20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE

SECURITIES EXCHANGE ACT OF 1934

OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ____ to ____

OR

[_] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

Commission file number: 001-34667

SEADRILL LIMITED

(Exact name of Registrant as specified in its charter)

(Address of principal executive offices)

Bermuda

(Jurisdiction of incorporation or organization)

Par-la-Ville Place, 4th Floor, 14 Par-la-Ville Road, Hamilton, HM 08 Bermuda

(Address of principal executive offices)

Georgina Sousa

Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda

Tel: +1 (441) 295-9500, Fax: +1 (441) 295-3494

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Common stock, $2.00 par value	New York Stock Exchange
Title of class	Name of exchange on which registered

Securities registered or to be registered pursuant to Section 12(g) of the Act:  None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

As of December 31, 2014, there were 492,759,938 shares, par value $2.00 per share, of the Registrant's common stock outstanding.

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[X] Yes [_] No

If this report is an annual report or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

[_] Yes [X] No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [_] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months

[X] Yes [_] No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  [X] Accelerated filer  [_]

Non-accelerated filer   [_] (Do not check if a smaller reporting company) Smaller reporting company  [_]

Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:

[X]  U.S. GAAP

[_]  International Financial Reporting Standards as issued by the International Accounting Standards Board

[_]  Other

If "Other" has been checked in response to the previous question, indicate by check mark which

financial statement item the Registrant has elected to follow.

[_]  Item 17

[_]  Item 18

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[_]  Yes [X]  No

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical or present facts or conditions.

This Annual Report and any other written or oral statements made by us or on our behalf may include forward-looking statements which reflect our current views with respect to future events and financial performance. The words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect" and similar expressions identify forward-looking statements.

The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors and matters discussed elsewhere in this Annual Report, and in the documents incorporated by reference in this Annual Report, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include:

• factors related to the offshore drilling market, including supply and demand, utilization rates, day rates, customer drilling programs, commodity prices, effects of new rigs on the market, effects of retirement or scrapping of rigs on the market, exploitation of sources of oil that do not require offshore drilling units, the development of alternative sources of fuel and energy, and effects of changes in oil and gas prices and the state of the global economy on market outlook for our various geographical operating sectors and classes of rigs,

• hazards inherent in the drilling industry and marine operations causing personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage, claims by third parties or customers and suspension of operations,

• customer contracts, including contract backlog, contract commencements, contract terminations, contract option exercises, contract revenues, contract awards and rig mobilizations,

• repudiation, nullification, modification or renegotiation of contracts,

• delay in payments by, or disputes with our customers under our drilling contracts,

• newbuildings, upgrades, shipyard and other capital projects, including completion, delivery and commencement of operations dates,

• expected downtime and lost revenue and the ability of our drilling units to perform satisfactorily or to our expectations,

• political and other uncertainties, including political unrest, risks of terrorist acts, war and civil disturbances, piracy, significant governmental influence over many aspects of local economies, seizure, nationalization or expropriation of property or equipment,

• limitations on insurance coverage, such as war risk coverage, in certain areas,

• foreign and U.S. monetary policy and foreign currency fluctuations and devaluations,

• the inability to repatriate income or capital,

• expected costs of maintenance and repairs, including complications associated with repairing and replacing equipment in remote locations,

• import-export quotas,

• wage and price controls and imposition of trade barriers,

• regulatory or financial requirements to comply with foreign bureaucratic actions, including potential limitations on drilling activity, changing taxation policies and other forms of government regulation and economic conditions that are beyond our control,

• the level of expected capital expenditures, our expected financing of such capital expenditures and the timing and cost of completion of capital projects,

• our ability to successfully employ our drilling units,

• our ability to procure or have access to financing,

• our expected debt levels,

• our ability to comply with loan covenants,

• liquidity and adequacy of cash flow for our obligations,

• factors affecting our results of operations and cash flow from operations, including revenues and expenses, uses of excess cash, including debt retirement, timing and proceeds of asset sales,

• tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, including those associated with our activities in Bermuda, Brazil, Norway, the United Kingdom, and the United States,

• legal and regulatory matters, including results and effects of legal proceedings , outcome and effects of internal and governmental investigations,

• customs and environmental matters,

• effects of accounting changes and adoption of accounting policies,

• recruitment and retention of personnel ,

• pension plan and other post-retirement benefit plan contributions,

• the timing of severance payments and benefit payments,

• acquisitions and divestitures of businesses and assets and the execution of transactions to acquire and divest businesses and assets, and

• other important factors described from time to time in the reports filed or furnished by us with the Securities and Exchange Commission, or the Commission, and the New York Stock Exchange, or NYSE.

We caution readers of this Annual Report not to place undue reliance on these forward-looking statements, which speak only as of their dates.  We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward looking statement.

TABLE OF CONTENTS
		Page
PART 1
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3	KEY INFORMATION	1
ITEM 4.	INFORMATION ON THE COMPANY	20
ITEM 4A	UNRESOLVED STAFF COMMENTS	31
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	31
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	57
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	62
ITEM 8	FINANCIAL INFORMATION	68
ITEM 9.	THE OFFER AND LISTING	69
ITEM 10.	ADDITIONAL INFORMATION	71
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	81
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	84
PART II
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	84
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	84
ITEM 15	CONTROLS AND PROCEDURES	84
ITEM 16.	RESERVED	85
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	85
ITEM 16B.	CODE OF ETHICS	85
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	85
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	86
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	86
ITEM 16F.	CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT	86
ITEM 16G.	CORPORATE GOVERNANCE	87
ITEM 16H.	MINE SAFETY DISCLOSURE	87
PART III
ITEM 17.	FINANCIAL STATEMENTS	87
ITEM 18.	FINANCIAL STATEMENTS	87
ITEM 19.	EXHIBITS	88

PART 1.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Throughout this Annual Report, unless the context otherwise requires, references to "Seadrill Limited," "Seadrill," the "Company," "we," "us," "Group," "our" and words of similar import refer to Seadrill Limited, its subsidiaries and its other consolidated entities. Unless otherwise indicated, all references to "US$" and "$" in this Annual Report are to, and amounts are presented in, U.S. dollars.

A. SELECTED FINANCIAL DATA

The selected statement of operations and other financial data of the Company with respect to the fiscal years ended December 31,2014, 2013 and 2012 and the selected balance sheet data of the Company as of December 31,2014 and 2013 have been derived from the Company's Consolidated Financial Statements included in Item 18 of this Annual Report, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP.

The selected statement of operations and other financial data for the fiscal years ended December 31,2011 and 2010 and the selected balance sheet data as of December 31,2012, 2011 and 2010 have been derived from the Consolidated Financial Statements of the Company that are not included herein.

The following table should be read in conjunction with "Item 5. Operating and Financial Review and Prospects" and the Company's Consolidated Financial Statements and Notes thereto, which are included herein. The Company's financial statements are maintained in U.S. dollars. We refer you to the Notes to our Consolidated Financial Statements for a discussion of the basis on which our Consolidated Financial Statements are presented.

	Year ended December 31,
	2014	2013	2012	2011	2010
		(In millions of U.S. dollars except common share and per share data)
Statement of Operations Data:
Total operating revenues	4,997	5,282	4,478	4,192	4,041
Net operating income	2,279	2,098	1,791	1,774	1,625
Net income	4,087	2,786	1,205	1,482	1,172
Earnings per share, basic	8.32	5.66	2.37	3.05	2.73
Earnings per share, diluted	8.30	5.47	2.34	2.96	2.73
Dividends paid	1,466	1,356	1,975	1,440	990
Dividends paid per share	2.98	2.74	4.31	3.14	2.41
Dividends declared per share *	2.00	3.72	3.51	3.06	2.74

 * Includes the fourth quarter dividends for 2013, 2011, 2010 and 2009 that were declared subsequent to the year end in the first quarter of the following year.

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	Year ended December 31,
	2014		2013		2012		2011		2010
			(In millions of U.S. dollars except common share and per share data)
Balance Sheet Data (at end of period):
Cash and cash equivalents	831		744		318		483		755
Drilling units	15,145		17,193		12,894		11,223		10,795
Newbuildings	2,030		3,419		1,882		2,531		1,247
Investment in associated companies	2,898		140		509		721		205
Goodwill	604		1,200		1,320		1,320		1,676
Total assets	26,506		26,300		19,632		18,304		17,497
Long-term debt (including current portion)	12,620		13,466		10,761		9,993		9,157
Common share capital	985		938		938		935		886
Total equity	10,390		8,202		6,024		6,302		5,937
Common shares outstanding (in millions)	492.8		469.0		469.2		467.8		443.1
Weighted average common shares outstanding (in millions)	478.0		469.0		468.5		458.6		409.2
Other Financial Data:
Net cash provided by operating activities	1,574		1,695		1,590		1,669		1,210
Net cash provided by/(used in) investingactivities	66		(2,964	)	(1,360	)	(2,486	)	(2,207	)
Net cash provided by/(used in) by financing activities	(1,521	)	1,695		(395	)	538		1,293
Capital expenditures	(3,168	)	(4,463	)	(1,690	)	(2,543	)	(2,368	)

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

Our assets are primarily engaged in offshore contract drilling for the oil and gas industry in benign and harsh environments worldwide, including ultra-deepwater environments. The following summarizes risks that may materially affect our business, financial condition or results of operations. Unless otherwise indicated in this Annual Report, all information concerning our business and our assets is as of December 31, 2014.

Risks Relating to Our Industry

Our business in the offshore drilling sector depends on the level of activity in the offshore oil and gas industry, which is significantly affected by, among other things, volatile oil and gas prices, and may be materially and adversely affected by a decline in the offshore oil and gas industry.

The offshore contract drilling industry is cyclical and volatile. Our business in the offshore drilling sector depends on the level of activity in oil and gas exploration, development and production in offshore areas worldwide. The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development and political and regulatory environments affect our customers’ drilling programs. Oil and gas prices and market expectations of potential changes in these prices also significantly affect this level of activity and demand for drilling units.

Oil and gas prices are extremely volatile and are affected by numerous factors beyond our control, including the following:

• worldwide production and demand for oil and gas;

• the cost of exploring for, developing, producing and delivering oil and gas;

• expectations regarding future energy prices;

• advances in exploration, development and production technology;

• the ability of the Organization of Petroleum Exporting Countries (“OPEC”), to set and maintain levels and pricing;

• the level of production in non-OPEC countries;

• government regulations, including restrictions on offshore transportation of oil and natural gas;

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• local and international political, economic and weather conditions;

• domestic and foreign tax policies;

• development and exploitation of alternative fuels and non-conventional hydrocarbon production;

• the policies of various governments regarding exploration and development of their oil and gas reserves, accidents, severe weather, natural disasters and other similar incidents relating to the oil and gas industry; and

• the worldwide political and military environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East, eastern Europe or other geographic areas or further acts of terrorism in the United States, or elsewhere.

Declines in oil and gas prices for an extended period of time, or market expectations of potential decreases in these prices, could negatively affect our business in the offshore drilling sector. Sustained periods of low oil prices typically result in reduced exploration and drilling because oil and gas companies’ capital expenditure budgets are subject to cash flow from such activities and are therefore sensitive to changes in energy prices. These changes in commodity prices can have a dramatic effect on rig demand, and periods of low demand can cause excess rig supply and intensify the competition in the industry which often results in drilling units, particularly older and less technologically advanced drilling units, being idle for long periods of time. We cannot predict the future level of demand for our services or future conditions of the oil and gas industry. In response to the recent decrease in the prices of oil and gas, a number of our oil and gas company customers have recently announced decreases in budgeted expenditures for offshore drilling. Any future decrease in exploration, development or production expenditures by oil and gas companies could reduce our revenues and materially harm our business and results of operations.

In addition to oil and gas prices, the offshore drilling industry is influenced by additional factors, including:

• the availability of competing offshore drilling units;

• the level of costs for associated offshore oilfield and construction services;

• oil and gas transportation costs;

• the level of rig operating costs, including crew and maintenance;

• the discovery of new oil and gas reserves;

• the political and military environment of oil and gas reserve jurisdictions; and

• regulatory restrictions on offshore drilling.

Any of these factors could reduce demand for our services and adversely affect our business and results of operations.

Please also see "The current downturn in activity in the oil and gas drilling industry has had and is likely to continue to have an adverse impact on our business and results of operations."

Our business and operations involve numerous operating hazards.

Our operations are subject to hazards inherent in the drilling industry, such as blowouts, reservoir damage, loss of production, loss of well control, lost or stuck drill strings, equipment defects, punch-throughs, craterings, fires, explosions and pollution. Contract drilling and well servicing require the use of heavy equipment and exposure to hazardous conditions, which may subject us to liability claims by employees, customers and third parties. These hazards can cause personal injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage, claims by third parties or customers and suspension of operations. Our offshore fleet is also subject to hazards inherent in marine operations, either while on-site or during mobilization, such as capsizing, sinking, grounding, collision, damage from severe weather and marine life infestations. Operations may also be suspended because of machinery breakdowns, abnormal drilling conditions, failure of subcontractors to perform or supply goods or services or personnel shortages. We customarily provide contract indemnity to our customers for claims that could be asserted by us relating to damage to or loss of our equipment, including rigs and claims that could be asserted by us or our employees relating to personal injury or loss of life. Damage to the environment could also result from our operations, particularly through spillage of fuel, lubricants or other chemicals and substances used in drilling operations, or extensive uncontrolled fires. We may also be subject to property, environmental and other damage claims by oil and gas companies. Our insurance policies and contractual rights to indemnity may not adequately cover losses, and we do not have insurance coverage or rights to indemnity for all risks. Consistent with standard industry practice, our clients generally assume, and indemnify us against, well control and subsurface risks under dayrate contracts. These are risks associated with the loss of control of a well, such as blowout or cratering, the cost to regain control of or re-drill the well and associated pollution. However, there can be no assurances that these clients will be willing or financially able to indemnify us against all these risks. In addition, a court may decide that certain indemnities in our current or future contracts are not enforceable. For example, in a 2012 case related to the fire and explosion that took place on the unaffiliated Deepwater Horizon Mobile Offshore Drilling Unit in the Gulf of Mexico in April 2010, or the Deepwater Horizon Incident (to which we were not a party), the U.S. District Court for the Eastern District of Louisiana invalidated certain contractual indemnities for punitive damages and for civil penalties under the U.S. Clean Water Act under a drilling contract governed by U.S. maritime law as a matter of public policy. Further, pollution and environmental risks generally are not totally insurable.

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If a significant accident or other event occurs that is not fully covered by our insurance or an enforceable or recoverable indemnity from a client, the occurrence could adversely affect our consolidated statement of financial position, results of operations or cash flows. The amount of our insurance may also be less than the related impact on enterprise value after a loss. Our insurance coverage will not in all situations provide sufficient funds to protect us from all liabilities that could result from our drilling operations. Our coverage includes annual aggregate policy limits. As a result, we retain the risk through self-insurance for any losses in excess of these limits. Any such lack of reimbursement may cause us to incur substantial costs. In addition, we could decide to retain more risk through self-insurance in the future. This self-insurance results in a higher risk of losses, which could be material, that are not covered by third party insurance contracts. Specifically, we have at times in the past elected to self-insure for physical damage to rigs and equipment caused by named windstorms in the U.S. Gulf of Mexico due to the substantial costs associated with such coverage. Beginning April 1, 2014 we have insured a limited part of this windstorm risk in a combined single limit annual aggregate policy. The Company is currently negotiating the renewal of its policy to insure a limited part of this windstorm risk for a further period starting May 1, 2015 through March 31, 2016, and no final decision has been made on whether the renewal will be implemented. If we elect to self-insure such risks again in the future and such windstorms cause significant damage to any rig and equipment we have in the U.S. Gulf of Mexico, it could have a material adverse effect on our financial position, results of operations or cash flows. Moreover, no assurance can be made that we will be able to maintain adequate insurance in the future at rates that we consider reasonable, or obtain insurance against certain risks.

An over-supply of offshore drilling units may lead to a reduction in dayrates and therefore may materially impact our revenues and profitability.

During the recent period of high utilization and high dayrates, which we believe ended in early 2014, industry participants have increased the supply of drilling units by ordering construction of new drilling units. Historically, this has resulted in an over-supply of drilling units and has caused a subsequent decline in utilization and dayrates when the drilling units have entered the market, sometimes for extended periods of time until the new units have been absorbed into the active fleet. A relatively large number of the drilling units currently under construction have not been contracted for future work, and a number of units in the existing worldwide fleet are currently off contract.

The supply of available uncontracted units is likely to intensify price competition as scheduled delivery dates occur and additional contracts terminate without renewal and lead to a reduction in dayrates as the active fleet grows. Rig owners are bidding for available work extremely competitively with a focus on utilization over returns, which will likely drive rates down to or below cash breakeven levels. Any reductions in drilling activity by our customers may not be uniform across different geographic regions. Locations where costs of drilling and production are relatively higher, such as Arctic or deepwater locations, may be subject to greater reductions in activity. Such reductions in high cost regions may lead to relocation of drilling units, increasing the supply of available drilling units in regions with relatively less reductions in activity. In addition, customers may request renegotiation of existing contracts to lower dayrates. In an over-supplied market, we may have limited bargaining power to renegotiate on more favorable terms. Lower utilization and dayrates could adversely affect our revenues and profitability.

In addition, prolonged periods of low utilization and dayrates could also result in the recognition of impairment charges on our drilling units if future cash flow estimates, based on information available to management at the time, indicate that the carrying value of these drilling units may not be recoverable.

Please also see "The current downturn in activity in the oil and gas drilling industry has had and is likely to continue to have an adverse impact on our business and results of operations."

The market value of our current drilling units and those we acquire in the future may decrease, which could cause us to incur losses if we decide to sell them following a decline in their market values.

During the second half of 2014, the estimated fair value of our drilling units, based upon various broker valuations, has decreased by approximately 10%. If the offshore contract drilling industry suffers further adverse developments in the future, the fair market value of our drilling units may decline further. The fair market value of the drilling units that we currently own, or may acquire in the future, may increase or decrease depending on a number of factors, including:

• general economic and market conditions affecting the offshore contract drilling industry, including competition from other offshore contract drilling companies;

• types, sizes and ages of drilling units;

• supply and demand for drilling units;

• costs of newbuildings;

• prevailing level of drilling services contract dayrates;

• governmental or other regulations; and

• technological advances.

If we sell any drilling unit at a time when prices for drilling units have fallen, such a sale may result in a loss. Such a loss could materially and adversely affect our business prospects, financial condition, liquidity, results of operations and available cash flow.

Please also see "The current downturn in activity in the oil and gas drilling industry has had and is likely to continue to have an adverse impact on our business and results of operations."

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Consolidation of suppliers may increase the cost of obtaining supplies, or restrict our ability to obtain needed supplies, which may have a material adverse effect on our results of operations and financial condition.

We rely on certain third parties to provide supplies and services necessary for our offshore drilling operations, including but not limited to drilling equipment suppliers, catering and machinery suppliers. Recent mergers have reduced the number of available suppliers, resulting in fewer alternatives for sourcing key supplies. With respect to certain items, such as blow-out preventors, or BOPs, we are dependent on the original equipment manufacturer for repair and replacement of the item or its spare parts. For instance, we experienced an interruption of operations in early 2013 as a result of a defective batch of connector bolts procured by a supplier of BOP equipment, and the only source of approved replacement bolts was that same supplier. Such consolidation, combined with a high volume of drilling units under construction, may result in a shortage of supplies and services thereby increasing the cost of supplies and/or potentially inhibiting the ability of suppliers to deliver on time. These cost increases or delays could have a material adverse effect on our results of operations and result in rig downtime, and delays in the repair and maintenance of our drilling rigs.

Our international operations in the offshore drilling sector involve additional risks, which could adversely affect our business.

We operate in various regions throughout the world. As a result of our international operations, we may be exposed to political and other uncertainties, including risks of:

• terrorist acts, armed hostilities, war and civil disturbances;

• acts of piracy, which have historically affected ocean-going vessels, trading in regions of the world such as the South China Sea, the Gulf of Aden off the coast of Somalia, and off the west coast of Africa;

• significant governmental influence over many aspects of local economies;

• seizure, nationalization or expropriation of property or equipment;

• repudiation, nullification, modification or renegotiation of contracts;

• limitations on insurance coverage, such as war risk coverage, in certain areas;

• political unrest;

• foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;

• the inability to repatriate income or capital;

• complications associated with repairing and replacing equipment in remote locations;

• import-export quotas, wage and price controls and imposition of trade barriers;

• U.S. and foreign sanctions or trade embargoes;

• regulatory or financial requirements to comply with foreign bureaucratic actions;

• changing taxation policies, including confiscatory taxation;

• other forms of government regulation and economic conditions that are beyond our control; and

• governmental corruption.

In addition, international contract drilling operations are subject to various laws and regulations of the countries in which we operate, including laws and regulations relating to:

• the equipping and operation of drilling units;

• repatriation of foreign earnings and exchange controls;

• oil and gas exploration and development;

• taxation of offshore earnings and the earnings of expatriate personnel; and

• use and compensation of local employees and suppliers by foreign contractors.

Some foreign governments favor or effectively require (i) the awarding of drilling contracts to local contractors or to drilling rigs owned by their own citizens, (ii) the use of a local agent or (iii) foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These practices may adversely affect our ability to compete in those regions. It is difficult to predict what governmental regulations may be enacted in the future that could adversely affect the international drilling industry. The actions of foreign governments, including initiatives by OPEC, may adversely affect our ability to compete. Failure to comply with applicable laws and regulations, including those relating to sanctions and export restrictions, may subject us to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets.

If our drilling units are located in countries that are subject to economic sanctions or other operating restrictions imposed by the U.S. or other governments, our reputation and the market for our common stock could be adversely affected.

In 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act or CISADA, which expanded the scope of the former Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions to non-U.S. companies such as ours, and introduced limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export of refined petroleum or petroleum products. On August 10, 2012, the U.S. signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012, or the Iran Threat Reduction Act, which places further restrictions on the ability of non-U.S. companies to do business or trade with Iran and Syria. Perhaps the most significant provision in the Iran Threat Reduction Act is that prohibitions in the existing Iran sanctions

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applicable to U.S. persons will now apply to any foreign entity owned or controlled by a U.S. person (essentially making the U.S. sanctions against Iran as expansive as U.S. sanctions against Cuba). These new sanctions were codified within the Iranian Transactions Regulations on or about December 26, 2012. The other major provision in the Iran Threat Reduction Act is that issuers of securities must disclose to the Commission in their annual and quarterly reports filed after February 6, 2013 if the issuer or “any affiliate” has “knowingly” engaged in certain sanctioned activities involving Iran during the timeframe covered by the report. The disclosure must describe the nature and extent of the activity in detail and the Commission will publish the disclosure on its website. The President of the U.S. must then initiate an investigation and determine whether sanctions on the issuer or its affiliate will be imposed. Such negative publicity and the possibility that sanctions could be imposed would present a risk for any issuer that is knowingly engaged in sanctioned conduct or that has an affiliate that is knowingly engaged in such conduct. At this time, we are not aware of any violative activity, conducted by ourselves or by any affiliate, that is likely to trigger a Commission disclosure requirement.

Sanctions affecting non-U.S. companies like us were expanded yet again under the 2013 National Defense Authorization Act, with the passage of the Iran Freedom and Counter-Proliferation Act, and we believe that these sanctions will continue to become more restrictive for the foreseeable future. In addition to the sanctions against Iran, U.S. law continues to restrict U.S. owned or controlled entities from doing business with Cuba and various U.S. sanctions have certain other extraterritorial effects that need to be considered by non U.S. companies. Moreover, any U.S. persons who serve as officers, directors or employees of our subsidiaries would be fully subject to U.S. sanctions. It should also be noted that other governments are more frequently implementing sanctions regimes.

From time to time, we may enter into drilling contracts with countries or government-controlled entities that are subject to sanctions and embargoes imposed by the U.S. government and/or identified by the U.S. government as state sponsors of terrorism where entering into such contracts would not violate U.S. law, or may enter into drilling contracts involving operations in countries or with government-controlled entities that are subject to sanctions and embargoes imposed by the U.S government and/or identified by the U.S. government as state sponsors of terrorism. However, this could negatively affect our ability to obtain investors. In some cases, U.S. investors would be prohibited from investing in an arrangement in which the proceeds could directly or indirectly be transferred to or may benefit a sanctioned entity. Moreover, even in cases where the investment would not violate U.S. law, potential investors could view such drilling contracts negatively, which could adversely affect our reputation and the market for our shares. With the exception of certain drilling contracts between our majority owned subsidiary, North Atlantic Drilling Ltd., or NADL, and Rosneft Oil Company, or Rosneft, for activity in Russian Arctic and deepwater areas, we do not currently have any drilling contracts or plans to initiate any drilling contracts involving operations in countries or with government controlled entities that are subject to sanctions and embargoes imposed by the U.S. government and/or identified by the U.S. government as state sponsors of terrorism.

On November 24, 2013, the P5+1 (the United States, United Kingdom, Germany, France, Russia and China) entered into an interim agreement with Iran entitled the "Joint Plan of Action", or JPOA. Under the JPOA it was agreed that, in exchange for Iran taking certain voluntary measures to ensure that its nuclear program is only used for peaceful purposes, the United States and the European Union would voluntarily suspend certain sanctions for a period of six months. On January 20, 2014, the United States and the European Union indicated that they would begin implementing the temporary relief measures provided for under the JPOA. These measures include, among other things, the suspension of certain sanctions on the Iranian petrochemicals, precious metals and automotive industries from January 20, 2014 to July 20, 2014. The JPOA has since been renewed twice, and is set to expire on June 30, 2015.

Certain of our customers or other parties that we have entered into contracts with may be the subject of sanctions imposed by the United States, the European Union and / or other international bodies as a result of the annexation of Crimea by Russia in March 2014 and the subsequent conflict in eastern Ukraine, or may be affiliated with persons or entities that are the subject of such sanctions. If we determine that such sanctions require us to terminate existing contracts or if we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected or we may suffer reputational harm. In addition, such sanctions may prevent us from closing the previously announced transactions between our subsidiary NADL and Rosneft Oil Company, or performing some or all of our obligations under the drilling contracts with Rosneft Oil Company, which could impact our future revenue, backlog, and results of operations.

As stated above, we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance. However, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines or other penalties and could result in some investors deciding, or being required, to divest their interest, or not to invest, in our shares. Additionally, some investors may decide to divest their interest, or not to invest, in our shares simply because we may do business with companies that do business in sanctioned countries. Moreover, our drilling contracts may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us, or our drilling rigs, and those violations could in turn negatively affect our reputation. Investor perception of the value of our shares may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

Any failure to comply with the complex laws and regulations governing international trade could adversely affect our operations.

The shipment of goods, services and technology across international borders subjects our offshore drilling segment to extensive trade laws and regulations. Import activities are governed by unique customs laws and regulations in each of the countries of operation. Moreover, many countries, including the United States, control the export and re-export of certain goods, services and technology and impose related export recordkeeping and reporting obligations. Governments also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities. U.S. sanctions in particular are targeted against countries (such as Russia, Venezuela, Iran, Myanmar and Sudan, among others) that are heavily involved in the petroleum and petrochemical industries, which includes drilling activities.

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The laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions are complex and constantly changing. These laws and regulations may be enacted, amended, enforced or interpreted in a manner materially impacting our operations. Shipments can be delayed and denied export or entry for a variety of reasons, some of which are outside our control and some of which may result from failure to comply with existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled operational downtime. Any failure to comply with applicable legal and regulatory trading obligations could also result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from government contracts, seizure of shipments and loss of import and export privileges.

Our ability to operate our drilling units in the U.S. Gulf of Mexico could be restricted by governmental regulation.

Hurricanes have from time to time caused damage to a number of drilling units unaffiliated to us in the Gulf of Mexico. The Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEMRE, formerly the Minerals Management Service of the U.S. Department of the Interior, effective October 1, 2011, reorganized into two new organizations, the Bureau of Ocean Energy Management, or BOEM, and the Bureau of Safety and Environmental Enforcement, or BSEE, and issued guidelines for tie-downs on drilling units and permanent equipment and facilities attached to outer continental shelf production platforms, and moored drilling unit fitness. BSEE subsequently issued additional guidelines requiring Mobile Offshore Drilling Units (MODUs) to be outfitted with Global Positioning Systems (GPS) and to provide BSEE with real-time GPS location data for MODUs effective March 19, 2013. These guidelines effectively impose new requirements on the offshore oil and natural gas industry in an attempt to increase the likelihood of survival of offshore drilling units during a hurricane. The guidelines also provide for enhanced information and data requirements from oil and natural gas companies that operate properties in the U.S. Gulf of Mexico region of the Outer Continental Shelf. BOEM and BSEE may issue similar guidelines for future hurricane seasons and may take other steps that could increase the cost of operations or reduce the area of operations for our ultra-deepwater drilling units, thereby reducing their marketability. Implementation of new guidelines or regulations that may apply to ultra-deepwater drilling units may subject us to increased costs and limit the operational capabilities of our drilling units, although such risks to the extent possible should rest with our clients.

We currently do not have any jack-up rigs or moored drilling units operating in the U.S. Gulf of Mexico. However, we do have three ultra-deepwater semi-submersible drilling rigs and three ultra-deepwater drillships operating in the U.S. Gulf of Mexico, that are self-propelled and equipped with thrusters and other machinery, which enable the rig to move between drilling locations and remain in position while drilling without the need for anchors.

Public health threats could have an adverse effect on our operations and our financial results.

Public health threats, such as ebola, influenza, Severe Acute Respiratory Syndrome and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, could adversely impact our operations, and the operations of our customers. In addition, public health threats in any area, including areas where we do not operate, could disrupt international transportation. Our crews generally work on a rotation basis, with a substantial portion relying on international air transport for rotation. Any such disruptions could impact the cost of rotating our crews, and possibly impact our ability to maintain a full crew on all rigs at a given time. Any of these public health threats and related consequences could adversely affect our financial results.

Fluctuations in exchange rates and non-convertibility of currencies could result in losses to us.

As a result of our international operations, we are exposed to fluctuations in foreign exchange rates due to revenues being received and operating expenses paid in currencies other than U.S. dollars. Accordingly, we may experience currency exchange losses if we have not fully hedged our exposure to a foreign currency, or if revenues are received in currencies that are not readily convertible. We may also be unable to collect revenues because of a shortage of convertible currency available to the country of operation, controls over currency exchange or controls over the repatriation of income or capital.

We use the U.S. dollar as our functional currency because the majority of our revenues and expenses are denominated in U.S. dollars. Accordingly, our reporting currency is also U.S. dollars. We do, however, earn revenues and incur expenses in other currencies, such as the Norwegian Kroner, UK Pound Sterling, and Brazilian Reals, and there is a risk that currency fluctuations could have an adverse effect on our statements of operations and cash flows.

Governmental laws and regulations, including environmental laws and regulations, may add to our costs or limit our drilling activity.

Our business in the offshore drilling industry is affected by laws and regulations relating to the energy industry and the environment in the geographic areas where we operate. The offshore drilling industry is dependent on demand for services from the oil and gas exploration and production industry, and, accordingly, we are directly affected by the adoption of laws and regulations that, for economic, environmental or other policy reasons, curtail exploration and development drilling for oil and gas. We may be required to make significant capital expenditures or operational changes to comply with governmental laws and regulations. It is also possible that these laws and regulations may, in the future, add significantly to our operating costs or significantly limit drilling activity. Our ability to compete in international contract drilling markets may be limited by foreign governmental regulations that favor or require the awarding of contracts to local contractors or by regulations requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. Governments in some countries are increasingly active in regulating and controlling the ownership of concessions, the exploration for oil and gas, and other aspects of the oil and gas industries. Offshore drilling in certain areas, including arctic areas, has been curtailed and, in certain cases, prohibited because of concerns over protection

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of the environment. Operations in less developed countries can be subject to legal systems that are not as mature or predictable as those in more developed countries, which can lead to greater uncertainty in legal matters and proceedings.

To the extent new laws are enacted or other governmental actions are taken that prohibit or restrict offshore drilling or impose additional environmental protection requirements that result in increased costs to the oil and gas industry, in general, or the offshore drilling industry, in particular, our business or prospects could be materially adversely affected. The operation of our drilling units will require certain governmental approvals, the number and prerequisites of which cannot be determined until we identify the jurisdictions in which we will operate on securing contracts for the drilling units. Depending on the jurisdiction, these governmental approvals may involve public hearings and costly undertakings on our part. We may not obtain such approvals or such approvals may not be obtained in a timely manner. If we fail to timely secure the necessary approvals or permits, our customers may have the right to terminate or seek to renegotiate their drilling contracts to our detriment. The amendment or modification of existing laws and regulations or the adoption of new laws and regulations curtailing or further regulating exploratory or development drilling and production of oil and gas could have a material adverse effect on our business, operating results or financial condition. Future earnings may be negatively affected by compliance with any such new legislation or regulations.

We are subject to complex environmental laws and regulations that can adversely affect the cost, manner or feasibility of doing business.

Our operations are subject to numerous international, national, state and local laws and regulations, treaties and conventions in force in international waters and the jurisdictions in which our drilling units operate or are registered, which can significantly affect the ownership and operation of our drilling units. These requirements include, but are not limited to the United Nation's International Maritime Organization, IMO, the International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended and generally referred to as MARPOL, including the designation of Emission Control Areas, or ECAs thereunder, the IMO International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended and generally referred to as CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, the International Convention for the Safety of Life at Sea of 1974 as from time to time amended and generally referred to as SOLAS, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, the IMO International Convention on Load Lines in 1966, as from time to time amended, the International Convention for the Control and Management of Ships’ Ballast Water and Sediments in February 2004, or the BWM Convention, European Union (EU) regulations, the U.S. Oil Pollution Act of 1990, or OPA, requirements of the U.S. Coast Guard and the U.S. Environmental Protection Agency, or EPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the U.S. Maritime Transportation Security Act of 2002, the U.S. Outer Continental Shelf Lands Act, and Brazil’s National Environmental Policy Law (6938/81), Environmental Crimes Law (9605/98) and Law (9966/2000) relating to pollution in Brazilian waters. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or implementation of operational changes and may affect the resale value or useful lifetime of our drilling units. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with them or the impact thereof on the resale prices or useful lives of our rigs. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations.

Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil or chemical spill, for which we are deemed a responsible party, could result in our incurring significant liability, including fines, penalties and criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, the 2010 explosion of the Deepwater Horizon well and the subsequent release of oil into the Gulf of Mexico, or other similar events, may result in further regulation of the shipping industry, and modifications to statutory liability schemes, thus exposing us to further potential financial risk in the event of any such oil or chemical spill.

We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, and certificates with respect to our operations, and satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition and our ability to pay dividends, if any, in the future.

Although our drilling units are separately owned by our subsidiaries, under certain circumstances a parent company and all of the unit-owning affiliates in a group under common control engaged in a joint venture could be held liable for damages or debts owed by one of the affiliates, including liabilities for oil spills under OPA or other environmental laws. Therefore, it is possible that we could be subject to liability upon a judgment against us or any one of our subsidiaries.

Our drilling units could cause the release of oil or hazardous substances. Any releases may be large in quantity, above our permitted limits or occur in protected or sensitive areas where public interest groups or governmental authorities have special interests. Any releases of oil or hazardous substances could result in fines and other costs to us, such as costs to upgrade our drilling rigs, clean up the releases, and comply with more stringent requirements in our discharge permits. Moreover, these releases may result in our customers or governmental authorities suspending or terminating our operations in the affected area, which could have a material adverse effect on our business, results of operation and financial condition.

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If we are able to obtain from our customers some degree of contractual indemnification against pollution and environmental damages in our contracts, such indemnification may not be enforceable in all instances or the customer may not be financially able to comply with its indemnity obligations in all cases, and we may not be able to obtain such indemnification agreements in the future. In addition, a court may decide that certain indemnities in our current or future contracts are not enforceable. For example, in a 2012 case related to the Deepwater Horizon Incident (to which we were not a party), the U.S. District Court for the Eastern District of Louisiana invalidated certain contractual indemnities for punitive damages and for civil penalties under the U.S. Clean Water Act under a drilling contract governed by U.S. maritime law as a matter of public policy.

Our insurance coverage may not be available in the future, or we may not obtain certain insurance coverage. Even if insurance is available and we have obtained the coverage, it may not be adequate to cover our liabilities or our insurance underwriters may be unable to pay compensation if a significant claim should occur. Any of these scenarios could have a material adverse effect on our business, operating results and financial condition.

Climate change and regulation of greenhouse gases could have a negative impact on our business.

Due to concern over the risk of climate change, a number of countries and the IMO have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions. Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions. As of January 1, 2013, all ships (including rigs and drillships) must comply with mandatory requirements adopted by the IMO’s Maritime Environment Protection Committee, or the MEPC, in July 2011, relating to greenhouse gas emissions. The European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from marine vessels.

All ships are required to follow the Ship Energy Efficiency Management Plans, or SEEMP, and minimum energy efficiency levels per capacity mile, outlined in the Energy Efficiency Design Index, or EEDI, applies to all new ships. These requirements could cause us to incur additional compliance costs. The IMO is planning to implement market-based mechanisms to reduce greenhouse gas emissions from ships at an upcoming MEPC session. In April 2013, the European Union Parliament rejected proposed changes to the European Union Emissions law regarding carbon trading. The measures would have limited the availability of permits that allow companies to emit greenhouse gases. The European Union is still considering an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from marine vessels, including drilling units, and in June 2013, the European Commission issued a memorandum recommending a “gradual approach” starting with a program to monitor, report and verify such greenhouse gas emissions from ships. In the United States, the EPA has issued a finding that greenhouse gases endanger the public health and safety and has adopted regulations to limit greenhouse gas emissions from certain mobile sources and large stationary sources. Although the mobile source emissions regulations do not apply to greenhouse gas emissions from drilling units, such regulation of drilling units is foreseeable, and the EPA has in recent years received petitions from the California Attorney General and various environmental groups seeking such regulation.

Compliance with changes in laws, regulations and obligations relating to climate change could increase our costs related to operating and maintaining our assets, and might also require us to install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions, or administer and manage a greenhouse gas emissions program.

Additionally, adverse effects upon the oil and gas industry relating to climate change, including growing public concern about the environmental impact of climate change, may also adversely affect demand for our services. For example, increased regulation of greenhouse gases or other concerns relating to climate change may reduce the demand for oil and gas in the future or create greater incentives for use of alternative energy sources. Any long-term material adverse effect on the oil and gas industry could have a significant financial and operational adverse impact on our business, including capital expenditures to upgrade our drilling rigs, that we cannot predict with certainty at this time.

The aftermath of the moratorium on offshore drilling in the U.S. Gulf of Mexico, and new regulations adopted as a result of the investigation into the Macondo well blowout, could negatively impact us.

In the near-term aftermath of the Deepwater Horizon Incident, in which we were not involved, that led to the Macondo well blow out situation, the U.S. government on May 30, 2010 imposed a six-month moratorium on certain drilling activities in water deeper than 500 feet in the U.S. GOM and subsequently implemented Notices to Lessees 2010-N05 and 2010 N-06, providing enhanced safety requirements applicable to all drilling activity in the U.S. GOM, including drilling activities in water shallower than 500 feet. On October 12, 2010, the U.S. government lifted the moratorium subject to compliance with the requirements set forth in Notices to Lessees 2010-N05 and 2010-N06. Additionally, all drilling in the U.S. GOM must comply with the Interim Final Ruleto Enhance Safety Measures for Energy Development on the Outer Continental Shelf (Drilling Safety Rule) and the Workplace Safety Rule on Safety and Environmental Management Systems and various requirements imposed through Notices to Lessees and Operators (SEMS). Operators were required to implement a SEMS program by November 15, 2011 and submit their first completed SEMS audit to BSEE by November 15, 2013. The original SEMS rule was later modified by the SEMS II final rule which became effective June 4, 2013. SEMS II enhanced and supplemented operators' SEMS programs with employee training, empowering field level personnel with safety management decisions and strengthening auditing procedures by requiring them to be completed by independent third parties. Operators had until June 4, 2014 to comply with SEMS II, except for certain auditing requirements. All SEMS audits must comply with SEMS II by June 4, 2015. The U.S. Occupational Safety and Health Act (OSHA) imposes additional recordkeeping obligations concerning occupational injuries and illnesses for MODUs attached to the outer continental shelf.

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In addition, in order to obtain drilling permits, operators must submit applications that demonstrate compliance with the enhanced regulations, which require independent third-party inspections, certification of well design and well control equipment and emergency response plans in the event of a blowout, among other requirements. Operators have previously had, and may in the future have, difficulties obtaining drilling permits in the U.S. GOM. In addition, the oil and gas industry has adopted new equipment and operating standards, such as the American Petroleum Institute Standard 53 relating to the installation and testing of well control equipment. Likewise, in August 2014, BSEE proposed an Advanced Notice of Proposed Rulemaking proposing variations to the permitting program that would bolster the offshore financial assurance and bonding program. These new and proposed guidelines and standards for safety, environmental and financial assurance and any other new guidelines or standards the U.S. government or industry may issue or any other steps the U.S. government or industry may take, could disrupt or delay operations, increase the cost of operations, increase out-of-service time or reduce the area of operations for drilling rigs in U.S. and non-U.S. offshore areas.

We continue to evaluate these new measures to ensure that our rigs and equipment are in full compliance, where applicable. As new standards and procedures are being integrated into the existing framework of offshore regulatory programs, we anticipate that there may be increased costs associated with regulatory compliance and delays in obtaining permits for other operations such as recompletions, workovers and abandonment activities.

Additional requirements could be forthcoming based on further recommendations by regulatory agencies investigating the Macondo incident. We are not able to predict the likelihood, nature or extent of additional rulemaking or when the interim rules, or any future rules, could become final. The current and future regulatory environment in the U.S. GOM could impact the demand for drilling units in the U.S. GOM in terms of overall number of rigs in operations and the technical specification required for offshore rigs to operate in the U.S. GOM. It is possible that short-term potential migration of rigs from the U.S. GOM could adversely impact dayrate levels and fleet utilization in other regions. Additional governmental regulations concerning licensing, taxation, equipment specifications, training requirements or other matters could increase the costs of our operations, and escalating costs borne by our customers, along with permitting delays, could reduce exploration and development activity in the U.S. GOM and, therefore, reduce demand for our services. In addition, insurance costs across the industry are expected to increase as a result of the Macondo incident and, in the future, certain insurance coverage is likely to become more costly, and may become less available or not available at all. We cannot predict if the U.S. government will issue new drilling permits in a timely manner, nor can we predict the potential impact of new regulations that may be forthcoming as the investigation into the Macondo well incident continues. Nor can we predict if implementation of additional regulations might subject us to increased costs of operating and/or a reduction in the area of operation in the U.S. GOM. As such, our cash flow and financial position could be adversely affected if our three ultra-deepwater semi-submersible drilling rigs and three ultra-deepwater drillships operating in the U.S. GOM were subject to the risks mentioned above.

We cannot guarantee that the use of our drilling units will not infringe the intellectual property rights of others.

The majority of the intellectual property rights relating to our drilling units and related equipment are owned by our suppliers. In the event that one of our suppliers becomes involved in a dispute over infringement of intellectual property rights relating to equipment owned by us, we may lose access to repair services, replacement parts, or could be required to cease use of some equipment. In addition, our competitors may assert claims for infringement of intellectual property rights related to certain equipment on our drilling units and we may be required to stop using such equipment and/or pay damages and royalties for the use of such equipment. The consequences of technology disputes involving our suppliers or competitors could adversely affect our financial results and operations. We have provisions in some of our supply contracts to provide indemnity from the supplier against intellectual property lawsuits. However, we cannot be assured that these suppliers will be willing or financially able to honor their indemnity obligations, or guarantee that the indemnities will fully protect us from the adverse consequences of such technology disputes. We also have provisions in some of our client contracts to require the client to share some of these risks on a limited basis, but we cannot provide assurance that these provisions will fully protect us from the adverse consequences of such technology disputes.

We may not be able to keep pace with the continual and rapid technological developments that characterize the market for our services, and our failure to do so may result in our loss of market share.

The market for our services is characterized by continual and rapid technological developments that have resulted in, and will likely continue to result in, substantial improvements in equipment functions and performance. As a result, our future success and profitability will be dependent in part upon our ability to keep pace with technological developments. If we are not successful in acquiring new equipment or upgrading our existing equipment in a timely and cost-effective manner in response to technological developments or changes in standards in our industry, we could lose business and profits. The cost of upgrading our equipment may increase as our fleet ages, which could adversely affect our financial performance. In addition, current competitors or new market entrants may develop new technologies, services or standards that could render some of our services or equipment obsolete, which could have a material adverse effect on our operations.

Failure to comply with the U.S. Foreign Corrupt Practices Act or the UK Bribery Act could result in fines, criminal penalties, drilling contract terminations and an adverse effect on our business.

We currently operate, and historically have operated, our drilling units in a number of countries throughout the world, including some with developing economies. Also, our business interaction with national oil companies as well as the state or government-owned shipbuilding enterprises and financing agencies puts us in contact with persons who may be considered “foreign officials” under the U.S. Foreign Corrupt Practices Act of 1977, or the FCPA, and the Bribery Act 2010 of the United Kingdom or the UK Bribery Act. One such national oil company customer, Petrobras, is currently subject of a substantial public investigation of allegations of corruption by local authorities in Brazil. We are subject to the risk that we or our affiliated companies or our or their respective officers, directors, employees and agents may take actions determined to be in violation of anti-corruption laws, including the FCPA and the UK Bribery Act. Any such violation could result in substantial

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fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.

In order to effectively compete in some foreign jurisdictions, we utilize local agents and/or establish entities with local operators or strategic partners. All of these activities may involve interaction by our agents with government officials. Even though some of our agents and partners may not themselves be subject to the FCPA, the UK Bribery Act or other anti-bribery laws to which we may be subject, if our agents or partners make improper payments to government officials or other persons in connection with engagements or partnerships with us, we could be investigated and potentially found liable for violation of such anti-bribery laws and could incur civil and criminal penalties and other sanctions, which could have a material adverse effect on our business and results of operation.

Acts of terrorism, piracy and political and social unrest could affect the markets for drilling services, which may have a material adverse effect on our results of operations.

Acts of terrorism, piracy and political and social unrest, brought about by world political events or otherwise, have caused instability in the world’s financial and insurance markets in the past and may occur in the future. Such acts could be directed against companies such as ours. Our drilling operations could also be targeted by acts of terrorism, piracy, or acts of vandalism or sabotage carried out by environmental activist groups. In addition, acts of terrorism and social unrest could lead to increased volatility in prices for crude oil and natural gas and could affect the markets for drilling services and result in lower dayrates. Insurance premiums could increase and coverage may be unavailable in the future.

A cyber-attack could materially disrupt our business

We rely on information technology systems and networks in our operations and administration of our business. Our drilling operations or other business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and networks, or to steal data. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to unauthorized release of information or alteration of information on our systems. Any such attack or other breach of our information technology systems could have a material adverse effect on our business and results of operations.

We may be subject to litigation, arbitration and other proceedings that could have an adverse effect on us.

We are currently involved in various litigation matters, and we anticipate that we will be involved in litigation matters from time to time in the future. The operating hazards inherent in our business expose us to litigation, including personal injury litigation, environmental litigation, contractual litigation with clients, intellectual property litigation, tax or securities litigation, and maritime lawsuits, including the possible arrest of our drilling units. We cannot predict with certainty the outcome or effect of any claim or other litigation matter, or a combination of these. If we are involved in any future litigation, or if our positions concerning current disputes are found to be incorrect, this may have an adverse effect on our business, financial position, results of operations and available cash, because of potential negative outcomes, the costs associated with asserting our claims or defending such lawsuits, and the diversion of management’s attention to these matters. Please see "Item 8. Financial Information - A. Consolidated Statements and Other Financial Information - Legal Proceedings".

Risks Relating to Our Company

The current downturn in activity in the oil and gas drilling industry has had and is likely to continue to have an adverse impact on our business and results of operations.

The oil and gas drilling industry is cyclical, and the industry has entered a downcycle. Crude oil prices have fallen during the past year. The price of Brent crude has fallen from over $100 per barrel in March 2014, to approximately $50 per barrel as of March 20, 2015. In response to the recent decrease in the prices of oil and gas, a number of our oil and gas company customers have recently announced decreases in budgeted expenditures for offshore drilling. Declines in capital spending levels, coupled with additional newbuild supply, have and are likely to continue to put significant pressure on dayrates and utilization. The decline and the perceived risk of a further decline in oil and/or gas prices could cause oil and gas companies to further reduce their overall level of activity or spending, in which case demand for our services may further decline and revenues may continue to be adversely affected through lower drilling unit utilization and/or lower dayrates.

Historically, when drilling activity and spending decline, utilization and dayrates also decline and drilling has been reduced or discontinued, resulting in an oversupply of drilling units. The recent oversupply of drilling units will be exacerbated by the entry of newbuild rigs into the market. The supply of available uncontracted units has and is likely to further intensify price competition as scheduled delivery dates occur and additional contracts terminate without renewal and lead to a reduction in dayrates as the active fleet grows. We currently have 15 rigs under construction comprised of four drillships, three semi-submersibles, and eight jack-ups. Of the rigs under construction, two have drilling contracts that commence upon delivery. In addition, the contract between NADL and Rosneft Oil Company for the newbuild drilling unit West Rigel is at significant risk of termination. We have reached agreements with both Cosco and Dalian shipyards in China to delay delivery of the Sevan Developer, a semi-submersible drilling rig, and eight jack-up drilling rigs, which were not contacted for employment. There is no assurance that we will be able to delay the delivery of our other newbuilds that do not have associated drilling contracts.

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If we are unable to secure contracts for our drilling units, including for when newbuilds are delivered to us and upon the expiration of our existing contracts, we may continue to idle or stack our units. When idled or stacked, drilling units do not earn revenues, but continue to require cash expenditures for crews, fuel, insurance, berthing and associated items. As of March 20, 2015, we had four units, comprised of the West Resolute, West Triton, West Navigator, and West Cressida idled or stacked. Subsequently on March 24, 2015, the West Cressida signed a one year contract expiring in March 2016. If our lenders are not confident that we are able to employ our assets, we may be unable to secure additional financing on terms acceptable to us or at all for the remaining installment payments we are obligated to make before the delivery of our remaining newbuilds and our other capital requirements including principal repayments.

In general, drilling unit owners are bidding for available work extremely competitively with a focus on utilization over returns, which has and will likely continue to drive rates down to or below cash breakeven levels. To maintain the continued employment of our units, we may also accept contracts at lower dayrates or on less favorable terms due to market conditions. In addition, customers have and may in the future request renegotiation of existing contracts to lower dayrates. In an over-supplied market, we may have limited bargaining power to renegotiate on more favorable terms. Lower utilization and dayrates have and will adversely affect our revenues and profitability.

In the current environment our customers may seek to cancel or renegotiate our contracts for various reasons, including adverse conditions, resulting in lower dayrates. For instance, Rosneft Oil Company, or Rosneft, recently terminated the contract with NADL for the West Navigator, prior to commencement, and the remaining contracts between NADL and Rosneft are at significant risk of termination. In addition, we were recently unable to conclude execution of contract extensions for the drilling units West Taurus and West Eminence in Brazil after the approval of such extensions by Petrobras.

The effects of the downcycle may have other impacts on our business as well. During the period ended December 31, 2014 we recognized a charge of $232 million relating to the impairment of goodwill allocated to out jack-up drilling rig segment. Prolonged periods of low utilization and dayrates could also result in a reduction in the market value of our drilling units or goodwill. This could lead to the recognition of further impairment charges on our drilling units or goodwill if future cash flow estimates, based on information available to management at the time, indicate that the carrying value of these drilling units or goodwill may not be recoverable. In addition, if the market value of our drilling units decreases, and we sell any drilling unit at a time when prices for drilling units have fallen, such a sale may result in a loss, which would negatively affect our results of operations.

Prolonged periods of low dayrates, the possible termination or loss of contracts and reduced values of our drilling units could negatively impact our ability to comply with certain financial covenants under the terms of our debt agreements. Our ability to comply with these restrictions and covenants, including meeting financial ratios and tests, is dependent on our future performance and may be affected by events beyond our control. If a default occurs under these agreements, lenders could terminate their commitments to lend or in some circumstances accelerate the outstanding loans and declare all amounts borrowed due and payable. In addition, our existing debt agreements contain cross-default provisions. In the event of a default by us under one of our debt agreements, the lenders under our other existing debt agreements could determine that we are in default under our other financing agreements. This could lead to an acceleration and enforcement of such agreements by our lenders.

We do not know when the market for offshore drilling units may recover, or the nature or extent of any future recovery. There can be no assurance that the current demand for drilling rigs will not further decline in future periods. The continued or future decline in demand for drilling rigs would adversely affect our financial position, operating results and cash flows.

The amount of our debt could limit our liquidity and flexibility in obtaining additional financing and in pursuing other business opportunities.

As of December 31, 2014, we had $13.0 billion in principal amount of interest bearing debt, representing approximately 222% of our total market capitalization, of which $9.8 billion was secured by, among other things, liens on our drilling units. Our current indebtedness and future indebtedness that we may incur could affect our future operations, as a portion of our cash flow from operations will be dedicated to the payment of interest and principal on such debt and will not be available for other purposes. Covenants contained in our debt agreements require us to meet certain financial tests and non-financial tests, which may affect our flexibility in planning for, and reacting to, changes in our business or economic conditions, may limit our ability to dispose of assets or place restrictions on the use of proceeds from such dispositions, withstand current or future economic or industry downturns and compete with others in our industry for strategic opportunities, and may limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes. Our ability to meet our debt service obligations and to fund planned expenditures, including construction costs for our newbuilding projects, will be dependent upon our future performance, which will be subject to prevailing economic conditions, industry cycles and financial, business, regulatory and other factors affecting our operations, many of which are beyond our control. Our future cash flows may be insufficient to meet all of our debt obligations and contractual commitments, and any insufficiency could negatively impact our business. To the extent that we are unable to repay our indebtedness as it becomes due or at maturity, we may need to refinance our debt, raise new debt, sell assets or repay the debt with the proceeds from equity offerings. Additional indebtedness or equity financing may not be available to us in the future for the refinancing or repayment of existing indebtedness, and we may not be able to complete asset sales in a timely manner sufficient to make such repayments.

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We may be unable to comply with covenants in our credit facilities or any future financial obligations that impose operating and financial restrictions on us, which could result in a default under the terms of these agreements, which could accelerate our repayment of funds that we have borrowed.

Our debt agreements and future financial obligations may impose, among other things, operating and financial restrictions on us. These restrictions may prohibit or otherwise limit our ability to, among other things:

•enter into other financing arrangements;

•incur additional indebtedness;

•create or permit liens on our assets;

•sell our drilling units or the shares of our subsidiaries;

•make investments;

•change the general nature of our business;

•pay dividends to our shareholders;

•change the management and/or ownership of the drilling units;

•make capital expenditures; and

•compete effectively to the extent our competitors are subject to less onerous restrictions.

We may seek and obtain waivers or amendments from our lenders with respect to the restrictions and covenants contained in our debt agreements. If we are unable to comply with any of the restrictions and covenants in our debt agreements governing our indebtedness, or in current or future debt financing agreements, and we are unable to obtain a waiver or amendment from our lender for such noncompliance, a default could occur under the terms of those agreements. Our ability to comply with these restrictions and covenants, including meeting financial ratios and tests, is dependent on our future performance and may be affected by events beyond our control. If a default occurs under these agreements, lenders could terminate their commitments to lend or in some circumstances accelerate the outstanding loans and declare all amounts borrowed due and payable. Our drilling units serve as security for our commercial bank indebtedness. If our lenders were to foreclose their liens on our drilling units in the event of a default, this may impair our ability to continue our operations. As of December 31, 2014, we had $9.8 billion of interest-bearing debt secured by, among other things, liens on our drilling units. In addition, all of our loan agreements contain cross-default provisions, meaning that if we are in default under one of our loan agreements, amounts outstanding under our other loan agreements may also be in default, accelerated and become due and payable. We also consolidate certain subsidiaries of Ship Finance International Limited (NYSE: SFL), or Ship Finance, entities into our financial statements as variable interest entities, or VIEs. To the extent that the VIEs may default under their indebtedness and their debt becomes classified as current in their financial statements, we would in turn, mark such indebtedness current in our consolidated financial statements. The characterization of the indebtedness in our financial statements as current may adversely impact our compliance with the covenants contained in our existing and future debt agreements. If any of these events occur, we cannot guarantee that our assets will be sufficient to repay in full all of our outstanding indebtedness, and we may be unable to find alternative financing. Even if we could obtain alternative financing, that financing might not be on terms that are favorable or acceptable.

Moreover, in connection with any waivers of or amendments to our credit facilities that we may obtain, our lenders may impose additional operating and financial restrictions on us or modify the terms of our existing credit facilities. These restrictions may further restrict our ability to, among other things, pay dividends, repurchase shares of our common stock, make capital expenditures or incur additional indebtedness, including through the issuance of guarantees.

Failure to comply with covenants and other provisions in our existing or future debt agreements could result in cross-defaults under our existing debt agreements, which would have a material adverse effect on us.

Our existing debt agreements contain cross-default provisions that may be triggered if we default under the terms of our existing or future financing agreements. In the event of a default by us under one of our debt agreements, the lenders under our existing debt agreements could determine that we are in default under our other financing agreements. In addition, certain subsidiaries of Seadrill Partners LLC, or Seadrill Partners, are joint borrowers with our subsidiaries under some of our existing debt agreements, and certain subsidiaries of Seadrill Partners have provided guarantees and collateral in relation to certain of our debt agreements in which they have a financial interest. While we are not a guarantor of the debts of Seadrill Partners and its subsidiaries, in the event that the subsidiaries of Seadrill Partners default under their indebtedness, such default could trigger the cross-default provisions in our existing debt agreements or future debt agreements. Such cross defaults could result in the acceleration of the maturity of such debt under these agreements and the lenders thereunder may foreclose upon any collateral securing that debt, including our drilling units, even if we were to subsequently cure such default. In the event of such acceleration and foreclosure, we might not have sufficient funds or other assets to satisfy all of our obligations, which would have a material adverse effect on our business, results of operations and financial condition and would significantly reduce our ability, or make us unable, to pay dividends to our shareholders for so long as such default is continuing.

13

We may not be able to raise equity or debt financing sufficient to execute our growth strategy and to pay the cost of all of our newbuilding drilling units, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business is capital intensive and, to the extent we do not generate sufficient cash from operations, we may need to raise additional funds through public or private debt or equity offerings to execute our growth strategy and to fund our capital expenditures. Our ability to access the capital markets may be limited by our financial condition at the time, by changes in laws and regulations or interpretation thereof and by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control.

Borrowings under our current credit facilities, which are subject to certain conditions, and available cash on hand are not sufficient to pay the remaining installments related to our contracted commitments of all of our newbuilding drilling units, which as of March 20, 2015 was $5.0 billion. If we are not able to borrow additional funds, raise other capital or utilize available cash on hand, we may not be able to acquire these drilling units, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. If for any reason we fail to make a payment when due under our newbuilding contracts, which may result in a default under our newbuilding contracts, or otherwise fail to take delivery of our newbuild units, we would be prevented from realizing potential revenues from these projects, we could also lose all or a portion of our yard payments that were paid by us, which as of March 20, 2015, amounted to $1.6 billion and we could be liable for penalties and damages under such contracts. Following such potential defaults we are also exposed under cross-default provisions in our loan financing agreements.

Our failure to obtain the funds for necessary future capital expenditures could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may not pay dividends in the future

Under our bye-laws, any dividends declared will be in the sole discretion of our Board of Directors, or the Board, and will depend upon earnings, market prospects, current capital expenditure programs and investment opportunities. Under Bermuda law, we may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that (a) we are, or would after the payment be, unable to pay our liabilities as they become due; or (b) the realizable value of our assets would thereby be less than our liabilities. In addition, since we are a holding company with no material assets other than the shares of our subsidiaries through which we conduct our operations, our ability to pay dividends will depend on our subsidiaries distributing to us their earnings and cash flow. We suspended the payment of dividends in November 2014, and we cannot predict when, or if, dividends will be paid in the future.

We rely on a small number of customers.

Our contract drilling business is subject to the risks associated with having a limited number of customers for our services. As of December 31, 2014, our five largest customers accounted for approximately 63% of our future contracted revenues, or backlog. Our results of operations could be materially adversely affected if any of our major customers failed to compensate us for our services, terminated our contracts with or without cause, failed to renew our existing contracts or refused to award new contracts to us and we are unable to enter into contracts with new customers at comparable dayrates.

We may be restricted from competing with Seadrill Partners under the Omnibus Agreement.

We have entered into an omnibus agreement with Seadrill Partners in connection with its initial public offering, which may restrict our ability to, among other things, acquire, own, operate or contract for certain drilling units operating under drilling contracts of five or more years, unless we offer to sell such drilling units to Seadrill Partners. These restrictions could harm our business and adversely affect our financial position and results of operations and ability to implement our growth strategy. For additional information, please see “Item 7. Major Shareholders and Related Party Transactions-B. Related Party Transactions-Seadrill Partners-Omnibus Agreement-Noncompetition.”

We are exposed to the credit risks of our key customers and certain other third parties, and non-payment by these customers and other parties could adversely affect our financial position, results of operations and cash flows.

We are subject to risks of loss resulting from non-payment or non-performance by our customers and certain other third parties. Some of these customers and other parties may be highly leveraged and subject to their own operating and regulatory risks. If any key customers or other parties default on their obligations to us, our financial results and condition could be adversely affected. Any material nonpayment or nonperformance by these entities, other key customers or certain other third parties could adversely affect our financial position, results of operations and cash flows.

14

Newbuilding projects and surveys are subject to risks that could cause delays or cost overruns.

As of March 20, 2015, we had an outstanding newbuilding order book with various yards for an additional 15 drilling units with corresponding contractual yard and other payment commitments totaling $5.0 billion. These construction projects are subject to risks of delay or cost overruns inherent in any large construction project from numerous factors, including shortages of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain required permits or approvals, unanticipated cost increases between order and delivery, design or engineering changes and work stoppages and other labor disputes, adverse weather conditions or any other events of force majeure, terrorist acts, war, piracy or civil unrest. Significant cost overruns or delays could adversely affect our financial position, results of operations and cash flows. Additionally, failure to complete a project on time may result in the delay of revenue from that rig. New drilling rigs may experience start-up difficulties following delivery or other unexpected operational problems that could result in uncompensated downtime, which also could adversely affect our financial position, results of operations and cash flows or the cancellation or termination of drilling contracts.

Failure to secure a drilling contract prior to delivery of our newbuilding drilling rigs could adversely affect our results of operations.

We have entered into agreements with various shipbuilding yards in Singapore, South Korea and China for the construction of 15 new drilling units consisting of drillships, semi-submersible rigs and jack-up rigs. We have not yet secured drilling contracts on 13 of these newbuilding drilling units. In addition, the contract between NADL and Rosneft Oil Company for the newbuild drilling unit West Rigel is at significant risk of termination. Historically, the industry has at times experienced prolonged periods of overcapacity, during which many rigs were idle for long periods of time. Our failure to secure a drilling contract for any of these newbuilding drilling units prior to their delivery could adversely affect our cash flows and results of operations. In addition, in the event we are unable to secure a contract for any of these newbuilding drilling units prior to their delivery we may not be able to obtain financing for such drilling units, or we may not be able to obtain financing in the amounts or on the terms that we have obtained financing for other drilling units in the past.

Some of our offshore drilling contracts may be terminated early due to certain events.

Some of our customers have the right to terminate their drilling contracts upon the payment of an early termination fee. However, such payments may not fully compensate us for the loss of the contract. Under certain circumstances, our contracts may permit customers to terminate contracts early without the payment of any termination fees, as a result of nonperformance, longer periods of downtime or impaired performance caused by equipment or operational issues, or sustained periods of downtime due to force majeure events beyond our control. In addition, national oil company customers may have special termination rights by law. During periods of challenging market conditions, we may be subject to an increased risk of our clients seeking to repudiate their contracts, including through claims of non-performance. Our customers’ ability to perform their obligations under their drilling contracts with us may also be negatively impacted by the prevailing uncertainty surrounding the development of the world economy and the credit markets. If our customers cancel some of our contracts, and we are unable to secure new contracts on a timely basis and on substantially similar terms, or if contracts are suspended for an extended period of time or if a number of our contracts are renegotiated, it could adversely affect our consolidated statement of financial position, results of operations or cash flows.

The provisions of the majority of our offshore rig contracts that are term contracts at fixed dayrates may not permit us fully to recoup our costs in the event of a rise in our expenses.

The majority of our drilling units are employed on long-term contracts. The average remaining contract length as of March 20, 2015, was 2.1 for our floaters and 1.1 years for our jack-up rigs, excluding the remaining contract length attributable to the SeaMex contracts which were deconsolidated after the reporting year end. The majority of these contracts have dayrates that are fixed over the contract term. In order to mitigate the effects of inflation on revenues from term contracts, most of our long-term contracts include escalation provisions. These provisions allow us to adjust the dayrates based on stipulated cost increases including wages, insurance and maintenance cost. However, actual cost increases may result from events or conditions that do not cause correlative changes to the applicable indices. Furthermore, certain indices are updated semi-annually, and therefore may be outdated at the time of adjustment. In addition, the adjustments are normally performed on a semi-annual or annual basis. For these reasons, the timing and amount awarded as a result of such adjustments may differ from our actual cost increases, which could adversely affect our financial performance. Some of our long term contracts contain rate adjustment provisions based on market day-rate fluctuations rather than cost increases. In such contracts, the day rate could be adjusted lower during a period when costs of operation rise, which could adversely affect our financial performance. Shorter-term contracts normally do not contain escalation provisions. In addition, normally our contracts contain provisions for either fixed or dayrate compensation during mobilization. These rates may not fully cover our costs of mobilization, and mobilization may be delayed, increasing our cost, without additional compensation from the customer, for reasons beyond our control.

15

Our operating and maintenance costs will not necessarily fluctuate in proportion to changes in operating revenues.

Our operating expenses and maintenance costs depend on a variety of factors including crew costs, provisions, equipment, insurance, maintenance and repairs and shipyard costs, many of which are beyond our control and affect the entire offshore drilling industry. During periods after which a rig becomes idle, we may decide to “warm stack” the rig, which means the rig is kept fully operational and ready for redeployment, and maintains most of its crew. As a result, our operating expenses during a warm stacking will not be substantially different than those we would incur if the rig remained active. We may also decide to “cold stack” the rig, which the means the rig is stored in a harbor, shipyard or a designated offshore area, and the crew is reassigned to an active rig or dismissed. However, reductions in costs following the decision to cold stack a rig may not be immediate, as a portion of the crew may be required to prepare the rig for such storage. Moreover, as our drilling rigs are mobilized from one geographic location to another, the labor and other operating and maintenance costs can vary significantly. Operating and maintenance costs will not necessarily fluctuate in proportion to changes in operating revenues. Operating revenues may fluctuate as a function of changes in supply of offshore drilling units and demand for contract drilling services, which in turn, affect dayrates, and the economic utilization and performance of our fleet of drilling units. However, our operating costs are generally related to the number of units in operation and the cost level in each country or region where the units are located. In addition, equipment maintenance costs fluctuate depending upon the type of activity that the unit is performing and the age and condition of the equipment. In connection with new assignments, we might incur expenses relating to preparation for operations under a new contract. The expenses may vary based on the scope and length of such required preparations and the duration of the contractual period over which such expenditures are amortized. In situations where our drilling units incur idle time between assignments, the opportunity to reduce the size of our crews on those drilling units is limited, as the crews will be engaged in preparing the unit for its next contract. When a unit faces longer idle periods, reductions in costs may not be immediate as some of the crew may be required to prepare drilling units for stacking and maintenance in the stacking period. Should units be idle for a longer period, we will seek to redeploy crew members, who are not required to maintain the drilling units, to active rigs to the extent possible. However, there can be no assurance that we will be successful in reducing our costs in such cases.

We may not be able to renew or obtain new and favorable contracts for drilling units whose contracts are expiring or are terminated, which could adversely affect our revenues and profitability.

As of March 20, 2015, we had 9 contracts that expire in 2015, 12 contracts that expire in 2016 and 8 contracts that expire in 2017. Our ability to renew existing contracts or obtain new contracts will depend on the prevailing market conditions, which may vary among different geographic regions, different types of drilling units, and specific customers. Likewise, our customers may reduce their activity levels or seek to terminate or renegotiate drilling contracts with us. If we are not able to obtain new contracts in direct continuation, or if new contracts are entered into at dayrates substantially below the existing dayrates or on terms otherwise less favorable compared to existing contracts terms, such as contracts on a turnkey basis, our revenues and profitability could be adversely affected.

The offshore drilling markets in which we compete experience fluctuations in the demand for drilling services, as measured by the level of exploration and development expenditures and supply of capable drilling equipment. Upon the expiration or termination of their current contracts, we may not be able to obtain contracts for our drilling units and there may be a gap in employment of the rigs between current contracts and subsequent contracts. In particular, if oil and natural gas prices are low, or it is expected that such prices will decrease in the future, at a time when we are seeking to arrange contracts for our drilling units, we may not be able to obtain drilling contracts at attractive dayrates or at all.

If the dayrates which we receive for the reemployment of our current drilling units are less favorable, we will recognize less revenue from their operations. Our ability to meet our cash flow obligations will depend on our ability to consistently secure drilling contracts for our drilling units at sufficiently high dayrates. We cannot predict the future level of demand for our services or future conditions in the oil and gas industry. If oil and gas companies do not continue to maintain or increase exploration, development and production expenditures, we may have difficulty securing drilling contracts, or we may be forced to enter into contracts at unattractive dayrates, which would adversely affect our ability to pay dividends to our shareholders.

We may incur impairment charges as a result of reduced demand for drilling services or other factors

We have recorded charges for impairment of goodwill due to declining day rates and future market expectations for day rates in the sector. These have been trending lower as a result of the recent decline in the price of oil, which has impacted the spending plans of our customers. In the future, we may be required to record additional impairment charges to goodwill or other assets. Such impairment charges could have a material adverse effect on our financial performance or results of operations. In addition, such impairment charges could adversely impact our ability to comply with the restrictions and covenants in our debt agreements, including meeting financial ratios and tests in those agreements. If we are unable to comply with the restrictions and covenants in the agreements governing our indebtedness or in current or future debt financing agreements, a default could occur under the terms of those agreements.

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Our future contracted revenue, or backlog, for our fleet of drilling units may not be ultimately realized.

As of March 20, 2015, the future contracted revenue for our fleet of drilling units, or contract backlog, was approximately $9.7 billion excluding $3.1 billion of backlog attributable to the Rosneft contracts, and excluding $1.6 billion of backlog attributable to the SeaMex jack-up drilling rigs which were deconsolidated after the reporting year. The actual amount of revenues earned and the actual periods during which revenues are earned may differ from the stated amounts and periods due to shipyard and maintenance projects, downtime and other events within or beyond our control. In addition, our customers may seek to cancel or renegotiate our contracts for various reasons, including adverse conditions, resulting in lower dayrates. For instance, Rosneft Oil Company, or Rosneft, recently terminated the contract with NADL for the West Navigator, prior to commencement, and the remaining contracts between NADL and Rosneft are at significant risk of termination. In addition, we were recently unable to conclude execution of contract extensions for the drilling units West Taurus and West Eminence in Brazil after the approval of such extensions by Petrobras. Our inability, or the inability of our customers to perform, under our or their contractual obligations may have a material adverse effect on our financial position, results of operations and cash flows.

Competition within the offshore drilling industry may adversely affect our results of operations and financial condition.

The offshore drilling industry is highly competitive and fragmented and includes several large companies that compete in many of the markets we serve, as well as numerous small companies that compete with us on a local basis. Offshore drilling contracts are generally awarded on a competitive bid basis or through privately negotiated transactions. In determining which qualified drilling contractor is awarded a contract, the key factors are pricing, rig availability, rig location, condition and integrity of equipment, its record of operating efficiency, including high operating uptime, technical specifications, safety performance record, crew experience, reputation, industry standing and customer relations. Our operations may be adversely affected if our current competitors or new market entrants introduce new drilling rigs with better features, performance, prices or other characteristics in comparison to our drilling rigs, or expand into service areas where we operate. In addition, mergers among oil and natural gas exploration and production companies have reduced, and may from time to time further reduce the number of available customers, which would increase the ability of potential customers to achieve pricing terms favorable to them.

The offshore drilling industry has historically been cyclical and is impacted by oil and gas price levels and volatility. There have been periods of high demand, short rig supply and high dayrates, followed by periods of low demand, excess rig supply and low dayrates. Changes in oil and gas prices can have a dramatic effect on rig demand, and periods of excess rig supply may intensify competition in the industry and result in the idling of drilling units. We have idled and stacked rigs, and may in the future idle or stack additional rigs or enter into lower dayrate drilling contracts in response to market conditions. We cannot predict when or if any idled or stacked rigs will return to service.

Competitive pressures and other factors may result in significant price competition, particularly during industry downturns, which could have a material adverse effect on our results of operations and financial condition.

An economic downturn could have a material adverse effect on our revenue, profitability and financial position.

We depend on our customers’ willingness and ability to fund operating and capital expenditures to explore, develop and produce oil and gas, and to purchase drilling and related equipment. There has historically been a strong link between the development of the world economy and demand for energy, including oil and gas. The world economy is currently facing a number of challenges. Concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations and the overall stability of the euro. An extended period of adverse development in the outlook for European countries could reduce the overall demand for oil and natural gas and for our services. These potential developments, or market perceptions concerning these and related issues, could affect our financial position, results of operations and cash available for distribution. This includes uncertainty surrounding the sovereign debt and credit crises in certain European countries. In addition, turmoil and hostilities in Ukraine, Korea, the Middle East, North Africa and other geographic areas and countries are adding to the overall risk picture.

In addition, worldwide financial and economic conditions could cause our ability to access the capital markets to be severely restricted at a time when we would like, or need, to access such markets, which could impact our ability to react to changing economic and business conditions. Worldwide economic conditions have in the past impacted, and could in the future impact, the lenders participating in our credit facilities and our customers, causing them to fail to meet their obligations to us. In addition, a portion of the credit under our credit facilities is provided by European banking institutions. If economic conditions in Europe preclude or limit financing from these banking institutions, we may not be able to obtain financing from other institutions on terms that are acceptable to us, or at all, even if conditions outside Europe remain favorable for lending.

An extended period of adverse development in the outlook for the world economy could reduce the overall demand for oil and gas and for our services. Such changes could adversely affect our results of operations and cash flows beyond what might be offset by the simultaneous impact of possibly higher oil and gas prices.

17

Failure to obtain or retain highly skilled personnel could adversely affect our operations.

We require highly skilled personnel to operate and provide technical services and support for our business. Competition for skilled and other labor required for our drilling operations has increased in recent years as the number of rigs activated or added to worldwide fleets has increased. The number of rigs in operation may grow in the future as new units are delivered, which could increase the future demand for offshore drilling crews. Notwithstanding a general downturn in the drilling industry, in some regions such as Brazil and Western Africa, limited availability of qualified personnel in combination with local regulations focusing on crew composition, are expected to further increase demand for qualified offshore drilling crews, which may increase our costs. Future expansion of the rig fleet, or improved demand for drilling services in general, coupled with shortages of qualified personnel could further create and intensify upward pressure on wages and make it more difficult for us to staff and service our rigs. Such developments could adversely affect our financial results and cash flow. Furthermore, as a result of any increased competition for people and risk for higher turnover, we may experience a reduction in the experience level of our personnel, which could lead to higher downtime and more operating incidents.

Our labor costs and the operating restrictions that apply to us could increase as a result of collective bargaining negotiations and changes in labor laws and regulations.

Some of our employees are represented by collective bargaining agreements. The majority of these employees work in Brazil, Mexico, Nigeria, Norway and the U.K. In addition, some of our contracted labor works under collective bargaining agreements. As part of the legal obligations in some of these agreements, we are required to contribute certain amounts to retirement funds and pension plans and are restricted in our ability to dismiss employees. In addition, many of these represented individuals are working under agreements that are subject to salary negotiation. These negotiations could result in higher personnel costs, other increased costs or increased operating restrictions that could adversely affect our financial performance.

An inability to obtain visas and work permits for our employees on a timely basis could hurt our operations and have an adverse effect on our business.

Our ability to operate worldwide depends on our ability to obtain the necessary visas and work permits for our personnel to travel in and out of, and to work in, the jurisdictions in which we operate. Governmental actions in some of the jurisdictions in which we operate may make it difficult for us to move our personnel in and out of these jurisdictions by delaying or withholding the approval of these permits. If we are not able to obtain visas and work permits for the employees we need for operating our rigs on a timely basis, or for third party technicians needed for maintenance or repairs, we might not be able to perform our obligations under our drilling contracts, which could allow our customers to cancel the contracts. If our customers cancel some of our contracts, and we are unable to secure new contracts on a timely basis and on substantially similar terms, it could adversely affect our consolidated statement of financial position, results of operations or cash flows.

The failure to consummate or integrate acquisitions of other businesses and assets in a timely and cost-effective manner could have an adverse effect on our financial condition and results of operations.

Acquisition of assets or businesses that expand our drilling operations is an important component of our business strategy. We believe that acquisition opportunities may continue to arise from time to time, and any such acquisition could be significant. Any acquisition could involve the payment by us of a substantial amount of cash, the incurrence of a substantial amount of debt or the issuance of a substantial amount of equity. Certain acquisition and investment opportunities may not result in the consummation of a transaction. In addition, we may not be able to obtain acceptable terms for the required financing for any such acquisition or investment that arises. We cannot predict the effect, if any, that any announcement or consummation of an acquisition would have on the trading price of our common stock. Our future acquisitions could present a number of risks, including the risk of incorrect assumptions regarding the future results of acquired operations or assets or expected cost reductions or other synergies expected to be realized as a result of acquiring operations or assets, the risk of failing to successfully and timely integrate the operations or management of any acquired businesses or assets and the risk of diverting management’s attention from existing operations or other priorities. If we fail to consummate and integrate our acquisitions in a timely and cost effective manner, our financial condition and results of operations could be adversely affected.

We may suffer losses through our investments in other companies in the offshore drilling and oilfield services industry, which could have a material adverse effect on our business, financial condition, results of operation and cash flows.

We currently hold investments in several other companies in our industry that own/operate offshore drilling rigs with similar characteristics to our fleet of rigs or deliver various other oilfield services. These investments include equity interests in Archer Limited, or Archer, SapuraKencana Petroleum Berhad, or SapuraKencana, and Seabras Sapura Participacoes SA and Sapura Holdco Ltd. (collectively, Seabras Sapura), among others. In addition, following the deconsolidation of Seadrill Partners on January 2, 2014, our interest in Seadrill Partners, Seadrill Operating LP, and Seadrill Capricorn Holdings LLC are all treated as investments in associates. The market value of our equity interest in these companies is likely to be volatile and could fluctuate in response to changes in oil and gas prices and activity levels in the offshore oil and gas industry. If we sell our equity interest in an investment at a time when the value of such investment has fallen, we may incur a loss on the sale or an impairment loss being recognized, ultimately leading to a reduction in earnings.

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Interest rate fluctuations could affect our earnings and cash flow.

In order to finance our growth we have incurred significant amounts of debt. With the exception of some of our bonds and convertible bonds, the large majority of our debt arrangements have floating interest rates. As such, significant movements in interest rates could have an adverse effect on our earnings and cash flow. In order to manage our exposure to interest rate fluctuations, we use interest rate swaps to effectively fix a part of our floating rate debt obligations. The principal amount covered by interest rate swaps is evaluated continuously and determined based on our debt level, our expectations regarding future interest rates and our overall financial risk exposure. As of December 31, 2014, our total floating rate debt amounted to $10.3 billion of which we had entered into interest rate swap agreements to fix the interest rate for a principal amount of $8.1 billion. The corresponding weighted average interest rate was 2.18% as of the same date. Although we enter into various interest rate swap transactions to manage exposure to movements in interest rates, there can be no assurance that we will be able to continue to do so at a reasonable cost or at all. If we are unable to effectively manage our interest rate exposure through interest rate swaps, any increase in market interest rates would increase our interest rate exposure and debt service obligations, which would exacerbate the risks associated with our leveraged capital structure.

A change in tax laws of any country in which we operate could result in a higher tax expense or a higher effective tax rate on our worldwide earnings.

We conduct our operations through various subsidiaries in countries throughout the world. Tax laws, regulations and treaties are highly complex and subject to interpretation. Consequently, we are subject to changing tax laws, regulations and treaties in and between countries in which we operate, including treaties between the United States and other nations. Our income tax expense is based upon our interpretation of the tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws, regulations or treaties, including those in and involving the United States, or in the interpretation thereof, or in the valuation of our deferred tax assets, which is beyond our control could result in a materially higher tax expense or a higher effective tax rate on our worldwide earnings.

A loss of a major tax dispute or a successful tax challenge to our operating structure, intercompany pricing policies or the taxable presence of our subsidiaries in certain countries could result in a higher tax rate on our worldwide earnings, which could result in a significant negative impact on our earnings and cash flows from operations.

Our income tax returns are subject to review and examination. We do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority. If any tax authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our subsidiaries in certain countries; or if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure; or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could increase substantially and our earnings and cash flows from operations could be materially adversely affected.

United States tax authorities may treat us as a "passive foreign investment company" for United States federal income tax purposes, which may have adverse tax consequences to U.S. shareholders.

A foreign corporation will be treated as a "passive foreign investment company," or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive income." For purposes of these tests, "passive income" includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income." U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

We presently believe that we are not a PFIC and do not anticipate becoming a PFIC. This is, however, a factual determination made on an annual basis and is subject to change. Therefore, we can give you no assurance as to our PFIC status.

If the United States Internal Revenue Service, or IRS, were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders may face adverse U.S. federal income tax consequences.  Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, or the Code, (which election could itself have adverse consequences for such shareholders, as discussed below under "Item 10 Additional Information – E. Taxation"), such shareholders would be liable to pay U.S. federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of the common shares, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of the common shares. In the event that our shareholders face adverse U.S. federal income tax consequences as a result of investing in shares of our common stock, this could adversely affect our ability to raise additional capital through the equity markets. See "Item 10 Additional Information – E. Taxation" for a more comprehensive discussion of the U.S. federal income tax consequences to U.S. shareholders if we are treated as a PFIC.

Investors are encouraged to consult their own tax advisors concerning the overall tax consequences of the ownership of the common shares arising in an investor's particular situation under U.S. federal, state, local or foreign law.

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We depend on directors who are associated with affiliated companies, which may create conflicts of interest.

Our principal shareholder is Hemen Holding Limited, or Hemen. All but one of our directors serve as directors of other companies affiliated with Hemen. Our directors owe fiduciary duties to both us and other related parties, and may have conflicts of interest in matters involving or affecting us and our customers. In addition, they may have conflicts of interest when faced with decisions that could have different implications for other related parties than they do for us. We cannot assure you that any of these conflicts of interest will be resolved in our favor.

Risks Relating to Our Common Shares

Because we are a foreign corporation, you may not have the same rights that a shareholder in a U.S. corporation may have.

We are a Bermuda exempted company limited by shares. Our memorandum of association and bye-laws and the Companies Act, 1981 of Bermuda, or the Companies Act, govern our affairs. The Companies Act does not clearly establish your rights and the fiduciary responsibilities of our directors as do statutes and judicial precedent in some U.S. jurisdictions. Therefore, it may be more difficult to protect your interests as a shareholder in relation to the actions of management, directors or controlling shareholders, than it would be for shareholders of U.S. corporations to do the same. There is a statutory remedy under Section 111 of the Companies Act which provides that a shareholder may seek redress in the courts as long as such shareholder can establish that our affairs are being conducted, or have been conducted, in a manner oppressive or prejudicial to the interests of some part of the shareholders, including such shareholder.

We are incorporated in Bermuda and it may not be possible for our investors to enforce U.S. judgments against us.

We are incorporated in Bermuda and substantially all of our assets are located outside the U.S. In addition, all but one of our directors and all but one of our executive officers are non-residents of the U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be difficult or impossible for U.S. investors to serve process within the U.S. upon us or our directors and executive officers, or to enforce a judgment against us for civil liabilities in U.S. courts.

In addition, you should not assume that courts in the countries in which we are incorporated or where our assets are located (1) would enforce judgments of U.S. courts obtained in actions against us based upon the civil liability provisions of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us based on those laws.

We are subject to certain anti-takeover provisions in our constitutional documents.

Several provisions of our bye-laws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our Board to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions could also discourage, delay or prevent the merger, amalgamation or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider to be in its best interest. For more detailed information, reference is made to "Item 10. Additional Information" of this Annual Report.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

The Company

Seadrill Limited was incorporated in Bermuda under the Companies Act on May 10, 2005 as an exempted company limited by shares.  Our shares of common stock have been listed under the symbol "SDRL" on the Oslo Stock Exchange, or OSE, since November 2005 and on the NYSE since April 2010. Our principal executive offices are located at Par-la-Ville Place, 4th Floor, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda and our telephone number is +1 (441) 295-6935.

We are an offshore drilling contractor providing worldwide offshore drilling services to the oil and gas industry. Our primary business is the ownership and operation of drillships, semi-submersible rigs and jack-up rigs for operations in shallow-, mid-, deep, and ultra deep-water areas, and in benign and harsh environments. We contract our drilling units primarily on a dayrate basis to drill wells for our customers, who are oil super-majors and major integrated oil and gas companies, state-owned national oil companies and independent oil and gas companies. A dayrate drilling contract generally extends over a period of time covering either the drilling of a single well or group of wells or covering a stated term.

Through a number of acquisitions of companies, secondhand units and contracts for newbuildings, we have developed into one of the world’s largest international offshore drilling contractors, employing approximately 9,450 skilled employees. At March 20, 2015, we had a fleet of 39 offshore drilling units consisting of 12 semi-submersible rigs, 8 drillships and 19 jack-up rigs in operation and contracts for the construction of 15 offshore drilling units. These figures exclude the 5 jack-up rigs deconsolidated as part of the SeaMex joint venture in March 2015, but include the West Carina drillship which was delivered subsequent to the December 31, 2014 year end. Please see "Item 4. D. Property, Plant and Equipment", for further information on our fleet of drilling units and newbuilds.

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NADL, our majority owned subsidiary, is a Bermuda company formed in 2011 that focuses entirely on harsh environment offshore drilling operations. In January 2014, NADL completed its initial public offering ("IPO") in the United States of 13,513,514 common shares at $9.25 per share. As of December 31, 2014, we owned approximately 70.4% of NADL’s outstanding common shares, which are listed for trading on the NYSE and Norwegian Over-the-Counter Exchange, or Norwegian OTC, under the symbol “NADL.”

Sevan Drilling ASA, or Sevan, a controlled subsidiary, is a Norwegian company that focuses on owning and operating drilling units and specializes in the ultra-deepwater segment. As of December 31, 2014, we owned 50.11% of the outstanding shares in Sevan. Sevan's common shares trade on the OSE under the symbol “SEVDR”.

Asia Offshore Drilling, or AOD, a controlled subsidiary, is a company incorporated in Bermuda that owns and operates three high specification jack up drilling rigs. As of December 31, 2014, we owned 66.2% of the outstanding shares in AOD.

In addition to owning and operating our offshore drilling units through our subsidiaries, we also, from time to time, make investments in other offshore drilling and oil services companies. We currently have the following significant equity investments, among others, in other companies in our industry:

• Seadrill Partners, an associated company, is a Marshall Islands limited liability company formed in 2012 that focuses on owning and operating offshore drilling rigs under long term contracts with major oil companies. In October 2012, Seadrill Partners completed its IPO in the United States of 8,750,000 common units at $22.00 per unit. As of January 2, 2014, Seadrill Partners was deconsolidated. As of December 31, 2014, we currently own 46.6% of the outstanding limited liability interests of Seadrill Partners, which includes outstanding common and subordinated units. Seadrill Partners' common units trade on the NYSE under the symbol "SDLP". We also own significant non-controlling interests in various subsidiaries of Seadrill Partners.

• Archer, a global oilfield service company that specializes in drilling and well services. We currently own 39.9% of the outstanding common shares of Archer.

• SapuraKencana, an integrated oil and gas services and solutions provider. We currently own 8.2% of the outstanding common shares of SapuraKencana.

• Seabras Sapura, a group of related companies that construct, own and operate pipe-laying service vessels in Brazil. We have a 50% ownership stake in each of these companies.

Please see the Notes to our Consolidated Financial Statements included in this Annual Report for further information on our investments.

Management of the Company

Overall responsibility for the management of Seadrill Limited and its subsidiaries rests with the Board. The Board has organized the provision of management services through a subsidiary incorporated in the United Kingdom, Seadrill Management Ltd. The Board has defined the scope and terms of the services to be provided by Seadrill Management authorizing it to run day-to-day operations. The Board must be consulted on all matters of material importance and/or of an unusual nature and, for such matters, will provide specific authorization to personnel in Seadrill Management to act on its behalf.

Seadrill Management also has service and other management agreements with Seadrill Partners, an associated company, and SapuraKencana, where Seadrill Management provides management and operational services relating to various drilling units owned by these companies.

Acquisitions, Disposals, and Other Significant Developments for the period from January 1, 2014 through and including December 31, 2014

Acquisitions and capital expenditures

In December 2014, we exercised a purchase option for the West Polaris, an ultra-deepwater drillship, from Ship Finance International Limited ("Ship Finance"). The West Polaris was acquired from the Company by Ship Finance in 2008 and subsequently bareboat chartered to Seadrill with purchase options commencing in 2012. The purchase option price was $456 million and total consideration payable to Ship Finance was $111 million after debt, which was settled in January 2015.

We had total capital expenditures of approximately $3.2 billion, $4.5 billion and $1.7 billion in the years ended 2014, 2013 and 2012 respectively. Our capital expenditures relate primarily to our newbuild drilling unit program, capital additions and equipment to our existing drilling units and payments for long term maintenance. We financed this capital expenditure through cash generated from operations, secured and unsecured debt arrangements and the sale of partial ownership interests in certain subsidiaries and investments. Please refer to "Item 4D. Property, Plants and Equipment" and "Item 5. Operating and Financial Review and Prospects" for further information on the Company's fleet.

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Disposals and deconsolidations

During the period from Seadrill Partners' IPO, in October 2012 until the time of its first effective annual general meeting, or AGM, on January 2, 2014, the Company retained the sole power to appoint, remove and replace all members of Seadrill Partners' board of directors. Beginning with its first AGM, the majority of the board members of Seadrill Partners became electable by its common unitholders and accordingly, it is from this date the Company no longer retained the power to control the board of directors of Seadrill Partners. Seadrill Partners was therefore deconsolidated by the Company on January 2, 2014. As a result of the deconsolidation the Company derecognized the assets and liabilities of Seadrill Partners, and recognized its ownership interests in Seadrill Partners, and its non-controlling interests in Seadrill Partners subsidiaries, at fair value. See Note 11 to our Consolidated Financial Statements included herein for further discussion on deconsolidation of Seadrill Partners.

During 2014, we entered into a joint venture agreement with an investment fund controlled by Fintech Advisory Inc, or Fintech, to form SeaMex Ltd., or SeaMex, a 50% owned joint venture. Fintech is a private investment manager founded in 1989 that has a strong investment record and operation in Latin American countries. SeaMex has been formed for the purpose of owning and managing the jack-up drilling units working for Petroleos Mexicanos, or Pemex as well as to develop and pursue further opportunities in Mexico and other Latin American countries. The joint venture became effective on March 10, 2015. As of this date the Company will deconsolidate the five jack-up rigs, West Courageous, West Defender, West Intrepid, West Oberon and West Titania and related companies that form part of the joint venture, and recognize its 50% equity investment in SeaMex at fair value.

On November 4, 2014, we completed the sale of the entities that own and operate the West Vela to Seadrill Capricorn Holdings LLC, 49% owned by the Company and 51% owned by Seadrill Partners. Total initial consideration for the transaction was $900 million, of which Seadrill Partners' 51% share was $459 million.

On July 17, 2014, we sold an additional 28% interest in Seadrill Operating LP, a limited partnership controlled by Seadrill Partners, for $373 million to Seadrill Partners. Following this sale, we own a 42% interest in Seadrill Operating LP.

During the twelve months ended December 31, 2014, the Company sold a portion of its investment in SapuraKencana and received proceeds of $297 million, net of transaction costs. As a result of the sale, a gain of $131 million was recognized, which is included in the consolidated statement of operations within "Gain on realization of marketable securities". As a result of this transaction, our ownership interest in SapuraKencana’s outstanding common shares is 8.18%.

On March 21, 2014, we sold the entities that own and operate the West Auriga to Seadrill Capricorn Holdings LLC, 49% owned by the Company and 51% owned by Seadrill Partners. Total consideration for the transaction was $1.24 billion, of which Seadrill Partners' 51% share was $632 million.

Other significant developments

On March 17, 2014, Seadrill Partners, issued 10,400,000 common units in a public offering, with Seadrill also subscribing directly for 1,633,987 common units. On June 18, 2014, Seadrill Partners issued 6,100,000 common units to the public and 3,183,700 to Seadrill. On September 29, 2014, Seadrill Partners, issued a further 8,000,000 common units to the public. As a result of these transactions the Company's equity ownership interest in Seadrill Partners as of March 20, 2015, was 46.6% including both the common and subordinated units.

Rosneft Framework Agreement

On May 26, 2014, we entered into an Investment and Co-Operation Agreement with NADL and Rosneft to pursue onshore and offshore growth opportunities in the Russian market.

In connection with the Investment and Co-Operation Agreement, on August 20, 2014, we entered into a Framework Agreement with NADL and Rosneft, pursuant to which Rosneft agreed to sell, and NADL agreed to purchase, 100% of the capital of Rosneft’s Russian land drilling subsidiary, RN Burenie LLC, together with its subsidiaries, in exchange for such number of newly issued common shares of NADL, based on an agreed share price of $9.25 per share, as payment of the agreed purchase price, subject to certain cash adjustments. As part of this transaction, Rosneft has agreed to purchase additional shares in NADL at closing, at the same price, to increase its aggregate ownership interest in NADL to at least 30%. In addition, the Framework Agreement provides that Rosneft is entitled to receive additional shares of NADL following the commencement of certain offshore drilling contracts awarded by Rosneft to NADL. The Framework Agreement also provides that we and Rosneft will enter into a Shareholder Agreement to reflect certain agreements relating to NADL and the shares owned by both us and Rosneft in NADL, including, among other things, certain restrictions on such stockholders’ rights to vote, standstill restrictions and certain rights of first refusal. The Framework Agreement also contains customary closing conditions, including the necessary corporate approvals from Rosneft and certain termination rights.

The Framework Agreement provided for a closing date of no earlier than November 10, 2014, and that the agreement would terminate if the transaction had not closed by December 31, 2014. On November 7, 2014 the parties mutually agreed to extend the date of termination of the Framework Agreement until May 31, 2015 and on April 16, 2015, the parties mutually agreed to further extend the date of termination of the Framework Agreement until May 31, 2017, whereby both parties can effectively terminate the Framework Agreement and / or any offshore drilling contracts at any time prior to May 31, 2017 at no cost. The parties have agreed to use their reasonable endeavors to renegotiate, by no later than May 31, 2017, the terms of the transactions contemplated in the Framework Agreement, the characteristics of the transactions contemplated in the Framework Agreement, and the terms of the related offshore drilling contracts. During this time, NADL is permitted to market its offshore drilling rigs subject to existing drilling contracts with Rosneft, enter into binding contracts with third parties in respect of

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those rigs, delay the mobilization of those rigs under the Rosneft contracts in order to comply with the terms of any contracts with third parties, delay the construction or delivery of any of those rigs, and extend the construction period or shipyard stay of any of those rigs.

We can provide no assurances that we will be able to reach an agreement with Rosneft by May 31, 2017. Even if an agreement is reached, the terms of such agreement may differ materially from the terms contemplated in the original Framework Agreement as summarized herein.

Acquisitions, Disposals, and Other Significant Developments January 1, 2013 for the period from through and including December 31, 2013

Acquisitions and capital expenditures

In December 2013, we acquired the high specification jack-up newbuild in process, Prospector 3 from Prospector Offshore Drilling Rig Construction S.à.r.l., an unrelated party, for a total purchase price of $235 million. The rig was subsequently renamed West Titania.

In July 2013 we obtained control of 50.1% of the total outstanding shares of Sevan through direct ownership and our forward share purchase agreements which result in a controlling financial interest and as a result Sevan became a consolidated subsidiary from July 2, 2013. As a result of our increased interest, we were required to make a mandatory offer in accordance with the Oslo Stock Exchange rules for the remaining outstanding shares in Sevan for NOK 3.95. This mandatory offer period expired on August 23, 2013. As a result of the offer, we obtained an additional 47,394 shares, bringing our total interest in Sevan to 297,941,358 shares, or 50.11% of the total outstanding shares.

On March 25, 2013, we and the other major shareholder in Asia Offshore Drilling, Mermaid Maritime Plc, signed a shareholder resolution that changed the board of directors' composition in favor of the Company. Based on this change as of March 25, 2013 we obtained control of the board of directors and also owned 66.18% of the outstanding shares. As a result of obtaining control, we consolidated the results and financial position of AOD from this date. We currently own 66.23% of the outstanding common shares of Asia Offshore Drilling.

During 2013 we entered into agreements with yards to construct eight high specification jack-up rigs and four ultra deepwater drillships with a total estimated project price for all rigs of $4.2 billion including project management, drilling and handling tools, spares, operations preparation and capitalized interest.

Disposals

In April 2013, we completed the sale of the entities that own and operate 10 tender rigs to SapuraKencana for an enterprise value of $2.9 billion. The sale included the following tender rigs: T-4, T-7, T-11, T-12, West Alliance, West Berani, West Jaya, West Menang, West Pelaut, West Setia, and the newbuild rigs T-17, T-18, and West Esperanza. In addition our 49% ownership in Varia Perdana and Tioman Drilling was sold as part of this transaction, which included the following rigs: T-3, T-6, T-9, T-10, and the Teknik Berkat.

During 2013, we sold entities that operate and own the tender rigs T-15, T-16 and semi-submersible rigs West Leo and West Sirius to subsidiaries of Seadrill Partners. As of December 31, 2013, Seadrill Partners was a consolidated subsidiary and therefore no gain or loss was recorded on sale by the Company.

Other significant developments

On December 9, 2013, Seadrill Partners closed a public offering of 12,880,000 common units representing liability company interests at a price of $29.50 per common unit (including the underwriters allotment). Concurrently with the closing of the Offering, the Company purchased directly from the Seadrill Partners 3,394,916 common units at a price of $29.50 per unit. After this transaction, we owned 62.4% of the outstanding limited liability interests which includes Seadrill Partners’ outstanding common and subordinated units.

Acquisitions, Disposals, and Other Significant Developments for the period from January 1, 2012 through and including December 31, 2012

Acquisitions and capital expenditures

In November, 2012, we entered into an agreement with Songa Eclipse Ltd. to acquire the ultra-deepwater semi-submersible drilling rig Songa Eclipse for a cash consideration of $590 million. The cash consideration also included the acquisition of the drilling contract with Total Offshore Angola that was fixed and due to end in December 2013 with threeone year options to extend the contract. The physical delivery and final payment took place on January 3, 2013 which was considered to be the date of acquisition.

During 2012 we entered into agreements with yards to construct two ultra deepwater drillships, two ultra-deepwater semi-submersible rigs, and one tender rig with a total estimated project price for all rigs of $2.6 billion including project management, drilling and handling tools, spares, operations preparation and capitalized interest.

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Other significant developments

In November 2012, after a series of share acquisitions, our ownership interest in Asia Offshore Drilling increased to 12,190,858 common shares, or 64.23%. On November 12, 2012, we launched a mandatory offer to acquire the remaining issued and outstanding common shares of Asia Offshore Drilling for a purchase price per share of NOK28.71. Subsequent to this we owned 66.23% of the outstanding common shares of Asia Offshore Drilling.

On October 18, 2012, Seadrill Partners LLC (NYSE:SDLP), or Seadrill Partners, our then wholly owned subsidiary, launched an initial public offering in the United States of 10,062,550 common units (including the overallotment option that was granted to the underwriters and exercised), representing limited liability company interests, at $22.00 per unit. With the proceeds of its initial public offering, Seadrill Partners acquired four ownership stakes in drilling rigs from us, the West Capricorn, West Aquarius, West Capella andthe West Vencedor.

On May 17, 2012, SapuraCrest and Kencana Petroleum Bhd merged into a new entity SapuraKencana Petroleum Bhd, or SapuraKencana. As a consequence, our equity interest was diluted and the accounting treatment for this investment changed from being treated as an associated company to a marketable security, which is marked-to-market each quarter. In relation to the dilution, we booked a non-cash gain of $169 million. On May 30, 2012, we sold 300 million shares at MYR2.12 in the secondary market receiving gross proceeds of approximately $200 million and which resulted in an accounting gain of $84 million. This reduced our holdings of SapuraKencana to 319,540,802 shares, which was equivalent to 6.4% of the outstanding shares.

On March 27, 2012, NADL completed a private placement, raising $300 million through the issuance of 150 million new ordinary shares at $2.00 per share. The proceeds of the private placement were used to finance the first yard installment for a newbuilding harsh environment semi-submersible rig, repay intra-company debt to Seadrill and general corporate purposes. We purchased 75 million shares of NADL in the private placement. Following the private placement, our ownership interest in NADL was reduced from 77% to 73%.

B. BUSINESS OVERVIEW

We are an offshore drilling contractor providing worldwide offshore drilling services to the oil and gas industry. Our primary business is the ownership and operation of drillships, semi-submersible rigs and jack-up rigs for operations in shallow-, mid-, deep- and ultra deep-water areas, and in benign and harsh environments. We contract our drilling units primarily on a dayrate basis to drill wells for our customers, who are oil super-majors and major integrated oil and gas companies, state-owned national oil companies and independent oil and gas companies. A dayrate drilling contract generally extends over a period of time covering either the drilling of a single well or group of wells or covering a stated term. The various types of drilling units in our fleet are as follows:

Drillships

Our drillships are self-propelled ships equipped for drilling in deep waters, and are positioned over the well through a computer-controlled thruster system similar to that used on semi-submersible rigs. Drillships are suitable for drilling in remote locations because of their mobility and large load-carrying capacity. Depending on country of operation, drillships operate with crews of 65 to 100 people.

Semi-submersible drilling rigs

Semi-submersible drilling rigs (which include cylindrical designed units) consist of an upper working and living quarters deck connected to a lower hull, such as columns and pontoons. Such rigs operate in a "semi-submerged" floating position, in which the lower hull is below the waterline and the upper deck protrudes above the surface. The rig is situated over a wellhead location and remains stable for drilling in the semi-submerged floating position, due in part to its wave transparency characteristics at the water line.

There are two types of semi-submersible rigs, moored and dynamically positioned. Moored semi-submersible rigs are positioned over the wellhead location with anchors, while the dynamically positioned semi-submersible rigs are positioned over the wellhead location by a computer-controlled thruster system. Depending on country of operation, semi-submersible rigs generally operate with crews of 65 to 100 people.

Jack-Up Rigs

Jack-up rigs are mobile, self-elevating drilling platforms equipped with legs that are lowered to the ocean floor. A jack-up rig is towed to the drill site with its hull riding in the sea as a vessel and its legs raised. At the drill site, the legs are lowered until they penetrate the sea bed and the hull is elevated until it is above the surface of the water. After completion of the drilling operations, the hull is lowered until it rests on the water, the legs are raised and the rig can be relocated to another drill site. Jack-ups are generally suitable for water depths of 450 feet or less and operate with crews of 40 to 60 people.

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Reporting Segments

We report our business in the following reportable segments:

• Floaters: We offer services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to semi-submersible rigs and drillships for harsh and benign environments in mid-, deep- and ultra-deep waters.

• Jack-ups: We offer services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to jack-up rigs for operations in harsh and benign environments.

In prior periods, the company reported a Tender Rigs segment, which related to services encompassing drilling, completion and maintenance of offshore production wells in Southeast Asia, West Africa and the Americas. In these periods, the Company had drilling contracts related to self-erecting tender rigs and semi-submersible tender rigs. Following the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners LLC ("Seadrill Partners") as of January 2, 2014, the Company no longer has any drilling contracts in the Tender rig segment.

Information regarding our revenues, segment operating profit or loss and total assets attributable to each operating segment for the last three fiscal years is presented in Note 3 to our Consolidated Financial Statements included in this Annual Report. Information regarding our operating revenues and identifiable assets attributable to each of our geographic areas of operations for the last three fiscal years is also presented in Note 3 to our Consolidated Financial Statements included in this Annual Report.

Our Business Strategies

Our primary objective is to profitably grow our business to increase long-term distributable cash flow per share to our shareholders through the following principal strategies:

Continue to provide excellent service to our customers

We are a leading offshore deepwater drilling company and our mission is to continue to be the preferred offshore drilling contractor and to deliver excellent performance to our clients by consistently fulfilling their expectations for performance and safety standards. We believe that we have one of the most modern fleets in the industry and believe that by combining quality assets and experienced and skilled employees we will be able to provide our customers with safe and effective operations, and establish and maintain a position as a preferred provider of offshore drilling services for our customers. We believe that a combination of quality drilling rigs and highly skilled employees will facilitate the procurement of term contracts and premium dayrates.

Growth through newbuildings, targeted alliances, mergers and acquisitions

We have grown our fleet significantly since our formation in 2005. Our strategy is focused on developing a fleet of new premium offshore drilling units through newbuild orders and targeted acquisitions of modern assets. In line with this strategy, we have invested significantly in new rigs with enhanced technical capabilities. Following the deconsolidation and disposal of 7 ultra-deepwater and 3 tender rigs to Seadrill Partners, and 5 high-specification jack-ups to SeaMex, we had as March 20, 2015, 25 ultra-deepwater units built in 2000 or after, 2 mid-water semi-submersible harsh environment rigs and 24 high-specification jack-up rigs built after 2005 and 3 harsh environment jack-ups. In addition, consistent with our goal to operate the most technologically advanced drilling unit fleet and our commitment to safety, in the future, we may sell certain assets from time to time to replenish and grow our fleet. In April 2013, we completed the sale of 10 tender rigs to SapuraKencana and our investments in entities that owned tender rigs, for an enterprise value of $2.9 billion and we currently own approximately an 8% equity interest in SapuraKencana. We used the proceeds from the transaction to repay indebtedness and further grow our premium ultra-deepwater and jack-up segments.

In addition, we have made significant investments in companies operating in our industry, the offshore drilling segment and in the oil services segment, including investments in our subsidiaries, and other companies that we have equity investments in, including Seadrill Partners, Archer, Seabras Sapura, SapuraKencana and SeaMex. Refer to "Item 4A - History and development of the Company" for further information.

Market Overview

We provide operations in oil and gas exploration and development in regions throughout the world and our customers include major oil and gas companies, state-owned national oil companies and independent oil and gas companies. Our customers have experienced a significant decline in oil prices and reduced near term capital expenditures. As a result, the offshore drilling market is encountering a significant reduction in demand.

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The global fleet of drilling units

The global fleet of offshore drilling units consists of drillships, semi-submersible rigs, jack-up rigs and tender rigs. The existing worldwide fleet as of March 20, 2015 totals 899 units including 118 drillships, 198 semi-submersible rigs, 544 jack-up rigs and 39 tender rigs. In addition, there are 56 drillships, 128 jack-up rigs, 30 semi-submersible rigs and 9 tender rigs under construction. The water depth capacities for the various drilling rig types depend on rig specifications, capabilities and equipment outfitting. Jack-up rigs normally work in water depths up to 450ft while semi-submersible rigs and drillships can work in water depths up to 12,000ft and tender rigs work in water depths up to 410ft for tender barges and up to 6,000ft for semi-tenders. All offshore rigs are capable of working in benign environment but there are certain additional requirements for rigs to operate in harsh environments due to extreme marine and climatic conditions, as well as, temperatures. The number of units outfitted for such operations are limited and the present number of rigs operating in harsh environment totals 43 units.

Semi-submersible rigs and drillships

The world fleet of semi-submersible rigs and drillships currently totals 316 units. In addition, there are 86 units under construction, 30 semi-submersible rigs and 56 drillships. Of the total fleet, 131 units were built before 1998. These units are mainly moored units and have an average age of 33 years. For the existing 185 rigs built after 1998, the majority have been outfitted with thrusters allowing for dynamic positioning. 29 of the 185 units are capable of operations in water depths up to 7,500ft and 156 of the 185 units are capable of operations in ultra-deep waters (waters deeper than 7,500ft).

The demand for dynamically positioned drillships and semi-submersible rigs has seen strong growth since 2005. The reason for this increase in demand has been related to growth in deepwater activities by oil companies. In addition to increased demand, the oil companies have also required higher operational capacities and technical specification of the units. In order to meet demand, a significant number of new rigs have been built since 2005 increasing the number of dynamically positioned drillships and semi-submersible rigs with ultra-deepwater capabilities from 29 to 156. Until recently, higher oil prices and an improved economic outlook has spurred a higher activity level from oil companies that has increased the demand for ultra-deepwater units resulting in renewed interest for construction of further new ultra-deepwater units, as well as, pushing dayrates up.

As a result of the recent decline in oil prices and reductions in oil companies spending levels, the offshore drilling market is currently entering its second year of a downturn. Approximately a quarter of the global fleet of ultra-deepwater floaters will become available in 2015, a third of which are newbuilds that are yet to be delivered. Based on this available capacity, significant delays or cancellation of newbuild projects can be expected. New tendering activity remains subdued as oil companies set their budgets at materially lower levels than seen in recent years. Rig owners are bidding for available work extremely competitively with a focus on utilization over returns, which will likely drive rates down to or below cash breakeven levels.

Jack-up rigs

The world fleet of jack-up rigs as at March 20, 2015, totals 544. Of these rigs, 470 rigs are operational, 28 are warm-stacked and 46 are cold-stacked. In addition, there are 128 units under construction. The existing world fleet includes 78 units equipped and outfitted for operations in harsh environments of which 16 rigs are approved for operations in Norway. Out of the rigs currently under construction, 32 will have harsh environment capabilities but only 4 will be outfitted for operations in Norway. The average age of the existing fleet is currently 23.4 for the benign environment units and 13.1 for the harsh environment units. The overall utilization rate for jack-up rigs is 74% while the utilization rate for benign environment jack-up rigs built after 2005 is 83% and the utilization rate for the harsh environment rigs is 83%. Of the existing fleet, 221 rigs are capable of drilling in water depths higher than 350ft.

The low oil price and number of newbuilds entering the market continues to pose utilization and dayrate challenges to this segment. Currently there are more than 200 units in the global fleet that are more than 30 years old. Although there will be some instances where an operator may see some value in using a simpler design, broadly speaking most will see more value in hiring a premium unit to replace an older one.

The above overview of the various offshore drilling sectors is based on previous market developments and current market conditions. Future markets conditions and developments cannot be predicted and may well differ from our current expectations.

Seasonality

In general, seasonal factors do not have a significant direct effect on our business. However, we have operations in certain parts of the world where weather conditions during parts of the year could adversely impact the operational utilization of the rigs and our ability to relocate rigs between drilling locations, and as such, limit contract opportunities in the short term. Such adverse weather could include the hurricane season for our operations in the U.S. Gulf of Mexico, the winter season in offshore Norway, and the monsoon season in Southeast Asia.

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Customers

Our customers are oil and gas exploration and production companies, including major integrated oil companies, independent oil and gas producers and government-owned oil and gas companies. In the year ended December 31, 2014 our five largest customers were:

• Petroleo Brasileiro S.A., or Petrobras, which accounted for approximately 20%of our revenues;

• Total S.A. Group, or Total, which accounted for approximately 13%of our revenues;

• Statoil ASA, or Statoil, which accounted for approximately 13%of our revenues;

• Exxon Mobil Corp, or Exxon, which accounted for approximately 10%of our revenues; and

• Petróleos Mexicanos, or Pemex, which accounted for approximately 7% of our revenues.

Most of our drilling units are contracted to customers, and our future contracted revenue, or backlog, at March 20, 2015 totaled approximately $9.7 billion excluding $3.1 billion of backlog attributable to the Rosneft drilling contracts which are at significant risk of being terminated, and excluding $1.6 billion of backlog attributable to the SeaMex contracts which were deconsolidated after the reporting year. $7.8 billion of our backlog is attributable to our semi-submersible rigs and drillships. Calculations exclude Seadrill Partners related backlog, which became an associated company as of January 2, 2014. We expect approximately $3.4 billion of our backlog to be realized in the remainder of 2015. Backlog for our drilling fleet is calculated as the contract dayrate multiplied by the number of days remaining on the contract, assuming full utilization. Backlog excludes revenues for mobilization and demobilization, contract preparation, and customer reimbursables.  The amount of actual revenues earned and the actual periods during which revenues are earned will be different from the backlog projections due to various factors.  Downtime, caused by unscheduled repairs, maintenance, weather and other operating factors, may result in lower applicable dayrates than the full contractual operating dayrate.

In light of the current environment, Seadrill is encountering and may in the future encounter situations where counterparties request relief to contracted dayrates or seek early contract termination. In the event of early termination for the customer's convenience, an early termination amount is typically payable to Seadrill, in accordance with the terms of the drilling agreement. While the Company is confident that its contract terms are enforceable, it may be willing to engage in discussions to modify such contracts if there is a commercial agreement that is beneficial to both parties.

In February 2015, we announced that we no longer believed that the previously announced contract extensions of our ultra-deepwater semi-submersibles the West Taurus and the West Eminence with Petrobras would be concluded in the timeframe or on the previously approved commercial terms. As a result, we removed $1.1 billion from our expected contract backlog.

In March 2015, NADL announced it had received a notice of termination from Rosneft of the service order for the West Navigator. The drillship was indicatively scheduled to commence operations under its five-year contract with Rosneft during the summer of 2015, which would have required earlier mobilization. NADL believes that it will be very challenging to close the transactions with Rosneft on the same terms or in the timeframe contemplated in the executed agreements. There are significant risks attached to remaining drilling contracts with Rosneft. NADL will be marketing the West Navigator for alternative future opportunities, however remains in discussions with Rosneft to explore various alternatives for future co-operation.

The following table shows the percentage of rig days committed by year as of March 20, 2015. The percentage of rig days committed is calculated as the ratio of total days committed under contracts to total available days in the period. Total available days for our units under construction are based on their expected delivery dates.

	Year ending December 31,
% of rig-days committed	2015		2016		2017
Floaters	80	%	53	%	31	%
Jack-up rigs	72	%	37	%	9	%

Competition

The offshore drilling industry is highly competitive, with market participants ranging from large multinational companies to small locally-owned companies.

The demand for offshore drilling services is driven by oil and gas companies’ exploration and development drilling programs. These drilling programs are affected by oil and gas companies’ expectations regarding oil and gas prices, anticipated production levels, worldwide demand for oil and gas products and many other factors. The availability of quality drilling prospects, exploration success, availability of qualified rigs and operating personnel, relative production costs, availability and lead time requirements for drilling and production equipment, the stage of reservoir development and political and regulatory environments also affect our customers’ drilling programs. Oil and gas prices are volatile, which has historically led to significant fluctuations in expenditures by our customers for drilling services. Variations in market conditions during cycles impact us in different ways, depending primarily on the length of drilling contracts in different regions. For example, contracts in shallow waters

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for jack-up rig activities are shorter term, so a deterioration or improvement in market conditions for such units tends to quickly impact revenues and cash flows from those operations. On the other hand, contracts in deepwater for semi-submersible rigs and drillships tend to be longer term, so a change in market conditions tends to have a more delayed impact. Accordingly, short-term changes in these markets may have a minimal short-term impact on revenues and cash flows, unless the timing of contract renewals coincides with short-term movements in the market.

Offshore drilling contracts are generally awarded on a competitive bid basis. In determining which qualified drilling contractor is awarded a contract, the key factors are pricing, rig availability and sustainability, rig location, condition of equipment, operating integrity, safety performance record, crew experience, reputation, industry standing and client relations.

Furthermore, competition for offshore drilling rigs is generally on a global basis, as rigs are highly mobile. However, the cost associated with mobilizing rigs between regions is sometimes substantial, as entering a new region could necessitate upgrades of the unit and its equipment to specific regional requirements. In particular, for rigs to operate in harsh environments, such as offshore Norway and Canada, as opposed to benign environments, such as the U.S. Gulf of Mexico, West Africa, Brazil, the Mediterranean and Southeast Asia, more demanding weather conditions would require more costly investment in the outfitting and maintenance of the drilling units.

We believe that the market for drilling contracts will continue to be highly competitive for the foreseeable future.

Risk of Loss and Insurance

Our operations are subject to hazards inherent in the drilling of oil and gas wells, including blowouts and well fires, which could cause personal injury, suspend drilling operations, or seriously damage or destroy the equipment involved. Offshore drilling contractors such as us are also subject to hazards particular to marine operations, including capsizing, grounding, collision and loss or damage from severe weather. Our marine insurance package policy provides insurance coverage for physical damage to our rigs, loss of hire for some of our rigs and third party liability.

Our insurance claims are subject to a deductible, or non-recoverable, amount. We currently maintain a deductible per occurrence of up to $5 million related to physical damage to our rigs. However, a total loss of, or a constructive total loss of, a drilling unit is recoverable without being subject to a deductible. For general and marine third-party liabilities, we generally maintain a deductible of up to $500,000 per occurrence on personal injury liability for crew claims, non-crew claims and third-party property damage including oil pollution from the drilling units. Furthermore, for some of our rigs we purchase insurance to cover loss due to the drilling unit being wholly or partially deprived of income as a consequence of damage to the unit. The loss of hire insurance has a deductible period of 60 days after the occurrence of physical damage. Thereafter, our insurance policies are limited to 290 days. If the repair period for any physical damage exceeds the number of days permitted under our loss of hire policy, we will be responsible for the costs in such period. We do not have loss of hire insurance on our benign environment jack-up rigs.

We have elected to place an insurance policy for physical damage to rigs and equipment caused by named windstorms in the U.S. Gulf of Mexico with a Combined Single Limit of $100 million in the annual aggregate, which includes Loss of Hire. The policy runs for the 2014 Windstorm season starting April 1, 2014 to May 1, 2015. The Company is currently negotiating the renewal of its policy to insure a limited part of this windstorm risk for a further period starting May 1, 2015 through March 31, 2016.

Environmental and Other Regulations in the Offshore Drilling Industry

Our operations are subject to numerous laws and regulations in the form of international treaties and maritime regimes, flag state requirements, national environmental laws and regulations, navigation and operating permits requirements, local content requirements, and other national, state and local laws and regulations in force in the jurisdictions in which our drilling units operate or are registered, which can significantly affect the ownership and operation of our drilling units. See "Item 3. Key Information - D. Risk Factors - Governmental laws and regulations, including environmental laws and regulations, may add to our costs or limit our drilling activity.”

Flag State Requirements

All of our drilling units are subject to regulatory requirements of the flag state where the drilling unit is registered. These include engineering, safety and other requirements related to the drilling industry and to maritime vessels in general. In addition, each of our drilling units must be “classed” by a classification society. The classification society certifies that the drilling rig is “in-class,” signifying that such drilling rig has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the flag state and the international conventions of which that country is a member. Maintenance of class certification requires expenditure of substantial sums, and can require taking a drilling unit out of service from time to time for repairs or modifications to meet class requirements. Our drilling units must generally undergo a class survey once every five years.

International Maritime Regimes

These requirements include, but are not limited to, MARPOL, the CLC, the Bunker Convention, SOLAS, the ISM Code, and the BWM Convention. These various conventions regulate air emissions and other discharges to the environment from our drilling units worldwide, and we may incur costs to comply with these regimes and continue to comply to these regimes as they may be amended in the future. In addition, these conventions impose liability for certain discharges, including strict liability in some cases. See "Item 3. Key Information - D. Risk Factors - We are subject to complex environmental laws and regulations that can adversely affect the cost, manner or feasibility of doing business.”

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Environmental Laws and Regulations

These laws and regulations include the OPA, the CERCLA, the U.S. Clean Water Act, the U.S. Clean Air Act, the MTSA, European Union regulations, and Brazil’s National Environmental Policy Law (6938/81), Environmental Crimes Law (9605/98) and Law (9966/2000) relating to pollution in Brazilian waters. These laws govern the discharge of materials into the environment or otherwise relate to environmental protection. In certain circumstances, these laws may impose strict liability, rendering us liable for environmental and natural resource damages without regard to negligence or fault on our part. Implementation of new environmental laws or regulations that may apply to ultra deepwater drilling units may subject us to increased costs or limit the operational capabilities of our drilling units and could materially and adversely affect our operations and financial condition. See "Item 3 Key Information - D. Risk Factors - We are subject to complex environmental laws and regulations that can adversely affect the cost, manner or feasibility of doing business.”

Safety Requirements

Our operations are subject to special safety regulations relating to drilling and to the oil and gas industry in many of the countries where we operate. The United States undertook substantial revision of the safety regulations applicable to our industry following the Deepwater Horizon Incident, in which we were not involved, that led to the Macondo well blow out situation, in 2010. Other countries are also undertaking a review of their safety regulations related to our industry. These safety regulations may impact our operations and financial results. For instance, the revisions to the regulations in the United States have resulted in new requirements, such as specific requirements for maintenance and certification of BOP’s, which may cause us to incur cost and may result in additional downtime for our drilling units in the US Gulf of Mexico. See "Item 3 Key Information - D. Risk Factors - The aftermath of the moratorium on offshore drilling in the U.S. Gulf of Mexico, and new regulations adopted as a result of the investigation into the Macondo well blowout, could negatively impact us.”

Navigation and Operating Permit Requirements

Numerous governmental agencies issue regulations to implement and enforce the laws of the applicable jurisdiction, which often involve lengthy permitting procedures, impose difficult and costly compliance measures, particularly in ecologically sensitive areas, and subject operators to substantial administrative, civil and criminal penalties or may result in injunctive relief for failure to comply. Some of these laws contain criminal sanctions in addition to civil penalties.

Local Content Requirements

Governments in some countries have become increasingly active in local content requirements on the ownership of drilling companies, local content requirements for equipment utilized in our operations, and other aspects of the oil and gas industries in their countries. These regulations include requirements for participation of local investors in our local operating subsidiaries in countries such as Angola and Nigeria, and local content requirements in relation to drilling unit construction contracts in which we are participating in Brazil. Although these requirements have not had material impact on our operations in the past, they could have a material impact on our earnings, operations and financial condition in the future.

Other Laws and Regulations

In addition to the requirements described above, our international operations in the offshore drilling segment are subject to various other international conventions and laws and regulations in countries in which we operate, including laws and regulations relating to the importation of and operation of drilling units and equipment, currency conversions and repatriation, oil and gas exploration and development, taxation of offshore earnings and earnings of expatriate personnel, the use of local employees and suppliers by foreign contractors and duties on the importation and exportation of drilling units and other equipment.

C. ORGANIZATIONAL STRUCTURE

Please see "Item 4. Information on the Company - A. History and Development of the Company" for further information on the Seadrill Limited group of companies.

A full list of our significant management, operating and rig-owning subsidiaries is shown in Exhibit 8.1.

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D. PROPERTY, PLANTS AND EQUIPMENT

We own a substantially modern fleet of drilling units. The following table sets forth the units that we own or have contracted for delivery as of March 20, 2015, which excludes Seadrill Partners' drilling units, which were deconsolidated on January 2, 2014:

Unit	Year built	Water depth (feet)	Drilling depth (feet)	Area of location	Month of contract expiry
Jack-up rigs
West Epsilon (2)	1993	400	30,000	Norway	December 2016
West Resolute	2007	350	30,000	Sharjah
West Prospero	2007	400	30,000	Malaysia	May 2016
West Vigilant	2008	350	30,000	Malaysia	May 2015
West Ariel	2008	400	30,000	Republic of Congo	August 2016
West Triton	2008	375	30,000	Sharjah
West Freedom	2009	350	30,000	Venezuela	April 2017
West Cressida	2009	375	30,000	Singapore	March 2016 (5)
West Mischief	2010	350	30,000	Republic of Congo, Abu Dhabi	July 2017
West Callisto	2010	400	30,000	Saudi Arabia	November 2015
West Leda	2010	375	30,000	Malaysia, Vietnam	July 2015
West Elara (2)	2011	450	40,000	Norway	March 2017
West Castor	2013	400	30,000	Brunei	May 2016
West Telesto	2013	400	30,000	Australia	July 2015
West Tucana	2013	400	30,000	In transit, Angola	May 2017
AOD-1 (3)	2013	400	30,000	Saudi Arabia	May 2016
AOD-2 (3)	2013	400	30,000	Saudi Arabia	June 2016
AOD-3 (3)	2013	400	30,000	Saudi Arabia	October 2016
West Linus (2)	2014	450	40,000	Norway	May 2019
West Titan (NB)(1)	2015	400	30,000	Dalian Shipyard (China)
West Proteus (NB)(1)	2015	400	30,000	Dalian Shipyard (China)
West Rhea (NB)(1)	2015	400	30,000	Dalian Shipyard (China)
West Tethys (NB)(1)	2016	400	30,000	Dalian Shipyard (China)
West Hyperion (NB)	2016	400	30,000	Dalian Shipyard (China)
West Umbriel (NB)(1)	2016	400	30,000	Dalian Shipyard (China)
West Dione (NB)(1)	2017	400	30,000	Dalian Shipyard (China)
West Mimas (NB)(1)	2017	400	30,000	Dalian Shipyard (China)
Semi-submersible rigs
West Alpha (2)	1986	2,000	23,000	Norway, Russia	July 2016
West Venture (2)	2000	2,600	30,000	Norway	July 2015
West Phoenix (2)	2008	10,000	30,000	UK	September 2015
West Hercules	2008	10,000	35,000	Canada	January 2017
West Taurus	2008	10,000	35,000	Brazil	April 2015
West Eminence	2009	10,000	30,000	Brazil	July 2015
Sevan Driller (4)	2009	10,000	40,000	Brazil	June 2016
West Orion	2010	10,000	35,000	Brazil	July 2016
West Pegasus	2011	10,000	35,000	Mexico	August 2016
West Eclipse	2011	10,000	40,000	Angola	June 2015
Sevan Brasil (4)	2012	10,000	40,000	Brazil	July 2018

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Unit	Year built	Water depth (feet)	Drilling depth (feet)	Area of location	Month of contract expiry
Sevan Louisiana (4)	2013	10,000	40,000	USA	May 2017
Sevan Developer (NB) (1)(4)	2015	10,000	40,000	COSCO Shipyard (China)
West Mira (NB)(1)	2015	10,000	40,000	Hyundai Shipyard (South Korea)	September 2020
West Rigel (NB)(1)(2)	2015	10,000	40,000	Jurong Shipyard (Singapore)
Drillships
West Navigator (2)	2000	7,500	35,000	Norway
West Polaris	2008	10,000	35,000	Angola	March 2018
West Gemini	2010	10,000	35,000	Angola	October 2017
West Tellus	2013	12,000	40,000	In transit, Brazil	April 2018
West Neptune	2014	12,000	40,000	USA	December 2017
West Jupiter	2014	12,000	40,000	Nigeria	December 2019
West Saturn	2014	12,000	40,000	Nigeria	December 2016
West Carina (1)	2015	12,000	40,000	In transit, Brazil	May 2018
West Aquila (NB)(1)	2015	12,000	40,000	DSME Shipyard (South Korea)
West Libra (NB)(1)	2015	12,000	40,000	DSME Shipyard (South Korea)
West Draco (NB)(1)	2015	12,000	40,000	Samsung Heavy Industries (South Korea)
West Dorado (NB)(1)	2015	12,000	40,000	Samsung Heavy Industries (South Korea)

(1) Newbuild under construction or in mobilization to its first drilling assignment.

(2) Owned by our subsidiary NADL in which we own 70.4% of the outstanding shares.

(3) Owned by AOD in which we own 66.2% of the outstanding shares.

(4) Owned by Sevan in which we control 50.1% of the outstanding shares.

(5) The West Cressida has a one year contract expiring in March 2016, which was signed on March 24, 2015.

The West Courageous, West Defender, West Intrepid, West Oberon, and the West Titania were classified as held for sale at December 31, 2014 as part of the SeaMex transaction as discussed in Note 37 to the Consolidated Financial Statements included herein. Subsequently, on March 10, 2015 these rigs were deconsolidated as discussed in Note 39 to the Consolidated Financial Statements included herein.

In addition to the drilling units listed above, as of December 31, 2014, we have buildings, plant and equipment with a net book value of $46 million, including office equipment. Our offices in Stavanger in Norway, Singapore, Houston in the United States, Rio de Janeiro in Brazil, Dubai in the United Arab Emirates and Aberdeen, Liverpool and London in the United Kingdom are leased and aggregate office operating costs were $24 million in 2014.

We do not have any material intellectual property rights.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

The following should be read in conjunction with "Item 3. Key Information – A. Selected Financial Data", "Item 4. Information on the Company" and our Consolidated Financial Statements and Notes thereto included herein.

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Fleet Development

The following table summarizes the development of our active fleet of drilling units for the periods presented, based on the dates when the units began operations:

			Floaters
Unit type	Jack-up rigs		Drillships		Semi- submersible rigs		Tender rigs		Total units
At December 31, 2011	15		4		10		11		40
additions	1		—		2		—		3
(disposals)	—		—		—		—		—
At December 31, 2012	16		4		12		11		43
additions	5		3		3		2		13
(disposals)	(1	)	—		—		(10	)	(11	)
At December 31, 2013	20		7		15		3		45
additions	4		3		1		—		8
(disposals)	—		(3	)	(4	)	(3	)	(10	)
At December 31, 2014	24		7		12		—		43

Factors Affecting our Results of Operations

The principal factors which have affected our results and are expected to affect our future results of operations and financial position include:

• the number and timing of availability of our drilling units;

• the dayrates obtainable of our drilling units;

• the daily operating expenses of our drilling units;

• utilization rates for our drilling units;

• administrative expenses we incur;

• gains on disposals of assets;

• interest and other financial items;

• acquisitions and divestitures of businesses and assets;

• tax expenses;

• deconsolidation of subsidiaries.

Deconsolidation of Seadrill Partners

Under the terms of the Operating Agreement of Seadrill Partners, its board of directors has the power to oversee and direct the operations of, and manage and determine the strategies and policies of Seadrill Partners. During the period from Seadrill Partners' IPO in October 2012 until the time of its first effective AGM on January 2, 2014, the Company retained the sole power to appoint, remove and replace all members of Seadrill Partner's board of directors. Beginning with its first AGM the majority of the board members became electable by the common unitholders and accordingly, from this date the Company no longer retained the power to control the board of directors as a result of certain provisions in the Operating Agreement which limits the Company's ability to vote its full holding of common units in an election of directors to the board of Seadrill Partners. As of this date Seadrill Partners has been considered an associated entity and not a controlled subsidiary of the Company. Seadrill Partners was therefore deconsolidated by the Company on January 2, 2014. The deconsolidation of Seadrill Partners has impacted the reported results of operations and cash flows, such that our results after that date may not be comparable to our historical results. See Note 11 to the Consolidated Financial Statements included herein for further discussion on the deconsolidation of Seadrill Partners.

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Revenues

In general, our drilling units are contracted for a period of time to provide offshore drilling services at an agreed dayrate. A unit will be stacked if it has no contract in place. Dayrates are volatile and can vary depending on the type of drilling unit and its capabilities, operating expenses, taxes and other factors. An important factor in determining the level of revenue is the technical utilization of the drilling rig. To the extent that our operations are interrupted due to equipment breakdown or operational failures, we do not generally receive dayrate compensation for the period of the interruption. Furthermore, our dayrates may be reduced in instances of interrupted or suspended service due to, among other things, repairs, upgrades, weather, maintenance, force majeure or requested suspension of services by the client and other operating factors.

The terms and conditions of the contracts allow for compensation when factors beyond our control, including weather conditions, influence the drilling operations and, in some cases, for compensation when we perform planned maintenance activities. In many of our contracts we are entitled to cost escalation to compensate for some of our cost increases as reflected in publicly available cost indices.

In addition to contracted dayrates, customers may pay mobilization and demobilization fees for units before and after their drilling assignments, and may also reimburse us for costs incurred by the Company at their request for additional supplies, personnel and other services, not covered by the contractual dayrate.

The following table summarizes our average dayrates and economic utilization percentage by rig type for the periods under review:

	Year ended December 31,
	2014		2013		2012
	Average dayrates $	Economic utilization %	Average dayrates $	Economic utilization %	Average dayrates $	Economic utilization %
Jack-up rigs	179,327	96	168,000	98	153,000	86
Floaters	488,771	92	497,000	94	489,000	90
Tender rigs	N/A	N/A	152,000	99	115,000	98

Note: Average dayrates are the weighted average dayrates for each type of unit, based on the actual days available for each unit of that type. Economic utilization is calculated as the total days worked divided by the total days each rig is contracted in the period.

Operating Expenses

Our operating expenses consist primarily of vessel and rig operating expenses, reimbursable expenses, depreciation and amortization and general and administrative expenses.

• Vessel and rig operating expenses are related to the drilling units we have in operation and include the remuneration of offshore crews, onshore rig supervision staff, expenses for repairs and maintenance, as well as other expenses specifically related to the drilling units.

• Reimbursable expenses are incurred at the request of customers, and include supplies, personnel and other services.

• Depreciation and amortization expenses are based on the historical cost of our drilling units and other equipment.

• General and administrative expenses include the costs of our regional offices in various locations, as well as the remuneration and other compensation of the directors and employees engaged in the management and administration of the Company.

Financial items and other income/expense

Our financial items and other income/expense consist primarily of interest income, interest expense, share in results from associated companies, gain/loss on derivative financial instruments, foreign exchange gain/loss and other non-operating income or expenses. See further discussion below in relation to these items:

• The amount of interest expense recognized depends on the overall level of debt we have incurred and prevailing interest rates for our agreements. However, overall interest expense may be reduced as a consequence of capitalization of interest expense relating to drilling units under construction.

• Share in results from associated companies recognized relate to our share of earnings or losses in our investments accounted for as equity method investments.

• Gains/losses recognized on derivative financial instruments reflect various mark-to-market adjustments to the value of our interest rate and forward currency swap agreements and other derivative financial instruments, and the net settlement amount paid or received on swap agreements.

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• Foreign exchange gains/losses recognized generally relate to transactions and revaluation of balances carried in currencies other than the US dollar.

• Other non-operating income or expense relate to items which generally do not fall within any other categories listed above

Income taxes

Income tax expense reflects current tax payable and deferred taxes related to our drilling unit owning and operating activities and may vary significantly depending on jurisdictions and contractual arrangements. In most cases the calculation of tax is based on net income or deemed income, the latter generally being a function of gross turnover.

Critical Accounting Estimates

The preparation of our Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience, available information and assumptions that we believe to be reasonable.  Our critical accounting estimates are important factors to our financial condition and results of operations and require us to make subjective or complex assumptions or estimates about matters that are uncertain.  Significant accounting policies are discussed in Note 2 (Accounting Policies) to the Consolidated Financial Statements included herein. We believe that the following are the critical accounting estimates used in the preparation of our Consolidated Financial Statements. In addition, there are other items within our Consolidated Financial Statements that require estimation.

Drilling Units

Rigs, vessels and equipment are recorded at historical cost less accumulated depreciation. The cost of these assets less estimated residual value is depreciated on a straight-line basis over their estimated remaining economic useful lives. The estimated economic useful life of our floaters, and jack-up rigs, when new, is 30 years.

Significant investments are capitalized and depreciated in accordance with the nature of the investment. Significant investments that are deemed to increase an asset’s value for its remaining useful life are capitalized and depreciated over the remaining life of the asset. We determine the carrying value of these assets based on policies that incorporate our estimates, assumptions and judgments relative to the carrying value, remaining useful lives and residual values. The assumptions and judgments we use in determining the estimated useful lives of our drilling units reflect both historical experience and expectations regarding future operations, utilization and performance. The use of different estimates, assumptions and judgments in establishing estimated useful lives could result in materially different net book values of our drilling units and results of operations.

The useful lives of drilling units and related equipment are difficult to estimate due to a variety of factors, including technological advances that impact the methods or cost of oil and gas exploration and development, changes in market or economic conditions and changes in laws or regulations affecting the drilling industry. We re-evaluate the remaining useful lives of our drilling units as and when certain events occur which directly impact our assessment of their remaining useful lives and include changes in operating condition, functional capability and market and economic factors.

The carrying values of our long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be appropriate. We assess recoverability of the carrying value of the asset by estimating the undiscounted future net cash flows expected to result from the asset, including eventual disposition. If the undiscounted future net cash flows are less than the carrying value of the asset, an impairment is made to the market value or to the discounted future net cash flows. In general, impairment analysis are based on expected costs, utilization and dayrates for the estimated remaining useful lives of the asset or group of assets being assessed. An impairment loss is recorded in the period in which it is determined that the aggregate carrying amount is not recoverable. Asset impairment evaluations are, by nature, highly subjective. They involve expectations about future cash flows generated by our assets, and reflect management’s assumptions and judgments regarding future industry conditions and their effect on future utilization levels, dayrates and costs. The use of different estimates and assumptions could result in significantly different carrying values of our assets and could materially affect our results of operations.

Goodwill

We allocate the cost of acquired businesses to the identifiable tangible and intangible assets and liabilities acquired, with any remaining amount being capitalized as goodwill. Goodwill is tested for impairment at least annually. We perform a goodwill impairment test as of December 31 for each reporting segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. We have determined that our reporting units are the same as our operating segments for the purpose of allocating goodwill and the subsequent testing of goodwill for impairment.

We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two step goodwill impairment test. When assessing the qualitative factors to make this determination we consider amongst other things, the overall macroeconomic environment, drilling industry and market trends, trends in contracting costs and day rates, developments in interest rates, market values of drilling units, expectations of the future price of oil and our market capitalization.

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The Company performed its annual goodwill impairment test as of December 31, 2014 for both its reporting units; Floaters and Jack-ups. The Company elected to bypass the qualitative assessment given the recent decline in market conditions in the offshore drilling industry and performed the two step goodwill impairment test. The estimated fair values of the Floater and Jack-up reporting units were derived using an income approach which estimated discounted future cash flows for each reporting unit. Our estimated future free cash flows are primarily based on our expectations around day rates, drilling unit utilization, operating costs, capital and long term maintenance expenditures and applicable tax rates. The cash flows are estimated over the remaining useful economic lives of the assets but no longer than 30 years in total, and discounted using an estimated market participant weighted average cost of capital of 9.5%.

The annual impairment test resulted in the Company recognizing an impairment loss of $232 million for the year ended December 31, 2014 relating to its Jack-up reporting unit. The impairment loss relating to the Jack-up reporting unit is primarily due to declining day rates and future market expectations for day rates in the sector. These have been trending lower as a result of the recent decline in the price of oil, which has impacted the spending plans of our customers. No impairment was recognized relating to the Floater reporting unit as the fair value estimate substantially exceeded carrying value. Negative future changes in our expectations for the Floater reporting unit could result in impairments in the future.

The impairment charge relating to the Jack-up reporting unit was allocated between the Company and its non-controlling interests based upon the non-controlling interests share in each drilling unit within the Jack-up segment. The overall charge to the reporting unit was first allocated to each drilling unit based upon the relative fair values of those drilling units. The non-controlling interest in each drilling unit was then applied to the allocated charge in order to determine the portion attributable to non-controlling interests.

As of December 31, 2014 the aggregated estimated fair value of the Company’s reporting units exceeded its market capitalization. The Company evaluated the difference by reviewing the implied control premium as compared to other market transactions within our industry and considering other benchmark data and analysis prepared by offshore drilling industry analysts. The Company deems the implied control premium to be reasonable in the context of the data considered.

The assumptions used in the Company’s estimated cash flows were derived from unobservable inputs and are based on management’s judgments and assumptions available at the time of performing the impairment test. Key assumptions which have a particularly material impact on the estimated fair value of the reporting unit include expected future market day rates and drilling unit future utilization. Whilst management has used external data and analysis in determining these assumptions, the assumptions are inherently subjective. The use of different judgments and assumptions surrounding the estimates of future cash flows of the reporting units would potentially result in materially different Goodwill carrying value and operating results.

If we dispose of or deconsolidate assets that constitute a business, we allocate a portion of the reporting unit’s goodwill to that business in determining the gain or loss on the disposal of the business. The amount of goodwill that is allocated to the business is based on the relative fair values of that business and the portion of the reporting unit that will be retained.

Income Taxes

Seadrill Ltd is a Bermuda company. Currently we are not required to pay income taxes in Bermuda on ordinary income or capital gains as we qualify as an exempt company. We have received written assurance from the Minister of Finance in Bermuda that we will be exempt from taxation until March 2035. Certain of our subsidiaries operate in other jurisdictions where income taxes are imposed. Consequently income taxes have been recorded in these jurisdictions when appropriate. Our income tax expense is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. We provide for income taxes based on the tax laws and rates in effect in the countries in which operations are conducted and income is earned. The income tax rates and methods of computing taxable income vary substantially between jurisdictions. Our income tax expense is expected to fluctuate from year to year as our operations are conducted in different tax jurisdictions and the amount of pre-tax income fluctuates.

The determination and evaluation of our annual group income tax provision involves interpretation of tax laws in various jurisdictions in which we operate and requires significant judgment and use of estimates and assumptions regarding significant future events, such as amounts, timing and character of income, deductions and tax credits. There are certain transactions for which the ultimate tax determination is unclear due to uncertainty in the ordinary course of business. We recognize tax liabilities based on our assessment of whether our tax positions are more likely than not sustainable, based solely on the technical merits and considerations of the relevant taxing authority’s widely understood administrative practices and precedence. Changes in tax laws, regulations, agreements, treaties, foreign currency exchange restrictions or our levels of operations or profitability in each jurisdiction may impact our tax liability in any given year. While our annual tax provision is based on the information available to us at the time, a number of years may elapse before the ultimate tax liabilities in certain tax jurisdictions are determined. Current income tax expense reflects an estimate of our income tax liability for the current year, withholding taxes, changes in prior year tax estimates as tax returns are filed, or from tax audit adjustments. Our deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reflected on the balance sheet. Valuation allowances are determined to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. To determine the amount of deferred tax assets and liabilities, as well as of the valuation allowances, we must make estimates and certain assumptions regarding future taxable income, including where our drilling units are expected to be deployed, as well as other assumptions related to our future tax position. A change in such estimates and assumptions, along with any changes in tax laws, could require us to adjust the deferred tax assets, liabilities, or valuation allowances.

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Impairment of equity method investees and marketable securities

We assess our equity method investees and marketable securities for impairment during each reporting period to evaluate whether an event or change in circumstances has occurred in that period which may have a significant adverse effect on the carrying value of the investment. We record an impairment charge for other-than-temporary declines in fair value when the fair value is not anticipated to recover above the carrying value within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in fair value are not reflected in earnings until the equity method investee is sold.

As of December 31, 2014 an unrealized loss of $395 million had been recognized in accumulated other comprehensive income, as a result of remeasuring the value of the Company's common unit interests in Seadrill Partners to market price as at December 31, 2014. We have evaluated the near term prospects of the Seadrill Partners in relation to the severity and duration of the decline in fair value. Seadrill Partners continues to make significant distributions to its common unitholders. Its drilling units are largely on long term contracts and so it has little exposure to short term movements in market conditions or dayrates. Based on that evaluation and our ability and intent to hold the investment for a reasonable period of time sufficient for a forecasted recovery of fair value, we do not consider our investments in Seadrill Partners to be other-than-temporarily impaired at December 31, 2014. The Company also recorded an unrealized loss of $48 million in accumulated other comprehensive income as at December 31, 2014 as a result of remeasuring the value of Company's equity interest in SapuraKencana. We have evaluated the near term prospects of SapuraKencana in relation to the severity and duration of the decline in fair value. Based on that evaluation and our ability and intent to hold the investment for a reasonable period of time sufficient for a forecasted recovery of fair value, we do not consider the investments to be other-than-temporarily impaired at December 31, 2014. The evaluation of whether a decline in fair value is other-than-temporary requires a high degree of judgment and the use of different assumptions could materially affect our earnings.

