##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 20-F

|(Mark One)                                  |  |                                                                                               
|------------------------------------------- |  | ----------------------------------------------------------------------------------------------
|o                                           |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
|                                            |  |                                                                                               
|OR                                         
|                                            |  |                                                                                               
|x                                           |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934          
|                                            |  |                                                                                               
|For the fiscal year ended December 31, 2002
|                                            |  |                                                                                               
|OR                                         
|                                            |  |                                                                                               
|o                                           |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934      

Commission file number: 333-9110

OCEAN RIG ASA

(Exact name of Registrant as specified in its charter)


KINGDOM OF NORWAY
(Jurisdiction of incorporation or organization)Koppholen 4
P.O. Box 409
4067 Stavanger, Norway
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

None


Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

None


Securities for which there is a reporting obligation pursuant to Section 15(d) of the Securities Exchange Act
of 1934:

10 1/4% senior secured notes due 2008 of Ocean Rig Norway AS and guarantees thereof
by each of Ocean Rig ASA, Ocean Rig 1 AS and Ocean Rig 2 AS.

Number of outstanding shares of each of the Registrants classes of capital or common stock as of December
31, 2002, the close of the period covered by the annual report:

|                                        |  |  |             | 
|--------------------------------------- |  |  | ----------- | 
|Common shares par value NOK 1 per share |  |  | 492,886,851 | 

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 x      No o | 

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17oItem 18x



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TABLE OF CONTENTS

|         |  |                                                                              |  |  |     |      |    | 
|-------- |  | ---------------------------------------------------------------------------- |  |  | --- | ---- | -- | 
|         |  |                                                                              |  |  |     | Page
|PART I   |  |                                                                              |  |  |     |      | 1  | 
|ITEM 1   |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  |  | 1   |     
|ITEM 2   |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  |  | 1   |     
|ITEM 3   |  | KEY INFORMATION                                                              |  |  | 1   |     
|ITEM 4   |  | INFORMATION ON OUR COMPANY                                                   |  |  | 12  |     
|ITEM 5   |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  |  | 23  |     
|ITEM 6   |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  |  | 36  |     
|ITEM 7   |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  |  | 41  |     
|ITEM 8   |  | FINANCIAL INFORMATION                                                        |  |  | 43  |     
|ITEM 9   |  | THE OFFER AND LISTING                                                        |  |  | 45  |     
|ITEM 10  |  | ADDITIONAL INFORMATION                                                       |  |  | 46  |     
|ITEM 11  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  |  | 49  |     
|ITEM 12  |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  |  | 50  |     
|PART II  |  |                                                                              |  |  |     |      | 50 | 
|ITEM 13  |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  |  | 50  |     
|ITEM 14  |  | MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  |  | 50  |     
|ITEM 15  |  | CONTROLS AND PROCEDURES                                                      |  |  | 50  |     
|ITEM 16  |  | AUDIT COMMITTEE
FINANCIAL EXPERT; CODE OF ETHICS; PRINCIPAL ACCOUNTANT FEES  |  |  | 51  |     
|PART III |  |                                                                              |  |  |     |      | 52 | 
|ITEM 17  |  | FINANCIAL STATEMENTS                                                         |  |  | 52  |     
|ITEM 18  |  | FINANCIAL STATEMENTS                                                         |  |  | 52  |     
|ITEM 19  |  | EXHIBITS                                                                     |  |  | 101 |     



i



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NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This annual report includes and incorporates by reference forward-looking
statements that involve risks and uncertainties. These forward-looking
statements are based on forecasts of future results and estimates of amounts
not yet determinable and also include statements about our market
opportunities, future prospects, expected activities, developments and business
strategies. We have based these forward-looking statements on our own
information and on information from other sources that we believe are reliable.

Forward-looking statements are identified by their use of terms and
phrases such as anticipate, believe, could, estimate, expect,
intend, may, plan, predict, project, will and similar terms and
phrases, including references to assumptions. Such forward-looking statements
are related to future events and the future financial performance of our
company, and involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of our company
or of the industry to be materially different from any results, performance or
achievements projected or implied by such forward-looking statements. These
statements are contained in Item 4, Information on our Company and Item 5,
Operating and Financial Review and Prospects, and other sections of this
annual report.

Forward-looking statements in this annual report include, among others,
expectations regarding the following:



| |  |  | our results of operations and financial conditions in the future;                                                 
| | - |  | ------------------------------------------------------------------------------------------------------------------
|
| |  |  | the prospects for the offshore drilling industry;                                                                 
|
| |  |  | our ability to generate sufficient cash-flow to meet our debt service requirements;                               
|
| |  |  | our ability to retain existing contracts and secure future
drilling contracts for our rigs at attractive dayrates;
|
| |  |  | future competition; and                                                                                           
|
| |  |  | our ability to develop our operations in accordance with our plans.                                               

Due to such uncertainties and risks, you should not place undue reliance
on the forward-looking statements included in this annual report. We do not
undertake to update our forward-looking statements or risk factors to reflect
future events or circumstances.



---

We will provide, without charge, to each person to whom this report is
delivered, upon written or oral request, a copy of any or all of the documents
incorporated by reference into this annual report (other than exhibits, unless
such exhibits are specifically incorporated by reference in such documents).
Written requests for copies of these documents should be directed to us at the
address given on the front cover of this annual report.

ii





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##### 



PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

In this annual report on Form 20-F, where we refer to Ocean Rig, we,
us, our and similar words, we mean Ocean Rig ASA and its subsidiaries as a
group. When we refer to Ocean Rig ASA or any of its subsidiaries individually,
we use the full name of that entity.

A. Selected Financial Data

The following table presents selected consolidated financial information
for Ocean Rig ASA and its consolidated subsidiaries. This information has been
derived from, and should be read in conjunction with, our consolidated
financial statements. Our consolidated financial statements have been audited
by PricewaterhouseCoopers DA, independent accountants, as stated in their
report, which also contains an explanatory paragraph discussing our ability to
continue as a going concern. See Note 26 to the financial statements included
in Item 18 of this annual report.

Our consolidated financial statements as of December 31, 1998, 1999, 2000, 2001 and 2002 and for the years ended December 31, 1998, 1999, 2000, 2001 and
2002 have been prepared in accordance with generally accepted accounting
principles in Norway, or Norwegian GAAP. For a discussion of certain
differences between Norwegian GAAP and U.S. GAAP, see Note 27 to the financial
statements included in Item 18. The data set forth below should be read in
conjunction with Item 5, Operating and Financial Review and Prospects.

Since our inception in 1996, our activities have been primarily directed
at the development and marketing of our drilling rigs, and we did not commence
earning any revenues from our planned principal operations, namely the
operation and management of our rigs, until 2002.

1



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##### 



|                                           |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |        |        | 
|------------------------------------------ | ------------------- | ---------------------------------------------------------- | -------- | ----------------------- | ------ | ---- | -------- | -------------------------------------------------------- | ------ | ---- | -------- | ------ | ------- | ------- | -------- | ------ | ------- |  | -------- | ------- | ------- |  | ------- | ------ | ------ | 
|                                           |                     |                                                            |          | Year ended December 31,
|                                           |                     |                                                            |          |                        
|                                           |                     |                                                            |          | 1998                    |        | 1999 |          | 2000                                                     |        | 2001 |          | 2002   |         | 2002   
|                                           |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |        
|                                           |                     |                                                            |          | NOK                     |        | NOK  |          | NOK                                                      |        | NOK  |          | NOK    |         | USD (1)
|                                           |                     |                                                            |          |                         |        |      |          | (amounts in thousands, except for per-share information) |        |      |          |       
|Norwegian
GAAP                             |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |       
|Income Statement Data:                     |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |       
|                                           | Operating revenues  |                                                            |          | 20,088                  |        |      |          | 15,762                                                   |        |      |          | 13,749 |         |         |          | 10,538 |         |  |          | 534,331 |         |  |         | 77,021 |       
|                                           | Operating expenses: |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |        |       
|                                           |                     | Salaries and other personnel expenses                      |          |                         | 22,886 |      |          |                                                          | 29,841 |      |          |        | 45,479  |         |          |        | 110,285 |  |          |         | 164,335 |  |         |        | 23,688 | 
|                                           |                     | Other operating and administrative expenses                |          |                         | 66,228 |      |          |                                                          | 84,253 |      |          |        | 127,251 |         |          |        | 350,998 |  |          |         | 388,668 |  |         |        | 56,024 | 
|                                           |                     | Depreciation, amortization and asset
impairment write down |          |                         | 90,289 |      |          |                                                          | 2,211  |      |          |        | 3,821   |         |          |        | 255,171 |  |          |         | 160,586 |  |         |        | 23,148 | 
|                                           |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |        |       
|Total operating expenses                   |                     |                                                            | 179,403  |                         |        |      | 116,305  |                                                          |        |      | 176,551  |        |         |         | 716,454  |        |         |  | 713,589  |         |         |  | 102,860 |       
|                                           |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |        |       
|Operating loss                             |                     |                                                            | (159,315 | )                       |        |      | (100,633 | )                                                        |        |      | (162,802 | )      |         |         | (705,916 | )      |         |  | (179,258 | )       |         |  | (25,839 | )     
|                                           |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |       
|Net financial income (expense)             |                     |                                                            | 50,560   |                         |        |      | (17,409  | )                                                        |        |      | (166,912 | )      |         |         | (113,212 | )      |         |  | 388,408  |         |         |  | 55,987  |       
|                                           |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |        |       
|Net (loss) income                          |                     |                                                            | (108,797 | )                       |        |      | (118,249 | )                                                        |        |      | (329,934 | )      |         |         | (819,457 | )      |         |  | 209,128  |         |         |  | 30,145  |       
|                                           |                     |                                                            |          |                         |        |      |          |                                                          |        |      |          |        |         |         |          |        |         |  |          |         |         |  |         |        |       
|Basic earnings (loss) per share (2), (7)   |                     |                                                            | (8.98    | )                       |        |      | (6.58    | )                                                        |        |      | (8.14    | )      |         |         | (15.84   | )      |         |  | 1.10     |         |         |  | 0.16    |       
|Diluted earnings (loss) per share (2), (7) |                     |                                                            | (8.98    | )                       |        |      | (6.58    | )                                                        |        |      | (8.14    | )      |         |         | (15.84   | )      |         |  | 0.79     |         |         |  | 0.11    |       

|                      |                                            |  |                                           |           |      |  |                        |           |      |  |      |           |      |  |  |           |   |  |  |           |   |  |  |           |  
|--------------------- | ------------------------------------------ |  | ----------------------------------------- | --------- | ---- |  | ---------------------- | --------- | ---- |  | ---- | --------- | ---- |  |  | --------- | - |  |  | --------- | - |  |  | --------- | -
|                      |                                            |  | As of, or for the year ended December 31,
|                      |                                            |  |                                          
|                      |                                            |  | 1998                                      |           | 1999 |  | 2000                   |           | 2001 |  | 2002 |           | 2002
|                      |                                            |  |                                           |           |      |  |                        |           |      |  |      |           |     
|                      |                                            |  | NOK                                       |           | NOK  |  | NOK                    |           | NOK  |  | NOK  |           | USD 
|                      |                                            |  |                                           |           |      |  | (amounts in thousands) |           |      |  |      |           |      |  | 
|Balance Sheet Data:   |                                            |  |                                           |           |      |  |                        |           |      |  |      |           |      |  |  |           |   |  |  |           |   |  |  |          
|                      | Cash and cash equivalents                  |  |                                           | 320,597   |      |  |                        | 575,803   |      |  |      | 613,718   |      |  |  | 170,205   |   |  |  | 137,346   |   |  |  | 19,798    |  
|                      | Total assets                               |  |                                           | 5,345,220 |      |  |                        | 6,046,118 |      |  |      | 6,869,791 |      |  |  | 8,188,358 |   |  |  | 8,915,928 |   |  |  | 1,285,180 |  
|                      | Total liabilities                          |  |                                           | 2,724,458 |      |  |                        | 2,878,216 |      |  |      | 3,694,385 |      |  |  | 5,385,070 |   |  |  | 4,457,888 |   |  |  | 642,579   |  
|                      | Capital stock                              |  |                                           | 363,306   |      |  |                        | 1,066,902 |      |  |      | 1,333,659 |      |  |  | 1,682,316 |   |  |  | 492,887   |   |  |  | 71,047    |  
|                      | Total shareholders equity                 |  |                                           | 2,620,762 |      |  |                        | 3,167,902 |      |  |      | 3,175,406 |      |  |  | 2,803,288 |   |  |  | 4,458,040 |   |  |  | 642,601   |  
|Other financial data: |                                            |  |                                           |           |      |  |                        |           |      |  |      |           |      |  |  |           |   |  |  |           |   |  |  |          
|                      | Capital expenditures (rig
investments)     |  |                                           | 1,752,558 |      |  |                        | 2,614,863 |      |  |      | 1,230,451 |      |  |  | 1,563,195 |   |  |  | 1,903,093 |   |  |  | 274,320   |  
|                      | EBITDA (3)                                 |  |                                           | (69,026   | )    |  |                        | (98,422   | )    |  |      | (158,981  | )    |  |  | (450,745  | ) |  |  | (18,672   | ) |  |  | (2,691    | )
|                      | Number of shares
outstanding (4), (5), (7) |  |                                           | 363,306   |      |  |                        | 35,563    |      |  |      | 44,455    |      |  |  | 56,077    |   |  |  | 492,887   |   |  |  | 492,887   |  
|                      | Dividends declared (6)                     |  |                                           |          |      |  |                        |          |      |  |      |          |      |  |  |          |   |  |  |          |   |  |  |          |  
|                      | US GAAP:                                   |  |                                           |           |      |  |                        |           |      |  |      |           |      |  |  |           |   |  |  |           |   |  |  |           |  
|                      | Net (loss) income                          |  |                                           | (158,327  | )    |  |                        | (118,741  | )    |  |      | (331,827  | )    |  |  | (817,626  | ) |  |  | 235,622   |   |  |  | 33,951    |  
|                      | Total shareholders equity                 |  |                                           | 2,621,254 |      |  |                        | 3,175,595 |      |  |      | 3,175,595 |      |  |  | 2,803,295 |   |  |  | 4,484,472 |   |  |  | 646,457   |  



---

|(1) |  | Translation of amounts from Norwegian  (NOK) to United States
dollars ($) has been made for the convenience of the reader using the noon
buying rate as of December 31, 2002 of $1.00 = NOK 6.9375.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The weighted average number of shares outstanding has been retroactively
restated to reflect the reverse stock split (30:1) that took place in
1999.                                               
|   
|(3) |  | EBITDA is defined as net income (loss) prior to deductions for net
financial income, income taxes, depreciation, amortization and asset
impairment write down.                                     
|   
|(4) |  | In December 1999, we carried out a reverse share split (30:1) whereby the
par value of our shares was increased from NOK 1.0 to NOK 30.0 per share.                                                
|   
|(5) |  | In February 2002, the nominal value of our shares was written down from
NOK 30.0 per share to NOK 1.0 per share.                                                                                   

2



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##### 



|(6) |  | No dividends were paid on our shares during these periods.                                                                                                             
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(7) |  | In May 2003 the Companys General Meeting approved a reverse share split
of 10:1 effective as of May 21, 2003. All EPS calculations will be
restated in future periods.

Presented below is the Companys EBITDA, defined as earnings prior to
deductions for net financial items (interest), taxes, depreciation and
amortization. The EBITDA figures are not intended to represent cash flows from
operations as defined by Norwegian GAAP, and should not be considered an
alternative to net income, as an indicator of the Companys operating
performance or to cash flows from operations as a measure of liquidity. The
EBITDA figures should only be used as information relating to the Companys
operating activities and should be read in conjunction with comparable GAAP
financial information of the Company located in the Companys financial
statements and notes thereto. The Company frequently uses the EBITDA figures to
measure operating results from operations before depreciation, interest items
and taxes. The Company believes the EBITDA figures provide a good measure to
better understand the operating results from the variable activities directly
related to operations of the rigs such as utilization and operating regularity
of the rigs as well as income rate and operating cost situations.

2002 was the first year the Company had income from rig operating
activities with Leiv Eiriksson in operation for ten months and Eirik Raude in
operations for the last two months of the year. Operating results for 2002 are
therefore not directly comparable to operating results in previous years.

EBITDA reconciliation:

|                                                           |  |                         |          |      |  |      |          |      |  |      |          |      |  |  |          |   |  |  |          |   |  |  |         |  
|---------------------------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | -------- | ---- |  | ---- | -------- | ---- |  |  | -------- | - |  |  | -------- | - |  |  | ------- | -
|                                                           |  | Year ended December 31,
|                                                           |  |                        
|                                                           |  | 1998                    |          | 1999 |  | 2000 |          | 2001 |  | 2002 |          | 2002
|                                                           |  |                         |          |      |  |      |          |      |  |      |          |     
|                                                           |  | NOK                     |          | NOK  |  | NOK  |          | NOK  |  | NOK  |          | USD 
|EBITDA                                                     |  |                         | (69,026  | )    |  |      | (98,422  | )    |  |      | (158,981 | )    |  |  | (450,745 | ) |  |  | (18,672  | ) |  |  | (2,691  | )
|Depreciation, amortization
and asset impairment
write-down |  |                         | (90,289  | )    |  |      | (2,211   | )    |  |      | (3,821   | )    |  |  | (255,171 | ) |  |  | (160,586 | ) |  |  | (23,148 | )
|Net financial income (loss)                                |  |                         | 50,560   |      |  |      | (17,409  | )    |  |      | (166,912 | )    |  |  | (133,212 | ) |  |  | 388,408  |   |  |  | 55,987  |  
|Taxes                                                      |  |                         | (42      | )    |  |      | (207     | )    |  |      | (220     | )    |  |  | (329     | ) |  |  | (22      | ) |  |  | (3      | )
|                                                           |  |                         |          |      |  |      |          |      |  |      |          |      |  |  |          |   |  |  |          |   |  |  |         |  
|Net income (loss)                                          |  |                         | (108,797 | )    |  |      | (118,249 | )    |  |      | (329,934 | )    |  |  | (819,457 | ) |  |  | 209,128  |   |  |  | 30,145  |  
|                                                           |  |                         |          |      |  |      |          |      |  |      |          |      |  |  |          |   |  |  |          |   |  |  |         |  

Exchange Rate Information

We publish our financial statements in Norwegian kroner (kroner or
NOK). In this annual report, references to dollars,  USD or $ are to
United States dollars. For the convenience of the reader, this annual report
contains translations of certain kroner amounts into dollars at specified
rates. These translations should not be construed as representations that the
kroner amounts actually represent such dollar amounts or could be converted
into dollars at those rates. Unless otherwise stated, the translations of
kroner into dollars have been made at the rate of $1.00 = NOK 6.9375 , which
was the noon buying rate in the City of New York for cable transfers in
Norwegian kroner as certified for customs purposes by the Federal Reserve Bank
of New York on December 31, 2002.

The table below sets out the average exchange rate between the kroner and
the U.S. dollar for each of the last five calendar years. The following
exchange rates have been calculated using the average of the noon buying rates
during each of the past five annual periods.

3



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##### 



|                  |  |      |      |     |  |               |      |            |  |  |      |  |  |  |      | 
|----------------- |  | ---- | ---- | --- |  | ------------- | ---- | ---------- |  |  | ---- |  |  |  | ---- | 
|Kroner per dollar
|                 
|Year              |  | High |      | Low |  | End of Period |      | Average(1)
|                  |  |      |      |     |  |               |      |           
|2002              |  |      | 9.11 |     |  |               | 6.94 |            |  |  | 6.94 |  |  |  | 7.93 | 
|2001              |  |      | 9.45 |     |  |               | 8.54 |            |  |  | 8.97 |  |  |  | 9.03 | 
|2000              |  |      | 9.59 |     |  |               | 7.93 |            |  |  | 8.80 |  |  |  | 8.83 | 
|1999              |  |      | 8.10 |     |  |               | 7.40 |            |  |  | 8.01 |  |  |  | 7.84 | 
|1998              |  |      | 7.81 |     |  |               | 7.38 |            |  |  | 7.58 |  |  |  | 7.56 | 



| | (1) |  | The average of the noon buying rates on the last
business day of each month during the relevant period.
| | --- |  | -------------------------------------------------------------------------------------------------------

The table below sets out the highest and lowest exchange rate between the
kroner and the U.S. dollar for each of the six months preceding the filing of
this annual report and for the current month to June 20, 2003:

|                                  |  |      |      |     |  |  |      | 
|--------------------------------- |  | ---- | ---- | --- |  |  | ---- | 
|Kroner per dollar                
|                                 
|Period                            |  | High |      | Low
|                                  |  |      |      |    
|December 2002                     |  |      | 7.31 |     |  |  | 6.94 | 
|January 2003                      |  |      | 7.00 |     |  |  | 6.83 | 
|February 2003                     |  |      | 7.20 |     |  |  | 6.87 | 
|March 2003                        |  |      | 7.46 |     |  |  | 7.06 | 
|April 2003                        |  |      | 7.32 |     |  |  | 7.00 | 
|May 2003                          |  |      | 7.03 |     |  |  | 6.68 | 
|June 2003 (through June 20, 2003) |  |      | 7.04 |     |  |  | 6.72 | 

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

In evaluating our company and our business, investors should consider
carefully, in addition to other information contained in this annual report,
the following risk factors.

We are substantially leveraged and currently have insufficient capital, and
cannot guarantee that we will be able to generate sufficient cash flow or raise
additional capital in amounts sufficient to meet required payments of principal
and interest on our debts.

We are substantially leveraged. As of December 31, 2002, we have USD 591
million outstanding in aggregate principal amount of indebtedness (including
the 101/4% senior secured 1998 Notes issued by Ocean Rig Norway in 1998 (the
Notes), the floating rate senior secured 1998 Loans incurred by Ocean Rig
Norway in 1998 (the 1998 Loans), the Convertible Bonds issued by Ocean Rig
ASA in 2000, the Fortis Facility incurred by Ocean Rig 2 AS in 2002 (the
Fortis Facility or the 2002 Loans), the USD Short Term Loan issued in 2002
and the Mandatory Convertible Bonds issued by Ocean Rig ASA in 2002). Although
the agreements governing our indebtedness limit the incurrence of additional
indebtedness, under certain circumstances the amount of permitted additional
indebtedness could be substantial. Our high degree of leverage could have
important negative consequences for holders of our shares and bonds, including
the possibility that:



| |  |  | we may be unable to obtain additional financing in the future for
working capital, capital expenditures, acquisitions, debt service
requirements, general corporate purposes or other purposes,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | we may be required to use a substantial portion of our cash flow from
operations to pay principal of and interest on our indebtedness,
thereby reducing the funds available for other purposes,

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| |   |  | including our operations, marketing activities, future business opportunities and outfitting or construction of additional rigs,                                                                                                                                                                                                                                
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | while the cash flow from our drilling rigs may be adequate to service the obligations under the Notes,
the 1998 Loans and the Fortis Facility, any residual cash flow might not be available for servicing the
remaining debt obligations, including the Convertible Bonds and the USD Short Term Loan, or for repayment
of this loan scheduled for August 2003.
|
| |  |  | we may not have the flexibility to adjust to changing market conditions or the ability to withstand
competitive pressures as a result of our leveraged position and the covenants contained in our debt
instruments, thus putting the Company at a competitive disadvantage,                                                                                    
|
| |  |  | we may be more vulnerable to a downturn in general economic conditions or in our business, or                                                                                                                                                                                                                                                                   
|
| |  |  | Ocean Rigs managements discretion with respect to certain business decisions may be restricted by
covenants contained in the documents governing its indebtedness.                                                                                                                                                                                            

We will be dependent on revenues from our operations in order to make
scheduled payments on our indebtedness. The success of our operations will
depend on many factors, including the level of drilling activity in the oil and
gas industry, the proper functioning of our rigs, and numerous other factors
that are beyond our control. We cannot guarantee that we will be able to
achieve and maintain a level of cash flow from operations sufficient to permit
us to pay the principal, premium, if any, and interest on our indebtedness.

If we are unable to generate sufficient cash flow and cannot otherwise
obtain funds necessary to meet required payments of principal, premium, if any,
and interest on our debts, or if we otherwise fail to comply with the covenants
governing our indebtedness, we could be in default under the terms of the
agreements relating to our outstanding indebtedness, including the senior debt
agreements. Our senior debt agreements also include provisions that require
Ocean Rig, upon the occurrence of certain events, to offer to repurchase the
senior secured debt. Certain of these events could be beyond our control, such
as the loss of a rig or a change of control in the event that a person or group
of persons (as such term is used under the Norwegian Securities Trading Act of
1997) becomes the owner of more than 40% of the voting stock of the Company.
Although the security interests granted to secure the senior secured debt
include any insurance proceeds obtained in connection with the event requiring
the offer to prepay such debt, we cannot guarantee if or when the amounts would
be received and, even if received, that the amounts would be sufficient to
satisfy our repurchase obligations. If these assets, together with our cash
flow and capital resources, are insufficient to fund our debt service or
repurchase obligations, we may be forced to reduce or delay capital
expenditures, sell assets, seek to obtain additional equity capital or
restructure or refinance our debt. We cannot guarantee that any of these
alternative measures would be successful or would permit Ocean Rig to meet its
scheduled debt service or repurchase obligations. In the event of default, the
holders of our debt instruments could elect to declare all debts to be due and
payable together with accrued and unpaid interest. As a result, we could be
forced into bankruptcy or liquidation.

The Fortis Facility contains restrictions on, among other things, minimum
working capital and value adjusted equity (including market value of rigs). As
of December 31, 2002, the Company was unable to comply with two of its
covenants relating to these restrictions. Ocean Rig obtained temporary waivers
from the lenders as of May 15, 2003 waiving noncompliance of the working
capital covenant through March 31, 2003, and waiving noncompliance of the value
adjusted equity covenant through December 31, 2003. While we expect to meet
the covenants at future determination dates, we cannot guarantee that we will
do so, and a failure to remedy any such noncompliance within applicable grace
periods could cause us to be in default under the terms of this facility.

5



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We may be unable to secure ongoing drilling contracts, and the contracts that
we enter into may not provide sufficient cash flow to meet our obligations with
respect to its indebtedness.

Ocean Rigs ability to meet its obligations under its indebtedness will
depend on its ability to consistently secure drilling contracts for its rigs at
sufficiently high day rates. Although we currently have secured drilling
contracts for our two drilling rigs Leiv Eiriksson and Eirik Raude, neither
contract is a long-term contract and we cannot guarantee that we will be able
to obtain additional contracts for either rig upon the expiration or
termination of the existing arrangements. If Ocean Rig cannot obtain
attractive, long-term contracts, we may be forced to enter into short-term
contracts at unattractive day rates or to place the rigs in storage until
acceptable contracts can be obtained. Even if we do obtain acceptable
contracts, we may encounter unforeseen technical or other problems or a need
for additional modifications or repairs during the initial operating period of
the rigs, which may prevent us from receiving the full day rate or earning
bonuses until we are able to correct any such problems or make the necessary
modifications. In addition, as recently occurred with Eirik Raude, there may be
periods in between contracts in which we are not receiving dayrates for one or
both of our rigs.

Our ability to obtain long- or short-term drilling contracts will be
affected by conditions in the offshore petroleum industry, which can rapidly
change as a result of:



| |  |  | political conditions in oil-producing regions,                                                                                           
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the inability of members of the Organization of Petroleum Exporting
Countries to agree to and maintain oil price and production controls,
|
| |  |  | actions of governmental authorities,                                                                                                     
|
| |  |  | fluctuating levels of consumer demand,                                                                                                   
|
| |  |  | weather conditions, and                                                                                                                  
|
| |  |  | overall economic conditions.                                                                                                             

Competition in the offshore contract drilling industry has become particularly
intense in the past two to three years, as offshore drilling activity fell to
historically low levels through the end of 1999. This decrease was due to the
global reduction in exploration and development expenditures resulting from the
consistently low oil prices from late 1997 through early 1999 and consolidation
among major oil companies during the same period.

Despite a recovery in crude oil prices, exploration and development
drilling expenditures have only recently begun to recover, and exploration and
production budget expansion has been moderate. The current situation is
uncertain due to recent macro economic changes and high oil and gas price
volatility. Indications point to a more cautious budget approach with flat or
perhaps small increases in exploration and production budgets.

Drilling contracts are traditionally awarded on a competitive bid basis.
Intense price competition is often the primary factor in the awarding of
contracts, although rig availability as well as quality and
technical/operational capability of equipment are also major factors which are
considered. We cannot predict the future level of demand for its services or
future conditions in the oil and gas industry. If the oil and gas companies do
not continue their recent increases in exploration, development and production
expenditures, we may have difficulty securing drilling contracts, or we may be
forced to enter into contracts at unattractive day rates. Either of these
events could impair our ability to generate sufficient cash flow to make
principal and interest payments under our indebtedness. In addition, we may be
required to move our rigs from a region in which demand is low to another
region in which demand is higher or day rates are more attractive. We would
likely incur material expenses in connection with moving the rigs and the
start-up of drilling operations, and those expenses probably would not be
reimbursed by our customers.

6



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Our customers could terminate or seek to renegotiate drilling contracts for our
rigs for reasons that are beyond our control, and we will not realize revenues
from the rigs if they are not under contract.

Our customers could terminate or seek to renegotiate drilling contracts
for a variety of specific reasons relating to each individual contract
including the following, which are largely beyond our direct control:



| |  |  | the rigs may not function in accordance with their specifications or the needs of the customer,                                                           
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the rigs may be damaged or destroyed by adverse weather, accidents or other force majeure events, or                                                      
|
| |  |  | operation of the rigs may be interrupted as a result of breakdown, unseaworthiness, and failure in construction or other
mechanical or technical failures.

We are not likely to realize any material revenues for times during which
our rigs are not under contract. However, we will continue to incur the expense
of maintaining its rigs during idle periods. In addition, it could be expensive
and time consuming for us to repair a damaged rig, to modify a rig to remedy
failure in the construction or design of the rig or to replace faulty
equipment. We cannot guarantee that all such costs would be covered by our
insurance policy, and we may not be entitled to any compensation for lost
revenues.

We have incurred operating losses each quarter since the inception of our
company and we cannot guarantee that we will not continue to incur losses.

Ocean Rig was founded in 1996. To date, we have engaged primarily in the
design, planning, development, marketing and construction of four rigs, and we
have only two operating rigs. As a result of the sizeable capital investments
required to design and build our rigs, and the fact that we have only just
begun to realize any cash flow from our rigs, we have reported total operating
losses from the inception through December 31, 2002 of NOK 1,159 million. We
have only a limited history of managing or operating rigs. In light of the
uncertainties associated with the volatility of demand for drilling rigs and
our significant payment obligations under our indebtedness, we cannot guarantee
that we will be able to operate profitably in the foreseeable future or to
remain viable as an independent company. We also cannot guarantee that the
estimates of operating losses or cash flow will be accurate or that our need
for additional capital to fund operating losses or capital investments will not
continue substantially longer than expected.

Our revenues depend on a small number of drilling rigs, which operate in harsh
environments and could be damaged or destroyed.

Our operations are dependent on a small number of rigs. Eirik Raude,
pursuant to the drilling contract with EnCana and the new contract with
Imperial Oil, continues to operate offshore the east coast of Canada, and Leiv
Eiriksson is also operating in unfavorable sea conditions and will be exposed
to other risks inherent in deepwater drilling that may cause damage or loss.
The replacement or repair of a rig could take a significant amount of time, and
it is unlikely that we would have any right to compensation for lost revenues
during that time. As long as we have only two rigs in operation, loss of or
serious damage to one of the rigs would materially reduce our revenues for the
time that a rig is out of operation. In light of the sophisticated design of
the rigs, we may be unable to obtain a replacement rig that could perform under
the conditions under which our rigs are expected to operate.

Our operations are subject to numerous risks inherent in the offshore
drilling industry. The drilling of oil and gas wells, particularly exploratory
wells where little is known of the subsurface formations, involves the risks of
extreme pressure and temperature, blowout, cratering and fires that could
result in reservoir damage, injury or death to personnel, substantial damage to
our rigs, pollution,

7



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suspension of drilling operations and loss of production. Our rigs are
subject to the hazards inherent in marine operations, such as capsizing,
grounding, collision, damage from heavy weather or sea conditions and unsound
location, both while on site and during transport to site or for outfitting or
repair. We also may be subject to liability for oil spills, reservoir damage
and other accidents.

Any contractual indemnification and insurance that we obtain may not be
sufficient to cover the cost of repairing or replacing a damaged or lost rig or
to pay any liabilities that we may incur.

We generally expect to be able to obtain contractual indemnification
pursuant to which our customers would agree to protect and indemnify Ocean Rig
to some degree from liability for reservoir, pollution and environmental
damages. Nonetheless, we cannot guarantee that we will be able to obtain full
indemnities in all of our contracts, that the level of indemnification we can
obtain will be meaningful, that the indemnification provisions will be
enforceable or that our customers will be financially able to comply with their
indemnity obligations. We will always, to some extent, be exposed to potential
liabilities relating to oil and other types of pollution. Although we intend to
seek to obtain adequate coverage under our liability insurance and also to
limit our exposure in its agreements with our customers there can be no
assurance that such attempts to limit, reduce or offset such liability will be
sufficient.

We maintain insurance in accordance with industry standards. Our insurance
is intended to cover normal risks in our current operations, and we intend to
obtain additional insurance against certain delays, property damage, war risk,
general liability and environmental liabilities, including pollution caused by
sudden and accidental oil spills, as necessary. Although we have obtained
insurance for the full assessed market value of our rigs, insurance coverage
may not under certain circumstances be available and if available may not
provide sufficient funds to protect Ocean Rig from all losses and liabilities
that could result from our operations. The principal risks against which we may
not be fully insured or insurable are environmental liabilities, which may
result from a blowout or similar accident, and liabilities resulting from
reservoir damage caused by our negligence. Moreover, any insurance is expected
to be subject to substantial deductibles and to provide for premium adjustments
based on claims, and our insurance coverage is not likely to protect fully, if
at all, against loss of income. We may decide to maintain business interruption
insurance with respect to our rigs, but if we do obtain that type of insurance,
we may elect to discontinue it at any time. The occurrence of a casualty, loss
or liability against which we are not fully insured could significantly reduce
our revenues, make it financially impossible for us to obtain a replacement rig
or to repair a damaged rig, cause Ocean Rig to pay fines or damages that may
have priority over the payment obligations under the indebtedness or otherwise
impair the ability to meet the obligations under the indebtedness and to
operate profitably. In addition, we cannot guarantee that insurance will be
available to Ocean Rig at all or on terms acceptable to us, that we will
maintain insurance or, if Ocean Rig is so insured, that our policy will be
adequate to cover our loss or liability in all cases.

We may be unable to meet our future capital requirements in connection with the
operation and maintenance of our rigs.

Our future capital requirements and level of expenses will depend on
numerous factors, including, among other things, the timing and terms on which
drilling contracts can be negotiated, the amount of cash generated from
operations, the level of demand for our services and general industry
conditions. In the event that our existing resources and other committed
funding are insufficient to fund our operating and maintenance activities, we
may need to raise additional funds through public offerings or private
placements of debt or equity securities. We cannot guarantee that we will be
able to obtain additional financing at all or on terms acceptable to Ocean Rig.
If adequate funds are not available, we may have to reduce expenditures for
investments in new projects, which could hinder the companys growth and
prevent us from realizing potential revenues from prior investments.

8



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We may be unable to compete successfully with other companies in the offshore
drilling industry, many of which have superior resources, name recognition and
experience.

The number of participants in the contract offshore drilling industry is
small and primarily consists of a few large, experienced contractors that have
greater financial resources than us. Since we are a new participant in this
field and have no operating history, we may not be able to compete in the
industry successfully. In addition, because of the relatively small size of our
company, we will not be able to take advantage of economies of scale to the
same extent as our larger competitors. In light of the high capital
requirements inherent in the offshore drilling industry, we also may be unable
to make future investments in new technologies or fleet expansion necessary for
us to succeed in this industry, while our larger competitors superior
financial resources may enable them to respond more rapidly to changing market
demands.

The offshore contract drilling industry has historically been highly
competitive and cyclical, and a sustained period of low oil and gas prices,
deterioration in the economic conditions in a major industrialized or
developing region or a general downturn in the worlds industrialized economies
could curtail spending by oil and gas companies and, as a result, lower demand
for offshore contract drilling services. Therefore, we cannot predict whether
market conditions will be favorable for our rigs when they become available.
Some of our competitors have significantly greater financial, marketing,
personnel and other resources than we have. As a result, our competitors may be
better able to withstand cyclical fluctuations in demand for offshore drilling
and production and related services and better positioned to compete for
existing demand for such services.

We cannot guarantee that our use of the Bingo rig design concept will not
infringe on the rights of others or that competitors will not duplicate our
technology.

Although Ocean Rig purchased the right to use the Bingo rig design concept
for our rigs, neither Ocean Rig nor the company from which we bought those
rights have obtained or applied for any patents or other intellectual property
protection relating to the design. As a result, we cannot guarantee that other
parties will not challenge our right to use the Bingo concept or seek damages
for alleged infringement of rights that they claim to own. We may also lose the
competitive advantage that we sought to achieve through use of the Bingo design
concept if our competitors duplicate key aspects of the design without seeking
our permission, and we may be unable to prevent competitors from doing so.

We may loose key personnel or be unable to secure the services of a sufficient
number of qualified workers for the operation of our rigs.

Our success depends to a large extent upon the continued services of our
senior management and upon our ability to attract and retain key operating
personnel. The loss of the services of any such employee could have a negative
effect on Ocean Rig. We do not maintain key man insurance with respect to
these individuals. While our success depends in part upon these personnel, we
believe that there are other qualified managers in the offshore drilling
industry. However, we cannot guarantee that we would be able to engage
qualified managers and, if we were, on what terms.

In recent years, unemployment rates in the offshore contract drilling
industry have reached unusually low levels, leading to lower availability of
skilled labor and increased labor costs. While we believe that we will be able
to retain a sufficient number of qualified personnel to operate our rigs in
accordance with customer requirements, we cannot guarantee that there will not
be a shortage of available skilled workers in the future or that the cost of
labor will not rise, either of which could impair our ability to operate our
rigs profitably.

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Our operations will be subject to a number of risks that are inherent in doing
business abroad.

We expect to derive all or a substantial portion of our revenues from the
operation of our rigs outside such known jurisdictions as Norway, Canada and
the United States, in locations including offshore Brazil and/or West Africa,
and are in fact currently operating our first rig offshore Angola. As a result,
we will likely be subject to certain political, economic and other risks
inherent in doing business abroad, including the risk of war and civil
disturbances, expropriation and the general hazards associated with assertions
of national sovereignty over areas in which our rigs will operate. Our
operations abroad may face the additional risks of fluctuating currency values,
hard currency shortages, controls of currency exchange and repatriation of
income or capital, as well as liabilities related to taxes and import duties.

We could be subject to significant environmental liabilities as a result of the
nature of our planned operations.

Our operations may involve the use and/or disposal of materials that may
be classified as hazardous substances. The environmental laws and regulations
of the countries in which we may operate generally have become more stringent
in recent years. Such laws and regulations may expose us to liability for the
conduct of, or for conditions caused by, others, or for acts of Ocean Rig that
were in compliance with all applicable laws at the time such actions were
taken. In the past several years, protection of the environment has become a
higher and more visible priority of many governments throughout the world.
Offshore drilling in certain areas has been opposed by environmental groups
and, in some areas, has been legally restricted. Our operations could be
restricted and our rigs could become more expensive to operate if new laws are
enacted or other governmental actions are taken that prohibit or restrict
offshore drilling or impose additional environmental protection requirements.
Moreover, we may have no right to compensation from our customers if our costs
are increased through such governmental actions, and our operating margins may
fall as a result.

Governmental Regulation could hamper our operations and reduce demand for our
services

Our operations are, and will be, subject to numerous international
conventions as well as national, state and local laws and regulations in force
in the jurisdictions in which we conduct, or will conduct, our business. These
laws and regulations relate to the protection of the environment, human health
and safety, taxes, labor and wage standards and other requirements.

The amendment or modification of existing laws and regulations or the
adoption of new laws and regulations curtailing or further regulating
exploratory or development drilling and production for oil and gas for
political, economic or other reasons could harm our business, operating results
or financial condition. We cannot predict the extent to which our future cash
flow and earnings may be affected by mandatory compliance with any such new
legislation or regulations.
The construction and operation of our rigs will require certain governmental
approvals, the number and requirements of which cannot be determined until we
identifiy the jurisdictions in which Ocean Rig will operate. Depending on the
jurisdiction, these approvals may involve public hearings and costly
undertakings on our part. We cannot guarantee that we will obtain such
approvals or that such approvals will be obtained in a timely manner. If we
fail to secure needed approvals or permits within certain time limits, our
customers may have the right to terminate drilling contracts, or they may seek
to renegotiate their contracts to Ocean Rigs detriment.

Changes in the laws, regulations and licensing policies regarding
exploration for and development of oil and gas reserves in the countries in
whose territory our rigs may operate could reduce the rate of development of
oil and gas fields, which in turn would affect demand for our rigs. The
offshore drilling and floating production industry, of which we are a part, is
dependent on demand for services

10



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from the oil and gas exploration industry and, accordingly, is affected by
changing taxes, regulations and other laws or policies affecting the oil and
gas industry generally.

Certain liens could supercede our lenders mortgages on Leiv Eiriksson and
Eirik Raude.

Ocean Rig 1 AS has mortgaged Leiv Eiriksson to secure the obligations of
Ocean Rig Norway AS in relation to the issuance of the Notes and the incurrence
of the 1998 Loans, and Ocean Rig 2 AS has mortgaged Eirik Raude to secure the
obligations of Ocean Rig Norway AS in relation to the above facilities, and on
a first priority basis to secure the obligations of Ocean Rig 2 AS under the
2002 Loans. Both Leiv Eiriksson and Eirik Raude are permanently registered in
the Bahamas. Bahamian law provides that mortgages over permanently registered
vessels may be enforced by admiralty proceedings in rem by the mortgagee
against the rigs.

Under Norwegian law it is not possible to create a general security
interest over all the assets of a debtor. It is only possible to create
security interests over assets if Norwegian law specifically allows such
interests. Security interests are created by the creation of security
documents specifically describing the asset or type of asset subject to the
security interest and by taking the necessary steps in order to perfect the
security. The type of asset will determine which steps are required to perfect
such security interest. As Norwegian law does not provide for the creation of
a security interest over a contractual right or obligation, it is not possible
to create a security interest over a building contract or drilling contract as
such. Furthermore, under Norwegian bankruptcy law, the bankruptcy estate has
the right to assume the contractual rights and obligations of a debtor. It is
not possible to deprive the bankruptcy estate of this right by assigning the
contract in question to a creditor.

