other Lender Party (as the case may be), whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the other Lender Party (as the case may be) makes written demand therefor. No Lender or other Lender Party shall be indemnified for Taxes incurred or accrued more than 90 days prior to the date that such Lender or other Lender Party notifies Pride thereof.

(e) Within 90 days after the date of any payment of Taxes by or at the direction of any Borrower, such Borrower will furnish to the Administrative Agent, at its address referred to in Section 8.02, (i) the original or a certified copy of a receipt evidencing payment thereof, if the relevant taxing authority provides a receipt, or (ii) if the relevant taxing authority does not provide a receipt, other reasonable evidence of the payment thereof. Should any Lender or other Lender Party ever receive any refund, credit or deduction from any taxing authority to which such Lender or other Lender Party would not be entitled but for the payment by any Borrower of Taxes as required by this Section 2.13 (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 such Lender or other Lender Party, as the case may be, in its sole discretion), such Lender or other Lender Party, as the case may be, thereupon shall repay to such Borrower an amount with respect to such refund, credit or deduction equal to any net reduction in taxes actually obtained by such Lender or other Lender Party, as the case may be, and determined by such Lender or other Lender Party, as the case may be, to be attributable to such refund, credit or deduction.

(f) Each Lender shall use commercially reasonable efforts (consistent with its internal policies and legal and regulatory restrictions) to select a jurisdiction for its Applicable Lending Office or change the jurisdiction of its Applicable Lending Office, as the case may be, so as to avoid the imposition of any Taxes or to eliminate the amount of any such additional amounts which may thereafter accrue; provided that no such selection or change of the jurisdiction for its Applicable Lending Office shall be made if, in the reasonable judgment of such Lender, such selection or change would be disadvantageous to such Lender.

(g) Without prejudice to the survival of any other agreement hereunder, the agreements and obligations of the Borrowers contained in this Section 2.13 shall survive the payment in full of all Obligations but shall terminate thereafter at the end of six months after the expiration of the applicable statute of limitations for assessment of Taxes or Other Taxes against a Lender or Lender Party with respect to payments by the Borrowers hereunder or under the other Credit Documents. Without prejudice to the survival of any other agreement hereunder, the agreements and obligations of the Lender Parties contained in this Section 2.13 shall survive the payment in full of all Obligations.

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Section 2.14 Sharing of Payments, Etc. (a) If any Lender (a “benefited Lender”) shall at any time receive any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the principal of or interest on the Advances owed to it (other than pursuant to Section 2.06 or 2.17) or participations in Letter of Credit Liabilities (“Other Participations”) held by it (other than pursuant to Section 2.06 or 2.17) in excess of its ratable share of payments on account of the Advances or Other Participations, as the case may be, obtained by all Lenders, such benefited Lender shall forthwith purchase from the other Lenders such participations in the Advances owed to them or in their Other Participations, as the case may be, as shall be necessary to cause such benefited Lender to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such benefited Lender, such purchase from each Lender shall be rescinded and each such Lender shall repay to the benefited Lender the purchase price to the extent of its ratable share (according to the proportion of (i) the amount of the participation purchased from such Lender as a result of such excess payment to (ii) the total amount of such excess payment) of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the benefited Lender) of any interest or other amount paid or payable by the benefited Lender in respect of the total amount so recovered.

(b) Each Credit Party agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.14 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of such Credit Party in the amount of such participation.

Section 2.15 Ratable Reduction or Termination of the Commitments; Effect of Termination. (a) Pride shall have the right at any time and from time to time, upon at least three (3) Business Days’ prior and irrevocable written notice to the Administrative Agent, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, with any partial reduction (i) to be in an amount not less than $5,000,000 as determined by Pride in integral multiples of $1,000,000 and (ii) as to the Commitments, to be allocated ratably among the Lenders in proportion to their respective Commitments; provided, that the Commitments may not be reduced to an amount less than the sum of the Dollar Equivalent of the aggregate principal amount of outstanding Advances plus the Dollar Equivalent of the aggregate amount of outstanding Letter of Credit Liabilities (after giving effect to payments on such proposed termination or reduction date). The Administrative Agent shall give prompt notice to each Lender of any such termination or reduction of the Commitments. Any termination of Commitments pursuant to this Section 2.15 is permanent and may not be reinstated.

(b) Upon and at all times after any Commitment of any Lender is terminated pursuant to any provision of this Agreement, such Commitment shall be zero and such Lender shall have no further obligation to make any Advances.

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Section 2.16 Increase of Commitments; Additional Lenders.

(a) From time to time, on or after the Effective Date, so long as no Default or Event of Default has occurred and is continuing, or would occur as a result of a commitment increase pursuant to this Section 2.16, on the applicable Commitment Increase Effective Date, Pride may, upon written notice to the Administrative Agent, elect to increase the Commitments in minimum increments of $10,000,000 up to a maximum aggregate amount (after giving effect thereto) of $750,000,000. In no event shall the aggregate Commitments of all Lenders exceed $750,000,000 at any time. At the time of sending such notice with respect to any increase in the Commitments, Pride (in consultation with the Administrative Agent) shall specify the proposed Commitment Increase Effective Date for such increase in the Commitments.

(b) Pride 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 such Person that is an existing Lender, increase its Commitment and, in the case of any other such Person (an “Additional Lender”), become a party to this Agreement; provided, however, (i) any bank or financial institution that is not an existing Lender must be acceptable to the Administrative Agent and the Issuing Banks, which acceptance will not be unreasonably withheld or delayed and (ii) the Commitment of each Additional Lender must be at least $5,000,000. No Lender shall have any obligation whatsoever to agree to increase its Commitment.

(c) An increase in the aggregate amount of the Commitments pursuant to this Section 2.16 shall become effective (the “Commitment Increase Effective Date”) upon (i) receipt by the Administrative Agent of (x) a Joinder Agreement signed by the Borrowers, by each Additional Lender and by each other Lender whose Commitment is to be increased, (y) evidence of appropriate corporate authorization on the part of the Borrowers with respect to the increase in the Commitments and (z) opinions of counsel for the Borrowers with respect to the increase in the Commitments as the Administrative Agent may reasonably request and (ii) satisfaction of the conditions set forth in Section 3.04. Promptly after any Commitment Increase Effective Date, the Administrative Agent will provide the Lenders a copy of Schedule II to the applicable Joinder Agreement listing the Commitments and Ratable Percentages of each Lender after such Commitment Increase Effective Date.

(d) Upon the acceptance of any such Joinder Agreement by the Administrative Agent, the Commitments shall automatically be increased by the amount of the Commitments added through such Joinder Agreement and the Commitments of each Lender whose Commitment is being increased set forth on Schedule I hereto shall automatically be deemed to be updated to reflect the increased amount of such Lender’s Commitment after giving effect to such Joinder Agreement.

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(e) Upon any increase in the aggregate amount of the Commitments pursuant to this Section 2.16 that is not pro rata among all Lenders, (x) the Borrowers, the Administrative Agent and the Lenders shall as of the effective date of such increase make adjustments to the outstanding principal amount of 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 Advances hereunder and the repayment of Advances plus all applicable accrued interest, fees and expenses as shall be necessary to provide for Advances by the Lenders in proportion to their respective Commitments after giving effect to such increase, together with any breakage fees and funding losses that are required to be paid pursuant to Section 2.06 and Section 2.10, and each Lender shall be deemed to have made an assignment of its outstanding Advances and Commitments, and assumed outstanding Advances and Commitments of other Lenders as of the effective date of such increase as may be necessary to effect the foregoing, and (y) 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 unfunded participations in each such Letter of Credit in the proportion its respective Commitment bears to the aggregate Commitments after giving effect to such increase.

Section 2.17 Replacement of Lender. (a) In the event that (i) any Lender demands payment pursuant to Section 2.06, 2.10 or 2.13, (ii) any Lender becomes an Affected Lender as set forth in Section 2.11, (iii) any Lender (a “Non-Consenting Lender”) refuses to consent to an amendment, modification or waiver of this Agreement or any other action that, pursuant to Section 8.01, requires consent of 100% of the Lenders (or 100% of the Lenders affected thereby) and the Supermajority Lenders have provided their consent to such amendment, modification or waiver or other action, or (iv) any Lender shall become a Defaulting Lender, the Borrowers shall have the right, (x) in the case of the circumstances described in clauses (i) and (ii), within 30 days after the date of the giving by such Lender of any notice or demand required or otherwise permitted to be given pursuant to Section 2.06, 2.10, 2.11 or 2.13, and (y) in the case of the circumstances described in clauses (iii) and (iv), at any time such Lender is a Non-Consenting Lender or Defaulting Lender, as applicable, in each case as long as no Event of Default or Default then exists, to replace such Lender in accordance with the procedure set forth in Section 2.17(b); provided that no such replacement shall be effected without (i) the prior written consent of the Issuing Banks (such consent not to be unreasonably withheld) and (ii) in the case of the replacement of a Lender that is an Issuing Bank, termination of all Letters of Credit issued by such Issuing Bank (or other satisfaction of such Letters of Credit in a manner acceptable to the Issuing Bank) and, if there are no other Issuing Banks at the time, the agreement of the replacement Lender to become an Issuing Bank.

(b) If the Borrowers determine to replace a Lender pursuant to this Section 2.17, then the Borrowers will replace such Lender with an Eligible Assignee in accordance with Section 8.06(a), (b) and (d), including execution by such Eligible Assignee of an appropriate Transfer Agreement, provided that no Lender or other Person shall have any obligation to increase its Commitment or otherwise to replace, in whole or in part, any Lender and further provided that if such Lender being replaced is a Non-Consenting Lender, each Eligible Assignee shall consent, at the time of assignment, to each matter in respect of which such replaced Lender was a Non-Consenting Lender and the Borrowers shall also replace each other Lender that is a Non-Consenting Lender at such time with an Eligible Assignee as provided in this Section 2.17(b). Upon satisfaction of the requirements set forth in the first sentence of this Section 2.17(b), payment to such Lender of all principal, interest and such Lender’s share of accrued

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commitment fees and Letter of Credit commissions, in immediately available funds, and the payment by the Borrowers of all requested costs accruing to the date of purchase which the Borrowers are obligated to pay underSection 8.04 and all other amounts owed by the Borrowers to such Lender, (i) such Lender being replaced shall execute such Transfer Agreement and shall no longer constitute a “Lender” hereunder and all of its Commitments shall be deemed terminated, except that its rights under Sections 2.06, 2.10, 2.13 and 8.04 shall continue with respect to events and occurrences occurring before or concurrently with its ceasing to be a “Lender” hereunder, and (ii) such Eligible Assignee shall constitute a “Lender” hereunder in accordance with such Transfer Agreement (including assumption of the Commitment, if any, and other obligations of the Lender being so replaced).

Section 2.18 Certificates of Lenders. Any Lender demanding or giving notice of amounts due to such Lender under Section 2.10 or 2.13 shall, as part of each demand or notice for payment required under such Section, deliver to Pride (with a copy to the Administrative Agent) a certificate setting forth in reasonable detail the amount and basis of the increased costs or additional amounts payable to such Lender hereunder, and such certificate shall be conclusive and binding in the absence of manifest error.

Section 2.19 Letters of Credit. (a) Each Issuing Bank agrees, on the terms and conditions herein set forth, to issue Letters of Credit for the account of any Borrower in support of obligations of such Borrower or any of its Subsidiaries from time to time on any Business Day during the period from the date hereof until one month before the Maturity Date; provided that (i) at no time shall the Dollar Equivalent of the aggregate Letter of Credit Liabilities exceed $100,000,000, nor shall any Lender that is an Issuing Bank have any obligation, without such Lenders’ consent, to issue Letters of Credit that exceed, in the aggregate, the Dollar Equivalent of $33,333,334, (ii) no Letter of Credit shall have a Stated Expiry Date later than the earlier of one year from the date of its issuance and five (5) Business Days prior to the Maturity Date, and (iii) at no time shall a Letter of Credit be issued if, after giving effect thereto, the Dollar Equivalent of the aggregate outstanding amount of Advances plus the Dollar Equivalent of the outstanding Letter of Credit Liabilities exceeds the Commitments. Each Letter of Credit shall be issued on notice given by a Borrower to an Issuing Bank and the Administrative Agent (which shall give to each Lender prompt notice thereof) not later than 12:00 Noon (New York City time) on the third Business Day prior to the date of the issuance of the proposed Letter of Credit. Each such notice of a Letter of Credit (a “Notice of Letter of Credit”) shall be by telecopier, in substantially the form of Exhibit C, specifying therein the requested (i) date of issuance of such Letter of Credit (which shall be a Business Day), (ii) amount of such Letter of Credit and whether such amount is to be denominated in Dollars or Euros, (iii) expiration date of such Letter of Credit, and (iv) purpose and terms of such Letter of Credit and other information contemplated by Exhibit C. Additionally, if requested by an Issuing Bank, the applicable Borrower shall execute and deliver to such Issuing Bank an application for letter of credit on such Issuing Bank’s standard form or on another form agreed upon by such Borrower and such Issuing Bank. Letters of Credit and any increases and extensions thereof hereunder may be issued in face amounts of either Dollars or Euros. Each Issuing Bank may, at its option, issue any Letter of Credit on behalf of BVI Borrower by causing any foreign or domestic branch or affiliate of such Issuing Bank to issue such Letter of Credit; provided that any exercise of such option shall not affect the obligation of the Borrowers to repay all drawings and other amounts due under such Letter of Credit in accordance with the terms of the Credit Documents.

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(b) With respect to each Letter of Credit issued by an Issuing Bank, the Borrower for the account of which such Letter of Credit was issued agrees to pay (i) to such Issuing Bank, for its sole account, a fronting fee in the amount agreed between such Issuing Bank and such Borrower prior to delivery of the Notice of Letter of Credit on the maximum face amount of such Letter of Credit and (ii) to the Administrative Agent a commission, computed (on the basis of a year of 360 days for the actual number of days elapsed) at a rate per annum equal to the Applicable Margin in effect from time to time, on the maximum face amount of such Letter of Credit from the date of issuance of such Letter of Credit until the Expiration Date for such Letter of Credit payable quarterly in arrears on the 7^th day of each January, April, July and October and on such Expiration Date (which commission shall be shared ratably by all Lenders (including the Issuing Bank) based on their respective Ratable Percentages). For any Letter of Credit issued with a face amount in Euros, the fees shall be converted into Dollars using the applicable Exchange Rate in effect on the day such fee shall be due and payable hereunder. Anything herein to the contrary notwithstanding, during such period as a Lender is a Defaulting Lender, to the extent any Borrower has provided Cash Collateral in respect of such Defaulting Lender’s unreallocated obligations with respect to a Letter of Credit pursuant to Section 2.20(b) or Section 2.21(b), such Defaulting Lender will not be entitled to any fees accruing during such period pursuant to this Section 2.19(b) (without prejudice to the rights of the Lenders other than Defaulting Lenders in respect of such fees), provided that (i) to the extent that a portion of the Letter of Credit Liabilities of such Defaulting Lender is reallocated to the Non-Defaulting Lenders pursuant to Section 2.20, such fees that would have accrued for the benefit of such Defaulting Lender will instead accrue for the benefit of and be payable to such Non-Defaulting Lenders, pro rata in accordance with their respective portions of such reallocation, and (ii) to the extent any portion of such Letter of Credit Liabilities cannot be so reallocated and have not been Cash Collateralized by any Borrower, such fees will instead accrue for the benefit of and be payable to the applicable Issuing Bank as its interests appear (and the pro rata payment provisions of Section 2.12 will automatically be deemed adjusted to reflect the provisions of this Section). Additionally, the applicable Borrower agrees to pay to each Issuing Bank solely for such Issuing Bank’s account, in connection with each Letter of Credit issued by such Issuing Bank, customary issuance and administrative fees and expenses for such Letter of Credit as agreed from time to time between such Issuing Bank and such Borrower.

(c) Each Borrower will immediately and unconditionally pay to each Issuing Bank upon demand the amount of each payment made by such Issuing Bank under any Letter of Credit issued by it for the account of such Borrower. If the applicable Borrower shall fail to pay to such Issuing Bank the amount of any such payment immediately upon demand in accordance with the terms of this Agreement, such payment shall immediately constitute, without necessity of further act or evidence, a loan (a “Demand Loan”) made by such Issuing Bank to such Borrower on the date of such payment in a principal amount equal to the Dollar Equivalent of such payment and repayable upon demand, together with interest on the principal amount of such Demand Loan remaining unpaid from time to time, payable on demand and computed from the date such Demand Loan is made as specified above to the date of repayment in full thereof, at a rate per annum equal to the Alternative Base Rate in effect from time to time plus 2% per annum.

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(d) The obligations of the Borrowers under this Agreement and any other agreement or instrument relating to any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and such other agreement or instrument under all circumstances, including the following circumstances:

(i) any lack of validity or enforceability of this Agreement, any Letter of Credit or any other agreement or instrument relating thereto (collectively, the “L/C Related Documents”);

(ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the applicable Borrower in respect of any Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;

(iii) the existence of any claim, set-off, defense or other right that any Borrower may have at any time against any beneficiary or transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the L/C Related Documents or any other matter;

(iv) any statement or any other document presented under any 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;

(v) payment by the Issuing Bank under any Letter of Credit against presentation of a draft or document that does not comply with the terms of such Letter of Credit; or

(vi) any exchange, release or non-perfection of any collateral for, or any release or amendment or waiver of or consent to departure from any guarantee of, all or any of the obligations of applicable Borrower in respect of any Letter of Credit.

However, this Section 2.19(d) shall not limit any right of the Borrowers to make a claim against the Issuing Bank to the extent provided in Section 2.19(e).

(e) Each Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit issued for the account of such Borrower with respect to the use of such Letter of Credit. Neither the Issuing Bank that issues any Letter of Credit nor any branch, affiliate or correspondent bank of such Issuing Bank nor any of their respective employees, agents, officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit issued by it or any acts

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or omissions of any beneficiary or transferee of any Letter of Credit issued by it in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not strictly comply with the terms of the relevant Letter of Credit, including failure of any documents to bear any reference or adequate reference to the relevant Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit issued by it; provided that, notwithstanding clauses (a) through (d) of this sentence, each Borrower shall have a claim against any Issuing Bank that issues a Letter of Credit for the account of such Borrower, and such Issuing Bank shall be liable to such Borrower, to the extent of any direct, but not consequential or other, damages suffered by such Borrower that such Borrower proves were caused by (i) such Issuing Bank’s willful misconduct or gross negligence in determining whether documents presented under such Letter of Credit issued by it comply with the terms of such Letter of Credit or (ii) such Issuing Bank’s willful failure to make lawful payment under such Letter of Credit issued by it after the presentation to it of a draft and documents strictly complying with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing, each 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.

(f) Upon the date of the issuance of a Letter of Credit, the Issuing Bank that issues such Letter of Credit shall be deemed to have sold to each other Lender, and each other Lender shall have been deemed to have purchased from such Issuing Bank, a ratable participation in the related Letter of Credit Liabilities and all related Demand Loans equal to such Lender’s Ratable Percentage at such date. Each Issuing Bank that issues a Letter of Credit shall promptly notify each such participant Lender of each Letter of Credit issued or increased by it, the amount of such Lender’s participation in such Letter of Credit and each payment thereunder. Upon the making of any payment under a Letter of Credit issued by an Issuing Bank, each Lender (other than such Issuing Bank) shall pay for the purchase of its participation therein by immediate payment to such Issuing Bank of same day funds in the amount of its participation in such payment.

(g) If any Lender becomes, and during the period it remains, a Defaulting Lender, if any Letter of Credit is at the time outstanding, the applicable Issuing Bank may (except to the extent the Commitments have been fully reallocated pursuant to Section 2.20), by notice to Pride and such Defaulting Lender through the Administrative Agent, require the Borrowers to provide Cash Collateral to such Issuing Bank in amount equal to the aggregate amount of the unreallocated obligations (contingent or otherwise) of such Defaulting Lender in respect of such Letter of Credit, or to make other arrangements satisfactory to the applicable Issuing Bank, in its sole discretion, to protect it against the risk of non-payment by such Defaulting Lender of amounts in respect of such Letter of Credit.

Section 2.20 Reallocation of Defaulting Lender Commitment, Etc. If a Lender becomes, and during the period it remains, a Defaulting Lender, the following provisions shall apply with respect to such Defaulting Lender:

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(a) the Letter of Credit Liabilities of such Defaulting Lender will, subject to the limitation in the proviso below, automatically be reallocated (effective on the day such Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in accordance with their respective Commitments; provided that (i) each Non-Defaulting Lender’s total Revolving Credit Exposure may not in any event exceed the Commitment of such Non-Defaulting Lender as in effect at the time of such reallocation, (ii) such Letter of Credit Liabilities shall not be automatically reallocated at any time when an Event of Default has occurred and is continuing and (iii) neither such reallocation nor any payment by a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of any claim the Borrowers, the Administrative Agent, the Issuing Banks or any other Lender may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender;

(b) to the extent that any portion (the “Unreallocated Portion”) of the Defaulting Lender’s Letter of Credit Liabilities cannot be so reallocated by reason of the proviso to Section 2.20(a) above, Pride will, not later than three Business Days after demand by the Administrative Agent (at the direction of the applicable Issuing Bank), (i) Cash Collateralize the obligations of the Borrowers to the applicable Issuing Bank in respect of such Letter of Credit Liabilities in an amount at least equal to the aggregate amount of the Unreallocated Portion of such Letter of Credit Liabilities, or (ii) make other arrangements satisfactory to the Administrative Agent and to the applicable Issuing Bank, in their sole discretion, to protect them against the risk of non-payment by such Defaulting Lender; and

(c) any amount paid by any Borrower for the account of a Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity payments or other amounts) will be applied by the Administrative Agent, to the fullest extent permitted by law, to the making of payments from time to time in the following order of priority: first to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent under this Agreement, second to the payment of any amounts owing by such Defaulting Lender to the Issuing Banks under this Agreement, ratably among them in accordance with such amounts owed, third to the payment of any amounts owing by such Defaulting Lender to Non-Defaulting Lenders under this Agreement, ratably among them in accordance with such amounts owed, and fourth, to pay amounts owing under this Agreement to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct; provided that, with respect to any application pursuant to this Section 2.20(c) of amounts received from BVI Borrower, such amounts shall be applied only on account of principal, interest, fees, indemnity payments or other amounts owed by BVI Borrower; and provided further that, upon making any payment to the Administrative Agent or any Issuing Bank for the account of a Defaulting Lender, the applicable Borrower’s obligation to pay such amount to such Defaulting Lender shall be fully discharged and such Defaulting Lender shall have no recourse to any Credit Party for the payment of such amount.

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Section 2.21 Right to Give Drawdown Notices. In furtherance of the foregoing, if any Lender becomes, and during the period it remains, a Defaulting Lender each Issuing Bank is hereby authorized by each Borrower (which authorization is irrevocable and coupled with an interest) to give, in its discretion, through the Administrative Agent, Notices of Borrowing pursuant to Section 2.02 in such amounts and at such times as may be required to (a) reimburse an outstanding disbursement made with respect to a Letter of Credit issued by such Issuing Bank on behalf of such Borrower that has not been reimbursed by such Borrower upon demand pursuant to Section 2.19(c) or (b) Cash Collateralize the obligations of such Borrower in respect of outstanding Letters of Credit issued by such Issuing Bank on behalf of such Borrower in an amount equal to the aggregate amount of the obligations (contingent or otherwise) of such Defaulting Lender in respect of such Letters of Credit (after giving effect to any reallocation under Section 2.20(a)) if and to the extent the obligation to provide Cash Collateral under Section 2.20(b) has not been satisfied.

Section 2.22 Termination of Defaulting Lender Commitment. Pride may terminate the unused amount of the Commitment of a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which will promptly notify the Lenders thereof), and in such event the provisions of Section 2.20(c) will apply to all amounts thereafter paid by any Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts), provided that such termination will not be deemed to be a waiver or release of any claim the Borrowers, the Administrative Agent, the Issuing Banks or any Lender may have against such Defaulting Lender.

ARTICLE III
CONDITIONS

Section 3.01 Initial Conditions Precedent. The obligation of any Issuing Bank to issue the initial Letter of Credit and the obligation of each Lender to make its initial Advance pursuant to the terms and conditions of this Agreement is subject to the condition precedent that the Administrative Agent shall have received on or before the day of the initial Advance (or, if earlier, the day of issuance of the initial Letter of Credit) the following, each dated on or before such day, in form and substance reasonably satisfactory to the Administrative Agent (the first day when all such conditions have been satisfied or waived is hereinafter referred to as the “Effective Date”):

(a) Duly executed signature pages to this Agreement (including by facsimile or other electronic means) in a sufficient number of signed counterparts as requested by the Administrative Agent and any Notes requested pursuant to Section 2.02(f) prior to the Effective Date.