Recent accounting pronouncements

Recently Adopted Accounting Standards

Balance sheet—Effective January 1, 2014, the Company has adopted the accounting standards update that expands on the recognition, measurement and disclosure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The update requires measurement of the obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of the amount the entity agreed to pay on the basis of its arrangement and any additional amount the Company expects to pay on behalf of its co-obligors. The update also requires an entity to disclose the nature, amount and other information of the obligation. The update was effective for interim and annual periods beginning on or after December 15, 2013. As a result, the Company has disclosed relevant obligations in Note 23 to the Consolidated Financial Statements included herein.

Recently Issued Accounting Standards effective 2014

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the criteria for reporting discontinued operations to include only disposals representing a strategic shift in operations. The ASU also requires expanded disclosures regarding the assets, liabilities, income, and expenses of discontinued operations. This ASU will be effective for the first interim period beginning after December 15, 2014 and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides new authoritative guidance on the methods of revenue recognition and related disclosure requirements. The accounting standard update will be effective for the first interim period beginning after December 15, 2016 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides new authoritative guidance with regards to management's responsibility to assess an entity's ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The ASU will be effective for all entities in the first annual period ending after December 15, 2016 (December 31, 2016 for calendar year-end entities) and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which made targeted amendments to the current consolidation guidance that could affect all industries. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The accounting standard update will be effective for the first interim period beginning after December 15, 2015 and early adoption is permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

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A. RESULTS OF OPERATIONS

We provide drilling and related services to the offshore oil and gas industry. The split of our organization into segments has historically been based on differences in management structure and reporting, economic characteristics, customer base, asset class and contract structure.

We currently operate in the following segments:

Floaters: We offer services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to semi-submersible rigs and drillships for harsh and benign environments in mid-, deep- and ultra-deep waters.

Jack-up rigs: We offer services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to jack-up rigs for operations in harsh and benign environment.

Tender rigs: We previously offered services encompassing drilling, completion and maintenance of offshore production wells. The drilling contracts related to self-erecting tender rigs and semi-submersible tender rigs. Following the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners on January 2, 2014, the Company no longer owns rigs in the tender rig segment.

Segment results are evaluated on the basis of operating profit, and the information given below is based on the internal reporting structure used in the reporting to the Executive Management and the Board. The accounting principles for the segments are the same as for the Company's Consolidated Financial Statements.

Fiscal Year Ended December 31, 2014, compared to Fiscal Year Ended December 31, 2013.

The following table sets forth our operating results for 2014 and 2013.

	Year ended December 31, 2014									Year ended December 31, 2013
In US$ millions	Floaters		Jack- up rigs		Tender Rigs	Other		Total		Floaters		Jack- up rigs		Tender Rigs		Other		Total
Total operating revenues	3,360		1,478		—	159		4,997		3,698		1,175		382		27		5,282
Gain on sale of assets	632		—		—	—		632				61				—		61
Total operating expenses	(2,000	)	(1,203	)	—	(147	)	(3,350	)	(2,226	)	(786	)	(206	)	(27	)	(3,245	)
Net operating income	1,992		275		—	12		2,279		1,472		450		176		—		2,098
Interest expense								(478	)									(445	)
Other financial items								2,305										1,287
Income before taxes								4,106										2,940
Income taxes								(19	)									(154	)
Net income								4,087										2,786

Total operating revenues

In US $millions	2014	2013	Change
Floaters	3,360	3,698	(9	)%
Jack-up rigs	1,478	1,175	26	%
Tender Rigs	—	382	(100	)%
Other	159	27	489	%
Total operating revenues	4,997	5,282	(5	)%

Total operating revenues were $5.0 billion for 2014, compared to $5.3 billion in 2013, a decrease of $0.3 billion or 5%. Total operating revenues are predominantly contract revenues with additional amounts of reimbursable and other revenues. There was an increase in the jack-up segment due to an increase of rigs in operation, improved utilization as well as an increase in average dayrates. The increase in Jack-up segment was offset by a decrease in Floaters segment primarily due to the deconsolidation of Seadrill Partners. This was further offset by the sale of the tender rig business at the end of April 2013, where the tender rigs sold contributed to revenues for the first four months of 2013 compared to no revenues in 2014.

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Total operating revenues in the floaters segment were $3.4 billion in 2014 compared to $3.7 billion in 2013, a decrease of $0.3 billion or 9%. The decrease was mainly due to the decrease in the number of drilling units in the floaters segment to 19 as of December 31, 2014 from 22 at December 31, 2013 due to the deconsolidation of Seadrill Partners on January 2, 2014, which owned 5 floaters at the time of deconsolidation and the sale of two further drilling units West Auriga and West Vela to Seadrill Partners during 2014. This decrease was partially offset by the addition of three new drilling units in late 2014: West Neptune, West Saturn and West Jupiter, in addition to Sevan Louisiana which started operations in May 2014.

Total operating revenues in the jack-up rigs segment were $1.5 billion in 2014 compared to $1.2 billion in 2013, an increase of $0.3 billion, or 26%. The increase was mainly due to the increased number of drilling units in the jack-up segment to 24 at December 31, 2014 from 20 at December 31, 2013 due to the addition of the newbuild rigs West Titania, West Oberon, West Telesto and West Linus, and full year operations of the AOD 1, AOD 2, AOD 3, West Tucana and West Castor.

Total operating revenues in the tender rig segment were nil in 2014 compared to $382 million in 2013. The decrease was due to the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners on January 02, 2014.

Other revenues predominately represents management fee income for the provision of management services to third and related parties.

Gain on disposals

In 2014 we recorded a gain of $632 million on the sale of the Drillships West Auriga and West Vela to Seadrill Partners. In 2013, we recorded a gain of $61 million on the sale of the jack-up rig West Janus.

Total operating expenses

In US$ millions	2014	2013	Change
Floaters	2,000	2,226	(10	)%
Jack-up rigs	1,203	786	53	%
Tender rigs	—	206	(100	)%
Other	147	27	444	%
Total operating expenses	3,350	3,245	3	%

Total operating expenses were $3.3 billion in 2014 compared to $3.2 billion in 2013, an increase of $0.1 billion, or 3%. Total operating expenses consist of vessel and rig operating expenses, depreciation and amortization, reimbursable expenses and general and administrative expenses. Total general and administrative expenses were $315 million in 2014 compared to $300 million in 2013, an increase of $15 million or 5%. The increase was mainly due to additional costs incurred related to increased management support across our business to support our growth and strategic initiatives and the addition of Sevan Drilling from July 2013. Reimbursable expenses in each segment were closely in line with reimbursable revenues.

Total operating expenses for the floaters operating segment were $2.0 billion in 2014 compared to $2.2 billion in 2013, a decrease of $0.2 billion or 10%. This is mainly related to the decrease in the number of rigs in operation due to the deconsolidation of Seadrill Partners which owned five floaters at the time of deconsolidation plus sale of two further rigs to Seadrill Partners: West Auriga and West Vela during 2014. This decrease was partially offset by addition of three new rigs towards the end of 2014 (West Neptune, West Saturn and West Jupiter) in addition to Sevan Louisiana which started operations in May 2014.

Total operating expenses for the jack-up rigs operating segment were $1.2 billion in 2014 compared to $0.8 billion in 2013, an increase of $0.4 billion or 53%. This increase was mainly due to the impairment of goodwill of $232 million relating to the Jack-up segment. Operating costs also increased in 2014 due to the increase in the number of rigs in operation, including the addition of the newbuild rigs West Titania, West Oberon, West Telesto and West Linus, and full year operations of the AOD 1, AOD 2, AOD 3, West Castor and West Tucana.

Total operating expenses for the tender rig segment were nil in 2014 compared to $206 million in 2013. The decrease was due to the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners on January 02, 2014.

'Other' expenses predominately relate to costs associated with the provision of management services to third and related parties.

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Interest expense

Interest expense was $478 millionin 2014 compared to $445 million in 2013 an increase of $33 million or 7%. The increase was mainly due to the inclusion of a full year's interest expense relating to Sevan in 2014 as compared to only half-year in 2013. In addition, more interest was capitalized in 2013 as compared to 2014 according to the number of rigs under construction in each period. This increase is partially offset by deconsolidation of Seadrill Partners and reduction in long-term debt in 2014.

Other financial items

Other financial items reported in the income statement include the following items:

In US$ millions	2014		2013
Interest income	63		24
Share in results of associated companies	89		(223	)
(Loss)/gain on derivative financial instruments	(497	)	133
Foreign exchange gain/(loss)	164		52
Other financial items	70		45
Net loss on debt extinguishment	(54	)	—
Gain on realization of marketable securities	131		—
Gain on deconsolidation of Seadrill Partners	2,339		—
Gain on sale of tender rig business	—		1,256
Total other financial items	2,305		1,287

Interest income was $63 million in 2014 compared to $24 million in 2013. Interest income for the period was primarily comprised of interest earned on restricted cash balances, interest earned and accreted on deferred consideration from SapuraKencana related to the sale of the tender rig business. During 2014 the Company also received interest from Seadrill Partners, since its deconsolidation on January 2, 2014.

Share in results from associated companies was an income of $89 million in 2014 compared to a loss of $223 million in 2013. The income in 2014 mainly comprised of share of income from Seadrill Partners, which was partially offset by $88 million loss on the sale of a 28% limited partner interest in Seadrill Operating LP to Seadrill Partners. The loss in 2013 was mainly comprised of our share of net losses in Archer during the year.

The loss on derivative financial instruments was $497 million in 2014 compared to a gain of $133 million in 2013. The loss in 2014 mainly related to a loss of $176 million on our interest rate swap agreements and a loss of $171 million on our cross currency interest swaps due to unfavorable movement in swap interest rates during the year; loss on our TRS agreements of $73 million; a loss of $58 million on foreign exchange swap agreements; and a loss on other derivatives of $19 million. Gains in 2013 were mainly related to a gain of $143 million on our interest rate swap agreements due to the favorable movement in swap interest rates during the year; gain on our TRS agreements of $19 million; and gain on other derivatives of $30 million, which was partially offset by a loss on our cross currency interest rate and foreign exchange swap agreements of $10 million.

Foreign exchange gains amounted to $164 million in 2014 compared to gains of $52 million in 2013. This was mainly due to the revaluation of our NOK denominated bonds to the US dollar and is favorable due to the weakening of NOK compared to the U.S. Dollar.

Included in the results for 2014 is net loss on debt extinguishment of $54 million primarily relating to the extinguishment of the Company's convertible bond. The loss primarily relates to the incentive payment made to bondholders. Please see Note 23 to the Consolidated Financial Statements included herein for further discussion.

Included in the results for 2014 is a gain on realization of marketable securities of $131 million being recycled out of accumulated other comprehensive income into the income statement as a gain relating to the sale of shares in SapuraKencana. See Note 7 to the Consolidated Financial Statements included herein for further discussion.

Included in the results for 2014 is a gain on deconsolidation of Seadrill Partners of $2,339 million. The gain represents the excess of the fair value of the Company's investments in Seadrill Partners over the carrying value of the Company's share of the net assets of Seadrill Partners deconsolidated. See Note 11 to the Consolidated Financial Statements included herein for further discussion.

Included in the results for 2013 is a gain of $1,256 million on sale of the tender rig business to SapuraKencana. The sale closed on April 30, 2013. See Note 11 to the Consolidated Financial Statements included herein for further discussion.

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Income taxes

Income tax expense was $19 million for the year ended December 31, 2014 compared to $154 million for the year ended December 31, 2013. The decrease was mainly due to changes in uncertain tax positions taken in prior periods that were recognized during the year ended December 31, 2014.  Our effective tax rate was approximately 1% for the year ended December 31, 2014 as compared to 5% for the year ended December 31, 2013. The decrease in the effective rate is principally due to the non-taxable gain on deconsolidation of Seadrill Partners.

Certain of the Company's Norwegian subsidiaries have been party to an ongoing dispute to a tax reassessment issued in October 2011 by the Norwegian tax authorities in regards to the transfer of certain legal entities to a different tax jurisdiction and the principles for conversion of functional currency. In April 2014 these subsidiaries entered into a settlement agreement with the Norwegian tax authorities resulting in discontinued legal proceedings in the Oslo District Court. The terms of the settlement agreement included the Company making a cash payment to the tax authorities for settlement of revised reassessments agreed between the parties. Following settlement of the uncertainties arising from these matters, we recognized a $94 million positive impact on our second quarter 2014 effective tax rate.

Significant amounts of our income and costs are reported in non-taxable jurisdictions such as Bermuda. The drilling rig operations are normally carried out in taxable jurisdictions.  In the tax jurisdictions where we operate, the corporate income tax rates range from 17% to 35% for earned income and the deemed tax rates vary from 4% to 10% of revenues. Further, losses in one tax jurisdiction may not be offset against taxable income in other jurisdictions. Accordingly, our effective tax rate may differ significantly from period to period depending on the level of activity in and mix of each of tax jurisdictions in which our operations are conducted.

Unrealized (loss)/gain on marketable securities, net

The net unrealized loss at December 31, 2014 was $982 million, compared to a gain of $333 million at December 31, 2013, presented in the statement of total comprehensive income. The unrealized loss in 2014 was a result of recent reductions in the market capitalization of Seadrill Partners and SapuraKencana, both of which the Company holds investments in, as compared to the gains made on the investment in SapuraKencana made in 2013.

Fiscal Year Ended December 31, 2013, compared to Fiscal Year Ended December 31, 2012.

The following table sets forth our operating results for 2013 and 2012.

	Year ended December 31, 2013										Year ended December 31, 2012
In US$ millions	Floaters		Jack-up rigs		Tender Rigs		Other		Total		Floaters		Jack-up rigs		Tender Rigs		Other	Total
Total operating revenues	3,698		1,175		382		27		5,282		2,859		861		758		—	4,478
Gain on sale of assets	—		61		—		—		61		—		—		—		—	—
Total operating expenses	(2,226	)	(786	)	(206	)	(27	)	(3,245	)	(1,609	)	(637	)	(441	)	—	(2,687	)
Net Operating income	1,472		450		176		—		2,098		1,250		224		317		—	1,791
Interest expense									(445	)								(340	)
Other financial items									1,287									(14	)
Income before taxes									2,940									1,437
Income taxes									(154	)								(232	)
Net income									2,786									1,205

Total operating revenues

In US $millions	2013	2012	Change
Floaters	3,698	2,859	29	%
Jack-up rigs	1,175	861	36	%
Tender Rigs	382	758	(50	)%
Other	27	—	100	%
Total operating revenues	5,282	4,478	18	%

Total operating revenues were $5.3 billion in 2013 compared $4.5 billion in 2012, an increase of $0.8 billion or 18%. Total operating revenues are predominantly contract revenues with additional amounts of reimbursable and other revenues. There was an increase in the floater and jack-up segments due to an increase of rigs in operation, improved utilization across the floaters and jack-up segments as well as an increase in average dayrates. This was offset primarily by the sale of the tender rig business at the end of April 2013, where the tender rigs sold contributed to revenues for the first four months of 2013 compared to a full year of revenues in 2012.

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Total operating revenues in the floaters segment were $3.7 billion in 2013 compared to $2.9 billion in 2012, an increase of $0.8 billion, or 29%. The increase was mainly due to the increase in the number of drilling units in the floaters segment from 16 at December 31, 2012 to 22 at December 31, 2013 due to the addition of the acquired rigs: West Eclipse, Sevan Driller and Sevan Brasil and related amortization of acquired unfavorable contracts associated with these rigs, and the addition of the newbuild rigs West Tellus, West Auriga and West Vela in the second half of 2013. Also a full year operations of the West Leo and West Capricorn contributed to the increase compared to the prior year whereas these rigs entered into service towards the end of the first half of 2012.

Total operating revenues in the jack-up rigs segment were $1.2 billion in 2013 compared to $0.9 billion in 2012, an increase of $0.3 billion or 36%. The increase was mainly due to the increased number of drilling units in the jack-up segment to 20 at December 31, 2013 from 16 at December 31, 2012 due to the addition of the acquired rigs AOD 1, AOD 2, AOD 3, and the newbuild West Tucana, and full year operations of the West Defender and West Resolute.

Total operating revenues in the tender rig segment were $382 million in 2013 compared to $758 million2012 a decrease of $376 million or 50%. The decrease was mainly due to the sale of the majority of tender rig business to SapuraKencana, which closed on April 30, 2013 and therefore the rigs sold only contributed four months of revenue in 2013 compared to a full year of operations in 2012. This decrease was partly offset by the addition of our newbuilds T-15 and T-16 which commenced operations during the second half of 2013 and revenues earned from management and administrative agreements with SapuraKencana for certain rigs and transition services related to the sale of the tender rig business.

Gain on sale of assets

In 2013 we recorded a gain of $61 million on the sale of the jack-up rig West Janus. We did not record any gain on sale of assets in 2012.

Total operating expenses

In US$ millions	2013	2012	Change
Floaters	2,226	1,609	38	%
Jack-up rigs	786	637	23	%
Tender rigs	206	441	(53	)%
Other	27	—	100	%
Total operating expenses	3,245	2,687	21	%

Total operating expenses were $3.2 billion in 2013 compared to $2.7 billion in 2012, an increase of $0.5 billion or 21%. Total operating expenses consist of vessel and rig operating expenses, depreciation and amortization, reimbursable expenses and general and administrative expenses. Total general and administrative expenses were $300 million in 2013 compared to $250 million in 2012, an increase of $50 million or 20%. The increase was mainly due to additional costs incurred related to the transition of our corporate management services function to the United

Kingdom from Norway, increased management support across our business to support our growth and strategic initiatives and the addition of

Sevan from July 2013. Reimbursable expenses in each segment were closely in line with reimbursable revenues.

Total operating expenses for the floaters segment were $2.2 billion in 2013 compared to $1.6 billion2012, an increase of $0.6 billion or 38%. This was mainly related to the increase in the number of rigs in operation including the acquired rigs: West Eclipse, Sevan Driller and Sevan Brasil; the addition of our newbuild rigs: West Auriga, West Vela and West Tellus; and the West Leo and West Capricorn which had a full year of operations in 2013 compared to partial operations in 2012.

Total operating expenses for the jack-up rigs segment were $786 million in 2013 compared to $637 million in 2012, an increase of $149 million or 23%. This was mainly related to the increase in the number of rigs in operation including the acquired rigs: AOD 1, AOD 2, AOD 3; the addition of our newbuild rig West Tucana; and full year operations of the West Defender and West Resolute.

Total operating expenses for the tender rig segment increased were $206 million in 2013 compared to $441 million in 2012 a decrease of $235 million or 53%. The decrease in expense was mainly due to the sale of the tender rig business in which 2013 only included four months of operating expenses compared to a full year in 2012. The decrease was partly offset by the addition of the newbuilds T-15 and T-16 into operations during the second half of 2013 as well as expenses incurred associated with our management and administration agreement with SapuraKencana.

Interest expense

Interest expense was $445 million in 2013 compared to $340 million in 2012 an increase of $105 million or 31%.The increase was mainly due to an increase in long term borrowing during the period related to additional credit facilities entered into in conjunction with the delivery of our newbuilds, additional debt from consolidations and acquisitions, bond issuances and other financing arrangements including related party borrowings.

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Other financial items

Other financial items reported in the income statement include the following items:

In US$ millions	2013		2012
Interest income	24		25
Share in results of associated companies	(223	)	(220	)
(Loss)/gain on derivative financial instruments	133		3
Foreign exchange gain	52		(70	)
Gain on realization of marketable securities	—		85
Gain on re-measurement of previously held equity interest	—		169
Other financial items	45		(6	)
Gain on sale of tender rig business	1,256		—
Total other financial items	1,287		(14	)

Interest income was consistent from the prior year and was $24 million in 2013 compared to $25 million in 2012. Interest income is primarily comprised of interest earned on restricted cash balances, interest earned and accreted on deferred consideration from SapuraKencana related to the sale of the tender rig business.

Share in results from associated companies was a loss of $223 million in 2013 compared to a loss of $220 million in 2012. The loss in 2013 was mainly comprised of our share of net losses in Archer during the year. The loss in 2012 was mainly comprised of an impairment charge recognized on our investment in Archer in addition to recording our share in their results.

Gains from derivative financial instruments were of $133 million in 2013 compared to a gain of $3 million in 2012.Gains in 2013 were mainly related to a gain of $143 million on our interest rate swap agreements due to the favorable movement in swap interest rates during the year; gains on our TRS agreements of $19 million; and gains on other derivatives of $30 million, which was partially offset by losses on our cross currency interest rate and foreign exchange swap agreements of $59 million.

Foreign exchange gains amounted to $52 million in 2013 compared to a loss of $70 million in 2012. This was mainly due to the revaluation of our NOK denominated bonds to the US dollar and was favorable due to the weakening of NOK compared to the U.S. Dollar.

Included in the results for 2013 is a gain on re-measurement of the equity interest held in AOD and Sevan. The re-measurement of these investments was due to obtaining a controlling financial interest during the period and subsequently consolidating these companies' results through a step acquisition. In 2012, we recognized a gain of $169 million based on a decline in our equity interest in SapuraCrest being re-classified as marketable securities as a consequence of the merger between SapuraCrest and Kencana Petroleum. See Notes 12 and 14 in the Consolidated Financial Statements for further discussion.

Included in the results for 2012 is a gain of sale of shares in SapuraKencana of $85 million. During 2013 we had no such gain.

Included in the results for 2013 is a bargain purchase gain of $32 million related to our acquisitions of AOD and Sevan. See Note 12 to the Consolidated Financial Statements included herein for further discussion.

Included in the results for 2013 is a gain of $1,256 million on sale of the tender rig business to SapuraKencana. The sale closed on April 30,

2013. See Note 11 of Consolidated Financial Statements for further discussion.

Income taxes

Income tax expense was $154 million for the year ended December 31, 2013 compared to $232 million in the year ended December 31, 2012.The decrease was mainly due to the absence of additional expense recognized in 2012 associated with uncertain tax positions. This decrease was offset by an increase in operating income as a result of increased revenues. Our effective tax rate was approximately 5% in 2013 as compared to 16% in 2012. The decrease in the effective tax rate is principally due to the non-taxable gain on sale of tender rig business.

Significant amounts of our income and costs are reported in nontaxable jurisdictions such as Bermuda. The drilling rig operations are normally carried out in taxable jurisdictions. In the tax jurisdictions where we operate, the corporate tax rate ranges from 16% to 35% for earned income and the deemed tax rates vary from 5% to 10% of revenues. Further, losses in one tax jurisdiction may not be offset against taxable income in other jurisdictions. Accordingly, our effective tax rate may differ significantly from period to period depending on the level of activity in and mix of each of tax jurisdictions in which our operations are conducted.

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B. LIQUIDITY AND CAPITAL RESOURCES

We operate in a capital intensive industry. Our investment in newbuildings, secondhand drilling units and our acquisition of other companies have been financed through a combination of equity issuances, bond and convertible bond offerings, and borrowings from commercial banks and export credit agencies. Our liquidity requirements relate to servicing our debt, funding investment in drilling units, funding working capital requirements, funding potential dividend payments and maintaining adequate cash reserves to mitigate the effects of fluctuations in operating cash flows. Most of our contract and other revenues are received monthly in arrears, and most of our operating costs are paid on a monthly basis.

Our funding and treasury activities are conducted within corporate policies to maximize returns while maintaining appropriate liquidity for our operating requirements. Cash and cash equivalents are held mainly in U.S. dollars, with lesser amounts held in Norwegian Kroner and Brazilian Real.

Our short-term liquidity requirements relate to servicing our debt and funding working capital requirements. Sources of liquidity include existing cash balances, restricted cash balances for certain debt, short-term investments, amounts available under revolving credit facilities and contract and other revenues. We believe that contract and other revenues will generate sufficient cash flow to fund our anticipated debt service and working capital requirements for the short and medium term.

Our long-term liquidity requirements include funding the equity portion of investments in new drilling units, and repayment of long-term debt balances including those relating to our borrowings and our consolidated subsidiaries discussed below.

As of December 31, 2014, we had cash and cash equivalents totaling $1.1 billion, as compared to $0.9 billion for the same period in 2013, including $268 million of short term restricted cash, as compared to $168 million for the same period in 2013. In the year ended December 31, 2014, we generated cash from operations of $1.6 billion, used $0.1 billion in investing activities, and cash outflows from financing activities were $1.5 billion; as compared to $1.7 billion, $3.0 billion, and $1.7 billioninflows, respectively, in the same period in 2013.

At December 31, 2014, the Company had contractual commitments under sixteen newbuilding contracts totaling $5.4 billion (2013: $7.7 billion). The contract commitments are mainly yard installments and are for the construction of three semi-submersible rigs, eight jack-up rigs and five drillships.

The maturity schedule for the contractual commitments as of December 31, 2014 is as follows:

(In US$ millions)	2015	2016	2017	2018	2019	2020 and thereafter	Total
Newbuildings	4,722	667	—	—	—	—	5,389

Borrowings under our current credit facilities and available cash on hand are not sufficient to pay the remaining installments related to our contracted yard commitments for all of our newbuilding drilling units, which currently totals $5.0 billionas at March 20, 2015 (after $364 million paid in yard installments since December 31, 2014, relating to the drillship West Carina). We have raised $950 million through secured bank financing, subsequent to December 31, 2014 of which $500 million has already been committed to our newbuildings. As at December 31, 2014 we had a total of $50 million of undrawn borrowing capacity under our existing credit facilities. For our other deliveries scheduled to take place in 2015, and 2016, we are exploring financing options for the remaining amounts not yet financed. We are focused on securing financing for the deliveries in 2015 and believe that we will be able to secure the amounts required at affordable terms and rates due to our past experience and successes as well as current discussions with various potential counterparties in raising such funds.

We believe the cash that we generate from our operations supported by existing and future debt capacity, provided by our contract backlog, current and future asset base, is expected to be sufficient to meet our existing commitments to fund new buildings including meeting our working capital needs, as well as service our debt obligations in accordance with the existing maturity profile. If we enter into significant further investments and/or newbuilding commitments we expect that we will require additional issuances of equity and/or new debt to meet our capital requirements. See "Item 8. Financial Information – Dividend Policy." A deterioration in our operating performance, inability to obtain cost efficiencies, lack of success in adding new contracts to our backlog and an inability to finance our commitments as well as numerous other factors detailed above in "Risk Factors" could limit our ability to further the growth of our business and to meet working capital requirements.

We plan to pay our debt as it becomes due, although our gearing decisions will largely be dependent upon our contract backlog and financial outlook. Any decision to refinance debt maturing in future years will take the above factors into consideration, and we believe it is likely that we will refinance a portion of our debt.

For the year ended December 31, 2014 we paid cash dividends of$2.98 per common share, or a total of $1.5 billion, while for the same period in 2013 we paid $1.4 billion in total cash dividends. The increase in the amounts paid in 2014 compared to 2013 is a result of a combination of factors: (i) an increase in the quarterly dividend per share rate, (ii) non-payment of the dividend in the first quarter of 2013 as the dividend in respect of the fourth quarter in 2012 was accelerated and paid together with the third quarter dividend of 2012; this was offset by (iii) non-payment of the dividend in the fourth quarter of 2014 due to suspension of the dividend. On November 26, 2014, the Company suspended dividend distributions until further notice.

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Seadrill Limited, as the parent company of its operating subsidiaries, is not a party to any drilling contracts directly and is therefore dependent on receiving cash distributions from its subsidiaries and other investments to meet its payment obligations. Cash dividend payments are regularly transferred by the various subsidiaries. Surplus funds are deposited to maximize returns while providing the Company with flexibility to meet all requirements for working capital and capital investments.

Borrowings

As of December 31, 2014, we had total outstanding borrowings under our credit facilities of $12.6 billion at an average annual interest rate of approximately 4.20%. In addition, we had interest bearing debt of $415 million under loan agreements with related parties.

Set forth below is a summary of our outstanding indebtedness as of December 31, 2014.

(In US$ millions, unless otherwise indicated)	Outstanding as at December 31, 2014
Credit facilities:
$700 facility	420
$2,000 facility (NADL)	1,367
$400 facility	280
$420 facility	351
$440 facility	258
$450 facility	416
$1,450 facility	433
$360 facility (Asia Offshore Drilling)	309
$300 facility	210
$1,750 facility (Sevan Drilling)	1,225
$150 facility	150
$450 facility (2013)	397
$1,500 facility (2014)	1,469
$1,350 facility	1,317
Total credit facilities	8,602
Ship Finance Loans
$390 facility (SFL Deepwater)	303
$375 facility (SFL Hercules)	284
$475 facility (SFL Linus)	451
Total Ship Finance Loans	1,038
Unsecured bonds
NOK1,800 million bond	242
$350 bond	342
$1 billion bond	1,000
$500 bond	479
NOK1,500 million bond (NADL)	190
$ 600m bond (NADL)	413
SEK 1,500 bond	190
Total unsecured bonds	2,856
CIRR Loans
NOK850 million Eksportfinans	27
NOK904 million Eksportfinans	29
NOK1,011 million Eksportfinans	68
Other credit facilities with corresponding restricted cash deposits	124
Total debt	12,620

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Credit Facilities

$1,500 million senior secured credit facility

In June 2009, the Company entered into a $1,500 million senior secured loan facility with a syndicate of banks and export credit facility agencies, to partly fund the acquisition of the West Capella, West Sirius, West Ariel and West Aquarius, which were pledged as security. The facility bore interest at LIBOR plus 3.31% per annum and was repayable over a term of five years. The outstanding balance at December 31, 2013 was $706 million.

In February 2014 Seadrill Partners entered into an independently financed term loan and the proceeds received from Seadrill Partners new term loan were used to repay the third party lenders of this facility and settle the related party back to back loan financing between the Company and Seadrill Partners. See Note 31 to the Consolidated Financial Statements included herein for further details on related party transactions.

$1,200 facility, $1,121 facility

In June 2010, the Company entered into a $1,200 million senior secured facility with a group of commercial lending institutions and export credit agencies. The ultra-deepwater semi-submersible drilling rig West Orion, the ultra-deepwater drillship West Gemini and the tender rig West Vencedor were pledged as security. The facility bore interest at LIBOR plus 2.25% per annum and was repayable over a term of five years. The outstanding balance as of December 31, 2013, was $733 million.

In January 2011, the Company entered into a $1,121 million senior secured credit facility with a bank to fund the acquisition of two ultra-deepwater semi-submersible rigs, West Leo and West Pegasus, which both were pledged as security. The facility bore interest at LIBOR plus a margin between 2.25% and 3.00% per annum, and was repayable over a term of seven years. The facility was fully drawn as of December 31, 2013 with a balance of $912 million.

On December 10, 2013, the $1,121 million facility with Lloyds Bank TSB as agent was transferred to DNB Bank ASA as new agent and lender and to Metrogas, a related party, as new lender. There were no other changes to the facility. As Metrogas is a related party of the Company, the portion of the facility related to Metrogas of $840 million was accordingly reclassified as debt due to related parties on the consolidated balance sheet, leaving the remaining $72 million in long-term debt. See Note 31 to the Consolidated Financial Statements included herein.

In February 2014, Seadrill Partners entered into an independently financed senior secured credit facility. The proceeds received by Seadrill Partners were used to settle the related party back to back loan financing between the Company and Seadrill Partners for the West Leo portion and repay the lenders of the $1,121 million facility.

On August 26, 2014, the remainder of the $1,200 million facility and $1,121 million facility were repaid in full. The Company recognized a $16 milliongain on debt extinguishment within net loss on debt extinguishment in the Company's consolidated statement of operations relating to the $1,121 million facility. As one of the lenders of the $1,121 million facility was Metrogas, a related party, this transaction has been disclosed within Note 31 to the Consolidated Financial Statements included herein for further details on related party transactions.

$700 million senior secured term loan

In October 2010, the Company entered into a $700 million senior secured loan facility with a syndicate of banks to partly fund the acquisition of seven jack-up drilling rigs, which have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $1,074 million. The facility bears interest at LIBOR plus 2.50% per annum and is repayable over a term of five years. As of December 31, 2014, the outstanding balance was $420 million, as compared to $490 million in 2013. At maturity a balloon payment of $350 million is due in October 2015. We do not have any undrawn capacity on this facility as of December 31, 2014. Subsequent to the period end, on March 6, 2015, the tranches relating to the West Courageous, West Defender, and the West Intrepid were repaid, totaling $170 million.

$2,000 million senior secured credit facility

In April 2011, NADL, our majority owned subsidiary, entered into a $2,000 million senior secured credit facility with a syndicate of banks to partly fund the acquisition of six drilling units from Seadrill, which have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $2,343 million. The facility has a six year term and bears interest at LIBOR plus 2.00% per annum. As of December 31, 2014, the outstanding balance was $1,367 million, as compared to $1,503 million in 2013. At maturity a balloon payment of $950 million is due. We had $50 million undrawn under this facility as of December 31, 2014, which bears a commitment fee of 40% of the margin.

$400 million senior secured credit facility

In December 2011, the Company entered into a $400 million senior secured credit facility with a syndicate of banks. The jack-up rigs West Cressida, West Callisto, West Leda and West Triton have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $694 million. The facility has a five year term and bears interest of LIBOR plus 2.50% per annum. As of December 31, 2014, the outstanding balance was $280 million, as compared to $320 million in 2013. At maturity a balloon payment of $200 million is due. We do not have any undrawn capacity on this facility as December 31, 2014.

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$420 million senior secured credit facility

On December 28, 2012 SFL West Polaris Limited, formerly a consolidated VIE, entered into a $420 million term loan facility with a syndicate of banks to refinance the existing $700 million secured term loan facility. The new facility had a term of five years and bore interest of LIBOR plus a margin of 3.00%. On February 28, 2014 the margin on the facility was reduced from 3.00% to 2.25%.

On December 30, 2014, the Company purchased SFL West Polaris Limited from Ship Finance, and accordingly we have represented the facility within "Credit facilities" from "Ship Finance Loans". Please refer to note 35 to our Consolidated Financial Statements included herein for more information. The drillship West Polaris has been pledged as security. The net book value at December 31, 2014 of the unit pledged as security is $564 million. As at December 31, 2014, the outstanding balance under the facility was $351 million, compared to $387 millionas atDecember 31, 2013.

$550 million senior secured term loan and revolving credit facility

In December 2011, the Company entered into a $550 million secured credit facility with a syndicate of banks to partly fund the delivery of the ultra-deepwater semi-submersible drilling unit West Capricorn, which was pledged as security. The facility had a five year term and bore interest at LIBOR plus 1.50% to 2.25% per annum. As of December 31, 2013, the outstanding balance was $440 million. At maturity a balloon payment of $275 million was due.

In June 2014 Seadrill Partners entered into an amended senior secured credit facility, with the proceeds used by Seadrill Partners to repay the third party lenders of this facility and settle the related party back to back rig financing agreement between the Company and Seadrill Partners. See Note 31 to the Consolidated Financial Statements included herein for further details on related party transactions.

$440 million secured credit facility

In December 2012, the Company entered into a $440 million secured credit facility with a syndicate of banks to fund the delivery of two tender rigs and two jack-up drilling rigs. As of December 31, 2014, we have drawn $320 million on the facility, and the T-15, T-16, and West Telesto have been pledged as security, while the tranche for the West Oberon was cancelled due to other funding opportunities for this rig. The tender rigs T-15 and T-16 were sold to Seadrill Partners during 2013, and subsequently the Company entered into a back to back rig financing agreement with Seadrill Partners for the corresponding portions of the secured credit facility for $101 million and $98 million respectively. Under the terms of the secured credit facility agreements for the T-15 and T-16, certain subsidiaries of the Company and Seadrill Partners are jointly and severally liable for their own debt and obligations under the relevant facility and the debt and obligations of other borrowers who are also party to such agreements. These obligations are continuing and extend to amounts payable by any borrower under the relevant agreement. See Note 31 to our Consolidated Financial Statements for further details on related party transactions. The total net book values as at December 31, 2014 of all the units pledged as security was $470 million. The total net book value of the T-15 and T-16, which the Company no longer owns, was$261 million as at December 31, 2014. The facility bears interest at LIBOR plus 3.25% per annum and is repayable over a term of five years. The outstanding balance as at December 31, 2014 was $258 million, as compared with $293 million in 2013. At maturity a balloon payment of $166 million is due.

$450 million senior secured credit facility

On December 21, 2012, we entered into $450 million senior secured credit facility with a syndicate of banks, and was drawn down on January 3, 2013. The West Eclipse semi-submersible rig was pledged as security, which has a net book value of $657 million as at December 31, 2014. The facility was scheduled to mature within one year and bore interest of LIBOR plus 3.00%. On December 20, 2013, we amended this facility for an additional one year, with an amended interest rate of LIBOR plus 2.00%. On December 19, 2014, we amended this facility with a new maturity date of February 3, 2015 on the same terms. As of December 31, 2014, the outstanding balance was $416 million as compared to $450 million at December 31, 2013. Subsequent to the year end, in January 2015, this facility has been repaid in full and replaced with a new $950 million facility, as discussed below.

$1,450 million senior secured credit facility

On March 20, 2013, we entered into a $1,450 million senior secured credit facility with a syndicate of banks and export credit agencies. The West Auriga, West Vela, and West Tellus were pledged as security. The facility has a final maturity in 2025, with the commercial tranche due for renewal in 2018, and bears an interest of LIBOR plus a margin in the range of 1.20% to 3.00%.

In March 2014, we completed the sale of the entities that own and operate the West Auriga to Seadrill Partners of which one of the entities sold, was a borrower and a guarantor under this facility, and accordingly we have derecognized the portion of this facility relating to the West Auriga. Seadrill Partners subsequently repaid the tranches relating to the West Auriga in full. In November 2014, we completed the sale of the entities that own and operate the West Vela to Seadrill Partners, of which one of the entities sold was a borrower and a guarantor under this facility, and accordingly we have derecognized the portion of this facility relating to the West Vela. See Note 11 to the Consolidated Financial Statements included herein for further details of these disposals to Seadrill Partners.

Under the terms of the $1,450 million secured credit facility agreement, certain subsidiaries of Seadrill and Seadrill Partners are jointly and severally liable for their own debt and obligations under the facility and the debt and obligations of other borrowers who are also party to such agreement.  These obligations are continuing and extend to amounts payable by any borrower under the facility. The total amount owed by all

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parties under this facility as of December 31, 2014 is $856 million (2013: $1,390 million) of which $433 million relates to Seadrill and the West Tellus. Seadrill has not recognized any amounts that are related to amounts owed under the facility by other borrowers. Seadrill has provided an indemnity to Seadrill Partners for any payments or obligations related to this facility that are not related to the West Auriga or West Vela.

If a balloon payment of $86 million relating to the commercial tranches of the West Vela and West Tellus is not refinanced to the satisfaction of the remaining lenders after five years, the remaining tranches also become due after five years.

As at December 31, 2014 the net book value of the West Tellus was $622 million and we also held $50 million of cash in a restricted account, pledged as collateral. Subsequent to the year end, the restricted cash was released in full a result of our entering into a new contract with Petrobras. We do not have any undrawn capacity on this facility as of December 31, 2014.

$360 million senior secured credit facility

On April 10, 2013, our majority owned subsidiary AOD entered into a $360 million senior secured credit facility with a syndicate of banks. The facility is available in three equal tranches of $120 million, with each tranche relating to AOD 1, AOD 2 and AOD 3, which have been pledged as security. The loan has a five year maturity from the initial borrowing date, and bears interest of LIBOR plus 2.75%. As at December 31, 2014 the rigs have a net book value of $225 million, $222 million and $230 million respectively. As of December 31, 2014, the outstanding balance was $309 million as compared to $345 million at December 31, 2013.

$300 million senior secured credit facility

On July 16, 2013, we entered into a$300 million senior secured credit facility with a syndicate of banks and export credit agencies. The West Tucana and West Castor were pledged as security, and bears interest of LIBOR plus a margin of 3.00%, and matures in 2023. As at December 31, 2014 the net book values of the West Tucana and West Castor were $204 million and $213 million respectively. As of December 31, 2014, the outstanding balance was $210 million as compared to $234 million at December 31, 2013.

$150 million senior secured credit facility

On October 22, 2013, we entered into a $150 million secured credit facility with a bank. The West Oberon and the West Prospero were pledged as security, bears interest of LIBOR plus a margin of 0.75%, with a maturity date in June 2014. The loan was subsequently amended with a new maturity date of March 31, 2015 and revised margin of 1.0%. As at December 31, 2014 the net book value of the West Oberon and West Prospero were $226 million and $165 million respectively. As of December 31, 2014 and 2013 the outstanding balance was $150 million. Subsequent to the year end, on March 26, 2015, this facility was repaid in full as part of the SeaMex transaction.

$450 million senior secured credit facility (2013)

On December 13, 2013, we entered into a $450 million senior secured facility with a syndicate of banks. The West Eminence has been pledged as security, and bears interest of LIBOR plus a margin of 1.75% and matures in June 2016. This facility replaced an existing $800 million facility, which had an outstanding balance of $194 million and was fully repaid on December 19, 2013. As at December 31, 2014 the net book value of the West Eminence was $589 million. As at December 31, 2014, the outstanding balance was $397 million as compared to $450 million as at December 31, 2013.

$1,350 million senior secured credit facility

In August 2014, the Company entered into a $1,350 million senior secured credit facility with a syndicate of banks. The new facility consists of a term loan facility for $675 million and a revolving credit facility in an amount up to $675 million. The West Pegasus, West Gemini and West Orion were pledged as security. The total net book value at December 31, 2014 of the units pledged as security is $1,767 million. The facility bears interest at LIBOR plus a margin of 2% per annum, and is repayable in quarterly installments over a term of five years. The revolver is fully repayable at the final maturity date. The revolver facility was fully drawn and we do not have any undrawn capacity as of December 31, 2014. As at December 31, 2014, the outstanding balance was $1,317 million.

$1,500 million senior secured credit facility (2014)

In July 2014, the Company entered into a $1,500 million senior secured credit facility with a syndicate of banks to finance the three newbuilds, the West Saturn, West Neptune and West Jupiter which are pledged as security. The net book value at December 31, 2014 of the units pledged as security is $1,840 million. The facility bears interest at LIBOR plus a margin of between 1.4% and 2.5% per annum, and is repayable over a term of 12 years. The loan includes a Commercial Interest Reference Rate (CIRR) tranche with Eksportfinans ASA, the Norwegian export credit agency, that bears fixed interest at 2.38% per annum. If the commercial tranche of $300 million does not get refinanced to the satisfaction of the remaining lenders after five years, the remaining tranches also become due after five years. If the commercial balloon of $175 million does not get refinanced to the satisfaction of the remaining lenders by September 2019, the remaining tranches also become due. As at December 31, 2014, the outstanding balance was $1,469 million as compared to nil as at December 31, 2013.

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$950 million senior secured credit facility

In January 2015, we entered into a $950 million senior secured credit facility with a syndicate of banks and export credit agencies to partly fund the delivery of the West Carina and to refinance our indebtedness related to the West Eclipse. This facility is comprised of a $285 million term loan, a $475 million revolving facility and a $190 million ECA facility. The commercial facilities have a 5 year term and bear interest at LIBOR plus 2.00% and the ECA facility has a 12 year term and has a CIRR interest rate of 2.12%.

$1,750 million secured credit facility

On September 27, 2013 subsidiaries of Sevan Drilling entered into a $1,750 million bank facility with a syndicate of banks and export credit agencies. The facility consists of two tranches in the amounts of $1,400 million and $350 million. On October 23, 2013 the first tranche of $1,400 million was drawn and was used to repay the existing credit facilities related to Sevan Driller and Sevan Brasil and to settle the remaining installment and other amounts for the delivery of Sevan Louisiana. The Sevan Driller, Sevan Brasil and Sevan Louisiana have been pledged as security. In December 2014 the $350 million tranche relating to the Sevan Developer was cancelled at our request as a consequence of the deferral agreement made with Cosco, and the borrowing entity relating to the Sevan Developer was released from its obligations under this facility. The facility has a maturity in September 2018 and bears interest of LIBOR plus a margin of 2.90%. As at December 31, 2014 the net book of the Sevan Driller, Sevan Brasil and Sevan Louisiana were $589 million, $601 million and $719 million respectively. As at December 31, 2014, the outstanding balance was $1,225 million as compared to $1,400 million as at December 31, 2013.

Ship Finance Loans

The following loans relate to the Ship Finance International entities that we consolidate in our financial statements as VIEs. Refer to Note 35 to our Consolidated Financial Statements included herein for more information.

SFL Deepwater Ltd and SFL Hercules Ltd

In September 2008, SFL Deepwater Ltd entered into a $1,400 million secured term loan facility with a syndicate of banks to partly fund the acquisition of West Taurus and West Hercules, which have been pledged as security. The facility had an interest at LIBOR plus 1.40% per annum and was repayable over a term of five years. The facility has been repaid in full as discussed further below.

On May 24, 2013, the Hercules tranche of the $1,400 million facility was refinanced and replaced by a new $375 million facility, with a syndicate of banks and financial institutions. The new facility is secured by the West Hercules, which has a net book value of $603 million as of December 31, 2014. The new facility has a term of six years and bears interest of LIBOR plus a margin of 2.75%. As of December 31, 2014, the outstanding balance under the facility is $284 million. There is no undrawn capacity on this facility at year end.

On October 31, 2013, the Taurus tranche of the $1,400 million facility was refinanced and replaced with a new $390 million facility with a syndicate of banks and financial institutions. The new facility is secured by the West Taurus, which has a net book value of $450 million as at December 31, 2014. The new facility has a term of five years and bears an interest of LIBOR plus a margin of 2.50%. As of December 31, 2014, the outstanding balance under the facility is $303 million. There is no undrawn capacity on this facility at year end.

SFL Linus Ltd

On October 17, 2013, SFL Linus Ltd entered into a $475 million secured term loan and revolving credit facility with a syndicate of banks to fund the acquisition of West Linus, which has been pledged as security and has a net book value of $581 million as at December 31, 2014. The facility was fully drawn on February 18, 2014, on the date of delivery of West Linus. The facility bears interest of LIBOR plus 2.75% and matures in June 2019. As of December 31, 2014, the outstanding balance under the facility is $451 million. There is no undrawn capacity on this facility at year end.

Unsecured Bonds

$350 million fixed interest rate bond

In October 2010, the Company raised $350 million through the issue of a five year bond which matures in October 2015. The bond bears a fixed interest rate of 6.50% per annum, payable semi-annually in arrears. In May 2012, we repurchased $8 million of the bonds.  As of December 31, 2014, the outstanding balance was $342 million.

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$650 million3.375% Convertible Bonds and conversion

In October 2010, the Company issued at par $650 million of convertible bonds. Interest on the bonds was fixed at 3.375%, payable semi-annually in arrears. The bonds were convertible into the Company's common shares at any time up to 10 banking days prior to October 27, 2017. The conversion price at the time of issuance was $38.92 per share, representing a 30% premium to the share price at the time. For accounting purposes $121 million was, at the time of issuance of the bonds, allocated to the bond equity component and $529 million to the bond liability component, due to the cash settlement option stipulated in the bond agreement. The bonds were due to mature in October 2017. The bond equity component was amortized over the maturity term, and recognized within interest expense in the consolidated statement of operations.

In July 2014, the Company launched a voluntary incentive payment offer to convert any and all of the $650 million principal amount of 3.375% convertible bonds. Holders of $649 million of principal amount of convertible bonds accepted the voluntary incentive offer and the Company then elected to exercise the "90% clean-up call" provision on the remaining $1 million outstanding.

Holders converted at the contractual conversion price of $27.69 per share and received an incentive payment of $12,102.95 per $100,000 principal amount of bond held. As a result of the transaction, the number of common shares outstanding in the Company increased by 23.8 million shares, with an increase to equity of $893 million.

As a result of the conversion the Company recorded a charge of $79 million related to the incentive paid for the induced conversion and a loss on debt extinguishment of $16 million. These amounts were recognized within net loss on debt extinguishment in the Company's consolidated statement of operations. $278 million of the total consideration transferred on conversion was allocated to the reacquisition of the embedded conversion option and recognized as a reduction of stockholders’ equity. The total cash outflow due to the incentive payments and accrued interest was $69 million.

NOK 1,250 million floating interest rate bond

In January 2012, the Company raised $225 million (NOK1,250 million) through the issue of a two year senior unsecured bond, with a maturity date of February 13, 2014. The bond bears interest of NIBOR plus 3.25% per annum, payable quarterly in arrears. The bond was repaid in full on the maturity date.

$1,000 million fixed interest bond

In September 2012, the Company raised $1,000 million through the issue of a 5 year bond which matures in September 2017. Interest on the bonds bears a fixed interest rate of 5.625% per annum, payable semi-annually in arrears. The interest rate increased to 6.125% in March 2014 as the Company remained unrated.

NOK 1,800 million floating interest rate bonds

On March 5, 2013 the Company issued a NOK1,800 millionsenior unsecured bond with maturity in March 2018. The bond bears interest of NIBOR plus a margin of 3.75% per annum. The bond was subsequently swapped to US$ with a fixed rate of 4.94% per annum until maturity.

$500 million senior unsecured bond

On September 20, 2013, the Company issued a $500 million senior unsecured bond issue. The bond matures in September 2020 and bears interest of 6.125% per annum. The interest rate increased to 6.625% in March 2014 as the Company remained unrated.

In December 2014 the Company repurchased $21 million (of par value) of the $500 million senior unsecured bond, recognizing a gain on debt extinguishment of $3 million.

NOK1,500 million floating interest rate bonds

On October 17, 2013, NADL, our majority owned subsidiary, issued a NOK1,500 million senior unsecured bond issue with maturity in October 2018, and an interest rate of NIBOR plus a margin of 4.40% per annum. The bond was subsequently swapped to US$ with a fixed rate of 6.18% per annum until maturity.

In December 2014 the Company purchased NOK 82 million (of par value) of the NOK 1,500 million senior unsecured bond issued by NADL, recognizing a gain on debt extinguishment of $4 million.

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$600 million senior unsecured bond

In January 2014, NADL, our majority owned subsidiary, issued a $600 million senior unsecured bond issue. The bond matures in January 2019 and bears interest of 6.25% per annum. In conjunction with the issue and subsequently in the open market we bought 27.5% of the bond, which amounted to $165 million. During June 2014 we sold a portion of the bond owned by the Company for $25 million. In December 2014 the Company purchased $47 million (of par value) of the $600 million senior unsecured bond issued by NADL, recognizing a gain on debt extinguishment of $16 million. As of December 31, 2014 we held 31.1% of the bond, which amounted to $187 million.

SEK1,500 million senior unsecured bond

In March 2014, we issued a SEK1,500 million senior unsecured bond. The bond matures in March 2019 and bears interest of STIBOR plus 3.25%. The bond was subsequently swapped to US$ with a fixed rate of 5.2% per annum until maturity. 

Unsecured bond repurchases

During the year ended December 31, 2014, the Company recognized a total gains on debt extinguishment due to the repurchases of bonds of $23 million, which are presented within "Net loss on debt extinguishment" in the Company’s consolidated statement of operations.

Commercial Interest Reference Rate (CIRR) Credit Facilities

In April 2008, the Company entered into a CIRR term loan for NOK850 million with Eksportfinans ASA, the Norwegian export credit agency. The loan bears fixed interest at 4.56% per annum and is repayable over a term of eight years. The outstanding balance at December 31, 2014 was $27 million (NOK200 million), compared to $49 million, in 2013.

In June 2008, the Company entered into a CIRR term loan for NOK904 million with Eksportfinans ASA. The loan bears fixed interest at 4.15% per annum and is repayable over a term of eight years. The outstanding balance at December 31, 2014 was $29 million (NOK213 million), compared to $52 million, in 2013.

In July 2008, the Company entered into a CIRR term loan for NOK1,011 million with Eksportfinans ASA. The loan bears fixed interest at 4.15% per annum and is repayable over a term of 12 years. The outstanding balance at December 31, 2014 was $68 million (NOK506 million), compared to $96 million, in 2013.

In connection with the above three CIRR fixed interest term loans totaling $124 million (NOK919 million), fixed interest cash deposits equal to the total outstanding loan balances have been established with commercial banks. The collateral cash deposits are reduced in parallel with repayments of the CIRR loans and receive fixed interest at the same rates as those paid on the CIRR loans. The collateral cash deposits are classified as "restricted cash" in the consolidated balance sheet, and the effect of these arrangements is that the CIRR loans have no effect on net interest bearing debt.

Related Party Loan Agreements

$1,121 million facility - Metrogas

For a description of this facility, please see above under "Credit Facilities - $1,200 facility, $1,121 facility"

Ship Finance loan agreements

SFL Deepwater Ltd and SFL Linus Ltd have loans from Ship Finance of $290 million and $125 million which are presented as long term debt due to related parties as at December 31, 2014. The loans mature in 2023 and 2029 respectively. The loans bear interest of 4.5% per annum. On December 30, 2014 Seadrill acquired SFL Polaris Ltd from Ship Finance and as a result the outstanding loan of $145 million relating to the SFL West Polaris Ltd was settled, and simultaneously Seadrill Limited recognized a payable of $111 million to Ship Finance for the purchase price. Please see Note 35 to the Consolidated Financial Statements included herein for more details.

Covenants Contained in our Debt Facilities

Our debt agreements generally contain financial covenants as well as security provided to lenders in the form of pledged assets.

Bank Loans

In addition to security provided to lenders in the form of pledged assets, our bank loan agreements generally contain financial covenants, including:

• Aggregated minimum liquidity requirement for the group: to maintain cash and cash equivalents of at least $150 million within the group.

• Interest coverage ratio: to maintain an EBITDA to interest expense ratio of at least 2.5:1.

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• Current ratio: to maintain current assets to current liabilities ratio of at least 1:1. Current assets are defined as book value less minimum liquidity, but including up to 20.0% of shares in listed companies owned 20.0% or more. Current liabilities are defined as book value less the current portion of long term debt.

• Equity ratio: to maintain total equity to total assets ratio of at least 30.0%. Both equity and total assets are adjusted for the difference between book and market values of drilling units.

• Leverage ratio: to maintain a ratio of net debt to EBITDA no greater than 4.5:1. Net debt is calculated as all interest bearing debt less cash and cash equivalents excluding minimum liquidity requirements.

• Debt service coverage ratio: The $1,450m secured debt facility and the $1,500m secured debt facility (2014) contain a requirement for the individual borrowers to maintain a ratio of EBITDA of the respective borrower to debt services (being all finance charges and principal) of not less than 1.15:1.

For the purposes of the above tests, EBITDA is defined as the earnings before interest, taxes, depreciation and amortization on a consolidated basis and (ii) the cash distributions from investments, each for the previous period of twelve months as such term is defined in accordance with accounting principles consistently applied. However, in the event that Seadrill or a member of the group acquires rigs or rig owning entities with historical EBITDA available for the rigs' previous ownership, such EBITDA shall be included for covenant purposes in the relevant loan agreement, and if necessary, be annualized to represent a twelve (12) month historical EBITDA. In the event that Seadrill or a member of the group acquires rigs or rig owning companies without historical EBITDA available, Seadrill is entitled to base a twelve month historical EBITDA calculation on future projected EBITDA only subject to any such new rig having (i) a firm charter contract in place at the time of delivery of the rig, with a minimum duration of twelve months, and (ii) a firm charter contract in place at the time of such EBITDA calculation, provided Seadrill provides the agent bank with a detailed calculation of future projected EBITDA. Further, EBITDA shall include any realized gains and/or losses in respect of the disposal of rigs or the disposal of shares in rig owning companies.

Cash distributions from investments are defined as cash received by Seadrill, by way of dividends, in respect of its ownership interests in companies which Seadrill does not control but over which it exerts significant influence.

In addition to financial covenants, our credit facility agreements generally contain covenants which are customary in secured financing in this industry, including operational covenants in relation to the relevant rigs, information undertakings and covenants in relation to corporate existence and conduct of our business. We are in compliance with related covenants as of December 31, 2014.

The credit facility agreements also identify various events that may trigger mandatory reduction, prepayment, and cancellation of the facility including, among others, the following:

• total loss or sale of a drilling unit securing a credit facility;

• cancellation or termination of any existing charter contract or satisfactory drilling contract; and

• a change of control.

The credit facility agreements contain customary events of default, such as failure to repay principal and interest, and other events of defaults, such as:

• failure to comply with the financial or insurance covenants;

• cross-default to other indebtedness held by both Seadrill Partners and its subsidiaries and by the Company;

• failure by the Company to remain listed on a stock exchange;

• the occurrence of a material adverse change;

• revocation, termination, or modification of any authorization, license, consent, permission, or approval as necessary to conduct operations as contemplated by the applicable Rig Financing Agreement; and

• the destruction, abandonment, seizure, appropriation or forfeiture of property of the guarantors or the Company and its subsidiaries, or the limitation by seizure, expropriation, nationalization, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority, of the authority or ability of the Company or any subsidiary thereof to conduct its business, which has or reasonably may be expected to have a material adverse effect.

Our secured credit facilities are secured by:

• guarantees from rig owning subsidiaries (guarantors),

• a first priority share pledge over all the shares issued by each of the guarantors,

• a first priority perfected mortgage in all collateral rigs and any deed of covenant thereto, subject to contractual agreed "quiet enjoyment" undertakings with the end-user of the collateral rigs to be entered into if this is required by the relevant end-user pursuant to the relevant contract,

• a first priority security interest over each of the rig owners' with respect to all earnings and proceeds of insurance, and

• a first priority security interest in the earnings accounts.

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Our loan and other debt agreements also contain, as applicable, loan-to-value clauses, which could require the Company, at its option, to post additional collateral or prepay a portion of the outstanding borrowings should the value of the drilling units securing borrowings under each of such agreements decrease below required levels. In addition, the loan and other debt agreements include certain financial covenants including the requirement to maintain a certain level of free cash and failure to comply with any of the covenants in the loan agreements could result in a default under those agreements and under other agreements containing cross-default provisions. We were in compliance with all financial loan covenants as of December 31, 2014.

The Company has recently initiated discussions with its lenders in respect of its secured credit facilities to proactively amend the leverage ratio covenant, contained in such credit facilities, to provide the Company with additional future flexibility in view of the current market downturn. 

The Company expects that as part of the amendment agreement it would be restricted from making dividend payments, buying back shares or entering into similar transactions for the duration of the period for which additional leverage ratio headroom was provided under the amended facilities.  The amendment is expected to last until December 31, 2016. Should the Company wish to revert to the original financial covenants during this period then these restrictions would be lifted.

As of the date of this report, the Company has received the required majority lender consent regarding all of its senior secured facilities, except for the $440m secured credit facility, for which the Company expects to obtain majority lender consent in due course.  These amendments to the Company’s secured credit facilities are not final and are subject to the approval of the Company’s board of directors.  As of December 31, 2014, the Company was in compliance with all of the covenants under its secured credit facilities.

Bonds

For the Company’s outstanding Norwegian bonds, Swedish bond and the $350 million bond, the main financial covenant is to maintain a total equity to total assets ratio of at least 30.0%. Both equity and total assets are adjusted for the difference between book value and market values of drilling units.

For our $1,000 million, $500 million, and $600 million bonds, we are subject to certain financial and restrictive covenants contained in our indentures which restrict, among other things, our ability to pay dividends, incur indebtedness, incur liens, and make certain investments. In addition, these indentures contain other customary terms, including certain events of default, upon the occurrence of which, the bonds may be declared immediately due and payable.

In addition to the above, our bond indentures generally also contain restrictions which are customary for unsecured financings in this industry for similar unrated bonds, including limitations on indebtedness, payments, transactions with affiliates and restrictions on consolidation, merger and sale of assets.

We are in compliance with related covenants as of December 31, 2014.

Covenants contained in the loan agreements of our consolidated Ship Finance Variable Interest Entities

The Company consolidates certain subsidiaries of Ship Finance into the financial statements as variable interest entities. While we are not, directly or indirectly, obligated to repay the borrowings under this facility, a breach of one or more of the covenants contained in this credit facility may have a material adverse effect on us. The main financial covenants contained in the variable interest entities are as follows:

• Ship Finance must maintain cash and cash equivalents of at least $25 million.

• Ship Finance must maintain positive working capital.

• Ship Finance must have a ratio of total liabilities to total assets of at least 0.8 to 1.0 at the end of each quarter.

• The Company's covenants under the bank loans listed above also apply.

The Ship Finance subsidiaries owning West Taurus, West Hercules and West Linus are consolidated into our financial statements as a VIEs.  To the extent that these VIEs defaults under its indebtedness and is marked current in its financial statements, we would in turn, mark such indebtedness current in our consolidated financial statements.  The characterization of the indebtedness in our financial statements as current may adversely impact our compliance with the covenants contained in our existing and future debt agreements. In the event of a default by us under one of our debt agreements, the lenders under our existing debt agreements could determine that we are in default under our other financing agreements. This could result in the acceleration of the maturity of such debt under these agreements and the lenders thereunder may foreclose upon any collateral securing that debt, including our drilling rigs, even if we were to subsequently cure such default. We and Ship Finance are in compliance with related covenants as of December 31, 2014.

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Covenants contained in NADL's debt agreements

In February 2015, NADL received approval from its Norwegian Bondholders to amend the Bond Agreement for its NOK1.5 billion Norwegian Bond maturing in 2018. Under the terms of the agreement, Seadrill will provide a guarantee for the Bond Issue in exchange for amendments to the covenant package, principally replacing the current financial covenants with the financial covenants within Seadrill's NOK bonds. Additionally, North Atlantic Drilling received approval to amend its $2 billion credit facility and $475 million term loan and revolving credit facility. Under the terms of the agreements, Seadrill will provide a guarantee for the credit facility in exchange for amendments to the covenant package, principally replacing the existing financial covenants with financial covenants within Seadrill's secured credit facilities. This amendment to the covenants was applicable to the period ended December 31, 2014. As such there are no longer separate financial covenants contained within NADL's credit facilities or bond agreements.

Covenants contained in Seadrill Partners' debt agreements

As detailed above certain subsidiaries of Seadrill Partners are borrowers and guarantors to the $440 million secured credit facility and the $1,450 million senior secured credit facility. If Seadrill Partners were to default under one of its other financing agreements, it could cause an event of default under these credit facilities. Seadrill Partners’ failure to comply with covenants and other provisions in its existing or future financing agreements could result in cross-defaults under the Company’s existing financing agreements.

Seadrill Partners was in compliance with all applicable covenants as of December 31, 2014.

Interest rate information

As of December 31, 2014, the three month United States dollar LIBOR was 0.25%, as compared to 0.27% in 2013 and three month NIBOR was 1.43%, as compared to 1.75% in 2013.

Derivatives

We use financial instruments to reduce the risk associated with fluctuations in interest and foreign exchange rates. Most of these agreements do not qualify for hedge accounting and any changes in the fair values of the financial instruments are included in the Consolidated Statement of Operations under "gain/(loss) on derivative financial instruments." One of our consolidated VIEs have executed interest rate cash flow hedges in the form of an interest rate swap. The movements in the fair value of this hedging swap are reflected in "Accumulated other comprehensive income (loss)."

As of December 31, 2014, we had losses of $497 million (2013: gains of $133 million) in our consolidated statement of operations consisting of the following:

Interest-rate swap agreements and forward exchange contracts

Total realized and unrealized loss on interest-rate swap agreements, not qualified for hedge accounting, and cross currency interest rate swaps, and forward exchange contracts amounted to $405 million for the year ended December 31, 2014. The loss is recognized in the statement of operations as gain/(loss) on derivative financial instruments.

As of December 31, 2014, the Company and its consolidated subsidiaries, including a VIE, had entered into interest rate swap contracts with a combined outstanding principal amount of $8.1 billion, as compared to $10.0 billion at December 31, 2013, at rates between 0.74% per annum and 4.63% per annum, as compared to 0.74% and 4.63% in 2013. The overall effect of these swaps is to fix the interest rate on $8.1 billion of floating rate debt at a weighted average interest rate 2.18% per annum, as compared to $10.0 billion at 2.12% in 2013.

As of December 31, 2014, we had outstanding cross currency interest rate swaps with principal amount of $807 million, as compared to $786 million at December 31, 2013, with maturity dates between March 2018 and March 2019 at rates ranging from 4.94% to 6.18% per annum.

As of December 31, 2014, our net exposure to short term fluctuations in interest rates on our outstanding debt was $1.3 billion as compared to $1.5 billion in 2013, based on our total interest bearing debt including related party of $13.0 billion less the $8.9 billion outstanding balance of fixed interest rate swaps and cross currency interest rate swaps, less the $2.8 billion in fixed interest loans and bonds.

As of December 31, 2014, we had entered into forward exchange contracts to sell approximately $260 million, as compared to $272 million in 2013, in exchange for Norwegian Kroner between January 2015 and May 2015, at exchange rates ranging from NOK6.37 million to NOK6.89 million per US dollar.

During the year, we also entered into British Pounds Sterling (GBP) swap contracts to buy approximately GBP30 million (US$49 million) between January 2015 and April 2015 at an average exchange rates between GBP1.59 per US dollar and GBP1.68 per US dollar.

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Total Return Swap Agreements

During 2014, 2013 and 2012 the Company entered into and settled various TRS agreements which are indexed to the Company's own common shares. The total realized and unrealized loss recognized in the consolidated statement of operations relating to the Company's TRS agreements in 2014 was $73 million (2013: gain of $19 million). As of December 31, 2014 we had an outstanding agreement related to 4 million shares at NOK 96.02 per share with an expiry date of March 3, 2015 (As at December 31, 2013: 1.4 million shares at NOK 255.38 per share). Subsequent to the year end, on March 3, 2015, the TRS agreement related to 4 million shares was rolled over with a new expiry date of June 3, 2015, and a new reference price of NOK87.4056 per share.

The settlement amount for the TRS transaction will be (A) the market value of the shares at the date of settlement plus all dividends paid by the Company between entering into and settling the contract, less (B) the reference price of the shares agreed at the inception of the contract plus the counterparty's financing costs. Settlement will be either a payment by the counterparty to us, if (A) is greater than (B), or a payment by us to the counterparty, if (B) is greater than (A). There is no obligation for us to purchase any shares under the agreement and this arrangement has been recorded as a derivative transaction, with the fair value of the TRS recognized as an asset or liability as appropriate, and changes in fair values recognized in the consolidated statement of operations.

In addition to the above TRS transactions, we may from time to time enter into short-term TRS arrangements relating to securities in other companies. The above TRS indexed to our own common shares was our only TRS agreement as of December 31, 2014.

Sevan share repurchase agreements

During 2013, the Company, entered into forward agreements pursuant to which the Company sold its shares in Sevan to commercial banks and then entered into a share purchase agreement to repurchase the same amount of shares at a later date which is generally within three months from the date of entering into the sale agreement. As of December 31, 2014 the company had agreements for 216,065,464 Sevan shares at a strike price of NOK4.17 and 81,828,500 Sevan shares at a strike price of NOK4.20 with maturity date of February 6, 2015. These share repurchase agreements have been accounted for as secured borrowings and therefore the Company have recognized the liabilities associated with these repurchases in other current liabilities in the amount of $167 million as of December 31, 2014.

On February 6, 2015 the Company entered into new forward agreements for the option to repurchase 216,065,464 and $81,828,500 shares of Sevan on May 6, 2015 at a strike price of NOK0.7249 and NOK0.7246 respectively.

SapuraKencana share agreements

On September 18, 2013, we entered into two derivative contract agreements with a commercial bank which enabled the Company to obtain financing against a portion of our equity investment in SapuraKencana in which the Company received $250 million upfront as prepayment for one of the agreements. The agreements have a settlement date three years from the inception date and include an interest equivalent component which is based on the prepaid amount received and LIBOR plus 1.90% per annum. As part of these agreements, a number of shares in SapuraKencana were pledged as security, the value of which as at December 31, 2014 amounted to $325 million, and is presented as a long term marketable security on the consolidated balance sheet. See Note 14 to the consolidated financial statements included herein. The unrealized gains and losses resulting from measuring the fair value of these contracts at December 31, 2014 are a gross asset of $103 million, and a gross liability of $103 million which have been offset in the consolidated balance sheet and consolidated income statement as these agreements meet the criteria for offsetting. The $250 million received as a prepayment to the Company is included in other long-term liabilities. The agreements also contain financial covenants which are similar to the Company's existing secured credit facilities. See Note 23 to the consolidated financial statements included herein.

Other derivative arrangements

Total realized and unrealized loss on other derivative instruments amounted to $19 million for the year ended December 31, 2014 (2013:gain of $30 million), mainly due to losses on Rowan Drilling forwards in 2014 and gains on Rowan Drilling forwards in 2013.

Equity

As of December 31, 2014, the number of common shares issued, of par value $2.00 each, was 493,078,678 and fully paid share capital amounted to $985 million, compared to $938 million as at December 31, 2013. The increase is due to the conversion of the $650 million 3.375% convertible bond that occurred in July 2014. As a result of the transaction, the number of common shares outstanding in the Company increased by 23.8 million shares. Refer to the borrowings section above for more information.

As of December 31, 2014, we held 318,740 of our common shares as treasury shares, compared to 272,441 in 2013 and 72,859 in 2012.

A share repurchase program was approved by the Board in 2007, authorizing us to buy back shares which may be either cancelled, or held as treasury shares to meet our obligations relating to our share option scheme. Under the program no shares were purchased during the year ended December 31, 2014 as compared to 900,000 shares in the year ended December 31, 2013, and no shares in the year ended December 31, 2012.

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In November 2014 the Board authorized a share buyback program under which the Company may repurchase up to approximately 10% of shares outstanding. The Company may repurchase shares from time to time in open market transactions or private transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by Management of the Company based on its evaluation of market conditions, capital allocation opportunities, and other factors. The program does not require the Company to repurchase any specific number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice. During 2014, no shares were purchased under this authorization.

In May 2005, a general meeting of the Company approved authorizing the Board to establish and maintain an employee share option scheme, or the Option Scheme, in order to encourage the holding of shares in the Company by individuals including directors, officers and other employees of the Company to held shares in the Company. The Board has made a number of grants pursuant to rules established to implement the Option Scheme. As of December 31, 2014, 2.2 million options remain outstanding (compared to 2.8 million in December 31, 2013). The fair value of the options granted is recognized in the statement of operations as an expense, with a corresponding amount credited to additional paid in capital (see Note 29 to the Consolidated Financial Statements). The additional paid-in capital arising from share options was $10 million in the year ended December 31, 2014, as compared to $7 million in 2013 and $8 million in 2012.

In October 2013, the Board approved 373,700 awards under our Restricted Stock Units (“RSU”) plan. In November 2013, the Board of NADL, our consolidated subsidiary, approved 278,778 awards under NADL`s RSU plan. The fair value of the RSUs granted is recognized in the statement of operations as an expense, with a corresponding amount credited to additional paid in capital (see Note 29 to the Consolidated Financial Statements). The additional paid-in capital arising from the RSU plans was $5 million in the year ended December 31, 2014, as compared to $2 million in 2013 and nil in 2012.

As of December 31, 2014, our total additional paid-in capital including contributed surpluses amounted to $5.2 billion, as compared to $4.6 billion in 2013 and $4.3 billion in 2012, of which $3.7 billion arises from shares issued at a premium, with the remaining balance attributable to the Option Scheme, purchases and sales of treasury shares, share issuances in NADL, and conversion of convertible bonds.

As of December 31, 2014, we were party to a TRS agreement with 4 million of our common shares as underlying security, whereby we are exposed to movements in the price of our shares. Please see the section entitled "Derivatives" above.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

We do not undertake any significant expenditure on research and development, and have no significant interests in patents or licenses.

D. TREND INFORMATION

The offshore drilling market, which was initially challenged by the pace of supply additions, is now dealing with a significant reduction in demand. To compound these issues, OPEC made clear its intention to focus on market share rather than price resulting in a significant decline in oil prices. A desire by oil companies to reduce capital expenditures amidst the significant price decline has severely curtailed drilling budgets for at least 2015. Consequently significant additional spare capacity for offshore drilling units is likely to materialize as 2015 progresses.

Ultra-deepwater floaters (>7,500 ft water)

The offshore drilling market is entering its second year of a downturn, which is shaping up to be more challenging than the first and worse than had previously been expected by the industry. Approximately a quarter of ultra-deepwater floaters will become available in 2015, a third of which are newbuilds that are yet to be delivered. Based on this available capacity, significant delays or cancellations of newbuild projects can be expected. New tendering activity remains subdued as oil companies set their budgets at materially lower levels than seen in recent years. Rig owners are bidding for available work extremely competitively with a focus on utilization over returns, which will likely drive rates down to or below cash breakeven levels.

The severity of this downturn is forcing the contract drilling industry to make decisions regarding cold stacking and scrapping of older units. This activity is expected to accelerate, likely to levels which have not been seen in two decades. Owners of older, inefficient units face difficult decisions as these units approach periodic classing activities and most seem to be opting not to invest the significant expenditures required, instead choosing to stack or scrap the unit. From a long term perspective, we believe these decisions will ultimately create a more healthy industry as weaker players leave the business and old rigs are retired.

Premium jack-up rigs (>350 ft water)

Although shelf production is likely to remain robust as oil companies focus on their most economic fields, the low oil price and number of newbuilds entering the market continues to pose utilization and dayrate challenges to this segment. 2015 is expected to become significantly more challenging with 60 units forecast to be entering service. Between now and 2017, approximately 130 units are scheduled for delivery, it is likely that a portion of these will be delayed or cancelled.

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Over time the number of newbuilds entering the market will force the retirement of older less capable units and result in a replacement cycle. Currently there are more than 200 units in the global fleet that are more than 30 years old. Although there will be some instances where an operator may see some value in using a simpler design, broadly speaking most will see more value in hiring a premium unit to replace an older one.

E. OFF BALANCE SHEET ARRANGEMENTS

The Company had no off-balance sheet arrangements as of December 31, 2014 or 2013, other than operating lease obligations and other commitments in the ordinary course of business that we are contractually obligated to fulfill with cash under certain circumstances. These commitments include guarantees in favor of banks, suppliers and variable interest entities and guarantees towards third parties such as surety performance guarantees towards customers as it relates to our drilling contracts, contract bidding, customs duties, tax appeals and other obligations in various jurisdictions. Obligations under these guarantees are not normally called, as we typically comply with the underlying performance requirement. As of December 31, 2014, we had not been required to make collateral deposits with respect to these agreements.

The maximum potential future payment are summarized in Note 33 in the Consolidated Financial Statements of this Annual Report.

F. CONTRACTUAL OBLIGATIONS

At December 31, 2014, we had the following contractual obligations and commitments:

	Payment due by period
(In millions of US dollars)	Less than 1 year	1 – 3 years	3 – 5 years	After 5 years	Total
Interest bearing debt	2,309	6,596	2,725	990	12,620
Related party interest bearing debt	—	—	—	415	415
Total debt repayments	2,309	6,596	2,725	1,405	13,035
Interest payments	433	933	115	35	1,516
Related party interest payments	25	76	25	25	151
Pension obligations	11	36	13	69	129
Operating lease obligations	15	29	7	21	72
Newbuilding commitments (1)	4,722	667	—	—	5,389
Total contractual obligations (2)	7,515	8,337	2,885	1,555	20,292

(1) Newbuilding commitments relate to eight jack-up rigs totaling $1.7 billion, three semi-submersible rigs totaling $1.0 billion, and five drillships totaling $2.7 billion. Note that the newbuilding commitments include $0.4 billion related to the Sevan Developer that are presented as a contractual obligation in the balance sheet in the line item "Other short term liabilities". See Note 12 – Business Acquisitions to our consolidated financial statements for further information.

(2) Total Contractual obligations do not include $9 million of unrecognized tax benefits, inclusive of interest and penalties, included in our consolidated balance sheet as of December 31, 2014 as we are unable to specify with certainty the periods in which we may settle such amounts.

G. SAFE HARBOR

See the section entitled "Cautionary Statement Regarding Forward Looking Statements" in this Annual Report.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

The following table sets forth information regarding our directors and officers, and also certain key employees within our operating subsidiaries, who are responsible for overseeing the management of our business.

Name	Age	Position
John Fredriksen	70	President, Director and Chairman of the Board
Kate Blankenship	50	Director and Audit Committee member
Kathrine Fredriksen	31	Director
Bert Bekker	76	Director
Paul Leand Jr.	48	Director
Ørjan Svanevik	49	Director
Dr. Charles Woodburn	44	Director
Georgina Sousa	64	Company Secretary
Per Wullf	55	Chief Executive Officer and President, Seadrill Management
Rune Magnus Lundetræ (1)	38	Chief Financial Officer and Senior Vice President, Seadrill Management
David Sneddon	51	Chief Accounting Officer and Senior Vice President, Seadrill Management
Anton Dibowitz	43	Chief Commercial Officer and Senior Vice President, Seadrill Management
Svend Anton Maier	50	Senior Vice President Americas
José Firmo	45	Senior Vice President Brazil
Alf Ragnar Løvdal	57	Senior Vice President and CEO of North Atlantic Management
Ray Watkins	55	Vice President Asia Pacific
Philip Souyris	46	Vice President Mexico
Silvio Bresciani	58	Senior Vice President, Africa & Middle East

(1) Rune Magnus Lundetræ will step down as Chief Financial Officer of Seadrill Management Limited with effect from 30 June 2015.

Certain biographical information about each of our directors, executive officers and key officers is set forth below.

John Fredriksen has served as Chairman of the Board, President and a director of the Company since its inception in May 2005. Mr. Fredriksen has also served since 1997 as Chairman, President, Chief Executive Officer and a director of Frontline Ltd. (NYSE:FRO), or Frontline, a Bermuda company listed on the NYSE, the OSE and the London Stock Exchange, since 2004 as Chairman of the Board, President, CEO and a director of Golden Ocean Group Limited, or Golden Ocean, a Bermuda company listed on the OSE and on the Singapore stock exchange, and from 2001 until September 2014 as Chairman of the Board, President and a director of Golar LNG Limited, or Golar, a Bermuda company listed on the Nasdaq Global Market. Mr. Fredriksen has served since September 2013 as the Chairman of the Board of our majority owned subsidiary North Atlantic. Mr. Fredriksen is the father of Ms. Kathrine Fredriksen, a director of the Company.

Kate Blankenship has served as a director of the Company since its inception in May 2005. Mrs. Blankenship has also served as a director of Frontline since 2003. Mrs. Blankenship joined Frontline in 1994 and served as its Chief Accounting Officer and Company Secretary until October 2005. Mrs. Blankenship has been a director of Ship Finance since October 2003, Seadrill Partners since June 2012, NADL since February 2011, Independent Tankers Corporation Limited, or Independent Tankers, since February 2008, Golar since July 2003, Golar LNG Partners since September 2007, Golden Ocean since November 2004, Archer since its incorporation in 2007 and Avance Gas Holding Ltd since October 2013. She is a member of the Institute of Chartered Accountants in England and Wales.

Kathrine Fredriksen has served as a director of the Company since September 2008. Ms. Fredriksen has also served as a director of Golar LNG Partners from April 2013 until September 2014, and served as a director of Golar from February 2008 until April 2013. She graduated from Wang Handels Gymnas in Norway and studied at the European Business School in London. Ms. Fredriksen is the daughter of Mr. John Fredriksen, our President and Chairman.

Bert Bekker has served as a director of the Company since April, 2013. Mr. Bekker has been in the heavy marine transport industry since 1978 when he co-founded Dock Express Shipping Rotterdam (the predecessor of Dockwise Transport). Mr. Bekker retired from his position as Chief Executive Officer of Dockwise Transport B.V. in May 2003. Mr. Bekker served as Chief Executive Officer of Cableship Contractors N.V. Curacao from March 2001 until June 2006. In May 2006, Mr. Bekker was appointed Executive Advisor Heavy Lift of Frontline Management AS, an affiliate of Frontline, and in January 2007, he was appointed CEO of Sealift Management B.V. Mr. Bekker held that position until its merger with Dockwise Ltd in May 2007. Mr. Bekker served as a director of Dockwise Ltd. from June 2007 until December 2009. Mr. Bekker currently

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serves as a director of Wilh. Wilhelmsen Netherlands B.V., part of the Wilh. Wilhelmsen ASA Group, and has served as a director since July 2003. Mr. Bekker has served as a director of Seadrill Partners since September 2012.

Paul Leand has served as a director of the Company since April, 2013. Mr. Leand is the Chief Executive Officer and director of AMA Capital Partners LLC, or AMA, an investment bank specializing in the maritime industry.  From 1989 to 1998 Mr. Leand served at the First National Bank of Maryland where he managed the Bank's Railroad Division and its International Maritime Division. He has worked extensively in the U.S. capital markets in connection with AMA's restructuring and mergers and acquisitions practices. Mr. Leand serves as a member of the Investment Committee of AMA Shipping funds, a series of private equity funds formed and managed by AMA. Mr. Leand has also served as a director of Ship Finance since 2003, Golar LNG Partners since 2011, North Atlantic since 2012 and Eagle Bulk Shipping Inc. since 2014.

Ørjan Svanevik has served as a director of the Company since October 2014. Mr. Svanevik joined Seatankers in July 2014 and has a broad industry background, with special knowledge of oil and gas, maritime, shipbuilding, and engineering sectors. He has extensive experience from global operations, investment management and corporate finance. Mr Svanevik was previously Managing Director for the investment advisory firm Oavik Capital from October 2008 to July 2014. Prior to this he was Head of M&A and a Partner at Aker ASA from 2005 to 2008, and COO and EVP of Kværner ASA from 2004 to 2005. Prior to this Mr Svanevik also worked in corporate advisory and Investment banking for Arkwright from 1994 to 2001. He started his career at Schlumberger, where he held various international financial management positions from 1991 to 1994. Mr Svanevik has an AMP from Harvard Business School and a MBA from Thunderbird.

Dr. Charles Woodburn was appointed as a Director of the Company in January 2015. Dr. Woodburn has been the Chief Executive Officer of Expro Group since 2010. Previously, he spent 15 years with Schlumberger from 1995 to 2010 where he held many senior management roles, including President of Wireline from 2006 to 2009. Then from 2009 to 2010 he was in charge of Schlumberger's engineering and manufacturing, reporting directly to the Chief Operating Officer. Dr. Woodburn holds a PhD and MA in Engineering from Cambridge University and an MBA from Erasmus University.

Georgina Sousa has served as Company Secretary of the Company since February 2006. She is a director and the Head of Corporate Administration for Frontline. Until January 2007, she was Vice-President-Corporate Services of Consolidated Services Limited, a Bermuda Management Company, having joined the firm in 1993 as Manager of Corporate Administration.  From 1976 to 1982 she was employed by the Bermuda law firm of Appleby, Spurling & Kempe as a Company Secretary and from 1982 to 1993 she was employed by the Bermuda law firm of Cox & Wilkinson as Senior Company Secretary.

Per Wullf was appointed Chief Executive Officer and President of Seadrill Management in July, 2013. Mr. Wullf has also served as a director of Sevan since January 2012. Previously, Mr. Wullf served as the Chief Operating Officer and Executive Vice President of Seadrill Management since 2009. Mr. Wullf has more than 28 years of experience in the international offshore and onshore drilling industry with A.P. Moller - Maersk A/S, serving as Managing Director for Maersk Drilling Norge AS from 2006 to 2009.

Rune Magnus Lundetræ has served as Chief Financial Officer and Senior Vice President of Seadrill Management since February 2012. Mr. Lundetrae has also served as CFO of Seadrill Partners since June 2012. Before his current position Mr. Lundetræ was Finance Director for Seadrill Americas and Commercial Director for Seadrill Europe (now North Atlantic). He also served as CFO for Scorpion Offshore Ltd after Seadrill acquired a majority stake in the company in July 2010 and up to delisting the company in November 2010, and as CFO of North Atlantic from May 2012 until February 2014. Prior to joining Seadrill Mr. Lundetræ worked as an auditor for KPMG and PricewaterhouseCoopers in Stavanger, Norway from 2001 until 2007. Mr. Lundetræ graduated as MSc in Management from the London School of Economics in 2001 and as MSc in Accounting and Auditing from the Norwegian School of Business Administration (NHH) in 2004. He registered as a Certified Public Accountant (CPA) in Norway in 2005.

David Sneddon was appointed Chief Accounting Officer and Senior Vice President in December 2013. Prior to joining Seadrill Mr Sneddon held several senior positions in Novelis Inc., most recently as VP Finance in Europe, and prior to that held various positions in Alcan Inc and KPMG. Mr Sneddon has a Masters degree in Economics and Accountancy from Aberdeen University and is a member of the Institute of Chartered Accountants of Scotland.

Anton Dibowitz has served as Chief Commercial Officer and Senior Vice President of Seadrill Management since January 2013. He has over 15 years drilling industry experience most recently serving as Vice President Marketing and prior to that as Commercial Director, Deepwater Western Hemisphere Division, since joining Seadrill in April 2007. Prior to Seadrill, Mr Dibowitz held various positions within tax, process reengineering and marketing at Transocean and Ernst & Young LLP.  He is a Certified Public Accountant and a graduate of the University of Texas at Austin where he has a Bachelors degree in Business Administration, and Masters degrees in Professional Accounting (MPA) and Business Administration (MBA).

Svend Anton Maier has served as Senior Vice President, Americas, since February 2015. Previously he served as Senior Vice President Russia for NADL from August 2014 until February 2015, and as Senior Vice President Africa and Middle-East for Seadrill from January 2011 until August 2014. Mr. Maier joined the Company in February 2007 as Vice President, Deepwater Eastern Hemisphere. Mr. Maier has more than 20 years of experience in the offshore drilling industry. Prior to joining us, Mr. Maier held several senior positions in Transocean Ltd., including operations manager in Egypt, Equatorial Guinea and Gabon. Mr. Maier graduated from the Maritime Institute of Tønsberg with a degree in marine engineering.

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José Firmo was appointed Senior Vice President of the Company's Brazil region in October 2014. Mr Firmo has over 25 years of experience in the Oilfield Services industry. Since 1992 when he joined Schlumberger he has worked in numerous jobs ranging from Testing & Wireline Field Engineer offshore Brazil, Field Manager positions in the North and South America, Global Business Development for Completions, Testing Global Human Resources Director, to lately Vice President of Operations Latin America for Testing Services. Born in Rio de Janeiro, he holds a Masters degree in Business Administration from the Rotterdam School of Management, Erasmus University.

Alf Ragnar Løvdal has been the Chief Executive Officer of North Atlantic Management AS since January 2013. Mr. Løvdal has served as Senior Vice President for Seadrill in Asia Pacific from April 2009 until December 2012. He was previously Chief Executive Officer in Seawell Management AS. Mr. Løvdal has close to 35 years of experience from the oil and gas industry, of which 10 years of which he was responsible for the well services business in the drilling contractor Smedvig, which Seadrill acquired in early 2006. Mr. Løvdal has over the years held several senior positions, including general manager operations for the mobile units. Prior to his engagement with Smedvig and Seadrill, Mr. Løvdal held various positions in different oil service companies, including five years of offshore field experience with Schlumberger. He has a degree in mechanical engineering from Horten Engineering Academy in Norway.

Ray Watkins was appointed Vice President of the Asia Pacific region in May 2013. Mr Watkins has more than thirty years of international experience in the drilling industry. He has served as Director of Operations for the West Africa region from February 2011 to April 2013. Prior to joining Seadrill, Mr Watkins held several senior positions in Maersk Drilling and Maersk FPSOs including Managing Director, Director of global operations and regional Manager. Mr Watkins is a certified Mechanical Engineer.

Philip Souyris has served as Senior Vice President since January 2015. Mr Souyris has 17 years in the offshore drilling industry 14 of them focused on the Deepwater side. Prior to joining us back in July 2014, Mr Souyris held several senior positions in Schlumberger Ltd since 1998, including 3 years of field experience, Drilling Engineering, Drilling Manager for Brazil, to Operations Manager in East Mediterranean Europe. Mr Philip Souyris graduated from Universidad Nacional del Sur as Industrial Engineer and also holds a Masters specialization of Industrial Organization, from the same institution.

Silvio Bresciani was appointed Vice President of the Africa and Middle East region in February 2015. Mr Bresciani has 35 years’ experience in the drilling industry. He has served as Chief Operating Officer & President of Sam Antonio International from September 2008 to May 2011. Most recently, Mr. Bresciani was Vice President of Global Business Development for Nabors Drilling International from July 2011 to February 2015. Mr Bresciani attended Escola Politecnica in Brazil and qualified as a Civil Engineer with a specialization in Drilling Engineering. He is a Brazilian national and resides in Dubai.

B. COMPENSATION

During the year ended December 31, 2014, we paid our directors and executive officers aggregate compensation of $10.6 million, including compensation in the form of options exercised. In addition we have incurred compensation expense in the aggregate amount of $0.3 million for their pension and retirement benefits.

In addition to cash compensation, during 2014 we also recognized an expense of $2.1 million relating to stock options granted in 2010, 2011, 2012, and 2013 to certain of our directors and employees. The options vest over a two to four years period and they expire between May 2014 and December 2017. The exercise price of the options at December 31, 2014, was in the range NOK137.40 to NOK273.00 (equivalent to $18.46 to $36.67) per share, and will for most options be reduced by the amount of any future dividends declared with respect to the common shares.

C. BOARD PRACTICES

Our Board is elected annually by a vote of a majority of the common shares represented at the meeting at which one or more holders of one-third of our outstanding common shares constitutes a quorum. In addition, the maximum and minimum number of directors is determined by resolution of our shareholders, but no less than two directors shall serve at any given time. Each director shall hold office until the next annual general meeting following his or her election or until his or her successor is elected.

Our Board currently consists of seven directors. Mr. Svanevik and Dr. Woodburn were appointed to fill vacancies on the Board on October 27, 2014 and January 14, 2015, respectively. All of our directors were re-elected at our annual general meeting on September 19, 2014 except for Mr. Tor Olav Trøim who decided not to stand for re-election to the Board. Mr Trøim served as a director of the Company since May 2005.

Four of our directors, Kate Blankenship, Paul Leand, Bert Bekker and Charles Woodburn are independent pursuant to Rule 10A-3 of the Securities Exchange Commission Act of 1934, as amended.

We currently have an audit committee, which is responsible for overseeing the quality and integrity of the Company's financial statements and its accounting, auditing and financial reporting practices, our compliance with legal and regulatory requirements, the independent auditor's qualifications, independence and performance and our internal audit function. Our audit committee consists of Mrs. Blankenship.

We currently have a compensation committee responsible for establishing and reviewing the executive officers' and senior managements' compensation and benefits. Our committee consists of Mr. Svanevik and Mrs. Blankenship.

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In lieu of a nomination committee, our Board is responsible for identifying and recommending potential candidates to become board members and recommending directors for appointment to board committees.

There are no service contracts between us and any of our directors providing for benefits upon termination of their employment or service.

As a foreign private issuer we are exempt from certain requirements of the NYSE that are applicable to U.S. listed companies. For a listing and further discussion of how our corporate governance practices differ from those required of U.S. companies listed on the NYSE, please see Item 16G or visit the corporate governance section of our website at www.seadrill.com.

D. EMPLOYEES

As of December 31, 2014, we had approximately 9,450 employees.

Some of our employees and our contracted labor, most of whom work in Brazil, Nigeria, Norway and the U.K., are represented by collective bargaining agreements. As part of the legal obligations in some of these agreements, we are required to contribute certain amounts to retirement funds and pension plans and have restricted ability to dismiss employees. In addition, many of these represented individuals are working under agreements that are subject to salary negotiation. These negotiations could result in higher personnel costs, other increased costs or increased operating restrictions that could adversely affect our financial performance.

We consider our relationships with the various unions as stable, productive and professional. At present, there are no ongoing negotiations or outstanding issues.

Total employees (including contracted-in staff )	December 31, 2014	December 31, 2013	December 31, 2012
Operating segments:
Floaters	4,505	5,100	3,900
Jack-up rigs	2,985	2,650	2,150
Tender rigs	—	1,115	2,500
Other	1,850	—	—
Corporate	110	100	150
Total employees	9,450	8,965	8,700
Geographical location:
Norway	1,455	1,695	1,350
Rest of Europe	110	100	100
North America	2,485	1,990	1,250
South America	1,155	1,015	700
Asia Pacific	1,130	1,355	3,050
Africa and Middle East	3,115	2,810	2,250
Total employees	9,450	8,965	8,700

The number of employees has increased over the three years to December 31, 2014 as a result of the increase in our operating fleet of drilling units and business acquisitions partially offset by the sale of a majority of our tender rig business. 'Other' predominately represents employees providing management services to third and related parties.

E. SHARE OWNERSHIP

The table below shows the number of common shares beneficially owned and the percentage owned of our outstanding common shares for our directors, officers and key employees as of March 20, 2015 and the percentage held of the total common shares in issue. Also shown are their interests in share options awarded to them under the Option Scheme which was approved by the Company in May 2005, and restricted stock units (RSUs) awarded to them under Seadrill's Restricted Stock Units Plan approved by the Company in October 2013. The subscription price for options granted under the scheme will normally be reduced by the amount of all dividends declared by the Company in the period from the date of grant until the date the option is exercised.

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Director or Key Employee	Beneficial Interest in Common Shares of $2.00 each		Interest in Options and Restricted Stock Units (RSUs)
	Number of shares	%	Scheme	Total number of options	Number of options vested	Exercise price	Expiry date
John Fredriksen (Note 2)	(Note 2)	(Note 2)	—	—	—	—	—
Kate Blankenship	—	(Note 1)	—	—	—	—	—
Kathrine Fredriksen	—	(Note 1)	—	—	—	—	—
Bert Bekker	—	(Note 1)	—	—	—	—	—
Paul Leand Jr.	—	(Note 1)	—	—	—	—	—
Ørjan Svanevik	—	(Note 1)	—	—	—	—	—
Dr. Charles Woodburn	—	(Note 1)	—	—	—	—	—
Georgina Sousa	—	(Note 1)	—	—	—	—	—
Per Wullf	—	(Note 1)	Options	60,000	48,000	NOK 185.20	December 2015
			Options	60,000	30,000	NOK 202.05	December 2016
			Options	130,000	32,500	NOK 273.00	December 2017
Rune Magnus Lundetræ	—	(Note 1)	Options	15,000	12,000	NOK 192.90	December 2015
			Options	15,000	7,500	NOK 202.05	December 2016
			Options	40,000	10,000	NOK 219.13	April 2017
			Options	40,000	10,000	NOK 273.00	December 2017
David Sneddon	—	(Note 1)	RSUs	15,000	—	—	December 2016
			RSUs	4,500	—	—	December 2017
Anton Dibowitz	—	(Note 1)	Options	25,000	20,000	NOK 192.90	December 2015
			Options	35,000	17,500	NOK 202.05	December 2016
			Options	60,000	15,000	NOK 273.00	December 2017
Svend Anton Maier	—	(Note 1)	RSUs	4,500	—	—	December 2017
Jose Firmo	—	(Note 1)	RSUs	10,000	—	—	December 2017
Alf Ragnar Løvdal	—	(Note 1)	Options	16,000	12,000	NOK 185.20	December 2015
			Options	45,000	7,500	NOK 202.05	December 2016
			RSUs (Note 3)	71,850	—	—	December 2016
Ray Watkins	—	(Note 1)	Options	20,000	10,000	NOK 202.05	December 2016
			RSUs	10,000	—	—	December 2016
			RSUs	4,500	—	—	December 2017
Philip Souyris	—	(Note 1)	—	—	—	—	—
Silvio Bresciani	—	(Note 1)	—	—	—	—	—

(1) Less than 1%

(2) Hemen Holding Limited, a Cyprus holding company, and other related companies which are collectively referred to herein as Hemen, the shares of which are held in trusts established by Mr. John Fredriksen for the benefit of his immediate family. Mr. Fredriksen disclaims beneficial ownership of the 119,097,583 shares of our common stock held by Hemen, except to the extent of his voting and dispositive interest in such shares of common stock. Mr. Fredriksen has no pecuniary interest in the shares held by Hemen. In addition, to the holdings of shares and options contained in the table above, as of March 20, 2015, Hemen is party to separate TRS agreements relating to 3,900,000 of our common shares.

(3) The restricted stock units awarded to Alf Ragnar Løvdal are part of the NADL RSU plan.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

The following table presents certain information as at March 20, 2015, regarding the ownership of our common shares with respect to each shareholder whom we know to beneficially own more than 5% of our outstanding common shares:

	Common Shares Held
Shareholder	Number	%
Hemen (1)	119,097,583	24.2	%
Barrow, Hanley, Mewhinney & Strauss, LLC (2)	31,289,877	6.4	%
Tong Jinquan (3)	25,620,984	5.2	%

(1) For further information regarding Hemen see "Item 6. Directors, Senior Management and Employees -E. Share Ownership".

(2) This information was derived from Schedule 13G filed with the Commission on February 10, 2015.

(3) This information was derived from Schedule 13G filed with the Commission on February 11, 2015.

We had a total of 493,078,678 common shares outstanding of which 318,740 were held as treasury shares, as of March 20, 2015.

Our major shareholders have the same voting rights as our other shareholders. No corporation or foreign government owns more than 50% of our outstanding common shares. We are not aware of any arrangements, the operation of which may at a subsequent date result in a change in control of Seadrill.

B. RELATED PARTY TRANSACTIONS

Seadrill Partners

As of January 2, 2014, the date of deconsolidation, Seadrill Partners is considered to be a related party and not a controlled subsidiary of the Company. The following is a summary of the related party agreements with Seadrill Partners:

Omnibus Agreement- In connection with the closing of the initial public offering of Seadrill Partners, we entered into an omnibus agreement with Seadrill Partners. The following discussion describes certain provisions of the omnibus agreement.

Noncompetition

Under the omnibus agreement, Seadrill agreed, and caused its controlled affiliates to agree, not to acquire, own, operate or contract for any drilling rig operating under a contract for five or more years. For purposes of the omnibus agreement, the term drilling rigs refers only to semi-submersibles, drillships and tender rigs. We refer to these drilling rigs, together with any related contracts, as “Five-Year Drilling Rigs” and to all other drilling rigs, together with any related contracts, as “Non-Five-Year Drilling Rigs.” The restrictions in this paragraph do not prevent Seadrill or any of its controlled affiliates from:

(1) acquiring, owning, operating or contracting for Non-Five-Year Drilling Rigs;

(2) acquiring one or more Five-Year Drilling Rigs if Seadrill promptly offers to sell the drilling rig to Seadrill Partners for the acquisition price plus any administrative costs (including reasonable legal costs) associated with the transfer to Seadrill Partners at the time of the acquisition;

(3) putting a Non-Five-Year Drilling Rig under contract for five or more years if Seadrill offers to sell the drilling rig to Seadrill Partners for fair market value (x) promptly after the time it becomes a Five-Year Drilling Rig and (y) at each renewal or extension of that contract for five or more years;

(4) acquiring one or more Five-Year Drilling Rigs as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or contracting for those drilling rigs; provided, however, that:

(a) if less than a majority of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, Seadrill must offer to sell such drilling rigs to Seadrill Partners for their fair market value plus any additional tax or other similar costs that Seadrill incurs in connection with the acquisition and the transfer of such drilling rigs to Seadrill Partners separate from the acquired business; and

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(b) if a majority or more of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, Seadrill must notify Seadrill Partners of the proposed acquisition in advance. Not later than 10 days following receipt of such notice, Seadrill Partners will notify Seadrill if Seadrill Partners wishes to acquire such drilling rigs in cooperation and simultaneously with Seadrill acquiring the Non-Five-Year Drilling Rigs. If Seadrill Partners does not notify Seadrill of its intent to pursue the acquisition within 10 days, Seadrill may proceed with the acquisition and then offer to sell such drilling rigs to Seadrill Partners as provided in (a) above;

(5) acquiring a non-controlling interest in any company, business or pool of assets;

(6) acquiring, owning, operating or contracting for any Five-Year Drilling Rig if Seadrill Partners does not fulfill its obligation to purchase such drilling rig in accordance with the terms of any existing or future agreement;

(7) acquiring, owning, operating or contracting for a Five-Year Drilling Rig subject to the offers to Seadrill Partners described in paragraphs (2), (3) and (4) above pending Seadrill Partners’ determination whether to accept such offers and pending the closing of any offers Seadrill Partners accepts;

(8) providing drilling rig management services relating to any drilling rig;

(9) owning or operating a Five-Year Drilling Rig that Seadrill owned and operated as of October 24, 2012, and that was not included in the initial fleet of Seadrill Operating LP, Seadrill Capricorn Holdings LLC and Seadrill Operating LLC (collectively, “OPCO”); or

(10) acquiring, owning, operating or contracting for a Five-Year Drilling Rig if Seadrill Partners has previously advised Seadrill that Seadrill Partners consents to such acquisition, operation or contract.

If Seadrill or any of its controlled affiliates acquires, owns, operates or contracts for Five-Year Drilling Rigs pursuant to any of the exceptions described above, it may not subsequently expand that portion of its business other than pursuant to those exceptions. Under the omnibus agreement Seadrill Partners is not restricted from acquiring, operating or contracting for Non-Five-Year Drilling Rigs. Upon a change of control of Seadrill Partners, the noncompetition provisions of the omnibus agreement will terminate immediately. Upon a change of control of Seadrill, the noncompetition provisions of the omnibus agreement applicable to Seadrill will terminate at the time that is the later of the date of the change of control and the date on which all of our outstanding subordinated units have converted to common units.

Rights of First Offer on Drilling Rigs

Under the omnibus agreement, Seadrill Partners and its subsidiaries granted to Seadrill a right of first offer on any proposed sale, transfer or other disposition of any Five-Year Drilling Rigs or Non-Five-Year Drilling Rigs owned by Seadrill Partners. Under the omnibus agreement, Seadrill agreed (and will cause their subsidiaries to agree) to grant a similar right of first offer to Seadrill Partners for any Five-Year Drilling Rigs they might own. These rights of first offer do not apply to a (a) sale, transfer or other disposition of drilling rigs between any affiliated subsidiaries, or pursuant to the terms of any current or future contract or other agreement with a contractual counterparty or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third-party.

Prior to engaging in any negotiation regarding any drilling rig’s disposition with respect to a Five-Year Drilling Rig with a non-affiliated third-party or any Non-Five-Year Drilling Rig, Seadrill Partners or Seadrill, as the case may be, will deliver a written notice to the other relevant party setting forth the material terms and conditions of the proposed transaction. During the 30 day period after the delivery of such notice, Seadrill Partners and Seadrill will negotiate in good faith to reach an agreement on the transaction. If Seadrill Partners does not reach an agreement within such 30 day period, Seadrill Partners or Seadrill, as the case may be, will be able within the next 180 calendar days to sell, transfer, dispose or re-contract the drilling rig to a third party (or to agree in writing to undertake such transaction with a third party) on terms generally no less favorable to Seadrill Partners or Seadrill, as the case may be, than those offered pursuant to the written notice. Upon a change of control of Seadrill Partners, the right of first offer provisions of the omnibus agreement will terminate immediately. Upon a change of control of Seadrill, the right of first offer provisions applicable to Seadrill under the omnibus agreement will terminate at the time that is the later of the date of the change of control and the date on which all of its outstanding subordinated units have converted to common units.

Rights of First Offer on OPCO Equity Interests

Pursuant to the omnibus agreement, Seadrill granted to Seadrill Partners a 30 day right of first offer on any proposed transfer, assignment, sale or other disposition of any equity interests in OPCO upon agreement of the purchase price of such equity interests by Seadrill and Seadrill Partners. The right of first offer under the omnibus agreement does not apply to a transfer, assignment, sale or other disposition of any equity interest in OPCO between any controlled affiliates.

Prior to engaging in any negotiation regarding any disposition of equity interests in OPCO to an unaffiliated third party, Seadrill will deliver a written notice setting forth the material terms and conditions of the proposed transactions. During the 30 days period after the delivery of such notice, Seadrill Partners and Seadrill will negotiate in good-faith to reach an agreement on the transaction. If the parties do not reach an agreement within such 30 day period, Seadrill will be able within the next 180 days to transfer, assign, sell or otherwise dispose of any equity interest in OPCO to an unaffiliated third party (or agree in writing to undertake such transaction with a third party) on terms generally no less favorable to the third party than those included in the written notice.

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If Seadrill or its affiliates no longer control Seadrill Partners, the provisions of the omnibus agreement relating to the right of first offer with respect to the equity interests in OPCO will terminate automatically. Upon a change of control of Seadrill, the provisions of the omnibus agreement relating to the right of first offer with respect to the equity interests in OPCO will terminate at the later of (a) the date on which all of the outstanding subordinated units have converted into common units and (b) the date of the change of control of Seadrill.

Indemnification

Under the omnibus agreement, Seadrill has agreed to indemnify Seadrill Partners until October 24, 2017 against certain environmental and toxic tort liabilities with respect to the assets contributed or sold to Seadrill Partners to the extent arising prior to the time they were contributed or sold to Seadrill Partners. Liabilities resulting from a change in law after October 24, 2012 are excluded from the environmental indemnity. There is an aggregate cap of $10 million on the amount of indemnity coverage provided by Seadrill for environmental and toxic tort liabilities. No claim may be made unless the aggregate dollar amount of all claims exceeds $500,000, in which case Seadrill is liable for claims only to the extent such aggregate amount exceeds $500,000.

Seadrill has also agreed to indemnify Seadrill Partners for liabilities related to:

• certain defects in title to Seadrill’s assets contributed or sold to OPCO and any failure to obtain, prior to the time they were contributed, certain consents and permits necessary to conduct, own and operate such assets, which liabilities arise on or before October 24, 2015 (or, in the case of the T-15 or the T-16, within three years after its purchase of the T-15 or the T-16); and

• tax liabilities attributable to the operation of the assets contributed or sold to OPCO prior to the time they were contributed or sold.

Amendments

The omnibus agreement may not be amended without the prior approval of the conflicts committee of Seadrill Partners’ board of directors if the proposed amendment will, in the reasonable discretion of its board of directors, adversely affect holders of its common units.

Management and administrative service agreements– In connection with the IPO, subsidiaries of Seadrill Partners, entered into a management and administrative services agreement with Seadrill Management, a wholly owned subsidiary of the Company, pursuant to which Seadrill Management provides the Seadrill Partners certain management and administrative services. The services provided by Seadrill Management are charged at cost plus management fee equal to 5% of Seadrill Management’s costs and expenses incurred in connection with providing these services. The agreement has an initial term for 5 years and can be terminated by providing 90 days written notice.

Technical and administrative service agreement– In connection with the IPO, subsidiaries of Seadrill Partners entered into certain advisory, technical and/or administrative services agreements with subsidiaries of the Company. The services provided by the Company’s subsidiaries are charged at cost plus service fee equal to approximately 5% of costs and expenses incurred in connection with providing these services.

The total income recognized under the above agreements for the period ended December 31, 2014 was $59 million.

Rig Financing Agreements– In September 2012 prior to the IPO of Seadrill Partners, each of Seadrill Partners controlled subsidiaries that owns the West Capricorn, the West Vencedor, the West Aquarius, and the West Capella, or the rig owning subsidiaries, entered into intercompany loan agreements with the Company in the amount of approximately $523 million, $115 million, $305 million and $295 million respectively, corresponding to the aggregate principal amount outstanding under the external facilities allocable to the West Capricorn, the West Vencedor, the West Aquarius, and the West Capella respectively. During 2013, the rig owning companies of the T-15, T-16, West Leo and West Sirius entered into intercompany loan agreements with Company in the amount of approximately $101 million, $93 million, $486 million and $220 million respectively, corresponding to the aggregate principal amount outstanding under the facilities allocable to the T-15, T-16, West Leo and West Sirius respectively. The Company refers to these arrangements collectively as "Rig Financing Agreements". Pursuant to these intercompany loan agreements, each rig owning subsidiary can make payments of principal and interest to Seadrill or directly to the third party lenders under each facility, corresponding to payments of principal and interest due under each Rig Financing Agreement that are allocable to each rig. During the year ended December 31, 2014 subsidiaries of Seadrill Partners entered into a new term loan in which the proceeds were used to repay the amounts owed to the Company related to the drilling units West Capella, West Aquarius, West Sirius, West Leo and West Capricorn.

In June 2014 the Company repaid the underlying $1,200 million senior secured loan relating to the West Vencedor, and as a result the West Vencedor Loan Agreement between the Company and Seadrill Partners was amended to carry on the existing loan on the same terms. The total amount owed under the remaining West Vencedor Loan agreement as of December 31, 2014, was $78 million.

Total amounts owed under the Rig Financing Agreements as of December 31, 2014, relating to the T-15 and T-16, totaled $159 million. Certain subsidiaries of Seadrill Partners are guarantors under the external facilities in which these rigs are pledged as security. Under the terms of the facilities, the guarantors are jointly and severally liable for other guarantors and the borrower who are party to this facility. The Company has provided an indemnification to Seadrill Partners for any payments or obligations related to these facilities for any losses incurred which do not relate to the West Vencedor, T-15 and T-16.

The Rig Financing Agreements related to the West Aquarius, West Capella, West Leo, West Sirius and West Capricorn were repaid during the year ended December 31, 2014 in conjunction with Seadrill Partners obtaining independent third party financing. The total outstanding principal repaid was $1.5 billion.

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Interest income for the period ending December 31, 2014 for these arrangements was $20 million.

Revolving credit facility– In October 2012 Seadrill Partners entered into a $300 million revolving credit facility with the Company. The facility is for a term of five years and bears interest at a rate of LIBOR plus 5% per annum, with an annual 2% commitment fee on the undrawn balance. In March 2014 the facility was reduced to a maximum of $100 million. The outstanding balance of $125.9 million was repaid in full in March 2014. The outstanding balance as at December 31, 2014 was nil.

$109.5 million Vendor financing loan - In May, 2013, Seadrill Partners borrowed from the Company $109.5 million as vendor financing to fund the acquisition of the T-15. The loan bears interest at a rate of LIBOR plus a margin of 5.00% and matures in May 2016. The outstanding balance as at December 31, 2014 was $109.5 million.

$229.9 million discount note - On December 13, 2013, as part of the acquisition of the West Sirius, a subsidiary of Seadrill Partners issued a zero coupon discount note to the Company for $229.9 million. The note was repayable in June 2015 and upon maturity, the Company was due to receive $238.5 million. In February 2014, Seadrill Partners repaid this note in full.

$70 million discount note - In December 2013, as part of the acquisition of the West Sirius, Seadrill Partners issued a zero coupon discount note to the Company for $70 million. The note was repayable in June 2015 and upon maturity, the Company was due to receive $73 million. In February 2014, Seadrill Partners repaid this note in full.

$100 million discount note - In March 2014, as part of the acquisition of the West Auriga, Seadrill Partners issued a zero coupon discount note to the Company for $100 million. The note is repayable in September 2015 and upon maturity, the Company will receive $103.7 million. This note was repaid in full in June 2014.

Other revenues and expenses - Other revenues and expenses include operating revenues and costs earned and incurred for certain drilling units on behalf of subsidiaries of Seadrill Partners, insurance premiums and bareboat charter arrangements. Other revenues and expenses earned and incurred for the period ending December 31, 2014 were $43.2 million and $25.8 million respectively. Derivatives and other interest expenses charged to Seadrill Partners totaled $82.1 million for the period ending December 31, 2014.

Receivables and Payables – Receivables and payables with Seadrill Partners and its subsidiaries are comprised of management fees, advisory and administrative services, and other items including accrued interest. In addition, certain receivables and payables arise when the Company pays an invoice on behalf of Seadrill Partners or its subsidiaries and vice versa. Receivables and payables are generally settled quarterly in arrears. Trading balances to Seadrill Partners and its subsidiaries are unsecured, bear interest at a rate equal to LIBOR plus approximately 4% per annum, and are intended to be settled in the ordinary course of business.

Receivables (payables) with Seadrill Partners and its subsidiaries as of December 31, 2014 consisted of the following:

(In US$ millions)	December 31, 2014
Rig financing agreements and Loan agreements	237
$109.5 million Vendor financing loan	110
Deferred consideration receivable	74
Other receivables	264
Other payables	(77	)

West Auriga Acquisition

On March 21, 2014, the Company sold the entities that own and operate the West Auriga (the “Auriga business”)to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners that is 49% owned by the Company. The entities continue to be related parties subsequent to the sale. The purchase price consisted of an enterprise value of $1.24 billion, less debt assumed of $443 million. The total consideration of $797 million was comprised of cash of $697 million and a discount note receivable of $100 million. The purchase price was subsequently adjusted by a working capital adjustment of $331 million arising from related party balances which remained with the disposed entities for the construction, equipping and mobilization of the West Auriga. The total recognized gain on sale of the Auriga business was $440 million, after taking into account a goodwill allocation of $33 million, which has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. Refer to "Note 11 - Disposals of businesses" of the consolidated financial statements attached herein for more information.

Purchase of additional limited partner interest in Seadrill Operating LP

On July 21, 2014, the Company sold a 28% limited partner interest in Seadrill Operating LP, a subsidiary of Seadrill Partners, to Seadrill Partners for cash consideration of $373 million. This resulted in a loss on sale of investment of $88 million, which has been recognized within "share in results from associated companies" in the Company’s consolidated statement of operations. Refer to "Note 17 - Investments in Associated Companies" of the consolidated financial statements attached herein for more information

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West Vela Acquisition

On November 4, 2014, the Company sold the entities that own and operate the West Vela (the “Vela business”) to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners and 49% owned by the Company. The entities continue to be related parties subsequent to the sale. The purchase price consisted of an enterprise value of $900 million, less debt assumed of $433 million that was outstanding under the existing facility related to West Vela. The Company is also to receive deferred consideration of $44 thousand per day for the remainder of the West Vela's current contract with BP which runs to November 2020. In addition, the Company will receive a contingent amount of up to $40 thousand per day for the remainder of the BP contract, depending on the actual amount of contract revenue received from BP. The Company's accounting policy is not to recognize contingent consideration before it is considered realizable. The total consideration recognized on disposal of $535 million was comprised of cash of $467 million, and deferred consideration receivable of $74 million. The purchase price was also adjusted by a working capital adjustment of $6 million. The gain recognized at the time of disposal of the Vela business was $191 million, after taking into account a goodwill allocation of $41 million. The gain has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. During the quarter ended December 31, 2014, the Company also recognized $1 million related to the contingent consideration realized during the period. Refer to "Note 11 - Disposals of businesses" of the consolidated financial statements attached herein for more information.

Hemen and other related parties

Since our formation, our largest shareholder has been Hemen, which currently holds approximately 24.17% of our shares.  The Company transacts business with the following related parties, being companies in which Hemen has a significant interest:

• Ship Finance

• Metrogas

• Archer

• Frontline Management (Bermuda) Limited, or Frontline Management

Ship Finance Transactions

The Company has entered into sale and lease back contracts for several drilling units with subsidiaries of Ship Finance. The Company has determined that the Ship Finance subsidiaries, which own the units, are variable interest entities (VIEs), and that the Company is the primary beneficiary of the risks and rewards connected with the ownership of the units and the charter contracts. Accordingly, these VIEs are fully consolidated in the Company's consolidated accounts. The equity attributable to Ship Finance in the VIEs is included in non-controlling interests in the Company's consolidated accounts (See also Note 35 - Variable Interest Entities).

During the year ended December 31, 2014 and 2013we incurred the following lease costs on units leased from the Ship Finance subsidiaries.

(US$ millions)	2014	2013
West Polaris	55	70
West Hercules	75	77
West Taurus	111	112
West Linus	59	—
Total	300	259

These lease costs are eliminated on consolidation.

On July 1, 2010 our consolidated VIEs, SFL Deepwater Ltd and SFL Polaris Ltd, paid a dividend of $290 million and $145 million respectively to Ship Finance. Ship Finance simultaneously granted loans to SFL Deepwater Ltd and SFL Polaris Ltd for the same amounts. The loans bear interest at 4.5% per annum and are reported as long-term debt due to related parties in our balance sheet as the loans mature in 2023.

On June 28, 2013, NADL, our majority owned subsidiary, sold the entity that owns the newbuild jack-up, West Linus, to the Ship Finance subsidiary SFL Linus Ltd. The purchase consideration for this reflected the market value of the rig as of the delivery date which was $600 million. This rig was simultaneously chartered back over a period of 15 years to NADL. Upon closing, SFL Linus Ltd received a $195 million loan from Ship Finance which bears an interest of 4.5% per annum and matures in 2029. During 2014 the loan was reduced to $125 million, and is reported as long-term debt due to related parties in our balance sheet as of December 31, 2014.

On December 30, 2014 we entered into a share sale and purchase agreement with Ship Finance, where we acquired 100% of the equity interests in SFL West Polaris Limited, which was the owner of West Polaris. In addition the Company purchased an outstanding loan of SFL West Polaris Limited of $97 million from Ship Finance. The acquisition price for the shares and the loan amounted to $111 million. As at December 31, 2014,

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the consideration for the shares and loan was unpaid, and was settled on January 5, 2015. Please see Note 35 to our Consolidated Financial Statements included herein for further information.

The total interest expense of the above loans relating to Ship Finance for 2014 was $24 million (2013: $20 million, 2012: $20 million).

During 2013 the VIEs declared dividends totaling $223 million, which were settled against existing intercompany balances with Ship Finance.

Metrogas transactions

From time to time, we enter into transactions with Metrogas primarily to manage short-term working capital requirements.

On December 10, 2013, the $1,121 million facility with Lloyds Bank TSB as agent was transferred to DNB Bank ASA as new agent and a lender and to Metrogas, a related party, as the new lender. There have been no other changes to the facility. As Metrogas is a related party of the Company, the proportion of the facility related to Metrogas of $840 million was accordingly been reclassified as debt due to related parties on the consolidated balance sheet as of December 31, 2013. On February 21, 2014, Seadrill Partners entered into a term loan B agreement for $1.8 billion due in February 2021 where some of the proceeds were used to repay the portion of this facility that is related to the West Leo, which totaled $472.6 million as of December 31, 2013. The amount that was paid to Metrogas was $436 million.

On August 26, 2014, the $1,121 million facility was repaid in full, and replaced by a new $1,350 million senior secured credit facility with a syndicate of banks and DNB Bank ASA as agent. The Company recognized a $16 million gain on debt extinguishment within other financial items in the Company's consolidated statement of operations. Please see Note 23 to the Consolidated Financial Statements included herein.

The total interest expense of the above loans relating to Metrogas for 2014 was $1 million (2013: $10 million; 2012: $7 million).

Archer transactions

From time to time, we may enter into transactions with Archer our former consolidated subsidiary and current associated company investment related to Archer's working capital requirements and debt restructuring. During the years presented we had the following transactions:

On November 12, 2012, we granted Archer a short term unsecured loan of $55 million. The loan bears interest of LIBOR plus a margin and was settled in February 2013.

On February 20, 2013, the Company obtained a short-term unsecured loan of $43 million from Archer. The loan had an interest of LIBOR plus a margin of 5% and was repaid in full on February 27, 2013.

On March 7, 2013, the Company provided a guarantee to Archer on its payment obligations on a certain financing arrangements. The maximum liability to the Company is limited to $100 million. The guarantee fee is 1.25% per annum. On July 31, 2013, the Company provided Archer with an additional guarantee of $100 million, which was provided as part of Archer’s divestiture of a division, to support Archer's existing bank facilities. The guarantee fee is 1.25% per annum. During 2014, the guarantees above were increased to a total of $250 million. The guarantee fee is 1.25% per annum.

In December 2013, the Company provided Archer Topaz Limited, a wholly owned subsidiary of Archer, with a guarantee of a maximum of EUR56 million, to support Archer's credit facilities. The guarantee fee is 1.25% per annum.

On July 14, 2014, the Company provided Archer Norge AS, a wholly owned subsidiary of Archer, with a guarantee of a maximum of $20 million, to support Archer's guarantee facility. The guarantee fee is 1.25% per annum.

On February 5, 2014, the Company provided Archer with a guarantee of a maximum of GBP 25.9 million, to support Archer's leasing obligations of a warehouse.

On February 12, 2014, the Company provided Archer with a guarantee of $120 million enabling Archer to finance the purchase of land rigs in Argentina.

These guarantee fees are included in other financial items in our consolidated statement of operations.

Archer provides certain management support and administrative services for the Company, and charged the Company fees of $4.0 million for the twelve months ended December 31, 2014 (2013: nil; 2012: nil) respectively. These amounts are included in general and administrative expenses. Also included in other financial items are guarantee fees charged to Archer of $3.7 million for the twelve months ended December 31, 2014 (2013: nil; 2012: nil) respectively.

The total net interest income of the above loans relating to Archer for 2014 was nil (2013: $0.7 million; 2012: $0.1 million).

On March 6, 2015, the Company purchased a $50 million subordinated loan made by Metrogas, a related party, to Archer, a related party. The aggregate consideration paid for the loan by the Company to Metrogas was $51 million which is equal to the sum of the outstanding principal amount of $50 million and $1 million accrued commitment fee and interest on the loan.

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Frontline Management transactions

Frontline Management provides management support and administrative services for the Company, and charged the Company fees of $4 million for these services in 2014 (2013: $2.0 million; 2012: $2.0 million). This amount is included in "general and administrative expenses".

Other related parties

Seabras Sapura transactions

Seabras Sapura Participacoes SA and Seabras Sapura Holdco Ltd, together referred to as Seabras Sapura, are joint ventures each owned 50% by the Company.

In May 2014, we entered into a loan agreement with Seabras Sapura of $11 million. The loan has an interest of 3.4% and is repayable by May 31, 2015.

In May 2014, we entered into a loan agreement with Seabras Sapura of €4 million. The loan has an interest of 3.4% and is repayable by May 31, 2015.

The total net interest income of the above loans relating to Sapura for 2014 was $0.3 million (2013: nil; 2012: nil).

Other related party transactions

In the year ended December 31, 2014, the Company recognized related party revenues of $97 million (2013: $2 million, 2012: $15 million). In 2014 the revenue related to Seadrill Partners under the management agreements as described above.

C. INTEREST OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Please see the section of this Annual Report on Form 20-F entitled "Item 18. Financial Statements."

Legal Proceedings

The Company is a party, as plaintiff or defendant, to some lawsuits in various jurisdictions for demurrage, damages, off-hire and other claims and commercial disputes arising from the construction or operation of its drilling units, in the ordinary course of business or in connection with its acquisition activities.  The Company believes that the resolution of such claims will not have a material adverse effect on the Company's operations or financial condition either individually or in the aggregate. The Company's best estimate of the outcome of the various disputes has been reflected in the financial statements of the Company as of December 31, 2014 which is not material except as disclosed otherwise.

In December 2014, a purported shareholder class action lawsuit, Fuchs et al. v. Seadrill Limited et al., No. 14-cv-9642 (LGS)(KNF), was filed in US Federal District Court in the Southern District of New York, alleging, among other things, that Seadrill and certain of its executives made materially false and misleading statements in connection with the payment of dividends.  In January 2015, a second purported shareholder class action lawsuit, Heron v. Seadrill Limited et al., No. 15-cv-0429 (LGS)(KNF), was filed in the same court on similar grounds. The judge has entered an order consolidating these cases. We cannot predict the outcome of these cases, nor can we estimate the amount of any possible loss. Accordingly, no loss contingency has been recognized within the financial statements.

Dividend Policy

Under our bye-laws, our Board may declare cash dividends or distributions, and may also pay a fixed cash dividend biannually or on other dates. The objective of our Board is to generate competitive returns for our shareholders. Any dividends declared will be in the sole discretion of our Board and will depend upon earnings, market prospects, current capital expenditure programs and investment opportunities. Under Bermuda law, a company may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that (a) we are, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realizable value of our assets would thereby be less than its liabilities.

In addition, since we are a holding company with no material assets other than the shares of our subsidiaries through which we conduct our operations, our ability to pay dividends will depend on our subsidiaries distributing to us their earnings and cash flow.

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For the years ended December 31, 2014, 2013 and 2012, we paid aggregate dividends to our shareholders in the amounts of $1,415 million ($2.98 per share), $1,287 million ($2.74 per share) and $1,925 million ($4.31 per share), respectively. The $1.7 dividend per share paid in December 2012, includes the accelerated dividend of $0.85 for the fourth quarter.

On November 26, 2014, the Company suspended dividend distributions until further notice. The Company cannot assure when it will resume paying dividends, if at all.

We have paid dividends as follows:

Payment date	Amount per share
2014
March 20, 2014	$	0.98
June 19, 2014	$	1.00
September 18, 2014	$	1.00
2013
June 20, 2013	$	0.88
September 20, 2013	$	0.91
December 20, 2013	$	0.95
2012
March 23, 2012	$	0.80
June 7, 2012	$	0.97
September 20, 2012	$	0.84
December 21, 2012	$	1.70

B. SIGNIFICANT CHANGES

There has been no significant changes since the date of our Consolidated Financial Statements included in this report, other than as described in Note 39 - Subsequent Events thereto.

ITEM 9. THE OFFER AND LISTING

A4. OFFER AND LISTING DETAILS

Shares of our common stock, par value $2.00 per share, have traded on the OSE since November 22, 2005 and on the NYSE since April 15, 2010, under the symbol "SDRL."

The NYSE listing is intended to be the Company's "primary listing" and the OSE listing is intended to be the Company's secondary listing.

The following table sets forth the high and low closing prices of our common shares for the five most recent fiscal years:

	NYSE		OSE
	High (US$)	Low (US$)	High (NOK)	Low (NOK)
Fiscal year ended December 31
2014	40.84	10.66	250.00	80.65
2013	47.78	34.75	289.00	202.00
2012	42.07	32.07	244.20	192.90
2011	38.24	25.88	215.00	148.00
2010	34.76 *	18.09 *	207.80	115.90

* The Company commenced trading on the NYSE on April 15, 2010.

The following table sets forth the high and low closing prices of our common shares for each full financial quarter for the two most recent fiscal years:

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	NYSE		OSE
	High (US$)	Low (US$)	High (NOK)	Low (NOK)
Fiscal year ended December 31, 2014
First quarter	40.84	32.93	250.00	197.50
Second quarter	40.37	32.75	246.50	195.60
Third quarter	40.22	26.58	248.30	172.30
Fourth quarter	25.47	10.66	170.60	80.65

	NYSE		OSE
	High (US$)	Low (US$)	High (NOK)	Low (NOK)
Fiscal year ended December 31, 2013
First quarter	39.68	36.13	217.60	206.90
Second quarter	41.47	34.75	245.20	202.00
Third quarter	47.78	40.31	289.00	244.30
Fourth quarter	46.95	38.54	284.40	236.40

The following table sets forth the high and low closing prices of our common shares for the six most recent months:

	NYSE		OSE
	High (US$)	Low (US$)	High (NOK)	Low (NOK)
April 20, 2015 *	12.59	9.35	95.85	75.10
March 2015	11.11	8.97	86.80	73.60
February 2015	14.34	11.46	104.90	87.00
January 2015	12.01	9.52	88.50	73.60
December 2014	13.92	10.66	97.05	80.65
November 2014	22.26	14.66	154.30	100.50
October 2014	25.47	22.61	170.60	148.00

* For the period through and including April 20, 2015.

B. PLAN OF DISTRIBUTION

Not applicable.

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C. MARKETS

Our common shares currently trade on the NYSE and the OSE under the symbol "SDRL".

D. SELLING SHAREHOLDERS

Not applicable.

E. DILUTION

Not applicable.

F. EXPENSES OF THE ISSUE

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM OF ASSOCIATION AND BYE-LAWS

The Memorandum of Association of the Company was filed as Exhibit 1.1 to the Company's Registration Statement on Form 20-F (Registration No. 001-34667), which was filed with the Commission on March 25, 2010, and is hereby incorporated by reference into this Annual Report. Our Amended and Restated Bye-laws are filed as Exhibit 1.3 to this Annual Report.

Our Company was incorporated by registration under the Companies Act. The object of our business, as stated in section 6 of our Memorandum of Association, is to carry on business as the owners, operators and managers of ocean drilling ships, vessels, platforms, rigs and equipment of all kinds, and to act as a holding company. Our Company may not engage in insurance or reinsurance business or carry on business as a mutual fund. Our Memorandum of Association and bye-laws do not impose any limitations on the ownership rights of our shareholders.

Shareholder Meetings. Under our Bye-laws, annual shareholder meetings will be held in accordance with the Companies Act at a time and place (other than Norway or the United Kingdom) selected by the Board. The quorum at any annual or general meeting is equal to one or more shareholders, either present in person or represented by proxy, holding in the aggregate shares carrying 33 1/3% of the exercisable voting rights. Special meetings may be called at the discretion of the Board and at the request of shareholders holding at least one-tenth of all outstanding shares entitled to vote at a meeting. Annual shareholder meetings and special meetings must be called by not less than seven days' prior written notice specifying the place, day and time of the meeting. The Board may fix any date as the record date for determining those shareholders eligible to receive notice of and to vote at the meeting.

The Companies Act provides that a company must have a general meeting of its shareholders in each calendar year. The Companies Act does not impose any general requirements regarding the number of voting shares which must be present or represented at a general meeting in order for the business transacted at the general meeting to be valid. The Companies Act generally leaves the quorum for shareholders meeting to the company to determine in its Bye-laws. The Companies Act specifically imposes special quorum requirements where the shareholders are being asked to approve the modification of rights attaching to a particular class of shares (33.33%) or an amalgamation or merger transaction (33.33%) unless in either case the Bye-laws provide otherwise. The Company's Bye-laws provide that the quorum required for shareholder meetings is one or more shareholders present or represented holding shares carrying 33.33% of the voting rights entitled to be exercised at such meeting.

There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our common shares.

The key powers of our shareholders include the power to alter the terms of the Company's Memorandum of Association and to approve and thereby make effective any alterations to the Company's Bye-laws made by the directors. Dissenting shareholders holding 20% of the Company's shares may apply to the Court to annul or vary an alteration to the Company's Memorandum of Association. A majority vote against an alteration to the Company's Bye-laws made by the directors will prevent the alteration from becoming effective. Other key powers are to approve the alteration of the Company's capital including a reduction in share capital, to approve the removal of a director, to resolve that the Company be wound up or discontinued from Bermuda to another jurisdiction or to enter into an amalgamation, merger transaction or winding up. Under the Companies Act, all of the foregoing corporate actions require approval by an ordinary resolution (a simple majority of votes cast), except in the case of an amalgamation or merger transaction, which requires approval by 75% of the votes cast unless the Bye-Laws provide otherwise). The

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Company's Bye-laws only require an ordinary resolution to approve an amalgamation or merger transaction. In addition, the Company's Bye-laws confer express power on the board to reduce its issued share capital selectively with the authority of an ordinary resolution.

The Companies Act provides shareholders holding 10% of the Company's voting shares the ability to request that the Board shall convene a meeting of shareholders to consider any business which the shareholders wish to be discussed by the shareholders including (as noted below) the removal of any director. However, the shareholders are not permitted to pass any resolutions relating to the management of the Company's business affairs unless there is a pre-existing provision in the Company's Bye-Laws which confers such rights on the shareholders. Subject to compliance with the time limits prescribed by the Companies Act, shareholders holding 20% of the voting shares (or alternatively, 100 shareholders) may also require the directors to circulate a written statement not exceeding 1,000 words relating to any resolution or other matter proposed to be put before, or dealt with at, the annual general meeting of the Company.

Majority shareholders do not generally owe any duties to other shareholders to refrain from exercising all of the votes attached to their shares. There are no deadlines in the Companies Act relating to the time when votes must be exercised.

The Companies Act provides that a company shall not be bound to take notice of any trust or other interest in its shares. There is a presumption that all the rights attaching to shares are held by, and are exercisable by, the registered holder, by virtue of being registered as a member of the company. The company's relationship is with the registered holder of its shares. If the registered holder of the shares holds the shares for someone else (the beneficial owner) then if the beneficial owner is entitled to the shares, the beneficial owner may give instructions to the registered holder on how to vote the shares. The Companies Act provides that the registered holder may appoint more than one proxy to attend a shareholder meeting, and consequently where rights to shares are held in a chain the registered holder may appoint the beneficial owner as the registered holder's proxy.

Directors. The Companies Act provides that the directors shall be elected or appointed by the shareholders. A director may be elected by a simple majority vote of shareholders, at a meeting where shareholders holding not less than 33.33% of the voting shares are present in person or by proxy. A person holding 50% or more of the voting shares of the Company will be able to elect all of the directors, and to prevent the election of any person whom such shareholder does not wish to be elected. There are no provisions for cumulative voting in the Companies Act or the Bye-Laws and the Company's Bye-Laws do not contain any super-majority voting requirements. The appointment and removal of directors is covered by Bye-laws 89, 90 and 91.

There are procedures for the removal of one or more of the directors by the shareholders before the expiration of his term of office. Shareholders holding 10% or more of the voting shares of the Company may require the Board to convene a shareholder meeting to consider a resolution for the removal of a director. At least 14 days' written notice of a resolution to remove a director must be given to the director affected, and that director must be permitted to speak at the shareholder meeting at which the resolution for his removal is considered by the shareholders. Any vacancy created by such a removal may be filled at the meeting by the election of another person by the shareholders or in the absence of such election, by the Board.

The Companies Act stipulates that an undischarged bankruptcy of a director (in any country) shall prohibit that director from acting as a director, directly or indirectly, and taking part in or being concerned with the management of a company, except with leave of the court. The Company's Bye-Law 92 is more restrictive in that it stipulates that the office of a Director shall be vacated upon the happening of any of the following events (in addition to the Director's resignation or removal from office by the shareholders):

• If he becomes of unsound mind or a patient for any purpose of any statute or applicable law relating to mental health and the Board resolves that he shall be removed from office;

• If he becomes bankrupt or compounds with his creditors;

• If he is prohibited by law from being a Director; or

• If he ceases to be a Director by virtue of the Companies Act.

Under the Company's Bye-laws, the minimum number of directors comprising the Board at any time shall be two. The Board currently consists of seven directors. The minimum and maximum number of directors comprising the Board from time to time shall be determined by way of an ordinary resolution of the shareholders of the Company. The shareholders may, at the annual general meeting by ordinary resolution, determine that one or more vacancies in the Board be deemed casual vacancies. The Board, so long as a quorum remains in office, shall have the power to fill such casual vacancies. Each director will hold office until the next annual general meeting or until his successor is appointed or elected. A majority of the directors must not be residents of the United Kingdom.

The Company's Bye-laws do not prohibit a director from being a party to, or otherwise having an interest in, any transaction or arrangement with the Company or in which the Company is otherwise interested. The Company's Bye-laws provide that a director who has an interest in any transaction or arrangement with the Company and who has complied with the provisions of the Companies Act and with its Bye-Laws with regard to disclosure of such interest shall be taken into account in ascertaining whether a quorum is present, and will be entitled to vote in respect of any transaction or arrangement in which he is so interested. The Company's Bye-law 97 provides its Board the authority to exercise all of the powers of the Company to borrow money and to mortgage or charge all  or any part of our property and assets as collateral security for any debt, liability or obligation. The Company's directors are not required to retire because of their age, and the directors are not required to be holders of

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the Company's common shares. Directors serve for one year terms, and shall serve until re-elected or until their successors are appointed at the next annual general meeting. The Company's Bye-laws provide that no director, alternate director, officer, person or member of a committee, if any, resident representative, or his heirs, executors or administrators, which we refer to collectively as an indemnitee, is liable for the acts, receipts, neglects, or defaults of any other such person or any person involved in our formation, or for any loss or expense incurred by us through the insufficiency or deficiency of title to any property acquired by us, or for the insufficiency of deficiency of any security in or upon which any of our monies shall be invested, or for any loss or damage arising from the bankruptcy, insolvency, or tortious act of any person with whom any monies, securities, or effects shall be deposited, or for any loss occasioned by any error of judgment, omission, default, or oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in relation to the execution of his duties, or supposed duties, to us or otherwise in relation thereto. Each indemnitee will be indemnified and held harmless out of our funds to the fullest extent permitted by Bermuda law against all liabilities, loss, damage or expense (including but not limited to liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other costs and expenses properly payable) incurred or suffered by him as such director, alternate director, officer, person or committee member or resident representative (or in his reasonable belief that he is acting as any of the above). In addition, each indemnitee shall be indemnified against all liabilities incurred in defending any proceedings, whether civil or criminal, in which judgment is given in such indemnitee's favor, or in which he is acquitted. The Company is authorized to purchase insurance to cover any liability it may incur under the indemnification provisions of its Bye-laws. Each shareholder has agreed in Bye-law 144 to waive to the fullest extent permitted by Bermuda law any claim or right of action he might have whether individually or derivatively in the name of the Company against each indemnitee in respect of any action taken by such indemnitee or the failure by such indemnitee to take any action in the performance of his duties to the Company. The indemnification and waiver provisions are covered by Bye-laws 138 through 146.

Dividends. Holders of common shares are entitled to receive dividend and distribution payments, pro rata based on the number of common shares held, when, as and if declared by the Board, in its sole discretion. Any future dividends declared will be at the discretion of the Board and will depend upon our financial condition, earnings and other factors.

As a Bermuda exempted company, we are subject to Bermuda law relating to the payment of dividends. We may not pay any dividends if, at the time the dividend is declared or at the time the dividend is paid, there are reasonable grounds for believing that, after giving effect to that payment;

• we will not be able to pay our liabilities as they fall due; or

• the realizable value of our assets is less than our liabilities.

In addition, since we are a holding company with no material assets, and conduct our operations through subsidiaries, our ability to pay any dividends to shareholders will depend on our subsidiaries' distributing to us their earnings and cash flow. Some of our loan agreements currently limit or prohibit our subsidiaries' ability to make distributions to us and our ability to make distributions to our shareholders.

Oslo Stock Exchange. The Company's Bye-laws provide that any person, other than its registrar, who acquires or disposes of an interest in shares which triggers a notice requirement of the OSE must notify the Company's registrar immediately of such acquisition or disposal and the resulting interest of that person in shares.

The Company's Bye-law 39 requires the Company to provide notice to the OSE if a person (other than the Company's registrar) resident for tax purposes in Norway (or such other jurisdiction as the Board may nominate from time to time) is found to hold 50% or more of the Company's aggregate issued share capital, or holds shares with 50% or more of the outstanding voting power.

The Company's Bye-laws also require it to comply with requirements that the OSE may impose from time to time relating to notification of the OSE in the event of specified changes in the ownership of the Company's common shares.

Shares and preemptive rights. Subject to certain balance sheet restrictions, the Companies Act permits a company to purchase its own shares if it is able to do so without becoming cash flow insolvent as a result. The restrictions are that the par value of the share must be charged against the company's issued share capital account or a company fund which is available for dividend or distribution or be paid for out of the proceeds of a fresh issue of shares. Any premium paid on the repurchase of shares must be charged to the company's current share premium account or charged to a company fund which is available for dividend or distribution. The Companies Act does not impose any requirement that the directors shall make a general offer to all shareholders to purchase their shares pro rata to their respective shareholdings. The Company's Bye-Laws do not contain any specific rules regarding the procedures to be followed by the Company when purchasing its own shares, and consequently the primary source of the Company's obligations to shareholders when the Company tenders for its shares will be the rules of the listing exchanges on which the Company's shares are listed. The Company's power to purchase its own shares is covered by Bye-laws 9, 10 and 11.

The Companies Act and our Bye-Laws do not confer any pre-emptive, redemption, conversion or sinking fund rights attached to our common shares. Holders of common shares are entitled to one vote per share on all matters submitted to a vote of holders of common shares. Unless a different majority is required by law or by our Bye-laws, resolutions to be approved by holders of common shares require approval by a simple majority of votes cast at a meeting at which a quorum is present.

Bye-Law 8 specifically provides that the issuance of more shares ranking pari passu with the shares in issue shall not constitute a variation of class rights, unless the rights attached to shares in issue state that the issuance of further shares shall constitute a variation of class rights. Bye-

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Law 12 confers on the directors the right to dispose of any number of unissued shares forming part of the authorized share capital of the Company without any requirement for shareholder approval. The Company's power to issue shares is covered by Bye-laws 12, 13, 14, 15 and 97.

Liquidation. In the event of our liquidation, dissolution or winding up, the holders of common shares are entitled to share in our assets, if any, remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any outstanding preference shares.

Anti-Takeover Effects of Provisions of Our Constitutional Documents

Several provisions of our bye-laws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our Board to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger, amalgamation or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest and (2) the removal of our incumbent directors and executive officers.

Should a person or persons resident for tax purposes in Norway, other than Nordea Bank Norge ASA, become the holder of 50% or more of the aggregate of our issued and outstanding common stock, being held or owned directly or indirectly, we will be entitled to dispose of such number of shares that would reduce the person or persons ownership of our common stock to under 50%.

Where a person or entity becomes the owner of more than 30% of our issued and outstanding common stock, our Board can decline to register the acquired common shares in excess of 30% unless the acquirer makes an offer to purchase our remaining shares of common stock or agrees to sell part of the shares of common stock acquired to reduce the number of our common shares held by them to below 30% of our issued and outstanding common stock. Sale of the acquirer's shares over 30% of the issued and outstanding common stock must take place no later than two weeks from when his total share ownership rose above 30%, the acquisition date. Offers to purchase our remaining shares must occur within four weeks of the acquisition date and the offer price must be at least as high as the highest price paid by the acquirer in the six months prior to the acquisition date. Should the acquirer fail to reduce his common shares or make an offer for the outstanding common shares with the time period, the acquirer will not be able to exercise any rights associated with the shares in excess of 30% of our outstanding and issued common stock.

There is a statutory remedy under Section 111 of the Companies Act, which provides that a shareholder may seek redress in the Bermuda courts as long as such shareholder can establish that a company's affairs are being conducted, or have been conducted, in a manner oppressive or prejudicial to the interests of some part of the shareholders, including such shareholder.

C. MATERIAL CONTRACTS

Attached as exhibits to this Annual Report are the contracts we consider to be both material and not in the ordinary course of business. Descriptions of these contracts are included within “Item 4. Information on the Company” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.” Other than these contracts, we have no material contracts other than those entered in the ordinary course of business.

D. EXCHANGE CONTROLS

The Bermuda Monetary Authority, or the BMA, must give permission for all issuances and transfers of securities of a Bermuda exempted company like ours, unless the proposed transaction is exempted by the BMA's written general permissions. We have received general permission from the BMA to issue any unissued common shares and for the free transferability of our common shares as long as our common shares are listed on an "appointed stock exchange". Our common shares are listed on the OSE and the NYSE, each of which is an "appointed stock exchange". Our common shares may therefore be freely transferred among persons who are residents and non-residents of Bermuda.

Although we are incorporated in Bermuda, we are classified as a non-resident of Bermuda for exchange control purposes by the BMA. Other than transferring Bermuda Dollars out of Bermuda, there are no restrictions on our ability to transfer funds into and out of Bermuda or to pay dividends to U.S. residents who are holders of Common Shares or other non-residents of Bermuda who are holders of our common shares in currency other than Bermuda Dollars.

In accordance with Bermuda law, share certificates may be issued only in the names of corporations, individuals or legal persons. In the case of an applicant acting in a special capacity (for example, as an executor or trustee), certificates may, at the request of the applicant, record the capacity in which the applicant is acting. Notwithstanding the recording of any such special capacity, we are not bound to investigate or incur any responsibility in respect of the proper administration of any such estate or trust.