Rig mortgages are generally subordinate to certain maritime liens that
arise by operation of law. The priority that such mortgages would have against
the claims of other lien creditors in an enforcement proceeding is generally
determined by, and will vary in accordance with, the laws of the country where
the proceeding is brought. Relevant Bahamian law provides that the following
liens and claims take priority over rig mortgages registered in the Bahamas and
no other claim takes priority over such mortgages: (1) any sum awarded by a
court as costs arising out of any proceedings in respect of the arrest of a rig
or the subsequent sale thereof; (2) wages and other sums due to the master,
officers and other members of the rigs complement in respect of their
employment on the rig; (3) port, canal and other waterway dues and any
outstanding fees payable under the Bahamian Merchant Shipping Act in respect of
the rig; (4) claims against the owner in respect of loss of life or personal
injury occurring, whether on land or on water, in direct connection with the
operation of the rig; (5) claims against the rigs owner, based on tort and not
capable of being based on contract, in respect of loss of or damage to property
occurring, whether on land or on water, in direct connection with the operation
of the rig; (6) claims for salvage, wreck removal and contribution in general
average; and (7) any lien exercisable by a rig builder or repairer over a rig
in our possession prior to the date of the mortgage.

Leiv Eiriksson, which serves as security for the Notes and 1998 Loans, and
Eirk Raude, which serves as security for the Notes, 1998 Loans and 2002 Loans
may be used and operated in international waters and jurisdictions other than
the Bahamas. In fact, Leiv Eiriksson is currently operating offshore Angola,
and Eirk Raude is currently operating offshore Canada. We cannot assure you
that, if enforcement proceedings are initiated against a particular rig, such
rig will be located in a jurisdiction having the same procedures and lien
priorities as the Bahamas and that the relative lien priority against other
maritime liens will be as favorable as in the Bahamas. Other jurisdictions may
provide no legal remedy for the enforcement of the mortgages securing the Notes
or our other debt facilities, or a remedy dependent on court proceedings may be
so expensive and time consuming as to be impracticable. Furthermore, certain
jurisdictions, may not permit either rig to be sold prior to entry of a
judgment, which could result in a lengthy delay that could lead to increased
custodial costs, deterioration in the condition of the rig and substantial
reduction in its value.

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Each of Ocean Rig 1 AS and Ocean Rig 2 AS as a subsidiary guarantor has
the right in our discretion to change the registry and flag of Leiv Eiriksson
or Eirik Raude to certain specified jurisdictions, as well as other
jurisdictions upon the delivery of an opinion of nationally recognized maritime
counsel in the United States which is satisfactory to the trustees to the
effect that the interests of the holders of Notes will not be adversely
affected by such change of registry and flag. We cannot assure you that the
mortgage after such registry change will provide protection under applicable
law comparable to the protection provided by Bahamian maritime law.

We are dependent on our operating subsidiaries for income.

Both Ocean Rig ASA and its direct subsidiary, Ocean Rig Norway AS, are
holding companies. Ocean Rig ASA (the parent) and Ocean Rig Norway AS will
derive a substantial part of their operating income from management fee
advances and dividends from their subsidiaries. Accordingly, in paying the
principal, premium, if any, interest on, and additional amounts, if any, with
respect to our indebtedness, Ocean Rig Norway AS will rely on income from
dividends and advances from our operating subsidiaries. Generally, under
Norwegian law, a company is able to pay dividends on only 80% of our net income
to shareholders. Also, the ability of our subsidiaries to pay such dividends
or make such distributions may be subject to, among other things, applicable
laws and, under certain circumstances, restrictions contained in joint venture
agreements and debt instruments that may be entered into in the future, which
may affect our ability to meet our obligations with respect to our
indebtedness. In addition, certain of our subsidiaries may in the future have
covenants with respect to their outstanding debt which may restrict their
ability to pay dividends in the event such subsidiary is not in compliance with
financial maintenance tests included in such debt agreements.

Our operations and financing plans may be adversely affected by acts of war and
terrorism.

On September 11, 2001, terrorist attacks on the World Trade Center in New
York and the Pentagon in Washington, D.C. caused significant loss of life and
property damage and disruptions in the U.S. and global markets. The short term
and long term impact of these events, including military conflicts or economic
or diplomatic sanctions, is unclear, but could have a material effect on
general economic conditions and market liquidity. Acts of war and terrorism may
negatively impact financial institutions and reduce liquidity in the market,
which could exacerbate the effects of an economic downturn and impair the
ability of Ocean Rig to secure future contracts or seek additional financing.

ITEM 4. INFORMATION ON OUR COMPANY

A. History and Development of Our Company

Our legal and commercial name is Ocean Rig ASA. We are a limited
liability company incorporated in the Kingdom of Norway in 1996. Our principal
executive and registered offices are located at Koppholen 4, P.O. Box 409, 4067
Stavanger, Norway. Our telephone number at that address is (47) 51 96 90 00.

We operated as a development stage company from our inception in 1996
until February 2002, when our first drilling rig, Leiv Eiriksson, commenced
operations. Since inception, we have devoted substantially all of our efforts
to the ongoing construction of our fleet of rigs, Leiv Eiriksson and Eirik
Raude, and two baredecks: (1) designing, engineering and contracting with a
baredeck construction yard in Dalian, China, outfitting yards in Mississippi
and in Halifax, Canada, and various equipment suppliers for our rigs; (2)
overseeing construction of the rigs; (3) raising capital; and (4) marketing the
rigs. As Leiv Eiriksson began drilling operations in February 2002 and our
second rig, Eirik Raude, was completed and commenced operations in November
2002, we have as of December 31, 2002, for the first time, received revenues
from the operation of rig drilling activities. We sold our two remaining
baredecks in March 2002. We have financed our operations primarily through the
issuance of debt and equity securities and financial income generated from our investment of the
proceeds from such issuances. Our principal capital expenditures in 2000, 2001
and 2002 were for the construction of our rigs. Our capital expenditures
amounted to NOK 1,231 million ($177.4 million) in 2000, NOK 1,563 million ($
225.3 million) in 2001 and NOK 1,903 million ($ 274.3 million) in 2002. As of
December 31, 2002, we had an accumulated operating loss on a consolidated basis
of NOK 1,159.2 million ($167.1 million).

12



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##### 



The following material corporate events occurred in 2002 and
2003:



| |  |  | In January 2002, we executed a drilling contract with an
affiliate of ExxonMobil Corporation for drilling services for Leiv
Eiriksson off the coast of Angola.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | On February 7, 2002, Leiv Eiriksson commenced drilling
operations offshore Angola under the contract with ExxonMobil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  |  | In February 2002, we entered into a short-term revolving
facility totaling $19 million with EnCana. We borrowed $10 million
under this facility, which we repaid in full upon the sale of our
baredecks in March 2002. The facility matured upon delivery of
Eirik Raude under the drilling contract with EnCana.                                                                                                                                                                                                                                                                                                                                                                  
|
| |  |  | In February 2002, the par value of our shares was written
down from NOK 30.0 to NOK 1.0 per share. The share capital
following the write-down was NOK 56,077,201 comprising 56,077,201
shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | In February 2002, subordinate convertible bonds issued in
November 2001 were converted to 73,666,667 new shares in the
company. The share capital following the conversion was NOK
129,743,867 comprising 129,743,867 shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | In February 2002, we entered into an agreement with Noble
Drilling for the sale of our two baredecks for a sales price of USD
45 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  |  | In March 2002, we notified the lenders under the 2001 Loans
(defined below) that we currently had insufficient funds to pay
remaining completion costs for Eirik Raude (as defined under that
facility) and as a result, were in default under the collateral
agency agreement relating to the 2001 Loans. We notified the
lenders on June 10, 2002 that this default had been cured as a
result of payments of completion costs for Eirik Raude made with
funds received in March, April and June, as described below. These
loans were repaid in full, and all security interest released, upon
the entering into the 2002 Loans (Fortis Facility) in June 2002,
described below.
|
| |  |  | In March 2002, we consummated the sale of our two baredecks
to Noble Drilling. Proceeds from the sale were received the same
month and applied in part toward the completion of Eirik Raude.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | In April 2002, we raised NOK 220 million ($24.4 million at
historical exchange rates) through a private placement issuing
24,444,445 new shares. The share capital, following the issue, was
NOK 154,188,312 comprising 154,188,312, shares. Proceeds from this
placement were also used to help fund completion of Eirik Raude.                                                                                                                                                                                                                                                                                                                                                   
|
| |  |  | In April 2002, there were several changes in our board of
directors and management. Christian Huseby resigned as President
and CEO of Ocean Rig ASA and Tore Grottum resigned as CFO. Kai
Solberg-Hansen was appointed as the new President and CEO. Bjarne
Skeie resigned as Chairman of the Board. The board appointed
Morten Borge as the new Chairman. Bjarne Skeie is continuing as a
member of the board of Ocean Rig ASA. In addition, two members of
the board, Tore O. Berg and Frederik Steenbuch, resigned from the
board.                                                                                                                                              

13



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##### 





| |  |  | In May/June 2002, after a review of the project cost to
complete Eirik Raude and reconciliation of completion estimates, we
announced that we expected that costs to complete the rigs would
increase by approximately USD 45 million. We raised NOK 250.1
million ($30.1 million at historical exchange rates) through a
private placement issuing 31,257,500 new shares at a subscription
price of NOK 8 per share, and NOK 382.6 million (at historical
exchange rates) ($45.9 million) through the issuance of 32,800
units consisting of bonds, warrants and an aggregate of 4,428,000
new shares. Proceeds were used to make interest payments due on
the Notes, 1998 Loans and the Convertible Bonds, and to help pay
remaining completion costs for Eirik Raude. We subsequently raised
$7.1 million in two subsequent issues, consisting of 76,743 new
shares at a subscription price of NOK 8 per share, totaling NOK 0.6
million ($0.1 million at historical exchange rates) and 5,000
short-term financing units consisting of bonds, warrants and an
aggregate of 675,000 shares, totaling NOK 55 million ($7 million at
historical exchange rates). The share capital, following the issue,
was NOK 190,625,555 comprising 190,625,555 shares.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | On June 21, 2002, Eirik Raude was mechanically completed
and we took delivery of the rig from the Irving Shipyard in
Halifax. We began commissioning and testing of the rig in
preparation for commencement under the contract with EnCana.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | In June 2002, we delivered an irrevocable notice to the
lenders of the 2001 Loans that we would refinance the 2001 Loans
with the take-out facility from Fortis and Nordea Bank. The
take-out facility (referred to herein as the Fortis Facility or
the 2002 Loans was closed on June 28, 2002 and the proceeds
received were used to pay off the 2001 Loans in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  |  | In August 2002, we issued a three year mandatory zero
coupon convertible bond totaling NOK 669.5 million ($88.1 million
at historical exchange rates) with a conversion right at NOK 3.50
per share, convertible into a total of 191,275,142 shares. The loan
balance consisted of NOK 323.9 million in new capital to the
Company and NOK 345.6 million of the loan was converted from other
loans in the company to the new loan. At the same time we issued
191,275,142 warrants with a subscription price of NOK 1.0 per
share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  |  | In September 2002, we extended our current contract with
ExxonMobil for Leiv Eiriksson with one additional well to the firm
part of the contract. In the same month, Eirik Raude left Halifax
to commence a four-week period of sea trials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | In October 2002, Det Norske Veritas issues a Certificate
of Fitness for Eirik Raude following approvals from Canada-Nova
Scotia Offshore Petroleum Board and Canada-Newfoundland Offshore
Petroleum Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | On November 1, 2002, Eirik Raude was delivered on contract
with EnCana Corporation and commenced drilling operations off the
East Coast of Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  |  | In November, a total of 191,258,154 of our warrants are
exercised raising a total of NOK 191.3 million ($25.6 million at
historical exchange rates) in new equity. Our share capital
following the exercise of the warrants was NOK 381,883,709
comprising 381,883,709 shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  |  | In December 2002, Eirik Raude successfully completed
testing of the emergency disconnect and reconnect and completed the
testing of the Blow out Preventer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | In December 2002, we raised NOK 111.0 million ($15.5
million at historical exchange rates) through a private placement
issuing 111,000,000 new shares at a subscription price of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

14



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| |   |  | NOK 1.0 per share. The share capital following the issue was NOK
492,883,709 comprising 492,883,709 shares. Proceeds from this
placement were also used to help fund completion of Eirik Raude. A
total of 3,142 shares were converted from the Mandatory Convertible
Bond in December 2002, increasing the share capital to NOK
492,886,851 comprising 492,886,851 shares.                                                                                                                                                                                                                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In December 2002, we announced certain amendments to the
Fortis Facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | In January 2003, we issued NOK
35.1 million ($ 5.1 million at historical exchange rates) in a subsequent share issue, issuing
35,151,298 new shares at a subscription price of NOK 1.0 per share.
Further, 264,285 shares were converted from the Mandatory
Convertible Bond in January 2003. The share capital following the
share issue and conversion was NOK 528,302,434 comprising
528,302,434 shares.                                                                                                                                                                                  
|
| |  |  | In February 2003, we announced that Esso Exploration Angola
Limited had exercised its first option well to the drilling
contract for Leiv Eiriksson offshore Angola, West-Africa.                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  |  | In March 2003, the board appointed Geir Aune as Chairman of
the Board. Morten Borge, the previous chairman of the Board,
continues as a member of the Board.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | In May 2003, we exercised our option to extend the final
installment of USD 8.7 million on our short term USD loan, by three
months to August 13, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | In May 2003, BP Exploration Angola Limited exercised its
second option well under the drilling contract for Leiv Eiriksson.
The well will start immediately after the first option well is
completed and will last for an estimated 50 days, through August
2003.                                                                                                                                                                                                                                                                                                                            
|
| |  |  | In May 2003, 223,428 shares were converted from the
Mandatory Convertible bond. Further, 8 new shares were issued in
connection with the reverse share split approved by the Annual
General Meeting in May 2003. The share capital following the share
issue and conversion was NOK 528,525,870 comprising 528,525,870
shares.                                                                                                                                                                                                                                                               
|
| |  |  | The Fortis Facility contains restrictions on, among other
things, minimum working capital and value adjusted equity
(including market value of rigs). As of December 31, 2002, the
Company was unable to comply with two of its covenants relating
to these restrictions . Ocean Rig obtained temporary waivers from
the lenders as of May 15, 2003 waiving noncompliance of the working
capital covenant through March 31, 2003, and waiving noncompliance
of the value adjusted equity covenant through December 31, 2003,
and expects to meet the covenants at future determination dates.
|
| |  |  | In the Annual General meeting on May 16, 2003 our
shareholders decided to increase the par value of the Companys
shares from NOK 1.0 to NOK 10.0 per share. As a result of the
reverse share split, our shares traded with a par value of NOK 10.0
per share as of May 21, 2003. The number of shares, due to the
reverse share split, was reduced from 528,525,870 shares to
52,852,587 shares on May 21, 2003. As a result of the reverse share
split, the conversion prices of our convertible debt have been
proportionately adjusted on a scale 10:1.                                  
|
| |  |  | In the General meeting in May 2003, our shareholders
authorized a new option plan for Board members and management of
our company. The share option plan authorized in August 2002 was
withdrawn.                                                                                                                                                                                                                                                                                                                                                                                            

15



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##### 





| |  |  | In June 2003, Ocean Rig Canada Inc, a wholly owned
subsidiary of Ocean Rig ASA, was awarded a contract with Imperial
Oil Resources Ventures Limited to drill their Balvenie well
offshore Nova Scotia commencing on or about July 1, 2003 with an
estimated duration of approximately 50  60 days.              
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In June 2003, we employed Thor Kristian Hagness in a new
position as President, responsible for operations, marketing,
quality, safety and environmental issues.                                                                                                                                                 
|
| |  |  | On June 12, 2003, Ocean Rig completed the last well under
the firm period of the EnCana contract. As no options under the
contract were exercised, Eirik Raude was redelivered to the
Partnership formed by Ocean Rig and EnCana to operate the rig, in
preparation for commencement under the Imperial contract.

B. Business Overview

We were an Oslo-based publicly-listed company up until December 31, 2002.
As of January 1, 2003 we moved to Stavanger, Norway. We were formed in 1996 to
construct, own and operate a fleet of high-specification semi-submersible
drilling rigs for offshore oil and gas exploration and development drilling
primarily in deepwater and harsh environments. Our activities since our
inception have been largely limited to the ongoing construction of four Bingo
9000 fifth-generation semi-submersible drilling rigs: Rig No. 1 (Leiv
Eiriksson), Rig No. 2 (Eirik Raude), Rig No. 3 and Rig No. 4. Leiv Eiriksson
and Eirik Raude are both operational, and the baredecks Rig No. 3 and Rig No. 4
were sold in March 2002 to help fund completion costs for Eirik Raude. We
believe that our rigs are among the most advanced in the world, capable of
drilling in ultra-deep waters in excess of 8,000 feet using dynamic-positioning
systems.

Strategy

We are committed to our strategy of creating maximum value for our
shareholders by developing our Company as an independent world wide
ultra-deepwater contractor, and taking advantage of our position as the owner
and operator of the most modern and unique semi-submersible drilling rigs in
the world.

The strong performance of the major oil companies should have a positive
impact on plans for drilling activity, contract opportunities and day rates,
especially in the deepwater segment. We believe that deepwater exploration and
development will increase the demand for high-quality drilling units.
Prospects in the deepwater segment appear to be positive. The discovery rate
is higher in deepwater than in other areas, and this has resulted in lower
exploration costs per barrel of oil equivalents found in deepwater. Despite
the higher costs associated with deepwater operations, fields in production are
more competitive because development and operating costs per barrel of oil
equivalents are lower than in many fields in traditional areas. Although the
current situation in 2003 is uncertain due to recent economic changes and high
volatility in oil prices, we expect these factors to attract resources to
deepwater activities, which, in turn, should increase the demand for deepwater
rigs and. See Item 3, Key Information-Risk Factors-Market conditions remain
uncertain and we may be unable to secure ongoing drilling contracts. We plan
on continuing to focus our marketing efforts primarily on West Africa, Canada,
the Gulf of Mexico, Brazil and the North Sea/Atlantic Margin area.

Rig Fleet

Our semi-submersible drilling rigs have been constructed based on the
Bingo 9000 design, which encompasses state-of-the-art capabilities and maximum
outfitting flexibility, in order to provide us with the broadest variety of
options for pursuing opportunities in deepwater markets. Leiv Eiriksson and
Eirik

16



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Raude are fifth-generation rigs with improved operating efficiency due to
the use of the latest technological advances. Eirik Raude is designed to carry
out drilling operations in water depths of up to 10,000 feet. Leiv Eiriksson
is built for operation in water depths of up to 8,200 feet, but can be upgraded
to the same water depth capability as Eirik Raude. Both Leiv Eiriksson and
Eirik Raude are capable of drilling to a total depth of 33,000 feet and will
remain stable in harsh weather conditions due to their superior motion
characteristics and advanced dynamic-positioning systems.

The Bingo 9000 design is a generational improvement on the Bingo design,
which has a proven record of operational efficiency. Although we have made
improvements to the Bingo design, the basic technology employed in the
construction of our rigs is well-known and field tested. The technological
improvements that we have built into our rigs include more sophisticated
positioning capabilities, motion characteristics and safety features. We have
also incorporated a structural design that permit one of the largest variable
deck loads of any existing semi-submersible design, which is a critical
drilling capability determinant. Our rigs are meeting the latest and most
stringent industry requirements currently applied and are capable of performing
complex drilling operations.

Although we purchased the right to use the Bingo rig design concept for
our rigs, neither we nor the company from whom we bought those rights has
secured or applied for any patents or other intellectual property protection
relating to such design. As a result, it is possible that third parties could
challenge our right to use the Bingo concept or seek damages for alleged
infringement of rights that they claim to own. Also, we may also lose the
competitive advantage that we sought to achieve through use of the Bingo design
concept if our competitors duplicate key aspects of the design without seeking
our permission. Furthermore, we cannot guarantee that we will be able to
prevent third party competitors from doing so.

As the EnCana contract for Eirik Raude contemplated operation of the rig
in a harsh-environment area off the eastern coast of Canada the rig went
through a process which in certain cases is referred to as winterization. $15
million of the total cost of this process was reimbursed by EnCana.

Semi-submersible drilling rigs are typically used in water depths
exceeding 300 feet and in harsh environments. They can drill in water that is
too deep for jack-up drilling rigs. Their superior motion characteristics give
them a competitive advantage over drillships in harsh weather conditions. Our
fifth-generation rigs are able to operate in water depths and severe weather
areas in which other semi-submersible rigs and drillships are not certified to
operate in. The main features of Rig No. 1 and Rig No. 2 include:



| |  |  | water depth capacity of up to 8,200 and 10,000 feet,
respectively;                         
| | - |  | -------------------------------------------------------------------------------------------
|
| |  |  | variable deck load of 6,700 metric tons and a total payload
capacity of 14,000 metric tons;
|
| |  |  | three independent mud systems with a total capacity in excess of 11,000 bbls;              
|
| |  |  | dynamic-positioning system (DP Class 3);                                                   
|
| |  |  | installed power of 45,000 kilowatts;                                                       
|
| |  |  | thruster capacity of 33,000 kilowatts; and                                                 
|
| |  |  | self-propulsion for efficient mobilization.                                                

Construction of the Rigs

The hulls, also known as baredeck units, for Leiv Eiriksson, Eirik Raude,
Rig No. 3 and Rig No. 4 were built at the Dalian New Shipyard in China and were
delivered to us on June 18, 1998, October 6, 1998, May 7, 1999 and September
15, 1999, respectively. We entered into outfitting contracts with Friede
Goldman in December 1997 and June 1998 to outfit Leiv Eiriksson and Eirik Raude, respectively,

17



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and a completion contract with the Halifax shipyard of Irving Shipbuilding
for the completion of Eirik Raude. We also entered into purchase agreements
with a number of companies for the delivery of owner-furnished equipment for
Leiv Eiriksson and Eirik Raude.

On the whole, the progression of the construction project for Leiv
Eiriksson and Eirik Raude was a little slower than the timeframe that was
originally drawn up. The amount of change orders and repair of errors made from
the Friede Goldman shipyard increased the amount of work needed to finish Eirik
Raudeat Halifax, and caused delays in the commencement of operations for Liev
Eiriksson,which commenced operations in February 2002. We gained valuable
experience from the completion, testing and commissioning of Leiv Eiriksson,
which was the basis for planning the final phase of the construction project,
and the test phase for Eirik Raude. Eirik Raude was mechanically completed and
delivered to us by the Halifax Shipyard on June 21, 2002, ready for
commissioning and sea trials, and commenced operations on November 1, 2002.

Completion of Eirik Raude

In July 2001, Eirik Raude was transferred from the Friede Goldman Shipyard
to the Halifax Shipyard for completion and winterization.

The activities of Halifax Shipyard for the completion of Eirik Raude were
regulated by a contract concluded July 25, 2001, and subsequently amended,
between Ocean Rig 2 AS and Irving Shipbuilding, Inc. This contract required the
Halifax Shipyard to complete detail design, outfitting and winterization of
Eirik Raude with support and assistance from our personnel.

It was originally estimated that Eirik Raude would be mechanically
completed and able to start sea trials by the end of the first quarter of 2002.
Based on ongoing project review, Irving Shipbuilding and Ocean Rig worked
towards the objective that Eirik Raude would be mechanically completed by the
end of June 2002. In order to ensure timely delivery of Eirik Raude under this
revised estimate, Irving Shipbuilding and Ocean Rig entered into an amendment
to the building contract which established specific milestones, which the
Halifax Yard was required to achieve in order to receive its bonus. Eirik Raude
was mechanically completed on June 21, 2002 and Ocean Rig took immediately
delivery of the rig from the Halifax Shipyard in Halifax. The rig went into a
new phase of commissioning, sea trails and testing of equipment. Eirik Raude
was completed and delivered under the drilling contract with EnCana, where the
rig commenced operations on November 1, 2002.

Equipment Contracts

We entered into purchase agreements with a number of suppliers for the
delivery of owner furnished equipment for Leiv Eiriksson and Eirik Raude. These
purchase agreements covered the supply of power and electrical systems,
derrick, pipehandling, cranes and lifting tackle, drilling control systems,
BOP, control systems, drill pipes, marine riser systems, diesel engines,
dynamic positioning systems, thrusters, mooring winches, drilling mud pumps and
other mechanical drilling equipment. Our principal suppliers include ABB
Industri AS, Marine Division; Cameron Norge AS, a subsidiary of Cooper Cameron
Corporation; ABB Vetco Gray U.K. Ltd.; Kongsberg Simrad AS; Ulstein Brattvaag
AS; Hydralift ASA; Aquamaster-Rauma Ltd.; Wärtsilä NSD Finland Oy; and Varco BJ
Oil Tools, a subsidiary of Varco International.

18



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Rig Management and Operations

We employ a core group of professionals with significant experience in the
offshore drilling industry. These employees work from our Stavanger offices, as
well as in direct operational roles in Luanda, Angola and Halifax, Canada.
Moreover, in conjunction with our marketing alliance with Sonangol for the
Angolan market, we entered into an agreement in June 2000 with Pride Foramer
S.A. (Pride), a subsidiary of the U.S. drilling company Pride International,
Inc., which is among the worlds large drilling contractors, for operation of
Leiv Eiriksson offshore Angola. Sonangol is also a party to this agreement.
Pride owns and manages two advanced deepwater drillships that operate offshore
Angola. Pride has considerable experience from operations in Angola, and has
for a number of years had a base organization, a well-developed infrastructure
and other functions of which we now make use. According to our agreement with
Pride, we have our own key personnel both onshore and offshore.

We have not entered into management agreements for the operation of Leiv
Eiriksson for areas other than Angola.

Effective April 13, 2001 (and later amended), Ocean Rig entered into a
series of agreements with EnCana (at the time PanCanadian) pursuant to which
Eirik Raude would provide offshore drilling services to EnCana and other
companies offshore the east coast of Canada. Under the agreements Ocean Rig and
EnCana formed the Partnership (East Cost Drilling Partnership (ECDP)) to
operate the rig under the EnCana Drilling Contract offshore the east coast of
Canada. ECDP is jointly owned by Ocean Rig and EnCana with an ownership of 5%
and 95%, respectively.

Marketing

Offshore Contract Drilling Service

We expect our future contracts for the provision of offshore drilling
services to vary in their terms and conditions. We may obtain drilling
contracts either through competitive bidding or through direct negotiations
with oil companies. Drilling contracts generally provide for a fixed day rate
that is payable regardless of whether the drilling results in a successful
well. Drilling contracts may provide for lower rates for days on which the rig
is in transit or drilling operations are interrupted by adverse weather
conditions or other conditions beyond our or the customers control. Likewise,
we may receive lower dayrates, or no dayrates at all, for periods during which
drilling is restricted or interrupted as a result of equipment breakdowns.
Under typical drilling contracts, such interruptions in drilling operations
that accumulate to more than one to two days per month result in a loss of day
rate, and longer interruptions (typically lasting for more than 15 to 30
consecutive days) may permit the oil company to cancel the drilling contract.
We typically would continue to incur full operating costs during any
interruptions in the operation of our rigs. Certain interruptions caused by
technical breakdowns may be covered by our insurance.

Some day rate contracts provide for the payment of performance bonuses.
Payments under day rate contracts are expected to account for the most
substantial portion of our revenues. As a result it is unlikely that we will
realize revenues from our rigs for periods during which they are not under
contract or are not in use due to repairs or maintenance. Under day rate
contracts, we will be responsible for all operating expenses of our rigs,
including wages, supplies, insurance, repair and maintenance costs and the fees
payable under our rig management contracts with third parties.

The duration of day rate contracts generally encompasses either the
drilling of a single well or group of wells or a stated calendar period (the
latter being known as term contracts). We are primarily seeking to obtain
term contracts. Current market conditions and recent contracts entered into by
other

19



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companies indicate that a contract term between six months and three years is
common. Drilling contracts usually may be terminated by the customer if the rig
is destroyed or lost, if the performance of the contractor does not meet the
contractual obligations, or if drilling operations are suspended for a set
period of time due to a breakdown of equipment or certain events beyond the
control of the parties.

Eirik Raude: Drilling Contract with EnCana

Under the terms of the agreement entered into with EnCana in April 2001,
Eirik Raude was operated under this contract by Ocean Rig through the
partnership East Coast Drilling Partnership (ECDP), in which Ocean Rig holds a
5% ownership (see Rig Management & Operations, above). ECDP as the contractor
and Ocean Rig as the owner, each have offices in Halifax.

The drilling contract with EnCana included drilling operations for a
minimum firm six month period with an option for five additional wells.

After delivery of the rig to EnCana, Eirik Raude started drilling its first
well offshore Nova Scotia. Start-up of the rig was marked by extremely harsh
weather with many winter storms, showing that with experienced and skilled
crews Eirik Raude can operate under very difficult conditions in extreme
waters. Safety on the rig has been satisfactory and no serious lost-time
injuries have occurred. The first well was completed in mid-January 2003.
After a few days for preparation and mobilization in Halifax in the second half
of January, Eirik Raude started drilling its second well on February 8, 2003 on
the Flemish Pass field off Newfoundland. The drilling is for PetroCanada under
a sub-contract with EnCana. The Company has just completed a second well under
this sub-contract in June 2003, upon completion of which the firm period
terminated, pursuant to the terms of the contract.

Contract with Imperial Oil Resource Ventures Limited

Ocean Rig has been awarded a contract with Imperial Oil Resource Ventures
Limited to drill offshore Nova Scotia upon completion of the EnCana contract
firm period. Drilling under this contract with Imperial Oil is expected to
commence around July 1, 2003. The estimated duration of this work is
approximately 50 to 60 days.

Leiv Eiriksson: Drilling Contract with ExxonMobil

On January 19, 2002, Leiv Eiriksson arrived in West Africa and started
installation of ExxonMobil / BPs third party equipment in accordance with
contract. On February 7, 2002 the rig started drilling operations at a water
depth of about 2000 meter offshore of West Africa on a contract with ExxonMobil
and BP. The firm portion of the contract included six wells drilled during the
course of 2002 and the first part of 2003. After drilling of the six firm wells
the contract provides for another six optional wells. In February 2003, Esso
Exploration Angola Limited exercised the first option well which started after
completion of the sixth firm well. In May 2003, BP Exploration Angola
exercised the second option well, drilling of which will commence upon
completion of the first option well and take approximately 50 days, with an
estimated completed in August 2003.

Competition

We are focusing our marketing efforts on the ultra-deepwater market
segment. The rigs competing in this market segment consist of fifth-generation
semi-submersible drilling rigs and drillships. Offshore drilling rigs, and
semi-submersible drilling rigs in particular, are grouped by generations, to
reflect the technical sophistication at the time the rig is constructed.
Generally, each successive generation is associated with the ability to drill
in deeper water depths and improved technology. Fifth-generation

20



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rigs are generally associated with water depth capability of over 5,000 feet.
Given our focus, we consider as competitors only those fifth-generation rigs
that can drill in ultra-deepwater depths exceeding 7,000 feet.

Notwithstanding our belief that there are a small number of rigs that can
technically and operationally compete with our rigs, the offshore contract
drilling industry remains highly competitive. Oil and gas companies often award
contracts through competitive bidding, and, although a rigs specifications and
a contractors performance record, crew quality and quality of service and
equipment may be considered in the bidding process, price often is the primary
factor in the selection of a drilling contractor. We believe that competition
for drilling contracts will continue to be intense in the future, although
competition in the ultra-deepwater market segment may be less intense due to
the limited supply of available rigs.

The deepwater market remains stable, and in our opinion this segment will
continue to be attractive in the long term. In the short term, the deepwater
segment may be influenced by uncertainty around crude prices. Other segments of
the offshore drilling industry have, during certain periods, experienced some
reduction in activity levels due to lower prices for natural gas and the
decline in crude prices. We believe that our prospects of winning attractive
contracts after the completion of our current contract portfolio are good.

Governmental Regulation and Environmental Matters

Our operations are, and will be, subject to numerous international
conventions, national, state and local laws and regulations in force in the
jurisdictions in which we conduct, or will conduct, business. These laws and
regulations relate to the protection of the environment, health and safety
requirements, taxes, labor and wage standards and other requirements.

The operation of the rigs may involve the use and disposal of materials
that may be classified as environmentally hazardous substances. Environmental
laws and regulations applicable to the locations in which the rigs will be
operated may be stringent. These laws and regulations may expose us to
liability for the conduct of, or conditions caused by others, or for actions
relating to the rigs that were in compliance with all applicable laws at the
time such actions were taken. In recent years, the protection of the
environment has been the subject of increasing concern. Offshore drilling in
certain areas has been opposed by environmental groups and, in some areas, has
been restricted. To the extent that new laws are enacted or other governmental
actions are taken that prohibit or restrict offshore drilling or impose
additional environmental protection requirements result in increased costs to
the oil and gas industry in general and the offshore drilling industry in
particular, our business or prospects could be significantly harmed. The
amendment or modification of existing laws and regulations or the adoption of
new laws and regulations curtailing or further regulating exploratory or
development drilling and production for oil and gas for political, economic,
environmental or other reasons could likewise harm our business, operating
results or financial condition. We cannot predict the extent to which our
future cash flow and earnings may be affected by mandatory compliance with any
new legislation or regulations like those mentioned above.

The operation of the rigs requires certain governmental approvals, the
number and requirements of which may be subject to change at any time (i.e.,
Angola and Canada).

The laws, regulations and licensing policies of the various jurisdictions
in which our rigs will operate for the exploration for and development of oil
and gas reserves could impact the rate of development of oil and gas fields,
which in turn would affect the demand for our rigs. The offshore drilling and
floating production industry, of which we are a part, is dependent on demand
for services from the oil and gas exploration industry and, accordingly, is
impacted by changing taxes, regulations and other laws or policies affecting
the oil and gas industry generally.

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C. Organizational Structure

The Ocean Rig group comprises Ocean Rig ASA and its subsidiaries, all of
which are wholly owned, directly or indirectly. The following diagram
illustrates our current corporate:

(OCEAN RIG GRAPH)

The following table sets forth our ownership of each company in our group:

|                      |  |                     |       |            |     |   |     |  
|--------------------- |  | ------------------- | ----- | ---------- | --- | - | --- | -
|Company               |  | Place of            |       | Ownership 
|Name                  |  | Incorporation       |       | Interest %
|                      |  |                     |       |           
|Ocean Rig AS          |  | Norway              |       |            | 100 | %
|U.S. Ocean Rig Inc.   |  |                     | U.S.A |            |     |   | 100 | %
|Ocean Rig Ltd.        |  |                     | U.K   |            |     |   | 100 | %
|Ocean Rig Norway AS   |  | Norway              |       |            | 100 | %
|Ocean Rig Angola AS   |  | Norway              |       |            | 100 | %
|Ocean Rig 1 AS        |  | Norway              |       |            | 100 | %
|Ocean Rig 2 AS        |  | Norway              |       |            | 100 | %
|Ocean Rig 3 AS        |  | Norway              |       |            | 100 | %
|Ocean Rig 4 AS        |  | Norway              |       |            | 100 | %
|OR Netherlands B.V    |  | Netherlands         |       |            | 100 | %
|Ocean Rig Canada Inc. |  | Nova Scotia, Canada |       |            | 100 | %

D. Property, Plants and Equipment

Our principal offices are in Stavanger, Norway and occupy approximately
1,200 square meters of leased premises. We also maintain leased office space
in Aberdeen, Scotland (United Kingdom), Halifax, Nova Scotia (Canada) and
Luanda, Angola. We believe that all leased properties are adequate for our
present activities and likely to meet our needs for the foreseeable future.

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

General

This section should be read in conjunction with our financial statements
included in this annual report. Unless otherwise indicated, all financial
information in this annual report has been prepared in accordance with
Norwegian GAAP. The U.S. dollar translations provided in this annual report
are, unless otherwise indicated, calculated at the exchange rate as of December
31, 2002 reported by the Federal Reserve Bank of New York as its noon buying
rate for Norwegian kroner, which was NOK 6.9375 per $1.00. All transactions
from Norwegian Kroner (NOK) to U.S. dollars ($ or USD) set forth in the
discussion below have been made solely for the convenience of the reader, and
should not be construed as a representation that the kroner amounts actually
represent such U.S. dollar amounts or could be converted into U.S. dollars at
the rate implied by such translations.

The following information contains forward-looking statements. These
forward-looking statements should be read in conjunction with the cautionary
discussion relating to forward-looking statements found in the section entitled
Notice Regarding Forwarding-Looking Statements and in Item 3, Key
InformationRisk Factors.

Overview

We operated as a development-stage company from our inception in September
1996 until the first quarter of 2002. Since inception, we have devoted
substantially all of our efforts to the ongoing construction of our fleet of
four (now two) rigs: (1) designing, engineering and contracting with a
baredeck construction yard in Dalian, China, outfitting yards in Mississippi
and in Halifax, Canada, as well as various equipment suppliers for our rigs;
(2) overseeing construction of the rigs; (3) raising capital; and (4) marketing
our rigs. Our first rig, Leiv Eiriksson commenced drilling operations offshore
Angola under a drilling contract with ExxonMobil on February 7, 2002, and our
second rig, Eirik Raude commenced drilling operations on November 1, 2002 under
the drilling contract with EnCana Corporation, thus, the year ended 2002 was
our first year with revenues from drilling operations. We sold our two
remaining baredecks to Noble Drilling in March 2002.

The Company has incurred operating losses in each period since inception
and up to December 31, 2002. As of December 31, 2002, we had an accumulated
net loss from operations of NOK 1,159.2 million ($167.1 million). To date, our
capital raising efforts have consisted of the following:



| |  |  | private placements of shares in October and November 1996;                           
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | public offering of shares in Norway in January 1997;                                 
|
| |  |  | global offering of shares (including a public offering in Norway) in October 1997;   
|
| |  |  | issuance of 10 1/4% notes due 2008 together with the incurrence of loans in May 1998;
|
| |  |  | private placement and subsequent share issue in September/October 1999;              
|
| |  |  | private placement of shares in May/June 2000;                                        
|
| |  |  | issuance in May/June 2000 of 13% subordinated convertible bonds due 2005;            
|
| |  |  | issuance in October 2000 of 11% subordinated convertible bonds due 2005;             
|
| |  |  | private placement and subsequent share issue in May/June 2001;                       
|
| |  |  | incurrence of floating rate loans in June 2001;                                      
|
| |  |  | issuance of zero coupon subordinated convertible bonds in November/December 2001;    
|
| |  |  | incurrence of short-term revolving loan in February 2002;                            

23



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| |  |  | private placement and subsequent share issue in April 2002;                                             
| | - |  | --------------------------------------------------------------------------------------------------------
|
| |  |  | private placement and subsequent issue of shares and
incurrence of USD short term loan in May/June 2002;
|
| |  |  | incurrence of a convertible loan and issuance of warrants
in August 2002;                               
|
| |  |  | private placement and subsequent issue of shares in
December 2002 and January 2003; and                 
|
| |  |  | financial income on such funds.                                                                         

With both rigs on contract and in operations, we expect to generate net
operating profit. The time it will take for the Company to reach profitability
after taking financial items into account, if ever, are highly uncertain. We
cannot assure you that we will generate significant revenues in the future.

Rig Construction

The baredeck units for Leiv Eiriksson, Eirik Raude, Rig No. 3 and Rig No.
4 were delivered to us on June 18, 1998, October 6, 1998, May 7, 1999 and
September 15, 1999, respectively. Outfitting of Leiv Eiriksson and Eirk Raude
commenced at the Friede Goldman Shipyard in Pascagoula, Mississippi thereafter.
After a series of delays and disputes at the Friede Goldman Shipyard, Leiv
Eiriksson left the Friede Goldman Shipyard in May 2001 and started a series of
sea trials and commissioning. The rig commenced drilling operations on February
7, 2002. Eirik Raude left the Friede Goldman Shipyard and underwent
commissioning and sea trials at the Halifax Shipyard, and commenced operations
offshore Canada in November 2002. The baredecks for Rig No. 3 and Rig No. 4
were sold to Noble Drilling in March 2002 for $45 million.

A. Operating Results

Year ended December 31, 2002 Compared to Year ended December 31, 2001

We had revenues for 2002 of NOK 534.3 million ($77.0 million) mainly
related to the operation of one rig for more than 10 months and both our rigs
in operation in the last two months of the year, compared to NOK 10.5 million
($1.5 million) for 2001. In 2001 Ocean Rig had no rigs in operation. Revenue in
2001 related to external activities of Ocean Rig AS (providing rig management
services). Operating expenses amounted to NOK 713.5 million ($102.8 million) of
which NOK 553.0 million ($ 79.7 million) was for other operating expenses and
NOK 160.6 million ($23.2 million) for depreciation.

Other operating expenses apply mainly to operation of Leiv Eiriksson (cost
such as crew cost, repair and maintenance, catering and insurance),
preparations for operation and operation of Eirik Raude and fees to external
advisers as well as general administrative expenses. For 2001, other operating
expenses amounted to NOK 461.3 million ($ 66.5 million) and depreciation and
write-downs amounted to NOK 255.2 million ($ 36.8 million). The write down of
NOK 240.1 million ($34.6 million) was a result of asset impairment write-down
related to Rig No. 3 and Rig No. 4 of NOK 240.1 million ($26.8 million). The
impairment review was performed due to the fact that the market value of the
Companys equity exceeded the carrying amount of the shareholders equity in
addition to increases in expected costs to complete the rigs.

The Groups cash on hand and long-term loans are mainly in USD. This
resulted in a net foreign-exchange gain of NOK 598.3 million ($86.3 million) in
2002. Net foreign-exchange losses totaled NOK 70.7 million ($10.2 million) in
2001. Interest expense during the construction period has been capitalized as
part of the cost price for the rigs. Capitalized interest amounted to NOK 301.5
million ($43.5 million) for 2002 and NOK 449.1 million ($64.7 million) for
2001. The reduction in interest expenses capitalized in 2002 compared with 2001
is primarily attributable to the fact that the no interest was capitalized in
the last quarter of 2002 after the completion of Eirik Raude.

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Our loss before taxes in 2002 was NOK 209.2 million ($30.2 million)
compared to a loss before taxes of NOK 819.1 million ($ 118.1 million) in 2001.
The major reasons for this change are the increase in revenue from 2001 to 2002
and the positive development in exchange rates in 2002 compared with 2001 as
explained above.

