Subsequent to arrival, an inspection of a section of the hull disclosed an unacceptable level of corrosion, which will need a dry-dock facility to perform permanent repairs. No dry-dock facilities are there in Africa for a semi submersible. So, the rig will be moved outside of Africa for additional assessment and to perform the essential repairs. The hull repairs, along with other maintenance and repairs to the unit are projected to need most of the left over term of the contract, which had been projected to end in March 2010.

Loss of revenue resulting from cancellation of the remaining contract term is projected to decrease the company’s backlog by around $140 million. The revenue loss is projected to lower second quarter 2009 results by an expected $0.03 per fully diluted share from the previous guidance provided by the company of $0.66 to $0.71 per fully diluted share, while the third and fourth quarters of 2009 are estimated to be negatively impacted by about $0.13 per fully diluted share per quarter. Further impact is projected to the financial results in the second, third and fourth quarters of 2009 resulting from the cost of mobilization and repairs, the majority of which cannot be reasonably estimated until further inspection of the rig is accomplished at the dry-dock facility.

The Pride Venezuela is a typically moored semi submersible rig, capable of operating in waters depths of around 1,500 feet. The rig started active service in 1982.