We will take no notice of any trust applicable to any of our shares or other securities whether or not we had notice of such trust.

As an "exempted company", we are exempt from Bermuda laws which restrict the percentage of share capital that may be held by non-Bermudians, but as an exempted company, we may not participate in certain business transactions including: (i) the acquisition or holding of land in Bermuda (except that required for its business and held by way of lease or tenancy for terms of not more than 21 years) without the express authorization of the Bermuda legislature; (ii) the taking of mortgages on land in Bermuda to secure an amount in excess of $50,000 without the consent of the Minister of Business Development and Tourism of Bermuda; (iii) the acquisition of any bonds or debentures secured on any land in Bermuda

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except bonds or debentures issued by the Government of Bermuda or by a public authority in Bermuda; or (iv) the carrying on of business of any kind in Bermuda, except in so far as may be necessary for the carrying on of its business outside Bermuda or under a license granted by the Minister of Business Development and Tourism of Bermuda.

The Bermuda government actively encourages foreign investment in "exempted" entities like us that are based in Bermuda but do not operate in competition with local business. In addition to having no restrictions on the degree of foreign ownership, we are subject neither to taxes on our income or dividends nor to any exchange controls in Bermuda. In addition, there is no capital gains tax in Bermuda, and profits can be accumulated by us, as required, without limitation. There is no income tax treaty between the United States and Bermuda pertaining to the taxation of income other than applicable to insurance enterprises.

E. TAXATION

The following is a discussion of the material Bermuda, United States federal income and other tax considerations with respect to the Company and holders of common stock. This discussion does not purport to deal with the tax consequences of owning common stock to all categories of investors, some of which, such as dealers in securities, investors whose functional currency is not the United States Dollar and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common stock, may be subject to special rules. This discussion deals only with holders who hold the common stock as a capital asset, generally for investment purposes. Shareholders are encouraged to consult their own tax advisors concerning the overall tax consequences arising in their own particular situation under United States federal, state, local or foreign law of the ownership of common stock.

If an entity treated as a partnership for U.S. federal income tax purposes holds common stock, the U.S. federal income tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership.  Partners of partnerships holding the common stock are encouraged to consult their own tax advisors.

Bermuda and Other Non-United States Tax Considerations

As of the date of this Annual Report, we are not subject to taxation under the laws of Bermuda. Distributions we receive from our subsidiaries also are not subject to any Bermuda tax. As of the date of this Annual Report, there is no Bermuda income, corporation or profits tax, withholding tax, capital gains tax, capital transfer tax, or estate duty or inheritance tax payable by non-residents of Bermuda in respect of capital gains realized on a disposition of our common stock or in respect of distributions they receive from us with respect to our common stock. This discussion does not, however, apply to the taxation of persons ordinarily resident in Bermuda. Bermuda shareholders should consult their own tax advisors regarding possible Bermuda taxes with respect to dispositions of, and distributions on, our common stock.

We have received from the Minister of Finance under The Exempted Undertaking Tax Protection Act 1966, as amended, an assurance that, in the event that Bermuda enacts legislation imposing tax computed on profits, income, any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance, the imposition of any such tax shall not be applicable to us or to any of our operations or shares, debentures or other obligations, until March 31, 2035. This assurance is subject to the proviso that it is not to be construed to prevent the application of any tax or duty to such persons as are ordinarily resident in Bermuda or to prevent the application of any tax payable in accordance with the provisions of the Land Tax Act 1967.  The assurance does not exempt us from paying import duty on goods imported into Bermuda.  In addition, all entities employing individuals in Bermuda are required to pay a payroll tax and there are other sundry taxes payable, directly or indirectly, to the Bermuda government.  We and our subsidiaries incorporated in Bermuda pay annual government fees to the Bermuda government.

Bermuda currently has no tax treaties in place with other countries in relation to double-taxation or for the withholding of tax for foreign tax authorities.

Dividends distributed by Seadrill Limited out of Bermuda

Currently, there is no withholding tax payable in Bermuda on dividends distributed from Seadrill Limited to its shareholders.

Taxation of rig owning entities

The majority of our drilling rigs are owned in tax-free jurisdictions such as Bermuda. There is no taxation of the rig owners' income in these jurisdictions. The remaining drilling rigs are owned in jurisdictions with income or tonnage taxation of the rig owners' income. These jurisdictions are Hungary, Norway and Singapore.

Please also see the section below entitled "Taxation in country of drilling operations."

Taxation in country of drilling operations

Income derived from drilling operations is generally taxed in the country where these operations take place. The taxation of income derived from drilling operations could be based on net income, deemed income, withholding taxes and or other bases, depending upon the applicable tax legislation in each country of operation.  Some countries levy withholding taxes on bareboat charter payments (internal rig rent), branch profits, crew, dividends, interest and management fees.

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Drilling operations can be carried out by locally incorporated companies, foreign branches of operating companies or foreign branches of the rig owning entities. We elect the appropriate structure with due regard to the applicable legislation of each country where the drilling operations occur.

Taxation may also extend to the rig owning entity in some of the countries where the drilling operations are performed.

Net income

Net income corresponds to gross income derived from the drilling operations less tax-deductible costs (i.e. operating costs, crew, insurance, management fees and capital costs (internal bareboat fee; tax depreciation; interest costs) incurred in relation to those operations).  In addition to net income tax, withholding tax on branch profits, dividends, internal bareboat fees, among other items, may also be levied.

Net income taxation for an international drilling contractor is complex, and pricing of internal transactions (e.g., rig sales; bareboat fees; services) will allocate overall taxable income between the relevant countries. We apply Organization for Economic Cooperation and Development, or OECD, Transfer Pricing Guidelines as a basis to arrive at pricing for internal transactions. OECD Transfer Pricing Guidelines describe various methods to price internal services on terms believed by us to be no less favorable than are available from unaffiliated third parties. However, some tax authorities could disagree with our transfer pricing methods and disputes may arise in regards to correct pricing.

Deemed income

Deemed income tax is normally calculated based on gross turnover, which can include or exclude reimbursables and often reflects an assumed profit ratio, multiplied by the applicable corporate tax rate. Some countries will also levy withholding taxes on the distribution of dividend and/or branch profits at the deemed tax rate.

Withholding and other taxes

Some countries base their taxation solely on withholding tax on gross turnover.  In addition, some countries levy stamp duties, training taxes or similar taxes on the gross turnover.

Customs duties

Customs duties are generally payable on the importation of drilling rigs, equipment and spare parts into the country of operation, although several countries provide exemption from such duties for the temporary importation of drilling rigs. Such exemption may also apply to the temporary importation of equipment.

Taxation of other income

Other income related to crewing, management fees and technical services will generally be taxed in the country where the service provider is resident, although withholding tax and/or income tax may also be imposed in the country where the drilling operations take place.

Dividends and other investment income will be taxable in accordance with the legislation of the country where the company holding the investment is resident. For companies resident in Bermuda, there is currently no tax on these types of income.

Some countries levy withholding taxes on outbound dividends and interest payments.

Capital gains taxation

In respect of drilling rigs located in Bermuda and Singapore, no capital gains tax is payable in these countries upon the sale or disposition of a rig. However, some countries may impose a capital gains tax or a claw-back of tax depreciation (on a full or partial basis) upon the sale of a rig during or attributable to such time as the rig is operating within such country, or within a certain time after completion of such drilling operations, or when the rig is exported after completion of such drilling operations.

Other taxes

Our operations may be subject to sales taxes, value added taxes, or other similar taxes in various countries.

Taxation of shareholders

Taxation of shareholders will depend upon the jurisdiction where the shareholder is a tax resident. Shareholders should seek advice from their tax advisor to determine the taxation to which they may be subject based on the shareholder's circumstances.

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United States Federal Income Tax Considerations

The following are the material United States federal income tax consequences to us of our activities and to U.S. Holders and Non-U.S. Holders, each as defined below, of the ownership of our common stock.  This discussion does not purport to deal with the tax consequences of owning common stock to all categories of investors, some of which, such as dealers in securities, investors whose functional currency is not the United States Dollar and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common stock, may be subject to special rules.  The following discussion of United States federal income tax matters is based on the United States Internal Revenue Code of 1986, as amended, or the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, or the Treasury Regulations, all of which are subject to change, possibly with retroactive effect.  The discussion below is based, in part, on the description of our business in this Annual Report and assumes that we conduct our business as described.  Unless otherwise noted, references in the following discussion to the "Company," "we" and "us" are to Seadrill Limited and its subsidiaries on a consolidated basis.

United States Federal Income Taxation of U.S. Holders

As used herein, the term "U.S. Holder" means a beneficial owner of common stock that is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common stock, you are encouraged to consult your tax advisor.

Distributions

Subject to the discussion of PFICs below, any distributions made by us with respect to our common stock to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or "qualified dividend income" as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in his common stock on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United States corporation, U.S. Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common stock will generally be treated as "passive category income" or, in the case of certain types of U.S. Holders, "general category income" for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

Dividends paid on our common stock to a U.S. Holder who is an individual, trust or estate, or a "U.S. Individual Holder" will generally be treated as "qualified dividend income" that is taxable to such U.S. Individual Holders at preferential tax rates provided that (1) the common stock is readily tradable on an established securities market in the United States (such as the NYSE, on which our common stock is traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which, as discussed below, we are not and do not anticipate being in the future); (3) the U.S. Individual Holder has owned the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend; and (4) the U.S. Individual Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Any dividends paid by the Company which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Individual Holder.

Special rules may apply to any "extraordinary dividend", generally, a dividend paid by us in an amount which is equal to or in excess of 10% of a shareholder's adjusted tax basis (or fair market value in certain circumstances) in a share of common stock. If we pay an "extraordinary dividend" on our common stock that is treated as "qualified dividend income," then any loss derived by a U.S. Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend.

Sale, Exchange or other Disposition of Common Stock

Assuming we do not constitute a PFIC for any taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder's tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder's holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as United States source income or loss, as applicable, for United States foreign tax credit purposes. A U.S. Holder's ability to deduct capital losses is subject to certain limitations.

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3.8% Tax on Net Investment Income

Certain U.S. Holders, including individuals, estates, or, in certain cases, trusts, will generally be subject to a 3.8% tax on the lesser of (1) the U.S. Holder's net investment income for the taxable year and (2) the excess of the U.S. Holder's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000).  A U.S. Holder's net investment income will generally include distributions made by us which constitute a dividend for U.S. federal income tax purposes and gain realized from the sale, exchange or other disposition of our common stock.  This tax is in addition to any income taxes due on such investment income.

If you are a U.S. Holder that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of the 3.8% tax on net investment income to the ownership and disposition of our common stock.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special United States federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a PFIC for United States federal income tax purposes. In general, a foreign corporation will be treated as a PFIC with respect to a United States shareholder, if, for any taxable year in which such shareholder holds stock in such foreign corporation, either:

• at least 75% of the corporation's gross income for such taxable year consists of passive income (e.g. dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or

• at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income.

For purposes of determining whether a foreign corporation is a PFIC, it will be treated as earning and owning its proportionate share of the income and assets, respectively, of any of its subsidiary corporations in which it owns at least 25% of the value of the subsidiary's stock.

Income earned by a foreign corporation in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute "passive income" unless the foreign corporation is treated under specific rules as deriving its rental income in the active conduct of a trade or business or is received from a related party.

We presently believe that we are not a PFIC and do not anticipate becoming a PFIC.  This is, however, a factual determination made on an annual basis and is subject to change.  Therefore, we can give you no assurance as to our PFIC status.

As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different United States federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a "Qualified Electing Fund," which election we refer to as a "QEF election." As an alternative to making a QEF election, a U.S. Holder should be able to make a "mark-to-market" election with respect to our common stock, as discussed below. In addition, if we were to be treated as a PFIC for any taxable year ending on or after December 31, 2013, a U.S. Holder would be required to file an annual report with the United States Internal Revenue Service, or the IRS, for that year with respect to such U.S. Holder's common stock.

Taxation of U.S. Holders Making a Timely QEF Election

If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an "Electing Holder," the Electing Holder must report each year for United States federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder's adjusted tax basis in the common stock would be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed would result in a corresponding reduction in the adjusted tax basis in the common stock and would not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common stock. A U.S. Holder would make a QEF election with respect to any taxable year during which the Company is a PFIC by filing IRS Form 8621 with his United States federal income tax return. If we were aware that we or any of our subsidiaries were to be treated as a PFIC for any taxable year, we would, if possible, provide each U.S. Holder with all necessary information in order to make the QEF election described above.  If we were to be treated as a PFIC, a U.S. Holder would be treated as owning his proportionate share of stock in each of our subsidiaries which is treated as a PFIC and a separate QEF election would be necessary with respect to each subsidiary.  It should be noted that we may not be able to provide such information if we did not become aware of our status as a PFIC in a timely manner.

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Taxation of U.S. Holders Making a "Mark-to-Market" Election

Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate, our stock is treated as "marketable stock," a U.S. Holder would be allowed to make a "mark-to-market" election with respect to our common stock, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations.  The "mark-to-market" election will not be available for any of our subsidiaries. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common stock at the end of the taxable year over such holder's adjusted tax basis in the common stock. The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis in the common stock over its fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder's tax basis in his common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included as ordinary income by the U.S. Holder.  It should be noted that the mark-to-market election would likely not be available for any of our subsidiaries which are treated as PFICs.

Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, if we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a QEF election or a "mark-to-market" election for that year, whom we refer to as a "Non-Electing Holder," would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on our common stock in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the common stock), and (2) any gain realized on the sale, exchange or other disposition of our common stock. Under these special rules:

• the excess distribution or gain would be allocated ratably over the Non-Electing Holders' aggregate holding period for the common stock;

• the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary income; and

• the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

These penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection with its acquisition of our common stock. If a Non-Electing Holder who is an individual dies while owning our common stock, such Non-Electing Holder's successor generally would not receive a step-up in tax basis with respect to such common stock.

United States Federal Income Taxation of "Non-U.S. Holders"

A beneficial owner of our common stock that is not a U.S. Holder is referred to herein as a "Non-U.S. Holder."

Dividends on Common Stock

Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to our common stock, unless that income is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is subject to United States federal income tax only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.

Sale, Exchange or Other Disposition of Common Stock

Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock, unless:

• the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to that gain, that gain is subject to United States federal Income tax only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or

• the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

If a Non-U.S. Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the common stock, including dividends and the gain from the sale, exchange or other disposition of the common stock that is effectively connected with the conduct of that United States trade or business will generally be subject to United States federal income tax in the same manner as discussed in

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the previous section relating to the United States federal income taxation of U.S. Holders. In addition, if the Non-U.S. Holder is a corporation, the Non-U.S. Holder's earnings and profits that are attributable to the effectively connected income, subject to certain adjustments, may be subject to an additional United States federal branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable United States income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, and other taxable distributions, made by the Company to you within the United States will be subject to information reporting requirements. Such payments will also be subject to backup withholding if paid to a U.S. Individual Holder who:

• fails to provide an accurate taxpayer identification number;

• is notified by the IRS that he has failed to report all interest or dividends required to be shown on his United States federal income tax returns; or

• in certain circumstances, fails to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on an applicable IRS Form W-8.

If a Non-U.S. Holder sells his common stock to or through a United States office of a broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless the Non-U.S. Holder certifies that he is a non-United States person, under penalties of perjury, or otherwise establishes an exemption. If a Non-U.S. Holder sells his common stock through a non-United States office of a non-United States broker and the sales proceeds are paid to the Non-U.S. Holder outside the United States then information reporting and backup withholding generally will not apply to that payment.  However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to a Non-U.S. Holder outside the United States, if the Non-U.S. Holder sells his common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States.

Backup withholding is not an additional tax.  Rather, a taxpayer generally may obtain a refund of any amounts withheld under backup withholding rules that exceed the taxpayer's United States federal income tax liability by filing a refund claim with the IRS.

Pursuant to recently enacted legislation, individuals who are U.S. Holders (and to the extent specified in the applicable Treasury Regulations, certain individuals who are non-U.S. Holders and certain U.S. entities) who hold "specified foreign financial assets" (as defined in section 6038D of the Code and the applicable Treasury Regulations) are required to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) with information relating to each such asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year.  Specified foreign financial assets would include, among other assets, our common stock, unless the common stock were held through an account maintained with a U.S. financial institution.  Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect.  Additionally, the statute of limitations on the assessment and collection of U.S. federal income tax with respect to a taxable year for which the filing of IRS Form 8938 is required may not close until three years after the date on which IRS Form 8938 is filed.  U.S. Holders (including U.S. entities) and Non-U.S. Holders are encouraged to consult their own tax advisors regarding their reporting obligations under section 6038D of the Code.

Other Tax Considerations

In addition to the tax consequences discussed above, we may be subject to tax in one or more other jurisdictions where we conduct activities.  The amount of any such tax imposed upon our operations may be material.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

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H. DOCUMENTS ON DISPLAY

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. In accordance with these requirements we file reports and other information with the Commission. These materials, including this Annual Report on Form 20-F and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the Commission at 100 F Street, NE, Room 1580, Washington, D.C. 20549.  You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates from the Public Reference Section of the Commission at its principal office in Washington, D.C.  The Commission maintains a website (http://www.sec.gov.) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. In addition, documents referred to in this Annual Report on Form 20-F may be inspected at our principle executive offices at Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, Bermuda HM 08 and at the offices of Seadrill Management Ltd., at Building 11, Chiswick Park, 566 Chiswick High Road, London, W4 5YA, United Kingdom.

I. SUBSIDIARY INFORMATION

Not applicable

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including changes in interest rates, foreign currency fluctuations, equity and credit risk. Our policy is to hedge our exposure to these risks where possible, within boundaries deemed appropriate by management. We accomplish this by entering into a variety of derivative instruments and contracts to maintain the desired level of risk exposure. We may enter into derivative instruments from time to time for speculative purposes.

Interest Rate Risk

A significant portion of our debt obligations and surplus funds placed with financial institutions are subject to movements in interest rates. It is our policy to obtain the most favorable interest rates available without increasing our foreign currency exposure. In keeping with this, our surplus funds are used to repay the revolving credit tranches under our credit facilities, or placed in accounts or fixed deposits with reputable financial institutions in order to maximize returns, while providing the Company with the flexibility to meet working capital and capital investments.

We use interest rate swaps to manage our exposure to interest rate risks. Interest rate swaps are used to convert floating rate debt obligations to a fixed rate in order to achieve an overall desired position of fixed and floating rate debt. The extent to which interest rate swaps are used is determined by reference to our net debt exposure. Most of our interest rate swaps do not qualify for hedge accounting and movements in their fair values are reflected in the statement of operations under "gain/(loss) on derivative financial instruments". Interest rate swap agreements that have a positive fair value are recorded as "Other current assets", while swaps with a negative fair value are recorded as "Other current liabilities".

As of December 31, 2014, we were party to interest rate swap agreements with a combined outstanding principal amount of approximately $7.9 billion (excluding the interest rate swap agreements qualified for hedge accounting as described below), compared to $9.8 billion in 2013, at rates between 0.74% per annum and 4.63% per annum. The swap agreements mature between May 15, 2015 and December 27, 2022. The fair values of our interest rate swaps as of December 31, 2014, and December 31, 2013, were as follows:

	December 31, 2014			December 31, 2013
(In millions of U.S. dollars)	Outstanding principal	Fair value		Outstanding principal	Fair Value
Other current assets (liabilities)	7,918	(134	)	9,776	(89	)

In addition to the above interest rate swaps, one of our fully-consolidated VIEs has executed interest rate cash flow hedges in the form of interest rate swaps. These interest rate swaps qualify for hedge accounting under US GAAP, and the instruments have been formally designated as a hedge to the underlying loan. Movements in their fair value are reflected in "Accumulated other comprehensive income (loss)", with their fair value recorded as "Other current assets" or "Other current liabilities". As of December 31, 2014, the fully-consolidated VIEs had entered into interest rate swap agreements with a combined outstanding principal amount of $224 million, compared to $246 million in 2013, at rates between 1.77% to 2.01% per annum. These swap agreements matures between October and December 2018, and the fair values as of December 31, 2014, and December 31, 2013, were as follows:

	December 31, 2014			December 31, 2013
(In millions of U.S. dollars)	Outstanding principal	Fair value		Outstanding principal	Fair Value
Other current assets (liabilities)	224	(3	)	246	(2	)

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As of December 31, 2014, our net exposure to floating interest rate fluctuations on our outstanding debt was $1.3 billion, compared with $1.5 billion as of December 31, 2013, based on our total net interest bearing debt including related party of $13.0 billion less the $8.9 billion total notional principal of our floating to fixed interest rate swaps and cross currency swaps, less the $2.8 billion in fixed interest loans. A 1% change in short-term interest rates would thus increase or decrease our net income by approximately $13 million on an annual basis as of December 31, 2014, compared to $15.1 million in 2013.

At December 31, 2014 we also had outstanding cross currency interest rate swaps with principal amount of $807 million (December 31, 2013: $786 million) with maturity dates between March 2018 and March 2019 at rates ranging from 4.94% to 6.18% per annum. The fair value of our cross currency interest rate swap contracts as of December 31, 2014, and December 31, 2013, was as follows:

	December 31, 2014			December 31, 2013
(In millions of U.S. dollars)	Outstanding principal	Fair value		Outstanding principal	Fair Value
Other current assets (liabilities)	807	(201	)	786	(46	)

Foreign Exchange Risk

The Company and the majority of its subsidiaries use the U.S. dollar as their functional currency because the majority of their revenues and expenses are denominated in U.S. dollars. Accordingly, the Company's reporting currency is also U.S. dollars. We do, however, earn revenue and incur expenses in other currencies and there is thus a risk that currency fluctuations could have an adverse effect on the value of our cash flows.

Our foreign currency risk arises from:

• the measurement of debt and other monetary assets and liabilities denominated in foreign currencies converted to U.S. dollars, with the resulting gain or loss recorded as "Other financial items";

• changes in the fair value of foreign currency forward contracts, which are recorded as "Other financial items";

• the impact of fluctuations in exchange rates on the reported amounts of our revenues and expenses which are contracted in foreign currencies; and

• foreign subsidiaries whose accounts are not maintained in U.S. dollars, which when converted into U.S. dollars can result in exchange adjustments which are recorded as a component in shareholders' equity.

We use foreign currency forward contracts and cross currency interest rate swaps (as mentioned above) to manage our exposure to foreign currency risk on certain assets, liabilities and future anticipated transactions. Such derivative contracts do not qualify for hedge accounting treatment and are recorded in the balance sheet under "Other current assets" if the contracts have a net positive fair value, and under "Other current liabilities" if the contracts have a net negative fair value, with changes in the fair value recorded in the consolidated statement of operations under "Other financial items - Gain/(loss) on derivative financial instruments"

At December 31, 2014, we had various contracts to sell approximately $260 million between January 1, 2015 and May 1, 2015 for Norwegian Kroner at exchange rates ranging from NOK6.37 million to NOK6.89 million per U.S. dollar. The fair value of our Norwegian Kroner currency forward contracts as of December 31, 2014, and December 31, 2013, was as follows:

	December 31, 2014			December 31, 2013
(In millions of U.S. dollars)	Notional Amount	Fair value		Notional Amount	Fair Value
Other current assets (liabilities)	260	(24	)	272	(3	)

At December 31, 2014, we also had various contracts to buy approximately GBP30 million (US$49 million) between January 2015 and April 2015 for British Pounds at an average exchange rate of GBP1.59 per US dollar.

The fair value of our British Pound currency forward contracts as of December 31, 2014, and December 31, 2013, was as follows:

	December 31, 2014			December 31, 2013
(In millions of U.S. dollars)	Notional Amount	Fair value		Notional Amount	Fair Value
Other current assets (liabilities)	49	(3	)	65	1

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A 1% change in the exchange rate between the U.S. dollar and the bought forward currencies would result in a fair value gain or loss of $11 million that would be reflected in our consolidated statements of operations, based on our currency forward contracts as of December 31, 2014.

Equity risk

As of December 31, 2014, we had entered into a TRS contract indexed to 4,000,000 of our own shares, whereby we carry the risk of fluctuations in the market price of our shares. The settlement amount for the contract will be (A) the market value of the shares at the date of settlement plus the amount of dividends paid on the shares by us between entering into and settling the contract, less (B) the reference price of the shares agreed at the inception of the contract plus the counterparty's financing costs. Settlement will be either a payment from or to the counterparty, depending on whether (A) is more or less than (B). The contract was scheduled to expire in March 3, 2015 and the agreed reference price was NOK96.02 per common share. The open position at December 31, 2014, exposes us to market risk associated with our share price, and it is estimated that a 10% reduction in the price below the value at December 31, 2014, would generate an adverse fair value adjustment of up to $5 million, which would be recorded in the consolidated statement of operations. Subsequent to the year end, on March 3, 2015, the TRS agreement related to 4 million shares was rolled over with a new expiry date of June 3, 2015, and a new reference price of NOK87.4056 per share.

In addition to the above TRS agreement, which has our own share as underlying security, we may from time to time enter into short-term TRS arrangements relating to securities in other companies.

We hold equity investments in several other companies in our industry that own and/or operate offshore drilling units with similar characteristics to our own fleet of rigs or deliver various oil services. These investments provide us with additional exposure to market segments in which we operate or other oil services. As at December 31, 2014, these included:

• a 39.9% equity interest in Archer (OSE:ARCHER), a Bermuda oil service company;

• a 6.4% equity interest in SapuraKencana (BURSA: SKPETRO), a Malaysian oil services company;

• a 50% equity interest in Seabras Participacoes SA, a Brazilian holding company, which owns the vessel-owning company of one pipe-laying vessel currently under construction.

• a 50% equity interest in Seabras Sapura Holding GmbH, an Austria holding company, which owns the vessel-owning entities of five pipe-laying vessels currently under construction.

• a 30% equity interest in Itaunas, a Holland vessel-owning company of one drillship currently under construction.

• a 30% equity interest in Camburi, a Holland vessel-owning company of one drillship currently under construction.

• a 30% equity interest in Sahy, a Holland vessel-owning company of one drillship currently under construction.

• a 46.6% equity interest in Seadrill Partners, which included our ownership interest in both its common and subordinated units.

• Direct Ownership interests in the following entities controlled by Seadrill Partners:

i.42% in Seadrill Operating LP

ii.49% Seadrill Capricorn Holdings LLC

iii.39% in Seadrill Deepwater Drillship Ltd and 29% indirect interest in Seadrill Mobile Units (Nigeria) Ltd.

If the market value of any of these investments should fall below the recorded book value, and this decrease in market value is determined to be other than temporary, there could be an impairment charge recognized in our consolidated statement of operations.

Please see Notes 14 and 17 to our Consolidated Financial Statements included in this Annual Report for information on our investments.

Concentration of credit risk

The market for our services is the offshore oil and gas industry, and the customers consist primarily of major integrated oil companies, independent oil and gas producers and government-owned oil companies. We perform ongoing credit evaluations of our customers and generally do not require collateral in our business agreements. Reserves for potential credit losses are maintained when necessary.

The following table shows those of our customers who have generated 10% or more of our contract revenues in any of the periods shown:

	Year ended December 31,
Customer	2014		2013		2012
Petrobras	20	%	16	%	15	%
Total	13	%	14	%	14	%
Statoil	13	%	14	%	9	%
ExxonMobil	10	%	12	%	11	%
Shell	2	%	7	%	10	%
Other customers	42	%	37	%	41	%

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We may also face credit related losses in the event that counterparties to our derivative financial instrument contracts do not perform according to the terms of the contract. The credit risk arising from these counterparties relates to unrealized profits from foreign exchange forward contracts and interest rate swaps. We generally do not require collateral for our financial instrument contracts. We do, however, enter into master netting agreements with our counterparties to derivative financial instrument contracts to mitigate our exposure to counterparty credit risks. These agreements provide us with the legal right to discharge all or a portion of amounts owed to a counterparty by offsetting against them any amounts that the counterparty may owe us.

In the opinion of management, our counterparties are creditworthy financial institutions, and we do not expect any significant loss to result from their non-performance. The credit exposure of interest rate swap agreements, currency option contracts and foreign currency contracts is represented by the fair value of contracts with a positive fair value at the end of each period, reduced by the effects of master netting agreements.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. DEBT SECURITIES

Not applicable.

B. WARRANTS AND RIGHTS

Not applicable.

C. OTHER SECURITIES

Not applicable.

D. AMERICAN DEPOSITORY SHARES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Neither we nor any of our subsidiaries have been subject to a material default in the payment of principal, interest, a sinking fund or purchase fund installment or any other material default that was not cured within 30 days. In addition, the payments of our dividends are not and have not been in arrears, nor have they been subject to material delinquency that was not cured within 30 days.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.CONTROLS AND PROCEDURES

a) Disclosure Controls and Procedures

Management assessed the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rule 13a-15(e) of the Exchange Act as of December 31, 2014. Based upon that evaluation the Principal Executive Officer and Principal Financial Officers concluded that the Company's disclosure controls and procedures are effective as of the evaluation date.

b)     Management's annual report on internal controls over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) promulgated under the Exchange Act.

Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's Board , management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

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• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of Company's management and directors; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

Management conducted the evaluation of the effectiveness of the internal controls over financial reporting using the control criteria framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, published in its report entitled Internal Control-Integrated Framework (2013).

Our management with the participation of our Principal Executive Officer and Principal Financial Officers assessed the effectiveness of the design and operation of the Company's internal controls over financial reporting pursuant to Rule 13a-15 of the Exchange Act as of December 31, 2014. Based upon that evaluation, management, including the Principal Executive Officer and Principal Financial Officers, concluded that the Company's internal controls over financial reporting are effective as of December 31, 2014.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2014 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

c) Attestation report of the registered public accounting firm

The independent registered public accounting firm that audited the Consolidated Financial Statements, PricewaterhouseCoopers LLP, has issued an attestation report on the effectiveness of the Company's internal control over financial reporting as of December 31, 2014, appearing under Item 18, and such report is incorporated herein by reference.

d)Changes in internal control over financial reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 16.RESERVED

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

Our Board has determined that the sole member of the audit committee, Kate Blankenship, is an independent Director and is the Audit Committee Financial Expert.

ITEM 16B. CODE OF ETHICS

We have adopted a Code of Ethics that applies to all entities controlled by the Company and its employees, directors, officers and agents of the Company. We have posted a copy of our Code of Ethics on our website at www.seadrill.com. We will provide any person, free of charge, a copy of our Code of Ethics upon written request to our registered office.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountant for the fiscal years ended December 31, 2014 and 2013 was PricewaterhouseCoopers LLP in the United Kingdom. The following table sets forth the fees related to audit and other services provided by the principal accountants:

(in U.S. dollars)	2014	2013
Audit fees (a)	5,781,969	9,398,155
Audit-related fees (b)	—	—
Taxation fees (c)	24,565	158,010
All other fees (d)	550,934	1,137,210
Total	6,357,468	10,693,375

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a) Audit fees

Audit fees represent professional services rendered for the audit of our annual financial statements and services provided by the principal accountant in connection with statutory and regulatory filings or engagements.

b) Audit-related fees

Audit-related fees consist of assurance and related services rendered by the principal accountant related to the performance of the audit or review of our financial statements which have not been reported under Audit fees above.

c) Taxation fees

Taxation fees represent fees for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning.

d) All other fees

All other fees include services other than audit fees, audit-related fees and taxation fees set forth above, primarily including information security and network penetration testing services.

e)Audit Committee's Pre-Approval Policies and Procedures

Our Board has adopted pre-approval policies and procedures in compliance with paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X that require the Board to approve the appointment of our independent auditor before such auditor is engaged, and approve each of the audit and non-audit related services to be provided by such auditor under such engagement by the Company. All services provided by the principal auditor in 2014, 2013 and 2012 were approved by the Board pursuant to the pre-approval policy.

ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.     PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

A share repurchase program was approved by the Board in 2007, authorizing us to buy back shares which may either be cancelled or held as treasury shares to meet our obligations relating to our share option scheme.

In November 2014 the Board authorized a share buyback program under which the Company may repurchase up to approximately 10% of shares outstanding. The Company may repurchase shares from time to time in open market transactions or private transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by Management of the Company based on its evaluation of market conditions, capital allocation opportunities, and other factors. The program does not require the Company to repurchase any specific number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice.

The following table provides a summary of our repurchases of our equity securities for the years ended December 31, 2014 and 2013.

Period	Total Number of Shares Purchased	Average Price		Total Number of Shares Purchased as part of Publicly announced plans or programs	Maximum Number of shares that may yet be purchased under the plans of programs
March 2013	150,000	NOK	212.30	—	2,000,000
April 2013	150,000	NOK	212.92	—	2,000,000
August 2013	300,000	NOK	273.50	300,000	1,700,000
November 2013	300,000	NOK	279.60	300,000	1,400,000
April 2014	300,000	NOK	196.80	—	1,400,000
June 2014	200,000	NOK	232.30	—	1,400,000
November 2014	—	—		—	50,675,994

All of the above purchases were made in open market transactions.

ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

Not applicable.

86

ITEM 16G.     CORPORATE GOVERNANCE

Pursuant to an exception under the NYSE listing standards available to foreign private issuers, we are not required to comply with all of the corporate governance practices followed by U.S. companies under the NYSE listing standards, which are available at www.nyse.com.  Pursuant to Section 303.A.11 of the NYSE Listed Company Manual, we are required to list the significant differences between our corporate governance practices and the NYSE standards applicable to listed U.S. companies. Set forth below is a list of those differences:

• Independence of Directors. The NYSErequires that a U.S. listed company maintain a majority of independent directors. As permitted under Bermuda law and our bye-laws, four members of our Board, Mrs. Kate Blankenship, Mr. Paul Leand, Dr. Charles Woodburn and Mr. Bert Bekker, are independent according to the NYSE's standards for independence applicable to a foreign private issuer.

• Executive Sessions.  The NYSErequires that non-management directors meet regularly in executive sessions without management. The NYSEalso requires that all independent directors meet in an executive session at least once a year. As permitted under Bermuda law and our bye-laws, our non-management directors do not regularly hold executive sessions without management and we do not expect them to do so in the future.

• Nominating/Corporate Governance Committee.  The NYSErequires that a listed U.S. company have a nominating/corporate governance committee of independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee. As permitted under Bermuda law and our bye-laws, we do not currently have a nominating or corporate governance committee.

• Audit Committee.  The NYSErequires, among other things, that a listed U.S. company have an audit committee with a minimum of three members, all of whom are independent. As permitted by Rule 10A-3 under the Exchange Act, our audit committee consists of one independent member of our Board, Mrs. Kate Blankenship.

• Corporate Governance Guidelines.  The NYSErequires that a listed U.S. Company adopt and disclose corporate governance guidelines. The guidelines must address, among other things: director qualification standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession and an annual performance evaluation. We are not required to adopt such guidelines under Bermuda law and we have not adopted such guidelines.

We believe that our established corporate governance practices satisfy the NYSE listing standards.

ITEM 16H. MINE SAFETY DISCLOSURE.

Not applicable.

PART III

ITEM 17.                   FINANCIAL STATEMENTS

See "Item 18. Financial Statements"

ITEM 18. FINANCIAL STATEMENTS

The following financial statements listed below and set forth on pages F-1 through F-81 are filed as part of this Annual Report on Form 20-F:

Consolidated Financial Statements of Seadrill Limited
Index to Consolidated Financial Statements of Seadrill Limited	F-1
Reports of Independent Registered Public Accounting Firms – PricewaterhouseCoopers LLP and PricewaterhouseCoopers AS	F-2
Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012	F-4
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012	F-5
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012	F-8
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2014, 2013 and 2012	F-10
Notes to Consolidated Financial Statements	F-11

87

ITEM 19.    EXHIBITS

Exhibit Number	Description
1.1	Memorandum of Association of Seadrill Limited (1)
1.2	Bye-Laws of Seadrill Limited as adopted by the sole shareholder on May 13, 2005 and as amended by resolution of the shareholders at the Annual General Meeting held on December 1, 2006 and as further amended by resolution of the shareholders at the Annual General Meeting held on September 28, 2007 (1)
1.3	Amended and Restated Bye-Laws of Seadrill Limited, as amended by resolution of the shareholders at the Annual General Meeting held on September 20, 2013 (3)
1.4	Certificate of Incorporation of Seadrill Limited delivered May 10, 2005 (1)
1.5	Certificate of Deposit of Memorandum of Increase of Share Capital delivered May 13, 2005 (1)
1.6	Certificate of Deposit of Memorandum of Increase of Share Capital delivered August 8, 2005 (1)
1.7	Certificate of Deposit of Memorandum of Increase of Share Capital delivered December 20, 2006 (1)
1.8	Certificate of Incorporation on Name Change delivered December 20, 2006 (1)
2.1	Form of Common Stock Certificate (1)
4.1	Share Option Scheme dated December 1, 2006 (1)
4.2	Bermuda Tax Assurance (1)
4.3	Rules of the Seadrill Limited Restricted Stock Unit Plan (3)
4.4	Omnibus Agreement among Seadrill Limited, Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating LP, Seadrill Operating GP LLC, and Seadrill Capricorn, dated as of October 24, 2012
4.5	Framework agreement by and among Rosneft Oil Company, Seadrill Limited and North Atlantic Drilling Limited, dated August 20, 2014, as amended by the first letter amendment dated November 7, 2014, and the second letter amendment dated April 15, 2015. †
8.1	Subsidiaries of the Company
11.1	Code of Ethics (2)
12.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
12.2	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
12.3	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
13.1	Certification of the Principal Executive Officer pursuant to 18 USC Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of the Principal Financial Officer pursuant to 18 USC Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.3	Certification of the Principal Financial Officer pursuant to 18 USC Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

(1) Incorporated by reference to the Company's registration statement on Form 20-F, filed on March 18, 2010

(2) Incorporated by reference to the Company's annual report on Form 20-F, filed on May 5, 2010

(3) Incorporated by reference to the Company's annual report on Form 20-F, filed on April 23, 2014

† Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the Commission.

88

Index to Consolidated Financial Statements of Seadrill Limited

Consolidated Financial Statements of Seadrill Limited
Index to Consolidated Financial Statements of Seadrill Limited	F-1
Reports of Independent Registered Public Accounting Firms – PricewaterhouseCoopers LLP and PricewaterhouseCoopers AS	F-2
Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012	F-4
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012	F-5
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012	F-8
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2014, 2013 and 2012	F-10
Notes to Consolidated Financial Statements	F-11

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Seadrill Limited

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of comprehensive income, of cash flows and of changes in equity present fairly, in all material respects, the financial position of Seadrill Limited and its subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 15(b). Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audits of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Uxbridge, United Kingdom

April 21, 2015

F-2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Seadrill Limited

In our opinion, the accompanying consolidated statements of operations, of comprehensive income, of cash flows and of changes in equity for the year ended December 31, 2012 present fairly, in all material respects, the results of the operations and cash flows of Seadrill Limited and its subsidiaries for the year ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers AS

PricewaterhouseCoopers AS

Oslo, Norway

April 30, 2013

F-3

Seadrill Limited

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended December 31, 2014, 2013 and 2012

(In US$ millions, except per share data)

	2014		2013		2012
Operating revenues
Contract revenues	4,518		4,892		4,295
Reimbursable revenues	190		278		180
Other revenues	289		112		3
Total operating revenues	4,997		5,282		4,478
Gain on disposals	632		61		—
Operating expenses
Vessel and rig operating expenses	1,938		1,977		1,656
Reimbursable expenses	172		257		166
Depreciation and amortization	693		711		615
Loss on impairment	232		—		—
General and administrative expenses	315		300		250
Total operating expenses	3,350		3,245		2,687
Operating income	2,279		2,098		1,791
Financial items and other income and expense
Interest income	63		24		25
Interest expense	(478	)	(445	)	(340	)
Share in results from associated companies (net of tax)	89		(223	)	(220	)
(Loss)/gain on derivative financial instruments	(497	)	133		3
Net loss on debt extinguishment	(54	)	—		—
Foreign exchange gain/(loss)	164		52		(70	)
Gain on realization of marketable securities	131		—		85
Gain on deconsolidation of Seadrill Partners	2,339		—		—
Gain on sale of tender rig business	—		1,256		—
Other financial items	70		45		163
Total financial items and other income and expense	1,827		842		(354	)
Income before income taxes	4,106		2,940		1,437
Income tax expense	(19	)	(154	)	(232	)
Net income	4,087		2,786		1,205
Net income attributable to the non-controlling interest	108		133		97
Net income attributable to the parent	3,979		2,653		1,108
Basic earnings per share (U.S. dollar)	8.32		5.66		2.37
Diluted earnings  per share (U.S. dollar)	8.30		5.47		2.34
Declared regular dividend per share (U.S. dollar)	2.00		3.72		2.54
Declared extraordinary dividend per share (U.S. dollar)	—		—		0.97

See accompanying notes that are an integral part of these Consolidated Financial Statements.

F-4

Seadrill Limited

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

for the years ended December 31, 2014, 2013 and 2012

(In US$ millions)

	2014		2013		2012
Net income	4,087		2,786		1,205
Other comprehensive income/(loss), net of tax:
Change in unrealized (loss)/gain on marketable securities, net	(982	)	333		205
Change in unrealized foreign exchange differences	(22	)	6		13
Change in actuarial (loss)/gain relating to pension	(28	)	(7	)	(25	)
Change in unrealized gain/(loss) on interest rate swaps in VIEs and subsidiaries	1		3		20
Other comprehensive (loss)/income:	(1,031	)	335		213
Total comprehensive income for the period	3,056		3,121		1,418
Comprehensive income attributable to the non-controlling interest	53		134		111
Comprehensive income attributable to the parent	3,003		2,987		1,307

Note: All items of other comprehensive income/(loss) are stated net of tax.

See accompanying notes that are an integral part of these Consolidated Financial Statements.

F-5

Seadrill Limited

CONSOLIDATED BALANCE SHEETS

As at December 31, 2014 and 2013

(In US$ millions)

	2014	2013
ASSETS
Current assets
Cash and cash equivalents	831	744
Restricted cash	268	168
Marketable securities	426	416
Accounts receivables, net	1,017	1,042
Amount due from related party - current	466	101
Assets held for sale - current	134	—
Other current assets	273	363
Total current assets	3,415	2,834
Non-current assets
Investment in associated companies	2,898	140
Marketable securities	325	666
Newbuildings	2,030	3,419
Drilling units	15,145	17,193
Goodwill	604	1,200
Restricted cash	181	150
Deferred tax assets	30	37
Equipment	46	49
Amount due from related party - non-current	313	—
Assets held for sale - non-current	1,105	—
Other non-current assets	414	612
Total non-current assets	23,091	23,466
Total assets	26,506	26,300
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt	2,309	1,566
Trade accounts payable	84	90
Short-term debt to related party	189	55
Liabilities associated with assets held for sale - current	58	—
Other current liabilities	1,934	2,114
Total current liabilities	4,574	3,825
Non-current liabilities
Long-term debt	10,311	11,900
Long-term debt due to related parties	415	1,415
Deferred tax liabilities	67	60
Liabilities associated with assets held for sale - non-current	50	—
Other non-current liabilities	699	898
Total non-current liabilities	11,542	14,273
Commitments and contingencies (see note 33)

F-6

Seadrill Limited

CONSOLIDATED BALANCE SHEETS (continued)

As at December 31, 2014 and 2013

(In US$ millions except common share and per share data)

Equity	2014		2013
Common shares of par value US$2.00 per share: 800,000,000 shares authorized 492,759,938 outstanding at December 31, 2014 (December 31, 2013, 468,978,492)	985		938
Additional paid in capital	3,258		2,641
Contributed surplus	1,956		1,956
Accumulated other comprehensive (loss)/income	(448	)	528
Retained earnings	4,013		1,449
Total Shareholder's equity	9,764		7,512
Non-controlling interest	626		690
Total equity	10,390		8,202
Total liabilities and equity	26,506		26,300

See accompanying notes that are an integral part of these Consolidated Financial Statements.

F-7

Seadrill Limited

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended December 31, 2014, 2013 and 2012

(In US$ millions)

	2014		2013		2012
Cash Flows from Operating Activities
Net income	4,087		2,786		1,205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	693		711		615
Amortization of deferred loan charges	54		43		30
Amortization of unfavorable and favorable contracts	(131	)	(65	)	12
Amortization of mobilization revenue	(177	)	(136	)	(162	)
Share of results from associated companies	(121	)	223		220
Share-based compensation expense	10		7		8
Gain on disposals and deconsolidations	(2,971	)	(1,367	)	(169	)
Unrealized loss/(gain) related to derivative financial instruments	197		(249	)	6
Impairment of goodwill	232		—		—
Gain on realization of marketable securities	(138	)	—		(86	)
Dividends received from associated company	526		15		18
Deferred income tax	(6	)	(47	)	25
Unrealized foreign exchange (gain)/loss on long-term debt	(165	)	(47	)	6
Payments for long-term maintenance	(295	)	(190	)	(133	)
Loss on sale of investments	89		—		—
Net gain on debt extinguishment	(12	)	—		—
Changes in operating assets and liabilities, net of effect of acquisitions and disposals
Unrecognized mobilization fees received from customers	348		226		238
Trade accounts receivable	(295	)	(206	)	(198	)
Trade accounts payable	21		(29	)	34
Net related party balances	(248	)	(114	)	60
Prepaid expenses/accrued revenue	13		(45	)	(64	)
Interest bearing note receivable with customers	—		—		(76	)
Other, net	(137	)	179		1
Net cash provided by operating activities	1,574		1,695		1,590

F-8

Seadrill Limited

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

for the years ended December 31, 2014, 2013 and 2012

(In US$ millions)

	2014		2013		2012
Cash Flows from Investing Activities
Additions to newbuildings	(2,508	)	(3,884	)	(1,343	)
Additions to drilling units and equipment	(365	)	(389	)	(214	)
Sale of rigs and equipment	—		48		—
Settlement of disputes with ship yard	—		—		38
Business combinations and step acquisitions, net of cash acquired	—		(554	)	—
Sale of business, net of cash disposed	1,138		1,958		—
Cash in deconsolidated subsidiary	(90	)	—		—
Change in restricted cash	(131	)	123		102
Investment in associated companies	(586	)	(151	)	(153	)
Proceeds from disposal of investments in associated companies	373		—		65
Short-term loan granted to related parties	—		—		(55	)
Purchase of marketable securities	(150	)	—		(19	)
Long term loan granted to related parties	(18	)	(125	)	(20	)
Repayment from long-term loan granted to related parties	2,096		10		20
Proceeds from disposal of marketable securities	307		—		219
Net cash provided by/(used in) investing activities	66		(2,964	)	(1,360	)
Cash Flows from Financing Activities
Proceeds from debt	5,072		7,703		3,477
Repayments of debt	(4,344	)	(4,919	)	(2,752	)
Debt fees paid	(65	)	(93	)	(37	)
Proceeds from debt to related party	90		756		1,013
Repayments of debt to related party	(910	)	(1,181	)	(487	)
Dividends paid to non-controlling interests	(51	)	(69	)	(50	)
Contribution from non-controlling interests, net of issuance cost	115		365		350
Proceeds relating to share forward contracts and other derivatives	—		453		—
Purchase of treasury shares	(18	)	(39	)	—
Proceeds from sale of treasury shares	—		6		16
Dividends paid	(1,415	)	(1,287	)	(1,925	)
Employee stock options exercised	5		—		—
Net cash (used in)/provided by financing activities	(1,521	)	1,695		(395	)
Cash reclassified as held for sale	(26	)	—		—
Effect of exchange rate changes on cash and cash equivalents	(6	)	—		—
Net increase/(decrease) in cash and cash equivalents	87		426		(165	)
Cash and cash equivalents at beginning of the year	744		318		483
Cash and cash equivalents at the end of year	831		744		318
Supplementary disclosure of cash flow information
Interest paid, net of capitalized interest	(493	)	336		260
Taxes paid	(227	)	109		179

See accompanying notes that are an integral part of these Consolidated Financial Statements.

F-9

Seadrill Limited

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

for the years ended December 31, 2014, 2013 and 2012

(In US$ millions)

	Common shares		Additional paid in capital		Contributed surplus	Accumulated other comprehensive (loss)/income		Retained Earnings		Total equity before NCI		Non-controlling interest		Total equity
Balance at December 31, 2011	935		2,097		1,956	(5	)	994		5,977		325		6,302
Sale of treasury shares	3		12		—	—		—		15		—		15
Share-based compensation	—		8		—	—		—		8		—		8
Private placement in North Atlantic Drilling Ltd ("NADL")	—		84		—	—		—		84		66		150
Establishment of non-controlling interest in Seadrill Partners	—		134		—	—		—		134		69		203
Costs related to capital increase in subsidiary	—		(3	)	—	—		—		(3	)	—		(3	)
Other comprehensive income	—		—		—	199		—		199		14		213
Dividends declared	—		—		—	—		(2,019	)	(2,019	)	(50	)	(2,069	)
Net income	—		—		—	—		1,108		1,108		97		1,205
Balance at December 31, 2012	938		2,332		1,956	194		83		5,503		521		6,024
Sale of treasury shares	—		6		—	—		—		6		—		6
Purchase of treasury shares	—		(39	)	—	—		—		(39	)	—		(39	)
Share-based compensation	—		7		—	—		—		7		—		7
Establishment of non-controlling interest	—		—		—	—		—		—		297		297
Issuance of common units by Seadrill Partners to public	—		228		—	—		—		228		137		365
Issuances of common units by Seadrill Partners and impact on non-controlling interest	—		(102	)	—	—		—		(102	)	102		—
Sale of drilling units to Seadrill Partners	—		209		—	—		—		209		(209	)	—
Other comprehensive income	—		—		—	334		—		334		1		335
Dividends declared	—		—		—	—		(1,287	)	(1,287	)	(69	)	(1,356	)
Dividend to Non-controlling interests in VIEs	—		—		—	—		—		—		(223	)	(223	)
Net income	—		—		—	—		2,653		2,653		133		2,786
Balance at December 31, 2013	938		2,641		1,956	528		1,449		7,512		690		8,202
Sale and purchase of treasury shares, net	(1	)	(22	)	—	—		—		(23	)	—		(23	)
Share-based compensation charge	—		10		—	—		—		10		—		10
Employee stock options issued	1		4		—	—		—		5		—		5
Conversion of convertible bond	47		568		—	—		—		615		—		615
Deconsolidation of Seadrill Partners	—		—		—	—		—		—		(115	)	(115	)
Initial public offering of NADL	—		63		—	—		—		63		52		115
Acquisition of West Polaris	—		(6	)	—	—		—		(6	)	(7	)	(13	)
Sale of NCI	—		—		—	—		—		—		4		4
Other comprehensive loss	—		—		—	(976	)	—		(976	)	(55	)	(1,031	)
Dividends declared	—		—		—	—		(1,415	)	(1,415	)	(51	)	(1,466	)
Net income	—		—		—	—		3,979		3,979		108		4,087
Balance at December 31, 2014	985		3,258		1,956	(448	)	4,013		9,764		626		10,390

See accompanying notes that are an integral part of these Consolidated Financial Statements.

Dividends per share 

During the year to December 31, 2014, the Company declared dividends of $2.00 per ordinary share (year ended December 31, 2013: $3.72 per share; year ended December 31, 2012$3.51 per share, including an extraordinary dividend of $0.97 per share). 

F-10

Seadrill Limited

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – General information

Seadrill Limited is incorporated in Bermuda and is a publicly listed company on the New York Stock Exchange and the Oslo Stock Exchange. We provide offshore drilling services to the oil and gas industry. As of December 31, 2014 the Company owned and operated 43 offshore drilling units and had 16 offshore drilling units under construction. Our fleet consists of drillships, jack-up rigs and semi-submersible rigs for operations in shallow and deepwater areas, as well as benign and harsh environments. Following the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners on January 2, 2014 we no longer operate in the tender rig segment.

As used herein, and unless otherwise required by the context, the term "Seadrill" refers to Seadrill Limited and the terms "Company", "we", "Group", "our" and words of similar import refer to Seadrill and its consolidated companies. The use herein of such terms as group, organization, we, us, our and its, or references to specific entities, is not intended to be a precise description of corporate relationships.

Basis of presentation

The financial statements are presented in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The amounts are presented in United States dollar (U.S. dollar) rounded to the nearest million, unless otherwise stated.

The accompanying consolidated financial statements present the financial position of Seadrill Limited, the consolidated subsidiaries and the group's interest in associated entities. Investments in companies in which the Company controls, or directly or indirectly holds more than 50% of the voting control are consolidated in the financial statements, as well as certain variable interest entities of which the Company is deemed to be the primary beneficiary.

The accounting policies set out below have been applied consistently to all periods in these consolidated financial statements, unless otherwise noted.

Basis of consolidation

The consolidated financial statements include the assets and liabilities of the Company, its majority owned and controlled subsidiaries and certain variable interest entities, ("VIE"s) in which the Company is deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated on consolidation.

A VIE is defined as a legal entity where either (a) the total equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated support; (b) equity interest holders as a group lack either i) the power to direct the activities of the entity that most significantly impact on its economic success, ii) the obligation to absorb the expected losses of the entity, or iii) the right to receive the expected residual returns of the entity; or (c) the voting rights of some investors in the entity are not proportional to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. U.S. GAAP requires a VIE to be consolidated by its primary beneficiary, being the interest holder, if any, which has both (1) the power to direct the activities of the entity which most significantly impact on the entity's economic performance, and (2) the right to receive benefits or the obligation to absorb losses from the entity which could potentially be significant to the entity. We evaluate our subsidiaries, and any other entities in which we hold a variable interest, in order to determine whether we are the primary beneficiary of the entity, and where it is determined that we are the primary beneficiary we fully consolidate the entity.

Investment in companies in which we hold an ownership interest of between 20% and 50%, and over which we exercise significant influence, but do not consolidate, are accounted for using the equity method. The Company records its investments in associated companies and its share of earnings or losses in the consolidated statements of operations as "Share in results from associated companies." The excess, if any, of purchase price over book value of the Company's investments in equity method investees is included in the accompanying consolidated balance sheets in "Investment in associated companies."

Investments in companies in which our ownership is less than 20% are valued at fair value unless it is not possible to estimate fair value, then the cost method is used.

Intercompany transactions and internal sales have been eliminated on consolidation. Unrealized gains and losses arising from transactions with associates are eliminated to the extent of the Company's interest in the entity.

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Note 2 – Accounting policies

Use of estimates

Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Contract revenue

A substantial majority of the Company's revenues are derived from dayrate based drilling contracts (which may include lump sum fees for mobilization and demobilization) and other service contracts. Both dayrate based and lump sum fee revenues are recognized ratably over the contract period when services are rendered. Under some contracts, the Company is entitled to additional payments for meeting or exceeding certain performance targets. Such additional payments are recognized when any uncertainties are resolved or upon completion of the drilling program.

In connection with drilling contracts, the Company may receive lump sum fees for the mobilization of equipment and personnel or for capital additions and upgrades prior to commencement of drilling services. These up-front fees are recognized as revenue over the contract term, excluding option periods.

In some cases, the Company may receive lump sum non-contingent fees or dayrate based fees from customers for demobilization upon completion of a drilling contract. Non-contingent demobilization fees are recognized as revenue over contract term, excluding option periods not exercised by our customers. Contingent demobilization fees are recognized as earned upon completion of the drilling contract.

Fees received from customers under drilling contracts for capital upgrades are deferred and recognized over the contract term, excluding option periods not exercised.

In certain countries in which we operate, taxes such as sales, use, value-added, gross receipts and excise may be assessed by the local government on our revenues. We generally record our tax-assessed revenue transactions on a net basis in our consolidated statement of income.

Reimbursables

Reimbursements received for the purchases of supplies, personnel services and other services provided on behalf of and at the request of our customers in accordance with a contract or agreement are recorded as revenue. The related costs are recorded as reimbursable expenses in the same period.

Other revenues

In a business combination there may exist favorable and unfavorable drilling contracts which are recorded at fair value at the date of acquisition. A favorable or unfavorable drilling contract is a contract that has a dayrate which differs from prevailing market rates at the time of acquisition. The net present value of such contracts is recorded as an asset or liability at the purchase date and subsequently recognized as revenue or reduction to revenue over the contract term.

Related party revenues relate to management support and administrative services provided to our associates in which we maintain an investment. External management fees relate to the operational, administrative and support services we provide to third parties.

Mobilization and demobilization expenses

Mobilization costs incurred as part of a drilling contract are capitalized and recognized as expense over the contract term, excluding option periods not exercised by our customers. The costs of relocating drilling units that are not under contract are expensed as incurred.

Demobilization costs are costs related to the transfer of a vessel or drilling rig to a safe harbor or different geographic area and are expensed as incurred.

Vessel and Rig Operating Expenses

Vessel and rig operating expenses are costs associated with operating a drilling unit that is either in operation or stacked, and include the remuneration of offshore crews and related costs, supplies, insurance costs, expenses for repairs and maintenance as well as costs related to onshore personnel in various locations where we operate the drilling units and are expensed as incurred.

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Repairs, maintenance and periodic surveys

Costs related to periodic overhauls of drilling units are capitalized under drilling units and amortized over the anticipated period between overhauls, which is generally 5 years. Related costs are primarily yard costs and the cost of employees directly involved in the work. Amortization costs for periodic overhauls are included in depreciation and amortization expense. Costs for other repair and maintenance activities are included in vessel and rig operating expenses and are expensed as incurred.

Foreign currencies

The Company and the majority of its subsidiaries use the U.S. dollars as their functional currency because the majority of their revenues and expenses are denominated in U.S. dollars. Accordingly, the Company's reporting currency is also U.S. dollars. For subsidiaries that maintain their accounts in currencies other than U.S. dollars, the Company uses the current method of translation whereby the statements of operations are translated using the average exchange rate for the year and the assets and liabilities are translated using the year end exchange rate. Foreign currency translation gains or losses on consolidation are recorded as a separate component of other comprehensive income in shareholders' equity.

Transactions in foreign currencies are translated into U.S. dollars at the rates of exchange in effect at the date of the transaction. Foreign currency assets and liabilities are translated using rates of exchange at the balance sheet date. Gains and losses on foreign currency transactions are included in the consolidated statements of operations.

Current and non-current classification

Assets and liabilities are classified as current assets and liabilities respectively, if their maturity is within 1 year of the balance sheet date. Otherwise, they are classified as non-current assets and liabilities.

Cash and cash equivalents

Cash and cash equivalents consist of cash, bank deposits and highly liquid financial instruments with original maturities of three months or less.

Restricted cash

Restricted cash consists of bank deposits which have been pledged as collateral for certain guarantees issued by a bank or minimum deposits which must be maintained in accordance with contractual arrangements. Restricted cash amounts with maturities longer than one year are classified as non-current assets.

Equity method investments

Investments in common stock are accounted for using the equity method of accounting if the investment gives the Company the ability to exercise significant influence, but not control over, the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors such as representation on the investee’s Board of Directors and the nature of commercial arrangements are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the Company records its investments in equity-method investees in the consolidated balance sheet under “Investment in associated companies” and its share of the investees’ earnings or losses together with other-than-temporary impairments in value and gain/loss on sale of investments under “Share in results from associated companies (net of tax)” in the consolidated statements of income.

All other equity investments, which consist of investments for which the Company does not have the ability to exercise significant influence, or are not investments in common stock, are accounted for under the cost method or at fair value if readily determinable.

The Company analyzes its equity method investees for impairment at each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the value of the investment. The Company records an impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in value are not reflected in earnings until sale of the equity method investee occurs.

Marketable securities

Marketable equity securities held by the Company which do not give the Company the ability to exercise significant influence are considered to be available-for-sale. These are remeasured at fair value each reporting period with resulting unrealized gains and losses recorded as a separate component of accumulated other comprehensive income in shareholders' equity. Gains and losses are not realized until the securities are sold or subject to an other than temporary impairment. Gains and losses on forward contracts to purchase marketable equity securities that do not meet the definition of a derivative are accounted for as available-for-sale.

The Company analyzes its available-for-sale securities for impairment at each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the value of the securities. The Company records an

F-13

impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in value are not reflected in earnings until sale of the securities held as available for sale occurs.

Receivables

Receivables, including accounts receivable, are recorded in the balance sheet at their nominal amount less an allowance for doubtful accounts. The Company establishes reserves for doubtful accounts on a case-by-case basis when it is unlikely that required payments of specific amounts will occur. In establishing these reserves, the Company considers the financial condition of the customer as well as specific circumstances related to the receivable such as customer disputes. Receivable amounts determined as being unrecoverable are written off.

Newbuildings

The carrying value of drilling units under construction ("Newbuildings") represents the accumulated costs at the balance sheet date. Cost components include payments for yard installments and variation orders, construction supervision, equipment, spare parts, capitalized interest, costs related to first time mobilization and commissioning costs. No charge for depreciation is made until commissioning of the newbuilding has been completed and it is ready for its intended use.

The Company may have option agreements with shipyards to order new drilling units at fixed or variable prices which require some or no additional payment upon exercise. Payments for drilling unit purchase options are capitalized at the time when option contracts are acquired or entered into. The Company reviews the expected future cash flows, which would result from the exercise of each option contract on a contract by contract basis to determine whether the carrying value of the option is recoverable.

Capitalized interest

Interest expense is capitalized during construction of newbuildings based on accumulated expenditures for the applicable project at the Company's current rate of borrowing. The amount of interest expense capitalized in an accounting period shall be determined by applying an interest rate ("the capitalization rate") to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in an accounting period shall be based on the rates applicable to borrowings outstanding during the period. The Company does not capitalize amounts beyond the actual interest expense incurred in the period.

If the Company's financing plans associate a specific new borrowing with a qualifying asset, the Company uses the rate on that borrowing as the capitalization rate to be applied to that portion of the average accumulated expenditures for the asset that does not exceed the amount of that borrowing. If average accumulated expenditures for the asset exceed the amounts of specific new borrowings associated with the asset, the capitalization rate to be applied to such excess shall be a weighted average of the rates applicable to other borrowings of the Company.

Drilling units

Rigs, vessels and related equipment are recorded at historical cost less accumulated depreciation. The cost of these assets, less estimated residual value is depreciated on a straight-line basis over their estimated remaining economic useful lives. The estimated residual value is taken to be offset by any decommissioning costs that may be incurred. The estimated economic useful life of the Company's floaters and, jack-up rigs, when new, is 30 years.

Significant investments are capitalized and depreciated in accordance with the nature of the investment. Significant investments that are deemed to increase an asset's value for its remaining useful life are capitalized and depreciated over the remaining life of the asset.

Cost of property and equipment sold or retired, with the related accumulated depreciation and write-downs are removed from the consolidated balance sheet, and resulting gains or losses are included in the consolidated statement of operations.

Assets held for sale

Assets are classified as held for sale when all of the following criteria are met: Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group), the asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups), an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated, the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale, within 1 year. The term probable refers to a future sale that is likely to occur, the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Discontinued operations

The Company will present the results of operations of a component of the Company as defined by US GAAP, that either has been disposed of or is classified as held for sale, as discontinued operations, if both of the conditions are met: The operations and cash flow of the component

F-14

have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposal transaction and; the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Equipment

Equipment is recorded at historical cost less accumulated depreciation and is depreciated over its estimated remaining useful life, which is between 3 and 5 years depending on the type of asset.

Goodwill

The Company allocates the purchase price of acquired businesses to the identifiable tangible and intangible assets and liabilities acquired, with any remaining amount being recorded as goodwill. Goodwill is tested for impairment at least annually at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The Company has determined that its reporting units are the same as its operating segments for the purpose of allocating goodwill and the subsequent testing of goodwill for impairment.

The Company tests goodwill for impairment on an annual basis as of December 31 each year or when events or circumstances indicate that a potential impairment exists. The Company may first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two step goodwill impairment test.

If the qualitative factors indicate possible impairment, the Company performs a quantitative assessment to estimate fair value of its reporting units compared to their carrying value.  In the event that the fair value is less than carrying value, the Company must perform an exercise similar to a purchase price allocation in a business combination in order to determine the amount of the impairment charge. The quantitative goodwill impairment test for a reporting unit is based on discounted cash flows. The Company uses estimated future cash flows applying contract dayrates during the firm contract periods and estimated forecasted dayrates for the periods after expiry of firm contract periods. The estimated future cash flows will be based on remaining economic useful lives for the assets, and discounted using a weighted average cost of capital (WACC).

Other intangible assets and liabilities

Other intangible assets and liabilities are recorded at fair value on the date of acquisition less accumulated amortization. The amounts of these assets and liabilities less the estimated residual value, if any, is generally amortized on a straight-line basis over the estimated remaining economic useful life or contractual period. Other intangible assets include technology, customer relationships and favorable drilling contracts. Other intangible liabilities include unfavorable drilling contracts.

Impairment of long-lived assets

The carrying value of long-lived assets that are held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the undiscounted future net cash flows expected to result from the asset, including eventual disposition. If the undiscounted future net cash flows are less than the carrying value of the asset, an impairment is made to the market value or the discounted future net cash flows.

Defined benefit pension plans

The Company has several defined benefit plans which provide retirement, death and early termination benefits. The Company's net obligation is calculated separately for each plan by estimating the amount of the future benefit that employees have earned in return for their cumulative service.

The aggregated projected future benefit obligation is discounted to a present value, and the aggregated fair value of any plan assets is deducted. The discount rate is the market yield at the balance sheet date on government bonds in the relevant currency and based on terms consistent with the post-employment benefit obligations. The retirement benefits are generally a function of number of years of employment and amount of employees' remuneration. The plans are primarily funded through payments to insurance companies. The Company records its pension costs in the period during which the services are rendered by the employees. Actuarial gains and losses are recognized in the statement of operations when the net cumulative unrecognized actuarial gains or losses for each individual plan at the end of the previous reporting year exceed 10 percent of the higher of the present value of the defined benefit obligation and the fair value of plan assets at that date. These gains and losses are recognized over the expected remaining working lives of the employees participating in the plans. Otherwise, recognition of actuarial gains and losses is included in other comprehensive income.  Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income.

Treasury shares

Treasury shares are recognized at cost as a component of equity. The purchase of treasury shares reduces the Company's share capital by the nominal value of the acquired treasury shares. The amount paid in excess of the nominal value is treated as a reduction of additional paid-in capital.

F-15

Derivative Financial Instruments and Hedging Activities

The Company's primary derivative instruments include interest-rate swap agreements, foreign currency options and forward exchange contracts which are recorded at fair value. Changes in the fair value of these derivatives, which have not been designated as hedging instruments, are recorded as a gain or loss as a separate line item within financial items in our consolidated statement of operations.

Changes in the fair value of any derivative instrument that we have formally designated as a hedge, are recognized in accumulated other comprehensive income/(loss) in the consolidated balance sheets. Any change in fair value relating to an ineffective portion of a designated hedge is recognized, in the consolidated statement of operations. When the hedged item affects the income statement, the gain or loss included in accumulated other comprehensive income is reported on the same line in the consolidated statements of operations as the hedged item.

Income taxes

Seadrill is a Bermuda company. Currently, the Company is not required to pay taxes in Bermuda on ordinary income or capital gains as we qualify as an exempt company. The Company has received written assurance from the Minister of Finance in Bermuda that it will be exempt from taxation until March 2035. Certain subsidiaries operate in other jurisdictions where taxes are imposed. Consequently income taxes have been recorded in these jurisdictions when appropriate.

Significant judgment is involved in determining the provision for income taxes. There are certain transactions for which the ultimate tax determination is unclear due to uncertainty in the ordinary course of business. Seadrill recognizes tax liabilities based on its assessment of whether its tax positions are more likely than not sustainable, based on the technical merits and considerations of the relevant taxing authority's widely understood administrative practices and precedence.

Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax loss carry forwards. A deferred tax asset is recognized only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilized. The amount of deferred tax provided is based upon the expected manner of settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date. The impact of tax law changes is recognized in periods when the change is enacted.

Deferred charges

Loan related costs, including debt arrangement fees, are capitalized and amortized over the term of the related loan and are included in interest expense.

Convertible debt

Convertible bond loans issued by the Company include both a loan component (host contract) and an option to convert the loan to shares (embedded derivative).

An embedded derivative, such as a conversion option, may be separated from its host contract and accounted for separately if certain criteria are met (including if the contract that embodies both the embedded derivative and the host contract is not measured at fair value, the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract and if a separate instrument with the same terms as the embedded instrument would be a derivative).

If an embedded derivative instrument is separated from its host contract, the host contract shall be accounted for based on generally accepted accounting principles applicable to instruments of that type which do not contain embedded derivative instruments.

Total Return Equity Swaps

From time to time, the Company enters into total return equity swaps ("TRS") indexed to the Company's own shares, where the counterparty acquires shares in the Company and the Company carries the risk of fluctuations in the share price of the acquired shares. The fair value of each TRS is recorded as an asset or liability, with the changes in fair value recorded in the consolidated statement of operations. The Company may, from time to time, enter into TRS arrangements indexed to shares in other companies which are accounted for in a similar manner.

Share-based compensation

The Company has established an employee share ownership plan under which employees, directors and officers of the Group may be allocated options to subscribe for new shares in the ultimate parent, Seadrill Limited. The compensation cost for share options is recognized as an expense over the service period based on the fair value of the options granted.

The fair value of the share options issued under the Company's employee share option plans is determined at grant date taking into account the terms and conditions upon which the options are granted, and using a valuation technique that is consistent with generally accepted valuation methodologies for pricing financial instruments, and that incorporates all factors and assumptions that knowledgeable, willing market participants

F-16

would consider in determining fair value. The fair value of the share options is recognized as personnel expenses with a corresponding increase in equity over the period during which the employees become unconditionally entitled to the options. Compensation cost is initially recognized based upon options expected to vest with appropriate adjustments to reflect actual forfeitures. National insurance contributions arising from such incentive programs are expensed when the options are exercised.

The Company has also established a Restricted Stock Units (“RSU”) plan where the holder of an award is entitled to receive shares if still employed at the end of the three year vesting period. There is no requirement for the holder to pay for the share on grant or vesting of the award.

The fair value of the RSU award is calculated as the market share price on grant date. The fair value of the awards expected to vest is recognized as compensation cost straight-line over the vesting period.

Provisions

A provision is recognized in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Related parties

Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also related if they are subject to common control or common significant influence. All transactions between the related parties are based on the principle of arm's length.

Earnings per share

Basic earnings per share ("EPS") is calculated based on the income (loss) for the period available to common stockholders divided by the weighted average number of shares outstanding for basic EPS for the period. Diluted EPS includes the effect of the assumed conversion of potentially dilutive instruments which for the Company includes share options, restricted stock units and convertible debt. The determination of dilutive earnings per share requires the Company to potentially make certain adjustments to net income and for the weighted average shares outstanding used to compute basic earnings per share unless anti-dilutive.

Recently Adopted Accounting Standards

Balance sheet—Effective January 1, 2014, the Company has adopted the accounting standards update that expands on the recognition, measurement and disclosure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). The update requires measurement of the obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of the amount the entity agreed to pay on the basis of its arrangement and any additional amount the Company expects to pay on behalf of its co-obligors. The update also requires an entity to disclose the nature, amount and other information of the obligation. The update was effective for interim and annual periods beginning on or after December 15, 2013. As a result, the Company has disclosed relevant obligations in Note 23.

Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the criteria for reporting discontinued operations to include only disposals representing a strategic shift in operations. The ASU also requires expanded disclosures regarding the assets, liabilities, income, and expenses of discontinued operations. This ASU will be effective for the first interim period beginning after December 15, 2014 and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides new authoritative guidance on the methods of revenue recognition and related disclosure requirements. The accounting standard update will be effective for the first interim period beginning after December 15, 2016 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides new authoritative guidance with regards to management's responsibility to assess an entity's ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The ASU will be effective for all entities in the first annual period ending after December 15, 2016 (December 31, 2016 for calendar year-end entities) and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

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In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which made targeted amendments to the current consolidation guidance that could affect all industries. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The accounting standard update will be effective for the first interim period beginning after December 15, 2015 and early adoption is permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

Note 3 – Segment information

Operating segments

The Company provides drilling and related services to the offshore oil and gas industry. Our business has been organized into three operating segments: (1) Floaters, which includes drillships and semi-submersible rigs, (2) jack-up rigs and (3) other, which consists primarily of rig management services. The Company presents the following two reportable segments:

• Floaters: Services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to semi-submersible rigs and drillships for harsh and benign environments in mid-, deep- and ultra-deep waters.

• Jack-up rigs: Services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to jack-up rigs for operations in harsh and benign environment.

Segment results are evaluated on the basis of operating income, and the information given below is based on information used for internal management reporting.

In prior periods, the company reported a tender rigs segment, which related to services encompassing drilling, completion and maintenance of offshore production wells in Southeast Asia, West Africa and the Americas. In these periods, the Company had drilling contracts related to self-erecting tender rigs and semi-submersible tender rigs. Following the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners LLC ("Seadrill Partners") as of January 2, 2014, the Company no longer has any drilling contracts in the tender rig segment. Accordingly, the Company did not report this segment for the year ended December 31, 2014. The Company however provides rig management services to Seadrill Partners which are recognized within Other.

To more closely align the segment results with the information presented for internal management reporting, the company has separately disclosed rig management related revenues within Other. The Company has also amended its presentation of total assets and only allocates Drilling units and newbuildings to its reportable segments. Prior periods have been conformed to the current period presentation.

Revenues

(In US$ millions)	2014	2013	2012
Floaters	3,360	3,698	2,859
Jack-up rigs	1,478	1,175	861
Tender Rigs	—	382	758
Other	159	27	—
Total	4,997	5,282	4,478

Depreciation and amortization

(In US$ millions)	2014	2013	2012
Floaters	508	531	412
Jack-up rigs	185	163	146
Tender Rigs	—	17	57
Other	—	—	—
Total	693	711	615

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Operating income – net income

(In US$ millions)	2014		2013		2012
Floaters	1,992		1,472		1,250
Jack-up Rigs	275		450		225
Tender Rigs	—		176		316
Other	12		—		—
Operating income	2,279		2,098		1,791
Unallocated items:
Total financial items and other	1,827		842		(354	)
Income tax expense	(19	)	(154	)	(232	)
Net income	4,087		2,786		1,205

Drilling Units and Newbuildings - Total assets

(In US$ millions)	2014	2013
Floaters	12,849	15,459
Jack-up Rigs	4,326	4,699
Tender Rigs	—	454
Total Drilling Units and Newbuildings	17,175	20,612
Assets held for sale	1,239	—
Investments in Associated companies	2,898	140
Marketable securities	751	1,082
Goodwill	604	1,200
Cash and restricted cash	1,280	1,062
Other assets	2,559	2,204
Total	26,506	26,300

Goodwill

(In US$ millions)	2014	2013
Floaters	604	890
Jack-up Rigs	—	281
Tender Rigs	—	29
Total	604	1,200

Capital expenditures – fixed assets

(In US$ millions)	2014	2013	2012
Floaters	2,327	3,178	1,342
Jack-up Rigs	776	1,371	150
Tender Rigs	—	150	198
Total	3,103	4,699	1,690

F-19

Geographic segment data

Revenues are attributed to geographical segments based on the country of operations for drilling activities, i.e. the country where the revenues are generated. The following presents the Company's revenues and fixed assets by geographic area:

Revenues

(In US$ millions)	2014	2013	2012
Norway	1,071	1,198	815
Brazil	991	825	629
Angola	707	734	358
Others *	2,228	2,525	2,676
Total Revenue	4,997	5,282	4,478

* Other countries represents countries in which we operate that individually had revenues representing less than 10 percent of total revenues earned for any of the periods presented.

Major customers

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

Fixed assets – operating drilling units (1)

(In US$ millions)	2014	2013
Brazil	2,798	2,881
Norway	2,252	2,298
Angola	1,852	2,090
USA	1,382	2,718
Others *	6,861	7,206
Total	15,145	17,193

(1) The fixed assets referred to in the table are the Company's operating drilling units. Asset locations at the end of a period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.

* Other countries represents countries in which we operate that individually had fixed assets representing less than 10 percent of total fixed assets for any of the periods presented.

F-20

Note 4 – Other revenues

Other revenues consist of the following:

	Year ended December 31
(In US$ millions)	2014	2013		2012
Amortization of unfavorable contracts	130	67		—
Amortization of favorable contracts	—	(2	)	(12	)
Revenues related party	97	2		15
External management fees with third parties	62	45		—
Total	289	112		3

The unfavorable contract values in 2014 and 2013 arose from our acquisitions of the Songa Eclipse and Sevan Drilling ASA, see Notes 12 and 21.

Related party revenues were related to management support and administrative services during the year provided to our associates in which we maintain an investment.

External management fees relate to the operational, administrative and support services we provide to SapuraKencana as part of the agreement we entered into when we sold majority of the tender rig business. See Note 11.

Note 5 – Gain on disposals

The Company has recognized the following gains on disposals:

(In US$ millions)	Net proceeds	Book value on disposal	Gain
Year ended December 31, 2014:
Sale of West Auriga business	466	26	440
Sale of West Vela business	536	344	192
Total for year ended December 31, 2014	1,002	370	632
Year ended December 31, 2013:
Sale of Jack-up rig West Janus	73	12	61
Total for year ended December 31, 2013	73	12	61
Year ended December 31, 2012:
None	—	—	—
Total for year ended December 31, 2012	—	—	—

Note 6 – Interest expense

	Year ended December 31
(In US$ millions)	2014		2013		2012
Gross interest expense	548		540		416
Capitalized interest	(70	)	(95	)	(76	)
Net interest expense	478		445		340

Note 7 – Gain on realization of marketable securities

On May 17, 2012, SapuraCrest (BURSA: SCRES) and Kencana (BURSA: KEPB) jointly announced that they entered into a merger agreement forming a new company, SapuraKencana Petroleum BHD (SapuraKencana). Consequently the Company received 589 million shares in the new company and a cash payment of $65 million. This merger resulted in the dilution of our equity share from 23.59% to 11.79% and we recognized a gain on the decline in our ownership of $169 million in our consolidated statement of operations. In addition, on May 30, 2012, the Company announced the sale of 300 million shares in SapuraKencana which resulted in a gain of $84 million in our consolidated statement of operations.

F-21

The Company's holding of shares in SapuraKencana following this transaction represented 6.4% ownership of the outstanding shares at that time. The net proceed from the sale of these shares was $198 million.

In April 2014, the Company sold a portion of its investment in SapuraKencana and received proceeds of $297 million, net of transaction costs. As a result of the sale, a gain of $131 million was recognized in the consolidated statement of operations within "Gain on realization of marketable securities", including amounts which had been previously recognized in other comprehensive income. As a result of this transaction, as of December 31, 2014, our ownership interest in SapuraKencana’s outstanding common shares was 8.18%.

Note 8 – Impairment loss on marketable securities and investments in associated companies

In 2012, the Company determined that the decline in fair value of the Archer Limited ("Archer") investment was other than temporary based primarily upon its evaluation of the severity of the excess of its cost basis over the market price of the security and the prospects for recovery within 2013. As a result, an impairment loss was recognized reducing its cost basis of this associated company to the market price of the shares in question as of December 31, 2012, which was $121 million. The impairment loss amounted to $221 million and is presented as "Share of result from associated companies" in the consolidated statements of operations.

Note 9 – Taxation

Income taxes consist of the following:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Current tax expense:
Bermuda	—		—		—
Foreign	23		200		167
Deferred tax (benefit)/expense:
Bermuda	—		—		—
Foreign	(4	)	(50	)	58
Tax related to internal sale of assets in subsidiary,  amortized for group purposes	—		4		7
Total tax expense	19		154		232
Effective tax rate	0.5	%	5.2	%	16.1	%

The effective tax rate for the twelve months ended December 31, 2014 is 0.5%. The effective tax rate has been positively impacted by the resolution of uncertain tax positions, the deconsolidation of Seadrill Partners, and asset sales during the year.

The Company, including its subsidiaries, is taxable in several jurisdictions based on its rig operations. A loss in one jurisdiction may not be offset against taxable income in another jurisdiction. Thus, the Company may pay tax within some jurisdictions even though it might have an overall loss at the consolidated level.

The income taxes for the years ended December 31 2014, 2013 and 2012 differed from the amount computed by applying the Bermudan statutory income tax rate of 0% as follows:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Income taxes at statutory rate	—		—		—
Effect of transfers to new tax jurisdictions	—		4		7
Effect of change on uncertain tax positions relating to prior year	(85	)	(7	)	91
Effect of taxable income in various countries	104		157		134
Total tax expense	19		154		232

Deferred Income Taxes

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. The net deferred tax assets (liabilities) consist of the following:

F-22

Deferred Tax Assets:

(In US$ millions)	December 31, 2014		December 31, 2013
Pension	19		12
Provisions	20		8
Net operating losses carried forward	291		130
Other	3		2
Gross deferred tax asset	333		152
Valuation allowance related to net operating losses carried forward	(280	)	(115	)
Net deferred tax asset	53		37

Deferred Tax Liability:

(In US$ millions)	December 31, 2014		December 31, 2013
Property, plant and equipment	60		60
Foreign exchange	7		—
Gross deferred tax liability	67		60
Net deferred tax	(14	)	(23	)

Net deferred taxes are classified as follows:

(In US$ millions)	December 31, 2014		December 31, 2013
Short-term deferred tax asset	19		—
Long-term deferred tax asset	34		37
Long-term deferred tax liability	(67	)	(60	)
Net deferred tax	(14	)	(23	)

As of December 31, 2014, deferred tax assets related to net operating loss ("NOL") carryforwards was $291 million, which can be used to offset future taxable income. NOL carryforwards which were generated in various jurisdictions, include $271 million that will not expire, $4 million that will expire, if not utilized, in 2024 and $16 million that will expire, if not utilized, between 2033 and 2034. A valuation allowance of $280 million on the NOL carryforwards results where we do not expect to generate future taxable income. The change in the valuation allowance was due to increases of $165 million and zero utilization during the year compared to an increase of $41 million and zero utilization in 2013 and $44 million and zero utilization in 2012.

Uncertain tax positions

Certain of the Company's Norwegian subsidiaries have been party to an ongoing dispute to a tax reassessment issued in October 2011 by the Norwegian tax authorities in regards to the transfer of certain legal entities to a different tax jurisdiction and the principles for conversion of functional currency.

In April 2014 these subsidiaries entered into a settlement agreement with the Norwegian tax authorities resulting in discontinued legal proceedings in the Oslo District Court. The terms of the settlement agreement include the Company making a cash payment to the tax authorities for settlement of revised reassessments agreed between the parties.

Following settlement of the uncertainties arising from these matters, we recognized a decrease in the unrecognized tax benefits, including interest and penalties of approximately $147 million of which approximately $94 million had a positive impact on our effective tax rate for the twelve months endedDecember 31, 2014 as noted above.

As of December 31, 2014, we had unrecognized tax benefits of $9 million which is included in other current liabilities on our consolidated balance sheet. The changes to our liabilities related to unrecognized tax benefits, including interest and penalties that we recognize as a component of income tax expense, where as follows:

F-23

	Year ended December 31
(In US$ millions)	2014		2013		2012
Balance beginning of period	147		154		63
Increases as a result of positions taken in prior periods	9		29		109
Increases as a result of positions taken during the current period	—		12		8
Decreases as a result of positions taken in prior periods	(147	)	(14	)	(26	)
Decreases as a result of positions taken in the current period	—		(34	)	—
Balance end of period	9		147		154

As of December 31, 2014, if recognized, $9 million of our unrecognized tax benefits, including interest and penalties, would have a favorable impact on our effective tax rate.

The parent company, Seadrill Limited, is headquartered in Bermuda where it has been granted a tax exemption until 2035.  Other jurisdictions in which the Company and its subsidiaries operate are taxable based on rig operations. A loss in one jurisdiction may not be offset against taxable income in another jurisdiction.  Thus, the Company may pay tax within some jurisdictions even though it may have an overall loss at the consolidated level.  The following table summarizes the earliest tax years that remain subject to examination by the major taxable jurisdictions in which the Company operates:

Jurisdiction	Earliest Open Year
United States	2013
Angola	2007
Australia	2008
Nigeria	2007
Norway	2007
Thailand	2003

Note 10 – Earnings per share

The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares outstanding during the period. Diluted EPS includes the effect of the assumed conversion of potentially dilutive instruments.

The components of the numerator for the calculation of basic and diluted EPS are as follows:

(In US$ millions)	2014		2013	2012
Net income attributable to the parent	3,979		2,653	1,108
Less: Allocation to participating securities	(6	)	—	—
Net income available to stockholders	3,973		2,653	1,108
Effect of dilution	117		38	37
Diluted net income available to stockholders	4,090		2,691	1,145

The components of the denominator for the calculation of basic and diluted EPS are as follows:

(In US$ millions)	2014	2013	2012
Basic earnings per share:
Weighted average number of common shares outstanding	478	469	469
Diluted earnings per share:
Effect of dilutive convertible bonds	14	22	20
Effect of dilutive share options	1	1	1
Weighted average number of common shares outstanding adjusted for the effects of dilution	493	492	490

F-24

(In US$)	2014	2013	2012
Basic Earnings per share	8.32	5.66	2.37
Diluted earnings per share	8.30	5.47	2.34

Note 11 – Disposals of businesses and deconsolidation of subsidiary

Disposals in 2014

Deconsolidation of Seadrill Partners

Under the terms of the Operating Agreement of Seadrill Partners, the board of directors of Seadrill Partners has the power to oversee and direct the operations of, and manage and determine the strategies and policies of Seadrill Partners. During the period from Seadrill Partners' IPO in October 2012 until the time of its first effective Annual General Meeting ("AGM") on January 2, 2014, the Company retained the sole power to appoint, remove and replace all members of Seadrill Partner's board of directors. From the first AGM, the majority of the board members became electable by the common unitholders and accordingly, from this date the Company no longer retained the power to control the board of directors as a result of certain provisions in the Operating Agreement which limits the Company's ability to vote its full holding of common units in an election of directors to the board of Seadrill Partners. As of January 2, 2014, Seadrill Partners is considered to be an associated company, and a related party, and not a controlled subsidiary of the Company. As such Seadrill Partners was deconsolidated by the Company.

Under the terms of various agreements between Seadrill and Seadrill Partners entered into in connection with the IPO of Seadrill Partners, Seadrill will continue to provide management, technical and administrative services to Seadrill Partners and its subsidiaries. See further discussion in Note 31 for these services and agreements.

As a result of the deconsolidation the Company has derecognized the assets and liabilities of Seadrill Partners and its subsidiaries, and has recognized its ownership interests in Seadrill Partners and its direct ownership interests in Seadrill Partners subsidiaries, Seadrill Capricorn Holdings LLC, Seadrill Operating LP, Seadrill Deepwater Drillship Ltd and its indirect ownership of Seadrill Mobile Units through another wholly owned subsidiary, at fair value at the date of deconsolidation. Additionally, the external third party debt associated with the drilling units in Seadrill Partners is not derecognized from the Company on the deconsolidation date, as the external debt was not transferred to Seadrill Partners or its subsidiaries. However, the Company had entered into back to back loan agreements at the time of the IPO and upon each sale of a drilling unit to Seadrill Partners which mirror the same terms and conditions. Therefore, the Company has recognized a related party loan receivable for similar amounts. The excess of the fair value of the investments over the carrying value of Seadrill’s share of Seadrill Partners' net assets has been recognized as a gain in the Company’s consolidated statement of operations.

The gain recognized on deconsolidation, which all relates to the remeasurement of the Company's retained interests in Seadrill Partners and its subsidiaries is as follows:

(In US$ millions)	As at January 2, 2014
Fair value of investment in Seadrill Partners (a)	3,724
Carrying value of the non-controlling interest in Seadrill Partners	115
Subtotal	3,839
Less:
Carrying value of Seadrill Partners’ net assets	1,260
Goodwill allocated to Seadrill Partners	240
Gain on deconsolidation of Seadrill Partners	2,339

(a)Fair value of investments and continuing involvement with investees

The estimated fair value of the Company's residual interest in Seadrill Partners comprised of the following:

(In US$ millions)	As of January 2, 2014
Common units (i)	671
Subordinated units (ii)	427
Seadrill Member Interest and Incentive Distribution Rights ("IDRs") (iii)	244
Direct ownership interests (iv)	2,382
Total	3,724

F-25

(i) Common units (marketable securities)

As of the deconsolidation date, the Company held 21.5 million common units representing 48.3% of the common units in issue as a class. The Company's holding in the voting common units of Seadrill Partners are accounted for as marketable securities on the basis that during the subordination period the common units have preferential dividend and liquidation rights, and therefore do not represent ‘in-substance common stock’ as defined by US GAAP.

These securities have been recognized on January 2, 2014 at the quoted market price and are re-measured at fair value each reporting period. Any unrealized gains and losses on these securities are recognized directly in equity as a component of other comprehensive income unless an unrealized loss is considered "other-than-temporary", in which case it is transferred to the statement of operations and realized. Dividend income from the common units is recognized in the consolidated statement of operations.

(ii) Subordinated units

As of the deconsolidation date the Company held 16.5 million units representing 100% of the subordinated units. The Company's holding in the subordinated units of Seadrill Partners are accounted for under the equity method on the basis that the subordinated units are considered to be ‘in-substance common stock’. The subordination period will end on the satisfaction of various tests as prescribed in the Operating Agreement of Seadrill Partners, but will not end before September 30, 2017 except upon removal of the Seadrill Member. Upon the expiration of the subordination period, the subordinated units will convert into common units.

The fair value of the subordinated units on January 2, 2014, was determined based on the quoted market price of the listed common units as of the deconsolidation date, but discounted for their non-tradability and subordinated dividend and liquidation rights during the subordination period. Under the equity method the Company recognizes its share of Seadrill Partners’ earnings allocable to the subordinated units, less amortization of the basis difference (see (c) below), through the ‘share in results of associated companies’ line in the consolidated statement of operations. Dividends are recognized as a reduction in investment carrying value.

(iii) Seadrill Member Interest and IDRs

The Seadrill Member Interest (which is a 0% non-economic interest) holds the rights to 100% of the IDRs and is unable to trade these until the end of the subordination period without the approval of a majority of unaffiliated common unitholders. The Seadrill Member Interest and the IDRs in Seadrill Partners are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured.

The fair value of the Company's interest in the Seadrill Member and the attached IDRs as of January 2, 2014 was determined using a Monte Carlo simulation method. The method takes into account the cash distribution waterfall, historical volatility, dividend yield and share price of the common units as of the deconsolidation date. Distributions to the IDRs are recognized in the consolidated statement of operations.

iv) Direct Ownership interests

The Company held the following ownership interests in entities controlled by Seadrill Partners as of the date of deconsolidation:

• 70% ownership in Seadrill Operating LP

Seadrill Operating LP is a limited partnership and is controlled by its General Partner, Seadrill Operating GP LLC, which is wholly owned by Seadrill Partners.

• 49% ownership in Seadrill Capricorn Holdings LLC

Seadrill Capricorn Holdings LLC is a limited liability company. There is only one class of member interest which is deemed to represent voting common stock.

• 39% ownership of Seadrill Deepwater Drillship Ltd. and 39% (indirect) ownership of Seadrill Mobile Units (Nigeria) Ltd.

The Company held a 39% direct ownership interest in Seadrill Deepwater Drillship Ltd. and a 39% indirect ownership of Seadrill Mobile Units Ltd., through its 100% subsidiary, Seadrill UK Ltd. Both entities are limited companies and only have one class of stock, which is deemed to represent voting common stock.

All of the Company's direct ownership interests are accounted for under the equity method as the Company is deemed to have significant influence over these entities through its voting rights and by virtue of Seadrill’s representation on the board of Seadrill Partners.

The fair values of the four ownership interests described above have been determined using a discounted cash-flow (“DCF”) methodology, using discounted cash-flow forecasts.

(b)Gain on retained investment

The entire gain on deconsolidation relates to the re-measurement of the various retained investments described above.

F-26

(c)Accounting for basis differences

The Company’s investments that are accounted for under the equity method (subordinated units and direct ownership interests) were recognized at fair value upon deconsolidation. Basis differences therefore exist between the fair value of the investments and the underlying carrying values of the investees’ net assets at the date of deconsolidation. A valuation exercise has been performed for each separate investment accounted for under the equity method, in order to allocate these basis differences to identifiable assets and liabilities, with any residual amount recognized as goodwill. Differences have been allocated to depreciable or amortizable assets or liabilities and will be amortized over the estimated useful economic life of the underlying assets and liabilities. This amortization is recognized in the consolidated statement of operations in the ‘share in results from associated companies’ line.

The total investments in Seadrill Partners recorded under the equity method of $2,809 million included the Company's share of the basis difference between the total fair value and the total underlying book value of Seadrill Partners' assets at the deconsolidation date are as follows:

(In US$ millions)	Book value	Fair value	Basis Difference	Seadrill's share of basis difference (1)
Drilling units	3,444	5,245	1,801	1,295
Drilling contracts	—	170	170	142
Goodwill	—	1,214	1,214	352
Total	3,444	6,629	3,185	1,789

(1) Seadrill's share of the basis difference relates to both its investment in the subordinated units of Seadrill Partners, and its direct ownership interests in various subsidiaries of Seadrill Partners, all of which investments are accounted for under the equity method. The total basis difference has been assigned based on Seadrill's proportional ownership interest in each investee. In the case of Seadrill's investment in the subordinated units of Seadrill Partners, the proportional allocation to the subordinated units was based on the relative fair values of the various equity interests in Seadrill Partners.

The basis difference has been accounted for as follows:

(i) The basis difference assigned to drilling units is being depreciated over the remaining estimated useful lives of the units.

(ii) The basis difference relating to the drilling contracts is being amortized over the remaining term of the contract.

(iii) The Company will not amortize the difference assigned to goodwill, but will consider any indicators of impairment.

F-27

Disposal of the West Auriga

On March 21, 2014, the Company sold the entities that own and operate the West Auriga (the “Auriga business”)to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners that is 49% owned by the Company. The entities continue to be related parties subsequent to the sale.

The purchase price consisted of an enterprise value of $1.24 billion, less debt assumed of $443 million. The total consideration of $797 million was comprised of cash of $697 million and a discount note receivable of $100 million. The purchase price was subsequently adjusted by a working capital adjustment of $331 million arising from related party balances which remained with the disposed entities for the construction, equipping and mobilization of the West Auriga. The total recognized gain on sale of the Auriga business was $440 million, after taking into account a goodwill allocation of $33 million, which has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income.

(In US$ millions)	March 21, 2014
Enterprise value	1,240
Less: Debt assumed	(443	)
Purchase price	797
Less: Working capital adjustment	(331	)
Adjusted purchase price	466
Cash	697
Discount note issued	100
Less: Working capital payable	(331	)
Fair value of purchase consideration	466
Less: net carrying value of assets and liabilities	7
Less: allocated goodwill to subsidiaries	(33	)
Gain on sale	440

Under the terms of various agreements between Seadrill and Seadrill Partners entered into in connection with the IPO of Seadrill Partners, Seadrill will continue provide management, technical and administrative services to Seadrill Partners and its subsidiaries. See further discussion in Note 31 for these services and agreements.

F-28

Disposal of the West Vela

On November 4, 2014, the Company sold the entities that own and operate the West Vela (the “Vela business”) to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners and 49% owned by the Company. The entities continue to be related parties subsequent to the sale.

The purchase price consisted of an enterprise value of $900 million, less debt assumed of $433 million that was outstanding under the existing facility related to West Vela. The Company is also to receive deferred consideration of $44 thousand per day for the remainder of the West Vela's current contract with BP which runs to November 2020. In addition, the Company will receive a contingent amount of up to $40 thousand per day for the remainder of the BP contract, depending on the actual amount of contract revenue received from BP. The Company's accounting policy is not to recognize contingent consideration before it is considered realizable. The total consideration recognized on disposal of $535 million was comprised of cash of $467 million, and deferred consideration receivable of $74 million. The purchase price was also adjusted by a working capital adjustment of $6 million.

The gain recognized at the time of disposal of the Vela business was $191 million, after taking into account a goodwill allocation of $41 million. The gain has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. During the quarter ended December 31, 2014, the Company also recognized $1 million related to the contingent consideration realized during the period.

(In US$ millions)	November 4, 2014
Enterprise value	900
Deferred consideration receivable	74
Less: Debt assumed	(433	)
Purchase price	541
Less: Working capital adjustment	(6	)
Adjusted purchase price	535
Cash	467
Deferred consideration receivable	74
Less: Working capital payable	(6	)
Fair value of purchase consideration	535
Less: net carrying value of assets and liabilities	(303	)
Less: allocated goodwill to subsidiaries	(41	)
Gain on sale	191

Under the terms of various agreements between Seadrill and Seadrill Partners entered into in connection with the IPO of Seadrill Partners, Seadrill will continue provide management, technical and administrative services to Seadrill Partners and its subsidiaries. See further discussion in Note 31 for these services and agreements.

Disposals in 2013

Sale of majority of tender rig business

On April 30, 2013 we completed the sale of the entities which owned and operated the following tender rigs: T-4, T-7, T-11, T-12, West Alliance, West Berani, West Jaya, West Menang, West Pelaut, West Setia, and the newbuilds T-17, T-18, and West Esperanza. In addition our 49% ownership in Varia Perdana and Tioman Drilling was sold as part of this transaction, which included the following rigs: T-3, T-6, T-9, T-10, and the Teknik Berkat. This is collectively referred to as the “tender rig businesses”.

The agreed upon price was for an enterprise value of $2.9 billion. The enterprise value price is comprised of $1.2 billion in cash, $416 million in new shares in SapuraKencana (at MYR3.18per share), $760 million related to all the debt in the tender rigs business, future estimated non recognized capital commitments of $320 million and deferred consideration of $187 million. The deferred consideration consists of non-contingent consideration of $145 million payable in three years and contingent consideration of $42 million depending on certain specified future performance conditions. Fair value of consideration received of $2.6 billion is the estimated enterprise value reduced by the future non recognized estimated capital commitments, an EBITDA contribution of approximately $75 million and an adjustment for working capital balances and other miscellaneous items and deferred consideration. The fair values recognized for the deferred consideration are $135 million and $nil for the non-

F-29

contingent and contingent consideration respectively. The total recognized gain on this transaction was $1.3 billion, which has been presented in our consolidated statement of operations, under “Gain on sale of tender rig business”. The gain is calculated as follows:

(In US$ millions)	December 31, 2013
Fair value of consideration received	2,600
Carry value of assets and liabilities	1,324
Other related costs to sale	20
Total gain on sale	1,256

In conjunction with the sale agreement, the Company entered into an arrangement to continue to manage and supervise at the Company's risk, the construction of three tender rig newbuilds; T-17, T-18, and West Esperanza. Under this arrangement the Company will incur and be reimbursed for all associated costs in accordance within an agreed upon budget to complete the construction of these rigs, except for the yard installment payments, which are paid by SapuraKencana. These rigs will be delivered in 2013 and 2014. The Company will also provide operational management, administration and support services for the three tender rigs: West Jaya, West Setia, and West Esperanza which are located outside of Asia until the client contract expiry date. The Company will be reimbursed for all costs and expenses incurred and earn an agreed upon margin for these rig management services. Additionally, the Company will provide transition and separation services for certain administrative and IT functions for the tender rig business for a period of one year following the sale in which costs and expenses are reimbursed in addition to earning an agreed upon margin. While we have retained the ownership of the tender rigs T-15 and T-16, also as part of the sale agreement, SapuraKencana have been responsible for the operational management, administration and support services for the tender rig T-15 and T-16 effective from November 1, 2013 subject to similar terms for the rigs we will continue to manage as noted above.

After this transaction, the Company has ownership of 720,329,691 shares in SapuraKencana, a holding of 12.02%, representing a gross value of $1,078 million based on the closing share price of RM4.90 on December 31, 2013. This is currently held as a marketable security on the consolidated balance sheet, see Note 14 to the consolidated financial statements included herein. Additionally as a result of the sale transaction, the Company obtained board representation for SapuraKencana.

We have determined that we have significant continuing involvement in the ongoing tender rig business with SapuraKencana and therefore, we have concluded that the results of the tender rig business sold should not be presented as a discontinued operation in our consolidated statement of operations.

Disposals in 2012

There were no disposals of businesses in the year ended December 31, 2012.

Note 12 – Business Acquisitions

Acquisitions in 2014

There were no business acquisitions in the year ended December 31, 2014.

Acquisitions in 2013

Acquisition of Songa Eclipse

On November 15, 2012 a subsidiary of the Company entered into an agreement with Songa Eclipse Ltd to acquire the ultra-deepwater semi-submersible drilling rig, "Songa Eclipse" for cash consideration of $590 million. The cash consideration also included the acquisition of the drilling contract with Total Offshore Angola that is fixed and ended December 2013 with threeone year options to extend the contract. This acquisition is in line with our strategy of building a modern fleet through selective acquisitions and organic growth giving us an increased exposure to the ultra-deepwater market. A prepayment of $59 million was made before the end of 2012 and the physical delivery and final payment took place on January 3, 2013, which was considered to be the acquisition date. This purchase was considered to constitute a business combination for accounting purposes.

The drilling unit has been valued at fair value separately from the attached drilling contract. Drilling unit valuations are derived from the assessment of a variety of valuation techniques and inputs.  These include assessing comparable market transactions and considering implied earnings multiples, replacement values and current construction costs to arrive an estimated fair value.

The fair value of the attached drilling contract has been assessed separately.  The contract was valued using an 'excess earnings' technique where the terms of the contract are assessed relative to current market conditions. The value of the contract related intangible was determined by means of calculating the incremental or decremental cash flows arising over the life of the contract compared with a contract with terms at prevailing market rates.  An estimate of prevailing market rates was obtained from independent brokers and cross checked against the Company’s own view on prevailing market rates. 

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The unfavorable contract acquired is amortized over the estimated length of the contract, including extension periods, and is presented in the Statement of Operations within other revenues. Subsequent to the acquisition, the drilling rig has been renamed the West Eclipse.

The fair values of net assets acquired were as follows:

(In US$ millions)	January 3, 2013
Fair value of net assets acquired:
Drilling units	698
Unfavorable contract – Other current liabilities	(27	)
Unfavorable contract – Other non-current liabilities	(81	)
Net assets acquired	590
Fair value of consideration	590

In the Consolidated Statement of Operations $194 million of West Eclipse revenue and a net income of $42 million have been included since the acquisition date up until December 31, 2013.

Consolidation of Asia Offshore Drilling Ltd (AOD)

On March 25, 2013, we and the other major shareholder in AOD, Mermaid Maritime Plc, signed a shareholder resolution that changed the board of directors composition in favor of the Company. Based on this change as of March 25, 2013 we obtained control of the board of directors and also own 66.18% of the outstanding shares. As a result of obtaining control, we have consolidated the results and financial position of AOD from this date. This event is considered to constitute a business combination achieved in stages in accordance with US GAAP. This acquisition is in line with our strategy of building a modern fleet through selective acquisitions and organic growth giving us an increased exposure to the high specification jack-up market.

The drilling unit has been valued at fair value separately from the attached drilling contract. Drilling unit valuations are derived from the assessment of a variety of valuation techniques and inputs.  These include assessing comparable market transactions and considering implied earnings multiples, replacement values and current construction costs to arrive at an estimated fair value. For newbuilds we have made an estimation of the remaining contractual payments for newbuilds under construction.

The fair value of the attached drilling contract has been assessed separately.  The contract was valued using an 'excess earnings' technique where the terms of the contract are assessed relative to current market conditions. The value of the contract related intangible was determined by means of calculating the incremental or decremental cash flows arising over the life of the contract compared with a contract with terms at prevailing market rates. The contract was deemed to be at prevailing market rates and as such no intangible asset or liability was recognized.

The estimated fair value of the non-controlling interest and the previously held equity investment have been determined based on the quoted share price for AOD at the time of the acquisition.

F-31

The fair values of net assets acquired, the remeasurement of our previously held equity interest, measurement of the non-controlling interest and associated bargain purchase gain are as follows:

(In US$ millions)	March 25, 2013
Cash and cash equivalents	1
Current assets	1
Drilling units	633
Non-current assets	633
Construction obligation	(316	)
Other current liabilities	(8	)
Current liabilities	(324	)
Non-current liabilities	—
Net assets acquired	310
Net book value of equity investment	185
Fair value of previously held equity investment	195
Gain on re-measurement of previously held equity  investment	10
Fair value of establishment of non-controlling interest	100
Bargain purchase
Fair value of establishment of non-controlling interest	100
Fair value of previously held equity investment	195
Total	295
Net assets acquired	310
Gain on bargain purchase	15

The Company recognized a bargain purchase gain on this acquisition as a result of the market capitalization of AOD being lower than the net assets at the time of acquisition.

In the consolidated statement of operations $75 million of AOD revenue and a net income of $37 million have been included since the acquisition date up until December 31, 2013.

Consolidation of Sevan Drilling ASA

On June 26 and 27, 2013 we entered into arrangements to purchase an additional 120,065,464 shares in Sevan Drilling ASA ("Sevan") at an average price of NOK 3.9311, for a total of $78 million. This transaction was settled on July 2, 2013. The increased interest in Sevan allows us to expand our fleet of deepwater drilling units. Following these additional share acquisitions we obtained control of 50.1% of the total outstanding shares of Sevan through direct ownership and our existing interest in forward share purchase agreements which result in a controlling financial interest under US GAAP. As a result of obtaining a controlling financial interest, we have consolidated the results and financial position of Sevan from July 2, 2013 which has been determined to be the acquisition date. The acquisition is considered to constitute a business combination achieved in stages. 

The drilling unit has been valued at fair value separately from the attached drilling contract. Drilling unit valuations are derived from the assessment of a variety of valuation techniques and inputs.  These include assessing comparable market transactions and considering implied earnings multiples, replacement values and current construction costs to arrive at an estimated fair value.

The fair value of any attached drilling contracts has been assessed separately.  The contracts were valued using an 'excess earnings' technique where the terms of the contract are assessed relative to current market conditions. The values of the contract related intangibles were determined by means of calculating the incremental or decremental cash flows arising over the life of the contracts compared with contracts with terms at prevailing market rates.  An estimate of prevailing market rates was obtained from independent brokers and cross checked against the Company’s own view on prevailing market rates. 

F-32

The unfavorable contracts for Sevan Driller and Sevan Brasil are amortized over the remaining contract periods resulting in approximately $20 million per quarter in total. The unfavorable contract for Sevan Louisiana will start amortizing when the contract commences with approximately $1 million per quarter for the fixed contract period.

The fair value of the non-controlling interest and the previously held equity investment have been determined based on the quoted share price for Sevan at the time of the acquisition. Additionally the Company recognized a gain of $8 million as a result of measuring at fair value its 29.9% equity interest in Sevan Drilling held before obtaining a controlling financial interest. The gain is reported as a separate line "Gain on re-measurement of previously held equity interest" in the consolidated statement of operations.

The fair value of trade and other receivables is $49 million and includes trade receivables with a fair value of $24 million. This amount is also the gross contractual amount for trade receivables. All other assets and liabilities book values have been estimated to equal fair values at the date of acquisition.

The Company recognized a bargain purchase gain of $17 million as a result of this acquisition. The gain is reported as a separate line "Gain on bargain purchase" in the consolidated statement of operations. The bargain purchase gain is a result of the market capitalization of Sevan Drilling being lower than the net assets at the time of the acquisition.

In the consolidated statement of operations $169 million of Sevan revenue and a net income of $31 million have been included since the acquisition date up until December 31, 2013.

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The fair values of net assets acquired including the remeasurement of our previously held equity interest, measurement of the non-controlling interest and associated bargain purchase gain are as follows:

(In US$ millions)	July 2, 2013
Cash and cash equivalents	54
Restricted cash	63
Trade and other receivables	49
Current assets	166
Drilling units	1,246
Newbuildings	1,227
Deferred income tax asset	76
Valuation allowance income tax asset	(76	)
Other non-current assets	1
Non-current assets	2,474
Total assets	2,640
Current portion of long-term debt	(112	)
Trade and other payables	(115	)
Construction obligation	(923	)
Unfavorable contracts	(79	)
Other current liabilities	(26	)
Current liabilities	(1,255	)
Long-term interest bearing debt	(703	)
Unfavorable contracts	(257	)
Other non-current liabilities	(16	)
Non-current liabilities	(976	)
Total liabilities	(2,231	)
Net assets acquired	409
Net book value of equity investment	109
Fair value of previously held equity investment	117
Gain on re-measurement of previously held equity  investment	8
Fair value of establishment of non-controlling interest	197
Bargain purchase
Fair value of consideration transferred	78
Fair value of establishment of non-controlling interest	197
Fair value of previously held equity investment	117
Total	392
Net assets acquired	409
Gain on bargain purchase	17

As a result of our increased ownership interests in Sevan during the quarter, we were required to make a mandatory offer in accordance with the Oslo Stock Exchange rules for the remaining outstanding shares in Sevan for NOK 3.95. This mandatory offer period expired on August 23, 2013. As a result of the offer, we obtained an additional 47,394 shares, bringing our total interest in Sevan to 297,941,358 shares, or 50.11% of the total outstanding shares.

F-34

Acquisitions in 2012

There were no business acquisitions in the year ended December 31, 2012.

Note 13 – Restricted cash

Restricted cash includes:

(In US$ millions)	December 31, 2014	December 31, 2013
CIRR deposits (1)	124	197
Margin calls related to share forward agreements	264	72
Cash pledged as collateral under credit facilities	50	—
Tax withholding deposits	11	49
Total restricted cash	449	318
Long-term restricted cash (related to CIRR deposits and margin calls)	181	150
Short-term restricted cash	268	168

(1) CIRR deposits are cash deposited with commercial banks, which match Commercial Interest Reference Rate ("CIRR") loans from Eksportfinans ASA, the Norwegian export credit agency (See Note 23 to the consolidated financial statements included herein). The deposits are used to make repayments of the CIRR loans.

Note 14 – Marketable securities

Marketable securities held by the Company are equity securities considered to be available-for-sale securities. The following tables summarize the carrying values of the marketable securities in the balance sheet:

	As at December 31, 2014
(In US$ millions)	Original cost	Cumulative unrealized fair value gains/(losses)	Cumulative other than temporary impairments	Carrying value
Petromena	—	—	—	—
Sapura Kencana	373	(48)	—	325
Seadrill Partners - Common Units	821	(395)	—	426
Total	1,194	(443)	—	751

	As at December 31, 2013
(In US$ millions)	Original cost	Cumulative unrealized fair value gains/(losses)	Cumulative other than temporary impairments	Carrying value
Petromena	20	—	(16)	4
Sapura Kencana	539	539	—	1,078
Total	559	539	(16)	1,082

SapuraKencana

During 2012 we owned a 23.6% share in SapuraCrest Petroleum Bhd, which was accounted for using the equity method. On May 17, 2012 SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd merged resulting in dilution of our shareholdings from 23.6% to 11.8% and therefore we recognized a gain of $169 million which is included in our consolidated statement of operations. The investment was consequently transferred from investment in associated companies to an investment accounted for at fair value as an available-for-sale security. Additionally during 2012 we further reduced our ownership share to 6.4% through a sale of shares and therefore we recognized a gain of $84 million which was included in the consolidated statement of operations.

On April 30, 2013, as part of the consideration for the sale of certain tender rigs to SapuraKencana, we received 400.8 million shares in SapuraKencana, increasing our shareholding from 6.4% to 12.0%.

F-35

On September 18, 2013, we entered into a financing arrangement whereby a proportion of our holding of SapuraKencana shares have been pledged as security for the contractual period which extends beyond the next 12 months. Accordingly, these pledged shares have been reclassified as long term marketable securities in the balance sheet. See Note 32 to the Consolidated Financial Statements included herein.

During the twelve months ended December 31, 2014, the Company sold a portion of its investment in SapuraKencana and received proceeds of $297 million, net of transaction costs. As a result of the sale, a gain of $131 million was recognized, including amounts which had been previously recognized in other comprehensive income, which was recognized on an average cost basis. The gain is included in the consolidated statement of operations within "Gain on realization of marketable securities". As a result of this transaction, our ownership interest in SapuraKencana’s outstanding common shares is 8.18%.

As of December 31, 2014 accumulated unrealized loss recognized in other comprehensive income totaled $48 million had been recognized in accumulated other comprehensive income. We have evaluated the near term prospects of SapuraKencana in relation to the severity and duration of the decline in fair value. Based on that evaluation and our ability and intent to hold the investment for a reasonable period of time sufficient for a forecasted recovery of fair value, we do not consider the investment to be other-than-temporarily impaired at December 31, 2014.

Seadrill Partners Common Units

Our holding of the voting common units of Seadrill Partners are accounted for as marketable securities on the basis that during the subordination period the common units have preferential dividend and liquidation rights, and therefore do not represent a ‘in-substance common stock’ interest as defined by US GAAP. These securities were recognized on January 2, 2014 at the quoted market price and are re-measured at fair value each reporting period at a total value of $671 million. For more details on the deconsolidation of Seadrill Partners see Note 11.

In March 2014 and June 2014, the Company purchased additional common units in Seadrill Partners of 1,633,987 at $30.60 per unit and 3,183,700 at $31.41 per unit respectively, totaling $150 million. Our ownership interest in Seadrill Partners' common units is 28.6% as of December 31, 2014.

As of December 31, 2014 an unrealized loss of $395 million had been recognized in accumulated other comprehensive income. We have evaluated the near term prospects of the Seadrill Partners in relation to the severity and duration of the decline in fair value. Seadrill Partners continues to make significant distributions to its common unitholders. Its drilling units are largely on long term contracts and so it has little exposure to short term movements in market conditions or dayrates. Based on that evaluation and our ability and intent to hold the investment for a reasonable period of time sufficient for a forecasted recovery of fair value, we do not consider the investment to be other-than-temporarily impaired at December 31, 2014.

Petromena

In February 2014 we received the final payment related to our investment in the 81.1%of the partially redeemed Petromena NOK 2,000 million bond (“Petromena”) of $10 million. The residual $6 millionafter the investment was reduced has been recorded as a gain in "other financial items" in the consolidated statement of operations.

The following table summarizes the gross realized gains and losses from purchases and sales of marketable securities during the years presented:

	Year ended December 31, 2014
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Petromena	6	—	—	—	10	—	—
Sapura Kencana	—	—	—	(456)	297	—	131
Seadrill Partners - Common Units	—	—	—	(395)	—	821	—

	Year ended December 31, 2013
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Petromena	—	—	—	—	—	—	—
Sapura Kencana	—	—	333	—	—	416	—

F-36

	Year ended December 31, 2012
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Other	—	(19)	—	—	—	—	(1)
Sapura Kencana	—	—	205	—	197	237	(84)

Marketable securities in SapuraKencana and Seadrill Partners with an aggregate fair value of $751 million are in an unrealized loss position.

The total cumulative unrealized holding losses as of December 31, 2014 amounted to $443 million (December 31, 2013: $539 million accumulated gains). The loss in 2014 represents the unrealized losses on our Seadrill Partners common units and SapuraKencana investment recorded in accumulated other comprehensive income in the balance sheet. These securities have all been in an unrealized loss position for less than 12 months.

Note 15 – Accounts receivable

Accounts receivable are presented net of allowances for doubtful accounts. The allowance for doubtful accounts receivables at December 31, 2014 was $16 million (2013: $27 million).

Accounts receivable is also presented net of customer receivables associated with Assets held for sale. The balance of accounts receivable classified as assets held for sale at December 31, 2014 is $78 million (2013: $0 million). Please refer to Note 37 – Assets held for sale.

The Company did not recognize any bad debt expense in 2014, 2013, or 2012, but has instead reduced contract revenue for the disputed amounts.

Note 16 – Other current assets

Other current assets include:

(In US$ millions)	December 31, 2014	December 31, 2013
Prepaid expenses	30	43
Deferred charges	42	38
Accrued revenue	—	43
Unrealized gains on derivative contracts	5	9
Reimbursable amounts due from customers	79	59
Deferred mobilization cost	7	57
Deferred tax asset	9	—
Taxes receivable	29	28
Other current assets	72	86
Total other current assets	273	363

F-37

Note 17 – Investment in associated companies

The Company has the following investments that are or have been recorded using the equity method for the periods presented in these financial statements:

	December 31, 2014		December 31, 2013		December 31, 2012
Varia Perdana Sdn Bhd ("Varia Perdana")	—	%	—	%	49.0	%
Tioman Drilling Company Sdn Bhd ("Tioman Drilling")	—	%	—	%	49.0	%
Archer	39.9	%	39.9	%	39.9	%
Asia Offshore Drilling Ltd ("AOD")	(1)		(1)		66.2	%
Sevan Drilling ASA ("Sevan Drilling")	(1)		(1)		28.5	%
Seabras Sapura Participacoes SA ("Seabras Sapura Participacoes")	50.0	%	50.0	%	50.0	%
Seabras Sapura Holding GmbH ("Seabras Sapura Holdco")	50.0	%	50.0	%	50.0	%
Itaunas Drilling B.V. ("Itaunas Drilling")	30.0	%	30.0	%	30.0	%
Camburi Drilling B.V. ("Camburi Drilling")	30.0	%	30.0	%	30.0	%
Sahy Drilling B.V. ("Sahy Drilling")	30.0	%	30.0	%	30.0	%
Seadrill Partners ("SDLP")	(2)		(1)		(1)

(1) During these periods the relevant investment was not accounted for under the equity method

(2) As of the deconsolidation date of Seadrill Partners on January 2, 2014, we have recognized our ownership interests in Seadrill Partners and direct ownership interests in Seadrill Partners subsidiaries, at fair value at the date of deconsolidation. Refer to Seadrill Partners paragraph below for additional information.

Varia Perdana and Tioman Drilling

Varia Perdana is a company incorporated in Malaysia, which operates a fleet of tender rigs. It was 51% owned by SapuraKencana and 49% owned by the Company. The Company sold its share to SapuraKencana in April 2013 as part of the disposal of majority of the tender rigs to SapuraKencana, refer to Note 11 of the consolidated financial statements.

Tioman Drilling is a company incorporated in Malaysia, which provides well services. It was 51% owned by SapuraKencana and 49% owned by the Company. The Company sold its share to SapuraKencana in April 2013 as part of the disposal of majority of the tender rigs to SapuraKencana, see Note 11 to the consolidated financial statements included herein.

In the 12 months ended December 31, 2013, prior to disposal the Company received dividends of $15 million relating to Varia Perdana and Tioman Drilling. (2012: $18 million).

Archer

Archer is a company listed on the Oslo Stock Exchange and provides drilling and well services. Prior to February 2011, Archer was a consolidated subsidiary. In February 2011, we deconsolidated Archer and as a result, Archer is accounted for as an associated company. Refer to Note 11 of the consolidated financial statements for further information.

On February 8, 2013, we were allocated 82,003,000 shares in the private placement of Archer, amounting to a value of $98 million. In addition, as consideration for acting as an underwriter to the placement, the Company received another 2,811,793 shares, amounting to a value of $3 million. The consideration for the shares was settled against the existing $55 million loan to Archer, with the remainder of the consideration funded by a $43 million loan from Archer, which was repaid on February 27, 2013. Refer to Note 31 of the consolidated financial statements. As of December 31, 2014 we held 39.9% of the outstanding shares of Archer.

In conjunction with the private placement of Archer on February 8, 2013 the Company also provided a guarantee to Archer on its payment obligations on a certain financing arrangements. The maximum liability to the Company is limited to $100 million with a guarantee fee of 1.25%.On July 31, 2013, the Company provided Archer with an additional guarantee of $100 million, which was provided as part of Archer’s divestiture of a division, to support Archer's existing bank facilities. During 2014, the guarantees above were increased to a total of $250 million. The guarantee fee is 1.25% per annum.

On December 31, 2013, the Company provided Archer Topaz Limited, a wholly owned subsidiary of Archer, with a guarantee of a maximum of €56 million, to support Archer's credit facilities. The guarantee fee is 1.25% per annum.

On February 5, 2014, the Company provided Archer with a guarantee of a maximum of GBP 25.9 million, to support Archer's leasing obligations of a warehouse.

On February 12, 2014, the Company provided Archer with a guarantee of $120 million enabling Archer to finance the purchase of land rigs in Argentina.

F-38

On July 14, 2014, we provided Archer Norge AS, a wholly owned subsidiary of Archer, with a guarantee of a maximum of $20 million, to support Archer's guarantee facility. The guarantee fee is 1.25% per annum.

These guarantee fees are included in other financial items in our consolidated statement of operations.

AOD

AOD is a company incorporated in Bermuda that owns and operates three high specification jack up drilling rigs. In addition to the Company's investment, the Company was responsible for the construction supervision, project and commercial management of AOD's drilling rigs.

During 2012 after a series of share acquisitions, the Company acquired additional shares in AOD, and the Company's ownership in AOD increased from 33.8% to 66.2%. Although the Company owned a 66.2% interest in AOD, the Company did not have majority control over AOD, and therefore, AOD continued to be an equity method investment of the Company as of December 31, 2012.

On March 12, 2013 we participated in Asia Offshore Drilling’s private placement and were allocated 13.2 million shares worth $67 million. This was settled by converting debt into shares.

In March 2013 a shareholder resolution changed the board of directors composition of AOD in which the Company gained control of a majority of the board of directors, and as a result, AOD became a consolidated subsidiary of the Company from March 25, 2013, and AOD was derecognized as an associated company. Refer to Note 12 of the consolidated financial statements.

Sevan Drilling

Sevan Drilling is a Norwegian public limited liability company (ASA), and is listed on the Oslo Stock Exchange specializing in the ultra deepwater drilling segment.

On February 7, 2013, the Company was allocated and subscribed for 81,828,500 additional shares in Sevan Drilling at a subscription price of NOK $3.95 as part of a private placement. This increased our ownership to approximately 29.9%

On June 26 and 27, 2013 the Company entered into agreements with a commercial bank to acquire a total of 120,065,464 additional shares in Sevan Drilling at an average price of NOK 3.9311. These agreements were settled on July 2, 2013. After settlement on July 2, 2013 of these additional share purchases, the Company had direct ownership in shares or ownership interests through existing share forward purchase agreements in 50.1% of the total outstanding shares in Sevan Drilling. As a result of the increased ownership, the Company obtained a controlling financial interest and Sevan Drilling became a consolidated subsidiary from July 2, 2013 and Sevan Drilling was derecognized as an associated company. Refer to Note 12 of the consolidated financial statements.

Seabras Sapura Participacoes and Seabras Sapura Holdco

Seabras Sapura Participacoes SA is a company incorporated in Brazil, which is currently constructing one pipe-laying vessel. It is 50% owned by TL Offshore Sdn. Bhd., a subsidiary of SapuraKencana, and 50% owned by the Company.

The Company has provided yard guarantees in relation to the Seabras Sapura Participacoes pipe-laying vessel of EUR47 million, which have been provided on a 50:50 basis with TL Offshore. The guarantee continues to be in place until the yard obligations have been fulfilled, which is expected to be in 2015.

Seabras Sapura Holdco Ltd is a company incorporated in Bermuda, which is currently constructing five pipe-laying vessels. It is 50% owned by TL Offshore Sdn. Bhd. and 50% owned by the Company. During 2014 Seabras Sapura Holdco Ltd was transferred into a new company Seabras Sapura Holding GmbH (a company incorporated in Austria).

The Company has provided yard guarantees in relation to Seabras Sapura Holdco pipe-laying vessels totaling $375 million (2013: $625 million), which have been provided on a 50:50 basis with TL Offshore. The guarantees continue to be in place until the yard obligations have been fulfilled, which is expected to be during 2016 for the final three vessels.

Itaunas Drilling, Camburi Drilling, and Sahy Drilling

Itaunas Drilling BV is a company incorporated in Holland, which is currently constructing a drillship. It is 70% owned by Sete International GmbH and 30% owned by the Company.

Camburi Drilling BV is a company incorporated in Holland, which is currently constructing a drillship. It is 70% owned by Sete International GmbH and 30% owned by the Company.

Sahy Drilling BV is a company incorporated in Holland, which is currently constructing a drillship. It is 70% owned by Sete International GmbH and 30% owned by the Company.

F-39

Seadrill Partners

As a result of the deconsolidation of Seadrill Partners on January 2, 2014, the Company has derecognized the assets and liabilities of Seadrill Partners and its subsidiaries, and has recognized its ownership interests in Seadrill Partners and its direct ownership interests in Seadrill Partners subsidiaries, Seadrill Capricorn Holdings LLC, Seadrill Operating LP, Seadrill Deepwater Drillship Ltd and its indirect ownership of Seadrill Mobile Units through another wholly owned subsidiary, at fair value at the date of deconsolidation. For further discussion please refer to Note 11 of the consolidated financial statements.

Seadrill’s investment in Seadrill Partners accounted for under the equity method is comprised of the following:

Subordinated units - the Company's holding in the subordinated units of Seadrill Partners are accounted for under the equity method on the basis that the subordinated units are considered to be ‘in-substance common stock’. The subordination period will end on the satisfaction of various tests as prescribed in the Operating Agreement of Seadrill Partners, but will not end before September 30, 2017 except upon removal of the Seadrill Member. Upon the expiration of the subordination period, the subordinated units will convert into common units.

Direct Ownership interests - Seadrill holds ownership interests in the following entities controlled by Seadrill Partners as at December 31, 2014:

i. 42% in Seadrill Operating LP: Seadrill Operating LP is a limited partnership and is controlled by its General Partner, Seadrill Operating GP LLC, which is wholly owned by Seadrill Partners.

ii. 49% Seadrill Capricorn Holdings LLC: Seadrill Capricorn Holdings LLC is a limited liability company. There is only one class of member interest which is deemed to represent voting common stock.

iii. 39% in Seadrill Deepwater Drillship Ltd and 29% indirect interest in Seadrill Mobile Units (Nigeria) Ltd.: Both entities are limited companies and only have one class of stock, which is deemed to represent voting common stock.

All of the Company's direct ownership interests are accounted for under the equity method as the Company is deemed to have significant influence over these entities through its voting rights and by virtue of Seadrill’s representation on the board of Seadrill Partners.

Sale of 28% limited partner interest in Seadrill Operating LP

On July 21, 2014, the Company sold a 28% limited partner interest in Seadrill Operating LP, a subsidiary of Seadrill Partners, to Seadrill Partners for cash consideration of $373 million. This resulted in a loss on sale of investment of $88 million, which has been recognized within "share in results from associated companies" in the Company’s consolidated statement of operations. The Company will continue to account for its remaining 42% limited partner interest in Seadrill Operating LP under the equity method.

Sale of investment in Seadrill Mobile Units (Nigeria) Limited

On December 30, 2014 the Company sold a 10% equity interest in Seadrill Mobile Units (Nigeria) Limited, for cash consideration of $7.2 million. This resulted in a gain on sale of investment of $0.4 million, which has been recognized within "share in results from associated companies" in the Company’s consolidated statement of operations. The Company will continue to account for its remaining 29% equity interest in Seadrill Mobile Units (Nigeria) Limited under the equity method.

Summarized balance sheet information of the Company's equity method investees is as follows:

	As of December 31, 2014
(In US$ millions)	Current assets	Non-current assets	Current liabilities	Non-current liabilities
Archer	633	1,171	441	817
Seabras Sapura Participacoes	17	194	14	149
Seabras Sapura Holding	104	690	52	730
Itaunas Drilling	—	187	137	42
Camburi Drilling	1	336	133	183
Sahy Drilling	—	173	109	53
Seadrill Partners	762	5,585	686	3,617
Total	1,517	8,336	1,572	5,591

F-40

	December 31, 2013
(In US$ millions)	Current assets	Non-current assets	Current liabilities	Non-current liabilities
Archer	594	1,201	476	684
Seabras Sapura Participacoes	12	129	3	112
Seabras Sapura Holding	—	219	—	219
Itaunas Drilling	1	161	44	108
Camburi Drilling	1	199	95	91
Sahy Drilling	1	155	40	103
Total	609	2,064	658	1,317

Summarized statement of operations information for the Company's equity method investees is as follows:

	Year ended December 31, 2014
(In US$ millions)	Operating revenues	Net operating income		Net income
Archer	2,254	26		(96	)
Seabras Sapura Participacoes	29	(6	)	(6	)
Seabras Sapura Holding	39	24		13
Itaunas Drilling	—	—		—
Camburi Drilling	—	—		—
Sahy Drilling	—	—		—
Seadrill Partners	1,343	615		315
Total	3,665	659		226

	Year ended December 31, 2013
(In US$ millions)	Operating revenues	Net operating income		Net income
Archer	2,041	(438	)	(519	)
Seabras Sapura Participacoes	—	(2	)	(1	)
Seabras Sapura Holding	—	—		(1	)
Itaunas Drilling	—	—		—
Camburi Drilling	—	—		—
Sahy Drilling	—	—		—
Total	2,041	(440	)	(521	)

	Year ended December 31, 2012
(In US$ millions)	Operating revenues	Net operating income		Net income
Varia Perdana	106	85		83
Tioman	157	12		6
Archer	2,191	(322	)	(375	)
AOD	—	(2	)	(2	)
Sevan Drilling	173	11		(12	)
Seabras Sapura Participacoes	—	—		(1	)
Sahy Drilling	—	(1	)	(1	)
Total	2,627	(217	)	(302	)

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At the year-end the book values of the Company's investment in associated companies are as follows:

(In US$ millions)	December 31, 2014	December 31, 2013
Archer	—	8
Seabras Sapura Participacoes	21	12
Seabras Sapura Holding	117	109
Itaunas Drilling	3	3
Camburi Drilling	6	4
Sahy Drilling	4	4
Seadrill Partners - Total direct ownership interests	2,091	—
Seadrill Partners - Subordinated Units	412	—
Seadrill Partners - Seadrill Member Interest and IDRs *	244	—
Total	2,898	140

* The Seadrill Partners - Seadrill Member Interest and IDR's are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured. For more details on the deconsolidation of Seadrill Partners see Note 11.

The quoted market value as at December 31, 2014 for Archer was $125 million. Quoted market prices for all our other equity investments are not available because, other than Seadrill Partners, these companies are not publicly traded. Seadrill Partners subordinated units are not tradable and hence have no quoted market price.

At the year end the share of recorded equity in the statutory accounts of the Company's associated companies were as follows:

(In US$ millions)	December 31, 2014	December 31, 2013	December 31, 2012
Tioman	—	—	10
Varia Perdana	—	—	105
Archer	218	253	370
AOD	—	—	110
Sevan Drilling	—	—	189
Seabras Sapura Participacoes	24	13	22
Seabras Sapura Holding	6	—	—
Itaunas Drilling	3	3	3
Camburi Drilling	6	4	4
Sahy Drilling	4	4	3
Seadrill Partners *	N/A	—	—
Total	261	277	816

* The Company's share of recorded equity for which it accounts under the equity method in the statutory accounts of Seadrill Partners consists of the non-controlling interest as well as a proportionate amount of equity before non-controlling interests based on the subordinated units which the company owns in Seadrill Partners. The equity attributable to non-controlling interest in Seadrill Partners as at December 31, 2014 of $1,116 million is all attributable to Seadrill's direct ownership interests in controlled subsidiaries of Seadrill Partners. Seadrill's holding in the subordinated units represents 18.0% of the limited partner interests in Seadrill Partners. Total equity before non-controlling interests within Seadrill Partners as at December 31, 2014 was $928 million.

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Note 18 – Newbuildings

(In US$ millions)	December 31, 2014		December 31, 2013
Opening balance	3,419		1,882
Additions	2,433		4,930
Capitalized interest and loan related costs	70		95
Re-classified as Drilling Units	(3,892	)	(3,335	)
Disposal of tender rigs	—		(153	)
Closing balance	2,030		3,419

Note 19 – Drilling units

(In US$ millions)	December 31, 2014		December 31, 2013
Cost	19,101		19,967
Accumulated depreciation	(2,991	)	(2,774	)
Re-classified as assets held for sale	(965	)	—
Net book value	15,145		17,193

Depreciation and amortization expense was $684 million, $703 million and $608 million for the years ended December 31, 2014, 2013 and 2012, respectively.

As of the deconsolidation date of Seadrill Partners on January 2, 2014, we have deconsolidated the entities that own and operate the following drilling units: West Sirius, West Aquarius, West Capella, West Capricorn, West Leo, T-15, T-16 and West Vencedor. For more details on the deconsolidation of Seadrill Partners see Note 11.

On March 21, 2014 we completed the sale of the entities that own and operate the West Auriga to Seadrill Partners. For more details on the sale of West Auriga see Note 11.

On November 4, 2014 we completed the sale of the entities that own and operate the West Vela to Seadrill Partners. For more details on the sale of West Vela see Note 11.

During the year ended December 31, 2014, a subsidiary of the Company entered into a joint venture agreement to form SeaMex Ltd with an investment fund controlled by Fintech Advisory Inc. (Fintech), for the purpose of owning and managing certain jack-up drilling units located in Mexico under contract with Pemex and to pursue other opportunities in Mexico and other Latin American countries. The West Oberon, West Intrepid, West Defender, West Courageous and West Titania jack-up drilling rigs will be included in the joint venture. The joint venture will become effective upon meeting certain closing conditions. On the completion of the transaction, the Company will no longer control the entities that own and operate these drilling units, and as such the Company will deconsolidate these entities and subsequently recognize its investment in the joint venture. Accordingly, the assets and liabilities held within the Company’s consolidated balance sheet that are related to the disposal group have been reclassified as held for sale and depreciation has ceased for these related assets. We have not presented this disposal group as discontinued operations in our statement of operations as we will continue to hold significant influence over SeaMex Ltd. For more details on assets held for sale see Note 37.

Note 20 – Equipment

Equipment consists of office equipment, furniture and fittings.

(In US$ millions)	December 31, 2014		December 31, 2013
Cost	73		79
Accumulated depreciation	(27	)	(30	)
Net book value	46		49

Depreciation and amortization expense was $9 million, $8 million and $7 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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Note 21 – Goodwill and other intangible assets and liabilities

Goodwill

The goodwill balance and changes in the carrying amount is as follows:

(In US$ millions)	December 31, 2014		December 31, 2013
Net book balance at January 1	1,200		1,320
Disposals and deconsolidations	(315	)	(120	)
Impairment of goodwill	(232	)	—
Re-classified as assets held for sale	(49	)	—
Net book balance of December 31	604		1,200

Of the $315 million derecognized through disposals and deconsolidations, $286 million related to the Floater segment and $29 million related to the tender rig segment (2013: $120 million related to the tender rig segment). The $49 million reclassified as assets held for sale relates to the Jack-up segment.

For more details on the deconsolidation of Seadrill Partners and the disposal of subsidiaries see Note 11, and details on Assets held for sale see Note 37.

Period ended December 31, 2014

The Company performed its annual goodwill impairment test as of December 31, 2014 for both its reporting units; Floaters and Jack-ups. The Company elected to bypass the qualitative assessment given the recent decline in market conditions in the offshore drilling industry. The annual impairment test resulted in the Company recognizing an impairment loss of $232 million relating to its Jack-up reporting unit. The impairment loss relating to the Jack-up reporting unit is primarily due to declining day rates and future market expectations for day rates in the sector. These have been trending lower as a result of the recent decline in the price of oil, which has impacted the spending plans of our customers. No impairment was recognized relating to the Floater reporting unit as the fair value estimate substantially exceeded carrying value.

The impairment charge relating to the Jack-up reporting unit was allocated between the parent and non-controlling interests based upon the non-controlling interests share in each drilling unit within the Jack-up segment. The overall charge to the reporting unit was first allocated to each drilling unit based upon the relative fair values of those drilling units. The non-controlling interest in each drilling unit was then applied to the allocated charge in order to determine the portion attributable to non-controlling interests. The total impairment allocated to the non-controlling interest was $39 million.

The estimated fair values of the Floater and Jack-up reporting units were derived using an income approach which estimated discounted future cash flows for each reporting unit. Our estimated future free cash flows are primarily based on our expectations around day rates, drilling unit utilization, operating costs, capital and long term maintenance expenditures and applicable tax rates. The cash flows are estimated over the remaining useful economic lives of the assets but no longer than 30 years in total, and discounted using an estimated market participant weighted average cost of capital of 9.5%.

The assumptions used in the Company’s estimated cash flows were derived from unobservable inputs and are based on management’s judgments and assumptions available at the time of performing the impairment test.

As of December 31, 2014 the aggregated estimated fair value of the Company’s reporting units exceeded its market capitalization. The Company evaluated the difference by reviewing the implied control premium as compared to other market transactions within our industry and considering other benchmark data and analysis prepared by offshore drilling industry analysts. The Company deems the implied control premium to be reasonable in the context of the data considered.

For the periods ended 2013 and 2012

For the years ended December 31, 2013 and 2012 the Company performed a qualitative assessment of its reporting units which determined that it was more likely than not that the fair value of its Floaters and Jack-up reporting units were not less than their carrying amount. As a result it was not considered necessary to perform the two step goodwill impairment test and no impairment losses were recognized.

Intangibles

Intangible assets/liabilities relate to favorable/unfavorable contracts which are recorded at fair value at the date of acquisition. The amounts recognized represent the net present value of the existing contracts at the time of acquisition compared to the current market rates at the time of acquisition, discounted at the weighted average cost of capital. The estimated unfavorable contract values have been recognized and amortized over the terms of the contracts, ranging from two to five years. The gross carrying amounts and accumulated amortization were as follows:

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	December 31, 2014					December 31, 2013
	Gross carrying amount	Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Favorable contracts - intangible assets
Balance at beginning of period	—	—		—		51		(49	)	2
Amortization of favorable contracts	—	—		—		—		(2	)	(2	)
Derecognition of fully amortized contracts	—	—		—		(51	)	51		—
Balance at end of period	—	—		—		—		—		—
Unfavorable contracts - intangible liabilities
Balance at beginning of period	444	(67	)	377		—		—		—
Additions	—	—		—		444		—		444
Amortization of unfavorable contracts	—	(130	)	(130	)	—		(67	)	(67	)
Balance at end of period	444	(197	)	247		444		(67	)	377

We amortize the favorable and unfavorable contracts as revenue or reduction to revenue over the contract term. This is recognized within other revenues in the consolidated statement of operations. The table below shows the amounts relating to favorable and unfavorable contracts that is expected to be amortized over the next five years:

	Year ended December 31
(In US$ millions)	2015	2016	2017	2018	2019	Total
Amortization of unfavorable contracts	116	65	43	23	—	247

Note 22 – Other non-current assets

Other non-current assets consist of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Deferred charges	103	114
Deferred tax effect of internal transfer of assets	102	131
Deferred mobilization costs	47	65
Deferred consideration (1)	154	142
Accrued revenue	—	155
Other	8	5
Total other non-current assets	414	612

(1) The Deferred consideration is related to the sale of the tender rig business. See Note 11 to the consolidated financial statements included herein.

Deferred charges represent debt arrangement fees that are capitalized and amortized into interest expense over the life of the debt instrument.

(In US$ millions)	December 31, 2014		December 31, 2013
Debt arrangement fees	385		338
Accumulated amortization	(240	)	(186	)
Total book value	145		152
Less: Short-term amount	(42	)	(38	)
Long-term amount	103		114
Amortization for the period	54		43

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Note 23 – Long-term debt

As of December 31, 2014 and 2013, the Company had the following debt:

(In US$ millions)	December 31, 2014		December 31, 2013
Credit facilities:
$1,500 facility	—		706
$1,200 facility	—		733
$700 facility	420		490
$1,121 facility	—		72
$2,000 facility (NADL)	1,367		1,503
$400 facility	280		320
$550 facility	—		440
$420 facility	351		—
$440 facility	258		293
$450 facility	416		450
$1,450 facility	433		1,390
$360 facility (Asia Offshore Drilling)	309		345
$300 facility	210		234
$1,750 facility (Sevan Drilling)	1,225		1,400
$150 facility	150		150
$450 facility (2013)	397		450
$1,500 facility (2014)	1,469		—
$1,350 facility	1,317		—
Total credit facilities	8,602		8,976
Ship Finance Loans
$420 facility (SFL Polaris)	—		387
$375 facility (SFL Hercules)	284		362
$390 facility (SFL Deepwater)	303		383
$475 facility (SFL Linus)	451		—
Total Ship Finance Loans	1,038		1,132
Unsecured bonds and convertible bonds
Total unsecured bonds	2,856		2,584
Convertible bonds	—		577
Total unsecured bonds and convertible bonds	2,856		3,161
Other credit facilities with corresponding restricted cash deposits	124		197
Total debt	12,620		13,466
Less: current portion	(2,309	)	(1,566	)
Long-term portion	10,311		11,900

The outstanding debt as of December 31, 2014 is repayable as follows:

(In US$ millions)	December 31, 2014
2015	2,309
2016	1,458
2017	2,869
2018	2,269
2019	2,725
2020 and thereafter	990
Total debt	12,620

F-46

Credit facilities

$1,500 million senior secured credit facility

In June 2009, the Company entered into a $1,500 million senior secured loan facility with a syndicate of banks and export credit facility agencies, to partly fund the acquisition of the West Capella, West Sirius, West Ariel and West Aquarius, which were pledged as security. The facility bore interest at LIBOR plus 3.31% per annum and was repayable over a term of five years. The outstanding balance at December 31, 2013 was $706 million.

In February 2014, Seadrill Partners entered into an independently financed term loan and the proceeds received from Seadrill Partners new term loan were used to repay the third party lenders of this facility and settle the related party back to back loan financing between the Company and Seadrill Partners. See Note 31 for further details on related party transactions.

$1,200 facility, $1,121 facility

In June 2010, the Company entered into a $1,200 million senior secured facility with a group of commercial lending institutions and export credit agencies. The ultra-deepwater semi-submersible drilling rig West Orion, the ultra-deepwater drillship West Gemini and the tender rig West Vencedor were pledged as security. The facility bore interest at LIBOR plus 2.25% per annum and was repayable over a term of five years. The outstanding balance as of December 31, 2013, was $733 million.

In January 2011, the Company entered into a $1,121 million senior secured credit facility with a bank to fund the acquisition of two ultra-deepwater semi-submersible rigs, West Leo and West Pegasus, which both were pledged as security. The facility bore interest at LIBOR plus a margin between 2.25% and 3.00% per annum, and was repayable over a term of seven years. The facility was fully drawn as of December 31, 2013 with a balance of $912 million.

In December 2013, the $1,121 million facility with Lloyds Bank TSB as agent was transferred to DNB Bank ASA as new agent and lender, and to Metrogas Holdings Inc, or Metrogas, a related party, as new lender. There were no other changes to the facility. As Metrogas is a related party of the Company, the portion of the facility related to Metrogas of $840 million was accordingly reclassified as debt due to related parties on the consolidated balance sheet, leaving the remaining $72 million in long-term debt. See Note 31 to the consolidated financial statements included herein.

In February 2014, Seadrill Partners entered into an independently financed senior secured credit facility. The proceeds received by Seadrill Partners were used to settle the related party back to back loan financing between the Company and Seadrill Partners for the West Leo portion and repay the lenders of the $1,121 million facility.

In August 2014, the remainder of the $1,200 million facility and $1,121 million facility were repaid in full, after Seadrill Partners entered into an amended senior secured credit facility. The Company recognized a $16 milliongain on debt extinguishment within net loss on debt extinguishment in the Company's consolidated statement of operations relating to the $1,121 million facility. As one of the lenders of the $1,121 million facility was Metrogas Holdings Inc, a related party, this transaction has been disclosed within Note 31 - Related party transactions.

$700 million senior secured term loan

In October 2010, the Company entered into a $700 million senior secured loan facility with a syndicate of banks to partly fund the acquisition of seven jack-up drilling rigs, which have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $1,074 million. The facility bears interest at LIBOR plus 2.50% per annum and is repayable over a term of five years. As of December 31, 2014, the outstanding balance was $420 million, as compared to $490 million in 2013. At maturity a balloon payment of $350 million is due in October 2015. We do not have any undrawn capacity on this facility as of December 31, 2014. Subsequent to the period end, on March 6, 2015, the tranches relating to the West Courageous, West Defender, and the West Intrepid were repaid, totaling $170 million.