Year ended December 31, 2001 Compared to Year ended December 31, 2000

We had revenues for 2001 of NOK 10.5 million ($1.5 million) related to
external activities of Ocean Rig AS compared to NOK 13.7 million ($2.0
million) for 2000. Our operating expenses mainly consisted of personnel
expenses and fees of our advisors, primarily legal fees, marketing fees and
engineering fees. We incurred an operating loss of NOK 705.9 million ($ 101.8
million) in 2001 compared to an operating loss of NOK 162.8 million ($ 23.5
million) for the same period in 2000 . The increase in operating loss from
2000 to 2001 was primarily due to an increase in operating and administrative
expenses, reflecting costs related to completion, outfitting and preparation of
Rig No. 1 for operation, and writedown of two baredeck hulls.

The Groups cash on hand and long-term deposits are mainly in USD. This
has resulted in a net foreign exchange loss of NOK 70.7 million ($ 10.2
million) for 2001 compared to NOK 202.6 million ($ 29.2 million) for 2000. Both
realized and unrealized foreign exchange gains and losses are recognized as
they arise, on the basis of the exchange rate at the end of each quarter.
Interest expense during the construction period has been capitalized as part of
the cost price for the rigs. Capitalized interest amounts to NOK 449.1 million
($64.7 million) for 2001 compared to NOK 334.4 million ($48.2 million) for
2000.

Our loss before taxes was NOK 819.1 million ($118.1 million) in 2001
compared to a loss before taxes of NOK 329.7 million ($47.5 million) in 2000.

Our financial statements are prepared in accordance with generally
accepted accounting principles in Norway (Norwegian GAAP) which differ in
certain respects from accounting principles generally accepted in the United
States (U.S. GAAP), and reconciled to U.S. GAAP for purposes of this annual
report. For a detailed discussion of the significant differences, see Note 27
to the Financial Statements included in this annual report.

B. Liquidity and Capital Resources

Since the commencement of our operations, we have financed our operations
primarily through the placement of debt and equity securities, the incurrence
of indebtedness and financial income generated from our securities placements.
As of December 31, 2002, we had received total proceeds of approximately NOK
10.4 billion (USD 1,322 million at historical exchange rates) from such
placements. Our placements and indebtedness include the issuance of
10 1/4%
senior secured notes due 2008 (the Notes) and incurrence of floating rate
senior secured loans due 2008 (the 1998 Loans).

Ocean Rigs subsidiary, Ocean Rig Norway AS, which issued the Notes and
incurred the 1998 Loans, is subject to the terms of the indenture under which
the Notes were issued and the credit agreement pursuant to which the 1998 Loans
were made. Such agreements place significant limitations on the use of funds
held by Ocean Rig Norway AS. These funds were, among other things, used for
the payment of certain initial interest payments on the debt instruments and to
fund the construction and outfitting of the Companys two rigs.

In 1998, Ocean Rig Norways subsidiary, Ocean Rig 2 AS, the owner of Eirik
Raude, entered into credit agreements with Fortis Bank (formerly MeesPierson
N.V.), Christiania Bank og Kreditkasse ASA and Eksportfinans ASA (collectively,
the Banks), which, subject to certain conditions, entitled Ocean Rig 2 AS to
draw up to USD 50.0 million prior to delivery of Eirik Raudeand up to USD
100.0 million after the delivery of Eirik Raude. As a number of the conditions
for making drawdowns under the bank facility were not fulfilled, no drawdowns were made under this facility,
USD 100.0 million of which was refinanced with the 2001 Loans (described
below).

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In May/June 2000, Ocean Rig ASA issued NOK 200.0 million (USD 21.9 million
at historical exchange ratres) of 13% subordinated convertible bonds due 2005.
The bonds have a five year maturity, a 13% coupon and a conversion price of NOK
70 per share (updated conversion price at March 31, 2003 is NOK 22.83 per
share). The Company also increased its share capital by NOK 266.8 million (
USD 28.6 million at historical exchange rates) by issuing 8,891,900 shares each
with a par value of NOK 30.0. The subscription price for this issuance was NOK
40.0 per share. The total subscription amount was NOK 555.7 million (USD 62.8
million at historical exchange rates) for the convertible bonds and the share
issuance has been fully paid to the Company.

In October 2000, Ocean Rig ASA issued NOK 300.0 million (USD 32.8 million
at historical exchange rates) of 11% subordinated convertible bonds due 2005.
These bonds have a five year maturity, a 11% coupon and a conversion price of
NOK 75.0 per share (updated conversion price at March 31, 2003 is NOK 24.45
per share).

During August / September 2002 NOK 66.0 million and NOK 41.0 million of
the NOK 200.0 million convertible bond and NOK 300.0 million convertible bonds,
respectively, were converted to the Companys new Mandatory Convertible Bond
issued in August / September 2002 as discussed below.

In April/May 2001, the Company further increased its share capital by NOK
400.0 million (USD 43.7 million at historical exchange rates) by issuing
10,000,000 shares each with a par value of NOK 30. The shares were offered in
a private placement at a price of NOK 40.0 per share to existing shareholders
owning more than 38,000 shares as of April 30, 2001. The total subscription
amount of NOK 400.0 million for the share issuance has been fully paid to the
Company. In a subsequent share issue, 1.6 million shares were offered to and
subscribed to by shareholders holding less than 38,000 shares on terms
principally the same as in the private placement. The total subscription
amount of NOK 64.9 million (USD 7.2 million at historical exchange rates) for
the subsequent share issuance has been fully paid to the Company.

In June 2001, Ocean Rig successfully concluded a five-year Loan Facility
(the 2001 Loans), in principal amount of USD 100.0 million, to finance the
remaining completion costs of Leiv Eirikksonand Eirik Raude. This Loan
Facility refinanced the bank facility entered into by Ocean Rig 2 in 1998 with
Fortis Bank (Nederland) N.V., Christiania Bank and Kreditkasse ASA described
above. This facility was repaid in full on June 28, 2002 with a six-year
take-out facility with Fortis and Christiania Bank (the Fortis Facility),
pursuant to a loan agreement entered into in November 2001, as amended.

As a consequence of increased costs in connection with increased
investments and further delays in the construction of the Companys two rigs,
the Company issued in November / December 2001 an equity issue of NOK 440.0
million (USD 49.0 million at historical exchange rates), equaling 58,666,667
shares. Since the par value of the Companys shares was higher than the price
payable for the new shares, the General Meeting decided that the increase in
share capital should take place in the form of a short-term subordinated
convertible bond issue, to be converted into shares immediately upon completion
of the write-down of the par value of the Companys shares. A resolution was
made to write down the par value of the Companys shares from NOK 30.0 per
share to NOK 1.0 per share. In a subsequent issue in December 2001, the Company
issued an equity issue (on same terms as the original issue) totaling NOK 112.5
million (USD 12.5 million at historical exchange rates), equaling 14,999,999
shares. The total subordinated convertible bond totaling NOK 552.5 million was
converted to 73,666,666 shares in the company in February 2002.

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In February 2002, the Company entered into a short-term revolving credit
facility provided by EnCana totalling USD 19.0 million. An initial drawdown of
USD 10.0 million was made under this
facility in February 2002. The loan was initially secured with a mortgage
over the Companys fourth baredeck. Upon the sale of this baredeck in March
2002, this mortgage was released and part of the proceeds of the sale were used
to repay the outstanding amount under this facility at that time. The facility
matured upon the delivery of Eirik Raudeunder the drilling contract with
EnCana November 1, 2002.

In April 2002, the Company conducted a private placement of 24,444,445 new
shares with a par value of NOK 1. The subscription price was NOK 9 per share.
The private placement was directed towards the largest existing shareholders of
the company as of April 2, 2002. The total subscription amount of NOK 220.0
million (USD 25.0 million at historical exchange rates) was fully paid to the
company in April 2002. Proceeds from this placement were also used to help
fund the shortfall with respect to remaining completion costs for Eirik Raude.

In May / June 2002, after a review of the project and reconciliation of
completion estimates, the company announced that it is expected that costs for
Eirik Raudewould increase by approximately USD 45.0 million. As a result of
the delayed startup for Leiv Eirikksonand these cost overruns for Eirik Raude,
the Company required additional financing for the period until both rigs were
in normal operation. Accordingly, the Company, in cooperation with some of the
major shareholders, negotiated a financing solution consisting of a private
placement of shares and short term bonds (the USD Short Term Loan) combined
with the issuance of shares and warrants. The Company raised an additional NOK
652.7 million (USD 80.9 millions at historical exchange rates) in new liquidity
from this financing.

In August 2002, the Company announced that, after a change in the project
management team at the Halifax shipyard in Canada and an in-depth analysis of
the scope of work remaining for the completion of Eirik Raude, the date for
commencement of operations were postponed and scheduled to be in the beginning
of the fourth quarter of 2002. The results of the analysis increased the
estimated cost to complete the rig by USD 40.0 million in addition to a delay
in revenues of approximately USD 5.0 million. To cover the increased capital
requirement it was resolved that a mandatory convertible bond loan be issued
with the right for both the lender and the borrower to convert new bonds to
shares in the Company. Participants in the Companys USD Short Term Loan from
May/June 2002 and the NOK subordinated convertible loans issued in 2000 were
offered the opportunity to convert their loans fully or partially to the new
mandatory convertible bond issue. The subscription amount totalled NOK 669.5
million (USD 77.9 million at historical exchange rates) and included both
subscribed bonds and conversion of existing loans. In a subsequent issue the
Company raised NOK 77.4 million (USD 10.2 million) which included both
subscribed bonds and conversion of existing loans. The transactions provided
the Company with new liquidity of NOK 324 million (USD 42.6 million at
historical exchange rates) and reduced the Companys USD Short Term Loan from
May/June 2002 by approximately NOK 248 million (USD 32.6 million at historical
exchange rates).

Participants in the new loan were allotted a total of 191,275,343
independent subscription rights, each granting the right to subscribe to one
share in Ocean Rig for NOK 1.0 per share by October 31, 2002. The independent
subscription rights were exercisable upon i) failure to deliver Eirik Raudeon
contract by October 15, 2002 or ii) cost overrun exceeding USD 8.0 million
resulting from completion from the rig.

Since the rig was not completed and delivered on contract by October 15,
2002 the independent subscriptions rights became exercisable on October 16,
2002. 191,258,154 (99.99% of the total number of subscription rights) were
exercised by October 31, 2002. Exercise of the subscription rights provided the
Company with approximately USD 25.0 million in new liquidity (at historical
exchange rates).

In December 2002 the Company conducted a private placement of NOK 111.0
million (USD 15.5 million at historical exchange rates) at a subscription price
of NOK 1.0 per share.

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In January 2003, in a subsequent issue, the Company issued shares
totalling NOK 35.1 million (USD 5.1 million at historical exchange rates) at a
subscription price of NOK 1.0 per share.

The Fortis Facility (described above) contains restrictions on, among
other things, minimum working capital and value adjusted equity (including
market value of rigs). As of December 31, 2002, the Company was unable to
comply with two of its covenants relating to these restrictions . Ocean Rig
obtained temporary waivers from the lenders as of May 15, 2003 waiving
noncompliance of the working capital covenant through March 31, 2003, and
waiving noncompliance of the value adjusted equity covenant through December
31, 2003, and expects to meet the covenants at future determination dates.

The Company may seek to access the public or private capital markets
whenever conditions are favorable. The Company also, under certain
circumstances, may seek additional funding through strategic partnerships and
other financing mechanisms. There can be no assurance that such funding will
be available on terms acceptable to the Company or allowable under the terms of
the Notes, the 1998 Loans and the 2002 Loans.

Outstanding Debt Obligations and Commitments

|                                                 |                              |                                    |  |                 |  |  |  | 
|------------------------------------------------ | ---------------------------- | ---------------------------------- |  | --------------- |  |  |  | 
|Facility                                         | Principal Amount Outstanding | Maturity Date                     
|                                                 |                              |                                    |  |                
|1998 Senior Secured Notes                        |                              | $225 million                       |  | June 1, 2008   
|1998 Floating-Rate Senior
Secured Loans          |                              | $125 million                       |  | June 1, 2008   
|2002 Floating Rate Senior
Secured Loans          |                              | $100 million                       |  | June 28, 2006  
|Zero Coupon Mandatory                            |                              | NOK  669.5 million ($96.5 million) |  | August 22, 2005
|Convertible Bond
13% convertible bond 2000/
2005 |                              | NOK 134 million ($19.3 million)    |  | May 25, 2005   
|11% convertible bond 2000/
2005                  |                              | NOK 259 million ($37.3 million)    |  | May 25, 2005   
|2002 USD Short Term Loan(1)                      |                              | $13.1 million                      |  | May, 13, 2003  



---

|(1) |  | In May 2003, the Company exercised its option to extend the final
installment by three months from May 13, 2003 to August 13, 2003.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------

Related-Party Transactions

Ocean Rig has entered into the following agreements with related parties:

|                                                                                                               |  |                |         |                         |  |                             |        |      |  |  |        |  |  |  |        | 
|-------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ----------------------- |  | --------------------------- | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                                                                                                               |  |                |         |                         |  | Payments to related parties
|                                                                                                               |  |                |         |                         |  |                            
|                                                                                                               |  | Total Contract |         | Year ended December 31,
|                                                                                                               |  | value          |         | 2000                    |  | 2001                        |        | 2002
|                                                                                                               |  |                |         |                         |  |                             |        |     
|                                                                                                               |  | NOK            |         | NOK                     |  | NOK                         |        | NOK 
|                                                                                                               |  |                |         |                         |  | (amounts in thousands)      |        |      |  | 
|Agreement regarding delivery
of equipment from Hydralift
ASA for Rig No. 1 and
Rig No. 2 (total for both rigs) |  |                | 567,435 |                         |  |                             | 39,358 |      |  |  | 43,789 |  |  |  | 21,194 | 

28



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Board member Bjarne Skeie sold his shares in Hydralift ASA in December
2002 and as of December 31, 2002, Hydralift is no longer considered as related
party to the Company. Transactions up until Mr. Skeies sale of his shares in
Hydralift ASA are included in the table.

Amounts related to payments to Hydralift ASA for the supply of equipment have
mainly been capitalized as part of spare parts.

In addition to the above-mentioned transaction, two of the Board members have
received compensation for additional services during 2002. Chairman of the
Board, Morten Borge received a compensation of NOK 1,442,818 for work performed
that exceeds work relating to his position as Chairman of the Board. Board
member Geir Aune received consulting fees of NOK 100,000.

C. Research and Development, Patents and Licenses

Although we purchased the right to use the Bingo rig design for our rigs,
neither we nor the company from whom we bought those rights has secured or
applied for any patents or other intellectual property protection relating to
the design. See Item 3, Key Information-Risk Factors.

D. Trend Information

The long-term prospects for the deepwater market remain optimistic, as it
is expected that a significant portion of future world oil supply will come
from deepwater plays. The short-term outlook however, has uncertainties. A
sizeable portion of the deepwater fleet comes to the end of their long term
contracts, towards the end of 2003 and into 2004. This available capacity is in
addition to capacity, which a number of clients are prepared to sublet, for
drilling units they have under contract, but for which they have limited
amounts of work. Coupling this with and economic uncertainties in the major
economies world wide, contributes to an uncertain market outlook in the
short-term. Ocean Rig continues to focus its marketing efforts primarily on
West Africa, in the US Gulf of Mexico, offshore Brazil and the East Coast of
Canada. The company is also pursuing prospects in the North Sea/Atlantic Margin
area.

Despite the current uncertainty, the fundamentals remain in place. World
oil demand has grown by 14% since 1990. World demand for gas has increased
twice as much as the rate of oil, over 20% since 1990 to 230 bcf per day in
2000. According to BP a cautious forecast suggests the world will be using 90
million barrels of oil and 300 bcf of gas per day in ten years time. Even in
the current economic climate, demand for oil and gas continues to grow, but at
a slower pace. The latest IEA estimate shows a 200,000 barrel per day increase
in demand for 2002. Except for the 1979-1982 period, demand has grown every
year since 1971 (see figure 3 below). This, combined with a very moderate
growth in production capacity has almost eliminated the worlds production
buffer. On top of this many fields in the OECD area will peak in the next
couple of years and start declining. This will leave the world even more
dependent on a few Middle East producers.

In the mid 1980s there was a significant surplus capacity in the oil
market (developed production capacity in relation to consumption). During the
1990s a significant growth in consumption was not compensated through a
corresponding increase in production capacity, implying a much more balanced
ratio of supply and demand. Oil market experts disagree on the actual size of
the remaining capacity surplus, but there seems to be consensus that the
surplus is significantly lower than it has been historically. The experts also
seem to agree that the remaining spare capacity is largely in the hands of OPEC
or more specifically Saudi-Arabia, Iraq and United Arab Emirates.

Analysts such as IEA, CGES, DOE, etc., anticipate continued growth in oil
consumption over the next 10 years, while on the supply side a number of fields
and provinces suffer from declining output from aging oil fields. The rate of
recovery (i.e., percentage exploitation of each field) has improved

29



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significantly and has increased demand for drilling and other oil-related
services. At the same time, new discoveries represent a smaller portion of
total consumption than previously (BP Statistical Review). On a more aggregate
level, this indicates a requirement for a high activity level across the entire
life cycle of oil and gas developments going forward.

Investments in Exploration and Development

Worldwide Exploration and Production (E&P) spending is forecast to rise 0
- 5% in 2003, following a similar increase in 2001. However, large geographical
differences are expected. A flat development is seen in the US, while
international spending is expected to be up 5%. Spending can be positively
affected if US gas prices hover around todays high levels ( > USD 5 per
cubic feet).

Global upstream investments increased significantly from 1991 to 1998
despite relatively stable and even falling prices. Historically, E&P
investments have been more closely linked to the aggregate demand for oil than
the oil price itself, as long as the oil price is high enough to generate
adequate cash flow. Since 1999 aggressive production cuts and improved
discipline, among OPEC members, have contributed to high oil prices. However
the global demand growth for oil has been low and E&P investment levels are
still beyond 1998-levels. See Item 3, Key Information-Risk Factors.
The growth within deep water, which is Ocean Rigs main market, is expected to
be much higher than for the industry in general. During the last couple of
years the worlds deepwater reserves have more than doubled

According to the World Deepwater Report 2001-2005 by Douglas-Westwood and
Infield Systems 26 companies will spend an estimated USD 10 billion annually by
2005, more than doubling current expenditures. Production from shallow-water
regions is now in serious decline. Below 500 meters however, production is set
to increase dramatically as the major oil companies target more than 20 billion
boe of reserves slated for development in 114 fields offshore Brazil, the Gulf
of Mexico and West Africa. In addition to large reserves another factor driving
activity is the high potential for deepwater prospects. Down to 100 meters the
average field is expected to produce some 16,000 boe per day, while between
1,000 to 1,500 meters the average field is expected to produce some 62,000 boe
per day. In the past five years only two companies, Petrobras and Shell, have
brought more than 1 billion boe of deepwater reserves on-stream, but in the
next five years Petrobras has 3.3 billion boe of prospects, BP 2.6 billion boe,
ExxonMobil 2.4 billion boe, Shell 2.3 billion boe and Chevron Texaco 1.5
billion boe. TotalFinaElf is a newcomer to the billion-barrel deepwater club as
its huge Girasol development came on-stream offshore Angola in late 2001.

Market for Drilling Rigs for Deepwater Drilling

Drilling at water depths exceeding 400 feet + normally requires the use of
semi-submersible rigs or drillships. Water depths between 3,000 and 10,000 feet
are termed extreme depths and drilling operations at these depths are pushing
the limits of existing technology.

Semi-submersible drilling rigs

Semi-submersible drilling rigs are floating platforms and feature a
ballasting system that can lower parts of the hull to a predetermined depth (50
- 80 feet). This reduces the rigs exposure to wave impacts and increases
stability. Semi-submersible drilling rigs retain their position above the
wellhead either by means of a conventional mooring system, consisting of
anchors and chains or cables, or by a computerized Dynamic Positioning system
(DP system).

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Drillships

Drillships are ships with on-board propulsion machinery, often constructed
for drilling in deep water. They are based on conventional ship hulls but have
certain modifications. Drilling operations are conducted through openings in
the hull (''moon pools). Drillships normally have higher load capacity than
semi-submersible drilling rigs and are well suited to offshore drilling in
remote areas due to their mobility and high load capacity. Like
semi-submersible drilling rigs, drillships can be equipped with conventional
mooring systems or DP systems.

|                   |  |                  |  |                     |  |                   |  |             |  |  |  | 
|------------------ |  | ---------------- |  | ------------------- |  | ----------------- |  | ----------- |  |  |  | 
|Market segment     |  | Water depth      |  | Rig type            |  | Major market     
|Shallow water      |  | < 400 feet       |  | Jack-ups            |  | US Gulf          
|Intermediate water |  | 300-3,000 feet   |  | 2nd & 3rd           |  | Worldwide        
|                   |  |                  |  |                     |  | generation semis, |  |             |  | 
|                   |  |                  |  |                     |  | drillships,       |  |             |  | 
|Deepwater          |  | 3,000-5,000 feet |  | 2nd, 3rd, 4th & 5th |  | West Africa,     
|                   |  |                  |  |                     |  | generation semis  |  | Brazil, USA
|                   |  |                  |  |                     |  | and drillships,   |  |             |  | 
|                   |  |                  |  |                     |  | including DP      |  |             |  | 
|Ultra-deepwater    |  | > 5,000 feet     |  | 5th generation DP   |  | Brazil, USA, West
|                   |  |                  |  |                     |  | semis and DP      |  | Africa     
|                   |  |                  |  |                     |  | drillships        |  |             |  | 

The worldwide fleet of mobile drilling rigs totals 586 units. Leaving
aside the 383 jack-ups (most of which are only capable of drilling in water
depths between 150 and 300 feet) there are 203 floating rigs. There are a total
of 164 (working and idle) semi submersibles and 39 (working and idle)
drillships in the world today.

The market for drilling at ultra-deepwater depths (greater than 5000 feet)
consists of 63 rigs. 38 of these are semi-submersible drilling rigs while 25
are conventional drillships.

Technical Advances

During the last decade the technology involved in exploration and
production of oil and gas has developed rapidly. New solutions for floating
production, well drilling and completion and pipeline technology have enabled
oil companies to operate on a commercial basis at greater depths. Furthermore,
developments within the seismic technology field have led to a higher success
rate in exploration drilling, and an increase in the number of fields in
production or development.

Trends

During recent years developments in the market have been positive for
suppliers of rigs, equipment and services. Despite setbacks in certain segments
the overall trend has been favorable the last two years. Activity has picked up
and capacity has tightened, thus increasing rates and prices. The current
drilling plans of the oil companies supported by oil service companies indicate
a concern for rig availability, particularly in deepwater. Seismic tendering
activity has increased, reflecting a shift in supply to Canada, Brazil and West
Africa.

Following the tightening of the market, the rates for supply vessels have
increased dramatically and have, for short periods, reached 1998 levels. Going
forward, new geographic regions and deepwater field developments, such as the
Canadian region, will likely offer significant growth. See Item 3, Key
Information-Risk Factors.

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Supply and Demand for Deepwater Rigs

We believe that exploration and development activities in deepwater and/or
harsh environments will increase the demand for high quality equipment,
including high-end drilling units, despite economic uncertainty and high
volatility in oil prices. See Item 3, Key Information-Risk Factors.

Until 1997 deepwater drilling was limited to offshore Brazil and to a
lesser degree the U.S. Gulf of Mexico and most drilling by floating rigs was in
medium water depths. Since then demand for deepwater drilling has accelerated.
The major deepwater markets today are West Africa, Brazil and the GoM.

The ultra deepwater market is expected to continue to gain strength in the
medium and long term since oil production from these water depths is
technically and economically viable.

Utilization rates for rigs

The utilization rate for rigs (i.e., the number of rigs under contract in
relation to the total number of available rigs on the market) was close to 100%
for all types of rigs in February 1998, after which the utilization rate
started to decline. Currently capacity utilization for semi-submersible rigs is
approximately 69%. The corresponding figure for drillships is somewhat higher
at 72%. The utilization rate for rigs in the segment in which Ocean Rig is
operating (ultra-deepwater and/or harsh environments) is close to 100%.

The outlook for the deepwater drilling segment is based on the expected
level of exploration and development activity for deepwater oil and gas fields,
which, in turn, is affected by oil companies revenues and ability to invest in
exploration and development activities.

Key elements for deepwater drilling are:



| |  | New technologies including deepwater drilling units have opened up the
deepwater reserve base for exploration.                                                                                                                                                                                        
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | A great deal of previously unexplored acreage has become accessible,
and the success rate of deepwater exploration drilling is higher than
that at other depths. As a consequence, exploration costs per barrel
of oil equivalents found are generally lower at deepwater levels than
at other levels.
| 
| |  | At more moderate depths the giant finds are few and far between while
in deepwater the expectations is that there are many large oil
accumulations to be found.                                                                                                                                       
| 
| |  | So far, only 53 out of 216 fields which have been discovered in deep
water (2,000 ft or deeper) are under development.                                                                                                                                                                                

These elements combine to direct resources toward deepwater activities, and
demand for deepwater rigs and drillships are expected to increase as
exploration and development activities increase.

Development of market rates for semi-submersible rigs

Dayrates for ultra-deepwater semi-submersibles in the Canadian market look
promising. New contracts in this region have been secured at dayrates of USD
200,000. The first deepwater rig in the Canadian market started working in
November 2001. Fixtures for units capable of drilling in depths of up to 1,500
meters (5,000 feet) in the West-African region are currently in the range of
USD 130,000 to 140,000 per day. Dayrates in the ultra-deepwater segment are
typically now around USD 170,000.

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E. Off Balance Sheet Arrangements

None.

F. Tabular Disclosure of Contractual Obligations

As of December 31, 2002, the Company had the following contractual
obligations:

|                             |  |                        |           |        |  |             |         |             |  |                        |           |  |  |  |   |  |  |  |           | 
|---------------------------- |  | ---------------------- | --------- | ------ |  | ----------- | ------- | ----------- |  | ---------------------- | --------- |  |  |  | - |  |  |  | --------- | 
|                             |  | Payments due by Period
|                             |  |                       
|Contractual Obligations      |  | Less than              |           |        |  |             |         |             |  |                        |           |  |  | 
|                             |  | Total                  |           | 1 year |  | 1 - 3 years |         | 3 - 5 years |  | More than 5 years     
|                             |  |                        |           |        |  |             |         |             |  |                       
|                             |  | NOK                    |           | NOK    |  | NOK         |         | NOK         |  | NOK                   
|                             |  |                        |           |        |  |             |         |             |  | (amounts in thousands) |           |  |  | 
|Notes and Loans              |  |                        | 3,129,476 |        |  |             | 23,982  |             |  |                        |          |  |  |  |  |  |  |  | 3,105,494 | 
|Convertible loans            |  |                        | 393,000   |        |  |             |        |             |  |                        | 393,000   |  |  |  |  |  |  |  |          | 
|Madatory convertible
bond(1) |  |                        | 669,452   |        |  |             |        |             |  |                        | 669,452   |  |  |  |  |  |  |  |          | 
|USD Short Term Loan(2)       |  |                        | 90,814    |        |  |             | 90,814  |             |  |                        |           |  |  |  |  |  |  |  |          | 
|Operating leases             |  |                        | 6,565     |        |  |             | 3,490   |             |  |                        | 3,075     |  |  |  |  |  |  |  |          | 
|                             |  |                        |           |        |  |             |         |             |  |                        |           |  |  |  |   |  |  |  |           | 
|Total                        |  |                        | 4,289,307 |        |  |             | 118,286 |             |  |                        | 1,065,527 |  |  |  |  |  |  |  | 3,105,494 | 
|                             |  |                        |           |        |  |             |         |             |  |                        |           |  |  |  |   |  |  |  |           | 



---

|(1) |  | The Mandatory convertible bond is shown gross of unamortized
balance of warrants and intrinsic value. See Note 12, Convertible
loans, for further information.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The Short term loan is shown gross of unamortized discount.
See Note 10, USD Short Term Loan, for further information.                                        

Certain of the notes and loans included in the table are subject to
covenants requirements. If there is an event of default with respect to these
covenants, the holders of these debt instruments could elect to declare all
debts to be due and payable together with accrued and unpaid interest. As a
result, we could be forced into bankruptcy or liquidation.

The Application of Critical Accounting Policies

Financial Reporting Release No. 60, which was released by the Securities
and Exchange Commission, requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. Note 1 of the Notes to Financial Statements includes a summary of
the accounting policies and methods used in the preparation of our consolidated
financial statements. The following is a brief discussion of the more
significant accounting policies and methods that we use.

General

The preparation of financial statements in conformity with generally
accepted accounting policies in Norway requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. We evaluate these estimates on an ongoing basis,
utilizing historical experience, consultation with experts and other methods we
consider reasonable in the particular circumstances. Nevertheless, actual
results may differ significantly from our estimates. The most significant
estimates and the assumptions relate to our construction-in-progress and fixed
assets balances and to revenue and expense recognition.

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Construction-in-Progress and Other Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation and
impairment charges to recognize an economic impairment when management has
determined that an impairment has occurred. Cost includes interest incurred
during the construction period of the rigs based on prevailing interest rates
and weighted average capital expenditures. Expenditures for additions,
significant renewals and betterments are capitalized, whereas expenditures for
maintenance and repairs are expenses as incurred. The rigs are depreciated on
a straight-line basis over the estimated useful life of the assets ranging from
5 to 30 years. The primary portion of the rigs is depreciated over 30 years.
When assets are sold or retired, their costs and related accumulated
depreciation are removed from accounts and any gain or loss is included in net
income. The estimated useful life of the rigs could change resulting in
different depreciation amounts or impairment in the future.

Prior to January 1, 2003 we evaluated the realizability of long-lived
assets for impairment as events or changes in circumstances indicate that the
carrying amount of such assets may not be fully recoverable. We evaluate the
recovery of long-lived assets by measuring the carrying amount of the assets
against the estimated undiscounted future cash flows associated with the
assets. At the time such evaluations indicate that the future undiscounted cash
flows are not sufficient to recover the carrying value of the assets, the
assets are adjusted to their fair values based on estimated future net cash
flows, discounted at a market rate of interest. During 2001, we recognized an
impairment on Rig No. 3 and Rig No. 4 based on this analysis. To the extent
that circumstances change or assumptions used in undiscounted and discounted
cash flow calculations change, we could experience additional impairments in
the future.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires
that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized
as part of the carrying amount of the long-lived asset. An entity must measure
changes in the liability for an asset retirement obligation due to passage of
time by applying an interest method of allocation to the amount of the
liability at the beginning of the period. The interest rate used to measure the
change shall be the credit-adjustment risk-free rate that existed when the
liability was initially measured. That amount is to be recognized as an
increase in the carrying amount of the liability as an expense classified as an
operating item in the statement of income. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The Company does not expect an impact from
adoption of SFAS 143.

In January 2003, the FASB issued Interpretation 46, Consolidation of
Variable Interest Entities. In general, a variable interest entity is a
corporation, partnership, trust, or any other legal structure used for business
purposes that either (a) does not have equity investors with voting rights or
(b) has equity investors that do not provide sufficient financial resources for
the entity to support its activities. Interpretation 46 requires a variable
interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entitys activities or
entitled to receive a majority of the entitys residual returns or both. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after June 15, 2003. The Company is currently in the process of
evaluating the impact of the adoption of Interpretation 46.

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Change in Norwegian GAAP accounting standard for the impairment of long-lived assets

Norwegian GAAP introduced a new accounting standard for the impairment of
long lived assets effective January 1, 2003. The new standard differs
significantly from the US GAAP accounting standard. Under Norwegian GAAP, the
nominal value approach is not used. If circumstances indicate that the carrying
value of the assets may not be recoverable, a recoverability test is performed
to calculate the fair value of the assets. The fair value of the assets are
determined through testing, where the higher of, the net sales value of the
assets or the net value in use of the assets, are used in determining fair
value. The value in use is determined by discounting future cash flows through
a net present value calculation. If the carrying value of the assets is not
recoverable, the carrying amount of the assets is written down to its estimated
fair value. Any subsequent reversed changes to the fair value of the assets
will be booked as an adjustment to the book value of the assets by a reversal
of previous impairment loss. The change in Norwegian GAAP Accounting standard
will cause a difference between Norwegian GAAP and US GAAP for financial
reporting periods subsequent to year end December 31, 2002.

For additional information on our significant accounting policies, see
Note 1 to our accompanying financial statements.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth information with respect to the members of
our board of directors and the executive officers of our company as of December
31, 2002. Our directors serve two-year terms. There is no limitation on the
number of terms that a director may serve. The executive officers of our
company are appointed by and serve at the discretion of our board of directors:

|                        |  |     |    |          |  |                                   
|----------------------- |  | --- | -- | -------- |  | ----------------------------------
|Name                    |  | Age |    | Position
|                        |  |     |    |         
|Morten Borge (1)        |  |     | 55 |          |  | Chairman of the Board of Directors
|Bjarne Skeie (1)        |  |     | 58 |          |  | Director                          
|James F. Skouverøe      |  |     | 58 |          |  | Director                          
|Geir Aune (1)           |  |     | 44 |          |  | Director                          
|Roy Mosvold             |  |     | 38 |          |  | Director                          
|Kai Solberg Hansen (3)  |  |     | 54 |          |  | President and CEO                 
|Christian Mowinckel (4) |  |     | 49 |          |  | Senior Vice President-Finance     
|Nina E Tveita           |  |     | 39 |          |  | Senior Vice President-HMS & Q     
|Willy Tørhaug           |  |     | 53 |          |  | Senior Vice President-Operations  
|Robert M. Warrack       |  |     | 57 |          |  | Senior Vice President-Marketing   
|Kjersti Stenberg (5)    |  |     | 42 |          |  | Senior Vice President-Accounting  
|Rolf Ytreland (6)       |  |     | 59 |          |  | Managing Director Ocean Rig AS    



---

|(1) |  | On April 7, 2002, Bjarne Skeie resigned as Chairman of the Board of
Directors, but continues as a Director. The board elected Morten Borge
as Chairman of the Board. In March 2003, the board elected Geir Aune
as Chairman. Mr. Borge continues as a director.                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Ocean Rig ASA received on March 19, 2002 notice from two of the
directors of the board, Tore O. Berg and Fredrik Steenbuch, that they
wished to withdraw from their appointments of the board of Ocean Rig
ASA effective April 2, 2002. Since these resignations until the General
Meeting on May 16, 2003, the board has consisted of 5 members.On May
16, 2003 Jon R. Aisbitt was elected as director of the board.
|   
|(3) |  | Kai Solberg-Hansen was appointed by the board at April 8, 2002. In
May, 2003, Thor Christian Haugnaess was appointed into a new position
as President. Mr. Solberg-Hansen remains CEO and Managing Director.                                                                                                                                                                                                         
|   
|(4) |  | Mr. Mowinckel joined the company in August 2002.                                                                                                                                                                                                                                                                                                                                                                     
|   
|(5) |  | Kjersti Stenberg joined the company in March 2002. Mrs Stenberg
left the Company in June 2003 and is replaced by Erling Meinich-Bache
who joined the company in March 2003.                                                                                                                                                                                                                                          
|   
|(6) |  | Mr. Ytreland will be resigning as of September 1 ,2003 and will be
replaced by Mr. Jorgen Cederfeldt, who is currently Operation Manager
at Ocean Rig AS.                                                                                                                                                                                                                                                            

Morten Borgejoined the board of Ocean Rig ASA on November 21, 2001. He
has experience with Arvid Bergvall AS, Pegasus Ocean Services Ltd., O.
Ditlev-Simonsen Jr and Anglo Eastern Management Services Ltd. Mr. Borge has
served as Managing Director of Mosvold Shipping AS in Kristiansand, Chairman of
Dual Drilling Inc in Dallas, and Chairman and Managing Director of Mosvold
Shipping Ltd in Bermuda. He holds an MBA from Mannheim University. Mr. Borge
resides in Kristiansand, Norway. As Chairman of the Board, Mr. Borge will serve
Ocean Rig on a full-time basis.

Bjarne Skeiehas vast experience as a director of various privately and
publicly traded companies in Norway. He currently serves as Chairman of the
Board of Directors of Skeie Group AS and the publicly traded companies
Hydralift ASA, which supplies equipment to the petroleum (including offshore

36



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drilling rig companies) and shipping industries, and Sinvest ASA. Mr. Skeie
also serves as a member of the Board of Directors of Baltic Holding ASA and
Ecuanor ASA, and as Chairman of the Board of Directors of Skeie Eindom AS. Mr.
Skeie holds an engineering degree from Boston College of Engineering and
resides in Kristiansand, Norway.

James Frithjof Skouverøeserves as member of the Board of Directors of
Stolt Offshore S.A., an offshore contracting company quoted on Nasdaq and
listed on the Oslo Stock Exchange. He is currently an active owner of a group
of companies operating within the contracting and manufacturing sectors in
Norway and Sweden. Mr. Skouverøe has previously served as President of Stolt
Sea Farm AS. Mr. Skouverøe holds a M.Sc. degree from the Norwegian University
of Science and Technology at Trondheim and holds an M.B.A. from INSEAD. He
resides in Oslo, Norway.

Geir Aunejoined the board of Ocean Rig ASA on November 21, 2001. He has
experience as a field engineer for Schlumberger and in various positions as
managing director or Chairman of industrial investment companies and
offshore/oil service related companies. Mr. Aune has served as Vice Chairman of
Wilrig ASA, CEO of NCL Holding ASA and Norwegian Cruise Line and CEO of DSND
Subsea AS. Mr. Aune resides in Baerum, Norway.

Roy T. Mosvoldjoined the board of Ocean Rig ASA on November 21, 2001. He
has experience from New York and London in shipping (dry cargo, chemicals,
tanker and gas), investment and trading. Mr. Mosvold has served as Chairman of
Mosvold Shipping Ltd. He is currently involved in his own trading, shipping and
investment companies based in London. Mr. Mosvold holds a B.Sc. with a major in
Finance and International Business from New York University. He resides in
London, UK.

Jon R. Aisbittwas elected as director of the board on May 16, 2003. Mr.
Aisbitt was a former partner of Goldman Sachs & Co. and has 20 years experience
in international investment banking,

Kai Solberg-Hansenhas over 25 years of experience in the offshore and
maritime sector. Before joining our company, he was CEO of the Norwegian
drilling contractor Northern Offshore ASA. He has worked as CFO of Kvaerner
Maritime, as well as the Norwegian drilling contractors Wilrig AS and Ross
Offshore AS. Mr. Solberg-Hansen holds a M. Sc. in Business from the Norwegian
School of Management BI. He resides in Drøbak, Norway. Mr. Solberg-Hansen was
appointed President and CEO on April 7, 2002.

Thor Christian Haugnaesshas been working for Schlumberger for 19 years.
His current position is Director of Quality, Health, Safety, Security and
Environment for Middle East, East Africa and Asia. In Schlumberger he has held
several positions in Field Operations, Staff and Line Management. His
assignment has covered oilfield operations in Europe, Africa, Middle East and
Asia. Haugnaess is holding a Master of Science degree in Petroleum Technology
from NTH, University in Trondheim, Norway. He resides in Dubai.

Christian Mowinckeljoined Ocean Rig in late July 2002 as Senior Vice
President Fianance. His working career includes senior positions in Den norske
Bank ASA, Elkem ASA, Kvaerner ASA and Deloitte & Touche in the field of
banking, project development, international and corporate finance as well as
corporate restructuring. Mr. Mowinckel holds a Master of Business and
Administration degree from University of Wisconsin, USA and resides in Oslo,
Norway.

Nina E, Tveitahas been working with HES&Q issues for the international
offshore drilling industry since 1987. She has been HES&Q manager for Polycrest
AS and for Saipem Norway Branch before she in 1998 became Senior Vice President
HES&Q for Ocean Rig. She holds M. Sc. Degree in Petroleum Technology with a
major in Safety management from Rogaland University. Mrs. Tveita resides in
Stavanger, Norway.

37



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Willy Tørhaughas 29 years experience from the offshore industry. From
1985 he has had leading positions in the operations of drilling rigs in the
industry with companies like Golar Nor Offshore, Jebsens (UK), Ltd, Aker
Drilling and Transocean. He joined Ocean Rig in 1997 and was promoted Senior
Vice President Operations from June 2002. Mr Tørhaug resides in Stavanger,
Norway.

Robert M. Warrackhas 20 years experience in the drilling contracting
business and was recruited to Ocean Rig from a position as Business Development
Manager for Smedvig Offshore in Aberdeen. Before that he served as Vice
President of Contracts and Sales for Sonat Offshore. Mr. Warrack holds a B.
Sc.degree in Mechanical engineering from Heroit University, Edinborough. He
resides in Aberdeen, Scotland. Mr Warrack has been appointed Senior Vice
President Marketing from January 1, 2003.

Kjerst Stenbergjoined Ocean Rig ASA in March 2002. She has nine years
experience as an auditor and she has held various positions for companies in
the finance, oil and trade industry. Mrs. Stenberg is a Certified Public
Accountant and resided in Oslo, Norway.

Erling Meinich-Bachejoined Ocean Rig in March 2003. He has 10 years
experience from various positions in Hitec ASA and latest as Vice President
Finance in National Oilwell Norway AS. Mr. Meinich-Bache holds a M.Sc. in
Finacial Management and resides in Stavanger, Norway.

Rolf Ytrelandhas 38 years of experience in marine and offshore drilling
operations, spending 25 years in key positions such as Managing Director, Vice
President Operations, Vice President Technical & Engineering, Chief Engineer
and Construction Superintendent with various companies, including Wilh.
Wilhelmsen, Dolphin, Aker Drilling Services and Polycrest. Mr. Ytreland holds a
degree as Chief Engineer. He resides in Stavanger, Norway.

Jørgen Cederfeldtis educated as Marine Master with 15 years experience as
OIM on semi submersible diving and accommodation platforms. He has very good
knowledge of DP operations and has served long periods as DP Training
Supervisor on rigs in Mexico. Since 1995 he has worked as Operation Manager in
Polycrest/ Ocean Rig being responsible for the companys managed accommodation
rigs.

B. Compensation

For the year ended December 31, 2002, the aggregate compensation that we
paid to our directors and officers for services in all capacities was NOK 1.1
million ($152,988). Each member of our board of directors that was on the
board for the entire period ending at the general assembly in 2003 was entitled
to receive a remuneration of NOK 300,000 ($33,436) for 2002-2003. Members
serving for only part of this period received compensation based upon the
amount of time served as a board member.

