Chiles Offshore Signs Notice of Award for Rig Under Construction

Chiles Offshore Inc. today announced that it has executed a Notice of Award for a long-term contract by an affiliate of Phillips Petroleum for its ultra-premium jackup drilling rig the Chiles Discovery, currently under construction at the Keppel FELS Shipyard in Singapore. The Chiles Discovery is expected to be delivered from the yard during the second quarter of 2002, and is scheduled to commence work prior to the end of June 2002 in Phillips' Bayu Undan Gas Recycle Project, located in Area A of the Timor Gap Zone of Cooperation between Australia and East Timor.

The contract is expected to last for a minimum of 600 days (15 wells).

Phillips will have options to extend the contract for up to an additional five wells (estimated up to 200 days). Assuming work is performed under the contract for 600 days, contract revenues will approximate $60 million, exclusive of mobilization and de-mobilization fees.

According to William Chiles, president and CEO: "The Chiles Discovery is the first ultra-premium jackup drilling rig to be delivered of the two we currently have under construction in Singapore and Brownsville, Texas, respectively. Both of these ultra-premium jackup rigs are of the KFELS Mod V 'B' design which will incorporate some of the new 'state-of-the-art' technologies including large mud pumping capacity, 70 ft. extended cantilever, large drilling fluid storage capacities, digital drilling controls and automatic pipe-handling equipment."