$2,000 million senior secured credit facility

In April 2011, NADL our majority owned subsidiary, entered into a $2,000 million senior secured credit facility with a syndicate of banks to partly fund the acquisition of six drilling units from Seadrill, which have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $2,343 million. The facility has a six year term and bears interest at LIBOR plus 2.00% per annum. As of December 31, 2014, the outstanding balance was $1,367 million, as compared to $1,503 million in 2013. At maturity a balloon payment of $950 million is due. We had $50 million undrawn under this facility as of December 31, 2014, which bears a commitment fee of 40% of the margin.

$400 million senior secured credit facility

In December 2011, the Company entered into a $400 million senior secured credit facility with a syndicate of banks. The jack-up rigs West Cressida, West Callisto, West Leda and West Triton have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $694 million. The facility has a five year term and bears interest of LIBOR plus 2.50% per annum. As of December 31, 2014, the outstanding balance was $280 million, as compared to $320 million in 2013. At maturity a balloon payment of $200 million is due. We do not have any undrawn capacity on this facility as December 31, 2014.

F-47

$420 million senior secured credit facility

In December 2012, SFL West Polaris Limited, formerly a consolidated VIE, entered into a $420 million term loan facility with a syndicate of banks to refinance the existing $700 million secured term loan facility. The new facility had a term of five years and bore interest of LIBOR plus a margin of 3.00%. On February 28, 2014 the margin on the facility was reduced from 3.00% to 2.25%.

On December 31, 2014, the Company purchased SFL West Polaris Limited from Ship Finance and accordingly we have represented the facility within "Credit facilities". Please refer to note 35 for more information. The drillship West Polaris has been pledged as security. The net book value at December 31, 2014 of the unit pledged as security is $564 million. As at December 31, 2014, the outstanding balance under the facility was $351 million, compared to $387 millionas atDecember 31, 2013.

$550 million senior secured term loan and revolving credit facility

In December 2011, the Company entered into a $550 million secured credit facility with a syndicate of banks to partly fund the delivery of the ultra-deepwater semi-submersible drilling unit West Capricorn, which was pledged as security. The facility had a five year term and bore interest at LIBOR plus 1.50% to 2.25% per annum. As of December 31, 2013, the outstanding balance was $440 million. At maturity a balloon payment of $275 million was due.

In June 2014, Seadrill Partners entered into an amended senior secured credit facility, with the proceeds used by Seadrill Partners to repay the third party lenders of this facility and settle the related party back to back loan rig financing agreement between the Company and Seadrill Partners. See Note 31 for further details on related party transactions.

$440 million secured credit facility

In December 2012, the Company entered into a $440 million secured credit facility with a syndicate of banks to fund the delivery of two tender rigs and two jack-up drilling rigs. As of December 31, 2014 we have drawn $320 million on the facility and the T-15, T-16, and West Telesto have been pledged as security, while the tranche for the West Oberon was cancelled due to other funding opportunities for this rig. The tender rigs T-15 and T-16 were sold to Seadrill Partners during 2013, and subsequently the Company entered into a back to back rig financing agreements with Seadrill Partners for the corresponding portions of the secured credit facility for $101 million and $98 million respectively. Under the terms of the secured credit facility agreements for the T-15 and T-16, certain subsidiaries of the Company and Seadrill Partners are jointly and severally liable for their own debt and obligations under the relevant facility and the debt and obligations of other borrowers who are also party to such agreements. These obligations are continuing and extend to amounts payable by any borrower under the relevant agreement. See Note 31 for further details on related party transactions. The total net book values as at December 31, 2014 of all the units pledged as security was $470 million. The total net book value of the T-15 and T-16, which the Company no longer owns, was$261 million as at December 31, 2014. The facility bears interest at LIBOR plus 3.25% per annum and is repayable over a term of 5 years. The outstanding balance as at December 31, 2014 was $258 million, as compared with $293 million in 2013. At maturity a balloon payment of $166 million is due. We do not have any undrawn capacity on this facility as of December 31, 2014.

$450 million senior secured credit facility

In December 2012, we entered into a $450 million senior secured credit facility with a syndicate of banks, and was drawn down on January 3, 2013. The West Eclipse semi-submersible rig was pledged as security, which has a net book value of $657 million as at December 31, 2014. The facility was scheduled to mature within one year and bore interest of LIBOR plus 3.00%. On December 20, 2013, we amended this facility for an additional one year, with an amended interest rate of LIBOR plus 2.00%. On December 19, 2014, we amended this facility with a new maturity date of February 3, 2015 on the same terms. As of December 31, 2014, the outstanding balance was $416 million as compared to $450 million as at December 31, 2013. We do not have any undrawn capacity on this facility as of December 31, 2014. Subsequent to the year end, in January 2015, this facility has been repaid in full and replaced with a new $950 million facility.

$1,450 million senior secured credit facility

In March 2013, we entered into a $1,450 million senior secured credit facility with a syndicate of banks and export credit agencies. The West Auriga, West Vela, and West Tellus were pledged as security. The facility has a final maturity in 2025, with the exception of a commercial tranche of $203 million due for renewal in 2018, and bears an interest of LIBOR plus a margin in the range of 1.20% to 3.00%.

In March 2014, we completed the sale of the entities that own and operate the West Auriga to Seadrill Partners of which one of the entities sold, was a borrower and a guarantor under this facility, and accordingly we have derecognized the portion of this facility relating to the West Auriga. Seadrill Partners subsequently repaid the tranches relating to the West Auriga in full. In November 2014, we completed the sale of the entities that own and operate the West Vela to Seadrill Partners, of which one of the entities sold was a borrower and a guarantor under this facility, and accordingly we have derecognized the portion of this facility relating to the West Vela. See note 11 for further details of these disposals to Seadrill Partners.

Under the terms of the $1,450 million secured credit facility agreement, certain subsidiaries of Seadrill and Seadrill Partners are jointly and severally liable for their own debt and obligations under the facility and the debt and obligations of other borrowers who are also party to such agreement.  These obligations are continuing and extend to amounts payable by any borrower under the facility. The total amount owed by all parties under this facility as of December 31, 2014 is $856 million (compared to $1,390 million as at December 31, 2013) of which $433 million

F-48

relates to Seadrill and the West Tellus. Seadrill has not recognized any amounts that are related to amounts owed under the facility by other borrowers. Seadrill has provided an indemnity to Seadrill Partners for any payments or obligations related to this facility that are not related to the West Auriga or West Vela.

If a balloon payment of $86 million relating to the commercial tranches of the West Vela and West Tellus do not get refinanced to the satisfaction of the remaining lenders after five years, the remaining tranches also become due after five years.

As at December 31, 2014 the net book value of the West Tellus was $622 million and we also held $50 million of cash in a restricted account, pledged as collateral. Subsequent to the year end, the restricted cash was released in full as a result of our entering into a new contract with Petrobras. We do not have any undrawn capacity on this facility as of December 31, 2014.

$360 million senior secured credit facility

In April 2013, our majority owned subsidiary AOD entered into a $360 million senior secured credit facility with a syndicate of banks. The facility is available in three equal tranches of $120 million, with each tranche relating to AOD 1, AOD 2 and AOD 3, which have been pledged as security. The loan has a five year maturity from the initial borrowing date, and bears interest of LIBOR plus 2.75%. As at December 31, 2014 the rigs have a net book value of $225 million, $222 million and $230 million respectively. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014 the outstanding balance was $309 million as compared to $345 million as at December 31, 2013.

$300 million senior secured credit facility

In July 2013, we entered into a $300 million senior secured credit facility with a syndicate of banks and export credit agencies. The West Tucana and West Castor were pledged as security, and bears interest of LIBOR plus a margin of 3.00%, and matures in 2023.As at December 31, 2014 the net book values of the West Tucana and West Castor were $204 million and $213 million respectively. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014 the outstanding balance was $210 million as compared to $234 million as at December 31, 2013.

$150 million senior secured credit facility

In October 2013, we entered into a $150 million secured credit facility with a bank. The West Oberon and the West Prospero were pledged as security, bears interest of LIBOR plus a margin of 0.75%, with a maturity date in June 2014. The loan was subsequently amended with a new maturity date of March 31, 2015 and revised margin of 1.0%. As at December 31, 2014 the net book value of the West Oberon and West Prospero were $226 million and $165 million respectively. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014 and outstanding balance was $150 million, compared to $150 million as at December 31, 2013. Subsequent to the year end, on March 26, 2015, this facility was repaid in full as part of the SeaMex transaction.

$450 million senior secured credit facility (2013)

In December 2013, we entered into a $450 million senior secured facility with a syndicate of banks. The West Eminence has been pledged as security, and bears interest of LIBOR plus a margin of 1.75% and matures in June 2016. This facility replaced an existing $800 million facility, which had an outstanding balance of $194 million and was fully repaid on December 19, 2013. As at December 31, 2014 the net book value of the West Eminence was $589 million. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014, the outstanding balance was $397 million as compared to $450 million as at December 31, 2013.

$1,350 million senior secured credit facility

In August 2014, the Company entered into a $1,350 million senior secured credit facility with a syndicate of banks. The new facility consists of a term loan facility for $675 million and a revolving credit facility in an amount up to $675 million. The West Pegasus, West Gemini and West Orion were pledged as security. The total net book value at December 31, 2014 of the units pledged as security is $1,767 million. The facility bears interest at LIBOR plus a margin of 2% per annum, and is repayable in quarterly installments over a term of five years. The revolver is fully repayable at the final maturity date. The revolver facility was fully drawn and we do not have any undrawn capacity as of December 31, 2014. As at December 31, 2014, the outstanding balance was $1,317 million as compared to nil as at December 31, 2013.

F-49

$1,500 million senior secured credit facility (2014)

In July 2014, the Company entered into a $1,500 million senior secured credit facility with a syndicate of banks to finance the three newbuilds, the West Saturn, West Neptune and West Jupiter which are pledged as security. The net book value at December 31, 2014 of the units pledged as security is $1,840 million. The facility bears interest at LIBOR plus a margin of between 1.4% and 2.5% per annum, and is repayable over a term of 12 years. The loan includes a Commercial Interest Reference Rate (CIRR) tranche with Eksportfinans ASA, the Norwegian export credit agency, that bears fixed interest at 2.38% per annum. If a commercial tranche of $300 million does not get refinanced to the satisfaction of the remaining lenders after five years, the remaining tranches also become due after five years. If the commercial tranche balloon payment of $175 million does not get refinanced to the satisfaction of the remaining lenders by September 2019, the remaining tranches also become due. As at December 31, 2014, the outstanding balance was $1,469 million as compared to nil as at December 31, 2013.

$1,750 million secured credit facility

In September 2013 subsidiaries of Sevan Drilling entered into a $1,750 million bank facility with a syndicate of banks and export credit agencies. The facility consists of two tranches in the amounts of $1,400 million and $350 million. On October 23, 2013 the first tranche of $1,400 million was drawn and was used to repay the existing credit facilities related to Sevan Driller and Sevan Brasil and to settle the remaining installment and other amounts for the delivery of Sevan Louisiana. The Sevan Driller, Sevan Brasil and Sevan Louisiana have been pledged as security. In December 2014 the $350 million tranche relating to the Sevan Developer was cancelled at our request as a consequence of the deferral agreement made with Cosco, and the borrowing entity relating to the Sevan Developer was released from its obligations under this facility. The facility has a maturity in September 2018 and bears interest of LIBOR plus a margin of 2.90%. As at December 31, 2014 the net book of the Sevan Driller, Sevan Brasil and Sevan Louisiana were $589 million, $601 million and $719 million respectively. As at December 31, 2014, the outstanding balance was $1,225 million as compared to $1,400 million as at December 31, 2013.

Ship Finance International Limited ("Ship Finance") Loans

The following loans relate to the Ship Finance International entities that we consolidate in our financial statements as Variable Interest Entities (VIEs). Refer to Note 35 for more information.

SFL West Polaris

In December 2012 SFL West Polaris Limited entered into a $420 million term loan facility with a syndicate of banks to refinance the existing $700 million secured term loan facility. The new facility has a term of five years and bears interest of LIBOR plus a margin of 3.00%. On December 30, 2014 Seadrill purchased SFL West Polaris from Ship Finance International, and accordingly we have represented this loan within "Credit facilities", refer to information above.

SFL Deepwater Ltd and SFL Hercules Ltd

In September 2008, SFL Deepwater Ltd entered into a $1,400 million secured term loan facility with a syndicate of banks to partly fund the acquisition of West Taurus and West Hercules, which have been pledged as security. The facility had an interest at LIBOR plus 1.40% per annum and was repayable over a term of five years. The facility has been repaid in full as discussed further below.

In May 2013, the Hercules tranche of the $1,400 million facility was refinanced and replaced by a new $375 million facility, with a syndicate of banks and financial institutions. The new facility is secured by the West Hercules, which has a net book value of $603 million as of December 31, 2014. The new facility has a term of six years and bears interest of LIBOR plus a margin of 2.75%. As at December 31, 2014, the outstanding balance under the facility was $284 million, compared to $362 million as at December 31, 2013. There is no undrawn capacity on this facility at December 31, 2014.

In October 2013, the Taurus tranche of the $1,400 million facility was refinanced and replaced with a new $390 million facility with a syndicate of banks and financial institutions. The new facility is secured by the West Taurus, which has a net book value of $450 million as at December 31, 2014. The new facility has a term of five years and bears an interest of LIBOR plus a margin of 2.50%. As at December 31, 2014, the outstanding balance under the facility was $303 million compared to $383 million as at December 31, 2013. There is no undrawn capacity on this facility as at December 31, 2014.

SFL Linus Ltd

On October 17, 2013, SFL Linus Ltd entered into a $475 million secured term loan and revolving credit facility with a syndicate of banks to fund the acquisition of West Linus, which has been pledged as security and has a net book value of $581 million as at December 31, 2014. The facility was fully drawn on February 18, 2014, on the date of delivery of West Linus. The facility bears interest of LIBOR plus 2.75% and matures in June 2019. As at December 31, 2014, the outstanding balance under the facility was $451 million, compared to nil as at December 31, 2013. There is no undrawn capacity on this facility at December 31, 2014

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Unsecured Bonds

$350 million fixed interest rate bond

In October 2010, the Company raised $350 million through the issue of a five year bond which matures in October 2015. The bond bears a fixed interest rate of 6.50% per annum, payable semi-annually in arrears. In May 2012, we repurchased $8 million of the bonds.  As at December 31, 2014, the outstanding balance was $342 million.

$650 million3.375% Convertible Bonds and conversion

In October 2010, the Company issued at par $650 million of convertible bonds. Interest on the bonds was fixed at 3.375%, payable semi-annually in arrears. The bonds were convertible into the Company's common shares at any time up to 10 banking days prior to October 27, 2017. The conversion price at the time of issuance was $38.92 per share, representing a 30% premium to the share price at the time. For accounting purposes $121 million was, at the time of issuance of the bonds, allocated to the bond equity component and $529 million to the bond liability component, due to the cash settlement option stipulated in the bond agreement. The bonds were due to mature in October 2017. The bond equity component was amortized over the maturity term, and recognized within interest expense in the consolidated statement of operations.

In July 2014, the Company launched a voluntary incentive payment offer to convert any and all of the $650 million principal amount of 3.375% convertible bonds. Holders of $649 million of principal amount of convertible bonds accepted the voluntary incentive offer and the Company then elected to exercise the "90% clean-up call" provision on the remaining $1 million outstanding.

Holders converted at the contractual conversion price of $27.69 per share and received an incentive payment of $12,102.95 per $100,000 principal amount of bond held. As a result of the transaction, the number of common shares outstanding in the Company increased by 23.8 million shares, with an increase to equity of $893 million.

As a result of the conversion the Company recorded a charge of $79 million related to the incentive paid for the induced conversion and a loss on debt extinguishment of $16 million. These amounts were recognized within net loss on debt extinguishment in the Company's consolidated statement of operations. $278 million of the total consideration transferred on conversion was allocated to the reacquisition of the embedded conversion option and recognized as a reduction of stockholders’ equity. The total cash outflow due to the incentive payments and accrued interest was $69 million.

NOK 1,250 million floating interest rate bond

In January 2012, the Company raised $225 million (NOK1,250 million) through the issue of a two year senior unsecured bond, with a maturity date of February 13, 2014. The bond bears interest of NIBOR plus 3.25% per annum, payable quarterly in arrears. The bond was repaid in full on the maturity date.

$1,000 million fixed interest bond

In September 2012, the Company raised $1,000 million through the issue of a 5 year bond which matures in September 2017. Interest on the bonds bears a fixed interest rate of 5.625% per annum, payable semi-annually in arrears. The interest rate increased to 6.125% in March 2014 as the Company remained unrated.

NOK 1,800 million floating interest rate bonds

In March 2013 the Company issued a NOK1,800 millionsenior unsecured bond with maturity in March 2018. The bond bears interest of NIBOR plus a margin of 3.75% per annum, payable quarterly in arrears. The bond was subsequently swapped to US$ with a fixed rate of 4.94% per annum until maturity.

$500 million senior unsecured bond

On September 20, 2013, the Company issued a $500 million senior unsecured bond issue. The bond matures in September 2020 and bears interest of 6.125% per annum, payable semi-annually in arrears. The interest rate increased to 6.625% in March 2014 as the Company remained unrated.

In December 2014 the Company repurchased $21 million (of par value) of the $500 million senior unsecured bond, recognizing a gain on debt extinguishment of $3 million.

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NOK1,500 million floating interest rate bonds

In October 2013, NADL, our majority owned subsidiary, issued a NOK1,500 million senior unsecured bond issue with maturity in October 2018, and an interest rate of NIBOR plus a margin of 4.40% per annum. The bond was subsequently swapped to US$ with a fixed rate of 6.18% per annum until maturity.

In December 2014, the Company purchased NOK82 million (of par value) of the NOK1,500 million senior unsecured bond issued by NADL, recognizing a gain on debt extinguishment of $4 million.

$600 million senior unsecured bond

In January 2014, NADL, our majority owned subsidiary, issued a $600 million senior unsecured bond issue. The bond matures in January 2019 and bears interest of 6.25% per annum. In conjunction with the issue and subsequently in the open market we bought 27.5% of the bond, which amounted to $165 million. During June 2014, we sold a portion of the bond owned by the Company for $25 million. In December 2014 the Company purchased $47 million (of par value) of the $600 million senior unsecured bond issued by NADL, recognizing a gain on debt extinguishment of $16 million. As of December 31, 2014 we held 31.1% of the bond, which amounted to $187 million

SEK1,500 million senior unsecured bond

In March 2014, we issued a SEK1,500 million senior unsecured bond. The bond matures in March 2019 and bears interest of STIBOR plus 3.25%. The bond was subsequently swapped to US$ with a fixed rate of 5.2% per annum until maturity. 

Unsecured bond repurchases

During the year ended December 31, 2014, the Company recognized a total gains on debt extinguishment due to the repurchases of bonds of $23 million, which are presented within "Net loss on debt extinguishment" in the Company’s consolidated statement of operations.

Commercial Interest Reference Rate (CIRR) Credit Facilities

In April 2008, the Company entered into a CIRR term loan for NOK850 million with Eksportfinans ASA, the Norwegian export credit agency. The loan bears fixed interest at 4.56% per annum and is repayable over a term of eight years. The outstanding balance at December 31, 2014 was $27 million (NOK200 million) compared to $49 million at December 31, 2013.

In June 2008, the Company entered into a CIRR term loan for NOK904 million with Eksportfinans ASA. The loan bears fixed interest at 4.15% per annum and is repayable over a term of eight years. The outstanding balance at December 31, 2014 was $29 million (NOK213 million) compared to $52 million at December 31, 2013.

In July 2008, the Company entered into a CIRR term loan for NOK1,011 million with Eksportfinans ASA. The loan bears fixed interest at 4.15% per annum and is repayable over a term of 12 years. The outstanding balance at December 31, 2014 was $68 million (NOK506 million) compared to $96 million at December 31, 2013.

In connection with the above three CIRR fixed interest term loans totaling $124 million (NOK919 million), fixed interest cash deposits equal to the total outstanding loan balances have been established with commercial banks. The collateral cash deposits are reduced in parallel with repayments of the CIRR loans and receive fixed interest at the same rates as those paid on the CIRR loans. The collateral cash deposits are classified as "restricted cash" in the consolidated balance sheet, and the effect of these arrangements is that the CIRR loans have no effect on net interest bearing debt.

Covenants contained in our debt facilities

Our debt agreements generally contain financial covenants as well as security provided to lenders in the form of pledged assets.

Bank Loans

In addition to security provided to lenders in the form of pledged assets, our bank loan agreements generally contain financial covenants, including:

• Aggregated minimum liquidity requirement for the group: to maintain cash and cash equivalents of at least $150 million within the group.

• Interest coverage ratio: to maintain an EBITDA to interest expense ratio of at least 2.5:1.

• Current ratio: to maintain current assets to current liabilities ratio of at least 1:1. Current assets are defined as book value less minimum liquidity, but including up to 20.0% of shares in listed companies owned 20.0% or more. Current liabilities are defined as book value less the current portion of long term debt.

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• Equity ratio: to maintain total equity to total assets ratio of at least 30.0%. Both equity and total assets are adjusted for the difference between book and market values of drilling units.

• Leverage ratio: to maintain a ratio of net debt to EBITDA no greater than 4.5:1. Net debt is calculated as all interest bearing debt less cash and cash equivalents excluding minimum liquidity requirements.

• Debt service coverage ratio: The $1,450 secured debt facility and the $1,500 secured debt facility (2014) contain a requirement for the individual borrowers to maintain a ratio of EBITDA of the respective borrower to debt services (being all finance charges and principal) of not less than 1.15:1.

For the purposes of the above tests, EBITDA is defined as the earnings before interest, taxes, depreciation and amortization on a consolidated basis and (ii) the cash distributions from investments, each for the previous period of twelve months as such term is defined in accordance with accounting principles consistently applied. However, in the event that Seadrill or a member of the group acquires rigs or rig owning entities with historical EBITDA available for the rigs' previous ownership, such EBITDA shall be included for covenant purposes in the relevant loan agreement, and if necessary, be annualized to represent a twelve (12) month historical EBITDA. In the event that Seadrill or a member of the group acquires rigs or rig owning companies without historical EBITDA available, Seadrill is entitled to base a twelve month historical EBITDA calculation on future projected EBITDA only subject to any such new rig having (i) a firm charter contract in place at the time of delivery of the rig, with a minimum duration of twelve months, and (ii) a firm charter contract in place at the time of such EBITDA calculation, provided Seadrill provides the agent bank with a detailed calculation of future projected EBITDA. Further, EBITDA shall include any realized gains and/or losses in respect of the disposal of rigs or the disposal of shares in rig owning companies.

Cash distributions from investments are defined as cash received by Seadrill, by way of dividends, in respect of its ownership interests in companies which Seadrill does not control but over which it exerts significant influence.

In addition to financial covenants, our credit facility agreements generally contain covenants which are customary in secured financing in this industry, including operational covenants in relation to the relevant rigs, information undertakings and covenants in relation to corporate existence and conduct of our business. We are in compliance with related covenants as of December 31, 2014.

The credit facility agreements also identify various events that may trigger mandatory reduction, prepayment, and cancellation of the facility including, among others, the following:

• total loss or sale of a drilling unit securing a credit facility;

• cancellation or termination of any existing charter contract or satisfactory drilling contract; and

• a change of control.

The credit facility agreements contain customary events of default, such as failure to repay principal and interest, and other events of defaults, such as:

• failure to comply with the financial or insurance covenants;

• cross-default to other indebtedness held by both Seadrill Partners and its subsidiaries and by the Company;

• failure by the Company to remain listed on a stock exchange;

• the occurrence of a material adverse change;

• revocation, termination, or modification of any authorization, license, consent, permission, or approval as necessary to conduct operations as contemplated by the applicable Rig Financing Agreement; and

• the destruction, abandonment, seizure, appropriation or forfeiture of property of the guarantors or the Company and its subsidiaries, or the limitation by seizure, expropriation, nationalization, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority, of the authority or ability of the Company or any subsidiary thereof to conduct its business, which has or reasonably may be expected to have a material adverse effect.

Our secured credit facilities are secured by:

• guarantees from rig owning subsidiaries (guarantors),

• a first priority share pledge over all the shares issued by each of the guarantors,

• a first priority perfected mortgage in all collateral rigs and any deed of covenant thereto, subject to contractual agreed "quiet enjoyment" undertakings with the end-user of the collateral rigs to be entered into if this is required by the relevant end-user pursuant to the relevant contract,

• a first priority security interest over each of the rig owners' with respect to all earnings and proceeds of insurance, and

• a first priority security interest in the earnings accounts.

Our loan and other debt agreements also contain, as applicable, loan-to-value clauses, which could require the Company, at its option, to post additional collateral or prepay a portion of the outstanding borrowings should the value of the drilling units securing borrowings under each of such agreements decrease below required levels. In addition, the loan and other debt agreements include certain financial covenants including the requirement to maintain a certain level of free cash and failure to comply with any of the covenants in the loan agreements could result in a

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default under those agreements and under other agreements containing cross-default provisions. We were in compliance with all financial loan covenants as of December 31, 2014.

In addition to financial covenants, our credit facility agreements contain covenants which are customary in secured financing in this industry, including operational covenants in relation to the relevant rigs, information undertakings and covenants in relation to corporate existence and conduct of our business.

Bonds

For the Company’s outstanding Norwegian bonds, Swedish bond and the $350 million bond, the main financial covenant is to maintain a total equity to total assets ratio of at least 30.0%. Both equity and total assets are adjusted for the difference between book value and market values of drilling units.

For our $1,000 million, $500 million, and $600 million bonds, we are subject to certain financial and restrictive covenants contained in our indentures which restrict, among other things, our ability to pay dividends, incur indebtedness, incur liens, and make certain investments. In addition, these indentures contain other customary terms, including certain events of default, upon the occurrence of which, the bonds may be declared immediately due and payable.

In addition to the above, our bond indentures generally also contain restrictions which are customary for unsecured financings in this industry for similar unrated bonds, including limitations on indebtedness, payments, transactions with affiliates and restrictions on consolidation, merger and sale of assets.

We are in compliance with related covenants as of December 31, 2014.

Covenants contained within our consolidated Ship Finance Variable Interest Entities

The Company consolidates certain Ship Finance entities into the financial statements as variable interest entities. While we are not, directly or indirectly, obligated to repay the borrowings under this facility, a breach of one or more of the covenants contained in this credit facility may have a material adverse effect on us. The main financial covenants contained in the variable interest entities are as follows:

• Ship Finance must maintain cash and cash equivalents of at least $25 million.

• Ship Finance must maintain positive working capital.

• Ship Finance must have a ratio of total liabilities to total assets of at least 0.8 to 1.0 at the end of each quarter.

• The Company's covenants under the bank loans listed above also apply.

The Ship Finance subsidiaries owning West Taurus, West Hercules and West Linus are consolidated into our financial statements as a variable interest entity (“VIEs”).  To the extent that these VIEs defaults under its indebtedness and is marked current in its financial statements, we would in turn, mark such indebtedness current in our consolidated financial statements.  The characterization of the indebtedness in our financial statements as current may adversely impact our compliance with the covenants contained in our existing and future debt agreements. In the event of a default by us under one of our debt agreements, the lenders under our existing debt agreements could determine that we are in default under our other financing agreements. This could result in the acceleration of the maturity of such debt under these agreements and the lenders thereunder may foreclose upon any collateral securing that debt, including our drilling rigs, even if we were to subsequently cure such default. We and Ship Finance are in compliance with related covenants as of December 31, 2014.

Covenants contained in North Atlantic Drilling Limited ("NADL")

In February 2015, NADL received approval from its Norwegian Bondholders to amend the Bond Agreement for its NOK1.5 billion Norwegian Bond maturing in 2018. Under the terms of the agreement, Seadrill will provide a guarantee for the Bond Issue in exchange for amendments to the covenant package, principally replacing the current financial covenants with the financial covenants within Seadrill's NOK bonds. Additionally, NADL received approval to amend its US$2 billion credit facility and US$475 million term loan and revolving credit facility. Under the terms of the agreements, Seadrill will provide a guarantee for the credit facility in exchange for amendments to the covenant package, principally replacing the existing financial covenants with financial covenants within Seadrill's secured credit facilities. This amendment to the covenants was applicable to the period ended December 31, 2014. As such there are no longer separate financial covenants contained within NADL's credit facilities or bond agreements.

Seadrill Partners covenants

As detailed above certain subsidiaries of Seadrill Partners are borrowers and guarantors to the $440 million secured credit facility and the $1,450 million senior secured credit facility. If Seadrill Partners were to default under one of its other financing agreements, it could cause an event of default under these credit facilities. Seadrill Partners’ failure to comply with covenants and other provisions in its existing or future financing agreements could result in cross-defaults under the Company’s existing financing agreements.

Seadrill Partners are in compliance with all applicable covenants as of December 31, 2014.

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Note 24 – Other current liabilities

Other current liabilities are comprised of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Taxes payable	160	332
Employee withheld taxes, social security and vacation payment	122	105
Intangible liabilities - unfavorable contracts (1)	116	109
Accrued interest expense	77	70
Liabilities relating to investment in shares (2)	167	198
Deferred mobilization revenue	178	192
Derivative financial instruments (3)	372	145
Accrued expenses	292	458
Construction obligation (4)	428	483
Other current liabilities	22	22
Total other current liabilities	1,934	2,114

(1) Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Notes 12 and 21 to the consolidated financial statements included herein.

(2) Liabilities relating to investment in shares primarily represents amounts owed in respect of the Company's share forward purchase contracts for Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

(3) Derivative financial instruments consist of unrealized losses on various types of derivatives.

(4) The construction obligation has been recognized upon the acquisition of Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

Note 25 – Other non-current liabilities

Other non-current liabilities are comprised of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Accrued pension liabilities	84	58
Deferred mobilization revenues	224	311
Intangible liabilities - unfavorable contracts (1)	131	268
Derivative financial instruments (2)	257	250
Other non-current liabilities	3	11
Total other non-current liabilities	699	898

(1) Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Note 12 and 21 to the consolidated financial statements included herein.

(2) Derivative financial instruments represent liabilities associated with other derivative arrangements. See Note 32 to the consolidated financial statements included herein.

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Note 26 – Common shares

	2014				2013				2012
All shares are common shares of $2.00 par value each	Shares		$millions		Shares		$millions		Shares		$millions
Authorized share capital	800,000,000		1,600		800,000,000		1,600		800,000,000		1,600
Issued and fully paid share capital	493,078,678		986		469,250,933		939		469,250,933		938
Treasury shares held by Company	(318,740	)	(1	)	(272,441	)	(1	)	(72,859	)	—
Outstanding shares in issue	492,759,938		985		468,978,492		938		469,178,074		938

As of December 31, 2014, the Company's shares were listed on the Oslo Stock Exchange and the New York Stock Exchange.

The Company was incorporated on May 10, 2005 and 6,000 ordinary shares of par value $2.00 each were issued. Since incorporation the number of issued shares has increased from 6,000 to 493,078,678 of par value $2.00 each as of December 31, 2014. There were no new shares issued in 2014 or 2013 other than the conversion of convertible bonds in 2014, which resulted in 23.8 million shares issued, as discussed in Note 23.

A share repurchase program was approved by the Board in 2007 giving the Company the authorization to buy back shares. Shares bought back under the authorization may be cancelled or held as treasury shares. Treasury shares may be held to meet the Company's obligations relating to the share option plans. As at December 31, 2014 the Company held 318,740 treasury shares and net shares outstanding at December 31, 2014 was 492,759,938.

In November 2014 the Board authorized a share buyback program under which the Company may repurchase up to approximately 10% of shares outstanding. The Company may repurchase shares from time to time in open market transactions or private transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by Management of the Company based on its evaluation of market conditions, capital allocation opportunities, and other factors. The program does not require the Company to repurchase any specific number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice.

Note 27 – Non-controlling interest

The Company's consolidated statement of operations, balance sheet and statement of cash flows include the results of NADL, Asia Offshore Drilling Ltd, and Sevan Drilling ASA for the year ended, and as at December 31, 2014. As at December 31, 2014, the Company has the following ownership interests in these companies: 70.36% of NADL, 66.24% of Asia Offshore Drilling Ltd, and 50.11% of Sevan Drilling ASA. The amount of shareholders' equity not attributable to the Company is included in non-controlling interests.

NADL

In January 2014, NADL completed its IPO in the United States of 13,513,514 common shares at $9.25 per share. The non-controlling interest recognized on the IPO was $52 million.

Seadrill Partners

On October 24, 2012, Seadrill Partners completed its IPO of 10,062,500 common units representing limited liability company interests in Seadrill Partners at a price of $22.00 per unit, for gross proceeds of $221 million and net proceeds after issuance costs of $203 million (including 1,312,500 common units issued in connection with the exercise of the over-allotment option). Seadrill Partners is listed on the New York stock exchange under the symbol "SDLP". Upon completion of the offering, the Company owned 14,752,525 common units and 16,543,350 subordinated units which represents 75.67% of the limited liability company interests in Seadrill Partners. Subsequent to the IPO, in October 2013, Seadrill Partners issued 3,310,622 common units to the Company, which increased the Company's total ownership interest to 77.47%. In December 2013, Seadrill Partners issued a further 3,394,916 common units to the Company and 12,880,000 common units to the public, which had the effect of reducing the Company's ownership total ownership to 62.35% as of December 31, 2013. The effect of these transactions was to increase the non-controlling interest by $239 million.

During the period from Seadrill Partners' IPO in October 2012 until the time of its first effective Annual General Meeting ("AGM") on January 2, 2014, the Company retained the sole power to appoint, remove and replace all members of Seadrill Partner's board of directors. From the first AGM, the majority of the board members became electable by the common unitholders and accordingly, from this date the Company no longer retained the power to control the board of directors as a result of certain provisions in the Operating Agreement which limits the Company's ability to vote its full holding of common units in an election of directors to the board of Seadrill Partners. As of January 2, 2014, Seadrill Partners is considered to be an associated company and not a controlled subsidiary of the Company, and as such Seadrill Partners was deconsolidated by the Company. The non-controlling interest derecognized was $115 million. See Note 11 of the consolidated financial statements.

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AOD

On March 25, 2013, we obtained control of the Board of Asia Offshore Drilling Ltd and owned 66.18% of the outstanding shares. As a result of obtaining control we have consolidated the results and financial position of Asia Offshore Drilling Ltd from this date. The fair value of the non-controlling interest established upon obtaining a controlling financial interest was $100 million. See Note 12 to the consolidated financial statements included herein. Subsequent to the date of consolidation, the Company's percentage ownership increased to 66.21%, and then increased again to 66.24% as at December 31, 2014.

Sevan

On July 2, 2013 we obtained a controlling financial interest in Sevan Drilling and had ownership interests in 50.1% of the outstanding shares. As a result of obtaining control we consolidated the results and financial position of Sevan Drilling from this date. The fair value non-controlling interest established upon obtaining a controlling financial interest was $197 million. See Note 12 to the consolidated financial statements included herein.

Ship Finance VIEs

In 2007 and 2008 the Company entered into sale and leaseback arrangements for drilling units with Ship Finance International Ltd, who incorporated subsidiary companies for the sole purpose of owning and leasing the drilling units. The Company has recognized these subsidiary companies as VIEs and concluded that the Company is their primary beneficiary. Accordingly, these subsidiary companies are included in the Company's consolidated financial statements, with the Ship Finance International Ltd equity in these companies included in non-controlling interest. In 2012, the Company acquired all the shares in one of these Ship Finance International Ltd companies, Rig Finance II Ltd for $47 million. As a consequence of this, Rig Finance II Ltd is no longer treated as a VIE but a wholly owned subsidiary. In 2013 these VIEs declared dividends of $223 million to Ship Finance International Limited. In December 2014, the Company acquired all the shares of the Ship Finance International Ltd company, SFL Polaris Ltd, for a consideration of $111 million. The non-controlling interest derecognized was $7 million. As a consequence of this, SFL Polaris Ltd is no longer treated as a VIE but a wholly owned subsidiary. See Note 35 to the consolidated financial statements included herein.

Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited

On December 30, 2014 the Company entered into share sale and purchase agreements with Heirs Holding Limited, where we sold a 10% of equity stake in each of the Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited for consideration of $1.8 million each. Seadrill Offshore Nigeria Limited is a Nigerian holding company which has a 10% equity interest in the West Saturn, and Seadrill Nigeria Operations Limited is a Nigerian holding company which has a 10% equity interest in the West Jupiter. There was no net income attributable to non-controlling interest recognized with Heirs Holding Limited as the transaction occurred on December 30, 2014.

Changes in non-controlling interest in 2014, 2013 and 2012 are as follows:

(In US$ millions)	Ship Finance International Ltd VIEs		North Atlantic Drilling Ltd		Seadrill Partners LLC		Asia Offshore Drilling Ltd	Sevan Drilling ASA	Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited	Total
December 31, 2011	215		110		—		—	—		325
Changes in 2012	20		10		69		—	—		99
Net income attributable to non-controlling interest in 2012	39		48		10		—	—		97
December 31, 2012	274		168		79		—	—	—	521
Changes in 2013	(220	)	(56	)	15		100	197	—	36
Net income attributable to non-controlling interest in 2013	24		61		21		11	16	—	133
December 31, 2013	78		173		115		111	213	—	690
Changes in 2014	(57	)	(4	)	(115	)	—	—	4	(172	)
Net income attributable to non-controlling interest in 2014	11		36		—		23	38	—	108
December 31, 2014	32		205		—		134	251	4	626

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Note 28 – Accumulated other comprehensive income

Accumulated other comprehensive income for the years December 31, 2014 and December 31, 2013:

(In US$ millions)	December 31, 2014		December 31, 2013
Unrealized (loss)/gain on marketable securities	(443	)	539
Unrealized gain on foreign exchange	51		73
Actuarial loss relating to pension	(57	)	(35	)
Share in unrealized gains from associated companies	1		—
Unrealized loss on interest rate swaps in VIEs	—		(49	)
Accumulated other comprehensive (loss)/income	(448	)	528

The unrealized loss on marketable securities relates to the accumulated losses on the investments in SapuraKencana and Seadrill Partners Common units. Refer to Note 14 - Marketable securities for further information.

The applicable amount of income taxes associated with each component of other comprehensive income is nil, other than noted below, due to the fact that the items relate to companies domiciled in non-taxable jurisdictions. However, for actuarial loss related to pension, the accumulated applicable amount of income taxes is $22 million ($16 million in 2013) as this item is related to companies domiciled in Norway where the tax rate is 28%.

Note 29 – Share based compensation

The fair value of share based compensation is recognized as personnel compensation expense, and in the year ended December 31, 2014, $10 million (2013: $7 million, 2012: $8 million) was included in the consolidated statement of operations.

Share Options

At a general meeting of shareholders held in May 2005, our shareholders authorized the Board to establish and maintain the Option Scheme in order to encourage our directors, officers and other employees to hold shares in the Company. The Option Scheme will expire in May 2016. The Option Scheme permits the Board, at its discretion, to grant options to acquire shares in the Company to employees and directors of the Company or its subsidiaries.  The options are not transferable. The subscription price is at the discretion of the Board, provided the subscription price is never reduced below the par value of the share. The subscription price for certain options granted under the Option Scheme will be reduced by the amount of all dividends declared by the Company in the period from the date of grant until the date the option is exercised. Options granted under the Option Scheme will vest at a date determined by the board at the date of the grant.  The options granted under the plan to date vest over a period of one to five years.  There is no maximum number of shares authorized for awards of equity share options and authorized, unissued or treasury shares of the Company may be used to satisfy exercised options.

During 2014, no share options were granted. The assumptions used in estimating fair value are as follows: 2.4% risk-free interest rate, volatility of 26.1%, 0% dividend yield and an expected option term of four years. The risk-free interest rates were estimated using the US Treasury yield curve in effect at the time of grant for instruments with a similar life. The dividend yield has been estimated at 0% as the exercise price is reduced by all dividends declared by the Company from the date of grant to the exercise date. It is also assumed that 100% of options granted will vest.

The following summarizes share option transactions related to the Seadrill Scheme in 2014, 2013 and 2012:

	2014			2013			2012
	Options		Weighted average exercise price $	Options		Weighted average exercise price $	Options		Weighted average exercise price $
Outstanding at beginning of year	2,838,758		28.53	3,875,891		29.88	5,420,438		26.16
Granted	—		—	270,000		45.66	181,012		37.41
Exercised	(461,477	)	20.19	(700,418	)	22.60	(1,415,000	)	16.39
Forfeited	(136,165	)	34.57	(606,715	)	32.30	(312,559	)	30.84
Outstanding at end of year	2,241,116		35.10	2,838,758		28.53	3,875,891		29.88
Exercisable at end of year	1,169,584		27.38	1,080,306		27.38	1,164,214		21.19

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Options granted in 2008 had been re-priced with exercise prices now being NOK90.83 ($14.09) and NOK104.64 ($16.24) per share; they may be exercised one third each year beginning 12 months after they were granted, and expire in May 2014. These same prices and dates apply to the options granted in 2009. Options granted in April 2010 had exercise price of NOK137.40 ($23.13), may be exercised one third after 12 or 15 months and expire in March/June 2015. Options granted in November 2010 had exercise prices of NOK192.90 ($31.4) for American citizens or residents and NOK185.20 ($31.06) for non-Americans. They may be exercised one fifth each year beginning 12 months after they were granted and expire in December 2015. Options granted in November 2011 had exercise prices of NOK202.10 ($34.68) and can be exercised one fourth at a time, after the first 18, 36, 48 and 60 months from the grant date. They expire in December 2016. Options granted during 2012 had exercise prices, ranging from NOK202.10 to NOK224.53. They have the same exercise schedule as the 2011's grant and expire between December 2016 and December 2017. Options granted in October 2013 had an exercise price of NOK273 and can be exercised one fourth at time after 13, 25, 37 and 49 months from the grant date.

The weighted average grant-date fair value of options granted during 2014 is nil (2013: $10.23 per share, 2012: $7.06 per share).

As of December 31, 2014 there was $3 million in unrecognized compensation costs relating to non-vested options granted under the Options Schemes (2013: $7 million, 2012: $11 million). This amount will be recognized as expense of $2 million in 2015, $1 million in 2016 and less than a million in 2017.

There were 2,241,116 options outstanding at December 31, 2014 (2013: 2,838,758). Their weighted average remaining contractual life was 21 months (2013: 43 months) and their weighted average fair value was $7.97 per option (2013: $8.27 per option). The weighted average parameters used in calculating these weighted average fair values are as follows: risk-free interest rate 2.03% (2013: 2.03%), volatility 26% (2013: 26.1%), dividend yield 0% (2013: 0%), option holder retirement rate 0% (2013: 0%) and expected term 4 years (2013: 4 years).

During 2014 the total intrinsic value of options exercised was $9 million (2013: $17 million, 2012: $32 million) on the day of exercise. The intrinsic value of options fully vested but not exercised at December 31, 2014 was zero since the weighted average exercise price per share exceeded the market price of our shares as at that date. The average remaining term of the options was 34 months.

Restricted Stock Units

On October 1, 2013, the Board of the Company approved 373,700 awards under the Company`s Restricted Stock Units, or RSU, plan. On November 7, 2013, the Board of our consolidated subsidiary, NADL, approved 278,778 awards under NADL`s RSU plan.

In December 2014, the Board of the Company approved 162,560 awards under the Company's RSU plan.

Under the terms of both plans, the holder of an award is entitled to receive a share in the respective company if still employed at the end of the three year vesting period. There is no requirement for the holder to pay for the share on grant date or upon vesting of the award. In addition the holder is entitled to receive an amount equal to the ordinary dividends declared and paid on the Company and NADL shares during the vesting period.

The fair value of the awards are calculated based on the market share price on grant date which for 2013 awards was $46.1 and NOK58 for the Company and NADL shares respectively. The fair value for the 2014 awards for the Company shares was $11.0.

The fair value of the awards expected to vest is recognized as compensation cost straight-line over the vesting period. All awards are currently expected to vest. Compensation cost related to the RSU plans of $5 million has been recognized in 2014 (2013: $2 million). As of December 31, 2014 there was $15 million in unrecognized compensation costs related to non-vested awards.

Note 30 - Pension benefits

The Company has several defined benefit pension plans covering substantially all Norwegian employees. All of the plans are administered by a life insurance company. Under these plans, the Company contributes to the employee's pension plans with amounts ranging from five to eight percent of the employee's annual salary. Total payments to these plans were $0.9 million, $1.6 million and $1.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.

For onshore employees in Norway, who are participants in the defined benefit plans, the primary benefits are a retirement pension of approximately 66 percent of salary at retirement age of 67 years, together with a long-term disability pension. The retirement pension per employee is capped at an annual payment of 66 percent of the total of 12 times the Norwegian Social Security Base. All employees in this group may choose to retire at 62 years of age on a pre-retirement pension. Offshore employees in Norway have a retirement and long-term disability pension of approximately 60 percent of salary at retirement age of 67. Most offshore employees on drilling units may choose to retire at 60 years of age on a pre-retirement pension.

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Consolidated balance sheet position

(In US$ millions)	2014		2013
Non-current liabilities	82		58
Deferred tax	(22	)	(16	)
Shareholders equity	60		42

Annual pension cost

(In US$ millions)	2014		2013		2012
Service cost	13		14		12
Interest cost on prior years' benefit obligation	7		7		5
Gross pension cost for the year	20		21		17
Expected return on plan assets	(6	)	(4	)	(5	)
Administration charges	1		—		—
Net pension cost for the year	15		17		12
Social security cost	2		2		2
Amortization of actuarial gains/losses	2		2		—
Impact of settlement/curtailment funded status	—		(2	)	(4	)
Total net pension cost	19		19		10

The funded status of the defined benefit plan

(In US$ millions)	December 31, 2014		December 31, 2013
Projected benefit obligations at end of period	186		180
Plan assets at market value	(114	)	(129	)
Accrued pension liability exclusive social security	72		51
Social security related to pension obligations	10		7
Accrued pension liabilities	82		58

Change in benefit obligations

(In US$ millions)	2014		2013
Projected benefit obligations at beginning of period	180		171
Interest cost	7		7
Service cost	13		14
Benefits paid	(2	)	(2	)
Change in unrecognized actuarial gain	23		13
Foreign currency translations	(35	)	(15	)
Acquisition/transfer members	—		(8	)
Projected benefit obligations at end of period	186		180

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Change in pension plan assets

(In US$ millions)	2014		2013
Fair value of plan assets at beginning of year	129		122
Estimated return	2		5
Contribution by employer	17		19
Administration charges	(1	)	—
Benefits paid	(2	)	(2	)
Change in unrecognized actuarial loss	(9	)	—
Foreign currency translations	(22	)	(10	)
Acquisition/transfer members	—		(5	)
Fair value of plan assets at end of year	114		129

The accumulated benefit obligation for all defined benefit pension plans was $146 million and $132 million at December 31, 2014 and 2013, respectively.

Pension obligations are actuarially determined and are critically affected by the assumptions used, including the expected return on plan assets, discount rates, compensation increases and employee turnover rates. The Company periodically reviews the assumptions used, and adjusts them and the recorded liabilities as necessary.

The expected rate of return on plan assets and the discount rate applied to projected benefits are particularly important factors in calculating the Company's pension expense and liabilities. The Company evaluates assumptions regarding the estimated rate of return on plan assets based on historical experience and future expectations on investment returns, utilizing the asset allocation classes held by the plan's portfolios. The discount rate is based on the covered bond rate in Norway. Changes in these and other assumptions used in the actuarial computations could impact the projected benefit obligations, pension liabilities, pension expense and other comprehensive income.

Assumptions used in calculation of pension obligations

(In %)	2014		2013		2012
Rate of compensation increase at the end of year	2.75	%	3.75	%	3.50	%
Discount rate at the end of year	2.30	%	4.00	%	4.20	%
Prescribed pension index factor	1.20	%	1.40	%	1.40	%
Expected return on plan assets for the year	3.20	%	4.40	%	4.00	%
Employee turnover	4.00	%	4.00	%	3.50	%
Expected increases in Social Security Base	2.50	%	3.50	%	3.25	%

The weighted-average asset allocation of funds related to the Company's defined benefit plan at December 31, was as follows:

Pension benefit plan assets

(In %)	2014		2013
Equity securities	7.2	%	4.2	%
Debt securities	51.9	%	55.7	%
Real estate	14.2	%	13.9	%
Money market	23.5	%	24.7	%
Other	3.2	%	1.50	%
Total	100.0	%	100.0	%

The investment policies and strategies for the pension benefit plan funds do not use target allocations for the individual asset categories. The investment objectives are to maximize returns subject to specific risk management policies. The Company diversifies its allocation of plan assets by investing in both domestic and international fixed income securities and domestic and international equity securities. These investments are readily marketable and can be sold to fund benefit payment obligations as they become payable.

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Cash flows - Contributions expected to be paid

The table below shows the Company's expected annual pension plans contributions under defined benefit plans for the years 2015-2024. The expected payments are based on the assumptions used to measure the Company's obligations at December 31, 2014 and include estimated future employee services.

(In US$ millions)	December 31, 2014
2015	11
2016	12
2017	12
2018	12
2019	13
2020-2024	69
Total payments expected during the next 10 years	129

Note 31 – Related party transactions

Seadrill Partners

As of January 2, 2014, the date of deconsolidation, Seadrill Partners is considered to be a related party and not a controlled subsidiary of the Company. The following is a summary of the related party agreements with Seadrill Partners:

Management and administrative service agreements– In connection with the IPO, subsidiaries of Seadrill Partners, entered into a management and administrative services agreement with Seadrill Management, a wholly owned subsidiary of the Company, pursuant to which Seadrill Management provides the Seadrill Partners certain management and administrative services. The services provided by Seadrill Management are charged at cost plus management fee equal to 5% of Seadrill Management’s costs and expenses incurred in connection with providing these services. The agreement has an initial term for 5 years and can be terminated by providing 90 days written notice.

Technical and administrative service agreement– In connection with the IPO, subsidiaries of Seadrill Partners entered into certain advisory, technical and/or administrative services agreements with subsidiaries of the Company. The services provided by the Company’s subsidiaries are charged at cost plus service fee equal to approximately 5% of costs and expenses incurred in connection with providing these services.

Income recognized under the above agreements (a) & (b) for the period ended December 31, 2014 were $59 million.

Rig Financing Agreements– In September 2012 prior to the IPO of Seadrill Partners, each of Seadrill Partners controlled subsidiaries that owns the West Capricorn, the West Vencedor, the West Aquarius, and the West Capella, or the rig owning subsidiaries, entered into intercompany loan agreements with the Company in the amount of approximately $523 million, $115 million, $305 million and $295 million respectively, corresponding to the aggregate principal amount outstanding under the external facilities allocable to the West Capricorn, the West Vencedor, the West Aquarius, and the West Capella respectively. During 2013, the rig owning companies of the T-15, T-16, West Leo and West Sirius entered into intercompany loan agreements with Company in the amount of approximately $101 million, $93 million, $486 million and $220 million respectively, corresponding to the aggregate principal amount outstanding under the facilities allocable to the T-15, T-16, West Leo and West Sirius respectively. The Company refers to these arrangements collectively as "Rig Financing Agreements". Pursuant to these intercompany loan agreements, each rig owning subsidiary can make payments of principal and interest to Seadrill or directly to the third party lenders under each facility, corresponding to payments of principal and interest due under each Rig Financing Agreement that are allocable to each rig.

During the year ended December 31, 2014 subsidiaries of Seadrill Partners entered into a new term loan in which the proceeds were used to repay the amounts owed to the Company related to the drilling units West Capella, West Aquarius, West Sirius, West Leo and West Capricorn.

In June 2014 the Company repaid the underlying $1,200 million senior secured loan relating to the West Vencedor, and as a result the West Vencedor Loan Agreement between the Company and Seadrill Partners was amended to carry on the existing loan on the same terms. The total amount owed by Seadrill Partners to the Company under the remaining West Vencedor Loan agreement as of December 31, 2014, was $78 million.

Total amounts owed under the remaining Rig Financing Agreement as of December 31, 2014, relating to the T-15 and T-16, totaled $159 million. Certain subsidiaries of Seadrill Partners are guarantors under the external facilities in which these rigs are pledged as security. Under the terms of the facilities, the guarantors are jointly and severally liable for other guarantors and the borrower who are party to this facility. The Company has provided an indemnification to Seadrill Partners for any payments or obligations related to these facilities for any losses incurred which do not relate to the T-15 and T-16.

The Rig Financing Agreements related to the West Aquarius, West Capella, West Leo, West Sirius and West Capricorn were repaid during the year ended December 31, 2014 in conjunction with Seadrill Partners obtaining independent third party financing. The total outstanding principal repaid was $1.5 billion.

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Interest income for the period ending December 31, 2014 for these arrangements was $20 million.

Revolving credit facility– In October 2012 Seadrill Partners entered into a $300 million revolving credit facility with the Company. The facility is for a term of five years and bears interest at a rate of LIBOR plus 5% per annum, with an annual 2% commitment fee on the undrawn balance. In March 2014 the facility was reduced to a maximum of $100 million. The outstanding balance of $125.9 million was repaid in full in March 2014. The outstanding balance as at December 31, 2014 was nil.

$109.5 million Vendor financing loan - In May, 2013, Seadrill Partners borrowed from the Company $109.5 million as vendor financing to fund the acquisition of the T-15. The loan bears interest at a rate of LIBOR plus a margin of 5.00% and matures in May 2016. The outstanding balance as at December 31, 2014 was $109.5 million.

$229.9 million discount note - On December 13, 2013, as part of the acquisition of the West Sirius, a subsidiary of Seadrill Partners issued a zero coupon discount note to the Company for $229.9 million. The note was repayable in June 2015 and upon maturity, the Company was due to receive $238.5 million. In February 2014, Seadrill Partners repaid this note in full.

$70 million discount note - In December 2013, as part of the acquisition of the West Sirius, Seadrill Partners issued a zero coupon discount note to the Company for $70 million. The note was repayable in June 2015 and upon maturity, the Company was due to receive $73 million. In February 2014, Seadrill Partners repaid this note in full.

$100 million discount note - In March 2014, as part of the acquisition of the West Auriga, Seadrill Partners issued a zero coupon discount note to the Company for $100 million. The note is repayable in September 2015 and upon maturity, the Company will receive $103.7 million. This note was repaid in full in June 2014.

Other revenues and expenses - Other revenues and expenses include operating revenues and costs earned and incurred for certain drilling units on behalf of subsidiaries of Seadrill Partners, insurance premiums and bareboat charter arrangements. Other revenues and expenses earned and incurred for the period ending December 31, 2014 were $43.2 million and $25.8 million respectively. Derivatives and other interest expenses charged to Seadrill Partners totaled $82.1 million for the period ending December 31, 2014.

Receivables and Payables – Receivables and payables with Seadrill Partners and its subsidiaries are comprised of management fees, advisory and administrative services, and other items including accrued interest. In addition, certain receivables and payables arise when the Company pays an invoice on behalf of Seadrill Partners or its subsidiaries and vice versa. Receivables and payables are generally settled quarterly in arrears. Trading balances to Seadrill Partners and its subsidiaries are unsecured, bear interest at a rate equal to LIBOR plus approximately 4% per annum, and are intended to be settled in the ordinary course of business.

Receivables (payables) with Seadrill Partners and its subsidiaries as of December 31, 2014 consisted of the following:

(In US$ millions)	December 31, 2014
Rig financing agreements and Loan Agreements	237
$109.5 million Vendor financing loan	110
Deferred consideration receivable	74
Other receivables	264
Other payables	(77	)

West Auriga Acquisition

On March 21, 2014, the Company sold the entities that own and operate the West Auriga (the “Auriga business”)to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners that is 49% owned by the Company. The entities continue to be related parties subsequent to the sale. The purchase price consisted of an enterprise value of $1.24 billion, less debt assumed of $443 million. The total consideration of $797 million was comprised of cash of $697 million and a discount note receivable of $100 million. The purchase price was subsequently adjusted by a working capital adjustment of $331 million arising from related party balances which remained with the disposed entities for the construction, equipping and mobilization of the West Auriga. The total recognized gain on sale of the Auriga business was $440 million, after taking into account a goodwill allocation of $33 million, which has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. Refer to Note 11 - Disposals of businesses for more information.

Purchase of additional limited partner interest in Seadrill Operating LP

On July 21, 2014, the Company sold a 28% limited partner interest in Seadrill Operating LP, a subsidiary of Seadrill Partners, to Seadrill Partners for cash consideration of $373 million. This resulted in a loss on sale of investment of $88 million, which has been recognized within "share in results from associated companies" in the Company’s consolidated statement of operations. Refer to Note 17 - Investments in Associated Companies for more information

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West Vela Acquisition

On November 4, 2014, the Company sold the entities that own and operate the West Vela (the “Vela business”) to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners and 49% owned by the Company. The entities continue to be related parties subsequent to the sale. The purchase price consisted of an enterprise value of $900 million, less debt assumed of $433 million that was outstanding under the existing facility related to West Vela. The Company is also to receive deferred consideration of $44 thousand per day for the remainder of the West Vela's current contract with BP which runs to November 2020. In addition, the Company will receive a contingent amount of up to $40 thousand per day for the remainder of the BP contract, depending on the actual amount of contract revenue received from BP. The Company's accounting policy is not to recognize contingent consideration before it is considered realizable. The total consideration recognized on disposal of $535 million was comprised of cash of $467 million, and deferred consideration receivable of $74 million. The purchase price was also adjusted by a working capital adjustment of $6 million. The gain recognized at the time of disposal of the Vela business was $191 million, after taking into account a goodwill allocation of $41 million. The gain has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. During the quarter ended December 31, 2014, the Company also recognized $1 million related to the contingent consideration realized during the period. Refer to Note 11 - Disposals of businesses for more information.

Hemen and other related parties

Since our formation, our largest shareholder has been Hemen, which currently holds approximately 24.17% of our shares.  The Company transacts business with the following related parties, being companies in which Hemen has a significant interest:

• Ship Finance International Limited ("Ship Finance")

• Metrogas

• Archer

• Frontline Management (Bermuda) Limited ("Frontline")

Ship Finance Transactions

The Company has entered into sale and lease back contracts for several drilling units with subsidiaries of Ship Finance. The Company has determined that the Ship Finance subsidiaries, which own the units, are variable interest entities (VIEs), and that the Company is the primary beneficiary of the risks and rewards connected with the ownership of the units and the charter contracts. Accordingly, these VIEs are fully consolidated in the Company's consolidated accounts. The equity attributable to Ship Finance in the VIEs is included in non-controlling interests in the Company's consolidated accounts (See Note 35 to the consolidated financial statements included herein).

In the 12 months ended December 31, 2014, the Company incurred the following lease costs on units leased from the Ship Finance subsidiaries.

(US$ millions)	2014	2013	2012
West Polaris	55	70	114
West Hercules	75	77	75
West Taurus	111	112	114
West Linus	59	—	—
Total	300	259	303

These lease costs are eliminated on consolidation.

On July 1, 2010 our consolidated VIEs, SFL Deepwater Ltd and SFL Polaris Ltd, paid a dividend of $290 million and $145 million respectively to Ship Finance. Ship Finance simultaneously granted loans to SFL Deepwater Ltd and SFL Polaris Ltd for the same amounts. The loans bear interest at 4.5% per annum and are reported as long-term debt due to related parties in our balance sheet as the loans mature in 2023. On December 30, 2014 we entered into a share sale and purchase agreement with Ship Finance, where we acquired 100% of the equity interests in SFL West Polaris Limited, which was the owner of West Polaris. In addition the Company purchased an outstanding loan of SFL West Polaris Limited of $97 million from Ship Finance. The acquisition price for the shares and the loan amounted to $111 million. As at December 31, 2014, the consideration for the shares and loan was unpaid, and was settled on January 5, 2015. See Note 35 for more details.

On June 28, 2013, our subsidiary NADL sold the entity that owns the newbuild jack-up, West Linus, to the Ship Finance subsidiary SFL Linus Ltd. The purchase consideration for this reflected the market value of the rig as of the delivery date which was $600 million. This rig was simultaneously chartered back over a period of 15 years to NADL. Upon closing, SFL Linus Ltd received a $195 million loan from Ship Finance which bears an interest of 4.5% per annum and matures in 2029. During 2014 the loan was reduced to $125 million, and is reported as long-term debt due to related parties in our balance sheet as of December 31, 2014.

The total interest expense of the above loans relating to Ship Finance for 2014 was $24 million (2013: $20 million, 2012: $20 million).

F-64

During 2013 the VIEs declared dividends totaling $223 million, which were settled against existing intercompany balances with Ship Finance.

Metrogas transactions

From time to time, we may enter into agreements with Metrogas primarily to manage short-term working capital requirements. We had the following transactions with Metrogas:

On March 22, 2012, we obtained a short-term unsecured credit facility of $84 million from Metrogas. The principal plus interest was repaid in full in May 2012.

On May 15, 2012 we obtained a short term unsecured credit facility of $50 million from Metrogas. The principal plus interest was repaid in July 2012.

On June 7, 2012 we obtained a long term unsecured credit facility of NOK1,200 million from Metrogas. This loan agreement was amended on June 14 and June 27 increasing the loan amount to a total of NOK2,100 million. The principal plus interest was repaid in full in September 2012.

On December 20, 2012, we sold the Company's holding in a NADL unsecured bond of $500 million to Metrogas plus accrued interest of $9 million with a call option to repurchase the bond in full for a price equal to par plus unpaid accrued interest on the date of repurchase with a maturity date in June 2013. The obligation was recorded as a long term related party liability. In conjunction with this arrangement we also entered into an agreement to settle dividends payable to Metrogas in return for a short term unsecured loan of $93 million (see below). The North Atlantic bond bears a coupon of 7.75% per annum payable semi-annually in arrears. The net proceeds from these arrangements were $415 million. On May 31, 2013, the Company exercised its option to repurchase the bond from Metrogas, and as a result the bond is eliminated in the consolidated financial statements at December 31, 2014.

On December 21, 2012, we obtained a short term loan of $93 million from Metrogas. The loan bears interest of LIBOR plus a margin and was repaid in full on May 2, 2013.

On December 31, 2012, we obtained a short term loan from Metrogas of NOK140 million. The loan bears interest of NIBOR plus a margin and was repaid in full on January 2, 2013.

On February 27, 2013, we obtained a short-term loan from Metrogas of NOK300 million. The loan had an interest of NIBOR plus a margin and was repaid in full on March 12, 2013.

On March 27, 2013, we obtained a short-term loan from Metrogas of NOK700 million. The loan had an interest of NIBOR plus a margin, and was repaid in full on April 3, 2013.

On July 19, 2013, we entered into a loan agreement with Metrogas of NOK1,500 million. The loan had an interest of NIBOR plus a margin of 3.5% and was repaid in full on October 9, 2013.

On September 20, 2013, we obtained a short-term loan from Metrogas of $99 million. The loan had an interest of LIBOR plus a margin of 3.0%, and was repaid in full on September 30, 2013.

On December 10, 2013, the $1,121 million facility with Lloyds Bank TSB as agent was transferred to DNB Bank ASA as new agent and to Metrogas, as the lender. There have been no other changes to the facility. As Metrogas is a related party of the Company, the proportion of the facility related to Metrogas of $840 million was accordingly reclassified as debt due to related parties on the consolidated balance sheet as at December 31, 2014. On February 21, 2014, the Company entered into a term loan B agreement for $1.8 billion due in February 2021 in which some of the proceeds have been used to repay the portion of this facility that is related to the West Leo, which totaled $472.6 million as at December 31, 2013. The amount that was paid to Metrogas was $436 million.

On August 26, 2014, the $1,121 million facility was repaid in full, and replaced by a new $1,350 million senior secured credit facility with a syndicate of banks and DNB Bank ASA as agent. The Company recognized a $16 million gain on debt extinguishment within other financial items in the Company's consolidated statement of operations - see Note 23 – Long-term debt.

The total interest expense of the above loans relating to Metrogas for 2014 was $1 million (2013: $10 million; 2012: $7 million).

Archer transactions

From time to time, we may enter into transactions with Archer our former consolidated subsidiary and current associate investment related to Archer's working capital requirements and debt restructuring. We had the following transactions with Archer:

On June 27, 2012, the Company granted Archer a long term unsecured credit facility of $20 million. The principal plus interest was repaid in August 2012.

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On November 12, 2012, the Company granted Archer a short term unsecured loan of $55 million. The loan bears interest of LIBOR plus a margin and was settled in February 2013.

On February 20, 2013, the Company obtained a short-term unsecured loan of $43 million from Archer. The loan had an interest of LIBOR plus a margin of 5% and was repaid on February 27, 2013.

On March 27, 2013 the Company granted Archer a short term unsecured loan of $10 million. The loan had an interest of LIBOR plus a margin of 5%, and was repaid on April 2, 2013.

On March 7, 2013, the Company provided a guarantee to Archer on its payment obligations on a certain financing arrangements. The maximum liability to the Company is limited to $100 million. The guarantee fee is 1.25% per annum. On July 31, 2013, the Company provided Archer with an additional guarantee of $100 million, which was provided as part of Archer’s divestiture of a division, to support Archer's existing bank facilities. During 2014, the guarantees above were increased to a total of $250 million. The guarantee fee is 1.25% per annum.

On December 9, 2013, the Company provided Archer Topaz Limited, a wholly owned subsidiary of Archer, with a guarantee of a maximum of EUR56 million, to support Archer's credit facilities. The guarantee fee is 1.25% per annum.

On February 5, 2014, the Company provided Archer with a guarantee of a maximum of GBP 25.9 million, to support Archer's leasing obligations of a warehouse for a period of 10 years.

On February 12, 2014, the Company provided Archer with a guarantee of $120 million enabling Archer to finance the purchase of land rigs in Argentina.

On July 14, 2014, we provided Archer Norge AS, a wholly owned subsidiary of Archer, with a guarantee of a maximum of $20 million, to support Archer's guarantee facility. The guarantee fee is 1.25% per annum.

These guarantee fees are included in other financial items in our consolidated statement of operations.

Archer provides certain management support and administrative services for the Company, and charged the Company fees of $4.0 million for the twelve months ended December 31, 2014 (2013: nil; 2012: nil) respectively. These amounts are included in general and administrative expenses. Also included in other financial items are guarantee fees charged to Archer of $3.7 million for the twelve months ended December 31, 2014 (2013: nil; 2012: nil) respectively.

The total net interest income of the above loans relating to Archer for 2014 was nil (2013: $0.7 million; 2012: $0.1 million).

On March 6, 2015, the Company purchased a $50 million subordinated loan made by Metrogas, a related party, to Archer, a related party. The aggregate consideration paid for the loan by the Company to Metrogas was $51 million which is equal to the sum of the outstanding principal amount of $50 million and $1 million accrued commitment fee and interest on the loan.

Frontline transactions

Frontline provides management support and administrative services for the Company, and charged the Company fees of $4 million, $2 million and $2 million for these services in the years 2014, 2013 and 2012, respectively. These amounts are included in "general and administrative expenses".

Other related parties

Seabras Sapura transactions

Seabras Sapura Participacoes SA and Seabras Sapura Holdco Ltd, together referred to as Seabras Sapura, are joint ventures each owned 50% by the Company.

In May 2014, we entered into a loan agreement with Seabras Sapura of $11 million. The loan has an interest of 3.4% and is repayable by May 31, 2015.

In May 2014, we entered into a loan agreement with Seabras Sapura of €4 million. The loan has an interest of 3.4% and is repayable by May 31, 2015.

The total net interest income of the above loans relating to Seabras Sapura for 2014 was $0.3 million (2013: nil; 2012: nil).

F-66

Other related party transactions

In the year ended December 31, 2014, the Company recognized related party revenues of $97 million (2013: $2 million, 2012: $15 million). In 2014 the revenue related to Seadrill Partners under the management agreements as described above. The related party revenues in 2013 and 2012 related to a previous joint venture and related party Varia Perdana and its subsidiary Crest Tender Rigs Pte Ltd (together "Varia Group"), and Asia Offshore Drilling Ltd (AOD). During 2013 we provided management support, administrative and construction management services to AOD and received bare boat fees from the Varia Group. AOD became a consolidated subsidiary of the Company during 2013 and therefore these revenues are now eliminated on consolidation, see Note 12 to the consolidated financial statements included herein. The amounts related to the Varia Group during 2013 included the period up until the sale of our tender rig business, see Note 11 to the consolidated financial statements included herein.

Note 32 – Risk management and financial instruments

The majority of gross earnings from the Company's drilling units are receivable in U.S. dollars and the majority of the Company's other transactions, assets and liabilities are denominated in U.S. dollars, the functional currency of the Company. However, the Company has operations and assets in a number of countries worldwide and incurs expenditures in other currencies, causing its results from operations to be affected by fluctuations in currency exchange rates, primarily relative to the U.S. dollar. The Company is also exposed to changes in interest rates on floating interest rate debt, and to the impact of changes in currency exchange rates on NOK and SEK denominated debt. There is thus a risk that currency and interest rate fluctuations will have a negative effect on the value of the Company's cash flows. The Company has entered into derivative agreements to mitigate the risk of fluctuations, as described below.

Interest rate risk management

The Company's exposure to interest rate risk relates mainly to its floating interest rate debt and balances of surplus funds placed with financial institutions. This exposure is managed through the use of interest rate swaps and other derivative arrangements. The Company's objective is to obtain the most favorable interest rate borrowings available without increasing its foreign currency exposure. Surplus funds are generally used to repay revolving credit facilities, or placed in accounts or fixed deposits with reputable financial institutions in order to maximize returns, while providing the Company with the flexibility to meet working capital and capital investments. The extent to which the Company utilizes interest rate swaps and other derivatives to manage its interest rate risk is determined by the net debt exposure.

Interest rate swap agreements not qualified as hedge accounting

At December 31, 2014, the Company had interest rate swap agreements with an outstanding principal of $7,918 million (December 31, 2013: $9,776 million). These agreements do not qualify for hedge accounting, and accordingly any changes in the fair values of the swap agreements are included in the consolidated statement of operations under "Gain/(loss) on derivative financial instruments". The total fair value of the interest rate swaps outstanding at December 31, 2014 amounted to a gross liability of $191 million and a net liability of $134 million due to master netting agreements with our counterparties (December 31, 2013: a gross liability of $244 million and net liability of $89 million). The fair value of the interest rate swaps are classified as other current assets and liabilities in our consolidated balance sheet as of December 31, 2014 and December 31, 2013.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to interest rate swap agreements in 2014 amounted to $176.1 million (2013: gains of $143 million, 2012: losses of $129 million).

The Company's interest rate swap agreements as at December 31, 2014, were as follows:

Maturity date	Total outstanding principal as at December 31, 2014	Receive rate	Pay rate range
	(In US$ millions)
Expiring in 2015	50	3 month LIBOR	4.63%	4.63%
Expiring in 2016	1,350	3 month LIBOR	2.14%	3.36%
Expiring in 2016	35	6 month LIBOR	3.83%	3.83%
Expiring in 2017	1,428	3 month LIBOR	0.74%	3.8%
Expiring in 2018	1,000	3 month LIBOR	2.83%	3.34%
Expiring in 2019	707	3 month LIBOR	1.11%	1.36%
Expiring in 2020	3,141	3 month LIBOR	1.36%	2.19%
Expiring in 2022	207	3 month LIBOR	1.38%	1.38%
Total	7,918

F-67

The counterparties to the above agreements are reputable financial institutions. Credit risk exists to the extent that the counterparties are unable to perform under the contracts, but this risk is considered remote as the counterparties are reputable financial institutions which have all provided loan finance to us and the interest rate swaps are related to those financing arrangements.

In October 2013, five interest rate swaps relating to our consolidated subsidiary Sevan, with a total outstanding principle of $606 million and maturities between June 2016 and July 2018, were terminated as part of Sevan entering into a new $1,750 million facility, see Note 23 to the consolidated financial statements included herein. The total exit cost was $19 million, and the loss recorded for the quarter was $4 million which is recorded in the consolidated statement of operations under " Gain/(loss) on derivative financial instruments".

Cross currency interest rate swaps not qualified as hedge accounting

At December 31, 2014 the Company had outstanding cross currency interest rate swaps with principal amounts of $807 million (December 31, 2013: $786 million) with maturity dates between March 2018 and March 2019 at fixed rates ranging from 4.94% to 6.1825%. These agreements do not qualify for hedge accounting and accordingly any changes in the fair values of the swap agreements are included in the consolidated statement of operations under " Gain/(loss) on derivative financial instruments". The total fair value of cross currency interest swaps outstanding at December 31, 2014 amounted to a liability of $201 million (December 31, 2013: a liability of $46 million). The fair value of the cross currency interest swaps are classified as other current liabilities in the consolidated balance sheet as at December 31, 2014 and within other current liabilities as at December 31, 2013.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to cross currency interest rate swap agreements in 2014 amounted to $171.2 million (2013: loss of $10 million, 2012: gain of $36 million).

Interest rate hedge accounting

A Ship Finance subsidiary consolidated by the Company as a variable interest entity (VIEs), has entered into interest rate swaps in order to mitigate the exposure to variability in cash flows for future interest payments on the loans taken out to finance the acquisition of the West Linus.  These interest rate swaps qualify for hedge accounting under US GAAP, and the instruments have been formally designated as a hedge to the underlying loan. When the hedge is effective, any changes in its fair value is included in "other comprehensive income". The effectiveness of hedging instruments is assessed at each reporting period. The total fair value of these interest rate swaps outstanding at December 31, 2014 amounted to a liability of $3 million (December 31, 2013: a liability of $2 million), which are classified as other non-current liabilities in the consolidated balance sheet. Below is a summary of the notional amount, fixed interest rate payable and duration of the outstanding principal as of December 31, 2014.

Variable interest entity	Outstanding principal as at December 31, 2014	Receive rate	Pay rate	Length of contract
	(In US$ millions)
SFL Linus Limited (West Linus)	4.0	1 month LIBOR	2.01%	Mar 2014 - Oct 2018
SFL Linus Limited (West Linus)	4.0	2 month LIBOR	2.01%	Mar 2014 - Nov 2018
SFL Linus Limited (West Linus)	215.7	3 month LIBOR	1.77%	Dec 2013 - Dec 2018

In the year ended December 31, 2014 the above VIEs recorded no fair value gains/losses on interest rate swaps (December 31, 2013: gains of $3 million). For the year ended December 31, 2013 these gains were recorded by those VIEs as "other comprehensive income" but due to their ownership by Ship Finance these gains are allocated to "non-controlling interest" in our consolidated statement of changes in equity. The net interest paid on these swaps for the year ended December 31, 2014 was $4 million (2013: net interest of $5 million). During 2013, the interest rate swap relating to SFL Deepwater Limited (West Taurus) with principal $450 million matured in August 2013.

Any change in fair value resulting from hedge ineffectiveness is recognized immediately in earnings. The VIEs and therefore the Company, did not recognize any gain or loss due to hedge ineffectiveness in the consolidated financial statements during the years ended December 31, 2014, 2013 and 2012 relating to derivative financial instruments.

Foreign exchange risk management

The Company and the majority of its subsidiaries use the U.S. dollar as their functional currency because the majority of their revenues and expenses are denominated in U.S. dollars. Accordingly, the Company's reporting currency is also U.S. dollars. The Company does, however, earn revenue and incur expenses in other currencies and there is thus a risk that currency fluctuations could have an adverse effect on the value of our cash flows. The Company is also exposed to changes in interest rates on floating interest rate debt, and to the impact of changes in currency exchange rates on NOK and SEK denominated debt. The Company has entered into derivative agreements to mitigate the risk of exchange rate fluctuations as described below

F-68

Foreign currency forwards not qualified as hedge accounting

The Company uses foreign currency forward contracts and other derivatives to manage exposure to foreign currency risk on certain assets, liabilities and future anticipated transactions. Such derivative contracts do not qualify for hedge accounting treatment and are recorded in the consolidated balance sheet under current receivables if the contracts have a net positive fair value, and under other current liabilities if the contracts have a net negative fair value. At December 31, 2014, the Company had forward contracts to sell approximately $260 million between January 2015 and May 2015 at exchange rates ranging from NOK6.37 million to NOK6.89 million per US dollar. The total fair value of currency forward contracts December 31, 2014 amounted to a liability$24 million (December 31, 2013: a liability$3 million), and are classified as other current liabilities in the consolidated balance sheet.

During the year, we also entered into British Pounds Sterling (GBP) swap contracts to sell approximately GBP30 million ($49 million) between January 2015 and April 2015 at exchange rates ranging from GBP1.59 to GBP1.68 per US dollar. The total fair value of GBP currency swaps outstanding at December 31, 2014 amounted to a liability of $3 million (December 31, 2013: an asset of $1 million), and are classified as other current liabilities in the consolidated balance sheet as at December 31, 2014 and other current assets as at December 31, 2013.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to foreign currency forward agreements in 2014 amounted to $58 million (2013: losses of $49 million, 2012: gains of $12 million).

Other arrangements

The Company from time to time may enter into swap agreements, forward contracts or other derivative arrangements based on assets or equity shares of the Company which provide flexible financing alternatives at a low cost.

Total Return Swap ("TRS") Agreements

During 2014, 2013 and 2012 the Company entered into and settled various TRS agreements which are indexed to the Company's own common shares. The total realized and unrealized loss recognized in the consolidated statement of operations relating to the Company's TRS agreements in 2014 was a loss of $73 million (2013: gain of $19 million, 2012: gain of $7 million). The fair value of the TRS agreements at December 31, 2014 was a liability of $5 million (December 31, 2013: a liability of $2 million). The fair values of the TRS agreements are classified as other current liabilities in the balance sheet as at December 31, 2014 and December 31, 2013. As of December 31, 2014 we had an outstanding agreement related to 4 million shares at NOK96.02 per share (December 31, 2013: 1.4 million shares at NOK255.38 per share). We generally settle these agreements in cash, or through further rolling of the agreements. We are in control of the settlement of these agreements. Subsequent to the year end, on March 3, 2015, the TRS agreement related to 4 million shares was rolled over with a new expiry date of June 3, 2015, and a new reference price of NOK87.4056 per share.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to TRS agreements in 2014 amounted to $72.6 million (2013: gains of $19 million, 2012: gains of $7 million).

Sevan share repurchase agreements

During 2013 the Company has entered into agreements in which the Company has sold its shares in Sevan Drilling to commercial banks and then entered into a share purchase agreement to repurchase the same amount of shares at a later date which is generally within three months from the date of entering into the sale agreement. As of December 31, 2014 the Company has agreements for 216,065,464 Sevan Drilling shares to be repurchased on February 6, 2015 at a strike price of NOK4.1701 and 81,828,500 Sevan Drilling shares to be repurchased on February 6, 2015 at a strike price of NOK4.1966. These share repurchase agreements have been accounted for as secured borrowings and therefore the Company have recognized the liabilities associated with these repurchases in other current liabilities in the amount of $167 million as of December 31, 2014 (December 31, 2013: liability of $198 million).

On February 6, 2015 the Company entered into forward agreements to repurchase 216,065,464 and 81,828,500 Sevan Drilling shares on May 6, 2015 at a strike price of NOK0.7249 and NOK0.7246 respectively.

F-69

SapuraKencana share agreements

On September 18, 2013, we entered into two derivative contract agreements with a commercial bank which enabled the Company to obtain financing against a portion of our equity investment in SapuraKencana in which the Company received $250 million upfront as prepayment for one of the agreements. The agreements have a settlement date three years from the inception date and include an interest equivalent component which is based on the prepaid amount received and LIBOR plus 1.90% per annum. As part of these agreements, a number of shares in SapuraKencana were pledged as security, the value of which as at December 31, 2014 amounted to $325 million (December 31, 2013: $666 million), and is presented as a long term marketable security on the consolidated balance sheet (see Note 14 to the consolidated financial statements included herein). The unrealized gains and losses resulting from measuring the fair value of these contracts at December 31, 2014 are a gross asset of $103 million, and a gross liability of $103 million which have been offset in the consolidated balance sheet and consolidated income statement as these agreements meet the criteria for offsetting (December 31, 2013: gross asset of $83.6 million, and a gross liability of $83.6 million). The $250 million received as a prepayment to the Company is included in other long-term liabilities. The agreements also contain financial covenants which are similar to the Company's bank loans, See Note 23 to the consolidated financial statements included herein.

Other derivative agreements

Total realized and unrealized gains and losses on other derivative instruments amounted to a loss of $19 million for 2014 (2013: gain of $30 million).

Credit risk

The Company has financial assets, including cash and cash equivalents, marketable securities, other receivables and certain amounts receivable on derivative instruments, mainly forward exchange contracts and interest rate swaps. These assets expose the Company to credit risk arising from possible default by the counterparty. The Company considers the counterparties to be creditworthy financial institutions and does not expect any significant loss to result from non-performance by such counterparties. The Company, in the normal course of business, does not demand collateral. The credit exposure of interest rate swap agreements, currency option contracts and foreign currency contracts is represented by the fair value of contracts with a positive fair value at the end of each period, reduced by the effects of master netting agreements. It is the Company's policy to enter into master netting agreements with the counterparties to derivative financial instrument contracts, which give the Company the legal right to discharge all or a portion of amounts owed to a counterparty by offsetting them against amounts that the counterparty owes to the Company.

Fair values of financial instruments

The carrying value and estimated fair value of the Company's financial instruments at December 31, 2014 and December 31, 2013 are as follows:

	December 31, 2014		December 31, 2013
(In US$ millions)	Fair value	Carrying value	Fair value	Carrying value
Cash and cash equivalents	831	831	744	744
Restricted cash	449	449	318	318
Current portion of floating rate debt	1,928	1,928	1,315	1,315
Long-term portion of floating rate debt	7,713	7,713	8,793	8,793
Current portion of fixed rate CIRR loans	39	39	47	47
Long term portion of fixed rate CIRR loans	84	84	150	150
Fixed interest convertible bonds	—	—	704	577
Fixed interest bonds - short term	323	342	—	—
Fixed interest bonds - long term	2,015	1,892	1,837	1,842
Floating interest bonds - short term	—	—	204	204
Floating interest bonds - long term	483	622	541	538

The carrying value of cash and cash equivalents and restricted cash, which are highly liquid, is a reasonable estimate of fair value and categorized at level 1 on the fair value measurement hierarchy.

The fair value of the current and long-term portion of floating rate debt is estimated to be equal to the carrying value since it bears variable interest rates, which are reset regularly and usually in the range between every one to six months. This debt is not freely tradable and cannot be purchased by the Company at prices other than the outstanding balance plus accrued interest. We have categorized this at level 2 on the fair value measurement hierarchy.

F-70

The fair value of the long-term portion of the fixed rate CIRR loans is equal to the carrying value, as they are matched with equal balances of restricted cash. We have categorized this at level 2 on the fair value measurement hierarchy.

The convertible bonds are freely tradable and their fair value has been set equal to the price at which they were traded at on December 31, 2013. We have categorized this at level 1 on the fair value measurement hierarchy.

The fixed interest rate bonds are freely tradable and their fair value has been set equal to the price at which they were traded at on December 31, 2014 and December 31, 2013. We have categorized this at level 1 on the fair value measurement hierarchy.

Financial instruments that are measured at fair value on a recurring basis:

	Fair value	Fair value measurements at reporting date using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(In US$ millions)	December 31, 2014	(Level 1)	(Level 2)	(Level 3)
Assets:
Marketable securities	751	751	—	—
Interest rate swap contracts – short term receivable	5	—	5	—
Total assets	756	751	5	—
Liabilities:
Interest rate swap contracts – short term payable	139	—	139	—
Interest rate swap contracts – long term payable	3	—	3	—
Cross currency interest rate swap contracts – short term payable	201	—	201	—
Foreign exchange forwards – short term payable	27	—	27	—
Other derivative instruments – short term payable	5	—	5	—
Total liabilities	375	—	375	—

	Fair value	Fair value measurements at reporting date using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(In US$ millions)	December 31, 2013	(Level 1)	(Level 2)	(Level 3)
Assets:
Marketable securities	1,082	1,078	—	4
Interest rate swap contracts – short term receivable	5	—	5	—
Foreign exchange forwards – short term receivable	2	—	2	—
Other derivative instruments – short term receivable	2	—	2	—
Total assets	1,091	1,078	9	4
Liabilities:
Interest rate swap contracts – short term payable	94	—	94	—
Interest rate swap contracts – long term payable	2	—	2	—
Cross currency swap contracts – short term payable	46	—	46	—
Foreign exchange forwards – short term payable	3	—	3	—
Other derivative instruments – short term payable	2	—	2	—
Total liabilities	147	—	147	—

F-71

Roll forward of fair value measurements using unobservable inputs (Level 3) relating to the Petromena Bond. Please refer to Note 14 for additional information:

(In US$ millions)
Beginning balance January 1, 2014	4
Realization	6
Proceeds on disposal	(10	)
Closing balance December 31, 2014	—

US GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, US GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).

Level one input utilizes unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level two inputs are inputs other than quoted prices included in level one that are observable for the asset or liability, either directly or indirectly. Level two inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability, other than quoted prices, such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level three inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Quoted market prices are used to estimate the fair value of marketable securities, which are valued at fair value on a recurring basis.

The fair value of total return equity swaps is calculated using the closing prices of the underlying listed shares, dividends paid since inception and the interest rate charged by the counterparty.

The fair values of interest rate swaps, cross currency interest rate swaps, and forward exchange contracts are calculated using well-established independent valuation techniques applied to contracted cash flows and LIBOR and NIBOR interest rates as of December 31, 2014.

The fair value of other derivative instruments is calculated using the closing prices of the underlying securities, dividends paid since inception and the interest charged by the counterparty.

Retained Risk

a) Physical Damage Insurance

The Company retains the risk, through self-insurance, for the deductibles relating to physical damage insurance on the Company's drilling unit fleet, currently a maximum of $5 million per occurrence.

b) Loss of Hire Insurance

The Company purchases insurance to cover the deepwater drilling units, one semi tender and the North Atlantic fleet for loss of revenue in the event of extensive downtime caused by physical damage, where such damage is covered under the Company's physical damage insurance. The Company's self-insured retentions under the loss of hire insurance are up to 60 days after the occurrence of the physical damage plus a 25% quota share on the Loss of Hire daily amount. Thereafter, under the terms of the insurance, the Company is compensated for loss of revenue for a period ranging from 210 days up to 290 days. The Company retains the risk that the repair of physical damage takes longer than the total number of days in the loss of hire policy.

Concentration of risk

The Company has financial assets, including cash and cash equivalents, marketable securities, other receivables and certain derivative instrument receivable amounts. These other assets expose the Company to credit risk arising from possible default by the counterparty. There is also a concentration of credit risk with respect to cash and cash equivalents to the extent that most of the amounts are carried with DnB NOR Bank ASA, Nordea Bank Finland Plc, Fokus Bank, and ING Bank N.V. The Company considers these risks to be remote.

F-72

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

Note 33 – Commitments and contingencies

Legal Proceedings:

The Company is a party, as plaintiff or defendant, to some lawsuits in various jurisdictions for demurrage, damages, off-hire and other claims and commercial disputes arising from the construction or operation of its drilling units, in the ordinary course of business or in connection with its acquisition activities.  The Company believes that the resolution of such claims will not have a material adverse effect on the Company's operations or financial condition either individually or in the aggregate. The Company's best estimate of the outcome of the various disputes has been reflected in the financial statements of the Company as of December 31, 2014 which is not material.

In December 2014, a purported shareholder class action lawsuit, Fuchs et al. v. Seadrill Limited et al., No. 14-cv-9642 (LGS)(KNF), was filed in US Federal District Court in the Southern District of New York, alleging, among other things, that Seadrill and certain of its executives made materially false and misleading statements in connection with the payment of dividends.  In January 2015, a second purported shareholder class action lawsuit,  Heron v. Seadrill Limited et al., No. 15-cv-0429 (LGS)(KNF), was filed in the same court on similar grounds.  The judge has entered an order consolidating these cases. We cannot predict the outcome of these cases, nor can we estimate the amount of any possible loss. Accordingly, no loss contingency has been recognized within the financial statements.

Pledged assets

The book value of assets pledged under mortgages and overdraft facilities at December 31, 2014 was $17,772 million (2013: $18,301.58 million). In addition we have $325 million of marketable securities pledged as security for certain derivative arrangements.

Purchase Commitments

At December 31, 2014, the Company had contractual commitments under sixteen newbuilding contracts totaling $5,389 million (2013: $7,683 million). The contract commitments are mainly yard installments and are for the construction of three semi-submersible rigs, eight jack-up rigs and five drillships.

Note that the newbuilding commitments include $424 million related to the Sevan Developer that are presented as a contractual obligation in the balance sheet in the line item "Other short term liabilities". Sevan Drilling and Cosco Shipyard have agreed to amend the termination rights of the construction contract and defer the delivery date for the Sevan Developer. Delivery is deferred for 12 months with mutually agreed options, exercisable at 6 month intervals, to extend the delivery date for up to a total of 36 months from October 15, 2014. The agreement will terminate at the end of each deferral period, unless the option to extend is mutually agreed by both parties. If termination should occur, Sevan is entitled to a refund of its installments less any agreed costs. Cosco will complete construction and maintain the rig at the shipyard in Qidong. Sevan will continue to market the rig as part of its fleet. Payment of the construction liability and other related costs will be deferred until delivery.

The maturity schedule for the contractual commitments as of December 31, 2014 is as follows:

(In US$ millions)	2015	2016	2017	2018	2019	2020 and thereafter	Total
Newbuildings	4,722	667	—	—	—	—	5,389

F-73

Guarantees

The Company has issued guarantees in favor of third parties as follows, which is the maximum potential future payment for each type of guarantee:

(In US$ millions)	December 31, 2014	December 31, 2013
Guarantees to customers of the Company's own performance	1,824	1,541
Guarantee in favor of banks(1)	1,254	970
Guarantee in favor of suppliers (1) (2)	3,898	6,321
Guarantee in favor of Variable Interest Entities	1,428	1,674
Total	8,404	10,506

(1) Within guarantees in favor of banks are guarantees provided on behalf of Archer of $370 million and EUR72 million ($92 million) (2013200 million and EUR56 million ($77 million)). Guarantees in favor of suppliers includes guarantees on behalf of Archer of GBP 26 million ($40 million) (2013nil). See Note 31 to the consolidated financial statements included herein.

(2) Within guarantees in favor of suppliers are guarantees provided in relation to our joint ventures Seabras Sapura Participacoes and Seabras Sapura Holdco of EUR47 million ($60 million) and $375 million respectively (2013 EUR 47 million ($64 million) and $625 million respectively). See Note 17 to the consolidated financial statements included herein.

Note 34 – Operating leases

The Company has operating leases relating to premises, the most significant being its offices in Stavanger, London, Liverpool, Singapore, Houston, Rio de Janeiro and Dubai. In the years ended December 31, 2014, 2013 and 2012 rental expenses amounted to $24 million, $21 million and $25 million, respectively. Future minimum rental payments are as follows:

Year	(In US$ millions)
2015	15
2016	12
2017	10
2018	7
2019	7
2020 and thereafter	21
Total	72

Note 35 – Variable Interest Entities (VIEs)

As of December 31, 2014, the Company leased two semi-submersible rigs, and a jack-up from VIEs under finance leases. Each of the units had been sold by the Company to single purpose subsidiaries of Ship Finance and simultaneously leased back by the Company on bareboat charter contracts for a term of 15 years. The Company has several options to repurchase the units during the charter periods, and put options and obligations to purchase the assets at the end of the 15 years lease period.

On June 19, 2013, SFL Deepwater Ltd sold the West Hercules to SFL Hercules Ltd. This transaction under common control has no net effects on our consolidated financial statements, and we will continue to consolidate all relevant VIEs.

On June 28, 2013, our consolidated subsidiary NADL sold the entity that own the jack-up, the West Linus, to the Ship Finance subsidiary, SFL Linus Ltd. The purchase consideration reflected a market value of the rig as of the delivery date which was $600 million. This rig was simultaneously chartered back to the Company over a period of 15 years. Upon closing of the purchase, SFL Linus Ltd received a $195 million loan from Ship Finance which bears an interest of 4.5% per annum and matures in 2029. During 2014 the loan was reduced to $125 million, and is reported as long-term debt due to related parties in our balance sheet as of December 31, 2014.

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The following table gives a summary of the sale and leaseback arrangements and repurchase options, as of December 31, 2014:

Unit	Effective from	Sale value (In $ millions)	First repurchase option (In $ millions)	Month of first repurchase option	Last repurchase option * (In $ millions)	Month of last repurchase Option *
West Taurus	Nov 2008	850	418	February 2015	149	November 2023
West Hercules	Oct  2008	850	580	August 2011	135	August 2023
West Linus	Jul 2013	600	370	June 2018	170	June 2028

* For West Taurus and West Hercules repurchase obligations at the end of the lease terms have been agreed, at $149 million and $135 million, respectively. For West Linus the put option is $100 million.

The Company has determined that the Ship Finance subsidiaries, which own the units, are variable interest entities (VIEs), and that the Company is the primary beneficiary of the risks and rewards connected with the ownership of the units and the charter contracts. Accordingly, these VIEs are consolidated in the Company's results. The Company did not record any gains from the sale of the units, as they continued to be reported as assets at their original cost in the Company's consolidated balance sheet at the time of each transaction. The equity attributable to Ship Finance in the VIEs is included in non-controlling interests in the Company's consolidated results. At December 31, 2014 and December 31, 2013 the units are reported under drilling units in the Company's balance sheet.

The bareboat charter rates are set on the basis of a Base LIBOR Interest Rate for each bareboat charter contract, and thereafter are adjusted for differences between the LIBOR fixing each month and the Base LIBOR Interest Rate for each contract. A summary of the bareboat charter rates per day for each unit is given below.

	(In US$ thousands)
	2014	2015	2016	2017	2018
West Taurus	340	186	166	158	158
West Hercules	239	180	179	170	166
West Linus	222	222	223	222	222

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The assets and liabilities in the statutory accounts of the VIEs as at December 31, 2014 and as at December 31, 2013 are as follows:

(In US$ millions)	December 31, 2014				December 31, 2013
	SFL West Polaris Limited **	SFL Deepwater Limited	SFL Hercules Limited	SFL Linus Limited	SFL West Polaris Limited	SFL Deepwater Ltd.	SFL Hercules Limited	SFL Linus Limited
Name of unit	West Polaris	West Taurus	West Hercules	West Linus	West Polaris	West Taurus and West Hercules	West Hercules	West Linus
Investment in finance lease	N/A	429	426	574	488	515	477	195
Amount due from related parties *	N/A	45	5	14	45	30	25	—
Other assets	N/A	13	10	—	5	13	10	—
Total assets	N/A	487	441	588	538	558	512	195
Short-term interest bearing debt	N/A	32	28	51	36	80	28	—
Long-term interest bearing debt	N/A	271	256	400	351	303	333	—
Other liabilities	N/A	6	1	3	2	6	2	2
Long-term debt due to related parties *	N/A	145	145	125	145	145	145	195
Total liabilities	N/A	454	430	579	534	534	508	197
Equity	N/A	33	11	9	4	24	4	(2	)
Book value of units in the Company's consolidated accounts	N/A	450	603	581	577	458	617	162

* In the VIEs separate financial statements the related party balances are presented on a net basis.

** Refer to "West Polaris acquisition" discussion below.

West Polaris acquisition

On December 30, 2014 we entered into a share sale and purchase agreement with Ship Finance, where we acquired 100% of the equity interests in SFL West Polaris Limited, which was the owner of West Polaris. In addition, the Company purchased an outstanding loan of SFL West Polaris Limited of $97 million from Ship Finance. The acquisition price for the shares and the loan amounted to $111 million. This transaction is accounted for as an equity transaction and no gain or loss is recognized. Non-controlling interest of $7 million has been derecognized, with the residual $6 million recognized as a reduction in Additional Paid in Capital. As at December 31, 2014, the consideration for the shares and loan was unpaid, and was settled on January 5, 2015. Ship Finance continues to provide a guarantee for the bank loan which is held by SFL West Polaris Limited, although Seadrill has indemnified Ship Finance against any claims made against Ship Finance under the guarantee.

Note 36 - Equity offerings and drilling unit sale transactions with Seadrill Partners

The following table summarizes the issuances of common units for Seadrill Partners between their IPO in October 2012 until the deconsolidation of Seadrill Partners on January 2, 2014:

Date	Number of Common Units Issued to the Public	Number of Common Units Issued to Seadrill	Offering Price ($)	Gross proceeds from public ($'millions)	Net proceeds from public ($'millions)	Seadrill's ownership after the offering
October 24, 2012 (IPO)	10,062,500	14,752,525	22.00	221	203	75.67	%
October 18, 2013	—	3,310,622	32.29	—	—	77.47	%
December 13, 2013	12,880,000	3,394,916	29.50	380	365	62.35	%

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The following table summarizes the sale of the Company's drilling units to Seadrill Partners between its IPO until the deconsolidation of Seadrill Partners on January 2, 2014:

(In US$millions)	T-15	T-16	West Sirius		West Leo		Total
Adjusted sales price *	74	68	922		729		1,793
Less net assets transferred	5	—	(375	)	(116	)	(486	)
Excess of sales price over net assets transferred	79	68	547		613		1,307
Deemed contribution to Seadrill shareholders from non-controlling interest	19	16	105		69		209

* The Adjusted sales price above includes debt assumed and working capital adjustments.

These transactions were deemed to be reorganizations of entities under common control and accordingly no gains or losses were recognized by the Company.

On May 17, 2013, the Company sold its 100% interest in the entities that own and operate the tender rig T-15 to Seadrill Partners a total purchase price of $210 million, less approximately $101 million of debt outstanding, less $35 million of working capital adjustments. The acquisition was funded by issuance of vendor financing loan to Seadrill Partners of $110 million.

On October 18, 2013, the Company sold its 100% interest in the entity that owns the tender rig T-16, and the beneficial interest in the T-16 drilling contract (collectively, the “T-16 Business”), to Seadrill Partners for a total purchase price of $200 million, less approximately $93 million of debt outstanding, less $39 million of working capital adjustments. As part of the consideration, Seadrill Partners issued 3,310,622 common units to Seadrill as consideration for the purchase in a private placement transaction at a price of $32.29 per unit. This resulted in an increase in net assets attributable to the non-controlling interest of $19 million.

On December 13, 2013, the Company sold to Seadrill Partners: (i) 51% of its interest in each of the entities that own, operate and manage the semi-submersible drilling rig, West Sirius (the “Sirius Business”); and (ii) 30% of its interest interests in each of the entities that own and operate the semi-submersible drilling rig, West Leo (the “Leo Business”). The implied purchase prices of the Sirius Business was $1,035 million, less debt assumed of $220 million , plus working capital adjustments of $107 million. The implied purchase prices of the Leo Business was $1,250 million, less debt assumed of $486 million, less working capital adjustments of $35 million. In relation to these acquisitions, Seadrill Partners issued 12,880,000 common units to the public (including 1,680,000 common units issued to underwriters) and 3,394,916 common units to Seadrill, at a price of $29.50 per unit. The gross proceeds raised from the public was $380 million, and the net proceeds raised after issuance fees was $365 million, of which $137 million was attributable to the non-controlling interest. This resulted in an increase in net assets attributable to the non-controlling interest of $83 million.

Note 37 – Assets held for sale

During the year ended December 31, 2014, the Company entered into a joint venture agreement with an investment fund controlled by Fintech Advisory Inc. (Fintech), for the purpose of owning and managing certain jack-up drilling units located in Mexico under contract with Pemex. The West Oberon, West Intrepid, West Defender, West Courageous and West Titania jack-up drilling rigs were included within the joint venture. The transaction was completed on March 10, 2015, when Fintech subscribed for a 50% ownership interest in SeaMex Limited, which was previously 100% owned by the Company.

As a result of the transaction the Company no longer controls the entities that own and operate these jack-up drilling units, and accordingly the Company will deconsolidate these entities as of March 10, 2015, and subsequently recognize its 50% investment in the joint venture at fair value. The assets and liabilities held within the Company’s consolidated balance sheet as at December 31, 2014 that are related to the disposal group have been reclassified as held for sale and depreciation has ceased for the related assets. The Company has not presented this disposal group as discontinued operations in our statement of operations it will continue to hold significant influence over the joint venture.

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Assets and liabilities held in the Company's consolidated balance sheet included as held for sale are shown below:

(In US$ millions)	As at December 31, 2014
ASSETS
Current assets
Cash and cash equivalents	27
Accounts receivables, net	78
Deferred tax assets	9
Other current assets	20
Total current assets	134
Non-current assets
Drilling units	965
Deferred tax assets LT	5
Goodwill	49
Other non-current assets	86
Total non-current assets	1,105
Total assets	1,239
LIABILITIES
Current liabilities
Trade accounts payable	(2	)
Other current liabilities	(56	)
Total current liabilities	(58	)
Non-current liabilities
Other non-current liabilities	(50	)
Total non-current liabilities	(50	)
Total liabilities	(108	)

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Note 38 - Supplementary cash flow information

The table below summarizes the non-cash investing and financing activities relating to the periods presented:

(In US$ millions)	December 31, 2014	December 31, 2013	December 31, 2012
Non-cash investing activities
Disposal of West Auriga - consideration received as a loan note (1)	100	—	—
Disposal of West Vela - deferred consideration receivable (1)	74	—	—
Disposal of tender rig business - deferred consideration received in shares (1)	—	416	—
Disposal of tender rig business - deferred consideration in receivables (1)	—	145	—
Acquisition of Archer shares, settled against existing related party loan (2)	—	55	—
Acquisition of AOD shares, settled against existing related party loan (3)	—	67	—
Non-cash financing activities
Conversion of convertible bond into shares, decrease in long term debt (4)	584	—	—
Conversion of convertible bond into shares, net increase in equity (4)	615	—	—
Purchase of SFL Polaris, net increase in related party payables and net decrease in equity (5)	13	—	—
Sale of non-controlling interest, increase in receivables (6)	4	—	—
Dividend to non-controlling interests in VIEs (7)	—	223	—
Dividend payable to related party (8)	—	—	93

1. Disposals of the West Auriga, West Vela, in 2014 and the disposal of the tender rig business in 2013 - refer to Note 11 - Disposals of businesses

2. Private placement of Archer shares in February 2013 was settled against related party loan receivable - refer to Note 17 - Investments in associated companies

3. Private placement of AOD shares in March 2013 was settled against elated party loan receivable - refer to Note 17 - Investments in associated companies

4. Conversion of convertible bonds in July 2014 - refer to Note 23 - Long term debt

5. Purchase of SFL Polaris from Ship Finance - refer to Note 35 - VIEs

6. Sale of interests in Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited to Hiers Holding Limited - refer to Note 27 - Non-Controlling interests

7. Dividends declared by VIEs in 2013 to Ship Finance was settled against related party balances with Ship Finance - refer to Note 27 - Non-Controlling interests

8. Loan issued to Metrogas in 2012 - refer to Note 31 - Related party transactions

Note 39 – Subsequent Events

$950 million senior secured credit facility

In January 2015 the Company entered into a $950 million senior secured credit facility with a syndicate of banks and export credit agencies to partly fund the delivery of the West Carina and to refinance the Company's indebtedness related to the West Eclipse. The facility comprised of a $285 million term loan, a $475 million revolving facility and a $190 million ECA facility. The commercial facilities have a five years term and bear interest at LIBOR plus 2.00% and the ECA facility has a twelve year term and has a CIRR interest rate of 2.12%.

NADL bond and credit facilities amendment

In February 2015, NADL received approval from its Norwegian Bondholders to amend the Bond Agreement for its NOK1.5 billion Norwegian Bond maturing in 2018. Under the terms of the amendment, Seadrill will provide a guarantee for the Bond Issue in exchange for amendments to the covenant package, principally replacing the current financial covenants with the financial covenants within Seadrill's NOK bonds. Additionally NADL received approval to amend its $2 billion credit facility and $475 million term loan and revolving credit facility. Under the terms of the agreements, Seadrill will provide a guarantee for the credit facility in exchange for amendments to the covenant package, principally replacing the existing financial covenants with financial covenants within Seadrill's secured credit facilities. This amendment to the covenants was applicable to the period ended December 31, 2014. As such there are no longer separate financial covenants contained within NADL's credit facilities or bond agreements.

F-79

Purchase of loan from Metrogas

In March 2015, the Company purchased a $50 million subordinated loan made by Metrogas, a related party, to Archer, a related party. The aggregate consideration paid for the loan by the Company to Metrogas was $51 million which is equal to the sum of the outstanding principal amount of $50 million and $1 million accrued commitment fee and interest on the loan.

Deconsolidation of SeaMex Limited

During the year ended December 31, 2014, the Company entered into a joint venture agreement with an investment fund controlled by Fintech Advisory Inc. (Fintech), for the purpose of owning and managing certain jack-up drilling units located in Mexico under contract with Pemex. The West Oberon, West Intrepid, West Defender, West Courageous and West Titania jack-up drilling rigs were included within the joint venture. The transaction was completed on March 10, 2015, when Fintech subscribed for a 50% ownership interest in SeaMex Limited, which was previously 100% owned by the Company.

As a result of the transaction the Company no longer controls the entities that own and operate these jack-up drilling units, and accordingly the Company will deconsolidate these entities as of March 10, 2015, and subsequently recognize its 50% investment in the joint venture at fair value. The assets and liabilities held within the Company’s consolidated balance sheet as at December 31, 2014 that are related to the disposal group have been reclassified as held for sale and depreciation has ceased for the related assets. The Company has not presented this disposal group as discontinued operations in our statement of operations it will continue to hold significant influence over the joint venture. The Company is still finalizing the accounting for the transaction.

Subsequent to the period end, on March 6, 2015, the tranches of the $700 million senior secured loan facility relating to the West Courageous, West Defender, and the West Intrepid were repaid, totaling $170 million. On March 26, 2015, the $150 million secured credit facility relating to the West Oberon, was repaid in full.

Rosneft Framework Agreement extension

On May 26, 2014, we entered into an Investment and Co-Operation Agreement with NADL and Rosneft to pursue onshore and offshore growth opportunities in the Russian market. In connection with the Investment and Co-Operation Agreement, on August 20, 2014, we entered into a Framework Agreement with NADL and Rosneft, pursuant to which Rosneft agreed to sell, and NADL agreed to purchase, 100% of the capital of Rosneft’s Russian land drilling subsidiary, RN Burenie LLC, together with its subsidiaries, in exchange for such number of newly issued common shares of NADL, based on an agreed share price of $9.25 per share, as payment of the agreed purchase price, subject to certain cash adjustments. As part of this transaction, Rosneft has agreed to purchase additional shares in NADL at closing, at the same price, to increase its aggregate ownership interest in NADL to at least 30%. In addition, the Framework Agreement provides that Rosneft is entitled to receive additional shares of NADL following the commencement of certain offshore drilling contracts awarded by Rosneft to NADL. The Framework Agreement also provides that we and Rosneft will enter into a Shareholder Agreement to reflect certain agreements relating to NADL and the shares owned by us and Rosneft in NADL, including, among other things, certain restrictions on such stockholders’ rights to vote, standstill restrictions and rights of first refusal. The Framework Agreement also contains customary closing conditions, including the necessary corporate approvals from Rosneft, and certain termination rights.

The Framework Agreement provided for a closing date of no earlier than November 10, 2014, and that the agreement would terminate if the transaction had not closed by December 31, 2014. On November 7, 2014 the parties mutually agreed to extend the date of termination of the Framework Agreement until May 31, 2015 and on April 16, 2015, the parties mutually agreed to further extend the date of termination of the Framework Agreement until May 31, 2017, whereby both parties can effectively terminate the Framework Agreement and / or any offshore drilling contracts at any time prior to May 31, 2017 at no cost. The parties have agreed to use their reasonable endeavors to renegotiate, by no later than May 31, 2017, the terms of the transactions contemplated in the Framework Agreement, the characteristics of the transactions contemplated in the Framework Agreement, and the terms of the related offshore drilling contracts. During this time, NADL is permitted to market its offshore drilling rigs subject to existing drilling contracts with Rosneft, enter into binding contracts with third parties in respect of those rigs, delay the mobilization of those rigs under the Rosneft contracts in order to comply with the terms of any contracts with third parties, delay the construction or delivery of any of those rigs, and extend the construction period or shipyard stay of any of those rigs.

We can provide no assurances that we will be able to reach an agreement with Rosneft by May 31, 2017. Even if an agreement is reached, the terms of such agreement may differ materially from the terms contemplated in the original Framework Agreement as described herein.

Contract developments

In February 2015, we announced that we no longer believed that the previously announced contract extensions of our ultra-deepwater semi-submersibles the West Taurus and the West Eminence with Petrobras will be concluded in the timeframe or on the previously approved commercial terms. As a result, we removed $1.1 billion from our expected contract backlog.

In March 2015, NADL announced it had received a notice of termination from Rosneft of the service order for the West Navigator. The drillship was indicatively scheduled to commence operations under its five-year contract with Rosneft during the summer of 2015, which would have required earlier mobilization. NADL believes that it will be very challenging to close the transactions with Rosneft on the same terms or in the timeframe contemplated in the executed agreements. There are significant risks attached to remaining drilling contracts with Rosneft. NADL

F-80

will be marketing the West Navigator for alternative future opportunities, however remains in discussions with Rosneft to explore various alternatives for future co-operation.

Guarantee provided to Seabras Sapura JV

In February 2012 the Company entered into a joint venture agreement with SapuraKencana for the purpose of owning and managing certain pipelaying support vessels to be located in Brazil under contract with Petrobras. In April 2015 the relevant subsidiaries under the joint venture, 50% of the shares of such subsidiaries being indirectly owned by the Company, entered into a $780 million senior secured credit facility agreement in order to part fund the acquisition of the Sapura Onix, Sapura Jade and Sapura Rubi pipe-laying support vessels. As a condition to the lenders making the loan available to each of the borrowers, the Company has guaranteed, on a 50/50 basis with SapuraKencana, the obligations of the borrowers during certain defined time periods, the release of such guarantees being subject to the satisfaction of certain defined conditions.

F-81

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

Seadrill Limited

(Registrant)

Date: April 21, 2015

By:	/s/ Per Wullf
Name:	Per Wullf
Title:	Chief Executive Officer of Seadrill Management Ltd (Principal Executive Officer of Seadrill Limited)

EX-4.4

Exhibit 4.4

OMNIBUS AGREEMENTAMONG
SEADRILL LIMITED
SEADRILL MEMBER LLC
SEADRILL PARTNERS LLC
SEADRILL OPERATING GP LLC
SEADRILL OPERATING LPAND
SEADRILL CAPRICORN HOLDINGS LLC

US 1399120V.10

TABLE OF CONTENTS

ARTICLE I
DEFINITIONS

Section 1.1Definitions                                    1

ARTICLE II
FIVE-YEAR DRILLING RIG RESTRICTED BUSINESS OPPORTUNITIES

Section 2.1Five-Year Drilling Rig Restricted Businesses                6

Section 2.2Permitted Exceptions                                6

ARTICLE III
BUSINESS OPPORTUNITIES PROCEDURES

Section 3.1Procedures                                    7

Section 3.2Scope of Prohibition                                9

Section 3.3Enforcement                                    9

ARTICLE IV
RIGHTS OF FIRST OFFER

Section 4.1Rights of First Offer                                9

Section 4.2Procedures for Rights of First Offer                        10

ARTICLE VT-15 AND T-16 PURCHASE OPTIONS

Section 5.1Options to Purchase the T-15 Interests and the T-16 Interests        11

Section 5.2Procedures                                    11

ARTICLE VIINDEMNIFICATION

Section 6.1Seadrill Indemnification                            13

Section 6.2Limitation Regarding Indemnification                    13

Section 6.3Indemnification Procedures                            14

i

ARTICLE VII
MISCELLANEOUS

Section 7.1Choice of Law; Arbitration                            15

Section 7.2Notice                                        15

Section 7.3Entire Agreement                                15

Section 7.4Termination                                    15

Section 7.5Waiver; Effect of Waiver or Consent                        15

Section 7.6Amendment or Modification                            16

Section 7.7Assignment                                    16

Section 7.8Counterparts                                    16

Section 7.9Severability                                    16

Section 7.10Gender, Parts, Articles and Sections                        16

Section 7.11Further Assurances                                16

Section 7.12Withholding or Granting of Consent                        16

Section 7.13Laws and Regulations                                17

Section 7.14Negotiation of Rights of Seadrill, Members, Assignees and Third Parties    17

ii

OMNIBUS AGREEMENT

THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing Date (as defined herein), among Seadrill Limited, a Bermuda exempted company limited by shares (“Seadrill”), Seadrill Partners LLC, a Marshall Islands limited liability company (the “Company”), Seadrill Member LLC, a Marshall Islands limited liability company and member of the Company (including any permitted successors and assigns under the Operating Agreement (as defined herein)) (the “Seadrill Member”), Seadrill Operating LP, a Marshall Islands limited partnership (“Operating LP”), Seadrill Operating GP LLC, a Marshall Islands limited liability company and the general partner of Operating LP (“Operating GP”), and Seadrill Capricorn Holdings LLC, a Marshall Islands limited liability company (“Holdings LLC” and, together with Operating LP, “OPCO”).

R E C I T A L S:

1.The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Articles II and III, with respect to (a) those business opportunities that the Seadrill Entities (as defined herein) will not pursue during the term of this Agreement and (b) the procedures whereby such business opportunities are to be offered to the Company Group (as defined herein).

2.The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article IV, with respect to the Company’s right of first offer relating to (a) Five-Year Drilling Rigs (as defined herein) that Seadrill might own and (b) limited partner interests of OPCO that Seadrill owns.

3.The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article V, with respect to the rights of the Company to purchase the T-15 and the T-16 from Seadrill.

4.The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Section 5.2(b)(ii), and Article VI, with respect to certain indemnification obligations of Seadrill.

In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Article IDEFINITIONS

Section 1.1Definitions

. As used in this Agreement, the following terms shall have the respective meanings set forth below:

“AAA” has the meaning given such term in Section 7.1.

1

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“Agreement” means this Omnibus Agreement, as it may be amended, modified, or supplemented from time to time in accordance with Section 7.6 hereof.

“Board” means the Board of Directors of the Company.

“Break-up Costs” means the aggregate amount of any and all additional taxes, flag administration, financing, legal and other similar costs (except with respect to Section 2.2(b) where Break-up Costs shall be deemed to include only administrative costs associated with transfer and re-flagging, including related legal costs) to the Seadrill Entities that would be required to transfer Five-Year Drilling Rigs acquired by the Seadrill Entities as part of a larger transaction to a Company Group Member pursuant to Section 2.2(b) or Section 2.2(d)(i).

“Change of Control” means, with respect to any Person (the “Applicable Person”), any of the following events: (a) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person, unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the Applicable Person are changed into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of the surviving Person or its parent and (ii) the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the outstanding Voting Securities of the surviving Person or its parent immediately after such transaction; and (c) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act), other than Seadrill or its Affiliates with respect to the Seadrill Member, being or becoming the “beneficial owner” (as defined in Rules 13d‑3 and 13d‑5 under the Exchange Act) of more than 50% of all of the then outstanding Voting Securities of the Applicable Person, except in a merger or consolidation which would not constitute a Change of Control under clause (b) above.

“Chevron” means Chevron Corporation, which is expected to cause one or more of its Affiliates to be the contractual counterparty of the T-15 and the T-16 upon their respective completion, delivery and acceptance.

“Closing Date” means the date of the closing of the initial public offering of common units representing limited liability company interests in the Company.

“Company” is defined in the introduction to this Agreement.

2

“Company Entities” means the Seadrill Member, the Company, OPCO GP and OPCO and any Person controlled by any such entity.

“Company Group” means the Company, OPCO and any Person controlled by any such entity.

“Company Group Member” means any Person in the Company Group.

“Company Potential Transferee” has the meaning given such term in Section 6.1.

“Company Sale Assets” has the meaning given such term in Section 6.1.

“Company Transfer Notice” has the meaning given such term in Section 6.1.

“Company Transferring Party” has the meaning given such term in Section 6.1.

“Conflicts Committee” means the Conflicts Committee of the Board.

“Contribution Assets” has the meaning given such term in Section 6.1.

“Covered Environmental Losses” means all Losses suffered or incurred by the Company Group by reason of, arising out of or resulting from:

(a)    any violation or correction of violation of Environmental Laws; or

(b)    any event or condition relating to environmental or human health and safety matters, in each case, associated with the ownership or operation by the Company Group or the Seadrill Entities of the Contribution Assets (including, without limitation, the presence of Hazardous Substances on, under, about or migrating to or from the Contribution Assets or the disposal or release of, or exposure to, Hazardous Substances generated by or otherwise related to operation of the Contribution Assets), including, without limitation, the reasonable and documented cost and expense of (i) any investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration, remediation or other corrective action required or necessary under Environmental Laws, (ii) the preparation and implementation of any closure, remedial, corrective action or other plans required or necessary under Environmental Laws and (iii) any environmental or toxic tort (including, without limitation, personal injury or property damage claims) pre‑trial, trial or appellate legal or litigation support work;

but only to the extent that such violation complained of under clause (a), or such events or conditions included in clause (b), occurred before the Closing Date; and, provided, that in no event shall Losses to the extent arising from a change in any Environmental Law after the Closing Date be deemed “Covered Environmental Losses.”

“Environmental Laws” means all international, federal, state, foreign and local laws, statutes, rules, regulations, treaties, conventions, orders, judgments and ordinances having the force

3

and effect of law and relating to protection of natural resources, health and safety and the environment, each in effect and as amended through the Closing Date.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“First Offer Negotiation Period” has the meaning given such term in Section 4.2(c).

“Five-Year Drilling Rig” means any tender rig, drilling rig or drillship operating under a drilling contract for five or more years (other than a drilling contract among Seadrill Entities), together with the related drilling contract. For purposes of determining the length of the contract for purposes of this Agreement, the drilling contract shall be deemed to commence on the date of execution of such drilling contract, or the date of execution of an extension related thereto. For the avoidance of doubt, “Five-Year Drilling Rig” shall not include any jack-up rig.

“Hazardous Substances” means (a) each substance defined, designated or classified as a hazardous waste, hazardous substance, hazardous material, solid waste, contaminant or toxic substance under Environmental Laws; (b) petroleum and petroleum products, including crude oil and any fractions thereof; (c) natural gas, synthetic gas and any mixtures thereof; (d) any radioactive material; and (e) any asbestos‑containing materials in a friable condition.

“Holdings LLC” is defined in the introduction to this Agreement.

“Losses” means losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses (including, without limitation, court costs and reasonable attorneys’ and experts’ fees) of any and every kind or character; provided, however, that such term shall not include any special, indirect, incidental or consequential damages.

“Non-Five-Year Drilling Rig” means any tender rig, drilling rig or drillship that is not a Five-Year Drilling Rig. For the avoidance of doubt, “Non-Five-Year Drilling Rig” shall not include any jack-up rig.

“Offer” has the meaning given such term in Section 3.1.

“Offered Assets” has the meaning given such term in Section 3.1.

“Offeree” has the meaning given such term in Section 3.1.

“Offer Period” has the meaning given such term in Section 3.1.

“OPCO” is defined in the introduction to this Agreement.

“OPCO Equity Interest” has the meaning given such term in Section 4.1(a).

“Operating Agreement” means the First Amended and Restated Limited Liability Company Agreement of the Company, dated as of                          , 2012, as such agreement is in effect on the Closing Date, to which reference is hereby made for all purposes of this Agreement. No amendment or modification to the Operating Agreement subsequent to the Closing Date shall be

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given effect for purposes of this Agreement unless consented to by each of the Parties to this Agreement.

“Operating GP” is defined in the introduction to this Agreement.

“Operating LP” is defined in the introduction to this Agreement.

“Option Assets” has the meaning given such term in Section 5.1.

“Parties” means the parties to this Agreement and their successors and permitted assigns.

“Person” means an individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or any other entity.

“Potential Transferee” has the meaning given such term in Section 4.2(a).

“Sale Assets” has the meaning given such term in Section 4.2(a).

“Seadrill Entities” means Seadrill and any Person controlled, directly or indirectly, by Seadrill, other than the Company Entities.

“Seadrill Management” means Seadrill Management AS, a wholly owned subsidiary of Seadrill.

“Seadrill Member” is defined in the introduction to this Agreement.

“Seadrill Potential Transferee” has the meaning given such term in Section 4.2(b).

“Seadrill Sale Assets” has the meaning given such term in Section 4.2(b).

“Seadrill Transfer Notice” has the meaning given such term in Section 4.2(b).

“Seadrill Transferring Party” has the meaning given such term in Section 4.2(b).

“T-15” means the tender rig barge currently under construction that will operate under a contract with Chevron or any successor to Chevron in accordance with the terms of such contract.

“T-16” means the tender rig barge currently under construction that will operate under a contract with Chevron or any successor to Chevron in accordance with the terms of such contract.

“T-15 Interests” means all of Seadrill’s rights, title and interests in the T-15, including shares of capital stock or other equity interest of any Seadrill Entity holding ownership interests in the T-15 and including any drilling contracts or other agreements relating to the operation or ownership of the T-15 then in effect.

“T-16 Interests” means all of Seadrill’s rights, title and interests in the T-16, including shares of capital stock or other equity interest of any Seadrill Entity holding ownership interests in the

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T-16 and including any drilling contracts or other agreements relating to the operation or ownership of the T-16 then in effect.

“Transfer” means any transfer, assignment, sale or other disposition of any (a) Five-Year Drilling Rig by any Seadrill Entity or (b) OPCO Equity Interest by Seadrill; provided, however, that such term shall not include (i) transfers, assignments, sales or other dispositions from a Seadrill Entity to another Seadrill Entity, or from a Company Group Member to another Company Group Member, (ii) transfers, assignments, sales or other dispositions pursuant to the terms of any related drilling contract or other agreement with a contractual counterparty; (iii) transfers, assignments, sales or other dispositions pursuant to Article II of this Agreement; or (iv) grants of security interests in or mortgages or liens on such Five-Year Drilling Rigs in favor of a bona fide third party lender (but not the foreclosing of any such security interest, mortgage or lien).

“Transfer Notice” has the meaning given such term in Section 4.2(a).

“Transferring Party” has the meaning given such term in Section 4.2(a).

“Voting Securities” means securities of any class of Person entitling the holders thereof to vote in the election of members of the board of directors or other similar governing body of the Person.

ARTICLE IIFIVE-YEAR DRILLING RIG RESTRICTED BUSINESS OPPORTUNITIES

Section 2.1Five-Year Drilling Rig Restricted Businesses

. Subject to Section 7.4 and except as permitted by Section 2.2, each of the Seadrill Entities shall be prohibited from acquiring, owning, operating or contracting Five-Year Drilling Rigs.

Section 2.2Permitted Exceptions

. Notwithstanding any provision of Section 2.1 to the contrary, the restrictions in this Agreement shall not prevent any Seadrill Entity from:

(a)acquiring, owning, operating or contracting any Non-Five-Year Drilling Rig;

(b)acquiring one or more Five-Year Drilling Rigs if such Seadrill Entity offers to sell such Five-Year Drilling Rig to the Company for the acquisition price plus any Break-up Costs in accordance with the procedures set forth in Section 3.1;

(c)putting a Non-Five-Year Drilling Rig under contract for five or more years if such Seadrill Entity offers to sell such Non-Five-Year Drilling Rig to the Company for fair market value (x) after the time it becomes a Five-Year Drilling Rig and (y) at each renewal or extension of that contract for five or more years, in each case in accordance with the procedures set forth in Section 3.1;

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(d)acquiring one or more Five-Year Drilling Rigs as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or contracting such Five-Year Drilling Rig(s); provided, however, that:

(i)if less than a majority of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, the Seadrill Entity must offer to sell such Five-Year Drilling Rig(s) to the Company for their fair market value plus any Break-up Costs in accordance with the procedures set forth in Section 3.1; and

(ii)if a majority or more of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, Seadrill must notify the Company of the proposed acquisition in writing. The Company shall, not later than the 10^th calendar day following receipt of such notice, notify Seadrill if it or any other Company Group Member wishes to acquire any Five-Year Drilling Rig forming part of that business or package of assets in cooperation and simultaneously with the Seadrill Entity acquiring the Non-Five-Year Drilling Rigs forming part of that business or package of assets. If the Company does not notify Seadrill of its intent to pursue the acquisition within such 10 calendar days, the Seadrill Entity may proceed with the acquisition and then offer to sell Five-Year Drilling Rigs to the Company as provided in subsection (i) above;

(e)acquiring a non-controlling interest in any company, business or pool of assets;

(f)acquiring, owning, operating or contracting any Five-Year Drilling Rig if the Company does not fulfill its obligation to purchase such Five-Year Drilling Rig in accordance with the terms of any existing or future agreement;

(g)acquiring, owning, operating or contracting any Five-Year Drilling Rig that is subject to an offer to purchase by a Company Group Member as described in paragraphs (b), (c) and (d) above, in each case pending the offer of such Five-Year Drilling Rig to the Company and the Company’s determination pursuant to Section 3.1 whether to purchase the Five-Year Drilling Rig and, if the Company has determined to purchase or to cause any Company Group Member to purchase such Five-Year Drilling Rig, pending the closing of such purchase;

(h)providing ship management services relating to any drilling rig or drillship;

(i)owning or operating a Five-Year Drilling Rig that Seadrill owns and operates as of the Closing Date and that is not included in the fleet of tender rigs, drilling rigs or drillships to be contributed to the Company Group on the Closing Date; or

(j)acquiring, owning, operating or contracting any Five-Year Drilling Rig if the Company has previously advised Seadrill that it consents to such acquisition, operation or contract.

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ARTICLE IIIBUSINESS OPPORTUNITIES PROCEDURES

Section 3.1Procedures

. In the event that a Seadrill Entity acquires, operates or puts under contract Five-Year Drilling Rigs in accordance with Sections 2.2(b), 2.2(c) or 2.2(d)(i), then simultaneously or in any event not later than 30 calendar days after the consummation of the acquisition or the commencement of operations or drilling contract, such acquiring Party (the “Acquiring Party”) shall notify the Board and offer the Company (an “Offeree”) the opportunity for any Company Group Member to purchase such Non-Five-Year Drilling Rigs (the “Offered Assets”), for their fair market value (or, in the case of an acquisition in accordance with Section 2.2(b), the acquisition price) plus, in the case of an acquisition in accordance with Sections 2.2(b),or 2.2(d)(i), any applicable Break-up Costs, in each case on commercially reasonable terms in accordance with this Section 3.1 (the “Offer”). The Offer shall set forth the Acquiring Party’s proposed terms relating to the purchase of the Offered Assets by the applicable Company Group Member, including any liabilities to be assumed by the applicable Company Group Member as part of the Offer. As soon as practicable after the Offer is made, the Acquiring Party will deliver to the Offeree all information prepared by or on behalf of or in the possession of such Acquiring Party relating to the Offered Assets and reasonably requested by the Offeree. As soon as practicable, but in any event, within 30 calendar days after receipt of the Offer, the Offeree shall notify the Acquiring Party in writing that either:

(k)The Board has elected not to cause any Company Group Member to purchase such Offered Assets, in which event the Acquiring Party and its Affiliates shall, subject to the other terms of this Agreement (including Section 2.2(b)), be forever free, subject to the provisions of this Agreement, to continue to own, operate and contract such Offered Assets; or

(l)The Board has elected to cause any Company Group Member to purchase such Offered Assets, in which event the following procedures shall be followed:

(i)After the receipt of the Offer by the Offeree, the Acquiring Party and the Offeree shall negotiate in good faith regarding the fair market value (or, in the case of an acquisition in accordance with Section 2.2(b), the acquisition price) (and any applicable Break-up Costs) of the Offered Assets that are subject to the Offer and the other terms of the Offer on which the Offered Assets will be sold to the applicable Company Group Member. If the Acquiring Party and the Offeree agree on the fair market value (and any applicable Break-up Costs) of the Offered Assets that are subject to the Offer and the other terms of the Offer during the 30-day period (the “Offer Period”) after receipt by the Acquiring Party of the Board’s election to cause any Company Group Member to purchase the Offered Assets, the Board shall cause any Company Group Member to purchase the Offered Assets on such terms as soon as commercially practicable after such agreement has been reached.

(ii)If the Acquiring Party and the Offeree are unable to agree on the fair market value (or, in the case of an acquisition in accordance with Section 2.2(b), the acquisition price) (and any applicable Break-up Costs) of the Offered Assets that are subject to the Offer

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or on any other terms of the Offer during the Offer Period, the Acquiring Party and the Offeree will engage a mutually agreed-upon investment banking firm, rig broker or other expert advisor prior to the end of the Offer Period to determine the fair market value (or, in the case of an acquisition in accordance with Section 2.2(b), the acquisition price) of the Offered Assets and/or the other terms on which the Acquiring Party and the Offeree are unable to agree. In determining the fair market value of the Offered Assets and other terms on which the Offered Assets are to be sold, the investment banking firm, rig broker or other expert advisor, as applicable, will have access to the proposed sale and purchase values and terms for the Offer submitted by the Acquiring Party and the Offeree, respectively, and to all information prepared by or on behalf of the Acquiring Party relating to the Offered Assets and reasonably requested by such investment banking firm, rig broker or other expert advisor. Such investment banking firm, rig broker or other expert advisor will determine the fair market value (and any applicable Break-up Costs) of the Offered Assets and/or the other terms on which the Acquiring Party and the Offeree are unable to agree within 30 calendar days of its engagement and furnish the Acquiring Party and the Offeree its determination. The fees and expenses of the investment banking firm, rig broker or other expert advisor, as applicable, will be divided equally between the Acquiring Party and the Offeree. Upon receipt of such determination, the Offeree will have the option, but not the obligation:

(A)to cause any Company Group Member to purchase the Offered Assets for the fair market value (or, in the case of an acquisition in accordance with Section 2.2(b), the acquisition price) (and any applicable Break-up Costs), and on the other terms determined by the rig broker or investment banking firm, as soon as commercially practicable after determinations have been made; or

(B)not to cause any Company Group Member to purchase such Offered Assets, in which event the Acquiring Party and its Affiliates shall, subject to the other terms of this Agreement, be forever free to continue to own and operate such Offered Assets.

Section 3.2Scope of Prohibition

. If any Seadrill Entity or its Affiliates engages in the ownership or operation of Five-Year Drilling Rigs pursuant to any of the exceptions described in Section 2.2, the Seadrill Entity and its Affiliates may not subsequently expand that portion of their business other than pursuant to the exceptions contained in such Section 2.2. Except as otherwise provided in this Agreement or the Operating Agreement, each Party and its Affiliates shall be free to engage in any business activity whatsoever, including those that may be in direct competition with the Seadrill Entities or the Company Group Members.

Section 3.3Enforcement

. Each Party agrees and acknowledges that the other Parties do not have an adequate remedy at law for the breach by any such Party of its covenants and agreements set forth in this Article III, and that any breach by any such Party of its covenants and agreements set forth in this Article III would result in irreparable injury to such other Parties. Each Party further agrees and acknowledges

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that any other Party may, in addition to the other remedies which may be available to such other Party, file a suit in equity to enjoin such Party from such breach, and consent to the issuance of injunctive relief to enforce the provisions of Article III of this Agreement.

ARTICLE IVRIGHTS OF FIRST OFFER

Section 4.1Rights of First Offer

.

(a)The Company Group hereby grants Seadrill a right of first offer on any proposed Transfer by any Company Group Member of any Five-Year Vessels or any Non-Five-Year Vessels owned or acquired by any Company Group Member. The Seadrill Entities hereby grant the Company a right of first offer on any proposed Transfer of any (i) Five-Year Drilling Rigs owned or acquired by any Seadrill Entity after the Closing Date, and (ii) partnership interests in Operating LP or limited liability company interests in Holdings LLC (in each case, “OPCO Equity Interests”) by Seadrill. The Parties acknowledge and agree that nothing in this Section 4.1 shall prevent or restrict the Transfer of the capital stock, equity ownership interests or other securities of the Seadrill Member or the Company.

(b)The Parties acknowledge that all potential Transfers of Five-Year Drilling Rigs or OPCO Equity Interests pursuant to this Article IV are subject to obtaining any and all written consents of governmental authorities and other non‑affiliated third parties and to the terms of all existing agreements, in respect of such Five-Year Drilling Rig or OPCO Equity Interests, as applicable.

Section 4.2Procedures for Rights of First Offer

.

(a)In the event that a Company Group Member (a "Company Transferring Party") proposes to Transfer any Non-Five-Year Drilling Rig (the "Company Sale Assets"), prior to engaging in any negotiation for such Transfer with any non-affiliated third party or otherwise offering to Transfer the Company Sale Assets to any non-affiliated third party, such Company Transferring Party shall give Seadrill (a "Company Potential Transferee"), written notice setting forth all material terms and conditions (including, without limitation, the purchase price or the terms of the drilling contract and a description of the Company Sale Asset(s) on which such Company Transferring Party desires to Transfer the Company Sale Assets) (a "Company Transfer Notice").

(b)In the event that a Seadrill Entity (a “Seadrill Transferring Party” and, together with a Company Transferring Party, a “Transferring Party”) proposes to Transfer any Five-Year Drilling Rig or partnership interests of OPCO (the “Seadrill Sale Assets” and, together with the Company Sale Assets, the “Sale Assets”), prior to engaging in any negotiation for such Transfer with any non-affiliated third party or otherwise offering to Transfer the Seadrill Sale Assets

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to any non-affiliated third party, such Seadrill Transferring Party shall give the MLP (a “Seadrill Potential Transferee” and, together with a Company Potential Transferee, a “Potential Transferee”), written notice setting forth all material terms and conditions (including, without limitation, the purchase price or the terms of the drilling contract and a description of the Seadrill Sale Asset(s) on which such Seadrill Transferring Party desires to Transfer the Seadrill Sale Assets) (a “Seadrill Transfer Notice” and, together with a Company Transfer Notice, each a “Transfer Notice”)

(c)After delivery of a Transfer Notice, the Transferring Party then shall be obligated to negotiate in good faith for a 30‑day period following the delivery by the Transferring Party of the Transfer Notice (the “First Offer Negotiation Period”) to reach an agreement for the Transfer of such Sale Assets to the Potential Transferee or any of its Affiliates on the terms and conditions set forth in the Transfer Notice. If no such agreement with respect to the Sale Assets is reached during the First Offer Negotiation Period, and the Transferring Party has not Transferred, or agreed in writing to Transfer, such Sale Assets to a third party within 180calendar days after the end of the First Offer Negotiation Period on terms generally no less favorable to the Transferring Party than those included in the Transfer Notice, then the Transferring Party shall not thereafter Transfer any of the Sale Assets without first offering such assets to the applicable Potential Transferee in the manner provided above.

ARTICLE VT-15 AND T-16 PURCHASE OPTIONS

Section 5.1Options to Purchase theT-15Interests and theT-16Interests.

(d)Seadrill hereby grants to the Company Group the unconditional right and option to purchase for a respective purchase price to be agreed upon by Seadrill and the Company Group, at any time within 24 months following their respective acceptance by their contract counterparty, all of the T-15 Interests or T-16 Interests (each, an “Option Asset” and, together, the “Option Assets”).

(e)The Parties acknowledge that the potential transfer of the Option Assets pursuant to this Article V is subject to obtaining any and all written consents of governmental authorities and other third parties and to the terms of all agreements existing as of the date hereof in respect of the Option Assets including, without limitation, any rights of first refusal of the parties to such agreements to purchase the Option Assets. Seadrill hereby covenants and agrees to use its reasonable efforts to obtain any such consents required to be obtained by it in connection with the transfer of the Option Assets pursuant to this Article V.

Section 5.2Procedures

.

(a)If a Company Group Member decides to exercise the option to purchase the T-15 Interests or the T-16 Interests, it will provide written notice to Seadrill of such exercise, the

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purchase price it proposes to pay for the applicable Option Asset, and the other material terms of the purchase. The decision to purchase the applicable Option Asset, the purchase price to be paid for the applicable Option Asset, and the other terms of the purchase shall be approved by the Conflicts Committee. If the Company Group Member and Seadrill are unable to agree on the purchase price of the applicable Option Asset and/or the other material terms, the Company Group Member and Seadrill shall engage a mutually agreed‑upon investment banking firm, broker or other expert advisor to determine the fair market value of the applicable Option Asset and/or any other material terms on which the Company Group Member and Seadrill are unable to agree. In determining the fair market value of the applicable Option Asset and/or the other material terms on which the applicable Option Asset will be sold, the investment banking firm, broker or other expert advisor, as applicable, will have access to the proposed sale and purchase values and terms for the offer submitted by the Company Group Member and Seadrill, respectively, and to all information prepared by or on behalf of the Company Group Member and Seadrill with respect to the Option Assets and reasonably requested by such investment banking firm, rig broker or other expert advisor. Such investment banking firm, rig broker or other expert advisor will determine the fair market value of the applicable Option Asset and/or the other terms on which the Company Group Member and Seadrill were unable to agree within 30calendar days of its engagement and furnish the Company Group Member and Seadrill its determination in writing. The fees and expenses of the investment banking firm, broker or other expert advisor, as applicable, will be divided equally between the Company Group Member and Seadrill. Upon receipt of such determination, the Company Group Member will have the option, but not the obligation to purchase the applicable Option Asset for the fair market value and on the other terms determined by the investment banking firm, rigbroker or other expert advisor, as soon as commercially practicable after determinations have been made.

(b)If a Company Group Member chooses to exercise its option to purchase the T-15 Interests or the T-16 Interests under Section 5.2(a), the applicable parties shall enter into a purchase and sale agreement for the purchase and sale of the applicable Option Asset pursuant to which Seadrill shall be obligated to sell the applicable Option Asset to the Company Group Member and the Company Group Member shall be obligated to purchase such Option Asset from Seadrill on the terms either agreed upon or determined in accordance with Section 5.2(a). The terms of the purchase and sale agreement will include the following:

(i)the Company Group Member will deliver a cash purchase price (unless the Company Group Member and Seadrill agree that the consideration will be paid by means of equity of the Company, an interest‑bearing promissory note or other form of consideration);

(ii)the Company Group will be entitled to the benefit of the indemnification contained in Article VI of this Agreement for the remaining term of such indemnification with respect to events or conditions associated with the operation of the T-15 and the T-16 and occurring before the date of acquisition of the applicable Option Asset by the Company Group Member;

(iii)Seadrill will provide customary representations and warranties with respect to title to the applicable Option Asset and any other such matters as the

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Company Group Member may approve, which approval will not be unreasonably withheld;

(iv)Seadrill will grant to the Company Group Member the right, exercisable at the Company Group Member’s risk and expense, to make such surveys, tests and inspections of the T-15 or T-16 as the Company Group Member may deem desirable, so long as such surveys, tests or inspections do not damage the T-15 or T-16 or interfere with the activities of the Seadrill Entities or Chevron (or its successor, as applicable) thereon and so long as the Company Group Member has furnished Seadrill with evidence that adequate liability insurance is in full force and effect;

(v)the Company Group Member will have the right to terminate its obligation to purchase the T-15 Interests or the T-16 Interests under this Article V and the related purchase and sale agreement if the results of any searches, surveys, tests or inspections conducted pursuant to paragraph (iv) above are, in the reasonable opinion of the Company Group Member, unsatisfactory; and

(vi)neither Seadrill nor the applicable Company Group Member shall have any obligation to sell or buy the T-15 Interests or the T-16 Interests if any of the consents referred to in Section 5.1(b) above have not been obtained.

(c)If a Company Group Member chooses or is deemed to have chosen not to exercise its option to purchase the T-15 Interests or the T-16 Interests at the price determined by the investment banking firm, rig broker or other expert advisor under Section 5.2(a), all future rights to purchase such Option Asset by the Company Group will be extinguished.

ARTICLE VIINDEMNIFICATION

Section 6.1Seadrill Indemnification. Subject to the provisions of Section 6.2 and Section 6.3, Seadrill shall indemnify, defend and hold harmless the Company Group from and against: (%3) any Covered Environmental Losses relating to the assets contributed by the Seadrill Entities to the Company Group prior to or on the Closing Date (the “Contribution Assets”) to the extent that Seadrill is notified by the Company of any such Covered Environmental Losses within five (5) years after the Closing Date; (%3) Losses to the Company Group arising from (i) the failure of the Company Group, immediately after the Closing Date, to be the owner of such valid leasehold interests or fee ownership interests in and to the Contribution Assets as are necessary to enable the Company Entities to own and operate the Contribution Assets in substantially the same manner that the Contribution Assets were owned and operated by the Seadrill Entities immediately prior to the respective dates on which each such Contribution Asset was acquired by the Company Entities or (ii) the failure of the Company Entities to have by the Closing Date any consent or governmental permit necessary to allow the Company Entities to own or operate the Contribution Assets in substantially the same manner that the Contribution Assets were owned and operated by the Seadrill Entities immediately prior to the respective dates on which each such Contribution Asset was

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acquired by the Company Entities, in each of clauses (b)(i) and (b)(ii) above, to the extent that Seadrill is notified by the Company of such Losses within three (3) years after the Closing Date; and (%3) all federal, state, foreign and local income tax liabilities attributable to the operation of the Contribution Assets prior to the Closing Date, including any such income tax liabilities of the Seadrill Entities that may result from the consummation of the formation transactions for the Company Group and the Company, but excluding any federal, state, foreign and local income taxes reserved on the books of the Company Group on the Closing Date.

Section 6.2Limitation Regarding Indemnification

. The aggregate liability of Seadrill under Section 6.1(a) above shall not exceed $10,000,000. Furthermore, no claim may be made against Seadrill for indemnification pursuant to Section 6.1(a), unless the aggregate dollar amount of all claims for indemnification pursuant to such section shall exceed $500,000, in which case Seadrill shall be liable for claims for indemnification only to the extent such aggregate amount exceeds $500,000.

Section 6.3Indemnification Procedures

.

(a)The Company Group Members agree that within a reasonable period of time after they become aware of facts giving rise to a claim for indemnification pursuant to Section 6.1, they will provide notice thereof in writing to Seadrill specifying the nature of and specific basis for such claim.

(b)Seadrill shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Company Group that are covered by the indemnification set forth in Section 6.1, including, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent (which consent shall not be unreasonably withheld) of the Company Group unless it includes a full release of the Company Group from such matter or issues, as the case may be.

(c)The Company Group Members agree to cooperate fully with Seadrill with respect to all aspects of the defense of any claims covered by the indemnification set forth in Section 6.1, including, without limitation, the prompt furnishing to Seadrill of any correspondence or other notice relating thereto that the Company Group may receive, permitting the names of the members of the Company Group to be utilized in connection with such defense, the making available to Seadrill of any files, records or other information of the Company Group that Seadrill considers relevant to such defense and the making available to Seadrill of any employees of the Company Group; provided, however, that in connection therewith Seadrill agrees to use reasonable efforts to minimize the impact thereof on the operations of the Company Group and further agrees to maintain the confidentiality of all files, records and other information furnished by a Company Group Member pursuant to this Section 6.3. In no event shall the obligation of the Company Group to cooperate with Seadrill as set forth in the immediately preceding sentence be construed as imposing upon the Company Group an obligation to hire and pay for counsel in connection with the defense of any

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claims covered by the indemnification set forth in this Article VI; provided, however, that the Company Group Members may, at their own option, cost and expense, hire and pay for counsel in connection with any such defense. Seadrill agrees to keep any such counsel hired by the Company Group reasonably informed as to the status of any such defense (including providing such counsel with such information related to any such defense as such counsel may reasonably request) but Seadrill shall have the right to retain sole control over such defense.