At the Companys Extraordinary General Meeting in August 2002 a new share
option plan was approved authorizing the Board to issue up to 14,000,000 shares
in the Company to employees and Board members of the Company, each with a
subscription price of NOK 3.5 per share. Any previous granted options were
withdrawn Board members have the right to subscribe for up to 8,000,000 shares
and employees to subscribe for up to 6,000,000 shares. The options may at the
discretion of the holder, be utilized in one or more rounds up to the total
number of options.

In May 2003, at the companys General Meeting, a new option plan for the
Board members and management of the Company was authorized, and the share
option plan authorized in August 2002

38



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##### 



withdrawn. See Note 21, Share Option Plan and Note 25, Subsequent Events,
for further information about the Companys option program, included in Item
18.

Mr. Solberg Hansen received a salary of NOK 1,242,311 ($179,072 ) in 2002
and other compensation of NOK 11,072 ($1,596 ). At December 31, 2002 the
President holds 400,000 options in Ocean Rigs ASA with an exercise price of NOK
3.50. The options were granted during 2002 as part of the Companys option
scheme to employees. The President has not exercised any options during 2002.
The options were withdrawn by the ordinary general meeting held on May 16,
2003.

No funds have been set aside or accrued to provide for pension or
retirement benefits, except for funds paid to our retirement benefit plan, as
described in Note 17, Pensions, included in Item 18.

C. Board Practices

The following table sets forth information with respect to the current
term of office for the members of our board of directors.

|                   |  |                    |  |                       |  |                     |  |  |  |  |  | 
|------------------ |  | ------------------ |  | --------------------- |  | ------------------- |  |  |  |  |  | 
|Name               |  | Served Since       |  | Start of Current Term |  | End of Current Term
|                   |  |                    |  |                       |  |                    
|Bjarne Skeie       |  | September 26, 1996 |  | May 2002              |  | May 2004           
|James F. Skouverøe |  | June 17, 1997      |  | May 2002              |  | May 2004           
|Geir Aune          |  | November 2001      |  | November 2001         |  | November 2003      
|Morten Borge       |  | November 2001      |  | November 2001         |  | November 2003      
|Roy Mosvold        |  | November 2001      |  | November 2001         |  | November 2003      
|Jon Aisbitt        |  | May 2003           |  | May 2003              |  | May 2005           

Our directors do not have service contracts or other agreements that
provide for benefits on termination of employment.

We established an audit committee in May 2003. Members of the Audit
Committee are Jon R. Aisbitt (chairman) and Morten Borge. Ocean Rig is not
currently subject to the audit committee standards set forth under Section 10A
of the U.S. Exchange Act of 1934, as amended. However the Audit Committee was
established for the sake of good corporate governance and is given the mandate
to assist the board of directors in fulfilling their responsibility to the
shareholders, investment community and others relating to Ocean Rigs financial
statements. The Audit Committees primary responsibility is to oversee the
financial reporting process on behalf of the board and report the results of
their work to the board.

Members of the Compensation Committee are Roy Mosvold and James F.
Skouverøe.

D. Employees

On average, we had approximately 242 employees in 2002, 176 employees in
2001 and 93 employees in 2000. The increase in number of employees is due to
increased activity with the construction of the rigs and start of operations
for the Leiv Eiriksson and Eirik Raude in 2002. Our employees are not members
of unions or otherwise covered by collective bargaining agreements. We
consider relations with our employees to be good.

E. Share Ownership

Our board views options as an integral part of the compensation package of
employees and directors and the board will, as it believes necessary, grant
additional options to attract and retain executives or other key employees. At
our Extraordinary General meeting in August 2002 a new share option plan was
approved, authorizing our Board to issue up to 14,000,000 shares in our company
to employees and Board members of our company, each with a subscription price
of NOK 3.5 per share. Any previous granted options were withdrawn. The options
under this scheme were withdrawn by the

39



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##### 



ordinary general meeting in May 2003, and a new option program for the
Management and the Board of Directors was approved. The new option plan
authorizes the Board to issue up to 8,800,000 shares in respect of the option
plan each with a par value of NOK 10.0 per share. Of the total shares,
1,800,000 are reserved for the Chairman of the Board and 800,000 shares are
reserved for each of the remaining Board members ( 4,000,000 options). The
remaining 3,000,000 shares are reserved for the Companys management. The
option program is based upon five classes of options, with varying exercise
prices and vesting periods for each class. Options are granted on May 16, 2003
and vest according to each classs vesting period. Options can be exercised at
any time from date of vesting to date of maturity.

The authorization is valid for two years from May 16, 2003 to May 16, 2005.
Board member Morten Borge, Roy Mosvold, Jon Aisbitt and J. Frithjof Skouverre
each have confirmed purchase of 800,000 options each with an exercise price of
NOK 15.0 per share for a total consideration of USD 30.000 each.

The following table sets forth share ownership held in our company and
options granted to our directors and key management as of December 31, 2002.

|                      |  |                                    |  |            |           |             |  |  |           |  |  | 
|--------------------- |  | ---------------------------------- |  | ---------- | --------- | ----------- |  |  | --------- |  |  | 
|Name                  |  | Position                           |  | Shares (1) |           | Options (2)
|                      |  |                                    |  |            |           |            
|Directors             |  |                                    |  |            |           |             |  |  |           |  |  | 
|Morten Borge (3)      |  | Chairman of the Board of Directors |  |            | 94,000    |             |  |  | 1,300,000 | 
|J. Frithjof Skouverøe |  | Director                           |  |            | 46,581    |             |  |  | 675,000   | 
|Geir Aune (3)         |  | Director                           |  |            |          |             |  |  | 675,000   | 
|Bjarne Skeie          |  | Director                           |  |            |          |             |  |  | 675,000   | 
|Roy Mosvold           |  | Director                           |  |            | 1,885,830 |             |  |  | 675,000   | 
|Senior Management     |  |                                    |  |            |           |             |  |  |           |  |  | 
|Kai Solberg-Hansen    |  | President and CEO                  |  |            |           |             |  |  | 400,000   | 
|Christian Mowinckel   |  | Senior Vice President-Finance      |  |            |           |             |  |  | 250,000   | 
|Nina E Tveita         |  | Senior Vice President-HMS & Q      |  |            | 5,194     |             |  |  | 21,500    | 
|Willy Tørhaug         |  | Senior Vice President-Operations   |  |            |           |             |  |  | 250,000   | 
|Tomas Norrby          |  | Senior Vice President-Marketing    |  |            |           |             |  |  | 250,000   | 
|Kjersti Stenberg      |  | Senior Vice President-Accounting   |  |            |           |             |  |  | 53,500    | 
|Rolf Ytreland (4)     |  | Managing Director Ocean Rig AS     |  |            | 7,035     |             |  |  | 250,000   | 



---

|(1) |  | Includes shares owned by companies controlled by the director or immediate family.                                                                                                                       
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The above share option plan has lapsed and was replaced by a new plan approved May 16, 2003, see Item 6,
Directors, Senior Management and Employees-Compensation.                                      
|   
|(3) |  | On March 25, 2003 Mr. Borge resigned as Chairman, but continues as a Director. The board elected Mr. Aune as
Executive Chairman of the Board of Directors. May 16, 2003 Jon Aisbitt was elected Director.
|   
|(4) |  | July 1, 2003 Mr. Ytreland resigns as Managing Director Ocean Rig AS. He is replaced by Jørgen Cederfeldt. As
of 31.12.02 Mr Cederfeldt held 1374 shares in the Company.                                  

40



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##### 



ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



|A. |  | Major Shareholders
|-- |  | ------------------

To the knowledge of our management, Ocean Rig ASA is not directly or indirectly
controlled by another corporation or by any foreign government. As of June 6,
2003, only Goldman Sachs & Co, Deutsche Bank AG, Morgan Stanley & Co, Sinvest
ASA, and Odin Forvaltning AS owned more than five percent of our outstanding
shares. Goldman Sachs & Co held 27.9%, Deutsche Bank AG held 19.7%, Morgan
Stanley & Co held 15.6%, Sinvest ASA held 11.9%, and Odin Forvaltning AS held
6.3 % of our outstanding shares. Mr. Skeie is currently a director of our board
of directors and is the founder of our company. Mr. Skeie is also the largest
shareholder of Sinvest ASA and holds, directly or indirectly, 29.9% of the
share capital of that company. As of June 6, 2003, the total number of shares
held beneficially by directors and executive officers of our company as a group
was 278,864, representing approximately 0.5% of our outstanding shares (not
including the shares of Sinvest ASA). Directors and executive officers of our
company have also received options to purchase shares in our company, which may
be exercised at certain dates and prices. See Item 6, Directors, Senior
Management and Employees-Compensation. Our large shareholders do not have
voting rights different from those of our shareholders generally.

As of December 31, 2002 our companys share capital comprised 492,886,851
shares, with a par value of NOK 1 per share. On May 21, 2003 the par value of
our shares was increased from NOK 1 per share to NOK 10 per share following a
reverse 10:1 split. As of June 6, 2003 our company had 52,852,587 shares
issued and outstanding, par value NOK 10 per share. By full conversion of the
Companys Mandatory Convertible Bond the number of shares could increase to
71,931,015.

We have a single class of common shares. The following table sets forth
information regarding the beneficial ownership of our common shares as of June
6, 2003 by (1) each person known to us to own beneficially 5% or more of the
outstanding share capital of our company and (2) all of our directors and
executive officers as a group. The shareholders set forth below do not have any
different voting or other rights in relation to their shares.

|                                                |  |               |            |               |  |  |      |  
|----------------------------------------------- |  | ------------- | ---------- | ------------- |  |  | ---- | -
|                                                |  | Number of     |            | Percentage of
|Name of Beneficial Owner                        |  | Common Shares |            | Common Shares
|                                                |  |               |            |              
|Goldman Sachs & Co.                             |  |               | 14,731,385 |               |  |  | 27.9 | %
|Deutsche Bank AG                                |  |               | 10,414,128 |               |  |  | 19.7 | %
|Morgan Stanley & Co                             |  |               | 8,254,442  |               |  |  | 15.6 | %
|Sinvest ASA (1)                                 |  |               | 6,284,910  |               |  |  | 11.9 | %
|Odin Forvaltning AS                             |  |               | 3,328,102  |               |  |  | 6.3  | %
|Directors and executive officers as a group (2) |  |               | 281,120    |               |  |  | 0.5  | %



---

|(1) |  | Mr. Skeie, a director of the Board of directors holds 29.9%
of the shares in Sinvest ASA.   
|--- |  | --------------------------------------------------------------------------------------------
|   
|(2) |  | Excluding the shares indirectly owned by Mr. Skeie through
his 29.9% holdings in Sinvest ASA

Goldman Sachs & Co.has increased their ownership of our company to 27.9%
on June 6, 2003 from 2.2% on December 31, 2000. On December 31, 2001 they owned
16.22% of the shares of our company.

Deutsche Bank AGis at June 6, 2003 the owner of 19.7% of the shares of
our company. They did not have any shares at the years closing December 31,
2001, 2000 or 1999.

Morgan Stanley & Cohas increased their ownership of our company to 15.6%
on June 6, 2003 from 1.8% on December 31, 1999. On December 31, 2001 and 2000
they owned 12.61% and 7.7% respectively of the shares of our company.

Sinvest ASAhas reduced their ownership of our company from 17.96% on
December 31, 2001 to 11.9% on June 6, 2003. Sinvest ASA did not have any shares
on December 31, 2000 or 1999.

41



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##### 



Skeie Group AShas reduced their ownership of our company from 7.1% in
1999, through 5.96% in December 2001, to 0% as of June 6, 2003. Bjarne Skjeie
is a major shareholder in both Sinvest ASA and Skjeie Group AS.

Odin Forvaltning AShas increased their ownership of our company to 6.3%
on June 6, 2003 from 3.1% on December 31, 1999. On December 31, 2001 and 2000
they owned 5.71% and 2.5% respectively of the shares of our company.

Directors and executive officers as a group. Sinvest ASA and Directors and
executive group from the table above gives 6,563,774 shares as a total or 12.4%
of the total shares. This is an increase from 6.8% at year end 2001.

The number of record holders in the United States as of June 6, 2003 is
31. Our records indicate that 1.75% of Ocean Rigs issued and outstanding
share capital is held in the United States.



|B. |  | Related Party Transactions
|-- |  | --------------------------

We have entered into several agreements and transactions with related
parties, including those discussed below, and may continue to do so in the
future. We believe that these agreements and transactions have been and will
continue to be conducted on terms no less favorable to us than could be
obtained from unrelated third parties.

Agreements with Hydralift ASA

We entered into two contracts with Hydralift, one dated October 29, 1996
relating to Leiv Eiriksson and Eirik Raude, and one dated July 31, 1997
relating to Rigs No. 3 and No. 4, which gave Hydralift a right of first refusal
to provide owner-furnished equipment for the rigs. These contracts with
Hydralift are substantially similar and require us to purchase owner-furnished
equipment available from Hydralift if the material terms of the purchase (e.g.,
price, delivery and warranty) are equal to the most favorable terms offered to
us by any competitor of Hydralift.

The aggregate contract price for Leiv Eiriksson and Eirik Raude under our
equipment contracts with Hydralift was NOK 567.4 million at December 31, 2001,
of which we paid NOK 276.9 million ($39.9 million) in 1999, NOK 39.4 million
($5.7 million) in 2000, NOK 43.8 ($6.3 million ) in 2001 and NOK 21.2 million
($3.1 million) in 2002.

Our board of directors believes that the terms of our contracts with
Hydralift are no less favorable to us than those we could have obtained from an
unrelated third party. Board member Bjarne Skeie sold his shares in Hydralift
ASA in December 2002 and as of 31 December 2002, Hydralift is no longer
considered as related party to our Company. Transactions up until the sale of
shares in Hydralift ASA are included in the numbers above.

Other Transactions

Two of the Board members have received compensation for additional
services during 2002. Morten Borge, Chairman of the Board at December 31, 2002,
received a compensation of NOK 1,442,818 for work performed that exceeds work
relating to his position as Chairman of the Board. Board member Geir Aune
received consulting fees of NOK 100,000.

Ocean Rig has issued a loan to Senior Vice President Operations Willy
Tørhaug of NOK 1.2 million ($0.174 million).The loan was issued prior to July
2002 and there have been no material changes in loan terms. The loan is
interest bearing and has quarterly installments over 5 years, ending 2007.

42



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##### 





| | C. |  | Interests of Experts and Counsel
| | -- |  | --------------------------------

Not applicable.

ITEM 8. FINANCIAL INFORMATION



|A. |  | Consolidated Statements and Other Financial Information                                
|-- |  | ---------------------------------------------------------------------------------------
|  
|1. |  | Please refer to Item 18 for our consolidated financial statements.                     
|  
|2. |  | Please refer to Item 18 for our comparative financial statements.                      
|  
|3. |  | Please refer to Item 18 for the independent auditors report of PricewaterhouseCoopers.
|  
|4. |  | The last year of audited financial statements is not older than 15 months.             
|  
|5. |  | Not applicable.                                                                        
|  
|6. |  | Not applicable.                                                                        
|  
|7. |  | Legal Proceedings                                                                      

Except for the matters discussed below, we are not a party to any material
litigation other than routine legal proceedings incidental to our business.

Maritima/Safra Bank

In November 1998, we entered into a marketing agreement with the Brazilian
drilling contractor Formaritima, which is owned by the Brazilian company
Maritima Petroleo e Engenharia Ltda (Maritima) and the American drilling
contractor Pride International. Maritima undertook to pay us $15 million if
Maritima had not obtained contracts for Leiv Eiriksson and Eirik Raude by an
agreed deadline. The claim was secured by a letter of credit issued by Safra
National Bank of New York (Safra Bank). However, Maritima did not succeed in
providing drilling contracts for either of the rigs by the specified deadline.
As a result, Ocean Rig filed a claim under the letter of credit, which Safra
Bank rejected. In June 2001, a U. S. federal court found in favor of Ocean Rig,
and ruled that Safra Bank was to pay the specified amount. Safra Bank has paid
the amount of $15 million plus accrued interest into an account with HSBC Bank,
New York. HSBC Bank may release the funds only pursuant to an order from an
arbitration court in London, which is to hear the case. Maritima claimed
repayment of the above-mentioned $15 million (plus accrued interest). In
addition, Maritima claimed compensation for losses that it maintained it had
suffered as a result of breach of contract by Ocean Rig during a previous
marketing agreement between the parties.

The claims against Ocean Rig, totaling $449.6 million plus interest,
relate primarily to allegations by Maritima that the actions of Ocean Rig
caused the Brazilian state owned oil company Petrobras to cancel a series of
drilling contracts that had been entered into between Petrobras and Maritima.

On March 28, 2002, the award was published in the arbitration between
Maritima and Ocean Rig. With the exception of Maritimas claim for the return
of the sum of $15 million discussed further below, the arbitration tribunal has
dismissed all of Maritimas claims (totaling $449,556,779). It has also
confirmed that Ocean Rig was entitled to draw down on the $15 million letter of
credit which was issued

43



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##### 



in its favor by Safra National Bank of New York (on
Maritimas order). However, on the basis that Ocean Rig has not, in the event,
suffered any loss as a consequence of Maritimas failure to secure drilling
contracts with Petrobras for Ocean Rigs two drilling rigs, the tribunal
directed that the $15 million plus interest, which was deposited with HSBC Bank
in New York, should be returned to Maritima. Ocean Rig, based on the advice of
its legal advisers, determined that it would not appeal the award.



|8. |  | Dividend Policy
|-- |  | ---------------

We intend to retain any future earnings for payment of interest expense
and further development of our rig fleet and do not anticipate paying any cash
dividends in the foreseeable future.



|B. |  | Significant Changes
|-- |  | -------------------

Please refer to Note 25, Subsequent Events, to the consolidated
financial statements included in Item 18 for significant changes that have
occurred since December 31, 2002.

44



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##### 



ITEM 9. THE OFFER AND LISTING



|A. |  | Offer and Listing Details
|-- |  | -------------------------
|  
|   |  | Not applicable.          
|  
|B. |  | Plan of Distribution     
|  
|   |  | Not applicable.          
|  
|C. |  | Markets                  

Our outstanding registered securities consist solely of Ocean Rig Norway
ASs 101/4% senior secured notes due 2008 and the guarantees with respect
thereto, which were registered under the U.S. Securities Act of 1933 pursuant
to an exchange offer that expired on October 26, 1998. Neither the notes nor
the related guarantees are listed on an exchange and there is no formal trading
market for those securities, which are not registered under Section 12 of the
U.S. Securities Exchange Act of 1934.



|D. |  | Selling Shareholders 
|-- |  | ---------------------
|  
|   |  | Not applicable.      
|  
|E. |  | Dilution             
|  
|   |  | Not applicable.      
|  
|F. |  | Expenses of the Issue
|  
|   |  | Not applicable.      

45



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##### 



ITEM 10. ADDITIONAL INFORMATION



|A. |  | Share Capital          
|-- |  | -----------------------
|  
|   |  | Not applicable.        
|  
|B. |  | Articles of Association

The following is a summary of the relevant information about our share
capital and the relevant provisions of our articles of association and
Norwegian law. This summary does not purport to be complete and is qualified
in its entirety by our articles of association and Norwegian law.



|1. |  | We are registered in the Norwegian national register of business
enterprises under registration no. 976 769 643. Our corporate objective
is to own and operate, directly or indirectly, offshore drilling units,
offshore productions units and offshore drilling businesses as well as
activities relating to the foregoing items and activities. Our corporate
objective clause is found in § 3 of our articles of association.                                                                                                                                                                                                                                                      
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Under Norwegian corporate law, directors may not vote on issues where
they have a material interest. Compensation for the members of our board
of directors is determined by resolution of our shareholders at the annual
meeting of shareholders. Our directors cannot borrow from our company
unless the loan has adequate security, and the loan can not exceed
distributable equity. With respect to our own borrowing, our board of
directors has the power to arrange for financing as required and at its
discretion. There is no mandatory retirement age under Norwegian law or
in our articles of association. We do not require our directors to hold
shares in our company.
|  
|3. |  | We have only one class of shares. All shares have equal rights as to
voting and dividend distributions. There is no restriction on the number
of shares a shareholder may own. Further, our shareholders are not liable
for additional capital calls and we have no discriminatory provisions
against majority shareholders. Norwegian law requires that we grant
preemptive rights to existing shareholders. Our shares do not carry any
right to receive dividends, unless dividends are granted in the discretion
of our Board of Directors. Each share carries one vote, and voting is
cumulative. Directors terms are staggered.                                                 
|  
|4. |  | Any changes to the rights of our existing shareholders generally require
a two-thirds majority vote of our shareholders represented at the
shareholders meeting. In certain cases, such as reducing the rights to
dividends and dividing existing shares into classes not having equal
treatment for shareholders, a 90% majority vote or unanimity may be
required. These provisions are in accordance with the standard prescribed
by Norwegian law.                                                                                                                                                                                                                                
|  
|5. |  | Our shareholders meetings are convened by our board of directors upon at
least 14 days of notice. Shareholders of record as of the date of the
meeting are admitted. However, any shares that have been sold but not
delivered have no voting rights.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|6. |  | There are no limitations under our articles of association or under
Norwegian law on the ownership or voting rights of foreign shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|7. |  | We have no provisions under our articles of association that would have a
negative impact on a change of control, merger, acquisition or
restructuring, except that any matter requiring changes to our share
capital require a two-thirds majority vote.                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|8. |  | Our articles of association do not require disclosure of ownership,
although our share register is open to the public for review.
Furthermore, the Oslo Stock Exchange requires shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

46



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##### 





|    |  | passing certain thresholds (upward or downward) to give notice of their shareholdings.
The current thresholds are 5%, 10%, 20%, 33.3%, 50%, 66.7% and 90% of a
companys shares.                                                          
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|9.  |  | The law applicable to our company in the above areas is not significantly
different from that in the United States.                                                                                                                       
|   
|10. |  | Our articles of association are not more stringent than required by
Norwegian law as to changes in share capital. A two-thirds majority vote
of the shareholders represented at the shareholders meeting is required
for any such change.
|   
|C.  |  | Material Contracts                                                                                                                                                                                                                        

Please refer to Item 4, Information on our Company-Business Overview for
a description of all material contracts to which we are a party.



|D. |  | Exchange Controls
|-- |  | -----------------

Under Norwegian foreign exchange controls currently in effect, transfers
of capital to and from Norway are not subject to prior government approval
except for the physical transfer of payments in currency, which is restricted
to licensed banks. Consequently, a non-Norwegian resident may receive
dividend, principal and interest payments without a Norwegian exchange control
consent, provided that such payment is made through a licensed bank.

There are no limitations imposed by Norwegian law or our articles of
association on the right of non-resident or non-Norwegian persons to hold Ocean
Rig Norway ASs 101/4% senior secured notes due 2008.



|E. |  | Taxation
|-- |  | --------

The following discussion is a summary of material Norwegian income tax
matters relating to the acquisition, ownership and disposition of the 101/4%
senior secured notes due 2008 by non-residents of Norway and does not purport
to describe all of the tax considerations, including those arising under U.S.
tax laws, that may be relevant to a U.S. resident holder of the notes. Holders
of the notes are advised to consult their own tax advisors concerning the
consequences, in their particular circumstances, of the ownership and
disposition of the notes under Norwegian and other laws to which they may be
subject.

The discussion of Norwegian tax law set forth below is based on the laws
in force as of the date hereof, including the current convention between the
United States and Norway for the avoidance of double taxation with respect to
income taxes and interpretations thereof by the relevant tax authorities that
are in effect as of the date of this annual report, and does not take into
account possible future changes in Norwegian or other tax laws or in the
convention.

There is no Norwegian tax on interest received by United States residents.
In addition, under current Norwegian law, payments of principal, premium, and
interest on notes to a holder that is a non-resident of Norway are not subject
to Norwegian income or withholding tax unless effectively held in connection
with a permanent establishment in Norway. With the same exception, any gain
realized on the sale or other disposition of a note by such holder will not be
subject to Norwegian income or withholding tax. A holder of a note that is
neither a citizen nor a resident of Norway will not be subject to Norwegian
transfer, inheritance, gift or contribution taxes in respect of such note.



|F. |  | Dividends and Paying Agents
|-- |  | ---------------------------
|  
|   |  | Not applicable.            

47



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##### 





|G. |  | Statements by Experts
|-- |  | ---------------------
|  
|   |  | Not applicable.      
|  
|H. |  | Documents on Display 

We have filed our Form F-4 registration statement with the U.S. Securities
and Exchange Commission. This annual report does not contain all of the
information included in the registration
statement. You should refer to our registration statement and its
exhibits if you would like to find out more about our company and the 101/4%
notes due 2008.

We are not subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934. Regardless of whether or
not we are subject to the requirements of the Exchange Act, we have agreed to
provide the following information to the SEC, our note holders and our trustee
so long as any notes remain outstanding:



| |  |  | all annual and quarterly financial information that would be
required in a Form 20-F and Form 10-Q filing, including operating
and financial reviews and prospects and, with respect to annual
financial information, a report by our independent auditors
provided, however,if such financial information is prepared in
accordance with Norwegian GAAP, such information will be reconciled
to U.S. GAAP (including a determination of EBITDA);
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | all reports that would be required in a Form 8-K filing
(other than such reports required as a result of a Regulation S sale
of equity securities); and                                                                                                                                                                                                                                                                                          
|
| |  |  | as a foreign private issuer, we are exempt from the rules
under the Exchange Act prescribing the furnishing and content of
proxy statements, and our officers, directors and principal
stockholders are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of the Exchange Act.                                                                                                                        

You may inspect copies of our registration statement, its accompanying
exhibits, and any other document we file with the Commission, without charge.
You also may copy or obtain any of these documents at prescribed rates at the
public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Commission Public Reference Room by calling the Commission
at 1-800-SEC-0330.



|I. |  | Subsidiary Information
|-- |  | ----------------------

For more information on our subsidiaries, see Item 4, Information on our
Company-Organizational Structure.

48



---



##### 



ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk principally through movements in foreign
currency exchange rates and interest rates relating to our outstanding debt.
We manage volatility inherent in these business exposures through natural
hedges in our balance sheet and, where necessary, under our risk management
policies and through derivative financial instruments. We use only
conventional derivative instruments such as forward contracts. See Note 1 to
our consolidated financial statements for more information.

In cases in which derivatives constitute a hedge, they do not expose us to
market risk because the change in their market value offsets the change in the
fair value of the financial asset and liability being hedged. We do not enter
into any derivatives for trading purposes. Counterparties selected by us for
these transactions generally are highly rated international financial
institutions.

See Note 27 to our financial statements included in Item 18 of this annual
report for additional disclosure on borrowing analyzed by maturity date,
financial liabilities and assets analyzed by currency and interest rate risk
profile and fair value of financial instruments.

Interest Rate Risk

We are exposed to the effects of movements in interest rates on the
floating rate loans of Ocean Rig Norway AS and Ocean Rig 2 AS, which bear
interest at a rate of LIBOR plus an amount ranging from 2.75% to 4.75%,
depending on the loans. We have not to date entered into interest rate collars
or interest rate swaps to hedge against this exposure, but we might do so in
the future if we believe the market conditions are right. We estimate that a
change of 100 basis points across all maturities in the LIBOR interest rate
would have caused an increase or decrease in our interest expense of
approximately NOK 15.4 million ($2.2 million) and NOK 20.2 million ($2.9
million) for 2002 and 2001, respectively.

Foreign Currency Exchange Rate Risk

The financial statements of our company are reported in Norwegian kroner.
We have $450 million of long-term debt denominated in U.S. dollars. As a
result, fluctuations in exchange rates can have a significant effect on our
operating results and financial position. We estimate that a 10% increase or
decrease of the U.S. dollar relative to the Norwegian kroner would have
increased or decreased our interest expense in 2002 and 2001 by approximately
NOK 17.8 million ($2.6 million) and NOK 30.5 million
($4.4 million),
respectively, and long-term debt as of December 31, 2002 and 2001, would have
increased or decreased by NOK 313.5 million ($45.19 million) NOK 403.8 million
($58.2 million), respectively.

Leiv Eiriksson was constructed in the United States. The Rig left the
Friede Goldman Shipyard in May 2001 for sea trials and commissioning and
commenced operations offshore Angola on February 7, 2002. Eirik Raude was
mechanically completed on June 21, 2002 at the Halifax Shipyard in Nova Scotia,
Canada on a time and materials basis. Payments to the shipyard were made in
Canadian dollars. We have also entered into contracts in other currencies for
the delivery of owner-furnished equipment, which are not considered material.
We manage exposure to changes in foreign exchange rates through our normal
operating and financing activities, as well as through the use of financial
instruments. The only financial instruments we may utilize are forward exchange
contract, and we also maintained dollar cash deposits equal to our anticipated
foreign currency rig construction payments in dollars.

In general, we rely on natural hedges in our balance sheet and income
statement to manage the impact of fluctuations in exchange rates. Such natural
hedges include cash accounts in U.S. dollars and Canadian dollars designed to
manage the movements in exchange rates by creating an equal and offsetting
transaction.

49



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##### 



Forward contracts are used on limited occasions principally to hedge the
impact of exchange rate movements on the net investment in our dollar cash
accounts. We did not have any forward contracts outstanding as of December 31,
2002, 2001 or 2000.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



|A. |  | Not applicable.
|-- |  | ---------------
|  
|B. |  | Not applicable.
|  
|C. |  | Not applicable.
|  
|D. |  | Not applicable.
|  
|E. |  | Use of Proceeds

We have used the net proceeds from the issuance by Ocean Rig Norway AS of
the 101/4% notes due 2008, the incurrence by Ocean Rig Norway AS of loans in
May 1998, the issuance by Ocean Rig ASA of convertible notes and loans in 2000
and a mandatory convertible loan in 2002, the incurrence by Ocean Rig 2 AS of a
USD 100 million loan in 2001 (refinanced in June 2002) and the incurrence by
Ocean Rig ASA of a USD short term loan in 2002, and from various private
placements of shares together with existing cash and restricted cash on hand:
(1) to fund the construction and outfitting of Leiv Eiriksson and Eirik Raude;
(2) to fund the construction of the baredeck hulls for Rig No. 3 and Rig No. 4;
(3) to make interest payments on the senior secured notes due 2008, the
floating rate loans and other indebtedness; and (4) for general corporate
purposes. For a discussion of our capital investment program and capital
resources, see Item 5, Operating and Financial Review and Prospects-Liquidity
and Capital Resources.

ITEM 15. Controls and Procedures

Within the 90-day period prior to the filing of this report, an evaluation
was carried out under the supervision and with the participation of Ocean Rigs
management, including our Chief Executive Officer and Senior Vice-president,
Accounting, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-14(c) under the Securities
Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer
and and Senior Vice-president, Accounting concluded that the design and
operation of these disclosure controls and procedures were effective. No
significant changes were made in our internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.

50



---



##### 



ITEM 16A. Audit Committee Financial Expert

The Financial Expert of the audit committee is Jon R. Aisbitt.

ITEM 16B. Code of Ethics

Not required.

ITEM 16C. Principal Accountant Fees and Services

Not required.

51



---



##### 



PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

Ocean Rig ASA and Subsidiaries

INDEX TO FINANCIAL STATEMENTS

|                                                                                                               |  |      |    | 
|-------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Consolidated Financial Statements of Ocean Rig ASA                                                             |  | Page
|Report of Independent Auditors                                                                                 |  |      | 53 | 
|Consolidated
Statements of Operations for the years ended December 31,2000, 2001 and 2002                      |  |      | 54 | 
|Consolidated Balance Sheets as of December 31, 2001 and 2002                                                   |  |      | 55 | 
|Consolidated
Statements of Changes in Shareholders Equity for the yearsended
December 31, 2000, 2001 and 2002 |  |      | 56 | 
|Consolidated
Statements of Cash Flows for the years ended December 31,2000, 2001 and 200                       |  |      | 57 | 
|Notes to Financial Statements                                                                                  |  |      | 58 | 

52



---



##### 



REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Ocean Rig ASA:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of changes in
shareholders equity, present fairly, in all material respects, the
consolidated financial position of Ocean Rig ASA and Subsidiaries at December
31, 2001 and 2002 and the results of their operations and their cash flows for
each of the 3 years in the period ended December 31, 2000, 2001 and 2002, in
conformity with generally accepted accounting principles in Norway. These
financial statements are the responsibility of our companys management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards in Norway and the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

Accounting principles generally accepted in Norway vary in certain important
respects from accounting principles generally accepted in the United States.
The application of the latter would have affected the determination of
consolidated net income for each of the three years in the period ended
December 31, 2002 and the determination of consolidated shareholders equity at
December 31, 2001 and 2002 to the extent summarized in Note 27 to the
consolidated financial statements.

The accompanying financial statements have been prepared assuming that Ocean
Rig will continue as a going concern. As discussed in Note 26 to the financial
statements, Ocean Rig has suffered recurring losses from operations and has
insufficient capital that raise substantial doubt about its ability to continue
as a going concern. Managements plans in regard to these matters are also
described in Note 26. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

PricewaterhouseCoopers DA

Oslo, Norway
March 28, 2003
except as to the information
presented in Note 25 and 26, for which the date is
June 25, 2003

53



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002

|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|---------------------------------------------------------- |  | -------------------------------------------------------- | -------- | ---- |  | ---- | -------- | ------ |  |  | -------- | - |  |  | ------- | -
|                                                           |  | Year ended December 31,                                 
|                                                           |  |                                                         
|                                                           |  | 2000                                                     |          | 2001 |  | 2002 |          | 2002  
|                                                           |  |                                                          |          |      |  |      |          |       
|                                                           |  | NOK                                                      |          | NOK  |  | NOK  |          | USD(1)
|                                                           |  | (amounts in thousands, except for per share information)
|Operating revenues                                         |  |                                                          | 13,749   |      |  |      | 10,538   |        |  |  | 534,331  |   |  |  | 77,021  |  
|Operating expenses:                                        |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Salaries and other personnel expenses                      |  |                                                          | 45,479   |      |  |      | 110,285  |        |  |  | 164,335  |   |  |  | 23,688  |  
|Other operating and administrative expenses                |  |                                                          | 127,251  |      |  |      | 350,998  |        |  |  | 388,668  |   |  |  | 56,024  |  
|Depreciation, amortization and asset
impairment write down |  |                                                          | 3,821    |      |  |      | 255,171  |        |  |  | 160,586  |   |  |  | 23,148  |  
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Total operating expenses                                   |  |                                                          | 176,551  |      |  |      | 716,454  |        |  |  | 713,589  |   |  |  | 102,860 |  
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Operating loss                                             |  |                                                          | (162,802 | )    |  |      | (705,916 | )      |  |  | (179,258 | ) |  |  | (25,839 | )
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Interest and other financial income                        |  |                                                          | 149,356  |      |  |      | 76,725   |        |  |  | 986,363  |   |  |  | 142,179 |  
|Interest and other financial expenses                      |  |                                                          | (316,268 | )    |  |      | (189,937 | )      |  |  | (597,955 | ) |  |  | (86,192 | )
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Net financial income (expense)                             |  |                                                          | (166,912 | )    |  |      | (113,212 | )      |  |  | 388,408  |   |  |  | 55,987  |  
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Income (loss) before taxes                                 |  |                                                          | (329,714 | )    |  |      | (819,128 | )      |  |  | 209,150  |   |  |  | 30,148  |  
|Income taxes                                               |  |                                                          | (220     | )    |  |      | (329     | )      |  |  | (22      | ) |  |  | (3      | )
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Net income (loss)                                          |  |                                                          | (329,934 | )    |  |      | (819,457 | )      |  |  | 209,128  |   |  |  | 30,145  |  
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Basic earnings/ (loss) per share                           |  |                                                          | (8.14    | )    |  |      | (15.84   | )      |  |  | 1.10     |   |  |  | 0.16    |  
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  
|Diluted earnings/ (loss) per share                         |  |                                                          | (8.14    | )    |  |      | (15.84   | )      |  |  | 0.79     |   |  |  | 0.11    |  
|                                                           |  |                                                          |          |      |  |      |          |        |  |  |          |   |  |  |         |  



---

|(1) |  | Translation of amounts from Norwegian kroner (NOK) into United States dollars (USD) has been made for the convenience of the reader using the
noon buying rate on December 31, 2002 of $1.00 = NOK 6.9375.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

54



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND 2002

|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|------------------------------------------ |  | ---------------------- | --------- | ---- |  | ------ | --------- |  |  |  | --------- | 
|                                           |  | As of December 31,    
|                                           |  |                       
|                                           |  | 2001                   |           | 2002 |  | 2002  
|                                           |  |                        |           |      |  |       
|                                           |  | NOK                    |           | NOK  |  | USD(1)
|                                           |  | (amounts in thousands)
|Assets                                     |  |                        |           |      |  |        |           |  |  |  |           | 
|Construction-in-progress                   |  |                        | 3,966,497 |      |  |        |          |  |  |  |          | 
|Rigs, machinery and equipment              |  |                        | 3,605,542 |      |  |        | 8,555,725 |  |  |  | 1,233,258 | 
|Long-term receivables and other assets     |  |                        | 131,297   |      |  |        | 93,920    |  |  |  | 13,538    | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Total non-current assets                   |  |                        | 7,703,336 |      |  |        | 8,649,645 |  |  |  | 1,246,796 | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Current receivables                        |  |                        | 61,323    |      |  |        | 120,310   |  |  |  | 17,342    | 
|Restricted cash                            |  |                        | 253,494   |      |  |        | 8,627     |  |  |  | 1,244     | 
|Cash and cash equivalents                  |  |                        | 170,205   |      |  |        | 137,346   |  |  |  | 19,798    | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Total current assets                       |  |                        | 485,022   |      |  |        | 266,283   |  |  |  | 38,384    | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Total assets                               |  |                        | 8,188,358 |      |  |        | 8,915,928 |  |  |  | 1,285,180 | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Liabilities And Shareholders Equity       |  |                        |           |      |  |        |           |  |  |  |           | 
|Share capital                              |  |                        | 1,682,316 |      |  |        | 492,887   |  |  |  | 71,047    | 
|Other equity                               |  |                        | 1,120,972 |      |  |        | 3,965,153 |  |  |  | 571,554   | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Total shareholders equity                 |  |                        | 2,803,288 |      |  |        | 4,458,040 |  |  |  | 642,601   | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Pension liabilities                        |  |                        | 1,088     |      |  |        | 591       |  |  |  | 85        | 
|Convertible loan                           |  |                        | 1,052,500 |      |  |        | 996,143   |  |  |  | 143,588   | 
|Notes and loans                            |  |                        | 4,007,109 |      |  |        | 3,105,494 |  |  |  | 447,639   | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Total long-term liabilities                |  |                        | 5,060,697 |      |  |        | 4,102,228 |  |  |  | 591,312   | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Commitments and contingencies              |  |                        |           |      |  |        |           |  |  |  |           | 
|Accounts payable                           |  |                        | 89,552    |      |  |        | 59,199    |  |  |  | 8,533     | 
|Short term loan                            |  |                        |          |      |  |        | 84,322    |  |  |  | 12,155    | 
|Other current liabilities                  |  |                        | 234,821   |      |  |        | 212,139   |  |  |  | 30,579    | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Total current liabilities                  |  |                        | 324,373   |      |  |        | 355,660   |  |  |  | 51,267    | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 
|Total liabilities and shareholders equity |  |                        | 8,188,358 |      |  |        | 8,915,928 |  |  |  | 1,285,180 | 
|                                           |  |                        |           |      |  |        |           |  |  |  |           | 



---

|(1) |  | Translation of amounts from Norwegian kroner (NOK) into United States dollars (USD) has been made for the convenience of
the reader using the noon buying rate on December 31, 2002 of $1.00 = NOK 6.9375.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

55



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002

|                                            |  |                                           |             |         |  |        |            |          |  |     |           |        |  |       |           |  
|------------------------------------------- |  | ----------------------------------------- | ----------- | ------- |  | ------ | ---------- | -------- |  | --- | --------- | ------ |  | ----- | --------- | -
|                                            |  |                                           |             |         |  |        |            |          |  |     |           |        |  | Total
|                                            |  | Number of                                 |             |         |  |        |            |          |  |     |           | Share-
|                                            |  | Shares                                    |             | Share   |  | Other  |            | holders'
|                                            |  | Outstanding                               |             | Capital |  | Equity |            | Equity  
|                                            |  |                                           |             |         |  |        |            |         
|                                            |  |                                           |             |         |  | NOK    |            | NOK      |  | NOK
|                                            |  | (amounts in thousands, except share data)
|Balance at December 31, 1999                |  |                                           | 35,563,395  |         |  |        | 1,066,902  |          |  |     | 2,101,000 |        |  |       | 3,167,902 |  
|Share issuances, net of share
issuance cost |  |                                           | 8,891,900   |         |  |        | 266,757    |          |  |     | 70,771    |        |  |       | 337,528   |  
|Net loss                                    |  |                                           |            |         |  |        |           |          |  |     | (329,934  | )      |  |       | (329,934  | )
|Translation differences                     |  |                                           |            |         |  |        |           |          |  |     | (90       | )      |  |       | (90       | )
|                                            |  |                                           |             |         |  |        |            |          |  |     |           |        |  |       |           |  
|Balance at December 31, 2000                |  |                                           | 44,455,295  |         |  |        | 1,333,659  |          |  |     | 1,841,747 |        |  |       | 3,175,406 |  
|Share issuances, net of share
issuance cost |  |                                           | 11,621,906  |         |  |        | 348,657    |          |  |     | 96,054    |        |  |       | 444,711   |  
|Net loss                                    |  |                                           |            |         |  |        |           |          |  |     | (819,457  | )      |  |       | (819,457  | )
|Translation differences                     |  |                                           |            |         |  |        |           |          |  |     | 2,628     |        |  |       | 2,628     |  
|                                            |  |                                           |             |         |  |        |            |          |  |     |           |        |  |       |           |  
|Balance at December 31, 2001                |  |                                           | 56,077,201  |         |  |        | 1,682,316  |          |  |     | 1,120,972 |        |  |       | 2,803,288 |  
|Write down of nominal share value           |  |                                           |             |         |  |        | (1,626,239 | )        |  |     | 1,626,239 |        |  |       |          |  
|Share issuances, net of share
issuance cost |  |                                           | 245,548,354 |         |  |        | 245,549    |          |  |     | 990,619   |        |  |       | 1,236,168 |  
|Exercise of warrants                        |  |                                           | 191,258,154 |         |  |        | 191,258    |          |  |     |          |        |  |       | 191,258   |  
|Conversion of convertible debt              |  |                                           | 3,142       |         |  |        | 3          |          |  |     | 8         |        |  |       | 11        |  
|Net income                                  |  |                                           |            |         |  |        |           |          |  |     | 209,128   |        |  |       | 209,128   |  
|Translation differences                     |  |                                           |            |         |  |        |           |          |  |     | 18,187    |        |  |       | 18,187    |  
|                                            |  |                                           |             |         |  |        |            |          |  |     |           |        |  |       |           |  
|Balance at December 31, 2002                |  |                                           | 492,886,851 |         |  |        | 492,887    |          |  |     | 3,965,153 |        |  |       | 4,458,040 |  
|                                            |  |                                           |             |         |  |        |            |          |  |     |           |        |  |       |           |  

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

56



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002

|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |          |  
|------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- |  | ---------------------- | ---------- | ------ |  | ------- | ---------- | - |  | ------ | -------- | -
|                                                                                     |                                                                                                      |  | Year ended December 31,
|                                                                                     |                                                                                                      |  |                        
|                                                                                     |                                                                                                      |  | 2000                    |            | 2001 |  | 2002                   |            | 2002  
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |       
|                                                                                     |                                                                                                      |  | NOK                     |            | NOK  |  | NOK                    |            | USD(1)
|                                                                                     |                                                                                                      |  |                         |            |      |  | (amounts in thousands) |            |        |  |        
|Cash flows from operating activities:                                                |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|Net income (loss)                                                                    |                                                                                                      |  | (329,934                | )          |      |  | (819,457               | )          |        |  | 209,128 |            |   |  | 30,145 |         
|Adjustments to reconcile net income (loss) to net cash
used in operating activities: |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Depreciation, amortization (including amortization of
loan
discount) and asset impairment write down |  |                         |            |      |  |                        |            |        |  |         | 317,141    |   |  |        | 45,714   |  
|                                                                                     | Gain / loss from sale of assets                                                                      |  |                         | 14,822     |      |  |                        | 287,002    |        |  |         | 2,251      |   |  |        | 324      |  
|                                                                                     | Net unrealized foreign exchange gain / loss                                                          |  |                         | 273,556    |      |  |                        | 56,702     |        |  |         | (621,413   | ) |  |        | (89,573  | )
|Changes in operating assets and liabilities:                                         |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Current receivables                                                                                  |  |                         | (372       | )    |  |                        | (44,569    | )      |  |         | (58,987    | ) |  |        | (8,503   | )
|                                                                                     | Accounts payable                                                                                     |  |                         | 22,384     |      |  |                        | 50,118     |        |  |         | (30,353    | ) |  |        | (4,375   | )
|                                                                                     | Other current liabilities                                                                            |  |                         | (9,893     | )    |  |                        | 61,310     |        |  |         | 41,516     |   |  |        | 5,984    |  
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Net cash used in operating activities                                                                |  |                         | (29,437    | )    |  |                        | (408,894   | )      |  |         | (140,717   | ) |  |        | (20,284  | )
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|Cash flows from investing activities:                                                |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Payments related to building contracts                                                               |  |                         | (1,230,451 | )    |  |                        | (1,563,195 | )      |  |         | (1,903,093 | ) |  |        | (274,320 | )
|                                                                                     | Change in restricted cash                                                                            |  |                         | 475,218    |      |  |                        | (217,535   | )      |  |         | 244,867    |   |  |        | 35,296   |  
|                                                                                     | Proceeds from sale of fixed assets                                                                   |  |                         |           |      |  |                        |           |        |  |         | 377,330    |   |  |        | 54,390   |  
|                                                                                     | Purchase of machinery, equipment and intangible assets                                               |  |                         | (1,805     | )    |  |                        | (803       | )      |  |         | (3,061     | ) |  |        | (441     | )
|                                                                                     | Net change in long-term receivables                                                                  |  |                         | (11        | )    |  |                        | (4,259     | )      |  |         | 3,367      |   |  |        | 485      |  
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Net cash used in investing activities                                                                |  |                         | (757,049   | )    |  |                        | (1,785,792 | )      |  |         | (1,280,590 | ) |  |        | (184,590 | )
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|Cash flows from financing activities:                                                |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Net proceeds from issuance of long-term debt and
convertible debt                                    |  |                         | 480,171    |      |  |                        | 1,315,454  |        |  |         | 831,484    |   |  |        | 119,854  |  
|                                                                                     | Net proceeds from the issuance of common shares and
warrants                                         |  |                         | 337,528    |      |  |                        | 444,711    |        |  |         | 566,098    |   |  |        | 81,600   |  
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Net cash provided by financing activities                                                            |  |                         | 817,699    |      |  |                        | 1,760,165  |        |  |         | 1,397,582  |   |  |        | 201,454  |  
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|                                                                                     | Effect of exchange rate changes on cash and equivalents                                              |  |                         | 6,702      |      |  |                        | (8,992     | )      |  |         | (9,134     | ) |  |        | (1,317   | )
|Net increase (decrease) in cash during the year                                      |                                                                                                      |  | 37,915                  |            |      |  | (443,513               | )          |        |  | (32,859 | )          |   |  | (4,737 | )       
|Cash and cash equivalents at beginning of year                                       |                                                                                                      |  | 575,803                 |            |      |  | 613,718                |            |        |  | 170,205 |            |   |  | 24,534 |         
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         
|Cash and cash equivalents at end of year                                             |                                                                                                      |  | 613,718                 |            |      |  | 170,205                |            |        |  | 137,346 |            |   |  | 19,798 |         
|                                                                                     |                                                                                                      |  |                         |            |      |  |                        |            |        |  |         |            |   |  |        |         



---

|(1) |  | Translation of amounts from Norwegian kroner (NOK) into United States dollars (USD) has been made for the convenience of the reader using the noon
buying rate on December 31, 2002 of $1.00 = NOK 6.9375.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

57



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements

NOTE 1. Organization and Significant Accounting Policies

General

Ocean Rig ASA (Ocean Rig or the Company) is a Norwegian public limited
joint stock company that was incorporated on September 26, 1996.

