Ability Drilling AS (OSL:ADRL) Ability Drilling And Geoenergie Bayern Cancel Agreement

Ability Drilling AS (OSL:ADRL) Date: 23 January 2009

Ability Drilling and Geoenergie Bayern cancel agreement

Ability Drilling and Geoenergie Bayern have agreed to terminate its agreement. The agreement included a drilling contract for land Rig no. 2, originally scheduled to start operations in Germany in Q4 2008.

According to CEO Hans Petter Eikeland there are several reasons for the termination of the agreement: "Delivery delays triggered the customer's decision regarding land rig no. 2, but the overall picture with lower energy prices worldwide, which is related to the current situation in the world economy, is also an important factor. We could not agree on the terms for a future partnership and decided to terminate the agreement."

Mr. Eikeland still believes geothermal drilling is an interesting market for Ability Drilling, but expects that it will take some time before the availability of projects improves. "Our rigs are very well suited for this type of projects, and we are in contact with several possible future customers. However, we believe that both credit issues and energy prices will slow down the market for a while."

The CEO confirms that Ability Drilling is negotiating new contracts for the rigs available for the market. "Negotiations are progressing well for all rigs, but the termination of contracts with Porosity and Geoenergie negatively impacts our business in the current quarter as we cannot employ the rigs over the night. Consequently, we have reduced manning and cost to adapt to the current situation while we are finalising new contracts. We expect this to be solved in Q1."

For further information, please contact:

CEO Hans Petter Eikeland, phone +47 56 32 43 43, or +47 93 20 81 77 CFO Kenneth Tunes, tlf. 56 32 43 43, eller 91 54 49 01

About Ability Drilling ASA: Ability Drilling aims to become the preferred operator and provider of Rack & Pinion (R&P) rigs in its defined core markets, by combining fourth generation drilling technology with outstanding drilling experience from offshore North Sea exploration and production activities.

The Company currently targets onshore oil operations in the MENA (Middle East North Africa) market, the geothermal market in Europe, as well as the market for drilling of LNG reservoirs. Both the land rig market in MENA and the geothermal segment in Europe are markets with strong growth and significant potential, while the market for drilling of LNG reservoirs is an emerging growth segment. Ability Drilling targets extension of the geographical footprint within all current focus areas.

Ability Drilling has so far ordered 11 rigs, of which 9 land rigs, one 150 T workover rig and one 150 T Ultra Light Drilling Rig. In addition, the company has options with construction partner TTS Sense for 33 additional land rigs and 40 additional workover rigs.

Ability Drilling is listed on Oslo Axess, with ticker ADRL.

This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

Ability Drilling AS

http://www.ability-drilling.com/

ISIN: NO0010333024
Stock Identifier: OSE.ADRL