DOF and First Reserve to Partner for DOF Subsea

DOF To Put Forward Offer at NOK 36 Per Share Corresponding To An Equity Value Of DOF Subsea Of NOK 4.3bn

On October 27, 2008, DOF ASA (“DOF”) and First Reserve (“First Reserve”), the leading energy-focused private equity firm, entered into binding agreements whereby DOF, subject to the offer document being approved by the Oslo Stock Exchange, shall put forward an offer to acquire all of the outstanding shares of DOF Subsea ASA (“DOFSUB”) at NOK 36.00 per share in cash (the “Offer”). DOF will put forward the Offer as soon as possible and expects to launch on Wednesday 29 October 2008. As part of the agreements, DOF and First Reserve have also agreed to enter into several subsequent transactions as described herein provided the Offer is successful.

DOF is currently the majority owner of DOFSUB holding 57.17% of the share capital and has received unconditional pre-acceptances from Mr Mons Aase, the chairman of DOFSUB, in relation to his entire shareholding in DOFSUB (owned through his wholly owned company MOCO AS) representing 0.75% of the shares outstanding.

The Offer will represent a premium of 44.0% to today’s closing share price and a premium of 18.0% to the closing share price on 9 July 2008 of NOK 30.50 which was the last trading day prior to DOF announcing its intention to acquire DOFSUB. By comparison, the overall market represented by the Oslo Stock Exchange Benchmark Index has during the period from 9 July 2008 to 27 October 2008 declined by 52.0%.

The Offer will be conditional upon, among other things, a minimum acceptance level giving DOF more than 90% of the DOFSUB shares outstanding on a fully diluted basis, that the contemplated financing is available and other customary conditions.

If the Offer is successful, DOF will transfer all of its shares in DOFSUB, including the shares received under the Offer, to a newly incorporated private holding company (“HoldCo”), which following such transfer will be owned 51% by DOF and 49% by First Reserve. The Oslo Stock Exchange has granted an exemption from the mandatory offer rules for this transfer that is conditional upon HoldCo executing a compulsory acquisition under the Norwegian Securities Trading Act no later than four weeks after completion of the Offer. Following the transfer of the DOFSUB shares, HoldCo will therefore proceed with a compulsory acquisition of the remaining outstanding shares in DOFSUB and delist DOFSUB. As a result of the Offer, DOF will in effect reduce its ownership in DOFSUB from 57.17% to 51%.

If the Offer is successful DOF and First Reserve have agreed that HoldCo will acquire the 50.5% of the shares in DOF Installer ASA (“DOFI”) that are currently controlled by DOF, at a price of NOK 125 per share in exchange for new shares in HoldCo. Following the acquisition of DOF’s shares in DOFI, HoldCo intends to put forward a cash offer to acquire the remaining shares outstanding in DOFI at NOK 125 per share. Such offer will be conditional upon, amongst other things, a minimum acceptance level giving HoldCo more than 90% of DOFI’s shares on a fully diluted basis, that all required governmental approvals are obtained and other customary conditions. First Reserve will contribute cash as equity in Holdco in an aggregate amount required to maintain its 49% ownership in HoldCo following such transaction. Following the offer for the remaining shares in DOFI, it has been agreed that DOF will, subject to relevant approvals, purchase hull no. 706 from DOFI for a cash consideration of approximately NOK 150 million.

Furthermore, and subject to the successful completion of the Offer and certain other conditions agreed between DOF and First Reserve, HoldCo will acquire from DOF the rights under the shipbuilding contracts for three ROV support vessels currently being built for DOF at the Tebma yard in India with expected delivery in 2009 and 2010 for approximately NOK 300 million in exchange for shares in HoldCo. First Reserve will contribute cash as equity in Holdco in an aggregate amount required to maintain its 49% ownership following such transaction. As part of this transaction, HoldCo will assume the remaining capital expenditure commitment in relation to the acquired ship building contracts.

Separately, and subject to the successful completion of the Offer, First Reserve will subscribe for new shares in Norskan AS, a 100% owned subsidiary of DOF, in a private placement of shares which will give First Reserve a 15.9% ownership in Norskan AS. The private placement of shares is expected to raise new equity capital of approximately NOK 300 million in Norskan AS. In addition, First Reserve will have the option to increase its ownership to 25%. Norskan AS is the holding company of the Norskan Offshore group which will own and operate a total fleet of twelve offshore vessels in Brazil, including three vessels under construction.

Mons Aase, CEO of DOF, made the following comment in relation to the announcement:

“The agreement will enable DOF and DOF Subsea to reach the next level through a combination of growth strategies. The capital infusion will bolster our competitive advantage and enable us to strengthen our position in Brazil. Moreover, First Reserve’s investment expertise and industry experience will present DOF Subsea with a unique opportunity to exploit the current sector growth and demand trends.”

Added Tom Sikorski, Managing Director of First Reserve:

“First Reserve is excited to partner with DOF and DOF Subsea in this deal. DOF and DOF Subsea have a world class team, a business model and a growth strategy that are in line with our investment goals. The market demand for vessels and services will continue to grow, evidenced by the spike in offshore activity in Brazil, Asia and West Africa. DOF and DOF Subsea are well-positioned to take advantage of this opportunity since they have among the largest and highest quality of fleets in the world. First Reserve stands to significantly benefit from the historic undersupply of this sector in promoting a company that is uniquely positioned for growth.”

Pareto Securities AS is acting as financial advisor to DOF in relation to the above transactions.