(b) A certificate of the Secretary or an Assistant Secretary of each Borrower certifying (i) the resolutions of the board of directors of such Borrower authorizing the execution of each Credit Document to which such Borrower is a party, (ii) the charter, bylaws or other applicable organizational documents of such Borrower and (iii) all other documents evidencing any necessary company action and governmental, shareholder and third-party consents, approvals and filings, if any, with respect to each such Credit Document and the transactions thereunder.

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(c) A certificate of the Secretary or an Assistant Secretary of each Borrower certifying the names and true signatures of the officers (or agents) authorized to sign each Credit Document to be executed by it.

(d) An opinion of Baker Botts L.L.P., special counsel for Pride, and if applicable, Guarantors, substantially in the form of Exhibit D, and an opinion of Maples and Calder, special counsel for BVI Borrower, substantially in the form of Exhibit D-1.

(e) An opinion of the general counsel of Pride, and if applicable, Guarantors, substantially in the form of Exhibit E.

(f) Certificates of existence, good standing and qualification with respect to the Borrowers from appropriate public officials in the jurisdictions of organization of the Borrowers.

(g) A certificate of an officer of each Borrower (i) certifying that the representations and warranties made by such Borrower in each Credit Document are correct, (ii) certifying as to the satisfaction of all conditions set forth in this Section 3.01 and (iii) with respect to the certificate for Pride, describing in reasonable detail the insurance maintained by Pride and its Subsidiaries on the date hereof as required by Section 5.01(c) and certifying that such insurance complies with Section 5.01(c) and is in full force and effect.

(h) Evidence of payment by the Borrowers of all fees and disbursements required to be paid by the Borrowers on the date hereof.

(i) Evidence of the termination of the Existing Credit Facility and the commitments thereunder and payment in full of all amounts owed thereunder (which termination and repayment may be contemporaneous with the satisfaction of the conditions under this Section 3.01 and the application of the proceeds of any Advances and the issuance of any Letters of Credit that occur on the Effective Date).

(j) All documentation and other information that the Borrowers are required by bank regulatory authorities to deliver to the Issuing Banks, the Lenders and the Administrative Agent under applicable “know your customer” and anti-money laundering rules and regulations, including Title III of the Patriot Act, that has been identified by the Issuing Banks, the Lenders and the Administrative Agent and notified to the Borrowers prior to the Effective Date.

Section 3.02 Additional Conditions Precedent to Each Advance. The obligation of each Lender to make any Advance shall be subject to the additional conditions precedent that, on the date of such Advance, the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by a Borrower of the proceeds of such Advance shall constitute a representation and warranty by the Borrowers that on the date of such Advance such statements are true):

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(i) The representations and warranties contained in Section 4.01 are correct in all material respects on and as of the date of such Advance (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects, and other than those representations and warranties that expressly relate solely to a specific earlier date and that remain correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects) as of such earlier date), before and after giving effect to such Advance and the Borrowing of which such Advance is a part and to the application of the proceeds therefrom, as though made on and as of such date,

(ii) The representations and warranties contained in each other Credit Document are correct in all material respects on and as of the date of such Advance (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects, and other than those representations and warranties that expressly relate solely to a specific earlier date and that remain correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects) as of such earlier date), before and after giving effect to such Advance and the Borrowing of which such Advance is a part and to the application of the proceeds therefrom, as though made on and as of such date, and

(iii) No event has occurred and is continuing, or would result from such Advance or the Borrowing of which such Advance is a part or from the application of the proceeds therefrom, which constitutes a Default or an Event of Default.

Section 3.03 Conditions Precedent to Each Letter of Credit. (a) The obligation of an Issuing Bank to (x) issue each Letter of Credit, (y) extend the expiry date thereof, or (z) increase the amount thereof, shall be subject to the additional conditions precedent that, on the date of such issuance, extension or increase, as applicable, of such Letter of Credit, the following statements shall be true (and each of the giving of the applicable Notice of Letter of Credit or request for extension or increase, as applicable, and the acceptance by the applicable Borrower of the issuance, extension or increase, as applicable, of such Letter of Credit shall constitute a representation and warranty by the Borrowers that on the date of issuance, extension or increase, as applicable, of such Letter of Credit such statements are true):

(i) The representations and warranties contained in Section 4.01 are correct in all material respects on and as of such date (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects, and other than those representations and warranties that expressly relate solely to a specific earlier date and that remain correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects) as of such earlier date), before and after giving effect to such issuance, as though made on and as of such date,

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(ii) The representations and warranties contained in each other Credit Document are correct in all material respects on and as of such date (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects, and other than those representations and warranties that expressly relate solely to a specific earlier date and that remain correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects) as of such earlier date), before and after giving effect to such issuance, as though made on and as of such date, and

(iii) No event has occurred and is continuing, or would result from the issuance, extension or increase, as applicable, of such Letter of Credit, which constitutes a Default or an Event of Default.

(b) In addition to the other conditions precedent herein set forth, if any Lender becomes, and during the period it remains, a Defaulting Lender the Issuing Banks will not be required to issue any Letter of Credit or to amend any outstanding Letter of Credit to increase the face amount thereof or extend the expiry date thereof, unless any exposure that would result therefrom as a result of such Defaulting Lender is eliminated or fully covered by the Commitments of the Non-Defaulting Lenders (after giving effect to any reallocation under Section 2.20(a)) or by Cash Collateralization or by making other arrangements satisfactory to the applicable Issuing Bank to protect it against the risk of nonpayment by such Defaulting Lender, or any combination of the foregoing.

Section 3.04 Conditions Precedent to Each Commitment Increase. The effectiveness of each increase in the Commitments pursuant to Section 2.16 (each, a “Commitment Increase”) shall be subject to the additional conditions precedent that, on the Commitment Increase Effective Date with respect to such Commitment Increase, the following statements shall be true:

(i) The representations and warranties contained in Section 4.01 are correct in all material respects on such Commitment Increase Effective Date (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects, and other than those representations and warranties that expressly relate solely to a specific earlier date and that remain correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects) as of such earlier date), before and after giving effect to such Commitment Increase, as though made on and as of such date,

(ii) The representations and warranties contained in each other Credit Document are correct in all material respects on and as of such Commitment Increase Effective Date (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects, and other than those representations and warranties that expressly relate solely to a specific earlier date and that remain correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects) as of such earlier date), before and after giving effect to such Commitment Increase, as though made on and as of such date, and

(iii) No event has occurred and is continuing, or would result from such Commitment Increase, which constitutes a Default or an Event of Default.

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Section 3.05 Determinations Under Article III. For purposes of determining compliance with the conditions specified in this Article III, each Lender shall be deemed to have consented to, approved and accepted and to be satisfied with each document or other matter required under this Article III to be consented to or approved by or acceptable or satisfactory to the Lenders or the Administrative Agent, unless both (i) an officer of the Administrative Agent responsible for the transactions contemplated by this Agreement (and, in the case of a Letter of Credit, an officer of the applicable Issuing Bank issuing such Letter of Credit responsible for the transactions contemplated by this Agreement) shall have received written notice from such Lender prior to such Advance, issuance of such Letter of Credit or Commitment increase specifying its objection thereto and (ii) in the case of an Advance, such Lender shall not have made available to the Administrative Agent any portion of such Advance.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Section 4.01 Representations and Warranties. Pride represents and warrants, as to itself and its Subsidiaries, and BVI Borrower represents and warrants as to itself only, as follows:

(a) Corporate Organization. Pride is a corporation duly organized and validly existing and in good standing under the laws of the State of Delaware. BVI Borrower is a company validly formed, validly existing and in good standing under the laws of the British Virgin Islands. Each Significant Subsidiary is duly organized or validly formed, validly existing and (if applicable) in good standing in each case under the laws of its jurisdiction of incorporation or formation, except where the failure to be so organized, formed, existing or in good standing could not reasonably be expected, in the aggregate, to result in a Material Adverse Effect. Each of the Borrowers and the Significant Subsidiaries has all requisite powers required in each case to carry on its business as now conducted, except where the failure to have such powers could not reasonably be expected, in the aggregate, to result in a Material Adverse Effect.

(b) Power and Authority; Validity. The execution, delivery and performance by (x) each Borrower of this Agreement, the Notes and each other Credit Document to which it is or will be a party are within such Borrower’s corporate powers and have been duly authorized by all necessary corporate action and (y) each other Credit Party of each other Credit Document to which it is or will be a party are within such Credit Party’s corporate or other organizational powers and have been duly authorized by all necessary corporate or other organizational action. Each Credit Document has been duly executed and delivered by the Borrowers or other Credit Party, as applicable. This Agreement and each other Credit Document to which any Borrower or any other Credit Party is a party are legal, valid and binding obligations of such Borrower or such other Credit Party, as applicable, enforceable against it in accordance with their respective terms, except as the enforceability thereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity.

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(c) Consents. All consents and approvals of, and filings and registrations with, and all other actions of, all governmental agencies, authorities or instrumentalities, or any other Person, required to have been obtained or made by the Credit Parties in order to execute, deliver and perform the Credit Documents to which it is a party and, with respect to the Borrowers, in order to obtain the Advances and Letters of Credit hereunder, have been or will have been obtained or made and are or will be in full force and effect.

(d) No Violation. Neither the execution, delivery or performance by any Credit Party of the Credit Documents to which it is a party nor compliance by it with the terms and provisions thereof, nor the consummation by it of the transactions contemplated herein or therein, will (i) contravene in any material respect any applicable provision of any law, statute, rule or regulation, or any applicable order, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any term, covenant, condition or other provision of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien other than any Permitted Lien upon any of the property or assets of such Credit Party or any of its Subsidiaries under, the terms of any material contractual obligation to which such Credit Party or any of its Subsidiaries is a party or by which they or any of their properties or assets are bound or to which they may be subject, or (iii) violate or conflict with any provision of the memorandum of association and articles of association, charter, articles or certificate of incorporation, partnership or limited liability company agreement, by-laws, or other applicable governance documents of such Credit Party or any of its Subsidiaries.

(e) Financial Statements. The Consolidated balance sheet of Pride and its Subsidiaries as of December 31, 2009, and the related Consolidated statements of income, cash flows and changes in stockholders’ equity of Pride and its Subsidiaries for the Fiscal Year then ended, copies of which have been furnished to each Lender, fairly present in all material respects the Consolidated financial position of Pride and its Subsidiaries as at such date and the Consolidated results of operations of Pride and its Subsidiaries for the year ended on such date, all in accordance with GAAP. The unaudited Consolidated balance sheet of Pride and its Subsidiaries as of March 31, 2010 and the related unaudited Consolidated statements of income and cash flows for the three month period ended March 31, 2010, certified by a financial or accounting officer of Pride, copies of which have been included in Pride’s Form 10-Q for the fiscal quarter ending March 31, 2010 (which has been filed with the SEC prior to the Effective Date), fairly present in all material respects, in conformity with GAAP except as otherwise expressly noted therein, the Consolidated financial position of Pride and its Subsidiaries as of such date and the Consolidated results of operations of Pride and its Subsidiaries for such period, subject to changes resulting from audit and normal year-end adjustments.

(f) No Material Adverse Change. As of the Effective Date, since March 31, 2010 to the Effective Date, there has been no material adverse change in the business, assets, operations, property or condition (financial or otherwise) of Pride and its Subsidiaries, taken as a whole (other than any such change resulting from the FCPA Investigation or the Brazilian Litigation), or the Borrowers’ ability to perform any of their payment obligations under this Agreement or any other Credit Document.

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(g) Taxes. Pride and its Subsidiaries have filed or caused to be filed all required United States federal income tax returns, and all other material tax returns that are required to be filed by them, whether in the United States or in any foreign jurisdiction, and have paid or provided for the payment, before the same become delinquent, of all taxes, rates, assessments, fees, charges and levies due pursuant to such returns or pursuant to any assessment received by Pride or any Subsidiary, other than those taxes, rates, assessments, fees, charges or levies being contested in good faith by appropriate proceedings, or which the failure to pay or delay in filing could not reasonably be expected to have a Material Adverse Effect.

(h) Investment Company Act; Margin Regulations; Use of Proceeds. Neither Pride nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company” as those terms are defined in, or subject to regulation under, the Investment Company Act of 1940, as amended. Neither Pride nor any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U). The proceeds of the Advances and the Letters of Credit shall only be used to refinance the amounts owing under the Existing Credit Facility, for investments, acquisitions and capital expenditures, to repay and back-up commercial paper and for other general corporate purposes of the Company and its Subsidiaries.

(i) No Default. No Default or Event of Default exists.

(j) Litigation. As of the Effective Date and any Commitment Increase Effective Date, other than the FCPA Investigation and the Brazilian Litigation with respect to clause (i) below, there is no action, suit or proceeding pending against Pride or any Subsidiary, or to the knowledge of Pride or any Subsidiary, threatened against Pride or any Subsidiary, before any court or arbitrator or any governmental body, agency or official, (i) as to which there is a reasonable likelihood of an adverse decision that could reasonably be expected, in the aggregate for all such actions, suits and proceedings, to result in a Material Adverse Effect, or (ii) as to which there is a reasonable likelihood of an adverse decision and which in any manner draws into question the legality, validity, binding effect or enforceability of the Credit Agreement or any other Credit Document.

(k) ERISA. No Termination Event has occurred or is reasonably expected to occur with respect to any Plan for which an Insufficiency in excess of $65,000,000 exists. Neither the Borrowers nor any ERISA Affiliate has received any notification (or has knowledge of any reason to expect) that any Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, for which a Withdrawal Liability in excess of $65,000,000 exists.

(l) Environmental. Pride and each of its Subsidiaries are in compliance with all applicable Environmental Laws, except to the extent that failure to comply with such Environmental Laws could not reasonably be expected to result in a Material Adverse Effect.

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(m) Ownership of Property. Pride and its Subsidiaries have good and valid title to or a valid leasehold interest in all their respective property necessary for the conduct of their respective businesses, in each case free and clear of all Liens (except Liens permitted hereby), except where the failure to have such title or leasehold interest could not reasonably be expected, in the aggregate, to result in a Material Adverse Effect. Neither Pride nor any Subsidiary has failed to obtain any license, permit, franchise, consent, approval or other governmental authorization necessary to the ownership of any of its properties or the conduct of its business, except such failures which could not reasonably be expected, in the aggregate (in the event that such failure were asserted by any Person through appropriate action), to result in a Material Adverse Effect.

(n) Intellectual Property. Pride and its Subsidiaries own or hold valid licenses to use all the patents, trademarks, permits, service marks, and trade names that are necessary to the operation of the business of Pride and its Subsidiaries as presently conducted, except where the failure to own, or hold valid licenses to use, such patents, trademarks, permits, service marks, and trade names could not reasonably be expected to have a Material Adverse Effect.

(o) True and Complete Disclosure. None of the written reports, financial statements, certificates, schedules or other written information (collectively, the “Information”) furnished by Pride or any of its Subsidiaries to the Arrangers, the Agents, the Issuing Banks or any Lender in connection with or pursuant to any Credit Document or the preparation or negotiation of any Credit Document contained, as of the date such Information was furnished (or, if such Information expressly related to a specific date, as of such specific date), any material misstatement of fact or omitted to state, as of the date such Information was furnished (or, if such Information expressly related to a specific date, as of such specific date), a material fact or any fact necessary to make the statements contained therein not materially misleading when taken as a whole in light of the circumstances under which such statements were made, except for such Information, if any, as has been updated, corrected, supplemented, superseded or modified pursuant to a written correction or supplement furnished to the Lenders prior to the Effective Date; provided that with respect to any financial projections, Pride and, to the extent applicable, BVI Borrower, represent and warrant only that such projections have been prepared in good faith based upon assumptions believed by Pride and, to the extent applicable, BVI Borrower, to be reasonable at the time made and at the time the projections are made available to any such Lender Party.

(p) Insurance. Pride and its Subsidiaries currently maintain, with responsible and reputable insurance companies or associations (including captive insurance companies, or through self insurance), insurance in such amounts, with such deductibles and covering such risks as is customarily carried by companies engaged in similar businesses and owning similar properties as Pride and its Significant Subsidiaries.

(q) Compliance with Law. Pride and its Subsidiaries are in compliance with all Governmental Requirements applicable to them or to their properties, except for (a) Governmental Requirements that are being contested in good faith by appropriate proceedings diligently conducted, (b) conduct being investigated in the FCPA Investigation or (c) instances in which the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

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(r) Existing Debt. Schedule 4.01(r) contains a complete and accurate list of all Debt (other than the Debt permitted by clauses (i), (iii) through (ix) and (xii) of Section 5.02(d)) outstanding as of the Effective Date and any Commitment Increase Effective Date, with respect to Pride and its Subsidiaries, in each case in a principal amount of $25,000,000 or more, in each case showing the aggregate principal amount thereof, the name of the respective borrower and any other entity which directly or indirectly guaranteed such Debt, and the scheduled payments of such Debt. For purposes of maintaining the accuracy of this representation and warranty after the Effective Date, the Borrowers are permitted to update Schedule 4.01(r) on any Commitment Increase Effective Date.

(s) Existing Liens. Schedule 4.01(s) contains a complete and accurate list of all Liens (other than the Liens permitted by clauses (ii) through (xxi) of Section 5.02(c)) outstanding as of the Effective Date and any Commitment Increase Effective Date, with respect to Pride and its Subsidiaries where the Debt or other obligations secured by such Lien is in a principal amount of $25,000,000 or more, in each case showing the name of the Person whose assets are subject to such Lien, the aggregate principal amount of the Debt secured thereby, and a description of the agreements or other instruments creating, granting, or otherwise giving rise to such Lien. For purposes of maintaining the accuracy of this representation and warranty after the Effective Date, the Borrowers are permitted to update Schedule 4.01(s) on any Commitment Increase Effective Date.

ARTICLE V
COVENANTS

Section 5.01 Affirmative Covenants. Pride covenants and agrees that, so long as any Advance shall remain unpaid, any Letter of Credit or Obligation shall remain outstanding or any Lender shall have any Commitment hereunder, Pride will:

(a) Reporting Requirements. Furnish to the Administrative Agent:

(i) as soon as available and in any event within 45 days after the end of each of the first three quarters of each Fiscal Year of Pride, the Consolidated balance sheets of Pride and its Subsidiaries as of the end of such quarter, and the Consolidated statements of income, cash flows and changes in stockholders’ equity of Pride and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter, setting forth, in comparative form, the corresponding figures for the corresponding period of the preceding Fiscal Year, all in reasonable detail and duly certified by a financial officer of Pride as having been prepared in accordance with GAAP, except for the absence of footnotes, and as fairly presenting in all material respects the Consolidated financial position and results of operations of Pride and its Subsidiaries as of the end of such quarter and for such periods, subject, however, to year-end

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audit adjustments, together with a certificate of such officer showing in detail the calculations of the financial covenants set forth in Sections 5.02(a) and 5.02(b) for the four quarter period ending at the end of such quarter and as at the end of such quarter, respectively (provided that the requirements of this Section 5.01(a)(i) with respect to the delivery of financial statements shall be deemed satisfied by publicly filing Pride’s Form 10-Q for such fiscal quarter with the SEC, and such financial statements shall be deemed to have been delivered to the Administrative Agent under this Section 5.01(a)(i) on the date such Form 10-Q has been posted on the SEC website accessible through http://www.sec.gov/edgar/searchedgar/webusers.htm or such successor webpage of the SEC thereto);

(ii) as soon as available and in any event not later than 90 days after the end of each Fiscal Year of Pride, copies of the Consolidated balance sheets of Pride and its Subsidiaries as of the end of such Fiscal Year, and Consolidated statements of income, cash flows and changes in stockholders’ equity of Pride and its Subsidiaries for such Fiscal Year, all certified by KPMG LLP or other independent certified public accountants of recognized national standing, together with a certificate of a financial officer of Pride showing in detail the calculations of the financial covenants set forth in Sections 5.02(a) and 5.02(b) for the four quarter period ending at the end of such year and as of the end of such year, respectively (provided that the requirements of this Section 5.01(a)(ii) with respect to the delivery of financial statements shall be deemed satisfied by publicly filing Pride’s Form 10-K for such Fiscal Year with the SEC, and such financial statements shall be deemed to have been delivered to the Administrative Agent under this Section 5.01(a)(ii) on the date such Form 10-K has been posted on the SEC website accessible through http://www.sec.gov/edgar/searchedgar/webusers.htm or such successor webpage of the SEC thereto);

(iii) promptly after the sending or filing thereof, copies of all material reports which Pride or any Subsidiary sends to the holders of its Equity Interests or public debt as such, and copies of all reports and registration statements which Pride or any Subsidiary files with the SEC or with any national securities exchange (provided that the requirements of this Section 5.01(a)(iii) shall be deemed satisfied by publicly filing such documents with the SEC, and such documents shall be deemed to have been delivered to the Administrative Agent under this Section 5.01(a)(iii) on the date such documents have been posted on the SEC website accessible through http://www.sec.gov/edgar/searchedgar/webusers.htm or such successor webpage of the SEC thereto);

(iv) promptly upon the receipt thereof by Pride or any Subsidiary, a copy of any written notice, complaint, request for information under any Environmental Law, summons or citation received from the EPA, or any other domestic or foreign governmental agency or instrumentality, federal, state or local, in any way concerning any action or omission on the part of Pride or any of its present or former Subsidiaries in connection with Hazardous Materials or the Environment if the amount involved could reasonably be expected to result in a liability of Pride or any Subsidiary in excess of $65,000,000 in the aggregate;

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(v) promptly after any Responsible Officer obtains knowledge thereof, (a) written notice in reasonable detail of any of the following that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect: (i) any violation of, noncompliance with, or remedial obligations under, any Environmental Law, (ii) any release or threatened release of Hazardous Materials affecting any property owned, leased or operated by Pride or any Subsidiary, (iii) the institution of any litigation or other proceeding or any adverse development in any such litigation or other proceeding or (iv) the institution of any investigation regarding taxes of Pride or any Subsidiary or the assertion of any tax claim against Pride or any Subsidiary, and (b) written notice in reasonable detail of any condition or event that could reasonably be expected to result in a Material Adverse Effect;

(vi) as soon as possible and in any event within five days after any Responsible Officer having obtained knowledge thereof, notice of the occurrence of any Event of Default or any Default, and a statement of a Responsible Officer of Pride setting forth the details of such Event of Default or Default and the action which Pride has taken and proposes to take with respect thereto;

(vii) as soon as possible and in any event (a) within thirty Business Days after a Responsible Officer knows that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan for which an Insufficiency in excess of $65,000,000 exists, has occurred and (b) within ten Business Days after a Borrower or any ERISA Affiliate knows or has reason to know that any other Termination Event with respect to any Plan for which an Insufficiency in excess of $65,000,000 exists, has occurred, a statement of the chief financial officer or chief accounting officer of Pride describing such Termination Event and the action, if any, which the Borrowers or such ERISA Affiliate proposes to take with respect thereto;

(viii) promptly and in any event within five Business Days after receipt thereof by Pride or any ERISA Affiliate, copies of each notice received by Pride or any ERISA Affiliate from the PBGC stating its intention to terminate any Plan for which an Insufficiency in excess of $65,000,000 exists or to have a trustee appointed to administer any Plan for which an Insufficiency in excess of $65,000,000 exists;

(ix) promptly and in any event within ten Business Days after receipt thereof by Pride or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice received by Pride or any ERISA Affiliate indicating liability in excess of $65,000,000 incurred or expected to be incurred by Pride or any ERISA Affiliate in connection with (a) the imposition of a Withdrawal Liability by a Multiemployer Plan, (b) the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA, or (c) the termination of a Multiemployer Plan within the meaning of Title IV of ERISA;

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(x) promptly upon receipt thereof and following such time as the appropriate officers of Pride shall have had reasonable time to respond thereto, a copy of each formal report or “management letter” submitted to Pride or any Subsidiary by its independent accountants in connection with any annual, interim or special audit made by it of the books of Pride or any Subsidiary; and

(xi) such other information respecting the business, condition or operations, financial or otherwise, of Pride, any Subsidiary or any SPV as any Lender through the Administrative Agent may from time to time reasonably request.