In determining the amount of any Loss for which any of the members of the Company Group is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by (a) any insurance proceeds realized by the Company Group, and such correlative insurance benefit shall be net of any incremental insurance premium that becomes due and payable by the Company Group as a result of such claim, and (b) all amounts recovered by the Company Group under contractual indemnities from third Persons. The Company Group hereby agrees to use commercially reasonable efforts to realize any applicable insurance proceeds or amounts recoverable under such contractual indemnities; provided, however, that the costs and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of the Company Group in connection with such efforts shall be promptly reimbursed by Seadrill in advance of any determination of whether such insurance proceeds or other amounts will be recoverable.

ARTICLE VIIMISCELLANEOUS

Section 7.1Choice of Law; Arbitration

. This Agreement shall be subject to and governed by the laws of the State of New York. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by final and binding arbitration in New York, New York, before a single arbitrator, in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The arbitrator shall be selected by mutual agreement of the parties, if possible. If the parties fail to reach agreement upon appointment of an arbitrator within 30 days following receipt by one party of the other party's notice of desire to arbitrate, the arbitrator shall be selected from a panel or panels of persons submitted by AAA. Judgment upon any award rendered pursuant to such arbitration may be entered in any court of competent jurisdiction or application may be made to any such court for enforcement of any such award and the entry of whatever orders are necessary for the enforcement thereof.

Section 7.2Notice

. All notices, requests or consents provided for or permitted to be given pursuant to this Agreement must be in writing and must be given by depositing the same in the mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by private‑courier, prepaid, or by telecopier to such party. Notice given by personal delivery or mail shall be effective upon actual receipt. Couriered notices shall be deemed delivered on the date the courier represents that delivery will occur. Notice given by telecopier shall be effective upon actual receipt if received during the recipient’s normal business

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hours, or at the beginning of the recipient’s next business day after receipt if not received during the recipient’s normal business hours. All notices to be sent to a party pursuant to this Agreement shall be sent to or made at the address set forth below such party’s signature to this Agreement, or at such other address as such party may stipulate to the other parties in the manner provided in this Section 7.2.

Section 7.3Entire Agreement

. This Agreement constitutes the entire agreement of the parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.

Section 7.4Termination

. Upon a Change of Control of the Seadrill Member or of the Company, the provisions of Articles II, III and IV, of this Agreement (but not less than all of such Articles) shall terminate immediately. Upon a Change of Control of Seadrill, the provisions of Articles II, III and IV of this Agreement applicable to Seadrill (but not less than all of such Articles) shall terminate at the time that is the later of (a) the date on which all of the Company’s outstanding subordinated units have converted to common units of the Company and (b) the date of the Change of Control of Seadrill.

Section 7.5Waiver; Effect of Waiver or Consent

. Any party hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto or (b) waive compliance with any agreement or condition contained herein. Except as otherwise specifically provided herein, any such extension or waiver shall be valid only if set forth in a written instrument duly executed by the party or parties to be bound thereby; provided, however, that the Company may not, without the prior approval of the Conflicts Committee, agree to any extension or waiver of this Agreement that, in the reasonable discretion of the Board, will adversely affect the holders of common units of the Company. No waiver or consent, express or implied, by any party of or to any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a waiver or consent of or to any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder. Failure on the part of a party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitations period has run.

Section 7.6Amendment or Modification

. This Agreement may be amended or modified from time to time only by the written agreement of all the parties hereto; provided, however, that the Company may not, without the prior approval of the Conflicts Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the Board, will adversely affect the holders of common units of the Company.

16

Section 7.7Assignment

. No party shall have the right to assign its rights or obligations under this Agreement without the consent of the other parties hereto.

Section 7.8Counterparts

. This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

Section 7.9Severability

. If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

Section 7.10Gender, Parts, Articles and Sections

. Whenever the context requires, the gender of all words used in this Agreement shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural. All references to Article numbers and Section numbers refer to Articles and Sections of this Agreement.

Section 7.11Further Assurances

. In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

Section 7.12Withholding or Granting of Consent

. Each party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate.

Section 7.13Laws and Regulations

. Notwithstanding any provision of this Agreement to the contrary, no party to this Agreement shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such party to be in violation of any applicable law, statute, rule or regulation.

Section 7.14Negotiation of Rights of Seadrill, Members, Assignees and Third Parties

17

. The provisions of this Agreement are enforceable solely by the parties to this Agreement, and no shareholder of Seadrill and no member, assignee or other Person of the Company shall have the right, separate and apart from Seadrill or the Company, as applicable, to enforce any provision of this Agreement or to compel any party to this Agreement to comply with the terms of this Agreement.

[SIGNATURE PAGES FOLLOW]

18

IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the Closing Date.

SEADRILL LIMITED

By: /s/ Tor Olav Trøim    
Name:     Tor Olav Trøim    
Title:     Vice-President and Director

Address for Notice:

Telephone:    (___) ___‑____

Fax:        (___) ___‑____

Attention:    

SEADRILL PARTNERS LLC

By: /s/ Graham Robjohns        
Name:     Graham Robjohns    
Title:     Chief Executive Officer

Address for Notice:

Telephone:    (___) ___‑____

Fax:        (___) ___‑____

Attention:

SIGNATURE PAGES TO
OMNIBUS AGREEMENT

SEADRILL MEMBER LLC

By: /s/ Tor Olav Trøim        
Name:     Tor Olav Trøim    
Title:     Vice-President and Director

Address for Notice:

Telephone:    (___) ___‑____

Fax:        (___) ___‑____

Attention:

SEADRILL OPERATING GP LLC

By: /s/ Rune Magnus Lundetræ        
Name:     Rune Magnus Lundetræ    
Title:     President

Address for Notice:

Telephone:    (___) ___‑____

Fax:        (___) ___‑____

Attention:

SIGNATURE PAGES TO
OMNIBUS AGREEMENT

SEADRILL OPERATING LP

By: Seadrill Operating GP LLC, its general partner

By: /s/ Rune Magnus Lundetræ    
Name:     Rune Magnus Lundetræ
Title:     President

Address for Notice:

Telephone:    (___) ___‑____

Fax:        (___) ___‑____

Attention:    

SEADRILL CAPRICORN HOLDINGS LLC

By: /s/ Robert Hingley-Wilson        
Name:     Robert Hingley-Wilson    
Title:     Director

Address for Notice:

Telephone:    (___) ___‑____

Fax:        (___) ___‑____

Attention:    

SIGNATURE PAGES TO
OMNIBUS AGREEMENT

EX-4.5

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

STRICTLY CONFIDENTIAL

DATED 20 AUGUST 2014

ROSNEFT OIL COMPANY

AND

SEADRILL LIMITED

AND

NORTH ATLANTIC DRILLING LTD.

_________________________________________

FRAMEWORK AGREEMENT

_________________________________________

CONTENTS

Page

1.INTERPRETATION    2

2.NADL ISSUANCE    33

3.CONTRACT SHARES    35

4.ONSHORE DRILLING CONTRACTS    38

5.EXTENDED CO-OPERATION    40

6.CONDITIONS    51

7.TERMINATION OF THIS AGREEMENT    55

8.ROSNEFT ACTIONS PENDING COMPLETION    58

9.NADL ACTIONS PENDING COMPLETION    59

10.COMPLETION    61

11.COMPLETION ACCOUNTS    62

12.ROSNEFT WARRANTIES AND COVENANTS    63

13.NADL WARRANTIES AND COVENANTS    65

14.SEADRILL WARRANTY    66

15.PARTIES’ WARRANTIES    67

16.LIABILITY; LIMITATIONS ON LIABILITY    68

17.TAJIKISTAN; OBK CONTRACTS    70

18.NON-SOLICITATION    71

19.INTER-COMPANY AMOUNTS    71

20.TRANSITIONAL SERVICES; POST COMPLETION UNDERTAKINGS; WEATHERFORD OPTION    72

21.BOOKS AND RECORDS    75

22.EFFECT OF COMPLETION    75

23.REMEDIES AND WAIVERS    75

24.ASSIGNMENT    75

25.ENTIRE AGREEMENT    76

26.NOTICES    77

27.ANNOUNCEMENTS    77

28.CONFIDENTIALITY    78

29.COSTS; EXPENSES AND TAX    79

30.COUNTERPARTS    80

31.INVALIDITY    80

32.CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999    80

33.CHOICE OF GOVERNING LAW    81

34.ARBITRATION    81

35.NATURE OF THIS AGREEMENT    82

36.LANGUAGE    82

Agreed Form Documents

1. Shareholders’ Agreement (including restated by-laws of NADL)

2. Russian SPA

3. Registration Rights Agreement

4. Legal opinion by Bermudan counsel regarding the valid issuance of the Consideration Shares and the Subscription Shares, and the future issuance of the Contract Shares

5. Pre-emption waiver in respect of shares in the Company

6. Decision of Rosneft as the sole participant of the Company approving: (i) the resignation of the existing general director of the Company; and (ii) the appointment of the person designated by NADL as general director

7. Minutes of the general participants’ meeting of Orenburg approving: (i) the resignation of the existing general director of Orenburg and the termination of the board of directors of Orenburg; and (ii) the appointment of persons designated by NADL as general director and to the Orenburg board, respectively

8. Decision of Orenburg approving: (i) the resignation of the existing general director of Orenburg Subsidiary; and (ii) the appointment of the person designated by NADL as general director.

9. Agreement terminating the employment agreement of the existing general director of the Company

10. Agreement terminating the employment agreement of the existing general director of Orenburg

11. Agreement terminating the employment agreement of the existing general director of Orenburg Subsidiary

12. Notices from each resigning general director of the Company, Orenburg and the Orenburg Subsidiary to the relevant respective banks informing the relevant bank(s) of their resignation and authorising the relevant bank(s) to no longer act in accordance with their instructions

13. Powers of attorney relating to each resigning general director of the Company, Orenburg and Orenburg Subsidiary

14. Pro forma Onshore Drilling Contract

THIS AGREEMENT (this “Agreement”) is made on August 2014

AMONGST:

1. ROSNEFT OIL COMPANY, an open joint stock company incorporated and registered under the laws of the Russian Federation with main state registration number (OGRN) 1027700043502 and having its head office located at Russian Federation, 115035 Moscow, 26/1 Sofiyskaya embankment (“Rosneft”);

AND

2. SEADRILL LIMITED, an exempted limited company incorporated under the laws of the Islands of Bermuda with official number 36832 and having its head office located at Par-la-Ville Place, 14 Par-la-ville Road, Hamilton HM08, Bermuda (“Seadrill”);

AND

3. NORTH ATLANTIC DRILLING LTD., an exempted limited company incorporated under the laws of the Islands of Bermuda with official number 45094 and having its head office located at Par-la-Ville Place, 14 Par-la-ville Road, Hamilton HM08, Bermuda (“NADL”).

WHEREAS:

(A) The Company operates a fleet of onshore drilling rigs used for the exploration and production of hydrocarbons onshore in Russia. The Company is a wholly-owned subsidiary of Rosneft.

(B) NADL owns and operates a fleet of offshore drilling rigs. NADL operates solely in the NADL Area and is a specialist in providing drilling services in the NADL Area. Seadrill owns approximately 70.4% (seventy point four per cent.) of the shares in NADL.

(C) NADL has agreed to issue the Consideration Shares and the Subscription Shares to Rosneft in return for the transfer of the Shares and the payment of the Subscription Price, respectively, on the terms and subject to the conditions set out in this Agreement.

(D) The transfer of the Shares will be effected by the Russian SPA and whilst this Agreement is not a transaction directed at the disposal of a participatory interest within the meaning of paragraph 1 of Article 21(11) of the LLC Law, this Agreement will be considered a contract establishing an obligation to enter into a transaction directed at the disposal of a participatory interest, provided that certain circumstances have occurred or the counterparty has performed certain counter-obligations, within the meaning of paragraph 3 of Article 21(11) of the LLC Law.

(E) The Retained Group has entered into Offshore Drilling Contracts for each of the Offshore Rigs with the NADL Group. Following the Acceptance Date under the Offshore Drilling Contracts in respect of each of the Offshore Rigs by the Retained Group, NADL has agreed to issue the Contract Shares to Rosneft.

(F) The Retained Group may enter into Additional Drilling Contracts with the NADL Group and/or the Seadrill Group following Completion. Following the Acceptance Date under Additional Drilling Contracts between the Retained Group and the NADL Group, NADL has agreed to issue the NADL Additional Contract Shares to Rosneft. Following the Acceptance Date under Additional Drilling Contracts between the Retained Group and the Seadrill Group, Seadrill has agreed to transfer the Seadrill Additional Contract Shares to Rosneft.

(G) Rosneft and Seadrill have agreed to enter into the Shareholders’ Agreement at Completion for the purpose of regulating the relationship between Rosneft and Seadrill as shareholders in NADL.

(H) The execution and delivery of the NADL Approval Documents, the issuance of the Consideration Shares and the Subscription Shares and the future issuance of the Contract Shares have been approved by the board of directors of NADL, and each necessary committee of the board of directors of NADL, including the NADL Conflicts Committee and the execution and delivery of the Seadrill Approval Documents has been approved by the board of Seadrill and each necessary committee of the board of directors of Seadrill.

WHEREBY IT IS AGREED AS FOLLOWS:

1. INTERPRETATION

1.1 In this Agreement:

“Acceptance Date”	means the date on which Rosneft (or any member of the Retained Group) has accepted the relevant rig in accordance with the terms of the relevant Offshore Drilling Contract;
“Accounts”	means, as regards the Company, the Company Accounts and, as regards Orenburg and the Orenburg Subsidiary, the Orenburg Accounts;
“Accounts Date”	means 31 December 2013;
“Actual Drilling Revenue”	means, in respect of a particular Settlement Date, the actual contractual revenue earned under an Offshore Drilling Contract by a member of the NADL Group in respect of operating day rate, standby rate or any other similar day rates set out in the Service Order for the relevant Offshore Rig (net of any VAT or sales or similar Tax and excluding any initial holding rate), during the preceding Settlement Period;
“Additional Contract Acceptance Date”	means the date on which Rosneft (or any member of the Retained Group) has accepted the relevant rig in accordance with the terms of the relevant Additional Drilling Contract;
“Additional Contract Actual Drilling Revenue”	means, in respect of a particular Settlement Date, the actual contractual revenue earned under an Additional Drilling Contract by a member of the NADL Group or member of the Seadrill Group (as the case may be) in respect of operating day rate, standby rate or any other similar day rates as set out in the service order for the relevant rig (net of any VAT or sales or similar Tax and excluding any initial holding rate), during the preceding Settlement Period;
“Additional Contract Aggregate Deficit”	;
“Additional Contract Aggregate Surplus”	;
“Additional Contract Estimated Drilling Revenue”	means, in respect of an Additional Drilling Contract, A x B where: A = the estimated contractual revenue estimated to be earned under an Additional Drilling Contract over the term of that Additional Drilling Contract as agreed in writing by Rosneft and NADL or Rosneft and Seadrill (as the case may be) at or before the time it is entered into provided that estimated contractual revenue shall be calculated on the basis of operating day rate, standby rate or any other similar day rates as set out in the service order for the relevant rig (net of any VAT or sales or similar Tax and excluding any initial holding rate) and shall ignore the effect of the Expected Capacity; and B = Expected Capacity;
“Additional Contract Revenue Deficit”	;
“Additional Contract Revenue Surplus”	has the meaning given in Clause 5.6(B);
“Additional Contract Rolled Forward Amount”	;
“Additional Contract Rolled Forward Surplus Amount”	;
“Additional Drilling Contracts”	means any offshore drilling contracts entered into between the Retained Group and the NADL Group or between the Retained Group and the Seadrill Group (as the case may be) following Completion pursuant to Clause 5 (Extended Co-Operation), which contracts shall be substantially on the terms of the Master Agreement;
“Aggregate Deficit”	;
“Aggregate Surplus”	;
“Aggregate Tier One Liability Cap”	;
“Aggregate Tier Two Liability Cap”	;
“Agreement”	means this Agreement and the Schedules and Attachments hereto (as amended from time to time);
“Anti-Corruption Warranties”	;
“Assessed Settlement Period”	means, in respect of a Settlement Date, the preceding Settlement Period;
“Authority”	means any supranational, state, municipal or local government or any other supranational, governmental, intergovernmental, body, department or organisation or any regulatory body appointed by any of the foregoing;
“Bankruptcy Law”	means the Federal Law of the Russian Federation No. 127-FZ of 26 October 2002 “On Insolvency (Bankruptcy)”;
“BMA Consent”	means the consent of the Bermuda Monetary Authority to the issuance of the Consideration Shares, the Subscription Shares, the Contract Shares and the NADL Additional Contract Shares;
“Bonds Prospectus”	means the prospectus issued by NADL on 13 February 2014 in connection with its proposed issue of the bonds described therein;
“Books and Records”	has its common meaning and includes: (A) all notices, correspondence, orders, inquiries, drawings, plans, books of account and other documents and all computer disks or tapes or other machine legible programs or other records; and (B) any documents which require to be maintained and retained according to applicable laws;
“Business Day”	means a day (other than a Saturday or Sunday) on which banks are open for general business in London, New York and Moscow;
“Business Information”	means all information (in whatever form held) including all: (A) trade secrets, formulas, designs, specifications, drawings, know-how, tools, methodologies, manuals, policies and instructions; (B) customer lists, sales, marketing and promotional information; (C) employee information; (D) business plans and forecasts; (E) technical or other expertise; and (F) all accounting and tax records, correspondence, orders and enquiries;
“Carve Out”	;
“Cash”	;
“Cash Tax Saving”	;
“Company”	means RN Burenie LLC, basic information concerning which is set out in Part A of Attachment 1 (Basic information about the Company);
“Company Accounts”	means the audited balance sheet and income statement for the Company as at and for the period ending on the Accounts Date, prepared in accordance with RAS;
“Company Management Information”	;
“Company Warranties”	means the representations and warranties set out in Part A of Schedule 5 (Rosneft Representations and Warranties) and those in Clause 12 (Rosneft Warranties and Covenants) given by Rosneft and “Company Warranty” shall be construed accordingly;
“Completion”	;
“Completion Accounts”	has the meaning given in Paragraph 4.1, 4.2(A) or 4.2(B) (as applicable) of Part A of Schedule 8 (Completion Accounts);
“Completion Adjustment Amount”	means an amount (which may be a positive or negative number) equal to (i) the Completion Net Working Capital Amount (ii) plus the Net Cash / Debt Amount (if such amount is positive) or minus the modulus of the Net Cash / Debt Amount (if such amount is negative);
“Completion Cash Amount”	means the aggregate of the amounts of Cash as at Completion agreed or determined in accordance with Schedule 8 (Completion Accounts);
“Completion Date”	means the date on which Completion takes place;
“Completion Debt Amount”	means the aggregate of the amounts of Debt as at Completion agreed or determined in accordance with Schedule 8 (Completion Accounts);
“Completion Net Working Capital Amount”	means the amount by which the Completion Working Capital Amount is (i) more than the Minimum Working Capital Amount (in which case the Completion Net Working Capital Amount shall be expressed as a positive number), or (ii) less than the Minimum Working Capital Amount (in which case the Completion Net Working Capital Amount shall be expressed as a negative number);
“Completion Working Capital Amount”	means the amount of Working Capital as at Completion agreed or determined in accordance with Schedule 8 (Completion Accounts);
“Conditions”	means the matters listed in Schedule 1 (Conditions to Completion);
“Consideration”	;
“Consideration Deficit”	;
“Consideration Share Price”	means US$9.25;
“Consideration Shares”	means that number of common shares of par value US$5 each in the share capital of NADL the value of which equals the Estimated Consideration (rounded up to the nearest whole number of shares), calculated by reference to the Consideration Share Price;
“Contract Shares”	means: (A) in relation to the First Offshore Drilling Contract, that number of common shares of par value US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) which equals A/B where: A = (i) ***** of the Estimated Drilling Revenue for the First Offshore Drilling Contract (ii) minus any amounts outstanding from Rosneft to NADL under this Agreement as at the Acceptance Date under the First Offshore Drilling Contract; and B = US$9.25; and (B) in relation to any Subsequent Offshore Drilling Contract, that number of common shares of par value US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) which equals A/B where: A = the Contract Shares Calculation; and B = US$9.25;
“Contract Shares Calculation”	means in respect of a Subsequent Offshore Drilling Contract: (A) ***** of the Estimated Drilling Revenue for that Subsequent Offshore Drilling Contract; (B) minus the Rolled Forward Amount (if any) or plus the Rolled Forward Surplus Amount (if any) as at the Acceptance Date under that Subsequent Offshore Drilling Contract; and (C) minus any amounts outstanding from Rosneft to NADL under this Agreement as at the Acceptance Date under that Subsequent Offshore Drilling Contract;
“Control”	means, in relation to a person, where a person has (i) direct or indirect control of more than 50% (fifty per cent.) of the voting rights at general meetings of shareholders (participants) or similar managing bodies of that person, (ii) the right to appoint more than 50% (fifty per cent.) of the board of directors, the management board or other management body of that person, or (iii) the right to appoint the chief executive officer (or similar officer) of that person, and “Controlled” and “Controlling” shall be construed accordingly.
“Current NADL Disclosure Letter”	means the Original NADL Disclosure Letter, as supplemented by the Updated NADL Disclosure Letter provided in accordance with Clause 13 (NADL Warranties and Covenants);
“CurrentRosneft Disclosure Letter”	means the Original Rosneft Disclosure Letter, as supplemented by the Updated Rosneft Disclosure Letter provided in accordance with Clause 12 (Rosneft Warranties and Covenants);
“Debt”	;
“Dispute Notice”	has the meaning given in Paragraph 3.1 of Part A of Schedule 8 (Completion Accounts);
“Dispute Resolution Process”	means any litigation, proceedings, prosecutions, or arbitrations;
“Disputed Items”	has the meaning given in Paragraph 3.2 of Part A of Schedule 8 (Completion Accounts);
“Draft Completion Accounts”	has the meaning given in Paragraph 1.1 of Part A of Schedule 8 (Completion Accounts);
“Drilling Business”	means the land drilling business undertaken by the Sale Group and activities as are reasonably incidental to the business undertaken by the Sale Group such as the provision of accommodation, catering and transport services;
“Drilling Contracts”	means the Offshore Drilling Contracts and the Onshore Drilling Contracts;
“Due Diligence Commencement Date”	;
“Encumbrance”	means any mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, right to acquire, third party right, interest or claim, other encumbrance or security or equity interest of any kind (or an agreement or commitment to create any of the same);
“Environmental Warranties”	means the Rosneft Warranties set out in Paragraph 13 of Part A of Schedule 5 (Rosneft Representations and Warranties) and “Environmental Warranty” shall be construed accordingly;
“Estimated Adjustment Amount”	means the amount by which the Estimated Consideration is less than the Initial Price or, if the Estimated Consideration is not less than the Initial Price, zero (US$0);
“Estimated Cash Amount”	means the amount of the Completion Cash Amount as estimated in good faith by Rosneft;
“Estimated Consideration”	means an amount equal to the lower of: (A) the Initial Price; and (B) (i) the Initial Price; (ii) plus the Estimated Net Cash / Debt Amount (if such amount is positive) or minus the modulus of the Estimated Net Cash / Debt Amount (if such amount is negative); and (iii) plus the Estimated Net Working Capital Amount (if such amount is positive) or minus the modulus of the Estimated Net Working Capital Amount (if such amount is negative);
“Estimated Debt Amount”	means the amount of the Completion Debt Amount as estimated in good faith by Rosneft;
“Estimated Drilling Revenue”	means: (A) in respect of an Offshore Drilling Contract, the amount set out opposite that contract in column 10 of Part A of Schedule 10 (Offshore Drilling Contracts); and (B) in respect of an Assessed Settlement Period, the amount set out opposite that Settlement Period in column 2 of Part B of Schedule 10 (Offshore Drilling Contracts), in each case, as adjusted from time to time in accordance with Clause 3.11;
“Estimated Net Cash / Debt Amount”	means the Estimated Cash Amount less the Estimated Debt Amount, which may be a positive or negative number;
“Estimated Net Working Capital Amount”	means the Estimated Working Capital Amount less the Minimum Working Capital Amount, which may be a positive or negative number;
“Estimated Working Capital Amount”	means the amount of the Completion Working Capital Amount, which may be a positive or negative number, as estimated in good faith by Rosneft;
“Exchange Act”	has the meaning given in Paragraph 9(B) of Schedule 6 (NADL Representations and Warranties);
“Existing VTB Leases”	means the rig leases which are in force as at the Signing Date between the Sale Group and VTB Leasing;
“Expected Capacity”	means: (A) in respect of deep water / floating drilling rigs, 0.94; and (B) in respect of jack-up drilling rigs, 0.97;
“Expert”	has the meaning given in Paragraph 4.2(B) of Part A of Schedule 8 (Completion Accounts);
“FAS”	means the Federal Anti-Monopoly Service of the Russian Federation, or any successor thereto, including any applicable territorial administration thereof;
“FAS Approval”	;
“First Offshore Drilling Contract”	;
“Fundamental NADL Warranties”	means the NADL Warranties set out in Clause 15 (Parties’ Warranties) given by NADL and Paragraphs 1, 2 and 5(B) of Schedule 6 (NADL Representations and Warranties) and “Fundamental NADL Warranty” shall be construed accordingly;
“Fundamental Rosneft Warranties”	means the Rosneft Warranties set out in Clause 15 (Parties’ Warranties) given by Rosneft and Paragraphs 1 and 9 of Part A of Schedule 5 (Rosneft Representations and Warranties) and “Fundamental Rosneft Warranty” shall be construed accordingly;
“General Director”	means the sole executive body of the relevant legal entity;
“IFRS”	means the International Financial Reporting Standards and International Accounting Standards issued by the International Accounting Standards Board together with the interpretations issued by the International Financial Reporting Interpretations Committee of the International Accounting Standards Board (as amended, supplemented or re issued from time to time);
“Information Technology”	means computer hardware, software and networks;
“Initial Price”	;
“Insolvency Event”	means, in relation to a person, any of the following: (A) declaring itself to be insolvent or filing a debtor’s application to recognise insolvency or being declared unable to pay its debts as they fall due; (B) the taking of any formal steps with a view to the deferral, rescheduling or other readjustment of all or a particular class of its creditors, or the taking of any formal steps to make a general assignment or arrangement or composition with or for the benefit of the relevant creditors; (C) any form of liquidation, winding up, receivership, administrative receivership, administration, arrangement or scheme with creditors, moratorium, stay or limitation of creditors’ rights, interim or provisional supervision by the court or by persons appointed by the court (or any equivalent or similar procedure under the law of any jurisdiction in which the relevant person is incorporated, registered, domiciled or resident or carries on business or has assets) being commenced or otherwise in place or under way in relation to it, whether in or out of court; (D) the appointment of a provisional liquidator, liquidator, administrator, receiver, receiver and manager, administrative receiver or similar officer; (E) it does not discharge the claims of any creditor related to monetary obligations determined by the court and/or make any mandatory payments (in Russian: obyasatel’niye platezhi) within three (3) months after their due date, or is otherwise incapable of satisfying the claims of any creditor related to monetary obligations and/or to make any mandatory payment; (F) the settlement of claims of one (1) or more creditors makes it impossible for it to discharge its monetary obligations or to make mandatory payments (in Russian: obyasatel’niye platezhi) and/or other payments in full to its other creditors; (G) its board of directors, participants or shareholders (as applicable) adopts a resolution to file a petition with a Russian arbitrazh court for its insolvency; (H) the levying or execution of any judgment, award or order on its property that will materially impair or make impossible its ability to carry on its business activity; (I) it meets the criteria for insolvency (in Russian: neplatezhesposobnost) and/or property insufficiency (in Russian: nedostatochnost imushestva); (J) it meets any other insolvency test specified by the Bankruptcy Law or other applicable law; or (K) anything analogous to the matters set out in (A) to (J) above occurs in relation to that person in any jurisdiction.
“Intellectual Property”	means patents, trademarks, rights in designs, copyrights (including rights in software) and database rights (whether or not any of these is registered and including applications for registration of any such thing) and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world;
“Intended Completion Date”	;
“Inter-Company Debt”	means the Inter-Company Receivables less the Inter-Company Payables;
“Inter-Company Payables”	means the aggregate of the amounts owing (including interest accrued on all such amounts), from members of the Sale Group to members of the Retained Group (including any distribution declared but not paid by any member of the Sale Group in favour of, or payable but not paid to, any member of the Retained Group);
“Inter-Company Receivables”	means the aggregate of the amounts owing (including interest accrued on all such amounts), from members of the Retained Group to members of the Sale Group (including any distribution declared but not paid by any member of the Retained Group in favour of, or payable but not paid to, any member of the Sale Group);
“Key Agreements”	means this Agreement and the Shareholders’ Agreement;
“Key Employees”	means any officer or director of any member of the Sale Group and any individual who works or performs services under a contract of employment with any member of the Sale Group as at the Signing Date, as listed in Attachment 6;
“Key NADL Warranties”	means the NADL Warranties set out in Clause 15 (Parties’ Warranties) given by NADL and Paragraphs 1 and 5(B) of Schedule 6 (NADL Representations and Warranties);
“Key Rosneft Warranties”	means the Rosneft Warranties set out in Clause 15 (Parties’ Warranties) given by Rosneft and Paragraphs 1 (other than those in sub-Paragraphs (H), (I), (J), (K), (M), (O), (P) and (Q)) and 9 of Part A of Schedule 5 (Rosneft Representations and Warranties);
“Key Warranty Disclosure”	;
“Known Matters”	;
“Land Rigs”	means the land rigs details of which are set out in Attachment 3 (Land Rigs);
“Leased Rigs”	means those Land Rigs set out in Part A of Attachment 3 which are, as at the date of this Agreement, leased by the Sale Group;
“Letter of Award”	means the letter of award dated 24 May 2014 setting out Rosneft's commitment to enter into the offshore drilling contracts referred to therein;
“LIBOR”	means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for three (3) month deposits in Dollars as shown on the appropriate Reuters screen page (or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters) on the first day of the relevant period;
“LLC Law”	means the Federal Law of the Russian Federation No. 14-FZ of 8 February 1998 “On Limited Liability Companies”;
“Long Stop Date”	means 31 December 2014;
“Master Agreement”	means the master agreement dated 30 July 2014 in respect of each of the Offshore Rigs between NADL and Rosneft as amended from time to time;
“Material Contract”	means: (A) any written contract to which any member of the Sale Group is a party which: (i) is material in the context of the Sale Group’s business; or (ii) involves payments or receipts of more than US$5,000,000 in any one year; or (iii) cannot be terminated or cancelled with less than 6 months’ notice; and (B) the share sale and purchase agreement in respect of the purchase of 100% (one hundred per cent.) participatory interest in Orenburg by the Company dated 1 April 2014;
“Material Orenburg Movable Property”	means property listed as such in the Current Rosneft Disclosure Letter and any other property with a book value exceeding RUB 1,000,000  (or an equivalent amount in any other currency at the exchange rate of the Central Bank of the Russian Federation as at the Signing Date) in accordance with the accounting records of Orenburg and the Orenburg Subsidiaries (in accordance with RAS) as at 1 January 2014 as disclosed;
“Minimum Working Capital Amount”	;
“NADL Accounts”	means the audited consolidated and combined consolidated carve-out financial statements, including consolidated statement of operations for the years ended December 31, 2013, 2012 and combined consolidated carve-out statement of operations for the year ended December 31, 2011, consolidated statement of comprehensive income for the years ended December 31, 2013, 2012 and combined consolidated carve-out statement of comprehensive income for the year ended December 31, 2011, consolidated balance sheet as of December 31, 2013 and 2012, consolidated statement of cash flows for the years ended December 31, 2013, 2012 and combined consolidated carve-out statement of cash flows for the year ended December 31, 2011, consolidated statement of changes in equity for the years ended December 31, 2013, 2012 and combined consolidated carve-out statement of changes in equity for the year ended December 31, 2011, and notes to them of NADL;
“NADL Additional Contract Shares”	means, in relation to an Additional Drilling Contract with a member of the NADL Group, that number of common shares of US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) which equals A/B where: A = (i) ***** of the Additional Contract Estimated Drilling Revenue for that Additional Drilling Contract (ii) minus the Additional Contract Rolled Forward Amount (if any) or plus the Additional Contract Rolled Forward Surplus Amount (if any) as at the Additional Contract Acceptance Date under that Additional Drilling Contract and (iii) minus any amounts outstanding from Rosneft to NADL under this Agreement as at the Additional Contract Acceptance Date under that Additional Drilling Contract; and B = the higher of: (i) the volume weighted average price as derived from Bloomberg of a common share of NADL for the thirty Business Days prior to the relevant Additional Contract Acceptance Date under that Additional Drilling Contract; and (ii) US$5;
“NADL Approval Documents”	means this Agreement, the Pro Forma Onshore Drilling Contract, the Russian SPA, the Current NADL Disclosure Letter and any other documents being entered into by NADL in connection with the transactions contemplated by this Agreement which are expressly referred to in this Agreement (but excluding the Offshore Drilling Contracts and any related documents and any Additional Drilling Contracts);
“NADL Area”	means: (A) the North Atlantic region encompassing the territorial waters and outer continental shelf jurisdictions of Norway, the United Kingdom, Iceland, Denmark (including the Faroe Islands), the Netherlands and Greenland (east coast only); (B) the territorial waters and outer continental shelf jurisdiction of Russia; (C) such parts of the Baltic Sea, the Gulf of Bothnia and the Black Sea that are not covered by ‎(B); and (D) all of the Caspian Sea;
“NADL Break Fee”	;
“NADLData Room”	means the virtual data room made available by NADL containing the documents contained in the DVD attached to the Original NADL Disclosure Letter, the cover of which has been signed by all parties;
“NADL Group”	means NADL and its subsidiaries and subsidiary undertakings from time to time, and shall include the Sale Group from the Completion Date, and “member of the NADL Group” shall be construed accordingly;
“NADL Key Employee”	means the CEO, CFO, Director of Operations, Director of Marketing and Director of Finance of NADL;
“NADL Key Warranty Disclosure”	;
“NADL Known Matters”	;
“NADL Legal Opinions”	;
“NADLMaterial Adverse Change”	means any event, circumstance, change, development or condition that: (A) occurs on or after the Signing Date; or (B) occurred before the Signing Date, but where knowledge or information in respect of such event, circumstances, change, development or condition was not publicly available and generally known by members of the global oil and gas industry prior to the execution of this Agreement and not known by Rosneft prior to the execution of this Agreement,    which gives rise to, or which is likely to give rise to a material adverse effect on the business, operations, assets, financial position, profits or prospects of the NADL Group, but excluding any of the following: (a) global economic, global financial or global market conditions (including changes in interest rates, exchange rates or securities or commodity prices); or (b) any act undertaken by (or omission of) NADL at the written request of Rosneft on or after the Signing Date; or (c) any act undertaken by (or omission of) NADL pursuant to and in accordance with its obligations under any of the Transaction Documents; or (d) any act undertaken by any member of the Retained Group (except for the enforcement of any of its rights or exercise of any of its discretions under any of the Transaction Documents); or (e) any changes generally affecting companies in the sector in which NADL operates and which do not have a disproportionately adverse impact on NADL;
“NADL Material Contract”	means any written contract to which any member of the NADL Group is a party which: (i) is material in the context of the NADL Group’s business; or (ii) involves payments or receipts of more than US$10,000,000 in any one year; or (iii) cannot be terminated or cancelled with less than 6 months’ notice;
“NADLTax Warranties”	means the NADL Warranties set out in Paragraph 4 of Schedule 6 (NADL Representations and Warranties);
“NADL Warranties”	means the representations and warranties set out in Schedule 6 (NADL Representations and Warranties) and those given by NADL in Clause 13 (NADL Warranties and Covenants) and Clause 15 (Parties’ Warranties) and “NADL Warranty” shall be construed accordingly;
“Net Cash / Debt Amount”	means the Completion Cash Amount less the Completion Debt Amount, which may be a positive or a negative number;
“Notary”	means such public notary as agreed between the parties to notarise the Russian SPA and to make such other arrangements as are necessary for the purpose of transferring the Shares from Rosneft to NADL at Completion;
“Offshore Drilling Contract”	means in respect of each Offshore Rig: (A) the Master Agreement; and (B) any Service Order;
“Offshore Rigs”	;
“Onshore Drilling Contracts”	means the drilling contracts in respect of each of the Land Rigs to be entered into pursuant to Clause 4 and on the terms set out in the Pro forma Onshore Drilling Contract;
“Orenburg”	means Orenburg Drilling LLC, basic information concerning which is set out in Part B of Attachment 1 (Basic information about the Subsidiaries);
“Orenburg Accounts”	means the consolidated balance sheet and income statement for Orenburg and the Orenburg Subsidiary as at and for the period ending 31 December 2013 prepared in accordance with IFRS;
“Orenburg Acquisition”	means the acquisition by the Company of Orenburg and the Orenburg Subsidiaries;
“Orenburg Completion Date”	means 1 April 2014;
“Orenburg Seller 1”	means OJSC VTB Leasing, an open joint stock company, incorporated and registered under the laws of the Russian Federation with main state registration number (OGRN) 1037700259244 and having its head office located at 109147, Moscow, Vorontsovskaya str. 43, bld. 1, Russia;
“Orenburg Sellers”	means Orenburg Seller 1 and LLC FinanceBusinessGroup (in Russian: ООО «ФинансБизнесГрупп»), a limited liability company, incorporated and registered under the laws of the Russian Federation with main state registration number (OGRN) 1067746478183 and having its head office located at 105066, Moscow, Novaya Basmannaya str. 37А, Russia;
“Orenburg Shares”	means the 100% (one hundred per cent.) participatory interest in the charter capital of Orenburg;
“Orenburg Subsidiary”	means OBK Service LLC, a limited liability company, incorporated and registered under the laws of the Russian Federation with main state registration number (OGRN) 1105658006475 and having its head office located at 460027, Orenburg, Donguzskaya str, 53 Russia;
“Orenburg Subsidiary Shares”	has the meaning given in Paragraph 3 of Part B of Schedule 5 (Rosneft Representations and Warranties);
“Orenburg Warranties”	means the representations and warranties set out in Part B of Schedule 5 (Rosneft Representations and Warranties) given by Rosneft and “Orenburg Warranty” shall be construed accordingly;
“Orenburg Warranty Claim”	means any claim for breach of any Orenburg Warranty;
“Original NADL Disclosure Letter”	means the letter of the same date as this Agreement written by NADL to Rosneft and delivered to Rosneft before the execution of this Agreement;
“OriginalRosneft Disclosure Letter”	means the letter of the same date as this Agreement written by Rosneft to Seadrill and NADL and delivered to Seadrill and NADL before the execution of this Agreement;
“Payment Date”	;
“Postponed Long Stop Date”	;
“Pro forma Onshore Drilling Contract”	;
“Procurement Documentation”	means procurement regulation (in Russian – положение о закупке), procurement plan (in Russian – план закупки) procurement notice (in Russian – извещение о закупке) and other documents and information required under the Procurement Law to lawfully procure goods, works and services;
“Procurement Law”	means Russian Federal Law No. 223-FZ of 18 July 2011 “On Procurement of Goods, Works and Services by Certain Types of Legal Entities”;
“Property” or “Properties”	means freehold, leasehold or other immovable property in any part of the world;
“Prospectus”	means the prospectus issued by NADL on 28 January 2014 in connection with its application to list its common shares on the New York Stock Exchange;
“RAS”	means: (A) with respect to the period up to and including 31 December 2012, the Russian accounting standards as adopted by Federal Law No. 129-FZ of 21 November 1996 “On Accounting”; and (B) with respect to the period from and including 1 January 2013, the Russian accounting standards as adopted by Federal Law No 402-FZ of 6 December 2011 “On Accounting”, as well as accounting policy regulations as adopted by the Russian Ministry of Finance and other generally accepted accounting principles and practices in the Russian Federation;
“Register”	means the Unified State Register of Legal Entities in the Russian Federation;
“Relevant Properties”	means the Properties referred to in Attachment 2 (Relevant Properties);
“Relevant Well Tier One Liability Cap”	has the meaning given in Clause 5.29(A)(i);
“Relevant Well Tier Two Liability Cap”	;
“Retained Group”	means Rosneft, its subsidiaries and subsidiary undertakings from time to time and any other persons Controlled by Rosneft, but excluding members of the Sale Group, and “member of the Retained Group” shall be construed accordingly;
“Revenue Deficit”	;
“Revenue Surplus”	;
“Rig Lease”	;
“Rolled Forward Amount”	;
“Rolled Forward Surplus Amount”	;
“Rosneft Approval Documents”	means this Agreement, the Shareholders’ Agreement, the Onshore Drilling Contracts, the Russian SPA, the Current Rosneft Disclosure Letter and any other documents being entered into by Rosneft (or any member of the Retained Group) in connection with the transactions contemplated by this Agreement which are expressly referred to in this Agreement (but excluding the Offshore Drilling Contracts and any related documents and any Additional Drilling Contracts);
“Rosneft Break Fee”	;
“RosneftData Room”	means the virtual data room made available by Rosneft containing the documents contained on the flash drive attached to the Original Rosneft Disclosure Letter, the cover of which has been signed by all parties;
“Rosneft Legal Opinions”	;
“Rosneft’s Solicitors”	means Baker Botts L.L.P., located at Suite 450, Ducat Place II, Gasheka str. 7, Moscow, 123056, Russia;
“RosneftTax Warranties”	means the Rosneft Warranties set out in Paragraph 18 of Part A of Schedule 5 (Rosneft Representations and Warranties);
“Rosneft Warranties”	means the Company Warranties and/or the Orenburg Warranties and the representations and warranties set out in Clause 15 (Parties’ Warranties) given by Rosneft and “Rosneft Warranty” shall be construed accordingly;
“Rosneft Warranty Claim”	means any claim for breach of any Rosneft Warranty;
“Russian Roubles” or “RUB”	means Russian roubles, the lawful currency of the Russian Federation;
“Russian SPA”	means a contribution agreement in the form set out in Schedule 11 (Russian SPA) in relation to the Shares to be entered into between Rosneft as contributor and NADL as issuer;
“Sale Group”	means the Company and the Subsidiaries and “member of the Sale Group” shall be construed accordingly;
“Sale GroupMaterial Adverse Change”	means any event, circumstance, change, development or condition that: (A) occurs on or after the Signing Date; or (B) occurred before the Signing Date, but where knowledge or information in respect of such event, circumstances, change, development or condition was not publicly available and generally known by members of the global oil and gas industry prior to the execution of this Agreement and not known by Seadrill or NADL prior to the execution of this Agreement, which gives rise to, or which is likely to give rise to a material adverse effect on the business, operations, assets, financial position, profits or prospects of the Sale Group taken as a whole, but excluding any of the following: (a) global economic, global financial or global market conditions (including changes in interest rates, exchange rates or securities or commodity prices); or (b) any act undertaken by (or omission of) any member of the Retained Group and/or any member of the Sale Group at the written request of Seadrill or NADL on or after the Signing Date; or (c) any act undertaken by (or omission of) any member of the Retained Group and/or any member of the Sale Group pursuant to and in accordance with its obligations under any of the Transaction Documents; or (d) any act undertaken by any member of the Seadrill Group or any member of the NADL Group (except for the enforcement of any of its rights or exercise of any of its discretions under any of the Transaction Documents); or (e) any changes generally affecting companies in the sector in which the Sale Group operates and which do not have a disproportionately adverse impact on the Sale Group; or (f) any change in applicable law relating to sanctions which does not result in a material impact on the Sale Group;
“Sanctions”	;
“Sanctions Event”	;
“Sanctions Matter”	;
“Seadrill Additional Contract Aggregate Deficit”	has the meaning given in Clause 5.16;
“Seadrill Additional Contract Aggregate Surplus”	;
“Seadrill Additional Contract Rolled Forward Amount”	;
“Seadrill Additional Contract Rolled Forward Surplus Amount”	;
“Seadrill Additional Contract Revenue Deficit”	;
“Seadrill Additional Contract Revenue Surplus”	;
“Seadrill Additional Contract Shares”	means, in relation to an Additional Drilling Contract with a member of the Seadrill Group, that number of common shares of par value US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) which equals A/B where: A = (i) ***** of the Additional Contract Estimated Drilling Revenue for that Additional Drilling Contract (ii) minus the Additional Contract Rolled Forward Amount (if any) or plus the Additional Contract Rolled Forward Surplus Amount (if any) as at the Additional Contract Acceptance Date under that Additional Drilling Contract and (iii) minus any amounts outstanding from Rosneft to Seadrill under this Agreement as at the Additional Contract Acceptance Date under that Additional Drilling Contract; and B = the volume weighted average price as derived from Bloomberg of a common share of NADL for the thirty Business Days prior to the relevant Additional Contract Acceptance Date under that Additional Drilling Contract;
“Seadrill Approval Documents”	means this Agreement and the Shareholders’ Agreement and any other documents being entered into by Seadrill in connection with the transactions contemplated by this Agreement which are expressly referred to in this Agreement (but excluding the Offshore Drilling Contracts and any related documents and any Additional Drilling Contracts);
“Seadrill Group”	means: (A) Seadrill; and (B) its subsidiaries and subsidiary undertakings from time to time, any holding company of any of them and all other subsidiaries or subsidiary undertakings of any such holding company, but excluding any member of the NADL Group, and “member of the Seadrill Group” shall be construed accordingly;
“Seadrill’s Solicitors”	means Slaughter and May of One Bunhill Row, London EC1Y 8YY;
“Seadrill Warranty”	means the representation and warranty set out in Clause 14 (Seadrill Warranty);
“SEC”	has the meaning given in Paragraph 9(B) of Schedule 6 (NADL Representations and Warranties);
“SecuritiesAct”	has the meaning given in Paragraph 9(B) of Schedule 6 (NADL Representations and Warranties);
“Service Order”	means the service order dated 30 July 2014 between Rosneft and the relevant member(s) of the NADL Group in respect of an Offshore Rig;
“Settlement Date”	means 1 June in each calendar year;
“Settlement Period”	means the period from and including 1 April in the prior calendar year to but excluding 1 April in the current calendar year;
“Shareholders’ Agreement”	means the shareholders’ agreement in the agreed form between Rosneft and Seadrill regulating the relationship between Rosneft and Seadrill as shareholders in NADL;
“Shareholder Debt”	means all loans and borrowings in the nature of indebtedness (other than Inter-Company Payables and Inter-Company Receivables in respect of the supply of goods and services) outstanding between any member of the Retained Group and any member of the Sale Group;
“Shares”	means the 100% (one hundred per cent.) participatory interest in the charter capital of the Company;
“Signing Date”	means the date on which this Agreement is entered into by the parties;
“Subscription Price”	means, in respect of all of the Subscription Shares, an amount equal to A x B where: A = the aggregate number of Subscription Shares; and B = US$9.25;
“Subscription Shares”	means that number of common shares of par value US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) as shall result in Rosneft holding (when aggregated with the Consideration Shares and any other common shares of par value US$5 each in the capital of NADL held by the Retained Group) 30% (thirty per cent.) of the share capital of NADL;
“Subsequent Offshore Drilling Contract”	;
“Subsidiaries”	means those companies identified as such in Part B of Attachment 1 (Basic Information about the Subsidiaries);
“Surviving Provisions”	;
“Tajikistan Business”	means all of the business of the Sale Group carried on in Tajikistan on, prior to or after the date of this Agreement, including all property, rights, assets, obligations and liabilities of the Sale Group relating to such business and including without limitation: (A) the Tajikistan Rig; (B) any employees or other persons employed by any member of the Sale Group and assigned to the Tajikistan Rig; (C) all other property, rights and assets of the Sale Group used in or for the purposes of the operation of the Tajikistan Rig and the Tajikistan Contract; (D) the benefit of all of the agreements, arrangements and commitments to which any member of the Sale Group is a party in relation to the Tajikistan Rig, including without limitation the Tajikistan Contract and in relation to any services provided to the Sale Group for the purposes of the operation of the Tajikistan Rig; and (E) any and all debts, liabilities or obligations of the Sale Group in relation to any of the foregoing.
“Tajikistan Contract”	means the agreement with OJSC Gazprom No. 277 dated 11 March 2009 in respect of the provision of drilling services in Tajikistan;
“Tajikistan Rig”	means the onshore drilling rig owned by Orenburg which, as at the Signing Date, is located in Tajikistan;
“Tax”	includes, without limitation, taxes on gross or net income, profits and gains, and all other taxes, levies, duties, imposts, charges and withholdings of any fiscal nature, including any excise, property, value added, sales, use, occupation, transfer, franchise and payroll taxes and any social security or social fund contributions together with all penalties, charges and interest relating to any of the foregoing taxes, withholdings and contributions or to any obligations with respect to any of the foregoing taxes, withholdings or contributions;
“Tax Authority”	means any government, state, federal or municipality or any governmental, state, social or other fiscal, revenue, customs or excise authority, body or official or other authority anywhere in the world competent to impose, assess, administer or collect any liability relating to Taxes;
“Tax Relief”	means any loss, relief, allowance, credit, exemption, incentive or set-off in respect of Tax, any deduction in computing income, profits or gains for the purposes of Tax or any right to the repayment of Tax;
“Third Party”	;
“Third Party Rights Clauses”	;
“Tier One Balance”	;
“Tier Two Balance”	;
“Transaction Documents”	;
“Transactions”	means the transactions contemplated by this Agreement, including for the avoidance of doubt the Russian SPA;
“Transfer Application Form”	means an application, which under item 14 of Article 21 of the LLC Law is required to be submitted by the Notary to the competent Authority to incorporate amendments to the Register in respect of the change in ownership of the Shares, and a copy of which under item 15 of Article 21 of the LLC Law is required to be submitted to the Company;
“Updated NADL Disclosure Letter”	;
“Updated Rosneft Disclosure Letter”	;
“U.S. Securities Laws”	;
“VAT”	means value added Tax or any other sales or turnover tax of any relevant jurisdiction;
“Weatherford Business”	means all of the land drilling business of the Retained Group which is currently carried on in Russia which was acquired by the Retained Group pursuant to the Weatherford SPA (the “Weatherford Acquisition”) and including all property, rights and assets of the Retained Group relating to such business which have been purchased, acquired or assumed since the completion date of the Weatherford Acquisition;
“Weatherford Consideration”	;
“Weatherford Option”	;
“Weatherford Option Notice”	;
“Weatherford Option Period”	means the period commencing on the Completion Date and ending on the earlier of (a) four months from the Due Diligence Commencement Date; and (b) the second anniversary of the Completion Date (inclusive);
“Weatherford Option Price”	;
“Weatherford SPA”	means the framework agreement entered into between Weatherford Worldwide Holdings GmbH, Weatherford Holdings (RUS), LLC, Weatherford Drilling International Holdings (BVI) Ltd. (as Sellers); Weatherford International public limited company as Guarantor for the Sellers; LLC “Zapad-Shmidt-Invest”, LLC “RN-Service”, LLC “City” (as Purchasers); and Rosneft Oil Company (as Guarantor for the Purchasers) dated 10 July 2014;
“Work Order”	;
“Working Capital”	means in respect of the Sale Group the aggregate amount of the following balance sheet line items set out in the statutory form of a balance sheet applicable for the 2013 year-end financial reporting as approved by the Ministry of Finance of the Russian Federation: i. “Запасы” (inventories), “Налог на добавленную стоимость по приобретенным ценностям” (value added tax on goods purchased), “Дебиторская задолженность” (accounts receivable), “Прочие оборотные активы” (other current assets); less ii. “Кредиторская задолженность” (accounts payable), “Доходы будущих периодов” (deferred income), “Оценочные обязательства” (provisions and accruals), “Прочие обязательства” (other liabilities); but, for the avoidance of doubt: (a) excluding amounts counted towards Cash and Debt, (b) excluding those assets and liabilities specifically required to be excluded from the Completion Working Capital Amount by Part C of Schedule 8 (Completion Accounts); (c) including those assets and liabilities specifically required to be included in the Completion Working Capital Amount by Part C of Schedule 8 (Completion Accounts), (d) including only those long-term liabilities falling within “Оценочные обязательства” (provisions and accruals) and “Прочие обязательства” (other liabilities) which are of the same nature, type and category as the short-term liabilities included in the Working Capital, and included in the calculation of Minimum Working Capital Amount in the agreed form set out in Part E of Schedule 8 (Completion Accounts); and (e) excluding obligations similar to provisions for environmental liabilities or asset retirement obligations. For the avoidance of doubt, Working Capital may be a positive or a negative amount;
“Working Hours”	means 9.00 a.m. to 5.30 p.m. on a Business Day; and
“Working Party”	has the meaning given in Clause 5.25.

1.2 In this Agreement, unless otherwise specified:

(A) references to Clauses, Paragraphs, Schedules and Attachments are to clauses and paragraphs of, and schedules and attachments to, this Agreement;

(B) all headings and titles are inserted for convenience only and are to be ignored in the interpretation of this Agreement;

(C) the Schedules and Attachments form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement;

(D) references to any document in the “agreed form” means that document in the form agreed by the parties and initialled for the purposes of identification by Rosneft’s Solicitors on behalf of Rosneft and Seadrill’s Solicitors on behalf of Seadrill and NADL (in each case with such amendments as may be agreed by or on behalf of the parties);

(E) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, consolidated, amended, modified or re-enacted;

(F) references to “$”, “Dollars” or “US$” are to the lawful currency of the United States of America;

(G) use of any gender includes the other genders;

(H) references to a “company” shall be construed so as to include any corporation or other body corporate, wherever and however incorporated or established;

(I) references to a “person” shall be construed so as to include any individual, firm, company, corporation, body corporate, Authority, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality);

(J) the expressions “body corporate”, “holding company”, “subsidiary”, “subsidiary undertaking” and “wholly owned subsidiary” shall have the meaning given in the UK Companies Act 2006;

(K) references to writing shall include any modes of reproducing words in a legible and non-transitory form;

(L) the rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things;

(M) general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words;

(N) any reference to a “day” (including the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight;

(O) references to times are to London time, unless specifically stated otherwise;

(P) any reference to any English or Russian (as the case may be) legal term for any action, remedy, method of financial proceedings, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than, in respect of any English legal term, England or, in respect of any Russian legal term, the Russian Federation, be deemed to include what most closely approximates in that jurisdiction to the English or Russian (as the case may be) legal term;

(Q) any reference to “shares” shall include a reference to participatory interests, units or the charter capital of a company and “shareholder” and “shareholding” will be construed accordingly, and references to “shareholders” will include a reference to participants and members;

(R) a reference to a “director” shall in the context of a company incorporated in the Russian Federation include a reference to the sole executive body (being either a general director or a managing company or a manager), each member of a collegial executive body and each member of a board of directors (supervisory board);

(S) any statement in this agreement qualified by the expression “to the best of Rosneft’s knowledge” or “so far as Rosneft is aware” or any similar expression shall mean the actual knowledge ofthe current CEO and CFO of the Company and the current CEO and CFO of Orenburg, Krzys Zielicki and Ilya Matveev, having made all reasonable enquiries;

(T) any statement in this agreement qualified by the expression “to the best of NADL's knowledge” or “so far as NADL is aware” or any similar expression shall mean the actual knowledge of Jon Olav Osthus, Robert Hingley-Wilson and the current CEO and CFO of NADL,having made all reasonable enquiries;

(U) references to “disclosed” or any similar expression shall mean fairly disclosed in sufficient detail so as to allow the recipient of the disclosure to appreciate the meaning, significance and implications of the matters disclosed;

(V) any amount to be converted from one currency into another currency for the purposes of this Agreement shall be converted into an equivalent amount at the Conversion Rate. For the purposes of this Clause 1.2(V):

(i) “Conversion Rate” means (i) where one of the currencies is RUB, the official exchange rate established by the Central Bank of Russia for the exchange of the relevant currency into RUB; and (ii) in all other cases the closing spot mid-trade composite London rate for a transaction between the two currencies in question as quoted on Bloomberg, in either case on the date immediately preceding the Relevant Date or, if no such rate is established or quoted on that date, on the preceding date on which such rates are quoted;

(ii) “Relevant Date” means, save as otherwise provided in this Agreement, the Business Day on which a payment or an assessment is to be made, save that, for the purposes of Clause 8 (Rosneft Actions Pending Completion), the Relevant Date shall mean the Signing Date;

(W) any reference to a “contingent” liability shall mean, for the purposes of Paragraphs 2(A)(iv), 7(B) and 18(A) of Part A of Schedule 5 (Rosneft Representations and Warranties), a “contingent liability” as determined in accordance with RAS 8/2010 “Estimated Liabilities, Contingent Liabilities, and Contingent Assets;” and for the purposes of Paragraphs 5(C), 9(E), 11(D) and 12(E) of Part A of Schedule 5 (Rosneft Representations and Warranties), a liability dependent on the occurrence or non-occurrence of one or more uncertain future events, and any reference to a “liability”, without further clarification as to whether such liability is actual or contingent, will be deemed to refer to an actual liability only;

(X) any reference to “any amounts outstanding from Rosneft to NADL under this Agreement” (or similar) or “any amounts outstanding from Rosneft to Seadrill under this Agreement” (or similar) shall mean:

(i) an arbitration tribunal constituted under Clause 34 (Arbitration) has issued an award or judgment in respect of the amount in respect of which no right of appeal exists or is waived; or

(ii) the parties have so expressly agreed in writing; or

(iii) the outstanding amount is due from Rosneft under an undisputed invoice,

and shall exclude, where relevant, any amounts outstanding from Rosneft to NADL or Seadrill (as the case may be) that have already been taken into account in calculating the Rolled Forward Amount, the Rolled Forward Surplus Amount, the Additional Contract Rolled Forward Amount or the Additional Contract Rolled Forward Surplus Amount;

(Y) where there is any reference to the issue of shares in the share capital of NADL based on a share price of US$9.25 per share, that share price shall be adjusted as necessary to take account of any subdivision or consolidation of the shares in the share capital of NADL; and

(Z) the parties hereby agree that it is not necessary for any part of this Agreement which is in Russian to be translated into English in order for it to have effect.

2. NADL ISSUANCE

Issue of Consideration Shares

2.1 NADL shall issue the Consideration Shares to Rosneft in accordance with Clause 2 (NADL Issuance), Clause 10 (Completion) and Schedule 4 (Completion arrangements) and, subject to the terms of this Agreement, Rosneft shall:

(AA) at Completion, contribute the Shares, free from all Encumbrances, together with all rights attached or accruing to them by entering into the Russian SPA at Completion; and

(BB) contribute the amount of the Consideration Deficit (if any) in accordance with Clause 2.11,

in each case to the share capital of NADL as payment for the Consideration Shares.

2.2 Each of the Consideration Shares shall be credited as fully paid, with the same rights and ranking pari passu in all respects with the existing fully paid common shares of par value US$5 each in the share capital of NADL. NADL shall issue the Consideration Shares free from all Encumbrances and from all other rights exercisable by or claims by third parties, together with all rights attached or accruing to them at Completion.

2.3 NADL and Seadrill shall procure that all rights of pre-emption over any of the Consideration Shares conferred by the constitutional documents of NADL, by applicable law or in any other way are waived prior to Completion.

2.4 NADL shall be entitled to exercise all rights attached to or accruing to the Shares, including the right to receive all dividends, distributions or return of capital declared, paid or made by the Company on or after the Completion Date.

Issue of Subscription Shares

2.5 At Completion, NADL shall issue the Subscription Shares to Rosneft and Rosneft shall subscribe and pay for the Subscription Shares at an aggregate price equal to the Subscription Price.

2.6 Each of the Subscription Shares shall be credited as fully paid, with the same rights and ranking pari passu in all respects with the existing fully paid common shares of par value US$5 each in the share capital of NADL. NADL shall issue the Subscription Shares free from all Encumbrances and from all other rights exercisable by or claims by third parties, together with all rights attached or accruing to them at Completion.

2.7 NADL and Seadrill shall procure that all rights of pre-emption over any of the Subscription Shares conferred by the constitutional documents of NADL, by applicable law or in any other way are waived prior to Completion.

Valuation of the Shares

2.8 The total value of the Shares (the “Consideration”) shall be calculated and adjusted in accordance with this Clause 2 (NADL Issuance), Clause 11 (Completion Accounts) and Schedule 8 (Completion Accounts).

True-up following Completion Accounts exercise

2.9 If the Completion Adjustment Amount:

(A) is a positive amount or is zero (US$0); or

(B) is a negative amount and the modulus of the Completion Adjustment Amount is less than or equal to the Estimated Adjustment Amount,

no adjustment to the Consideration shall be made in respect of the Completion Net Working Capital Amount or the Net Cash/Debt Amount.

2.10 If the Completion Adjustment Amount is a negative amount and the modulus of the Completion Adjustment Amount is more than the Estimated Adjustment Amount, the Consideration shall be reduced by an amount equal to the excess (the “Consideration Deficit”), subject to the provisions of Paragraph 1.5 of Part A of Schedule 8 (Completion Accounts).

2.11 Rosneft shall transfer to NADL an amount equal to the Consideration Deficit in accordance with Clause 2.1 within five Business Days of determination of the Completion Accounts. If the Consideration Deficit is in excess of US$30,000,000, then the Consideration Deficit shall be increased by an amount equal to LIBOR plus 4% (four per cent.) of the Consideration Deficit for the period from (and including) Completion to (but excluding) the date of actual payment.

3. CONTRACT SHARES

Issue of Contract Shares in relation to Offshore Drilling Contracts

3.1 Within 5 Business Days of the first Acceptance Date which occurs following Completion under any Offshore Drilling Contract (the “First Offshore Drilling Contract”), NADL shall issue Contract Shares to Rosneft in respect of the First Offshore Drilling Contract.

3.2 Within 5 Business Days of any Acceptance Date which occurs thereafter under any Offshore Drilling Contract (each a “Subsequent Offshore Drilling Contract”) NADL shall issue Contract Shares to Rosneft in respect of the Subsequent Offshore Drilling Contract in relation to which the Acceptance Date related. On the issue of such Contract Shares the Rolled Forward Amount (if any) shall then be zero.

3.3 Any Contract Shares issued pursuant to Clause 3.1 and Clause 3.2 shall be credited as fully paid, with the same rights and ranking pari passu in all respects with the existing fully paid common shares of par value US$5 each in the share capital of NADL. NADL shall issue any Contract Shares free from all Encumbrances and from all other rights exercisable by or claims by third parties, together with all rights attached or accruing to them at the time of issue. NADL shall procure that all rights of pre-emption over any of the Contract Sharesconferred by the constitutional documents of NADL, by applicable law or in any other way are waived prior to their issue.

True-up on each Settlement Date

3.4 As at each Settlement Date, NADL shall calculate:

(A) the amount (if any) by which A exceeds B where:

A = ***** of the aggregate Estimated Drilling Revenue in the Assessed Settlement Period; and

B = ***** of the aggregate Actual Drilling Revenue under all of the Offshore Drilling Contracts in the Assessed Settlement Period,

(such amount being the “Revenue Deficit”); or

(B) the amount (if any) by which X exceeds Y where:

X = ***** of the aggregate Actual Drilling Revenue under all of the Offshore Drilling Contracts in the Assessed Settlement Period; and

Y = ***** of the aggregate Estimated Drilling Revenue in the Assessed Settlement Period,

(such amount being the “Revenue Surplus”); and

(C) the Rolled Forward Amount (if any) or the Rolled Forward Surplus Amount (if any),

and notify those amounts to Rosneft in writing.

3.5 If there is a Revenue Deficit in respect of the Assessed Settlement Period and the aggregate of: (i) the Revenue Deficit in the Assessed Settlement Period; (ii) plus the Rolled Forward Amount (if any) or minus the Rolled Forward Surplus Amount (if any); and (iii) plus any amounts outstanding from Rosneft to NADL under this Agreement as at the Settlement Date (the “Aggregate Deficit”) is:

(A) a positive amount and equal to or more than US$10,000,000, then NADL shall receive from Rosneft an amount equal to the Aggregate Deficit within 10 Business Days following receipt of the notice from NADL under Clause 3.4 and the Rolled Forward Amount and the Rolled Forward Surplus Amount shall then each be zero;

(B) a negative amount, then the Rolled Forward Surplus Amount shall then be equal to the modulus of the Aggregate Deficit; or

(C) a positive amount and less than US$10,000,000, then no true-up is required at that time and the Rolled Forward Amount shall then be an amount equal to the Aggregate Deficit and the Rolled Forward Surplus Amount shall then be zero.

3.6 If there is a Revenue Surplus in respect of the Assessed Settlement Period and the aggregate of: (i) the Revenue Surplus in the Assessed Settlement Period, (ii) less the Rolled Forward Amount (if any) or plus the Rolled Forward Surplus Amount (if any), (iii) less any amounts outstanding from Rosneft to NADL under this Agreement as at the Settlement Date (the “Aggregate Surplus”) is:

(A) a positive amount and more than US$10,000,000, then, within 10 Business Days of that Settlement Date, NADL shall issue to Rosneft such number of common shares of par value US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) as equals A/B where:

A = the Aggregate Surplus; and

B =     US$9.25 per share,

and the Rolled Forward Amount and the Rolled Forward Surplus Amount shall then be zero;

(B) a negative amount and more than $10,000,000, then NADL shall receive from Rosneft an amount equal to the Aggregate Surplus within 10 Business Days following receipt of the notice from NADL under Clause 3.4 and the Rolled Forward Amount and the Rolled Forward Surplus Amount shall then each be zero;

(C) a negative amount and less than or equal to US$10,000,000, then the Rolled Forward Amount shall then be equal to the modulus of the Aggregate Surplus; or

(D) a positive amount and less than or equal to US$10,000,000, then no true-up is required at that time and the Rolled Forward Surplus Amount shall then be an amount equal to the Aggregate Surplus.

3.7 At the time of the termination or expiry of the last of the Offshore Drilling Contracts and outstanding Additional Drilling Contracts to terminate or expire:

(A) if there is a Rolled Forward Amount, Rosneft and NADL shall discuss an efficient mechanism for dealing with the remaining Rolled Forward Amount and, failing such agreement, Rosneft shall, either:

(i) on the Settlement Date immediately following such termination or expiry, elect to waive its dividend rights and Clause 16.9(B) shall apply; or

(ii) pay such amount to NADL within 10 Business Days following the Settlement Date immediately following such termination or expiry provided that if such amount is subject to Russian withholding tax, Rosneft shall gross up the remaining Rolled Forward Amount in such a way that after deducting Russian withholding tax from the grossed up Rolled Forward Amount NADL receives an amount equal to the Rolled Forward Amount less an amount equal to 50% (fifty per cent.) of the tax being withheld; and

(B) if there is a Rolled Forward Surplus Amount, within 10 Business Days following the Settlement Date immediately following such termination or expiry, NADL shall issue to Rosneft such number of common shares of par value US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) as equals A/B where:

A =     the Rolled Forward Surplus Amount; and

B =     US$9.25 per share,

and the Rolled Forward Surplus Amount shall then be zero.

3.8 Any shares issued pursuant to Clause 3.6 or 3.7 shall be credited as fully paid, with the same rights and ranking pari passu in all respects with the existing fully paid common shares of par value US$5 each in the share capital of NADL. NADL shall issue any shares issued pursuant to Clause 3.6 or 3.7 free from all Encumbrances and from all other rights exercisable by or claims by third parties, together with all rights attached or accruing to them at the time of issue. NADL shall procure that all rights of pre-emption over any of the shares issued pursuant to Clause 3.6 or 3.7 conferred by the constitutional documents of NADL, by applicable law or in any other way are waived prior to their issue.

3.9 On each issue of Contract Shares or fully paid common shares of par value US$5 each in the share capital of NADL under Clause 3.6 or 3.7, NADL shall deliver a share certificate for the relevant Contract Shares or fully paid common shares of par value US$5 each in the share capital of NADL in the name of Rosneft.

3.10 Any Rolled Forward Amount or Rolled Forward Surplus Amount shall increase by an amount equal to LIBOR plus 4% (four per cent.), which shall accrue from day to day and shall form part of the Rolled Forward Amount or Rolled Forward Surplus Amount (as the case may be).

3.11 If, prior to the Acceptance Date in respect of an Offshore Drilling Contract, Rosneft and NADL agree that the amount or timing of the Actual Drilling Revenue in respect of all Settlement Periods estimated to be earned from that Offshore Drilling Contract over the term of that Offshore Drilling Contract is different from that set out in Part C of Schedule 10 (Offshore Drilling Contracts), the parties shall make corresponding adjustments to the amounts set out in column 10 of Part A of Schedule 10 (Offshore Drilling Contracts) and / or column 2 of Part B of Schedule 10 (Offshore Drilling Contracts), and Schedule 10 (Offshore Drilling Contracts) and the number of Contract Shares to be issued pursuant to Clause 3.2 shall both be adjusted accordingly. The adjustments to Schedule 10 (Offshore Drilling Contracts) and to the Estimated Drilling Revenue pursuant to this Clause shall only be made in respect of an Offshore Drilling Contract if agreed by Rosneft and NADL prior to the Acceptance Date in respect of that Offshore Drilling Contract.

4. ONSHORE DRILLING CONTRACTS

4.1 Rosneft agrees that, subject to the satisfaction of the Conditions in Paragraphs 4 and 6(A) of Schedule 1 (Conditions to Completion), it shall procure that the relevant members of the Retained Group and the relevant members of the Sale Group execute each of the Onshore Drilling Contracts on or prior to, but conditional on, Completion. Rosneft agrees that the execution of each of the Onshore Drilling Contracts shall comply with the Procurement Law and Procurement Documentation of the relevant members of the Retained Group.

VTB Rigs

4.2 Rosneft shall procure that, between the Signing Date and Completion, the Sale Group shall enter into lease contracts with VTB Leasing for the lease of 28 (twenty eight) land rigs, details of which are set out in Part B of Attachment 3 (the “VTB Rigs”) (the “VTB Leases”). The VTB Leases shall be on substantially the same terms as the leases which are already in place as at the Signing Date between the Sale Group and VTB-Leasing and shall reflect the following principles:

(A) the VTB Rigs shall operate in Nefteyugansk;

(B) the VTB Rigs shall be delivered to the Sale Group at DDP Nefteyugansk (Pyt-Yakh) rail station (the “Delivery Location”) during the period from October 2014 to June 2015;

(C) the monthly lease payments to VTB Leasing in respect of each VTB Rig shall be as set out in the lease payment schedule in Part A of Attachment 7 (VTB Schedule);

(D) the Sale Group shall have the option exercisable at any time during the term of such VTB Leases to require VTB-Leasing to sell to the Sale Group such VTB Rigs as the Sale Group shall designate in writing. The purchase price for each VTB Rig shall be equal to the amount set out in the table entitled “ОРИЕНТИРОВОЧНЫЙ ГРАФИК ЛИЗИНГОВЫХ ПЛАТЕЖЕЙ” in each of Part B, Part C, Part D or Part E (as the case may be) of Attachment 7 (VTB Schedule); and

(E) VTB Leasing shall not be entitled to terminate the VTB Leases as a result of the change in ownership or control of the Sale Group pursuant to this Agreement and the Russian SPA and no break fee, termination payments, penalties or similar liabilities shall arise under the VTB Leases as a result of such change in ownership or control.

4.3 Subject to the entry into of the VTB Leases and the satisfaction of the Conditions in Paragraphs 4 and 6(A) of Schedule 1 (Conditions to Completion), Rosneft shall procure that the relevant members of the Retained Group and the relevant members of the Sale Group execute an Onshore Drilling Contract in respect of each of the VTB Rigs on or prior to, but conditional on, Completion. The parties agree that the Onshore Drilling Contracts will provide for the Retained Group to pay for the mobilisation from the Delivery Location to the drilling location.

4.4 Rosneft shall procure that the day rate for:

(D) the VTB Rigs under the Onshore Drilling Contracts shall, at all times during the five year term of such Onshore Drilling Contracts, be no less than:

(i) ***** per day (which number shall be increased by inflation of 6 per cent. per annum) (excluding VAT) for the Uralmash VTB Rigs; and

(ii) ***** per day (which number shall be increased by inflation of 6 per cent. per annum) (excluding VAT) for the ZJ-50DBS VTB Rigs; and

(E) the Leased Rigs under the Onshore Drilling Contracts shall, at all times during the five year term of such Onshore Drilling Contracts, be no less than:

(i) ***** per day (which number shall be increased by inflation of 6 per cent. per annum) (excluding VAT) for the Uralmash Leased Rigs; and

(ii) ***** per day (which number shall be increased by inflation of 6 per cent. per annum) (excluding VAT) for the ZJ-50DBS Leased Rigs.

Rosneft agrees that the provision of this Clause shall apply notwithstanding any relocation of any such VTB Rigs or Leased Rigs (as the case may be) from one region to another during the term of the Onshore Drilling Contracts.

5. EXTENDED CO-OPERATION

Transaction Documents

5.1 Each of Rosneft, Seadrill and NADL agrees that it shall seek to extend its co-operation with the other parties beyond Completion and on or prior to, but conditional on, Completion Seadrill and Rosneft shall execute the Shareholders’ Agreement.

Additional Drilling Contracts

5.2 Seadrill agrees and acknowledges that Rosneft’s objective is to increase its shareholding in NADL to 50% (fifty per cent.) less one (1) share in NADL and that this objective ideally will be achieved through the entry into of Additional Drilling Contracts and the related issue of NADL Additional Contract Shares to Rosneft or the transfer of Seadrill Additional Contract Shares to Rosneft pursuant to this Clause 5 (Extended Co-Operation). However, the parties further agree that to the extent that the issue of NADL Additional Contract Shares to Rosneft when combined with the transfer of Seadrill Additional Contract Shares to Rosneft, would result in Rosneft's shareholding in NADL exceeding 50% (fifty per cent.) less one (1) share in NADL then, notwithstanding any other provision in this Clause 5 (Extended Co-Operation), NADL shall only issue such number of NADL Additional Contract Shares to Rosneft or Seadrill shall only transfer such number of Seadrill Additional Contract Shares to Rosneft as results in Rosneft's shareholding in NADL not exceeding 50% (fifty per cent.) less one (1) share in NADL with an amount attributable to the value of the NADL Additional Contract Shares not issued or Seadrill Additional Contract Shares not transferred, as the case may be, being satisfied by a cash payment to Rosneft by NADL (if the amount is attributable to an Additional Drilling Contract with a member of the NADL Group) or Seadrill (if the amount is attributable to an Additional Drilling Contract with a member of the Seadrill Group) at the same time as the issue of the NADL Additional Contract Shares or transfer of the Seadrill Additional Contract Shares that are issued or transferred, respectively.

5.3 The parties shall bear their own costs of identifying and implementing opportunities and entering into any Additional Drilling Contracts unless otherwise agreed.

Additional Drilling Contracts with the NADL Group

5.4 Subject to Clause 5.2, if any member of the Retained Group and any member of the NADL Group agree to enter into any Additional Drilling Contract, then NADL shall issue NADL Additional Contract Shares to Rosneft within 5 Business Days from the Additional Contract Acceptance Date in respect of the relevant drilling rig.

5.5 Any NADL Additional Contract Shares issued pursuant to Clause 5.4 shall be credited as fully paid, with the same rights and ranking pari passu in all respects with the existing fully paid common shares of par value US$5 each in the share capital of NADL. NADL shall issue any NADL Additional Contract Shares free from all Encumbrances and from all other rights exercisable by or claims by third parties, together with all rights attached or accruing to them at the time of issue. NADL shall procure that all rights of pre-emption over any of the NADL Additional Contract Shares conferred by the constitutional documents of NADL, by applicable law or in any other way are waived prior to their issue.

True-up on each Settlement Date

5.6 As at each Settlement Date, NADL shall calculate:

(C) the amount (if any) by which A exceeds B where:

A = ***** of the aggregate Additional Contract Estimated Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the NADL Group is a party and in respect of which the Additional Contracts Acceptance Date has occurred; and

B = ***** of the aggregate Additional Contract Actual Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the NADL Group is party,

(such amount being the “Additional Contract Revenue Deficit”); or

(D) the amount (if any) by which X exceeds Y where:

X = ***** of the aggregate Additional Contract Actual Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the NADL Group is party; and

Y = ***** of the aggregate Additional Contract Estimated Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the NADL Group is a party and in respect of which the Additional Contracts Acceptance Date has occurred,

(such amount being the “Additional Contract Revenue Surplus”); and

(E) the Additional Contract Rolled Forward Amount (if any) or the Additional Contract Rolled Forward Surplus Amount (if any),

and notify those amounts to Rosneft in writing.

5.7 If there is an Additional Contract Revenue Deficit in respect of the Assessed Settlement Period and the aggregate of: (i) the Additional Contract Revenue Deficit in the Assessed Settlement Period; (ii) plus the Additional Contract Rolled Forward Amount (if any) or minus the Additional Contract Rolled Forward Surplus Amount (if any); and (iii) plus any amounts outstanding from Rosneft to NADL under this Agreement as at the Settlement Date in accordance with Clause 16.9 (the “Additional Contract Aggregate Deficit”) is:

(A) a positive amount and more than US$10,000,000, then NADL shall receive from Rosneft an amount equal to the Additional Contract Aggregate Deficit within 10 Business Days following receipt of the notice from NADL under Clause 5.6 and the Additional Contract Rolled Forward Amount and the Additional Contract Rolled Forward Surplus Amount shall then each be zero;

(B) a negative amount, then the Additional Contract Rolled Forward Surplus Amount shall then be equal to the modulus of the Additional Contract Aggregate Deficit; or

(C) a positive amount and less than or equal to US$10,000,000, then no true-up is required at that time and the Additional Contract Rolled Forward Amount shall then be an amount equal to the Additional Contract Aggregate Deficit and the Additional Contract Rolled Forward Surplus Amount shall then be zero.

5.8 If there is an Additional Contract Revenue Surplus in respect of the Assessed Settlement Period and the aggregate of: (i) the Additional Contract Revenue Surplus in the Assessed Settlement Period, (ii) less the Additional Contract Rolled Forward Amount (if any) or plus the Additional Contract Rolled Forward Surplus Amount (if any), (iii) less any amounts outstanding from Rosneft to NADL under this Agreement as at the Settlement Date (the “Additional Contract Aggregate Surplus”) is:

(A) a positive amount and more than $10,000,000, then, within 10 Business Days following that Settlement Date, NADL shall issue to Rosneft such number of NADL Additional Contract Shares (rounded up to the nearest whole number of shares) as equals A/B where:

A = the Additional Contract Aggregate Surplus; and

B =     the share price used to calculate the number of NADL Additional Contract Shares when they were issued, being “B” in the definition of NADL Additional Contract Shares,

and the Additional ContractRolled Forward Amount and the Additional Contract Rolled Forward Surplus Amount shall then be zero;

(B) a negative amount and more than $10,000,000, then NADL shall receive from Rosneft an amount equal to the Additional Contract Aggregate Surplus within 10 Business Days following receipt of the notice from NADL under Clause 5.6 and the Additional Contract Rolled Forward Amount and the Additional Contract Rolled Forward Surplus Amount shall then each be zero;

(C) a negative amount and less than or equal to US$10,000,000, then the Additional Contract Rolled Forward Amount shall then be equal to the modulus of the Additional Contract Aggregate Surplus; or

(D) a positive amount and less than or equal to $10,000,000, then no true up is required at that time and the Additional Contract Rolled Forward Surplus Amount shall be an amount equal to the Additional Contract Aggregate Surplus.

5.9 At the time of the termination or expiry of the last of the Offshore Drilling Contracts and outstanding Additional Drilling Contracts to which a member of the NADL Group is a party to terminate or expire:

(A) if there is an Additional Contract Rolled Forward Amount, Rosneft and NADL shall discuss an efficient mechanism for dealing with the remaining Additional Contract Rolled Forward Amount and, failing such agreement, Rosneft shall, either:

(i) on the Settlement Date immediately following such termination or expiry, elect to waive its dividend rights and Clause 16.9(B) shall apply; or

(ii) pay such amount to NADL within 10 Business Days following the Settlement Date following such termination or expiry provided that if such amount is subject to Russian withholding tax, Rosneft shall gross up the remaining Rolled Forward Amount in such a way that after deducting Russian withholding tax from the grossed up Rolled Forward Amount NADL receives an amount equal to the Rolled Forward Amount less an amount equal to 50% (fifty per cent.) of the tax being withheld; and

(B) if there is an Additional Contract Rolled Forward Surplus Amount, within 10 Business Days following such termination or expiry, NADL shall issue to Rosneft such number of common shares of par value US$5 each in the share capital of NADL (rounded up to the nearest whole number of shares) as equals A/B where:

A =     the Additional Contract Rolled Forward Surplus Amount; and

B = the share price used to calculate the number of NADL Additional Contract Shares when they were issued, being “B” in the definition of NADL Additional Contract Shares,

and the Additional Contract Rolled Forward Surplus Amount shall then be zero.

5.10 On each issue of NADL Additional Contract Shares, NADL shall deliver a share certificate for the relevant NADL Additional Contract Shares in the name of Rosneft.

5.11 Any Additional Contract Rolled Forward Amount and Additional Contract Rolled Forward Surplus Amount shall increase by an amount equal to LIBOR plus 4% (four per cent.), which shall accrue from day to day and shall form part of the Additional Contract Rolled Forward Amount or Additional Contract Rolled Forward Surplus Amount (as the case may be).

5.12 Where practicable, the parties will seek to combine and consolidate the true-up mechanisms and the provisions dealing with the issuance of the Contract Shares and the NADL Additional Contract Shares in Clause 3 (Contract Shares) and this Clause 5 (Extended Co-Operation) on any Settlement Date, Acceptance Date or Additional Contract Acceptance Date taking into account the differences in the share prices used in the calculations of the Contract Shares and the NADL Additional Contract Shares, including with the aim of simplifying the true-up provisions.

Additional Drilling Contracts with the Seadrill Group

5.13 Subject to Clause 5.2, if any member of the Retained Group and any member of the Seadrill Group agree to enter into any Additional Drilling Contract then Seadrill shall within 5 Business Days from the Additional Contract Acceptance Date in respect of the relevant drilling rig either:

(A) if Rosneft holds shares representing less than 50% (fifty per cent.) less one (1) share in NADL of all of the issued shares in NADL,transfer Seadrill Additional Contract Shares to Rosneft, provided that to the extent that the transfer of Seadrill Additional Contract Shares to Rosneft would result in Seadrill holding less than 10% (ten per cent.) of the share capital of NADL at such time, Seadrill shall satisfy its obligations under this Clause 5.13 by the transfer of an equivalent amount in cash to Rosneft; or

(B) if Rosneft holds shares representing 50% (fifty per cent.) less one (1) share in NADL or more of all the issued shares in NADL, pay in cash to Rosneft an amount equal to (i) ***** of the Additional Contract Estimated Drilling Revenue for that Additional Drilling Contract (ii) minus the Seadrill Additional Contract Rolled Forward Amount (if any) or plus the Seadrill Additional Contract Rolled Forward Surplus Amount (if any) in each case as at the Additional Contract Acceptance Date under that Additional Drilling Contract and (iii) minus any amounts outstanding from Rosneft to Seadrill under this Agreement as at the Additional Contract Acceptance Date under that Additional Drilling Contract.

5.14 Any Seadrill Additional Contract Shares transferred pursuant to Clause 5.13 shall be fully paid and transferred free from all Encumbrances and from all other rights exercisable by or claims by third parties, together with all rights attached or accruing to them at the date of transfer. On each transfer of Seadrill Additional Contract Shares, Seadrill shall deliver an executed form of transfer in the form required by applicable law and NADL shall deliver a share certificate for the relevant Seadrill Additional Contract Shares in the name of Rosneft.

True-up on each Settlement Date

5.15 As at each Settlement Date, Seadrill shall calculate:

(A) the amount (if any) by which A exceeds B where:

A = ***** of the aggregate Additional Contract Estimated Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the Seadrill Group is a party and in respect of which the Additional Contracts Acceptance Date has occurred; and

B = ***** of the aggregate Additional Contract Actual Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the Seadrill Group is party,

(such amount being the “Seadrill Additional Contract Revenue Deficit”); or

(B) the amount (if any) by which X exceeds Y where:

X = ***** of the aggregate Additional Contract Actual Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the Seadrill Group is party; and

Y = ***** of the aggregate Additional Contract Estimated Drilling Revenue in the Assessed Settlement Period under all Additional Drilling Contracts to which any member of the Seadrill Group is a party and in respect of which the Additional Contracts Acceptance Date has occurred,

(such amount being the “Seadrill Additional Contract Revenue Surplus”); and

(C) the Seadrill Additional Contract Rolled Forward Amount (if any) or the Seadrill Additional Contract Rolled Forward Surplus Amount (if any),

and notify those amounts to Rosneft in writing.

5.16 If there is a Seadrill Additional Contract Revenue Deficit in respect of the Assessed Settlement Period and the aggregate of: (i) the Seadrill Additional Contract Revenue Deficit in the Assessed Settlement Period; (ii) plus the Seadrill Additional Contract Rolled Forward Amount (if any) or minus the Seadrill Additional Contract Rolled Forward Surplus Amount (if any); and (iii) plus any amounts outstanding from Rosneft to Seadrill under this Agreement as at the Settlement Date in accordance with Clause 16.9 (the “SeadrillAdditional Contract Aggregate Deficit”) is:

(A) a positive amount and more than US$10,000,000, then Seadrill shall receive from Rosneft an amount equal to the Seadrill Additional Contract Aggregate Deficit within 10 Business Days following receipt of the notice from Seadrill under Clause 5.15 and the Seadrill Additional Contract Rolled Forward Amount and the Seadrill Additional Contract Rolled Forward Surplus Amount shall then each be zero;

(B) a negative amount, then the Seadrill Additional Contract Rolled Forward Surplus Amount shall then be equal to the modulus of the Seadrill Additional Contract Aggregate Deficit; or

(C) a positive amount and less than or equal to US$10,000,000, then no true-up is required at that time and the Seadrill Additional Contract Rolled Forward Amount shall then be an amount equal to the Seadrill Additional Contract Aggregate Deficit and the Seadrill Additional Contract Rolled Forward Surplus Amount shall then be zero.

5.17 If there is a Seadrill Additional Contract Revenue Surplus in respect of the Assessed Settlement Period and the aggregate of: (i) the Seadrill Additional Contract Revenue Surplus in the Assessed Settlement Period, (ii) less the Seadrill Additional Contract Rolled Forward Amount (if any) or plus the Seadrill Additional Contract Rolled Forward Surplus Amount (if any), (iii) less any amounts outstanding from Rosneft to Seadrill under this Agreement as at the Settlement Date (the “SeadrillAdditional Contract Aggregate Surplus”) is:

(A) a positive amount and more than $10,000,000, then, within 10 Business Days following that Settlement Date, Seadrill shall transfer to Rosneft such number of Seadrill Additional Contract Shares (rounded up to the nearest whole number of shares) as equals A/B where:

A = the Seadrill Additional Contract Aggregate Surplus; and

B =     the share price used to calculate the number of Seadrill Additional Contract Shares when they were transferred, being “B” in the definition of Seadrill Additional Contract Shares,

and the Seadrill Additional ContractRolled Forward Amount and the Seadrill Additional Contract Rolled Forward Surplus Amount shall then be zero;

(B) a negative amount and more than $10,000,000, then Seadrill shall receive from Rosneft an amount equal to the Seadrill Additional Contract Aggregate Surplus within 10 Business Days following receipt of the notice from Seadrill under Clause 5.15 and the Seadrill Additional Contract Rolled Forward Amount and the Seadrill Additional Contract Rolled Forward Surplus Amount shall then each be zero;

(C) a negative amount and less than or equal to US$10,000,000, then the Seadrill Additional Contract Rolled Forward Amount shall then be equal to the modulus of the Seadrill Additional Contract Aggregate Surplus; or

(D) a positive amount and less than or equal to $10,000,000, then no true up is required at that time and the Seadrill Additional Contract Rolled Forward Surplus Amount shall be an amount equal to the Seadrill Additional Contract Aggregate Surplus.

5.18 Any Seadrill Additional Contract Rolled Forward Amount and Seadrill Additional Contract Rolled Forward Surplus Amount shall increase by an amount equal to LIBOR plus 4% (four per cent.), which shall accrue from day to day and shall form part of the Seadrill Additional Contract Rolled Forward Amount or Seadrill Additional Contract Rolled Forward Surplus Amount (as the case may be).

Monitoring

5.19 Each of the parties shall appoint a management representative (the “Relationship Managers”). The Relationship Managers shall meet at such times and places as the Relationship Managers shall determine (but excluding in the territory of Russia, unless otherwise agreed by the Relationship Managers), subject to such meetings taking place at least on a quarterly basis. At the meetings of the Relationship Managers:

(A) the Rosneft Relationship Manager shall discuss the onshore and offshore drilling requirements of the Retained Group, including its proposed work programme;

(B) the NADL Relationship Manager and the Seadrill Relationship Manager shall discuss the future availability of onshore and offshore drilling rigs within the Seadrill Group and the NADL Group, including the type of rigs available and applicable rates; and

(C) the Relationship Managers shall discuss progress towards meeting the objective described in Clause 5.2 and other areas of possible co-operation between the Retained Group, the NADL Group and the Seadrill Group.

Further Co-operation

5.20 If the parties agree to award any additional onshore contract opportunities to the Company, the parties will negotiate in good faith to agree arrangements to provide the Retained Group with remuneration or commission in respect thereof.

Onshore Drilling Contracts

5.21 After Completion, NADL shall procure that no relevant member of the Sale Group terminates any of the Onshore Drilling Contracts before the expiry of its term other than in accordance with the terms of the relevant Onshore Drilling Contract (subject to proper performance by the relevant members of the Retained Group).

5.22 Rosneft and NADL shall work together in good faith to develop and agree Work Orders in respect of all of the Land Rigs on the terms and subject to the conditions set out in the Onshore Drilling Contracts on an annual basis (or at such frequency as shall be agreed between Rosneft and NADL) for a period of five (5) years following the Completion Date. Rosneft and NADL agree that the process of developing and agreeing Work Orders is not intended to be an opportunity for the Retained Group or the Sale Group to renegotiate the commercial terms of the Onshore Drilling Contracts.

5.23 The parties agree that the intention is for the Sale Group to make the Land Rigs available to Rosneft under the Onshore Drilling Contracts. Rosneft shall procure that all of the Land Rigs shall be the subject of a Work Order between the Retained Group and the Sale Group at all times throughout the five (5) year period following the Completion Date and shall pay on demand to NADL any losses suffered by NADL and/or any member of the Sale Group if any of the Land Rigs are not so subject (subject in each case to NADL acting in accordance with Clause 5.22 and the relevant members of the Sale Group not unreasonably withholding their agreement to the Work Orders in accordance with the Onshore Drilling Contract).

5.24 NADL shall procure that the relevant members of the Sale Group do not unreasonably withhold their agreement to the Work Orders as described in Clause 5.23. If any member of the Sale Group unreasonably withholds their agreement to the Work Orders, NADL shall pay on demand to Rosneft any losses suffered by Rosneft and/or any member of the Retained Group.

Joint working party

5.25 Rosneft and NADL shall establish a working party (the “Working Party”) in relation to the Onshore Drilling Contracts. Each of Rosneft and NADL shall appoint 5 representatives (or such other number as Rosneft and NADL shall agree from time to time) to the Working Party. The Working Party shall meet in person or by telephone at a minimum on a fortnightly basis.

5.26 In the period between the Signing Date and 31 August 2014, Rosneft and NADL shall procure that the Working Party shall:

(A) develop fair and manageable key performance indicators for monitoring the performance of the various parties to the Onshore Drilling Contracts;

(B) develop a performance based incentive programme that aligns the parties’ respective goals and objectives for achieving solid drilling performance metrics under a profitable economic incentive; and

(C) replace Appendices 4.3 and 4.4 of the Pro forma Onshore Drilling Contract with provisions which reflect the agreements reached in relation to (A) and (B) above.

5.27 In the period between the Signing Date and Completion, Rosneft and NADL shall procure that the Working Party shall:

(A) prepare and finalise each of the Onshore Drilling Contracts based on the Pro forma Onshore Drilling Contract; and

(B) prepare and agree the initial Work Orders which will be signed at Completion for all of the Land Rigs under the Onshore Drilling Contracts.

5.28 The parties agree that, subject to Clause 5.26 and 5.27, the only changes that should be made to the Pro forma Onshore Drilling Contract should be such changes as are reasonably necessary to deal with business processes, logistical and drilling issues and norms arising in each specific region.

Liability caps under the Onshore Drilling Contracts

5.29 Notwithstanding anything to the contrary in any of the Onshore Drilling Contracts, but subject to Clauses 5.31 and 5.32:

(A) the maximum aggregate liability of the NADL Group (subject to Clauses 5.29(B) and (C)):

(i) in respect of each well under the Onshore Drilling Contracts shall be:

(a) where there has been negligence of the NADL Group, *****; and

(b) where there has been gross negligence of the NADL Group, *****,

(such appropriate amount being the "Relevant Well Tier One Liability Cap"); and

(ii) in respect of any and all wells under all Onshore Drilling Contracts shall be ***** in aggregate (the "Aggregate Tier One Liability Cap");

(B) where the aggregate liability of the NADL Group under the Onshore Drilling Contracts in respect of all wells reaches the Aggregate Tier One Liability Cap, then, in respect of all further wells under any and all Onshore Drilling Contracts after that time, the maximum aggregate liability of the NADL Group (subject to Clause 5.29(C)):

(i) in respect of each such well under the Onshore Drilling Contracts shall be:

(a) where there has been negligence of the NADL Group, reduced from ***** to *****;

(b) where there has been gross negligence of the NADL Group, reduced from ***** to *****,

(such appropriate amount being the "Relevant Well Tier Two Liability Cap"); and

(ii) in respect of any and all wells under all Onshore Drilling Contracts shall be ***** in aggregate (the "Aggregate Tier Two Liability Cap"); and

(C) where the aggregate liability of the NADL Group under the Onshore Drilling Contracts in respect of all wells reaches the Aggregate Tier Two Liability Cap, then, in respect of all further wells under any and all Onshore Drilling Contracts after that time, the maximum aggregate liability of the NADL Group in respect of each such well under the Onshore Drilling Contracts shall be:

(i) where has been negligence of the NADL Group, reduced from ***** to *****; and

(ii) where has been gross negligence of the NADL Group, reduced from ***** to *****,

(such appropriate amount being the "Relevant Well Tier Three Liability Cap").

5.30 Rosneft shall procure that the Retained Group shall give effect to the provisions set out in Clause 5.29 and, to the extent that payments are made by the NADL Group at any time in excess of the liability caps set out in Clause 5.29, then Rosneft shall pay to NADL promptly on demand the difference between the amount paid by the NADL Group and the amount that should have been paid by the NADL Group in accordance with Clause 5.29. For the avoidance of doubt notwithstanding anything to the contrary in this Agreement, but subject to the caps on liability provided for in Clauses 5.29 to 5.33 (inclusive), the parties agree that liability under the Onshore Drilling Contracts shall be assessed under the terms of those Onshore Drilling Contracts.

5.31 The parties agree that, in the event that any of the rates set out in Appendix 4.1 of the Onshore Drilling Contracts increase, then each of the liability caps set out in Clause 5.29 above shall be increased by an amount equal to X in the following formula:

X = Y x (Z x 0.5)

where:

Y = the relevant liability cap immediately prior to the operation of this Clause 5.31; and

Z = the percentage by which the rates set out in Appendix 4.1 of the Onshore Drilling Contracts have increased.

5.32 The parties agree that if Rosneft has a claim in respect of a well under an Onshore Drilling Contract and:

(A) the aggregate liability of the NADL Group in respect of all wells under any and all Onshore Drilling Contracts has not then reached the Aggregate Tier One Liability Cap; and

(B) the balance of the Aggregate Tier One Liability Cap remaining after all previous claims in respect of wells under any and all Onshore Drilling Contracts have either been determined under the dispute resolution provisions of the Onshore Drilling Contracts or settled between the parties to the relevant Onshore Drilling Contract (the "Tier One Balance") is less than the lower of:

(i) the value of the claim; and

(ii) the Relevant Well Tier One Liability Cap,

then Rosneft shall have the right by written notice to NADL to elect to make the claim instead subject to the Aggregate Tier Two Liability Cap and the Relevant Well Tier Two Liability Cap. Upon such notice from Rosneft being received by NADL, the Aggregate Tier One Liability Cap shall be reduced by, and the Aggregate Tier Two Liability Cap shall be increased by, the Tier One Balance, but:

(x)     the Relevant Well Tier Two Liability Cap shall not increase; and

(y) the aggregate of the Aggregate Tier One Liability Cap and Aggregate Tier Two Liability Cap shall not increase,

and Clause 5.29(B) shall then apply subject to the amendments under this Clause 5.32 and the other terms of Clauses 5.29(C) to 5.31.

5.33 The parties agree that if Rosneft has a claim in respect of a well under an Onshore Drilling Contract and:

(A) the aggregate liability of the NADL Group in respect of all wells under any and all Onshore Drilling Contracts has exceeded the Aggregate Tier One Liability Cap but has not then reached the Aggregate Tier Two Liability Cap; and

(B) the balance of the Aggregate Tier Two Liability Cap (as increased, if applicable, pursuant to Clause 5.32) remaining after all previous claims in respect of wells under any and all Onshore Drilling Contracts have either been determined under the dispute resolution provisions of the Onshore Drilling Contracts or settled between the parties to the relevant Onshore Drilling Contract (the "Tier Two Balance") is less than the lower of:

(i) the value of the claim; and

(ii) the Relevant Well Tier Two Liability Cap,

then Rosneft shall have the right by written notice to NADL to elect to make the claim instead subject to the Relevant Well Tier Three Liability Cap. Upon such notice from Rosneft being received by NADL, the Relevant Well Tier Three Liability Cap shall not increase.

6. CONDITIONS

6.1 Completion is in all respects conditional upon the satisfaction or waiver of the Conditions in accordance with this Agreement (and, where applicable, such Conditions remaining satisfied up to Completion).

Obligations to satisfy

6.2 Rosneft will use reasonable endeavours to fulfil or procure the fulfilment of the Conditions listed in Paragraphs 3, 4, 5 and 6 of Schedule 1 (Conditions to Completion) as soon as possible and in any event before the Long Stop Date and will notify Seadrill and NADL in writing as soon as reasonably practicable of the satisfaction of each such Condition.

6.3 Seadrill and NADL will use reasonable endeavours to fulfil or procure the fulfilment of the Conditions listed in Paragraphs 1 and 7 to 8 (inclusive) of Schedule 1 (Conditions to Completion) as soon as possible and in any event before the Long Stop Date and will notify Rosneft in writing as soon as reasonably practicable of the satisfaction of each such Condition.

6.4 Each party will provide the other parties with such information and assistance as reasonably required in order to satisfy the Conditions, as soon as reasonably practicable following a request for the same, provided however that no party shall be required to provide another with any information of a commercially sensitive nature.

Waiver

6.5 NADL (with the written consent of Seadrill) may waive in writing in whole or in part all or any of the Conditions listed in Paragraphs 3 to 5 (inclusive) of Schedule 1 (Conditions to Completion) and Rosneft may waive in whole or in part all or any of the Conditions listed in Paragraphs 7 to 8 (inclusive) of Schedule 1 (Conditions to Completion).

6.6 The Conditions set out in Paragraphs 1 and 2 of Schedule 1 (Conditions to Completion) may not be waived by any party. The Conditions set out in Paragraph 6 of Schedule 1 (Conditions to Completion) may only be waived by agreement of the parties.

6.7 The waiver by any party of any Condition shall not act as a waiver of any breach by any other party of its obligations in connection therewith or otherwise and shall be without prejudice to any claim that the parties may have against each other.

Obligations to inform

6.8 Each party undertakes to disclose in writing to the other parties anything which will or may prevent any of the Conditions from being satisfied on or prior to the Long Stop Date (or subsequently) immediately when it comes to its attention and otherwise to keep each other party informed of the progress towards satisfaction of the Conditions.

6.9 For the purpose of satisfaction of the Condition listed in Paragraph 1 of Schedule 1 (Conditions to Completion) the parties shall cooperate and shall procure that the members of the Retained Group, the Seadrill Group and the NADL Group (as the case may be) co-operate for the provision and evaluation of information with a view to the preparation of the competition filings with all reasonable speed, as well as for the prompt and complete answer to any queries of the competent authorities and otherwise for the diligent pursuit of the process to obtain competition clearances, and, in particular, Rosneft shall, and shall procure that the relevant members of the Retained Group and the Sale Group shall, as soon as practicable, comply with the reasonable requests of NADL in connection with the provision of information to, and the response to requests from, FAS.

6.10 In the event that competition filings other than the filing to FAS listed as a Condition in Paragraph 1 of Schedule 1 (Conditions to Completion) are or may be triggered by Clause 4.1(a) and (b) of the Shareholders’ Agreement, the parties shall negotiate in good faith to agree whether such filings are required and warranted. If it is agreed that filings should be made, the parties shall then co-operate and shall procure that the members of the Retained Group, the Seadrill Group and the NADL Group (as the case may be) co-operate for the provision and evaluation of information with a view to the preparation of the competition filings with all reasonable speed, as well as for the prompt and complete answer to any queries of the competent authorities and otherwise for the diligent pursuit of the process to obtain competition clearances or, as soon as reasonably practicable and if required by the relevant law or regulation, before the occurrence of the relevant trigger event.

6.11 Each party undertakes to:

(A) notify the other parties and provide copies of any written communications from any Authority or other person in relation to obtaining any consent, approval or action required to satisfy a Condition or in relation to any future competition filing covered by Clause 6.10 where such communications have not been independently or simultaneously supplied to such other parties;

(B) (where permitted by the Authority or other person concerned) provide the other parties (or advisers nominated by such parties) with draft copies of all submissions and communications to Authorities or other persons in relation to obtaining any consent, approval or action required to satisfy a Condition or in relation to any future competition filing covered by Clause 6.10 (excluding communications of an administrative nature) at such time as will allow such other parties a reasonable opportunity to provide comments on such submissions and communications before they are submitted or sent and provide such other parties (or such advisers nominated by such parties) with copies of all such submissions and communications in the form submitted or sent, provided however that no party shall be required to provide another with copies of any element of such submissions or communications which contains information of a commercially sensitive nature; and

(C) to give the other parties reasonable notice of and reasonable opportunity to participate in and to attend all meetings and telephone calls with Authorities or other persons in connection with the satisfaction of a Condition or in relation to any future competition filing covered by Clause 6.10 (where permitted by the Authority or other person concerned), and allow such other parties or persons nominated by such other parties to make oral submissions at such meetings or telephone calls, provided however that no party shall be required to permit another to attend any part of such meetings or telephone calls during which information of a commercially sensitive nature is likely to be disclosed.

6.12 Notwithstanding anything to the contrary in this Agreement, Rosneft shall not be obliged to provide any correspondence or other information or documents in relation to satisfaction of the Condition listed in Paragraph 6 of Schedule 1 (Conditions to Completion) other than the relevant extract from the Rosneft board of directors minutes or Rosneft management board minutes evidencing satisfaction of such Condition.

NADL Break Fee

6.13 If on the date on which Completion is to take place in accordance with Clause 10.1:

(A) each of the Conditions has been satisfied or waived (as the case may be); and

(B) Rosneft has notified NADL and Seadrill that it is ready, willing and able to satisfy its obligations under Part A of Schedule 4 (Completion Arrangements),

but NADL and / or Seadrill has failed to satisfy its obligations under Part B of Schedule 4 (Completion Arrangements) on the date on which Completion is to take place in accordance with Clause 10.1 and Rosneft terminates this Agreement pursuant to Clause 10.6, then NADL shall pay to Rosneft ***** by way of liquidated damages in satisfaction of any and all claims in respect of the failure of NADL and / or Seadrill to fulfil their respective obligations under this Agreement but excluding, for the avoidance of doubt, their obligations under the Offshore Drilling Contracts (the “NADL Break Fee”).

6.14 If NADL and / or Seadrill reasonably consider that the Condition in Paragraph 2 of Schedule 1 (Conditions to Completion) will not be satisfied on the date on which Completion is otherwise intended to take place in accordance with Clause 10.1 (the “Intended Completion Date”) because of sanctions, embargoes, export controls or restrictive measures which have been imposed or expanded between 10 November 2014 and the Intended Completion Date (other than made pursuant to Bermuda’s International Sanctions Regulations 2013 that extend, or any other enactment of the United Kingdom or Bermuda that extends, Council Regulation (EU) 833/2014 (31st July 2014) to Bermuda or introduce equivalent sanctions in Bermuda)) (the “Sanctions”), and which have the effect of making unlawful or otherwise prohibiting the Completion of the Transactions or the execution or performance of any of the Drilling Contracts then, on or before the Intended Completion Date, Seadrill and NADL shall notify Rosneft in writing of such matter (a “Sanctions Matter“), and then:

(D) Completion shall be deferred;

(E) NADL and Seadrill shall obtain legal opinions from two independent international law firms of reputable standing which confirm that the Sanctions (1) were imposed or expanded between 10 November 2014 and the Intended Completion Date and (2) have the effect of making unlawful or otherwise prohibiting the Completion of the Transactions or the execution or performance of any of the Drilling Contracts (the “NADL Legal Opinions”); and

(F) NADL and Seadrill shall provide copies of such NADL Legal Opinions to Rosneft within 10 Business Days of the Intended Completion Date.

If NADL and Seadrill do not comply with their obligations under this Clause, Rosneft shall be entitled to terminate this Agreement pursuant to Clause 10.6 and, if Rosneft terminates this Agreement pursuant to Clause 10.6, NADL shall pay to Rosneft an amount equal to the NADL Break Fee in satisfaction of any and all claims in respect of the failure of NADL and / or Seadrill to fulfil their respective obligations under this Agreement but excluding, for the avoidance of doubt, their obligations under the Offshore Drilling Contracts, provided that the NADL Break Fee shall not be payable if NADL and Seadrill fail to notify Rosneft of a Sanctions Matter which would have the effect of making unlawful or otherwise prohibiting the completion by Rosneft of the Transactions or the execution or performance by Rosneft of any of the Drilling Contracts. If NADL and Seadrill comply with Clauses 6.14(B) and 6.14(C) above, NADL (with the consent of Seadrill) shall be entitled to terminate this Agreement pursuant to Clause 10.6.

6.15 For the avoidance of doubt, NADL shall not be obliged to pay the NADL Break Fee to Rosneft pursuant to Clause 6.13 where this Agreement terminates prior to 10 November 2014.

Rosneft Break Fee

6.16 If on the date on which Completion is to take place in accordance with Clause 10.1:

(E) each of the Conditions has been satisfied or waived (as the case may be); and

(F) NADL and Seadrill have notified Rosneft that they are ready, willing and able to satisfy their respective obligations under Part B of Schedule 4 (Completion Arrangements),

but Rosneft has failed to satisfy its obligations under Part A of Schedule 4 (Completion Arrangements) on the date on which Completion is to take place in accordance with Clause 10.1and NADL and Seadrill terminate this Agreement pursuant to Clause 10.6, then Rosneft shall pay to NADL ***** by way of liquidated damages in satisfaction of any and all claims in respect of the failure of Rosneft to fulfil its obligations under this Agreement but excluding, for the avoidance of doubt, its obligations under the Offshore Drilling Contracts (the “Rosneft Break Fee”).

6.17 If Rosneft reasonably considers that the Condition in Paragraph 2 of Schedule 1 (Conditions to Completion) will not be satisfied on the Intended Completion Date because of Sanctions which have the effect of making unlawful or otherwise prohibiting the Completion of the Transactions or the execution or performance of any of the Drilling Contracts then, on or before the Intended Completion Date, Rosneft shall notify NADL and Seadrill in writing of such matter, and then:

(A) Completion shall be deferred;

(B) Rosneft shall obtain legal opinions from two independent international law firms of reputable standing which confirm that the Sanctions (1) were imposed or extended between 10 November 2014 and the Intended Completion Date and (2) have the effect of making unlawful or otherwise prohibiting the Completion of the Transactions or the execution or performance of any of the Drilling Contracts (the “Rosneft Legal Opinions”); and

(C) Rosneft shall provide copies of such Rosneft Legal Opinions to NADL and Seadrill within 10 Business Days of the Intended Completion Date.

If Rosneft does not comply with its obligations under this Clause, NADL and Seadrill shall be entitled to terminate this Agreement pursuant to Clause 10.6 and, if NADL and Seadrill terminate this Agreement pursuant to Clause 10.6, Rosneft shall pay to NADL an amount equal to the Rosneft Break Fee in satisfaction of any and all claims in respect of the failure of Rosneft to fulfil its obligations under this Agreement but excluding, for the avoidance of doubt, its obligations under the Offshore Drilling Contracts, provided that the Rosneft Break Fee shall not be payable if Rosneft fails to notify NADL and Seadrill of a Sanctions Matter which would have the effect of making unlawful or otherwise prohibiting the completion by Seadrill or NADL of the Transactions or the execution or performance by Seadrill or NADL of any of the Drilling Contracts. If Rosneft complies with Clauses 6.17(B) and 6.17(C) above, Rosneft shall be entitled to terminate this Agreement pursuant to Clause 10.6.

6.18 For the avoidance of doubt, Rosneft shall not be obliged to pay the Rosneft Break Fee to NADL and Seadrill pursuant to Clause 6.16 where this Agreement terminates prior to 10 November 2014.

7. TERMINATION OF THIS AGREEMENT

Postponement of the Long Stop Date

7.1 If any of the Conditions is not fulfilled or waived, as the case may be, on or before 5.00 p.m. on the Long Stop Date then:

(F) if it was the obligation of Rosneft under Clause 6.2 to satisfy the relevant Condition (or Conditions) then NADL (with the written consent of Seadrill) may, in its absolute discretion, postpone the Long Stop Date by up to 20 Business Days; or

(G) if it was the obligation of Seadrill and NADL under Clause 6.3 to satisfy the relevant Condition (or Conditions) then Rosneft may, in its absolute discretion, postpone the Long Stop Date by up to 20 Business Days; or

(H) if responsibility for satisfaction of the relevant Condition or Conditions falls upon none of Rosneft, Seadrill and NADL, then the parties may postpone the Long Stop Date by mutual agreement,

(the Long Stop Date, as so postponed, being the “Postponed Long Stop Date”).

7.2 If, in the circumstances set out in Clause 7.1, either:

(E) the Long Stop Date is not postponed pursuant to Clause 7.1; or

(F) any of the Conditions remains to be fulfilled or waived, by 5.00 p.m. on the Postponed Long Stop Date,

this Agreement shall be capable of termination by any of (i) Rosneft (if it was the obligation of Seadrill or NADL under Clause 6.3 to satisfy the relevant Condition (or Conditions)) or (ii) NADL (with the consent of Seadrill) (if it was the obligation of Rosneft under Clause 6.2 to satisfy the relevant Condition (or Conditions)) or (iii) Rosneft or NADL (with the consent of Seadrill) (if no party to this Agreement had the obligation to satisfy the relevant Condition (or Conditions)) forthwith on written notice to the other parties.

Material Adverse Change

7.3 This Agreement may be terminated at any time prior to Completion by NADL (with the consent of Seadrill) if, prior to Completion, it provides a written notice of termination to Rosneft if:

(C) any of the Rosneft Warranties, as modified by the Original Rosneft Disclosure Letter, (either individually or collectively) are, or become, untrue or misleading in any respect or would be untrue or misleading if repeated at that time by reference to the facts and circumstances subsisting at that time on the basis that any reference in the Rosneft Warranties (whether express or implied) to the Signing Date were substituted by a reference to that time, and the underlying circumstances have a material adverse effect on the Sale Group, taken as a whole; or

(D) the Original Rosneft Disclosure Letter has been supplemented by an Updated Rosneft Disclosure Letter in accordance with Clause 12.1(B), if the substance of any update of any of the Rosneft Warranties which was made in the Updated Rosneft Disclosure Letter and the circumstances disclosed have a material adverse effect on the Sale Group, taken as a whole; or

(E) a Sale Group Material Adverse Change has occurred,

save in each case where Seadrill or NADL has consented to the relevant underlying circumstance for the purposes of Clause 8 (Rosneft Actions Pending Completion).

7.4 This Agreement may be terminated at any time prior to Completion by Rosneft if, prior to Completion, it provides a written notice of termination to Seadrill and NADL if:

(F) any of the NADL Warranties, as modified by the Original NADL Disclosure Letter, (either individually or collectively) are, or become, untrue or misleading in any respect or would be untrue or misleading if repeated at that time by reference to the facts and circumstances subsisting at that time on the basis that any reference in the NADL Warranties (whether express or implied) to the Signing Date were substituted by a reference to that time, and the underlying circumstances have or could reasonably be expected to have a material adverse effect on NADL; or

(G) the Original NADL Disclosure Letter has been supplemented by an Updated NADL Disclosure Letter in accordance with Clause 13.1(B), if the substance of any update of any of the NADL Warranties which was made in the Updated NADL Disclosure Letter and the circumstances disclosed have a material adverse effect on NADL, taken as a whole; or

(H) a NADL Material Adverse Change has occurred,

save in each case where Rosneft has consented to the relevant underlying circumstance for the purposes of Clause 9 (NADL Actions Pending Completion).

7.5 If any Service Order is terminated prior to Completion pursuant to clause 13.3 of the Master Agreement, either Rosneft or NADL (with the written consent of Seadrill) may terminate this Agreement forthwith on written notice to the other parties given at any time prior to Completion.

Effect of termination

7.6 If this Agreement is terminated in accordance with Clause 7 (Termination of this Agreement), all rights and obligations of the parties under this Agreement shall immediately terminate (except for the Surviving Provisions) but (for the avoidance of doubt) all rights, obligations and liabilities of the parties which have accrued before termination shall continue to exist.

7.7 Notwithstanding any other provision in this Agreement but without prejudice to Clauses 6.13 to 6.18 (inclusive), if at any time sanctions, embargoes, export controls, or restrictive measures are in force or are imposed or extended which have the effect of making unlawful or otherwise restricting or prohibiting any member of the NADL Group, member of the Seadrill Group or member of the Rosneft Group from performing their actual or prospective obligations under or pursuant to any of the Key Agreements (a “Sanctions Event”) then:

(C) if the Sanctions Event occurs before Completion, the parties shall use all reasonable endeavours to restructure the transactions or rights and obligations of the parties under the Key Agreements (including making changes to the transaction structure, the parties, its mechanics or sequence of steps) to enable the parties, so far as possible, to perform their respective obligations and enjoy and receive their respective rights and benefits as initially envisaged under the Key Agreements and in any other way that is reasonably practicable; or

(D) if the Sanctions Event occurs after Completion:

(i) the parties shall use all reasonable endeavours to restructure the transactions or rights and obligations of the parties under the Key Agreements (including making changes to the transaction structure, the parties, its mechanics or sequence of steps) to enable the parties, so far as possible, to perform their respective obligations and enjoy and receive their respective rights and benefits as initially envisaged under the Key Agreements and in any other way that is reasonably practicable; and

(ii) to the extent that any rights or obligations of a party under the Key Agreements are affected by the Sanctions Event, the parties shall not be in breach of the Key Agreements or otherwise liable to the other parties for any delay in performance or any non-performance of any obligations under the Key Agreements (and the time for performance will be extended accordingly) if and to the extent that the delay or non-performance is owing to the Sanction Event.

8. ROSNEFT ACTIONS PENDING COMPLETION

Conduct of business before Completion

8.1 Rosneft shall procure that between the Signing Date and Completion each member of the Sale Group shall carry on its business, as carried on as at the Signing Date, in the normal course and not, without the consent in writing of Seadrill and NADL, such consent not to be unreasonably withheld, delayed or conditioned, do any of the acts or matters listed in Schedule 2 (Rosneft Conduct of Business for the Sale Group before Completion).

8.2 Without prejudice to any of Rosneft’s other rights hereunder, Clause 8.1 and Schedule 2 (Rosneft Conduct of Business for the Sale Group before Completion) shall not operate so as to restrict or prevent:

(F) the completion or performance of any obligations undertaken pursuant to any contract or arrangement entered into by any member of the Sale Group prior to the Signing Date and which, in the case of a Material Contract, was disclosed no later than five (5) Business Days before the Signing Date in the Rosneft Data Room;

(G) any matter undertaken by any member of the Sale Group in an emergency or disaster situation with the intention of minimising any adverse effect thereof (and of which Seadrill and NADL will be promptly notified);

(H) any matter carried out in order to comply with this Agreement or the other Transaction Documents;

(I) any matter undertaken at the written request of Seadrill or NADL or with the written consent of Seadrill and NADL;

(J) any matter reasonably required in connection with the satisfaction of the Conditions;

(K) any matter required by law, including Tax law, regulation or any Authority, including any Tax Authority;

(L) a contribution to the charter capital of the Company in an aggregate amount of ***** to be made by Rosneft on or around (1) one Business Day before Completion; or

(M) a contribution of Shareholder Debt to the charter capital of the relevant member(s) of the Sale Group made in accordance with the provisions of Clause 19.1.

Provision of information to Seadrill and NADL

8.3 Subject to applicable law, as from the Signing Date:

(I) Rosneft shall (on a confidential basis) keep Seadrill and NADL informed of material developments affecting the Sale Group and promptly provide Seadrill and NADL with copies of relevant monthly reports;

(J) Rosneft shall, upon reasonable notice and subject to receipt of such undertakings as to confidentiality as Rosneft shall reasonably require, procure that the Sale Group shall give Seadrill, NADL and any persons authorised by them reasonable access during Working Hours to the premises and all the Books and Records and title deeds of the Sale Group and the directors and employees of the Sale Group and each member of the Sale Group will be instructed to give promptly all information and explanations to Seadrill, NADL or any such persons as they may reasonably request.

9. NADL ACTIONS PENDING COMPLETION

Conduct of business before Completion

9.1 NADL shall ensure that between the Signing Date and Completion NADL shall carry on its business, as carried on as at the Signing Date, in the normal course and not, without the consent in writing of Rosneft, such consent not to be unreasonably withheld, delayed or conditioned, do any of the acts or matters listed in Schedule 3 (NADL Conduct of Business before Completion). Seadrill shall ensure that between the Signing Date and Completion Seadrill will exercise its rights as a shareholder of NADL to ensure, so far as within its power and control, that none of the acts or matters listed in Part B of Schedule 3 (NADL Conduct of Business before Completion) are approved by NADL’s shareholders in general meeting or by written resolution without the consent in writing of Rosneft, such consent not to be unreasonably withheld, delayed or conditioned.

9.2 Without prejudice to any of NADL’s other rights hereunder, Clause 9.1 and Schedule 3 (NADL Conduct of Business before Completion) shall not operate so as to restrict or prevent:

(K) the completion or performance of any obligations undertaken pursuant to any contract or arrangement entered into by any member of the NADL Group prior to the Signing Date and which, in the case of a NADL Material Contract, was disclosed no later than five (5) Business Days before the Signing Date in the NADL Data Room;

(L) the entry into or operation of, and any commitment in connection with, any drilling contract entered into by NADL (or any member of the NADL Group) in relation to any Offshore Rig provided that any such action shall not result in the Offshore Rigs being unavailable for use pursuant to the Offshore Drilling Contracts from the anticipated date of commencement;

(M) any matter undertaken by NADL in an emergency or disaster situation with the intention of minimising any adverse effect thereof (and of which Rosneft will be promptly notified);

(N) any matter carried out in order to comply with this Agreement or the other Transaction Documents;

(O) any matter undertaken at the written request of Rosneft or with the written consent of Rosneft;

(P) any matter reasonably required in connection with the satisfaction of the Conditions; or

(Q) any matter required by law, including Tax law, regulation or any Authority, including any Tax Authority.

Provision of information to Rosneft

9.3 Subject to applicable law, as from the Signing Date:

(D) NADL shall (on a confidential basis) keep Rosneft informed of material developments affecting NADL and promptly provide Rosneft with copies of relevant monthly reports;

(E) NADL shall, upon reasonable notice and subject to receipt of such undertakings as to confidentiality as NADL shall reasonably require, give Rosneft and any persons authorised by them reasonable access during Working Hours to the premises and all the Books and Records and title deeds of the NADL Group and the directors and employees of the NADL Group and NADL will give promptly all information and explanations to Rosneft or any such persons as they may reasonably request.

10. COMPLETION

10.1 Completion shall take place on the last Business Day of the month in which all of the Conditions shall have been satisfied or waived in accordance with this Agreement, provided that if such Business Day falls less than 5 (five) Business Days following the day on which all of the Conditions have been so satisfied or waived, Completion shall take place on the last Business Day of the month immediately following, or such other date as the parties may agree. Completion shall be no earlier than 10 November 2014.

10.2 Completion shall take place at the offices of Rosneft’s Solicitors in Moscow.

10.3 At Completion, Rosneft shall do those things listed in Part A (Rosneft’s Obligations) of Schedule 4 (Completion arrangements) and Seadrill and NADL shall do those things listed in Part B (Seadrill and NADL’s Obligations) of Schedule 4 (Completion arrangements).

10.4 No later than three Business Days prior to Completion, Rosneft shall notify NADL of:

(E) the Estimated Cash Amount;

(F) the Estimated Debt Amount;

(G) the Estimated Net Cash / Debt Amount;

(H) the Estimated Working Capital Amount; and

(I) the Estimated Consideration.

10.5 Upon completion of the process of notarisation by the Notary of the Russian SPA and the Transfer Application Form in relation to the Russian SPA in accordance with this Clause 10 (Completion) and Schedule 4 (Completion arrangements), Rosneft and NADL shall use all reasonable endeavours to procure that the Notary submits the Transfer Application Form in relation to the Russian SPA to the Register as soon as reasonably practicable (and in any case within three (3) calendar days) following Completion in compliance with the requirements of parts 14 and 15 of Article 21 of the LLC Law.

10.6 If the obligations of the parties to be performed on the Completion Date under this Agreement are not complied with on the Completion Date, Rosneft, if Seadrill or NADL has not so complied, or Seadrill and NADL, if Rosneft has not so complied, may:

(A) defer Completion (so that the provisions of this Clause 10 (Completion) shall apply to Completion as so deferred); or

(B) proceed to Completion as far as practicable (without limiting its rights under this Agreement) and specify a later date (not being later than 5 Business Days after the Long Stop Date) on which Rosneft or, as the case may be, Seadrill and NADL shall be obliged to complete its outstanding obligations; or

(C) terminate this Agreement by notice in writing.

10.7 If there is any conflict between the terms of this Agreement and the Russian SPA, this Agreement shall prevail and the parties shall take such steps to make sure that the intention of the parties under this Agreement is implemented. The parties acknowledge and agree that the Russian SPA is to be entered into in furtherance of the transactions contemplated by this Agreement and to comply with the requirements of the law governing the Russian SPA, but collectively with this Agreement record the terms of one (1) series of related transactions, and not independent transactions. Each party covenants to each other party that it will not assert in any forum any argument predicated on the existence of a conflict between this Agreement and the Russian SPA or otherwise seek to deny the operability of any provision of this Agreement on the basis of an alleged conflict with the Russian SPA.

10.8 Rosneft on the one part, and NADL on the other part (each, the “indemnifying parties”) covenant to each other that they will, immediately on demand, pay an amount equal to all liability which: (i) if the indemnifying party is Rosneft, any of Seadrill or NADL or any other member of the Seadrill Group or the NADL Group; and (ii) if the indemnifying party is NADL, Rosneft or any other member of the Retained Group, in each case incurs or suffers in connection with, arising out of or resulting from, any breach of Clause 10.7 by any of such indemnifying parties (or, in the case of NADL, Seadrill).

11. COMPLETION ACCOUNTS

11.1 Following Completion, the parties shall comply with their respective obligations set out in Schedule 8 (Completion Accounts).

11.2 Rosneft shall procure that the Sale Group has Cash balances as at the Completion Date of at least ***** that are freely available immediately following Completion for use by members of the Sale Group. Rosneft shall satisfy its procurement obligation described in the immediately preceding sentence by a contribution to the charter capital of the Company.

11.3 If a provision has been accrued in the Completion Accounts and included in the Completion Debt Amount for any loss-making contract(s) of the Sale Group in accordance with Paragraph 17 of Part C of Schedule 8 (Completion Accounts) (the "Loss Provision") then, to the extent that at any time after the Completion Date revised terms for any such contract are negotiated so that any such losses which have been provided for in the Completion Accounts are reduced partially or eliminated in full under the revised terms, then NADL undertakes to pay Rosneft within 15 Business Days of the entry into force of the revised terms of the relevant contract a cash amount equal to the lower of:

(J) the Loss Provision included in the Completion Accounts in respect of the relevant contract; and

(K) the amount by which the Loss Provision would have been reduced had the negotiations of the revised terms of the relevant contract been concluded immediately prior to the determination or agreement of the Completion Accounts.

Each of Rosneft and NADL shall, and shall procure that the NADL Group and the Retained Group (as the case may be) shall, cooperate and provide such reasonable assistance as may be requested in such negotiations and the amendment of the relevant contract(s).

11.4 If any penalties or early termination fees in accordance with Paragraph 30(b) of Part C of Schedule 8 (Completion Accounts) and/or any claims in accordance with Paragraph 30(c) of Part C of Schedule 8 (Completion Accounts) have, in each case, been included in the Completion Debt Amount in the Completion Accounts then, to the extent that at any time after the Completion Date such penalties, early termination fees or claims are waived, forgiven or withdrawn, NADL undertakes to pay Rosneft within 15 Business Days of any such waiver, forgiveness or withdrawal a cash amount equal to the lower of: (i) the amount waived, forgiven or withdrawn; and (ii) the penalty, early termination fee and/or claim, as the case may be, included in the Completion Debt Amount in the Completion Accounts. Rosneft and NADL shall, and shall procure that the NADL Group and the Retained Group (as the case may be) shall, cooperate and provide such reasonable assistance as may be requested in the negotiation of any such waiver, forgiveness or withdrawal.

11.5 If a provision has been accrued in the Completion Accounts in relation to the receivables, accrued income or work in progress in relation to Severneft-Urengoy in accordance with Paragraph 24 of Part C of Schedule 8 (Completion Accounts) then, to the extent that at any time after the Completion Date Severneft-Urengoy formally accepts such receivables, accrued income or work in progress, then NADL undertakes to pay Rosneft within 15 Business Days of the receipt by the Sale Group of such formal acceptance from Severneft-Urengoy a cash amount equal to the lower of: (i) the amount accepted by Severneft-Urengoy; and (ii) the provision included in the Completion Accounts. Rosneft and NADL shall, and shall procure that the NADL Group and the Retained Group (as the case may be) shall, cooperate and provide such reasonable assistance as may be requested in obtaining relevant acceptances from Severneft-Urengoy.

11.6 If Rosneft makes a request for additional capital expenditure of the Sale Group to be agreed between the parties for the purposes of Paragraph 15 of Part C of Schedule 8 (Completion Accounts), neither NADL nor Seadrill shall withhold their agreement to such request provided the capital expenditure requested is reasonable.

12. ROSNEFT WARRANTIES AND COVENANTS

12.1 Rosneft represents and warrants to Seadrill and NADL that each of the Rosneft Warranties:

(E) is accurate in all respects and not misleading at the Signing Date, except as disclosed in the Original Rosneft Disclosure Letter; and

(F) will be accurate in all respects and not misleading at the Completion Date as if repeated immediately before Completion by reference to the facts and circumstances subsisting at that date on the basis that any reference in the Rosneft Warranties, whether express or implied, to the Signing Date is substituted by a reference to the Completion Date, except as disclosed in any updated disclosure letter which shall be in equivalent form to the Original Rosneft Disclosure Letter and delivered by Rosneft to Seadrill and NADL not later than five (5) Business Days prior to the Completion Date (the “Updated Rosneft Disclosure Letter”). The Updated Rosneft Disclosure Letter shall not:

(i) contain any disclosure of facts or circumstances which were known by Rosneft on or before the Signing Date (“Known Matters”), and to the extent the Updated Rosneft Disclosure Letter does contain any Known Matters such Known Matters shall not qualify the Rosneft Warranties or limit Rosneft’s liability in any way in respect thereof; or

(ii) contain any disclosure against any of the Key Rosneft Warranties (“Key Warranty Disclosure”), and to the extent the Updated Rosneft Disclosure Letter does contain any Key Warranty Disclosure such Key Warranty Disclosure shall not qualify the Key Rosneft Warranties or limit Rosneft’s liability in any way in respect thereof.

For the purposes of Clause 12.1(A) above and any Rosneft Warranty given at the Signing Date (and for the purposes of Paragraph 3 of Part A of Schedule 7 (Limitations on liability) insofar as it applies to Clause 12.1(A)), if the text of any Rosneft Warranty refers to the “Updated Rosneft Disclosure Letter” or the “Current Rosneft Disclosure Letter” such reference shall be deemed to be a reference to the Original Rosneft Disclosure Letter, the intention being that only matters set out in the Original Rosneft Disclosure Letter can be disclosed against those Rosneft Warranties given at the Signing Date.

12.2 Save as provided in Paragraph 27 of Part B of Schedule 5 (Rosneft Representations and Warranties), none of the Company Warranties shall apply to Orenburg or any of the Orenburg Subsidiaries or their respective business, assets or liabilities.

12.3 Rosneft accepts that Seadrill and NADL are entering into this Agreement in reliance upon the Rosneft Warranties and that Seadrill and NADL have been induced to enter into this Agreement by each of the Rosneft Warranties.

12.4 Rosneft undertakes to notify in writing to Seadrill and NADL anything which is or may constitute material breach of or be materially inconsistent with any of the Rosneft Warranties as soon as reasonably practicable after it comes to its notice both before or at the time of Completion.

12.5 Rosneft undertakes (in the absence of fraud) that, if any claim is made against it in connection with the Transactions, it shall not make any claim against any member of the Sale Group or any director, employee, agent or adviser of any member of the Sale Group on whom it may have relied before agreeing to any term of the Transaction Documents or authorising any statement in the Current Rosneft Disclosure Letter.

12.6 Each of the Rosneft Warranties shall be construed as a separate and independent warranty and (except where expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other Rosneft Warranty.

12.7 In the event that the representation or warranty given in Clause 12.1 is breached in relation to a Rosneft Tax Warranty, Rosneft undertakes to pay to NADL an amount equal to such amount as would be required to indemnify and hold harmless each member of the Sale Group against any cost, damage, expense, liability or loss arising in connection with or in consequence of the matter giving rise to such breach, without prejudice to any other claim as may be made in respect of such breach. For the avoidance of doubt the Rosneft Tax Warranties shall be qualified by any disclosures made in the Current Rosneft Disclosure Letter and Rosneft shall not be liable for any claim under the Rosneft Tax Warranties in respect of any fact, matter, event or circumstance to the extent that such fact, matter, event or circumstance has been disclosed in this Agreement or the Current Rosneft Disclosure Letter, as provided for in Clause 12.1.

12.8 For the avoidance of doubt, the parties agree and acknowledge that any damages arising as a result of or by reference to any breach of the Rosneft Tax Warranty set out at Paragraph 18(R) of Part A of Schedule 5 (Rosneft Representations and Warranties) will be calculated by reference to the difference between the actual payment and the relevant market value rather than the full amount of the relevant market value.

13. NADL WARRANTIES AND COVENANTS

13.1 NADL represents and warrants to Rosneft that each of the NADL Warranties:

(L) is accurate in all respects and not misleading at the Signing Date, except as disclosed in the Original NADL Disclosure Letter;

(M) will be accurate in all respects and not misleading at the Completion Date as if repeated immediately before Completion by reference to the facts and circumstances subsisting at that date on the basis that any reference in the NADL Warranties, whether express or implied, to the Signing Date is substituted by a reference to the Completion Date, except as disclosed in any updated disclosure letter which shall be in equivalent form to the Original NADL Disclosure Letter and delivered by NADL to Rosneft not later than five (5) Business Days prior to the Completion Date (the “Updated NADL Disclosure Letter”). The Updated NADL Disclosure Letter shall not:

(iv) contain any disclosure of facts or circumstances which were known by NADL on or before the Signing Date (“NADL Known Matters”), and to the extent the Updated NADL Disclosure Letter does contain any NADL Known Matters such NADL Known Matters shall not qualify the NADL Warranties or limit NADL’s liability in any way in respect thereof; or

(v) contain any disclosure against any of the Key NADL Warranties (“NADL Key Warranty Disclosure”), and to the extent the Updated NADL Disclosure Letter does contain any NADL Key Warranty Disclosure such NADL Key Warranty Disclosure shall not qualify the Key NADL Warranties or limit NADL’s liability in any way in respect thereof.

For the purposes of Clause 13.1(A) above and any NADL Warranty given at the Signing Date (and for the purposes of Paragraph 3 of Part B of Schedule 7 (Limitations on liability) insofar as it applies to Clause 13.1(A)), if the text of any NADL Warranty refers to the “Updated NADL Disclosure Letter” or the “Current NADL Disclosure Letter” such reference shall be deemed to be a reference to the Original NADL Disclosure Letter, the intention being that only matters set out in the Original NADL Disclosure Letter can be disclosed against those NADL Warranties given at the Signing Date.

13.2 NADL accepts that Rosneft is entering into this Agreement in reliance upon the NADL Warranties and that Rosneft has been induced to enter into this Agreement by each of the NADL Warranties.

13.3 NADL undertakes to notify in writing to Rosneft anything which is or may constitute a material breach of or be materially inconsistent with any of the NADL Warranties as soon as reasonably practicable after it comes to its notice both before or at the time of Completion.

13.4 NADL undertakes (in the absence of fraud) that if any claim is made against it in connection with the Transactions, not to make any claim against any current director, employee, agent or adviser of any member of the NADL Group on whom it may have relied before agreeing to any term of the Transaction Documents or authorising any statement in the Current NADL Disclosure Letter.

13.5 Each of the NADL Warranties shall be construed as a separate and independent warranty and (except where expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other NADL Warranty.

13.6 In the event that the representation or warranty given in Clause 13.1 is breached in relation to a NADL Tax Warranty, NADL undertakes to pay to Rosneft an amount equal to such amount as would be required to indemnify and hold harmless each member of the Retained Group against any cost, damage, expense, liability or loss arising in connection with or in consequence of the matter giving rise to such breach, without prejudice to any other claim as may be made in respect of such breach. For the avoidance of doubt the NADL Tax Warranties shall be qualified by any disclosures made in the Current NADL Disclosure Letter and NADL shall not be liable for any claim under the NADL Tax Warranties in respect of any fact, matter, event or circumstance to the extent that such fact, matter, event or circumstance has been disclosed in this Agreement or the Current NADL Disclosure Letter, as provided for in Clause 13.1.

13.7 For the avoidance of doubt, the parties agree and acknowledge that any damages arising as a result of or by reference to any breach of the NADL Tax Warranty set out at Paragraph 4(O) of Schedule 6 (NADL Representations and Warranties) will be calculated by reference to the difference between the actual payment and the relevant market value rather than the full amount of the relevant market value.

14. SEADRILL WARRANTY

Seadrill represents and warrants to Rosneft as at the Signing Date that (i) Seadrill is the sole legal and beneficial owner of 169,663,723 shares in NADL, which have been lawfully acquired and there is no Encumbrance over those shares and (ii) the shares in NADL owned by Seadrill represent approximately 70.4% (seventy point four per cent.) of the issued and outstanding share capital of NADL.

15. PARTIES’ WARRANTIES

15.1 Each party represents and warrants to each other party as at the Signing Date and immediately before Completion that:

(D) it is validly incorporated, in existence and duly registered and has the requisite capacity, power and authority to enter into and, subject to the satisfaction of the Conditions, perform this Agreement and the other Transaction Documents to which it is or will be a party and to execute, deliver and, subject to the satisfaction of the Conditions, perform any obligations it may have under this Agreement and any other Transaction Documents to which it is or will be a party;

(E) the obligations of it under this Agreement and any other Transaction Documents to which it is or will be a party constitute, or will constitute, binding obligations of it in accordance with their respective terms;

(F) the execution and delivery of, and, subject to the satisfaction of the Conditions, the performance by it of its obligations under this Agreement and any other Transaction Document to which it is or will be a party will not:

(i) result in a breach of any provision of its constitutional documents;

(ii) result in a breach of, or constitute a default under, any instrument by which it is bound;

(iii) result in a breach of any order, judgment or decree of any court or Authority by which it is bound; or

(iv) require it to obtain any governmental, statutory, regulatory or other approvals, consents, licences, waivers or exemptions, or give any notice to or make any registration with, any Authority or other party which has not been made or obtained at the date hereof save, for the avoidance of doubt, any approval, consent, licence, waiver, exemption, notice or registration required to satisfy the Conditions.

15.2 Rosneft gives the representations and warranties set out in Clause 15.1 in respect of each of the members of the Retained Group that is or will be a party to a Transaction Document.

15.3 NADL gives the representations and warranties set out in Clause 15.1 in respect of each of the members of the NADL Group that is or will be a party to a Transaction Document.

15.4 Seadrill gives the representations and warranties set out in Clause 15.1 in respect of each of the members of the Seadrill Group that is or will be a party to a Transaction Document.

16. LIABILITY; LIMITATIONS ON LIABILITY

16.1 Rosneft shall not be liable in respect of any breach of this Agreement to the extent that the limitations set out in Part A of Schedule 7 (Limitations on liability) apply.

16.2 Seadrill and NADL shall not be liable in respect of any breach of this Agreement to the extent that the limitations set out in Part B of Schedule 7 (Limitations on liability) apply.

16.3 In the absence of fraud and subject to Clause 13.1, Rosneft shall not be entitled to claim that any fact, matter or circumstance causes any of the NADL Warranties to be breached if it has been disclosed in the Current NADL Disclosure Letter.

16.4 In the absence of fraud and subject to Clause 12.1, Seadrill and NADL shall not be entitled to claim that any fact, matter or circumstance causes any of the Rosneft Warranties to be breached if it has been disclosed in the Current Rosneft Disclosure Letter.

16.5 If, whether before or following Completion, Seadrill or NADL becomes aware (whether by reason of any disclosure made pursuant to Clause 12 (Rosneft Warranties and Covenants) or not) that there has been any breach of the Rosneft Warranties or any other term of this Agreement, none of Seadrill or NADL shall be entitled to terminate or rescind this Agreement, save under Clauses 7.2, 7.3, 7.4 and 7.5 or Clause 10.6.

16.6 If, whether before or following Completion, Rosneft becomes aware (whether by reason of any disclosure made pursuant to Clause 13 (NADL Warranties and Covenants) or not) that there has been any breach of the NADL Warranties or any other term of this Agreement, Rosneft shall not be entitled to terminate or rescind this Agreement, save under Clauses 7.2, 7.3, 7.4 and 7.5 or Clause 10.6.

16.7 The provisions of Clauses 16.5 and 16.6 shall be without prejudice to any other right or remedy (other than termination or rescission) which any party may now or hereafter hold in respect of all or any part of the obligations of any other party under this Agreement and the other documents referred to in this Agreement.

16.8 If NADL fails to perform any of its obligations under this Agreement, Rosneft shall be entitled to make a claim against Seadrill in respect thereof as if Seadrill and NADL were jointly and severally liable for the relevant obligation(s) under this Agreement. The liability of Seadrill under this Clause 16.8 shall not exceed the liability of NADL in respect of non-performance of the relevant obligations.

16.9 Where any amount is due from Rosneft to NADL pursuant to this Agreement (other than any payment pursuant to Clause 2.11 or any payment for the subscription of shares in the share capital of NADL), Rosneft shall be entitled to elect no later than 5 Business Days before the due date for settlement of such amount to satisfy such amount in whole or in part by:

(A) payment of such amount (in whole or in part) in cash subject to Clauses 29.3 to 29.5; and/or

(B) waiving (in whole or in part, as required) all its rights to any dividend payable by NADL at the next two dividend payment dates in an amount equal to the amount of the payment due from Rosneft under this Clause 16.9 as increased by an amount equal to LIBOR plus 4% (four per cent.) per annum from (and including) the due date for settlement of such amount to (but excluding) the date on which the relevant dividend would have otherwise been settled provided that the maximum amount which Rosneft shall be entitled to waive on any one occasion shall be an amount equal to the lower of:

(vi) US$40,000,000; and

(vii) the aggregate of the quarterly dividend payments received by Rosneft in the seven months immediately preceding the due date for settlement of the amount from Rosneft to NADL; and/or

(C) to the extent that such amount is less than US$10,000,000, treating such amount (in whole or in part) as an amount outstanding from Rosneft to NADL for the purposes of Clause 3 (Contract Shares) at the Acceptance Date or Settlement Date (as the case may be) immediately following the due date for settlement and such amount shall increase by an amount equal to LIBOR plus 4% (four per cent.) per annum from (and including) the due date for such settlement to (but excluding) such Acceptance Date or Settlement Date (as the case may be); and/or

(D) to the extent that such amount is less than US$10,000,000,treating such amount (in whole or in part) as an amount outstanding from Rosneft to NADL for the purposes of Clause 5 (Extended Co-Operation) at the Additional Contract Acceptance Date or Settlement Date (as the case may be) immediately following the due date for settlement and such amount shall increase by an amount equal to LIBOR plus 4% (four per cent.) per annum from (and including) the due date for such settlement to (but excluding) such Additional Contract Acceptance Date or Settlement Date (as the case may be),

provided that:

(i) Rosneft shall only be entitled to exercise its rights under Clauses 16.9(C) and (D) where there is any Offshore Drilling Contract or Additional Drilling Contract in force and an Acceptance Date or Additional Contract Acceptance Date under any such contract or a Settlement Date is scheduled to fall within 6 months from the due date for settlement by Rosneft. Where an election has been made under Clause 16.9(B), an equivalent amount to that so waived shall cease to be an amount outstanding from Rosneft to NADL for the purposes of this Agreement, including Clauses 3 (Contract Shares) or 5 (Extended Co-Operation); and

(ii) if Rosneft does not make an election under this Clause 16.9, then Rosneft shall be deemed to have exercised its rights under Clause 16.9(B).

16.10 Rosneft may, at any time, elect to reduce the Rolled Forward Amount or the Additional Contract Rolled Forward Amount or the Seadrill Additional Contract Rolled Forward Amount by paying an amount in cash provided that Clauses 29.3 to 29.5 shall apply to such payment.

17. TAJIKISTAN; OBK CONTRACTS

Tajikistan

17.1 Rosneft shall procure that, prior to Completion, the Sale Group shall sell, and a member of the Retained Group shall buy, the Tajikistan Business and that such member of the Retained Group shall assume all of the liabilities and obligations of the Sale Group in relation to the Tajikistan Business (the “Carve Out”).

17.2 Where the consent of any third party is required to the Carve Out (or any elements thereof), Rosneft shall be responsible (at its own expense) for obtaining any such consent.

17.3 Without restricting the rights of NADL or its ability to claim damages on any basis, Rosneft shall pay NADL on demand on an after-Tax basis (which shall be construed in accordance with Clauses 29.3 to 29.5 (inclusive)) an amount equal to all costs, losses, damages, reasonable expenses (including reasonable legal and other professional expenses) or liabilities suffered or incurred by NADL or any member of the Sale Group:

(G) as a consequence of, or which would not have arisen but for, the implementation and completion of the Carve Out; and

(H) arising after Completion out of, or in connection with, the Tajikistan Business.