Ocean Rig, a development stage company through December 31, 2001, intends
to establish itself as a drilling contractor in the area of offshore
exploration, development and production drilling with a focus on deepwater and
harsh-environment areas. Ocean Rig commissioned the construction by Dalian New
Shipyard of China (Dalian) of four baredeck units modeled on the Bingo 9000
design, and entered into completion contracts for the outfitting of two rigs,
Leiv Eiriksson and Eirik Raude, at the US shipyard Friede Goldman Offshore,
Inc. (Friede Goldman) and subsequently a contract for the completion of Eirik
Raude at the Halifax Shipyard of Irving Shipbuilding. The Company sold its two
remaining baredecks in March 2002. During the first quarter of 2002, the
Company began to earn revenues from its planned principal operations.

Company reorganization

In May 1998, Ocean Rig reorganized its corporate structure by establishing
Ocean Rig Norway AS, a wholly owned subsidiary of Ocean Rig ASA, and by
establishing a single purpose company for each of its rigs then under
construction (collectively, the Rig Companies). The Rig Companies are named
Ocean Rig 1 AS, Ocean Rig 2 AS, Ocean Rig 3 AS and Ocean Rig 4 AS, and are all
wholly owned subsidiaries of Ocean Rig Norway AS as of December 31, 2002. The
Company sold its two baredecks in Ocean Rig 3 AS and Ocean Rig 4 AS in March
2002. The primary operations of the Company are conducted through Ocean Rig
Norway AS and its subsidiaries and the wholly owned management companies Ocean
Rig AS, Ocean Rig Ltd. and U.S. Ocean Rig Inc. Ocean Rig AS, formerly Polycrest
AS, was purchased by Ocean Rig ASA in February 1998. Ocean Rig Ltd. (in
Aberdeen, UK) and U.S. Ocean Rig Inc. (in Houston, USA) were established by
Ocean Rig ASA in 1998. Certain guarantees and collateral arrangements have been
made among Ocean Rig ASA and its subsidiaries in connection with the placement
of Senior Secured Notes and Loans by Ocean Rig Norway AS, and Senior Secured
Loans by Ocean Rig 2 AS.

Consolidation principles

The consolidated financial statements include Ocean Rig ASA and subsidiary
companies owned directly or indirectly more than 50 percent. All material
intercompany transactions and balances have been eliminated in consolidation.

Basis of presentation

The financial statements have been prepared in accordance with Norwegian
generally accepted accounting principles (Norwegian GAAP). Norwegian GAAP
differs in certain significant respects from accounting principles generally
accepted in the United States (U.S. GAAP). For additional information
relating to differences between Norwegian GAAP and U.S. GAAP, see Note 27.

The Company maintains its accounting records and prepares its financial
statements in Norwegian kroner (NOK). Amounts included in the financial
statements and notes are stated in thousands of Norwegian kroner (or thousands
of any other currency used herein), except percentages, share and per share
amounts and where otherwise noted. The U.S. dollar (USD) amounts disclosed in
the accompanying financial statements are presented solely for the convenience
of the reader at the rate of NOK 6.9375 per USD 1.00, the noon buying rate for
cable transfers as certified for customs purposes by the Federal

58



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Reserve Bank
of New York on December 31, 2002, unless otherwise stated. Any other USD
amounts presented in the notes to the financial statements are converted into
NOK also using the noon buying rate on December 31, 2002, unless otherwise
stated. Such translations should not be construed as representations that the
NOK amounts represent, or have been or could be converted into, U.S. dollars at
that or any other rate.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and 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 these estimates.

Revenue and expense recognition

Operating revenues are recognized as earned, based on contractual daily
rates or on a fixed-price basis, or when services are rendered. Mobilization
fees received and costs incurred to mobilize an offshore rig from one market to
another and other prepayments are recognized as revenues and operating costs,
respectively, over the term of the related drilling contract. Other operating
expenses are recorded when incurred.

Classification of balance sheet items

Cash, receivables and liabilities are classified as current assets and
liabilities, respectively, if maturity is within one year of the balance sheet
date. Assets and liabilities not maturing within one year of the balance sheet
date are classified as non-current assets and long-term liabilities,
respectively.

Cash and cash equivalents

Cash and cash equivalents include cash, bank deposits and other short-term
deposits with an original maturity of three months or less at the date of
purchase.

Restricted cash

Restricted cash includes cash pledged as collateral for bank guarantees to
the shipyards, cash paid to the retention account relating to the Fortis Loan
Facility, collateral to other suppliers and to employee tax withholding
amounts, Prior to the completion of the companys rigs, cash was held in
certain restricted trust accounts to be used only for the completion cost of
the rigs and interest expenses during the construction period.

Foreign currency transactions

Cash and cash equivalents, receivables and liabilities denominated in
foreign currency are translated using the exchange rate at the balance sheet
date, except for cash and cash equivalents identified to hedge foreign exchange
risk related to construction contracts which are translated to NOK at
historical exchange rates. Net unrealized foreign currency exchange gains or
losses are recorded as financial income or expense, respectively. Receivables
and liabilities hedged by use of derivative instruments are translated at the
hedged rate, except for the interest part denominated in foreign currency,
which is translated at the year-end exchange rate, and cash identified to hedge
foreign exchange risk, which is translated to NOK at historical exchange rates.

59



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Derivative financial instruments

The Company may from time to time enter into forward foreign exchange
contracts (forward contracts) as part of its overall foreign currency
risk-management strategy. These instruments are used as a means of hedging
exposure to foreign currency risk and are not recorded until the respective
payment is recorded. Such foreign currency transactions are considered hedges
when the Company has entered into a firm, binding construction contract and the
foreign currency transaction is designated as hedge of the foreign currency
commitments. Gains and losses on foreign currency transactions identified as
hedges are deferred and recorded as other current assets or liabilities until
settlement of the underlying transaction. Cash flows from financial instruments
that are hedges are categorized in the same category as the items being hedged.

If the forward contracts cease to meet the criteria for deferral
accounting, subsequent gains and losses are currently recognized in income as
financial income or expense. If a hedging instrument is sold or terminated
prior to maturity, gains and losses are spread over the remaining life of the
transaction.

The Company does not hold or issue derivative financial instruments for
trading purposes. At December 31, 2000, 2001 and 2002, the Company did not have
any outstanding forward foreign currency exchange contracts.

Construction-in-progress

Amounts due under construction contracts are capitalized at the time an
installment to a shipyard or other supplier becomes payable. Other costs
incurred in the process of getting the asset ready for its intended use are
capitalized as part of the acquisition cost as incurred. Interest costs
incurred during the construction of qualifying assets are capitalized based on
prevailing interest rates and weighted average capital expenditures.

Other fixed assets and depreciation

Other fixed assets are included in the balance sheet at acquisition cost
less accumulated depreciation. Depreciation is calculated on a straight-line
basis over the estimated useful life of the assets.

Expenditures for additions, significant renewals and betterments are
capitalized, whereas expenditures for maintenance and repairs are expensed as
incurred. When assets are sold or retired, their cost and related accumulated
depreciation are removed from accounts and any gain or loss is included in net
income.

Impairment of long-lived assets

The Company evaluates its long-lived assets for financial impairment as
events or changes in circumstances indicate that the carrying amount of such
assets may not be fully recoverable. The Company evaluates the recoverability
of long-lived assets by measuring the carrying amount of the assets against the
estimated undiscounted future cash flows associated with the assets. At the
time such evaluations indicate that the future undiscounted cash flows are not
sufficient to recover the carrying value of the assets, the assets are adjusted
to their fair values based on estimated future net cash flows, discounted at a
market rate of interest. Based on these evaluations, there were no adjustments
to the carrying value of long-lived assets in 2000 and 2002, but adjustment was
necessary in 2001, as described in Note 3, Construction-in-Progress.

60



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Income taxes

Income tax expense includes current taxes and changes in deferred taxes.
Deferred taxes are computed in accordance with the liability method, which
bases the estimated amount of future taxes to be refunded or paid on the
temporary differences between financial and tax reporting basis of assets and
liabilities using the prevailing tax rates as of the most recent balance sheet
date. Deferred tax assets are recorded based on general principles for
valuation of assets.

Share options

All costs related to grants of share options to employees are recorded in
accordance with the intrinsic value method. Under this method, the difference,
if any, between the market value of the stock at the grant date and the
exercise price to be paid by the employee is treated as a compensation expense
over the vested period.Any social security taxes related to the share options
are accrued based upon the difference between the market value of the
underlying shares and the exercise price of the options at the end of each
reporting period until the option is exercised.

The Company has implemented the disclosure provisions of Statement of
Financial Accounting Standards (SFAS) No. 123 and has presented pro-forma
information regarding net income determined as if the Company had accounted for
its share based employee compensation arrangements under the fair-value method.
The following table summarizes the pro-forma effect of share compensation
measured following the fair-value method:

|                                                                                                                                                   |  |                                               |          |      |  |      |          |   |  |  |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | -------- | ---- |  | ---- | -------- | - |  |  | ------- | -
|                                                                                                                                                   |  | Year ended December 31,                      
|                                                                                                                                                   |  |                                              
|                                                                                                                                                   |  | 2000                                          |          | 2001 |  | 2002
|                                                                                                                                                   |  |                                               |          |      |  |     
|                                                                                                                                                   |  | NOK                                           |          | NOK  |  | NOK 
|                                                                                                                                                   |  | (Amounts in thousands, except per share data)
|Net income (loss) as reported                                                                                                                      |  |                                               | (329,934 | )    |  |      | (819,457 | ) |  |  | 209,128 |  
|Add: Compensation expense
that would have been
included in net income had
the company adopted the
accounting provisions of
SFAS 123 for all awards |  |                                               | (6,449   | )    |  |      | (7,552   | ) |  |  | (17,402 | )
|Pro-forma net income (loss)                                                                                                                        |  |                                               | (336,383 | )    |  |      | (827,009 | ) |  |  | 191,726 |  
|                                                                                                                                                   |  |                                               |          |      |  |      |          |   |  |  |         |  
|Basic and diluted earnings
per share                                                                                                               |  |                                               | (8.14    | )    |  |      | (15.84   | ) |  |  | 1.10    |  
|                                                                                                                                                   |  |                                               |          |      |  |      |          |   |  |  |         |  
|Basic and diluted earnings
per share                                                                                                               |  |                                               | (8.30    | )    |  |      | (15.99   | ) |  |  | 1.01    |  

The Company estimated the fair value of the warrants using a modified
Black&Scholes model. To estimate the fair value of the warrants, the fair value
of the warrants, without considering that the warrants were contingent upon the
Company meeting certain criteria, was multiplied by the Companys estimate of
20% probability that the warrants would become exercisable.

61



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

|                        |  |                         |      |      |  |      |      |   |  |  |      |  
|----------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                        |  | Year ended December 31,
|                        |  |                        
|                        |  | 2000                    |      | 2001 |  | 2002
|                        |  |                         |      |      |  |     
|Expected volatility     |  |                         | 50   | %    |  |      | 93   | % |  |  | 50   | %
|Risk-free interest rate |  |                         | 6.61 | %    |  |      | 5.97 | % |  |  | 6.04 | %
|Expected life (years)   |  |                         | 4.8  |      |  |      | 2.6  |   |  |  | 3.0  |  
|Expected dividend rate  |  |                         |     |      |  |      |     |   |  |  |     |  

The weighted average fair value at grant date of each option outstanding
at December 31, 2001 and 2002 is NOK 24.37 and NOK 0.72, respectively.

Basic and diluted earnings (loss) per share

Basic earnings (loss) per share are computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding during the
period. On a diluted basis, both net earnings (loss) and shares outstanding are
adjusted to assume the conversion of the Companys potentially dilutive
instruments.

Pension plans

The projected benefit obligation for the Companys and its subsidiaries
defined benefit plans is the actuarial present value of plan benefits based
upon the pensions benefit formula, considering years of service rendered and
assumptions about future compensation levels. Pension plan assets are measured
at fair value, and differences between the actual return on assets and the
expected return are deferred and amortized over the average remaining service
period of active employees expected to receive benefits under the plan. Net
periodic pension cost (gross pension cost less expected return on plan assets)
is included in salaries and other personnel expenses. The gross pension costs
include service cost and interest cost on the projected benefit obligation and
amortization of any unrecognized gain or loss.

Share issuance costs

Share issuance costs are deducted directly from shareholders equity.

Debt issuance cost and debt discount

Debt issuance cost are capitalized and amortized over the term of the
related debt. Debt discount is reported as a direct reduction to the face
amount of the debt and allocated to the expected term of the related debt.

Debt issued with detachable warrants

When debt is issued with detachable warrants a calculation is made to
allocate the proceeds received between the loan and the warrants. The
allocation is made based upon an estimate of fair value for the securities at
the date of issue. The value allocated to the warrants is posted as a reduction
to the loan and an addition to equity and is amortized as financial expense
over the term of the loan.

Convertible debt

Convertible debt is recorded at its principal balance net of any discount
or premium. Any discount or premium is amortized over the term of the loan.
Further, an evaluation is made whether the embedded conversion feature within
the debt instrument is beneficial to the holder. Any intrinsic value is

62



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

recognized as a reduction to the convertible debt and an addition to equity.
The balance is amortized as financial expense over the term of the loan or up
until conversion.

NOTE 2. Restricted Cash

Net proceeds from certain of the loans incurred by the Company and a
portion of the proceeds received by the Company from its issuance of shares
were held in trust accounts for the completion of Leiv Eiriksson and Eirk Raude
and for the payment of interest expenses and certain other fees during the
construction period. In addition. In addition, restricted cash includes cash
pledged as collateral for bank guarantees to the shipyards, cash paid to the
retention account relating to the Fortis Loan Facility, collateral to other
suppliers and to employee tax withholding amounts.

Below are restricted cash items at December 31, 2001 and 2002:

|                                                                                                                                                                   |  |                        |         |      |  |  |       | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------- | ------- | ---- |  |  | ----- | 
|                                                                                                                                                                   |  | As of December 31,    
|                                                                                                                                                                   |  |                       
|                                                                                                                                                                   |  | 2001                   |         | 2002
|                                                                                                                                                                   |  |                        |         |     
|                                                                                                                                                                   |  | NOK                    |         | NOK 
|                                                                                                                                                                   |  | (amounts in thousands)
|Trust accounts (Construction Escrow Account,
Interest Escrow Account, Supplemental
Collateral Account, and Escrow Account under
the contracts with Noble Drilling) |  |                        | 241,474 |      |  |  | 819   | 
|Retention account  Fortis Loan Facility                                                                                                                           |  |                        |        |      |  |  | 2,881 | 
|Amount pledged as collateral for bank
guarantees to shipyards and suppliers                                                                                        |  |                        | 9,276   |      |  |  | 720   | 
|Taxes withheld from employees                                                                                                                                      |  |                        | 2,744   |      |  |  | 4,207 | 
|                                                                                                                                                                   |  |                        |         |      |  |  |       | 
|Total restricted cash                                                                                                                                              |  |                        | 253,494 |      |  |  | 8,627 | 
|                                                                                                                                                                   |  |                        |         |      |  |  |       | 

NOTE 3. Construction-in-Progress

Ocean Rig entered into yard contracts for the construction of four
baredeck units with Dalian New Shipyard in China, and for the outfitting of
Leiv Eiriksson and Eirik Raude with Friede Goldman Offshore, Inc. in the United
States. Leiv Eiriksson was delivered from Friede Goldman in May 2001. Ocean
Rig entered into a yard contract for the completion of Eirik Raude at Irving
Shipbuilding Inc. in Nova Scotia, Canada (the Halifax Shipyard) and the rig was
completed in November 2002. The Companys two baredecks were sold in March
2002. Lay-up costs for the two baredecks up until sale have been expensed as
incurred.

63



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Construction-in-progress consists of installments paid on shipyard
contracts as well as other costs related to the construction of the Companys
Bingo 9000 rigs. Interest costs are capitalized as part of construction in
progress. The capitalized amounts are allocated to the rigs as follows:

|                                                                                      |  |           |            |       |  |                        |            |          |  |       |          |   |  |  |          |   |  |  |            |  
|------------------------------------------------------------------------------------- |  | --------- | ---------- | ----- |  | ---------------------- | ---------- | -------- |  | ----- | -------- | - |  |  | -------- | - |  |  | ---------- | -
|                                                                                      |  | Leiv      |            | Eirik |  | Baredeck               |            | Baredeck |  |       |          |  
|                                                                                      |  | Eiriksson |            | Raude |  | No. 3                  |            | No. 4    |  | Total
|                                                                                      |  |           |            |       |  |                        |            |          |  |      
|                                                                                      |  | NOK       |            | NOK   |  | NOK                    |            | NOK      |  | NOK  
|                                                                                      |  |           |            |       |  | (amounts in thousands) |            |          |  |      
|Balance at December 31, 2000,
including capitalized interest                          |  |           | 2,808,829  |       |  |                        | 2,680,711  |          |  |       | 302,953  |   |  |  | 316,263  |   |  |  | 6,108,756  |  
|                                                                                      |  |           |            |       |  |                        |            |          |  |       |          |   |  |  |          |   |  |  |            |  
|Payments related to
building contracts 2001                                           |  |           | 596,115    |       |  |                        | 667,191    |          |  |       |         |   |  |  |         |   |  |  | 1,263,306  |  
|Capitalized interest 2001                                                             |  |           | 209,637    |       |  |                        | 239,495    |          |  |       |         |   |  |  |         |   |  |  | 449,132    |  
|Transferred to Rigs,
Machinery and Equipment                                          |  |           | (3,614,581 | )     |  |                        |           |          |  |       |         |   |  |  |         |   |  |  | (3,614,581 | )
|Write-down of assets                                                                  |  |           |           |       |  |                        |           |          |  |       | (113,403 | ) |  |  | (126,713 | ) |  |  | (240,116   | )
|                                                                                      |  |           |            |       |  |                        |            |          |  |       |          |   |  |  |          |   |  |  |            |  
|Balance at December 31,
2001, including
capitalized interest,
transfer and write-down |  |           |           |       |  |                        | 3,587,397  |          |  |       | 189,550  |   |  |  | 189,550  |   |  |  | 3,966,497  |  
|Payments related to
building contract in
2002                                         |  |           |           |       |  |                        | 1,409,251  |          |  |       |         |   |  |  |         |   |  |  | 1,409,251  |  
|Capitalized interest                                                                  |  |           |           |       |  |                        | 301,489    |          |  |       |         |   |  |  |         |   |  |  | 301,489    |  
|Transferred to Rigs,
Machinery and Equipment                                          |  |           |           |       |  |                        | (5,298,137 | )        |  |       |         |   |  |  |         |   |  |  | (5,298,137 | )
|Disposals 2002                                                                        |  |           |           |       |  |                        |           |          |  |       | (189,550 | ) |  |  | (189,550 | ) |  |  | (379,100   | )
|                                                                                      |  |           |            |       |  |                        |            |          |  |       |          |   |  |  |          |   |  |  |            |  
|Balance at December 31,
2002, including
capitalized interest,
transfer and write-down |  |           |           |       |  |                        |           |          |  |       |         |   |  |  |         |   |  |  |           |  
|                                                                                      |  |           |            |       |  |                        |            |          |  |       |          |   |  |  |          |   |  |  |            |  

At December 31, 2002 there were indications that the fair values of the rigs
could be less than their book carrying amounts. The Company performed an
impairment analysis in accordance with its policies, resulting in no impairment
write-down of the rigs. As a result of the impairment test that the Company
performed in 2001, the carrying values of Baredeck No 3 and Baredeck No 4 were
determined to be impaired, and adjusted to fair value in accordance with the
Companys policies, resulting in a charge of NOK 240.1 million in the results
from operations for the year ended December 31, 2001.

NOTE 4. Rigs, Machinery and Equipment

Rigs, machinery and equipment includes rigs, EDP equipment, office equipment
and automobiles. The primary portion of the rigs is depreciated over 30 years,
while other components are depreciated over

64



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

their useful lives, from 5 to 30
years. EDP equipment and office equipment are depreciated on a straight-line
basis at a rate of 20% to 30% per year, while automobiles are depreciated at a
rate of 20% per year.

Depreciation expenses were NOK 3.8 million, NOK 15.1 million and NOK 160.6
million for 2000, 2001, and 2002, respectively.

The following table includes activity in rigs, machinery and equipment for the
year ended December 31, 2001 and 2002:

|                                              |  |                        |           |           |  |                |         |       |  |  |        |   |  |  |           |  
|--------------------------------------------- |  | ---------------------- | --------- | --------- |  | -------------- | ------- | ----- |  |  | ------ | - |  |  | --------- | -
|                                              |  |                        |           |           |  | Drilling       |         |       |  |  |        |   |  | 
|                                              |  | Semi-                  |           | equipment |  | EDP/ office    |         |       |  | 
|                                              |  | submersible rig        |           | inventory |  | and            |         |       |  | 
|                                              |  | and spare              |           | and       |  | transportation |         |       |  | 
|                                              |  | equipment              |           | fixtures  |  | equipment      |         | Total
|                                              |  |                        |           |           |  |                |         |      
|                                              |  | NOK                    |           | NOK       |  | NOK            |         | NOK  
|                                              |  | (amounts in thousands)
|Cost at December 31, 2001                     |  |                        | 3,554,445 |           |  |                | 60,136  |       |  |  | 9,510  |   |  |  | 3,624,091 |  
|Additions in 2002                             |  |                        | 5,283,155 |           |  |                | 103,817 |       |  |  | 2,713  |   |  |  | 5,389,685 |  
|Disposals in 2002                             |  |                        |          |           |  |                |        |       |  |  | (1,026 | ) |  |  | (1,026    | )
|Translation adjustment                        |  |                        | (278,249  | )         |  |                |        |       |  |  | (274   | ) |  |  | (278,523  | )
|                                              |  |                        |           |           |  |                |         |       |  |  |        |   |  |  |           |  
|Cost at December 31, 2002                     |  |                        | 8,559,351 |           |  |                | 163,953 |       |  |  | 10,923 |   |  |  | 8,734,227 |  
|                                              |  |                        |           |           |  |                |         |       |  |  |        |   |  |  |           |  
|Accumulated depreciation at December
31, 2001 |  |                        | 12,008    |           |  |                |        |       |  |  | 6,541  |   |  |  | 18,549    |  
|Accumulated depreciation on disposals         |  |                        |          |           |  |                |        |       |  |  | (544   | ) |  |  | (544      | )
|Depreciation in 2002                          |  |                        | 152,999   |           |  |                | 6,120   |       |  |  | 1,467  |   |  |  | 160,586   |  
|Translation adjustment                        |  |                        |          |           |  |                |        |       |  |  | (89    | ) |  |  | (89       | )
|                                              |  |                        |           |           |  |                |         |       |  |  |        |   |  |  |           |  
|Accumulated depreciation at December
31, 2002 |  |                        | 165,007   |           |  |                | 6,120   |       |  |  | 7,375  |   |  |  | 178,502   |  
|                                              |  |                        |           |           |  |                |         |       |  |  |        |   |  |  |           |  
|Book value at December 31, 2002               |  |                        | 8,394,344 |           |  |                | 157,833 |       |  |  | 3,548  |   |  |  | 8,555,725 |  
|                                              |  |                        |           |           |  |                |         |       |  |  |        |   |  |  |           |  

Depreciation of Leiv Eiriksson and Eirik Raude commenced in November 2001 and
November 2002, respectively, when the rigs were ready for their intended use.

NOTE 5. Long-Term Receivables and Other Assets

|                                |  |                        |         |      |  |  |        | 
|------------------------------- |  | ---------------------- | ------- | ---- |  |  | ------ | 
|                                |  | As of December 31,    
|                                |  |                       
|                                |  | 2001                   |         | 2002
|                                |  |                        |         |     
|                                |  | NOK                    |         | NOK 
|                                |  | (amounts in thousands)
|Capitalized debt issuance costs |  |                        | 120,786 |      |  |  | 83,183 | 
|Loans to employees              |  |                        | 6,202   |      |  |  | 2,840  | 
|Prepaid pensions                |  |                        | 4,171   |      |  |  | 7,416  | 
|Other                           |  |                        | 138     |      |  |  | 481    | 
|                                |  |                        |         |      |  |  |        | 
|Total                           |  |                        | 131,297 |      |  |  | 93,920 | 
|                                |  |                        |         |      |  |  |        | 

65



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

NOTE 6. Other Current Liabilities

|                                              |  |                        |         |      |  |  |         | 
|--------------------------------------------- |  | ---------------------- | ------- | ---- |  |  | ------- | 
|                                              |  | As of December 31,    
|                                              |  |                       
|                                              |  | 2001                   |         | 2002
|                                              |  |                        |         |     
|                                              |  | NOK                    |         | NOK 
|                                              |  | (amounts in thousands)
|Short-term portion of long term debt          |  |                        |        |      |  |  | 23,982  | 
|Accrued interest and other financial expenses |  |                        | 59,891  |      |  |  | 46,870  | 
|Taxes withheld and social security tax        |  |                        | 9,825   |      |  |  | 24,086  | 
|Advance payment from customers                |  |                        | 48,998  |      |  |  | 17,136  | 
|Other accrued expenses                        |  |                        | 116,107 |      |  |  | 100,065 | 
|                                              |  |                        |         |      |  |  |         | 
|Total                                         |  |                        | 234,821 |      |  |  | 212,139 | 
|                                              |  |                        |         |      |  |  |         | 

NOTE 7. Other Operating and Administrative Expenses

|                                                                                               |  |                         |         |      |  |      |         |  |  |  |         | 
|---------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                                                                                               |  | Year ended December 31,
|                                                                                               |  |                        
|                                                                                               |  | 2000                    |         | 2001 |  | 2002
|                                                                                               |  |                         |         |      |  |     
|                                                                                               |  | NOK                     |         | NOK  |  | NOK 
|                                                                                               |  | (amounts in thousands) 
|Legal fees                                                                                     |  |                         | 49,955  |      |  |      | 64,074  |  |  |  | 19,726  | 
|Other fees (including engineering and service personnel
related to preparation for operations) |  |                         | 35,284  |      |  |      | 93,448  |  |  |  | 201,920 | 
|Materials used related to preparation for operations                                           |  |                         |        |      |  |      | 135,816 |  |  |  | 96,731  | 
|Travel and marketing                                                                           |  |                         | 19,129  |      |  |      | 23,165  |  |  |  | 10,695  | 
|Lay-up expenses (Baredecks No. 3 and 4)                                                        |  |                         | 5,257   |      |  |      | 4,018   |  |  |  | 1,967   | 
|Office and administrative expenses                                                             |  |                         | 9,472   |      |  |      | 19,957  |  |  |  | 51,166  | 
|Loss on sale of assets                                                                         |  |                         | 763     |      |  |      |        |  |  |  | 2,251   | 
|Other                                                                                          |  |                         | 7,391   |      |  |      | 10,250  |  |  |  | 4,212   | 
|                                                                                               |  |                         |         |      |  |      |         |  |  |  |         | 
|Total other operating and administrative expenses                                              |  |                         | 127,251 |      |  |      | 350,998 |  |  |  | 388,668 | 
|                                                                                               |  |                         |         |      |  |      |         |  |  |  |         | 

NOTE 8. Interest and Other Financial Income

|                       |  |                         |         |      |  |      |        |  |  |  |         | 
|---------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------ |  |  |  | ------- | 
|                       |  | Year ended December 31,
|                       |  |                        
|                       |  | 2000                    |         | 2001 |  | 2002
|                       |  |                         |         |      |  |     
|                       |  | NOK                     |         | NOK  |  | NOK 
|                       |  | (amounts in thousands) 
|Interest income        |  |                         | 59,322  |      |  |      | 17,993 |  |  |  | 21,485  | 
|Foreign currency gains |  |                         | 90,034  |      |  |      | 58,732 |  |  |  | 964,878 | 
|                       |  |                         |         |      |  |      |        |  |  |  |         | 
|Total                  |  |                         | 149,356 |      |  |      | 76,725 |  |  |  | 986,363 | 
|                       |  |                         |         |      |  |      |        |  |  |  |         | 

66



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

NOTE 9. Interest and Other Financial Expenses

|                                                               |  |                         |          |      |  |      |          |   |  |  |          |  
|-------------------------------------------------------------- |  | ----------------------- | -------- | ---- |  | ---- | -------- | - |  |  | -------- | -
|                                                               |  | Year ended December 31,
|                                                               |  |                        
|                                                               |  | 2000                    |          | 2001 |  | 2002
|                                                               |  |                         |          |      |  |     
|                                                               |  | NOK                     |          | NOK  |  | NOK 
|                                                               |  | (amounts in thousands) 
|Interest expense (total)                                       |  |                         | (334,388 | )    |  |      | (464,822 | ) |  |  | (474,345 | )
|Less: capitalized interest expenses                            |  |                         | 334,388  |      |  |      | 449,132  |   |  |  | 301,489  |  
|Amortization and write down of capitalized debt issuance costs |  |                         | (10,238  | )    |  |      | (31,831  | ) |  |  | (39,877  | )
|Foreign currency losses                                        |  |                         | (292,661 | )    |  |      | (129,428 | ) |  |  | (18,673  | )
|Other financial expenses                                       |  |                         | (13,369  | )    |  |      | (12,988  | ) |  |  | (366,549 | )
|                                                               |  |                         |          |      |  |      |          |   |  |  |          |  
|Total                                                          |  |                         | (316,268 | )    |  |      | (189,937 | ) |  |  | (597,955 | )
|                                                               |  |                         |          |      |  |      |          |   |  |  |          |  

NOTE 10. USD Short Term Loan (Zero Coupon bond 2002 / 2003)

In May and June 2002, Ocean Rig ASA issued a short-term USD 52.9 million
Zero coupon bond. The bond is structured as an unsecured zero coupon bond loan
with payment to the Company of USD 43.1 million. The discount is recorded as a
direct reduction of the principal loan amount and amortized as interest expense
over the term of the loan. The bond will be repaid in four installments during
the term of the loan, with the final installment May 13, 2003. The Company has
the right to extend the final installment, fully or partly by up to three
months (see note 25 regarding the extension of this final installment to August
2003). This right can be used only one time. An interest rate of 2.5% per month
will be payable by the Company if the extension clause is used. The Company and
bondholders can require redemption of the bonds if a change of control occurs
in the Company. The bond is not secured by any mortgage, pledge or other
security but the loan rank parri passu with other unsecured debt of the Company
and ahead of any subordinated debt. In connection with the issue of USD 52.9
million bond, the company also issued 35,614,800 warrants, each providing the
right to subscribe to one share in the Company at the subscription price of NOK
8.0 per share. The warrants are divided into four classes, with different
number of warrants expiring at different dates, with final expiration for the
last class on May 13, 2003. The warrants can be exercised at any time within
the maturity dates. During 2002, none of the warrants were exercised and a
total of 15,668,998 of the warrants expired unexercised. Net proceeds allocated
to warrants totaled NOK 37.9 million, net of issuance cost of NOK 0.7 million.

During 2002, USD 32.6 million of the USD 52.9 million bond was exchanged
for NOK 248.1 million of the Companys Mandatory Convertible Bond issued in
August and September 2002. A loss of NOK 33.1 million from the exchange was
recognized as a financial item at the time of extinguishment.

As of December 31, 2002, the outstanding principal balance of the USD
Short Term Loan is USD 13.1 million after repayment of two installments during
2002 of USD 7.2 million.

As of December 31, 2002 the recorded loan balance inclusive of unamortized
discount of NOK 6.5 million, is NOK 84.3 million.

Note 11. 1998 Notes and Loans and Floating-Rate Loan Credit Facility (2002 Fortis Facility)

67



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##### 



1998 Notes and Loans

OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

On May 27, 1998, Ocean Rig Norway AS, which is wholly owned by Ocean Rig
ASA, completed an offering of USD 225 million (NOK 1,560.9 million) aggregate
principal amount of 10 1/4% Senior Secured Notes due 2008 (the Notes).

Concurrently with the offering, Ocean Rig Norway AS entered into a
floating rate loan credit facility, pursuant to which a syndicate of lenders
made floating rate senior secured loans to Ocean Rig Norway at an aggregate
principal amount of USD 125 million (NOK 867.2 million) (the 1998 Loans).
The 1998 Loans bear interest at a rate of 475 basis points over LIBOR, which
amounted to 6.62% in 2002 and 9.26% in 2001.

The 1998 Notes and Loans are fully and unconditionally guaranteed on a
joint and several basis by Ocean Rig ASA, Ocean Rig 1 AS and Ocean Rig 2 AS.
The 1998 Notes and Loans mature on June 1, 2008.

The 1998 Notes and Loans, which contain covenants typical in high yield
debt financing, impose certain structural restrictions on the Company. Certain
material provisions of the Notes and Loans are as follows:

Covenants

The indenture relating to the Notes and the Credit Agreement governing the
1998 Loans restricts the Companys ability to;



| |  |  | Incur additional indebtedness;                                                                   
| | - |  | -------------------------------------------------------------------------------------------------
|
| |  |  | Pay dividends or make certain other restricted payments;                                         
|
| |  |  | Permit certain liens to exist on its assets;                                                     
|
| |  |  | Sell, assign, transfer, lease, convey or otherwise dispose of substantially all of its assets; or
|
| |  |  | Enter into certain transactions with affiliates.                                                 

Events of default

The indenture for the Notes and Credit Agreement governing the 1998 Loans
contain standard events of default, including:



| |  |  | Defaults in the payment of principal, premium or interest;                                                                                                                                                                                                                                                 
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Defaults in compliance with covenants contained in the indenture;                                                                                                                                                                                                                                          
|
| |  |  | Cross-default on more than USD 10 million of other indebtedness;                                                                                                                                                                                                                                           
|
| |  |  | Failure to pay more than USD 10 million of judgments; and                                                                                                                                                                                                                                                  
|
| |  |  | Certain events relating to Leiv Eiriksson and Eirik Raude                                                                                                                                                                                                                                                  
|
| |  |  | Certain provisions of the documents governing the Notes and the
1998 Loans were amended in June 2001 pursuant to a consent solicitation
in order to enable consummation of the Companys drilling contract with
EnCana (formerly PanCanadian Energy Corp. and PanCanadian Petroleum,
Ltd.) for Eirik Raude.

68



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Floating Rate Loan Credit Facility (USD 100 million Fortis Facility)

In June 2001, Ocean Rig 2 AS, a wholly owned subsidiary of Ocean Rig
Norway AS, entered into a floating rate loan credit facility, with Credit
Suisse First Boston as agent for the lenders, for an aggregate principal amount
of USD 100 million (the 2001 Loans). The 2001 Loans were issued at a discount
with proceeds amounting to USD 89 million to the Company. The 2001 Loans were
incurred in order to refinance a term loan facility entered into in May 1998
with Fortis Bank (formerly MeesPierson N.V.) and Nordea Bank (formerly
Christiania Bank og Kreditkasse ASA) for construction and completion of the
rigs. There were no funds drawn under the term loan facility.

In November 2001, the Company entered into an agreement to refinance the
2001 Loans with a six year term loan for an amount up to USD 100 million
entered into with Nordea Bank Norge and Fortis Bank ( the Fortis Facility).
On June 21, 2002 the Company gave an irrevocable notice to the lenders of the
2001 Loans that it intended to refinance the 2001 Loans with the Fortis
Facility. The refinancing was effective after the mechanical completion of
Eirik Raude on June 21, 2002. The Fortis Facility was drawn down on June 28,
2002 and at the same time the 2001 Loans were repaid in full by the proceeds
received from the Fortis Facility.

The Company is subject to the covenants and other agreements set forth in
the executed loan agreement (as amended) governing the Fortis Facility. The
Fortis Facility is collateralized by a first priority security interest in
Eirik Raude and related assets (previously held by the lenders of the 2001
Loans and released upon repayment of the 2001 Loans).

The Fortis Facility will mature on February 28, 2008, and bears interest
at a rate of LIBOR plus the applicable margin, which ranges between 1.75% per
annum and 2.75% per annum, depending on whether Eirik Raude is under contract,
the length of such contract, and minimum cash balances. Average interest paid
on the loan in 2002 amounted to 6.81%. The interest in 2002 includes an
additional margin linked to the loan status as long as Eirik Raude was under
construction, which is exempted as of the year end 2002.

The covenants under the loan agreement place restrictions on certain
corporate activities such as distributions, affiliate transactions and excess
cash. The agreement also contains standard events of default, including
defaults in the payment of principal or interest, invalidity of security
documents, cancellation of insurance in respect of Eirik Raude and bankruptcy.
The loan may be prepaid in whole or in part, without penalty or premium, upon
10 banking days notice. Interest on the loan is paid quarterly and the loan
amortizes semi-annually, with a lump sum payment being due on the maturity
date. As of December 31, 2002, the Company had not prepaid any amount.