(b) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, with all applicable laws, rules, regulations and orders (including ERISA and Environmental Laws), except to the extent that noncompliance therewith could not reasonably be expected to result in a Material Adverse Effect.

(c) Maintenance of Insurance; Contractual Indemnity.

(i) Maintain, and cause each of its Subsidiaries to maintain, with responsible and reputable insurance companies or associations, including captive insurance companies, or through self-insurance, insurance in such amounts, with such deductibles and covering such risks as is customarily carried by companies engaged in similar businesses and owning similar properties as Pride and its Significant Subsidiaries, and that reflects customary industry practices for companies engaged in similar businesses and owning similar properties as Pride and its Significant Subsidiaries (as such customary industry practices may change from time to time), with updates and additional coverage to reflect any changes in Governmental Requirements or industry practices from time to time, including without limitation in connection with deepwater operations; provided that:

(A) such insurance must include (1) customary protection and indemnity coverage (or equivalent), which shall include both primary and excess liability coverage (which primary and excess liability coverage shall insure against losses from sudden and accidental pollution) and (2) hull and machinery coverage for all material rig assets, which hull and machinery coverage shall provide for insured values of not less than the net book value of any such material rig assets as reported in the most recent financial statements delivered under Section 5.01(a)(i) or 5.01(a)(ii); and

(B) self-insurance must be reasonable and prudent considering Pride’s and its Subsidiaries’ business, properties and loss history, Governmental Requirements and industry practices (including without limitation those in connection with deepwater operations), in each case as they may change from time to time.

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(ii) Pride and its Subsidiaries shall use commercially reasonable efforts to obtain indemnification provisions in each material drilling contract entered into or amended, supplemented or otherwise modified by any such Person after the Effective Date pursuant to which Pride and its Affiliates are indemnified against liabilities (other than (x) liabilities fully covered by insurance that satisfies the requirements set forth in this Section 5.01(c)(i) and (y) other liabilities that do not satisfy the immediately preceding clause (x) and that do not exceed, in the aggregate, the threshold set forth on Schedule 5.01(c) attached hereto) arising out of contamination or pollution (other than the discharge or release of pollutants from a rig or vessel or originating on or above the surface of the water), regardless of fault, except when caused by Pride or such Affiliate’s gross negligence or willful misconduct; provided that if such indemnification provisions are not obtained in any such contract, Pride shall provide prompt written notice to Administrative Agent thereof.

(d) Preservation of Existence, Etc. Except as permitted by Section 5.02(e), preserve and maintain, and cause each of its Significant Subsidiaries to preserve and maintain, its legal existence, rights (charter, if applicable, and statutory), franchises, permits, licenses and approvals and qualify and remain qualified, and cause each Significant Subsidiary to qualify and remain qualified, as a foreign corporation or other entity in each jurisdiction in which qualification is legally required; provided, that this Section 5.01(d) shall not require Pride or any Significant Subsidiary to preserve or maintain any legal existence (other than that of Pride and BVI Borrower), right, franchise, permit, license, approval or qualification if Pride or such Significant Subsidiary shall determine that (i) the preservation and maintenance thereof is no longer desirable in the conduct of the business of Pride or such Significant Subsidiary, and that the loss thereof is not disadvantageous in any material respect to the Lenders, or (ii) the failure to maintain and preserve the same could not reasonably be expected, in the aggregate, to result in a Material Adverse Effect. Upon receipt of a written request therefor from Pride, the Administrative Agent will execute and deliver, at the Borrowers’ expense, all documents as may reasonably be requested to effect a release of a Guarantor that ceases to exist in accordance with this Section 5.01(d) or Section 5.02(e).

(e) Visitation Rights. At any reasonable time and from time to time, permit (i) the Administrative Agent or any of the Lenders or any agents or representatives thereof to visit and inspect the properties of Pride or any Subsidiary, and (ii) the Administrative Agent to examine and make copies of the records and books of account of Pride or any Subsidiary, and to discuss the affairs, finances and accounts of Pride or any Subsidiary with, and be advised as to the same by, any Responsible Officer of Pride.

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(f) Maintenance of Properties. Maintain, and cause each Significant Subsidiary to maintain, in good repair, working order and condition (but subject to reasonable wear and tear in the ordinary course of business), all property necessary to the proper conduct of the business of Pride and its Significant Subsidiaries, and from time to time make or cause to be made all appropriate repairs, renewals and replacements thereof in all material respects, except to the extent that the failure to so maintain such property or the failure to make or cause to be made such repairs, renewals or replacements could not reasonably be expected to result in a Material Adverse Effect; provided that this Section 5.01(f) shall not apply to property that is lost or damaged in connection with a casualty event or is subjected to a condemnation or other taking.

(g) Operation of Business. Operate, and cause each Subsidiary to operate, its business and properties prudently in all material respects in accordance with industry standards (including in respect of safety and Environmental matters) and in accordance with all insurance requirements, except where the failure to so operate could not reasonably be expected to result in a Material Adverse Effect

(h) Business. Remain, and cause each Subsidiary to remain, primarily engaged in (a) the contract drilling business, (b) the provision of services to the energy industry, (c) other existing businesses described in current SEC filings and/or (d) businesses related, ancillary or complementary to the business of Pride and its Subsidiaries on the date hereof.

(i) Books and Records. Maintain, and cause each Subsidiary and SPV to maintain, a system of accounting in such manner as will enable preparation of financial statements in accordance with GAAP.

(j) Taxes. Duly pay and discharge and cause each of its Subsidiaries to duly pay and discharge all Taxes upon or against it or its properties within ninety (90) days after becoming due or, if later, prior to the date on which penalties are imposed for such unpaid Taxes, unless and to the extent that (i) the same is being contested in good faith and by appropriate proceedings and reserves have been established in conformity with GAAP, or (ii) the failure to effect such payment or discharge or any delay in filing could not reasonably be expected to have a Material Adverse Effect.

(k) Subsidiary Guarantees. Concurrently with the execution by a Guarantor of a Guaranty, cause such Guarantor to deliver to the Administrative Agent legal opinions from counsel reasonably acceptable to the Administrative Agent covering the types of matters covered in Exhibits D and E, certificates of the type referred to in Sections 3.01(b), 3.01(c) and 3.01(f) in respect of such Guarantor and other documents reasonably requested by the Administrative Agent, all of which shall be in the form and substance reasonably satisfactory to the Administrative Agent.

(l) Further Assurances. At any time and from time to time, at the Borrowers’ expense, promptly execute and deliver, and cause each Subsidiary to execute and deliver, to the Administrative Agent such further instruments and documents, and take such further action, as the Majority Lenders may from time to time reasonably request, in order to further carry out the intent and purpose of the Credit Documents and to establish and protect the rights, interests and remedies created, or intended to be created, in favor of the Administrative Agent or any of the Lenders.

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Section 5.02 Negative Covenants. Pride covenants and agrees that, so long as any Advance shall remain unpaid, any Letter of Credit or Obligation shall remain outstanding or any Lender shall have any Commitment hereunder:

(a) Interest Coverage Ratio. Pride will not permit the Interest Coverage Ratio as of the end of any fiscal quarter to be less than 2.50 to 1.00 for any period of four consecutive fiscal quarters of Pride ending after the date hereof; provided that the covenant set forth in this Section 5.02(a) shall terminate and cease to be of further force and effect from and after the first date on which (i) no Default or Event of Default shall have occurred and be continuing, (ii) the corporate credit rating assigned to Pride by S&P is BBB- or higher (without negative outlook or negative watch), and (iii) the corporate credit rating assigned to Pride by Moody’s is Baa3 or higher (without negative outlook or review for downgrade).

(b) Consolidated Debt to Total Tangible Capitalization Ratio. Pride will not permit the Consolidated Debt to Total Tangible Capitalization Ratio as of the end of any fiscal quarter of Pride to exceed 50.0%.

(c) Liens. Pride will not create, assume, incur or suffer to exist or permit any Subsidiary to create, assume, incur or suffer to exist, any Lien on or in respect of any property of Pride or any Subsidiary, except that Pride and any Subsidiary may create, incur, assume or suffer to exist the following (collectively, the “Permitted Liens”):

(i) Liens existing on the Effective Date (each such Lien, to the extent it secures Debt or other obligations in an aggregate amount of $25,000,000 or more, being described on Schedule 4.01(s) attached hereto);

(ii) Liens on the Equity Interests or assets of SPV’s;

(iii) Liens securing interest rate or foreign exchange hedging obligations (regardless of whether such hedging obligations are subject to hedge accounting), incurred in the ordinary course of business and not for speculative purposes;

(iv) Liens to secure Debt incurred for the purpose of financing all or a part of the purchase price or construction cost of property (including the cost of upgrading, refurbishing, renovating or repairing drilling rigs, drillships and other vessels and platforms) if in the case of all such Liens, (A) such Liens secure Debt otherwise permitted, (B) the principal amount of the Debt secured by such Liens does not exceed the cost of the property so acquired, constructed, upgraded, refurbished, renovated or repaired plus transaction costs related thereto, (C) such Liens do not encumber any other property (other than the proceeds (including, without limitation, proceeds from associated contracts and insurances) of, improvements, accessions and upgrades to, and related contracts, intangibles and other assets incidental to or arising from, the property so acquired, constructed, upgraded, refurbished, renovated or repaired and the capital stock of Subsidiaries that own, whether

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directly or indirectly, only the property so acquired, constructed, upgraded, refurbished, renovated or repaired and related property), (D) such Liens attach no later than 12 months after the latest of (x) commencement of commercial operation of the property so acquired, constructed, upgraded, refurbished, renovated or repaired, (y) completion of the construction, upgrade, refurbishment, renovation or repair of such property and (z) the acquisition of such property and (E) the aggregate principal amount of the Debt secured by the Liens granted pursuant to this clause (iv) may not exceed, at any time, ten percent (10.0%) of Consolidated Tangible Net Worth;

(v) Liens created by capital leases, provided that such Liens attach only to the property leased pursuant thereto and proceeds (including, without limitation, proceeds from associated contracts and insurances) of, and improvements, accessions and upgrades to, the property leased pursuant thereto;

(vi) Liens arising in the ordinary course of business by operation of law, deposits, pledges or other Liens in connection with workers’ compensation, unemployment insurance, old age benefits, social security obligations, taxes, assessments, public or statutory obligations or other similar charges, good faith deposits, pledges or other liens in connection with (or to obtain letters of credit in connection with) bids, performance, return-of-money or payment bonds, contracts or leases to which Pride or its Subsidiaries are party or other deposits required to be made in the ordinary course of business; provided that in each case the obligation secured is not for Debt for borrowed money and is not overdue or, if overdue, is being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor;

(vii) mechanics’, workmen’s, materialmen’s, landlords’, carriers’, maritime or other similar Liens arising in the ordinary course of business (or deposits to obtain the release of such Liens) related to obligations not overdue for more than thirty (30) days if such Liens arise with respect to domestic assets and for more than ninety (90) days if such Liens arise with respect to foreign assets, or, if so overdue, that are being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor, or if such Liens otherwise could not reasonably be expected to have Material Adverse Effect;

(viii) Liens for taxes not more than ninety (90) days past due or which can thereafter be paid without penalty or which are being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor, or if such Liens otherwise could not reasonably be expected to have Material Adverse Effect;

(ix) Liens imposed by ERISA (or comparable foreign laws) which are being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor, or if such liens otherwise could not reasonably be expected to have Material Adverse Effect;

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(x) Liens arising out of judgments or awards against Pride or any of its Subsidiaries, or in connection with surety or appeal bonds or the like in connection with bonding such judgments or awards, the time for appeal from which or petition for rehearing of which shall not have expired or for which Pride or such Subsidiary shall be prosecuting on appeal or proceeding for review, and for which it shall have obtained (within thirty (30) days with respect to a judgment or award rendered in the United States or within sixty (60) days with respect to a judgment or award rendered in a foreign jurisdiction after entry of such judgment or award or expiration of any previous such stay, as applicable) a stay of execution or the like pending such appeal or proceeding for review; provided, that (i) the aggregate amount of uninsured or underinsured liabilities (net of customary deductibles, and including interest, costs, fees and penalties, if any) of Pride and its Subsidiaries secured by such Liens (other than liabilities of Pride and its Subsidiaries arising in connection with the Brazilian Litigation) shall not exceed $65,000,000 at any time outstanding and (ii) to the extent any such Liens secure liabilities of Pride and its Subsidiaries arising in connection with the Brazilian Litigation, such Liens shall be permitted unless the aggregate amount of uninsured or underinsured liabilities (net of customary deductibles, and including interest costs, fees and penalties, if any) of Pride and its Subsidiaries secured by such Liens would reasonably be expected to have a Material Adverse Effect;

(xi) rights reserved to or vested in any municipality or governmental, statutory or public authority by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the property of a Person;

(xii) rights reserved to or vested in any municipality or governmental, statutory or public authority to control, regulate or use any property of a Person;

(xiii) rights of a common owner of any interest in property held by a Person and such common owner as tenants in common or through other common ownership;

(xiv) encumbrances (other than to secure the payment of Debt), easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any property or rights-of-way of a Person for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines, removal of gas, oil, coal, metals, steam, minerals, timber or other natural resources, and other like purposes, or for the joint or common use of real property, rights-of-way, facilities or equipment, or defects, irregularity and deficiencies in title of any property or rights-of-way;

(xv) Liens created by or resulting from zoning, planning and environmental laws and ordinances and municipal regulations;

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(xvi) Liens on property securing Non-Recourse Debt incurred for the purpose of financing all or a part of the purchase price or construction cost of property (including the cost of upgrading, refurbishing, renovating or repairing drilling rigs, drillships and other vessels and platforms) if, in the case of all such Liens, such Liens do not encumber any other property (other than the proceeds (including, without limitation, proceeds from associated contracts and insurances) of, improvements, accessions and upgrades to, and related contracts, intangibles and other assets incidental to or arising from, the property so acquired, constructed, upgraded, refurbished, renovated or repaired and the capital stock of Subsidiaries that own, whether directly or indirectly, only the property so acquired, constructed, upgraded, refurbished, renovated or repaired and related property);

(xvii) Liens securing Debt or other obligations of (a) any SPV or Subsidiary of Pride in favor of Pride or (b) any Wholly-Owned Subsidiary that is not a Guarantor to any other Wholly-Owned Subsidiary of Pride;

(xviii) Liens on property existing at the time such property is acquired by Pride or any of its Subsidiaries and not created in contemplation of such acquisition (or on repairs, renewals, replacements, additions, accessions and betterments thereto), and Liens on the assets of any Person at the time such Person becomes a Subsidiary of Pride and not created in contemplation of such Person becoming a Subsidiary of Pride (or on repairs, renewals, replacements, additions, accessions and betterments thereto);

(xix) Liens created or evidenced by or resulting from financing statements filed by lessors of property (but only relating to the leased property);

(xx) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

(xxi) [Reserved];

(xxii) other Liens created in connection with securitization programs, if any, of Pride and its Subsidiaries; provided that, to the extent such liens secure Debt, such Debt is otherwise permitted;

(xxiii) other Liens securing Debt (or other obligations) the Dollar Equivalent of which does not exceed at the time of incurrence thereof (together with all such other Liens securing Debt (or other obligations) outstanding pursuant to this clause (xxiii) at such time), $100,000,000;

(xxiv) extensions, renewals and replacements of the Permitted Liens described above, so long as there is no increase in the Debt secured thereby (other than amounts incurred to pay costs of renewal and replacement) and no additional property (other than accessions, improvements, and replacements in respect of such property) is subject to such Lien.

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(d) Debt. Pride will not permit any Subsidiary to create, incur, assume, guarantee, otherwise become liable for or suffer to exist, any Debt other than:

(i) Debt under the Credit Documents;

(ii) Debt existing on the Effective Date (such Debt, to the extent the principal amount thereof is $25,000,000 or more, being described on Schedule 4.01(r) attached hereto);

(iii) Debt owing to Pride, any Subsidiary or any SPV;

(iv) Debt under any interest rate protection agreements or foreign exchange hedges (regardless of whether such hedging obligations are subject to hedge accounting) incurred in the ordinary course of business and not for speculative purposes;

(v) Debt (x) under unsecured overdraft lines of credit or for working capital purposes in foreign countries with financial institutions and (y) arising from the honoring by a bank or other Person of a check, draft or similar instrument inadvertently drawing against insufficient funds, all such Debt not to exceed $100,000,000 in the aggregate at any time outstanding;

(vi) Debt of a Person existing at the time such Person becomes a Subsidiary of Pride or is merged with or into Pride or any Subsidiary of Pride and not incurred in contemplation of such transaction;

(vii) Debt under performance guaranties and letters of credit issued in the ordinary course of business;

(viii) Debt consisting of Pre-Completion Guaranties to the extent that the aggregate principal amount of the obligations guaranteed under such Pre-Completion Guaranties does not exceed ten percent (10.0)% of Consolidated Tangible Net Worth at any time outstanding;

(ix) Debt incurred for the purpose of financing all or a part of the purchase price or construction cost of property (including the cost of upgrading, refurbishing, renovating or repairing drilling rigs, drillships and other vessels and platforms owned by Pride or any of its Subsidiaries) within the limitations of Section 5.02(c)(iv) above;

(x) Debt in an aggregate principal amount outstanding at the time of incurrence thereof (together with all such other Debt outstanding pursuant to this clause (x) at such time) not to exceed $100,000,000 (the “Subsidiary Debt Basket Amount”);

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(xi) Debt not otherwise permitted under any other clause of this Section 5.02(d) so long as each Subsidiary incurring such Debt has in force a Subsidiary Guaranty in substantially the form of Exhibit G; provided that such Subsidiary Guaranty shall contain a provision that such Subsidiary Guaranty, and all obligations thereunder of the Guarantor party thereto, shall be terminated upon notice by Pride to the Administrative Agent that (a) the aggregate principal amount of Debt of all Subsidiaries outstanding pursuant to the immediately preceding clause (x) and this clause (xi) is equal to or less than the Subsidiary Debt Basket Amount and (b) no Default or Event of Default has occurred and is continuing;

(xii) [Reserved]; and

(xiii) extensions, refinancings, renewals or replacements of the Debt permitted above which, in the case of any such extension, refinancing, renewal or replacement, does not increase the amount of the Debt being extended, refinanced, renewed or replaced, other than amounts incurred to pay the costs of such extension, refinancing, renewal or replacement.

(e) Mergers and Dispositions of All or Substantially All Assets. Pride shall not, nor shall it permit any Significant Subsidiary or Subsidiaries which, if taken together in a series of related transactions, would constitute a Significant Subsidiary, to, merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it, or liquidate or dissolve or sell, transfer, lease or otherwise dispose of all or substantially all of its assets, except that:

(i) Pride may merge into, or consolidate with, any Person if Pride is the surviving entity or, if such other Person is the surviving Person to any such merger or consolidation (A) the non-credit enhanced senior unsecured long-term debt of such Person (after giving effect to such merger or consolidation) shall have an Investment Grade Rating from at least one of S&P or Moody’s (provided that, if only one of S&P and Moody’s shall have assigned such debt an Investment Grade Rating, then the other rating agency shall have assigned such debt a Near-Investment Grade Rating) and (B) such Person shall have executed and delivered to the Administrative Agent and each Lender its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the other Credit Documents to which Pride is a party, together with such evidence of appropriate corporate authorization on the part of such Person with respect to such assumption and such opinions of counsel for such Person with respect to such assumption as the Administrative Agent may reasonably request,

(ii) any Subsidiary may merge into, or consolidate with, Pride if Pride is the surviving entity,

(iii) any Subsidiary that is not a Guarantor may merge into, or consolidate with, BVI Borrower if BVI Borrower is the surviving entity,

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(iv) any Subsidiary that is not a Guarantor (other than BVI Borrower) may merge into, or consolidate with, any other Subsidiary (other than BVI Borrower),

(v) any Subsidiary that is a Guarantor may merge into, or consolidate with, any other Subsidiary if (A) such Guarantor is the surviving entity or (B) such other Subsidiary is also a Guarantor,

(vi) any Subsidiary (other than BVI Borrower) may merge into, or consolidate with, any Person other than Pride or any other Subsidiary if (A) such Subsidiary is the surviving entity or (B) such other Person is the surviving entity and becomes a Subsidiary contemporaneously with such merger or consolidation (and if the Subsidiary prior to such merger or consolidation was a Guarantor, the surviving Subsidiary is also a Guarantor),

(vii) Pride may sell, transfer, lease or otherwise dispose of all or substantially all of its assets (including stock in its Subsidiaries) to any of its Subsidiaries or any other Person who will contemporaneously therewith become a Subsidiary, and

(viii) any Subsidiary may sell, transfer, lease or otherwise dispose of all or substantially all of its assets (including stock in its Subsidiaries) to Pride, any other Subsidiary or any other Person who will contemporaneously therewith become a Subsidiary;

provided that, in the case of any transaction described in the preceding clauses (i) and (vii), no Default or Event of Default shall exist immediately prior to, or after giving effect to, such transaction; provided further that sales, transfers or other dispositions (including by way of dividend or distribution) of Non-Core Assets shall not be subject to the restrictions imposed by this covenant.

(f) Restrictive Agreements. Pride shall not create or otherwise cause or permit to become effective, or permit any Subsidiary to create or otherwise cause or permit to become effective, any consensual encumbrance or restriction on the ability of any Subsidiary (other than a SPV or a Project Finance Subsidiary) to (i) pay dividends or make any other distributions to, or pay any debt owed to, Pride or any Subsidiary, (ii) make any loans or advances to or investments in Pride or any Subsidiary, or (iii) transfer any property to Pride or any Subsidiary, in each case, other than (a) encumbrances or restrictions contained in, or existing by reason of, any agreement or instrument existing on the date hereof, (b) encumbrances or restrictions contained in, or existing by reason of, any agreement or instrument relating to property existing at the time of the acquisition thereof, so long as such encumbrances or restrictions relate only to the property so acquired, (c) encumbrances or restrictions contained in, or existing by reason of, any agreement or instrument relating to any debt of, or otherwise to, any Subsidiary at the time such Subsidiary was merged or consolidated with or into, or acquired by, Pride or a Subsidiary or became a Subsidiary and not created in contemplation thereof, (d) encumbrances or restrictions contained in, or existing by reason of, any agreement or instrument

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effecting a renewal, extension, refinancing, refund or replacement (or successive extensions, renewals, refinancings, refunds or replacements) of debt issued under an agreement referred to in clauses (a) through (c) above, so long as the encumbrances and restrictions contained in any such renewal, extension, refinancing, refund or replacement agreement, taken as a whole, are not materially more restrictive than the encumbrances and restrictions contained in the original agreement, as determined in good faith by the board of directors of Pride, (e) customary provisions restricting subletting or assignment of any leases of Pride or any Subsidiary or provisions in agreements that restrict the assignment of such agreement or any rights thereunder, (f) restrictions on the sale or other disposition of any property securing Debt as a result of a Lien on such property permitted hereunder, (g) temporary encumbrances or restrictions with respect to a Subsidiary under an agreement that has been entered into for the disposition of all or substantially all of the outstanding Equity Interests of or assets of such Subsidiary, provided that such disposition is otherwise permitted hereunder, (h) customary restrictions on cash, other deposits or assets imposed by customers and other persons under contracts entered into in the ordinary course of business, (i) encumbrances or restrictions contained in any agreement or instrument relating to Debt that prohibit the transfer of all or substantially all of the assets of the obligor under such agreement or instrument unless the transferee assumes the obligations of the obligor under such agreement or instrument or such assets may be transferred subject to such prohibition, (j) encumbrances or restrictions constituting a requirement that a certain amount of Debt be maintained between a Subsidiary and Pride or another Subsidiary, (k) encumbrances or restrictions with respect to property under an agreement that has been entered into for the disposition of such property, provided that such disposition is otherwise permitted hereunder, (l) encumbrances or restrictions with respect to property under a charter, lease or other agreement that has been entered into for the employment of such property, (m) encumbrances or restrictions contained in, or existing by reason of, any agreement or instrument governing Debt of any Foreign Subsidiary, which encumbrances or restrictions are not applicable to any person, or the properties or assets of any person, other than any such Foreign Subsidiary and its subsidiaries, or (n) encumbrances or restrictions contained in joint venture agreements, partnership agreements and other similar agreements with respect to a joint ownership arrangement restricting the disposition or distribution of assets or property of such joint venture, partnership or other joint ownership entity, or any of such Person’s subsidiaries, if such encumbrances or restrictions are not applicable to the property or assets of any other Person.