OBK Contracts    

17.4 Without restricting the rights of NADL or its ability to claim damages on any basis, Rosneft shall pay to NADL on demand on an after-Tax basis (which shall be construed in accordance with Clauses 29.3 to 29.5 (inclusive)) an amount equal to all break fees, termination payments, penalties or other similar liabilities suffered or incurred by NADL or any member of the Sale Group (net of any Cash Tax Saving) before, on or after Completion to the extent not discharged before Completion and arising out of or in connection with:

(D) the termination or cancellation by Rosneft or any member of the Sale Group of any drilling contracts which Orenburg has entered into with any third party (not being a member of the NADL Group) (the “Orenburg Contracts”); and

(E) the termination or cancellation by any of the third parties to any Orenburg Contract of any of the Orenburg Contracts as a result of the exercise of a contractual right to terminate arising as a result of the change in ownership or control of the Sale Group pursuant to this Agreement and the Russian SPA,

save that this Clause 17.4 shall not apply to:

(i) any Orenburg Contracts entered into between Orenburg and Lukoil and any Orenburg Contracts entered into between Orenburg and Rusvetpetro;

(ii) any Orenburg Contracts terminated or cancelled prior to the Orenburg Acquisition; and

(iii) those Orenburg Contracts expressly referenced in Paragraph 30b(ii) of Schedule 8 (Completion Accounts).

18. NON-SOLICITATION

18.1 Rosneft will not and undertakes to procure that each member of the Retained Group will not do any of the following things:

(C) neither pending nor within one year after Completion, employ any person at present or at Completion an employee of any member of the Sale Group save with the prior written consent of NADL, such consent not to be unreasonably withheld or delayed; nor

(D) between one and two years after Completion, solicit or entice away from the employment of any member of the Sale Group any person at present or at Completion an employee of any member of the Sale Group except for any employee who answers a public advertisement not intended to target any specific employee or group of employees.

18.2 Each undertaking contained in Clause 18.1 shall be construed as a separate undertaking and if one or more of the undertakings is held to be against the public interest or unlawful or in any way an unreasonable restraint of trade, the remaining undertakings shall continue to bind Rosneft.

19. INTER-COMPANY AMOUNTS

19.1 Immediately prior to Completion, Rosneft shall (or shall procure that the relevant members of the Retained Group shall):

(I) settle the Shareholder Debt in full; and / or

(J) contribute the Shareholder Debt to the charter capital of the relevant member(s) of the Sale Group,

such that the settlement and / or contribution of the Shareholder Debt pursuant to this Clause shall constitute or result in full and final settlement of all Shareholder Debt and that, at Completion, no further amount shall be considered as due, owing or payable between any member of the Retained Group and any member of the Sale Group in respect of Shareholder Debt. The parties further acknowledge that one of the ways to settle the Shareholder Debt is for Rosneft as sole participant / shareholder of the Company to contribute to the charter capital of the Company funds equal to the Shareholder Debt so that the Company immediately uses such contributed funds in order to repay the Shareholder Debt in full.

19.2 Rosneft shall ensure that its compliance with the provisions in Clause 19.1 shall not result in:

(A) the waiver of any Shareholder Debt; or

(B) any change in the number of shareholders (participants) in any member of the Sale Group.

19.3 Rosneft as agent for the members of the Retained Group shall settle the Inter-Company Receivables (in respect of the supply of goods and services) within 60 Business Days following Completion (the “Payment Date”). If any Inter-Company Receivables remain outstanding as at the Payment Date, then those Inter-Company Receivables shall increase by an amount equal to LIBOR plus 4% (four per cent.) per annum from (and including) the Payment Date to (but excluding) the date of actual payment.

19.4 Without restricting the rights of NADL or its ability to claim damages on any basis, Rosneft shall pay to NADL on demand an amount equal to the aggregate of all amounts of incremental Tax incurred or suffered by any member of the NADL Group as a consequence of, or which would not have arisen but for, the settlement of the Shareholder Debt.

20. TRANSITIONAL SERVICES; POST COMPLETION UNDERTAKINGS; WEATHERFORD OPTION

Separation and Transitional Services

20.1 Rosneft and NADL shall give effect to Schedule 13 (TSA Provisions).

Post-Completion undertakings

20.2 Following Completion, NADL undertakes to Rosneft and to each member of the Retained Group:

(A) to procure that, as soon as reasonably practicable after the Completion Date and in any event within one month afterwards, the name of any member of the Sale Group which consists of or incorporates “RN” or “Rosneft” or anything which in the reasonable opinion of Rosneft is confusingly similar to “RN” or “Rosneft”, is changed to a name which does not include “RN” or “Rosneft” or any name confusingly similar thereto; and

(B) to procure that, as soon as reasonably practicable after the Completion Date and in any event within three months afterwards, the Sale Group shall cease to use or display any trade or service names, marks or logos owned by any member of the Retained Group or any trade or service names, marks or logos confusingly similar thereto and shall not order or create any new item including such trade or service name, mark or logo.

20.3 Rosneft hereby grants to each member of the Sale Group a non-exclusive, royalty free, fully paid-up licence to use “RN” and “Rosneft” for the period of three months after the Completion Date solely for the purposes of carrying on the business of any member of the Sale Group which incorporates, displays or uses “RN” or “Rosneft” in the manner carried on immediately prior to Completion.

Weatherford Option

20.4 As from delivery of a notice from NADL requesting access to undertake due diligence on the Weatherford Business, Rosneft shall (or shall procure that such member(s) of the Retained Group as own(s) the Weatherford Business shall), upon reasonable notice and subject to receipt of such undertakings of confidentiality as Rosneft shall reasonably require, make available to NADL and any persons authorised by them through an agreed individual or group of individuals within Rosneft and at an agreed location all the Books and Records and information relating to the Weatherford Business (including, for the avoidance of doubt, the Weatherford SPA) as NADL may reasonably request (the date on which the first such information or access is provided shall be the “Due Diligence Commencement Date”) and such inspection visits to each of the premises of the Weatherford Business as the parties shall reasonably agree and Rosneft shall promptly so provide all information to NADL or any such persons as they may reasonably request so as to enable NADL to carry out due diligence on the Weatherford Business and assess whether it wishes to exercise the Weatherford Option. The due diligence process under this Clause 20.4 shall last for a maximum period of four months from the Due Diligence Commencement Date subject to Rosneft complying with its obligations to provide such information.

20.5 Rosneft hereby grants to NADL an option (the “Weatherford Option”) exercisable during the Weatherford Option Period, to require Rosneft to sell, or to require Rosneft to procure that such member(s) of the Retained Group as own(s) the Weatherford Business at the time of the exercise of the Weatherford Option sell, the Weatherford Business to NADL (or such member of the NADL Group as NADL shall designate in writing) on the sale terms set out in Clauses 20.8 to 20.13 (inclusive).

20.6 The Weatherford Option may be exercised by the giving of a notice in writing by NADL to Rosneft during the Weatherford Option Period (the “WeatherfordOption Notice”). NADL shall be entitled to exercise the Weatherford Option only in respect of all of the Weatherford Business.

20.7 If the Weatherford Option is exercised in accordance with this Clause then, Rosneft (or the relevant member(s) of the Retained Group) shall sell and NADL (or a member of the NADL Group) shall purchase the Weatherford Business. If the Weatherford Option is not duly exercised during the Weatherford Option Period, it shall lapse and cease to have any further effect.

20.8 Each party undertakes to negotiate in good faith to agree whether the sale of the Weatherford Business should be subject to the satisfaction of any conditions. If it is agreed that any filings should be made and/or any regulatory or other third party approvals are necessary, the parties shall then co-operate in good faith and Rosneft and NADL shall use their respective reasonable endeavours to make any such filings or obtain any such regulatory or third party approvals.

20.9 The total consideration for the purchase of the Weatherford Business shall be an amount equal to the Weatherford Option Price.

20.10 The Weatherford Option Price shall be equal to the Weatherford Consideration, plus any capital invested by any member of the Retained Group into the Weatherford Business on or before exercise of the Weatherford Option, minus any dividends, distributions, returns of capital or other leakage (if any) paid out of the Weatherford Business to any member of the Retained Group on or before the date of exercise of the Weatherford Option. Each of the aforementioned cashflows shall be expressed in Dollars and shall be increased by an amount of interest equal to 13.3% per annum calculated from the date that the respective cashflow took place up to the exercise of the Weatherford Option.

20.11 The parties shall use their respective reasonable endeavours to procure that the Weatherford Option Price shall be agreed in good faith as soon as possible following the service of the Weatherford Option Notice and, in any event, within 20 (twenty) Business Days failing which, each matter in dispute shall be settled in accordance with Clause 34 of this Agreement.

20.12 Without prejudice to Clause 20.13, any transfer of the Weatherford Business shall be on the following terms:

(A) completion of the transfer of the Weatherford Business shall take place within one hundred and twenty (120) calendar days after the date of the Weatherford Option Notice (or such longer period as may be required in order to obtain any Regulatory Approval(s)); and

(B) the Retained Group shall do all such other things and execute all other documents (including any deed) as NADL may reasonably request to give effect to the sale and purchase of the Weatherford Business.

20.13 The parties agree that the sale and purchase of the Weatherford Business pursuant to the Weatherford Option Notice shall:

(A) be effected on substantially the same terms as those set out in the Weatherford SPA (but, subject to Clause 20.10);

(B) shall not include any terms similar to the completion accounts adjustment in the Weatherford SPA;

(C) include warranties, indemnities and associated liability limitation provisions which are substantially similar to the warranties and indemnities and associated liability limitation provisions (including the date of expiry for bringing claims) contained in the Weatherford SPA, subject only to such changes as are necessary to reflect any differences in sale structure (if applicable); and

(D) include a warranty from Rosneft that no facts, circumstances or events have arisen or occurred and nothing has been done or omitted to be done in relation to the Weatherford Business which would have given rise to a breach of any of the warranties contained in the Weatherford SPA during the period of the Retained Group’s ownership of the Weatherford Business provided that no claim shall be brought under such warranty unless written notice of such claim in accordance with Paragraph 2.1 of Part A of Schedule 7 (Limitations on Liability) shall have been given to Rosneft on or before the first anniversary of the completion of the transfer of the Weatherford Business to the NADL Group.

The warranties in respect of the Weatherford Business given by Rosneft to the relevant members of the NADL Group shall not be assignable by any such member of the NADL Group.

20.14 Subject to Clauses 20.8 to 20.13 (inclusive), if NADL exercises the Weatherford Option, the parties shall negotiate the terms of the documentation pursuant to which the transfer of the Weatherford Business will be effected in good faith and shall use their respective reasonable endeavours to agree all of the terms of the documentation as soon as reasonably practicable after the exercise of the Option Notice.

21. BOOKS AND RECORDS

For a period of four years after Completion, Rosneft shall retain and provide, on request, copies of any Books and Records of the Sale Group or which relate exclusively to the Sale Group but which are held by Rosneft or a member of the Retained Group.

22. EFFECT OF COMPLETION

Any provision of this Agreement and any other documents referred to in it which is capable of being performed after but which has not been performed at or before Completion and all representations and warranties and covenants and other undertakings contained in or entered into pursuant to this Agreement shall remain in full force and effect notwithstanding Completion.

23. REMEDIES AND WAIVERS

23.1 No delay or omission by any party to this Agreement in exercising any right, power or remedy provided by law or under this Agreement or any other documents referred to in it shall:

(A) affect that right, power or remedy; or

(B) operate as a waiver of it.

23.2 The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not preclude any other or further exercise of it or the exercise of any other right, power or remedy.

23.3 Save as otherwise provided in this Agreement, the rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law (save for the right to rescind).

24. ASSIGNMENT

24.1 This Agreement is personal to the parties to it. Accordingly no party may, without the prior written consent of Rosneft (in the case of Seadrill and NADL) or NADL (acting with consent of Seadrill) (in the case of Rosneft), assign, grant any security interest over, hold on trust or otherwise transfer the benefit of all or any of another party’s obligations under this Agreement, save in accordance with Clause 24.2.

24.2 Subject to Clause 24.3:

(A) Rosneft may, without the consent of the other parties, assign to a subsidiary the benefit of the whole or any part of this Agreement, provided that if the assignee ceases to be a subsidiary of Rosneft, it shall before ceasing to be so assign the benefit, so far as assigned to it, back to Rosneft or assign the benefit to another subsidiary of Rosneft; and

(B) Seadrill and/or NADL may, without the consent of Rosneft, assign the benefit of the whole or any part of this Agreement to a member of the Seadrill Group or the NADL Group (as the case may be), provided that if the assignee ceases to be a member of the Seadrill Group or the NADL Group, it shall before ceasing to be so assign the benefit, so far as assigned to it, back to Seadrill, NADL or another member of the Seadrill Group or NADL Group.

24.3 If any assignment is made in accordance with Clause 24.2, the assignee shall not be entitled to benefit from any greater obligation, or to receive any greater amount, than that to which the assignor would have been entitled.

25. ENTIRE AGREEMENT

25.1 The Transaction Documents, the documents referred to therein to be entered into on the Signing Date and the Completion Date and the Letter of Award constitute the whole and only agreement between the parties relating to the Transactions.

25.2 The Transaction Documents and the Letter of Award supersede any previous agreements (other than the Offshore Drilling Contracts) relating to the subject matter of the Transaction Documents, and set out the complete legal relationship of the parties arising from or connected with that subject matter.

25.3 Except in the case of fraud, each party acknowledges that it is entering into the Transaction Documents in reliance upon only the Transaction Documents and the Letter of Award and that it is not relying upon any other pre contractual statement.

25.4 For the purposes of this Clause 25 (Entire Agreement), “pre contractual statement” means any draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter of this Agreement made or given by any person at any time prior to this Agreement becoming legally binding.

25.5 A party’s only right or remedy under this Agreement in respect of a breach of any provision of this Agreement shall be for breach of this Agreement.

25.6 This Agreement may only be varied in writing signed by each of the parties.

25.7 At the Signing Date, the heads of agreement concluded by Rosneft and Seadrill and dated 31 March 2014 shall terminate, save for any rights of the parties accrued thereunder before the Signing Date.

25.8 In the event of any ambiguity or discrepancy between the provisions of this Agreement and any of the other Transaction Documents, the provisions of this Agreement shall prevail.

26. NOTICES

26.1 A notice under this Agreement shall only be effective if it is in writing. E-mails are permitted.

26.2 Notices under this Agreement shall be sent to a party at its address and for the attention of the individual notified by each party to the other parties on or before the Signing Date, provided that a party may change its notice details on giving notice to the other parties of the change in accordance with this Clause 26 (Notices). That notice shall only be effective on the day falling five clear Business Days after the notification has been received or such later date as may be specified in the notice.

26.3 Any notice given under this Agreement shall be deemed to have been duly given as follows:

(A) if delivered personally, on delivery;

(B) if sent by airmail, six clear Business Days after the date of posting; and

(C) if sent by e-mail, when sent/at the expiration of 48 hours after the time it was sent.

26.4 Any notice given under this Agreement outside Working Hours in the place to which it is addressed shall be deemed not to have been given until the start of the next period of Working Hours in such place.

27. ANNOUNCEMENTS

27.1 Subject to Clause 27.2, the parties shall not make any announcement concerning the Transactions or any ancillary matter without the prior written approval of the other parties, such approval not to be unreasonably withheld or delayed.

27.2 A party may (and any member of the Retained Group or the Seadrill Group or the NADL Group may) make an announcement concerning the Transactions or any ancillary matter if required by:

(D) law; or

(E) any securities exchange or Authority or any Tax Authority to which that party (or member of the Retained Group or the Seadrill Group or the NADL Group) is subject or submits, wherever situated, whether or not the requirement has the force of law,

in which case the relevant party shall (or shall procure that the member of the Retained Group or the Seadrill Group or the NADL Group shall) take all such steps as may be reasonable and practicable in the circumstances to agree the contents of the announcement with the other parties to this Agreement before making the announcement.

27.3 The restrictions contained in this Clause 27 (Announcements) shall continue to apply after Completion or the termination of this Agreement without limit in time.

28. CONFIDENTIALITY

28.1 Each party shall treat as confidential (and Rosneft shall procure that each member of the Retained Group shall treat as confidential, Seadrill shall procure that each member of the Seadrill Group shall treat as confidential and NADL shall procure that each member of the NADL Group shall treat as confidential), all information received or obtained as a result of entering into or performing this Agreement which relates to:

(F) the provisions of this Agreement;

(G) the negotiations relating to this Agreement and the Transactions;

(H) the subject matter of this Agreement; or

(I) the other parties,

and Rosneft shall, from Completion, also treat as confidential any information relating to the Sale Group.

28.2 Notwithstanding the other provisions of this Clause 28 (Confidentiality), a party may disclose any such confidential information:

(A) to the extent required by law or for the purpose of any judicial proceedings;

(B) to the extent required by any securities exchange or Authority or any Tax Authority to which that party is subject or submits, wherever situated, whether or not the requirement for information has the force of law;

(C) to the extent required to vest the full benefit of this Agreement in that party;

(D) to its professional advisers, auditors and bankers provided they have a duty to keep such information confidential;

(E) to the extent the information has come into the public domain through no fault of that party; or

(F) to the extent the other parties have given prior written consent to the disclosure, such consent not to be unreasonably withheld or delayed.

Any information to be disclosed pursuant to Clauses 28.2(A), 28.2(B), 28.2(C) or 28.2(D) shall be disclosed only after consultation with the other parties.

28.3 The restrictions contained in this Clause 28 shall continue to apply until three years after Completion or until three years after the termination of this Agreement (as applicable).

28.4 Rosneft acknowledges and agrees that:

(C) if any information provided under Clause 9.3 constitutes material non-public information, then until such information has been made public it shall not (and shall procure that the members of the Retained Group shall not) engage in any behaviour while in possession of such information which would amount to insider trading, or market manipulation or other market abuse, for the purposes of U.S. federal and state securities laws, including Section 10(b) of the Exchange Act and Rules 10b-5, 10b5-1 and 10b5-2 promulgated thereunder (collectively, “U.S. Securities Laws”); and

(D) some or all of the information referred to in (A) above may constitute material non-public information for the purposes of U.S. Securities laws. Rosneft hereby acknowledges that it is aware (and such members of the Retained Group as shall receive such information have been or will be advised by Rosneft) that the U.S. Securities Laws restrict both the purchase and sale of securities by persons who possess material non-public information relating to the issuer of such securities and the communication of such information to any other person under circumstances in which it is reasonably foreseeable that such other person is likely to purchase or sell such securities and further acknowledges that it shall not (and shall procure that the members of the Retained Group shall not) purchase or sell such securities while in possession of any such material non-public information, encourage another person to purchase or sell such securities or disclose such information to any other person under circumstances in which it is reasonably foreseeable that such other person is likely to purchase or sell such securities before such information has been made public.

29. COSTS; EXPENSES AND TAX

29.1 Except as otherwise agreed, each party shall pay its own costs and expenses in relation to the negotiations leading up to the Transactions and the preparation, execution and carrying into effect of this Agreement and the other Transaction Documents and Rosneft confirms and undertakes that no expense of whatever nature relating to the Transactions has been or is to be borne by any member of the Sale Group.

29.2 All costs relating to the notarisation of the Russian SPA, certification of Rosneft’s (and its authorised representative’s) and NADL’s (and its authorised representative’s) signature on the Russian SPA, certification of Rosneft’s (and its authorised representative’s) signature on the Transfer Application Form, notification of the Company on transfer of the Shares to NADL and other related notarial services will be borne in equal proportions by NADL (on the one hand) and Rosneft (on the other hand).

29.3 Except as required by law, all payments made by any party (or any member of the NADL Group, member of the Seadrill Group or member of the Retained Group) pursuant to this Agreement shall be made free and clear of any deduction or withholding whether in respect of Tax or otherwise.

29.4 If any deductions or withholdings in respect of Tax are required by law to be made from any amounts due from any party pursuant to this Agreement then that party shall be obliged to pay the receiving party (or the relevant member of the NADL Group, member of the Seadrill Group or member of the Retained Group) such sum as shall, after the deduction or withholding has been made, leave the receiving party (or the relevant member of the NADL Group, member of the Seadrill Group or member of the Retained Group) with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding.

29.5 If any sum payable under this Agreement shall be subject to Tax in the hands of the receiving party (or any member of the NADL Group, member of the Seadrill Group or member of the Retained Group), then, except to the extent that the amount of such payment has been increased to take account of the Tax that will be charged on receipt of such payment and, except in relation to interest, the amount so payable shall be increased by such amount as shall ensure that after payment of the Tax so charged there shall be left a sum equal to the amount that would otherwise be payable under this Agreement.

29.6 Rosneft and NADL shall discuss an efficient mechanism for the issue of the Contract Shares and the NADL Additional Contract Shares.

29.7 Clauses 29.3 and 29.5 shall be subject to Clause 3.7(A)(ii) and Clause 5.9(A)(ii), which shall prevail.

30. COUNTERPARTS

30.1 This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart.

30.2 Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute but one and the same instrument.

31. INVALIDITY

31.1 If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair:

(E) the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or

(F) the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Agreement.

32. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

32.1 Clauses 12.5, 13.4, 29.4 and 29.5 (the “Third Party Rights Clauses”) confer a benefit on certain persons named therein who are not a party to this Agreement (each for the purposes of this Clause 32 a “Third Party”) and, subject to the remaining provisions of this Clause, are intended to be enforceable by the Third Party by virtue of the Contracts (Rights of Third Parties) Act 1999.

32.2 The parties to this Agreement do not intend that any term of this Agreement, apart from the Third Party Rights Clauses, should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Agreement.

32.3 Notwithstanding the provisions of Clause 32.1, this Agreement may be varied in any way and at any time by the parties to this Agreement without the consent of any Third Party.

33. CHOICE OF GOVERNING LAW

This Agreement is to be governed by and construed in accordance with English law. Any matter, claim or dispute arising out of or in connection with this Agreement, whether contractual or non-contractual, is to be governed by and determined in accordance with English law.

34. ARBITRATION

34.1 All disputes arising out of or in connection with the present Agreement (other than those in relation to the Completion Accounts) shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. The seat, or legal place, of arbitration shall be Paris. The language of the arbitration proceedings shall be English.

34.2 In the event that, after a dispute has arisen and arbitration is commenced under Clause 34.1 (“First Arbitration”), another dispute arises between some or all of the same parties that concerns the same or substantially similar issues of law or fact as those at issue in the First Arbitration (“Related Conflict”), then, for the purpose of constituting the arbitral tribunal in the Related Conflict, the parties agree to nominate the same arbitrators as they nominated in the First Arbitration and to write jointly to the International Chamber of Commerce to request the appointment of the same arbitrators for the Related Conflict.

34.3 If, before or after the commencement of the First Arbitration, an arbitration is commenced under any Transaction Document other than this Agreement (“Transaction Document Conflict”), and any party to the First Arbitration contends that the Transaction Document Conflict raises similar issues of law or fact to those at issue in the dispute the subject of the First Arbitration (such that the issues should be resolved in one proceeding), then, provided that no date has been fixed for the final hearing in the First Arbitration, the arbitral tribunal appointed in the First Arbitration (“First Tribunal”) will have the absolute discretion to determine whether in the interests of justice and efficiency the proceedings will be consolidated and heard together.

34.4 In the event that the First Tribunal makes an order under Clause 34.3 consolidating two (2) or more arbitrations (“Consolidation Order”), then the composition of the First Tribunal will remain unchanged, unless any members of the First Tribunal are subject to a disqualifying conflict of interest. In such event, a new tribunal will be constituted for the consolidated proceeding (“New Tribunal”), and the members of the New Tribunal will be selected as follows:

(A) the parties to the consolidated proceeding will agree on the composition of the New Tribunal; and

(B) failing such agreement within thirty (30) days of the First Tribunal issuing its Consolidation Order, the International Chamber of Commerce will appoint all members of the New Tribunal.

34.5 Each party to the consolidated proceeding will be bound by the award rendered by the First Tribunal (or the New Tribunal, if one is constituted), even if it chooses not to participate in the consolidated proceeding.

35. NATURE OF THIS AGREEMENT

The parties hereby acknowledge and agree that this Agreement is not and shall not be deemed to be a transaction directed at the disposal of a participatory interest for the purposes of paragraph 1 of Article 21(11) of the LLC Law, and no party will raise any argument to the contrary. The parties hereby further acknowledge and agree that Clause 2 (NADL Issuance) is a contract establishing an obligation to enter into a transaction directed at the disposal of a participatory interest, provided that certain circumstances have occurred or the counterparty has performed certain counter obligations, within the meaning of paragraph 3 of Article 21(11) of the LLC Law.

36. LANGUAGE

36.1 Each notice, demand, request, statement, instrument, certificate, or other communication under or in connection with this Agreement shall be:

(A) in English; or

(B) if not in English, accompanied by an English translation made by a translator, and certified to be accurate by an officer of the party giving the notice.

36.2 The receiving party or its agent (as appropriate) shall be entitled to assume the accuracy of and rely upon any English translation of any document provided pursuant to Clause 36.1.

Schedule 1
(Conditions to Completion)

1. Competition consents

NADL having obtained the FAS Approval either without any qualifications or conditions, or with such qualifications and conditions as are acceptable to NADL and Rosneft, each acting reasonably.

2. Regulatory matters

No order or judgment of any court or Authority having been issued or made and no sanctions, embargoes, export controls or restrictive measures of any Authority having been imposed or expanded prior to Completion, and no legal or regulatory requirements remaining to be satisfied, other than the obtaining of any non-mandatory or post-Completion merger control consent, which has or have the effect of making unlawful or otherwise prohibiting the Completion of the Transactions or the execution or performance of any of the Drilling Contracts.

3. Operation of rigs

(C) All of the Land Rigs set out in Part A of Attachment 3 (Land Rigs) being: (i) operated by the Sale Group; (ii) fit for purpose on an as is basis; and (iii) the subject of an Onshore Drilling Contract with a term of at least five years or with a term equivalent to the remaining useful life of the relevant Land Rig.

(D) The Sale Group having entered into the VTB Leases with VTB Leasing in accordance with Clause 4.2, each of the VTB Leases remaining in full force and effect and each of the VTB Rigs being the subject of an Onshore Drilling Contract with a term of at least 5 years.

(E) The Existing VTB Leases remaining in place and Rosneft having obtained the consent of VTB Leasing to the change in ownership or control of the Sale Group pursuant to this Agreement and the Russian SPA and a waiver from VTB Leasing of:

(i) any rights that VTB Leasing has or may have under the terms of each of the Existing VTB Leases or otherwise to terminate any of the Existing VTB Leases as a result of such change in ownership or control and;

(ii) any rights that VTB Leasing has or may have under the terms of each of the Existing VTB Leases or otherwise to impose any consent fee, break fee, termination payments, penalties or similar liabilities as a result of such change in ownership or control.

4. Tender process

Rosneft having undertaken a tender process pursuant to the Procurement Law and Procurement Documentation of the relevant members of the Retained Group and having awarded all of the Onshore Drilling Contracts.

5. Compliance with Clause 8 (Rosneft Actions Pending Completion)

Rosneft has complied in all material respects with its obligations in Clause 8 (Rosneft Actions Pending Completion).

6. Rosneft approval

The passing of:

(A) a resolution of the Rosneft Board of Directors to approve the Rosneft Approval Documents (other than this Agreement); and

(B) a resolution of the Rosneft Board of Directors or a Management Board (as applicable) to approve this Agreement,

or, as may be applicable,

(C) a resolution to approve the Rosneft Approval Documents at a duly convened and held general meeting of the shareholders of Rosneft.

7. NYSE Listing

The Consideration Shares and the Subscription Shares shall have been approved for listing on the New York Stock Exchange, subject only to formal notice of issuance.

8. Compliance with Clause 9 (NADL Actions Pending Completion)

Each of NADL and Seadrill has complied in all material respects with its obligations in Clause 9 (NADL Actions Pending Completion).

Schedule 2
(Rosneft Conduct of Business for the Sale Group before Completion)

The acts and matters referred to in Clause 8.1 are as follows:

Corporate matters

(A) any creation, allotment or issue or any grant of any option over or other right to subscribe or purchase, or any redemption or purchase of, any share or loan capital or securities of any member of the Sale Group or securities convertible into any of the foregoing;

(B) any alteration of the constitutional documents of any member of the Sale Group, or the adopting or passing of any further regulations or resolutions inconsistent with them unless required by applicable law;

(C) the passing of any resolutions in general meeting or by way of written resolution for winding up of any member of the Sale Group;

(D) any change to the accounting reference date of any member of the Sale Group or any of the accounting practices, bases, methodologies, formulae, techniques or principles by which the management accounts and accounting records of the Sale Group are drawn up;

General business conduct; financing

(E) the making of any capital commitment which individually exceeds US$5,000,000 or which, together with all other capital commitments entered into between the Signing Date and the Completion Date, exceeds the sum of US$10,000,000 in aggregate;

(F) any acquisition or disposal (not being a disposal in the ordinary course of business or on normal arm’s length terms) or creation or grant of any option, security or Encumbrance in respect of: (i) any interest in any material part of the business and undertaking of any member of the Sale Group; (ii) any asset or business which individually exceeds US$5,000,000; or (iii) any material Intellectual Property owned by the Sale Group;

(G) the making of any loan which individually exceeds US$5,000,000 or which in aggregate exceed US$10,000,000 (other than the granting of trade credit in the ordinary course of business in accordance with the relevant member of the Sale Group’s normal practice) to any person (other than between members of the Sale Group);

(H) any borrowing which individually exceeds US$5,000,000 or which in aggregate exceed US$10,000,000 (other than the receipt of trade credit in the ordinary course of business or pursuant to and in accordance with the limits subsisting at the Signing Date);

(I) any material amendment, variation, waiver, termination (or giving of a notice of termination) of, or entry into:

(i) any drilling programme commitments or drilling contracts which would result in any of the Land Rigs being unavailable for use pursuant to the Onshore Drilling Contracts from the anticipated date of commencement (as agreed between the parties);

(ii) any guarantee or indemnity for the obligations of any person (other than any member of the Sale Group) which if called would result in a cost to any member of the Sale Group of US$5,000,000 or more;

(iii) any transaction with any member of the Retained Group other than in the normal course of business or on arm’s length terms;

(iv) any contract or commitment that is or would, if it were in written form, be a Material Contract;

(J) any failure to take any action required to maintain any of the insurances in force as at the Signing Date or knowingly do anything to make any such policy of insurance void or voidable;

(K) making any substantial change in the nature or organisation of the business of any member of the Sale Group or discontinuing or ceasing to operate all or a material part of the business of any member of the Sale Group;

(L) the commencement, compromise, settlement, withdrawal or abandonment of any Dispute Resolution Process involving a claim or liability in excess of US$1,000,000;

Employees

(M) any offer by any member of the Sale Group to engage:

(i) a new General Director or any of the General Director's direct reports or a new Region Manager (or its equivalent) or any of the Region Manager's (or such equivalent's) direct reports, in each case, of the Company or Orenburg; or

(ii) any new employee or consultant at an annual salary or fee per employee or consultant (on the basis of full time employment or consultancy) in excess of US$200,000 per annum;

(N) any dismissal of:

(i) the General Director or any of the General Director's director reports or the Region Manager or any of the Region Manager's direct reports, in each case, of the Company, Orenburg or any division of the Sale Group; or

(ii) any employee earning in excess of US$200,000 per annum by any member of the Sale Group, other than for cause or unless not to do so would damage the business of the Sale Group;

(O) any amendment, including any increase in emoluments (including pension contributions, bonuses, commissions and benefits in kind), to the terms of employment of any category of employees of any member of the Sale Group which would increase the aggregate remuneration of such category by more than 5% (five per cent.) save for increases in emoluments made in accordance with the normal practice of the Sale Group;

General

(P) the acquisition or disposal of any interest in real property which individually exceeds US$1,000,000 or which in aggregate exceed US$5,000,000;

(Q) the changing of the residence of any member of the Sale Group for Tax purposes; and

(R) the entering into of any agreement (conditional or otherwise) to do any of the foregoing.

Schedule 3
(NADL Conduct of Business before Completion)

The acts and matters referred to in Clause 9.1 are as follows:

Part A

(A) except for the ordinary established dividend capped to US$0.235 per calendar quarter, any declaration, authorisation, making or payment of a dividend (in cash or in specie) or other distribution of a similar nature or taxed in the same way as a dividend or any reduction of capital (other than lawfully made by any member of the NADL Group to NADL);

(B) any creation, allotment or issue or any grant of any option over or other right to subscribe or purchase, or any redemption or purchase of, any share or loan capital or securities of any member of the NADL Group or securities convertible into any of the foregoing;

(C) any material amendment, variation, waiver, termination (or giving of a notice of termination) of, or entry into any drilling programme commitments or drilling contracts or any disposal which would result in the Offshore Rigs being unavailable for use pursuant to the Offshore Drilling Contracts from the anticipated date of commencement;

(D) any material acquisition or material disposal (not being a disposal: (i) in the ordinary course of business; or (ii) on normal arm’s length terms;) by any member of the NADL Group which individually exceeds US$10,000,000;

(E) any disposal of any drilling unit;

(F) any material amendment, variation, waiver, termination (or giving of a notice of termination) of, or entry into any guarantee, security arrangement or indemnity for the obligations of any person (other than any member of the NADL Group) which if called would result in a cost to any member of the NADL Group of US$10,000,000 or more, other than any guarantee, security arrangement or indemnity for the obligations of any member of the Seadrill Group where the benefit received by NADL as a result of such amendment, variation, waiver, termination or entry is proportionate to the guarantee, security arrangement or indemnity provided;

(G) changing the jurisdiction of incorporation of any member of the NADL Group;

Part B

(H) any alteration of the constitutional documents of any member of the NADL Group, or the adopting or passing of any further bye-laws or resolutions inconsistent with them unless required by applicable law;

(I) the passing of any resolutions in general meeting or by way of written resolution for winding up, or to capitalise any profits or any sum standing to the credit of any reserve, of any member of the NADL Group;

(J) making any substantial change in the nature or organisation of the business of any member of the NADL Group or discontinuing or ceasing to operate all or a material part of the business of any member of the NADL Group; and

(K) the entering into of any agreement (conditional or otherwise) to do any of the foregoing in Paragraphs (A) to (J).

Schedule 4
(Completion arrangements)

Part A (Rosneft’s Obligations)

At Completion, Rosneft shall:

1. execute, in the presence of the Notary, three (3) counterparts of the Russian SPA;

2. execute, in the presence of the Notary, one (1) counterpart of the Transfer Application Form in relation to the Russian SPA;

3. procure that the Russian SPA and the Transfer Application Form in relation to the Russian SPA are duly notarised and provide or procure to be provided any documents necessary or reasonably requested by the Notary for the purposes of notarising the Russian SPA and the Transfer Application Form in relation to the Russian SPA in accordance with applicable Russian laws (to the extent such documents relate to Rosneft or the Company);

4. deliver to NADL or Seadrill’s Solicitors:

(A) duly notarised certified original counterpart of a pre-emption right waiver in the agreed form by the Company in respect of transfer of the Shares to NADL;

(B) as evidence of the authority of each person executing the Rosneft Approval Documents and any other documents referred to in this Schedule 4 on behalf of Rosneft or the relevant member of the Retained Group or the relevant member of the Sale Group (as applicable):

(i) originals of the written resolutions of the competent management bodies authorising the execution, delivery and performance of such Transaction Documents and each such other documents and all transactions contemplated therein, including, if applicable, as a major transaction (in Russian – крупная сделка) and/or related party transaction (in Russian – сделка, в совершении которой имеется заинтересованность) or, if not applicable, original confirmation letters from the general director of the respective companies in the agreed form that the respective documents and transactions contemplated therein do not constitute a major transaction (in Russian – крупная сделка) and related party transaction (in Russian – сделка, в совершении которой имеется заинтересованность) for such companies, and, if applicable, the issue of powers of attorney in favour of such person signing any of the foregoing on behalf of Rosneft, the relevant member of the Retained Group or the relevant member of the Sale Group; and

(ii) originals of each power of attorney referred to in Paragraph (B)(i) above in the agreed form (if applicable).

5. deliver to NADL an extract from the Register recording, and a copy of the relevant Russian law share purchase agreement effecting, the transfer by RN-Innostrannye Proyekty of the participatory interest in Orenburg not currently held by a member of the Sale Group to a member of the Sale Group;

6. deliver to Seadrill a counterpart of the Shareholders’ Agreement duly executed by Rosneft;

7. deliver to NADL a counterpart of each of the Onshore Drilling Contracts duly executed by Rosneft or other relevant member of the Retained Group and the relevant member of the Sale Group;

8. deliver to NADL a signed letter of consent from each of the Rosneft directors who will be appointed to the board of directors of NADL from Completion in accordance with the Shareholders’ Agreement agreeing to act as a director of NADL;

9. make available to NADL at the registered office of the relevant member of the Sale Group (to the extent not already there):

(A) the statutory books (which shall be written up to but not including the Completion Date), the certificate of incorporation (and any certificate of incorporation on change of name) and common seal (if any) of each member of the Sale Group, constitutional documents and all amendments thereto, and all registration certificates of the Sale Group members with relevant Authorities, including certificates of registration appearing on the register, Tax registration, and registration with state funds and statistics authorities, as well as all papers, books, banking books, records, cheque books, corporate bank cards, stamps, accounting records (including 1-S-bookkeeping data), contracts, correspondence with Authorities and counterparties, tax declarations, balance sheets and forms, tax registers/ledgers, accounting registers/ledgers, all other documents construing (as per RAS) the accounting primary documents, ledgers and records of promissory notes (or any other kind of document of the same kind) issued and/or received by a Sale Group member, ledgers and records of all powers of attorneys issued by a Sale Group member, all electronic data (including: accounting database, electronic registers of any kind, software of any kind licensed for the use by a Sale Group member) and information needed for access to and use of (including all keys, codes, logins and passwords) all electronic data of the Sale Group members, including accounts, internet banking systems, bank accounts and any web-based data, all minutes of (decisions by) management bodies and staff lists;

(B) the Books and Records referred to in Clause 21;

(C) originals of the Material Contracts;

(D) originals of the Accounts;

(E) originals of the title documents for the Relevant Properties which will include ownership certificates with respect to each of the Relevant Properties;

10. deliver to NADL:

(A) an original decision (in the agreed form) of Rosneft as the sole participant of the Company evidencing the approval by Rosneft as the sole participant of the Company of the resignation of the existing general director of the Company with effect as of the Completion Date and the appointment of the person designated by NADL;

(B) an original minutes (in the agreed form) of the general participants’ meeting of Orenburg evidencing the approval of the general participants’ meeting of Orenburg of the resignation of the existing general director of Orenburg with effect as of Completion Date and appointment of the person designated by NADL;

(C) an original decision (in the agreed form) of the sole participant of Orenburg Subsidiary evidencing the approval by sole participant of Orenburg Subsidiary of the resignation of the existing general director of Orenburg Subsidiary with effect as of Completion Date and appointment of the person designated by NADL;

(D) an original minutes (in the agreed form) of the general participants’ meeting of Orenburg approving the termination of powers of the board of directors of Orenburg with effect as of Completion Date and appointment of the board of directors comprising the persons designated by NADL in writing 15 calendar days prior to Completion;

(E) two (2) executed original agreements in the agreed form between the Company and the general director of the Company providing for the mutual termination of the employment agreement of the general director of the Company;

(F) two (2) executed original agreements in the agreed form between Orenburg and the general director of Orenburg providing for the mutual termination of the employment agreement of the general director of Orenburg;

(G) two (2) executed original agreements in the agreed form between Orenburg Subsidiary and the general director of Orenburg Subsidiary providing for the mutual termination of the employment agreement of the general director of Orenburg Subsidiary;

(H) originals of statements in the agreed form from each of the resigning general directors of the Company, Orenburg and Orenburg Subsidiary to the following banks informing the respective bank about his/her resignation and requesting and authorising the bank not to accept or act upon any request, order or instruction from him/her with regard to any bank account of the Company, Orenburg and Orenburg Subsidiary opened with such respective bank or any funds on such bank account:

(i) the Company:

(a) OJSC Russian Regional Development Bank (Moscow)

(b) OJSC Far Eastern Bank, Krasnoyarsk branch (Krasnoyarsk)

(c) OJSC Far Eastern Bank (Vladivostok)

(d) OJSC Russian Regional Development Bank, Nefteyugansk branch (Nefteyugansk)

(e) OJSC Far Eastern Bank, Sakhalin branch (Nogliki village)

(f) OJSC Russian Regional Development Bank, Nefteyugansk branch (Gubkinskiy)

(g) OJSC Russian Regional Development Bank, Krasnodar branch (Krasnodar)

(h) OJSC Russian Regional Development Bank, Usinsk branch (Usinsk)

(i) OJSC Far Eastern Bank, Irkutsk branch (Irkutsk)

(ii) Orenburg:

(a) OJSC Sberbank of Russia, Orenburg branch (Orenburg)

(b) OJSC Sberbank of Russia, Saratov branch (Stepnoe)

(c) OJSC VTB, Nizhniy Novgorod branch (Orenburg)

(d) CJSC UniCredit Bank (Moscow)

(e) OJSC Alfa Bank, Nizhegorodskiy branch (Orenburg)

(f) OJSC Bank of Moscow, Nizhegorodskiy branch (Orenburg)

(g) OJSC Bank of Moscow (Moscow)

(h) OJSC OJSC Russian Regional Development Bank (Moscow)

(iii) the Orenburg Subsidiary:

(a) OJSC VTB (Orenburg)

(b) OJSC Alfa Bank, Nizhegorodskiy branch (Orenburg)

(c) OJSC OJSC Russian Regional Development Bank (Moscow); and

(I) originals of the notarised power of attorneys in the agreed form issued by each resigning general director of the Company, Orenburg and Orenburg Subsidiary to the persons designated by NADL.

For the avoidance of doubt, the general directors of the members of the Sale Group shall be replaced on Completion as further envisaged by this Paragraph 10 only if the relevant request on replacement is delivered by NADL to Rosneft 15 calendar days prior to Completion and the Completion Accounts shall be prepared on the basis that NADL shall be liable for any payments by the members of the Sale Group as a result of such termination; and

11. deliver to NADL a counterpart of the registration rights agreement substantially in the form set out in Schedule 12 duly executed by Rosneft.

Part B (Seadrill and NADL’s Obligations)

1. At Completion, Seadrill shall:

(A) deliver (or shall procure that the relevant member of the Seadrill Group shall deliver) to Rosneft a counterpart of the Shareholders’ Agreement duly executed by Seadrill; and

(B) deliver to Rosneft or Rosneft’s Solicitors a copy of the minutes of duly held meetings or unanimous written resolutions of the directors of Seadrill authorising the execution of each of the Transaction Documents to which it is a party (such copy minutes or unanimous written resolutions being certified as true and correct by the secretary);

(C) deliver to Rosneft a legal opinion in the agreed form in respect of the valid issuance of the Consideration Shares and the Subscription Shares and the future issuance of the Contract Shares; and

(D) deliver (or shall procure that NADL delivers) to Rosneft a copy of the minutes of duly held meetings or written resolutions of the members of NADL approving the changes to the board of directors of NADL to reflect the terms of the Shareholders’ Agreement.

2. At Completion, NADL shall:

(A) execute, in the presence of the Notary, three (3) counterparts of the Russian SPA;

(B) provide or procure to be provided to the Notary any documents necessary or reasonably requested by the Notary for the purposes of notarising the Russian SPA in accordance with applicable Russian laws (to the extent such documents relate to NADL);

(C) deliver to Rosneft a copy of the FAS Approval and the BMA Consent; and

(D) deliver a share certificate for the Consideration Shares and the Subscription Shares in the name of Rosneft (and at Completion or on the Business Day immediately following the Completion Date a certified copy of the updated register of members of NADL showing Rosneft as the registered holder of the Consideration Shares and the Subscription Shares);

(E) deliver to Rosneft or Rosneft’s Solicitors a copy of the minutes of duly held meeting of the directors of NADL and the NADL Conflicts Committee authorising the execution of each of the NADL Approval Documents and the allotment and issue of the Consideration Shares, the Subscription Shares and the Contract Shares (such copy minutes or written resolutions being certified as true and correct by the secretary) and approving the changes to be made to the board of directors of NADL to reflect the terms of the Shareholders’ Agreement; and

(F) deliver to Rosneft a counterpart of the registration rights agreement substantially in the form set out in Schedule 12 duly executed by NADL.

Schedule 5
(Rosneft Representations and Warranties)

Part A

Company Warranties

1. Ownership of the Shares and shares in other members of the Sale Group

(A) Rosneft is the sole legal and beneficial owner of the Shares. The Shares constitute the entire charter capital of the Company.

(B) The Company's (and each other member of the Sale Group’s) charter capital has been fully paid up within the time periods established by Russian law.

(C) Thereis no option, right to acquire, pledge or other form of security or encumbrance or equity on, over or affecting the Shares or shares held by any member of the Sale Group in any other member of the Sale Group or any of them and there is no agreement or commitment to give or create any and no claim has been made by any person to be entitled to any.

(D) Neither Rosneft’s rights to the Shares or any part thereof nor any other member of the Sale Group’s rights to any shares in any other member of the Sale Group are being challenged either out-of-court or in court proceedings.

(E) The Shares and all shares held by any member of the Sale Group in any other member of the Sale Group have been validly issued and allotted and are fully paid up, excluding for the avoidance of doubt shares in Orenburg and the Orenburg Subsidiary.

(F) There is no agreement or commitment outstanding which calls for the allotment, issue or transfer of, or accords to any person the right to call for the allotment, issue or transfer of, any shares (including the Shares) or debentures in or securities of any member of the Sale Group.

(G) None of the Shares nor any shares held by any member of the Sale Group in any other member of the Sale Group are subject to any rights of pre-emption or restrictions on transfer.

(H) The information given in Part A of Attachment 1 (Basic information about the Company) and Part B of Attachment 1 (Basic information about the Subsidiaries) is true and accurate in all material respects and no member of the Sale Group has any interest in any other body corporate, unincorporated body, undertaking or association which is not a member of the Sale Group and so listed.

(I) No member of the Sale Group has given any power of attorney or other authority (express, implied or ostensible) which is still outstanding or effective.

(J) The copies of the constitutional documents of each member of the Sale Group which are attached to the Current Rosneft Disclosure Letter are complete and accurate in all respects, have attached to them copies of all resolutions and other documents required by law to be so attached and fully set out the rights and restrictions attaching to each class of share capital of the member of the Sale Group to which they relate. Each member of the Sale Group has complied with its constitutional documents in all material respects.

(K) The statutory books (including all registers and minute books) of each member of the Sale Group have been properly kept in all material respects and contain an accurate and complete record of the matters which should be dealt with in those books and no notice or allegation that any of them is incorrect or should be rectified has been received.

(L) There are no circumstances which are reasonably likely to give, or reasonably likely to have given, grounds to any person or authority to make any claims or initiate any proceedings or any other acts seeking to challenge Rosneft's ownership of the Shares or any other member of the Sale Group’s ownership of the shares in any other member of the Sale Group.

(M) All transactions with participatory interests in the charter capital of the Company and each other member of the Sale Group have been concluded in accordance with Russian law (including civil, corporate, antimonopoly and family law) and the obligations under such transactions have been properly performed by the respective parties thereto.

(N) Each member of the Sale Group is validly existing and is a company duly incorporated, and registered under the laws of the Russian Federation and has full power and authority under its constitutional documents and Russian law to conduct its business as it is presently carried on and to own, lease and operate its assets and properties.

(O) No member of the Sale Group has repaid, redeemed or purchased any of its own participatory interest, reduced its charter capital, or agreed to do any of such actions.

(P) No member of the Sale Group:

(i) is the owner of, or has agreed to acquire, any shares, securities or other interests in any company (other than the participatory interest of a member of the Sale Group);

(ii) is or has agreed to become a member of any partnership or other unincorporated association, joint venture or consortium (other than recognised trade associations);

(iii) is a party to any profit sharing agreement; or

(iv) is a party to or the subject of any shareholders' agreement (in Russian – договор об осуществлении прав участников общества).

(Q) No member of the Sale Group has any branch, agency or permanent establishment in any foreign jurisdiction outside the Russian Federation.

1. Company Accounts

(A) The Company Accounts:

(i) were prepared in all material respects in accordance with applicable law and accounting principles and practices generally accepted in the Russian Federation at the time they were audited;

(ii) comply with RAS in force on the date they were prepared (for the avoidance of any doubt, the Company Accounts were prepared in accordance with RAS on a consistent basis subject only to applicable changes caused by changes in accounting standards);

(iii) subject to Paragraph 2(A)(i) and (A)(ii), were prepared on the same basis and in accordance with the same accounting principles and practices, consistently applied, as the audited financial statements for the previous three financial periods; and

(iv) show in all material respects a true view of the assets and liabilities, including all contingent liabilities (if required pursuant to RAS) and the state of affairs of the Company and of the profits or losses of the Company for the accounting period to which the Company Accounts relate.

2. Company Management Information

The numbers set out against each line item in Attachment 6 (Company Management Information) are accurate allowing for a margin of error of 10% (ten per cent.).

3. Events since the Accounts Date

Save in each case for any matter consented to by Seadrill or NADL for the purposes of Clause 8, since the Accounts Date:

(A) there has been no material adverse change in the financial or trading position or prospects of any member of the Sale Group and so far as Rosneft is aware no circumstance has arisen which will give rise to any such change;

(B) the business of each member of the Sale Group has been carried on in the ordinary and usual course and in the same manner (including nature and scope) as in the past in all material respects;

(C) no resolution in general meeting or written resolution of shareholders of any member of the Sale Group has been passed;

(D) no change in the accounting reference period of any member of the Sale Group has been made;

(E) save for the Orenburg Acquisition, no member of the Sale Group has acquired or disposed of or agreed to acquire or dispose of any business or any material asset other than in the ordinary course of business and no contract involving material expenditure by it on capital account has been entered into by any member of the Sale Group; and

(F) no material debtor has been released by any member of the Sale Group on terms that he pays materially less than the book value of any debt and no material debt has been written off or has proved to be irrecoverable to any extent.

4. Contracts and commitments

(A) Copies of all Material Contracts are in Folders 1.2.8, 1.2.15.4.1 to 1.2.15.4.3 (inclusive), 1.2.15.5.1 to 1.2.15.5.6 (inclusive), 2.2.3.4 and 3.2.5.4 in the Rosneft Data Room and those copies are accurate and complete in all respects. Each such agreement was entered into in the ordinary course of business.

(B) Rosneft is not aware of any breach, invalidity, or grounds for determination, rescission, avoidance or repudiation of any Material Contract or of any allegation of such a thing and no notice of termination or intention to terminate has been received by Rosneft (or any member of the Sale Group) in respect thereof.

(C) Other than the Material Contracts referred to in Paragraph 5 (A), no member of the Sale Group is a party to or has any material actual or contingent liability under:

(i) any guarantee, indemnity, surety relationship, promissory note, bill of exchange or letter of credit;

(ii) any material contract for rent, lease, hire, hire purchase, credit sale, conditional sale or purchase by instalments;

(iii) any material agency, distributorship or management agreement;

(iv) any contract or arrangement which, directly or indirectly, restricts its freedom to carry on its business in a material respect in any part of the world in such manner as it may think fit or the ability to transfer the whole or any part of its business;

(v) any joint venture agreement or arrangement, partnership or any other agreement or arrangement under which it participates with any other person in any business in a material respect;

(vi) any material contract or arrangement which relates to matters not within the ordinary business of that member or constitutes a commercial transaction or arrangement deviant from the usual pattern for that member or is not entirely on arm’s length terms;

(vii) any contract or arrangement which is of three years’ or greater duration; or

(viii) any contract or arrangement which can be terminated in the event of any change in the underlying ownership or control of that member.

5. Insurances

(A) Full details of the insurance policies in respect of which any member of the Sale Group has an interest are included in Folders 1.2.15.6, 2.2.3.5 and 3.2.5.5 in the Rosneft Data Room and all such policies are written in the name of the relevant member of the Sale Group, are in full force and effect and are not void or voidable, and no claims are outstanding and, so far as Rosneft is aware, no event has occurred which might give rise to any claim other than included in the Folders in the Rosneft Data Room.

(B) Each member of the Sale Group has maintained adequate insurance cover:

(i) against all risks normally insured against by companies carrying on a similar business in Russia, and in particular has maintained all insurance required by statute (including civil liability insurance under Federal Law of the Russian Federation No. 225-FZ of 27 July 2010 “On Compulsory Insurance of Civil Liability of the Owner of a Hazardous Object for Inflicting Damage as a Result of an Accident at the Hazardous Object”) and adequate environmental liability insurance;

(ii) for the full residual value of their assets (free from any deduction or excess) and for such amount in respect of their businesses as would in the circumstances be prudent.

6. Arrangements between the Sale Group and Rosneft

(A) Full details of any material goods and services (including management and other head office services) supplied by any member of the Retained Group to any member of the Sale Group, or properties provided by any member of the Retained Group for the use by any member of the Sale Group, or supplied or provided (as the case may be) by any member of the Sale Group to or for the use of any member of the Retained Group are contained in Folders 1.2.15.7.1 to 1.2.15.7.3 (inclusive) and 2.2.3.6.1 of the Rosneft Data Room.

(B) Save for the Inter-Company Payables details of which are set out in the Current Rosneft Disclosure Letter, no financial indebtedness (actual or contingent) and no contract or arrangement (in particular, but without limitation, any contract or arrangement in connection with loans or borrowings, Property, Intellectual Property, Business Information, supply arrangements or seconded employees) is outstanding between any member of the Sale Group and any member of the Retained Group.

(C) No member of the Sale Group has agreed to guarantee or provide any securities or indemnities in relation to any debt or obligation of any member of the Retained Group.

7. Bank accounts and borrowings

(A) Full details of all bank accounts maintained by each member of the Sale Group are set out in the Current Rosneft Disclosure Letter.

(B) Full details of all overdraft, loan and other financial facilities available to any member of the Sale Group and the amounts outstanding under them are set out in the Current Rosneft Disclosure Letter and, so far as Rosneft is aware, neither Rosneft nor any member of the Sale Group has done anything whereby the continuance of any of those facilities might be affected or prejudiced. Details of all debentures, charges, guarantees and indemnities given to secure those facilities are set out in the Current Rosneft Disclosure Letter.

(C) The total amount borrowed by each member of the Sale Group from its bankers does not exceed its financial facilities and the total amount borrowed from whatsoever source does not exceed any limitation on its borrowing contained in the relevant member’s constitutional documents.

(D) So far as Rosneft is aware, no event which is or, with the passing of any time or the giving of any notice, certificate, declaration or demand, would become an event of default under or any breach of any of the terms of any loan capital, borrowing, debenture or financial facility of any member of the Sale Group or would entitle any third party to call for repayment prior to normal maturity has occurred or been alleged or is continuing.

(E) No member of the Sale Group has lent or agreed to lend any money which has not been repaid to it or has the benefit of any debt present or future (other than debts due to it in respect of the sale of trading stock in the normal course of trading).

8. Insolvency

(A) No order has been made, no petition has been presented, no meeting has been convened to consider a resolution and no resolution has been passed for the winding up of any member of the Sale Group.

(B) There is no action or request pending to declare any member of the Sale Group bankrupt or insolvent. No member of the Sale Group is subject to any order, petition or resolution with respect to insolvency or bankruptcy proceedings, or any similar actions or proceedings, and, so far as Rosneft is aware, there is no fact, matter, event or circumstance which could give rise to any of the foregoing.

(C) No administration order has been made or petition presented or application made for such an order and no administrator has been appointed or notice given or filed or, so far as Rosneft is aware, step taken or procedure commenced with a view to the appointment of an administrator in respect of any member of the Sale Group.

(D) No administrator (in Russian – арбитражный управляющий) has been appointed in respect of any member of the Sale Group or all or any of its assets.

(E) No member of the Sale Group is insolvent, or has failed to pay, secure or compound for any sum exceeding US$500,000 so as to entitle any of its creditors to initiate insolvency proceedings, or is unable to pay or has stopped paying its debts as they fall due and the value of the assets of any member of the Sale Group is not less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

(F) No unsatisfied judgment is outstanding against any member of the Sale Group.

(G) No Insolvency Event has occurred in relation to any member of the Sale Group, and there are no circumstances which are likely to result in an Insolvency Event in relation to any member of the Sale Group.

9. Licences

(A) So far as Rosneft is aware, all material licences, permits, consents and other permissions and approvals required for the carrying on of the business now being carried on by each member of the Sale Group have been obtained and remain in full force and effect, are not subject to onerous conditions and have at all times been complied with in all material respects.

(B) All reports, returns and information required by law or as a condition of any licence, consent, permit permission or approval to be made or given to any person or authority in connection with the business of any member of the Sale Group have been made or given to the appropriate person or authority.

(C) So far as Rosneft is aware, there is no circumstance which indicates that any licence, consent, permit, permission or approval is reasonably likely to be varied, revoked or not renewed, or which is reasonably likely to confer a right of variation or revocation.

10. Ownership of assets

(A) The particulars of the Land Rigs set out in Part A of Attachment 3 (Land Rigs) are true, complete and accurate in all respects.

(B) Each of the assets included in the Company Accounts or acquired by any member of the Sale Group since the Accounts Date (other than current assets sold, realised or applied in the normal course of trading) and each of the Land Rigs set out in Part A of Attachment 3 (Land Rigs) is owned or in the case of the Leased Rigs leased by a member of the Sale Group free from any Encumbrances and any third party rights other than as disclosed, and each of those assets capable of possession is in the possession of a member of the Sale Group.

(C) Subject to normal wear and tear, all plant and machinery (including fixed plant and machinery and Land Rigs set out in Part A of Attachment 3 (Land Rigs)), vehicles and office equipment used by any member of the Sale Group in connection with its business are capable of being efficiently and properly used in connection with the business of the relevant member of the Sale Group.

(D) No member of the Sale Group has any actual or contingent liability in respect of any activities of the Sale Group which do not form part of or are not related or ancillary to the Drilling Business.

11. Property

(A) The particulars of the Relevant Properties set out in Attachment 2 (Relevant Properties) are true, complete and accurate in all respects.

(B) In relation to each Relevant Property, the relevant member of the Sale Group is the sole and absolute owner of such Relevant Property and has good and marketable title to it. There are no leases, servitudes, rights or means of access, mortgages (or agreements to grant any of the foregoing) or agreements for sale or other disposal, affecting any of the Relevant Properties and, so far as Rosneft is aware, no person has or claims to have any right in respect of any of the Relevant Properties.

(C) There are no outstanding disputes, actions, claims, demands or complaints in respect of any Relevant Property.

(D) No notices, complaints or requirements have been issued or made by any third party or by any competent authority or undertaking exercising statutory or delegated powers in respect of the Relevant Properties and where such notices, complaints or requirements may have a material adverse effect on the business of the Company.

(E) No member of the Sale Group has any actual or contingent liability in respect of any estate or interest in real property whether arising as original tenant, assignee, guarantor or otherwise, other than in respect of the Relevant Properties.

(F) All title documentation relating to the Relevant Properties is in the possession of the relevant Sale Group members.

12. Environmental and Health and Safety

(A) In this Paragraph:

“EHS Claim”	means any investigation, inquiry, warning, notice, order, action, proceedings, litigation, claim or complaint by any regulatory body or any person under EHS Laws or in relation to EHS Matters that relate or apply to the activities, business or assets of the Sale Group;
“EHS Laws”	means all applicable laws of the Russian Federation (including all international treaties ratified by the Russian Federation or which apply in the Russian Federation) insofar as they relate to or apply to EHS Matters and apply to the activities, business or assets of the Sale Group;
“EHS Matters”	means: (i) pollution or contamination; (ii) the disposal, release, spillage, deposit, escape, discharge, leak or emission of, Hazardous Materials or Waste; (iii) exposure of any person to Hazardous Materials or Waste; (iv) abstraction of water; (v) matters related to health and safety at work; (vi) the creation or existence of any noise, vibration, radiation, common law or statutory nuisance, or other adverse impact on the Environment; and/or (vii) any other matters relating to human health and safety or the condition, protection, maintenance, restoration or replacement of the Environment or any part of it;
“EHS Permits”	means any permit, agreement, exemption, approval, registration, certification, licence, consent, declaration, franchise, surcharge, credit, allowance or authorisation in relation to EHS Matters or required by EHS Laws to carry on the business of any member of the Sale Group or in relation to any Relevant Properties or other assets of any member of the Sale Group;
“Environment”	means all or any part of the air (including the air within buildings and the air within other natural or man-made structures above or below ground), water and land and any living organisms or systems supported by those media;
“Hazardous Material”	means anything which alone or in combination with other things is capable of causing harm or damage to the Environment, property or to man or to any other organism supported by the Environment including any hazardous or toxic substances or pollutants, or which is regulated, controlled, prohibited or restricted by law or regulation relating to the Environment or EHS Matters; and
“Waste”	means any substance or material which is regulated, controlled, prohibited or restricted by law or regulation as “waste” including anything which is abandoned, unwanted or surplus irrespective of whether it is capable of being recovered or recycled or has any value; and
“Works”	means the carrying out of: (i) inspection, investigation, sampling and monitoring works; and (ii) any works, including the installation, operation, repair or replacement of plant or equipment, in order to manage, remove, remediate or contain any EHS Matter or in order to prevent an EHS Matter from arising.

(B) All material EHS Permits which are required under EHS Laws for the carrying on of the business of any member of the Sale Group have been obtained in the name of such member of the Sale Group and are valid, subsisting and in full force and effect.

(C) So far as Rosneft is aware, each member of the Sale Group has complied with EHS Law and the EHS Permits at all times in all material respects.

(D) So far as Rosneft is aware:

(i) there have been no acts or omissions of any member of the Sale Group in relation to EHS Matters; and

(ii) no EHS Matters exist or have arisen at or about any of the Relevant Properties;

which could give rise to material fines, penalties, losses, damages, costs, expenses or liabilities or could require any material Works.

(E) No material capital expenditure is proposed in relation to EHS Matters or is likely to be required in order to comply with, extend, renew or obtain any EHS Permit or obtain any new or additional EHS Permit or comply with EHS Laws during the period ending five years from the Signing Date in relation to the carrying on of the business of the Sale Group substantially as it is presently carried on.

(F) So far as Rosneft is aware:

(i) there has been no landfilling or burial of Hazardous Materials or Waste at any Relevant Property; and

(ii) there are no underground storage tanks at any Relevant Property.

(G) So far as Rosneft is aware, there has been no transfer, treatment or disposal of Hazardous Materials or Waste by or on behalf of any member of the Sale Group in circumstances which could give rise to any EHS Claim or any material fines, penalties, losses, damages, costs, expenses or liabilities or could require any material Works.

(H) No member of the Sale Group is currently involved in or subject to any EHS Claim, none is threatened and, so far as Rosneft is aware, none is reasonably likely to arise. No member of the Sale Group has received any notice, communication or information alleging any material liability in relation to EHS Matters or that any material Works are required or stating or suggesting that there is or might be any pollution, contamination or nuisance at or from any Relevant Property.

(I) Complete and accurate copies of all audits, assessments, surveys, searches, reviews, reports and compliance, liability or remediation cost studies or estimates in the possession or control of Rosneft or any member of the Sale Group which relate to:

(i) an outstanding material breach of EHS Law or an EHS Permit by a member of the Sale Group; and/or

(ii) an outstanding material liability or potential material liability for a member of the Sale Group under EHS Law, an EHS Permit or otherwise in respect of EHS Matters;

are included in Folders 1.2.15.13, 1.2.15.14.1 and 2.2.3.12.1 of the Rosneft Data Room.

(J) So far as Rosneft is aware, no member of the Sale Group has any material liability in respect of EHS Matters arising out of or in connection with (i) any act or omission of any former subsidiary, subsidiary undertaking or affiliate or any former or predecessor business or any formerly owned, occupied or used property; or (ii) any contract or other agreement whether relating to the sale or other disposal or grant of any interest or rights in relation to any shares, land or other asset or otherwise.

13. Litigation

(A) Except as claimant in the collection of debts arising in the ordinary course of business, no member of the Sale Group (or any of its directors in connection with the business of the Sale Group) is engaged in any litigation, arbitration or other dispute resolution process, or administrative or criminal proceedings, whether as claimant, defendant or otherwise. No litigation, arbitration or other dispute resolution process, or administrative or criminal proceedings by or against any member of the Sale Group (or any of its directors in connection with the business of the Sale Group) is pending, threatened or expected. So far as Rosneft is aware, there is no fact or circumstance likely to give rise to any litigation, arbitration, mediation or administrative or criminal proceedings.

(B) No member of the Sale Group has received notification that any investigation or inquiry is being or has been conducted by any Authority or other body in respect of the affairs of any member of the Sale Group. Rosneft is not aware of any circumstances which would give rise to such investigation or inquiry.

(C) No member of the Sale Group (or any of its directors in connection with the business of the Sale Group) has committed or is liable for any criminal, illegal, unlawful or unauthorised act or breach of any material obligation or duty whether imposed by or pursuant to statute, contract or otherwise, and no claim that it has or is remains outstanding against any such member.

(D) No inducement (financial or otherwise) has been given to any person by or on behalf of any member of the Sale Group with a view to that member of the Sale Group entering into any contract or other arrangement or obtaining any benefit.

14. Data Protection

(A) Each member of the Sale Group complies in all material respects with all applicable laws, guidelines and industry standards relating to the processing of personal data and privacy, including provisions of the Russian Civil Code and Federal Law of the Russian Federation No. 152-FZ of 27 July 2006 “On Personal Data”.

15. Employment

(A) Save as disclosed in the Current Rosneft Disclosure Letter, no trade union, works council, staff association or other body representing employees is recognised in any way for bargaining, information or consultation purposes in relation to their respective employees by either the Company or any Subsidiary and there are no agreements for collective bargaining or recognition with any such representative body.

(B) No employee or former employee of either the Company or any Subsidiary has brought any existing, or threatened to bring any material claims against them in respect of their employment or any other matter arising from their employment and so far as Rosneft is aware there are no facts or matters which could give rise to such claims.

(C) Each of the Company and the Subsidiaries has complied in all material respects with the terms of all relevant contracts of employment, policies, benefits and applicable laws, codes of conduct, collective agreements and orders and declarations relevant to its respective employees.

(D) Since the Accounts Date no material change has been made or proposed to the remuneration or other terms of employment of any Key Employee or to employees which in aggregate for those employees could have a material effect and no such change and no request for such change is due or expected within 6 months from the Signing Date.

(E) There is no material obligation or material amount due to any employee of the Company or the Subsidiaries in connection with or arising from his employment (or to any other relevant third party in respect of any such employee) which is in arrears or unsatisfied at the Signing Date (other than his normal salary for part of the month current).

(F) Full details of any (i) non-cash benefits or (ii) variable pay arrangements including bonus and commission arrangements or (iii) long term incentive or share option arrangements which in each case are provided to employees of the Company and the Subsidiaries have been disclosed.

(G) No Key Employee has given or received a notice in writing terminating his/her employment or engagement or is entitled (without giving prior notice) to terminate his/her employment or engagement with the relevant member of the Sale Group or will become so entitled by reason of the contribution of the Shares under this Agreement.

(H) No employee of either the Company or any Subsidiary is a party to or entitled to become a party to any agreement or arrangement that entitles such employee to receive from any member of the Sale Group any compensation on termination of employment or service other than as prescribed by mandatory provisions of the Russian law.

16. Pensions

(A) Other than any compulsory state pension scheme and the disclosed arrangements in relation to Neftegarant, there is no arrangement to which either the Company or the Subsidiaries contribute or may be liable to contribute under which benefits of any kind are payable to or in respect of any of their employees or former employees on retirement, death, disability, the attainment of a specified age or on the completion of a specified number of years’ service.

(B) All contributions by the Company or the Subsidiaries or by any of their employees in respect of any state pension scheme, Neftegarant or any other pension arrangement to which it has or may be liable to contribute have at all times been made in accordance with the relevant provisions of the relevant scheme and those which fall due for payment before Completion will have been paid by that date.

(C) The pension schemes for the employees of the Company and the Subsidiaries have been operated in all material respects in accordance with all applicable laws, their terms and have all applicable governmental and regulatory approvals which are necessary.

(D) Any pension schemes for the employees of the Company and the Subsidiaries are appropriately funded in accordance with local laws and have sufficient assets to meet their liabilities in accordance with the applicable accounting standards’ valuation principles.

(E) There are not in respect of any pension arrangements to which the Company or any Subsidiary contributes or has contributed or may become liable to contribute any material actions, suits or claims existing or, so far as Rosneft is aware, pending or threatened.

17. Tax

The Accounts and Tax

(A) The Company does not have any liability in respect of Tax (whether actual or contingent) in respect of the accounting period of the Company to which the Company Accounts relate that is not fully disclosed and provided for in the Company Accounts in each case as prepared in accordance with the accounting standards relevant for such Accounts.

Tax returns, disputes, records and claims, etc.

(B) Each member of the Sale Group has duly filed all Tax returns, forms and/or reports which are required under applicable law to be filed within the applicable time limits and such returns, forms and/or reports are correct and duly account for all transactions carried out by the Sale Group which are required under applicable law to be disclosed in such returns, forms and/or reports.

(C) All Tax (including any interest, penalties and surcharges) due and payable by each member of the Sale Group in accordance with applicable law (including those required to have been paid by way of withholding of Tax) prior to Completion Date have been paid on time and in full.

(D) There is no dispute or disagreement outstanding nor is any contemplated at the date of this Agreement with any Tax Authority regarding the Tax affairs of any member of the Sale Group and there are no circumstances which make it likely that any such dispute or disagreement will commence.

(E) Each member of the Sale Group has kept and maintained all records relevant to its Tax affairs as required by applicable law. However no claim may be made under this warranty in respect of any unavailability of Tax Relief.

(F) Each member of the Sale Group has duly submitted all claims and disclaimers or withdrawals of claims relating to Tax which have been assumed to have been made for the purposes of its Accounts.

(G) The amount of Tax chargeable on any member of the Sale Group under any return or assessment that remains open to audit or enquiry as at the Completion Date has not, to any material extent, depended on any concession, agreement or other formal or informal arrangement with any Tax Authority. No transaction in respect of which any consent, ruling, advanced agreement, confirmation or clearance (each a ruling) was required to be sought from any Tax Authority has been entered into or carried out by any member of the Sale Group without such ruling having first been properly obtained and all transactions in respect of which any consent, ruling, advanced agreement, confirmation or clearance (each a ruling) was obtained from any Tax Authority were carried out in accordance with the terms prescribed by such ruling.

(H) No member of the Sale Group has received any notice from any Tax Authority which requires or will or may require such member to withhold Tax from any payment made since the Accounts Date or which will or may be made after the date of this Agreement.

(I) No member of the Sale Group benefits from any preferential Tax regime, granted by law or by special authorisation issued by any Tax Authority or by any other authority, which could in whole or in part be affected by the signature of this Agreement.

Tax avoidance, etc.

(J) No member of the Sale Group is party to any transaction which is fraudulent or a sham or which has as its main purpose or one of its main purposes the avoidance of a liability to Tax.

(K) No member of the Sale Group has violated, breached or infringed any anti-abuse or similar rule in relation to Tax in any jurisdiction where any relief from Tax has been claimed for the benefit of any member of the Sale Group under domestic laws or any applicable double taxation treaty.

Value added tax

(L) Each member of the Sale Group has complied in all material respects with its obligations relating to VAT. Each member of the Sale Group that is required to be registered for the purposes of VAT has been so registered at all times that it has been so required, and such registration is not subject to any conditions imposed by or agreed with the relevant Tax Authority.

(M) Full, complete, correct and up-to-date records, invoices and other documents relating to VAT have been made, given, obtained and kept in each case in accordance with applicable law.

Duties, etc.

(N) All VAT, import and export duties, royalties and other taxes or charges payable by any member of the Sale Group to any Tax Authority relating to the production of hydrocarbons or the importation or export of goods and assets and all excise duties payable to any Tax Authority in respect of any assets (including trading stock) imported, exported, produced, owned or used by any member of the Sale Group have been duly declared and paid in full.

Deductions and withholdings

(O) Each member of the Sale Group has made all deductions in respect, or on account, of any Tax from any payments made by it which it is obliged to make under applicable law and has accounted in full to the appropriate authority for all amounts so deducted.

Residence

(P) Each member of the Sale Group is resident for Tax purposes in the Russian Federation and the Russian Federation is the only jurisdiction whose Tax Authorities seek to charge Tax on the worldwide profits or gains of such member. No member of the Sale Group has any agency, branch or permanent establishment in any jurisdiction except as the same are branches or representative offices as specified in Attachment 1 (Sale Group Information) in relation to such member.

Tax Grouping

(Q) Except as provided in its Accounts, no member of the Sale Group is, nor will it be, under any obligation to make any payment to anyone (including but not limited to members of the Retained Group but excluding any member of the Sale Group) under any Tax grouping, Tax sharing, fiscal consolidation or similar arrangements.

Non-arm’s length transactions

(R) No member of the Sale Group is or has been a party to any transaction or arrangement under which it may be required to pay for any asset or services or facilities of any kind an amount which is in excess of the market value of that asset or services or facilities or will receive any payment for any asset or services or facilities of any kind that it has supplied or provided or is liable to supply or provide which is less than the market value of that asset or services or facilities and in consequence of which it is or will be liable to Tax in relation to such excess or undervalue, and for the purposes of this warranty, market value shall be taken to mean market value determined for the purposes of and in accordance with any requirements of applicable transfer pricing legislation and this warranty shall apply only to any transaction or arrangement which falls under the transfer pricing regulation.

18. Intellectual Property

(A) Details of all registered Intellectual Property and material unregistered Intellectual Property owned or used by any member of the Sale Group are set out in the Current Rosneft Disclosure Letter and the specified member of the Sale Group:

(i) is the sole legal and beneficial owner of such Intellectual Property; or

(ii) uses such Intellectual Property pursuant to and within the terms and provisions of a valid, subsisting written contractual agreement or licence to which it is a party.

(B) All renewal, application and other official registry fees and steps required for the maintenance, protection and enforcement of the Intellectual Property owned by any member of the Sale Group have been paid or taken.

(C) Copies of all material licences, agreements and arrangements relating to Intellectual Property entered into by any member of the Sale Group are set out in Folders 1.2.15.19 and 2.2.3.11 of the Rosneft Data Room and no such material licences, agreements or arrangements are capable of termination as a result of the change in the underlying ownership or control of any member of the Sale Group.

(D) No member of the Sale Group nor, so far as Rosneft is aware, any other party is in material breach of any of the licences, agreements and arrangements disclosed pursuant to Paragraph 19(A).

(E) So far as Rosneft is aware, no third party is infringing or making unauthorised use of any Intellectual Property or rights in Business Information owned by any member of the Sale Group (or owned by any member of the Retained Group and relating to the business of any member of the Sale Group).

(F) So far as Rosneft is aware, the activities of the Sale Group do not infringe or make unauthorised use of, and have not infringed or made unauthorised use of, the Intellectual Property of any third party.

(G) No member of the Retained Group owns or is licensed to use any Intellectual Property or information which is also used by any member of the Sale Group.

(H) None of the Intellectual Property is the subject of any litigation, dispute, claim, opposition or administrative proceeding and, so far as Rosneft is aware, no such litigation, dispute, claim, opposition or administrative proceeding is expected or reasonably likely.

19. Information Technology

(A) Details of all material Information Technology which is owned by any member of the Sale Group or which is used by, or on behalf of, any member of the Sale Group are set out in the Current Rosneft Disclosure Letter and the specified member of the Sale Group:

(i) is the sole legal and beneficial owner of such Information Technology free from all Encumbrances; or

(ii) uses such Information Technology pursuant to and within the terms and provisions of a valid, subsisting written contractual arrangement or licence to which it is a party.

(B) Copies of all material agreements relating to Information Technology entered into by any member of the Sale Group are set out in Folders 1.2.15.19 and 2.2.3.11 in the Rosneft Data Room and no such material agreements are capable of termination as a result of the change in the underlying ownership or control of any member of the Sale Group.

(C) No member of the Sale Group nor, so far as Rosneft is aware, any other party is in material breach of any of the agreements disclosed pursuant to Paragraph 20(B).

(D) None of the Information Technology is the subject of any litigation, dispute, claim, opposition or administrative proceeding and, so far as Rosneft is aware, no such litigation, dispute, claim, opposition or administrative proceeding is expected or reasonably likely.

(E) There has been no material disruption to the commercial activities of the Sale Group (taken as a whole) in the six months prior to the Signing Date which has been caused only by any failure or breakdown of any Information Technology used by the Sale Group.

20. Anti-corruption

21.1 For the purposes of this Paragraph 21:

“Anti-Corruption Rules” means: (i) all laws, regulations and administrative requirements in the Russian Federation relating to the prevention and/or penalisation of bribery, money laundering and other forms of corrupt behaviour or practices or terrorism and anti-corruption internal policies, by-laws and other similar documents adopted by any member of the Sale Group as disclosed in Folder 4.1 of the Rosneft Data Room; and; (ii) the Company Policy for Combating Involvement in corrupt Practices put into effect at the Company under order dated 31 August 2012 No.199;

“associated person” means any officer, employee, consultant, agent or other person who performs services or otherwise acts for or on behalf of any member of the Sale Group;

“financial or other advantage” means any payment or other advantage in whatever form and however characterised (including any bribe, rebate, pay-off, influence payment, kickback, inducement or gift);

“government official” means: (i) any person that permanently, temporarily or under special authority performs the functions of a representative of any state or municipal authority; (ii) any person that permanently, temporarily or under special authority performs administrative or organisational functions of any public authority, local authority, national or municipal body, the Armed Forces of the Russian Federation or any other military unit of the Russian Federation; (iii) any officer or employee of a commercial organisation that is fully or partially owned by the state or municipal authority; or (iv) any candidate / applicant to fill any public or municipal office or post in the civil or municipal service, including any post in the government;

“public official” means: (i) any official or employee of a public body; or (ii) any candidate / applicant to fill any office in a public body.

“unlawful” in relation to any financial or other advantage, means that the offer, giving, promise, request or acceptance of, or agreement to receive, such financial or other advantage is or is reasonably likely to be in breach of Anti-Corruption Rules;

21.2 Except as disclosed in the Current Rosneft Disclosure Letter, none of the members of the Sale Group, their respective officers, directors or employees has, and so far as Rosneft is aware, none of the Sale Group’s other associated persons has, at any time directly or indirectly:

(A) offered, given, promised or paid any unlawful financial or other advantage to any person; or

(B) requested, agreed to receive or accepted any unlawful financial or other advantage or acted or omitted to act (or influenced another to act or omit to act) in anticipation or in consequence of doing so; or

(C) made or offered to make any payment, or given or offered to give anything of value, to any government official or public official, in order to secure any improper advantage or to obtain or retain business for the Sale Group.

21.3 The Sale Group has such systems and controls as are necessary to ensure compliance by it and its associated persons with Anti-Corruption Rules and, so far as Rosneft is aware, there has been no breach by the Sale Group or any of its associated persons of any such systems or controls.

21.4 Except as disclosed in the Current Rosneft Disclosure Letter, neither Rosneft nor any member of the Sale Group has within the last six years received any enquiry regarding or report or complaint of, or initiated any investigation or disciplinary proceedings in connection with, any breach or possible breach of Anti-Corruption Rules by any member of the Sale Group or any of its associated persons.

21.5 Except as disclosed in the Current Rosneft Disclosure Letter, neither Rosneft nor any member of the Sale Group has within the last six years, been subject to any investigation, inquiry, enforcement proceedings or sanction relating to any member of the Sale Group by any Authority relating to Anti-Corruption Rules.

21. Broker fees

No member of the Sale Group is liable for any finder's fee, brokerage or other commission or advisers' fees, costs or expenses in connection with this Agreement or any other Transaction Document.

22. Effect of the acquisition

The entry into and performance of this Agreement and other Transaction Documents will not:

(A) result in any member of the Sale Group losing the benefit of any of the Relevant Properties, any Land Rig or any other material asset or material right or privilege which it now enjoys;

(B) conflict with, or result in a breach of, or give rise to an event of default under, or require the consent of any person under any agreement, contract, arrangement, judgment, order, decree, award, demand, ruling, injunction or decision to which any member of the Sale Group is subject or bound; or

(C) result in any payment or other benefit to any employee of any member of the Sale Group.

23. Compliance with Laws

So far as Rosneft is aware, no member of the Sale Group has any liability, or is liable to give up or surrender any right or asset, as a result of any fraudulent act or omission on the part of any member of the Sale Group or any employee of the Sale Group in their capacity as such an employee.

24. Competition

25.1 So far as Rosneft is aware, no member of the Sale Group is or has over the course of the last five years:

(A) insofar as it may materially affect the business of the Sale Group, the NADL Group or the Seadrill Group, been a party to or is or has been concerned in any agreement or arrangement or is conducting or has conducted itself (whether by omission or otherwise) in a manner which:

(i) infringes any anti-trust legislation in any jurisdiction in which any member of the Sale Group has assets or carries or intends to carry on business or where its activities may have an effect; or

(ii) is unenforceable or void (whether in whole or in part) or renders any other member of the Sale Group or any Key Employees liable to civil, criminal or administrative proceedings by virtue of any anti-trust legislation or any undertakings given or orders made under such legislation in any jurisdiction in which any member of the Sale Group has assets or carries on business;

(B) given an undertaking to, or is subject to any order of or investigation by, or has received any request for information from, any court or Authority (including any national competition authority and any sectoral regulator) under any anti-trust legislation in any jurisdiction in which any member of the Sale Group has assets or carries on business; or

(C) received notice that any enforcement actions by any Authority are in progress or contemplation relating to any breach of any relevant statutory or licence requirements or conditions of the Sale Group.

Part B

Orenburg Warranties

1. The Company is the sole owner of the Orenburg Shares, the Orenburg Shares have been lawfully acquired and there are no Encumbrances existing or threatening to occur with respect to the Orenburg Shares.

2. The waivers of all members of Orenburg, other than the Orenburg Sellers (and of Orenburg, as appropriate), from their pre-emptive rights to purchase the Orenburg Shares or part thereof in connection with the Orenburg Acquisition were duly obtained and were not revoked before the Orenburg Completion Date.

3. Orenburg is the sole owner of 100% (one hundred per cent.) of the shares in the Orenburg Subsidiary (hereinafter, the “OrenburgSubsidiary Shares”), the Orenburg Subsidiary Shares have been lawfully acquired and there are no Encumbrances existing or threatening to occur with respect to the Orenburg Subsidiary Shares and there are no agreements, understandings or commitments creating such Encumbrances.

4. As at the Orenburg Completion Date, the Orenburg Sellers had full right and authority to sell the Orenburg Shares.

5. Orenburg and the Orenburg Subsidiary are duly incorporated and existing and there are no grounds for winding up or dissolution of Orenburg or the Orenburg Subsidiary.

6. All applicable tax obligations of Orenburg and the Orenburg Subsidiary have been duly satisfied by Orenburg or the Orenburg Subsidiary, in due time, to the extent required by applicable law and in all jurisdictions.

7. All accounting books, records and other statements of Orenburg and the Orenburg Subsidiary are up-to-date and are kept in accordance with applicable law in all material respects.

8. The financial statements and tax returns of Orenburg and the Orenburg Subsidiary are kept and filed in accordance with applicable law in all material respects.

9. There are no current guarantees, warranties, or indemnities other than indemnities made under drilling contracts in the normal course of business, or security obligations made by Orenburg or the Orenburg Subsidiary with respect to the obligations of any person, other than Orenburg, the amount of which in each case (separately or jointly under several interrelated obligations) exceeds RUB 15,000,000.

10. There are no actual obligations of Orenburg or the Orenburg Subsidiary that have occurred in the normal course of business the amount of which, in each case, exceeds RUB 15,000,000  (separately or jointly under several interrelated obligations) and there are no other actual obligations of Orenburg or the Orenburg Subsidiary the amount of which, in each case, exceeds RUB 15,000,000  (separately or jointly under several interrelated obligations) other than those disclosed.

11. Orenburg and the Orenburg Subsidiary have no accounts payable the amount of which, in each case, exceeds RUB 15,000,000  (separately or jointly under several interrelated obligations) other than those disclosed.

12. Orenburg’s and the Orenburg Subsidiary’s assets constitute all assets necessary to efficiently operate the business of Orenburg and the Orenburg Subsidiary in all material respects.

13. Each agreement with respect to a transaction the value of which exceeds RUB 25,000,000, to which any of Orenburg or the Orenburg Subsidiary is a party, is valid and enforceable and is complied with by Orenburg or the Orenburg Subsidiary and, to the best of Rosneft’s knowledge, by its counterparty in all material respects.

14. There are no agreements entered into by Orenburg or the Orenburg Subsidiary with any member of the Retained Group, other than as disclosed.

15. There are no current proceedings with respect to Orenburg or the Orenburg Subsidiary the amount of which exceeds RUB 15,000,000  and there are no written notices of pending proceedings with respect to Orenburg or the Orenburg Subsidiary the amount of which exceeds RUB 15,000,000  other than those disclosed.

16. Orenburg and the Orenburg Subsidiary are solvent and do not qualify for insolvency as defined by Russian law.

17. All immovable property and Material Orenburg Movable Property is owned by Orenburg or the Orenburg Subsidiary (as applicable) under full unencumbered ownership title or lease (and there are no agreements, understandings or commitments creating such Encumbrances) other than disclosed and/or otherwise lawfully operated and is suitable for use for its intended purposes and is in good repair and technical condition subject to normal depreciation.

18. The total amount payable by Orenburg and the Orenburg Subsidiary under all agreements entered into with any employees or other natural persons does not exceed RUB 15,000,000  for any period of 12 months (other than salaries payable to such employees in the normal course of business).

19. Each of Orenburg and the Orenburg Subsidiary has all licenses and other permits required to carry out its business in all material respects.

20. Orenburg and the Orenburg Subsidiary have complied and continue to comply with environment protection laws in all material respects and Orenburg and the Orenburg Subsidiary have no environmental obligations such as fines and penalties assessed by environmental authorities in the course of inspections or outstanding orders of inspecting environmental authorities.

21. Orenburg and the Orenburg Subsidiary have made no guarantees or indemnities other than indemnities made under drilling contracts in the normal course of business, warranties or other securities with respect to the obligations of their subsidiaries or third parties, under which outstanding indebtedness exists.

22. The value of Orenburg’s assets comprising immovable property located in the Russian Federation constitutes no more than 50% (fifty per cent.) of the Orenburg asset value.

23. Orenburg and the Orenburg Subsidiary have not disposed of or Encumbered any property after 1 January 2014 (other than any property disposable in the normal course of business).

24. Lease Agreements No. ДА-212/32-14/250 and No. ДА-212/33-14/251 entered into by Orenburg with respect to drilling rigs, the lease agreements with respect to which (No. ДЛ212/01-12 and No. ДЛ212/02-12) were terminated in 2014, have been made on the terms and conditions not less favourable than the terms and conditions of other lease agreements entered into by Orenburg and the Orenburg Subsidiary effective as at 1 January 2014.

25. Orenburg Seller 1 obtained conditional consent of the FAS No. ЦА/12008/14 dated March 31, 2014 to effect the Orenburg Acquisition.

26. Since the Orenburg Completion Date no facts, circumstances or events have arisen or occurred and nothing has been done or omitted to be done in relation to Orenburg, the Orenburg Subsidiary or their respective operations, assets and businesses which would have given rise to a breach of any of the Company Warranties had the Company Warranties been given in respect of or applied to Orenburg, the Orenburg Subsidiary or their respective operations, assets and businesses for the period starting from the Orenburg Completion Date.

27. No facts, circumstances or events have arisen or occurred and nothing has been done or omitted to be done by or in relation to Orenburg, the Orenburg Subsidiary or their respective operations, assets and businesses which would give rise to a breach of any of the Company Warranties set out in paragraphs 12(D), 14(C), 15, 16(C), 17(C) or (D), 18, 21, 23(B), 24 or 25 of Part A of Schedule 5 insofar as such warranties relate to compliance in all material respects with applicable law or regulation.

For the purposes of this Part B of Schedule 5:

“material” used with respect to the transaction value or the amount of potential liability means, respectively, the transaction value or amount of potential liability equal to or exceeding RUB 15,000,000  (or an equivalent amount in any other currency at the exchange rate of the Central Bank of the Russian Federation as at the date of relevant transaction or circumstances which served as grounds for the occurrence of liability).

Schedule 6
(NADL Representations and Warranties)

NADL Warranties

1. Consideration Shares and the Subscription Shares

(S) The Consideration Shares and the Subscription Shares will be validly allotted and issued and will on issue be credited as fully paid, with the same rights and ranking pari passu in all respects with the existing fully paid common shares of par value US$5 each in the share capital of NADL.

(T) The issue of the Consideration Shares and the Subscription Shares as well as the entry into and consummation of the Transactions will comply with all agreements to which any member of the NADL Group is a party or by which it or any of them or any of their respective properties or assets is bound and will not infringe any restrictions or the terms of any contract, obligation or commitment of any member of the NADL Group.

(U) NADL has the power to allot and issue the Consideration Shares and the Subscription Shares in the manner contemplated by this Agreement without any sanction or consent by members of NADL or any class of them and, subject to the passing of the resolutions of the board of directors of NADL referred to in Schedule 3 and Part B of Schedule 4 authorising the allotment and issue of the Consideration Shares and the Subscription Shares, and (save for the BMA Consent which will be outstanding as at the Signing Date and subject to customary conditions as at the Completion Date), there are no consents or approvals required by NADL for the allotment and issue of the Consideration Shares and the Subscription Shares which have not been irrevocably and unconditionally obtained.

2. NADL

(A) The information given in Attachment 5 (Basic information about NADL) is true and accurate in all material respects.

3. Assets; Intellectual Property

(A) NADL has full legal title (including ownership and lease rights) to or otherwise has the right to use, free from any current Encumbrances (or Encumbrances which, so far as Seadrill is aware, will come into effect after Completion) in relation to the real estate and material moveable assets used by NADL and there is no agreement, arrangement or obligation to create such Encumbrances and no claim has been received by NADL in respect of any such Encumbrance.

(B) Subject to normal wear and tear, all of the Offshore Rigs owned by the NADL Group are capable of being efficiently and properly used in connection with the NADL business.

(C) The assets of NADL comprise all such assets necessary for the carrying out of the business of NADL in all material respects in the manner in, and the extent to, which it is presently conducted. The ownership or use by NADL of the Offshore Rigs does not infringe the Intellectual Property of any third party to a material extent.

4. Tax

The Accounts and Tax

(A) No member of the NADL Group has any liability in respect of Tax (whether actual or contingent) in respect of its last accounting period ended prior to the Completion Date that is not fully disclosed and provided for in the accounts relating to such period, in each case as prepared in accordance with the accounting standards relevant for such accounts.

Tax returns, disputes, records and claims, etc.

(B) Each member of the NADL Group has duly filed all Tax returns, forms and/or reports which are required under applicable law to be filed within the applicable time limits and such returns, forms and/or reports are correct and duly account for all transactions carried out by the NADL Group which are required under applicable law to be disclosed in such returns, forms and/or reports.

(C) All Tax (including any interest, penalties and surcharges) due and payable by each member of the NADL Group in accordance with applicable law (including those required to have been paid by way of withholding of Tax) prior to Completion Date have been paid on time and in full.

(D) There is no dispute or disagreement outstanding nor is any contemplated at the date of this Agreement with any Tax Authority regarding the Tax affairs of any member of the NADL Group and there are no circumstances which make it likely that any such dispute or disagreement will commence.

(E) The amount of Tax chargeable on any member of the NADL Group under any return or assessment that remains open to audit or enquiry as at the Completion Date has not, to any material extent, depended on any concession, agreement or other formal or informal arrangement with any Tax Authority. No transaction in respect of which any consent, ruling, advanced agreement, confirmation or clearance (each a ruling) was required to be sought from any Tax Authority has been entered into or carried out by any member of the NADL Group without such ruling having first been properly obtained and all transactions in respect of which any consent, ruling, advanced agreement, confirmation or clearance (each a ruling) was obtained from any Tax Authority were carried out in accordance with the terms prescribed by such ruling.

(F) No member of the NADL Group benefits from any preferential Tax regime, granted by law or by special authorisation issued by any Tax Authority or by any other authority, which could in whole or in part be affected by the signature of this Agreement.

Tax avoidance, etc.

(G) No member of the NADL Group is party to any transaction which is fraudulent or a sham or which has as its main purpose or one of its main purposes the avoidance of a liability to Tax.

(H) No member of the NADL Group has violated, breached or infringed any anti-abuse or similar rule in relation to Tax in any jurisdiction where any relief from Tax has been claimed for the benefit of any member of the NADL Group under domestic laws or any applicable double taxation treaty.

Value added tax

(I) Each member of the NADL Group has complied in all material respects with its obligations relating to VAT. Each member of the NADL Group that is required to be registered for the purposes of VAT has been so registered at all times that it has been so required, and such registration is not subject to any conditions imposed by or agreed with the relevant Tax Authority.

(J) Full, complete, correct and up-to-date records, invoices and other documents relating to VAT have been made, given, obtained and kept in each case in accordance with applicable law.

Duties, etc.

(K) All VAT, import and export duties, royalties and other taxes or charges payable by any member of the NADL Group to any Tax Authority relating to the production of hydrocarbons or the importation or export of goods and assets and all excise duties payable to any Tax Authority in respect of any assets (including trading stock) imported, exported, produced, owned or used by any member of the NADL Group have been duly declared and paid in full.

Deductions and withholdings

(L) Each member of the NADL Group has made all deductions in respect, or on account, of any Tax from any payments made by it which it is obliged to make under applicable law and has accounted in full to the appropriate authority for all amounts so deducted.

Residence

(M) Each member of the NADL Group is resident for Tax purposes in the jurisdiction of its incorporation, which is the only jurisdiction whose Tax Authorities seek to charge Tax on the worldwide profits or gains of such member. No member of the NADL Group has any agency, branch or permanent establishment in any jurisdiction except that North Atlantic Norway Ltd has a branch in Norway and North Atlantic Drilling UK Ltd has branches in the Republic of Ireland and in the Russian Federation.

Tax Grouping

(N) Except as provided in its Accounts, no member of the NADL Group is, nor will it be, under any obligation to make any payment to anyone (including but not limited to members of the Seadrill Group but excluding any member of the NADL Group) under any Tax grouping, Tax sharing, fiscal consolidation or similar arrangements.

Non-arm’s length transactions

(O) No member of the NADL Group is or has been a party to any transaction or arrangement under which it may be required to pay for any asset or services or facilities of any kind an amount which is in excess of the market value of that asset or services or facilities or will receive any payment for any asset or services or facilities of any kind that it has supplied or provided or is liable to supply or provide which is less than the market value of that asset or services or facilities and in consequence of which it is or will be liable to Tax in relation to such excess or undervalue, and for the purposes of this warranty, market value shall be taken to mean market value determined for the purposes of and in accordance with any requirements of applicable transfer pricing legislation and this warranty shall apply only to any transaction or arrangement which falls under the transfer pricing regulation.

5. Financial Position

(A) NADL has not agreed to guarantee or provide any security or indemnity in relation to any debt or obligation of any person who is not a member of the NADL Group in each case or collectively exceeding US$10,000,000.

(B) NADL is not insolvent, and no insolvency or administration proceedings of any kind have been instituted in respect of NADL and, NADL is not aware of any reasons for initiating any procedures under applicable law which may result in NADL being insolvent.

6. Contracts

(A) NADL is not aware of any material breach, invalidity, or grounds for determination, rescission, avoidance or repudiation of any NADL Material Contract to which NADL is a party or of any allegation of such a thing and no notice of termination or intention to terminate has been received by NADL (or any member of the NADL Group) in respect thereof.

(B) Save as disclosed in the Current NADL Disclosure Letter, there are no material contracts between NADL and Seadrill or any member of the Seadrill Group or any NADL contract or arrangement in which any director of any member of the Seadrill Group or any person connected with any such director is interested, either directly or indirectly.

(C) Save as disclosed in the Current NADL Disclosure Letter, since the Accounts Date, NADL has not (unless in all material respects in the ordinary course of business) (i) entered into any material contract, (ii) acquired or disposed of any material asset; (iii) changed any material terms of employment of, or dismissed, any NADL Key Employee; or (iv) taken any other material action with respect to NADL's business.

7. Compliance with Law

(D) So far as NADL is aware, NADL has complied and is in compliance with environmental laws applicable to it, in each case in all material respects. So far as NADL is aware, NADL is not obliged to pay any material fines or penalties for any violation of such environmental laws.

(E) So far as NADL is aware, all material licences, permits, consents and other permissions and approvals required for the carrying on of the business now being carried on by NADL in all material respects have been obtained and remain in full force and effect, are not subject to onerous conditions and have at all times been complied with in all material respects. So far as NADL is aware, there is no circumstance which indicates that any such licence, permit, consent, permission or approval is reasonably likely to be varied, revoked or not renewed, or which is reasonably likely to confer a right of variation or revocation.

8. No litigation

Save as disclosed in the Current NADL Disclosure Letter, no member of the NADL Group is engaged in any litigation, arbitration or other dispute resolution process, or administrative or criminal proceedings, whether as claimant, defendant or otherwise the amount of which exceeds US$10,000,000. So far as NADL is aware, no such litigation, arbitration or other dispute resolution process, or administrative or criminal proceedings by or against any member of the NADL Group is pending, threatened or expected.

9. Securities Laws

(A) The Prospectus and Bonds Prospectus contained all of the information required to be included in it by applicable law and regulation. Since 29 January 2014, NADL has made all filings it has been required to make under, and complied with, all applicable rules of the New York Stock Exchange, the Bermuda Monetary Authority and any other securities exchange whose rules apply to NADL.

(B) NADL’s common shares are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and NADL has taken no action that is likely to have the effect of terminating the registration of the common shares under the Exchange Act. NADL has filed all material reports, forms and other documents (“SEC Documents”) required to be filed by it with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Act of 1933 (“Securities Act”) and the Exchange Act. Such SEC Documents (a) were filed on a timely basis; (b) at the time filed, were in compliance in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the rules of the SEC thereunder; and (c) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact in order to make the statements in such SEC Documents, in the light of the circumstances under which they were made, not misleading.

(C) The offer, sale and issuance of the Consideration Shares does not require registration under the Securities Act, any state securities laws or any foreign securities laws.

10. Share options

No member of the NADL Group has, or is proposing to introduce, any share incentive scheme, share option scheme or profit sharing, bonus, commission or other such incentive scheme for any directors or employees, save as disclosed in the Original NADL Disclosure Letter.

Schedule 7
(Limitations on Liability)

Part A: Liability of Rosneft

1. Limitation on quantum and general

1.3 Rosneft shall not be liable under this Agreement in respect of any individual claim (except under Clauses 2.1, 2.5, 2.11, 3.5(A), 3.6(B), 3.7(A), 5.7(A), 5.8(B), 5.9(A), 5.16(A), 5.17(B), 5.23, 5.29 to 5.33 (inclusive), 10.8, 11, 16.9, 17.1 to 17.3 (inclusive), 19, 20.1 and 29.1 to 29.5 (inclusive)):

(A) for less than ***** (excluding interest and costs); and

(B) unless and until the aggregate amount of all such individual claims exceeds *****, in which case Rosneft shall be liable for the whole amount, and not only in respect of the excess over such sum.

1.4 The aggregate liability of Rosneft in respect of all claims made under this Agreement (but excluding any Orenburg Warranty Claim and any claim in respect of a Fundamental Rosneft Warranty and claims under Clauses 2.1, 2.5, 2.11, 3.5(A), 3.6(B), 3.7(A), 4, 5.7(A), 5.8(B), 5.9(A), 5.16(A), 5.17(B), 5.23, 5.29 to 5.33 (inclusive), 10.8, 11, 16.9, 17.1 to 17.3 (inclusive), 19 and 20.1) shall not in any event exceed an amount equal to 50% (fifty per cent.) of the Consideration.

1.5 The aggregate liability of Rosneft in respect of all Orenburg Warranty Claims shall not in any event exceed:

(A) in respect of all claims under Paragraph 1 of Part B of Schedule 5, *****; and

(B) in respect of all other claims, *****.

1.6 The aggregate liability of Rosneft in respect of all claims made in respect of a Fundamental Rosneft Warranty and claims under Clauses 2.1, 2.5, 2.11, 4, 5.23, 10.8, 11, 16.9 and 19 shall not in any event exceed an amount equal to 100% (one hundred per cent.) of the Consideration.

1.7 The aggregate liability of Rosneft in respect of all claims made under Clauses 17.1 to 17.3 (inclusive) shall not in any event exceed *****.

1.8 Each provision of this Part A of Schedule 7 shall be read and construed without prejudice to each of the other provisions of this Part A of Schedule 7.

1.9 Nothing in this Schedule shall or shall be deemed to relieve or abrogate any member of the Seadrill Group or any member of the NADL Group of any common law or other duty to mitigate any loss or damage.

1.10 The financial limitations contained in Paragraphs 1.1, 1.3 and 1.5 above shall not apply in the event of any fraudulent act or omission on the part of Rosneft.

2. Time limits for bringing claims

2.12 No claim shall be brought against Rosneft under this Agreement (other than Clauses 3, 5, 16.9, 20, 21, 24, 27 and 29) unless a member of the Seadrill Group or a member of the NADL Group shall have given to Rosneft written notice of such claim specifying (in reasonable detail) the matter which gives rise to the claim, the nature of the claim and the amount claimed in respect thereof (if known) and a reasonable estimate of the loss thereby alleged to have been suffered by it:

(F) subject to Paragraphs 2.1(B), 2.1(C), 2.1(D) and 2.1(E) below, on or before the second (2^nd) anniversary of the Completion Date;

(G) in respect of any claims under the Fundamental Rosneft Warranties, Environmental Warranties or the Anti-Corruption Warranties, on or before the third (3rd) anniversary of the Completion Date;

(H) in respect of any Orenburg Warranty Claim, on or before the first (1st) anniversary of the Completion Date, save for any Orenburg Warranty Claim under the Orenburg Warranty set out in Paragraph 27 of Part B of Schedule 5;

(I) in respect of any claims under the Rosneft Tax Warranties on or before the later of the third (3rd) anniversary of the Completion Date and the date following three months after the expiry of the period specified by applicable law during which an assessment of the relevant liability to Tax may be issued by the relevant Tax Authority;

(J) in respect of any claims under Clause 28 (Confidentiality), on or before the third (3rd) anniversary of the Completion Date;

(K) in respect of any claims under Clauses 17.1 to 17.3 (inclusive), on or before the seventh (7th) anniversary of the Completion Date;

(L) in respect of any claims under Clauses 20.4 to 20.14 (inclusive), on or before the earlier of: (i) the first (1st) anniversary of the exercise of the Weatherford Option; and (ii) the third (3rd) anniversary of the Completion Date,

PROVIDED THAT the liability of Rosneft in respect of such claim shall absolutely determine (if such claim has not been previously satisfied, settled or withdrawn) if legal proceedings in respect of such claim shall not have been commenced within twelve months of the service of such notice and for this purpose proceedings shall not be deemed to have been commenced unless they shall have been properly issued and validly served upon Rosneft.

3. Exclusion of liability for disclosed matters

Subject to Clause 12.1, Rosneft shall not be liable for any claim under the Rosneft Warranties in respect of any fact, matter, event or circumstance to the extent that such fact, matter, event or circumstance has been disclosed in this Agreement or the Current Rosneft Disclosure Letter.

4. No liability if loss is otherwise compensated for

4.5 No liability shall attach to Rosneft under this Agreement to the extent that:

(A) the same loss has been recovered by Seadrill or NADL (as the case may be) under a claim pursuant to any other Rosneft Warranty or term of this Agreement or any other document entered into pursuant hereto and accordingly Seadrill or NADL (as the case may be) may only recover once in respect of the same loss;

(B) the amount of the liability has been specifically allowed, provided for or reserved for in respect of the matter giving rise to the loss in the Accounts;

(C) the liability is taken into account (including by the increase of any liability or outgoing or the reduction of any asset or receipt) in calculating the Completion Accounts; or

(D) after Completion, the same loss has been recovered by the Company from one or more of the Orenburg Sellers.

4.6 No liability shall attach to Rosneft in respect of a claim under Part A of Schedule 5 in respect of any litigation, arbitration or other dispute resolution process, or administrative or criminal proceedings (a “Litigation Claim”) if any liability in respect of that same claim is taken into account (including by the increase of any liability or outgoing or the reduction of any asset or receipt) in calculating the Completion Accounts and notwithstanding that the amount of the liability that has been taken into account in calculating the Completion Accounts is less than the value of the Litigation Claim.

5. Insurance

Rosneft shall not be liable in respect of any claim to the extent that the losses in respect of which such claim is made are covered by a policy of insurance and the insurer under that policy of insurance makes payment in respect of that claim to a member of the Seadrill Group or a member of the NADL Group.

6. No liability unless Rosneft given opportunity to remedy breaches

A breach by Rosneft which is capable of remedy shall not entitle Seadrill or NADL to compensation unless Rosneft is given written notice of such breach and such breach is not remedied within 30 days after the date on which such notice is served on Rosneft.

7. No liability if Company sold by NADL

Rosneft shall not be liable to satisfy any claim under this Agreement which shall be made after the Company shall cease to be a direct or indirect subsidiary of NADL unless Rosneft has consented to the sale or transfer of the Company out of the NADL Group.

8. No right of set-off

Each of Seadrill and NADL hereby waives and relinquishes any right of set-off or counterclaim, deduction or retention which any of them might otherwise have in respect of any claim under this Agreement or out of any payments which any of them may be obliged to make (or procure to be made) to Rosneft pursuant to this Agreement or otherwise.

9. Third party claims

9.4 Upon Seadrill, NADL or any member of the Sale Group becoming aware of any matter which is likely, in the reasonable opinion of Seadrill or NADL, to give rise to any claim against Rosneft under this Agreement, Seadrill or NADL (as the case may be) shall and shall procure (if relevant) that the Sale Group shall:

(B) notify Rosneft by written notice as soon as reasonably practicable (save that any failure to give such notice shall not preclude Seadrill or NADL from making a claim against Rosneft, but Rosneft shall not be liable to Seadrill or NADL in respect of such claim to the extent that the amount of it is increased, or is not reduced, as a result of such failure);

(C) consult with Rosneft regarding the conduct of any such claim and shall make (and shall procure that the Sale Group makes) no admission of liability, agreement, settlement or compromise with any third party in relation to any such claim or adjudication without the prior written consent of Rosneft (such consent not to be unreasonably withheld);

(D) subject to being fully indemnified to its reasonable satisfaction by Rosneft, take such action as Rosneft may reasonably request to avoid, dispute, resist, appeal, compromise or defend such third party claim or any adjudication in respect of that third party claim; and

(E) subject to being fully indemnified to its reasonable satisfaction by Rosneft, if so required by Rosneft in writing, place Rosneft in a position to take on or take over the conduct of all proceedings and/or negotiations of whatsoever nature arising in connection with the third party claim in question and provide such information and assistance as Rosneft may reasonably require in connection with the preparation for and conduct of such proceedings and/or negotiations.

9.5 Where Rosneft wishes the NADL Group to apply for interim measures ("obespechitelnye mery") to the Russian arbitrage court (an “Interim Measures Application”) in respect of the said matter and the provision of a bank guarantee or deposit is required or desirable in connection with such an Interim Measures Application, then Rosneft's rights under Paragraph 9.1 (other than Paragraph 9.1(A)) shall be conditional upon Rosneft, within the applicable time period required by the relevant Russian arbitrage court, notifying NADL in writing that it wishes the NADL Group to make an Interim Measures Application and providing funds to the NADL Group:

(M) to meet such costs as the NADL Group shall reasonably incur from time to time in order to obtain a bank guarantee for provision to the Russian arbitrage court and to maintain such guarantee; or

(N) in the form of a loan for payment of a deposit to the Russian arbitrage court,

in each case for such amount as is required by the Russian arbitrage court or otherwise considered desirable by Rosneft. No member of the NADL Group shall be obliged to make any Interim Measures Application or take any steps to preserve its rights to avoid, dispute, resist, appeal, compromise or defend any tax assessment unless Rosneft has complied with this Paragraph and Paragraph 9.1.

In the event that the relevant tax assessment is successfully avoided, disputed, resisted, appealed, compromised or defended and (i) the deposit funded by Rosneft is returned to the relevant member of the NADL Group or (ii) the bank guarantee is no longer required by the Russian arbitrage court, the relevant member of the NADL Group shall, in the case of (i), repay such amount to Rosneft within five Business Days following receipt from the relevant Russian arbitrage court, or, in the case of (ii), notify Rosneft and the respective bank as soon as possible following notification from the relevant Russian arbitrage court that the bank guarantee is no longer required.

9.6 Notwithstanding any other provision of this Paragraph 9, Seadrill and NADL shall not be required to take, permit or omit, or procure the taking, permitting or omission of, any step or action in relation to any third party claim, action or demand if and to the extent that Seadrill or NADL reasonably believes that the taking, permitting or omission of the relevant step or action would have an adverse effect on the reputation or goodwill of any member of the Seadrill Group or NADL Group.

10. Recovery from third parties

10.9 Where any member of the Seadrill Group or NADL Group is at any time entitled to recover from some other person any sum in respect of any matter giving rise to a claim under this Agreement (whether by payment, discount, credit, relief or otherwise), Seadrill or NADL shall, or shall procure that the relevant member of the Seadrill Group or NADL Group (as the case may be) shall, take reasonable steps to enforce such recovery. In the event that the Seadrill Group or NADL Group shall recover any amount from such other person, the amount of the claim against Rosneft shall be reduced by the amount so recovered less all reasonable costs of recovery and any Tax thereon.

10.10 If under Clause 16.9 Rosneft settles at any time to the Seadrill Group or the NADL Group an amount pursuant to a claim under this Agreement and the Seadrill Group or NADL Group (as the case may be) subsequently recovers from some other person any sum in respect of any matter giving rise to such claim (whether by payment, discount, credit, relief or otherwise), the Seadrill Group or NADL Group (as the case may be) shall repay to Rosneft the lesser of: (i) the amount settled by Rosneft to the Seadrill Group or the NADL Group (as the case may be); and (ii) the sum recovered from such other person less all reasonable costs of recovery and any Tax thereon.

11. Losses

Rosneft shall not be liable under this Agreement in respect of any loss of profit, loss of revenue, loss of goodwill or any indirect or consequential loss.

12. Matters arising subsequent to this Agreement

Without prejudice to the provisions of Clause 12, Rosneft shall not be liable under this Agreement in respect of any matter, act, omission or circumstance (or any combination thereof), including the aggravation of a matter or circumstance, and any losses arising therefrom, to the extent that the same would not have occurred but for:

(A) any matter or thing done or omitted to be done pursuant to and in compliance with this Agreement, at the request in writing or with the approval in writing of any of Seadrill or NADL;

(B) any act, omission or transaction of Seadrill or NADL or any member of the Seadrill Group or any member of the NADL Group or any member of the Sale Group, or their respective directors, officers, employees or agents or successors in title, after Completion (unless in the ordinary course of business or pursuant to a legally binding obligation to which a member of the Sale Group is subject);

(C) the passing of, or any change in, after Completion, any law, rule, regulation or administrative practice of any relevant practice of any relevant jurisdiction or Authority including (without prejudice to the generality of the foregoing) any increase in the rates of taxation or any imposition of taxation or any withdrawal of relief from tax not actually (or prospectively) in effect at Completion or any change after Completion of any generally accepted interpretation or application of any legislation; or

(D) any change in accounting or taxation policy, bases or practice of any member of the Sale Group introduced or having effect after Completion save for any change approved by Rosneft prior to Completion where such change has effect after Completion.

13. Right to recover

Rosneft shall not be liable unless and until the liability in respect of which a claim is made has become due and payable or has been agreed between Rosneft and Seadrill (with the consent of NADL). NADL and Seadrill shall not be entitled to recover from Rosneft under this Agreement more than once in respect of the same loss.

14. No liability for Rosneft Warranty Claims unless brought under relevant Rosneft Warranty

Rosneft shall not be liable for any Rosneft Warranty Claim, to the extent that it relates to Orenburg or the Orenburg Subsidiaries unless it is brought under Part B of Schedule 5.

15. Reduction of Consideration

All settlements under Clause 16.9 made by Rosneft under this Agreement shall, to the extent possible, be paid by way of a reduction to the Consideration payable under this Agreement.

16. Orenburg Tax

Rosneft shall not be liable for any claim arising out of Part B of Schedule 5 for or in connection with any Tax liability (and no Orenburg Warranty Claim may be made for or in connection with any Tax liability) arising prior to 1 January 2012 or by reference to or as a result of any event occurring prior to 1 January 2012.

Part B: Liability of Seadrill and NADL

1. Limitation on quantum and general

1.11 NADL shall not be liable under this Agreement in respect of any individual claim (except under Clauses 2.1, 2.3, 2.5, 2.7, 3.1, 3.2, 3.3, 3.6(A), 3.7(B), 3.8, 5.4, 5.5, 5.8(A), 5.9(B), 5.21, 5.24, 5.29 to 5.33 (inclusive), 10.8, 11, 20.1 and 29.1 to 29.5 (inclusive)):

(D) for less than ***** (excluding interest and costs); and

(E) unless and until the aggregate amount of all such individual claims exceeds *****, in which case NADL shall be liable for the whole amount, and not only in respect of the excess over such sum.

1.12 Seadrill shall not be liable under this Agreement in respect of any individual claim (except under Clauses 2.3, 2.7, 5.13, 5.14, 5.17(A), 10.8, 11, 16.8 and 29.1 to 29.5 (inclusive)):

(F) for less than ***** (excluding interest and costs); and

(G) unless and until the aggregate amount of all such individual claims under the Seadrill Warranty exceeds *****, in which case Seadrill shall be liable for the whole amount, and not only in respect of the excess over such sum.

1.13 The aggregate liability of Seadrill and NADL in respect of all claims made under this Agreement (but excluding any claim in respect of any Fundamental NADL Warranty and claims under Clauses 2.1, 2.2, 2.3, 2.5, 2.7, 3.1, 3.2, 3.3, 3.6(A), 3.7(B), 3.8, 5.4, 5.5, 5.8(A), 5.9(B), 5.13, 5.14, 5.17(A), 5.21, 5.24, 5.29 to 5.33 (inclusive), 10.8, 11, 16.8 and 20.1) shall not in any event exceed an amount equal to 50% (fifty per cent.) of the Consideration.

1.14 The aggregate liability of Seadrill and NADL in respect of all claims made in respect of any Fundamental NADL Warranty and under Clauses 2.1, 2.2, 2.3, 2.5, 2.7, 5.21, 5.24, 10.8, 11 and 16.8 shall not in any event exceed an amount equal to 100% (one hundred per cent.) of the Consideration.

1.15 Each provision of this Part B of Schedule 7 shall be read and construed without prejudice to each of the other provisions of this Part B of Schedule 7.

1.16 Nothing in this Schedule 7 shall or shall be deemed to relieve or abrogate Rosneft or any member of the Retained Group of any common law or other duty to mitigate any loss or damage.

1.17 The financial limitations contained in Paragraphs 1.1 and 1.2 above shall not apply in the event of any fraudulent act or omission on the part of NADL in the giving of the NADL Warranties.

2. Time limits for bringing claims

2.13 No claim shall be brought against Seadrill or NADL under this Agreement (other than Clauses 3, 5, 16.9, 19, 20, 21, 24, 27 and 29) unless Rosneft shall have given to Seadrill or NADL written notice of such claim specifying (in reasonable detail) the matter which gives rise to the claim, the nature of the claim and the amount claimed in respect thereof (if known) and Rosneft’s reasonable estimate of the loss thereby alleged to have been suffered by it:

(A) subject to Paragraph 2.1(B),2.1(C) and 2.1(D) below, on or before the second (2^nd) anniversary of the Completion Date;

(B) in respect of any claim under the Fundamental NADL Warranties, on or before the third (3rd) anniversary of the Completion Date;

(C) in respect of the NADL Tax Warranties on or before the later of the third (3rd) anniversary of the Completion Date and the date following three months after the expiry of the period specified by applicable law during which an assessment of the relevant liability to Tax may be issued by the relevant Tax Authority;

(D) in respect of any claims under Clause 28 (Confidentiality), on or before the third (3rd) anniversary of the Completion Date;

(E) in respect of any claims under Clauses 20.4 to 20.14 (inclusive), on or before the earlier of: (i) the first (1st) anniversary of the exercise of the Weatherford Option; and (ii) the third (3rd) anniversary of the Completion Date,

PROVIDED THAT the liability of NADL or Seadrill (as the case may be) in respect of such claim shall absolutely determine (if such claim has not been previously satisfied, settled or withdrawn) if legal proceedings in respect of such claim shall not have been commenced within twelve months of the service of such notice and for this purpose proceedings shall not be deemed to have been commenced unless they shall have been properly issued and validly served upon NADL or Seadrill (as the case may be).

3. Exclusion of liability for disclosed matters

Subject to Clause 13.1, NADL shall not be liable for any claim under the NADL Warranties in respect of any fact, matter, event or circumstance to the extent that such fact, matter, event or circumstance has been disclosed in this Agreement or the Current NADL Disclosure Letter.

4. No liability if loss is otherwise compensated for

4.7 No liability shall attach to Seadrill or NADL under this Agreement to the extent that:

(A) the same loss has been recovered by Rosneft under a claim pursuant to any other NADL Warranty, Seadrill Warranty or term of this Agreement or any other document entered into pursuant hereto and accordingly Rosneft may only recover once in respect of the same loss; or

(B) the amount of the liability has been specifically allowed, provided for or reserved for in respect of the matter giving rise to the loss in the NADL Accounts.

5. Insurance

None of Seadrill or NADL shall be liable in respect of any claim to the extent that the losses in respect of which such claim is made are covered by a policy of insurance and the insurer under that policy of insurance makes payment in respect of that claim to Rosneft (or any member of the Retained Group).

6. No liability unless NADL/Seadrill given opportunity to remedy breaches

A breach by NADL or Seadrill which is capable of remedy shall not entitle Rosneft to compensation unless NADL or Seadrill (as the case may be) is given written notice of such breach and such breach is not remedied within 30 days after the date on which such notice is served on NADL or Seadrill (as the case may be).

7. No right of set-off

Rosneft hereby waives and relinquishes any right of set-off or counterclaim, deduction or retention which it might otherwise have in respect of any claim under this Agreement or out of any payments which it may be obliged to make (or procure to be made) pursuant to this Agreement or otherwise.

8. Third party claims

8.4 Upon Rosneft or any member of the Retained Group becoming aware of any matter which is likely, in the reasonable opinion of Rosneft, to give rise to any claim against Seadrill or NADL under this Agreement, Rosneft shall and shall procure that the Retained Group shall:

(F) notify Seadrill or NADL (as the case may be) by written notice as soon as reasonably practicable (save that any failure to give such notice shall not preclude Rosneft from making a claim against Seadrill or NADL, but Seadrill and NADL shall not be liable to Rosneft in respect of such claim to the extent that the amount of it is increased, or is not reduced, as a result of such failure);

(G) consult with NADL and Seadrill regarding the conduct of any such claim and shall make (and shall procure that the Retained Group makes) no admission of liability, agreement, settlement or compromise with any third party in relation to any such claim or adjudication without the prior written consent of NADL and Seadrill (such consent not to be unreasonably withheld);

(H) subject to being fully indemnified to its reasonable satisfaction by NADL and Seadrill, take such action as NADL and Seadrill may reasonably request to avoid, dispute, resist, appeal, compromise or defend such third party claim or any adjudication in respect of that third party claim; and

(I) subject to being fully indemnified to its reasonable satisfaction by NADL and Seadrill, if so required by NADL and Seadrill in writing, place NADL and Seadrill in a position to take on or take over the conduct of all proceedings and/or negotiations of whatsoever nature arising in connection with the third party claim in question and provide such information and assistance as NADL and Seadrill may reasonably require in connection with the preparation for and conduct of such proceedings and/or negotiations.

8.5 Notwithstanding any other provision of this Paragraph 8, Rosneft shall not be required to take, permit or omit, or procure the taking, permitting or omission of, any step or action in relation to any third party claim, action or demand if and to the extent that Rosneft reasonably believes that the taking, permitting or omission of the relevant step or action would have an adverse effect on the reputation or goodwill of any member of the Retained Group.

9. Recovery from third parties

9.7 Where Rosneft (or any member of the Retained Group) is at any time entitled to recover from some other person any sum in respect of any matter giving rise to a claim under this Agreement (whether by payment, discount, credit, relief or otherwise), Rosneft shall, or shall procure that the relevant member of the Retained Group shall, take reasonable steps to enforce such recovery. In the event that Rosneft (or any member of the Retained Group) shall recover any amount from such other person, the amount of the claim against Seadrill and NADL shall be reduced by the amount so recovered less all reasonable costs of recovery and any Tax thereon.

9.8 If Seadrill or NADL (or any member of the Seadrill Group or any member of the NADL Group) pays at any time to Rosneft an amount pursuant to a claim under this Agreement and Rosneft (or any member of the Retained Group) subsequently recovers from some other person any sum in respect of any matter giving rise to such claim (whether by payment, discount, credit, relief or otherwise), Rosneft shall repay to Seadrill or NADL (or the relevant member of the Seadrill Group or NADL Group (as the case may be)) the lesser of: (i) the amount paid to Rosneft; and (ii) the sum recovered from such other person less all reasonable costs of recovery and any Tax thereon.

10. Losses

None of Seadrill or NADL shall be liable under this Agreement in respect of any loss of profit, loss of revenue, loss of goodwill or any indirect or consequential loss.

11. Matters arising subsequent to this Agreement

11.7 Without prejudice to the provisions of Clause 13 (NADL Warranties and Covenants), none of Seadrill or NADL shall be liable under this Agreement in respect of any matter, act, omission or circumstance (or any combination thereof), including the aggravation of a matter or circumstance, and any losses arising therefrom, to the extent that the same would not have occurred but for:

(A) any matter or thing done or omitted to be done pursuant to and in compliance with this Agreement, at the request in writing or with the approval in writing of Rosneft;

(B) any act, omission or transaction of Rosneft or any member of the Retained Group, or their respective directors, officers, employees or agents or successors in title, after Completion; or

(C) the passing of, or any change in, after Completion, any law, rule, regulation or administrative practice of any relevant practice of any relevant jurisdiction or Authority including (without prejudice to the generality of the foregoing) any increase in the rates of taxation or any imposition of taxation or any withdrawal of relief from tax not actually (or prospectively) in effect at Completion or any change after Completion of any generally accepted interpretation or application of any legislation.

12. Right to recover

None of Seadrill or NADL shall be liable unless and until the liability in respect of which a claim is made has become due and payable or has been agreed between Rosneft and Seadrill or NADL (as the case may be). Rosneft shall not have the right to recover from Seadrill or NADL under this Agreement more than once in respect of the same loss.

13. Reduction of Consideration

All payments made by the Seadrill Group or NADL Group under this Agreement shall, to the extent possible, be paid by way of a reduction to the Consideration under this Agreement.

Schedule 8
(Completion Accounts)

Part A: Preparation and determination of Completion Accounts; payment provisions

1. Preparation of Draft Completion Accounts

1.18 NADL shall procure the preparation by the Sale Group of stand-alone balance sheets of each of the Company, Orenburg and the Orenburg Subsidiary prepared as at immediately prior to Completion on the Completion Date and aggregation of these balance sheets into an aggregated balance sheet in accordance with this Schedule 8 and in the form set out in Part D (Balance Sheet) of this Schedule 8 and including a completion statement specifying:

(A) the Completion Working Capital Amount;

(B) the Completion Cash Amount;

(C) the Completion Debt Amount;

(D) the Net Cash / Debt Amount,

(the “Draft Completion Accounts”). The Draft Completion Accounts shall be delivered to Rosneft by NADL in accordance with Clause 26 (Notices) as soon as reasonably practicable and in any event within 75 calendar days following Completion. For the purposes of Clauses 2.9, 2.10 and 2.11, the Net Cash / Debt Amount and the Completion Net Working Capital Amount shall be converted into USD at the official RUB/USD rate of exchange of the Central Bank of Russia as at immediately prior to Completion on the Completion Date.

1.19 The Draft Completion Accounts shall be prepared in accordance with those accounting policies, principles, practices, bases and methodologies set out in Part B (Accounting policies, principles, practices, bases and methodologies) of this Schedule 8.

1.20 Rosneft shall, and shall procure that the Retained Group, provide without charge such reasonable access to their personnel (who shall be instructed to give information and explanations promptly), Books and Records as NADL or NADL’s Accountants and advisers may request in connection with the preparation of the Draft Completion Accounts.

1.21 Save in accordance with the provisions of Paragraph 4.2, no amendment shall be made to the Draft Completion Accounts after their delivery to Rosneft in accordance with Paragraph 1.1.

1.22 No amendment to the Draft Completion Accounts shall be made, and no Dispute Notice shall be served under Paragraph 3 below, if the amendment would result in a Consideration Deficit of less than US$250,000 under Clause 2.10 but if such amount is exceeded, the amendment shall be for the whole amount, and not only in respect of the excess over such amount.

2. Reviewof Draft Completion Accounts

NADLshall, and shall procure that each member of the NADL Group (including each member of the Sale Group) shall, provide without charge such reasonable access to their personnel (who shall be instructed to give information and explanations promptly) and Books and Records as Rosneft or Rosneft’s accountants and advisers may request in connection with their review of the Draft Completion Accounts.

3. Dispute mechanism

3.12 Subject to Paragraph 1.5 above, Rosneft may dispute the Draft Completion Accounts by notice in writing (in this Paragraph, the “Dispute Notice”) delivered to NADL in accordance with Clause 26 (Notices) within 25 calendar days or 15 Business Days (whichever greater) of receiving the Draft Completion Accounts.

3.13 The Dispute Notice shall specify (a) which items of the Draft Completion Accounts are disputed, (b) the reasons therefor and, to the extent practicable, (c) the effect that Rosneft believes that the items in dispute have on:

(A) the Completion Working Capital Amount;

(B) the Completion Cash Amount;

(C) the Completion Debt Amount;

(D) the Net Cash / Debt Amount; and

(E) the Completion Adjustment Amount,

those items or amounts specified in the Dispute Notice being referred to as the “Disputed Items”.

3.14 Only the Disputed Items shall be treated as being in dispute and no amendment may be made by either party, or any Expert appointed pursuant to Paragraph 4.2 below, to any items or amounts which are not Disputed Items.

3.15 Notwithstanding the other provisions of this Paragraph 3, if in preparing the Draft Completion Accounts NADL has:

(D) included in the calculation of the Completion Working Capital Amount a category of liability which was not included in the calculation of the Minimum Working Capital Amount as evidenced by Part E of this Schedule 8; and/or

(E) excluded from the calculation of the Completion Working Capital Amount a category of asset which was not excluded in the calculation of the Minimum Working Capital Amount as evidenced by Part E of this Schedule 8,

then in the Dispute Notice Rosneft may include an amended calculation of the Minimum Working Capital Amount that includes its good faith determination of the effect of the inclusion of such category of liability or exclusion of such category of asset, as the case may be, on the amount of the Minimum Working Capital Amount and, in the absence of fraud or manifest error, such amended Minimum Working Capital Amount shall be the Minimum Working Capital Amount for all purposes under this Agreement.

Notwithstanding the above, Rosneft shall not include in any amended calculation of the Minimum Working Capital Amount liabilities of the type described in Paragraphs 15 and 17 of Part C of Schedule 8.

4. Finalisation of Completion Accounts

4.8 If Rosneft does not serve the Dispute Notice under Paragraph 3.1 above, the Draft Completion Accounts shall constitute the Completion Accounts.

4.9 If Rosneft does serve the Dispute Notice under Paragraph 3.1 above, then NADL and Rosneft shall use their reasonable endeavours to resolve the Disputed Items and either:

(H) if Rosneft and NADL reach agreement on all Disputed Items within 20 Business Days of the Dispute Notice being served (or such longer period as Rosneft and NADL may agree in writing), the Draft Completion Accounts shall be amended to reflect such agreement and shall then constitute the Completion Accounts; or

(I) if Rosneft and NADL do not reach agreement in accordance with Paragraph (A) above, Rosneft or NADL may refer the dispute in respect of only the Disputed Items still remaining in dispute (and not those items of the Draft Completion Accounts that have been agreed between Rosneft and NADL in accordance with Paragraph (A) above) to such individual at one of KPMG or Ernst & Young as Rosneft and NADL may agree or, failing such agreement within 10 calendar days of expiry of the period described in Paragraph (A) above, to such independent firm of international standing as the President of the Institute of Chartered Accountants in England and Wales may, on the application of either Rosneft or NADL, nominate (the “Expert”), on the basis that the Expert is to make a decision on the dispute and notify Rosneft and NADL of its decision within 60 Business Days of receiving the reference or such longer reasonable period as the Expert may determine.

4.10 Each party shall bear its own costs with respect to the finalisation of the Completion Accounts. The costs of the Expert shall be borne by Rosneft and NADL as set out in Paragraph 4.4 below.

4.11 In any reference to the Expert in accordance with Paragraph 4.2 above:

(F) the Expert shall act as an expert and not as an arbitrator and shall be directed to determine any dispute by reference to the accounting policies, principles, practices bases and methodologies set out in Part B (Accounting policies, principles, practices, bases and methodologies) of this Schedule 8;

(G) the decision of the Expert shall, in the absence of fraud or manifest error, be final and binding on Rosneft and NADL and the Completion Accounts shall be the Draft Completion Accounts amended as necessary to reflect the decision of the Expert and, as amended, signed by the Expert;

(H) the costs of the Expert shall be paid by Rosneft and NADL equally or as otherwise determined by the Expert; and

(I) each of Rosneft and NADL shall respectively provide or procure the provision to the Expert of all such information as the Expert shall reasonably require including:

(i) by their respective accountants and advisers;

(ii) in the case of NADL, the Books and Records and personnel of the Sale Group; and

(iii) in the case of Rosneft, the Books and Records and personnel of the Retained Group.

5. Following determination of the Completion Accounts

5.34 Following determination of the Completion Accounts, the amount of the:

(A) the Completion Working Capital Amount;

(B) the Completion Cash Amount;

(C) the Completion Debt Amount; and

(D) the Net Cash / Debt Amount

shall be determined by reference to the Completion Accounts.

Part B: Accounting policies, principles, practices, bases and methodologies

The Draft Completion Accounts shall:

1. be prepared in accordance with the specific accounting principles, practices and policies set out in Part C of this Schedule 8;

2. to the extent not inconsistent with Paragraph 1 above, be prepared in accordance with the accounting principles, policies, procedures, assets recognition bases, methods, practices and estimation techniques (including in respect of the exercise of management judgment in respect of the same or similar underlying fact patterns or circumstances) adopted in the Company Accounts (for the Company), in the audited RAS accounts of Orenburg as at the Accounts Date (for Orenburg) and in the audited RAS accounts of Orenburg Subsidiary as at the Accounts Date (for the Orenburg Subsidiary) (the “Reference Accounts”), (the “Consistent Policies”) (Orenburg and the Orenburg Subsidiary, together “OBK”); and

3. subject to Paragraphs 1 and 2 above, be prepared in accordance with RAS as in force at the Accounts Date.

For the avoidance of doubt, Paragraph 1 shall take precedence over Paragraph 2 and Paragraph 3, and Paragraph 2 shall take precedence over Paragraph 3.

Part C: Specific accounting principles, practices and policies

The Draft Completion Accounts shall be prepared:

1. on the basis of the trial balances of the Company, Orenburg and Orenburg Subsidiary as at immediately prior to Completion on the Completion Date (the “Effective Time”). No account shall be taken of events taking place after the Effective Time, except that Adjusting Events as defined in ПБУ7/98 (“PBU 7/98”) (“Events after the Reporting Date”) shall be taken into account up until the time NADL delivers the Draft Completion Accounts to Rosneft (the “Cut-off Time”);

2. in RUB, rounded to the nearest million;

3. subject to Paragraphs 30.a, 30.b, 30.d, 30.e and 30.g of Part C of Schedule 8, on the basis that the Sale Group is a going concern and shall exclude the effect of change of control or ownership of the Sale Group and shall not take into account the effects of any post-Completion reorganisations or the post-Completion intentions or obligations of the Seadrill Group or the NADL Group, including any change in management strategy, direction or priority or possible closure of any business (or part thereof) which results from the change of ownership (provided that the valuation of a business, and its assets, shall be conducted in the context of the relevant business at Completion without taking into account any change of ownership thereof or the Seadrill Group or the NADL Group’s intentions with respect to the conduct of any business after Completion);

4. so that the Completion Date is treated as an accounting and tax year-end;

5. so that no item may be included in the Draft Completion Accounts more than once or in a manner which results in double-counting (and the provisions of this Schedule 8 shall be interpreted so as to avoid double-counting);

6. so that none of the following categories of assets, liabilities or equity (as reported in the Reference Accounts) shall be included in the Completion Cash Amount, the Completion Debt Amount or the Completion Working Capital Amount: intangible assets, research and development, intangible exploration assets, tangible exploration assets, fixed assets, investment property and equipment, long-term financial investments, deferred tax assets, long-term trade and other receivables, other non-current assets, deferred tax liabilities, share capital, treasury shares, reserve for the revaluation of non-current assets, additional paid-in capital, reserve capital and retained earnings;

7. subject to Paragraphs 6 and 12 on the basis that corporate profit tax which shall be included in the Draft Completion Accounts and classified within the Completion Debt Amount, shall be limited to amounts which, as at Completion, have been incurred or are required to be recognised as a liability on the balance sheet less any prepayments of such corporate profit tax made prior to Completion or amounts receivable in relation to corporate profit tax already paid, provided in all cases consistent with Tax law in force at Completion. Notwithstanding the previous sentence, the corporate profit tax should include corporate profit tax amounts calculated by reference to revenue and expenses recognised in the Draft Completion Accounts up to the Effective Time which otherwise would not qualify for recognition for current corporate profit tax purposes due to acts of acceptance and/or other documents being outstanding from customers and/or suppliers as at Draft Completion Accounts date;

8. subject to Paragraph 30.d of Part C of Schedule 8 so as to take no account of the costs of the Seadrill Group or the NADL Group, in each case in relation to the preparation, negotiation, execution or carrying into effect of any of the Transaction Documents (including the costs of the preparation, delivery, review and resolution of the Completion Accounts);

9. so as to include no provision with respect to any matter which is the subject of an indemnity claim, in favour of the Seadrill Group or the NADL Group under the terms of this Agreement or any of the other Transaction Documents;

10. so as to include no provision or accrual or other liability created for any amount that is recovered by the Seadrill Group or the NADL Group under a Rosneft Warranty Claim made between the Completion Date and the date when Rosneft has served a Dispute Notice under Paragraph 3.1 of this Schedule 8;

11. so that balances between legal entities comprising the Sale Group shall be reconciled and any unreconciled differences shall be investigated and eliminated;

12. so that no amounts shall be included in the Net Cash / Debt Amount or the Completion Working Capital Amount in relation to deferred tax assets or deferred tax liabilities;

13. so that an amount shall be included in the Completion Working Capital Amount in relation to prepayments made by the Sale Group for fixed assets or assets under construction not yet received or constructed as at the Effective Time;

14. so that no amounts shall be included in the Completion Working Capital Amount in respect of trade and other receivables or assets of the Sale Group in relation to trade and other receivables or assets that are collectable or recoverable in over 365 days from the Completion Date or which are otherwise in the nature of, or classified in the Reference Accounts as, fixed assets or intangible assets;

15. so that a liability of the Sale Group shall be included in the Completion Working Capital Amount in relation to fixed assets, assets under construction or similar non-current assets acquired or constructed but not paid for or otherwise settled as at the Effective Time. If such capital expenditure of the Sale Group (including an acquisition or construction of fixed assets, assets under construction or similar non-current assets) is formally agreed between the parties in writing (such agreement to reference this Paragraph 15 of Part C of Schedule 8) no liability shall be included in the Draft Completion Accounts in relation to such capital expenditure;

16. so that no item shall be included in, or excluded from, the Draft Completion Accounts solely on the grounds of materiality;

17. so that a provision shall be accrued in the Draft Completion Accounts and included in the Completion Debt Amount for any loss-making contracts (other than the Onshore Drilling Contracts) of the Sale Group;

18. so that a liability in relation to amounts received by the Sale Group shall be recognised in the Completion Working Capital Amount equal to such amounts received by the Sale Group (including contract advances) to the extent that no revenue has been recognised by the Effective Time in relation to such amounts received;

19. so that no provision shall be made in the Draft Completion Accounts for trade and other receivables to the extent they have been collected in cash by the Sale Group or otherwise settled prior to the Review Date;

20. so that full provision shall be made (without duplication) against the following receivables outstanding as at the Effective Time (other than those due to the Sale Group by the Retained Group) to the extent that they have not been collected in cash by the Sale Group or otherwise settled prior to the Review Date:

a. amounts due from counterparties in administration, liquidation or receivership, or bankrupt as of the Cut-off Time and which remain being in administration, liquidation or receivership, or bankrupt or have been liquidated as at the Review Date;

b. amounts due to the Company from Intaneft to the extent that such amounts are overdue as at the Effective Time;

c. amounts due to the Company from TransServis to the extent that such amounts are overdue as at the Effective Time;

d. amounts due to the Company from OOO Novator to the extent that such amounts are overdue as at the Effective Time;

e. amounts due to the Company from OAO Tyumenenergobank to the extent that such amounts are overdue as at the Effective Time;

f. amounts due to the Company from OOO Uralneftemash to the extent that such amounts are overdue as at the Effective Time;

g. amounts due to the Company from ZAO GlobalTel to the extent that such amounts are overdue as at the Effective Time;

h. amounts due to Orenburg from SANEKO to the extent that such amounts are overdue as at the Effective Time;

i. amounts due to the Orenburg Subsidiary which are overdue at the Effective Time by more than 90 days;

21. so that a provision shall be made within the Completion Working Capital Amount for work in progress of the Sale Group that is not recoverable from customers;

22. so that a provision shall be made within the Completion Working Capital Amount for defective or damaged or obsolete materials;

23. so that a provision shall be included in the Completion Working Capital Amount for any unrealised profit margin accrued as a result of a sale and purchase of inventory between the companies of the Sale Group to the extent that such inventory remains on the balance sheet of the purchasing company of the Sale Group as at the Effective Time;

24. so that a full provision shall be included in the Completion Working Capital Amount for any receivable, accrued income or work in progress in each case due from, or incurred in favour of, Severneft-Urengoy as at the Effective Time in relation to the Severneft-Urengoy master contract (and any related contracts or work orders with Severneft-Urengoy), except to the extent formally accepted by the customer prior to the Review Date;

25. so that the Completion Cash Amount shall comprise amounts at the Effective Time which are available to be lent, spent, or distributed by the Sale Group in the ordinary course of business at the Effective Time or which subsequently become freely available prior to the Review Date;

26. so that prepayments issued by the Sale Group shall comprise amounts paid by the Sale Group prior to the Effective Time in respect of goods and services, other assets and benefits receivable by the Sale Group after the Effective Time. To the extent that after Completion the Sale Group will not be eligible to benefit from the prepayments made by the Sale Group prior to the Effective Time, but would be eligible to receive a refund or rebate in relation to such prepayments, an asset shall be included in the Completion Working Capital Amount in the amount of such rebate or refund;

27. so that an accrual for liability shall be made in the Completion Working Capital Amount for goods and services delivered to the Sale Group on or before the Effective Time which have not been paid for or otherwise settled by the Effective Time;

28. so that no leases classified as operating leases in the Reference Accounts shall be reclassified as finance or capital leases. No leases classified as finance or capital leases in the Reference Accounts shall be reclassified as operating leases. Lease agreements entered into after 31 December 2013 shall be accounted for in accordance with the Consistent Policies and subject thereto, RAS and subject always to the agreed treatment of any Rig Leases as stated in the definition of Debt. For the avoidance of doubt, if lease agreements entered by the Sale Group prior to or on 31 December 2013 have been subsequently (but up to Completion) amended, including a revision of the underlying leasing terms and conditions which require a reclassification of a lease from operating to financial or vice versa, then such amendment or modification of the lease agreement shall be considered a new lease agreement for the purposes of the Draft Completion Accounts;

29. so that a liability shall be included in the Completion Working Capital Amount for any unpaid costs incurred by the Sale Group (or which are required to be recognised as a liability on the balance sheet) in relation to employee or contractor related costs, including salaries and overtime payable, bonuses, severance costs, insurance and holiday pay (including any such amounts arising on or as a consequence of Completion);

30. so that a liability or an asset shall be included in the Completion Debt Amount or Completion Cash Amount, as appropriate (to the extent not already included in the Completion Working Capital Amount) in respect of the following:

a. intercompany non-trading balances owed by the Sale Group to the Retained Group or by the Retained Group to the Sale Group, including all dividends and distributions payable (but excluding any such balances that are converted into equity or are waived prior to or at the Effective Time and hence are no longer payable or receivable by the Sale Group on or after Completion);

b. any penalties or early termination fees payable on the termination of the following contracts only:

(i) contracts in relation to indebtedness or borrowings of the Sale Group; and

(ii) drilling contracts of the Sale Group with Gazpromneft-Noyabrskneftegaz and Gazpromneft Orenburg

as a consequence of the change in control at Completion, and which have not been waived, otherwise forgiven, paid or otherwise settled at the Effective Time;

c. a provision shall be made for any claims payable by the Sale Group as at the Effective Time that shall be recognised on the balance sheet on the basis consistent with the provisions of Paragraph 2 of Part B of this Schedule 8 and subject thereto, in accordance with RAS;

d. any transaction bonuses, costs and advisory fees (including taxes thereon) to the extent incurred by the Sale Group (or incurred by the Retained Group and recharged to the Sale Group) before or on Completion that remain unpaid as at the Effective Time in relation to the transaction contemplated by this Agreement;

e. any unpaid costs incurred by the Sale Group before Completion that remain unpaid as at the Effective Time in relation to the acquisition of Orenburg from the Orenburg Sellers;

f. a liability in respect of any shortfall in

(i) actual capital expenditure (other than in respect of the acquisition of new rigs) incurred from 1 January 2014 to Completion inclusive either in the form of cash payments or the accrual of liabilities within the Completion Working Capital Amount or the Completion Debt Amount,

compared to

(ii) budgeted capital expenditure (other than in respect of the acquisition of new rigs) (the “Capex Budget”).

For these purposes, the Capex Budget shall be an amount of

(i) ***** for the period from 1 January 2014 to 31 October 2014, if Completion occurs on or before 31 October 2014,

or

(ii) if Completion occurs after 31 October 2014 but on or before 30 November 2014, ***** plus an amount of ***** for each calendar day between 31 October 2014 (excluding day of 31 October 2014) and Completion (including day of Completion),

or

(iii) if Completion occurs after 30 November 2014 but on or before 31 December 2014, ***** plus an amount of ***** for each calendar day between 30 November 2014 (excluding day of 30 November 2014) and Completion (including day of Completion);

For the avoidance of doubt, amounts stated in this Paragraph 30.f are gross of the VAT and “capital expenditure” in Paragraph 30.f shall only include expenditure which would be treated as capital expenditure on a basis consistent with Paragraph 2 of Part B to this Schedule, but subject to the specific policy in Paragraph 30.f(i) above; and

g. any liabilities of the Sale Group in respect of derivatives, hedging arrangements or other financial instruments entered into prior to Completion and measured at the amount that would be required to settle these at Completion; and

31. for the avoidance of doubt in the event of a conflict between various provisions of this Part C of Schedule 8, so that a more specific accounting policy shall prevail over a less specific accounting policy.

Part D: Balance Sheet. Balance sheet presentation for illustrative purposes on the basis that the definitions and accounting policies set forth in the Agreement, including Schedule 8 shall prevail.