After completion of Eirik Raude and delivery of the rig on contract with
EnCana Corporation in November 2002, certain amendments became effective on the
Fortis Facility as amended in June 2002. The amendments reduces the minimum
requirement for free cash balances, changes the installment schedule of the
loan and gives the Company the opportunity to replace installments on the loan
with deposits to a restricted retention account. Accumulated balance in the
retention account cannot be used by the Company. The Company has chosen to make
deposits to the retention account and thus, have no installments on the loan
until final maturity of the loan on February 28, 2008, in order to retain
maximum refinancing flexibility. The Company can at any time bring deposits to
the retention account to a close and use accumulated balance in the retention
account to pay installments on the loan up to date and thereafter pay
installments in accordance with the original installment plan. The balance as
of December 31, 2002 was NOK 691.4 million.

69



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

NOTE 12. Convertible Loans

Convertible Bonds 2000

Two convertible loans totaling NOK 500.0 million were issued in 2000 (the
Convertible Loans). These comprise a 13% subordinated convertible bond issue
2000/2005 with a face value of NOK 200.0 million and a 11% subordinated
convertible bond issue 2000/2005 with a face value of NOK 300.0 million. The
conversion price for the two Convertible Loans as of December 31, 2002 was
22.83 and NOK 24.45, respectively. The bondholders have the right to convert
the bonds to shares of Ocean Rig ASA at any time in the period from the issue
of the loans until May 25, 2005 (the redemption date of the Convertible Loans).

No collateral has been provided for the Convertible Loans. The Convertible
Loans and the associated interest are subordinate to all the other debt of the
Company and parri passu with all other unsecured subordinated debt of the
Company. The loan agreements also impose certain structural restrictions on the
Company. Approval of the trustee or the bondholders is required in the case of
discontinuance of operations, sale of material parts of the enterprise or
material change in the nature of business, certain dividend payments, other
payments to the shareholders that would reduce the equity of the Company, and
raising of further long-term debt in connection with the completion of the rigs
beyond a limit of approximately USD 110.0 million.

During August and September 2002, NOK 107 million of the NOK 500 million
Loans were exchanged for the new Mandatory Convertible Bond issued by Ocean Rig
ASA in August and September 2002. The exchange was completed at 90% and 85% of
the face value of NOK 200 million and NOK 300 million convertible loans
described below, respectively, and equaled subscription in the new convertible
bond of NOK 94.2 million. Further, NOK 3.2 million of the accrued interest was
exchanged to the new Mandatory Convertible Bond. A gain of NOK 12.7 million
from the exchange was recognized as a financial item at the time of
extinguishment.

The remaining 2000 convertible loans outstanding at December 31, 2002,
amounted to NOK 393 million.

Convertible Bonds 2001

In November/December 2001, the Company issued a short-term subordinated
convertible zero-coupon bond issue totaling NOK 552.5 million. The loan was
convertible to 73,666,666 shares. The financing took place in the form of a
short-term convertible loan since the par value of the Companys shares at
November 26, 2001, the time of the issue, was higher than the price payable for
the new shares. The convertible loan issue was convertible into shares
immediately upon completion of the write-down of the par value of the Companys
shares. The loan was
exchanged to 73,666,666 shares on February 26, 2002, and the Companys
equity was increased by NOK 552.5 million less NOK 31.2 million, representing
share issuance costs, for a net increase of NOK 521.3 million.

Mandatory Convertible Bond 2002

In August and September 2002 Ocean Rig ASA issued a zero coupon long-term
convertible bond with a face value of NOK 669.5 million (USD 88.1 million at
historical exchange rates) consisting of NOK 323.9 million (USD 42.6 million at
historical exchange rates) in cash proceeds and NOK 345.6 million (USD 45.5
million at historical exchange rates) that was exchanged from existing loans to
the new loan. The loan is convertible into shares in the Company at a
conversion price of NOK 3.50 per share at any time during the term of the loan.
The loan matures in whole on August 22, 2005, at which time the

70



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

full outstanding principal balance becomes due. The bondholders are required to
convert outstanding bonds at the maturity date of the loan if such conversion
is demanded by the Company, unless the Company undergoes debt negotiations or
bankruptcy proceedings have been initiated. During the first 12 months of the
loan, the loan shall rank pari passu with all other senior unsecured debt of
the Company and ahead of all subordinated debt of the Company. Thereafter, the
loan will be subordinated to all then existing debt of the Company, whether
subordinated or not. However, the loan shall rank senior to all other
subordinated loans that the Company issues after August 23, 2002.

Subscribers in the new loan also received one warrant for each new share
each bondholder has the right to acquire through conversion of the Mandatory
Convertible Loan and a total of 191,275,323 warrants were issued to
subscribers. Proceeds from the convertible loan were allocated to the warrants
based on relative fair values using the Black and Scholes option pricing model
applying a 50% volatility and discount rate of 7,02%. In determining the fair
value of the warrants, the Company estimated, as of the issue date, the
probability for the warrants to become exercisable to be 20% and a total of NOK
47.8 million were allocated to the fair value of the warrants. Consequently,
NOK 47.8 million was recorded as an offset to the loan carrying value and an
increase in additional paid-in capital.

Each warrant gave the holder the right to buy one share in the Company for
NOK 1.0 per share. The exercising of the warrants was conditional upon certain
events relating to the completion date and cost for Eirik Raude. If the Company
had not delivered Eirik Raude on contract with EnCana within October 31, 2002,
or the Company suffered cost overruns or loss of income in relation to Eirk
Raude of more than USD 8 .0 million compared to the projected remaining costs
estimated in April 2002, the warrants would become exercisable. The warrants
had to be exercised by October 31, 2002, unless the Company made a public
announcement that the conditions for subscription were not met. Any warrants
not exercised by October 31, 2002, would expire. On October 16, 2002, the
Company announced that the conditions for exercising were met and on October
31, 2002, a total of 191,258,154 warrants were exercised.

During 2002, NOK 11,000 of bonds were converted to shares in the Company,
equaling 3,142 new shares.

The outstanding loan balance as of December 31,2002 was NOK 669.5 million.

Since the effective conversion rate of the loan was less than the market
price of the Companys shares at the date of issuance of the loan, the Company
allocated NOK 26.8 million to the beneficial conversion feature embedded in the
loan. Consequently, the NOK 26.8 million was recorded as an offset to the loan
carrying value and as an increase in additional paid-in capital.

The resulting difference between the carrying value of the convertible
loan and the redemption value of NOK 74.6 million is being amortized as other
financial expense over the term of the loan or up until conversion. During
2002, NOK 8.3 million was amortized and recorded as other financial expense.
The outstanding unamortized balance of the value allocated to warrants and the
beneficial conversion feature was NOK 66.3 million as of December 31, 2002.

NOTE 13. Debt Issuance Costs

Costs in connection with the issuance of debt amounted to NOK 19.8 million
in 2000, NOK 38.3 million in 2001 and NOK 33.4 million in 2002. Unamortized
debt issuance cost related to the issuance of the NOK 552.5 million convertible
bond issued in 2001 of NOK 31.2 million were transferred to shareholders
equity at time of conversion of the convertible bonds in February 2002.
Amortization expense of NOK 10.2 million, NOK 31.8 million and NOK 39.9
million are included in financial

71



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

expenses in 2000, 2001 and 2002,
respectively. The unamortized debt issuance costs of NOK 83.2 million are
included in non-current receivables and other assets as of December 31, 2002.

NOTE 14. Income Taxes

The tax effect of temporary differences and tax loss carry forwards giving
rise to deferred tax assets (liabilities) were as follows as of December 31,
2001 and 2002:

|                                                     |  |                        |          |      |  |  |          |  
|---------------------------------------------------- |  | ---------------------- | -------- | ---- |  |  | -------- | -
|                                                     |  | December 31,          
|                                                     |  |                       
|                                                     |  | 2001                   |          | 2002
|                                                     |  |                        |          |     
|                                                     |  | NOK                    |          | NOK 
|                                                     |  | (amounts in thousands)
|Accelerated depreciation of assets for book purposes |  |                        | 89,965   |      |  |  | 56,908   |  
|Accrued expenses                                     |  |                        | 3,083    |      |  |  | 2,437    |  
|Tax loss carryforwards                               |  |                        | 617,529  |      |  |  | 650,217  |  
|                                                     |  |                        |          |      |  |  |          |  
|Total deferred tax assets                            |  |                        | 710,577  |      |  |  | 709,562  |  
|Pension asset                                        |  |                        | (863     | )    |  |  | (1,911   | )
|Capitalized interest expenses                        |  |                        | (259,287 | )    |  |  | (331,676 | )
|                                                     |  |                        |          |      |  |  |          |  
|Total deferred tax liabilities                       |  |                        | (260,150 | )    |  |  | (333,587 | )
|Less: valuation allowance                            |  |                        | (450,524 | )    |  |  | (375,975 | )
|                                                     |  |                        |          |      |  |  |          |  
|Net deferred tax assets                              |  |                        |         |      |  |  |         |  
|                                                     |  |                        |          |      |  |  |          |  

Management believes significant uncertainty exists regarding the
realizability of deferred tax assets. Accordingly, a valuation allowance has
been recorded as of December 31, 2001 and 2002. The change in valuation
allowance for the periods ended December 31, 2000, 2001 and 2002 was NOK 97.4
million, NOK 236.5 million and NOK -74.5 million, respectively.

72



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Cumulative tax-loss carryforward amounts at December 31, 2002 expire as
follows:

|      |  |                        |           | 
|----- |  | ---------------------- | --------- | 
|      |  | As of December 31, 002
|      |  |                       
|Year  |  | NOK                   
|      |  | (amounts in thousands)
|2008  |  |                        | 247,433   | 
|2009  |  |                        | 437,740   | 
|2010  |  |                        | 689,319   | 
|2011  |  |                        | 933,709   | 
|2012  |  |                        | 14,004    | 
|      |  |                        |           | 
|Total |  |                        | 2,322,205 | 
|      |  |                        |           | 

A reconciliation between income tax expense at the statutory income tax
for the years ended December 31, 2000, 2001 and 2002 to Oceans Rigs effective
tax is as follows:

|                                                 |  |                         |         |      |  |      |          |   |  |  |         |  
|------------------------------------------------ |  | ----------------------- | ------- | ---- |  | ---- | -------- | - |  |  | ------- | -
|                                                 |  | Year ended December 31,
|                                                 |  |                        
|                                                 |  | 2000                    |         | 2001 |  | 2002
|                                                 |  |                         |         |      |  |     
|                                                 |  | NOK                     |         | NOK  |  | NOK 
|                                                 |  | (amounts in thousands) 
|28% tax of earnings / (loss) before income taxes |  |                         | (92,320 | )    |  |      | (229,356 | ) |  |  | 58,562  |  
|Difference in tax rate                           |  |                         | (114    | )    |  |      | 156      |   |  |  | (12     | )
|Other permanent differences                      |  |                         | (4,756  | )    |  |      | (5,231   | ) |  |  | 16,019  |  
|Deferred tax valuation allowance                 |  |                         | 97,410  |      |  |      | 234,760  |   |  |  | (74,548 | )
|                                                 |  |                         |         |      |  |      |          |   |  |  |         |  
|Income tax expense                               |  |                         | 220     |      |  |      | 329      |   |  |  | 22      |  
|                                                 |  |                         |         |      |  |      |          |   |  |  |         |  

All current tax amounts are related to operations in the United States.

NOTE 15. Earnings / (loss) per share

Basic earnings / (loss) per share are computed by dividing net loss by the
weighted average number of common shares outstanding during the period.

|                                      |  |                 |          |                |  |                                                        |         |               |  |             |        |            |  |          |          |          |  |         |         |  |  |  |        |  
|------------------------------------- |  | --------------- | -------- | -------------- |  | ------------------------------------------------------ | ------- | ------------- |  | ----------- | ------ | ---------- |  | -------- | -------- | -------- |  | ------- | ------- |  |  |  | ------ | -
|                                      |  |                 |          |                |  |                                                        |         |               |  |             |        |            |  | Earnings |          | Weighted |  |         |         | 
|                                      |  |                 |          |                |  |                                                        |         |               |  |             |        |            |  | (loss)   |          | average  |  | Diluted
|                                      |  | Earnings (loss) |          | Weighted       |  | Basic                                                  |         | applicable to |  | shares      |        | Earnings /
|                                      |  | applicable to   |          | average shares |  | Earnings /                                             |         | diluted       |  | outstanding |        | (loss) per
|                                      |  | common shares   |          | outstanding    |  | (loss) per                                             |         | shares        |  | diluted     |        | share     
|                                      |  | (numerator)     |          | (denominator)  |  | share amount                                           |         | (numerator)   |  | denominator |        | amount    
|                                      |  |                 |          |                |  |                                                        |         |               |  |             |        |           
|                                      |  | NOK             |          | NOK            |  | NOK                                                    |         | NOK           |  | NOK         |        | NOK       
|Basic and diluted                     |  |                 |          |                |  |                                                        |         |               |  |             |        |            |  |          |          |          |  |         |         |  |  |  |        |  
|earnings (loss) per                   |  |                 |          |                |  |                                                        |         |               |  |             |        |            |  |          |          |          |  |         |         |  |  |  |        |  
|share                                 |  |                 |          |                |  | Amounts in thousands, except for per share information |         |               |  |            
|                                      |  |                 |          |                |  |                                                        |         |               |  |            
|For the year ended
December 31, 2000: |  |                 | (329,934 | )              |  |                                                        | 40,553  |               |  |             | (8.14  | )          |  |          | (329,934 | )        |  |         | 40,553  |  |  |  | (8.14  | )
|For the year ended
December 31, 2001: |  |                 | (819,457 | )              |  |                                                        | 51,749  |               |  |             | (15.84 | )          |  |          | (819,457 | )        |  |         | 51,749  |  |  |  | (15.84 | )
|For the year ended
December 31, 2002: |  |                 | 209,128  |                |  |                                                        | 190,739 |               |  |             | 1.10   |            |  |          | 217,428  |          |  |         | 276,454 |  |  |  | 0.79   |  

73



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Potentially dilutive securities are included in the calculation of
weighted average shares outstanding for calculating diluted earnings per share.
Potentially dilutive securities are not included in the computation if the
inclusion of such securities are anti-dilutive.

At December 31, 2002 the companys share capital was comprised of 492,886,851
shares.

Reconciliation for calculation of basic and dilutive earning (loss) per share:

Numerator:

|                                                                               |  |                         |          |      |  |      |          |   |  |  |         | 
|------------------------------------------------------------------------------ |  | ----------------------- | -------- | ---- |  | ---- | -------- | - |  |  | ------- | 
|                                                                               |  | Year ended December 31,
|                                                                               |  |                        
|                                                                               |  | 2000                    |          | 2001 |  | 2002
|                                                                               |  |                         |          |      |  |     
|Income (loss) applicable to common shares                                      |  |                         | (329,934 | )    |  |      | (819,457 | ) |  |  | 209,128 | 
|Financial expense attributable to
mandatory convertible debt                   |  |                         |         |      |  |      |         |   |  |  | 8,300   | 
|                                                                               |  |                         |          |      |  |      |          |   |  |  |         | 
|Income (loss) applicable for calculation
of dilutive earnings (loss) per share |  |                         | (329,934 | )    |  |      | (819,457 | ) |  |  | 217,428 | 
|                                                                               |  |                         |          |      |  |      |          |   |  |  |         | 

Denominator:

|                                            |  |                         |        |      |  |      |        |  |  |  |         | 
|------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------- | 
|                                            |  | Year ended December 31,
|                                            |  |                        
|                                            |  | 2000                    |        | 2001 |  | 2002
|                                            |  |                         |        |      |  |     
|Basic weighted average shares outstanding   |  |                         | 40,553 |      |  |      | 51,749 |  |  |  | 190,739 | 
|Effect of dilutive securities:              |  |                         |        |      |  |      |        |  |  |  |         | 
|Mandatory convertible debt                  |  |                         |       |      |  |      |       |  |  |  | 67,600  | 
|Warrants                                    |  |                         |       |      |  |      |       |  |  |  | 18,115  | 
|                                            |  |                         |        |      |  |      |        |  |  |  |         | 
|Diluted weighted average shares
outstanding |  |                         | 40,553 |      |  |      | 51,749 |  |  |  | 276,454 | 
|                                            |  |                         |        |      |  |      |        |  |  |  |         | 

NOTE 16. Related Party Transactions

|                                                                                                                      |  |                             |         |                         |  |                        |        |      |  |  |        |  |  |  |        | 
|--------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | ----------------------- |  | ---------------------- | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                                                                                                                      |  | Payments to related parties
|                                                                                                                      |  |                            
|                                                                                                                      |  | Total contract              |         | Year ended December 31,
|                                                                                                                      |  | value                       |         | 2000                    |  | 2001                   |        | 2002
|                                                                                                                      |  |                             |         |                         |  |                        |        |     
|                                                                                                                      |  | NOK                         |         | NOK                     |  | NOK                    |        | NOK 
|                                                                                                                      |  |                             |         |                         |  | (amounts in thousands) |        |      |  | 
|Agreement regarding delivery of
equipment from Hydralift ASA for
Leiv Eiriksson and
Eirik Raude (total for both rigs) |  |                             | 567,435 |                         |  |                        | 39,358 |      |  |  | 43,789 |  |  |  | 21,194 | 

Board member, Bjarne Skeie, sold his shares in Hydralift ASA in December
2002 and as of December 31, 2002, Hydralift ASA is no longer considered as
related party to our Company. Transactions up until Mr. Skeies sale of his
shares in Hydralift ASA are included in the table above.

Amounts related to payments to Hydralift ASA for the supply of equipment
are capitalized as part of construction-in-progress.

74



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

In addition to the above-mentioned transactions, two members of the Board
of Directors have received compensation for additional services during 2002.
The Chairman of the Board of Directors, Morten Borge, received a compensation
of NOK 1,442,818 for consulting work performed that exceeds work related to his
position as Chairman of the Board. Board member Geir Aune received consulting
fees of NOK 100,000 in 2002.

There are no outstanding receivables or payables related to the above
mentioned transactions as of December 31, 2002.

Ocean Rig has issued a loan to Senior Vice President Operations Willy
Tørhaug of NOK 1.2 million ($0.174 million). The loan is interest bearing and
has quarterly installments over 5 years, ending 2007.

NOTE 17. Pensions

The Company and its subsidiaries have pension schemes which are defined
benefit plans and cover a total of 110 active employees.

The plans are managed and funded through Norwegian life insurance
companies. The plans assets consist primarily of listed common stocks,
corporate and government bonds and real estate investments.

|                                                |  |                    |     |      |  |      |     |   |  |  |     |  
|----------------------------------------------- |  | ------------------ | --- | ---- |  | ---- | --- | - |  |  | --- | -
|                                                |  | As of December 31,
|                                                |  |                   
|Weighted average assumptions as of December 31, |  | 2000               |     | 2001 |  | 2002
|                                                |  |                    |     |      |  |     
|Discount rate                                   |  |                    | 6.0 | %    |  |      | 6.0 | % |  |  | 6.0 | %
|Expected return on plan assets                  |  |                    | 7.0 | %    |  |      | 7.0 | % |  |  | 7.0 | %
|Expected rate of compensation increases         |  |                    | 3.5 | %    |  |      | 3.5 | % |  |  | 3.5 | %
|Adjustments to the social security base         |  |                    | 3.0 | %    |  |      | 3.0 | % |  |  | 3.0 | %

|                                            |  |                         |       |      |  |      |        |   |  |  |        |  
|------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ------ | - |  |  | ------ | -
|                                            |  | Year ended December 31,
|                                            |  |                        
|                                            |  | 2000                    |       | 2001 |  | 2002
|                                            |  |                         |       |      |  |     
|Components of net periodic pension cost for |  | NOK                     |       | NOK  |  | NOK 
|the year ended December 31,                 |  | (amounts in thousands) 
|                                            |  |                        
|Service cost                                |  |                         | 4,037 |      |  |      | 4,069  |   |  |  | 4,784  |  
|Interest cost                               |  |                         | 750   |      |  |      | 802    |   |  |  | 1,002  |  
|Expected return on plan assets              |  |                         | (835  | )    |  |      | (1,022 | ) |  |  | (1,417 | )
|Amortization of unrecognized actuarial loss |  |                         | 117   |      |  |      | 81     |   |  |  | 141    |  
|Other pension cost                          |  |                         | 218   |      |  |      | 499    |   |  |  | 1,049  |  
|                                            |  |                         |       |      |  |      |        |   |  |  |        |  
|Net periodic pension cost                   |  |                         | 4,287 |      |  |      | 4,429  |   |  |  | 5,559  |  
|                                            |  |                         |       |      |  |      |        |   |  |  |        |  

75



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

|                                               |  |                        |        |      |  |  |        |  
|---------------------------------------------- |  | ---------------------- | ------ | ---- |  |  | ------ | -
|                                               |  | As of December 31,    
|                                               |  |                       
|                                               |  | 2001                   |        | 2002
|                                               |  |                        |        |     
|                                               |  | NOK                    |        | NOK 
|                                               |  |                        |        |     
|                                               |  | (amounts in thousands)
|Change in pension obligation                   |  |                        |        |      |  |  |        |  
|Pension obligation at beginning of year        |  |                        | 15,269 |      |  |  | 17,664 |  
|Service cost                                   |  |                        | 4,069  |      |  |  | 4,784  |  
|Interest cost                                  |  |                        | 802    |      |  |  | 1,002  |  
|Actuarial loss                                 |  |                        | (2,476 | )    |  |  | (967   | )
|                                               |  |                        |        |      |  |  |        |  
|Pension obligation at end of year              |  |                        | 17,664 |      |  |  | 22,483 |  
|Change in plan assets                          |  |                        |        |      |  |  |        |  
|Fair value of plan assets at beginning of year |  |                        | 13,167 |      |  |  | 18,446 |  
|Actual return on plan assets                   |  |                        | 1,022  |      |  |  | (868   | )
|Employer contribution                          |  |                        | 4,257  |      |  |  | 8,150  |  
|                                               |  |                        |        |      |  |  |        |  
|Fair value of plan assets at end of year       |  |                        | 18,446 |      |  |  | 25,728 |  
|                                               |  |                        |        |      |  |  |        |  
|Funded status                                  |  |                        | 782    |      |  |  | 3,245  |  
|Unrecognized net transition asset / obligation |  |                        | 2,302  |      |  |  | 3,580  |  
|                                               |  |                        |        |      |  |  |        |  
|Accrued pensions, net                          |  |                        | 3,084  |      |  |  | 6,825  |  
|                                               |  |                        |        |      |  |  |        |  

The Company has a prepaid pension asset of NOK 6.8 million which is
included in long-term receivables and other assets, while the Companys pension
liability of NOK 0.6 million is included in long-term liabilities.

NOTE 18. Supplemental Cash Flows Information

|                                     |  |                         |     |      |  |      |        |  |  |  |         | 
|------------------------------------ |  | ----------------------- | --- | ---- |  | ---- | ------ |  |  |  | ------- | 
|                                     |  | Year ended December 31,
|                                     |  |                        
|                                     |  | 2000                    |     | 2001 |  | 2002
|                                     |  |                         |     |      |  |     
|                                     |  | NOK                     |     | NOK  |  | NOK 
|                                     |  | (amounts in thousands) 
|Cash paid during the year for:       |  |                         |     |      |  |      |        |  |  |  |         | 
|Interest, net of amounts capitalized |  |                         |    |      |  |      | 15,750 |  |  |  | 172,856 | 
|Income taxes                         |  |                         | 207 |      |  |      | 220    |  |  |  | 329     | 

NOTE 19. Shareholders Equity

Common shares

There is only one class of common shares, and each common share is
entitled to one vote. Dividends are proposed by the Board of Directors and
subject to final approval by the Annual General Meeting based upon the
Companys distributable equity, financial condition, results of operations and
cash flows, as well as other factors the Board of Directors may deem relevant.
In February 2002, the par value of the Companys shares was written down form
NOK 30.0 per share to NOK 1.0 per share. As of December 31, 2002, the Company
had authorized 727,567,170 shares at par value NOK 1.0, of which 492,886,851
shares were issued and outstanding.

See further information of par value
per share in Note 26, Subsequent Events.

76



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

At December 31, 2002 NOK 21.6 million of other equity relates to the value
of outstanding warrants. Further, NOK 66.3 million relates to unamortized value
of warrants and intrinsic bonds value. See further information of outstanding
warrants in Note 21, Warrants.

Share issuances for cash

In May 2000, the Company made share offerings of common shares, which
resulted in the issuance of 8,891,900 new shares at NOK 30 per share. The
share capital increased by NOK 266.8 million and the additional paid-in capital
by NOK 88.9 million. The gross proceeds were reduced by NOK 18.1 million,
representing share issue costs. The net proceeds received were NOK 337.6
million.

In May/June 2001, the Company made share offerings of common shares, which
resulted in the issuance of 11,621,906 new shares at NOK 30 per share. The
share capital increased by NOK 348.7 million and the additional paid-in capital
by NOK 116.2 million. The gross proceeds were reduced by NOK 20.2 million,
representing share issue costs. The net proceeds received were NOK 444.7
million.

In February 2002, the Companys NOK 552.5 million Convertible Loan issued
in November and December 2001 was converted to 73,666,666 shares in the Company
at a conversion price of NOK 7.5 per share. The share capital increased by NOK
73.7 million and additional paid-in capital increased by NOK 447.7 million, net
of share issue cost of NOK 31.2 million.

In April 2002, the Company conducted a private placement issuing
24,444,445 shares at an issue price of NOK 9.0 per share. The share capital
increased by NOK 24.4 million and the additional paid-in capital increased by
NOK 195.6 million. The gross proceeds were reduced by NOK 5.8 million,
representing share issue costs. The net proceeds received were NOK 214.2
million.

In May and June 2002, the Company issued 751,743 shares at an issue price
of NOK 8.0 per share in a private placement. The share capital increased by NOK
0.7 million and additional paid-in capital increased by NOK 5.3 million. The
gross proceeds were reduced by NOK 0.03 million, representing share issue cost.
The net proceeds received were NOK 5.9 million. Further, included in the
private placement, warrants recorded at a fair value of NOK 38.6 million were
issued consisting of 35,614,800 warrants with an exercise price of NOK 8.0 per
share. The net proceeds received were NOK 37.9 million, after deduction for
issue cost of NOK 0.7 million.

In October 2002, a total of 191,258,154 of the warrants that the Company
issued in August 2002 were exercised with an exercise price of NOK 1.0 per
share, increasing the share capital by NOK 191.3 million.

In December 2002, the Company conducted a private placement issuing
111,000,000 shares at an issue price of NOK 1.0 per share. The share capital
increased by NOK 111.0 million equaling net proceeds received.

In December 2002, a total of 3,142 shares were converted from the
Companys Mandatory Convertible bond issued in August 2002 at an issue price of
NOK 3.50 per share. The share capital increased by NOK 3,142.0 and the
additional paid-in capital increased by NOK 7,858.0

Restricted and unrestricted reserves

Funds for additional paid-in capital represent restricted reserves
unavailable for dividend distributions. The level of these reserves is
regulated by Norwegian law, and represents only part of the
Companys total additional paid-in capital. The funds for additional
paid-in capital amounted to NOK 5,103.7 million as of December 31, 2002.

77



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

The net remaining additional paid-in capital and accumulated loss and
comprehensive income represent unrestricted reserves which, according to
Norwegian law, are available for dividend distributions. The unrestricted
reserves amounted to NOK 1,138.6 million as of December 31, 2002.

NOTE 20. Warrants

At December 31, 2002, the following warrants were outstanding:

|                                        |  |           |             |             |  |             |            |              |  |          |             |             |  |         |  |  |            |          |            | 
|--------------------------------------- |  | --------- | ----------- | ----------- |  | ----------- | ---------- | ------------ |  | -------- | ----------- | ----------- |  | ------- |  |  | ---------- | -------- | ---------- | 
|                                        |  |           |             |             |  |             |            |              |  |          |             |             |  |         |  |  |            | Warrants
|                                        |  | Number of |             | Warrants    |  | Warrants    |            |              |  |          |             | outstanding
|                                        |  | warrants  |             | expired     |  | exercised   |            | Subscription |  | December
|                                        |  | granted   |             | during 2002 |  | during 2002 |            | price        |  | 31, 2002
|                                        |  |           |             |             |  |             |            |              |  |         
|Warrants issued May / June 2002         |  |           | 35,614,800  |             |  |             | 15,668,998 |              |  |          |            |             |  | NOK 8.0 |  |  | 19,945,802 |         
|Warrants issued August /
September 2002 |  |           | 191,275,143 |             |  |             | 16,989     |              |  |          | 191,258,154 |             |  | NOK 3.5 |  |  |           |         
|                                        |  |           |             |             |  |             |            |              |  |          |             |             |  |         |  |  |            |          |            | 
|TOTAL                                   |  |           | 226,889,943 |             |  |             | 15,685,987 |              |  |          | 191,258,154 |             |  |         |  |  |            |          | 19,945,802 | 
|                                        |  |           |             |             |  |             |            |              |  |          |             |             |  |         |  |  |            |          |            | 

Any new shares issued by the Company following the exercise of warrants
will be equal in all respect to other outstanding shares and will carry
dividend rights from and including the date of which they are issued.

NOTE 21. Share Option Plans

On October 7, 1997, the Companys extraordinary general meeting approved a
Share Option Plan for the Companys executive employees, key personnel and
board members. The Board of Directors was authorized to grant up to 566,667
share options over the next 5 years. The authorization was withdrawn at the
Companys general meeting on May 18, 2000. In the same meeting the Board of
Directors was given authorization to grant up to 1,250,000 options to employees
and members of the Board of Directors.

The options awarded are granted at volume-weighted average market value
for the five trading days preceding the grant date. The options generally vest
over 5 years with 20% becoming exercisable each year, and have a maximum term
of 5 years. The Company has recorded no compensation expense for any grants.

In May 2000, as a result of a change in Norwegian tax regulations, the
exercise price for the options granted in 2000 was fixed at NOK 41.16 for the
730,000 options granted to employees and NOK 46.05 for the 200,000 options
granted to the board members in the group.

On November 21, 2001, the board granted a total of 925,000 options to
primary insiders and key employees, subject to existing options agreements
being cancelled. The exercise price was set at NOK 7.50 per share. The
expiration date of the options is November 21, 2006. The options vest over five
years, with 20% becoming exercisable each year. Employees and board members
who resign may exercise any fully vested options at any date on or before the
expiration date. The options will become immediately
vested upon a change of control of the Company or upon the sale of the
Companys first two rigs, contingent upon continued employment.

78



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

On April 8, 2002, the board granted 200,000 options to primary insiders at
an exercise price of NOK 9.20. The expiration date of the options is April 7,
2007. The options carry similar terms to the options issued on November 21,
2001. 100,000 of the options were subject to the approval of the General
Meeting, which was obtained May 24, 2002.

The authorization to issue 1,250,000 shares given to the board on May 18,
2000 expired May 18, 2002. On May 24, 2002, the General Meeting increased the
authorization to 4,000,000 shares. The authorization is valid for two years.
The General Meeting also authorised the Board to grant a total of 340,000
options to members of the Board at an exercise price of NOK 9.20 per share. All
previous options granted to the Board members were withdrawn.

At the Companys Extraordinary General Meeting in August 2002, a new
option plan was approved, authorizing the Board to grant up to 14,000,000
shares in the Company to employees and Board members of the Company, each with
a subscription price of NOK 3.50 per share. Any previous granted options were
withdrawn. Board members have the right to subscribe for up to 8,000,000 shares
and employees to subscribe for up to 6,000,000 shares. The options may, at the
discretion of the holder, be utilized in one or more rounds up to the total
number of options. The options may be exercised at the earliest one year after
the grant date. In the event of a mandatory bid on the Company, the options may
be exercised earlier. 50% of the authorized options are contingent upon the
completion date of Eirik Raude. Options not exercised within three years of
grant date will expire without any compensation. The authorization is effective
for two years and expires at the date of the Companys General Meeting in 2004.

During 2002, a total of 8,000,000 options were granted to members of the
Board of Directors and 3,091,000 options were granted to employees of the
Company. As of December 31, 2002, 50% of the options have expired due to (i)
25% of the options lapsed since the rig Eirik Raude was not on contract by
October 15, 2002 and (ii) another 25% of the options lapsed since Eirik Raude
had not commenced charter hire by October 31, 2002.

At December 31, 2002 the following options were granted and outstanding:

|                                  |  |          |  |         |           |         |  |            |      |  |  |  |      |  |  | 
|--------------------------------- |  | -------- |  | ------- | --------- | ------- |  | ---------- | ---- |  |  |  | ---- |  |  | 
|                                  |  | Exercise |  | Total   |           | Year    |  | Expiration
|                                  |  | price    |  | options |           | granted |  | year      
|                                  |  |          |  |         |           |         |  |           
|Members of the Board of Directors |  | NOK 3.50 |  |         | 4,000,000 |         |  |            | 2002 |  |  |  | 2005 | 
|Key employees of the Company      |  | NOK 3.50 |  |         | 1,545,500 |         |  |            | 2002 |  |  |  | 2005 | 

79



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Activity in the Companys share option plans for the three years ended December
31, 2002 was as follows:

|                                 |  |                                  |          |                             |  |           |       |          |  |           |            |          |  |  |        |  |  |          |            |   |  |  |        | 
|-------------------------------- |  | -------------------------------- | -------- | --------------------------- |  | --------- | ----- | -------- |  | --------- | ---------- | -------- |  |  | ------ |  |  | -------- | ---------- | - |  |  | ------ | 
|                                 |  | Exercise price greater           |          | Exercise price less than    |  |           |       |          |  |           |            |         
|                                 |  | than grant date share fair value |          | grant date share fair value |  | Total    
|                                 |  |                                  |          |                             |  |          
|                                 |  |                                  |          |                             |  | Weighted  |       |          |  |           |            | Weighted |  |  |        |  |  | Weighted
|                                 |  |                                  |          |                             |  | average   |       |          |  |           |            | average  |  |  |        |  |  | average 
|                                 |  | Number of                        |          | exercise                    |  | Number of |       | exercise |  | Number of |            | exercise
|                                 |  | Shares                           |          | price                       |  | Shares    |       | price    |  | Shares    |            | price   
|                                 |  |                                  |          |                             |  |           |       |          |  |           |            |         
|                                 |  |                                  |          |                             |  | (NOK)     |       |          |  |           |            | (NOK)    |  |  |        |  |  | (NOK)   
|Outstanding at January 1, 2000   |  |                                  | 253,026  |                             |  |           | 45.68 |          |  |           | 20,000     |          |  |  | 328.88 |  |  |          | 273,026    |   |  |  | 66.43  | 
|Granted                          |  |                                  | 710,000  |                             |  |           | 42.54 |          |  |           | 220,000    |          |  |  | 41.16  |  |  |          | 930,000    |   |  |  | 42.21  | 
|Cancelled                        |  |                                  | (253,026 | )                           |  |           | 88.99 |          |  |           | (20,000    | )        |  |  | 345.66 |  |  |          | (273,026   | ) |  |  | 107.79 | 
|                                 |  |                                  |          |                             |  |           |       |          |  |           |            |          |  |  |        |  |  |          |            |   |  |  |        | 
|Outstanding at December 31, 2000 |  |                                  | 710,000  |                             |  |           | 42.54 |          |  |           | 220,000    |          |  |  | 41.16  |  |  |          | 930,000    |   |  |  | 42.21  | 
|Granted                          |  |                                  |         |                             |  |           |      |          |  |           | 925,000    |          |  |  | 7.50   |  |  |          | 925,000    |   |  |  | 7.50   | 
|Cancelled                        |  |                                  | (710,000 | )                           |  |           | 42.54 |          |  |           | (20,000    | )        |  |  | 41.16  |  |  |          | (730,000   | ) |  |  | 42.50  | 
|                                 |  |                                  |          |                             |  |           |       |          |  |           |            |          |  |  |        |  |  |          |            |   |  |  |        | 
|Outstanding at December 31, 2001 |  |                                  |         |                             |  |           |      |          |  |           | 1,125,000  |          |  |  | 13.48  |  |  |          | 1,125,000  |   |  |  | 13.48  | 
|Granted                          |  |                                  |         |                             |  |           |      |          |  |           | 11,091,000 |          |  |  | 3.50   |  |  |          | 11,091,000 |   |  |  | 3.50   | 
|Expired                          |  |                                  |         |                             |  |           |      |          |  |           | (5,545,500 | )        |  |  | 3.50   |  |  |          | (5,545,500 | ) |  |  | 3.50   | 
|Cancelled                        |  |                                  |         |                             |  |           |      |          |  |           | (1,125,000 | )        |  |  | 13.48  |  |  |          | (1,125,000 | ) |  |  | 13.38  | 
|                                 |  |                                  |          |                             |  |           |       |          |  |           |            |          |  |  |        |  |  |          |            |   |  |  |        | 
|Outstanding at December 31, 2002 |  |                                  |         |                             |  |           |      |          |  |           | 5,545,500  |          |  |  | 3.50   |  |  |          | 5,545,500  |   |  |  | 3.50   | 
|                                 |  |                                  |          |                             |  |           |       |          |  |           |            |          |  |  |        |  |  |          |            |   |  |  |        | 

No options were exercised during 2002. At December 31, 2002, no options were exercisable.

NOTE 22. Disclosures about Fair Value of Financial Instruments

The Company is exposed to changes in foreign currency exchange rates and
changes in interest rates, which affect our results of operations and financial
condition. The Company manages exposure to changes in foreign currency exchange
rates through its normal operating and financing activities, as well as through
the use of financial instruments. Generally, the only financial instruments the
Company may utilize are forward exchange contracts. The Company had no forward
exchange contracts outstanding as of December 31, 2001 or 2002. The Company
manages exposure to changes in interest rates by maintaining debt with both
fixed and variable rates of interest.

The following table summarizes the estimated fair value of the Companys
financial instruments as of December 31, 2001 and 2002:

|                          |  |                        |           |       |  |          |           |       |  |     |  |     |  |  |           |  |  |  |           | 
|------------------------- |  | ---------------------- | --------- | ----- |  | -------- | --------- | ----- |  | --- |  | --- |  |  | --------- |  |  |  | --------- | 
|                          |  | As of December 31,    
|                          |  |                       
|                          |  | 2001                   |           | 2002 
|                          |  |                        |           |      
|                          |  | Carrying               |           | Fair  |  | Carrying |           | Fair 
|                          |  | Amount                 |           | Value |  | Amount   |           | Value
|                          |  |                        |           |       |  |          |           |      
|                          |  | NOK                    |           | NOK   |  |          |           |       |  | NOK |  | NOK
|                          |  | (amounts in thousands)
|Cash and cash equivalents |  |                        | 170,205   |       |  |          | 170,205   |       |  |     |  |     |  |  | 137,346   |  |  |  | 137,346   | 
|Restricted cash           |  |                        | 253,494   |       |  |          | 253,494   |       |  |     |  |     |  |  | 8,627     |  |  |  | 8,627     | 
|USD short-term debt       |  |                        |          |       |  |          |          |       |  |     |  |     |  |  | 114,796   |  |  |  | 108,757   | 
|Long-term debt            |  |                        | 4,007,109 |       |  |          | 3,596,459 |       |  |     |  |     |  |  | 3,105,494 |  |  |  | 2,812,922 | 
|Convertible loans         |  |                        | 1,052,500 |       |  |          | 1,061,950 |       |  |     |  |     |  |  | 1,062,452 |  |  |  | 513,428   | 

The amounts shown in the table are gross of unamortized discount and intrinsic
value.

80



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

The carrying value of NOK-denominated cash and cash equivalents and
restricted cash are a reasonable estimate of their fair value due to the
short-term nature of these instruments. The fair value of USD-denominated cash
and cash equivalents and restricted cash are based on the USD amounts
translated at year-end exchange rates.

The fair value of debt is determined by reference to the market value of
the Companys publicly traded debt instruments, as well as comparably rated
debt instruments at these dates.

The fair value of the USD Short Term Loan was, as of December 31, 2002,
93.35% of the principal amount equaling NOK 84.7 million. Unamortized discount
of NOK 6.5 million, is not included in the calculation of fair value.

The fair value of the Notes and 1998 Loans was, as of December 31, 2001
and December 31, 2002, approximately 87% and 88%, respectively, of the
principal amount. Fair value at December 31, 2002 was NOK 2,145.5 million and
NOK 2,748.1 million at December 31, 2001.

The fair value of the convertible loans were, as of December 31, 2001 85%
and 80% and as of December 31, 2002, 73% and 70% for the NOK 134.0 million and
NOK 259.0 million convertible loans, respectively. Fair value at December 31,
2002 for the two loans were NOK 97.8 million and NOK 181.3 million,
respectively. Fair value at December 31, 2001 of the two convertible loans
amounted to NOK 410.0 million.

The fair value of the Mandatory Convertible Loan, as of December 31, 2002,
was 35%, equaling a fair value of NOK 234.3 million. Unamortized balance of
warrants and intrinsic value of NOK 66.3 million is not included in the
calculation of fair value.

The vast majority of the Companys borrowings are with financial
institutions and other professional investors.

NOTE 23. Commitments and Contingencies

Construction commitments

The Company completed its construction project of its two rigs during 2002
and as of December 31, 2002 the Company has no further commitments relating to
its construction projects.

In August 2002, the Halifax Shipyard agreed to defer up to USD 10 million
in payments under the Halifax Contract until December 31, 2002. The Company was
required to provide security for the deferred amount. The USD 10 million
deferred balance was paid in full by the Company, and all security interest
were released, upon the delivery of Eirik Raude to EnCana under the EnCana
Drilling Contract on November 1, 2002.

Outstanding payments related to the construction of Eirik Raude amounted
to NOK 45.1 million as of December 31, 2002 and represent payments to various
suppliers. The Company had no outstanding payments to the Halifax Shipyard as
of December 31, 2002.

Insurance

The Company has obtained insurance for the assessed market value of the
rigs. However, such insurance coverage may not provide sufficient funds to
protect the Company from all liabilities that could result from its operations
in all situations. Risks against which the Company may not be fully insured or
insurable include environmental liabilities, which may result from a
blow-out or similar accident, or
81

OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

liabilities resulting from reservoir damage
alleged to have been caused by the negligence of the Company. Moreover, the
Companys insurance coverage may not protect against loss of income. The
occurrence of casualty or loss against which the Company is not fully insured
could have a material adverse effect on the Companys results of operations and
financial condition.