(g) Compliance with ERISA. Pride shall not terminate, nor shall they permit the termination of, any Plan so as to result in any liability of Pride or any Subsidiary to the PBGC in excess of $65,000,000.

(h) Affiliate Transactions. Pride shall not, and shall not permit any of its Subsidiaries to, enter into or engage in any material transaction or series of related transactions or related arrangements which in the aggregate would be material with any Affiliate, including without limitation, the purchase from, sale to or exchange of property with, any merger or consolidation with or into, or the rendering of any service by or for, any Affiliate, except pursuant to the requirements of Pride’s or such Subsidiary’s business and unless such transaction or arrangement or series of related transactions or arrangements, taken as a

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whole, are no less favorable to Pride or such Subsidiary than would be obtained in an arms’ length transaction with a Person not an Affiliate; provided that the foregoing restriction shall not apply to (i) transactions between or among Pride and its Subsidiaries or between or among Subsidiaries, (ii) transactions involving any employee benefit plans or related trusts of Pride or any of its Subsidiaries, (iii) transactions pursuant to any contract or agreement outstanding as of (x) with respect to Pride, the Effective Date or (y) with respect to any Subsidiary of Pride, the Effective Date, or if later, the date such Subsidiary first became a Subsidiary of Pride, (iv) the payment of reasonable compensation, fees and expenses to, and indemnity provided on behalf of, directors and officers of Pride or any Subsidiary, and (v) transactions otherwise specifically permitted herein.

(i) Documents. Pride shall not, nor shall it permit any Subsidiary to, amend, waive, terminate or otherwise modify, or agree to the amendment, waiver, termination or other modification of, the charter, bylaws or other similar documents of Pride or any Subsidiary, except if all such amendments, waivers, terminations and other modifications, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(j) Hedging. Pride shall not enter into, or permit any Subsidiary to enter into, any Hedging Agreement other than Hedging Agreements entered into for bona fide hedging purposes (and not for speculative purposes) in the ordinary course of the Borrowers’ or a Subsidiary’s business.

(k) Use of Proceeds. Pride shall not use, or permit any Subsidiary to use, the proceeds of any Advance or Letter of Credit for any purpose other than to refinance the Existing Credit Facility, investments, acquisitions, capital expenditures, the repayment and back-up of commercial paper or for other general corporate purposes, or use, or permit any Subsidiary to use, any such proceeds in a manner which violates or results in a violation of Regulation T, U or X of the Federal Reserve Board.

(l) Sale Leaseback Transactions. Pride shall not enter into, or permit any Subsidiary to enter into, any Sale Leaseback Transaction, except those that may be incurred, assumed or suffered to exist without violating this Agreement, including, without limitation, the financial covenants set forth in Section 5.02(a) and Section 5.02(b).

ARTICLE VI
EVENTS OF DEFAULT

Section 6.01 Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing:

(a) (i) The Borrowers shall fail to pay on the Commitment Termination Date any outstanding principal of any Advance or Demand Loan, any outstanding interest due thereon or any fees or other amounts due hereunder or under any other Credit Document to which the Borrowers are a party on the Commitment Termination Date, or (ii) with respect to amounts due on a day other than the Commitment Termination Date, the Borrowers shall fail to make any payment of principal, interest or fees or other amounts due hereunder or under any other Credit Document to which they are a party within three (3) Business Days following the date when due; or

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(b) Default by Pride or any Subsidiary in the observance or performance of any covenant set forth in Sections 5.02(a), 5.02(b), (c) or (e); or

(c) Default by Pride or any Subsidiary in the observance or performance of any provision hereof or of any other Credit Document not mentioned in clauses (a) or (b) above, which is not remedied within thirty (30) days after notice thereof to Pride by the Administrative Agent; or

(d) Any representation or warranty made by any Credit Party (or any officer, agent or representative of any Credit Party) (including representations and warranties deemed made pursuant to Section 3.02 or Section 3.03) in any Credit Document shall prove to have been incorrect in any material respect when made or deemed made; or

(e) Pride or any Subsidiary shall (i) fail to pay any principal of or premium or interest on any Debt which is outstanding in the principal amount of at least $65,000,000 in the aggregate, of such Person, when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or (ii) default in the observance or performance of any covenant or obligation contained in any agreement or instrument relating to any such Debt, or permit or suffer any other event to occur or condition to exist under any agreement or instrument relating to any such Debt, and such default or other event or condition shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect thereof is to accelerate, or to permit the acceleration of, the maturity of such Debt or require such Debt to be prepaid prior to the stated maturity thereof; or

(f) Pride or any Significant Subsidiary (i) has entered involuntarily against it an order for relief under the Bankruptcy Code or a comparable action is taken under any bankruptcy or insolvency law of another country or political subdivision of such country, (ii) generally does not pay, or admits its inability generally to pay, its debts as they become due, (iii) makes a general assignment for the benefit of creditors, (iv) applies for, seeks, consents to, or acquiesces in, the appointment of a receiver, custodian, trustee, liquidator or similar official for it or any substantial part of its property under the Bankruptcy Code or under the bankruptcy or insolvency laws of another country or a political subdivision of such country, (v) institutes any proceeding seeking to have entered against it an order for relief under the Bankruptcy Code or any comparable law, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fails to file an answer or other pleading denying the material allegations of or consents to or acquiesces in any such proceeding filed against it, (vi) makes any board of directors resolution in direct furtherance of any matter described in clauses (i)-(v) above, or (vii) fails to contest in good faith any appointment or proceeding described in this Section 6.01(f); or

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(g) A custodian, receiver, trustee, liquidator or similar official is appointed for Pride or any Significant Subsidiary or any substantial part of its property under the Bankruptcy Code or under the bankruptcy or insolvency laws of another country or a political subdivision of such country, or a proceeding described in Section 6.01(f)(v) is instituted against any Credit Party or any Significant Subsidiary, and such appointment continues undischarged or such proceeding continues undismissed and unstayed for a period of sixty (60) days (or one hundred twenty (120) days in the case of any such event occurring outside the United States of America); or

(h) Pride or any Subsidiary fails within thirty (30) days with respect to any judgments or orders that are rendered in the United States or sixty (60) days with respect to any judgments or orders that are rendered in foreign jurisdictions (or such earlier date as any execution on such judgments or orders shall take place) to vacate, pay, bond or otherwise discharge any non-interlocutory judgments or orders for the payment of money, the uninsured portion of which is in excess of $65,000,000 in the aggregate, and which are not stayed on appeal or otherwise being appropriately contested in good faith in a manner that stays execution; provided that any such judgment or order rendered in connection with the Brazilian Litigation shall not result in an Event of Default under this clause (h) if such judgment or order could not reasonably be expected to have a Material Adverse Effect; or

(i) Any Termination Event as defined in clause (b), (e) or (f) of the definition thereof with respect to a Plan shall have occurred and, 30 days after notice thereof shall have been given to Pride by the Administrative Agent, (i) such Termination Event shall still exist and (ii) the sum (determined as of the date of occurrence of such Termination Event) of the liabilities to the PBGC resulting from all such Termination Events is equal to or greater than $65,000,000; or

(j) Pride or any Subsidiary shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans in connection with Withdrawal Liabilities (determined as of the date of such notification), exceeds $65,000,000 or requires payments exceeding $65,000,000 in any year; or

(k) Pride or any Subsidiary shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of Pride and its Subsidiaries to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years which include the date hereof by an amount exceeding $65,000,000 in the aggregate; or

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(l) Any event occurs creating any ERISA Liabilities that could reasonably be expected to result in a Material Adverse Effect and such event is not cured within 30 days from the occurrence of such event; or

(m) Any Change in Control occurs;

(n) Any material provision of any Credit Document executed by a Credit Party for any reason is not a legal, valid, binding and enforceable obligation of such Credit Party (except as the enforceability thereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity), or any Credit Party shall so state in writing; or

(o) Any Credit Party shall contest the enforceability of any Subsidiary Guaranty;

then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to Pride, declare the obligation of the Issuing Banks to issue Letters of Credit to be terminated and the obligation of each Lender to make Advances to be terminated, whereupon each such obligation and all of the Commitments shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to Pride, declare the Advances, all interest thereon and all other Obligations to be forthwith due and payable, whereupon the Advances, all such interest and all other Obligations shall become and be forthwith due and payable, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or further notice of any kind, all of which are hereby expressly waived by the Borrowers and each other Credit Party; provided that in the event of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code, (a) the obligation of the Issuing Banks to issue Letters of Credit, the obligation of each Lender to make Advances and all of the Commitments shall automatically be terminated and (b) the Advances, all such interest, all other Obligations and all amounts contemplated by Section 6.02 shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrowers and each other Credit Party.

Section 6.02 L/C Cash Collateral Accounts. Upon the occurrence and during the continuance of any Event of Default (if the Administrative Agent has declared all amounts owed by the Borrowers hereunder to be due and payable), each Borrower agrees that it shall forthwith, without any demand or the taking of any other action by the Issuing Banks, the Administrative Agent, or any of the Lenders, provide cover for the outstanding Letter of Credit Liabilities in respect of all Letters of Credit issued for the account of such Borrower by paying to the Administrative Agent immediately available funds in the amount equal to the then aggregate Letter of Credit Liabilities of all such outstanding Letters of Credit, which funds shall be deposited into a blocked deposit account or accounts to be established and maintained at the office of one or more of the Issuing Banks (or affiliates thereof) in the name of the Administrative Agent as collateral security for all Letter of Credit Liabilities relating to Letters of Credit issued for the account of such Borrower (each, an “L/C Cash Collateral Account”). Each Borrower hereby pledges, and grants to the Administrative Agent for the

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ratable benefit of the Lenders, a first priority security interest in all funds held in its L/C Cash Collateral Account from time to time and all proceeds thereof, as security for the payment of all Obligations of such Borrower. The Administrative Agent shall have sole control over each L/C Cash Collateral Account and shall from time to time withdraw funds then held in such L/C Cash Collateral Account to satisfy the payment of the applicable Obligations as shall have become or shall become due and payable under this Agreement. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in each L/C 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 or for investing such funds.

Section 6.03 Application of Amounts Received Following the Occurrence of an Event of Default. Upon the occurrence and during the continuance of any Event of Default, any amounts received by the Administrative Agent from any Borrower or from a Guarantor in connection with its guaranty of the Obligations, shall be applied to the Obligations in the following order of priority:

(i) first, to the payment of any and all out-of-pocket costs and expenses of the Administrative Agent, as provided by this Agreement or by any other Credit Document, incurred in connection with the collection of such payment or in respect of the enforcement of any rights of the Administrative Agent, the Issuing Banks, or the Lenders under this Agreement or any other Credit Document;

(ii) second, to the payment of any and all out-of-pocket costs and expenses of the Issuing Banks and the Lenders, as provided by this Agreement or by any other Credit Document, incurred in connection with the collection of such payment or in respect of the enforcement of any rights of the Lenders or the Issuing Banks under this Agreement or any other Credit Document, pro rata in the proportion in which the amount of such costs and expenses unpaid to each Lender and Issuing Bank bears to the aggregate amount of the costs and expenses unpaid to all Lenders and Issuing Banks collectively, until all such fees, costs and expenses have been paid in full;

(iii) third, to the payment of any due and unpaid fees to the Administrative Agent or any Lender or any Issuing Bank as provided by this Agreement or any other Credit Document, pro rata in the proportion in which the amount of such fees due and unpaid to the Administrative Agent and each Lender and Issuing Bank bears to the aggregate amount of the fees due and unpaid to the Administrative Agent and all Lenders and Issuing Banks collectively, until all such fees have been paid in full;

(iv) fourth, to the payment of accrued and unpaid interest on the Advances and Demand Loans to the date of such application, pro rata in the proportion in which the amount of such interest, accrued and unpaid to each Lender or the applicable Issuing Banks bears to the aggregate amount of such interest accrued and unpaid to all Lenders and such Issuing Banks collectively, until all such accrued and unpaid interest has been paid in full;

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(v) fifth, (a) to the payment of principal on all Advances and Demand Loans pro rata in the proportion in which the amount of such principal due each Lender or the applicable Issuing Banks bears to the aggregate amount of such principal due to all Lenders and such Issuing Banks collectively, until all such principal has been paid in full, and (b) to the extent any Letters of Credit have not been fully cash collateralized pursuant to Section 6.02 hereof, to the cash collateralization of such Letters of Credit. With respect to Obligations that are not then payable, any amount reserved pursuant to this Section 6.03 shall be deposited in a Collateral Account until such time or times as such Obligations become payable, or the obligees under such Obligations notify the Administrative Agent that there are no remaining liabilities under such Obligations; and after such payment or notice, any surplus reserved amount, to the extent not applied to such Obligations, shall be available for distribution in accordance with the priority established in this Section 6.03; and

(vi) sixth; to the payment of any other outstanding Obligations then due and payable, pro rata in the proportion in which the outstanding Obligations owing to each Lender, Issuing Bank and Administrative Agent bears to the aggregate amount of all such Obligations until all such Obligations have been paid in full; and

(vii) seventh, any surplus of such amounts remaining after payment in full in cash of all the Obligations and the termination or cash collateralization of all Letters of Credit and the termination of all Commitments, shall be paid over to Pride, or whomever may be lawfully entitled to receive such surplus, in a commercially reasonable time, provided that none of the Lender Parties shall be liable for any interest, cost or expense in connection with any delay in delivering such proceeds to the Pride or other Person;

provided that, with respect to any application pursuant to this Section 6.03 of amounts received from BVI Borrower, (I) such amounts shall be applied in the foregoing order of priority, but without giving effect to clauses (i) through (iii), and (II) in applying such amounts pursuant to clauses (iv) through (vi), such amounts shall be applied only to (x) in the case of clause (iv), the payment of accrued and unpaid interest on Advances and Demand Loans made to BVI Borrower, (y) in the case of clause (v), the payment of principal on Advances and Demand Loans made to BVI Borrower or the cash collateralization of Letters of Credit issued for the account of BVI Borrower and (z) in the case of clause (vi), the payment of Obligations of BVI Borrower.

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ARTICLE VII
THE ADMINISTRATIVE AGENT AND THE ISSUING BANKS

Section 7.01 Authorization and Action. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Documents as are delegated to the Administrative Agent, by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Credit Documents (including enforcement or collection of the Notes), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to any Credit Document or applicable law and shall not be required to initiate or conduct any litigation or other proceedings. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrowers pursuant to the terms of this Agreement. The provisions of this Article VII are solely for the benefit of the Administrative Agent and the Lender Parties, and neither the Borrowers nor any other Credit Party shall have rights as a third party beneficiary of any of such provisions.

Section 7.02 Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with any Credit Document, except for its or their own gross negligence or willful misconduct. The duties of the Administrative Agent shall be mechanical and administrative in nature; the Administrative Agent shall not have, by reason of this Agreement or any other Credit Document a fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or any other Credit Document, expressed or implied, is intended or shall be so construed as to impose upon the Administrative Agent any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein. Without limitation of the generality of the foregoing, the Administrative Agent: (i) may treat the payee of any Note as the holder thereof until the Administrative Agent receives and accepts a Transfer Agreement entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.06; (ii) may consult with legal counsel (including counsel for any Credit Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith on the part of the Borrowers or any other Person or to inspect the property (including the books and records) of the Borrowers or any other Person; (v) shall not be responsible for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith or for the perfection, existence, sufficiency or value of any collateral, any guaranty or any insurance; and (vi) shall incur no liability under or in respect of any Credit Document, except for its own gross negligence or willful misconduct, by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed, given or sent by

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the proper party or parties. Without limiting the generality of the foregoing, insofar as the Administrative Agent is concerned, with respect to any Advance, each Lender shall be deemed to have consented to, approved and be satisfied with each matter referred to in Article III, unless the officer of the Administrative Agent responsible for the transactions contemplated by the Credit Documents shall have received written notice from such Lender prior to such Advance specifying its objection thereto and such Lender shall not have made available to the Administrative Agent any portion of such Advance; provided that this sentence is solely for the benefit of the Administrative Agent (and not any Credit Party) and shall not amend, waive or otherwise modify Article III, Section 6.01(d) or any other provision applicable to any Credit Party, whether in respect of such Advance or any other Advance or matter.

Section 7.03 Administrative Agent and Its Affiliates. With respect to its Commitment, the Advances made by it and the Notes issued to it, each Lender which is also the Administrative Agent shall have the same rights and powers under the Credit Documents as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include any Lender serving as the Administrative Agent in its individual capacity. Any Lender serving as the Administrative Agent and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, Pride, any of Pride’s Subsidiaries and any Person who may do business with or own securities of Pride or any Subsidiary, all as if such Lender were not the Administrative Agent and without any duty to account therefor to the Lenders. In the event that Citibank, N.A. or any of its Affiliates shall be or become an indenture trustee under the Trust Indenture Act of 1939 (as amended, the “Trust Indenture Act”) in respect of any securities issued or guaranteed by any Credit Party, the parties hereto acknowledge and agree that any payment or property received in satisfaction of or in respect of any Obligation of such Credit Party hereunder or under any other Credit Document by or on behalf of Citibank, N.A., in its capacity as the Administrative Agent for the benefit of any Lender Party under any Credit Document (other than Citibank, N.A. or an Affiliate of Citibank, N.A.) and which is applied in accordance with the Credit Documents shall be deemed to be exempt from the requirements of Section 311 of the Trust Indenture Act pursuant to Section 311(b)(3) of the Trust Indenture Act.

Section 7.04 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent 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 this Agreement and the other Credit Documents. The Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Advances or at any time or times thereafter. Nothing in this Agreement or any other Credit Document shall require the Administrative Agent to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender Party and each Lender Party confirms to the Administrative Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Administrative Agent.

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Section 7.05 Certain Rights of the Administrative Agent. If the Administrative Agent shall request instructions from the Majority Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, the Administrative Agent shall be entitled to refrain from such act or taking such action unless and until the Administrative Agent shall have received instructions from the Majority Lenders; and it shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender nor the holder of any Note shall have any right of action whatsoever against the Administrative Agent as a result of its acting or refraining from acting hereunder or under any other Credit Document in accordance with the instructions of the Majority Lenders or all of the Lenders, as the case may be. Furthermore, except for action expressly required of the Administrative Agent hereunder, the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall be specifically indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.

The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit 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. Each such sub-agent and the Related Parties of the Administrative Agent and each such sub-agent shall be entitled to the benefits of all provisions of this Article VII and Section 8.04 (as though such sub-agents were the “Administrative Agent” under the Credit Documents) as if set forth in full herein with respect thereto.

Section 7.06 Holders. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.

Section 7.07 Indemnification. The Lenders agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrowers), ratably according to the respective principal amounts of the Advances then held by each of them (or if no principal of the Advances is at the time outstanding, ratably according to the respective amounts of their Commitments then existing, or, if no such principal amounts are then outstanding and no Commitments are then existing, ratably according to the respective amounts of the Commitments existing immediately prior to the termination thereof), from and against any and all claims, damages, losses, liabilities and expenses (including reasonable fees and disbursements of counsel) of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of any of the Credit Documents or any action taken or omitted by the Administrative Agent under the Credit Documents (expressly including any such claim, damage, loss, liability or expense attributable to the ordinary, sole or contributory negligence of the administrative agent, but excluding any such claim, damage, loss, liability or expense attributable to the gross negligence or

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willful misconduct of the Administrative Agent). it is the intent of the parties hereto that the Administrative Agent shall, to the extent provided in this section 7.07, be indemnified for its own ordinary, sole or contributory negligence. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for such Lender’s ratable share of any reasonable out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent 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, the Credit Documents, or any of them, to the extent that the Administrative Agent is not reimbursed for such expenses by the Borrowers.

Section 7.08 Resignation by the Administrative Agent. (a) The Administrative Agent may resign from the performance of all its functions and duties hereunder and under the other Credit Documents at any time by giving 15 Business Days’ prior written notice to Pride and the Lenders. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.

(b) Upon any such notice of resignation, the Majority 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 exists, reasonably acceptable to Pride.

(c) If a successor to a resigning Administrative Agent shall not have been so appointed within such 15 Business Day period, the resigning Administrative Agent, with the consent of Pride if no Event of Default exists, shall have the right to then appoint a successor Administrative Agent who shall serve as Administrative Agent until such time, if any, as the Majority Lenders appoint a successor Administrative Agent as provided in clause (b) above; provided that Pride shall be deemed to have consented to any such appointment by the resigning Administrative Agent unless it shall object thereto by written notice to the resigning Administrative Agent within seven (7) Business Days after receiving notice thereof.

(d) If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above and shall have accepted such appointment by the 22^nd Business Day after the date such notice of resignation was given by the resigning Administrative Agent, the resigning Administrative Agent’s resignation shall become effective and the Lenders shall thereafter perform all the duties of the resigning Administrative Agent hereunder and under any other Credit Document until such time, if any, as the Majority Lenders appoint a successor Administrative Agent as provided above.

(e) After any Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article VII and Section 8.04 shall continue in effect for the benefit of such resigning 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 the resigning Administrative Agent was acting as Administrative Agent.

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(f) If the Administrative Agent is a Defaulting Lender due to the circumstances described in clause (c) of the definition of Defaulting Lender, the Majority 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 exists, reasonably acceptable to Pride. 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 due to the circumstances described in clause (c) of the definition of 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 Credit Document until such time, if any, as the Majority Lenders appoint a successor Administrative Agent as provided above. After the Administrative Agent is replaced in accordance with this clause (f), the provisions of this Article VII and Section 8.04 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.

Section 7.09 Resignation by an Issuing Bank. (a) Any Issuing Bank may resign from the performance of all its functions and duties hereunder and under the other Credit Documents at any time by giving 15 Business Days’ prior written notice to the Administrative Agent, the Borrowers, each other Issuing Bank and the Lenders. Such resignation shall take effect upon the appointment of a successor Issuing Bank pursuant to clauses (b) and (c) below or as otherwise provided below.

(b) Upon any such notice of resignation, the Majority Lenders shall have the right to appoint a successor Issuing Bank which shall be a commercial bank or trust company reasonably acceptable to the Borrowers.

(c) If a successor to a resigning Issuing Bank shall not have been so appointed within such 15 Business Day period, the resigning Issuing Bank, with the consent of Pride if no Event of Default exists, shall have the right to then appoint a successor Issuing Bank who shall serve as an Issuing Bank until such time, if any, as the Majority Lenders appoint a successor Issuing Bank as provided in clause (b) above; provided that Pride shall be deemed to have consented to any such appointment by the resigning Issuing Bank unless it shall object thereto by written notice to the resigning Issuing Bank within seven (7) Business Days after receiving notice thereof.

(d) If no successor Issuing Bank has been appointed pursuant to clause (b) or (c) above and shall have accepted such appointment by the 22^nd Business Day after the date such notice of resignation was given by the resigning Issuing Bank, the resigning Issuing Bank’s resignation shall become effective.

(e) After any Issuing Bank’s resignation hereunder as Issuing Bank, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Issuing Bank under this Agreement.

(f) In addition to the foregoing, if a Lender becomes, and during the period it remains, a Defaulting Lender any Issuing Bank may, upon prior written notice to Pride and the Administrative Agent, resign as Issuing Bank, effective at the close of business New York time on a date specified in such notice (which date may not be less than three Business Days after the date of such notice); provided that such resignation by such Issuing Bank will have no effect on the validity or enforceability of any Letter of Credit then outstanding or on the obligations of the Borrowers or any Lender under this Agreement with respect to any such outstanding Letter of Credit or otherwise to any Issuing Bank.

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Section 7.10 Issuing Banks’ Reliance, Etc. Neither the Issuing Banks nor any of their directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with any Credit Document, except for its or their own gross negligence or willful misconduct. The Issuing Banks shall not have, by reason of this Agreement or any other Credit Document a fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or any other Credit Document, expressed or implied, is intended or shall be so construed as to impose upon the Issuing Banks any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein. Without limitation of the generality of the foregoing, each Issuing Bank: (i) may treat the payee of any Note as the holder thereof until such Issuing Bank receives a Transfer Agreement entered into by the Lender that is payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.06, (ii) may consult with legal counsel (including counsel for any Credit Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith on the part of the Borrowers or any other Person or to inspect the property (including the books and records) of the Borrowers or any other Person; (v) shall not be responsible for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith or for the perfection, existence, sufficiency or value of any collateral, any guaranty or any insurance; and (vi) shall incur no liability under or in respect of any Credit Document, except for its own gross negligence or willful misconduct, by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed, given or sent by the proper party or parties.

