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Ship Finance International Limited : SFL - Acquisition of drilling rig

    Ship Finance International Limited : SFL - Acquisition of drilling rig

Press release from Ship Finance International Limited, July 1, 2013

Ship  Finance  International  Limited  (NYSE:  SFL)  ("Ship  Finance"  or  the 
"Company") today  announced  that  the  Company  has  agreed  to  acquire  the 
harsh-environment jack-up drilling rig West  Linus from a subsidiary of  North 
Atlantic Drilling Limited ("NADL"). West Linus is currently under construction
at Jurong Shipyard in Singapore with scheduled delivery in December 2013.

The total acquisition cost will be $600  million and the drilling rig will  be 
chartered back to NADL  on a bareboat  contract for a period  in excess of  15 
years. NADL has  been granted  four purchase  options, first  time after  five 
years and the last at  the end of the charter  period. Ship Finance will  also 
have an option to sell the rig back to NADL at the end of the charter  period. 
NADL  has   sub-chartered   the   rig   to   ConocoPhillips   Skandinavia   AS 
("ConocoPhillips") for a period  of five years with  two extension options  of 
two years each. Expected delivery to ConocoPhillips is April 2014 and the  rig 
will be  at a  mobilization rate  from the  delivery from  the shipyard  until 
commencement of the sub-charter.

$195 million of the purchase  price was paid in  June 2013, and the  remaining 
$405 million will be paid on delivery from the shipyard in December 2013.  The 
financing package will be $475 million in total, of which $70 million has been
funded now, and $405 million will be funded at delivery from the shipyard. The
$125 million  equity investment  has  been funded  from the  Company's  recent 
equity offering.

The bareboat charter rate over the first five years (excluding the four-month
mobilization period) will be approximately US$220,000 per day and the  average 
rate for the remaining 10-year  lease period will be approximately  US$115,000 
per day. The transaction will  add more than $800  million to our the  charter 
backlog, and  the  average yearly  net  cash  flow, after  interest  and  loan 
amortization, is  estimated to  be  approximately $19  million, or  $0.20  per 
share, during the first five years.

NADL is an offshore harsh environment drilling company with focus on the North
Atlantic basin. The company  has nine drilling units  in the fleet,  including 
five semi-submersible, a drillship, and  three jack-up rigs. Seadrill  Limited 
currently owns 74% of the outstanding shares and the company is listed on  the 
Oslo OTC exchange with a market capitalization of approximately $2 billion.

The bareboat charter  includes an  interest compensation  clause whereby  NADL 
will compensate us for volatility in the interest rate environment, and due to
the frontloaded nature  of the contract,  we will  be able to  repay the  loan 
amounts quickly. We expect  the rig-owning subsidiary to  be accounted for  as 
'Investment in  associate'  under US  GAAP,  similar to  our  three  deepwater 
drilling rigs on charter to Seadrill.

Ole B. Hjertaker, CEO of Ship Finance Management AS, said in a comment:  "Ship 
Finance has in  the recent  months invested nearly  $1 billion  in new  assets 
which is  a firm  commitment to  our continued  growth strategy.  We are  very 
pleased to  increase our  exposure  to the  strong  offshore industry  with  a 
state-of-the-art harsh environment jack-up drilling rig which will be employed
on a long-term drilling  contract to ConocoPhillips.  Our charter backlog  and 
long-term distribution capacity is building in an accretive manner, and  there 
is still good capacity for more investments."



July 1, 2013

The Board of Directors
Ship Finance International Limited
Hamilton, Bermuda

Investor and Analyst Contacts:
Harald Gurvin, Chief Financial Officer, Ship Finance Management AS
+47 23114009
Magnus T. Valeberg, Senior Vice President, Ship Finance Management AS
+47 23114012

Media Contact:
Ole B. Hjertaker, Chief Executive Officer, Ship Finance Management AS
+47 23114011

About Ship Finance

Ship Finance is  a major  ship owning  company listed  on the  New York  Stock 
Exchange (NYSE: SFL). Including  newbuildings, the Company has  a fleet of  70 
vessels, including  24 crude  oil  tankers (VLCC  and Suezmax),  two  chemical 
tankers,  12  drybulk   carriers,  19  container   vessels  (including   eight 
newbuildings), two  car carriers,  six offshore  supply vessels,  two  jack-up 
drilling   rigs    (including    one   newbuilding),    two    ultra-deepwater 
semi-submersible drilling rigs and one ultra-deepwater drillship. The fleet is
one of  the largest  in the  world and  most of  the vessels  are employed  on 
long-term charters. More information  can be found  on the Company's  website: 
www.shipfinance.org

Cautionary Statement Regarding Forward Looking Statements

This press release  may contain forward  looking statements. These  statements 
are based upon  various assumptions, many  of which are  based, in turn,  upon 
further  assumptions,  including  Ship  Finance  management's  examination  of 
historical  operating  trends.  Although  Ship  Finance  believes  that  these 
assumptions were  reasonable when  made,  because assumptions  are  inherently 
subject to significant uncertainties and contingencies which are difficult  or 
impossible to predict  and are beyond  its control, Ship  Finance cannot  give 
assurance that it will  achieve or accomplish  these expectations, beliefs  or 
intentions.

Important factors that, in the Company's  view, could cause actual results  to 
differ materially  from  those  discussed in  this  presentation  include  the 
strength  of  world  economies  and  currencies,  general  market   conditions 
including fluctuations in  charter hire  rates and vessel  values, changes  in 
demand in  the  tanker market  as  a result  of  changes in  OPEC's  petroleum 
production levels and worldwide  oil consumption and  storage, changes in  the 
Company's  operating  expenses  including   bunker  prices,  dry-docking   and 
insurance costs,  changes in  governmental rules  and regulations  or  actions 
taken by regulatory  authorities, potential liability  from pending or  future 
litigation, general domestic and international political conditions, potential
disruption of shipping routes due to accidents or political events, and  other 
important factors described  from time  to time in  the reports  filed by  the 
Company with the United States Securities and Exchange Commission.

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Source: Ship Finance International Limited via Thomson Reuters ONE
HUG#1713209
 
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