Environmental matters

The Companys operations may involve the use or handling of materials that
may be classified as environmentally hazardous substances. Environmental laws
and regulations applicable in the countries in which the Company intends to
conduct operations have generally become more stringent. Such laws and
regulations may expose the Company to liability for the conduct of or for
conditions caused by others, or for acts of the Company that were in compliance
with all applicable laws at the time such actions were taken. In recent years,
increased concern has been raised over protection of the environment. Offshore
drilling in certain areas has been opposed by environmental groups, and, in
certain areas, has been restricted. To the extent new laws are enacted or other
governmental actions are taken that prohibit or restrict offshore drilling or
impose additional environmental protection requirements that result in
increased costs to the oil and gas industry in general or the offshore drilling
industry in particular, the Companys business or prospects could be materially
adversely affected. The amendment or modification of existing laws and
regulations or the adoption of new laws and regulations curtailing or further
regulating exploratory or development drilling and production for oil and gas
for political, economic, environmental, or other reasons could have a material
adverse effect on the Companys business, operating results or financial
condition. The Company cannot predict the extent to which future earnings may
be affected by compliance with any such new legislation or regulations. In
addition, the Company may become subject to additional laws and regulations as
a result of future vessel operation or relocation or other operations of the
Company being conducted in jurisdictions in which it is not currently
operating.

The Company expects that it will be able to obtain some degree of
contractual indemnification from its customers in most of its drilling
contracts against pollution and environmental damages, but there can be no
assurance that such indemnification will be enforceable in all instances, that
the customer will be financially capable in all cases of complying with its
indemnity obligations or that the Company will be able to obtain such
indemnification agreements in the future.

The Company expects to maintain insurance coverage against certain
environmental liabilities, including pollution caused by sudden and accidental
oil spills. There can be no assurance, however, that such insurance will be
obtained, will continue to be available or carried by the Company or, if
available and carried, will be adequate to cover the Companys liability in all
circumstances, which could have a material adverse effect on the Companys
business, operating results and financial conditions.

Litigation

The Company is not a party to any litigation or legal proceedings.

Leases

The Company has operating lease commitments principally for office space.
These non-cancelable leases expire at various dates through 2005. Certain
leases contain renewal options for various periods of time, and generally
provide that the Company shall pay a portion of the operating costs applicable
to the leased property.

82



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

As of December 31, 2002, future minimum lease payments under non-cancelable
operating leases with an initial term of one year or more were as follows:

|                             |  |                        |       | 
|---------------------------- |  | ---------------------- | ----- | 
|                             |  | Operating Leases      
|                             |  |                       
|                             |  | NOK                   
|                             |  | (amounts in thousands)
|2003                         |  |                        | 3,490 | 
|2004                         |  |                        | 1,880 | 
|2005                         |  |                        | 1,195 | 
|                             |  |                        |       | 
|Total minimum lease payments |  |                        | 6,565 | 
|                             |  |                        |       | 

The Company recorded rent expense for 2000, 2001 and 2002 in the amount of NOK
4.0 million, NOK 4.5 million and NOK 4.5 million, respectively.

NOTE 24. Segment Information

Ocean Rig has two reportable segments, as defined by SFAS 131: (1)
offshore drilling operations and (2) rig management. Offshore drilling
operations have mainly been directed to the follow up of construction contracts
and marketing of the Companys rigs.

The accounting policies of the segments are the same as those described in
the Summary of Significant Accounting Policies. Ocean Rig evaluates the
performance of its segments and allocates resources to them based on revenue,
operating expenses, interest income, interest expenses, net income and assets.

The table below presents information about reported segments for the years
ending December 31, 2000, 2001 and 2002:

|                               |  |                        |           |            |  |       |        |   |  |  |           |  
|------------------------------ |  | ---------------------- | --------- | ---------- |  | ----- | ------ | - |  |  | --------- | -
|                               |  | Offshore               |           |            |  |       |        |   |  | 
|                               |  | Drilling               |           | Rig        |  |       |        |  
|                               |  | Operations             |           | Management |  | Total
|                               |  |                        |           |            |  |      
|                               |  | NOK                    |           | NOK        |  | NOK  
|                               |  | (amounts in thousands)
|Year ended December 31, 2000   |  |                        |           |            |  |       |        |   |  |  |           |  
|Revenues                       |  |                        |           |            |  |       | 13,749 |   |  |  | 13,749    |  
|Operating expenses             |  |                        | 167,070   |            |  |       | 9,481  |   |  |  | 176,551   |  
|Interest and financial income  |  |                        | 147,344   |            |  |       | 2,012  |   |  |  | 149,356   |  
|Interest and financial expense |  |                        | (315,790  | )          |  |       | (478   | ) |  |  | (316,268  | )
|Net (loss) income              |  |                        | (322,003  | )          |  |       | (7,931 | ) |  |  | (329,934  | )
|Total assets                   |  |                        | 6,855,438 |            |  |       | 13,353 |   |  |  | 6,869,791 |  
|Year ended December 31, 2001   |  |                        |           |            |  |       |        |   |  |  |           |  
|Revenues                       |  |                        |          |            |  |       | 10,538 |   |  |  | 10,538    |  
|Operating expenses             |  |                        | 712,766   |            |  |       | 3,688  |   |  |  | 716,454   |  
|Interest and financial income  |  |                        | 75,940    |            |  |       | 785    |   |  |  | 76,725    |  
|Interest and financial expense |  |                        | (189,857  | )          |  |       | (80    | ) |  |  | (189,937  | )
|Net (loss) income              |  |                        | (814,017  | )          |  |       | (5,440 | ) |  |  | (819,457  | )
|Total assets                   |  |                        | 8,166,009 |            |  |       | 22,349 |   |  |  | 8,188,358 |  
|Year ended December 31, 2002   |  |                        |           |            |  |       |        |   |  |  |           |  
|Revenues                       |  |                        | 504,347   |            |  |       | 29,984 |   |  |  | 534,331   |  
|Operating expenses             |  |                        | 678,820   |            |  |       | 34,769 |   |  |  | 713,589   |  
|Interest and financial income  |  |                        | 984,864   |            |  |       | 1,499  |   |  |  | 986,363   |  
|Interest and financial expense |  |                        | (596,120  | )          |  |       | (1,835 | ) |  |  | (597,955  | )
|Net (loss) income              |  |                        | 214,249   |            |  |       | (5,121 | ) |  |  | 209,128   |  
|Total assets                   |  |                        | 8,897,628 |            |  |       | 18,299 |   |  |  | 8,915,928 |  

83



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

The Companys two rigs commenced operations in 2002 and for the year ended
December 31, 2002, 94% of consolidated revenues come from operations of the
Companys two drilling rigs under the respective drilling contracts. For the
year ended December 31, 2001, consolidated revenues came from other rig
management operations. Other rig management operations offers services to
external companies as well as to Leiv Eiriksson and Eirik Raude and is based in
Norway.

The Companys two rigs, Leiv Eiriksson and Eirik Raude, commenced
operations in February 2002 and November 2002, respectively. During 2002 Leiv
Eiriksson have been drilling under a drilling contract with ExxonMobil offshore
Angola and Eirk Raude have been operating offshore Canada on a drilling
contract with EnCana Corporation. Other offshore drilling operations services
are primarily performed in Norway.

Geographic segment information offshore drilling operations:

|                             |  |                        |           |              |  |                 |           |       |  |  |         |   |  |  |           |  
|---------------------------- |  | ---------------------- | --------- | ------------ |  | --------------- | --------- | ----- |  |  | ------- | - |  |  | --------- | -
|                             |  | Leiv Eiriksson,        |           | Eirik Raude, |  | Administration, |           |       |  | 
|                             |  | Angola                 |           | Canada       |  | Norway          |           | TOTAL
|                             |  |                        |           |              |  |                 |           |      
|                             |  | NOK                    |           | NOK          |  | NOK             |           | NOK  
|                             |  | (amounts in thousands)
|External revenues            |  |                        | 455,175   |              |  |                 | 49,172    |       |  |  | 0       |   |  |  | 504,347   |  
|Operating expenses           |  |                        | 367,214   |              |  |                 | 150,544   |       |  |  | 1,455   |   |  |  | 519,213   |  
|Depreciation                 |  |                        | 128,409   |              |  |                 | 30,835    |       |  |  | 363     |   |  |  | 159,607   |  
|Operating loss               |  |                        | (40,448   | )            |  |                 | (132,207  | )     |  |  | (1,818  | ) |  |  | (174,473  | )
|Net financial items          |  |                        | (12,522   | )            |  |                 | (26,560   | )     |  |  | 427,826 |   |  |  | 388,744   |  
|Net loss before income taxes |  |                        | (52,970   | )            |  |                 | (158,767  | )     |  |  | 426,008 |   |  |  | 214,271   |  
|Net loss                     |  |                        | (52,970   | )            |  |                 | (158,767  | )     |  |  | 425,986 |   |  |  | 214,249   |  
|Total assets, external       |  |                        | 3,530,104 |              |  |                 | 4,989,917 |       |  |  | 305,896 |   |  |  | 8,897,628 |  
|Investments                  |  |                        | 10,329    |              |  |                 | 1,815,358 |       |  |  | 78,617  |   |  |  | 1,904,304 |  

84



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

NOTE 25. Subsequent Events

Subsequent private placement of Shares in January 2003

The Company conducted a subsequent private placement of shares in January
2003, issuing 35,151,298 shares for a subscription price of NOK 1.0 per share.
As a result, the Companys share capital increased by NOK 35.2 million. Net
proceeds to the Company totaled NOK 32.8 million, after reduction for share
issuance cost totaling NOK 2.4 million.

First optional well under the contract with ExxonMobil exercised

In February 2002, Esso exploration Angola Limited exercised its first
option for a further well under the contract for Leiv Eiriksson offshore
Angola, West-Africa.

Conversion of Mandatory Convertible Bond and issue of new shares

During January and May 2003 a total of 487,713 shares were converted from
the Companys Mandatory Convertible Bond at a conversion price of NOK 3.50 per
share. Further, 8 new shares were issued in connection with the reverse share
split approved by the General Meeting in May 2003 at a subscription price of
NOK 1.0 per share. Share capital was increased by NOK 0.5 million and
additional paid-in capital increased by NOK 1.2 million. Total shares following
the registration of the share issue and conversion is 528,525,870.

Extension of the final installment of the USD short term loan

In May 2003, the Company exercised its option to extend the final
installment on its May 2002 USD short term loan by three months, until August
13, 2003.

Reverse share split

The Annual General Meeting held on May 16, 2003 approved a reverse share
split of 10:1. Accordingly, the Companys total number of shares will be
reduced from 528,525,870 to 52,852,587 shares. As of May 21, 2003 the Companys
share traded with a par value of NOK 10 .0 per share. In the future financial
statements, the comparative earnings (loss) per share figures will be
retroactively restated to reflect the share split as if it had occurred as of
the beginning of each period presented.

Adjustment of conversions prices for convertible bonds

As a result of the reverse share split, the conversion rate for the
Companys convertible bonds are adjusted proportionately to account for the
10:1 reverse share split. Effective as of May 21, 2003 the Companys
convertible bonds have the following conversion prices:



| |  |  | Mandatory Convertible Bond 2000 / 2005 is convertible at a
price of NOK 35.0 per share.         
| | - |  | ------------------------------------------------------------------------------------------------
|
| |  |  | 13% Subordinated Convertible Bond 2002 / 2005 is convertible
at a price of NOK 228.30 per share.
|
| |  |  | 11% Subordinated Convertible Bond 2000 / 2005 is convertible
at a price of NOK 244.50 per share.

Second option well under the contract with ExxonMobil exercised

In May 2003, BP Exploration Angola exercised the second option well under
the present contract for Leiv Eiriksson in Angola. The well will start
immediately after the first option well with Esso Exploration Angola Limited
and will last for an estimated 50 days, through August 2003.

85



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Share Option Plan to Members of the Board of Directors and management of the
Company

At the Companys Ordinary General Meeting on May 16, 2003, an option plan
was approved, authorizing the Board to grant up to 8,800,000 options to buy
shares in the Company to management and Board members of the Company. Up to
1,800,000 and 800,000 options may be granted to the Chairman of the Board and
each of the other board members, respectively. Up to 3,000,000 options may be
granted to the management of the Company.

Subsequent to the May Ordinary General Meeting, the Board members
purchased options to subscribe a total of 3,200,000 shares with strike price of
NOK 15 for a total consideration of USD 120,000. The options were fully vested
at grant date. The board members will be able to recover the consideration paid
for the options if they are not re-elected and the options expire as a result.

For management and the executive chairman options are granted in option
packages consisting of three options with an exercise price of NOK 10.00, NOK
12.00 and NOK 14.00, respectively, and three options with an exercise price of
NOK 18.00. The options vest over a year, with 20% becoming exercisable every 90
days. In the event that a transaction (change of control, merger, demerger, or
sale of both drilling rigs) has been completed and the option holder resigns,
all options becomes exercisable and are kept by the option holder. No options
have formally been granted to management and the executive chairman.

Any options outstanding under the plan authorized by the Companys
Extraordinary General Meeting in August 2002 were cancelled.

Contract with Imperial Oil Resource Ventures Limited

On June 6, 2003 Ocean Rig was awarded a contract with Imperial Oil
Resource Ventures Limited to drill offshore Nova Scotia upon completion of the
EnCana contract firm period. Drilling under this contract with Imperial Oil is
expected to commence around July 1, 2003. The estimated duration of this work
is approximately 50 to 60 days.

NOTE 26. Liquidity

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company has suffered recurring
losses from operations and has insufficient capital that raises substantial
doubt about its ability to continue as a going concern. To strengthen the
Companys working capital, the Company completed a share issue in January 2003.
Further, the Company amended the terms of its loan with its bank syndicate,
which resulted in changes to the requirement for minimum cash covenant and
delays in the timing of certain principal installments. Management expects that
the Companys liquidity at the beginning of 2003 together with expected cash
flows from operations in 2003 and the share issuance in January will be
sufficient to cover interest payments and installments on loans in 2003,
however, the Company cannot give any guarantees in relation to its future
generation of cash flows. There can be no assurance that the Company will be
successful in its planned operations and be able to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

The Fortis Facility contains restrictions on, among other things, minimum
working capital and value adjusted equity (including market value of rigs). As
of December 31, 2002, the Company

86



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements
 (Continued)

was unable to comply with two of its covenants relating to these restrictions .
Ocean Rig obtained temporary waivers from the lenders as of May 15, 2003
waiving noncompliance of the working capital covenant through March 31, 2003,
and waiving noncompliance of the value adjusted equity covenant through
December 31, 2003, and expects to meet the covenants at future determination
dates.

NOTE 27. Differences between Generally Accepted Accounting Principles in Norway and the United States

The financial statements are prepared in accordance with the generally
accepted accounting principles in Norway (Norwegian GAAP), which differ in
certain respects from accounting principles generally accepted in the United
States (U.S. GAAP).

The major differences between Norwegian GAAP and U.S. GAAP for Ocean Rig are
summarized below:

|                                                    |                             |                            |          |                         |   |      |          |       |   |  |         |    |        | 
|--------------------------------------------------- | --------------------------- | -------------------------- | -------- | ----------------------- | - | ---- | -------- | ----- | - |  | ------- | -- | ------ | 
|                                                    |                             |                            |          | Year ended December 31,
|                                                    |                             |                            |          |                        
|                                                    |                             |                            |          | 2000                    |   | 2001 |          | 2002 
|                                                    |                             |                            |          |                         |   |      |          |      
|                                                    |                             |                            |          | NOK                     |   | NOK  |          | NOK  
|                                                    |                             |                            |          | (amounts in thousands) 
|Net income (loss) in accordance with Norwegian GAAP |                             |                            | (329,934 | )                       |   |      | (819,457 | )     |   |  | 209,128 |   
|Share options plan (a)                              |                             |                            |          |                         |   |      |          |       |   |  |         |   
|                                                    | Accrued compensation cost   |                            |          | (2,082                  | ) |      |          | 2,013 |   |  |         | 69 |       
|                                                    | Accrued social security tax |                            |          | 189                     |   |      |          | (182  | ) |  |         | (7 | )     
|                                                    |                             | Troubled debt restucturing |          |                         |  |      |          |       |  |  |         |    | 26,432 | 
|                                                    |                             |                            |          |                         |   |      |          |       |   |  |         |   
|Net income (loss) in accordance with U.S. GAAP      |                             |                            | (331,827 | )                       |   |      | (817,626 | )     |   |  | 235,622 |   
|                                                    |                             |                            |          |                         |   |      |          |       |   |  |         |   

|                                                       |                             |                                 |           |                        |   |      |           |   |        | 
|------------------------------------------------------ | --------------------------- | ------------------------------- | --------- | ---------------------- | - | ---- | --------- | - | ------ | 
|                                                       |                             |                                 |           | As of December 31,    
|                                                       |                             |                                 |           |                       
|                                                       |                             |                                 |           | 2001                   |   | 2002
|                                                       |                             |                                 |           |                        |   |     
|                                                       |                             |                                 |           | NOK                    |   | NOK 
|                                                       |                             |                                 |           | (amounts in thousands)
|Shareholders equity in accordance with Norwegian GAAP |                             |                                 | 2,803,288 |                        |   |      | 4,458,040 |  
|Share options (a)                                      |                             |                                 |           |                        |   |      |           |  
|                                                       | Accrued compensation cost   |                                 |           | (69                    | ) |      |           |  |       
|                                                       | Unearned stock compensation |                                 |           | 69                     |   |      |           |  |       
|                                                       | Accrued social security tax |                                 |           | 7                      |   |      |           |  |       
|                                                       |                             | Troubled
debt restructuring (c) |           |                        |  |      |           |   | 26,432 | 
|                                                       |                             |                                 |           |                        |   |      |           |  
|Shareholders equity in accordance with U.S. GAAP      |                             |                                 | 2,803,295 |                        |   |      | 4,484,472 |  
|                                                       |                             |                                 |           |                        |   |      |           |  

87



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements
 (Continued)

The change in shareholders equity in accordance with U.S. GAAP is as follows:

|                    |                                       |  |                        |           |      |  |           |          |   |  |           |           |  
|------------------- | ------------------------------------- |  | ---------------------- | --------- | ---- |  | --------- | -------- | - |  | --------- | --------- | -
|                    |                                       |  | As of December 31,    
|                    |                                       |  |                       
|                    |                                       |  | 2000                   |           | 2001 |  | 2002     
|                    |                                       |  |                        |           |      |  |          
|                    |                                       |  | NOK                    |           | NOK  |  | NOK      
|                    |                                       |  | (amounts in thousands)
|Beginning of year   |                                       |  | 3,167,902              |           |      |  | 3,175,595 |          |   |  | 2,803,295 |          
|Comprehensive loss: |                                       |  |                        |           |      |  |           |          |   |  |           |          
|                    | Net loss in accordance with U.S. GAAP |  |                        | (331,827  | )    |  |           | (817,626 | ) |  |           | 235,622   |  
|                    | Unearned stock compensation           |  |                        | 2,082     |      |  |           | (2,013   | ) |  |           | (69       | )
|                    | Translation differences               |  |                        | (90       | )    |  |           | 2,628    |   |  |           | 18,187    |  
|                    |                                       |  |                        |           |      |  |           |          |   |  |           |          
|                    | Comprehensive income and (loss)       |  |                        | 2,838,067 |      |  |           | (817,011 | ) |  |           | 253,740   |  
|                    |                                       |  |                        |           |      |  |           |          |   |  |           |          
|                    | Share issuances, net of issuance cost |  |                        | 337,528   |      |  |           | 444,711  |   |  |           | 1,427,437 |  
|                    |                                       |  |                        |           |      |  |           |          |   |  |           |          
|End of year         |                                       |  | 3,175,595              |           |      |  | 2,803,295 |          |   |  | 4,484,472 |          
|                    |                                       |  |                        |           |      |  |           |          |   |  |           |          

The components of shareholders equity in accordance with U.S. GAAP are as
follows as of December 31, 2001 and 2002:

|                            |  |                        |            |      |  |  |            |  
|--------------------------- |  | ---------------------- | ---------- | ---- |  |  | ---------- | -
|                            |  | As of December 31,    
|                            |  |                       
|                            |  | 2001                   |            | 2002
|                            |  |                        |            |     
|                            |  | NOK                    |            | NOK 
|                            |  | (amounts in thousands)
|Share capital               |  |                        | 1,682,316  |      |  |  | 492,887    |  
|Additional paid-in capital  |  |                        | 2,539,516  |      |  |  | 5,174,638  |  
|Accumulated deficit         |  |                        | (1,418,606 | )    |  |  | (1,182,984 | )
|Unearned stock compensation |  |                        | 69         |      |  |  | (69        | )
|                            |  |                        |            |      |  |  |            |  
|Total                       |  |                        | 2,803,295  |      |  |  | 4,484,472  |  
|                            |  |                        |            |      |  |  |            |  

a) Employee options

Under US GAAP, compensation expense should be measured and accounted for
at the grant date if the market price for the options is higher than the
exercise price of the options at the date of grant. Under variable plan
accounting the compensation expense should be measured and determined as the
difference between the fair value of the underlying stock and the exercise
price of the option (the intrinsic value of the options) at the balance sheet
date until the option is exercised. The compensation expense should be accrued
and expensed as salary expense over the service period. Norwegian GAAP is
consistent with US GAAP, however, in addition to measuring compensation
expense, Norwegian GAAP, requires the Company to accrue for social security
tax. The basis for the accrual is the intrinsic value of the options at the
balance sheet date multiplied with the social security tax rate. The cost is
expensed as salary expenses over the service period. According to U.S. GAAP the
social security tax should not be accrued for until the options are exercised.

In accordance with statement of Financial Accounting Standards (SFAS 123)
pro-forma information is required to be shown based upon a calculation of the
fair value of the options granted estimated using an option-pricing model. The
Companys option pricing model is based upon the Black-Scholes model and the
information is shown in Note 23, Share Option Plans.

88



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

b) Hedge accounting

The Company maintains cash accounts in U.S. dollars to hedge foreign
exchange risk related to its USD. Under Norwegian GAAP, the Companys USD cash
accounts, including restricted cash, are translated at the hedged rate, which
is the historical spot rate of the purchase of USD or the forward contract rate
obtained to purchase U.S. dollars.

Under U.S. GAAP, the Companys policy qualifies for hedge accounting,
however, the U.S. cash account, used as a hedging instrument, would be
translated at the year-end exchange rate and the resulting gain or loss would
be deferred on the balance sheet.

The Company did not have any hedge transactions outstanding at December 31,
2001 or 2002.

c) Troubled debt restructuring

Under US GAAP, if a creditor for economic or legal reasons related to a
debtors financial difficulties grants a concession to the debtor that it would
not otherwise consider, a restructuring of debt constitutes a troubled debt
restructuring. US GAAP defines a mathematical formula to determine if a
creditor has granted a concession. Based on this formula, the exchange of a
portion of the USD Short Term Loan and the Convertible Bonds 2000 into the
Mandatory Convertible Bond 2002 qualifies as a troubled debt restructuring.
Under Norwegian GAAP, the exchange has been accounted for as an extinguishment
of debt, resulting in a net loss of NOK 20.3 million. This net loss is reversed
to reconcile to US GAAP. Under US GAAP, the troubled debt restructuring
resulted in a gain of NOK 5.5 million (earnings per share; Basic 0.03, Diluted
0.02). Under accounting for troubled debt restructuring, subsequent to the
exchange interest expense is recognized at the effective interest rate to
amortize from the carrying value to the undiscounted future cash payments under
the Mandatory Convertible Bond 2002. As a result, interest expense for the
period from the date of the exchange until December 31, 2002 was NOK 0.6
million less according to US GAAP than under Norwegian GAAP.

Disclosure of derivative financial instruments

The Companys policies in respect of foreign currency and interest rate
risk management and the related use of financial instruments are set out in
Item 11 of this annual report, Quantitative and Qualitative Disclosures About
Market Risk. Short-term creditors have been excluded from the following
analyses.

a) Borrowings analyzed by maturity date

|                               |  |              |       |             |  |             |       |              |  |  |       |  |  |  |       | 
|------------------------------ |  | ------------ | ----- | ----------- |  | ----------- | ----- | ------------ |  |  | ----- |  |  |  | ----- | 
|                               |  | Notes and    |       | Convertible |  | 2002        |       | 2001        
|                               |  | Loans        |       | Loans       |  | Total       |       | Total       
|                               |  | (millions of |       | (millions   |  | (millions   |       | (millions of
|                               |  | dollars)     |       | of dollars) |  | of dollars) |       | dollars)    
|                               |  |              |       |             |  |             |       |             
|Due within one year (1)        |  |              | 16.5  |             |  |             |      |              |  |  | 16.5  |  |  |  | 61.6  | 
|Due between two and five years |  |              |      |             |  |             | 153.1 |              |  |  | 153.1 |  |  |  | 155.7 | 
|Due after five years           |  |              | 445.8 |             |  |             |      |              |  |  | 445.8 |  |  |  | 350.0 | 
|                               |  |              |       |             |  |             |       |              |  |  |       |  |  |  |       | 
|                               |  |              | 462.3 |             |  |             | 153.1 |              |  |  | 615.4 |  |  |  | 567.3 | 
|                               |  |              |       |             |  |             |       |              |  |  |       |  |  |  |       | 

(1)   Balance as of December 31, 2002 comprise of USD 13.1 million and USD 3.4
million representing short-term portion of long-term debt. Balance as of
December 31, 2001 represents convertible bonds that were converted to shares in
the Company in February 2003.

89



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

Loans repayable after five years comprised of:

|                                                                      |  |              |       |              |  |  |       | 
|--------------------------------------------------------------------- |  | ------------ | ----- | ------------ |  |  | ----- | 
|                                                                      |  | 2002         |       | 2001        
|                                                                      |  | Total        |       | Total       
|                                                                      |  | (millions of |       | (millions of
|                                                                      |  |              |       |             
|10 1/4% senior secured notes due 2008                                 |  |              | 225.0 |              |  |  | 225.0 | 
|Floating rate senior secured loans due 2008, LIBOR+4.75%              |  |              | 125.0 |              |  |  | 125.0 | 
|Floating
rate senior secured loans due 2008 LIBOR + 1.75%  2.75% (1) |  |              | 95.8  |              |  |  | -    | 
|                                                                      |  |              |       |              |  |  |       | 
|                                                                      |  |              | 445.8 |              |  |  | 350.0 | 
|                                                                      |  |              |       |              |  |  |       | 

(1)   Loan balance USD 95.8 million, net of short-term part of
long-term debt of USD 3.4 million.

b) Financial liabilities analyzed by currency and interest rate risk profile

|                 |  |                      |       |                   |  |              |       |              |  |      |       |      |  |  |       | 
|---------------- |  | -------------------- | ----- | ----------------- |  | ------------ | ----- | ------------ |  | ---- | ----- | ---- |  |  | ----- | 
|                 |  |                      |       |                   |  |              |       |              |  | 2002 |       | 2001
|                 |  | Floating rate amount |       | Fixed rate amount |  | Total        |       | Total       
|                 |  | (millions of         |       | (millions of      |  | (millions of |       | (millions of
|Currency:        |  | dollars)             |       | dollars)          |  | dollars)     |       | dollars)    
|                 |  |                      |       |                   |  |              |       |             
|Norwegian kroner |  |                      |      |                   |  |              | 153.1 |              |  |      | 153.1 |      |  |  | 117.3 | 
|US dollar        |  |                      | 99.2  |                   |  |              |      |              |  |      | 99.2  |      |  |  | 100.0 | 
|US dollar        |  |                      | 125.0 |                   |  |              | 238.1 |              |  |      | 363.1 |      |  |  | 350.0 | 
|                 |  |                      |       |                   |  |              |       |              |  |      |       |      |  |  |       | 
|                 |  |                      | 224.2 |                   |  |              | 391.2 |              |  |      | 615.4 |      |  |  | 567.3 | 
|                 |  |                      |       |                   |  |              |       |              |  |      |       |      |  |  |       | 

At December 31, 2002 and 2001, the weighted average interest rate on the
fixed rate financial liabilities was 10.9% and 11.5%, respectively. Floating
rate financial liabilities bear interest rates based on the 3-month US dollar
London inter-bank offer rate (LIBOR) plus 4.75% for the USD 125 million loan
and plus interest at a variable margin of 1.75% to 2.75% depending on the rigs
contract situation for the USD 99.2 million loan.

c) Financial assets analyzed by currency and interest rate risk profile

|                 |  |                 |       |              |  |               |        |              |  |      |        |  |  |  |        | 
|---------------- |  | --------------- | ----- | ------------ |  | ------------- | ------ | ------------ |  | ---- | ------ |  |  |  | ------ | 
|                 |  |                 |       |              |  | Cash and cash |        | 2002         |  | 2001
|                 |  | Restricted cash |       | equivalents  |  | Total         |        | Total       
|                 |  | (millions of    |       | (millions of |  | (millions of  |        | (millions of
|Currency:        |  | dollars)        |       | dollars)     |  | dollars)      |        | dollars)    
|                 |  |                 |       |              |  |               |        |             
|Norwegian kroner |  |                 | 0.710 |              |  |               | 10.709 |              |  |      | 11.419 |  |  |  | 17.082 | 
|Canadian dollar  |  |                 | 0.118 |              |  |               | 4.477  |              |  |      | 4.595  |  |  |  |        | 
|US dollar        |  |                 | 0,414 |              |  |               | 4.593  |              |  |      | 5.007  |  |  |  | 30.140 | 
|                 |  |                 |       |              |  |               |        |              |  |      |        |  |  |  |        | 
|                 |  |                 | 1,242 |              |  |               | 19,779 |              |  |      | 21.021 |  |  |  | 47.222 | 
|                 |  |                 |       |              |  |               |        |              |  |      |        |  |  |  |        | 

The financial assets earn interest at floating rates and comprise of restricted
cash and cash equivalents.

Financial instruments

Where necessary under the Companys risk management policy, the Company
may enter into derivative financial instruments to hedge its exposure to
foreign currency exchange rate risk and interest rate. The Company does not
enter into derivative financial instruments for trading purposes. The Company
only enters into contracts with parties that are highly rated international
financial institutions. Management believes that risk of loss is remote and in
any event would be immaterial to the consolidated net financial position of the
Company.

90



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

The accounting policies for the Companys derivative financial instruments
are disclosed in Note 1 to the Consolidated Financial Statements. The Company
had no derivative financial instruments outstanding at December 31, 2002.

Effect of recent pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires
that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized
as part of the carrying amount of the long-lived asset. An entity must measure
changes in the liability for an asset retirement obligation due to passage of
time by applying an interest method of allocation to the amount of the
liability at the beginning of the period. The interest rate used to measure the
change shall be the credit-adjustment risk-free rate that existed when the
liability was initially measured. That amount is to be recognized as an
increase in the carrying amount of the liability as an expense classified as an
operating item in the statement of income. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The Company does not expect an impact from
adoption of SFAS 143.

In January 2003, the FASB issued Interpretation 46, Consolidation of
Variable Interest Entities. In general, a variable interest entity is a
corporation, partnership, trust, or any other legal structure used for business
purposes that either (a) does not have equity investors with voting rights or
(b) has equity investors that do not provide sufficient financial resources for
the entity to support its activities. Interpretation 46 requires a variable
interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entitys activities or
entitled to receive a majority of the entitys residual returns or both. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after June 15, 2003. The Company is currently in the process of
evaluating the impact of the adoption of Interpretation 46.

Change in Norwegian GAAP accounting standard for the impairment of long-lived
assets

Norwegian GAAP introduced a new accounting standard for the impairment of
long lived assets effective January 1, 2003. The new standard differs
significantly from the US GAAP accounting standard. Under Norwegian GAAP, the
nominal value approach is not used. If circumstances indicate that the carrying
value of the assets may not be recoverable, a recoverability test is performed
to calculate the fair value of the assets. The fair value of the assets are
determined through testing, where the higher of, the net sales value of the
assets or the net value in use of the assets, are used in determining fair
value. The value in use is determined by discounting future cash flows through
a net present value calculation. If the carrying value of the assets is not
recoverable, the carrying amount of the assets is written down to its estimated
fair value. Any subsequent reversed changes to the fair value of the assets
will be booked as an adjustment to the book value of the assets by a reversal
of previous impairment loss. The change in Norwegian GAAP Accounting standard
will cause a difference between Norwegian GAAP and US GAAP for financial
reporting periods subsequent to year end December 31, 2002.

NOTE 28. Supplemental Guarantor Information

The Senior Secured Notes and 1998 Loans offered by Ocean Rig Norway AS are
fully and unconditionally guaranteed on a joint and several basis by Ocean Rig
ASA, Ocean Rig 1 AS and Ocean Rig 2 AS, and are collateralized by the shares
and assets of Ocean Rig 1 AS and Ocean Rig 2 AS. The 2002 Loans incurred by
Ocean Rig 2 AS are fully and unconditionally guaranteed on a joint and several

91



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

basis by Ocean Rig ASA and Ocean Rig Norway AS and are collateralized by
the shares and assets of Ocean Rig 2 AS.

Presented below is condensed consolidating financial information for: (1)
Ocean Rig Norway AS on a separate company basis; (2) Ocean Rig ASA on a parent
company only basis; (3) the guarantor subsidiaries Ocean Rig 1 AS and Ocean Rig
2 AS, on a combined basis; (4) the non-guarantor subsidiaries, Ocean Rig 3 AS,
Ocean Rig 4 AS and other non-guarantor subsidiaries, on a combined basis; (5)
elimination entries and (6) consolidated Ocean Rig ASA and subsidiaries.

The financial information for the above-mentioned entities represent
actual statement of operations, balance sheet and statement of cash flow for
the year ended December 31, 2002. The Company has centralized management,
accounting and administrative functions. While certain assets, liabilities and
costs are directly attributable to the subsidiaries, others are of a more
general nature and have been allocated to the subsidiaries based on assumptions
and estimates that our management believes are reasonable under the
circumstances. However, these allocations and estimates are not necessarily
indicative of the activity that would have resulted if any of the entities
disclosed had been operated on a stand alone basis for the periods presented.
Certain assets, liabilities, income and expenses have not been allocated.

The consolidating financial information has been prepared in accordance
with Norwegian GAAP which differs, in certain respects, from U.S. GAAP.

92



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000

|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |         | 
|--------------------------------------------------- | --------------------------------------------------------- |  | ---------------------- | ------ | --------- |  | -------------- | ------- | ------------- |  | -------------- | ------ | ----------- |  | ----------------- | ------ |  |  | --------- | -------- | - |  | -------- | ------- | 
|                                                    |                                                           |  |                        |        |           |  | Parent         |         | Subsidiary    |  | Non-Guarantor  |        | Elimination |  | Consolidated     
|                                                    |                                                           |  | Issuer                 |        | Guarantor |  | Guarantor      |         | Subsidiaries  |  | Entries        |        | Totals     
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |            
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  | Ocean Rig 3 AS    |        |  |  |           |          |   |  |         
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  | and               |        |  |  |           |          |   |  |         
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  | Ocean Rig 4 AS    |        |  |  |           |          |   |  |         
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  | Ocean Rig 1 AS |        | And other   |  |                   |        |  |  |           |          |  
|                                                    |                                                           |  | Ocean Rig              |        | Ocean Rig |  | and            |         | non-guarantor |  |                |        |             |  | Ocean Rig ASA and
|                                                    |                                                           |  | Norway AS              |        | ASA       |  | Ocean Rig 2 AS |         | subsidiaries  |  |                |        |             |  | Subsidiaries     
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                  
|                                                    |                                                           |  | NOK                    |        | NOK       |  | NOK            |         | NOK           |  | NOK            |        | NOK        
|                                                    |                                                           |  | (amounts in thousands)
|Operating revenues                                  |                                                           |  | 28,880                 |        |           |  | 28,880         |         |               |  |               |        |             |  | 71,648            |        |  |  | (115,659  | )        |   |  | 13,749   |        
|Operating expenses:                                 |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|                                                    | Salaries and other personnel expenses                     |  |                        |       |           |  |                | 11,163  |               |  |                |       |             |  |                   | 39,595 |  |  |           | (5,279   | ) |  |          | 45,479  | 
|                                                    | Other operating and administrative
expenses               |  |                        | 28,880 |           |  |                | 119,677 |               |  |                | 30,009 |             |  |                   | 55,417 |  |  |           | (106,732 | ) |  |          | 127,251 | 
|                                                    | Depreciation and amortization and
asset impairment losses |  |                        |       |           |  |                | 917     |               |  |                |       |             |  |                   | 2,903  |  |  |           |         |   |  |          | 3,821   | 
|                                                    | Equity in investee losses                                 |  |                        | 69,944 |           |  |                | 657,287 |               |  |                |       |             |  |                   |       |  |  |           | (727,231 | ) |  |          |        | 
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Total operating expenses                            |                                                           |  | 98,824                 |        |           |  | 789,044        |         |               |  | 30,009         |        |             |  | 97,915            |        |  |  | (839,242  | )        |   |  | 176,551  |        
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Operating loss                                      |                                                           |  | (69,944                | )      |           |  | (760,164       | )       |               |  | (30,009        | )      |             |  | (26,267           | )      |  |  | 723,583   |          |   |  | (162,802 | )      
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Interest and other financial income                 |                                                           |  | 7,528                  |        |           |  | 128,397        |         |               |  | 10,474         |        |             |  | 2,956             |        |  |  | 1         |          |   |  | 149,356  |        
|Interest and other financial expenses               |                                                           |  | (600,928               | )      |           |  | (32,555        | )       |               |  | (16,747        | )      |             |  | (587              | )      |  |  | 334,549   |          |   |  | (316,268 | )      
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Net financial income (expense)                      |                                                           |  | (593,400               | )      |           |  | 95,842         |         |               |  | (6,273         | )      |             |  | 2,369             |        |  |  | 334,550   |          |   |  | (166,912 | )      
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Loss before taxes                                   |                                                           |  | (663,344               | )      |           |  | (664,322       | )       |               |  | (36,282        | )      |             |  | (23,898           | )      |  |  | 1,058,133 |          |   |  | (329,714 | )      
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Income taxes                                        |                                                           |  |                       |        |           |  |               |         |               |  |               |        |             |  | (2,491            | )      |  |  | 2,271     |          |   |  | (220     | )      
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Net (loss) income in accordance with
Norwegian GAAP |                                                           |  | (663,344               | )      |           |  | (664,322       | )       |               |  | (36,282        | )      |             |  | (26,389           | )      |  |  | 1,014,986 |          |   |  | (329,934 | )      
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        
|Net (loss) income in accordance with
U.S. GAAP      |                                                           |  | (663,344               | )      |           |  | (666,225       | )       |               |  | (36,282        | )      |             |  | (26,389           | )      |  |  | 1,014,986 |          |   |  | (331,827 | )      
|                                                    |                                                           |  |                        |        |           |  |                |         |               |  |                |        |             |  |                   |        |  |  |           |          |   |  |          |        

93



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001

|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |         | 
|--------------------------------------------------- | ---------------------------------------------------------- |  | ---------------------- | ------- | --------- |  | -------------- | ------- | ------------- |  | -------------- | ------- | ----------- |  | ----------------- | ------- |  |  | ---------- | ---------- | - |  | -------- | ------- | 
|                                                    |                                                            |  |                        |         |           |  | Parent         |         | Subsidiary    |  | Non-Guarantor  |         | Elimination |  | Consolidated     
|                                                    |                                                            |  | Issuer                 |         | Guarantor |  | Guarantors     |         | Subsidiaries  |  | Entries        |         | Totals     
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |            
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  | Ocean Rig
3 AS,   |         |  |  |            |            |   |  |         
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  | or 4              |         |  |  |            |            |   |  |         
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  | As and            |         |  |  |            |            |   |  |         
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  | Ocean Rig 1 AS |         | other       |  |                   |         |  |  |            |            |  
|                                                    |                                                            |  | Ocean Rig              |         | Ocean Rig |  | and            |         | non-guarantor |  |                |         |             |  | Ocean Rig ASA and
|                                                    |                                                            |  | Norway AS              |         | ASA       |  | Ocean Rig 2 AS |         | subsidiaries  |  |                |         |             |  | Subsidiaries     
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                  
|                                                    |                                                            |  | NOK                    |         | NOK       |  | NOK            |         | NOK           |  | NOK            |         | NOK        
|                                                    |                                                            |  | (Amounts in thousands)
|Operating revenues                                  |                                                            |  | 75,294                 |         |           |  | 75,294         |         |               |  |               |         |             |  | 146,073           |         |  |  | 286,123    |            |   |  | 10,538   |        
|Operating expenses:                                 |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|                                                    | Salaries and personnel expenses                            |  |                        |        |           |  |                | 20,909  |               |  |                | 6,105   |             |  |                   | 83,271  |  |  |            |           |   |  |          | 110,285 | 
|                                                    | Other operating and administrative
expenses                |  |                        | 75,369  |           |  |                | 141,476 |               |  |                | 346,007 |             |  |                   | 68,330  |  |  |            | (280,184   | ) |  |          | 350,998 | 
|                                                    | Depreciation, amortization and
asset
impairment write down |  |                        |        |           |  |                | 298,500 |               |  |                | 12,116  |             |  |                   | 242,578 |  |  |            | (298,023   | ) |  |          | 255,171 | 
|                                                    | Equity in investee losses                                  |  |                        | 732,802 |           |  |                | 830,509 |               |  |                |         |             |  |                   |         |  |  |            | (1,563,311 | ) |  |          |        | 
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Total operating expenses                            |                                                            |  | 808,171                |         |           |  | 1,291,394      |         |               |  | 364,228        |         |             |  | 394,179           |         |  |  | (2,141,518 | )          |   |  | 716,454  |        
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Operating income (loss)                             |                                                            |  | (732,877               | )       |           |  | (1,216,100     | )       |               |  | (364,228       | )       |             |  | (248,106          | )       |  |  | 1,855,395  |            |   |  | (705,916 | )      
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Interest and other financial income                 |                                                            |  | 572                    |         |           |  | 19,760         |         |               |  | 54,767         |         |             |  | 1,626             |         |  |  |           |            |   |  | 76,725   |        
|Interest and other financial expenses               |                                                            |  | (405,166               | )       |           |  | (72,249        | )       |               |  | (166,837       | )       |             |  | (585              | )       |  |  | 454,900    |            |   |  | (189,937 | )      
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Net financial income (expense)                      |                                                            |  | (404,594               | )       |           |  | (52,489        | )       |               |  | (112,070       | )       |             |  | 1,041             |         |  |  | 454,900    |            |   |  | (113,212 | )      
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Loss before taxes                                   |                                                            |  | (1,137,471             | )       |           |  | (1,268,589     | )       |               |  | (476,298       | )       |             |  | (247,065          | )       |  |  | 2,310,295  |            |   |  | (819,128 | )      
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Income taxes                                        |                                                            |  |                       |         |           |  |               |         |               |  |               |         |             |  | (3,332            | )       |  |  | 3,003      |            |   |  | (329     | )      
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Net (loss) income in accordance with
Norwegian GAAP |                                                            |  | (1,137,471             | )       |           |  | (1,268,589     | )       |               |  | (476,298       | )       |             |  | (250,397          | )       |  |  | 2,313,298  |            |   |  | (819,457 | )      
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        
|Net (loss) income in accordance with
U.S. GAAP      |                                                            |  | (1,137,471             | )       |           |  | (1,266,758     | )       |               |  | (476,298       | )       |             |  | (250,397          | )       |  |  | 2,313,298  |            |   |  | (817,626 | )      
|                                                    |                                                            |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |            |            |   |  |          |        