Section 7.11 Issuing Banks and Their Affiliates. With respect to its Commitment, the Advances made by it and the Notes issued to it, each Lender which is also an Issuing Bank shall have the same rights and powers under the Credit Documents as any other Lender and may exercise the same as though it were not an Issuing Bank; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include any Lender serving as an Issuing Bank in its individual capacity. Any Lender serving as an Issuing Bank and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, Pride, any of its Subsidiaries and any Person who may do business with or own securities of Pride or any of its Subsidiaries, all as if such Lender were not an Issuing Bank and without any duty to account therefor to the Lenders.

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Section 7.12 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the Persons acting as bookrunners, arrangers, syndication agents or documentation agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the Administrative Agent or as a Lender Party hereunder.

Section 7.13 Cure of Defaulting Lender. If the Borrowers, the Administrative Agent and the Issuing Banks agree in writing in their discretion that a Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any amounts then held in the segregated account referred to in Section 2.20), such Lender will, to the extent applicable, purchase such portion of outstanding Advances and Letter of Credit Liabilities of the other Lenders and/or make such other adjustments as the Administrative Agent may determine to be necessary to cause the Advances made by the Lenders to be on a pro rata basis in accordance with their respective Commitments, whereupon such Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender (and such Advances of each Lender will automatically be adjusted on a prospective basis to reflect the foregoing); provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while such Lender was a Defaulting Lender; and provided further that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.

Section 7.14 Removal of Administrative Agent. Anything herein to the contrary notwithstanding, if at any time the Majority Lenders determine that the Person serving as Administrative Agent is (without taking into account any provision in the definition of “Defaulting Lender” requiring notice from the Administrative Agent or any other party) a Defaulting Lender the Majority Lenders may by notice to Pride and such Person remove such Person as Administrative Agent and, in consultation with Pride, appoint a replacement Administrative Agent hereunder. Such removal will be effective on the date a replacement Administrative Agent is appointed.

ARTICLE VIII
MISCELLANEOUS

Section 8.01 Amendments, Etc. No amendment or waiver of any provision of any Credit Document, nor consent to any departure by the Borrowers therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders and the Borrowers, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall (a) waive any of the conditions specified in Section 3.01 without the written consent of each Lender, (b) increase any Commitment of any Lender or subject any Lender to any additional obligation

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without the written consent of such Lender, (c) forgive or reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder without the written consent of each Lender affected thereby, (d) postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder without the written consent of each Lender affected thereby, (e) take any action which requires the signing of all the Lenders pursuant to the terms of any Credit Document without the written consent of each Lender, (f) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes which shall be required for the Lenders or any of them to take any action under any Credit Document without the written consent of each Lender, (g) amend this Section 8.01 without the written consent of each Lender, (h) release any Guarantor (except as contemplated by this Agreement) or release Pride from the Guaranty provided in Article IX without the written consent of each Lender, (i) change the definitions herein of Ratable Percentage or Majority Lenders without the written consent of each Lender or (j) change the provisions for pro rata payments, pro rata sharing or other pro rata treatment of the Lenders (including the order of application of proceeds set forth in Section 6.03) without the written consent of each Lender; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Banks in addition to the other Persons required herein to take such action, affect the rights or duties of the Issuing Banks under any Credit Document, and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required herein to take such action, affect the rights or duties of the Administrative Agent under any Credit Document. If a Defaulting Lender’s consent to an amendment, waiver, determination, consent, or notification is required pursuant to this Section 8.01 or any other provision in the Credit Documents, and such Defaulting Lender has failed to respond to a written request from the Administrative Agent to approve such waiver, amendment, determination, consent, or notification for 30 days after such Defaulting Lender’s receipt of such request, such Defaulting Lender will be deemed to have approved such amendment, waiver, determination, consent, or notification.

Section 8.02 Notices, Etc. Except as otherwise provided in this Section 8.02, all notices and other communications provided for hereunder shall be in writing (including telecopier communication) and mailed, telecopied, or delivered, if to the Borrowers, at Pride’s address or telecopier number set forth below its signature hereto; if to any Lender, at its Domestic Lending Office; if to the Administrative Agent, at its address or telecopier number set forth below:

Citibank, N.A.
Attention: Bank Loans Syndications Department
1615 Brett Road, Building #3
New Castle, DE 19720
Re: Pride International
Telecopier No.: 212-994-0961
Email address: GLAgentOfficeOps@citi.com

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if to an Issuing Bank identified on the signature pages hereof, at its address or telecopier number set forth below:

Citibank, N.A.
Attention: Bank Loans Syndications Department
1615 Brett Road, Building #3
New Castle, DE 19720
Re: Pride International
Telecopier No.: 212-994-0961
Email address: GLAgentOfficeOps@citi.com

Natixis
Global Energy & Commodities
333 Clay Street, Suite 4340
Houston, TX 77002
Attn: Joseph Brandariz
Telecopier No.: 713-583-7745
Email address: joseph.brandariz@us.natixis.com

Wells Fargo Bank, N.A.
Attn: Loan Administration Manager
1700 Lincoln, 3^rd Floor
Denver, CO 80203
Telecopier No.: 303-863-2729
Email address: denlclnsvmembersyndication@wellsfargo.com

or, as to any Credit Party, the Administrative Agent or any Issuing Bank, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to Pride, the Administrative Agent and the Issuing Banks. All such notices and communications shall be effective, if mailed, five Business Days after deposit in the mails; if sent by overnight courier, one Business Day after delivery to the courier company; and if sent by telecopier, when received by the receiving telecopier equipment, respectively; provided that notices and communications to the Administrative Agent or the Issuing Banks shall not be effective until received by the Administrative Agent or the Issuing Banks, as the case may be, during normal business hours and in no event, shall a voice mail message be effective notice, communication or confirmation hereunder.

The Borrowers hereby agree that they will provide to the Administrative Agent all information, documents and other materials that they are obligated to furnish to the Administrative Agent pursuant to the Credit Documents, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new Advance, or a Conversion or continuation of an existing Advance, a new Letter of Credit, any increase or extension of any Letter of Credit or other extension of credit (including any election of an interest rate or Interest Period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Advance, Letter of Credit, increase or extension of any Letter of Credit or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Agent to oploanswebadmin@citigroup.com. In addition, the Credit Parties agree to continue to provide the Communications to the Administrative Agent in the manner specified in the Credit Documents, but only to the extent requested by the Administrative Agent.

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The Credit Parties further agree that the Administrative Agent may make the Communications available to the Lenders and the Issuing Banks by posting the Communications on Intralinks, Fixed Income Direct or a substantially similar electronic transmission systems (the “Platform”). The Credit Parties acknowledge that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution.

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF ITS OR ITS AFFILIATE’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY TO ANY LENDER PARTY, ANY CREDIT PARTY OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE TRANSMISSION BY ANY CREDIT PARTY, ANY OF THE AGENT PARTIES OR ANY OTHER PERSON OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its email address set forth above during its normal business hours shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Credit Documents. Each Lender Party agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Credit Documents. Each Lender Party agrees (i) to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender Party’s email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.

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Nothing herein shall prejudice the right of the Credit Parties, the Administrative Agent, the Issuing Lenders or any Lender to give any notice or other communication pursuant to any Credit Document in any other manner specified in such Credit Document.

Section 8.03 No Waiver; Remedies. No failure on the part of any Lender, the Issuing Banks or the Administrative Agent to exercise, and no delay in exercising, any right under any Credit Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in the Credit Documents are cumulative and not exclusive of any remedies provided by law.

Section 8.04 Costs, Expenses and Indemnity. (a) Pride agrees to pay, upon demand by the Administrative Agent, (i) all reasonable costs and expenses incurred by the Administrative Agent, the Arrangers or any of their affiliates in connection with the preparation, execution, delivery, administration, modification and amendment of the Credit Documents and the other documents to be delivered under the Credit Documents, due diligence in connection with the Credit Documents and syndication of the credit facilities contemplated herein, including the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent with respect to preparation, execution and delivery of the Credit Documents and the satisfaction of the matters referred to in Section 3.01, and the reasonable costs and expenses of the Issuing Banks in connection with any Letter of Credit, and (ii) all legal and other costs and expenses of the Administrative Agent, the Issuing Banks and each Lender incurred during the existence of an Event of Default in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of the Credit Documents and the other documents to be delivered under the Credit Documents or incurred in connection with any workout, restructuring or bankruptcy.

(b) If any payment of principal of, or Conversion of, any LIBOR Advance is made by any Borrower other than on the last day of an Interest Period relating to such Advance, as a result of a payment, Conversion, acceleration of the maturity of such Borrower’s Note, or for any other reason, such Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment, Conversion, acceleration, or other reason, including any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such Advance.

(c) Pride hereby indemnifies and holds harmless each Lender Party and each of their respective directors, officers, employees and attorneys (collectively, “Indemnified Parties”) from and against any and all claims, damages, losses, liabilities and expenses (including reasonable fees and disbursements of counsel and claims, damages, losses, liabilities and expenses relating to Environmental matters) (collectively, “Losses”) for which any of them may become liable or which may be incurred by or asserted against an Indemnified Party, in each case arising out of, related to or in connection with (i) any transaction in which any proceeds of all or any part of the Advances are applied, (ii) breach by Pride or any Subsidiary of any Credit

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Document, (iii) violation by Pride or any Subsidiary of any Environmental Law or any other law, rule, regulation or order, or (iv) any investigation, litigation, or proceeding, whether or not any Indemnified Party is a party thereto, related to or in connection with any of the foregoing or any Credit Document (expressly including any such losses attributable to the ordinary, sole or contributory negligence of such Indemnified Party, but excluding any such losses attributable to the gross negligence or willful misconduct of such Indemnified Party as determined pursuant to a final non-appealable judgment of a court of competent jurisdiction). It is the intent of the parties hereto that each Indemnified Party shall, to the extent provided in this Section 8.04(c), be indemnified for its own ordinary, sole or contributory negligence. The Administrative Agent will provide Pride prompt notice of any matter (other than matters solely among Indemnified Parties) as to which indemnification pursuant to this Section 8.04(c) is claimed. Any Indemnified Party that proposes to settle or compromise any such indemnified claim shall give Pride written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising such claim or proceeding.

(d) Without prejudice to the survival of any other agreement hereunder, the agreements and obligations of the Borrowers contained in this Section 8.04 shall survive the payment in full of all Obligations.

Section 8.05 Right of Set-Off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) either (i) the Advances having become due and payable in accordance with the terms hereof, or (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of any Credit Party against any and all of the obligations of such Credit Party now or hereafter existing under any Credit Document, irrespective of whether or not such Lender shall have made any demand under any Credit Document and although such obligations may be unmatured. Each Lender agrees promptly to notify such Credit Party after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of set-off) which such Lender may have.

Section 8.06 Assignments and Participations. (a) Each Lender may, in accordance with applicable law, assign to one or more Lenders or other entities all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, the Advances owing to it and the Notes held by it); provided that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement in respect of its Commitment and Advances (including the Letter of Credit Liabilities held by the assigning Lender pursuant to Section 2.19), (ii) except in the case of an assignment of all of a Lender’s rights and obligations under this Agreement or an assignment to another Lender, the Commitment or the Dollar Equivalent amount of the Advances of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the

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Transfer Agreement with respect to such assignment) shall in no event be less than $5,000,000 and shall be in an integral multiple of $1,000,000 (or if the Advances being assigned are denominated in Euros, the smallest amount of Euros that has a Dollar Equivalent equal to or in excess of $1,000,000), (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for acceptance by the Administrative Agent and recording by the Administrative Agent in the Register, a Transfer Agreement, together with any Notes then held by such assigning Lender (to the extent such assigning Lender is assigning all of its rights and obligations under this Agreement) and a processing and recordation fee of $2,000 payable by the assignee. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Transfer Agreement, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Transfer Agreement, have the rights and obligations of a Lender hereunder, (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Transfer Agreement, relinquish its rights and be released from its obligations under this Agreement (and, in the case of a Transfer Agreement covering all of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto except that the rights under Sections 2.06, 2.10, 2.13 and 8.04 of such Lender shall continue with respect to events and occurrences occurring before or concurrently with its ceasing to be a party hereto), and (z) unless Pride consents to such assignment, no such assignee shall be entitled to receive any greater payment pursuant to Sections 2.06, 2.10 and 2.13 than the assigning Lender would have been entitled to receive with respect to the rights assigned to such assignee, except as a result of circumstances arising after, and that could not reasonably be expected at, the date of such assignment.

(b) By executing and delivering a Transfer Agreement, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Transfer Agreement, and other than that the assignor is the legal and beneficial owner of the interest being assigned and that the assigned interest is free and clear of any adverse claim, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith, the perfection, existence, sufficiency or value of any collateral, guaranty or insurance or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or any other Person or the performance or observance by the Borrowers or any other Person of any of its respective obligations under any Credit Document or any other instrument or document furnished pursuant hereto or in connection herewith; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Transfer Agreement; (iv) such assignee will, independently and without reliance upon the Administrative Agent, the Issuing Banks, such assigning Lender or any other Lender and based on such

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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 this Agreement, any of the other Credit Documents or any other instrument or document; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers and discretion under the Credit Documents as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers and discretion as are reasonably incidental thereto and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(c) The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Transfer Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment and the principal amount of the 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 the Borrowers, the Administrative Agent, the Issuing Banks 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 the Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d) Upon its receipt of a Transfer Agreement executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Notes then held by such assigning Lender (to the extent such assigning Lender is assigning all of its rights and obligations under this Agreement), the Administrative Agent shall, if such Transfer Agreement has been completed and is in substantially the form of Exhibit F, (i) accept such Transfer Agreement, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to Pride. Within five Business Days after its receipt of such notice, if such Eligible Assignee is not a Lender immediately prior to the effectiveness of such Transfer Agreement and requests a Note, an authorized officer of each Borrower shall execute and deliver to the Administrative Agent, or such Eligible Assignee, a Note executed by such Borrower in accordance with Section 2.02(f) (each such Note shall be dated the effective date of such Transfer Agreement, shall be properly completed and shall otherwise be in substantially the form of Exhibit A-1 or Exhibit A-2, as applicable).

(e) Each Lender, in accordance with applicable law, may sell participations to one or more Lenders or other entities (other than Pride or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including all or a portion of any of its Commitments, the Advances owing to it and the Notes held by it); provided that (i) such Lender’s obligations under this Agreement (including its Commitment to the Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Notes for all purposes of this Agreement, (iv) the Borrowers, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such

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Lender’s rights and obligations under this Agreement, (v) the terms of any such participation shall not restrict such Lender’s ability to make any amendment or waiver of any Credit Document or such Lender’s ability to consent to any departure by the Borrowers therefrom without the approval of the participant, except that the approval of the participant may be required to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, (vi) unless Pride otherwise consents, no such participant shall be entitled to receive any greater payment pursuant to Sections 2.06, 2.10 and 2.13 than such Lender would have been entitled to receive with respect to the rights assigned to such participant by such Lender, and (vii) such Lender shall give prompt written notice of such participation to Pride and the Administrative Agent.

(f) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including the Advances owing to it and the Notes held by it) in favor of any central bank or any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Board.

Section 8.07 Governing Law; Entire Agreement. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York without regard to its conflicts of law rules (other than Section 5-1401 of the New York General Obligations Law). This Agreement, the Notes, the other Credit Documents and any fee letter pertaining hereto constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto.

Section 8.08 Interest. It is the intention of the parties hereto that the Administrative Agent, the Issuing Banks, each Lender and each other Lender Party shall conform strictly to usury laws applicable to it, if any. Accordingly, if the transactions with any Lender Party contemplated hereby would be usurious under applicable law, if any, then, in that event, notwithstanding anything to the contrary in any Credit Document, it is agreed as follows: (a) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received by any Lender Party under any Credit Document shall under no circumstances exceed the maximum amount allowed by such applicable law and any excess shall be cancelled automatically and, if theretofore paid, shall at the option of the such Lender Party, be applied on the principal amount of the obligations owed to such Lender Party by the paying Borrower or refunded by such Lender Party to the paying Borrower, and (b) in the event that the maturity of any Note or other obligation payable to any Lender Party is accelerated or in the event of any permitted prepayment, then such consideration that constitutes interest under law applicable to such Lender Party may never include more than the maximum amount allowed by such applicable law and excess interest, if any, to such Lender Party provided for in any Credit Document or otherwise shall be cancelled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall, at the option of such Lender Party be credited by such Lender Party on the principal amount of the obligations owed to it by the paying Borrower or refunded by such Lender Party to the paying Borrower.

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Section 8.09 Confidentiality. Each of the Administrative Agent, the Lenders and the Issuing Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed:

(a) to its Affiliates and to its and its Affiliates’ respective managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives (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 purporting to have jurisdiction over it (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 Credit Document or any action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder;

(f) subject to an agreement containing provisions substantially the same as those of this Section 8.09, (i) to any assignee of, or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement, (ii) in the case of any Lender, to any actual or prospective counterparty to any swap, derivative or other transaction to which such Lender is or is proposed to be a party under which payments are to be made by reference to the Borrowers and their obligations, this Agreement or payments hereunder (but only to the extent such counterparty is a commercial bank, financial institution or is otherwise reasonably acceptable to Pride), or (iii) to the CUSIP Service Bureau or any similar organization;

(g) with the consent of Pride; or

(h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 8.09 or (y) becomes available to the Administrative Agent, any Lender or any Issuing Bank on a nonconfidential basis from a source other than the Pride or its Affiliates, excluding any Information from a source which, to the actual knowledge of the Lender Party receiving such Information, has been disclosed by such source in violation of a duty of confidentiality to Pride or any of its Affiliates.

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For purposes of this Section 8.09, “Information” means all information received from Pride or any of its Affiliates (including SPV’s) relating to Pride or any of its Affiliates (including SPV’s) or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by Pride or any of its Affiliates (including SPV’s), excluding any Information from a source which, to the actual knowledge of the Lender Party receiving such Information, has been disclosed by such source in violation of a duty of confidentiality to Pride or any of its Affiliates. Any Person required to maintain the confidentiality of Information as provided in this Section 8.09 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. Without prejudice to the survival of any other agreement hereunder, the agreements and obligations of the Lender Parties contained in this Section 8.09 shall survive the payment in full of all Obligations.

Section 8.10 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 8.11 Domicile of Loans. Subject to Section 2.10(c) and 2.13(f), each Lender may transfer and carry its loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender provided that no Lender shall be relieved of its obligations as a result thereof.

Section 8.12 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrowers, the Issuing Banks and the Administrative Agent and when the Administrative Agent shall have, as to each Lender, either received a copy of a signature page 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 and be enforceable by the Borrowers, the Administrative Agent, the Issuing Banks and each Lender and their respective successors and assigns, except that the Borrowers shall not have the right to assign their respective rights hereunder or any interest herein without the prior written consent of each Lender.

Section 8.13 WAIVER OF JURY TRIAL. THE BORROWERS, THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE NOTES, ANY LETTER OF CREDIT, ANY OTHER CREDIT DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 8.14 Severability. In the event any one or more of the provisions contained in this Agreement or in any other Credit Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

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Section 8.15 FORUM SELECTION AND CONSENT TO JURISDICTION. THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (OR THE STATE COURTS SITTING IN THE BOROUGH OF MANHATTAN IN THE EVENT THE SOUTHERN DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION), AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT, ANY LENDER, OR ANY ISSUING BANK ARISING OUT OF OR RELATING TO ANY OF THE CREDIT DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT. EACH BORROWER HEREBY AGREES THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION 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. EACH BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT BY PRIDE OR ANY OF ITS SUBSIDIARIES AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, ANY ISSUING BANK, OR THEIR AFFILIATES ARISING OUT OF OR RELATING TO ANY OF THE CREDIT DOCUMENTS SHALL BE BROUGHT EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (OR THE STATE COURTS SITTING IN THE BOROUGH OF MANHATTAN IN THE EVENT THE SOUTHERN DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION), AND ANY APPELLATE COURT FROM ANY THEREOF. NOTHING IN THIS AGREEMENT OR IN ANY OTHER CREDIT DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AGAINST ANY CREDIT PARTY OR ITS PROPERTIES IN ANY COURT OF COMPETENT JURISDICTION, INCLUDING THE JURISDICTIONS OF INCORPORATION OF ANY CREDIT PARTY NOT INCORPORATED IN THE UNITED STATES.

THE BORROWERS IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED IN ACCORDANCE WITH SECTION 8.02. EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY OF THE BORROWERS HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH BORROWER HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE CREDIT DOCUMENTS.

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Section 8.16 DAMAGES. EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY ACTION OR PROCEEDING REFERRED TO IN SECTION 8.15 ANY EXEMPLARY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES; PROVIDED THAT NOTHING HEREIN SHALL CONSTITUTE A WAIVER BY THE ADMINISTRATIVE AGENT, THE ISSUING BANKS OR ANY OTHER LENDER OF ANY RIGHT TO RECEIVE FULL PAYMENT OF ALL OBLIGATIONS.

Section 8.17 Patriot Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrowers in accordance with the Patriot Act. Pride shall, and shall cause each of its Affiliates to, provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act.

Section 8.18 Survival of Agreements, Representations and Warranties, Etc. All warranties, representations and covenants made in or in connection with any Credit Document shall be considered to have been relied upon by the Lender Parties and shall survive the issuance of any Letters of Credit and the issuance and delivery of the Notes and the making of Advances regardless of any investigation. In addition, the confidentiality provisions contained in Section 8.09 shall survive the termination of this Agreement.

Section 8.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Credit Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Borrower in respect of any such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Credit Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or the Lenders from the Borrowers in the Agreement Currency, Pride agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or the Lenders in such currency, the Administrative Agent agrees to return the amount of any excess to Pride (or to any other Person who may be entitled thereto under applicable law).

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Section 8.20 Currency Conversion. All payments of Obligations under this Agreement, the Notes or any other Credit Document shall be made in U.S. Dollars, except for Advances funded, or Letter of Credit Liabilities with respect to Letters of Credit issued, in Euros, which shall be repaid, including interest thereon, in Euros. If any payment of any Obligation, whether through payment by any Credit Party or the proceeds of any collateral, shall be made in a currency other than the currency required hereunder, such amount shall be converted into the currency required hereunder at the rate determined by the Administrative Agent or Issuing Bank, as applicable, as the rate quoted by it in accordance with methods customarily used by such Person for such or similar purposes as the spot rate for the purchase by such Person of the required currency with the currency of actual payment through its principal foreign exchange trading office at approximately 11:00 A.M. (local time at such office) on the effective date of such conversion, provided that the Administrative Agent or Issuing Bank, as applicable, may obtain such spot rate from another financial institution actively engaged in foreign currency exchange if the Administrative Agent or Issuing Bank, as applicable, does not then have a spot rate for the required currency

Section 8.21 Determination and Notice of Exchange Rates. On each Calculation Date (x) the Administrative Agent shall, not later than 4:00 P.M. (London time), determine the Exchange Rate (other than any Issuing Bank Exchange Rate, if applicable) as of such Calculation Date and give notice thereof, together with notice of any applicable Issuing Bank Exchange Rate, to the Lenders and Pride and (y) if any Euro-denominated Letter of Credit Liabilities are outstanding on such date, each applicable Issuing Bank shall, not later than 2:00 P.M. (London time), determine the Exchange Rate as of such Calculation Date for all such Letter of Credit Liabilities outstanding as of such date with respect to all Letters of Credit issued by such Issuing Bank or its affiliates (the “Issuing Bank Exchange Rate”) and give prompt notice thereof to the Administrative Agent. The Exchange Rates so determined shall become effective on the first Business Day immediately following the relevant Calculation Date (a “Reset Date”), shall remain effective until the next succeeding Reset Date, and shall for all purposes of this Agreement (other than Section 8.20 or any other provision expressly requiring the use of a current exchange rate) be the Exchange Rates employed in determining the Dollar Equivalent of the applicable amount of Euros. Notwithstanding anything contained herein to the contrary, if any Issuing Bank fails to timely deliver notice of its Issuing Bank Exchange Rate to the Administrative Agent pursuant to the provisions of this Section 8.21, the Administrative Agent may determine such rate in accordance with the definition of Exchange Rate and shall have no liability to such Issuing Bank for such determination. Not later than 2:00 P.M. (London time) on each Reset Date, the Administrative Agent shall determine the Dollar Equivalent of the aggregate principal amounts of the Advances and Letter of Credit Liabilities denominated in Euros (after giving effect to any Advances and/or Letters of Credit denominated in Euros being made, issued, repaid, or cancelled or reduced on such date), notify the Lenders and Pride of the results of such determination.