*****

Part E: Minimum Working Capital Amount calculation

*****

Schedule 9
(Pro forma Onshore Drilling Contract)

Schedule 10
(Offshore Drilling Contracts)

Part A

Identity of Offshore Rig	Name of service provider	PRE INITIAL TERM				INITIAL TERM
		Completion	Mobilisation (days)	Yardstay (days)	Holding period (days	Moving *****	Standby *****	Operating *****	Expected cap.
			*****	*****	*****	*****	*****	*****	*****
West Navigator	North Atlantic Drilling Russia L.L.C. and North Atlantic Navigator Ltd.	*****	*****	*****	*****	*****	*****	*****	*****
Estimated Drilling Revenue			*****	*****	*****	*****	*****	*****	*****
West Alpha	North Atlantic Drilling Russia L.L.C. and North Atlantic Alpha Ltd.	*****	*****	*****	*****	*****	*****	*****	*****
Estimated Drilling Revenue			*****	*****	*****	*****	*****	*****	*****
West Rigel	North Atlantic Drilling Russia L.L.C. and North Atlantic Rigel Ltd.	*****	*****	*****	*****	*****	*****	*****	*****
Estimated Drilling Revenue			*****	*****	*****	*****	*****	*****	*****
		Completion	Mobilisation (days)	Yardstay (days)	Holding period (days	Moving *****	Standby *****	Operating *****	Expected cap.
			*****	*****	*****	*****	*****	*****	*****
Energy Endeavour	Energy Endeavour Ltd. and North Atlantic Drilling Russia L.L.C.	*****	*****	*****	*****	*****	*****	*****	*****
Estimated Drilling Revenue			*****	*****	*****	*****	*****	*****	*****
CJ-54 I	North Atlantic Drilling Russia L.L.C.	*****	*****	*****	*****	*****	*****	*****	*****
Estimated Drilling Revenue			*****	*****	*****	*****	*****	*****	*****
CJ-54 II	North Atlantic Drilling Russia L.L.C.	*****	*****	*****	*****	*****	*****	*****	*****
Estimated Drilling Revenue			*****	*****	*****	*****	*****	*****	*****

Part B

Settlement Period	Estimated Drilling Revenue
*****	*****

Part C

Settlement Period	Estimated Drilling Revenue
	West Navigator	West Alpha	West Rigel	Energy Endeavour	CJ-54 I	CJ-54 II
*****	*****	*****	*****	*****	*****	*****

Schedule 11
(Russian SPA)

ROSNEFT OIL COMPANY / НЕФТЯНАЯ КОМПАНИЯ РОСНЕФТЬ

AND / И

NORTH ATLANTIC DRILLING LTD. / НОРТ АТЛАНТИК ДРИЛЛИНГ ЛТД.

CONTRIBUTION AGREEMENT

/

ДОГОВОР О ВНЕСЕНИИ ВКЛАДА В УСТАВНЫЙ КАПИТАЛ

in relation to the contribution of the participation interest in RN-Burenie, LLC to the share capital of North Atlantic Drilling Ltd.

/

в отношении внесения доли в уставном капитале ООО «РН-Бурение» в уставный капитал Норт Атлантик Дриллинг Лтд.

CONTRIBUTION AGREEMENT	договор о внесении вклада в уставный капитал
[●] 2014	[●] 2014
OJSC ROSNEFT OIL COMANY,an open joint stock company incorporated and existing under the laws of the Russian Federation, having its main state registration number 1027700043502 and located at Russian Federation, 115035 Moscow, 26/1 Sofiyskaya embankment, hereinafter referred to as “Rosneft”, represented by [●] (passport issued on [●] by [●], whose residence is at [●]), acting on the basis of [●],	ОАО «НК «РОСНЕФТЬ», открытое акционерное общество, созданное и действующее в соответствии с законодательством Российской Федерации, имеющее основной государственный регистрационный номер 1027700043502 и находящееся по адресу: Россия, 115035, Москва, Софийская набережная, 26/1, именуемое в дальнейшем «Роснефть», в лице [•] (паспорт [•], выдан [•] [•], зарегистрирован по адресу [•]), действующего на основании [•],
and	и
NORTH ATLANTIC DRILLING LTD., an exempted limited company incorporated and existing under the laws of the Islands of Bermuda, having its official number 45094 and located at Par-la-Ville Place, 14 Par-la-ville Road, Hamilton HM08, Bermuda, hereinafter referred to as “NADL”, represented by [●] (passport issued on [●] by [●], whose residence is at [●]), acting on the basis of [●],	НОРТ АТЛАНТИК ДРИЛЛИНГ ЛТД. (NORTH ATLANTIC DRILLING LTD.),компания с ограниченной ответственностью, созданная и действующая в соответствии с законодательством Бермудских островов, имеющая официальный номер 45094 и находящаяся по адресу: Бермудские острова, Гамильтон НМ08, Пар-ла-вилль Роуд 14, Пар-ла-Вилль Плейс, в дальнейшем именуемая «НАДЛ», в лице [•] (паспорт [•], выдан [•] [•], зарегистрирован по адресу [•]), действующего на основании [•],
each a “Party” and together the “Parties”, have entered into this contribution agreement (the “Agreement”) and agreed on transfer of the participation interest in the charter capital of the Company (as defined below) by making a contribution to the share capital of NADL under the following conditions:	каждая из которых далее именуется «Сторона», а при совместном именовании «Стороны», заключили настоящий договор о внесении вклада в уставный капитал (далее - «Договор») и согласились передать долю в уставном капитале Общества (как определено ниже) путем внесения вклада в уставный капитал НАДЛ на следующих условиях:
1.SUBJECT MATTER OF THE AGREEMENT	1.ПРЕДМЕТ ДОГОВОРА

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1.1.Rosneft shall transfer to NADL the participation interest in the charter capital of LLC RN-Burenie, a limited liability company incorporated and exising under the laws of the Russian Federation, having its main state registration number 1067746404681 and located at 26/1 Sofiyskaya naberezhnaya, Moscow, 115035, Russia (the “Company”), representing 100% of the charter capital of the Company with the nominal value of four billion three hundred seventy-four million nine hundred twenty-three thousand seven hundred thirty-six (4,374,923,736) rubles held by Rosneft on the basis [decision on incorporation] dated [●] (the “Interest”) by way of a contribution in kind to the share capital of NADL as payment for shares in the share capital of NADL to be allotted to Rosneft.	1.1.Роснефть передает НАДЛ долю в уставном капитале ООО «РН-Бурение», общества с ограниченной ответственностью, созданного и действующего в соответствии с законодательством Российской Федерации, имеющего основной государственный регистрационный номер 1067746404681, находящегося по адресу: Россия, 115035, Москва, Софийская набережная, 26/1, (далее - «Общество»), составляющую 100% уставного капитала Общества, номинальной стоимостью 4 374 923 736 (четыре миллиарда триста семьдесят четыре миллиона девятьсот двадцать три тысячи семьсот тридцать шесть) рублей, принадлежащую Роснефти на основании [решения о создании Общества] от [●] (далее - «Доля»), путем внесения в качестве неденежного вклада в уставный капитал НАДЛ в качестве оплаты акций НАДЛ размещаемых в пользу Роснефти.
1.2.Upon the transfer of the Interest, NADL shall issue to Rosneft common shares of par value US$5 each in the share capital of NADL credited as fully paid at an issuance price of 9.25 US dollars per share (the “Shares”) pursuant to the terms and conditions of this Agreement.	1.2.При передаче Доли НАДЛ выпустит в пользу Роснефти обыкновенные акции НАДЛ, имеющие номинальную стоимость 5 долларов США каждая, которые будут учтены как полностью оплаченные, по цене выпуска 9,25 долларов США за акцию(далее – «Акции») в соответствии с условиями настоящего Договора.
1.3.At the time of the notarial certification of this Agreement, NADL shall issue in favor of Rosneft a number of [●] Shares (the “Number of Shares”).	1.3.В момент нотариального удостоверения настоящего Договора NADL выпускает в пользу Роснефти Акции в количестве [●] штук (далее - «Количество Акций»).
1.4.Based on the results of an analysis of the financial statements of the Company, the value of the Interest and the total number of Shares to be issued in favor of Rosneft upon the transfer of the Interest may be adjusted by the Parties downward as agreed by the Parties after the notarial certification of this Agreement (the “Adjustment”).	1.4.По результатам анализа финансовой отчетности Общества, стоимость Доли и общее количество Акций, подлежащих выпуску в пользу Роснефти при передаче Доли может быть скорректировано Сторонами в меньшую сторону, как будет согласовано Сторонами после нотариального удостоверения настоящего Договора (далее - «Корректировка»).

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1.5.For the purposes of reflecting the results of the Adjustment (if any), the Parties shall enter into such supplementary agreement to this Agreement as may be necessary to reflect the agreed Adjustment and respective obligations of the Parties thereby, including in relation to Rosneft’s obligation to pay to NADL for any excess of Shares issued to Rosneft at the time of the notarial certification of this Agreement.	1.5.Для целей отражения результатов Корректировки (если она имеет место) Стороны обязуются заключить такое дополнительное соглашение к настоящему Договору, которое может быть необходимо для отражения согласованной Корректировки и соответствующих обязательств Сторон по ней, в том числе в отношении обязательства Роснефти оплатить НАДЛ за излишек Акций, выпущенных в пользу Роснефти в момент нотариального удостоверения настоящего Договора.
1.6.The register of members of NADL shall be updated to reflect issuance of Shares to Rosneft.	1.6.В реестр участников НАДЛ должны быть внесены изменения, отражающие выпуск Акций в пользу Роснефти.
1.7.The Parties confirm that the provision in relation to the Shares to be issued by NADL to Rosneft has been agreed in full and the Parties has no disagreements in this respect.	1.7.Стороны подтверждают, что условие о выпускаемых НАДЛ в пользу Роснефти Акциях является согласованным в полном объеме и между Сторонами отсутствуют разногласия по этому поводу.
1.8.The Parties agree that Rosneft acquires no right of pledge over the sold Interest of 100% in the charter capital of the Company under clause 5 of article 488 (Payment for Goods Sold on Credit) of the Civil Code of the Russian Federation.	1.8.Стороны договорились, что право залога у Роснефти на проданную Долю в размере 100% уставного капитала Общества в соответствии с пунктом 5 статьи 488 (Оплата товара, проданного в кредит) Гражданского кодекса Российской Федерации не возникает.
1.9.The Parties shall take all necessary steps for the effective issue and allotment of the Shares to Rosneft.	1.9.Стороны предпримут все необходимые действия для осуществления действительного выпуска и распределения Акций в пользу Роснефти.
2.RIGHTS AND OBLIGATIONS OF THE PARTIES	2.ПРАВА И ОБЯЗАННОСТИ СТОРОН
2.1.Rosneft shall:	2.1.Роснефть обязана:
2.1.1.sign an application for the change in the Unified State Register of the Legal Entities related to the information on participants of the Company at the Effective Date (as defined below);	2.1.1.в Дату Заключения Договора (как определено ниже) подписать заявление о внесении изменений в Единый государственный реестр юридических лиц в части сведений об участниках Общества;
2.1.2.cooperate with and to do all acts necessary in relation to the issue and allotment of the Shares to it.	2.1.2.сотрудничать и совершить все необходимые действия в отношении выпуска и размещения Акций в пользу Роснефти;
2.2. NADL shall:	2.2. НАДЛ обязана:
2.2.1.cooperate with and to do all acts necessary in relation to the issue and allotment of the Shares to Rosneft;	2.2.1.сотрудничать и совершить все необходимые действия в отношении выпуска и размещения Акций в пользу Роснефти;

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2.2.2.procure that NADL shareholder(s) pass(es) a resolution approving the issue and allotment of the Shares to Rosneft upon the transfer of the Interest by Rosneft to NADL;	2.2.2. обеспечить принятие решения акционерами НАДЛ о выпуске и размещении Акций в пользу Роснефти при передаче Доли Роснефтью в пользу НАДЛ;
2.2.3.deliver to Rosneft a Share certificate for the Number of Shares in the name of Rosneft;	2.2.3.передать Роснефти сертификат на Акции в отношении Количества Акций на имя Роснефти;
2.2.4.update its register of members as necessary to reflect the issuance of the Number of Shares and immediately thereafter each such event deliver a certified copy of such register of members to Rosneft.	2.2.4.внести изменения в реестр участников, необходимые для отражения выпуска Количества Акций и незамедлительно после этого передать Роснефти заверенную копию такого реестра участников.
3.INTEREST TRANSFER	3.ПЕРЕХОД ДОЛИ
3.1.The Interest transfers to NADL at the date of the certification of the execution of this Agreement by a Russian notary (the “Effective Date”).	3.1.Доля переходит в пользу НАДЛ в момент нотариального удостоверения настоящего Договора российским нотариусом («Дата Заключения Договора»).
3.2.A notary certifying the Agreement is to effectuate a notary action to file the application for the change in the Unified State Register of the Legal Entities related to the information on participants of the Company duly signed by Rosneft to the authorized governmental body within 3 days from the Effective Date.	3.2.В течение трех дней с Даты Заключения Договора, нотариус, совершивший его нотариальное удостоверение, совершает нотариальное действие по передаче в орган, осуществляющий государственную регистрацию юридических лиц, заявления о внесении соответствующих изменений в Единый государственный реестр юридических лиц в части сведений об участниках Общества, подписанного Роснефтью.
3.3.A notary certifying the Agreement is to effectuate a notary action to transfer a copy of the application referred to in clause 3.2 of the Agreement to the Company within 3 days from the Effective Date.	3.3.В течение 3 дней с Даты Заключения Договора, нотариус, совершивший его нотариальное удостоверение, совершает нотариальное действие по передаче Обществу копии заявления, указанного в пункте 3.2 Договора.
4.LIABILITY	4.ОТВЕТСТВЕННОСТЬ СТОРОН
4.1.The Parties bear responsibility as set forth by the laws of the Russian Federation.	4.1.За невыполнение своих обязательств Стороны несут ответственность в соответствии с действующим законодательством Российской Федерации.
4.2.Nothing in this Agreement prevents a Party suffered from a breach of the Agreement from taking any actions contemplated by the applicable law or other binding agreements the Parties are parties to.	4.2.Ничто в Договоре не препятствует Стороне, право которой нарушено, предъявить другой Стороне любые требования, предусмотренные применимым законодательством или иными соглашениями, сторонами которых являются Стороны.

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4.3.Notwithstanding anything stated to the contrary in this Agreement and subject to issuance of the Number of Shares to Rosneft pursuant to clause 1.3, in no case shall Rosneft be entitled to claim return of the Interest from NADL, including as a result of termination of this Agreement for whatever reason.	4.3.Несмотря на что-либо иное, указанное в настоящем Договоре, и при условии выпуска Количества Акций в адрес Роснефти в соответствии с пунктом 1.3, Роснефть ни при каких обстоятельствах не будет иметь право требовать от НАДЛ возврата Доли, в том числе в результате расторжения настоящего Договора по какой-либо причине.
5.DISPUTE RESOLUTION	5.ПОРЯДОК РАЗРЕШЕНИЯ СПОРОВ
All disputes arising out of or in connection with the present Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. The language of the arbitration proceedings shall be English. The seat of arbitration shall be Paris, France.	Все споры, возникающие из настоящего Договора или в связи с ним, подлежат окончательному урегулированию в соответствии с Арбитражным регламентом Международной торговой палаты одним или несколькими арбитрами, назначенными в соответствии с этим регламентом. Языком арбитражного разбирательства является английский. Местом арбитражного разбирательства должен быть Париж, Франция.
6.MISCELLANOUS	6.РАЗНОЕ
6.1.The Parties are explained with a content of article 167 of the Civil Code of the Russian Federation, articles 8, 9 14, 21, 46 of the Federal Law of the Russian Federation dated 8 February 1998 No. 14-FZ “On limited liability companies” and article 28 of the Federal Law of the Russian Federation dated 26 July 2006 No. 135-FZ “On protection of competition” by a notary.	6.1.Содержание статьи 167 Гражданского кодекса Российской Федерации, статей 8, 9, 14, 21, 46 Федерального закона Российской Федерации от 8 февраля 1998 года № 14-ФЗ «Об обществах с ограниченной ответственностью» и статьи 28 Федерального закона Российской Федерации от 26 июля 2006 года № 135-ФЗ «О защите конкуренции» нотариусом Сторонам разъяснено.
6.2. Rosneft warrants that the Interest is fully paid and prior signing hereof the Interest has not been sold, granted, pledged, encumbered by third parties’ rights, arrested, the title on the Interest has not disputed.	6.2.Роснефть гарантирует, что Доля полностью оплачена и до подписания настоящего Договора Доля никому другому не продана, не подарена, не заложена, не обременена правами третьих лиц, в споре и под арестом не состоит.
6.3.The present Agreement has been read aloud to the Parties.	6.3.Настоящий Договор прочитан Сторонам вслух.
6.4.The Agreement is governed and treated in accordance with the law of the Russian Federation with the exception of rules of conflict of laws.	6.4.Настоящий Договор регулируется и подлежит толкованию в соответствии с законодательством Российской Федерации, за исключением его коллизионных норм.
6.5.The Parties do not waive, cease or restrain any rights and obligations arising out of any other agreements the Parties are parties to.	6.5.Стороны не отказываются, не отменяют и не ограничивают никакие свои права и обязанности, возникающие из иных соглашений, заключенных с участием Сторон.

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6.6.All state duties and notary fees chargeable for the notary certification of the Agreement and for other notary actions effectuated by a Russian notary and pertaining to the Agreement (including for the notary actions to transfer the application referred to in clause 2.1.1 and a copy thereof) are payable in equal proportions by NADL and Rosneft.	6.6.Все расходы по уплате государственной пошлины или нотариального тарифа за нотариальное удостоверение Договора и за иные нотариальные действия, совершаемые российским нотариусом в связи с заключением Договора (в том числе за нотариальные действия по передаче заявления, указанного в пункте 2.1.1, и его копии) Роснефть и НАДЛ несут в равных долях.
6.7.All transfer taxes, stamp duties, registration charges and other similar taxes, duties and charges (as the case may be) chargeable for the issuance, allotment and transfer of Shares are payable by NADL.	6.7.Все расходы по уплате налогов, связанных с передачей имущества, регистрационных сборов и пошлин или других схожих налогов, сборов или пошлин (в зависимости от того, что применимо) за выпуск, размещение и передачу Акций несет НАДЛ.
6.8.The Agreement is executed in 3 copies in the Russian and English languages each. One of them shall be kept in folder of a notary. In the case of discrepancy between the English and Russian versions the Russian version shall prevail.	6.8.Настоящий Договор совершен в 3 экземплярах на русском и английском языках каждый. Один из них хранится в делах нотариуса. В случае противоречия между текстами на русском и английском языках русский текст будет иметь преимущество.
Signatures / Подписи Сторон
OJSC Rosneft Oil Company / ОАО «НК «Роснефть»	North Atlantic Drilling Ltd. / Норт Атлантик Дриллинг Лтд.
Name / Имя:	Name / Имя:
Title / Должность:	Title / Должность:
Signature / Подпись	Signature / Подпись
___________________________________	___________________________________

Город Москва.

_______________________ две тысячи четырнадцатого года

Настоящий договор удостоверен мной, [●], нотариусом города Москвы. Договор подписан в моем присутствии. Личность подписавших договор установлена, их дееспособность, а также полномочия представителей проверены.

Зарегистрировано в реестре под № _______________________

Взыскано по тарифу: _______________________ рублей.

Взыскано за правовую и техническую работу: _______________________ рублей.

Нотариус

7

8

Schedule 12
(Registration Rights Agreement)

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of [             ], 2014, by and between Seadrill Limited, a company organized under the laws of Bermuda ( “Seadrill”), Rosneft Oil Company, an open joint stock company organized under the laws of the Russian Federation (“Rosneft”), and North Atlantic Drilling Ltd., a company organized under the laws of the Bermuda (the “Company”).

WHEREAS, in connection with that certain Framework Agreement dated the date hereof (the “Framework Agreement”), the Company has, among other things, agreed to grant to the Holders (as defined below) and any of their respective Affiliates who from time to time own Registrable Securities certain registration rights applicable to Registrable Securities (as defined below) held by the Holders, and the parties hereto desire to enter into this Agreement to set forth the terms of such registration rights; and

WHEREAS, the execution and delivery of this Agreement by the parties hereto is a condition to the obligations of each of Rosneft, Seadrill and the Company under the Framework Agreement; and

NOW, THEREFORE, upon the premises and based on the mutual promises contained herein and in the Framework Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1.Certain Definitions. As used in this Agreement, the following initially capitalized terms shall have the following meanings:

(a)“Affiliate” means, with respect to any person, any subsidiary of such person that is controlled by such person; and “controlled by” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

(b)“Common Shares” means the Company’s Common Shares, par value $5.00 per share.

(c)“Company Securities” has the meaning set forth in Section 3 hereof.

(d)“Holder” means (i) Rosneft and any Affiliate of Rosneft (other than the Company or any of its Subsidiaries) who from time to time owns Registrable Securities, or (ii) any Permitted Transferee and any Affiliate of such Permitted Transferee who from time to time owns Registrable Securities.

(e)“Initiating Holders” has the meaning set forth in Section 3(b) hereof.

(f)“Initiating Holder Securities” has the meaning set forth in Section 3(b) hereof.

(g)“Maximum Marketable Amount” means, when used in connection with an underwritten offering, the aggregate number or principal amount of securities which, in the opinion of the managing underwriter for such offering, can be sold in such offering without materially and adversely affecting the offering (within a price range acceptable to holders a majority of Registrable Securities that have been requested for inclusion in such offering).

(h)“Other Holders” has the meaning set forth in Section 3(b) hereof.

(i)“Other Securities” has the meaning set forth in Section 3 hereof.

(j)“Permitted Transferee” has the meaning set forth in Section 11 hereof.

(k)“Person” means any individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, or other entity of whatever nature.

(l) “Registrable Securities” means any of the following held by a Holder (i) the Common Shares issued and sold pursuant to the Framework Agreement, (iii) any stock or other securities into which or for which such Common Shares may hereafter be changed, converted or exchanged, and (iv) any other securities issued to holders of such Common Shares (or such stock or other securities into which or for which such Common Shares are so changed, converted or exchanged) upon any reclassification, share combination, share subdivision, share dividend, share split, merger, consolidation, reorganization or similar transaction or event, provided that any such securities shall cease to be Registrable Securities when (a) such securities are transferred or sold in any manner to a person who is not a Permitted Transferee or after the registration rights with respect to the Holder thereof has expired pursuant to Section 12(h), (b) a Registration Statement covering such securities has been declared effective by the Commission and such securities have been disposed of pursuant to such effective Registration Statement, (c) such securities are have been under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, (d) such securities are otherwise transferred and such securities may be resold without subsequent registration under the Securities Act or (e) such securities shall have ceased to be outstanding.

(m)“Registration Expenses” means all out-of-pocket expenses incurred in connection with any registration of Registrable Securities pursuant to this Agreement (other than Selling Expenses), including, without limitation, the following; (i) all SEC, stock exchange, Financial Industry Regulatory Authority, Inc. (“FINRA”) and other registration, listing and filing fees and expenses; (ii) all fees, disbursements and expenses of the Company’s counsel(s) and accountant(s) in connection with the registration of the Registrable Securities to be disposed of and the reasonable fees, disbursements and expenses of one firm of attorneys for the Holders (selected by the Selling Holders who hold a majority of the Registrable Securities to be included in such registration statement), which fees shall not exceed (i) $40,000 per Registration Statement with respect to any underwritten offering and (ii) $15,000 with respect to any piggyback registration; (iii) all expenses in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus and any free writing prospectus (as defined in Rule 405 under the Securities Act) and amendments and supplements thereto and the mailing and delivering of copies thereof to any Holders, underwriters and dealers and all expenses incidental to delivery of the Registrable Securities; (iv) the cost of printing or producing any underwriting agreement, agreement among underwriters, agreement between syndicates, selling agreement, blue sky or legal investment memorandum or other document in connection with the offering, sale or delivery of the Registrable Securities to be disposed of; (v) all expenses in connection with the qualification of the Registrable Securities to be disposed of for offering and sale under state or non-U.S. securities laws in jurisdictions reasonably selected by the Holders that have requested registration of the Common Shares to be disposed of, including the reasonable fees and disbursements of counsel for the underwriters in connection with such qualification and the preparation of any blue sky and legal investments surveys (which fees and disbursements shall not exceed $40,000); (vi) transfer agents’, depositaries’ and registrars’ fees and the fees of any other agent appointed in connection with such offering; (viii) all security engraving and security printing, messenger, telephone and delivery expenses, (ix) internal expenses of the Company (including all salaries and expenses of employees of the Company performing legal or accounting duties); and (xi) all expenses incurred in connection with “roadshow” presentations and holding meetings with potential investors to facilitate the distribution and sale of Registrable Securities.

(n)“Rule 144” means Rule 144 promulgated under the Securities Act, or any successor rule to similar effect.

(o)“SEC” means the United States Securities and Exchange Commission.

(p)“Securities Act” means the Securities Act of 1933, as amended, or any successor statute.

(q)“Selling Expenses” means all underwriting discounts and commissions, selling concessions and stock transfer taxes applicable to the sale by the Holders of Registrable Securities pursuant to this Agreement.

(r)“Selling Holder” has the meaning set forth in Section 5(e) hereof.

2.Demand Registration.

(a)At any time prior to such time as the rights under this Section 2 terminate with respect to a Holder as provided in Section 12(h) hereof, upon written notice from such Holder in the manner set forth in Section 12(j) hereof requesting that the Company effect the registration under the Securities Act of any or all of the Registrable Securities held by such Holder or any of its Affiliates, which notice shall specify the intended method or methods of disposition of such Registrable Securities, the Company shall use its reasonable best efforts to effect, in the manner set forth in Section 5, the registration under the Securities Act of such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in such request (including (1) in an offering on a delayed or continuous basis under Rule 415 (or any successor rule of similar effect) promulgated under the Securities Act and accordingly requiring the filing of a “shelf” registration statement (a “Shelf Registration”) and/or (2) sales for cash or dispositions upon exchange or conversion of securities or dispositions for any form of consideration or no consideration), provided that:

(i)if, while a registration request is pending pursuant to this Section 2(a), the Company determines, following consultation with and receiving advice from its legal counsel, that the filing of a registration statement would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential and the disclosure of which the Company determines reasonably and in good faith would have a material adverse effect on any active proposal by the Company or its Subsidiaries to engage in any material acquisition, merger, consolidation, tender offer, business combination, reorganization or other material transaction, the Company shall not be required to effect a registration pursuant to this Section 2(a) until the earlier of (A) the date upon which such material information is otherwise disclosed to the public or ceases to be material and (B) 30 days after the Company makes such determination, provided, however, that the Company shall not be permitted to delay a requested registration in reliance on this clause (i) more than once in any 12-month period; provided, further, that, notwithstanding the foregoing, no such delay shall exceed such number of days that the Company determines in good faith to be reasonably necessary;

(ii)the Company shall not be obligated to file a registration statement relating to a registration request pursuant to this Section 2: (A) before the end of any applicable lock-up period; or (B) on more than three separate occasions; and

(iii)the Company shall not be required to file a separate registration statement, but may file one registration statement covering the Registrable Securities held by more than one Holder.

(b)Notwithstanding any other provision of this Agreement to the contrary, a registration requested by a Holder pursuant to this Section 2 shall not be deemed to have been effected (and, therefore, not requested for purposes of Section 2(a)), (i) unless the registration statement filed in connection therewith has become effective (and each Holder shall be permitted to withdraw all or part of such Holder’s Registrable Securities from a registration pursuant to this Section 2 at any time prior to the effective date thereof), (ii) if after such registration statement has become effective, it becomes subject to any stop order, or there is issued an injunction or other order or decree of the SEC or other governmental agency or court for any reason other than a misrepresentation or an omission by such Holder, which injunction, order or decree prohibits or otherwise materially and adversely affects the offer and sale of the Registrable Securities so registered, or if the registration is otherwise prohibited by applicable law, prior to the completion of the distribution thereof in accordance with the plan of distribution set forth in the registration statement or (iii) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied other than by reason of some act, misrepresentation or omission by a Holder and are not waived by the purchasers or underwriters.

(c)In the event that any registration pursuant to this Section 2 shall involve, in whole or in part, an underwritten offering, Holders owning at least a majority of the Registrable Securities to be registered in connection with such offering shall have the right to designate an underwriter reasonably satisfactory to the Company as the lead managing underwriter of such underwritten offering.

(d)The Company shall have the right to cause the registration of additional securities for sale for the account of any person (including the Company) in any registration of Registrable Securities requested by any Holder pursuant to Section 2(a); provided, however, that if the managing underwriter or other independent marketing agent for such offering (if any) determines that, in its opinion, the additional securities proposed to be sold will materially and adversely affect the offering and sale of the Registrable Securities to be registered in accordance with the intended method or methods of disposition then contemplated by such Holder, only the number or principal amount of such additional securities, if any (in excess of the number or principal amount of Registrable Securities), which, in the opinion of such underwriter or agent, can be so sold without materially and adversely affecting such offering shall be included in such registration. The rights of a Holder to cause the registration of additional Registrable Securities held by such Holder in any registration of Registrable Securities requested by another Holder pursuant to Section 2(a) shall be governed by the agreement of the Holders with respect thereto as provided in Section 11(a).

3.Piggyback Registration. If the Company proposes to register any of its Common Shares or any of its other securities (such Common Shares and other securities collectively, “Other Securities”) under the Securities Act, whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities under the Securities Act, it will at such time give prompt written notice to each Holder of its intention to do so (and, in any event, no later than 15 business days prior to the anticipated filing date of the registration statement relating to such registration). Such notice shall offer each such Holder the opportunity to include in such registration statement such number of Registrable Securities as each such Holder may request. Upon the written request of any such Holder made within 10 business days after the receipt of the Company’s notice (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), the Company shall effect, in the manner set forth in Section 5, in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Securities so requested to be registered, provided that:

(a)if at any time after giving written notice of its intention to register any securities and prior to the effective date of such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay registration of any Registrable Securities requested to be included in such registration for the same period as the delay in registering such Other Securities, but, in either such case, without prejudice to the rights of the Holders under Section 2;

(b)%4 if the registration referred to in the first sentence of this Section 3 is to be a registration in connection with an underwritten offering on behalf of any of the Company, holders of securities (other than Registrable Securities) of the Company (“Other Holders”) or Holders of Registrable Securities, and the managing underwriter for such offering advises the Company in writing that, in such firm’s opinion, such offering would be materially and adversely affected by the inclusion therein of Registrable Securities requested to be included therein pursuant to this Section 3 because such Registrable Securities are not of the same type, class or series as the securities to be offered and sold in such offering on behalf of the Company, the Other Holders and/or the Holders of Registrable Securities, the Company may exclude all such Registrable Securities requested to be included therein pursuant to this Section 3 from such offering;

(i)if the registration referred to in the first sentence of this Section 3 is to be a registration in connection with an underwritten primary offering on behalf of the Company, and the managing underwriter for such offering advises the Company in writing that, in such firm’s opinion, such offering would be materially and adversely affected by the inclusion therein of the Holder’s Registrable Securities requested to be included therein pursuant to this Section 3 because the number or principal amount of such Registrable Securities, considered together with the number or principal amount of securities proposed to be offered by the Company, exceeds the Maximum Marketable Amount, the Company shall include in such registration (1) first, all securities the Company proposes to sell for its own account (“Company Securities”); (2) second, the number or principal amount of Registrable Securities requested to be included therein pursuant to this Section 3 included in such registration (allocated among the Holders in accordance with the agreement of the Holders with respect thereto as provided in Section 11(a)); and (3) third, the number or principal amount of securities, if any, requested to be included therein by Other Holders (in excess of the number or principal amount of Company Securities and such Registrable Securities) which, in the opinion of such underwriter, can be so sold without materially and adversely affecting such offering (allocated pro rata among such Other Holders on the basis of the number or principal amount) of the securities requested to be included therein by each such Other Holder); and

(ii)if the registration referred to in the first sentence of this Section 3 is to be a registration in connection with an underwritten secondary offering on behalf of Other Holders made pursuant to demand registration rights granted by the Company to such Other Holders or on behalf of a Holder of Registrable Securities made pursuant to Section 2 of this Agreement (the “Initiating Holders”), and the managing underwriter for such offering advises the Company in writing that, in such firm’s opinion, such offering would be materially and adversely affected by the inclusion therein of the Holder’s Registrable Securities requested to be included therein pursuant to this Section 3 because the number or principal amount of such Registrable Securities, considered together with the number or principal amount of securities proposed to be offered by the Initiating Holders, exceeds the Maximum Marketable Amount, the Company shall include in such registration: (1) first, all securities any such Initiating Holder proposes to sell for its own account (the “Initiating Holder Securities”); (2) second, the number or principal amount of such Registrable Securities (in excess of the number or principal amount of Initiating Holder Securities) which, in the opinion of such underwriter, can be sold without materially and adversely affecting such offering (allocated among the Holders in accordance with the agreement of the Holders with respect thereto as provided in Section 11(a)); and (3) third, the number or principal amount of securities, if any, requested to be included therein by (x) Other Holders to which clause (1) does not apply or (y) the Company (in excess of the number or principal amount of Initiating Holder Securities and such Registrable Securities) which, in the opinion of such underwriter, can be so sold without materially and adversely affecting such offering (allocated among such Other Holders and the Company on the basis of the number or principal amount of the securities requested to be included therein by each such Other Holder or the Company; and

(c)the Company shall not be required to effect any registration of Registrable Securities under this Section 3 in any (i) registration statement on Form F-4 or S-8 (or such other similar successor forms then in effect under the Securities Act) or any other registration of any of its equity securities to be issued solely in connection with the Company’s acquisition of an entity or business in a transaction governed by Rule 145 promulgated under the Securities Act, (ii) registration of securities solely relating to an offering and sale to employees, directors or consultants of the Company or its subsidiaries pursuant to any employee stock plan or other employee benefit plan arrangement, (iii) registration not otherwise covered by clause (i) above pursuant to which the Company is offering to exchange its own securities for other securities, (iv) registration statement relating solely to dividend reinvestment or similar plans or (v) a shelf registration statement pursuant to which only the initial purchasers and subsequent transferees of debt securities of the Company or any of its subsidiaries that are convertible or exchangeable for Common Stock and that are initially issued pursuant to Rule 144A and/or Regulation S (or any successor provisions) of the Securities Act may resell such notes and sell the Common Stock into which such notes may be converted or exchanged;

(d)each Holder shall have the right to withdraw such Holder’s request for inclusion of its Registrable Securities in any underwritten public offering pursuant to this Section 3 at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to the Company of such Holder’s request to withdraw and, subject to the preceding clause, each Holder shall be permitted to withdraw all or part of such Holder’s Registrable Securities from a registration pursuant to this Section 3 at any time prior to the effective date thereof; and

(e)no registration of Registrable Securities effected under this Section 3 shall relieve the Company of its obligation to effect any registration of Registrable Securities required of the Company pursuant to Section 2 hereof.

4.Expenses. The Company agrees to pay all Registration Expenses with respect to a registration pursuant to this Agreement. All internal and other expenses of the Company or a Holder in connection with any offering pursuant to this Agreement, including, without limitation, the salaries and expenses of officers and employees, including in-house attorneys, shall be borne by the party incurring them. All Selling Expenses of the Holders participating in any registration pursuant to this Agreement shall be borne by such Holders pro rata based on each Holder’s number of Registrable Securities included in such registration.

5.Registration and Qualification. If and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2 or 3 hereof, the Company, shall:

(a)prepare and file a registration statement under the Securities Act relating to the Registrable Securities to be offered as soon as practicable, but in no event later than 45 days (60 days if the applicable registration form is other than Form F-3 or Form S-3) after the date notice is given, and use its reasonable best efforts to cause the same to become effective as soon as practicable thereafter, but in no event later than 135 days after the date notice is given (150 days if the applicable registration form is other than Form F-3 or Form S-3); provided that, a reasonable time before filing a registration statement or prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act and the rules and regulations adopted by the SEC thereunder), the Company will furnish to the Holders and their counsel and other representatives (including underwriters) for review and comment, copies of all documents proposed to be filed; and provided further, that if a Holder so requests (i) it and its counsel and other representatives (including underwriters) may participate in the drafting and preparation of such registration statement and prospectus and (ii) such information as it believes may be beneficial to be included in the registration statement and prospectus for marketing purposes shall be included therein so long as disclosure of such information is in compliance with applicable law;

(b)prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective with respect to the disposition of all Registrable Securities included therein and to otherwise comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities included therein until the earlier of (i) such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition set forth in such registration statement and (ii) the expiration of nine months (three years if the registration statement is a Form F-3 or Form S-3) after such registration statement becomes effective; provided, that such nine-month period shall be extended for such number of days that equals the number of days elapsing from (A) the date the written notice contemplated by paragraph (g) below is given by the Company to (B) the date on which the Company delivers to the Holders of Registrable Securities the supplement or amendment contemplated by paragraph (g) below;

(c)furnish to the Holders and to any underwriter of such Registrable Securities such number of conformed copies of such registration statement and of each amendment thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and of each supplement thereto, and of each free writing prospectus (as defined in Rule 405 under the Securities Act), in conformity with the requirements of the Securities Act, and such other documents, as the Holders or such underwriter may reasonably request in order to facilitate the public sale of the Registrable Securities, and a copy of any and all transmittal letters or other correspondence to, or received from, the SEC or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering;

(d)use its reasonable best efforts to register or qualify all Registrable Securities covered by such registration statement under the securities or blue sky laws of such jurisdictions (domestic or foreign) as the Holders or any underwriter of such Registrable Securities shall reasonably request, and use its reasonable best efforts to obtain all appropriate registrations, permits and consents required in connection therewith, and do any and all other acts and things which may be necessary or advisable to enable the Holders or any such underwriter to consummate the disposition in such jurisdictions of its Registrable Securities covered by such registration statement; provided that the Company shall not for any such purpose be required to register or qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, or to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction;

(e)(i) use its best efforts to furnish one or more opinions of counsel for the Company addressed to the underwriters and each Holder of Registrable Securities included in such registration (each a “Selling Holder”) dated the date of any closing under the underwriting agreement (if any) (or if such offering is not underwritten, dated the effective date of the registration statement), and (ii) use its best efforts to furnish one or more “comfort” letters addressed to the underwriters and each Selling Holder, if permissible under applicable accounting practices, and signed by the independent public accountants who have audited the Company’s financial statements included in such registration statement (or any financial statements of an acquired business or any other financial statements included in such registration statement), in each such case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities and such other matters as the Selling Holders may reasonably request and, in the case of such accountants’ letters, with respect to events subsequent to the date of such financial statements;

(f)immediately notify the Selling Holders in writing (i) at any time when a prospectus relating to a registration pursuant to Section 2 or 3 hereof is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) of any request by the SEC or any other regulatory body or other body having jurisdiction for any amendment of or supplement to any registration statement or other document relating to such offering, and (iii) of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement relating to such offering or the initiation of proceedings for that purpose and in any such case (i), (ii) or (iii) at the request of the Selling Holders, promptly prepare and furnish to the Selling Holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, to comply with such request by the SEC or any other regulatory authority or to remove such stop order;

(g)use its reasonable best efforts to list all such Registrable Securities covered by such registration on each securities exchange and inter-dealer quotation system on which the Common Shares is then listed and, if the Registrable Securities are a class of Common Shares that is not then so listed, then to list such securities on a securities exchange or inter-dealer quotation system selected by the holders of at least a majority of such Registrable Securities;

(h)use its reasonable best efforts to list all Registrable Securities covered by such registration statement on any securities exchange or inter-dealer quotation system (in each case, domestic or foreign) not described in paragraph (g) above as the Selling Holders or any underwriter of such Registrable Securities shall request, and use its reasonable best efforts to obtain all appropriate registrations, permits and consents required in connection therewith, and to do any and all other acts and things which may be necessary or advisable to effect such listing;

(i)to the extent reasonably requested by the lead or managing underwriters in connection with any underwritten offering, send appropriate officers of the Company to participate in any “road shows” and other customary marketing activities in connection with any such registration;

(j)use its reasonable best efforts to comply with all applicable rules of the SEC and to make available to its security holders, as soon as reasonably practicable (but not more than one hundred and twenty (120) days after the end of the twelve-month period beginning with the effective date of the registration statement), an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder;

(k)without limiting Section 5(e) above, use its reasonable best efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(l)without limiting the generality of any other provision of this Agreement, permit any Holder of Registrable Securities which Holder, in its reasonable judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such Holder and its counsel should be included; provided however that such language shall be removed if objected to by the Staff of the Securities and Exchange Commission; and

(m)otherwise use its reasonable best efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

The Company may require each Selling Holder to furnish the Company with such information regarding such Selling Holder and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request.

6.[intentionally left blank] .

7.Underwriting; Due Diligence.

(a)If requested by the underwriters for any underwritten offering of Registrable Securities pursuant to a registration requested under this Agreement, the Company shall enter into an underwriting agreement with such underwriters for such offering, such agreement to contain such representations and warranties by the Company and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution substantially to the effect and to the extent provided in Section 8 hereof and the provision of opinions of counsel and accountants’ letters to the effect and to the extent provided in Section 5(f) hereof and customary lock-up agreements. The Selling Holders on whose behalf the Registrable Securities are to be distributed by such underwriters shall be parties to any such underwriting agreement. Such underwriting agreement shall also contain such representations and warranties by the Selling Holders on whose behalf the Registrable Securities are to be distributed as are customarily contained in underwriting agreements with respect to secondary distributions (provided, for the sake of clarity, that such representations and warranties shall not include any representations and warranties other than those regarding such Selling Holder, such Selling Holder’s ownership of Registrable Securities to be sold in the offering and such Selling Holder’s intended method of distribution). The Selling Holders may require that any additional securities included in an offering proposed by a Holder be included on the same terms and conditions as the Registrable Securities that are included therein.

(b)In the event that any registration pursuant to Section 3 shall involve, in whole or in part, an underwritten offering, the Company may require the Registrable Securities requested to be registered pursuant to Section 3 to be included in such underwritten offering on the same terms and conditions as shall be applicable to the other securities being sold through underwriters under such registration. If requested by the underwriters for such underwritten offering, the Selling Holders on whose behalf the Registrable Securities are to be distributed shall enter into an underwriting agreement with such underwriters, such agreement to contain such representations and warranties by the Selling Holders (provided, for the sake of clarity, that such representations and warranties shall not include any representations and warranties other than those regarding such Selling Holder, such Selling Holder’s ownership of Registrable Securities to be sold in the offering and such Selling Holder’s intended method of distribution) and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution substantially to the effect and to the extent provided in Section 8 hereof and customary lock-up agreements.

(c)In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act, the Company shall give the Holders of such Registrable Securities and the Underwriters, if any, and their respective counsel and accountants, such reasonable and customary access to its books and records and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified the Company’s financial statements as shall be necessary, in the opinion of such Holders and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.

8.Indemnification and Contribution.

(a)In the case of each offering of Registrable Securities made pursuant to this Agreement, the Company agrees to indemnify and hold harmless each Holder, its officers and directors, each underwriter of Registrable Securities so offered and each person, if any, who controls any of the foregoing persons within the meaning of the Securities Act, from and against any and all claims, liabilities, losses, damages, expenses and judgments, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse them, as and when incurred, for any reasonable legal or other expenses incurred by them in connection with investigating any claims and defending any actions, insofar as such losses, claims, damages, liabilities or actions shall arise out of, or shall be based upon, any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or any free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment or supplement thereto, or in any document incorporated by reference therein, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company shall not be liable to a particular Holder in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement, or any omission, if such statement or omission shall have been made in reliance upon and in conformity with information relating to such Holder furnished to the Company in writing by or on behalf of such Holder and identified in such writing as being specifically for use in the preparation of the registration statement (or in any preliminary or final prospectus included therein) or any free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment or supplement thereto. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of a Holder and shall survive the transfer of such securities. The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to each Holder, any of such Holder’s directors or officers, underwriters of the Registrable Securities or any controlling person of the foregoing; provided, further, that this indemnity does not apply in favor of any underwriter or person controlling an underwriter (or, if a Selling Holder offers Registrable Securities directly without an underwriter, the Selling Holder) to the extent that any loss, liability, claim, damage or expense arises out of or is (i) based upon any untrue statement or alleged untrue statement or omission or alleged omission in the registration statement (or in any preliminary or final prospectus included therein) or any free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) that has been corrected in a subsequent applicable filing with the SEC but such underwriter or person controlling the underwriter (or the Selling Holder, if the Selling Holder offered the Registrable Securities directly without an underwriter) nonetheless failed to provide such corrected filing to the person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act or (ii) the gross negligence or willful misconduct of the underwriter or person controlling the underwriter (or, if a Selling Holder offers Registrable Securities directly without an underwriter, the Selling Holder).

(b)In the case of each offering made pursuant to this Agreement, each Holder of Registrable Securities included in such offering, by exercising its registration rights hereunder, agrees to indemnify and hold harmless the Company, its officers and directors and each person, if any, who controls any of the foregoing within the meaning of the Securities Act (and if requested by the underwriters, each underwriter who participates in the offering and each person, if any, who controls any such underwriter within the meaning of the Securities Act), from and against any and all claims, liabilities, losses, damages, expenses and judgments, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse them, as and when incurred, for any legal or other expenses incurred by them in connection with investigating any claim and defending any actions, insofar as any such losses, claims, damages, liabilities or actions shall arise out of, or shall be based upon, any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or any free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement of a material fact is contained in, or such material fact is omitted from, information relating to such Holder furnished in writing to the Company by or on behalf of such Holder and identified in such writing as being specifically for use in the preparation of such registration statement (or in any preliminary or final prospectus included therein) or any free writing prospectus (as defined in Rule 405 promulgated under the Securities Act). The foregoing indemnity is in addition to any liability which such Holder may otherwise have to the Company, any of its directors or officers, underwriters who participate in the offering or any controlling person of the foregoing; provided, however, that this indemnity does not apply in favor of any underwriter or person controlling an underwriter (or, if the Company offers Registrable Securities directly without an underwriter, the Company) to the extent that any loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission in the registration statement (or in any preliminary or final prospectus included therein) or any free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) that has been corrected in a subsequent applicable filing with the SEC but such underwriter or person controlling the underwriter (or the Company, if the Company offered the Registrable Securities directly without an underwriter) nonetheless failed to provide such corrected filing to the person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act.

(c)Each party indemnified under Paragraph (a) or (b) of this Section 8 shall, promptly after receipt of notice of any claim or the commencement of any action against such indemnified party in respect of which indemnity may be sought, notify the indemnifying party in writing of the claim or the commencement thereof; provided that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party on account of the indemnity agreement contained in paragraph (a) or (b) of this Section 8, except to the extent the indemnifying party was materially prejudiced by such failure, and in no event shall relieve the indemnifying party from any other liability which it may have to such indemnified party. If any such claim or action shall be brought against an indemnified party, and such indemnified party notifies the indemnifying party thereof, the indemnifying party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party, if each indemnifying party confirms in writing to the indemnified party that such indemnifying party has the obligation to indemnify the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided that each indemnified party, its officers and directors, if any, and each person, if any, who controls such indemnified party within the meaning of the Securities Act, shall have the right to employ separate counsel reasonably approved by the indemnifying party to represent them if the named parties to any action (including any impleaded parties) include both such indemnified party and an indemnifying party or an Affiliate of an indemnifying party, and such indemnified party shall have been advised by counsel that a conflict may exist between such indemnified party and such indemnifying party or such Affiliate that makes representation by the same counsel inadvisable, or if the indemnified party has concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or in conflict with those available to the indemnifying party, or such claim or action seeks an injunction or equitable relief against an indemnified party or involves actual or alleged criminal activity, or such claim or action involves or could have an effect upon matters beyond the scope of the indemnity provided herein, and in any such case the fees and expenses of one such separate counsel for all such indemnified parties shall be paid by the indemnifying party. An indemnified party will not enter into any settlement agreement which is not approved by the indemnifying party, such approval not to be unreasonably withheld, delayed or conditioned. The indemnifying party may not agree to any settlement of any such claim or action which (i) provides for any remedy or relief other than monetary damages for which the indemnifying party shall be responsible hereunder or (ii) does not include as an unconditional term thereof the delivery by each claimant or plaintiff to each indemnified party a written full and unconditional release from all liability in respect of such claim or action, without the prior written consent of the indemnified party. In any action hereunder as to which the indemnifying party has assumed the defense thereof with counsel reasonably satisfactory to the indemnified party, the indemnified party shall continue to be entitled to participate in the defense thereof, with counsel of its own choice, but, except as set forth above, the indemnifying party shall not be obligated hereunder to reimburse the indemnified party for the costs thereof.

(d)If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to herein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, in such proportion as shall be appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information related to and supplied by the indemnifying party on the one hand or the indemnified party on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission, but not by reference to any indemnified party’s stock ownership in the Company. In no event, however, shall a Holder be required to contribute in excess of the amount of the net proceeds received by such Holder in connection with the sale of Registrable Securities in the offering which is the subject of such loss, claim, damage or liability. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this paragraph shall be deemed to include, for purposes of this paragraph, any legal or other expenses reasonably incurred by such indemnifying party in connection with investigating, preparing to defend or defending any such action or claim or appearing as a third party witness with respect thereto. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

9.Rule 144/Form F-3 or Form S-3. The Company shall take such measures and file such information, documents and reports as shall be required by the SEC as a condition to the availability of Rule 144 (or any successor provision). The Company shall use its reasonable best efforts to cause all conditions to the availability of Form F-3 or Form S-3 (or any successor form thereto) under the Securities Act for the filing of registration statements under this Agreement to be met (except for conditions that relate to the number of securities of the Company owned by non-affiliates of the Company).

10.Holdback.

(a)Each Holder agrees, if so required by the managing underwriter of any offering of equity securities by the Company and provided that the Company and each of its executive officers and directors enter into similar agreements, not to sell, make any short sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of any Registrable Securities owned by such Holder, during the 7 days prior to and the 90 days after the registration statement relating to such offering has become effective (or such shorter period as may be required by the underwriter), except as part of such underwritten offering. Notwithstanding the foregoing sentence, each Holder subject to the foregoing sentence shall be entitled at any time to (i) deliver shares of Common Shares or other securities upon the exercise of an option or warrant or the conversion or exchange of a security outstanding on such date, (ii) sell any Registrable Securities acquired in open market transactions after the completion of such underwritten offering, (iii) sell any Registrable Securities in a transaction in which the purchaser agrees to be bound by the restrictions contained in the foregoing sentence and (iv) in the case of a Holder or its Affiliates, effect any distribution of shares of Common Shares to the holders of its shares by means of a distribution or exchange offer in a transaction intended to qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, as amended, or any corresponding provision of any successor statute. The Company may legend and may impose stop transfer instructions on any certificate evidencing Registrable Securities relating to the restrictions provided for in this Section 10. The Holders shall not be subject to the restrictions set forth in this Section 10(a) for longer than 97 days during any 12-month period and a Holder shall no longer be subject to such restrictions at such time as such Holder together with its Affiliates shall own less than 5% of the then outstanding shares of Common Shares on a fully-diluted basis. Notwithstanding anything to the contrary in this Section 10, each Holder of Registrable Securities shall be released, pro rata, from any agreement entered into pursuant to this Section 10 in the event and to the extent that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions in any such agreement pertaining to any officer, director or other holder of shares of Common Shares subject to such an agreement.

(b)The Company agrees, if so required by the managing underwriter of any offering of Registrable Securities, not to sell, make any short sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of any of its equity securities during the 30 days prior to and the 90 days after any underwritten registration pursuant to Section 2 or 3 hereof has become effective, except as part of such underwritten registration. Notwithstanding the foregoing sentence, the Company shall be entitled to (i) issue shares of Common Shares or other securities upon the exercise of an option or warrant, the settlement of any securities pursuant to employee benefit plans or the conversion or exchange of a security outstanding on such date, (ii) grant shares of Common Shares or other securities pursuant to employee benefit plans in effect on such date and (iii) sell shares of Common Shares or other securities in a transaction in which the purchaser agrees to be bound by the restrictions contained in the preceding paragraph. The Company shall use its reasonable best efforts to obtain and enforce similar agreements from any other Persons (other than the Holders, to which Section 10(a) applies) if requested by the managing underwriter of such offering.

11.Transfer of Registration Rights.

(a)A Holder may, subject to the terms of the shareholders’ agreement between Seadrill and Rosneft, transfer all or any portion of its rights under this Agreement to any transferee of a number of Registrable Securities that represents (assuming the conversion, exchange or exercise of all Registrable Securities so transferred that are convertible into or exercisable or exchangeable for the Company’s Common Shares) at least 5% of the then issued and outstanding Common Shares of the Company (each, a “Permitted Transferee”). Any Holder electing to transfer registration rights pursuant to this Section shall provide the Company with written notice promptly following such Holder’s execution of a binding agreement to transfer Registrable Securities. Such notice shall state the name and address of any Permitted Transferee and identify the number and/or aggregate principal amount of Registrable Securities with respect to which the rights under this Agreement are being transferred and the scope of the rights so transferred. In connection with any such transfer, the term “Holder” as used in this Agreement (other than in Sections 2(a)(ii) and 5(a)) shall, where appropriate to assign the rights and obligations hereunder to such Permitted Transferee, be deemed to refer to the Permitted Transferee of such Registrable Securities. Holders and any Permitted Transferees may exercise the registration rights hereunder in such priority, as among themselves, as they shall agree among themselves, and the Company shall observe any such agreements of which it shall have notice as provided above.

(b)After any such transfer, the transferring Holder shall retain its rights under this Agreement with respect to all other Registrable Securities owned by such transferring Holder.

(c)Upon the request of the transferring Holder, the Company shall execute an agreement with a Permitted Transferee substantially similar to this Agreement.

12.Miscellaneous.

(a)Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party who is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived.

(b)Severability. If any term or other provision of this Agreement is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

(c)Further Assurances. Subject to the specific terms of this Agreement, each of the parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.

(d)Failure or Indulgence not Waiver; Remedies Cumulative. No failure or delay on the part of either party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

(e)Entire Agreement. This Agreement, together with the Framework Agreement, contains the final and complete understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties, whether written or oral, with respect to the subject matter hereof. Notwithstanding the foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the Framework Agreement, the terms of this Agreement shall control.

(f)No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties and their respective Subsidiaries and is not intended to confer upon any other Person except the parties and their respective Subsidiaries any rights or remedies hereunder, and except for (i) any indemnified person under Section 8 and (ii) any Permitted Transferee.

(g)Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.

(h)Termination. The right of any Holder to request registration or inclusion in any registration pursuant to this Agreement shall terminate on such date as all Registrable Securities held or entitled to be held upon conversion by such Holder and its Affiliates may immediately be sold under Rule 144 during any ninety (90) day period.

(i)Amendment. No change or amendment will be made to this Agreement except by an instrument in writing signed on behalf of each of the parties.

(j)Notices. Unless expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or other generally accepted means of electronic transmission, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (ii) or (iii)), addressed as follows or sent by facsimile to the following number (or to such other address or facsimile number for a party as it shall have specified by like notice):

(i)if to the Company, to

Name:        North Atlantic Management AS

Address:    Løkkeveien 107, 4001 Stavanger, Norway

Email:        alf.ragnar.lovdal@seadrill.com

(ii)if to a Holder of Registrable Securities, to the name and address as the same appear in the security transfer books of the Company,

or to such other address as either party (or other Holders of Registrable Securities) may, from time to time, designate in a written notice in a like manner.

(k)Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

(l)Binding Effect; Assignment. This Agreement shall inure to the benefit of and be binding upon the parties and their respective legal representatives and successors. Except as specifically provided herein, and except that each Holder may assign any or all of its rights, interests and obligations hereunder to an Affiliate of such Holder, provided that any such Affiliate agrees in writing to be bound by all of the terms, conditions and provisions contained herein, this Agreement may not be assigned by either party.

(m)Preservation of Rights. The Company shall not hereafter grant any rights to any person to register securities of the Company, which are more favorable than, or would be inconsistent or conflict with, the rights granted to the Holders of the Registrable Securities under this Agreement. Without limiting the generality of the foregoing, the Company shall not hereafter grant to any person demand registration rights permitting it to exclude the Holders from including Registrable Securities in a registration on behalf of such person on a basis more favorable than that set forth in Section 2(d) hereof with respect to the Holders.

(n)Resolution of Disputes. If a dispute, claim or controversy results from or arises out of or in connection with this Agreement, the parties agree to use the procedures set forth in Clause 34 of the Framework Agreement, in lieu of other available remedies, to resolve the same.

(o)Construction. This Agreement shall be construed as if jointly drafted by the parties and, except as set forth in this Section 12(o), no rule of construction or strict interpretation shall be applied against any party. The paragraph headings contained in this Agreement are for reference purposes only, and shall not affect in any manner the meaning or interpretation of this Agreement.

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed by their authorized representative as of the date first written above.

NORTH ATLANTIC DRILLING LTD.
By:
Name:
Title:

SEADRILL LIMITED
By:
Name:
Title:

ROSNEFT OIL COMPANY
By:Name:
Title:

Schedule 13
(TSA Provisions)

1. Services

1.1 Rosneft (the “Provider”) shall provide or procure the provision of (i) the Transitional Services; (ii) the Turnkey Services and Turnkey Materials; and (iii) the Operational Services and Operational Materials (together, the “Services” and the “Materials”, respectively) to NADL (the “Recipient”) or such members of the Recipient’s Group as the Recipient may direct.

2. Term

Transitional Services

2.14 The Provider shall provide or procure the provision of the Transitional Services for a period of 24 months from Completion (or for such other period as may be agreed between the Provider and the Recipient).

2.15 The Recipient may notify the Provider at any time during the 24 month period that certain Transitional Services (or certain components of a Transitional Service) are no longer required (the “Redundant Services”). Within 20 days of receipt of such notification, the Provider shall notify the Recipient (the “Increase Notice”) of any actual increase in the cost the Provider will incur (the “Actual Cost Increase”) as a result of the termination of the Redundant Services (the “Related Services”), and any adverse impact that it envisages on its ability to perform the Related Services (an “Adverse Impact”) as a result of the Redundant Services being terminated, and shall provide such information and evidence as the Recipient may reasonably require to evidence such increase and impact. The Provider shall use reasonable endeavours to mitigate the Actual Cost Increase as a result of the termination of the Redundant Services.

2.16 If the Recipient wishes to terminate the Redundant Services it may do so on 30 days’ written notice from the date on which the Increase Notice is required to be served under Paragraph 2.2, whereupon the Provider shall cease to provide or procure the provision of the Redundant Services and its charges shall be reduced accordingly. However, the Provider shall be entitled to increase its charges for the Related Services by the amount of the Actual Cost Increase (provided this shall not be more than the amount notified in the Increase Notice) plus such amount (not being greater than 5% of the Actual Cost Increase) as shall be necessary to comply with Russian transfer pricing regulations. The Provider shall not be liable to the Recipient for any Adverse Impact on the Related Services that results from termination of the Redundant Services.

Operational Services and Materials

2.17 The Provider shall provide or procure the provision of the Operational Services and Operational Materials in relation to each Onshore Drilling Contract for such period as the relevant Onshore Drilling Contracts remains in effect or, if shorter, for a period of 5 (five) years from the Completion Date.

2.18 The provisions of Paragraphs 2.2 and 2.3 above shall apply, mutatis mutandis, in relation to any Operational Services or Operational Materials (or components thereof) that the Recipient no longer requires during the period in which Operational Services or Operational Materials are being provided.

Turnkey Services and Materials

2.19 The Provider shall provide or procure the provision of the relevant Turnkey Services and Turnkey Materials in relation to each Turnkey Contract (in addition to the Operational Services and Operational Materials) for such period as the relevant contract remains a Turnkey Contract for the purposes of this Schedule.

2.20 The provisions of Paragraphs 2.2 and 2.3 above shall apply, mutatis mutandis, in relation to any Turnkey Services or Turnkey Materials (or components thereof) that the Recipient no longer requires during the period in which Turnkey Services or Turnkey Materials are being provided.

3. Service Levels

3.16 The Provider shall procure that the Services and Materials are provided with all reasonable skill and care on the terms and conditions set out in this Schedule and in the SLAs.

3.17 In the event of any conflict between this Schedule and the SLAs, including as to the term of any such arrangements, this Schedule shall prevail. The Provider and the Recipient respectively shall procure that members of the Retained Group and members of the Recipient’s Group give effect to the terms of this Schedule. The Provider shall procure that the Services and Materials shall be provided under this Schedule and (subject to the previous sentence) on the terms set out in the SLAs for the periods referred to in Paragraph 2 above notwithstanding the earlier expiry of any of the SLAs provided that if the Recipient’s Group is in material breach of its obligations under an SLA and such breach has not been remedied within a reasonable period of time, then the Provider shall be entitled to terminate the relevant SLA in accordance with its terms and shall not be liable to the Recipient as a result of such termination.

3.18 The Provider may amend some or all of the SLAs between the date of this Agreement and Completion in order to incorporate into such SLAs the terms of this Schedule, but shall not otherwise amend or terminate any SLA without the Recipient’s prior written consent.

3.19 If either the Provider or the Recipient can establish prior to Completion to the reasonable satisfaction of the other that the historic performance of the Retained Group under any SLA has been consistently higher or consistently lower than the standard required under the relevant SLA, the Provider and the Recipient shall discuss in good faith and make appropriate amendments to the relevant SLA to reflect the higher or lower historic standard of performance, PROVIDED THAT no such amendments shall be made to the extent they could reasonably be expected to compromise the Recipient’s Group’s ability to perform its contractual obligations under the Onshore Drilling Contracts or Turnkey Contracts or comply with applicable Russian law. The Provider shall, upon reasonable notice and subject to the receipt of such undertakings as to confidentiality as the Provider shall reasonably require, provide the Recipient with such information and access to books, records and employees of the Retained Group as the Recipient may reasonably request for the purpose of assessing historic performance levels and any differences between those levels and the standard of performance required under the SLAs provided that the provision of such information and access shall not cause undue disruption to the Provider’s business and activities.

3.20 The Provider and the Recipient agree that, to the extent that the Provider and the Recipient agree to make any changes to the Services and Materials and the terms on which they will be provided in accordance with this Schedule, the Recipient and the Provider shall procure that the SLAs shall be amended in order to incorporate into such SLAs any such changes.

4. Third Party Consents

4.12 The Provider shall promptly obtain from Third Party Providers (in each case, to the extent not already obtained) and shall maintain such consents, licences, permits and approvals as are required by the Provider under the Third Party Contracts for the performance of its obligations set out in this Schedule and to permit the Recipient to obtain the full benefit of the Services and Materials (the “Provider Third Party Consents”).

4.13 The Recipient shall provide all such reasonable assistance in obtaining the Provider Third Party Consents as the Provider may reasonably request from time to time.

4.14 The costs of obtaining and maintaining any Provider Third Party Consents shall be borne by the Provider.

5. Fees

Transitional Services

5.35 The fees payable by the Recipient for the Transitional Services shall be: (i) during the period of up to 18 months from Completion, on the same terms as prevailed during the 12 months prior to the Signing Date, provided that the such fees shall increase in line with the annual level of cost inflation permitted under clause 5.1, Section 4 of the Onshore Drilling Contracts and shall be adjusted to the extent necessary to comply with the Russian transfer pricing regulations but shall not, in any event, be greater than the actual cost to the Provider plus 5%; and (ii) during the period from 18 months up to 24 months from Completion, an amount equal to the actual cost to the Provider of providing the relevant services plus 7%.

Operational Services and Materials

5.36 The Operational Services and the Operational Materials shall be provided on the same basis and under the same terms and conditions as regards fees and charges which applied in respect of the provision of those services pursuant to the SLAs in the 12 months prior to the Signing Date provided that such fees, charges or underlying costs for the Operational Services or Operational Materials (or any component thereof) after 31 December 2013 shall increase in line with the annual level of cost inflation permitted under clause 5.1, Section 4 of the Onshore Drilling Contracts.

Turnkey Services and Materials

5.37 The Turnkey Services and the Turnkey Materials shall be provided on the same basis and under the same terms and conditions as regards fees and charges which applied in respect of the provision of those services pursuant to the Turnkey Contracts in the 12 months prior to the Signing Date provided that such fees, charges or underlying costs for the Turnkey Services or Turnkey Materials (or any component thereof) after 31 December 2013 shall increase in line with the annual level of cost inflation permitted under clause 5.1, Section 4 of the Onshore Drilling Contracts.

5.38 Notwithstanding the foregoing provisions of this Paragraph 5, where Services or Materials comprise components that are sourced from outside the Retained Group as at the date of this Agreement, the actual cost of such components shall be recharged to the Recipient on a pass-through basis (subject to the Provider acting in a commercially prudent way), with the intention that the Recipient shall bear a proportionate share of any increase or decrease in the underlying cost.

5.39 The Provider shall be permitted to:

(A) outsource any components of the Services or Materials which are provided to the Sale Group and are not sourced from outside the Retained Group as at the date of this Agreement with the prior written consent of the Recipient (not to be unreasonably withheld or delayed);

(B) outsource any components of the Services or Materials which are not provided or outsourced by the Retained Group as at the date of this Agreement (the “New Services”) without the prior consent of the Recipient PROVIDED that:

(i) Rosneft shall notify NADL in writing promptly upon the outsourcing of such New Services (which notice shall include full details of any such New Services and the terms on which such New Services are provided);

(ii) no later than three Business Days prior to Completion, NADL shall notify Rosneft in writing whether it wishes such New Services (or any part of them) to be provided to the Sale Group following Completion;

(iii) if NADL does not serve a notice or notifies Rosneft that it does not wish the New Services (or any part of them) to be provided to the Sale Group following Completion, Rosneft shall terminate the relevant New Services on or before Completion and Rosneft shall ensure that such termination shall not result in any cost implications or any break fees, termination payments, penalties or other similar liabilities for NADL or the Sale Group; and/or

(C) transfer the provision of any components of the Services or Materials which are provided to the Sale Group and which are outsourced by the Retained Group as at the date of this Agreement to any other provider without the prior consent of the Recipient provided that any such change of provider does not result in a material change in the cost of such components or the quality of the service provided to the Sale Group.

5.40 The Provider shall procure that the allocation or apportionment of underlying costs between the Materials and Services provided to the Recipient’s Group on the one hand, and the other activities and operations to which such costs relate on the other hand, is done on a fair and proportionate basis and that the Recipient’s Group receives a fair and proportionate share of any rebates, refunds, credits or other benefits received by the Retained Group in respect thereof.

6. Liability

6.19 The maximum aggregate liability of the Provider and any member of the Retained Group arising out of or in connection with any breach of this Schedule in any period from 1 January to 31 December shall be an amount equal to:

(A) in the case of the Transitional Services, 5 times (5x) the aggregate amount of fees payable by the Recipient Group in respect of such services in such 12 month period;

(B) in the case of the Operational Services, 5 times (5x) the aggregate amount of fees payable by the Recipient Group in respect of such services in such 12 month period;

(C) in the case of the Operational Materials, 5 times (5x) the aggregate amount of fees payable by the Recipient Group in respect of such materials in such 12 month period;

(D) in the case of the Turnkey Services, 5 times (5x) the aggregate amount of fees payable by the Recipient Group in respect of such services in such 12 month period;

(E) in the case of the Turnkey Materials, 5 times (5x) the aggregate amount of fees payable by the Recipient Group in respect of such materials in such 12 month period;

6.20 The Provider does not exclude or limit its liability for fraud or for death or personal injury caused by its negligence or that of its employees or agents.

6.21 Neither the Recipient nor any member of the Recipient’s Group shall be liable for any breach of the Onshore Drilling Contracts to the extent that such liability is caused by, or attributable to, the Provider’s failure to provide or procure the provision of any of the Services or Materials or by any negligence or default of the Provider or any member of the Provider’s Group or any breach of applicable law (a “Provider Default”) and the Provider shall procure that no member of the Provider’s Group brings any claim against a member of the Recipient’s Group in respect of any loss, liability, cost, claim, matter or event to the extent caused by or attributable to a Provider Default. The Recipient and the Provider agree that liability under the Onshore Drilling Contracts and the SLAs in this regard shall be assessed and determined under the terms of those agreements including the relevant dispute resolution clauses.

7. Pensions

The Recipient shall take such steps as are necessary to ensure that no adverse changes to the pensions of the employees of the Sale Group occur following Completion, provided that the Provider shall procure prior to Completion that the Company maintains the current pension scheme arrangements of the employees of the Sale Group.

8. Access and Documentation

8.6 The Provider will, upon reasonable notice (accompanied by full details regarding the nature and reasons for the request) and subject to the receipt of such undertakings as to confidentiality as the Provider shall reasonably require, provide the Recipient (and the Recipient’s professional advisers) with access to books, records and personnel in connection with the provision of the Services and Materials to the extent strictly necessary to enable the Recipient to comply with its regulatory obligations (including any SEC filing requirements).

8.7 The Provider will provide, and procure that members of the Provider’s Group provide, upon reasonable notice (accompanied by full details regarding the nature and reasons for the request) and subject to the receipt of such undertakings as to confidentiality as the Provider shall reasonably require, the Recipient with reasonable supporting documents and access to books, records and personnel in respect of all costs incurred and fees charge in respect of the Services and Materials and the Recipient shall have the right to audit the costs of the Provider and members of the Provider’s Group at its own cost. Save in the case of fraud, any such access or audit shall be limited to matters relating to or arising in the then current calendar year, and the preceding calendar year.

8.8 In order to allow the Recipient to exercise its rights under this Paragraph 8, the Provider shall retain all relevant data for a period of 1 year and thereafter deliver such data to the Recipient who shall be entitled to retain such data for such period as it wishes.

8.9 The Provider shall not be liable to comply with its obligations under Paragraphs 8.1 and/or 8.2 if to do so would cause undue disruption to the Provider’s business and activities.

9. Transition and Separation

9.9 Within 5 Business Days of the Signing Date, the Provider and the Recipient shall form a committee which shall be tasked with formulating a plan for the separation of the Sale Group from the Retained Group and the later transition of the services covered by this Schedule to the Recipient and the Recipient’s Group (the “Transition and Separation Plan”). Each of the Provider and the Recipient shall use its best endeavours to finalise the Transition and Separation Plan by Completion.

9.10 The Provider and the Recipient will appoint people to act as project leaders and function heads to lead the process of agreeing, implementing and monitoring the operation of the Transition and Separation Plan in the following areas:

Role

Project Leader

IT

Accounting

HR

Security

Banking

Communication

Operations Performance/Excellence

QHSE

Supply Chain

Insurance

Operational Issues

Turnkey Issues

9.11 Relevant employees of the Sale Group will also be co-opted to assist in the process.

9.12 The Transition and Separation Plan will cover: (i) the actions which need to be taken to ensure that the Recipient is able to properly conduct the operations of the Sale Group from Completion, including changes to approval, accounting and other processes and procedures that will need to be implemented from Closing (“Pre-day 1 Actions”); and (ii) the actions which are required to ensure that the Recipient is able to transition off the Transitional Services during the 24 month period following Completion.

9.13 The Provider shall provide such reasonable assistance as the Recipient may require to implement the Pre-day 1 Actions.

9.14 If the Provider and the Recipient cannot reach agreement in respect of any aspect of the Transition and Separation Plan, then either the Provider or the Recipient may refer the matter to the project leaders who shall use all reasonable endeavours to reach an agreement. If the project leaders do not reach agreement within 10 Business Days of the matter being referred to them, the matter shall be referred, in the case of the Provider, to the representative of the Rosneft Group appointed as the Company Representative (as defined in and appointed in accordance with the Onshore Drilling Contracts) and, in the case of the Recipient, to the representative of the Recipient’s Group appointed as the Contractor Representative (as defined in and appointed in accordance with the Onshore Drilling Contracts).

10. Intellectual Property

To the extent that it is able to do so and for the period from Completion until the earlier of: (i) the termination or expiry of all of the Onshore Drilling Contracts; and (ii) the fifth anniversary of the Completion Date, the Provider grants, and shall procure that each relevant member of the Provider’s Group shall grant, to the Recipient a royalty-free, fully paid-up, non-exclusive licence to use Intellectual Property owned by any member of the Retained Group which has been used by any member of the Sale Group and which relates specifically to the Services and the Materials during the 3 years up to Completion.

11. Recipient Group Information

11.8 The Provider shall procure that controls and processes are put in place which ensure that the entities and persons providing the Services and/or Materials to the Recipient’s Group only have access to such information relating to the Recipient’s Group as is necessary to be able to provide the relevant Services and/or Materials.

11.9 The Provider shall procure that, subject to Paragraph 11.1 above, no information relating to the Recipient’s Group is disseminated through the Provider’s Group without the prior written consent of the Recipient.

12. Additional Definitions

In this Schedule:

“Accounting Services” means those accounting services which were provided by the Retained Group to any member of the Sale Group prior to the Signing Date and which are reasonably required by members of the Recipient’s Group following Completion, with one example being the services performed under the RN-Uchet agreement on statutory and tax accounting services dated 17 Dec 2010, with such services including but not limited to services relating to: statutory accounting and tax accounting, statutory and tax reporting to official bodies; accounting; tax administration; organisational matters; preparation of the Completion Accounts; and finance systems;

“Group” means, with respect to:

(i) the Provider, the Provider, its subsidiaries and subsidiary undertakings from time to time and any other persons controlled by the Provider (but excluding any member of the Sale Group); and

(ii) the Recipient, the Recipient, its subsidiaries and subsidiary undertakings from time to time and shall include the Sale Group from the Completion Date;

“IT Services” means those IT services which were provided by the Retained Group to any member of the Sale Group prior to the Signing Date and which are reasonably required by members of the Recipient’s Group following Completion, with examples being the services performed under the RN-Inform and RN agreements on IT services, with such services including but not limited to services in Moscow, in branches and in rig operations relating to: IT support (including but not limited to email services, equipment and local infrastructure management); network and internet; satellite services; mobile and fixed line telecommunications and conferencing; software support; consulting services; metrological services; and IP rights transferring;

“Operational Materials” means all of the materials of an operational nature which were provided by the Retained Group to any member of the Sale Group prior to the Signing Date and which are reasonably required by members of the Recipient’s Group in order to perform services under the Onshore Drilling Contracts (other than the Turnkey Contracts) following Completion with such materials including but not limited to those materials relating to: transportation services; maintenance services; fuel; equipment rentals; and real estate and camp rentals;

“Operational Services” means all of the services of an operational nature which were provided by the Retained Group to any member of the Sale Group prior to the Signing Date and which are reasonably required by members of the Recipient’s Group in order to perform services under the Onshore Drilling Contracts (other than the Turnkey Contracts) following Completion with such services including but not limited to: transportation services; maintenance services; fuel; equipment rentals; and real estate and camp rentals;

“SLAs” means the service level agreements under which services and materials equivalent to the Services and the Materials are currently performed and provided by the Retained Group to the Sale Group, including those agreements set out in Folders 1.2.15.4.1, 1.2.15.7.1, 2.2.3.6 and 3.2.5.4 of the Rosneft Data Room;

“Third Party Contract” means any agreement or arrangement entered into between the Provider and a Third Party Provider;

“Third Party Provider” means any third party supplier who is engaged by any member of the Provider’s Group to provide services or materials covered by this Schedule or which are used in connection with the provision of the Services or Materials or the performance of obligations under this Schedule;

“Transitional Services” means those non-operational support services which were provided by the Retained Group to any member of the Sale Group prior to the Signing Date and which are reasonably required by members of the Recipient’s Group following Completion including but not limited to services in respect of the following areas: Accounting Services; banking; communication; IT Services; and security;

“Turnkey Contracts” means those Onshore Drilling Contracts between the Sale Group and the Retained Group which operate on a “turnkey” basis rather than a “day rate” basis, it being recognised that once an Onshore Drilling Contract switches from a “turnkey” basis to a “day rate” basis it will cease to be a “Turnkey Contract” for the purposes of this Schedule, whereupon the Provider will cease to provide Turnkey Contracts and Turnkey Materials in relation to such contract, but will continue to provide Operational Services and Operational Materials;

“Turnkey Materials” means those materials (including but not limited to diesel, lubricants and heating oil but excluding Operational Materials) which were provided by the Retained Group to any member of the Sale Group prior to the Signing Date pursuant to the Turnkey Contracts and which are reasonably required by members of the Recipient’s Group in order to perform services under the Turnkey Contracts following Completion; and

“Turnkey Services” means those services which were provided by the Retained Group to any member of the Sale Group prior to the Signing Date pursuant to the Turnkey Contracts and which are reasonably required by members of the Recipient’s Group in order to perform services under the Turnkey Contracts following Completion, but excluding Operational Services.

IN WITNESS WHEREOF this Agreement has been signed by the parties on the date stated at the beginning of this Agreement.

On behalf of Rosneft Oil Company

Name: K.A. Zielicki

Title: Attorney

Signature:

/s/ K.A. Zielicki

On behalf of Seadrill Limited

Name: Tor Troim

Title: Director

Signature:

/s/ Tor Troim

On behalf of North Atlantic Drilling Ltd.

Name: Tor Troim

Title: Authorized Signatory

Signature:

/s/ Tor Troim

Attachment 1
(Sale Group information)

Part A
(Basic information about the Company)

(1)	Registered number (OGRN)	:	*****
(2)	Date of incorporation	:	*****
(3)	Place of incorporation	:	Russian Federation
(4)	Address of registered office	:	*****
(5)	Company form	:	Limited Liability Company
(6)	Registered charter capital amount	:	*****
(7)	Ownership of participatory interest	:	*****
(8)	Accounting reference date	:	31 December
(9)	Auditors	:	*****
(10)	Tax residence	:	Russian Federation
(11)	Braches and representative offices	:	*****

Part B
(Basic information about the Subsidiaries)

1.    Limited Liability Company Orenburgskaya burovaya kompaniya

(1)	Registered number (OGRN)	:	*****
(2)	Date of incorporation	:	*****
(3)	Place of incorporation	:	Russian Federation
(4)	Address of registered office	:	*****
(5)	Company form	:	Limited Liability Company
(6)	Registered charter capital amount	:	*****
(7)	Ownership of participatory interest	:	*****
(8)	Accounting reference date	:	31 December
(9)	Auditors	:	*****
(10)	Tax residence	:	Russian Federation
(11)	Branches and representative offices	:	*****

2.    OOO OBK-Servis

(1)	Registered number (OGRN)	:	*****
(2)	Date of incorporation	:	*****
(3)	Place of incorporation	:	Russian Federation
(4)	Address of registered office	:	*****
(5)	Company form	:	Limited Liability Company
(6)	Registered charter capital amount	:	*****
(7)	Ownership of participatory interest	:	*****
(8)	Accounting reference date	:	31 December
(9)	Auditors	:	*****
(10)	Tax residence	:	Russian Federation
(11)	Branches and representative offices	:	*****

Attachment 2
(Relevant Properties)

Part A: Relevant Properties of the Company

No.	Object	Identification number	Book value (Rubles)	Depreciation (amortization) (Rubles)	Depreciated cost (Rubles)	Certificate No. and date	Cadastral No.
*****	*****	*****	*****	*****	*****	*****	*****

Part B. Relevant Properties of Orenburg

No.	Object	Identification number	Book value (Rubles)	Depreciation (amortization) (Rubles)	Depreciated cost (Rubles)	Certificate No. and date	Cadastral No.
*****	*****	*****	*****	*****	*****	*****	*****

Attachment 3
(Land Rigs)

PART A

Part A: Land Rigs operated by the Company and Orenburg

No.	Rig Type	Number, works number	Year of manufacture
*****	*****	*****	*****

PART B

Part B: VTB Rigs

No.	Rig Type	Works number	Year of manufacture
*****	*****	*****	*****

Attachment 4
(Basic information about NADL)

1.	Registered number	:	45094
2.	Date of incorporation	:	10 February 2011
3.	Place of incorporation	:	Bermuda
4.	Address of registered office	:	Par-la-Ville Place, 4th Floor, 14 Par-la-Ville Road, Hamilton, HMGX
5.	Class of company	:	Exempted
6.	Authorised share capital (if any)	:	$2 billion
7.	Issued share capital (excluding treasury shares)	:	241,142,651
8.	Treasury shares		2,373,683

Attachment 5
(Key Employees)

No.	Name	Position
Company
*****	*****	*****
Orenburg
*****	*****	*****

Attachment 6
(Company Management Information)

		TOTAL
		RUB thousands	USD thousands	Rig data
Description (Russian)	Description (English)
*****	*****	*****	*****
*****	*****	*****	*****
*****	*****	*****	*****
*****	*****	*****	*****
*****	*****			*****
*****	*****			*****

Attachment 7
(VTB Schedule)

Part A

*****

Part B

*****

Part C

*****

Part D

*****

Part E

*****

From: Rosneft Oil Company
Russian Federation
115035 Moscow
26/1 Sofiyskaya embankment

To : Seadrill Limited
Par-la-Ville Place
14 Par-la-ville Road
Hamilton HM08
Bermuda

North Atlantic Drilling Ltd.Par-la-Ville Place
14 Par-la-ville Road
Hamilton HM08
Bermuda

7 November 2014

Dear Sirs

1. We refer to the framework agreement (the "FrameworkAgreement") dated 20 August 2014 between Rosneft Oil Company ("Rosneft"), Seadrill Limited ("Seadrill") and North Atlantic Drilling Ltd. ("NADL" and together with Rosneft and Seadrill, the "Parties" and each a "Party") in relation to, inter alia, the issuance by NADL of a certain number of NADL shares to Rosneft in consideration of the transfer by Rosneft to NADL of the 100% participatory interest in limited liability company "RN Burenie" and the issuance by NADL of certain additional NADL shares to Rosneft in consideration of a cash payment.

2. In this letter, unless the context requires otherwise, terms defined in the Framework Agreement and not otherwise defined herein, shall have the same meanings in this letter. The principles of interpretation in Clause 1 (Interpretation) of the Framework Agreement shall also apply to this letter. References in the Framework Agreement to the “Agreement” and the “Key Agreements” include this letter and the Framework Agreement as amended by the terms of this letter.

3. In accordance with Clause 25.6 of the Framework Agreement, the Parties have agreed to vary the Framework Agreement on the terms of paragraph 4 of this letter. The provisions of Clauses 23 to 36 of the Framework Agreement shall apply to this letter as though incorporated herein mutatis mutandis.

4. The Parties agree that the Framework Agreement shall be amended as follows:

Timing

(A) the definition of the "Long Stop Date" in Clause 1.1 shall be deleted and replaced with:

""Long Stop Date" means 31 May 2015 (or such other date as the parties shall mutually agree);";

(B) Clause 10.1 shall be deleted and replaced with:

"10.1 Completion shall take place on the last Business Day of the month in which all of the Conditions shall have been satisfied or waived in accordance with this Agreement, but in any event, subject to Clause 7.1, Completion shall not take place any later than the Long Stop Date. The target date for Completion shall be 31 May 2015 (or such other date as the parties shall mutually agree).”;

(C) the following new clause shall be added to Clause 7:

“7.5A    Rosneft and NADL shall not, and shall procure that no party to any of the Service Orders shall, exercise after Completion any rights which it may have to serve notice under clause 13.3 of the Master Agreement.”

Break fees

(D) the following definitions in Clause 1.1 shall be deleted:

(i) "Intended Completion Date";

(ii) "NADL Break Fee";

(iii) "NADL Legal Opinions";

(iv) "Rosneft Break Fee";

(v) "Rosneft Legal Opinions";

(vi) "Sanctions"; and

(vii) "Sanctions Matter";

(E) the reference in the first sentence of Clause 7.7 to "but without prejudice to Clauses 6.13 to 6.18 (inclusive)" shall be deleted; and

(F) Clauses 6.13 to 6.18 (inclusive) shall be deleted.

5. We also refer to the master agreement in relation to each of the six Offshore Rigs dated 30 July 2014 (the "Master Agreement") between Rosneft and NADL. Rosneft and NADL agree that the 100 day period referred to in Clause 13.3 of the Master Agreement shall be extended to 31 May 2015 and, accordingly, Clause 13.3 shall have effect as follows:

"13.3    TERMINATION ON NOTICE

Either Contractor or Company may terminate a Service Order in its sole discretion without any liability to the other for any loss howsoever arising therefrom by giving at least fourteen (14) days' written notice to the other, such notice to be given by the earlier of (i) 31 May 2015, and (ii) the date of the passing of a resolution to approve the cooperation with NADL

at a duly convened and held general meeting of the shareholders of Rosneft (or by such later date as Contractor and Company may agree)."

6. The variations provided for in this letter shall, save where expressly provided to the contrary, come into force upon the countersignature of this letter by NADL and Seadrill. Other than as provided in: (i) paragraph 4 above, the Framework Agreement shall continue in full force and effect, and (ii) paragraph 5 above, the Master Agreement shall continue in full force and effect.

7. Please confirm your agreement to the terms of this letter by countersigning below and returning one copy to us. This letter may be executed in any number of counterparts and by the Parties on separate counterparts, but shall not be effective unless each Party has executed at least one counterpart. Each counterpart shall constitute an original of this letter, but all the counterparts shall together constitute but one and the same instrument.

Yours faithfully,

/s/ [ILLEGIBLE]

Rosneft Oil Company

We acknowledge and agree to the terms of this letter:

/s/ Alf Ragnar LøvdalNorth Atlantic Drilling Ltd.	7 Nov 2014 Date
/s/ Per Wullf  Seadrill Limited	7 Nov 2014 Date

From: Rosneft Oil Company
Russian Federation
115035 Moscow
26/1 Sofiyskaya embankment

To : Seadrill Limited
Par-la-Ville Place
14 Par-la-ville Road
Hamilton HM08
Bermuda

North Atlantic Drilling Ltd.Par-la-Ville Place
14 Par-la-ville Road
Hamilton HM08
Bermuda

10 April 2015

Dear Sirs,

1. We refer to the framework agreement (the "FrameworkAgreement") dated 20 August 2014 as amended on 7 November 2014 between Rosneft Oil Company ("Rosneft"), Seadrill Limited ("Seadrill") and North Atlantic Drilling Ltd. ("NADL" and together with Rosneft and Seadrill, the "Parties" and each a "Party") in relation to, inter alia, the issuance by NADL of a certain number of NADL shares to Rosneft in consideration of the transfer by Rosneft to NADL of the 100% participatory interest in limited liability company "RN Burenie" and the issuance by NADL of certain additional NADL shares to Rosneft in consideration of a cash payment.

2. In this letter, unless the context requires otherwise, terms defined in the Framework Agreement and not otherwise defined herein, shall have the same meanings in this letter. The principles of interpretation in Clause 1 (Interpretation) of the Framework Agreement shall also apply to this letter. References in the Framework Agreement to the “Agreement” and the “Key Agreements” include this letter and the Framework Agreement as amended by the terms of this letter and the letter dated 7 November 2014.

3. In accordance with Clause 25.6 of the Framework Agreement, the Parties have agreed to vary the Framework Agreement on the terms of paragraph 4 of this letter. The provisions of Clauses 23 to 36 of the Framework Agreement shall apply to this letter as though incorporated herein mutatis mutandis.

4. The Parties agree that the Framework Agreement shall be amended as follows:

Timing

(G) the definition of the "Long Stop Date" in Clause 1.1 shall be deleted and replaced with:

""Long Stop Date" means 31 May 2017 (or such other date as the parties shall mutually agree);";

(H) Clause 10.1 shall be deleted and replaced with:

"10.1 Completion shall take place on the last Business Day of the month in which all of the Conditions shall have been satisfied or waived in accordance with this Agreement, but in any event, subject to Clause 7.1, Completion shall not take place any later than the Long Stop Date. The target date for Completion shall be 31 May 2017 (or such other date as the parties shall mutually agree).”;

6. We also refer to the master agreement in relation to each of the six Offshore Rigs dated 30 July 2014 as amended on 7 November 2014 (the "Master Agreement") between Rosneft and NADL. The Parties acknowledge that the Service Orders for the West Navigator and Energy Endeavour Offshore Rigs have been terminated by Rosneft in accordance with Clause 13.3 of the Master Agreement. Rosneft and NADL agree that the 100 day period referred to in Clause 13.3 of the Master Agreement shall be extended to 31 May 2017 and, accordingly, Clause 13.3 shall have effect as follows:

"13.3    Termination on notice

Either Contractor or Company may terminate a Service Order in its sole discretion without any liability to the other for any loss howsoever arising therefrom by giving at least fourteen (14) days' written notice to the other, such notice to be given by the earlier of (i) 31 May 2017, and (ii) the date of the passing of a resolution to approve the cooperation with NADL at a duly convened and held general meeting of the shareholders of Rosneft (or by such later date as Contractor and Company may agree)."

6. The variations provided for in this letter shall, save where expressly provided to the contrary, come into force upon the countersignature of this letter by NADL and Seadrill. Other than as provided in: (i) paragraph 4 above, the Framework Agreement shall continue in full force and effect, and (ii) paragraph 5 above, the Master Agreement shall continue in full force and effect.

7. The Parties agree to use their reasonable endeavours to renegotiate not later than the Long Stop Date the characteristics of the Transaction and the terms of the Transaction Documents and the Offshore Drilling Contracts based on current macroeconomic indicators.

8. Notwithstanding the terms of the Framework Agreement, Master Agreement and Service Orders, the Parties agree that Seadrill and NADL (and the owners of the Offshore Rigs that remain subject to Service Orders (the "Remaining Offshore Rigs")) shall be entitled to (i) market the Remaining Offshore Rigs, (ii) enter into binding contracts with third parties in respect of the Remaining Offshore Rigs (iii) delay the mobilisation of the Remaining

Offshore Rigs in order to comply with the terms of any contracts with third parties, (iv) delay the construction and / or delivery of any of the Remaining Offshore Rigs, and (v) extend the construction period or shipyard stay of any of the Remaining Offshore Rigs.

9. Please confirm your agreement to the terms of this letter by countersigning below and returning one copy to us. This letter may be executed in any number of counterparts and by the Parties on separate counterparts, but shall not be effective unless each Party has executed at least one counterpart. Each counterpart shall constitute an original of this letter, but all the counterparts shall together constitute but one and the same instrument.

Yours faithfully,

/s/ [ILLEGIBLE]

Rosneft Oil Company

We acknowledge and agree to the terms of this letter:

/s/ Alf Ragnar Løvdal  North Atlantic Drilling Ltd.	15 April 2015 Date
/s/ Per Wullf  Seadrill Limited	16-4-2015 Date

SK 25542 0001 6496897 v3

EX-8.1

Exhibit 8.1

SIGNIFICANT SUBSIDIARIES

The table below lists the Company's significant subsidiaries as of December 31, 2014:

Name of company	Country of Incorporation	Principal activities	Percent owned
Drilling unit owning companies
Asia Offshore Rig 1 Ltd	Bermuda	Owner of AOD 1	66.23%
Asia Offshore Rig 2 Ltd	Bermuda	Owner of AOD 2	66.23%
Asia Offshore Rig 3 Ltd	Bermuda	Owner of AOD 3	66.23%
Sevan Brasil Ltd	Bermuda	Owner of Sevan Brasil	50.11%
Sevan Drilling Rig VI Pte Ltd	Singapore	Owner of Sevan Developer no. 4	50.11%
Sevan Driller Ltd	Bermuda	Owner of Sevan Driller	50.11%
Sevan Louisiana Hungary KFT	Hungary	Owner of Sevan Louisiana	50.11%
North Atlantic Alpha Ltd	Bermuda	Owner of West Alpha	70.36%
Seadrill Aquila Ltd	Bermuda	Owner of West Aquila	100.00%
Seadrill Ariel Ltd.	Liberia	Owner of West Ariel	100.00%
Seadrill Callisto Ltd	Bermuda	Owner of West Calisto	100.00%
Seadrill Carina Ltd	Bermuda	Owner of West Carina	100.00%
Seadrill Castor Ltd	Bermuda	Owner of West Castor	100.00%
Seadrill Courageous (S) Pte Ltd	Singapore	Owner of West Courageous	100.00%
Seadrill Cressida Ltd	Bermuda	Owner of West Cressida	100.00%
Seadrill Defender (S) Pte Ltd	Singapore	Owner of West Defender	100.00%
Seadrill Dione Ltd	Bermuda	Owner of West Dione	100.00%
Seadrill Dorado Ltd	Bermuda	Owner of West Dorado	100.00%
Seadrill Draco Ltd	Bermuda	Owner of West Draco	100.00%
Seadrill Eclipse Ltd	Bermuda	Owner of West Eclipse	100.00%
North Atlantic Elara Ltd	Bermuda	Owner of West Elara	70.36%
Seadrill Eminence Ltd	Bermuda	Owner of West Eminence	100.00%
North Atlantic Epsilon Ltd	Bermuda	Owner of West Epsilon	70.36%
Seadrill Freedom Ltd	Bermuda	Owner of West Freedom	100.00%
Seadrill Gemini Ltd	Bermuda	Owner of West Gemini	100.00%
Seadrill Hyperion Ltd	Bermuda	Owner of West Hyperion	100.00%
Seadrill Intrepid (S) Pte Ltd	Singapore	Owner of West Intrepid	100.00%
Seadrill Jupiter Ltd.	Bermuda	Owner of West Jupiter	100.00%
Seadrill Indonesia Ltd	Bermuda	Owner of West Leda	100.00%
Seadrill Libra Ltd	Bermuda	Owner of West Libra	100.00%
Seadrill Mimas Ltd	Bermuda	Owner of West Mimas	100.00%
Seadrill Mira Ltd	Bermuda	Owner of West Mira	100.00%
Scorpion Rigs Ltd	Bermuda	Owner of West Mischief	100.00%
North Atlantic Navigator Ltd	Bermuda	Owner of West Navigator	70.36%
Seadrill Neptune Hungary KFT	Bermuda	Owner of West Neptune	100.00%
Seadrill Oberon (S) Pte Ltd	Singapore	Owner of West Oberon	100.00%
Seadrill Orion Ltd	Bermuda	Owner of West Orion	100.00%
Seadrill Pegasus Pte Ltd	Singapore	Owner of West Pegasus	100.00%
North Atlantic Pheonix Ltd	Bermuda	Owner of West Phoenix	70.36%
SFL Polaris Ltd	Bermuda	Owner of West Polaris	100.00%
Seadrill Prospero Ltd	Bermuda	Owner of West Prospero	100.00%
Seadrill Proteus Ltd	Bermuda	Owner of West Proteus	100.00%
Scorpion Resolute Ltd	Bermuda	Owner of West Resolute	100.00%
Seadrill Rhea Ltd	Bermuda	Owner of West Rhea	100.00%
North Atlantic Rigel Ltd	Bermuda	Owner of West Rigel	70.36%

Seadrill Saturn Ltd	Bermuda	Owner of West Saturn	100.00%
Seadrill Telesto Ltd	Bermuda	Owner of West Telesto	100.00%
Seadrill Tellus Ltd	Bermuda	Owner of West Tellus	100.00%
Seadrill Tethys Ltd	Bermuda	Owner of West Tethys	100.00%
Seadrill Titan Ltd	Bermuda	Owner of West Titan	100.00%
Seadrill Titania (S) Pte Ltd	Singapore	Owner of West Titania	100.00%
Seadrill Triton Ltd	Bermuda	Owner of West Triton	100.00%
Seadrill Tucana Ltd	Bermuda	Owner of West Tucana	100.00%
Seadrill Umbriel Ltd	Bermuda	Owner of West Umbriel	100.00%
North Atlantic Venture Ltd	Bermuda	Owner of West Venture	70.36%
Scorpion Vigilant Ltd	Bermuda	Owner of West Vigilant	100.00%
Drilling units under sale leaseback
SFL Deepwater Ltd*	Bermuda	Owner of West Taurus	—%
SFL Hercules Ltd*	Bermuda	Owner of West Hercules	—%
SFL Linus Ltd*	Bermuda	Owner of West Linus	—%
Contracting and management companies
North Atlantic Crew AS	Norway	Crewing Company	70.36%
North Atlantic Crewing Ltd (Bermuda)	Bermuda	Crewing Company	70.36%
North Atlantic Drilling UK Ltd	United Kingdom	Drilling services contractor	70.36%
North Atlantic Management AS	Norway	Management company	70.36%
North Atlantic Norway Ltd	Bermuda	Drilling services contractor	70.36%
North Atlantic Support Services Ltd	United Kingdom	Management company	70.36%
Sea Dragon de Mexico S. de R.L. de C.V.	Mexico	Management company	100.00%
Seadrill Americas Inc.	USA	Drilling services contractor and technical services company	100.00%
Seadrill Deepwater Contracting Ltd	Bermuda	Contracting company	100.00%
Seadrill Deepwater Crewing Ltd	Bermuda	Crewing company	100.00%
Seadrill Deepwater Units Pte Ltd.	Singapore	Management company	100.00%
Seadrill Insurance Ltd.	Bermuda	Insurance company	100.00%
Seadrill Management (S) Pte Ltd	Singapore	Management company	100.00%
Seadrill Management AME Ltd.	Bermuda	Management company	100.00%
Seadrill Management AS	Norway	Management company	100.00%
Seadrill Management Limited	United Kingdom	Management company	100.00%
Seadrill Management Services Ltd	British Virgin Islands	Management company	100.00%
Seadrill Offshore AS	Norway	Drilling services contractor	100.00%
Seadrill Offshore Singapore Pte Ltd	Singapore	Management company	100.00%
Seadrill Servicos de Petroleo Ltda.	Brazil	Drilling services contractor	100.00%
Holding Companies
North Atlantic Drilling Ltd	Bermuda	Holding Company	70.36%
Seadrill Common Holdings Ltd	Bermuda	Holding Company	100.00%
Seadrill Deepwater Holdings Ltd	Bermuda	Holding Company	100.00%
Seadrill Jack Up Holding Ltd	Bermuda	Holding Company	100.00%
Seadrill Member LLC	Marshall Islands	Holding Company	100.00%
Seadrill UK Ltd	United Kingdom	Holding Company	100.00%
SeaMex Ltd	Bermuda	Holding Company	100.00%
Sevan Drilling ASA	Norway	Holding Company	50.11%
Sevan Drilling Ltd	Bermuda	Holding Company	50.11%

* Fully consolidated Variable interest entities

EX-12.1

Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Per Wullf, certify that:

1. I have reviewed this annual report on Form 20-F of Seadrill Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

Date: April 21, 2015

/s/ Per Wullf

Per Wullf

President and Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Rune Magnus Lundetræ, certify that:

1. I have reviewed this annual report on Form 20-F of Seadrill Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

Date: April 21, 2015

/s/ Rune Magnus Lundetræ

Rune Magnus Lundetræ

Senior Vice President and Chief Financial Officer

EX-12.3

Exhibit 12.3

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, David Sneddon, certify that:

1. I have reviewed this annual report on Form 20-F of Seadrill Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

Date: April 21, 2015

/s/ David Sneddon

David Sneddon

Senior Vice President and Chief Accounting Officer

EX-13.1

Exhibit 13.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Seadrill Limited (the "Company") on Form 20-F for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof (the "Report"), I, Per Wullf, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: April 21, 2015

/s/ Per Wullf

Per Wullf

President and Chief Executive Officer

EX-13.2

Exhibit 13.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Seadrill Limited (the "Company") on Form 20-F for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof (the "Report"), I, Rune Magnus Lundetræ, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: April 21, 2015

/s/ Rune Magnus Lundetræ

Rune Magnus Lundetræ

Senior Vice President and Chief Financial Officer

EX-13.3

Exhibit 13.3

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Seadrill Limited (the "Company") on Form 20-F for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof (the "Report"), I, David Sneddon, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: April 21, 2015

/s/ David Sneddon

David Sneddon

Senior Vice President and Chief Accounting Officer

XML

Long-term debt (Long-term Debt Outstanding) (Details) In Millions, unless otherwise specified	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2014 US$2,000 facility (North Atlantic Drilling) USD ($)	Dec. 31, 2013 US$2,000 facility (North Atlantic Drilling) USD ($)	Dec. 31, 2014 US$1,500 facility USD ($)	Dec. 31, 2013 US$1,500 facility USD ($)	Dec. 31, 2014 US$1,200 facility USD ($)	Dec. 31, 2013 US$1,200 facility USD ($)	Dec. 31, 2014 Credit facility US$700 [Member] USD ($)	Dec. 31, 2013 Credit facility US$700 [Member] USD ($)	Dec. 31, 2013 Credit facility US$1,121 USD ($)	Dec. 31, 2014 US$400 facility USD ($)	Dec. 31, 2013 US$400 facility USD ($)	Dec. 31, 2014 US$550 facility USD ($)	Dec. 31, 2013 US$550 facility USD ($)	Dec. 31, 2014 $420 facility USD ($)	Dec. 31, 2013 $420 facility USD ($)	Dec. 31, 2014 US$440 facility USD ($)	Dec. 31, 2013 US$440 facility USD ($)	Dec. 31, 2014 Credit facility US$450 -Eclipse [Member] USD ($)	Dec. 31, 2013 Credit facility US$450 -Eclipse [Member] USD ($)	Dec. 31, 2014 US$1,450 facility USD ($)	Dec. 31, 2013 US$1,450 facility USD ($)	Dec. 31, 2014 US$360 facility (Asia Offshore Drilling) USD ($)	Dec. 31, 2013 US$360 facility (Asia Offshore Drilling) USD ($)	Dec. 31, 2014 Credit facility US$300 [Member] USD ($)	Dec. 31, 2013 Credit facility US$300 [Member] USD ($)	Dec. 31, 2014 $1,750 facility (Sevan Drilling) USD ($)	Dec. 31, 2013 $1,750 facility (Sevan Drilling) USD ($)	Dec. 31, 2014 $150 facility USD ($)	Dec. 31, 2013 $150 facility USD ($)	Oct. 31, 2013 $150 facility USD ($)	Dec. 31, 2014 Credit facility US$450 -Eminence [Member] USD ($)	Dec. 31, 2013 Credit facility US$450 -Eminence [Member] USD ($)	Dec. 31, 2014 Credit Facility $1,500 - 2014 USD ($)	Dec. 31, 2013 Credit Facility $1,500 - 2014 USD ($)	Dec. 31, 2014 Credit Facility $1,350 USD ($)	Dec. 31, 2013 Credit Facility $1,350 USD ($)	Dec. 31, 2014 Total Bank Loans and other USD ($)	Dec. 31, 2013 Total Bank Loans and other USD ($)	Dec. 31, 2014 Bonds USD ($)	Dec. 31, 2013 Bonds USD ($)	Dec. 31, 2014 Credit facility, Ship Finance International Loans, $420 facility USD ($)	Dec. 31, 2013 Credit facility, Ship Finance International Loans, $420 facility USD ($)	Dec. 31, 2014 Credit facility, Ship Finance International Loans, $375 facility USD ($)	Dec. 31, 2013 Credit facility, Ship Finance International Loans, $375 facility USD ($)	Dec. 31, 2014 Credit facility, Ship Finance International Loans, $390 facility USD ($)	Dec. 31, 2013 Credit facility, Ship Finance International Loans, $390 facility USD ($)	Dec. 31, 2014 Credit facility, Ship Finance International Loans, $475 facility USD ($)	Dec. 31, 2013 Credit facility, Ship Finance International Loans, $475 facility USD ($)	Dec. 31, 2014 Total Ship Finance Facilities USD ($)	Dec. 31, 2013 Total Ship Finance Facilities USD ($)	Dec. 31, 2014 Convertible bonds USD ($)	Dec. 31, 2013 Convertible bonds USD ($)	Dec. 31, 2014 Total Bonds USD ($)	Dec. 31, 2013 Total Bonds USD ($)	Dec. 31, 2014 Other credit facilities with corresponding restricted cash deposit [Member] USD ($)	Dec. 31, 2014 Other credit facilities with corresponding restricted cash deposit [Member] NOK	Dec. 31, 2013 Other credit facilities with corresponding restricted cash deposit [Member] USD ($)	Dec. 31, 2014 Long-term Debt Credit facility US$1,121 USD ($)	Dec. 31, 2013 Affiliated Entity Metrogas Credit facility US$1,121 USD ($)
Debt Instrument [Line Items]
Long-term Debt	$ 12,620.0	$ 13,466.0	$ 1,367.0	$ 1,503.0	$ 0	$ 706.0	$ 0	$ 733.0	$ 420.0	$ 490.0	$ 912.0	$ 280.0	$ 320.0	$ 0	$ 440.0	$ 351.0	$ 0	$ 258.0	$ 293.0	$ 416.0	$ 450.0	$ 433.0	$ 1,390.0	$ 309.0	$ 345.0	$ 210.0	$ 234.0	$ 1,225.0	$ 1,400.0	$ 150.0	$ 150.0	$ 150.0	$ 397.0	$ 450.0	$ 1,469.0	$ 0	$ 1,317.0	$ 0	$ 8,602.0	$ 8,976.0	$ 2,856.0	$ 2,584.0	$ 0	$ 387.0	$ 284.0	$ 362.0	$ 303.0	$ 383.0	$ 451.0	$ 0	$ 1,038.0	$ 1,132.0	$ 0	$ 577.0	$ 2,856.0	$ 3,161.0	$ 124.0	919.0	$ 197.0	$ 0	$ 72.0
Current portion of long-term debt	2,309	1,566
Long-term debt	$ 10,311	$ 11,900

XML

Segment information - Major Customers (Details) (Contract Revenues, Customer Concentration Risk)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Petrobras
Revenue, Major Customer [Line Items]
Concentration risk percentage	20.00%	16.00%	15.00%
Total
Revenue, Major Customer [Line Items]
Concentration risk percentage	13.00%	14.00%	14.00%
Statoil
Revenue, Major Customer [Line Items]
Concentration risk percentage	13.00%	14.00%	9.00%
Exxon
Revenue, Major Customer [Line Items]
Concentration risk percentage	10.00%	12.00%	11.00%
Shell
Revenue, Major Customer [Line Items]
Concentration risk percentage	2.00%	7.00%	10.00%

XML

Commitments and contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Maturity schedule for contractual commitments

The maturity schedule for the contractual commitments as of December 31, 2014 is as follows:

(In US$ millions)	2015	2016	2017	2018	2019	2020 and thereafter	Total
Newbuildings	4,722	667	—	—	—	—	5,389

Maximum potential future payment for each type of guarantee

The Company has issued guarantees in favor of third parties as follows, which is the maximum potential future payment for each type of guarantee:

(In US$ millions)	December 31, 2014	December 31, 2013
Guarantees to customers of the Company's own performance	1,824	1,541
Guarantee in favor of banks(1)	1,254	970
Guarantee in favor of suppliers (1) (2)	3,898	6,321
Guarantee in favor of Variable Interest Entities	1,428	1,674
Total	8,404	10,506

(1) Within guarantees in favor of banks are guarantees provided on behalf of Archer of $370 million and EUR72 million ($92 million) (2013200 million and EUR56 million ($77 million)). Guarantees in favor of suppliers includes guarantees on behalf of Archer of GBP 26 million ($40 million) (2013nil). See Note 31 to the consolidated financial statements included herein.

(2) Within guarantees in favor of suppliers are guarantees provided in relation to our joint ventures Seabras Sapura Participacoes and Seabras Sapura Holdco of EUR47 million ($60 million) and $375 million respectively (2013 EUR 47 million ($64 million) and $625 million respectively). See Note 17 to the consolidated financial statements included herein.

XML

Variable Interest Entities (VIEs) (Tables)

12 Months Ended

Dec. 31, 2014

Variable Interest Entities (VIEs) [Abstract]

Summary of sale and leaseback arrangements

The following table gives a summary of the sale and leaseback arrangements and repurchase options, as of December 31, 2014:

Unit	Effective from	Sale value (In $ millions)	First repurchase option (In $ millions)	Month of first repurchase option	Last repurchase option * (In $ millions)	Month of last repurchase Option *
West Taurus	Nov 2008	850	418	February 2015	149	November 2023
West Hercules	Oct  2008	850	580	August 2011	135	August 2023
West Linus	Jul 2013	600	370	June 2018	170	June 2028

* For West Taurus and West Hercules repurchase obligations at the end of the lease terms have been agreed, at $149 million and $135 million, respectively. For West Linus the put option is $100 million.

Summary of the bareboat charter rates per day based on Base LIBOR Interest Rate for the next five years

A summary of the bareboat charter rates per day for each unit is given below.

	(In US$ thousands)
	2014	2015	2016	2017	2018
West Taurus	340	186	166	158	158
West Hercules	239	180	179	170	166
West Linus	222	222	223	222	222

Assets and liabilities in the statutory accounts of the VIEs

The assets and liabilities in the statutory accounts of the VIEs as at December 31, 2014 and as at December 31, 2013 are as follows:

(In US$ millions)	December 31, 2014				December 31, 2013
	SFL West Polaris Limited **	SFL Deepwater Limited	SFL Hercules Limited	SFL Linus Limited	SFL West Polaris Limited	SFL Deepwater Ltd.	SFL Hercules Limited	SFL Linus Limited
Name of unit	West Polaris	West Taurus	West Hercules	West Linus	West Polaris	West Taurus and West Hercules	West Hercules	West Linus
Investment in finance lease	N/A	429	426	574	488	515	477	195
Amount due from related parties *	N/A	45	5	14	45	30	25	—
Other assets	N/A	13	10	—	5	13	10	—
Total assets	N/A	487	441	588	538	558	512	195
Short-term interest bearing debt	N/A	32	28	51	36	80	28	—
Long-term interest bearing debt	N/A	271	256	400	351	303	333	—
Other liabilities	N/A	6	1	3	2	6	2	2
Long-term debt due to related parties *	N/A	145	145	125	145	145	145	195
Total liabilities	N/A	454	430	579	534	534	508	197
Equity	N/A	33	11	9	4	24	4	(2	)
Book value of units in the Company's consolidated accounts	N/A	450	603	581	577	458	617	162

* In the VIEs separate financial statements the related party balances are presented on a net basis.

** Refer to "West Polaris acquisition" discussion below.

XML

Related party transactions (Metrogas Transactions) (Details)	12 Months Ended			1 Months Ended					0 Months Ended	12 Months Ended															0 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Aug. 31, 2014 Credit facility US$1,121 USD ($)	Jan. 31, 2011 Credit facility US$1,121 USD ($)	Dec. 31, 2013 Credit facility US$1,121 West Leo USD ($)	Feb. 21, 2014 Term Loan B USD ($)	Aug. 26, 2014 Secured Debt Credit Facility US $1,350 USD ($)	Dec. 20, 2012 Metrogas Affiliated Entity USD ($)	Dec. 31, 2014 Metrogas Affiliated Entity USD ($)	Dec. 31, 2013 Metrogas Affiliated Entity USD ($)	Dec. 31, 2012 Metrogas Affiliated Entity USD ($)	Dec. 10, 2013 Metrogas Affiliated Entity USD ($)	Dec. 21, 2012 Metrogas Affiliated Entity USD ($)	Jun. 27, 2012 Metrogas Affiliated Entity NOK	Jun. 07, 2012 Metrogas Affiliated Entity NOK	May 15, 2012 Metrogas Affiliated Entity USD ($)	Mar. 22, 2012 Metrogas Affiliated Entity USD ($)	Sep. 20, 2013 Metrogas Loans Payable Affiliated Entity USD ($)	Jul. 19, 2013 Metrogas Loans Payable Affiliated Entity USD ($)	Mar. 27, 2013 Metrogas Loans Payable Affiliated Entity USD ($)	Feb. 27, 2013 Metrogas Loans Payable Affiliated Entity USD ($)	Dec. 31, 2012 Metrogas Loans Payable Affiliated Entity NOK	Dec. 21, 2012 Metrogas Loans Payable Affiliated Entity USD ($)	Jul. 19, 2013 Metrogas Norwegian Interbank Offered Rate (NIBOR) [Member] Loans Payable Affiliated Entity	Sep. 20, 2013 Metrogas LIBOR Loans Payable Affiliated Entity	Aug. 26, 2014 Metrogas Credit facility US$1,121 Affiliated Entity USD ($)	Feb. 21, 2014 Metrogas Credit facility US$1,121 Affiliated Entity USD ($)	Dec. 10, 2013 Metrogas Credit facility US$1,121 Affiliated Entity USD ($)
Related Party Transaction [Line Items]
Short-term debt to related party	$ 189,000,000	$ 55,000,000												$ 93,000,000			$ 50,000,000	$ 84,000,000			$ 700,000,000	$ 300,000,000	140,000,000	$ 93,000,000
Long-term debt due to related parties	415,000,000	1,415,000,000													2,100,000,000	1,200,000,000
Proceeds from Sale of Unsecured bond									500,000,000
Accrued interest on sale of unsecured bond									9,000,000
Interest rate on related party debt									7.75%
Proceeds from debt to related party	90,000,000	756,000,000	1,013,000,000						415,000,000
Due to related parties											840,000,000		840,000,000
Description of variable rate basis																									NIBOR	LIBOR
Basis spread on variable rate																									3.50%	3.00%
Debt, face amount					1,121,000,000		1,800,000,000.0												99,000,000	1,500,000,000									1,121,000,000
Maximum borrowing capacity								1,350,000,000
Long-term debt	12,620,000,000	13,466,000,000				472,600,000
Repayments of debt to related party	910,000,000	1,181,000,000	487,000,000																									436,000,000
Net loss on debt extinguishment	(54,000,000)	0	0	16,000,000																							16,000,000
Interest expense	$ (478,000,000)	$ (445,000,000)	$ (340,000,000)							$ (1,000,000)	$ (10,000,000)	$ (7,000,000)

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Marketable securities (Changes in Carrying Amounts) (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	12 Months Ended
	Apr. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains		$ 70	$ 45	$ 163
Gross proceeds from sales		307	0	219
Petromena
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains		6	0
Gross realized losses		0	0
Gross Unrealized gains		0	0
Gross Unrealized losses		0	0
Gross proceeds from sales		10	0
Recognition and purchases		0	0
Gain/(loss) reclassified into income		0	0
Sapura Kencana
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains		0	0	0
Gross realized losses		0	0	0
Gross Unrealized gains		0	333	205
Gross Unrealized losses		456	0	0
Gross proceeds from sales		297	0	197
Recognition and purchases		0	416	237
Gain/(loss) reclassified into income	131	131	0	(84)
Seadrill Partners LLC
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains		0
Gross realized losses		0
Gross Unrealized gains		0
Gross Unrealized losses		395
Gross proceeds from sales		0
Recognition and purchases		821
Gain/(loss) reclassified into income		0
Other Investments
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains				0
Gross realized losses				(19)
Gross Unrealized gains				0
Gross Unrealized losses				0
Gross proceeds from sales				0
Recognition and purchases				0
Gain/(loss) reclassified into income				$ (1)

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Taxation (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Effective tax rate, excluding gain on sale of tender rigs (as a percent)	0.50%
Statutory income tax rate (in hundredths) (as a percent)	0.00%
Deferred tax assets not subject to expiration	$ 271
Valuation allowance, change in amount	165	41	44
Valuation allowance, utilization	0	0	0
Effect on effective tax rate, amount	(94)
Unrecognized tax benefits	9	147	154
Current tax expense:
Bermuda	0	0	0
Foreign	23	200	167
Deferred tax (benefit)/expense:
Bermuda	0	0	0
Foreign	(4)	(50)	58
Tax related to internal sale of assets in subsidiary, amortized for group purposes	0	4	7
Total tax expense	19	154	232
Effective tax rate (as a percent)	0.50%	5.20%	16.10%
Income tax reconciliation [Abstract]
Income taxes at statutory rate	0	0	0
Effect of transfers to new tax jurisdictions	0	4	7
Effect of change on uncertain tax positions relating to prior year	(85)	(7)	91
Effect of taxable income in various countries	104	157	134
Total tax expense	19	154	232
Deferred Tax Assets [Abstract]
Pension	19	12
Provisions	20	8
Net operating losses carried forward	291	130
Other	3	2
Gross deferred tax asset	333	152
Valuation allowance related to net operating losses carried forward	(280)	(115)
Net deferred tax asset	53	37
Deferred Tax Liability [Abstract]
Property, plant and equipment	60	60
Foreign exchange	7	0
Gross deferred tax liability	67	60
Net deferred tax	(14)	(23)
Net deferred taxes, classified [Abstract]
Short-term deferred tax asset	19	0
Long-term deferred tax asset	34	37
Long-term deferred tax liability	(67)	(60)
Net deferred tax	(14)	(23)
Changes to liabilities related to unrecognized tax benefits, excluding interest and penalties [Roll Forward]
Balance beginning of period	147	154	63
Increases as a result of positions taken in prior periods	9	29	109
Increases as a result of positions taken during the current period	0	12	8
Decreases as a result of positions taken in prior periods	(147)	(14)	(26)
Decreases as a result of positions taken in the current period	0	(34)	0
Balance end of period	9	147	154
UNITED STATES
Income Tax Examination [Line Items]
Earliest Open Year	2013
ANGOLA
Income Tax Examination [Line Items]
Earliest Open Year	2007
AUSTRALIA
Income Tax Examination [Line Items]
Earliest Open Year	2008
NIGERIA
Income Tax Examination [Line Items]
Earliest Open Year	2007
NORWAY
Income Tax Examination [Line Items]
Earliest Open Year	2007
THAILAND
Income Tax Examination [Line Items]
Earliest Open Year	2003
Tax Year 2024
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Deferred tax assets subject to expiration	4
Tax Years 2033 to 2034
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Deferred tax assets subject to expiration	$ 16

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Disposals of businesses and deconsolidation of subsidiary (West Vela) (Details) (USD $)	12 Months Ended			0 Months Ended	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Nov. 04, 2014	Dec. 31, 2014	Mar. 21, 2014	Jan. 02, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on disposals	$ 632,000,000	$ 61,000,000	$ 0
West Vela
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Deferred contingent consideration per day, remainder of contract				44,000
Deferred contingent consideration per day				40,000
Gain (loss) on contingent consideration related to disposals					1,000,000
Enterprise value				900,000,000
Deferred consideration				74,000,000
Less: Debt assumed				433,000,000
Purchase price				541,000,000
Less: Working capital adjustment				(6,000,000)
Purchase price				535,000,000
Cash				467,000,000
Less: net carrying value of assets and liabilities				(303,000,000)
Less: allocated goodwill to subsidiaries				(41,000,000)
Gain on disposals				$ 191,000,000
Seadrill Capricorn Holdings LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Ownership interest, percentage				49.00%		49.00%	49.00%

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Taxation

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Taxation

Taxation

Income taxes consist of the following:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Current tax expense:
Bermuda	—		—		—
Foreign	23		200		167
Deferred tax (benefit)/expense:
Bermuda	—		—		—
Foreign	(4	)	(50	)	58
Tax related to internal sale of assets in subsidiary,  amortized for group purposes	—		4		7
Total tax expense	19		154		232
Effective tax rate	0.5	%	5.2	%	16.1	%

The effective tax rate for the twelve months ended December 31, 2014 is 0.5%. The effective tax rate has been positively impacted by the resolution of uncertain tax positions, the deconsolidation of Seadrill Partners, and asset sales during the year.

The Company, including its subsidiaries, is taxable in several jurisdictions based on its rig operations. A loss in one jurisdiction may not be offset against taxable income in another jurisdiction. Thus, the Company may pay tax within some jurisdictions even though it might have an overall loss at the consolidated level.

The income taxes for the years ended December 31 2014, 2013 and 2012 differed from the amount computed by applying the Bermudan statutory income tax rate of 0% as follows:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Income taxes at statutory rate	—		—		—
Effect of transfers to new tax jurisdictions	—		4		7
Effect of change on uncertain tax positions relating to prior year	(85	)	(7	)	91
Effect of taxable income in various countries	104		157		134
Total tax expense	19		154		232

Deferred Income Taxes

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. The net deferred tax assets (liabilities) consist of the following:

Deferred Tax Assets:

(In US$ millions)	December 31, 2014		December 31, 2013
Pension	19		12
Provisions	20		8
Net operating losses carried forward	291		130
Other	3		2
Gross deferred tax asset	333		152
Valuation allowance related to net operating losses carried forward	(280	)	(115	)
Net deferred tax asset	53		37

Deferred Tax Liability:

(In US$ millions)	December 31, 2014		December 31, 2013
Property, plant and equipment	60		60
Foreign exchange	7		—
Gross deferred tax liability	67		60
Net deferred tax	(14	)	(23	)

Net deferred taxes are classified as follows:

(In US$ millions)	December 31, 2014		December 31, 2013
Short-term deferred tax asset	19		—
Long-term deferred tax asset	34		37
Long-term deferred tax liability	(67	)	(60	)
Net deferred tax	(14	)	(23	)

As of December 31, 2014, deferred tax assets related to net operating loss ("NOL") carryforwards was $291 million, which can be used to offset future taxable income. NOL carryforwards which were generated in various jurisdictions, include $271 million that will not expire, $4 million that will expire, if not utilized, in 2024 and $16 million that will expire, if not utilized, between 2033 and 2034. A valuation allowance of $280 million on the NOL carryforwards results where we do not expect to generate future taxable income. The change in the valuation allowance was due to increases of $165 million and zero utilization during the year compared to an increase of $41 million and zero utilization in 2013 and $44 million and zero utilization in 2012.

Uncertain tax positions

Certain of the Company's Norwegian subsidiaries have been party to an ongoing dispute to a tax reassessment issued in October 2011 by the Norwegian tax authorities in regards to the transfer of certain legal entities to a different tax jurisdiction and the principles for conversion of functional currency.

In April 2014 these subsidiaries entered into a settlement agreement with the Norwegian tax authorities resulting in discontinued legal proceedings in the Oslo District Court. The terms of the settlement agreement include the Company making a cash payment to the tax authorities for settlement of revised reassessments agreed between the parties.

Following settlement of the uncertainties arising from these matters, we recognized a decrease in the unrecognized tax benefits, including interest and penalties of approximately $147 million of which approximately $94 million had a positive impact on our effective tax rate for the twelve months endedDecember 31, 2014 as noted above.

As of December 31, 2014, we had unrecognized tax benefits of $9 million which is included in other current liabilities on our consolidated balance sheet. The changes to our liabilities related to unrecognized tax benefits, including interest and penalties that we recognize as a component of income tax expense, where as follows:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Balance beginning of period	147		154		63
Increases as a result of positions taken in prior periods	9		29		109
Increases as a result of positions taken during the current period	—		12		8
Decreases as a result of positions taken in prior periods	(147	)	(14	)	(26	)
Decreases as a result of positions taken in the current period	—		(34	)	—
Balance end of period	9		147		154

As of December 31, 2014, if recognized, $9 million of our unrecognized tax benefits, including interest and penalties, would have a favorable impact on our effective tax rate.

The parent company, Seadrill Limited, is headquartered in Bermuda where it has been granted a tax exemption until 2035.  Other jurisdictions in which the Company and its subsidiaries operate are taxable based on rig operations. A loss in one jurisdiction may not be offset against taxable income in another jurisdiction.  Thus, the Company may pay tax within some jurisdictions even though it may have an overall loss at the consolidated level.  The following table summarizes the earliest tax years that remain subject to examination by the major taxable jurisdictions in which the Company operates:

Jurisdiction	Earliest Open Year
United States	2013
Angola	2007
Australia	2008
Nigeria	2007
Norway	2007
Thailand	2003

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Taxation (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Components of income taxes

Income taxes consist of the following:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Current tax expense:
Bermuda	—		—		—
Foreign	23		200		167
Deferred tax (benefit)/expense:
Bermuda	—		—		—
Foreign	(4	)	(50	)	58
Tax related to internal sale of assets in subsidiary,  amortized for group purposes	—		4		7
Total tax expense	19		154		232
Effective tax rate	0.5	%	5.2	%	16.1	%

Income tax reconciliation

The income taxes for the years ended December 31 2014, 2013 and 2012 differed from the amount computed by applying the Bermudan statutory income tax rate of 0% as follows:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Income taxes at statutory rate	—		—		—
Effect of transfers to new tax jurisdictions	—		4		7
Effect of change on uncertain tax positions relating to prior year	(85	)	(7	)	91
Effect of taxable income in various countries	104		157		134
Total tax expense	19		154		232

Net deferred tax assets (liabilities)

Deferred Income Taxes

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. The net deferred tax assets (liabilities) consist of the following:

Deferred Tax Assets:

(In US$ millions)	December 31, 2014		December 31, 2013
Pension	19		12
Provisions	20		8
Net operating losses carried forward	291		130
Other	3		2
Gross deferred tax asset	333		152
Valuation allowance related to net operating losses carried forward	(280	)	(115	)
Net deferred tax asset	53		37

Deferred Tax Liability:

(In US$ millions)	December 31, 2014		December 31, 2013
Property, plant and equipment	60		60
Foreign exchange	7		—
Gross deferred tax liability	67		60
Net deferred tax	(14	)	(23	)

Net deferred taxes are classified as follows:

(In US$ millions)	December 31, 2014		December 31, 2013
Short-term deferred tax asset	19		—
Long-term deferred tax asset	34		37
Long-term deferred tax liability	(67	)	(60	)
Net deferred tax	(14	)	(23	)

Changes to liabilities related to unrecognized tax benefits

The changes to our liabilities related to unrecognized tax benefits, including interest and penalties that we recognize as a component of income tax expense, where as follows:

	Year ended December 31
(In US$ millions)	2014		2013		2012
Balance beginning of period	147		154		63
Increases as a result of positions taken in prior periods	9		29		109
Increases as a result of positions taken during the current period	—		12		8
Decreases as a result of positions taken in prior periods	(147	)	(14	)	(26	)
Decreases as a result of positions taken in the current period	—		(34	)	—
Balance end of period	9		147		154

Earliest tax years that remain subject to examination by major taxable jurisdictions

The following table summarizes the earliest tax years that remain subject to examination by the major taxable jurisdictions in which the Company operates:

Jurisdiction	Earliest Open Year
United States	2013
Angola	2007
Australia	2008
Nigeria	2007
Norway	2007
Thailand	2003

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CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 831	$ 744
Restricted cash	268	168
Marketable securities	426	416
Accounts receivables, net	1,017	1,042
Amount due from related party - current	466	101
Assets held for sale - current	134	0
Other current assets	273	363
Total current assets	3,415	2,834
Non-current assets
Investment in associated companies	2,898	140
Marketable securities	325	666
Newbuildings	2,030	3,419
Drilling units	15,145	17,193
Goodwill	604	1,200
Restricted cash	181	150
Deferred tax assets	30	37
Equipment	46	49
Amount due from related party - non-current	313	0
Assets held for sale - non-current	1,105	0
Other non-current assets	414	612
Total non-current assets	23,091	23,466
Total assets	26,506	26,300
Current liabilities
Current portion of long-term debt	2,309	1,566
Trade accounts payable	84	90
Short-term debt to related party	189	55
Liabilities associated with assets held for sale - current	58	0
Other current liabilities	1,934	2,114
Total current liabilities	4,574	3,825
Non-current liabilities
Long-term debt	10,311	11,900
Long-term debt due to related parties	415	1,415
Deferred tax liabilities	67	60
Liabilities associated with assets held for sale - non-current	50	0
Other non-current liabilities	699	898
Total non-current liabilities	11,542	14,273
Commitments and contingencies
Equity
Common shares of par value US$2.00 per share: 800,000,000 shares authorized 492,759,938 outstanding at December 31, 2014 (December 31, 2013, 468,978,492)	985	938
Additional paid in capital	3,258	2,641
Contributed surplus	1,956	1,956
Accumulated other comprehensive (loss)/income	(448)	528
Retained earnings	4,013	1,449
Total Shareholder's equity	9,764	7,512
Non-controlling interest	626	690
Total equity	10,390	8,202
Total liabilities and equity	$ 26,506	$ 26,300

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Accounting policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Accounting policies

Accounting policies

Use of estimates

Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Contract revenue

A substantial majority of the Company's revenues are derived from dayrate based drilling contracts (which may include lump sum fees for mobilization and demobilization) and other service contracts. Both dayrate based and lump sum fee revenues are recognized ratably over the contract period when services are rendered. Under some contracts, the Company is entitled to additional payments for meeting or exceeding certain performance targets. Such additional payments are recognized when any uncertainties are resolved or upon completion of the drilling program.

In connection with drilling contracts, the Company may receive lump sum fees for the mobilization of equipment and personnel or for capital additions and upgrades prior to commencement of drilling services. These up-front fees are recognized as revenue over the contract term, excluding option periods.

In some cases, the Company may receive lump sum non-contingent fees or dayrate based fees from customers for demobilization upon completion of a drilling contract. Non-contingent demobilization fees are recognized as revenue over contract term, excluding option periods not exercised by our customers. Contingent demobilization fees are recognized as earned upon completion of the drilling contract.

Fees received from customers under drilling contracts for capital upgrades are deferred and recognized over the contract term, excluding option periods not exercised.

In certain countries in which we operate, taxes such as sales, use, value-added, gross receipts and excise may be assessed by the local government on our revenues. We generally record our tax-assessed revenue transactions on a net basis in our consolidated statement of income.

Reimbursables

Reimbursements received for the purchases of supplies, personnel services and other services provided on behalf of and at the request of our customers in accordance with a contract or agreement are recorded as revenue. The related costs are recorded as reimbursable expenses in the same period.

Other revenues

In a business combination there may exist favorable and unfavorable drilling contracts which are recorded at fair value at the date of acquisition. A favorable or unfavorable drilling contract is a contract that has a dayrate which differs from prevailing market rates at the time of acquisition. The net present value of such contracts is recorded as an asset or liability at the purchase date and subsequently recognized as revenue or reduction to revenue over the contract term.

Related party revenues relate to management support and administrative services provided to our associates in which we maintain an investment. External management fees relate to the operational, administrative and support services we provide to third parties.

Mobilization and demobilization expenses

Mobilization costs incurred as part of a drilling contract are capitalized and recognized as expense over the contract term, excluding option periods not exercised by our customers. The costs of relocating drilling units that are not under contract are expensed as incurred.

Demobilization costs are costs related to the transfer of a vessel or drilling rig to a safe harbor or different geographic area and are expensed as incurred.

Vessel and Rig Operating Expenses

Vessel and rig operating expenses are costs associated with operating a drilling unit that is either in operation or stacked, and include the remuneration of offshore crews and related costs, supplies, insurance costs, expenses for repairs and maintenance as well as costs related to onshore personnel in various locations where we operate the drilling units and are expensed as incurred.

Repairs, maintenance and periodic surveys

Costs related to periodic overhauls of drilling units are capitalized under drilling units and amortized over the anticipated period between overhauls, which is generally 5 years. Related costs are primarily yard costs and the cost of employees directly involved in the work. Amortization costs for periodic overhauls are included in depreciation and amortization expense. Costs for other repair and maintenance activities are included in vessel and rig operating expenses and are expensed as incurred.

Foreign currencies

The Company and the majority of its subsidiaries use the U.S. dollars as their functional currency because the majority of their revenues and expenses are denominated in U.S. dollars. Accordingly, the Company's reporting currency is also U.S. dollars. For subsidiaries that maintain their accounts in currencies other than U.S. dollars, the Company uses the current method of translation whereby the statements of operations are translated using the average exchange rate for the year and the assets and liabilities are translated using the year end exchange rate. Foreign currency translation gains or losses on consolidation are recorded as a separate component of other comprehensive income in shareholders' equity.

Transactions in foreign currencies are translated into U.S. dollars at the rates of exchange in effect at the date of the transaction. Foreign currency assets and liabilities are translated using rates of exchange at the balance sheet date. Gains and losses on foreign currency transactions are included in the consolidated statements of operations.

Current and non-current classification

Assets and liabilities are classified as current assets and liabilities respectively, if their maturity is within 1 year of the balance sheet date. Otherwise, they are classified as non-current assets and liabilities.

Cash and cash equivalents

Cash and cash equivalents consist of cash, bank deposits and highly liquid financial instruments with original maturities of three months or less.

Restricted cash

Restricted cash consists of bank deposits which have been pledged as collateral for certain guarantees issued by a bank or minimum deposits which must be maintained in accordance with contractual arrangements. Restricted cash amounts with maturities longer than one year are classified as non-current assets.

Equity method investments

Investments in common stock are accounted for using the equity method of accounting if the investment gives the Company the ability to exercise significant influence, but not control over, the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors such as representation on the investee’s Board of Directors and the nature of commercial arrangements are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the Company records its investments in equity-method investees in the consolidated balance sheet under “Investment in associated companies” and its share of the investees’ earnings or losses together with other-than-temporary impairments in value and gain/loss on sale of investments under “Share in results from associated companies (net of tax)” in the consolidated statements of income.

All other equity investments, which consist of investments for which the Company does not have the ability to exercise significant influence, or are not investments in common stock, are accounted for under the cost method or at fair value if readily determinable.

The Company analyzes its equity method investees for impairment at each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the value of the investment. The Company records an impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in value are not reflected in earnings until sale of the equity method investee occurs.

Marketable securities

Marketable equity securities held by the Company which do not give the Company the ability to exercise significant influence are considered to be available-for-sale. These are remeasured at fair value each reporting period with resulting unrealized gains and losses recorded as a separate component of accumulated other comprehensive income in shareholders' equity. Gains and losses are not realized until the securities are sold or subject to an other than temporary impairment. Gains and losses on forward contracts to purchase marketable equity securities that do not meet the definition of a derivative are accounted for as available-for-sale.

The Company analyzes its available-for-sale securities for impairment at each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the value of the securities. The Company records an impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in value are not reflected in earnings until sale of the securities held as available for sale occurs.

Receivables

Receivables, including accounts receivable, are recorded in the balance sheet at their nominal amount less an allowance for doubtful accounts. The Company establishes reserves for doubtful accounts on a case-by-case basis when it is unlikely that required payments of specific amounts will occur. In establishing these reserves, the Company considers the financial condition of the customer as well as specific circumstances related to the receivable such as customer disputes. Receivable amounts determined as being unrecoverable are written off.

Newbuildings

The carrying value of drilling units under construction ("Newbuildings") represents the accumulated costs at the balance sheet date. Cost components include payments for yard installments and variation orders, construction supervision, equipment, spare parts, capitalized interest, costs related to first time mobilization and commissioning costs. No charge for depreciation is made until commissioning of the newbuilding has been completed and it is ready for its intended use.

The Company may have option agreements with shipyards to order new drilling units at fixed or variable prices which require some or no additional payment upon exercise. Payments for drilling unit purchase options are capitalized at the time when option contracts are acquired or entered into. The Company reviews the expected future cash flows, which would result from the exercise of each option contract on a contract by contract basis to determine whether the carrying value of the option is recoverable.

Capitalized interest

Interest expense is capitalized during construction of newbuildings based on accumulated expenditures for the applicable project at the Company's current rate of borrowing. The amount of interest expense capitalized in an accounting period shall be determined by applying an interest rate ("the capitalization rate") to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in an accounting period shall be based on the rates applicable to borrowings outstanding during the period. The Company does not capitalize amounts beyond the actual interest expense incurred in the period.

If the Company's financing plans associate a specific new borrowing with a qualifying asset, the Company uses the rate on that borrowing as the capitalization rate to be applied to that portion of the average accumulated expenditures for the asset that does not exceed the amount of that borrowing. If average accumulated expenditures for the asset exceed the amounts of specific new borrowings associated with the asset, the capitalization rate to be applied to such excess shall be a weighted average of the rates applicable to other borrowings of the Company.

Drilling units

Rigs, vessels and related equipment are recorded at historical cost less accumulated depreciation. The cost of these assets, less estimated residual value is depreciated on a straight-line basis over their estimated remaining economic useful lives. The estimated residual value is taken to be offset by any decommissioning costs that may be incurred. The estimated economic useful life of the Company's floaters and, jack-up rigs, when new, is 30 years.

Significant investments are capitalized and depreciated in accordance with the nature of the investment. Significant investments that are deemed to increase an asset's value for its remaining useful life are capitalized and depreciated over the remaining life of the asset.

Cost of property and equipment sold or retired, with the related accumulated depreciation and write-downs are removed from the consolidated balance sheet, and resulting gains or losses are included in the consolidated statement of operations.

Assets held for sale

Assets are classified as held for sale when all of the following criteria are met: Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group), the asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups), an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated, the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale, within 1 year. The term probable refers to a future sale that is likely to occur, the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Discontinued operations

The Company will present the results of operations of a component of the Company as defined by US GAAP, that either has been disposed of or is classified as held for sale, as discontinued operations, if both of the conditions are met: The operations and cash flow of the component have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposal transaction and; the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Equipment

Equipment is recorded at historical cost less accumulated depreciation and is depreciated over its estimated remaining useful life, which is between 3 and 5 years depending on the type of asset.

Goodwill

The Company allocates the purchase price of acquired businesses to the identifiable tangible and intangible assets and liabilities acquired, with any remaining amount being recorded as goodwill. Goodwill is tested for impairment at least annually at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The Company has determined that its reporting units are the same as its operating segments for the purpose of allocating goodwill and the subsequent testing of goodwill for impairment.

The Company tests goodwill for impairment on an annual basis as of December 31 each year or when events or circumstances indicate that a potential impairment exists. The Company may first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two step goodwill impairment test.

If the qualitative factors indicate possible impairment, the Company performs a quantitative assessment to estimate fair value of its reporting units compared to their carrying value.  In the event that the fair value is less than carrying value, the Company must perform an exercise similar to a purchase price allocation in a business combination in order to determine the amount of the impairment charge. The quantitative goodwill impairment test for a reporting unit is based on discounted cash flows. The Company uses estimated future cash flows applying contract dayrates during the firm contract periods and estimated forecasted dayrates for the periods after expiry of firm contract periods. The estimated future cash flows will be based on remaining economic useful lives for the assets, and discounted using a weighted average cost of capital (WACC).

Other intangible assets and liabilities

Other intangible assets and liabilities are recorded at fair value on the date of acquisition less accumulated amortization. The amounts of these assets and liabilities less the estimated residual value, if any, is generally amortized on a straight-line basis over the estimated remaining economic useful life or contractual period. Other intangible assets include technology, customer relationships and favorable drilling contracts. Other intangible liabilities include unfavorable drilling contracts.

Impairment of long-lived assets

The carrying value of long-lived assets that are held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the undiscounted future net cash flows expected to result from the asset, including eventual disposition. If the undiscounted future net cash flows are less than the carrying value of the asset, an impairment is made to the market value or the discounted future net cash flows.

Defined benefit pension plans

The Company has several defined benefit plans which provide retirement, death and early termination benefits. The Company's net obligation is calculated separately for each plan by estimating the amount of the future benefit that employees have earned in return for their cumulative service.

The aggregated projected future benefit obligation is discounted to a present value, and the aggregated fair value of any plan assets is deducted. The discount rate is the market yield at the balance sheet date on government bonds in the relevant currency and based on terms consistent with the post-employment benefit obligations. The retirement benefits are generally a function of number of years of employment and amount of employees' remuneration. The plans are primarily funded through payments to insurance companies. The Company records its pension costs in the period during which the services are rendered by the employees. Actuarial gains and losses are recognized in the statement of operations when the net cumulative unrecognized actuarial gains or losses for each individual plan at the end of the previous reporting year exceed 10 percent of the higher of the present value of the defined benefit obligation and the fair value of plan assets at that date. These gains and losses are recognized over the expected remaining working lives of the employees participating in the plans. Otherwise, recognition of actuarial gains and losses is included in other comprehensive income.  Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income.

Treasury shares

Treasury shares are recognized at cost as a component of equity. The purchase of treasury shares reduces the Company's share capital by the nominal value of the acquired treasury shares. The amount paid in excess of the nominal value is treated as a reduction of additional paid-in capital.

Derivative Financial Instruments and Hedging Activities

The Company's primary derivative instruments include interest-rate swap agreements, foreign currency options and forward exchange contracts which are recorded at fair value. Changes in the fair value of these derivatives, which have not been designated as hedging instruments, are recorded as a gain or loss as a separate line item within financial items in our consolidated statement of operations.

Changes in the fair value of any derivative instrument that we have formally designated as a hedge, are recognized in accumulated other comprehensive income/(loss) in the consolidated balance sheets. Any change in fair value relating to an ineffective portion of a designated hedge is recognized, in the consolidated statement of operations. When the hedged item affects the income statement, the gain or loss included in accumulated other comprehensive income is reported on the same line in the consolidated statements of operations as the hedged item.

Income taxes

Seadrill is a Bermuda company. Currently, the Company is not required to pay taxes in Bermuda on ordinary income or capital gains as we qualify as an exempt company. The Company has received written assurance from the Minister of Finance in Bermuda that it will be exempt from taxation until March 2035. Certain subsidiaries operate in other jurisdictions where taxes are imposed. Consequently income taxes have been recorded in these jurisdictions when appropriate.

Significant judgment is involved in determining the provision for income taxes. There are certain transactions for which the ultimate tax determination is unclear due to uncertainty in the ordinary course of business. Seadrill recognizes tax liabilities based on its assessment of whether its tax positions are more likely than not sustainable, based on the technical merits and considerations of the relevant taxing authority's widely understood administrative practices and precedence.

Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax loss carry forwards. A deferred tax asset is recognized only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilized. The amount of deferred tax provided is based upon the expected manner of settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date. The impact of tax law changes is recognized in periods when the change is enacted.

Deferred charges

Loan related costs, including debt arrangement fees, are capitalized and amortized over the term of the related loan and are included in interest expense.

Convertible debt

Convertible bond loans issued by the Company include both a loan component (host contract) and an option to convert the loan to shares (embedded derivative).

An embedded derivative, such as a conversion option, may be separated from its host contract and accounted for separately if certain criteria are met (including if the contract that embodies both the embedded derivative and the host contract is not measured at fair value, the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract and if a separate instrument with the same terms as the embedded instrument would be a derivative).

If an embedded derivative instrument is separated from its host contract, the host contract shall be accounted for based on generally accepted accounting principles applicable to instruments of that type which do not contain embedded derivative instruments.

Total Return Equity Swaps

From time to time, the Company enters into total return equity swaps ("TRS") indexed to the Company's own shares, where the counterparty acquires shares in the Company and the Company carries the risk of fluctuations in the share price of the acquired shares. The fair value of each TRS is recorded as an asset or liability, with the changes in fair value recorded in the consolidated statement of operations. The Company may, from time to time, enter into TRS arrangements indexed to shares in other companies which are accounted for in a similar manner.

Share-based compensation

The Company has established an employee share ownership plan under which employees, directors and officers of the Group may be allocated options to subscribe for new shares in the ultimate parent, Seadrill Limited. The compensation cost for share options is recognized as an expense over the service period based on the fair value of the options granted.

The fair value of the share options issued under the Company's employee share option plans is determined at grant date taking into account the terms and conditions upon which the options are granted, and using a valuation technique that is consistent with generally accepted valuation methodologies for pricing financial instruments, and that incorporates all factors and assumptions that knowledgeable, willing market participants would consider in determining fair value. The fair value of the share options is recognized as personnel expenses with a corresponding increase in equity over the period during which the employees become unconditionally entitled to the options. Compensation cost is initially recognized based upon options expected to vest with appropriate adjustments to reflect actual forfeitures. National insurance contributions arising from such incentive programs are expensed when the options are exercised.

The Company has also established a Restricted Stock Units (“RSU”) plan where the holder of an award is entitled to receive shares if still employed at the end of the three year vesting period. There is no requirement for the holder to pay for the share on grant or vesting of the award.

The fair value of the RSU award is calculated as the market share price on grant date. The fair value of the awards expected to vest is recognized as compensation cost straight-line over the vesting period.

Provisions

A provision is recognized in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Related parties

Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also related if they are subject to common control or common significant influence. All transactions between the related parties are based on the principle of arm's length.

Earnings per share

Basic earnings per share ("EPS") is calculated based on the income (loss) for the period available to common stockholders divided by the weighted average number of shares outstanding for basic EPS for the period. Diluted EPS includes the effect of the assumed conversion of potentially dilutive instruments which for the Company includes share options, restricted stock units and convertible debt. The determination of dilutive earnings per share requires the Company to potentially make certain adjustments to net income and for the weighted average shares outstanding used to compute basic earnings per share unless anti-dilutive.