94



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002

|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |         | 
|--------------------------------------------------- | --------------------------------------------------------- |  | ---------------------- | ------- | --------- |  | -------------- | ------- | ------------- |  | -------------- | ------- | ----------- |  | ----------------- | ------- |  |  | -------- | -------- | - |  | -------- | ------- | 
|                                                    |                                                           |  |                        |         |           |  | Parent         |         | Subsidiary    |  | Non-Guarantor  |         | Elimination |  | Consolidated     
|                                                    |                                                           |  | Issuer                 |         | Guarantor |  | Guarantor      |         | Subsidiaries  |  | Entries        |         | Totals     
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |            
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  | Ocean Rig 3 AS    |         |  |  |          |          |   |  |         
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  | and               |         |  |  |          |          |   |  |         
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  | Ocean Rig 4 AS    |         |  |  |          |          |   |  |         
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  | Ocean Rig 1 AS |         | and other   |  |                   |         |  |  |          |          |  
|                                                    |                                                           |  | Ocean Rig              |         | Ocean Rig |  | and            |         | non-guarantor |  |                |         |             |  | Ocean Rig ASA and
|                                                    |                                                           |  | Norway AS              |         | ASA       |  | Ocean Rig 2 AS |         | subsidiaries  |  |                |         |             |  | Subsidiaries     
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                  
|                                                    |                                                           |  | NOK                    |         | NOK       |  | NOK            |         | NOK           |  | NOK            |         | NOK        
|                                                    |                                                           |  | (amounts in thousands)
|Operating revenues                                  |                                                           |  | 76,187                 |         |           |  | 76,187         |         |               |  | 367,319        |         |             |  | 265,237           |         |  |  | (250,599 | )        |   |  | 534,331  |        
|Operating expenses:                                 |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|                                                    | Salaries and other personnel expenses                     |  |                        |        |           |  |                | 20,005  |               |  |                | 50,558  |             |  |                   | 95,633  |  |  |          | (1,861   | ) |  |          | 164,335 | 
|                                                    | Other operating and administrative
expenses               |  |                        | 76,178  |           |  |                | 58,971  |               |  |                | 295,588 |             |  |                   | 186,722 |  |  |          | (228,791 | ) |  |          | 388,668 | 
|                                                    | Depreciation and amortization and
asset impairment losses |  |                        |        |           |  |                | 6,646   |               |  |                | 136,250 |             |  |                   | 1,060   |  |  |          | 16,630   |   |  |          | 160,586 | 
|                                                    | Equity in investee losses                                 |  |                        | 187,041 |           |  |                | (42,187 | )             |  |                |        |             |  |                   |        |  |  |          | (144,854 | ) |  |          |        | 
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Total operating expenses                            |                                                           |  | 263,219                |         |           |  | 43,435         |         |               |  | 482,396        |         |             |  | 283,415           |         |  |  | (358,876 | )        |   |  | 713,589  |        
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Operating loss                                      |                                                           |  | (187,032               | )       |           |  | (32,752        | )       |               |  | (115,077       | )       |             |  | (18,178           | )       |  |  | 108,277  |          |   |  | (179,258 | )      
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Interest and other financial income                 |                                                           |  | 798,117                |         |           |  | 80,011         |         |               |  | 228,057        |         |             |  | 13,684            |         |  |  | (133,506 | )        |   |  | 986,363  |        
|Interest and other financial expenses               |                                                           |  | (533,842               | )       |           |  | (162,182       | )       |               |  | (320,090       | )       |             |  | (16,835           | )       |  |  | 434,994  |          |   |  | (597,955 | )      
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Net financial income (expense)                      |                                                           |  | 264,275                |         |           |  | (82,171        | )       |               |  | (92,033        | )       |             |  | (3,151            | )       |  |  | 301,488  |          |   |  | 388,408  |        
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Loss before taxes                                   |                                                           |  | 77,243                 |         |           |  | (49,419        | )       |               |  | (207,110       | )       |             |  | (21,329           | )       |  |  | 409,765  |          |   |  | 209,150  |        
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Income taxes                                        |                                                           |  |                       |         |           |  |               |         |               |  |               |         |             |  | 950               |         |  |  | (972     | )        |   |  | (22      | )      
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Net (loss) income in accordance with
Norwegian GAAP |                                                           |  | 77,243                 |         |           |  | (49,419        | )       |               |  | (207,110       | )       |             |  | (20,379           | )       |  |  | 408,793  |          |   |  | 209,128  |        
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        
|Net (loss) income in accordance with
U.S. GAAP      |                                                           |  | 77,243                 |         |           |  | (22,925        | )       |               |  | (207,110       | )       |             |  | (20,379           | )       |  |  | 408,793  |          |   |  | 235,622  |        
|                                                    |                                                           |  |                        |         |           |  |                |         |               |  |                |         |             |  |                   |         |  |  |          |          |   |  |          |        

95



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001

|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|---------------------------------------------------------------------------- |  | ---------------------- | --------- | ---------- |  | ---------- | --------- | ------------- |  | -------------- | --------- | ----------- |  | ----------------- | -------- | - |  |  | ---------- | - |  |  | --------- | 
|                                                                             |  |                        |           |            |  | Parent     |           | Subsidiary    |  | Non-Guarantor  |           | Elimination |  | Consolidated     
|                                                                             |  | Issuer                 |           | Guarantors |  | Guarantors |           | Subsidiaries  |  | Entries        |           | Totals     
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |            
|                                                                             |  |                        |           |            |  |            |           | OR 3 AS,      |  |                |           |            
|                                                                             |  |                        |           |            |  |            |           | OR 4 AS       |  |                |           |            
|                                                                             |  |                        |           |            |  |            |           | and           |  |                |           |            
|                                                                             |  |                        |           |            |  |            |           |               |  | Ocean Rig 1 AS |           | other       |  |                   |          |   |  |  |            |  
|                                                                             |  | Ocean Rig              |           | Ocean Rig  |  | and        |           | non-guarantor |  |                |           |             |  | Ocean Rig ASA and
|                                                                             |  | Norway AS              |           | ASA        |  | Or 2 AS    |           | Subsidiaries  |  |                |           |             |  | subsidiaries     
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                  
|                                                                             |  | NOK                    |           | NOK        |  | NOK        |           | NOK           |  | NOK            |           | NOK        
|                                                                             |  | (Amounts in thousands)
|ASSETS                                                                      
|Construction-in-progress                                                     |  |                        |          |            |  |            |          |               |  |                | 3,052,131 |             |  |                   | 359,137  |   |  |  | 555,229    |   |  |  | 3,966,497 | 
|Machinery and equipment                                                      |  |                        |          |            |  |            | 311       |               |  |                | 3,018,298 |             |  |                   | 1,896    |   |  |  | 585,067    |   |  |  | 3,605,542 | 
|Long term receivables and other assets                                       |  |                        | 56,053    |            |  |            | 51,772    |               |  |                | 19,163    |             |  |                   | 4,309    |   |  |  |           |   |  |  | 131,297   | 
|Intercompany loan receivable                                                 |  |                        | 5,630,206 |            |  |            | 267,578   |               |  |                | 180,319   |             |  |                   | 23,718   |   |  |  | (6,101,821 | ) |  |  |          | 
|Investment at equity                                                         |  |                        |          |            |  |            | 2,398,049 |               |  |                |          |             |  |                   |         |   |  |  | (2,398,049 | ) |  |  |          | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total non-current assets                                                     |  |                        | 5,686,259 |            |  |            | 2,717,710 |               |  |                | 6,269,911 |             |  |                   | 389,060  |   |  |  | (7,359,604 | ) |  |  | 7,703,336 | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Other current assets                                                         |  |                        |          |            |  |            | 3,091     |               |  |                | 49,682    |             |  |                   | 8,550    |   |  |  |           |   |  |  | 61,323    | 
|Restricted cash                                                              |  |                        |          |            |  |            | 6,219     |               |  |                | 245,030   |             |  |                   | 2,245    |   |  |  |           |   |  |  | 253,494   | 
|Cash and cash equivalents                                                    |  |                        | 134       |            |  |            | 133,362   |               |  |                | 28,420    |             |  |                   | 8,289    |   |  |  |           |   |  |  | 170,205   | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total current assets                                                         |  |                        | 134       |            |  |            | 142,672   |               |  |                | 323,132   |             |  |                   | 19,084   |   |  |  |           |   |  |  | 485,022   | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total assets                                                                 |  |                        | 5,686,393 |            |  |            | 2,860,382 |               |  |                | 6,593,043 |             |  |                   | 408,144  |   |  |  | (7,359,604 | ) |  |  | 8,188,358 | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                        
|Share capital                                                                |  |                        | 2,239,907 |            |  |            | 1,682,316 |               |  |                | 256,600   |             |  |                   | 1,113    |   |  |  | (2,497,620 | ) |  |  | 1,682,316
|Other equity                                                                 |  |                        | (145,153  | )          |  |            | (27,886   | )             |  |                | (359,343  | )           |  |                   | (297,074 | ) |  |  | 1,950,428  |   |  |  | 1,120,972 | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total shareholders equity                                                   |  |                        | 2,094,754 |            |  |            | 1,654,430 |               |  |                | (102,743  | )           |  |                   | (295,961 | ) |  |  | (547,192   | ) |  |  | 2,803,288 | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Pension liabilities                                                          |  |                        |          |            |  |            | 1,088     |               |  |                |          |             |  |                   |         |   |  |  |           |   |  |  | 1,088     | 
|Intercompany loan payable                                                    |  |                        |          |            |  |            | 51        |               |  |                | 5,712,324 |             |  |                   | 690,399  |   |  |  | (6,402,774 | ) |  |  |          | 
|Convertible loans                                                            |  |                        |          |            |  |            | 1,052,500 |               |  |                |          |             |  |                   |         |   |  |  |           |   |  |  | 1,052,500 | 
|Long-term debt                                                               |  |                        | 3,158,750 |            |  |            |          |               |  |                | 848,359   |             |  |                   | 1,032    |   |  |  | (1,032     | ) |  |  | 4,007,109 | 
|Accumulated losses of unconsolidated
losses in excess of investment          |  |                        | 408,606   |            |  |            |          |               |  |                |          |             |  |                   |         |   |  |  | (408,606   | ) |  |  |          | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total long-term liabilities                                                  |  |                        | 3,567,356 |            |  |            | 1,053,639 |               |  |                | 6,560,683 |             |  |                   | 691,431  |   |  |  | (6,812,412 | ) |  |  | 5,060,697 | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Accounts payable                                                             |  |                        |          |            |  |            | 6,334     |               |  |                | 78,880    |             |  |                   | 4,338    |   |  |  |           |   |  |  | 89,552    | 
|Other current liabilities                                                    |  |                        | 24,283    |            |  |            | 145,979   |               |  |                | 56,223    |             |  |                   | 8,336    |   |  |  |           |   |  |  | 234,821   | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total current liabilities                                                    |  |                        | 24,283    |            |  |            | 152,313   |               |  |                | 135,103   |             |  |                   | 12,674   |   |  |  |           |   |  |  | 324,373   | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total liabilities and shareholders
equity in accordance with Norwegian
GAAP |  |                        | 5,686,393 |            |  |            | 2,860,382 |               |  |                | 6,593,043 |             |  |                   | 408,144  |   |  |  | (7,359,604 | ) |  |  | 8,188,358 | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Shareholders equity in accordance
with U.S. GAAP                            |  |                        | 2,094,754 |            |  |            | 1,654,437 |               |  |                | (102,743  | )           |  |                   | (295,961 | ) |  |  | (547,192   | ) |  |  | 2,803,295 | 
|                                                                             |  |                        |           |            |  |            |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 

96



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements
 (Continued)

CONDENSED CONSOLIDATED BALANCE
SHEETSAS OF DECEMBER 31, 2002

|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|---------------------------------------------------------------------------- |  | ---------------------- | --------- | --------- |  | -------------- | --------- | ------------- |  | -------------- | --------- | ----------- |  | ----------------- | -------- | - |  |  | ---------- | - |  |  | --------- | 
|                                                                             |  |                        |           |           |  | Parent         |           | Subsidiary    |  | Non-Guarantor  |           | Elimination |  | Consolidated     
|                                                                             |  | Issuer                 |           | Guarantor |  | Guarantor      |           | Subsidiaries  |  | Entries        |           | Totals     
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |            
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  | Ocean Rig 3 AS    |          |   |  |  |            |   |  | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  | and               |          |   |  |  |            |   |  | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  | Ocean Rig 4 AS    |          |   |  |  |            |   |  | 
|                                                                             |  |                        |           |           |  |                |           |               |  | Ocean Rig 1 AS |           | And other   |  |                   |          |   |  |  |            |  
|                                                                             |  | Ocean Rig              |           | Ocean Rig |  | and            |           | non-guarantor |  |                |           |             |  | Ocean Rig ASA and
|                                                                             |  | Norway AS              |           | ASA       |  | Ocean Rig 2 AS |           | subsidiaries  |  |                |           |             |  | Subsidiaries     
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                  
|                                                                             |  | NOK                    |           | NOK       |  | NOK            |           | NOK           |  | NOK            |           | NOK        
|                                                                             |  | (amounts in thousands)
|ASSETS                                                                       |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Machinery and equipment                                                      |  |                        |          |           |  |                | 78,601    |               |  |                | 7,075,927 |             |  |                   | 2,399    |   |  |  | 1,398,798  |   |  |  | 8,555,725 | 
|Long-term receivables and other assets                                       |  |                        | 47,305    |           |  |                | 30,641    |               |  |                | 8,421     |             |  |                   | 7,553    |   |  |  |           |   |  |  | 93,920    | 
|Intercompany loan receivable                                                 |  |                        | 5,931,657 |           |  |                | 14,093    |               |  |                | 69,530    |             |  |                   | 22,273   |   |  |  | (6,037,553 | ) |  |  |          | 
|Investment at equity                                                         |  |                        | 174,353   |           |  |                | 3,965,124 |               |  |                |          |             |  |                   |         |   |  |  | (4,139,477 | ) |  |  |          | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total non-current assets                                                     |  |                        | 6,153,315 |           |  |                | 4,088,459 |               |  |                | 7,153,878 |             |  |                   | 32,225   |   |  |  | (8,778,232 | ) |  |  | 8,649,645 | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Other current assets                                                         |  |                        |          |           |  |                | 6,110     |               |  |                | 80,188    |             |  |                   | 34,454   |   |  |  | (442       | ) |  |  | 120,310   | 
|Restricted cash                                                              |  |                        |          |           |  |                | 1,275     |               |  |                | 3,700     |             |  |                   | 3,652    |   |  |  |           |   |  |  | 8,627     | 
|Cash and cash equivalents                                                    |  |                        | 106       |           |  |                | 83,196    |               |  |                | 39,060    |             |  |                   | 14,984   |   |  |  |           |   |  |  | 137,346   | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |            
|Total current assets                                                         |  |                        | 106       |           |  |                | 90,581    |               |  |                | 122,948   |             |  |                   | 53,090   |   |  |  | (442       | ) |  |  | 266,283   | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total assets                                                                 |  |                        | 6,153,421 |           |  |                | 4,179,040 |               |  |                | 7,276,826 |             |  |                   | 85,315   |   |  |  | (8,778,674 | ) |  |  | 8,915,928 | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Share capital                                                                |  |                        | 2,699,651 |           |  |                | 492,887   |               |  |                | 504,100   |             |  |                   | 1,105    |   |  |  | (3,204,856 | ) |  |  | 492,887   | 
|Other equity                                                                 |  |                        | 997,234   |           |  |                | 2,539,568 |               |  |                | (25,714   | )           |  |                   | (317,484 | ) |  |  | 771,549    |   |  |  | 3,965,153 | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total shareholders equity                                                   |  |                        | 3,696,885 |           |  |                | 3,032,455 |               |  |                | 478,386   |             |  |                   | (316,379 | ) |  |  | (2,433,307 | ) |  |  | 4,458,040 | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Pension liabilities                                                          |  |                        |          |           |  |                | 591       |               |  |                |          |             |  |                   |         |   |  |  |           |   |  |  | 591       | 
|Intercompany loans payable                                                   |  |                        |          |           |  |                | 5,691     |               |  |                | 5,979,545 |             |  |                   | 359,633  |   |  |  | (6,344,869 | ) |  |  |           | 
|Notes and loans, convertible debt                                            |  |                        | 2,438,100 |           |  |                | 996,143   |               |  |                | 667,393   |             |  |                   | 60       |   |  |  | (59        | ) |  |  | 4,101,637 | 
|Accumulated losses of unconsolidated
losses in excess of investment          |  |                        |          |           |  |                |          |               |  |                |          |             |  |                   |         |   |  |  |           |   |  |  |          | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |            
|Total long-term liabilities                                                  |  |                        | 2,438,100 |           |  |                | 1,002,425 |               |  |                | 6,646,938 |             |  |                   | 359,693  |   |  |  | (6,344,928 | ) |  |  | 4,102,228 | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |            
|Commitments and contingencies                                                |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Accounts payable                                                             |  |                        |          |           |  |                | 5,908     |               |  |                | 44,306    |             |  |                   | 8,985    |   |  |  |           |   |  |  | 59,199    | 
|Short term loan                                                              |  |                        |          |           |  |                | 84,322    |               |  |                |          |             |  |                   |         |   |  |  |            |   |  |  | 84,322    | 
|Other current liabilities                                                    |  |                        | 18,436    |           |  |                | 53,930    |               |  |                | 107,196   |             |  |                   | 33,016   |   |  |  | (439       | ) |  |  | 212,139   | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total current liabilities                                                    |  |                        | 18,436    |           |  |                | 144,160   |               |  |                | 151,502   |             |  |                   | 42,001   |   |  |  | (439       | ) |  |  | 355,660   | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Total liabilities and shareholders
equity in accordance with Norwegian
GAAP |  |                        | 6,153,421 |           |  |                | 4,179,040 |               |  |                | 7,276,826 |             |  |                   | 85,315   |   |  |  | (8,778,674 | ) |  |  | 8,915,928 | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 
|Shareholders equity in accordance
with U.S. GAAP                            |  |                        | 3,696,885 |           |  |                | 3,058,887 |               |  |                | 478,386   |             |  |                   | (316,379 | ) |  |  | (2,433,307 | ) |  |  | 4,484,472 | 
|                                                                             |  |                        |           |           |  |                |           |               |  |                |           |             |  |                   |          |   |  |  |            |   |  |  |           | 

97



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##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000

|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |         |         | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | -------------------------------------------- | -------- | ---------------------- | ------- | --------- | -------- | -------------- | ------- | ------------- | -------- | -------------- | - | ----------- | ------- | ----------------- | - |  | --------- | -------- | -------- | - | ---------- | ------- | ------- | 
|                                                                                                   |                                                               |                                              |          |                        |         |           |          | Parent         |         | Subsidiary    |          | Non-Guarantor  |   | Elimination |         | Consolidated     
|                                                                                                   |                                                               |                                              |          | Issuer                 |         | Guarantor |          | Guarantor      |         | Subsidiaries  |          | Entries        |   | Totals     
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |            
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         | Ocean Rig 3 AS    |   |  |           |          |          |   |            |        
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         | and               |   |  |           |          |          |   |            |        
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         | Ocean Rig 4 AS    |   |  |           |          |          |   |            |        
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          | Ocean Rig 1 AS |   | and other   |         |                   |   |  |           |          |          |  
|                                                                                                   |                                                               |                                              |          | Ocean Rig              |         | Ocean Rig |          | and            |         | non-guarantor |          |                |   |             |         | Ocean Rig ASA and
|                                                                                                   |                                                               |                                              |          | Norway AS              |         | ASA       |          | Ocean Rig 2 AS |         | subsidiaries  |          |                |   |             |         | Subsidiaries     
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |            
|                                                                                                   |                                                               |                                              |          | NOK                    |         | NOK       |          | NOK            |         | NOK           |          | NOK            |   | NOK        
|                                                                                                   |                                                               |                                              |          | (amounts in thousands)
|Cash Flows From Operating Activities:                                                              |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Net loss                                                                                           |                                                               |                                              | (663,344 | )                      |         |           | (664,322 | )              |         |               | (36,282  | )              |   |             | (26,389 | )                 |   |  | 1,060,404 |          |          |   | (329,934   | )      
|Adjustments to reconcile net (loss)
income to net cash provided by (used
in) operating activities: |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|                                                                                                   | Equity in investee losses                                     |                                              |          | 69,944                 |         |           |          | 657,284        |         |               |          |               |   |             |         |                  |   |  |           | (727,231 | )        |   |            |        |        
|                                                                                                   | Depreciation and amortization                                 |                                              |          | 8,745                  |         |           |          | 1,341          |         |               |          |               |   |             |         | 2,903             |   |  |           | 1,833    |          |   |            | 14,822  |        
|                                                                                                   | Asset impairment write-down                                   |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |         |        
|                                                                                                   | Net unrealized foreign exchange loss                          |                                              |          | 280,278                |         |           |          | (5,603         | )       |               |          | (1,785         | ) |             |         | (211              | ) |  |           | 877      |          |   |            | 273,556 |        
|Changes in operating assets and
liabilities:                                                       |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|                                                                                                   | Other current assets                                          |                                              |          | (1                     | )       |           |          | (3,049         | )       |               |          | (3,777         | ) |             |         | (210              | ) |  |           | (889     | )        |   |            | (372    | )      
|                                                                                                   | Accounts payable                                              |                                              |          |                       |         |           |          | (5,281         | )       |               |          | 26,159         |   |             |         | (42               | ) |  |           | 1,548    |          |   |            | 22,384  |        
|                                                                                                   | Other liabilities                                             |                                              |          | 375                    |         |           |          | 4,960          |         |               |          | (62            | ) |             |         | 48                |   |  |           | (15,214  | )        |   |            | (9,893  | )      
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Net cash (used in) provided by
operating activities                                                |                                                               |                                              | (304,003 | )                      |         |           | (14,667  | )              |         |               | (8,193   | )              |   |             | (23,901 | )                 |   |  | (321,328  | )        |          |   | (29,437    | )      
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Cash Flows From Investing Activities:                                                              |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Payments related to building contracts
and machinery and equipment                                 |                                                               |                                              |         |                        |         |           |         |                |         |               | (921,352 | )              |   |             | (1,805  | )                 |   |  | (309,099  | )        |          |   | (1,232,256 | )      
|                                                                                                   | Change in restricted cash                                     |                                              |          | 1,371                  |         |           |          | (10,503        | )       |               |          | 484,570        |   |             |         | (220              | ) |  |           |         |          |   |            | 475,218 |        
|                                                                                                   | Net change in long-term receivables
and intercompany balances |                                              |          | (396,470               | )       |           |          | (789,553       | )       |               |          | 449,118        |   |             |         | 49,122            |   |  |           | 687,772  |          |   |            | (11     | )      
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Net cash provided by (used in)
investing activities                                                |                                                               |                                              | (395,099 | )                      |         |           | (800,056 | )              |         |               | 12,336   |                |   |             | 47,097  |                   |   |  | 378,673   |          |          |   | (757,049   | )      
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Cash Flows from Financing
Activities:                                                              |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|                                                                                                   |                                                               | Proceeds from the issuance common
shares     |          |                        | 700,000 |           |          |                | 337,528 |               |          |                |  |             |         |                   |  |  |           |          | (700,000 | ) |            |         | 337,528 | 
|                                                                                                   |                                                               | Net proceeds from issuance of
long term debt |          |                        |        |           |          |                | 480,171 |               |          |                |  |             |         |                   |  |  |           |          |         |   |            |         | 480,171 | 
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Net cash provided by financing
activities                                                          |                                                               |                                              | 700,000  |                        |         |           | 817,699  |                |         |               |         |                |   |             |        |                   |   |  | (700,000  | )        |          |   | 817,699    |        
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Effect of exchange rate changes in cash                                                            |                                                               |                                              | 72       |                        |         |           | 4,772    |                |         |               | 1,785    |                |   |             | 73      |                   |   |  |          |          |          |   | 6,702      |        
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Net increase in cash during the year                                                               |                                                               |                                              | 970      |                        |         |           | 7,748    |                |         |               | 5,928    |                |   |             | 23,269  |                   |   |  |          |          |          |   | 37,915     |        
|Cash and cash equivalents at beginning
of year                                                     |                                                               |                                              | 2,487    |                        |         |           | 534,147  |                |         |               | 19,483   |                |   |             | 19,686  |                   |   |  |          |          |          |   | 578,803    |        
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        
|Cash and cash equivalents at end of
year                                                           |                                                               |                                              | 3,457    |                        |         |           | 541,895  |                |         |               | 25,411   |                |   |             | 42,955  |                   |   |  |          |          |          |   | 613,718    |        
|                                                                                                   |                                                               |                                              |          |                        |         |           |          |                |         |               |          |                |   |             |         |                   |   |  |           |          |          |   |            |        

98



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001

|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |            |           | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | -------------------------------------------- | ---------- | ---------------------- | --------- | --------- | ---------- | -------------- | ------- | ------------- | --------- | -------------- | ------- | ----------- | -------- | ----------------- | --- |  | ---------- | ---------- | ---------- | - | ---------- | ---------- | --------- | 
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            | Parent         |         | Subsidiary    |           | Non-Guarantor  |         | Elimination |          | Consolidated     
|                                                                                                   |                                                                    |                                              |            | Issuer                 |           | Guarantor |            | Guarantor      |         | Subsidiaries  |           | Entries        |         | Totals     
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |            
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          | Ocean Rig 3 AS    |     |  |            |            |            |   |            |           
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          | and               |     |  |            |            |            |   |            |           
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          | Ocean Rig 4 AS    |     |  |            |            |            |   |            |           
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           | Ocean Rig 1 AS |         | and         |          |                   |     |  |            |            |            |  
|                                                                                                   |                                                                    |                                              |            | Ocean Rig              |           | Ocean Rig |            | and            |         | non-guarantor |           |                |         |             |          | Ocean Rig ASA and
|                                                                                                   |                                                                    |                                              |            | Norway AS              |           | ASA       |            | Ocean Rig 2 AS |         | subsidiaries  |           |                |         |             |          | Subsidiaries     
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                  
|                                                                                                   |                                                                    |                                              |            | NOK                    |           | NOK       |            | NOK            |         | NOK           |           | NOK            |         | NOK        
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |            
|                                                                                                   |                                                                    |                                              |            | (amounts in thousands)
|Cash Flows From Operating Activities:                                                              |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Net loss                                                                                           |                                                                    |                                              | (1,137,471 | )                      |           |           | (1,268,589 | )              |         |               | (476,298  | )              |         |             | (250,397 | )                 |     |  | 2,313,298  |            |            |   | (819,457   | )         
|Adjustments to reconcile net (loss)
income to net cash provided by (used
in) operating activities: |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|                                                                                                   | Equity in investee losses                                          |                                              |            | 732,802                |           |           |            | 830,509        |         |               |           |               |         |             |          |                  |     |  |            | (1,563,311 | )          |   |            |           |          
|                                                                                                   | Depreciation and amortization                                      |                                              |            | 8,746                  |           |           |            | 302,422        |         |               |           | 31,279         |         |             |          | 242,578           |     |  |            | (298,023   | )          |   |            | 287,002    |          
|                                                                                                   | Asset impairment write-down                                        |                                              |            |                       |           |           |            |               |         |               |           |               |         |             |          |                  |     |  |            |           |            |   |            |           |          
|                                                                                                   | Net unrealized foreign exchange loss                               |                                              |            | 78,399                 |           |           |            | (423           | )       |               |           | (24,134        | )       |             |          | 160               |     |  |            | 2,700      |            |   |            | 56,702     |          
|Changes in operating assets and
liabilities:                                                       |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|                                                                                                   | Other current assets                                               |                                              |            |                       |           |           |            | 1,813          |         |               |           | (49,675        | )       |             |          | 8,925             |     |  |            | (5,632     | )          |   |            | (44,569    | )        
|                                                                                                   | Accounts payable                                                   |                                              |            |                       |           |           |            | (995           | )       |               |           | 44,287         |         |             |          | 1,193             |     |  |            | 5,633      |            |   |            | 50,118     |          
|                                                                                                   | Other liabilities                                                  |                                              |            | (4,579                 | )         |           |            | 112,395        |         |               |           | (38,431        | )       |             |          | (370              | )   |  |            | (7,705     | )          |   |            | 61,310     |          
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Net cash (used in) provided by
operating activities                                                |                                                                    |                                              | (322,103   | )                      |           |           | (22,868    | )              |         |               | (512,972  | )              |         |             | 2,089    |                   |     |  | 446,960    |            |            |   | (408,894   | )         
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Cash Flows From Investing Activities:                                                              |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|                                                                                                   | Payments related to building
contracts and machinery and
equipment |                                              |            |                       |           |           |            | 94             |         |               |           | (1,122,641     | )       |             |          | 300               |     |  |            | (441,751   | )          |   |            | (1,563,998 | )        
|                                                                                                   | Change in restricted cash                                          |                                              |            | 254                    |           |           |            | 5,434          |         |               |           | (222,212       | )       |             |          | (1,011            | )   |  |            |           |            |   |            | (217,535   | )        
|                                                                                                   | Investment in subsidiaries                                         |                                              |            | (513,000               | )         |           |            | (1,512,094     | )       |               |           |               |         |             |          |                  |     |  |            | 2,025,094  |            |   |            |           |          
|                                                                                                   | Net change in long-term receivables
and intercompany balances      |                                              |            | (680,240               | )         |           |            | 145,854        |         |               |           | 562,951        |         |             |          | (36,373           | )   |  |            | 3,549      |            |   |            | (4,259     | )        
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Net cash provided by (used in)
investing activities                                                |                                                                    |                                              | (1,192,986 | )                      |           |           | (1,360,712 | )              |         |               | (781,902  | )              |         |             | (37,084  | )                 |     |  | 1,586,892  |            |            |   | (1,785,792 | )         
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Cash Flows from Financing
Activities:                                                              |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|                                                                                                   |                                                                    | Proceeds from the issuance common
shares     |            |                        | 1,511,765 |           |            |                | 444,711 |               |           |                | 513,000 |             |          |                   | 329 |  |            |            | (2,025,094 | ) |            |            | 444,711   | 
|                                                                                                   |                                                                    | Net proceeds from issuance of
long term debt |            |                        |          |           |            |                | 521,344 |               |           |                | 794,110 |             |          |                   |    |  |            |            |           |   |            |            | 1,315,454 | 
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Net cash provided by financing
activities                                                          |                                                                    |                                              | 1,511,765  |                        |           |           | 966,055    |                |         |               | 1,307,110 |                |         |             | 329      |                   |     |  | (2,025,094 | )          |            |   | 1,760,165  |           
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Effect of exchange rate changes in cash                                                            |                                                                    |                                              | 1          |                        |           |           | 234        |                |         |               | (9,227    | )              |         |             |         |                   |     |  |           |            |            |   | (8,992     | )         
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Net increase in cash during the year                                                               |                                                                    |                                              | (3,323     | )                      |           |           | (417,291   | )              |         |               | 3,009     |                |         |             | (34,666  | )                 |     |  | 8,758      |            |            |   | (443,513   | )         
|Cash and cash equivalents at beginning
of year                                                     |                                                                    |                                              | 3,457      |                        |           |           | 541,895    |                |         |               | 25,411    |                |         |             | 42,955   |                   |     |  |           |            |            |   | 613,718    |           
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           
|Cash and cash equivalents at end of
year                                                           |                                                                    |                                              | 134        |                        |           |           | 124,604    |                |         |               | 28,420    |                |         |             | 8,289    |                   |     |  | 8,758      |            |            |   | 170,205    |           
|                                                                                                   |                                                                    |                                              |            |                        |           |           |            |                |         |               |           |                |         |             |          |                   |     |  |            |            |            |   |            |           

99



---



##### 



OCEAN RIG ASA AND SUBSIDIARIES

Notes To Financial Statements  (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2002

|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |       |            |         | 
|-------------------------------------------------------------------------------------------------- | ------------------------------- | ------------------------------------------------------------------ | ---------------------------------------- | - | ---------------------- | --------- | ---------- | - | -------------- | ------- | ------------- | - | -------------- | ------- | ----------- | ------- | ----------------- | - | ---------- | ------ | --------- | ---------- | ---------- | ----- | ---------- | ------- | 
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   | Parent         |         | Subsidiary    |   | Non-Guarantor  |         | Elimination |         | Consolidated     
|                                                                                                   |                                 |                                                                    |                                          |   | Issuer                 |           | Guarantor  |   | Guarantor      |         | Subsidiaries  |   | Entries        |         | Totals     
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |            
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         | Ocean Rig 3 AS    |   |            |        |           |            |            |       |           
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         | and               |   |            |        |           |            |            |       |           
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         | Ocean Rig 4 AS    |   |            |        |           |            |            |       |           
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   | Ocean Rig 1 AS |         | and         |         |                   |   |            |        |           |            |           
|                                                                                                   |                                 |                                                                    |                                          |   | Ocean Rig              |           | Ocean Rig  |   | and            |         | non-guarantor |   |                |         |             |         | Ocean Rig ASA and
|                                                                                                   |                                 |                                                                    |                                          |   | Norway AS              |           | ASA        |   | Ocean Rig 2 AS |         | subsidiaries  |   |                |         |             |         | Subsidiaries     
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                  
|                                                                                                   |                                 |                                                                    |                                          |   | NOK                    |           | NOK        |   | NOK            |         | NOK           |   | NOK            |         | NOK        
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |            
|                                                                                                   |                                 |                                                                    |                                          |   | (amounts in thousands)
|Cash Flows From Operating Activities:                                                              |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Net income / (loss)                                                                                |                                 |                                                                    | 77,243                                   |   |                        |           | (49,419    | ) |                |         | (207,110      | ) |                |         | (21,329     | )       |                   |   | 409,743    |        |           |            | 209,128    |      
|Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities: |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|                                                                                                   |                                 | Equity in investee losses                                          |                                          |   | 187,041                |           |            |   | (42,187        | )       |               |   |               |         |             |         |                  |   |            |        | (144,854  | )          |            |       |           |        
|                                                                                                   |                                 | Depreciation and amortization                                      |                                          |   | 8,748                  |           |            |   | 86,275         |         |               |   | 204,428        |         |             |         | 1,060             |   |            |        | 16,630    |            |            |       | 317,141    |        
|                                                                                                   | Gain / loss from sale of assets |                                                                    |                                          |  |                        |           |            |  |                |         |               |  |                |         |             | (18,007 | )                 |   |            | 20,258 |           |            |            | 2,251 |           
|                                                                                                   |                                 | Net unrealized foreign exchange gain / loss                        |                                          |   | (720,646               | )         |            |   | (756           | )       |               |   | (183,156       | )       |             |         | 730               |   |            |        | 282,415   |            |            |       | (621,413   | )      
|Changes in operating assets and liabilities:                                                       |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|                                                                                                   |                                 | Other current assets                                               |                                          |   |                       |           |            |   | (3,019         | )       |               |   | (25,090        | )       |             |         | (29,933           | ) |            |        | (945      | )          |            |       | (58,987    | )      
|                                                                                                   |                                 | Accounts payable                                                   |                                          |   |                       |           |            |   | (426           | )       |               |   | (34,574        | )       |             |         | 4,647             |   |            |        |          |            |            |       | (30,353    | )      
|                                                                                                   |                                 | Other liabilities                                                  |                                          |   | (5,847                 | )         |            |   | (92,545        | )       |               |   | 20,391         |         |             |         | 24,637            |   |            |        | 94,880    |            |            |       | 41,516     |        
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Net cash (used in) provided by operating activities                                                |                                 |                                                                    | (453,461                                 | ) |                        |           | (102,077   | ) |                |         | (225,111      | ) |                |         | (38,195     | )       |                   |   | 678,127    |        |           |            | (140,717   | )    
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Cash Flows From Investing Activities:                                                              |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|                                                                                                   |                                 | Payments related to building contracts and
machinery and equipment |                                          |   |                       |           |            |   | (78,572        | )       |               |   | (1,448,848     | )       |             |         | 1,735             |   |            |        | (376,999  | )          |            |       | (1,906,154 | )      
|                                                                                                   |                                 | Change in restricted cash                                          |                                          |   |                       |           |            |   | 4,944          |         |               |   | 241,329        |         |             |         | 1,406             |   |            |        |          |            |            |       | 244,867    |        
|                                                                                                   |                                 | Sale of fixed assets                                               |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         | 377,313           |   |            |        | 17        |            |            |       | 377,330    |        
|                                                                                                   |                                 | Net change in long-term receivables and
intercompany balances      |                                          |   | (1,071,451             | )         |            |   | (1,275,377     | )       |               |   | 685,729        |         |             |         | (329,277          | ) |            |        | 1,993,743 |            |            |       | 3,367      |        
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Net cash provided by (used in) investing activities                                                |                                 |                                                                    | (1,071,451                               | ) |                        |           | (1,349,005 | ) |                |         | (521,790      | ) |                |         | 44,895      |         |                   |   | 1,616,761  |        |           |            | (1,280,590 | )    
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Cash Flows from Financing Activities:                                                              |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|                                                                                                   |                                 |                                                                    | Proceeds from the issuance common shares |   |                        | 1,524,888 |            |   |                | 831,484 |               |   |                | 770,000 |             |         |                   |  |            |        |           | (2,294,888 | )          |       |            | 831,484 | 
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|                                                                                                   |                                 |                                                                    | Proceeds from issuance of long term debt |   |                        |          |            |   |                | 578,453 |               |   |                | (12,355 | )           |         |                   |  |            |        |           |           |            |       |            | 566,098 | 
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Net cash provided by financing activities                                                          |                                 |                                                                    |                                         |   |                        |           | 1,409,937  |   |                |         | 757,645       |   |                |         |            |         |                   |   | (2,294,888 | )      |           |            | 1,397,582  |      
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Effect of exchange rate changes in cash                                                            |                                 |                                                                    | (4                                       | ) |                        |           | (9,021     | ) |                |         | (105          | ) |                |         | (4          | )       |                   |   |           |        |           |            | (9,134     | )    
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Net increase in cash during the year                                                               |                                 |                                                                    | (28                                      | ) |                        |           | (50,166    | ) |                |         | 10,639        |   |                |         | 6,696       |         |                   |   |           |        |           |            | (32,859    | )    
|Cash and cash equivalents at beginning of year                                                     |                                 |                                                                    | 134                                      |   |                        |           | 133,362    |   |                |         | 28,421        |   |                |         | 8,288       |         |                   |   |           |        |           |            | 170,205    |      
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      
|Cash and cash equivalents at end of year                                                           |                                 |                                                                    | 106                                      |   |                        |           | 83,196     |   |                |         | 39,060        |   |                |         | 14,984      |         |                   |   |           |        |           |            | 137,346    |      
|                                                                                                   |                                 |                                                                    |                                          |   |                        |           |            |   |                |         |               |   |                |         |             |         |                   |   |            |        |           |            |            |      

100



---



##### 



ITEM 19. EXHIBITS

|        |  |                                                                                                                                                                                                                            |  | 
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|Exhibit |  |                                                                                                                                                                                                                            |  | 
|Number  |  | Description                                                                                                                                                                                                                |  | 
|        |  |                                                                                                                                                                                                                            |  | 
|1.1     |  | Articles of association of the Company (incorporated
by reference to Exhibits 3.1, 3.2, 3.3 and 3.4 to our
registration statement on Form F-4 (Registration
Statement No. 333-9110)).                                      |  | 
|        |  |                                                                                                                                                                                                                            |  | 
|2.1     |  | Undertaking to furnish a copy of the instruments
relating to our (1) 13% subordinated convertible bonds
due 2005 and (2) 11% subordinated convertible bonds
due 2005.                                                      |  | 
|        |  |                                                                                                                                                                                                                            |  | 
|2.2     |  | Indenture, dated May 27, 1998, among Ocean Rig Norway
AS, Ocean Rig ASA, Ocean Rig 1 AS, Ocean Rig 2 AS and
the Chase Manhattan Bank (incorporated by reference to
Exhibit 4.1 to our registration statement on Form
F-4). |  | 
|        |  |                                                                                                                                                                                                                            |  | 
|2.3     |  | Form of Note for 101/4% senior secured notes due
2008 (incorporated by reference to Exhibit 4.1 to our
registration statement on Form F-4).                                                                                |  | 
|        |  |                                                                                                                                                                                                                            |  | 
|8.1     |  | Significant subsidiaries (please see Item 4,
Information on our CompanyOrganizational Structure
of this Form 20-F).                                                                                                     |  | 
|        |  |                                                                                                                                                                                                                            |  | 
|12.1    |  | Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                         |  | 
|        |  |                                                                                                                                                                                                                            |  | 
|12.2    |  | Certification of Senior Vice-President, Accounting
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                                                                                               |  | 

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.

|                                            
|--------------------------------------------
|Ocean Rig ASA                               
|                                            
|/s/ Kai Solberg-HansenKai Solberg-Hansen
CEO
|                                            
|June 28, 2003Date                           

101



---



##### 



CERTIFICATIONS

I, Kai Solberg-Hansen, certify that:

1.     I have reviewed this annual report on Form 20-F of Ocean Rig ASA;

2.     Based on my knowledge, this annual 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 annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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-14 and 15d-14) for the registrant and have:



| |  | a) designed such disclosure controls and procedures 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 annual report is
being prepared;
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| |  | c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
function):



| |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: June 28, 2003

/s/ Kai Solberg-Hansen
Kai Solberg-Hansen
Chief Executive Officer

102



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##### 



CERTIFICATIONS

I, Erling Meinich-Bache, certify that:

1.     I have reviewed this annual report on Form 20-F of Ocean Rig ASA;

2.     Based on my knowledge, this annual 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 annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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-14 and 15d-14) for the registrant and have:



|a) |  | designed such disclosure controls and procedures 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 annual report is
being prepared;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|  
|c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
function):



|a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: June 28, 2003

/s/ Erling Meinich-Bache
Erling Meinich-Bache

Senior Vice President, Accounting

103