Section 8.22 Substitution of Currency. If a change in the lawful currency of the European Economic and Monetary Union occurs pursuant to any applicable law, rule or regulation of any governmental, monetary or multi-national authority, this Agreement (including, without limitation, the definition of LIBO Rate) will be amended to the extent determined by the Administrative Agent (acting reasonably, in consultation with the Borrower and in accordance with the terms of Section 8.01 hereof) to be necessary to reflect the change in such currency and to put the Lenders and the Borrowers in the same position, so far as possible, that they would have been in if no such change had occurred.

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ARTICLE IX
GUARANTY

Section 9.01 Guaranty. Pride hereby unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all BVI Borrower Obligations. Without limiting the generality of the foregoing, Pride’s liability shall extend to all amounts which constitute part of the BVI Borrower Obligations even if such BVI Borrower Obligations are declared unenforceable or not allowable in a bankruptcy, reorganization or similar proceeding involving BVI Borrower, any other Credit Party or any other Person. The foregoing guaranty is a guaranty of payment, not of collection, and Pride is primarily liable for the payment of the BVI Borrower Obligations. In no event shall the Administrative Agent or any other Lender Party have any obligation (although each such Person is entitled, at its option) to proceed against BVI Borrower or any collateral pledged to secure the BVI Borrower Obligations before seeking satisfaction from Pride of the BVI Borrower Obligations.

Section 9.02 Limit of Liability. Notwithstanding any provision herein to the contrary, Pride’s liability under the Guaranty provided in this Article IX shall be limited to an amount not to exceed as of any date of determination the greater of:

(a) the aggregate amount of all BVI Borrower Obligations outstanding on such date; or

(b) the amount which could be claimed by the Lender Parties from Pride under the Guaranty provided in this Article IX without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, any right to contribution or indemnification or any other right Pride may have.

Section 9.03 Guaranty Absolute. Pride unconditionally and irrevocably guarantees that the BVI Borrower Obligations will be paid strictly in accordance with the Credit Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any BVI Borrower Obligations or the rights of any Person with respect thereto. The obligations of Pride hereunder are independent of the obligations of any other Person in respect the BVI Borrower Obligations, and a separate action or actions may be brought and prosecuted against any Person regardless of whether any other Person is joined in any such action or actions. The liability of Pride in respect of the Guaranty provided in this Article IX shall be absolute and unconditional irrespective of:

(a) the lack of validity or unenforceability of any of the BVI Borrower Obligations or any Credit Document for any reason whatsoever, including that the act of creating any of the BVI Borrower Obligations is ultra vires, that the officers or representatives executing the documents creating the BVI Borrower Obligations exceeded their authority, that the BVI Borrower Obligations violate usury or other laws, or that any Credit Party has defenses to the payment of the BVI Borrower Obligations, including breach of warranty, statute of frauds, bankruptcy, statute of limitations, lender liability, or accord and satisfaction;

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(b) any change in the time, manner, or place of payment of, or in any term of, any of the BVI Borrower Obligations, any increase, reduction, extension, or rearrangement of the BVI Borrower Obligations, any amendment, supplement, or other modification of the Credit Documents, or any waiver or consent granted under the Credit Documents;

(c) any release, exchange, subordination, waste, or other impairment (including negligent, willful, unreasonable, or unjustifiable impairment) of any collateral securing payment of the BVI Borrower Obligations; the failure of any other Person to exercise diligence or reasonable care in the preservation, protection, enforcement, sale, or other handling of any such collateral; or the fact that any Lien related to any collateral for the BVI Borrower Obligations shall not be properly perfected, or shall prove to be unenforceable or subordinate to any other Lien;

(d) any full or partial release of any Credit Party (other than a full release of BVI Borrower, together with satisfaction of the conditions in Section 9.08 with respect to terminating the Guaranty provided in this Article IX) or any collateral;

(e) the failure to apply or the manner of applying any collateral or payments of the proceeds of any collateral against the BVI Borrower Obligations;

(f) any change in the organization or structure of any Credit Party; any change in the shareholders, directors, or officers of any Credit Party; or the insolvency, bankruptcy, liquidation, or dissolution of any Credit Party or any defense that may arise in connection with or as a result of any such insolvency, bankruptcy, liquidation or dissolution;

(g) the failure to give notice of any extension of credit made to BVI Borrower under any Credit Document, notice of acceptance of the Guaranty set forth in this Article IX, notice of any amendment, supplement, or other modification of any Credit Document, notice of the execution of any document or agreement creating any BVI Borrower Obligations, notice of any default or event of default, however denominated, under the Credit Documents, notice of intent to demand, notice of demand, notice of presentment for payment, notice of nonpayment, notice of intent to protest, notice of protest, notice of grace, notice of dishonor, notice of intent to accelerate, notice of acceleration, notice of bringing of suit, notice of any transfer of any of the BVI Borrower Obligations, notice of the financial condition of or other circumstances regarding any Credit Party, or any other notice of any kind relating to any of the BVI Borrower Obligations;

(h) any payment or grant of collateral by any Credit Party to any Person being held to constitute a preference, fraudulent obligation or fraudulent transfer under bankruptcy laws, or for any reason any Person is required to refund such payment or release such collateral;

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(i) any other action taken or omitted which affects the BVI Borrower Obligations, whether or not such action or omission prejudices Pride or increases the likelihood that Pride will be required to pay the BVI Borrower Obligations pursuant to the terms hereof;

(j) the fact that all or any of the BVI Borrower Obligations cease to exist by operation of law (other than as a result of the payment in full in cash of any or all of the BVI Borrower Obligations), including by way of discharge, limitation or tolling thereof under applicable bankruptcy laws; or

(k) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor (other than the payment in full in cash of the BVI Borrower Obligations).

Section 9.04 Waiver of Notice and Other Remedies. Pride hereby waives promptness, diligence, notice of acceptance, notice of acceleration, notice of intent to accelerate, and any other notice with respect to any of the BVI Borrower Obligations and the guaranty set forth herein and any requirement that any Person protect, secure, perfect or insure any security interest or other Lien or any property subject thereto or exhaust any right to take any action against any Credit Party or any other Person or any collateral. Pride agrees that its obligations under the Guaranty provided in this Article IX shall not be subject to any counterclaims, offsets or defenses against any Lender Party of any kind. There are no conditions precedent to the enforcement of the Guaranty provided in this Article IX. No Lender Party shall be required to mitigate damages or take any other action to reduce, collect, or enforce any of the BVI Borrower Obligations.

Section 9.05 Deferral of Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or any other Credit Document, until such time as the Obligations are irrevocably paid in full and all Letters of Credit and Commitments are terminated, Pride hereby expressly and irrevocably waives, on behalf of itself and its successors and assigns (including any surety), any and all rights at law or in equity to subrogation, to reimbursement, to exoneration, to contribution, to indemnification, to set off or to any other rights that could accrue to a surety against a principal, to a guarantor against a principal, to a guarantor against a maker or obligor, to an accommodation party against the party accommodated, to a holder or transferee against a maker, or to the holder of any claim against any Person, and which Pride may have or hereafter acquire in connection with or as a result of its execution, delivery and/or performance of this Agreement, or any other documents to which Pride is a party or otherwise.

If any amount shall be paid to Pride in violation of this Section 9.05, such amount shall be held in trust for the benefit of the Lender Parties, and shall promptly be paid to the Administrative Agent for the benefit of the Lender Parties to be applied to the BVI Borrower Obligations, whether matured or unmatured, as the Lender Parties may elect. Pride acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Documents and that the waivers set forth in this Section 9.05 are knowingly made.

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Section 9.06 Reinstatement. The Guaranty provided in this Article IX shall remain in full force and effect and continue to be effective should any petition be filed by or against any Credit Party for liquidation or reorganization, should any Credit Party become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of such Credit Party’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the BVI Borrower Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any Lender Party, 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 on account of the BVI Borrower Obligations, or any part thereof, is rescinded, reduced, restored or returned, the BVI Borrower Obligations shall be reinstated in the amount of such payment, or part thereof, that was rescinded, reduced, restored or returned. The provisions of this Section 9.06 shall survive payment in full of the BVI Borrower Obligations.

Section 9.07 Exercise of Remedies. The Administrative Agent, on behalf of the Lenders, shall have the right to make demands, file suits and claims, engage in other proceedings and exercise any other rights or remedies available to collect amounts owed pursuant to the terms of this Article IX, and the Administrative Agent shall not need the consent of any other Lender Party or Person to do so.

Section 9.08 Continuing Guaranty; Assignments. The Guaranty set forth in this Article IX is a continuing guaranty and shall (a) remain in full force and effect until the payment in full in cash of all of the BVI Borrower Obligations, the termination of all Letters of Credit issued for the account of BVI Borrower and the termination of the Commitments, (b) be binding upon Pride and its successors and assigns, and (c) inure to the benefit of each of the Lender Parties and their respective successors, transferees and permitted assigns.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

BORROWERS: PRIDE INTERNATIONAL, INC.
By:	/s/ Steven D. Oldham
Name:	Steven D. Oldham
Title:	Vice President and Treasurer

Address for notices to one or more Credit Parties:

Attention of the Treasurer of Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, Texas 77057
Fax Number: 713-789-1430
Telephone Number: 713-789-1400

with copies to its Assistant Treasurer, Treasury
Operations and its General Counsel.

PRIDE INTERNATIONAL LTD.
By:	/s/ Steven D. Oldham
Name:	Steven D. Oldham
Title:	Vice President and Treasurer

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

ADMINISTRATIVE AGENT: CITIBANK, N.A., as Administrative Agent
By:	/s/ Andrew Sidford
Name:	Andrew Sidford
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

ISSUING BANKS CITIBANK, N.A., as an Issuing Bank
By:	/s/ Andrew Sidford
Name:	Andrew Sidford
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

NATIXIS, as an Issuing Bank
By:	/s/ Louis P. Laville, III
Name:	Louis P. Laville, III
Title:	Managing Director
By:	/s/ Daniel Payer
Name:	Daniel Payer
Title:	Managing Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION, as an Issuing Bank
By:	/s/ Sarah L. Sandercock
Name:	Sarah L. Sandercock
Title:	Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

LENDERS CITIBANK, N.A.
By:	/s/ Andrew Sidford
Name:	Andrew Sidford
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

NATIXIS
By:	/s/ Louis P. Laville, III
Name:	Louis P. Laville, III
Title:	Managing Director
By:	/s/ Daniel Payer
Name:	Daniel Payer
Title:	Managing Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ Sarah L. Sandercock
Name:	Sarah L. Sandercock
Title:	Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

THE BANK OF NOVA SCOTIA
By:	/s/ John Frazell
Name:	John Frazell
Title:	Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

ING BANK N.V.
By:	/s/ J.J. Dicker
Name:	J.J. Dicker
Title:	Director
By:	/s/ Michael Klemme
Name:	Michael Klemme
Title:	Managing Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

BANK OF AMERICA, N.A.
By:	/s/ William W. Stevenson
Name:	William W. Stevenson
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

COMPASS BANK
By:	/s/ Stuart Murray
Name:	Stuart Murray
Title:	Senior Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

BNP PARIBAS
By:	/s/ Mark H. Wolf
Name:	Mark H. Wolf
Title:	Director
By:	/s/ Polly Schott
Name:	Polly Schott
Title:	Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

HSBC BANK USA, N.A.
By:	/s/ Dale T. Wilson
Name:	Dale T. Wilson
Title:	Senior Vice President
By:	/s/ Bruce Robinson
Name:	Bruce Robinson
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

STANDARD CHARTERED BANK
By:	/s/ James P. Hughes
Name:	James P. Hughes
Title:	Director
By:	/s/ Robert K. Reddington
Name:	Robert K. Reddington
Title:	AVP/Credit Documentation

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

JPMORGAN CHASE BANK, N.A.
By:	/s/ Thomas Okamoto
Name:	Thomas Okamoto
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

AMEGY BANK NATIONAL ASSOCIATION
By:	/s/ Kenyatta Gibbs
Name:	Kenyatta Gibbs
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

UBS LOAN FINANCE LLC
By:	/s/ [Illegible]
Name:	[Illegible]
Title:	Associate Director
By:	/s/ [Illegible]
Name:	[Illegible]
Title:	Director

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

FIRST COMMERCIAL BANK, LTD., NEW YORK BRANCH
By:	/s/ Jenn-Hwa Wang
Name:	Jenn-Hwa Wang
Title:	VP & General Manager

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

ENCORE BANK, N.A.
By:	/s/ Robert S. Martin
Name:	Robert S. Martin
Title:	Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

HUA NAN COMMERCIAL BANK, NY AGENCY
By:	/s/ Henry Hsieh
Name:	Henry Hsieh
Title:	Assistant Vice President

Signature Page to the Pride Amended and Restated Revolving Credit Agreement

EX-4.2

Exhibit 4.2

JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this “Agreement”) dated as of October 28, 2010, is being executed and delivered pursuant to the provisions of Section 2.16 of that certain Amended and Restated Revolving Credit Agreement dated as of July 30, 2010, among Pride International, Inc. (“Pride”) and Pride International Ltd. (together with Pride, the “Borrowers”, and each, a “Borrower”), the Lenders from time to time parties thereto, the Issuing Banks parties thereto, and Citibank, N.A., as Administrative Agent for the Lenders (as the same has been, and may hereafter be, amended, restated and supplemented from time to time, the “Credit Agreement”), by NIBC Bank N.V., which was not, prior to the date hereof, a Lender under the Credit Agreement (the “Additional Lender”), and the Borrowers, and accepted by the Administrative Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.

RECITALS

A. The Additional Lender has agreed to extend to the Borrowers a new Commitment in the amount specified on Schedule I and to become a Lender for all purposes of the Credit Agreement.

B. The parties to this Agreement are entering into this Agreement for the purpose of effecting the extension of the new Commitment of the Additional Lender, as contemplated by Section 2.16 of the Credit Agreement.

AGREEMENT

Accordingly, the Additional Lender hereby agrees as follows:

1. The Additional Lender hereby extends to the Borrowers, subject to and on the terms and conditions set forth in the Credit Agreement, a Commitment in the amount shown on Schedule I attached to this Agreement, from and after the Effective Date of this Agreement, and agrees to perform in accordance with the terms thereof all of the obligations which by the terms of the Credit Agreement and the other Credit Documents are required to be performed by it as a Lender thereunder. The Additional Lender represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) from and after the Effective Date of this Agreement, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and shall have and perform all of the obligations of a Lender thereunder, and (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01(a) of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement and to extend its Commitment to the Borrowers pursuant to the terms of the Credit Agreement, on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent, any Issuing Bank or any other Lender. The

Additional Lender agrees that it will, independently and without reliance on the Administrative Agent, any Issuing Bank 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 and analysis in taking or not taking action under the Credit Agreement or any other Credit Document. The Additional Lender has submitted, or shall promptly hereafter submit, to the Administrative Agent an administrative questionnaire duly completed by the Additional Lender to be used and relied upon by the Administrative Agent for all purposes of the Credit Agreement.

2. The Additional Lender acknowledges and agrees that the respective Commitments of the Additional Lender and the other Lenders under the Credit Agreement are several and not joint commitments and obligations of such Lenders. The Additional Lender further acknowledges and agrees that, after giving effect to the additional Commitment as provided in this Agreement, the respective Commitments and the respective Ratable Percentages of the Lenders shall be as set forth on Schedule II.

3. The Additional Lender agrees that this Agreement and the effectiveness of the additional Commitment as provided in this Agreement shall be subject to satisfaction by the Borrowers of the following conditions and requirements:

(a) The Borrowers shall have delivered to the Administrative Agent the following in form and substance satisfactory to the Administrative Agent:

(i) a counterpart of this Agreement signed by the Additional Lender and the Borrowers;

(ii) duly executed Notes payable to the Additional Lender to the extent requested by the Additional Lender; and

(iii) a certificate of the Secretary or Assistant Secretary of each Borrower, attaching and certifying copies of the authorizing resolutions for the additional Commitment and any Borrowings thereunder as provided in this Agreement.

The date on which the foregoing conditions have been satisfied shall be the “Effective Date” of this Agreement.

4. Pride shall pay to the Administrative Agent all reasonable costs and expenses incurred by the Administrative Agent in connection with this Agreement and the transactions contemplated herein, including without limitation, all reasonable fees and expenses of counsel for the Administrative Agent.

5. The Borrowers represent and warrant to the Administrative Agent and the Lenders, as of the Effective Date, that (i) this Agreement has been duly authorized, executed and delivered by the Borrowers, (ii) the Credit Agreement, as supplemented hereby, constitutes the legal, valid and binding obligation of the Borrowers enforceable against the Borrowers in accordance with its terms

except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, (iii) no Default or Event of Default exists, (iv) all representations and warranties of the Borrowers set forth in the Credit Agreement are true and correct in all material respects on such date (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects, and other than those representations and warranties that expressly relate solely to a specific earlier date and that remain correct in all material respects (other than those representations and warranties that are subject to a materiality qualifier, which shall be correct in all respects) as of such earlier date), and (v) since the date of the most recent financial statements of Pride and its Subsidiaries delivered to the Lenders pursuant to Section 5.01(a) of the Credit Agreement, there has been no material adverse change in the business, assets, operations, property or condition (financial or otherwise) of Pride and its Subsidiaries, taken as a whole (other than any such change resulting from the FCPA Investigation or the Brazilian Litigation), or the Borrowers’ ability to perform any of their payment obligations under the Credit Agreement or any other Credit Document.

6. Except as supplemented hereby, the Credit Agreement and all other documents executed in connection therewith shall remain in full force and effect. The Credit Agreement, as supplemented hereby, and all rights, powers and obligations created thereby or thereunder and under the Credit Documents and all such other documents executed in connection therewith are in all respects ratified and confirmed.

7. This Agreement may be executed in multiple counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are attached to the same document. Delivery of an executed counterpart by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement, together with the applicable provisions of the Credit Agreement, constitutes the entire agreement among the parties hereto regarding the subject matter hereof and supersedes all prior agreements and understandings, oral or written, regarding such subject matter.

8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

[Remainder of page intentionally left blank; signature pages follow.]

IN WITNESS WHEREOF, the Additional Lender and the Borrowers have caused this Agreement to be duly executed and delivered by their respective authorized officers and representatives, and the Administrative Agent, for the benefit of the Additional Lender and all other Lenders under the Credit Agreement, has caused the same to be accepted by its authorized officer, as of the day and year first above written.

NIBC BANK N.V., as the Additional Lender
By:	/s/ Jeroen van der Putten
	Name:	Jeroen van der Putten
	Title:	Associate Director
By:	/s/ J.A. van Hessen
	Name:	J.A. van Hessen
	Title:	Member of the Managing Board

[SIGNATURE PAGE TO JOINDER AGREEMENT]

PRIDE INTERNATIONAL, INC., as Borrower
By:	/s/ Steven D. Oldham
	Name:	Steven D. Oldham
	Title:	Vice President and Treasurer
PRIDE INTERNATIONAL, LTD., as Borrower
By:	/s/ Steven D. Oldham
	Name:	Steven D. Oldham
	Title:	Vice President and Treasurer

ACCEPTED THIS 28th
DAY OF October, 2010:

CITIBANK, N.A., as Administrative Agent
By:	/s/ Andrew Sidford
	Name:	Andrew Sidford
	Title:	Vice President

[SIGNATURE PAGE TO JOINDER AGREEMENT]

Schedule I

ADDITIONAL COMMITMENT

Additional Lender	Additional Commitment
NIBC Bank N.V.	$	30,000,000

TOTAL ADDITION: $30,000,000

SCHEDULE I

Schedule II

LENDER COMMITMENTS AND RATABLE PERCENTAGES*

Lenders	Commitment Amounts		Ratable Percentages
Amegy Bank, N.A.	$	30,000,000		4.00	%
Bank of America, N.A.	$	50,000,000		6.67	%
Bank of Nova Scotia	$	50,000,000		6.67	%
BNP Paribas	$	40,000,000		5.33	%
Citibank, N.A.	$	75,000,000		10.00	%
Compass Bank	$	50,000,000		6.67	%
Encore Bank, N.A.	$	10,000,000		1.33	%
First Commercial	$	10,000,000		1.33	%
HSBC Bank USA, N.A.	$	40,000,000		5.33	%
Hua Nan Commercial Bank, Ltd.	$	10,000,000		1.33	%
ING Bank N.V.	$	75,000,000		10.00	%
JPMorgan Chase Bank, N.A.	$	50,000,000		6.67	%
Natixis	$	75,000,000		10.00	%
Standard Chartered	$	40,000,000		5.33	%
UBS Loan Finance LLC	$	40,000,000		5.33	%
Wells Fargo Bank, National Association	$	75,000,000		10.00	%
NIBC Bank N.V.	$	30,000,000		4.00	%
TOTAL	$	750,000,000		100	%

* Upon the effectiveness of the Additional Commitment as provided in the Joinder Agreement.

SCHEDULE II

EX-4.3

Exhibit 4.3

EXECUTION VERSION

PRIDE INTERNATIONAL, INC.

and

THE BANK OF NEW YORK MELLON,
as Trustee

Third Supplemental Indenture

Dated as of August 6, 2010

to the Indenture
Dated as of July 1, 2004

6⁷/8% Senior Notes due 2020

7⁷/8% Senior Notes due 2040

TABLE OF CONTENTS

	Page
ARTICLE 1 SUPPLEMENT OF THE ORIGINAL INDENTURE		1
SECTION 1.01 Supplement to Article I of the Original Indenture		1
SECTION 1.02 Supplement to Article III of the Original Indenture		8
SECTION 1.03 Supplement to Article IV of the Original Indenture		12
SECTION 1.04 Supplement to Article IX of the Original Indenture		13
SECTION 1.05 Effect of Article 1		13
ARTICLE 2 THE NOTES		13
SECTION 2.01 Form and Terms		13
SECTION 2.02 Designation, Amount, etc		13
SECTION 2.03 Payment of Principal and Interest		14
SECTION 2.04 Denominations		15
SECTION 2.05 Legends		15
SECTION 2.06 Redemption at the Option of the Company		15
ARTICLE 3 REPRESENTATIONS OF THE COMPANY		15
SECTION 3.01 Authority of the Company		15
SECTION 3.02 Truth of Recitals and Statements		15
ARTICLE 4 CONCERNING THE TRUSTEE		15
SECTION 4.01 Acceptance of Trusts		15
SECTION 4.02 No Responsibility of Trustee for Recitals, Etc		16
ARTICLE 5 MISCELLANEOUS PROVISIONS		16
SECTION 5.01 Relation to the Original Indenture		16
SECTION 5.02 Meaning of Terms		17
SECTION 5.03 Counterparts of Supplemental Indenture		17
SECTION 5.04 USA Patriot Act		17
SECTION 5.05 Governing Law		17

Exhibit    A Form of Note

This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.

i

THIS THIRD SUPPLEMENTAL INDENTURE, dated as of August 6, 2010 is between Pride International, Inc., a Delaware corporation (the “Company”), and The Bank of New York Mellon, a New York banking corporation (as successor to JPMorgan Chase Bank, N.A.), as trustee (the “Trustee”) under the Indenture (as defined below).

WITNESSETH:

WHEREAS, the Company has duly authorized the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (the “Securities”), which are to be issued in one or more series, and the Company has heretofore made, executed and delivered to the Trustee its Indenture dated as of July 1, 2004 (the “Original Indenture”) pursuant to which the Securities are issuable;

WHEREAS, Sections 2.01, 2.03 and 9.01 of the Original Indenture provide that the form or terms of any series of Securities may be established in an Indenture supplemental thereto, and the Company desires to establish in this Third Supplemental Indenture both the form and terms of two separate series of Securities designated as its 6⁷/8% Senior Notes due 2020 (the “2020 Notes”) and its 7⁷/8% Senior Notes due 2040 (the “2040 Notes” and, collectively with the 2020 Notes, the “Notes”); and

WHEREAS, all things necessary to authorize the execution and delivery of this Third Supplemental Indenture, to establish the Notes as provided for in this Third Supplemental Indenture, and to make the Original Indenture, as supplemented with respect to the Notes including by this Third Supplemental Indenture and as it may otherwise be supplemented thereafter with applicability to the Notes (the Original Indenture, as so supplemented, being sometimes referred to herein as the “Indenture”), a valid agreement of the Company, in accordance with its terms, have been done;

NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH that, for and in consideration of the premises and the purchase of the Notes by the Holders, the Company and the Trustee mutually covenant and agree, solely for the equal and proportionate benefit of the respective Holders from time to time of Notes, as follows:

ARTICLE 1
SUPPLEMENT OF THE ORIGINAL INDENTURE

SECTION 1.01 Supplement to Article I of the Original Indenture. Section 1.01 of the Original Indenture is supplemented or superseded with respect to the Notes, in the case of definitional paragraphs that may be inconsistent, by inserting therein, in alphabetical order, the following definitional paragraphs:

“2020 Notes” has the meaning given in the recitals.

“2040 Notes” has the meaning given in the recitals.

1

“Attributable Indebtedness,” when used with respect to any Sale/Leaseback Transaction, means, as at the time of determination, the present value (discounted at the rate set forth or implicit in the terms of the lease included in such transaction) of the total obligations of the lessee for rental payments (other than amounts required to be paid on account of taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items which do not constitute payments for property rights) during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall be the lesser of the net amount determined assuming termination upon the first date such lease may be terminated (in which case the net amount shall also include the amount of the penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) or the net amount determined assuming no such termination.

“Capitalized Lease Obligation” of any Person means any obligation of such Person to pay rent or other amounts under a lease of property, real or personal, that is required to be accounted for as a capital lease for financial reporting purposes in accordance with GAAP; and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

“Change in Control” means: (1) a determination by the Company that any Person or group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than a Parent Holding Company has become the direct or indirect beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the Voting Stock of the Company; (2) the Company is merged with or into or consolidated with another Person and, immediately after giving effect to such merger or consolidation, less than 50% of the outstanding Voting Stock of the surviving or resulting Person is then beneficially owned (within the meaning of Rule 13d-3 of the Exchange Act) in the aggregate by (x) the stockholders of the Company immediately prior to such merger or consolidation, or (y) if the record date has been set to determine the stockholders of the Company entitled to vote on such merger or consolidation, the stockholders of the Company as of such record date, or (z) a Parent Holding Company; (3) the Company, either individually or in conjunction with one or more Subsidiaries, sells, conveys, transfers or leases, or the Subsidiaries sell, convey, transfer or lease, all or substantially all of the assets of the Company and the Subsidiaries, taken as a whole (either in one transaction or a series of related transactions), including capital stock of the Subsidiaries, to any Person (other than a Wholly Owned Subsidiary of the Company or a Parent Holding Company); (4) the liquidation or dissolution of the Company; or (5) the first day on which a majority of the individuals who constitute the Board of Directors are not Continuing Directors.

“Change in Control Purchase Date” has the meaning specified in Section 3.12(a).

“Change in Control Purchase Notice” has the meaning specified in Section 3.12(c).

“Change in Control Purchase Price” has the meaning specified in Section 3.12(a).

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“Common Stock” means common stock, par value $.01 per share, of the Company as it exists on the Issue Date or any other capital stock of the Company into which such Common Stock shall be reclassified or changed.

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker that would be used, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the applicable series of Notes.

“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations.

“Consolidated Net Tangible Assets” means the total amount of assets (less applicable reserves and other properly deductible items) after deducting (1) all current liabilities (excluding the amount of those which are by their terms extendable or renewable at the option of the obligor to a date more than 12 months after the date as of which the amount is being determined and current maturities of long-term debt) and (2) all goodwill, tradenames, trademarks, patents, unamortized debt discount and expense and other like intangible assets, all as set forth on the most recent quarterly balance sheet of the Company and its consolidated subsidiaries and determined in accordance with GAAP.

“Continuing Director” means an individual who is a member of the Board of Directors and either (i) who was a member of the Board of Directors on the Issue Date or (ii) whose nomination for election or election to the Board of Directors was approved by vote of at least a majority of the directors then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved.

“Corporate Trust Office of the Trustee” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which, in the case of The Bank of New York Mellon, shall be 101 Barclay Street, 8W, New York, New York 10286.

“Funded Indebtedness” means all Indebtedness that matures on, or that is renewable at the option of any obligor thereon to, a date more than one year after the date on which such Indebtedness is originally incurred.

“Indebtedness” of any Person means, without duplication, (i) all indebtedness of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), other than standby letters of

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credit, performance bonds and other obligations issued by or for the account of such Person in the ordinary course of business, to the extent not drawn or, to the extent drawn, if such drawing is reimbursed not later than the third Business Day following demand for reimbursement, (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred in the ordinary course of business, (v) all Capitalized Lease Obligations of such Person, (vi) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person (provided that if the obligations so secured have not been assumed in full by such Person or are not otherwise such Person’s legal liability in full, then such obligations shall be deemed to be in an amount equal to the greater of (a) the lesser of (1) the full amount of such obligations and (2) the fair market value of such assets, as determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution, and (b) the amount of obligations as have been assumed by such Person or which are otherwise such Person’s legal liability), and (vii) all Indebtedness of others (other than endorsements in the ordinary course of business) guaranteed by such Person to the extent of such guarantee.

“Indenture” has the meaning specified in the recitals.

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company.

“Investment Grade Status” with respect to a series of Notes exists as of any time if at such time either (i) the rating assigned to the Notes of such series by Moody’s is Baa3 (or the equivalent) or higher and by S&P is BB+ (or the equivalent) or higher, or (ii) the rating assigned to the Notes of such series by Moody’s is Ba1 (or the equivalent) or higher and by S&P is BBB- (or the equivalent) or higher.

“Issue Date” means August 6, 2010, the date on which the Notes are first authenticated and delivered under this Indenture.

“Joint Venture” means any partnership, corporation or other entity, in which up to and including 50% of the partnership interests, outstanding voting stock or other equity interests is owned, directly or indirectly, by the Company and/or one or more Subsidiaries. A Joint Venture shall not be a Subsidiary.

“Lien” means any mortgage, pledge, lien, charge, security interest or similar encumbrance. For purposes of this Indenture, the Company or any Subsidiary of the Company shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capitalized Lease Obligation or other title retention agreement relating to such asset.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

“Notes” has the meaning specified in the recitals.

“Original Indenture” has the meaning specified in the recitals.

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“Parent Holding Company” means (a) from and after the time the Common Stock is not listed on a United States or foreign national or regional securities exchange or traded through the National Association of Securities Dealers Automated Quotation System or similar system or another Person succeeds to and is substituted for the Company under this Indenture, a Person which, immediately after such time, had substantially the same stockholders, directly or indirectly, as the Company immediately prior to such time with holdings in substantially the same proportion as such stockholders’ holdings in the Company immediately prior to such time, (b) from and after the sale, conveyance, assignment, transfer, lease or other disposition of all or substantially all of the Company’s and the Subsidiaries’ assets, taken as a whole, the Company (as determined prior to the transaction) and (c) each Wholly Owned Subsidiary of another Parent Holding Company.

“Pari Passu Indebtedness” means any Indebtedness of the Company, whether outstanding on the Issue Date of the Notes or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinated in right of payment to the Notes.

“Permitted Liens” shall mean (i) Liens existing on the Issue Date of the Notes; (ii) Liens on property or assets of, or any shares of stock of, or other equity interests in, or indebtedness of, any Person existing at the time such Person becomes a Subsidiary of the Company or at the time such Person is merged into or consolidated with the Company or any of its Subsidiaries or at the time of a sale, lease or other disposition of the properties of a Person (or a division thereof) as an entirety or substantially as an entirety to the Company or a Subsidiary; (iii) Liens in favor of the Company or any of its Subsidiaries; (iv) Liens in favor of governmental bodies to secure progress or advance payments; (v) Liens securing industrial revenue, pollution control or other revenue bonds; (vi) Liens on assets existing at the time of acquisition thereof, securing all or any portion of the cost of acquiring, constructing, improving, developing, expanding or repairing such assets or securing Indebtedness incurred prior to, at the time of, or within 24 months after, the later of the acquisition, the completion of construction, improvement, development, expansion or repair or the commencement of commercial operation of such assets, for the purpose of (a) financing all or any part of the purchase price of such assets or (b) financing all or any part of the cost of construction, improvement, development, expansion or repair of any such assets; (vii) statutory liens or landlords’, carriers’, warehouseman’s, mechanics’, suppliers’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings; (viii) Liens in connection with legal proceedings or securing tax assessments; (ix) Liens on the stock, partnership or other equity interest of the Company or any Subsidiary in any Joint Venture or any Subsidiary that owns an equity interest in such Joint Venture to secure Indebtedness, provided the amount of such Indebtedness is contributed and/or advanced solely to such Joint Venture; and (x) any extensions, substitutions, replacements or renewals in whole or in part of a Lien enumerated in clauses (i) through (ix) above.

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“Principal Property” means any drilling rig or drillship, or integral portion thereof, owned or leased by the Company or any Subsidiary and used for drilling offshore oil and gas wells, which, in the opinion of the Board of Directors, is of material importance to the business of the Company and its Subsidiaries taken as a whole, but no such drilling rig or drillship, or portion thereof, shall be deemed of material importance if its net book value (after deducting accumulated depreciation) is less than 2% of Consolidated Net Tangible Assets.

“Rating Decline” with respect to a series of Notes means that, at any time within 90 days (which period shall be extended so long as the rating of the Notes of such series is under publicly announced consideration for possible downgrade by either Moody’s or S&P) after the later of the date of public notice of a Change in Control, or of public notice of the Company’s intention or that of any other Person to effect a Change in Control, the rating of the Notes of such series is decreased by both Moody’s and S&P by one or more ratings categories and the Notes of such series following such downgrade do not qualify for Investment Grade Status. A Rating Decline will be deemed to occur as a result of a Change in Control if it occurs within the foregoing timeframe.

“Reference Treasury Dealer” means each of Goldman, Sachs & Co. (and its successors), Citigroup Global Markets Inc. (and its successors) and two other nationally recognized investment banking firms that are primary U.S. Government securities dealers (a “Primary Treasury Dealer”), specified from time to time by the Company; provided, however, that if any of the foregoing shall cease to be a nationally recognized investment banking firm that is a Primary Treasury Dealer, the Company shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer as of 3:30 p.m., New York time, on the third Business Day preceding such Redemption Date.

“Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining scheduled payments of the principal thereof and interest thereon that would be due after the related Redemption Date but for such redemption.

“Sale/Leaseback Transaction” means any arrangement with any Person pursuant to which the Company or any Subsidiary leases any Principal Property that has been or is to be sold or transferred by the Company or the Subsidiary to such Person, other than (1) temporary leases for a term, including renewals at the option of the lessee, of not more than five years; (2) leases between the Company and a Subsidiary or between Subsidiaries; and (3) leases of Principal Property executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction, alteration, improvement or repair, or the commencement of commercial operation of the Principal Property.

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“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor to the rating agency business thereof.

“Subsidiary” means a Person at least a majority of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, “voting stock” means stock that ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. A Joint Venture shall not be a Subsidiary.

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15 (519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue; provided that if no maturity is within three months before or after the Stated Maturity for the applicable series of Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight-line basis rounding to the nearest month; or (ii) if such release (or any successor release) is not published during the week preceding such calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the third Business Day preceding such Redemption Date.

“USA Patriot Act” has the meaning specified in Section 5.06 hereof.

“Voting Stock” means, with respect to any Person, securities of any class or classes of capital stock of such Person entitling the holders thereof (whether at all times or at the times that such class of capital stock has voting power by reason of the happening of any contingency) to vote in the election of members of the board of directors or comparable body of such Person.

“Wholly Owned Subsidiary” means, with respect to a Person, any subsidiary of that Person to the extent (1) all of the Voting Stock of such subsidiary, other than any director’s qualifying shares mandated by applicable law, is owned directly or indirectly by such Person; or (2) such subsidiary is organized in a foreign jurisdiction and is required by the applicable laws and regulations of such foreign jurisdiction to be partially owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction in order for such subsidiary to transact business in such foreign jurisdiction, if such Person (a) directly or indirectly owns the remaining capital stock of such subsidiary and (b) by contract or otherwise, controls the management and business of such subsidiary and derives the economic benefits of ownership of such subsidiary to substantially the same extent as if such subsidiary were a wholly owned subsidiary.

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SECTION 1.02 Supplement to Article III of the Original Indenture. New Sections 3.12 through 3.18 are hereby added to Article III of the Original Indenture, but only with respect to the Notes, as follows:

SECTION 3.12 Purchase of Notes at Option of the Holder upon Change in Control.

(a) If there shall have occurred a Change in Control resulting in a Rating Decline with respect to a series of Notes, the Company shall, at the option of each Holder of the Notes of such series, become obligated to repurchase all or any portion (provided that the principal amount shall be $1,000 or an integral multiple thereof) of the Notes of such series held by such Holder as of the date that is no later than 35 Business Days after the date on which the Company gives notice of the Change in Control in accordance with clause (b) below (the “Change in Control Purchase Date”) for cash at a price specified Paragraph 7 of the Notes (the “Change in Control Purchase Price”), subject to satisfaction by or on behalf of such Holder of the requirements set forth in this Section 3.12.

(b) Within 15 Business Days after the Change in Control resulting in a Rating Decline, the Company shall mail a written notice of such Change in Control by first-class mail to the Trustee and to each Holder (and to beneficial owners if required by applicable law) of affected Notes. The notice shall include a form of Change in Control Purchase Notice (substantially in the form of the Option of Holder to Elect Purchase Upon Change in Control attached to the Form of Note (as defined below) to be completed by such Holder and shall state the following:

(1) briefly, the events causing a Change in Control and the date such Change in Control is deemed to have occurred for purposes of this Section 3.12;

(2) the date by which the Change in Control Purchase Notice pursuant to this Section 3.12 must be given;

(3) the Change in Control Purchase Date;

(4) the Change in Control Purchase Price;

(5) the name and address of the Paying Agent;

(6) that Notes must be surrendered to the Paying Agent to collect payment;

(7) that the Change in Control Purchase Price for any Note as to which a Change in Control Purchase Notice has been duly given and not withdrawn will be paid promptly following the later of the Change in Control Purchase Date and the time of surrender of such Note as described in clause (6) above;

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(8) any other procedures the Holder must follow to exercise rights under this Section 3.12 and a brief description of those rights; and

(9) the procedures for withdrawing a Change in Control Purchase Notice.

(c) A Holder of affected Notes may exercise its rights specified in Section 3.12(a) upon delivery of a written notice of purchase (a “Change in Control Purchase Notice”) to the Paying Agent at any time prior to the close of business on the Change in Control Purchase Date, stating:

(1) the certificate number of any Note in certificated form which such Holder will deliver to be purchased;

(2) the series and the portion of the principal amount of each Note of such series which such Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof; and

(3) that such Note shall be purchased as of the Change in Control Purchase Date pursuant to the terms and conditions specified in paragraph 7 of the Notes and in this Indenture.

Delivery of the Note (which may be in book-entry form in accordance with the procedures of the Depositary for a Global Note), whether prior to, on or after the Change in Control Purchase Date (together with all necessary endorsements), to the Paying Agent shall be a condition to the receipt by such Holder of the Change in Control Purchase Price therefor; provided, however, that such Change in Control Purchase Price shall be so paid pursuant to this Section 3.12 only if each Note so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Change in Control Purchase Notice.

The Company shall purchase from the Holder thereof, pursuant to this Section 3.12, a portion of a Note if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Note also apply to the purchase of such portion of such Note.

Any purchase by the Company contemplated pursuant to the provisions of this Section 3.12 shall be consummated by the payment of cash to the Holder according to the second sentence of the first paragraph of Section 3.13.

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Change in Control Purchase Notice contemplated by this Section 3.12(c) shall have the right to withdraw such Change in Control Purchase Notice at any time prior to the close of business on the Change in Control Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.13.

The Paying Agent shall promptly notify the Company of the receipt by it of any Change in Control Purchase Notice or written withdrawal thereof.

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SECTION 3.13 Effect of Change in Control Purchase Notice

Upon receipt by the Paying Agent of the Change in Control Purchase Notice in accordance with Section 3.12 and compliance by the Company with Section 3.14, the Holder of the Note in respect of which such Change in Control Purchase Notice was given shall (unless such Change in Control Purchase Notice is withdrawn as specified in the following paragraph) thereafter be entitled to receive solely the Change in Control Purchase Price with respect to such Note. Such Change in Control Purchase Price shall be paid to such Holder promptly following the later of (x) the Business Day following the Change in Control Purchase Date with respect to such Note and (y) the time of delivery of such Note to the Paying Agent by the Holder thereof in the manner required by Section 3.12.

A Change in Control Purchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the Paying Agent at any time prior to the close of business on the Change in Control Purchase Date, specifying:

(1) the certificate number of the Note in certificated form in respect of which such notice of withdrawal is being submitted;

(2) the series and the principal amount of the Note with respect to which such notice of withdrawal is being submitted; and

(3) the principal amount, if any, of such Note (which must be $1,000 or an integral multiple thereof) which remains subject to the original Change in Control Purchase Notice and which has been or will be delivered for purchase by the Company.

The Paying Agent will promptly return to the respective Holders thereof any Notes with respect to which a Change in Control Purchase Notice has been withdrawn in compliance with this Indenture.

SECTION 3.14 Deposit of Change in Control Purchase Price

By 11:00 a.m., New York City time, on the Business Day following the Change in Control Purchase Date, the Company shall deposit with the Paying Agent (or, if the Company is acting as Paying Agent, shall segregate and hold in trust as provided in Section 2.06) an amount of cash in immediately available funds sufficient to pay the aggregate Change in Control Purchase Price of all the Notes or portions thereof which are to be purchased as of the Change in Control Purchase Date.

SECTION 3.15 Notes Purchased in Part

Any Note which is to be purchased under Section 3.12 only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement, or a written instrument of transfer in form satisfactory to the Company and the Trustee executed by the Holder or such Holder’s attorney duly authorized in writing), and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes of the same series, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered which is not purchased.

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SECTION 3.16 Covenant to Comply with Securities Laws upon Purchase of Notes

In connection with any offer to purchase or purchase of Notes under Section 3.12, the Company shall (i) comply with the provisions of the Exchange Act that may then be applicable, and (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, if required.

SECTION 3.17 Repayment to the Company

The Trustee and the Paying Agent shall return to the Company, upon written request, any cash, together with interest on such cash as hereinafter provided (subject to the provisions of Section 7.07), held by them for the payment of a Change in Control Purchase Price or Redemption Price that remains unclaimed as provided in Section 8.03; provided, however, that to the extent that the aggregate amount of cash so deposited by the Company exceeds the aggregate Change in Control Purchase Price or Redemption Price, respectively, of the Notes or portions thereof to be purchased or redeemed, then promptly after the Business Day following the Change in Control Purchase Date or Redemption Date, as the case may be, the Trustee or the Paying Agent, as the case may be, shall return any such excess to the Company together with interest on any cash as hereinafter provided (subject to the provisions of Section 7.07). Any cash deposited with the Trustee or with the Paying Agent pursuant to this Article III shall be invested by the Trustee or Paying Agent, as applicable, in short-term obligations of, or fully guaranteed by, the United States of America, or commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s as specifically directed in writing by the Company. Interest earned on such investments shall be repaid to the Company pursuant to this Section 3.17. Except as provided for in this Section 3.17, neither the Paying Agent nor the Trustee shall be under any liability for interest on any money received by it pursuant to this Indenture.

SECTION 3.18 Outstanding Notes

If the Paying Agent holds, in accordance with this Indenture, by 11:00 a.m., New York City time, on the Business Day following a Change in Control Purchase Date, money sufficient to pay the Change in Control Purchase Price of the Notes to be purchased as of the Change in Control Purchase Date, then (i) the Change in Control Purchase Price for such Notes shall be deemed paid and (ii) after such Change in Control Purchase Date, such Notes shall cease to be outstanding, interest on such Notes shall cease to accrue and all other rights of the Holder of such Notes shall terminate (other than the right to receive the Change in Control Purchase Price upon delivery of the Note in accordance with the terms of this Indenture), whether or not such Notes are delivered to the Paying Agent.

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SECTION 1.03 Supplement to Article IV of the Original Indenture. Article IV of the Original Indenture is supplemented with respect to the Notes by inserting the following new Sections at the end thereof:

SECTION 4.08 Limitation on Liens

The Company shall not, and shall not permit any of its Subsidiaries to, issue, assume or guarantee any Indebtedness for borrowed money secured by any Lien upon any Principal Property or any shares of stock or Indebtedness of any Subsidiary that owns or leases a Principal Property (whether such Principal Property, shares of stock or Indebtedness are now owned or hereafter acquired) without making effective provision whereby the Notes (together with, if the Company shall so determine, any other Indebtedness or other obligation of the Company or any Subsidiary) shall be secured equally and ratably with (or, at the option of the Company, prior to) the Indebtedness so secured for so long as such Indebtedness is so secured. The foregoing restrictions will not, however, apply to Indebtedness secured by Permitted Liens.

Notwithstanding the foregoing, the Company and its Subsidiaries may, without securing the Notes, issue, assume or guarantee Indebtedness that would otherwise be subject to the foregoing restrictions in an aggregate principal amount that, together with all other such Indebtedness of the Company and its Subsidiaries that would otherwise be subject to the foregoing restrictions (not including Indebtedness permitted to be secured under the definition of Permitted Liens) and the aggregate amount of Attributable Indebtedness deemed outstanding with respect to Sale/Leaseback Transactions (other than Sale/Leaseback Transactions in connection with which the Company has voluntarily retired any of the Securities, any Pari Passu Indebtedness or any Funded Indebtedness pursuant to Section 4.09(c)) does not at any one time exceed 15% of Consolidated Net Tangible Assets.

SECTION 4.09 Limitation on Sale/Leaseback Transactions

The Company shall not, and shall not permit any Subsidiary to, enter into any Sale/Leaseback Transaction with any Person (other than the Company or a Subsidiary) unless:

(a) the Company or such Subsidiary would be entitled to incur Indebtedness in a principal amount equal to the Attributable Indebtedness with respect to such Sale/Leaseback Transaction secured by a Lien on the property subject to such Sale/Leaseback Transaction pursuant to Section 4.08 without equally and ratably securing the Notes, pursuant to Section 4.08;

(b) after the Issue Date of the Notes and within a period commencing nine months prior to the consummation of such Sale/Leaseback Transaction and ending nine months after such consummation, the Company or any Subsidiaries shall have expended for property used or to be used in the ordinary course of business of the Company and its Subsidiaries an amount equal to all or a portion of the net proceeds of such Sale/Leaseback Transaction and the Company shall have elected to designate such amount as a credit against such Sale/Leaseback Transaction (with any such amount not being so designated to be applied as set forth in clause (c) below or as otherwise permitted); or

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(c) the Company, during the nine-month period after the effective date of such Sale/Leaseback Transaction, shall have applied to the voluntary defeasance or retirement of any Securities, any Pari Passu Indebtedness or any Funded Indebtedness an amount equal to the greater of the net proceeds of the sale or transfer of the property leased in such Sale/Leaseback Transaction and the fair value, as determined by the Board of Directors of the Company and evidenced by a Board Resolution, of such property at the time of entering into such Sale/Leaseback Transaction (in either case adjusted to reflect the remaining term of the lease and any amount expended by the Company as set forth in clause (b) above).

SECTION 1.04 Supplement to Article IX of the Original Indenture. Section 9.02 of the Original Indenture is supplemented with respect to the Notes by deleting the word “or” at the end of clause (9) thereof, replacing the period at the end of clause (10) thereof with “; or” and adding the following new clause (11) to such Section:

(11) materially and adversely affect the right provided in Article III to require the Company to repurchase Notes in accordance with Section 3.12.

SECTION 1.05 Effect of Article 1. The supplements to the Original Indenture set forth in Article 1 of this Third Supplemental Indenture affect only the provisions of the Original Indenture as such provisions relate to the Notes, the series of Securities comprised of the Notes and the rights, remedies and obligations of the Company, the Holders of Notes, the Trustee and other Persons set forth in the Original Indenture as such rights, remedies and obligations relate to the Notes.

ARTICLE 2
THE NOTES

SECTION 2.01 Form and Terms. The Notes of each series shall be issued upon original issuance in whole in the form of one or more Global Securities (the “Global Notes”). The Depository Trust Company and the Trustee are hereby designated as the Depositary and the Security Custodian, respectively, for the Global Notes under the Indenture. The Notes of each series and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto (the “Form of Note”). The terms of the Notes set forth on Exhibit A hereto are incorporated by reference herein as if set forth herein in their entirety.

SECTION 2.02 Designation, Amount, etc.

(a) The 2020 Notes shall be entitled the “6⁷/8% Senior Notes due 2020” of the Company and the 2040 Notes shall be entitled the “7⁷/8% Senior Notes due 2040” of the Company. The 2020 Notes and the 2040 Notes shall each be separate series of Securities under the Indenture.

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(b) The initial limit upon the aggregate principal amount of the 2020 Notes and the 2040 Notes that may be authenticated and delivered under the Indenture (except for Notes of such series authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes of such series pursuant to Section 2.08, 2.09, 2.12, 2.17, 3.07 or 9.05 of the Indenture and except for any Notes of such series which, pursuant to Section 2.04 or 2.17 of the Indenture, are deemed never to have been authenticated and delivered thereunder) is $900,000,000 and $300,000,000, respectively; provided, however, that the authorized aggregate principal amount of the Notes of each series may be increased before or after the issuance of any Notes of such series by a Board Resolution (or action pursuant to a Board Resolution) to such effect; provided further, however, that the authorized aggregate principal amount of the Notes of each series may be increased only if the additional Notes issued will be fungible with the original Notes of such series for United States federal income tax purposes. The Notes of a series issued on the Issue Date and any such additional Notes of such series subsequently issued shall be treated as a single series for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.

(c) The Notes shall not be entitled to the benefit of Section 4.03(b) of the Original Indenture (and shall not constitute Rule 144A Securities).

SECTION 2.03 Payment of Principal and Interest.

(a) The date on which the principal of the 2020 Notes is payable shall be August 15, 2020. The date on which the principal of the 2040 Notes is payable shall be August 15, 2040.

(b) The rate at which the 2020 Notes shall bear interest shall be 6⁷/8% per annum, and the rate at which the 2040 Notes shall bear interest shall be 7⁷/8% per annum. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. The Interest Payment Dates on which such interest shall be payable shall be February 15 and August 15 of each year, commencing February 15, 2011. The record dates for the interest payable on the Notes on any Interest Payment Date shall be the February 1 and August 1, as the case may be, next preceding such Interest Payment Date.

(c) No Additional Amounts with respect to the Notes shall be payable.

(d) The place or places where the principal of, premium (if any) on and interest on the Notes shall be payable shall be the office or agency of the Company maintained for that purpose, initially the office of the Trustee in The City of New York, and any other office or agency maintained by the Company for such purpose. Payments in respect of Global Notes (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by the Holder of such Notes. In all other cases, at the option of the Company, payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the register of the Notes maintained by the Registrar.

14

(e) The Paying Agent and Registrar for the Notes of each series initially shall be the Trustee.

SECTION 2.04 Denominations. The Notes shall be issued in denominations of $2,000 or any integral multiple of $1,000 above such amount.

SECTION 2.05 Legends. Each Global Note shall bear the legend set forth on the face of the Form of Note.

SECTION 2.06 Redemption at the Option of the Company.

(a) The Notes of each series are subject to redemption, in whole at any time and in part from time to time, at the option of the Company, in principal amounts of $1,000 and integral multiples of $1,000 above such amount (provided that the unredeemed portion of any Note redeemed in part may not be less than $2,000), upon not less than 30 nor more than 60 days’ prior notice as provided in the Indenture, at a Redemption Price equal to the sum of (i) 100% of the principal amount of the Notes to be redeemed, (ii) the amount, if any, by which the sum of the present values of the Remaining Scheduled Payments thereon (excluding accrued and unpaid interest to the Redemption Date), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, exceeds the principal amount of the Notes to be redeemed, and (iii) accrued and unpaid interest thereon to the Redemption Date.

(b) The Company shall have no obligation to redeem, purchase or repay Notes pursuant to any sinking fund or analogous provision or, except as provided in Section 3.12 of the Indenture, at the option of a Holder thereof.

ARTICLE 3
REPRESENTATIONS OF THE COMPANY

SECTION 3.01 Authority of the Company. The Company is duly authorized to execute and deliver this Third Supplemental Indenture, and all corporate action on its part required for the execution and delivery of this Third Supplemental Indenture has been duly and effectively taken.

SECTION 3.02 Truth of Recitals and Statements. The Company warrants that the recitals of fact and statements contained in this Third Supplemental Indenture are true and correct, and that the recitals of fact and statements contained in all certificates and other documents furnished thereunder will be true and correct.

ARTICLE 4
CONCERNING THE TRUSTEE

SECTION 4.01 Acceptance of Trusts. The Trustee accepts the trusts hereunder and agrees to perform the same, but only upon the terms and conditions set forth in the Original Indenture and in this Third Supplemental Indenture, to all of which the Company and the respective Holders of the Notes at any time hereafter outstanding agree by their acceptance thereof.

15

SECTION 4.02 No Responsibility of Trustee for Recitals, Etc. The recitals and statements contained in this Third Supplemental Indenture shall be taken as the recitals and statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Third Supplemental Indenture, except that the Trustee is duly authorized by all necessary corporate actions to execute and deliver this Third Supplemental Indenture.

The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under the Indenture to the extent arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; it being understood that the Trustee shall use its best efforts to resume performance as soon as practicable under the circumstances.

In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

The Trustee may rely upon and comply with instructions or directions sent via unsecured facsimile or email transmission by an authorized Person and the Trustee shall not be liable for any loss, liability or expense of any kind incurred by the Company or the Holders due to the Trustee’s reliance upon and compliance with instructions or directions given by unsecured facsimile or email transmission, provided, however, that such loss, liability or expense has not arisen from the negligence or willful misconduct of the Trustee, it being understood that the failure of the Trustee to verify or confirm that the Person providing the instructions or directions is, in fact, an authorized Person does not constitute negligence or willful misconduct.

The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to the Indenture.

ARTICLE 5
MISCELLANEOUS PROVISIONS

SECTION 5.01 Relation to the Original Indenture. The provisions of this Third Supplemental Indenture shall become effective immediately upon the execution and delivery hereof. This Third Supplemental Indenture and all the terms and provisions herein contained shall form a part of the Original Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Original Indenture; provided, however, such terms and provisions shall be so included in this Third Supplemental Indenture solely for the benefit of the Company, the Trustee and the Holders of the Notes. The Original Indenture is hereby ratified and confirmed and shall remain and continue in full force and effect in accordance with the terms and provisions thereof, as supplemented by this Third Supplemental Indenture, and the Original Indenture and this Third Supplemental Indenture shall be read, taken and construed together as one instrument.

16

SECTION 5.02 Meaning of Terms. Any term used in this Third Supplemental Indenture which is defined in the Original Indenture shall have the meaning specified in the Original Indenture, unless the context shall otherwise require.

SECTION 5.03 Counterparts of Supplemental Indenture. This Third Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

SECTION 5.04 USA Patriot Act. The Company acknowledges that, in accordance with Section 326 of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended, modified or supplemented from time to time, the “USA Patriot Act”), the Trustee, like all financial institutions, is required to obtain, verify, and record information that identifies each person or legal entity that opens an account. The Company agrees that it will provide the Trustee with such information as the Trustee may request in order for the Trustee to satisfy the requirements of the USA Patriot Act.

SECTION 5.05 Governing Law. This Third Supplemental Indenture and the Notes shall be governed by and construed in accordance with the internal laws of the State of New York, except to the extent the laws of the State of New York require the application of the laws of another jurisdiction.

17

IN WITNESS WHEREOF, Pride International, Inc. has caused this Third Supplemental Indenture to be executed in its corporate name by a duly authorized officer, and The Bank of New York Mellon has caused this Third Supplemental Indenture to be executed by a duly authorized officer, all as of the date first above written.

PRIDE INTERNATIONAL, INC.
By:	/s/ Steven D. Oldham
	Steven D. Oldham
	Vice President and Treasurer
THE BANK OF NEW YORK MELLON, as Trustee
By:	/s/ Laurence J. O’Brien
	Laurence J. O’Brien
	Vice President

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*	To be included only if the Security represents a 2020 Note.
**	To be included only if the Security represents a 2040 Note.
***	To be included only if the Security is a Global Security.

Exhibit A

[FORM OF FACE OF SECURITY]

[Unless and until it is exchanged in whole or in part for Securities in definitive form, this Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. The Depository Trust Company (55 Water Street, New York, New York), a New York corporation (“DTC”), shall act as the Depositary until a successor shall be appointed by the Company and the Registrar. Unless this certificate is presented by an authorized representative of DTC to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]***

PRIDE INTERNATIONAL, INC.

[6⁷/8% SENIOR NOTE DUE 2020]*
[7⁷/8% SENIOR NOTE DUE 2040]**

CUSIP No. _____________

No._____ $_________________

Pride International, Inc., a Delaware corporation (the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, promises to pay to                      or registered assigns, the principal sum of                                          Dollars[, or such greater or lesser amount as indicated on the Schedule of Exchanges of Securities hereto,]*** on August 15, [2020]*[2040]**.

Interest Payment Dates:	February 15 and August 15
Record Dates:	February 1 and August 1

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

A-1

IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers.

Dated:

PRIDE INTERNATIONAL, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

Certificate of Authentication:

This is one of the Securities of the series
designated therein referred to in the within-
mentioned Indenture.

THE BANK OF NEW YORK MELLON, as Trustee
By:
	Authorized Signatory

A-2

[FORM OF REVERSE OF SECURITY]

PRIDE INTERNATIONAL, INC.

[6⁷/8% SENIOR NOTE DUE 2020]*
[7⁷/8% SENIOR NOTE DUE 2040]**

This Security is one of a duly authorized issue of [6⁷/8 % Senior Notes due 2020]* [7⁷/8 % Senior Notes due 2040]** (the “Securities”) of Pride International, Inc., a Delaware corporation (the “Company”).

1. Interest. The Company promises to pay interest on the principal amount of this Security at [6⁷/8%]*[7⁷/8%]** per annum. The Company will pay interest semiannually on February 15 and August 15 of each year (each an “Interest Payment Date”), or if any such day is not a Business Day, on the next succeeding Business Day. Interest on the Securities will accrue from the most recent Interest Payment Date on which interest has been paid or, if no interest has been paid, from August 6, 2010; provided that if there is no existing Default in the payment of interest, and if this Security is authenticated between a record date referred to on the face hereof (each, a “Record Date”) and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be February 15, 2011. The Company shall pay interest on overdue principal and premium (if any) from time to time at a rate equal to the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.

2. Method of Payment. The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders of Securities at the close of business on the Record Date next preceding the Interest Payment Date, even if such Securities are canceled after such Record Date and on or before such Interest Payment Date. The Holder must surrender this Security to a Paying Agent to collect principal payments. The Company will pay the principal of, premium (if any) on and interest on the Securities in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Such amounts shall be payable at the offices of the Trustee (as defined below); provided that, at the option of the Company, the Company may pay such amounts (1) by wire transfer with respect to Global Securities or (2) by check payable in such money mailed to a Holder’s registered address with respect to any Securities.

3. Paying Agent and Registrar. Initially, The Bank of New York Mellon (the “Trustee”), the trustee under the Indenture (as defined below), will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar, co-registrar or additional paying agent without notice to any Holder. The Company or any Subsidiary of the Company may act in any such capacity.

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4. Indenture. The Company issued the Securities under an Indenture, dated as of July 1, 2004 (the “Base Indenture”), between the Company and the Trustee, as amended and supplemented with respect to the Securities including by the Third Supplemental Indenture thereto, dated as of August 6, 2010 and as it may otherwise be supplemented thereafter with applicability to the Securities (the Base Indenture, as so amended and supplemented, the “Indenture”). The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “TIA”), as in effect on the date of execution of the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms and for the definitions of capitalized terms used but not defined herein. The Securities are unsecured general obligations of the Company limited to $[900,000,000]*[300,000,000]** in aggregate principal amount; provided, however, that the authorized aggregate principal amount of the Securities may be increased before or after the issuance of any Securities by a Board Resolution (or action pursuant to a Board Resolution) to such effect; provided further, however, that the authorized aggregate principal amount of the Securities may be increased only if the additional Securities issued will be fungible with the original Securities for United States federal income tax purposes. The Base Indenture provides for the issuance of other series of debt securities (including the Securities, the “Debt Securities”) thereunder.

5. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in minimum denominations of $2,000 and any integral multiples of $1,000. The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. Neither the Company, the Trustee nor the Registrar shall be required to register the transfer or exchange of (a) any Security selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (b) any Security during the period beginning 15 Business Days before the mailing of notice of redemption of Securities to be redeemed and ending at the close of business on the day of mailing.

6. Persons Deemed Owners. The registered Holder of a Security shall be treated as its owner for all purposes.

7. Purchase by the Company at the Option of the Holder upon a Change in Control. Upon the terms and subject to the conditions of the Indenture, if any Change in Control resulting in a Rating Decline with respect to the Securities occurs, the Company shall, at the option of each Holder of the Securities, purchase all Securities for which a Change in Control Purchase Notice shall have been delivered as provided in the Indenture and not withdrawn, as of the Change in Control Purchase Date specified therein, for a Change in Control Purchase Price equal to 101% of the principal amount of such Securities, plus accrued and unpaid interest, if any, thereon through and including the Change in Control Purchase Date (subject to the right of Holders on a Record Date to receive interest due on the relevant Interest Payment Date). The Change in Control Purchase Price shall be paid in cash.

Holders of Securities have the right to withdraw any Change in Control Purchase Notice by delivering to the Paying Agent a written notice of withdrawal prior to the close of business on the Change in Control Purchase Date in accordance with the provisions of the Indenture.

A-4

If cash sufficient to pay the Change in Control Purchase Price of all Securities or portions thereof to be purchased as of the Change in Control Purchase Date is deposited with the Paying Agent on the Business Day following the Change in Control Purchase Date, then interest ceases to accrue on such Securities (or portions thereof) after the Change in Control Purchase Date and the Holders thereof shall have no other rights as such (other than the right to receive the Change in Control Purchase Price upon surrender of such Security). No interest on the Securities to be purchased will be payable by the Company on any Interest Payment Date subsequent to the Business Day following the Change in Control Purchase Date, if the requirements of the immediately preceding sentence are satisfied.

8. Redemption. The Securities are subject to redemption, in whole at any time and in part from time to time, at the option of the Company, in principal amounts of $1,000 and integral multiples of $1,000 above such amount (provided that the unredeemed portion of any Security redeemed in part may not be less than $2,000), upon not less than 30 nor more than 60 days’ prior notice as provided in the Indenture, at a Redemption Price equal to the sum of (i) 100% of the principal amount of the Securities to be redeemed, (ii) the amount, if any, by which the sum of the present values of the Remaining Scheduled Payments thereon (excluding accrued and unpaid interest to the Redemption Date), discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, exceeds the principal amount of the Securities to be redeemed, and (iii) accrued and unpaid interest thereon to the Redemption Date.

9. Amendments and Waivers. Subject to certain exceptions and limitations, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Debt Securities of all series affected by such amendment or supplement (acting as one class), and any existing or past Default or Event of Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of the principal of, premium (if any) on or interest on the Securities) by the Holders of at least a majority in principal amount of the then outstanding Debt Securities of any series or of all series (acting as one class) in accordance with the terms of the Indenture. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Securities or waive any provision of either: (i) to cure any ambiguity, omission, defect or inconsistency; (ii) if required, to provide for the assumption of the obligations of the Company under the Indenture in the case of the merger, consolidation or sale, lease, conveyance, transfer or other disposition of all or substantially all of the assets of the Company; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities or to provide for the issuance of bearer Securities (with or without coupons); (iv) to provide any security for, or to add any guarantees of or additional obligors on, the Securities; (v) to comply with any requirement in order to effect or maintain the qualification of the Indenture under the TIA; (vi) to add to the covenants of the Company for the benefit of the Holders of the Securities, or to surrender any right or power conferred by the Indenture upon the Company; (vii) to add any additional Events of Default with respect to all or any series of the Debt Securities; (viii) to change or eliminate any of the provisions of the Indenture, provided that no outstanding Security is adversely affected in any material respect; (ix) to supplement any of the provisions of the Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of the Securities pursuant to the Indenture; or (x) to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee with respect to the Securities and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one Trustee, pursuant to the requirements of the Indenture.

A-5

The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Securities with respect to which such consent is required or sought as of a date identified by the Company in a notice furnished to Holders in accordance with the terms of the Indenture.

Without the consent of each Holder affected, the Company may not (i) reduce the amount of Debt Securities whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Security; (iii) reduce the principal of or premium on, or change the Stated Maturity of, any Security; (iv) reduce the premium, if any, payable upon the redemption of any Security or change the time at which any Security may or shall be redeemed; (v) change the coin or currency in which any Security or any premium or interest with respect thereto is payable; (vi) impair the right to institute suit for the enforcement of any payment of principal of or premium (if any) or interest on any Security, except as provided in the Indenture; (vii) make any change in the percentage of principal amount of Debt Securities necessary to waive compliance with certain provisions of the Indenture or make any change in the provision for modification; (viii) waive a continuing Default or Event of Default in the payment of principal of or premium (if any) or interest on the Securities or (ix) materially and adversely affect the right provided in the Indenture to require the Company to repurchase Securities as described in paragraph 7 of this Security.

A supplemental indenture that changes or eliminates any covenant or other provision of the Base Indenture, as supplemented from time to time, which has expressly been included solely for the benefit of one or more particular series of Debt Securities under the Base Indenture, or which modifies the rights of the Holders of Debt Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under the Indenture of the Holders of Debt Securities of any other series.

10. Defaults and Remedies. Events of Default are defined in the Indenture and generally include: (i) default for 30 days in payment of any interest on the Securities; (ii) default in any payment of principal of or premium, if any, on the Securities when due and payable; (iii) default by the Company in compliance with any of its other covenants or agreements in, or provisions of, the Securities or in the Indenture which shall not have been remedied within 60 days after written notice by the Trustee or by the holders of at least 25% in principal amount of the Securities then outstanding (or, in the event that other Debt Securities issued under the Base Indenture are also affected by the default, then 25% in principal amount of all outstanding Debt Securities so affected); or (iv) certain events involving bankruptcy, insolvency or reorganization of the Company. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Securities (or, in the case of an Event of Default described in clause (iii) above, if outstanding Debt Securities of other series are affected by such Default, then at least 25% in

A-6

principal amount of the then outstanding Debt Securities so affected), may declare the principal of and interest on all the Securities (or such Debt Securities) to be immediately due and payable, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization of the Company, all outstanding Debt Securities under the Base Indenture become due and payable immediately without further action or notice. The amount due and payable upon the acceleration of any Security is equal to 100% of the principal amount thereof plus accrued interest to the date of payment. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Securities (or affected Debt Securities) may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal, premium or interest) if it determines that withholding notice is in their interests. The Company must furnish annual compliance certificates to the Trustee.

11. Discharge Prior to Maturity. The Indenture with respect to the Securities shall be discharged and canceled upon the payment of all of the Securities and shall be discharged except for certain obligations upon the irrevocable deposit with the Trustee of any combination of funds and U.S. Government Obligations sufficient for such payment.

12. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may make loans to, accept deposits from, and perform services for the Company or any of its Affiliates, and may otherwise deal with the Company or any such Affiliates, as if it were not Trustee.

13. No Recourse Against Others. A director, officer, employee, stockholder, partner or other owner of the Company or the Trustee, as such, shall not have any liability for any obligations of the Company under the Securities or for any obligations of the Company or the Trustee under the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release shall be part of the consideration for the issue of Securities.

14. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

15. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed thereon.

16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

A-7

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to:

Pride International, Inc.

5847 San Felipe, Suite 3300

Houston, Texas 77057

Attention: General Counsel

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OPTION OF HOLDER TO ELECT PURCHASE
UPON CHANGE IN CONTROL

If you want to elect to have this Security purchased by the Company pursuant to Section 3.12 of the Indenture, check this box: o

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.12 of the Indenture, state the principal amount you elect to have purchased: $                                         (in multiples of $1,000)

This Security (or the portion thereof specified above) shall be purchased as of the Change in Control Purchase Date pursuant to the terms and conditions specified in paragraph 7 of this Security and in the Indenture.

Date:	Your Signature:
	(Sign exactly as your name appears on the Security)

Tax Identification No.:

Signature Guarantee:

(Participant in a Recognized Signature
Guarantee Medallion Program)

A-9

SCHEDULE OF EXCHANGES OF SECURITIES***

The following exchanges of a part of this Global Security for other Securities have been made:

			Principal Amount
	Amount of	Amount of	of this Global	Signature of
	Decrease in	Increase in	Security Following	Authorized Officer
	Principal Amount	Principal Amount	Such Decrease	of Trustee or
Date of Exchange	of this Global Security	of this Global Security	or Increase	Security Custodian

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ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to:

(Insert assignee’s social security or tax I.D. number)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint as agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Date:	Your Signature:
		(Sign exactly as your name appears on the face of this Security)

Signature Guarantee:

(Participant in a Recognized Signature
Guarantee Medallion Program)

A-11

EX-10.1

Exhibit 10.1

PRIDE INTERNATIONAL, INC.
2007 LONG-TERM INCENTIVE PLAN

(As Amended and Restated Effective March 16, 2010)

First Amendment

Pride International, Inc. (the “Company”) having previously established the Pride International, Inc. 2007 Long-Term Incentive Plan, as amended and restated effective March 16, 2010 (the “Plan”), and having reserved the right under Section 14 thereof to amend the Plan, does hereby amend the Plan, effective as of August 13, 2010, as follows:

1. Section 8(a)(i) of the Plan is hereby amended by inserting the following sentence immediately after the fifth sentence of such section:

“Options shall have a minimum vesting period of three years; provided, however, that (1) the Committee may provide for earlier vesting upon a Change in Control or an Employee’s termination of employment, including by reason of death, disability or retirement and (2) vesting may occur incrementally over the three-year minimum vesting period.”

2. Section 8(a)(ii) of the Plan is hereby amended by inserting the following sentence immediately after the fifth sentence of such section:

“SARs shall have a minimum vesting period of three years; provided, however, that (1) the Committee may provide for earlier vesting upon a Change in Control or an Employee’s termination of employment, including by reason of death, disability or retirement and (2) vesting may occur incrementally over the three-year minimum vesting period.”

PRIDE INTERNATIONAL, INC.
By:	/s/ Brady K. Long
Name:		Brady K. Long
Title:		Vice President, General Counsel & Secretary

ATTEST:
/s/ Lonnie D. Bane
Name:	Lonnie D. Bane
Title:	Senior Vice President, Human Resources & Administration

EX-12

EXHIBIT 12

Computation of Ratio of Earnings to Fixed Charges
(in millions except ratio of earnings to fixed charges)

	Nine Months Ended
	September 30,
	2010			2009
Earnings:
Income from continuing operations before income taxes	$	184.1		$	436.0
Portion of rents representative of interest expense		3.4			4.6
Interest on indebtedness, including amortization of deferred loan costs		(6.5	)		(0.1	)
Amortization of capitalized interest		—			—
Earnings, as adjusted	$	181.0		$	440.5
Fixed Charges:
Portion of rents representative of interest expense	$	3.4		$	4.6
Interest on indebtedness, including amortization of deferred loan costs		(6.5	)		(0.1	)
Capitalized interest		73.6			51.7
Total fixed charges	$	70.5		$	56.2
Ratio of earnings to fixed charges		2.57	x		7.84	x

EX-31.1

EXHIBIT 31.1

I, Louis A. Raspino, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pride International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Louis A. Raspino
	Louis A. Raspino
	President and Chief Executive Officer (Principal Executive Officer)

Date: November 4, 2010

EX-31.2

EXHIBIT 31.2

I, Brian C. Voegele, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pride International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Brian C. Voegele
	Brian C. Voegele
	Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Date: November 4, 2010

EX-32

EXHIBIT 32

Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) (the “Act”) and Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each of the undersigned, Louis A. Raspino, President and Chief Executive Officer of Pride International, Inc., a Delaware corporation (the “Company”), and Brian C. Voegele, Senior Vice President and Chief Financial Officer of the Company, hereby certifies that, to his knowledge:

(1) the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 4, 2010

By:	/s/ Louis A. Raspino
	Louis A. Raspino
	President and Chief Executive Officer (Principal Executive Officer)

By:	/s/ Brian C. Voegele
	Brian C. Voegele
	Senior Vice President and Chief Financial Officer (Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to Section 906 of the Act and Rule 13a-14(b) promulgated under the Exchange Act and is not being filed as part of the Report or as a separate disclosure document.