Recently Adopted Accounting Standards

Balance sheet—Effective January 1, 2014, the Company has adopted the accounting standards update that expands on the recognition, measurement and disclosure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). The update requires measurement of the obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of the amount the entity agreed to pay on the basis of its arrangement and any additional amount the Company expects to pay on behalf of its co-obligors. The update also requires an entity to disclose the nature, amount and other information of the obligation. The update was effective for interim and annual periods beginning on or after December 15, 2013. As a result, the Company has disclosed relevant obligations in Note 23.

Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the criteria for reporting discontinued operations to include only disposals representing a strategic shift in operations. The ASU also requires expanded disclosures regarding the assets, liabilities, income, and expenses of discontinued operations. This ASU will be effective for the first interim period beginning after December 15, 2014 and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides new authoritative guidance on the methods of revenue recognition and related disclosure requirements. The accounting standard update will be effective for the first interim period beginning after December 15, 2016 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides new authoritative guidance with regards to management's responsibility to assess an entity's ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The ASU will be effective for all entities in the first annual period ending after December 15, 2016 (December 31, 2016 for calendar year-end entities) and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which made targeted amendments to the current consolidation guidance that could affect all industries. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The accounting standard update will be effective for the first interim period beginning after December 15, 2015 and early adoption is permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

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Long-term debt (Ship Finance International Limited ("Ship Finance") Loans) (Details) (USD $)	1 Months Ended		12 Months Ended	0 Months Ended
	Sep. 30, 2008	Dec. 31, 2012	Dec. 31, 2014	Oct. 17, 2013	Feb. 28, 2014	Dec. 31, 2013	Oct. 31, 2010	Oct. 31, 2013	May 31, 2013
Debt Instrument [Line Items]
Long-term Debt			$ 12,620,000,000			$ 13,466,000,000
Credit facility, International Loans, 1
Debt Instrument [Line Items]
Debt Instrument, Face Amount			475,000,000	475,000,000
Pledged assets			581,000,000
Long-term Line of Credit			451,000,000			0
Ship Finance International Loans, $1,400 facility
Debt Instrument [Line Items]
Maturity of debt	5 years
SFL West Polaris Limited | Ship Finance International Loans, $700 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount		420,000,000					700,000,000
Debt instrument term		5 years
West Taurus | Ship Finance International Loans, $1,400 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount	1,400,000,000							390,000,000
Assets pledged			450,000,000
Long-term Debt			303,000,000			383,000,000
Maturity of debt			5 years
West Hercules [Member] | Ship Finance International Loans, $1,400 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount									375,000,000
Assets pledged			603,000,000
Long-term Debt			284,000,000			362,000,000
Maturity of debt			6 years
Secured Debt | Credit facility, International Loans, 1 | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis				LIBOR
Basis spread on variable rate			2.75%
Secured Debt | Ship Finance International Loans, $700 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis		LIBOR
Basis spread on variable rate		3.00%			2.25%
Secured Debt | SFL West Polaris Limited | Ship Finance International Loans, $700 facility
Debt Instrument [Line Items]
Assets pledged			$ 564,000,000
Secured Debt | West Taurus | Ship Finance International Loans, $1,400 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis	LIBOR		LIBOR
Basis spread on variable rate	1.40%		2.50%
Secured Debt | West Hercules [Member] | Ship Finance International Loans, $1,400 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis			LIBOR
Basis spread on variable rate			2.75%

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Other current assets

12 Months Ended

Dec. 31, 2014

Other Assets [Abstract]

Other current assets

Other current assets

Other current assets include:

(In US$ millions)	December 31, 2014	December 31, 2013
Prepaid expenses	30	43
Deferred charges	42	38
Accrued revenue	—	43
Unrealized gains on derivative contracts	5	9
Reimbursable amounts due from customers	79	59
Deferred mobilization cost	7	57
Deferred tax asset	9	—
Taxes receivable	29	28
Other current assets	72	86
Total other current assets	273	363

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Related party transactions (Administrative Service Agreements) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Oct. 31, 2012
Related Party Transaction [Line Items]
Revenues related party	$ 97	$ 2	$ 15
Seadrill Partners LLC | Equity Method Investee
Related Party Transaction [Line Items]
Technical and administrative service agreement fee, percentage				5.00%
Revenues related party	$ 59
Seadrill Management | Seadrill Partners LLC | Equity Method Investee
Related Party Transaction [Line Items]
Management fee, percentage				5.00%
Management service agreement period				5 years
Management service agreement termination notice period				90 days

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Equity offerings and drilling unit sale transactions with Seadrill Partners (Sale of Company Drilling Units to Seadrill Partners) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended	15 Months Ended
	Dec. 31, 2014	Jan. 02, 2014
Redeemable Noncontrolling Interest [Line Items]
Adjusted sales price		$ 1,793	[1]
Less net assets transferred		(486)
Excess of sales price over net assets transferred		1,307
Deemed contribution to Seadrill shareholders from non-controlling interest	13	209
T-15
Redeemable Noncontrolling Interest [Line Items]
Adjusted sales price		74	[1]
Less net assets transferred		5
Excess of sales price over net assets transferred		79
Deemed contribution to Seadrill shareholders from non-controlling interest		19
T-16
Redeemable Noncontrolling Interest [Line Items]
Adjusted sales price		68	[1]
Less net assets transferred		0
Excess of sales price over net assets transferred		68
Deemed contribution to Seadrill shareholders from non-controlling interest		16
West Sirius
Redeemable Noncontrolling Interest [Line Items]
Adjusted sales price		922	[1]
Less net assets transferred		(375)
Excess of sales price over net assets transferred		547
Deemed contribution to Seadrill shareholders from non-controlling interest		105
West Leo
Redeemable Noncontrolling Interest [Line Items]
Adjusted sales price		729	[1]
Less net assets transferred		(116)
Excess of sales price over net assets transferred		613
Deemed contribution to Seadrill shareholders from non-controlling interest		$ 69

[1] The Adjusted sales price above includes debt assumed and working capital adjustments.

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Drilling units (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Drilling units [Line Items]
Book value on disposal	$ 17,175	$ 20,612
Drilling units
Drilling units [Line Items]
Cost	19,101	19,967
Accumulated depreciation	(2,991)	(2,774)
Re-classified as assets held for sale	(965)	0
Book value on disposal	15,145	17,193	0
Depreciation and amortization expense	$ 684	$ 703	$ 608

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Other current liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Payables and Accruals [Abstract]

Other current liabilities

Other current liabilities are comprised of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Taxes payable	160	332
Employee withheld taxes, social security and vacation payment	122	105
Intangible liabilities - unfavorable contracts (1)	116	109
Accrued interest expense	77	70
Liabilities relating to investment in shares (2)	167	198
Deferred mobilization revenue	178	192
Derivative financial instruments (3)	372	145
Accrued expenses	292	458
Construction obligation (4)	428	483
Other current liabilities	22	22
Total other current liabilities	1,934	2,114

(1) Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Notes 12 and 21 to the consolidated financial statements included herein.

(2) Liabilities relating to investment in shares primarily represents amounts owed in respect of the Company's share forward purchase contracts for Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

(3) Derivative financial instruments consist of unrealized losses on various types of derivatives.

(4) The construction obligation has been recognized upon the acquisition of Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

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Business Acquisitions (Tables)

12 Months Ended

Dec. 31, 2014

Business Acquisition [Line Items]

Preliminary Value of Net Assets Acquired

The fair values of net assets acquired were as follows:

(In US$ millions)	January 3, 2013
Fair value of net assets acquired:
Drilling units	698
Unfavorable contract – Other current liabilities	(27	)
Unfavorable contract – Other non-current liabilities	(81	)
Net assets acquired	590
Fair value of consideration	590

Sevan Drilling ASA

Business Acquisition [Line Items]

Purchase price allocation of acquired companies

The fair values of net assets acquired including the remeasurement of our previously held equity interest, measurement of the non-controlling interest and associated bargain purchase gain are as follows:

(In US$ millions)	July 2, 2013
Cash and cash equivalents	54
Restricted cash	63
Trade and other receivables	49
Current assets	166
Drilling units	1,246
Newbuildings	1,227
Deferred income tax asset	76
Valuation allowance income tax asset	(76	)
Other non-current assets	1
Non-current assets	2,474
Total assets	2,640
Current portion of long-term debt	(112	)
Trade and other payables	(115	)
Construction obligation	(923	)
Unfavorable contracts	(79	)
Other current liabilities	(26	)
Current liabilities	(1,255	)
Long-term interest bearing debt	(703	)
Unfavorable contracts	(257	)
Other non-current liabilities	(16	)
Non-current liabilities	(976	)
Total liabilities	(2,231	)
Net assets acquired	409
Net book value of equity investment	109
Fair value of previously held equity investment	117
Gain on re-measurement of previously held equity  investment	8
Fair value of establishment of non-controlling interest	197
Bargain purchase
Fair value of consideration transferred	78
Fair value of establishment of non-controlling interest	197
Fair value of previously held equity investment	117
Total	392
Net assets acquired	409
Gain on bargain purchase	17

Asia Offshore Drilling

Business Acquisition [Line Items]

Purchase price allocation of acquired companies

The fair values of net assets acquired, the remeasurement of our previously held equity interest, measurement of the non-controlling interest and associated bargain purchase gain are as follows:

(In US$ millions)	March 25, 2013
Cash and cash equivalents	1
Current assets	1
Drilling units	633
Non-current assets	633
Construction obligation	(316	)
Other current liabilities	(8	)
Current liabilities	(324	)
Non-current liabilities	—
Net assets acquired	310
Net book value of equity investment	185
Fair value of previously held equity investment	195
Gain on re-measurement of previously held equity  investment	10
Fair value of establishment of non-controlling interest	100
Bargain purchase
Fair value of establishment of non-controlling interest	100
Fair value of previously held equity investment	195
Total	295
Net assets acquired	310
Gain on bargain purchase	15

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Earnings per share

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Earnings per share

Earnings per share

The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares outstanding during the period. Diluted EPS includes the effect of the assumed conversion of potentially dilutive instruments.

The components of the numerator for the calculation of basic and diluted EPS are as follows:

(In US$ millions)	2014		2013	2012
Net income attributable to the parent	3,979		2,653	1,108
Less: Allocation to participating securities	(6	)	—	—
Net income available to stockholders	3,973		2,653	1,108
Effect of dilution	117		38	37
Diluted net income available to stockholders	4,090		2,691	1,145

The components of the denominator for the calculation of basic and diluted EPS are as follows:

(In US$ millions)	2014	2013	2012
Basic earnings per share:
Weighted average number of common shares outstanding	478	469	469
Diluted earnings per share:
Effect of dilutive convertible bonds	14	22	20
Effect of dilutive share options	1	1	1
Weighted average number of common shares outstanding adjusted for the effects of dilution	493	492	490

(In US$)	2014	2013	2012
Basic Earnings per share	8.32	5.66	2.37
Diluted earnings per share	8.30	5.47	2.34

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Other revenues (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues [Abstract]
Amortization of unfavorable contracts	$ 130	$ 67	$ 0
Amortization of favorable contracts	0	(2)	(12)
Revenues related party	97	2	15
External management fees with third parties	62	45	0
Total	$ 289	$ 112	$ 3

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Accounting policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The financial statements are presented in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The amounts are presented in United States dollar (U.S. dollar) rounded to the nearest million, unless otherwise stated.

The accompanying consolidated financial statements present the financial position of Seadrill Limited, the consolidated subsidiaries and the group's interest in associated entities. Investments in companies in which the Company controls, or directly or indirectly holds more than 50% of the voting control are consolidated in the financial statements, as well as certain variable interest entities of which the Company is deemed to be the primary beneficiary.

The accounting policies set out below have been applied consistently to all periods in these consolidated financial statements, unless otherwise noted.

Basis of consolidation

Basis of consolidation

The consolidated financial statements include the assets and liabilities of the Company, its majority owned and controlled subsidiaries and certain variable interest entities, ("VIE"s) in which the Company is deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated on consolidation.

A VIE is defined as a legal entity where either (a) the total equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated support; (b) equity interest holders as a group lack either i) the power to direct the activities of the entity that most significantly impact on its economic success, ii) the obligation to absorb the expected losses of the entity, or iii) the right to receive the expected residual returns of the entity; or (c) the voting rights of some investors in the entity are not proportional to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. U.S. GAAP requires a VIE to be consolidated by its primary beneficiary, being the interest holder, if any, which has both (1) the power to direct the activities of the entity which most significantly impact on the entity's economic performance, and (2) the right to receive benefits or the obligation to absorb losses from the entity which could potentially be significant to the entity. We evaluate our subsidiaries, and any other entities in which we hold a variable interest, in order to determine whether we are the primary beneficiary of the entity, and where it is determined that we are the primary beneficiary we fully consolidate the entity.

Investment in companies in which we hold an ownership interest of between 20% and 50%, and over which we exercise significant influence, but do not consolidate, are accounted for using the equity method. The Company records its investments in associated companies and its share of earnings or losses in the consolidated statements of operations as "Share in results from associated companies." The excess, if any, of purchase price over book value of the Company's investments in equity method investees is included in the accompanying consolidated balance sheets in "Investment in associated companies."

Investments in companies in which our ownership is less than 20% are valued at fair value unless it is not possible to estimate fair value, then the cost method is used.

Intercompany transactions and internal sales have been eliminated on consolidation. Unrealized gains and losses arising from transactions with associates are eliminated to the extent of the Company's interest in the entity.

Use of estimates

Use of estimates

Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Contract revenue

Contract revenue

A substantial majority of the Company's revenues are derived from dayrate based drilling contracts (which may include lump sum fees for mobilization and demobilization) and other service contracts. Both dayrate based and lump sum fee revenues are recognized ratably over the contract period when services are rendered. Under some contracts, the Company is entitled to additional payments for meeting or exceeding certain performance targets. Such additional payments are recognized when any uncertainties are resolved or upon completion of the drilling program.

In connection with drilling contracts, the Company may receive lump sum fees for the mobilization of equipment and personnel or for capital additions and upgrades prior to commencement of drilling services. These up-front fees are recognized as revenue over the contract term, excluding option periods.

In some cases, the Company may receive lump sum non-contingent fees or dayrate based fees from customers for demobilization upon completion of a drilling contract. Non-contingent demobilization fees are recognized as revenue over contract term, excluding option periods not exercised by our customers. Contingent demobilization fees are recognized as earned upon completion of the drilling contract.

Fees received from customers under drilling contracts for capital upgrades are deferred and recognized over the contract term, excluding option periods not exercised.

In certain countries in which we operate, taxes such as sales, use, value-added, gross receipts and excise may be assessed by the local government on our revenues. We generally record our tax-assessed revenue transactions on a net basis in our consolidated statement of income.

Reimbursables

Reimbursables

Reimbursements received for the purchases of supplies, personnel services and other services provided on behalf of and at the request of our customers in accordance with a contract or agreement are recorded as revenue. The related costs are recorded as reimbursable expenses in the same period.

Other revenues

Other revenues

In a business combination there may exist favorable and unfavorable drilling contracts which are recorded at fair value at the date of acquisition. A favorable or unfavorable drilling contract is a contract that has a dayrate which differs from prevailing market rates at the time of acquisition. The net present value of such contracts is recorded as an asset or liability at the purchase date and subsequently recognized as revenue or reduction to revenue over the contract term.

Related party revenues relate to management support and administrative services provided to our associates in which we maintain an investment. External management fees relate to the operational, administrative and support services we provide to third parties.

Mobilization and demobilization expenses

Mobilization and demobilization expenses

Mobilization costs incurred as part of a drilling contract are capitalized and recognized as expense over the contract term, excluding option periods not exercised by our customers. The costs of relocating drilling units that are not under contract are expensed as incurred.

Demobilization costs are costs related to the transfer of a vessel or drilling rig to a safe harbor or different geographic area and are expensed as incurred.

Rig operating expenses

Vessel and Rig Operating Expenses

Vessel and rig operating expenses are costs associated with operating a drilling unit that is either in operation or stacked, and include the remuneration of offshore crews and related costs, supplies, insurance costs, expenses for repairs and maintenance as well as costs related to onshore personnel in various locations where we operate the drilling units and are expensed as incurred.

Repairs, maintenance and periodic surveys

Repairs, maintenance and periodic surveys

Costs related to periodic overhauls of drilling units are capitalized under drilling units and amortized over the anticipated period between overhauls, which is generally 5 years. Related costs are primarily yard costs and the cost of employees directly involved in the work. Amortization costs for periodic overhauls are included in depreciation and amortization expense. Costs for other repair and maintenance activities are included in vessel and rig operating expenses and are expensed as incurred.

Foreign currencies

Foreign currencies

The Company and the majority of its subsidiaries use the U.S. dollars as their functional currency because the majority of their revenues and expenses are denominated in U.S. dollars. Accordingly, the Company's reporting currency is also U.S. dollars. For subsidiaries that maintain their accounts in currencies other than U.S. dollars, the Company uses the current method of translation whereby the statements of operations are translated using the average exchange rate for the year and the assets and liabilities are translated using the year end exchange rate. Foreign currency translation gains or losses on consolidation are recorded as a separate component of other comprehensive income in shareholders' equity.

Transactions in foreign currencies are translated into U.S. dollars at the rates of exchange in effect at the date of the transaction. Foreign currency assets and liabilities are translated using rates of exchange at the balance sheet date. Gains and losses on foreign currency transactions are included in the consolidated statements of operations.

Current and non-current classification

Current and non-current classification

Assets and liabilities are classified as current assets and liabilities respectively, if their maturity is within 1 year of the balance sheet date. Otherwise, they are classified as non-current assets and liabilities.

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents consist of cash, bank deposits and highly liquid financial instruments with original maturities of three months or less.

Restricted cash

Restricted cash

Restricted cash consists of bank deposits which have been pledged as collateral for certain guarantees issued by a bank or minimum deposits which must be maintained in accordance with contractual arrangements. Restricted cash amounts with maturities longer than one year are classified as non-current assets.

Equity method investments

Equity method investments

Investments in common stock are accounted for using the equity method of accounting if the investment gives the Company the ability to exercise significant influence, but not control over, the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors such as representation on the investee’s Board of Directors and the nature of commercial arrangements are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the Company records its investments in equity-method investees in the consolidated balance sheet under “Investment in associated companies” and its share of the investees’ earnings or losses together with other-than-temporary impairments in value and gain/loss on sale of investments under “Share in results from associated companies (net of tax)” in the consolidated statements of income.

All other equity investments, which consist of investments for which the Company does not have the ability to exercise significant influence, or are not investments in common stock, are accounted for under the cost method or at fair value if readily determinable.

The Company analyzes its equity method investees for impairment at each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the value of the investment. The Company records an impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in value are not reflected in earnings until sale of the equity method investee occurs.

Marketable securities

Marketable securities

Marketable equity securities held by the Company which do not give the Company the ability to exercise significant influence are considered to be available-for-sale. These are remeasured at fair value each reporting period with resulting unrealized gains and losses recorded as a separate component of accumulated other comprehensive income in shareholders' equity. Gains and losses are not realized until the securities are sold or subject to an other than temporary impairment. Gains and losses on forward contracts to purchase marketable equity securities that do not meet the definition of a derivative are accounted for as available-for-sale.

The Company analyzes its available-for-sale securities for impairment at each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the value of the securities. The Company records an impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date, unless there are mitigating factors that indicate impairment may not be required. If an impairment charge is recorded, subsequent recoveries in value are not reflected in earnings until sale of the securities held as available for sale occurs.

Receivables

Receivables

Receivables, including accounts receivable, are recorded in the balance sheet at their nominal amount less an allowance for doubtful accounts. The Company establishes reserves for doubtful accounts on a case-by-case basis when it is unlikely that required payments of specific amounts will occur. In establishing these reserves, the Company considers the financial condition of the customer as well as specific circumstances related to the receivable such as customer disputes. Receivable amounts determined as being unrecoverable are written off.

Newbuildings

Newbuildings

The carrying value of drilling units under construction ("Newbuildings") represents the accumulated costs at the balance sheet date. Cost components include payments for yard installments and variation orders, construction supervision, equipment, spare parts, capitalized interest, costs related to first time mobilization and commissioning costs. No charge for depreciation is made until commissioning of the newbuilding has been completed and it is ready for its intended use.

The Company may have option agreements with shipyards to order new drilling units at fixed or variable prices which require some or no additional payment upon exercise. Payments for drilling unit purchase options are capitalized at the time when option contracts are acquired or entered into. The Company reviews the expected future cash flows, which would result from the exercise of each option contract on a contract by contract basis to determine whether the carrying value of the option is recoverable.

Capitalized interest

Capitalized interest

Interest expense is capitalized during construction of newbuildings based on accumulated expenditures for the applicable project at the Company's current rate of borrowing. The amount of interest expense capitalized in an accounting period shall be determined by applying an interest rate ("the capitalization rate") to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in an accounting period shall be based on the rates applicable to borrowings outstanding during the period. The Company does not capitalize amounts beyond the actual interest expense incurred in the period.

If the Company's financing plans associate a specific new borrowing with a qualifying asset, the Company uses the rate on that borrowing as the capitalization rate to be applied to that portion of the average accumulated expenditures for the asset that does not exceed the amount of that borrowing. If average accumulated expenditures for the asset exceed the amounts of specific new borrowings associated with the asset, the capitalization rate to be applied to such excess shall be a weighted average of the rates applicable to other borrowings of the Company.

Drilling units

Drilling units

Rigs, vessels and related equipment are recorded at historical cost less accumulated depreciation. The cost of these assets, less estimated residual value is depreciated on a straight-line basis over their estimated remaining economic useful lives. The estimated residual value is taken to be offset by any decommissioning costs that may be incurred. The estimated economic useful life of the Company's floaters and, jack-up rigs, when new, is 30 years.

Significant investments are capitalized and depreciated in accordance with the nature of the investment. Significant investments that are deemed to increase an asset's value for its remaining useful life are capitalized and depreciated over the remaining life of the asset.

Cost of property and equipment sold or retired, with the related accumulated depreciation and write-downs are removed from the consolidated balance sheet, and resulting gains or losses are included in the consolidated statement of operations.

Assets held for sale

Assets held for sale

Assets are classified as held for sale when all of the following criteria are met: Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group), the asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups), an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated, the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale, within 1 year. The term probable refers to a future sale that is likely to occur, the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Discontinued operations

Discontinued operations

The Company will present the results of operations of a component of the Company as defined by US GAAP, that either has been disposed of or is classified as held for sale, as discontinued operations, if both of the conditions are met: The operations and cash flow of the component have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposal transaction and; the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Equipment

Equipment

Equipment is recorded at historical cost less accumulated depreciation and is depreciated over its estimated remaining useful life, which is between 3 and 5 years depending on the type of asset.

Goodwill

Goodwill

The Company allocates the purchase price of acquired businesses to the identifiable tangible and intangible assets and liabilities acquired, with any remaining amount being recorded as goodwill. Goodwill is tested for impairment at least annually at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The Company has determined that its reporting units are the same as its operating segments for the purpose of allocating goodwill and the subsequent testing of goodwill for impairment.

The Company tests goodwill for impairment on an annual basis as of December 31 each year or when events or circumstances indicate that a potential impairment exists. The Company may first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two step goodwill impairment test.

If the qualitative factors indicate possible impairment, the Company performs a quantitative assessment to estimate fair value of its reporting units compared to their carrying value.  In the event that the fair value is less than carrying value, the Company must perform an exercise similar to a purchase price allocation in a business combination in order to determine the amount of the impairment charge. The quantitative goodwill impairment test for a reporting unit is based on discounted cash flows. The Company uses estimated future cash flows applying contract dayrates during the firm contract periods and estimated forecasted dayrates for the periods after expiry of firm contract periods. The estimated future cash flows will be based on remaining economic useful lives for the assets, and discounted using a weighted average cost of capital (WACC).

Other intangible assets

Other intangible assets and liabilities

Other intangible assets and liabilities are recorded at fair value on the date of acquisition less accumulated amortization. The amounts of these assets and liabilities less the estimated residual value, if any, is generally amortized on a straight-line basis over the estimated remaining economic useful life or contractual period. Other intangible assets include technology, customer relationships and favorable drilling contracts. Other intangible liabilities include unfavorable drilling contracts.

Impairment of long-lived assets

Impairment of long-lived assets

The carrying value of long-lived assets that are held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the undiscounted future net cash flows expected to result from the asset, including eventual disposition. If the undiscounted future net cash flows are less than the carrying value of the asset, an impairment is made to the market value or the discounted future net cash flows.

Defined benefit pension plans

Defined benefit pension plans

The Company has several defined benefit plans which provide retirement, death and early termination benefits. The Company's net obligation is calculated separately for each plan by estimating the amount of the future benefit that employees have earned in return for their cumulative service.

The aggregated projected future benefit obligation is discounted to a present value, and the aggregated fair value of any plan assets is deducted. The discount rate is the market yield at the balance sheet date on government bonds in the relevant currency and based on terms consistent with the post-employment benefit obligations. The retirement benefits are generally a function of number of years of employment and amount of employees' remuneration. The plans are primarily funded through payments to insurance companies. The Company records its pension costs in the period during which the services are rendered by the employees. Actuarial gains and losses are recognized in the statement of operations when the net cumulative unrecognized actuarial gains or losses for each individual plan at the end of the previous reporting year exceed 10 percent of the higher of the present value of the defined benefit obligation and the fair value of plan assets at that date. These gains and losses are recognized over the expected remaining working lives of the employees participating in the plans. Otherwise, recognition of actuarial gains and losses is included in other comprehensive income.  Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income.

Treasury shares

Treasury shares

Treasury shares are recognized at cost as a component of equity. The purchase of treasury shares reduces the Company's share capital by the nominal value of the acquired treasury shares. The amount paid in excess of the nominal value is treated as a reduction of additional paid-in capital.

Derivative Financial Instruments and Hedging Activities

Derivative Financial Instruments and Hedging Activities

The Company's primary derivative instruments include interest-rate swap agreements, foreign currency options and forward exchange contracts which are recorded at fair value. Changes in the fair value of these derivatives, which have not been designated as hedging instruments, are recorded as a gain or loss as a separate line item within financial items in our consolidated statement of operations.

Changes in the fair value of any derivative instrument that we have formally designated as a hedge, are recognized in accumulated other comprehensive income/(loss) in the consolidated balance sheets. Any change in fair value relating to an ineffective portion of a designated hedge is recognized, in the consolidated statement of operations. When the hedged item affects the income statement, the gain or loss included in accumulated other comprehensive income is reported on the same line in the consolidated statements of operations as the hedged item.

Income taxes

Income taxes

Seadrill is a Bermuda company. Currently, the Company is not required to pay taxes in Bermuda on ordinary income or capital gains as we qualify as an exempt company. The Company has received written assurance from the Minister of Finance in Bermuda that it will be exempt from taxation until March 2035. Certain subsidiaries operate in other jurisdictions where taxes are imposed. Consequently income taxes have been recorded in these jurisdictions when appropriate.

Significant judgment is involved in determining the provision for income taxes. There are certain transactions for which the ultimate tax determination is unclear due to uncertainty in the ordinary course of business. Seadrill recognizes tax liabilities based on its assessment of whether its tax positions are more likely than not sustainable, based on the technical merits and considerations of the relevant taxing authority's widely understood administrative practices and precedence.

Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax loss carry forwards. A deferred tax asset is recognized only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilized. The amount of deferred tax provided is based upon the expected manner of settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date. The impact of tax law changes is recognized in periods when the change is enacted.

Deferred charges

Deferred charges

Loan related costs, including debt arrangement fees, are capitalized and amortized over the term of the related loan and are included in interest expense.

Convertible debt

Convertible debt

Convertible bond loans issued by the Company include both a loan component (host contract) and an option to convert the loan to shares (embedded derivative).

An embedded derivative, such as a conversion option, may be separated from its host contract and accounted for separately if certain criteria are met (including if the contract that embodies both the embedded derivative and the host contract is not measured at fair value, the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract and if a separate instrument with the same terms as the embedded instrument would be a derivative).

If an embedded derivative instrument is separated from its host contract, the host contract shall be accounted for based on generally accepted accounting principles applicable to instruments of that type which do not contain embedded derivative instruments.

Total Return Equity Swaps

Total Return Equity Swaps

From time to time, the Company enters into total return equity swaps ("TRS") indexed to the Company's own shares, where the counterparty acquires shares in the Company and the Company carries the risk of fluctuations in the share price of the acquired shares. The fair value of each TRS is recorded as an asset or liability, with the changes in fair value recorded in the consolidated statement of operations. The Company may, from time to time, enter into TRS arrangements indexed to shares in other companies which are accounted for in a similar manner.

Share-based compensation

Share-based compensation

The Company has established an employee share ownership plan under which employees, directors and officers of the Group may be allocated options to subscribe for new shares in the ultimate parent, Seadrill Limited. The compensation cost for share options is recognized as an expense over the service period based on the fair value of the options granted.

The fair value of the share options issued under the Company's employee share option plans is determined at grant date taking into account the terms and conditions upon which the options are granted, and using a valuation technique that is consistent with generally accepted valuation methodologies for pricing financial instruments, and that incorporates all factors and assumptions that knowledgeable, willing market participants would consider in determining fair value. The fair value of the share options is recognized as personnel expenses with a corresponding increase in equity over the period during which the employees become unconditionally entitled to the options. Compensation cost is initially recognized based upon options expected to vest with appropriate adjustments to reflect actual forfeitures. National insurance contributions arising from such incentive programs are expensed when the options are exercised.

The Company has also established a Restricted Stock Units (“RSU”) plan where the holder of an award is entitled to receive shares if still employed at the end of the three year vesting period. There is no requirement for the holder to pay for the share on grant or vesting of the award.

The fair value of the RSU award is calculated as the market share price on grant date. The fair value of the awards expected to vest is recognized as compensation cost straight-line over the vesting period.

Provisions

Provisions

A provision is recognized in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Related parties

Related parties

Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also related if they are subject to common control or common significant influence. All transactions between the related parties are based on the principle of arm's length.

Earnings per share

Earnings per share

Basic earnings per share ("EPS") is calculated based on the income (loss) for the period available to common stockholders divided by the weighted average number of shares outstanding for basic EPS for the period. Diluted EPS includes the effect of the assumed conversion of potentially dilutive instruments which for the Company includes share options, restricted stock units and convertible debt. The determination of dilutive earnings per share requires the Company to potentially make certain adjustments to net income and for the weighted average shares outstanding used to compute basic earnings per share unless anti-dilutive.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

Balance sheet—Effective January 1, 2014, the Company has adopted the accounting standards update that expands on the recognition, measurement and disclosure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). The update requires measurement of the obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of the amount the entity agreed to pay on the basis of its arrangement and any additional amount the Company expects to pay on behalf of its co-obligors. The update also requires an entity to disclose the nature, amount and other information of the obligation. The update was effective for interim and annual periods beginning on or after December 15, 2013. As a result, the Company has disclosed relevant obligations in Note 23.

Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the criteria for reporting discontinued operations to include only disposals representing a strategic shift in operations. The ASU also requires expanded disclosures regarding the assets, liabilities, income, and expenses of discontinued operations. This ASU will be effective for the first interim period beginning after December 15, 2014 and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides new authoritative guidance on the methods of revenue recognition and related disclosure requirements. The accounting standard update will be effective for the first interim period beginning after December 15, 2016 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides new authoritative guidance with regards to management's responsibility to assess an entity's ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The ASU will be effective for all entities in the first annual period ending after December 15, 2016 (December 31, 2016 for calendar year-end entities) and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which made targeted amendments to the current consolidation guidance that could affect all industries. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The accounting standard update will be effective for the first interim period beginning after December 15, 2015 and early adoption is permitted. The Company is in the process of evaluating the impact of this standard update on its consolidated financial statements and related disclosures.

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Assets Held For Sale (Tables)

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

(In US$ millions)	November 4, 2014
Enterprise value	900
Deferred consideration receivable	74
Less: Debt assumed	(433	)
Purchase price	541
Less: Working capital adjustment	(6	)
Adjusted purchase price	535
Cash	467
Deferred consideration receivable	74
Less: Working capital payable	(6	)
Fair value of purchase consideration	535
Less: net carrying value of assets and liabilities	(303	)
Less: allocated goodwill to subsidiaries	(41	)
Gain on sale	191

The gain is calculated as follows:

(In US$ millions)	December 31, 2013
Fair value of consideration received	2,600
Carry value of assets and liabilities	1,324
Other related costs to sale	20
Total gain on sale	1,256

(In US$ millions)	March 21, 2014
Enterprise value	1,240
Less: Debt assumed	(443	)
Purchase price	797
Less: Working capital adjustment	(331	)
Adjusted purchase price	466
Cash	697
Discount note issued	100
Less: Working capital payable	(331	)
Fair value of purchase consideration	466
Less: net carrying value of assets and liabilities	7
Less: allocated goodwill to subsidiaries	(33	)
Gain on sale	440

Assets and liabilities held in the Company's consolidated balance sheet included as held for sale are shown below:

(In US$ millions)	As at December 31, 2014
ASSETS
Current assets
Cash and cash equivalents	27
Accounts receivables, net	78
Deferred tax assets	9
Other current assets	20
Total current assets	134
Non-current assets
Drilling units	965
Deferred tax assets LT	5
Goodwill	49
Other non-current assets	86
Total non-current assets	1,105
Total assets	1,239
LIABILITIES
Current liabilities
Trade accounts payable	(2	)
Other current liabilities	(56	)
Total current liabilities	(58	)
Non-current liabilities
Other non-current liabilities	(50	)
Total non-current liabilities	(50	)
Total liabilities	(108	)

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Accumulated other comprehensive income (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Accumulated other comprehensive income, net of tax [Abstract]
Unrealized (loss)/gain on marketable securities	$ (443,000,000)	$ 539,000,000
Unrealized gain on foreign exchange	51,000,000	73,000,000
Actuarial loss relating to pension	(57,000,000)	(35,000,000)
Share in unrealized gains from associated companies	1,000,000	0
Unrealized loss on interest rate swaps in VIEs	0	(49,000,000)
Accumulated other comprehensive (loss)/income	(448,000,000)	528,000,000
Other comprehensive income taxes	0
Actuarial loss related to pension, tax effect	$ 22,000,000	$ 16,000,000
Tax rate in Norway (in hundredths)	28.00%

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Restricted cash (Tables)

12 Months Ended

Dec. 31, 2014

Restricted Cash and Investments [Abstract]

Schedule of Restricted Cash and Cash Equivalents

Restricted cash includes:

(In US$ millions)	December 31, 2014	December 31, 2013
CIRR deposits (1)	124	197
Margin calls related to share forward agreements	264	72
Cash pledged as collateral under credit facilities	50	—
Tax withholding deposits	11	49
Total restricted cash	449	318
Long-term restricted cash (related to CIRR deposits and margin calls)	181	150
Short-term restricted cash	268	168

(1) CIRR deposits are cash deposited with commercial banks, which match Commercial Interest Reference Rate ("CIRR") loans from Eksportfinans ASA, the Norwegian export credit agency (See Note 23 to the consolidated financial statements included herein). The deposits are used to make repayments of the CIRR loans.

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Pension benefits

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Pension benefits

Pension benefits

The Company has several defined benefit pension plans covering substantially all Norwegian employees. All of the plans are administered by a life insurance company. Under these plans, the Company contributes to the employee's pension plans with amounts ranging from five to eight percent of the employee's annual salary. Total payments to these plans were $0.9 million, $1.6 million and $1.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.

For onshore employees in Norway, who are participants in the defined benefit plans, the primary benefits are a retirement pension of approximately 66 percent of salary at retirement age of 67 years, together with a long-term disability pension. The retirement pension per employee is capped at an annual payment of 66 percent of the total of 12 times the Norwegian Social Security Base. All employees in this group may choose to retire at 62 years of age on a pre-retirement pension. Offshore employees in Norway have a retirement and long-term disability pension of approximately 60 percent of salary at retirement age of 67. Most offshore employees on drilling units may choose to retire at 60 years of age on a pre-retirement pension.

Consolidated balance sheet position

(In US$ millions)	2014		2013
Non-current liabilities	82		58
Deferred tax	(22	)	(16	)
Shareholders equity	60		42

Annual pension cost

(In US$ millions)	2014		2013		2012
Service cost	13		14		12
Interest cost on prior years' benefit obligation	7		7		5
Gross pension cost for the year	20		21		17
Expected return on plan assets	(6	)	(4	)	(5	)
Administration charges	1		—		—
Net pension cost for the year	15		17		12
Social security cost	2		2		2
Amortization of actuarial gains/losses	2		2		—
Impact of settlement/curtailment funded status	—		(2	)	(4	)
Total net pension cost	19		19		10

The funded status of the defined benefit plan

(In US$ millions)	December 31, 2014		December 31, 2013
Projected benefit obligations at end of period	186		180
Plan assets at market value	(114	)	(129	)
Accrued pension liability exclusive social security	72		51
Social security related to pension obligations	10		7
Accrued pension liabilities	82		58

Change in benefit obligations

(In US$ millions)	2014		2013
Projected benefit obligations at beginning of period	180		171
Interest cost	7		7
Service cost	13		14
Benefits paid	(2	)	(2	)
Change in unrecognized actuarial gain	23		13
Foreign currency translations	(35	)	(15	)
Acquisition/transfer members	—		(8	)
Projected benefit obligations at end of period	186		180

Change in pension plan assets

(In US$ millions)	2014		2013
Fair value of plan assets at beginning of year	129		122
Estimated return	2		5
Contribution by employer	17		19
Administration charges	(1	)	—
Benefits paid	(2	)	(2	)
Change in unrecognized actuarial loss	(9	)	—
Foreign currency translations	(22	)	(10	)
Acquisition/transfer members	—		(5	)
Fair value of plan assets at end of year	114		129

The accumulated benefit obligation for all defined benefit pension plans was $146 million and $132 million at December 31, 2014 and 2013, respectively.

Pension obligations are actuarially determined and are critically affected by the assumptions used, including the expected return on plan assets, discount rates, compensation increases and employee turnover rates. The Company periodically reviews the assumptions used, and adjusts them and the recorded liabilities as necessary.

The expected rate of return on plan assets and the discount rate applied to projected benefits are particularly important factors in calculating the Company's pension expense and liabilities. The Company evaluates assumptions regarding the estimated rate of return on plan assets based on historical experience and future expectations on investment returns, utilizing the asset allocation classes held by the plan's portfolios. The discount rate is based on the covered bond rate in Norway. Changes in these and other assumptions used in the actuarial computations could impact the projected benefit obligations, pension liabilities, pension expense and other comprehensive income.

Assumptions used in calculation of pension obligations

(In %)	2014		2013		2012
Rate of compensation increase at the end of year	2.75	%	3.75	%	3.50	%
Discount rate at the end of year	2.30	%	4.00	%	4.20	%
Prescribed pension index factor	1.20	%	1.40	%	1.40	%
Expected return on plan assets for the year	3.20	%	4.40	%	4.00	%
Employee turnover	4.00	%	4.00	%	3.50	%
Expected increases in Social Security Base	2.50	%	3.50	%	3.25	%

The weighted-average asset allocation of funds related to the Company's defined benefit plan at December 31, was as follows:

Pension benefit plan assets

(In %)	2014		2013
Equity securities	7.2	%	4.2	%
Debt securities	51.9	%	55.7	%
Real estate	14.2	%	13.9	%
Money market	23.5	%	24.7	%
Other	3.2	%	1.50	%
Total	100.0	%	100.0	%

The investment policies and strategies for the pension benefit plan funds do not use target allocations for the individual asset categories. The investment objectives are to maximize returns subject to specific risk management policies. The Company diversifies its allocation of plan assets by investing in both domestic and international fixed income securities and domestic and international equity securities. These investments are readily marketable and can be sold to fund benefit payment obligations as they become payable.

Cash flows - Contributions expected to be paid

The table below shows the Company's expected annual pension plans contributions under defined benefit plans for the years 2015-2024. The expected payments are based on the assumptions used to measure the Company's obligations at December 31, 2014 and include estimated future employee services.

(In US$ millions)	December 31, 2014
2015	11
2016	12
2017	12
2018	12
2019	13
2020-2024	69
Total payments expected during the next 10 years	129

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Drilling units

12 Months Ended

Dec. 31, 2014

Drilling units [Abstract]

Drilling units

Drilling units

(In US$ millions)	December 31, 2014		December 31, 2013
Cost	19,101		19,967
Accumulated depreciation	(2,991	)	(2,774	)
Re-classified as assets held for sale	(965	)	—
Net book value	15,145		17,193

Depreciation and amortization expense was $684 million, $703 million and $608 million for the years ended December 31, 2014, 2013 and 2012, respectively.

As of the deconsolidation date of Seadrill Partners on January 2, 2014, we have deconsolidated the entities that own and operate the following drilling units: West Sirius, West Aquarius, West Capella, West Capricorn, West Leo, T-15, T-16 and West Vencedor. For more details on the deconsolidation of Seadrill Partners see Note 11.

On March 21, 2014 we completed the sale of the entities that own and operate the West Auriga to Seadrill Partners. For more details on the sale of West Auriga see Note 11.

On November 4, 2014 we completed the sale of the entities that own and operate the West Vela to Seadrill Partners. For more details on the sale of West Vela see Note 11.

During the year ended December 31, 2014, a subsidiary of the Company entered into a joint venture agreement to form SeaMex Ltd with an investment fund controlled by Fintech Advisory Inc. (Fintech), for the purpose of owning and managing certain jack-up drilling units located in Mexico under contract with Pemex and to pursue other opportunities in Mexico and other Latin American countries. The West Oberon, West Intrepid, West Defender, West Courageous and West Titania jack-up drilling rigs will be included in the joint venture. The joint venture will become effective upon meeting certain closing conditions. On the completion of the transaction, the Company will no longer control the entities that own and operate these drilling units, and as such the Company will deconsolidate these entities and subsequently recognize its investment in the joint venture. Accordingly, the assets and liabilities held within the Company’s consolidated balance sheet that are related to the disposal group have been reclassified as held for sale and depreciation has ceased for these related assets. We have not presented this disposal group as discontinued operations in our statement of operations as we will continue to hold significant influence over SeaMex Ltd. For more details on assets held for sale see Note 37.

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Newbuildings

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Newbuildings

Newbuildings

(In US$ millions)	December 31, 2014		December 31, 2013
Opening balance	3,419		1,882
Additions	2,433		4,930
Capitalized interest and loan related costs	70		95
Re-classified as Drilling Units	(3,892	)	(3,335	)
Disposal of tender rigs	—		(153	)
Closing balance	2,030		3,419

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Related party transactions (Receivables (payables) with Seadrill Partners) (Details) (Seadrill Partners LLC, Equity Method Investee, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Rig Financing Agreements
Related Party Transaction [Line Items]
Due from (to) related party	237
Vendor Financing Loan
Related Party Transaction [Line Items]
Due from (to) related party	110
Deferred Consideration Receivable, Disposals
Related Party Transaction [Line Items]
Due from (to) related party	74
Other Related Party Receivables
Related Party Transaction [Line Items]
Due from (to) related party	264
Other Related Party Payables
Related Party Transaction [Line Items]
Due from (to) related party	(77)
Unsecured Debt
Related Party Transaction [Line Items]
Description of variable rate basis	LIBOR
Basis spread on variable rate	4.00%

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Variable Interest Entities (Narrative) (Details) (USD $)	12 Months Ended	15 Months Ended	0 Months Ended		12 Months Ended
	Dec. 31, 2014 rig	Jan. 02, 2014	Jun. 28, 2013	Dec. 30, 2014	Dec. 31, 2013
Sale Leaseback Transaction [Line Items]
Number of semi submersible rigs under sale leaseback arrangements	2
Number of newbuild jack-ups under finance lease arrangements	1
Term of lease contracts	15 years
Long-term debt due to related parties	$ 415,000,000				$ 1,415,000,000
Deemed contribution to Seadrill shareholders from non-controlling interest	13,000,000	209,000,000
Variable Interest Entity, Primary Beneficiary | North Atlantic Drilling | West Linus
Sale Leaseback Transaction [Line Items]
Contingent consideration arrangements, maximum			600,000,000
Lessee Leasing Arrangements, Operating Leases, Term of Contract			15 years
SFL West Polaris Limited
Sale Leaseback Transaction [Line Items]
Percentage of voting interests acquired				100.00%
Loans assumed				97,000,000
Total acquisition price				111,000,000
Deemed contribution to Seadrill shareholders from non-controlling interest				7,000,000
Additional paid-in capital
Sale Leaseback Transaction [Line Items]
Deemed contribution to Seadrill shareholders from non-controlling interest	6,000,000				(209,000,000)
Additional paid-in capital | SFL West Polaris Limited
Sale Leaseback Transaction [Line Items]
Deemed contribution to Seadrill shareholders from non-controlling interest	6,000,000
Affiliated Entity | Ship Finance
Sale Leaseback Transaction [Line Items]
Long-term debt due to related parties	$ 125,000,000		$ 195,000,000
Interest rate on related party debt			4.50%

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Disposals of businesses and deconsolidation of subsidiary (West Auriga) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Mar. 21, 2014	Nov. 04, 2014	Jan. 02, 2014
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale	$ 632	$ 61	$ 0
West Auriga
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Enterprise value				1,240
Less: Debt assumed				443
Purchase price				797
Less: Working capital adjustment				(331)
Purchase price				466
Cash				697
Discount note issued				100
Less: net carrying value of assets and liabilities				7
Less: allocated goodwill to subsidiaries				(33)
Gain on sale				$ 440
Seadrill Capricorn Holdings LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Ownership interest, percentage				49.00%	49.00%	49.00%

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Supplementary cash flow information

12 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Elements [Abstract]

Supplementary cash flow information

Supplementary cash flow information

The table below summarizes the non-cash investing and financing activities relating to the periods presented:

(In US$ millions)	December 31, 2014	December 31, 2013	December 31, 2012
Non-cash investing activities
Disposal of West Auriga - consideration received as a loan note (1)	100	—	—
Disposal of West Vela - deferred consideration receivable (1)	74	—	—
Disposal of tender rig business - deferred consideration received in shares (1)	—	416	—
Disposal of tender rig business - deferred consideration in receivables (1)	—	145	—
Acquisition of Archer shares, settled against existing related party loan (2)	—	55	—
Acquisition of AOD shares, settled against existing related party loan (3)	—	67	—
Non-cash financing activities
Conversion of convertible bond into shares, decrease in long term debt (4)	584	—	—
Conversion of convertible bond into shares, net increase in equity (4)	615	—	—
Purchase of SFL Polaris, net increase in related party payables and net decrease in equity (5)	13	—	—
Sale of non-controlling interest, increase in receivables (6)	4	—	—
Dividend to non-controlling interests in VIEs (7)	—	223	—
Dividend payable to related party (8)	—	—	93

1. Disposals of the West Auriga, West Vela, in 2014 and the disposal of the tender rig business in 2013 - refer to Note 11 - Disposals of businesses

2. Private placement of Archer shares in February 2013 was settled against related party loan receivable - refer to Note 17 - Investments in associated companies

3. Private placement of AOD shares in March 2013 was settled against elated party loan receivable - refer to Note 17 - Investments in associated companies

4. Conversion of convertible bonds in July 2014 - refer to Note 23 - Long term debt

5. Purchase of SFL Polaris from Ship Finance - refer to Note 35 - VIEs

6. Sale of interests in Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited to Hiers Holding Limited - refer to Note 27 - Non-Controlling interests

7. Dividends declared by VIEs in 2013 to Ship Finance was settled against related party balances with Ship Finance - refer to Note 27 - Non-Controlling interests

8. Loan issued to Metrogas in 2012 - refer to Note 31 - Related party transactions

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Common Shares

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Share capital

Common shares

	2014				2013				2012
All shares are common shares of $2.00 par value each	Shares		$millions		Shares		$millions		Shares		$millions
Authorized share capital	800,000,000		1,600		800,000,000		1,600		800,000,000		1,600
Issued and fully paid share capital	493,078,678		986		469,250,933		939		469,250,933		938
Treasury shares held by Company	(318,740	)	(1	)	(272,441	)	(1	)	(72,859	)	—
Outstanding shares in issue	492,759,938		985		468,978,492		938		469,178,074		938

As of December 31, 2014, the Company's shares were listed on the Oslo Stock Exchange and the New York Stock Exchange.

The Company was incorporated on May 10, 2005 and 6,000 ordinary shares of par value $2.00 each were issued. Since incorporation the number of issued shares has increased from 6,000 to 493,078,678 of par value $2.00 each as of December 31, 2014. There were no new shares issued in 2014 or 2013 other than the conversion of convertible bonds in 2014, which resulted in 23.8 million shares issued, as discussed in Note 23.

A share repurchase program was approved by the Board in 2007 giving the Company the authorization to buy back shares. Shares bought back under the authorization may be cancelled or held as treasury shares. Treasury shares may be held to meet the Company's obligations relating to the share option plans. As at December 31, 2014 the Company held 318,740 treasury shares and net shares outstanding at December 31, 2014 was 492,759,938.

In November 2014 the Board authorized a share buyback program under which the Company may repurchase up to approximately 10% of shares outstanding. The Company may repurchase shares from time to time in open market transactions or private transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by Management of the Company based on its evaluation of market conditions, capital allocation opportunities, and other factors. The program does not require the Company to repurchase any specific number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice.

Equity offerings and drilling unit sale transactions with Seadrill Partners

The following table summarizes the issuances of common units for Seadrill Partners between their IPO in October 2012 until the deconsolidation of Seadrill Partners on January 2, 2014:

Date	Number of Common Units Issued to the Public	Number of Common Units Issued to Seadrill	Offering Price ($)	Gross proceeds from public ($'millions)	Net proceeds from public ($'millions)	Seadrill's ownership after the offering
October 24, 2012 (IPO)	10,062,500	14,752,525	22.00	221	203	75.67	%
October 18, 2013	—	3,310,622	32.29	—	—	77.47	%
December 13, 2013	12,880,000	3,394,916	29.50	380	365	62.35	%

The following table summarizes the sale of the Company's drilling units to Seadrill Partners between its IPO until the deconsolidation of Seadrill Partners on January 2, 2014:

(In US$millions)	T-15	T-16	West Sirius		West Leo		Total
Adjusted sales price *	74	68	922		729		1,793
Less net assets transferred	5	—	(375	)	(116	)	(486	)
Excess of sales price over net assets transferred	79	68	547		613		1,307
Deemed contribution to Seadrill shareholders from non-controlling interest	19	16	105		69		209

* The Adjusted sales price above includes debt assumed and working capital adjustments.

These transactions were deemed to be reorganizations of entities under common control and accordingly no gains or losses were recognized by the Company.

On May 17, 2013, the Company sold its 100% interest in the entities that own and operate the tender rig T-15 to Seadrill Partners a total purchase price of $210 million, less approximately $101 million of debt outstanding, less $35 million of working capital adjustments. The acquisition was funded by issuance of vendor financing loan to Seadrill Partners of $110 million.

On October 18, 2013, the Company sold its 100% interest in the entity that owns the tender rig T-16, and the beneficial interest in the T-16 drilling contract (collectively, the “T-16 Business”), to Seadrill Partners for a total purchase price of $200 million, less approximately $93 million of debt outstanding, less $39 million of working capital adjustments. As part of the consideration, Seadrill Partners issued 3,310,622 common units to Seadrill as consideration for the purchase in a private placement transaction at a price of $32.29 per unit. This resulted in an increase in net assets attributable to the non-controlling interest of $19 million.

On December 13, 2013, the Company sold to Seadrill Partners: (i) 51% of its interest in each of the entities that own, operate and manage the semi-submersible drilling rig, West Sirius (the “Sirius Business”); and (ii) 30% of its interest interests in each of the entities that own and operate the semi-submersible drilling rig, West Leo (the “Leo Business”). The implied purchase prices of the Sirius Business was $1,035 million, less debt assumed of $220 million , plus working capital adjustments of $107 million. The implied purchase prices of the Leo Business was $1,250 million, less debt assumed of $486 million, less working capital adjustments of $35 million. In relation to these acquisitions, Seadrill Partners issued 12,880,000 common units to the public (including 1,680,000 common units issued to underwriters) and 3,394,916 common units to Seadrill, at a price of $29.50 per unit. The gross proceeds raised from the public was $380 million, and the net proceeds raised after issuance fees was $365 million, of which $137 million was attributable to the non-controlling interest. This resulted in an increase in net assets attributable to the non-controlling interest of $83 million.

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Risk management and financial instruments

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Risk management and financial instruments

Risk management and financial instruments

The majority of gross earnings from the Company's drilling units are receivable in U.S. dollars and the majority of the Company's other transactions, assets and liabilities are denominated in U.S. dollars, the functional currency of the Company. However, the Company has operations and assets in a number of countries worldwide and incurs expenditures in other currencies, causing its results from operations to be affected by fluctuations in currency exchange rates, primarily relative to the U.S. dollar. The Company is also exposed to changes in interest rates on floating interest rate debt, and to the impact of changes in currency exchange rates on NOK and SEK denominated debt. There is thus a risk that currency and interest rate fluctuations will have a negative effect on the value of the Company's cash flows. The Company has entered into derivative agreements to mitigate the risk of fluctuations, as described below.

Interest rate risk management

The Company's exposure to interest rate risk relates mainly to its floating interest rate debt and balances of surplus funds placed with financial institutions. This exposure is managed through the use of interest rate swaps and other derivative arrangements. The Company's objective is to obtain the most favorable interest rate borrowings available without increasing its foreign currency exposure. Surplus funds are generally used to repay revolving credit facilities, or placed in accounts or fixed deposits with reputable financial institutions in order to maximize returns, while providing the Company with the flexibility to meet working capital and capital investments. The extent to which the Company utilizes interest rate swaps and other derivatives to manage its interest rate risk is determined by the net debt exposure.

Interest rate swap agreements not qualified as hedge accounting

At December 31, 2014, the Company had interest rate swap agreements with an outstanding principal of $7,918 million (December 31, 2013: $9,776 million). These agreements do not qualify for hedge accounting, and accordingly any changes in the fair values of the swap agreements are included in the consolidated statement of operations under "Gain/(loss) on derivative financial instruments". The total fair value of the interest rate swaps outstanding at December 31, 2014 amounted to a gross liability of $191 million and a net liability of $134 million due to master netting agreements with our counterparties (December 31, 2013: a gross liability of $244 million and net liability of $89 million). The fair value of the interest rate swaps are classified as other current assets and liabilities in our consolidated balance sheet as of December 31, 2014 and December 31, 2013.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to interest rate swap agreements in 2014 amounted to $176.1 million (2013: gains of $143 million, 2012: losses of $129 million).

The Company's interest rate swap agreements as at December 31, 2014, were as follows:

Maturity date	Total outstanding principal as at December 31, 2014	Receive rate	Pay rate range
	(In US$ millions)
Expiring in 2015	50	3 month LIBOR	4.63%	4.63%
Expiring in 2016	1,350	3 month LIBOR	2.14%	3.36%
Expiring in 2016	35	6 month LIBOR	3.83%	3.83%
Expiring in 2017	1,428	3 month LIBOR	0.74%	3.8%
Expiring in 2018	1,000	3 month LIBOR	2.83%	3.34%
Expiring in 2019	707	3 month LIBOR	1.11%	1.36%
Expiring in 2020	3,141	3 month LIBOR	1.36%	2.19%
Expiring in 2022	207	3 month LIBOR	1.38%	1.38%
Total	7,918

The counterparties to the above agreements are reputable financial institutions. Credit risk exists to the extent that the counterparties are unable to perform under the contracts, but this risk is considered remote as the counterparties are reputable financial institutions which have all provided loan finance to us and the interest rate swaps are related to those financing arrangements.

In October 2013, five interest rate swaps relating to our consolidated subsidiary Sevan, with a total outstanding principle of $606 million and maturities between June 2016 and July 2018, were terminated as part of Sevan entering into a new $1,750 million facility, see Note 23 to the consolidated financial statements included herein. The total exit cost was $19 million, and the loss recorded for the quarter was $4 million which is recorded in the consolidated statement of operations under " Gain/(loss) on derivative financial instruments".

Cross currency interest rate swaps not qualified as hedge accounting

At December 31, 2014 the Company had outstanding cross currency interest rate swaps with principal amounts of $807 million (December 31, 2013: $786 million) with maturity dates between March 2018 and March 2019 at fixed rates ranging from 4.94% to 6.1825%. These agreements do not qualify for hedge accounting and accordingly any changes in the fair values of the swap agreements are included in the consolidated statement of operations under " Gain/(loss) on derivative financial instruments". The total fair value of cross currency interest swaps outstanding at December 31, 2014 amounted to a liability of $201 million (December 31, 2013: a liability of $46 million). The fair value of the cross currency interest swaps are classified as other current liabilities in the consolidated balance sheet as at December 31, 2014 and within other current liabilities as at December 31, 2013.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to cross currency interest rate swap agreements in 2014 amounted to $171.2 million (2013: loss of $10 million, 2012: gain of $36 million).

Interest rate hedge accounting

A Ship Finance subsidiary consolidated by the Company as a variable interest entity (VIEs), has entered into interest rate swaps in order to mitigate the exposure to variability in cash flows for future interest payments on the loans taken out to finance the acquisition of the West Linus.  These interest rate swaps qualify for hedge accounting under US GAAP, and the instruments have been formally designated as a hedge to the underlying loan. When the hedge is effective, any changes in its fair value is included in "other comprehensive income". The effectiveness of hedging instruments is assessed at each reporting period. The total fair value of these interest rate swaps outstanding at December 31, 2014 amounted to a liability of $3 million (December 31, 2013: a liability of $2 million), which are classified as other non-current liabilities in the consolidated balance sheet. Below is a summary of the notional amount, fixed interest rate payable and duration of the outstanding principal as of December 31, 2014.

Variable interest entity	Outstanding principal as at December 31, 2014	Receive rate	Pay rate	Length of contract
	(In US$ millions)
SFL Linus Limited (West Linus)	4.0	1 month LIBOR	2.01%	Mar 2014 - Oct 2018
SFL Linus Limited (West Linus)	4.0	2 month LIBOR	2.01%	Mar 2014 - Nov 2018
SFL Linus Limited (West Linus)	215.7	3 month LIBOR	1.77%	Dec 2013 - Dec 2018

In the year ended December 31, 2014 the above VIEs recorded no fair value gains/losses on interest rate swaps (December 31, 2013: gains of $3 million). For the year ended December 31, 2013 these gains were recorded by those VIEs as "other comprehensive income" but due to their ownership by Ship Finance these gains are allocated to "non-controlling interest" in our consolidated statement of changes in equity. The net interest paid on these swaps for the year ended December 31, 2014 was $4 million (2013: net interest of $5 million). During 2013, the interest rate swap relating to SFL Deepwater Limited (West Taurus) with principal $450 million matured in August 2013.

Any change in fair value resulting from hedge ineffectiveness is recognized immediately in earnings. The VIEs and therefore the Company, did not recognize any gain or loss due to hedge ineffectiveness in the consolidated financial statements during the years ended December 31, 2014, 2013 and 2012 relating to derivative financial instruments.

Foreign exchange risk management

The Company and the majority of its subsidiaries use the U.S. dollar as their functional currency because the majority of their revenues and expenses are denominated in U.S. dollars. Accordingly, the Company's reporting currency is also U.S. dollars. The Company does, however, earn revenue and incur expenses in other currencies and there is thus a risk that currency fluctuations could have an adverse effect on the value of our cash flows. The Company is also exposed to changes in interest rates on floating interest rate debt, and to the impact of changes in currency exchange rates on NOK and SEK denominated debt. The Company has entered into derivative agreements to mitigate the risk of exchange rate fluctuations as described below

Foreign currency forwards not qualified as hedge accounting

The Company uses foreign currency forward contracts and other derivatives to manage exposure to foreign currency risk on certain assets, liabilities and future anticipated transactions. Such derivative contracts do not qualify for hedge accounting treatment and are recorded in the consolidated balance sheet under current receivables if the contracts have a net positive fair value, and under other current liabilities if the contracts have a net negative fair value. At December 31, 2014, the Company had forward contracts to sell approximately $260 million between January 2015 and May 2015 at exchange rates ranging from NOK6.37 million to NOK6.89 million per US dollar. The total fair value of currency forward contracts December 31, 2014 amounted to a liability$24 million (December 31, 2013: a liability$3 million), and are classified as other current liabilities in the consolidated balance sheet.

During the year, we also entered into British Pounds Sterling (GBP) swap contracts to sell approximately GBP30 million ($49 million) between January 2015 and April 2015 at exchange rates ranging from GBP1.59 to GBP1.68 per US dollar. The total fair value of GBP currency swaps outstanding at December 31, 2014 amounted to a liability of $3 million (December 31, 2013: an asset of $1 million), and are classified as other current liabilities in the consolidated balance sheet as at December 31, 2014 and other current assets as at December 31, 2013.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to foreign currency forward agreements in 2014 amounted to $58 million (2013: losses of $49 million, 2012: gains of $12 million).

Other arrangements

The Company from time to time may enter into swap agreements, forward contracts or other derivative arrangements based on assets or equity shares of the Company which provide flexible financing alternatives at a low cost.

Total Return Swap ("TRS") Agreements

During 2014, 2013 and 2012 the Company entered into and settled various TRS agreements which are indexed to the Company's own common shares. The total realized and unrealized loss recognized in the consolidated statement of operations relating to the Company's TRS agreements in 2014 was a loss of $73 million (2013: gain of $19 million, 2012: gain of $7 million). The fair value of the TRS agreements at December 31, 2014 was a liability of $5 million (December 31, 2013: a liability of $2 million). The fair values of the TRS agreements are classified as other current liabilities in the balance sheet as at December 31, 2014 and December 31, 2013. As of December 31, 2014 we had an outstanding agreement related to 4 million shares at NOK96.02 per share (December 31, 2013: 1.4 million shares at NOK255.38 per share). We generally settle these agreements in cash, or through further rolling of the agreements. We are in control of the settlement of these agreements. Subsequent to the year end, on March 3, 2015, the TRS agreement related to 4 million shares was rolled over with a new expiry date of June 3, 2015, and a new reference price of NOK87.4056 per share.

The total realized and unrealized losses recognized in the consolidated statement of operations relating to TRS agreements in 2014 amounted to $72.6 million (2013: gains of $19 million, 2012: gains of $7 million).

Sevan share repurchase agreements

During 2013 the Company has entered into agreements in which the Company has sold its shares in Sevan Drilling to commercial banks and then entered into a share purchase agreement to repurchase the same amount of shares at a later date which is generally within three months from the date of entering into the sale agreement. As of December 31, 2014 the Company has agreements for 216,065,464 Sevan Drilling shares to be repurchased on February 6, 2015 at a strike price of NOK4.1701 and 81,828,500 Sevan Drilling shares to be repurchased on February 6, 2015 at a strike price of NOK4.1966. These share repurchase agreements have been accounted for as secured borrowings and therefore the Company have recognized the liabilities associated with these repurchases in other current liabilities in the amount of $167 million as of December 31, 2014 (December 31, 2013: liability of $198 million).

On February 6, 2015 the Company entered into forward agreements to repurchase 216,065,464 and 81,828,500 Sevan Drilling shares on May 6, 2015 at a strike price of NOK0.7249 and NOK0.7246 respectively.

SapuraKencana share agreements

On September 18, 2013, we entered into two derivative contract agreements with a commercial bank which enabled the Company to obtain financing against a portion of our equity investment in SapuraKencana in which the Company received $250 million upfront as prepayment for one of the agreements. The agreements have a settlement date three years from the inception date and include an interest equivalent component which is based on the prepaid amount received and LIBOR plus 1.90% per annum. As part of these agreements, a number of shares in SapuraKencana were pledged as security, the value of which as at December 31, 2014 amounted to $325 million (December 31, 2013: $666 million), and is presented as a long term marketable security on the consolidated balance sheet (see Note 14 to the consolidated financial statements included herein). The unrealized gains and losses resulting from measuring the fair value of these contracts at December 31, 2014 are a gross asset of $103 million, and a gross liability of $103 million which have been offset in the consolidated balance sheet and consolidated income statement as these agreements meet the criteria for offsetting (December 31, 2013: gross asset of $83.6 million, and a gross liability of $83.6 million). The $250 million received as a prepayment to the Company is included in other long-term liabilities. The agreements also contain financial covenants which are similar to the Company's bank loans, See Note 23 to the consolidated financial statements included herein.

Other derivative agreements

Total realized and unrealized gains and losses on other derivative instruments amounted to a loss of $19 million for 2014 (2013: gain of $30 million).

Credit risk

The Company has financial assets, including cash and cash equivalents, marketable securities, other receivables and certain amounts receivable on derivative instruments, mainly forward exchange contracts and interest rate swaps. These assets expose the Company to credit risk arising from possible default by the counterparty. The Company considers the counterparties to be creditworthy financial institutions and does not expect any significant loss to result from non-performance by such counterparties. The Company, in the normal course of business, does not demand collateral. The credit exposure of interest rate swap agreements, currency option contracts and foreign currency contracts is represented by the fair value of contracts with a positive fair value at the end of each period, reduced by the effects of master netting agreements. It is the Company's policy to enter into master netting agreements with the counterparties to derivative financial instrument contracts, which give the Company the legal right to discharge all or a portion of amounts owed to a counterparty by offsetting them against amounts that the counterparty owes to the Company.

Fair values of financial instruments

The carrying value and estimated fair value of the Company's financial instruments at December 31, 2014 and December 31, 2013 are as follows:

	December 31, 2014		December 31, 2013
(In US$ millions)	Fair value	Carrying value	Fair value	Carrying value
Cash and cash equivalents	831	831	744	744
Restricted cash	449	449	318	318
Current portion of floating rate debt	1,928	1,928	1,315	1,315
Long-term portion of floating rate debt	7,713	7,713	8,793	8,793
Current portion of fixed rate CIRR loans	39	39	47	47
Long term portion of fixed rate CIRR loans	84	84	150	150
Fixed interest convertible bonds	—	—	704	577
Fixed interest bonds - short term	323	342	—	—
Fixed interest bonds - long term	2,015	1,892	1,837	1,842
Floating interest bonds - short term	—	—	204	204
Floating interest bonds - long term	483	622	541	538

The carrying value of cash and cash equivalents and restricted cash, which are highly liquid, is a reasonable estimate of fair value and categorized at level 1 on the fair value measurement hierarchy.

The fair value of the current and long-term portion of floating rate debt is estimated to be equal to the carrying value since it bears variable interest rates, which are reset regularly and usually in the range between every one to six months. This debt is not freely tradable and cannot be purchased by the Company at prices other than the outstanding balance plus accrued interest. We have categorized this at level 2 on the fair value measurement hierarchy.

The fair value of the long-term portion of the fixed rate CIRR loans is equal to the carrying value, as they are matched with equal balances of restricted cash. We have categorized this at level 2 on the fair value measurement hierarchy.

The convertible bonds are freely tradable and their fair value has been set equal to the price at which they were traded at on December 31, 2013. We have categorized this at level 1 on the fair value measurement hierarchy.

The fixed interest rate bonds are freely tradable and their fair value has been set equal to the price at which they were traded at on December 31, 2014 and December 31, 2013. We have categorized this at level 1 on the fair value measurement hierarchy.

Financial instruments that are measured at fair value on a recurring basis:

	Fair value	Fair value measurements at reporting date using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(In US$ millions)	December 31, 2014	(Level 1)	(Level 2)	(Level 3)
Assets:
Marketable securities	751	751	—	—
Interest rate swap contracts – short term receivable	5	—	5	—
Total assets	756	751	5	—
Liabilities:
Interest rate swap contracts – short term payable	139	—	139	—
Interest rate swap contracts – long term payable	3	—	3	—
Cross currency interest rate swap contracts – short term payable	201	—	201	—
Foreign exchange forwards – short term payable	27	—	27	—
Other derivative instruments – short term payable	5	—	5	—
Total liabilities	375	—	375	—

	Fair value	Fair value measurements at reporting date using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(In US$ millions)	December 31, 2013	(Level 1)	(Level 2)	(Level 3)
Assets:
Marketable securities	1,082	1,078	—	4
Interest rate swap contracts – short term receivable	5	—	5	—
Foreign exchange forwards – short term receivable	2	—	2	—
Other derivative instruments – short term receivable	2	—	2	—
Total assets	1,091	1,078	9	4
Liabilities:
Interest rate swap contracts – short term payable	94	—	94	—
Interest rate swap contracts – long term payable	2	—	2	—
Cross currency swap contracts – short term payable	46	—	46	—
Foreign exchange forwards – short term payable	3	—	3	—
Other derivative instruments – short term payable	2	—	2	—
Total liabilities	147	—	147	—

Roll forward of fair value measurements using unobservable inputs (Level 3) relating to the Petromena Bond. Please refer to Note 14 for additional information:

(In US$ millions)
Beginning balance January 1, 2014	4
Realization	6
Proceeds on disposal	(10	)
Closing balance December 31, 2014	—

US GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, US GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).

Level one input utilizes unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level two inputs are inputs other than quoted prices included in level one that are observable for the asset or liability, either directly or indirectly. Level two inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability, other than quoted prices, such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level three inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Quoted market prices are used to estimate the fair value of marketable securities, which are valued at fair value on a recurring basis.

The fair value of total return equity swaps is calculated using the closing prices of the underlying listed shares, dividends paid since inception and the interest rate charged by the counterparty.

The fair values of interest rate swaps, cross currency interest rate swaps, and forward exchange contracts are calculated using well-established independent valuation techniques applied to contracted cash flows and LIBOR and NIBOR interest rates as of December 31, 2014.

The fair value of other derivative instruments is calculated using the closing prices of the underlying securities, dividends paid since inception and the interest charged by the counterparty.

Retained Risk

a) Physical Damage Insurance

The Company retains the risk, through self-insurance, for the deductibles relating to physical damage insurance on the Company's drilling unit fleet, currently a maximum of $5 million per occurrence.

b) Loss of Hire Insurance

The Company purchases insurance to cover the deepwater drilling units, one semi tender and the North Atlantic fleet for loss of revenue in the event of extensive downtime caused by physical damage, where such damage is covered under the Company's physical damage insurance. The Company's self-insured retentions under the loss of hire insurance are up to 60 days after the occurrence of the physical damage plus a 25% quota share on the Loss of Hire daily amount. Thereafter, under the terms of the insurance, the Company is compensated for loss of revenue for a period ranging from 210 days up to 290 days. The Company retains the risk that the repair of physical damage takes longer than the total number of days in the loss of hire policy.

Concentration of risk

The Company has financial assets, including cash and cash equivalents, marketable securities, other receivables and certain derivative instrument receivable amounts. These other assets expose the Company to credit risk arising from possible default by the counterparty. There is also a concentration of credit risk with respect to cash and cash equivalents to the extent that most of the amounts are carried with DnB NOR Bank ASA, Nordea Bank Finland Plc, Fokus Bank, and ING Bank N.V. The Company considers these risks to be remote.

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

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Segment information (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment results

Segment results are evaluated on the basis of operating income, and the information given below is based on information used for internal management reporting.

In prior periods, the company reported a tender rigs segment, which related to services encompassing drilling, completion and maintenance of offshore production wells in Southeast Asia, West Africa and the Americas. In these periods, the Company had drilling contracts related to self-erecting tender rigs and semi-submersible tender rigs. Following the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners LLC ("Seadrill Partners") as of January 2, 2014, the Company no longer has any drilling contracts in the tender rig segment. Accordingly, the Company did not report this segment for the year ended December 31, 2014. The Company however provides rig management services to Seadrill Partners which are recognized within Other.

To more closely align the segment results with the information presented for internal management reporting, the company has separately disclosed rig management related revenues within Other. The Company has also amended its presentation of total assets and only allocates Drilling units and newbuildings to its reportable segments. Prior periods have been conformed to the current period presentation.

Revenues

(In US$ millions)	2014	2013	2012
Floaters	3,360	3,698	2,859
Jack-up rigs	1,478	1,175	861
Tender Rigs	—	382	758
Other	159	27	—
Total	4,997	5,282	4,478

Depreciation and amortization

(In US$ millions)	2014	2013	2012
Floaters	508	531	412
Jack-up rigs	185	163	146
Tender Rigs	—	17	57
Other	—	—	—
Total	693	711	615

Operating income – net income

(In US$ millions)	2014		2013		2012
Floaters	1,992		1,472		1,250
Jack-up Rigs	275		450		225
Tender Rigs	—		176		316
Other	12		—		—
Operating income	2,279		2,098		1,791
Unallocated items:
Total financial items and other	1,827		842		(354	)
Income tax expense	(19	)	(154	)	(232	)
Net income	4,087		2,786		1,205

Drilling Units and Newbuildings - Total assets

(In US$ millions)	2014	2013
Floaters	12,849	15,459
Jack-up Rigs	4,326	4,699
Tender Rigs	—	454
Total Drilling Units and Newbuildings	17,175	20,612
Assets held for sale	1,239	—
Investments in Associated companies	2,898	140
Marketable securities	751	1,082
Goodwill	604	1,200
Cash and restricted cash	1,280	1,062
Other assets	2,559	2,204
Total	26,506	26,300

Goodwill

(In US$ millions)	2014	2013
Floaters	604	890
Jack-up Rigs	—	281
Tender Rigs	—	29
Total	604	1,200

Capital expenditures – fixed assets

(In US$ millions)	2014	2013	2012
Floaters	2,327	3,178	1,342
Jack-up Rigs	776	1,371	150
Tender Rigs	—	150	198
Total	3,103	4,699	1,690

Company's revenues and fixed assets by geographic area

Fixed assets – operating drilling units (1)

(In US$ millions)	2014	2013
Brazil	2,798	2,881
Norway	2,252	2,298
Angola	1,852	2,090
USA	1,382	2,718
Others *	6,861	7,206
Total	15,145	17,193

(1) The fixed assets referred to in the table are the Company's operating drilling units. Asset locations at the end of a period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.

* Other countries represents countries in which we operate that individually had fixed assets representing less than 10 percent of total fixed assets for any of the periods presented.

Geographic segment data

Revenues are attributed to geographical segments based on the country of operations for drilling activities, i.e. the country where the revenues are generated. The following presents the Company's revenues and fixed assets by geographic area:

Revenues

(In US$ millions)	2014	2013	2012
Norway	1,071	1,198	815
Brazil	991	825	629
Angola	707	734	358
Others *	2,228	2,525	2,676
Total Revenue	4,997	5,282	4,478

* Other countries represents countries in which we operate that individually had revenues representing less than 10 percent of total revenues earned for any of the periods presented.

Schedules of Concentration of Risk, by Risk Factor

Major customers

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

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Long-term debt (Notes)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Long-term debt

Long-term debt

As of December 31, 2014 and 2013, the Company had the following debt:

(In US$ millions)	December 31, 2014		December 31, 2013
Credit facilities:
$1,500 facility	—		706
$1,200 facility	—		733
$700 facility	420		490
$1,121 facility	—		72
$2,000 facility (NADL)	1,367		1,503
$400 facility	280		320
$550 facility	—		440
$420 facility	351		—
$440 facility	258		293
$450 facility	416		450
$1,450 facility	433		1,390
$360 facility (Asia Offshore Drilling)	309		345
$300 facility	210		234
$1,750 facility (Sevan Drilling)	1,225		1,400
$150 facility	150		150
$450 facility (2013)	397		450
$1,500 facility (2014)	1,469		—
$1,350 facility	1,317		—
Total credit facilities	8,602		8,976
Ship Finance Loans
$420 facility (SFL Polaris)	—		387
$375 facility (SFL Hercules)	284		362
$390 facility (SFL Deepwater)	303		383
$475 facility (SFL Linus)	451		—
Total Ship Finance Loans	1,038		1,132
Unsecured bonds and convertible bonds
Total unsecured bonds	2,856		2,584
Convertible bonds	—		577
Total unsecured bonds and convertible bonds	2,856		3,161
Other credit facilities with corresponding restricted cash deposits	124		197
Total debt	12,620		13,466
Less: current portion	(2,309	)	(1,566	)
Long-term portion	10,311		11,900

The outstanding debt as of December 31, 2014 is repayable as follows:

(In US$ millions)	December 31, 2014
2015	2,309
2016	1,458
2017	2,869
2018	2,269
2019	2,725
2020 and thereafter	990
Total debt	12,620

Credit facilities

$1,500 million senior secured credit facility

In June 2009, the Company entered into a $1,500 million senior secured loan facility with a syndicate of banks and export credit facility agencies, to partly fund the acquisition of the West Capella, West Sirius, West Ariel and West Aquarius, which were pledged as security. The facility bore interest at LIBOR plus 3.31% per annum and was repayable over a term of five years. The outstanding balance at December 31, 2013 was $706 million.

In February 2014, Seadrill Partners entered into an independently financed term loan and the proceeds received from Seadrill Partners new term loan were used to repay the third party lenders of this facility and settle the related party back to back loan financing between the Company and Seadrill Partners. See Note 31 for further details on related party transactions.

$1,200 facility, $1,121 facility

In June 2010, the Company entered into a $1,200 million senior secured facility with a group of commercial lending institutions and export credit agencies. The ultra-deepwater semi-submersible drilling rig West Orion, the ultra-deepwater drillship West Gemini and the tender rig West Vencedor were pledged as security. The facility bore interest at LIBOR plus 2.25% per annum and was repayable over a term of five years. The outstanding balance as of December 31, 2013, was $733 million.

In January 2011, the Company entered into a $1,121 million senior secured credit facility with a bank to fund the acquisition of two ultra-deepwater semi-submersible rigs, West Leo and West Pegasus, which both were pledged as security. The facility bore interest at LIBOR plus a margin between 2.25% and 3.00% per annum, and was repayable over a term of seven years. The facility was fully drawn as of December 31, 2013 with a balance of $912 million.

In December 2013, the $1,121 million facility with Lloyds Bank TSB as agent was transferred to DNB Bank ASA as new agent and lender, and to Metrogas Holdings Inc, or Metrogas, a related party, as new lender. There were no other changes to the facility. As Metrogas is a related party of the Company, the portion of the facility related to Metrogas of $840 million was accordingly reclassified as debt due to related parties on the consolidated balance sheet, leaving the remaining $72 million in long-term debt. See Note 31 to the consolidated financial statements included herein.

In February 2014, Seadrill Partners entered into an independently financed senior secured credit facility. The proceeds received by Seadrill Partners were used to settle the related party back to back loan financing between the Company and Seadrill Partners for the West Leo portion and repay the lenders of the $1,121 million facility.

In August 2014, the remainder of the $1,200 million facility and $1,121 million facility were repaid in full, after Seadrill Partners entered into an amended senior secured credit facility. The Company recognized a $16 milliongain on debt extinguishment within net loss on debt extinguishment in the Company's consolidated statement of operations relating to the $1,121 million facility. As one of the lenders of the $1,121 million facility was Metrogas Holdings Inc, a related party, this transaction has been disclosed within Note 31 - Related party transactions.

$700 million senior secured term loan

In October 2010, the Company entered into a $700 million senior secured loan facility with a syndicate of banks to partly fund the acquisition of seven jack-up drilling rigs, which have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $1,074 million. The facility bears interest at LIBOR plus 2.50% per annum and is repayable over a term of five years. As of December 31, 2014, the outstanding balance was $420 million, as compared to $490 million in 2013. At maturity a balloon payment of $350 million is due in October 2015. We do not have any undrawn capacity on this facility as of December 31, 2014. Subsequent to the period end, on March 6, 2015, the tranches relating to the West Courageous, West Defender, and the West Intrepid were repaid, totaling $170 million.

$2,000 million senior secured credit facility

In April 2011, NADL our majority owned subsidiary, entered into a $2,000 million senior secured credit facility with a syndicate of banks to partly fund the acquisition of six drilling units from Seadrill, which have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $2,343 million. The facility has a six year term and bears interest at LIBOR plus 2.00% per annum. As of December 31, 2014, the outstanding balance was $1,367 million, as compared to $1,503 million in 2013. At maturity a balloon payment of $950 million is due. We had $50 million undrawn under this facility as of December 31, 2014, which bears a commitment fee of 40% of the margin.

$400 million senior secured credit facility

In December 2011, the Company entered into a $400 million senior secured credit facility with a syndicate of banks. The jack-up rigs West Cressida, West Callisto, West Leda and West Triton have been pledged as security. The net book value at December 31, 2014 of the units pledged as security is $694 million. The facility has a five year term and bears interest of LIBOR plus 2.50% per annum. As of December 31, 2014, the outstanding balance was $280 million, as compared to $320 million in 2013. At maturity a balloon payment of $200 million is due. We do not have any undrawn capacity on this facility as December 31, 2014.

$420 million senior secured credit facility

In December 2012, SFL West Polaris Limited, formerly a consolidated VIE, entered into a $420 million term loan facility with a syndicate of banks to refinance the existing $700 million secured term loan facility. The new facility had a term of five years and bore interest of LIBOR plus a margin of 3.00%. On February 28, 2014 the margin on the facility was reduced from 3.00% to 2.25%.

On December 31, 2014, the Company purchased SFL West Polaris Limited from Ship Finance and accordingly we have represented the facility within "Credit facilities". Please refer to note 35 for more information. The drillship West Polaris has been pledged as security. The net book value at December 31, 2014 of the unit pledged as security is $564 million. As at December 31, 2014, the outstanding balance under the facility was $351 million, compared to $387 millionas atDecember 31, 2013.

$550 million senior secured term loan and revolving credit facility

In December 2011, the Company entered into a $550 million secured credit facility with a syndicate of banks to partly fund the delivery of the ultra-deepwater semi-submersible drilling unit West Capricorn, which was pledged as security. The facility had a five year term and bore interest at LIBOR plus 1.50% to 2.25% per annum. As of December 31, 2013, the outstanding balance was $440 million. At maturity a balloon payment of $275 million was due.

In June 2014, Seadrill Partners entered into an amended senior secured credit facility, with the proceeds used by Seadrill Partners to repay the third party lenders of this facility and settle the related party back to back loan rig financing agreement between the Company and Seadrill Partners. See Note 31 for further details on related party transactions.

$440 million secured credit facility

In December 2012, the Company entered into a $440 million secured credit facility with a syndicate of banks to fund the delivery of two tender rigs and two jack-up drilling rigs. As of December 31, 2014 we have drawn $320 million on the facility and the T-15, T-16, and West Telesto have been pledged as security, while the tranche for the West Oberon was cancelled due to other funding opportunities for this rig. The tender rigs T-15 and T-16 were sold to Seadrill Partners during 2013, and subsequently the Company entered into a back to back rig financing agreements with Seadrill Partners for the corresponding portions of the secured credit facility for $101 million and $98 million respectively. Under the terms of the secured credit facility agreements for the T-15 and T-16, certain subsidiaries of the Company and Seadrill Partners are jointly and severally liable for their own debt and obligations under the relevant facility and the debt and obligations of other borrowers who are also party to such agreements. These obligations are continuing and extend to amounts payable by any borrower under the relevant agreement. See Note 31 for further details on related party transactions. The total net book values as at December 31, 2014 of all the units pledged as security was $470 million. The total net book value of the T-15 and T-16, which the Company no longer owns, was$261 million as at December 31, 2014. The facility bears interest at LIBOR plus 3.25% per annum and is repayable over a term of 5 years. The outstanding balance as at December 31, 2014 was $258 million, as compared with $293 million in 2013. At maturity a balloon payment of $166 million is due. We do not have any undrawn capacity on this facility as of December 31, 2014.

$450 million senior secured credit facility

In December 2012, we entered into a $450 million senior secured credit facility with a syndicate of banks, and was drawn down on January 3, 2013. The West Eclipse semi-submersible rig was pledged as security, which has a net book value of $657 million as at December 31, 2014. The facility was scheduled to mature within one year and bore interest of LIBOR plus 3.00%. On December 20, 2013, we amended this facility for an additional one year, with an amended interest rate of LIBOR plus 2.00%. On December 19, 2014, we amended this facility with a new maturity date of February 3, 2015 on the same terms. As of December 31, 2014, the outstanding balance was $416 million as compared to $450 million as at December 31, 2013. We do not have any undrawn capacity on this facility as of December 31, 2014. Subsequent to the year end, in January 2015, this facility has been repaid in full and replaced with a new $950 million facility.

$1,450 million senior secured credit facility

In March 2013, we entered into a $1,450 million senior secured credit facility with a syndicate of banks and export credit agencies. The West Auriga, West Vela, and West Tellus were pledged as security. The facility has a final maturity in 2025, with the exception of a commercial tranche of $203 million due for renewal in 2018, and bears an interest of LIBOR plus a margin in the range of 1.20% to 3.00%.

In March 2014, we completed the sale of the entities that own and operate the West Auriga to Seadrill Partners of which one of the entities sold, was a borrower and a guarantor under this facility, and accordingly we have derecognized the portion of this facility relating to the West Auriga. Seadrill Partners subsequently repaid the tranches relating to the West Auriga in full. In November 2014, we completed the sale of the entities that own and operate the West Vela to Seadrill Partners, of which one of the entities sold was a borrower and a guarantor under this facility, and accordingly we have derecognized the portion of this facility relating to the West Vela. See note 11 for further details of these disposals to Seadrill Partners.

Under the terms of the $1,450 million secured credit facility agreement, certain subsidiaries of Seadrill and Seadrill Partners are jointly and severally liable for their own debt and obligations under the facility and the debt and obligations of other borrowers who are also party to such agreement.  These obligations are continuing and extend to amounts payable by any borrower under the facility. The total amount owed by all parties under this facility as of December 31, 2014 is $856 million (compared to $1,390 million as at December 31, 2013) of which $433 millionrelates to Seadrill and the West Tellus. Seadrill has not recognized any amounts that are related to amounts owed under the facility by other borrowers. Seadrill has provided an indemnity to Seadrill Partners for any payments or obligations related to this facility that are not related to the West Auriga or West Vela.

If a balloon payment of $86 million relating to the commercial tranches of the West Vela and West Tellus do not get refinanced to the satisfaction of the remaining lenders after five years, the remaining tranches also become due after five years.

As at December 31, 2014 the net book value of the West Tellus was $622 million and we also held $50 million of cash in a restricted account, pledged as collateral. Subsequent to the year end, the restricted cash was released in full as a result of our entering into a new contract with Petrobras. We do not have any undrawn capacity on this facility as of December 31, 2014.

$360 million senior secured credit facility

In April 2013, our majority owned subsidiary AOD entered into a $360 million senior secured credit facility with a syndicate of banks. The facility is available in three equal tranches of $120 million, with each tranche relating to AOD 1, AOD 2 and AOD 3, which have been pledged as security. The loan has a five year maturity from the initial borrowing date, and bears interest of LIBOR plus 2.75%. As at December 31, 2014 the rigs have a net book value of $225 million, $222 million and $230 million respectively. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014 the outstanding balance was $309 million as compared to $345 million as at December 31, 2013.

$300 million senior secured credit facility

In July 2013, we entered into a $300 million senior secured credit facility with a syndicate of banks and export credit agencies. The West Tucana and West Castor were pledged as security, and bears interest of LIBOR plus a margin of 3.00%, and matures in 2023.As at December 31, 2014 the net book values of the West Tucana and West Castor were $204 million and $213 million respectively. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014 the outstanding balance was $210 million as compared to $234 million as at December 31, 2013.

$150 million senior secured credit facility

In October 2013, we entered into a $150 million secured credit facility with a bank. The West Oberon and the West Prospero were pledged as security, bears interest of LIBOR plus a margin of 0.75%, with a maturity date in June 2014. The loan was subsequently amended with a new maturity date of March 31, 2015 and revised margin of 1.0%. As at December 31, 2014 the net book value of the West Oberon and West Prospero were $226 million and $165 million respectively. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014 and outstanding balance was $150 million, compared to $150 million as at December 31, 2013. Subsequent to the year end, on March 26, 2015, this facility was repaid in full as part of the SeaMex transaction.

$450 million senior secured credit facility (2013)

In December 2013, we entered into a $450 million senior secured facility with a syndicate of banks. The West Eminence has been pledged as security, and bears interest of LIBOR plus a margin of 1.75% and matures in June 2016. This facility replaced an existing $800 million facility, which had an outstanding balance of $194 million and was fully repaid on December 19, 2013. As at December 31, 2014 the net book value of the West Eminence was $589 million. We do not have any undrawn capacity on this facility as of December 31, 2014. As at December 31, 2014, the outstanding balance was $397 million as compared to $450 million as at December 31, 2013.

$1,350 million senior secured credit facility

In August 2014, the Company entered into a $1,350 million senior secured credit facility with a syndicate of banks. The new facility consists of a term loan facility for $675 million and a revolving credit facility in an amount up to $675 million. The West Pegasus, West Gemini and West Orion were pledged as security. The total net book value at December 31, 2014 of the units pledged as security is $1,767 million. The facility bears interest at LIBOR plus a margin of 2% per annum, and is repayable in quarterly installments over a term of five years. The revolver is fully repayable at the final maturity date. The revolver facility was fully drawn and we do not have any undrawn capacity as of December 31, 2014. As at December 31, 2014, the outstanding balance was $1,317 million as compared to nil as at December 31, 2013.

$1,500 million senior secured credit facility (2014)

In July 2014, the Company entered into a $1,500 million senior secured credit facility with a syndicate of banks to finance the three newbuilds, the West Saturn, West Neptune and West Jupiter which are pledged as security. The net book value at December 31, 2014 of the units pledged as security is $1,840 million. The facility bears interest at LIBOR plus a margin of between 1.4% and 2.5% per annum, and is repayable over a term of 12 years. The loan includes a Commercial Interest Reference Rate (CIRR) tranche with Eksportfinans ASA, the Norwegian export credit agency, that bears fixed interest at 2.38% per annum. If a commercial tranche of $300 million does not get refinanced to the satisfaction of the remaining lenders after five years, the remaining tranches also become due after five years. If the commercial tranche balloon payment of $175 million does not get refinanced to the satisfaction of the remaining lenders by September 2019, the remaining tranches also become due. As at December 31, 2014, the outstanding balance was $1,469 million as compared to nil as at December 31, 2013.

$1,750 million secured credit facility

In September 2013 subsidiaries of Sevan Drilling entered into a $1,750 million bank facility with a syndicate of banks and export credit agencies. The facility consists of two tranches in the amounts of $1,400 million and $350 million. On October 23, 2013 the first tranche of $1,400 million was drawn and was used to repay the existing credit facilities related to Sevan Driller and Sevan Brasil and to settle the remaining installment and other amounts for the delivery of Sevan Louisiana. The Sevan Driller, Sevan Brasil and Sevan Louisiana have been pledged as security. In December 2014 the $350 million tranche relating to the Sevan Developer was cancelled at our request as a consequence of the deferral agreement made with Cosco, and the borrowing entity relating to the Sevan Developer was released from its obligations under this facility. The facility has a maturity in September 2018 and bears interest of LIBOR plus a margin of 2.90%. As at December 31, 2014 the net book of the Sevan Driller, Sevan Brasil and Sevan Louisiana were $589 million, $601 million and $719 million respectively. As at December 31, 2014, the outstanding balance was $1,225 million as compared to $1,400 million as at December 31, 2013.

Ship Finance International Limited ("Ship Finance") Loans

The following loans relate to the Ship Finance International entities that we consolidate in our financial statements as Variable Interest Entities (VIEs). Refer to Note 35 for more information.

SFL West Polaris

In December 2012 SFL West Polaris Limited entered into a $420 million term loan facility with a syndicate of banks to refinance the existing $700 million secured term loan facility. The new facility has a term of five years and bears interest of LIBOR plus a margin of 3.00%. On December 30, 2014 Seadrill purchased SFL West Polaris from Ship Finance International, and accordingly we have represented this loan within "Credit facilities", refer to information above.

SFL Deepwater Ltd and SFL Hercules Ltd

In September 2008, SFL Deepwater Ltd entered into a $1,400 million secured term loan facility with a syndicate of banks to partly fund the acquisition of West Taurus and West Hercules, which have been pledged as security. The facility had an interest at LIBOR plus 1.40% per annum and was repayable over a term of five years. The facility has been repaid in full as discussed further below.

In May 2013, the Hercules tranche of the $1,400 million facility was refinanced and replaced by a new $375 million facility, with a syndicate of banks and financial institutions. The new facility is secured by the West Hercules, which has a net book value of $603 million as of December 31, 2014. The new facility has a term of six years and bears interest of LIBOR plus a margin of 2.75%. As at December 31, 2014, the outstanding balance under the facility was $284 million, compared to $362 million as at December 31, 2013. There is no undrawn capacity on this facility at December 31, 2014.

In October 2013, the Taurus tranche of the $1,400 million facility was refinanced and replaced with a new $390 million facility with a syndicate of banks and financial institutions. The new facility is secured by the West Taurus, which has a net book value of $450 million as at December 31, 2014. The new facility has a term of five years and bears an interest of LIBOR plus a margin of 2.50%. As at December 31, 2014, the outstanding balance under the facility was $303 million compared to $383 million as at December 31, 2013. There is no undrawn capacity on this facility as at December 31, 2014.

SFL Linus Ltd

On October 17, 2013, SFL Linus Ltd entered into a $475 million secured term loan and revolving credit facility with a syndicate of banks to fund the acquisition of West Linus, which has been pledged as security and has a net book value of $581 million as at December 31, 2014. The facility was fully drawn on February 18, 2014, on the date of delivery of West Linus. The facility bears interest of LIBOR plus 2.75% and matures in June 2019. As at December 31, 2014, the outstanding balance under the facility was $451 million, compared to nil as at December 31, 2013. There is no undrawn capacity on this facility at December 31, 2014

Unsecured Bonds

$350 million fixed interest rate bond

In October 2010, the Company raised $350 million through the issue of a five year bond which matures in October 2015. The bond bears a fixed interest rate of 6.50% per annum, payable semi-annually in arrears. In May 2012, we repurchased $8 million of the bonds.  As at December 31, 2014, the outstanding balance was $342 million.

$650 million3.375% Convertible Bonds and conversion

In October 2010, the Company issued at par $650 million of convertible bonds. Interest on the bonds was fixed at 3.375%, payable semi-annually in arrears. The bonds were convertible into the Company's common shares at any time up to 10 banking days prior to October 27, 2017. The conversion price at the time of issuance was $38.92 per share, representing a 30% premium to the share price at the time. For accounting purposes $121 million was, at the time of issuance of the bonds, allocated to the bond equity component and $529 million to the bond liability component, due to the cash settlement option stipulated in the bond agreement. The bonds were due to mature in October 2017. The bond equity component was amortized over the maturity term, and recognized within interest expense in the consolidated statement of operations.

In July 2014, the Company launched a voluntary incentive payment offer to convert any and all of the $650 million principal amount of 3.375% convertible bonds. Holders of $649 million of principal amount of convertible bonds accepted the voluntary incentive offer and the Company then elected to exercise the "90% clean-up call" provision on the remaining $1 million outstanding.

Holders converted at the contractual conversion price of $27.69 per share and received an incentive payment of $12,102.95 per $100,000 principal amount of bond held. As a result of the transaction, the number of common shares outstanding in the Company increased by 23.8 million shares, with an increase to equity of $893 million.

As a result of the conversion the Company recorded a charge of $79 million related to the incentive paid for the induced conversion and a loss on debt extinguishment of $16 million. These amounts were recognized within net loss on debt extinguishment in the Company's consolidated statement of operations. $278 million of the total consideration transferred on conversion was allocated to the reacquisition of the embedded conversion option and recognized as a reduction of stockholders’ equity. The total cash outflow due to the incentive payments and accrued interest was $69 million.

NOK 1,250 million floating interest rate bond

In January 2012, the Company raised $225 million (NOK1,250 million) through the issue of a two year senior unsecured bond, with a maturity date of February 13, 2014. The bond bears interest of NIBOR plus 3.25% per annum, payable quarterly in arrears. The bond was repaid in full on the maturity date.

$1,000 million fixed interest bond

In September 2012, the Company raised $1,000 million through the issue of a 5 year bond which matures in September 2017. Interest on the bonds bears a fixed interest rate of 5.625% per annum, payable semi-annually in arrears. The interest rate increased to 6.125% in March 2014 as the Company remained unrated.

NOK 1,800 million floating interest rate bonds

In March 2013 the Company issued a NOK1,800 millionsenior unsecured bond with maturity in March 2018. The bond bears interest of NIBOR plus a margin of 3.75% per annum, payable quarterly in arrears. The bond was subsequently swapped to US$ with a fixed rate of 4.94% per annum until maturity.

$500 million senior unsecured bond

On September 20, 2013, the Company issued a $500 million senior unsecured bond issue. The bond matures in September 2020 and bears interest of 6.125% per annum, payable semi-annually in arrears. The interest rate increased to 6.625% in March 2014 as the Company remained unrated.

In December 2014 the Company repurchased $21 million (of par value) of the $500 million senior unsecured bond, recognizing a gain on debt extinguishment of $3 million.

NOK1,500 million floating interest rate bonds

In October 2013, NADL, our majority owned subsidiary, issued a NOK1,500 million senior unsecured bond issue with maturity in October 2018, and an interest rate of NIBOR plus a margin of 4.40% per annum. The bond was subsequently swapped to US$ with a fixed rate of 6.18% per annum until maturity.

In December 2014, the Company purchased NOK82 million (of par value) of the NOK1,500 million senior unsecured bond issued by NADL, recognizing a gain on debt extinguishment of $4 million.

$600 million senior unsecured bond

In January 2014, NADL, our majority owned subsidiary, issued a $600 million senior unsecured bond issue. The bond matures in January 2019 and bears interest of 6.25% per annum. In conjunction with the issue and subsequently in the open market we bought 27.5% of the bond, which amounted to $165 million. During June 2014, we sold a portion of the bond owned by the Company for $25 million. In December 2014 the Company purchased $47 million (of par value) of the $600 million senior unsecured bond issued by NADL, recognizing a gain on debt extinguishment of $16 million. As of December 31, 2014 we held 31.1% of the bond, which amounted to $187 million

SEK1,500 million senior unsecured bond

In March 2014, we issued a SEK1,500 million senior unsecured bond. The bond matures in March 2019 and bears interest of STIBOR plus 3.25%. The bond was subsequently swapped to US$ with a fixed rate of 5.2% per annum until maturity. 

Unsecured bond repurchases

During the year ended December 31, 2014, the Company recognized a total gains on debt extinguishment due to the repurchases of bonds of $23 million, which are presented within "Net loss on debt extinguishment" in the Company’s consolidated statement of operations.

Commercial Interest Reference Rate (CIRR) Credit Facilities

In April 2008, the Company entered into a CIRR term loan for NOK850 million with Eksportfinans ASA, the Norwegian export credit agency. The loan bears fixed interest at 4.56% per annum and is repayable over a term of eight years. The outstanding balance at December 31, 2014 was $27 million (NOK200 million) compared to $49 million at December 31, 2013.

In June 2008, the Company entered into a CIRR term loan for NOK904 million with Eksportfinans ASA. The loan bears fixed interest at 4.15% per annum and is repayable over a term of eight years. The outstanding balance at December 31, 2014 was $29 million (NOK213 million) compared to $52 million at December 31, 2013.

In July 2008, the Company entered into a CIRR term loan for NOK1,011 million with Eksportfinans ASA. The loan bears fixed interest at 4.15% per annum and is repayable over a term of 12 years. The outstanding balance at December 31, 2014 was $68 million (NOK506 million) compared to $96 million at December 31, 2013.

In connection with the above three CIRR fixed interest term loans totaling $124 million (NOK919 million), fixed interest cash deposits equal to the total outstanding loan balances have been established with commercial banks. The collateral cash deposits are reduced in parallel with repayments of the CIRR loans and receive fixed interest at the same rates as those paid on the CIRR loans. The collateral cash deposits are classified as "restricted cash" in the consolidated balance sheet, and the effect of these arrangements is that the CIRR loans have no effect on net interest bearing debt.

Covenants contained in our debt facilities

Our debt agreements generally contain financial covenants as well as security provided to lenders in the form of pledged assets.

Bank Loans

In addition to security provided to lenders in the form of pledged assets, our bank loan agreements generally contain financial covenants, including:

• Aggregated minimum liquidity requirement for the group: to maintain cash and cash equivalents of at least $150 million within the group.

• Interest coverage ratio: to maintain an EBITDA to interest expense ratio of at least 2.5:1.

• Current ratio: to maintain current assets to current liabilities ratio of at least 1:1. Current assets are defined as book value less minimum liquidity, but including up to 20.0% of shares in listed companies owned 20.0% or more. Current liabilities are defined as book value less the current portion of long term debt.

• Equity ratio: to maintain total equity to total assets ratio of at least 30.0%. Both equity and total assets are adjusted for the difference between book and market values of drilling units.

• Leverage ratio: to maintain a ratio of net debt to EBITDA no greater than 4.5:1. Net debt is calculated as all interest bearing debt less cash and cash equivalents excluding minimum liquidity requirements.

• Debt service coverage ratio: The $1,450 secured debt facility and the $1,500 secured debt facility (2014) contain a requirement for the individual borrowers to maintain a ratio of EBITDA of the respective borrower to debt services (being all finance charges and principal) of not less than 1.15:1.

For the purposes of the above tests, EBITDA is defined as the earnings before interest, taxes, depreciation and amortization on a consolidated basis and (ii) the cash distributions from investments, each for the previous period of twelve months as such term is defined in accordance with accounting principles consistently applied. However, in the event that Seadrill or a member of the group acquires rigs or rig owning entities with historical EBITDA available for the rigs' previous ownership, such EBITDA shall be included for covenant purposes in the relevant loan agreement, and if necessary, be annualized to represent a twelve (12) month historical EBITDA. In the event that Seadrill or a member of the group acquires rigs or rig owning companies without historical EBITDA available, Seadrill is entitled to base a twelve month historical EBITDA calculation on future projected EBITDA only subject to any such new rig having (i) a firm charter contract in place at the time of delivery of the rig, with a minimum duration of twelve months, and (ii) a firm charter contract in place at the time of such EBITDA calculation, provided Seadrill provides the agent bank with a detailed calculation of future projected EBITDA. Further, EBITDA shall include any realized gains and/or losses in respect of the disposal of rigs or the disposal of shares in rig owning companies.

Cash distributions from investments are defined as cash received by Seadrill, by way of dividends, in respect of its ownership interests in companies which Seadrill does not control but over which it exerts significant influence.

In addition to financial covenants, our credit facility agreements generally contain covenants which are customary in secured financing in this industry, including operational covenants in relation to the relevant rigs, information undertakings and covenants in relation to corporate existence and conduct of our business. We are in compliance with related covenants as of December 31, 2014.

The credit facility agreements also identify various events that may trigger mandatory reduction, prepayment, and cancellation of the facility including, among others, the following:

• total loss or sale of a drilling unit securing a credit facility;

• cancellation or termination of any existing charter contract or satisfactory drilling contract; and

• a change of control.

The credit facility agreements contain customary events of default, such as failure to repay principal and interest, and other events of defaults, such as:

• failure to comply with the financial or insurance covenants;

• cross-default to other indebtedness held by both Seadrill Partners and its subsidiaries and by the Company;

• failure by the Company to remain listed on a stock exchange;

• the occurrence of a material adverse change;

• revocation, termination, or modification of any authorization, license, consent, permission, or approval as necessary to conduct operations as contemplated by the applicable Rig Financing Agreement; and

• the destruction, abandonment, seizure, appropriation or forfeiture of property of the guarantors or the Company and its subsidiaries, or the limitation by seizure, expropriation, nationalization, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority, of the authority or ability of the Company or any subsidiary thereof to conduct its business, which has or reasonably may be expected to have a material adverse effect.

Our secured credit facilities are secured by:

• guarantees from rig owning subsidiaries (guarantors),

• a first priority share pledge over all the shares issued by each of the guarantors,

• a first priority perfected mortgage in all collateral rigs and any deed of covenant thereto, subject to contractual agreed "quiet enjoyment" undertakings with the end-user of the collateral rigs to be entered into if this is required by the relevant end-user pursuant to the relevant contract,

• a first priority security interest over each of the rig owners' with respect to all earnings and proceeds of insurance, and

• a first priority security interest in the earnings accounts.

Our loan and other debt agreements also contain, as applicable, loan-to-value clauses, which could require the Company, at its option, to post additional collateral or prepay a portion of the outstanding borrowings should the value of the drilling units securing borrowings under each of such agreements decrease below required levels. In addition, the loan and other debt agreements include certain financial covenants including the requirement to maintain a certain level of free cash and failure to comply with any of the covenants in the loan agreements could result in a default under those agreements and under other agreements containing cross-default provisions. We were in compliance with all financial loan covenants as of December 31, 2014.

In addition to financial covenants, our credit facility agreements contain covenants which are customary in secured financing in this industry, including operational covenants in relation to the relevant rigs, information undertakings and covenants in relation to corporate existence and conduct of our business.

Bonds

For the Company’s outstanding Norwegian bonds, Swedish bond and the $350 million bond, the main financial covenant is to maintain a total equity to total assets ratio of at least 30.0%. Both equity and total assets are adjusted for the difference between book value and market values of drilling units.

For our $1,000 million, $500 million, and $600 million bonds, we are subject to certain financial and restrictive covenants contained in our indentures which restrict, among other things, our ability to pay dividends, incur indebtedness, incur liens, and make certain investments. In addition, these indentures contain other customary terms, including certain events of default, upon the occurrence of which, the bonds may be declared immediately due and payable.

In addition to the above, our bond indentures generally also contain restrictions which are customary for unsecured financings in this industry for similar unrated bonds, including limitations on indebtedness, payments, transactions with affiliates and restrictions on consolidation, merger and sale of assets.

We are in compliance with related covenants as of December 31, 2014.

Covenants contained within our consolidated Ship Finance Variable Interest Entities

The Company consolidates certain Ship Finance entities into the financial statements as variable interest entities. While we are not, directly or indirectly, obligated to repay the borrowings under this facility, a breach of one or more of the covenants contained in this credit facility may have a material adverse effect on us. The main financial covenants contained in the variable interest entities are as follows:

• Ship Finance must maintain cash and cash equivalents of at least $25 million.

• Ship Finance must maintain positive working capital.

• Ship Finance must have a ratio of total liabilities to total assets of at least 0.8 to 1.0 at the end of each quarter.

• The Company's covenants under the bank loans listed above also apply.

The Ship Finance subsidiaries owning West Taurus, West Hercules and West Linus are consolidated into our financial statements as a variable interest entity (“VIEs”).  To the extent that these VIEs defaults under its indebtedness and is marked current in its financial statements, we would in turn, mark such indebtedness current in our consolidated financial statements.  The characterization of the indebtedness in our financial statements as current may adversely impact our compliance with the covenants contained in our existing and future debt agreements. In the event of a default by us under one of our debt agreements, the lenders under our existing debt agreements could determine that we are in default under our other financing agreements. This could result in the acceleration of the maturity of such debt under these agreements and the lenders thereunder may foreclose upon any collateral securing that debt, including our drilling rigs, even if we were to subsequently cure such default. We and Ship Finance are in compliance with related covenants as of December 31, 2014.

Covenants contained in North Atlantic Drilling Limited ("NADL")

In February 2015, NADL received approval from its Norwegian Bondholders to amend the Bond Agreement for its NOK1.5 billion Norwegian Bond maturing in 2018. Under the terms of the agreement, Seadrill will provide a guarantee for the Bond Issue in exchange for amendments to the covenant package, principally replacing the current financial covenants with the financial covenants within Seadrill's NOK bonds. Additionally, NADL received approval to amend its US$2 billion credit facility and US$475 million term loan and revolving credit facility. Under the terms of the agreements, Seadrill will provide a guarantee for the credit facility in exchange for amendments to the covenant package, principally replacing the existing financial covenants with financial covenants within Seadrill's secured credit facilities. This amendment to the covenants was applicable to the period ended December 31, 2014. As such there are no longer separate financial covenants contained within NADL's credit facilities or bond agreements.

Seadrill Partners covenants

As detailed above certain subsidiaries of Seadrill Partners are borrowers and guarantors to the $440 million secured credit facility and the $1,450 million senior secured credit facility. If Seadrill Partners were to default under one of its other financing agreements, it could cause an event of default under these credit facilities. Seadrill Partners’ failure to comply with covenants and other provisions in its existing or future financing agreements could result in cross-defaults under the Company’s existing financing agreements.

Seadrill Partners are in compliance with all applicable covenants as of December 31, 2014.

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Non-controlling interest (Details) (USD $)	12 Months Ended			15 Months Ended	0 Months Ended				1 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jan. 02, 2014	Dec. 13, 2013	Oct. 18, 2013	Oct. 24, 2012	Dec. 30, 2014	Jan. 31, 2014	Dec. 31, 2013	Oct. 31, 2013	Mar. 25, 2013	Jan. 02, 2014	Mar. 26, 2013	Jul. 02, 2013
Noncontrolling Interest [Line Items]
Noncontrolling interest, increase from subsidiary equity issuance	$ 4,000,000	$ 297,000,000	$ 203,000,000
Deconsolidation of Seadrill Partners	(115,000,000)
Dividend paid to non controlling interest in VIE		223,000,000
Deemed contribution to Seadrill shareholders from non-controlling interest	13,000,000			209,000,000
Net income attributable to non-controlling interest	108,000,000	133,000,000	97,000,000
Ship Finance
Noncontrolling Interest [Line Items]
Number of Ship Finance companies acquired		1
Acquisition of remaining equity shares of former VIE		47,000,000
Net income attributable to non-controlling interest	11,000,000	24,000,000	39,000,000
North Atlantic Drilling
Noncontrolling Interest [Line Items]
Ownership percentage	70.36%
Net income attributable to non-controlling interest	36,000,000	61,000,000	48,000,000
Seadrill Partners LLC
Noncontrolling Interest [Line Items]
Ownership percentage		62.35%			62.35%	77.47%	75.67%			62.35%	77.47%
Common units representing liability entity's interests (in shares)							10,062,500
Common unit price representing liability entity's interests					$ 29.5	$ 32.29	$ 22.00
Gross proceeds from completion of IPO					380,000,000	0	221,000,000
Consideration received from shares issued					365,000,000	0	203,000,000
Common units issued in connection with an over allotment option (in shares)							1,312,500
Common units owned upon completion of IPO (in shares)							14,752,525
Subordinated units owned upon completion of IPO (in shares)							16,543,350
Net income attributable to non-controlling interest	0	21,000,000	10,000,000
Asia Offshore Drilling
Noncontrolling Interest [Line Items]
Ownership percentage	66.24%													66.21%
Net income attributable to non-controlling interest	23,000,000	11,000,000	0
Sevan Drilling ASA
Noncontrolling Interest [Line Items]
Ownership percentage	50.11%														50.10%
Ownership interest, percentage															50.10%
Fair Value of Non Controlling Interests															197,000,000
Net income attributable to non-controlling interest	38,000,000	16,000,000	0
Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited
Noncontrolling Interest [Line Items]
Net income attributable to non-controlling interest	0	0						0
Seadrill Offshore Nigeria Limited
Noncontrolling Interest [Line Items]
Proceeds from disposal of associated companies								1,800,000
Seadrill Nigeria Operations Limited
Noncontrolling Interest [Line Items]
Percentage in subsidiary sold								10.00%
Proceeds from disposal of associated companies								1,800,000
Non-controlling Interest
Noncontrolling Interest [Line Items]
Noncontrolling interest, increase from subsidiary equity issuance	4,000,000	297,000,000	69,000,000
Deconsolidation of Seadrill Partners	(115,000,000)
Dividend paid to non controlling interest in VIE		223,000,000
Deemed contribution to Seadrill shareholders from non-controlling interest	7,000,000	209,000,000
IPO | North Atlantic Drilling
Noncontrolling Interest [Line Items]
New shares issued by equity method investment									13,513,514
Sale of stock, price per share									$ 9.25
Noncontrolling interest, increase from subsidiary equity issuance									52,000,000
Stock Issued to Reporting Entity | Seadrill Partners LLC
Noncontrolling Interest [Line Items]
New shares issued by equity method investment					3,394,916	3,310,622	14,752,525			3,394,916	3,310,622
Stock Issued to Public | Seadrill Partners LLC
Noncontrolling Interest [Line Items]
New shares issued by equity method investment					12,880,000	0	10,062,500			12,880,000
Noncontrolling interest, increase from subsidiary equity issuance										239,000,000
SFL West Polaris Limited
Noncontrolling Interest [Line Items]
Total acquisition price								111,000,000
Deemed contribution to Seadrill shareholders from non-controlling interest								7,000,000
Asia Offshore Drilling
Noncontrolling Interest [Line Items]
Ownership percentage												66.18%
Fair value of establishment of non-controlling interest												100,000,000
Total acquisition price												295,000,000
Seadrill Partners LLC
Noncontrolling Interest [Line Items]
Deconsolidation of Seadrill Partners													$ (115,000,000)
Investment owned, ownership percentage	28.60%
West Saturn | Seadrill Offshore Nigeria Limited
Noncontrolling Interest [Line Items]
Investment owned, ownership percentage	10.00%
West Jupiter | Seadrill Nigeria Operations Limited
Noncontrolling Interest [Line Items]
Investment owned, ownership percentage	10.00%

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Risk management and financial instruments - Fair Value of Financial Instruments Table (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 831	$ 744
Restricted cash	449	318
Current portion of floating rate debt	1,928	1,315
Long-term portion of floating rate debt	7,713	8,793
Current portion of fixed rate CIRR loans	39	47
Long term portion of fixed rate CIRR loans	84	150
Fixed interest convertible bonds	0	704
Fixed interest bonds - short term	323	0
Fixed interest bonds - long term	2,015	1,837
Floating interest bonds - short term	0	204
Floating interest bonds - long term	483	541
Carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	831	744
Restricted cash	449	318
Current portion of floating rate debt	1,928	1,315
Long-term portion of floating rate debt	7,713	8,793
Current portion of fixed rate CIRR loans	39	47
Long term portion of fixed rate CIRR loans	84	150
Fixed interest convertible bonds	0	577
Fixed interest bonds - short term	342	0
Fixed interest bonds - long term	1,892	1,842
Floating interest bonds - short term	0	204
Floating interest bonds - long term	$ 622	$ 538

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Investment in associated companies (Details)	0 Months Ended	12 Months Ended			0 Months Ended			0 Months Ended			12 Months Ended				12 Months Ended				12 Months Ended			0 Months Ended	12 Months Ended				12 Months Ended				12 Months Ended						12 Months Ended			12 Months Ended			12 Months Ended								12 Months Ended		0 Months Ended
	May 17, 2012 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Jul. 21, 2014 Seadrill Operating LP USD ($)	Jul. 21, 2014 Seadrill Operating LP	Jan. 02, 2014 Seadrill Operating LP	Dec. 30, 2014 Seadrill Mobile Units (Nigeria) Ltd USD ($)	Dec. 30, 2014 Seadrill Mobile Units (Nigeria) Ltd	Jan. 02, 2014 Seadrill Mobile Units (Nigeria) Ltd	Dec. 31, 2012 Varia Perdana USD ($)	Dec. 31, 2014 Varia Perdana USD ($)	Dec. 31, 2013 Varia Perdana USD ($)	Apr. 30, 2013 Varia Perdana	Dec. 31, 2012 Tioman USD ($)	Dec. 31, 2014 Tioman USD ($)	Dec. 31, 2013 Tioman USD ($)	Apr. 30, 2013 Tioman	Dec. 31, 2014 Archer USD ($)	Dec. 31, 2013 Archer USD ($)	Dec. 31, 2012 Archer USD ($)	Mar. 12, 2013 Asia Offshore Drilling	Dec. 31, 2012 Asia Offshore Drilling USD ($)	Dec. 31, 2014 Asia Offshore Drilling USD ($)	Dec. 31, 2013 Asia Offshore Drilling USD ($)	Dec. 31, 2011 Asia Offshore Drilling	Dec. 31, 2012 Sevan Drilling ASA USD ($)	Dec. 31, 2014 Sevan Drilling ASA USD ($)	Dec. 31, 2013 Sevan Drilling ASA USD ($)	Feb. 07, 2013 Sevan Drilling ASA	Dec. 31, 2014 Seabras Sapura Participacoes USD ($) vessel	Dec. 31, 2013 Seabras Sapura Participacoes USD ($)	Dec. 31, 2012 Seabras Sapura Participacoes USD ($)	Dec. 31, 2014 Seabras Sapura Holding USD ($) vessel	Dec. 31, 2013 Seabras Sapura Holding USD ($)	Dec. 31, 2012 Seabras Sapura Holding USD ($)	Dec. 31, 2014 Itaunas Drilling USD ($)	Dec. 31, 2013 Itaunas Drilling USD ($)	Dec. 31, 2012 Itaunas Drilling USD ($)	Dec. 31, 2014 Camburi Drilling USD ($)	Dec. 31, 2013 Camburi Drilling USD ($)	Dec. 31, 2012 Camburi Drilling USD ($)	Dec. 31, 2014 Sahy Drilling USD ($)	Dec. 31, 2013 Sahy Drilling USD ($)	Dec. 31, 2012 Sahy Drilling USD ($)	Dec. 31, 2014 Seadrill Partners LLC USD ($)	Dec. 31, 2013 Seadrill Partners LLC USD ($)		Dec. 31, 2012 Seadrill Partners LLC USD ($)		Dec. 31, 2013 Varia Perdana and Tioman Drilling USD ($)	Dec. 31, 2012 Varia Perdana and Tioman Drilling USD ($)	Feb. 08, 2013 Private Placement Archer USD ($)	Mar. 12, 2013 Private Placement Asia Offshore Drilling USD ($)	Jun. 27, 2013 Private Placement Sevan Drilling ASA NOK	Feb. 07, 2013 Private Placement Sevan Drilling ASA NOK	Feb. 08, 2013 Underwrite Placement Archer USD ($)	Dec. 31, 2014 Financial Guarantee Archer USD ($)	Jul. 31, 2013 Financial Guarantee Archer USD ($)	Feb. 08, 2013 Financial Guarantee Archer USD ($)	Dec. 31, 2014 Financial Guarantee Seabras Sapura Participacoes EUR (€)	Dec. 31, 2014 Financial Guarantee Seabras Sapura Holding USD ($)	Dec. 31, 2013 Financial Guarantee Seabras Sapura Holding USD ($)	Dec. 31, 2013 Financial Guarantee Archer Topaz Limited EUR (€)	Jul. 14, 2014 Financial Guarantee Archer Norge AS USD ($)	Feb. 05, 2014 Property Lease Guarantee Archer GBP (£)	Dec. 31, 2014 Seadrill Operating LP	Dec. 31, 2014 Sevan Drilling ASA	Jul. 02, 2013 Sevan Drilling ASA	Dec. 31, 2014 Seadrill Capricorn Holdings LLC	Dec. 31, 2014 SFL Deepwater Ltd	Jan. 02, 2014 SFL Deepwater Ltd	Dec. 31, 2014 Seadrill Mobile Units (Nigeria) Ltd	Jan. 02, 2014 Seadrill Mobile Units (Nigeria) Ltd	Dec. 31, 2014 Direct Ownership Interest Seadrill Partners LLC USD ($)	Dec. 31, 2013 Direct Ownership Interest Seadrill Partners LLC USD ($)	Dec. 31, 2014 Subordinated Units Seadrill Partners LLC USD ($)	Jan. 02, 2014 Subordinated Units Seadrill Partners LLC	Dec. 31, 2013 Subordinated Units Seadrill Partners LLC USD ($)	Dec. 31, 2014 Incentive Distribution Rights Seadrill Partners LLC USD ($)		Dec. 31, 2013 Incentive Distribution Rights Seadrill Partners LLC USD ($)		Feb. 20, 2013 Loans Payable Archer USD ($)	Feb. 12, 2014 ARGENTINA Payment Guarantee Archer USD ($)
Schedule of Equity Method Investments [Line Items]
Percentage of equity method investment ownership (in hundredths)						42.00%	70.00%		29.00%	39.00%	49.00%	0.00%	0.00%	49.00%	49.00%	0.00%	0.00%	49.00%	39.90%	39.90%	39.90%		66.20%			33.80%	28.50%			29.90%	50.00%	50.00%	50.00%	50.00%	50.00%	50.00%	30.00%	30.00%	30.00%	30.00%	30.00%	30.00%	30.00%	30.00%	30.00%																						42.00%		50.10%	49.00%	39.00%	39.00%	29.00%	39.00%			18.00%	100.00%
Ownership percentage held by equity method investee (in hundredths)												51.00%				51.00%															50.00%			50.00%			70.00%			70.00%			70.00%
Dividends		$ 526,000,000	$ 15,000,000	$ 18,000,000																																															$ 15,000,000	$ 18,000,000
New shares issued by equity method investment																						13,200,000.0																															82,003,000		120,065,464	81,828,500	2,811,793
Consideration received from shares issued																																																					98,000,000	67,000,000			3,000,000
Debt, face amount																																																																																				43,000,000
Maximum additional potential future payment																																																											100,000,000	100,000,000	47,000,000	375,000,000	625,000,000	56,000,000
Guarantee fee percentage																																																										1.25%		1.25%				1.25%	1.25%
Maximum potential future payment		8,404,000,000	10,506,000,000																																																							250,000,000							20,000,000	25,900,000																			120,000,000
Per share price of shares issued (in NOK per share)																																																							3.9311	3.95
Ownership percentage																																																																				50.11%	50.10%
Number of pipelying vessels																															1			5
Number of pipelying vessels ordered																																		3
Equity method investment, percentage of investment sold						28.00%			10.00%
Proceeds from disposal of investments in associated companies	65,000,000	373,000,000	0	65,000,000	373,000,000			7,200,000
Share in results from associated companies (loss)/gain		89,000,000	(223,000,000)	(220,000,000)	(88,000,000)			400,000
Equity method investment, summarized financial information, equity excluding NCI																																														1,116,000,000
Equity method investment, summarized financial information, equity before noncontrolling interest																																														928,000,000
Equity method investment, summarized balance sheet information [Abstract]
Current assets		1,517,000,000	609,000,000																633,000,000	594,000,000											17,000,000	12,000,000		104,000,000	0		0	1,000,000		1,000,000	1,000,000		0	1,000,000		762,000,000
Non-current assets		8,336,000,000	2,064,000,000																1,171,000,000	1,201,000,000											194,000,000	129,000,000		690,000,000	219,000,000		187,000,000	161,000,000		336,000,000	199,000,000		173,000,000	155,000,000		5,585,000,000
Current liabilities		1,572,000,000	658,000,000																441,000,000	476,000,000											14,000,000	3,000,000		52,000,000	0		137,000,000	44,000,000		133,000,000	95,000,000		109,000,000	40,000,000		686,000,000
Non-current liabilities		5,591,000,000	1,317,000,000																817,000,000	684,000,000											149,000,000	112,000,000		730,000,000	219,000,000		42,000,000	108,000,000		183,000,000	91,000,000		53,000,000	103,000,000		3,617,000,000
Equity method investment, summarized statement of operations information [Abstract]
Operating revenues		3,665,000,000	2,041,000,000	2,627,000,000							106,000,000				157,000,000				2,254,000,000	2,041,000,000	2,191,000,000		0				173,000,000				29,000,000	0	0	39,000,000	0		0	0		0	0		0	0	0	1,343,000,000
Net operating income		659,000,000	(440,000,000)	(217,000,000)							85,000,000				12,000,000				26,000,000	(438,000,000)	(322,000,000)		(2,000,000)				11,000,000				(6,000,000)	(2,000,000)	0	24,000,000	0		0	0		0	0		0	0	(1,000,000)	615,000,000
Net income		226,000,000	(521,000,000)	(302,000,000)							83,000,000				6,000,000				(96,000,000)	(519,000,000)	(375,000,000)		(2,000,000)				(12,000,000)				(6,000,000)	(1,000,000)	(1,000,000)	13,000,000	(1,000,000)		0	0		0	0		0	0	(1,000,000)	315,000,000
Equity method investment, equity information [Abstract]
Investment in associated companies		2,898,000,000	140,000,000																0	8,000,000											21,000,000	12,000,000		117,000,000	109,000,000		3,000,000	3,000,000		6,000,000	4,000,000		4,000,000	4,000,000
Investment in associated companies		2,898,000,000	140,000,000																																											2,809,000,000																													2,091,000,000	0	412,000,000		0	244,000,000	[1]	0	[1]
Equity method investment, quoted market value																			125,000,000
Equity in statutory accounts		$ 261,000,000	$ 277,000,000	$ 816,000,000							$ 105,000,000	$ 0	$ 0		$ 10,000,000	$ 0	$ 0		$ 218,000,000	$ 253,000,000	$ 370,000,000		$ 110,000,000	$ 0	$ 0		$ 189,000,000	$ 0	$ 0		$ 24,000,000	$ 13,000,000	$ 22,000,000	$ 6,000,000	$ 0	$ 0	$ 3,000,000	$ 3,000,000	$ 3,000,000	$ 6,000,000	$ 4,000,000	$ 4,000,000	$ 4,000,000	$ 4,000,000	$ 3,000,000		$ 0	[2]	$ 0	[2]

[1] The Seadrill Partners - Seadrill Member Interest and IDR's are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured. For more details on the deconsolidation of Seadrill Partners see Note 11.

[2] The Company's share of recorded equity for which it accounts under the equity method in the statutory accounts of Seadrill Partners consists of the non-controlling interest as well as a proportionate amount of equity before non-controlling interests based on the subordinated units which the company owns in Seadrill Partners. The equity attributable to non-controlling interest in Seadrill Partners as at December 31, 2014 of $1,116 million is all attributable to Seadrill's direct ownership interests in controlled subsidiaries of Seadrill Partners. Seadrill's holding in the subordinated units represents 18.0% of the limited partner interests in Seadrill Partners. Total equity before non-controlling interests within Seadrill Partners as at December 31, 2014 was $928 million.

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Goodwill and other intangible assets (Tables)

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

The goodwill balance and changes in the carrying amount is as follows:

(In US$ millions)	December 31, 2014		December 31, 2013
Net book balance at January 1	1,200		1,320
Disposals and deconsolidations	(315	)	(120	)
Impairment of goodwill	(232	)	—
Re-classified as assets held for sale	(49	)	—
Net book balance of December 31	604		1,200

Other intangible assets

The gross carrying amounts and accumulated amortization were as follows:

	December 31, 2014					December 31, 2013
	Gross carrying amount	Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Favorable contracts - intangible assets
Balance at beginning of period	—	—		—		51		(49	)	2
Amortization of favorable contracts	—	—		—		—		(2	)	(2	)
Derecognition of fully amortized contracts	—	—		—		(51	)	51		—
Balance at end of period	—	—		—		—		—		—
Unfavorable contracts - intangible liabilities
Balance at beginning of period	444	(67	)	377		—		—		—
Additions	—	—		—		444		—		444
Amortization of unfavorable contracts	—	(130	)	(130	)	—		(67	)	(67	)
Balance at end of period	444	(197	)	247		444		(67	)	377

Finite-Lived Intangible Liabilities, Future Amortization Expense

The table below shows the amounts relating to favorable and unfavorable contracts that is expected to be amortized over the next five years:

	Year ended December 31
(In US$ millions)	2015	2016	2017	2018	2019	Total
Amortization of unfavorable contracts	116	65	43	23	—	247

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Accounts receivable (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Accounts Receivable, Net, Current [Abstract]
Allowance for doubtful accounts receivables	$ 16,000,000	$ 27,000,000
Accounts receivables, net	78,000,000	0
Bad debt expense	$ 0	$ 0	$ 0

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Share based compensation (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share option transactions related to the Seadrill Scheme

The following summarizes share option transactions related to the Seadrill Scheme in 2014, 2013 and 2012:

	2014			2013			2012
	Options		Weighted average exercise price $	Options		Weighted average exercise price $	Options		Weighted average exercise price $
Outstanding at beginning of year	2,838,758		28.53	3,875,891		29.88	5,420,438		26.16
Granted	—		—	270,000		45.66	181,012		37.41
Exercised	(461,477	)	20.19	(700,418	)	22.60	(1,415,000	)	16.39
Forfeited	(136,165	)	34.57	(606,715	)	32.30	(312,559	)	30.84
Outstanding at end of year	2,241,116		35.10	2,838,758		28.53	3,875,891		29.88
Exercisable at end of year	1,169,584		27.38	1,080,306		27.38	1,164,214		21.19

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Other current liabilities (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Payables and Accruals [Abstract]
Taxes payable	$ 160		$ 332
Employee withheld taxes, social security and vacation payment	122		105
Intangible liabilities - unfavorable contracts	116	[1]	109	[1]
Accrued interest expense	77		70
Liabilities relating to investment in shares	167	[2]	198	[2]
Deferred mobilization revenue	178		192
Derivative financial instruments	372	[3]	145	[3]
Accrued expenses	292		458
Construction obligation	428	[4]	483	[4]
Other current liabilities	22		22
Total other current liabilities	$ 1,934		$ 2,114

[1] Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Notes 12 and 21 to the consolidated financial statements included herein.

[2] Liabilities relating to investment in shares primarily represents amounts owed in respect of the Company's share forward purchase contracts for Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

[3] Derivative financial instruments consist of unrealized losses on various types of derivatives.

[4] The construction obligation has been recognized upon the acquisition of Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

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Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Equipment [Abstract]

Equipment

Equipment consists of office equipment, furniture and fittings.

(In US$ millions)	December 31, 2014		December 31, 2013
Cost	73		79
Accumulated depreciation	(27	)	(30	)
Net book value	46		49

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Risk management and financial instruments - Derivatives with Variable Interest Entities (Details) (Interest Rate Swap, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Variable Interest Entity, Primary Beneficiary | Swap 32
Derivative [Line Items]
Outstanding principal	4.0
Derivative, fixed interest rate	2.014%
Variable Interest Entity, Primary Beneficiary | Swap 33
Derivative [Line Items]
Outstanding principal	4.0
Derivative, fixed interest rate	2.014%
Variable Interest Entity, Primary Beneficiary | Swap 34
Derivative [Line Items]
Outstanding principal	215.7
Derivative, fixed interest rate	1.7725%
Maximum | Swap 32
Derivative [Line Items]
Derivative maturity date	Oct. 31, 2018
Maximum | Swap 33
Derivative [Line Items]
Derivative maturity date	Nov. 30, 2018
Maximum | Swap 34
Derivative [Line Items]
Derivative maturity date	Dec. 01, 2018
Minimum | Swap 32
Derivative [Line Items]
Derivative maturity date	Mar. 01, 2014
Minimum | Swap 33
Derivative [Line Items]
Derivative maturity date	Mar. 01, 2014
Minimum | Swap 34
Derivative [Line Items]
Derivative maturity date	Dec. 01, 2013

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Variable Interest Entities (VIEs)

12 Months Ended

Dec. 31, 2014

Variable Interest Entities (VIEs) [Abstract]

Variable Interest Entities (VIEs)

Variable Interest Entities (VIEs)

As of December 31, 2014, the Company leased two semi-submersible rigs, and a jack-up from VIEs under finance leases. Each of the units had been sold by the Company to single purpose subsidiaries of Ship Finance and simultaneously leased back by the Company on bareboat charter contracts for a term of 15 years. The Company has several options to repurchase the units during the charter periods, and put options and obligations to purchase the assets at the end of the 15 years lease period.

On June 19, 2013, SFL Deepwater Ltd sold the West Hercules to SFL Hercules Ltd. This transaction under common control has no net effects on our consolidated financial statements, and we will continue to consolidate all relevant VIEs.

On June 28, 2013, our consolidated subsidiary NADL sold the entity that own the jack-up, the West Linus, to the Ship Finance subsidiary, SFL Linus Ltd. The purchase consideration reflected a market value of the rig as of the delivery date which was $600 million. This rig was simultaneously chartered back to the Company over a period of 15 years. Upon closing of the purchase, SFL Linus Ltd received a $195 million loan from Ship Finance which bears an interest of 4.5% per annum and matures in 2029. During 2014 the loan was reduced to $125 million, and is reported as long-term debt due to related parties in our balance sheet as of December 31, 2014.

The following table gives a summary of the sale and leaseback arrangements and repurchase options, as of December 31, 2014:

Unit	Effective from	Sale value (In $ millions)	First repurchase option (In $ millions)	Month of first repurchase option	Last repurchase option * (In $ millions)	Month of last repurchase Option *
West Taurus	Nov 2008	850	418	February 2015	149	November 2023
West Hercules	Oct  2008	850	580	August 2011	135	August 2023
West Linus	Jul 2013	600	370	June 2018	170	June 2028

* For West Taurus and West Hercules repurchase obligations at the end of the lease terms have been agreed, at $149 million and $135 million, respectively. For West Linus the put option is $100 million.

The Company has determined that the Ship Finance subsidiaries, which own the units, are variable interest entities (VIEs), and that the Company is the primary beneficiary of the risks and rewards connected with the ownership of the units and the charter contracts. Accordingly, these VIEs are consolidated in the Company's results. The Company did not record any gains from the sale of the units, as they continued to be reported as assets at their original cost in the Company's consolidated balance sheet at the time of each transaction. The equity attributable to Ship Finance in the VIEs is included in non-controlling interests in the Company's consolidated results. At December 31, 2014 and December 31, 2013 the units are reported under drilling units in the Company's balance sheet.

The bareboat charter rates are set on the basis of a Base LIBOR Interest Rate for each bareboat charter contract, and thereafter are adjusted for differences between the LIBOR fixing each month and the Base LIBOR Interest Rate for each contract. A summary of the bareboat charter rates per day for each unit is given below.

	(In US$ thousands)
	2014	2015	2016	2017	2018
West Taurus	340	186	166	158	158
West Hercules	239	180	179	170	166
West Linus	222	222	223	222	222

The assets and liabilities in the statutory accounts of the VIEs as at December 31, 2014 and as at December 31, 2013 are as follows:

(In US$ millions)	December 31, 2014				December 31, 2013
	SFL West Polaris Limited **	SFL Deepwater Limited	SFL Hercules Limited	SFL Linus Limited	SFL West Polaris Limited	SFL Deepwater Ltd.	SFL Hercules Limited	SFL Linus Limited
Name of unit	West Polaris	West Taurus	West Hercules	West Linus	West Polaris	West Taurus and West Hercules	West Hercules	West Linus
Investment in finance lease	N/A	429	426	574	488	515	477	195
Amount due from related parties *	N/A	45	5	14	45	30	25	—
Other assets	N/A	13	10	—	5	13	10	—
Total assets	N/A	487	441	588	538	558	512	195
Short-term interest bearing debt	N/A	32	28	51	36	80	28	—
Long-term interest bearing debt	N/A	271	256	400	351	303	333	—
Other liabilities	N/A	6	1	3	2	6	2	2
Long-term debt due to related parties *	N/A	145	145	125	145	145	145	195
Total liabilities	N/A	454	430	579	534	534	508	197
Equity	N/A	33	11	9	4	24	4	(2	)
Book value of units in the Company's consolidated accounts	N/A	450	603	581	577	458	617	162

* In the VIEs separate financial statements the related party balances are presented on a net basis.

** Refer to "West Polaris acquisition" discussion below.

West Polaris acquisition

On December 30, 2014 we entered into a share sale and purchase agreement with Ship Finance, where we acquired 100% of the equity interests in SFL West Polaris Limited, which was the owner of West Polaris. In addition, the Company purchased an outstanding loan of SFL West Polaris Limited of $97 million from Ship Finance. The acquisition price for the shares and the loan amounted to $111 million. This transaction is accounted for as an equity transaction and no gain or loss is recognized. Non-controlling interest of $7 million has been derecognized, with the residual $6 million recognized as a reduction in Additional Paid in Capital. As at December 31, 2014, the consideration for the shares and loan was unpaid, and was settled on January 5, 2015. Ship Finance continues to provide a guarantee for the bank loan which is held by SFL West Polaris Limited, although Seadrill has indemnified Ship Finance against any claims made against Ship Finance under the guarantee.

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Common Shares (Tables)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Share capital

	2014				2013				2012
All shares are common shares of $2.00 par value each	Shares		$millions		Shares		$millions		Shares		$millions
Authorized share capital	800,000,000		1,600		800,000,000		1,600		800,000,000		1,600
Issued and fully paid share capital	493,078,678		986		469,250,933		939		469,250,933		938
Treasury shares held by Company	(318,740	)	(1	)	(272,441	)	(1	)	(72,859	)	—
Outstanding shares in issue	492,759,938		985		468,978,492		938		469,178,074		938

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Earnings per share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Earnings Per Share [Abstract]
Net income attributable to the parent	$ 3,979	$ 2,653	$ 1,108
Less: Allocation to participating securities	(6)	0	0
Net income attributable to the parent	3,973	2,653	1,108
Effect of dilution	117	38	37
Diluted net income available to stockholders	$ 4,090	$ 2,691	$ 1,145
Weighted average number of common shares outstanding, basic, in shares	478	469	469
Weighted average number of common shares outstanding, in shares	14	22	20
Effect of dilutive share options, in shares	1	1	1
Weighted average number of common shares outstanding adjusted for the effects of dilution	493	492	490
Basic Earnings per share	$ 8.32	$ 5.66	$ 2.37
Diluted earnings per share	$ 8.30	$ 5.47	$ 2.34

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Disposals of businesses and deconsolidation of subsidiary (Details) In Millions, except Share data, unless otherwise specified	12 Months Ended																						0 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($) business_disposal	Jan. 02, 2014 SFL Deepwater Ltd	Dec. 31, 2014 Seadrill Partners LLC USD ($)	Jul. 21, 2014 Seadrill Operating LP	Jan. 02, 2014 Seadrill Operating LP	Dec. 30, 2014 Seadrill Mobile Units (Nigeria) Ltd	Jan. 02, 2014 Seadrill Mobile Units (Nigeria) Ltd	Dec. 31, 2014 Sapura Kencana USD ($)	Apr. 30, 2014 Sapura Kencana	Dec. 31, 2013 Sapura Kencana USD ($)	Apr. 30, 2013 Sapura Kencana MYR	Dec. 31, 2012 Sapura Kencana	Dec. 31, 2014 Varia Perdana	Dec. 31, 2013 Varia Perdana	Apr. 30, 2013 Varia Perdana	Dec. 31, 2012 Varia Perdana	Dec. 31, 2014 Tioman	Dec. 31, 2013 Tioman	Apr. 30, 2013 Tioman	Dec. 31, 2012 Tioman	Apr. 30, 2013 Tender Rig Business USD ($) rig	Dec. 31, 2013 Available-for-sale Securities Sapura Kencana USD ($)	Dec. 31, 2013 Available-for-sale Securities Sapura Kencana MYR
Subsidiary, Sale of Stock [Line Items]
Cumulative number of shares issued																								720,329,691	720,329,691
Ownership percentage after issuance of stock (in hundredths)					28.60%						8.18%		12.00%	6.40%										12.02%	12.02%
Ownership interest, percentage				39.00%		42.00%	70.00%	29.00%	39.00%						0.00%	0.00%	49.00%	49.00%	0.00%	0.00%	49.00%	49.00%
Gain on sale of business	$ 0	$ 1,256	$ 0																				$ 1,256
Investment in Equity Investee																							416
Investment in Equity Investee, share price													3.18
Assets secured by collateral																							760
Non-recognized capital commitments																							320
Consideration																							2,900
Cash																							1,200
Deferred consideration																							187
Deferred consideration, non-contingent																							145
Deferred Consideration, non-contingent, payable period																							3 years
Deferred consideration, contingent																							42
Deferred Consideration, non-Contingent, fair value																							135
Deferred Consideration, contingent, fair value																							0
Fair value of consideration received																							2,600
Working capital adjustment																							75
Carry value of assets and liabilities																							1,324
Other related costs to sale																							20
Number of rigs under construction																							3
Carrying value	$ 751	$ 1,082			$ 426					$ 325		$ 1,078												$ 1,078
Closing share price (per share)																									4.90
Number of Business Disposals			0

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Equipment (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Equipment [Line Items]
Net book value	$ 17,175	$ 20,612
Equipment
Equipment [Line Items]
Cost	73	79
Accumulated depreciation	(27)	(30)
Net book value	46	49
Depreciation and amortization expense	$ 9	$ 8	$ 7

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Disposals of businesses and deconsolidation of subsidiary (Fair Value of Investments and Continuing Involvement with Investees) (Details) (Seadrill Partners LLC, USD $) In Millions, unless otherwise specified	Jan. 02, 2014
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners	$ 3,724	[1]
Common Unit
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners	671	[2]
Subordinated Units
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners	427	[3]
Incentive Distribution Rights
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners	244	[4]
Direct Ownership Interest
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners	$ 2,382	[5]

[1] Fair value of investments and continuing involvement with investees

[2] Common units (marketable securities)As of the deconsolidation date, the Company held 21.5 million common units representing 48.3% of the common units in issue as a class. The Company's holding in the voting common units of Seadrill Partners are accounted for as marketable securities on the basis that during the subordination period the common units have preferential dividend and liquidation rights, and therefore do not represent ‘in-substance common stock’ as defined by US GAAP. These securities have been recognized on January 2, 2014 at the quoted market price and are re-measured at fair value each reporting period. Any unrealized gains and losses on these securities are recognized directly in equity as a component of other comprehensive income unless an unrealized loss is considered "other-than-temporary", in which case it is transferred to the statement of operations and realized. Dividend income from the common units is recognized in the consolidated statement of operations.

[3] Subordinated unitsAs of the deconsolidation date the Company held 16.5 million units representing 100% of the subordinated units. The Company's holding in the subordinated units of Seadrill Partners are accounted for under the equity method on the basis that the subordinated units are considered to be ‘in-substance common stock’. The subordination period will end on the satisfaction of various tests as prescribed in the Operating Agreement of Seadrill Partners, but will not end before September 30, 2017 except upon removal of the Seadrill Member. Upon the expiration of the subordination period, the subordinated units will convert into common units. The fair value of the subordinated units on January 2, 2014, was determined based on the quoted market price of the listed common units as of the deconsolidation date, but discounted for their non-tradability and subordinated dividend and liquidation rights during the subordination period. Under the equity method the Company recognizes its share of Seadrill Partners’ earnings allocable to the subordinated units, less amortization of the basis difference (see (c) below), through the ‘share in results of associated companies’ line in the consolidated statement of operations. Dividends are recognized as a reduction in investment carrying value.

[4] Seadrill Member Interest and IDRsThe Seadrill Member Interest (which is a 0% non-economic interest) holds the rights to 100% of the IDRs and is unable to trade these until the end of the subordination period without the approval of a majority of unaffiliated common unitholders. The Seadrill Member Interest and the IDRs in Seadrill Partners are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured. The fair value of the Company's interest in the Seadrill Member and the attached IDRs as of January 2, 2014 was determined using a Monte Carlo simulation method. The method takes into account the cash distribution waterfall, historical volatility, dividend yield and share price of the common units as of the deconsolidation date. Distributions to the IDRs are recognized in the consolidated statement of operations.

[5] Direct Ownership interestsThe Company held the following ownership interests in entities controlled by Seadrill Partners as of the date of deconsolidation:•70% ownership in Seadrill Operating LPSeadrill Operating LP is a limited partnership and is controlled by its General Partner, Seadrill Operating GP LLC, which is wholly owned by Seadrill Partners. •49% ownership in Seadrill Capricorn Holdings LLCSeadrill Capricorn Holdings LLC is a limited liability company. There is only one class of member interest which is deemed to represent voting common stock. •39% ownership of Seadrill Deepwater Drillship Ltd. and 39% (indirect) ownership of Seadrill Mobile Units (Nigeria) Ltd.The Company held a 39% direct ownership interest in Seadrill Deepwater Drillship Ltd. and a 39% indirect ownership of Seadrill Mobile Units Ltd., through its 100% subsidiary, Seadrill UK Ltd. Both entities are limited companies and only have one class of stock, which is deemed to represent voting common stock. All of the Company's direct ownership interests are accounted for under the equity method as the Company is deemed to have significant influence over these entities through its voting rights and by virtue of Seadrill’s representation on the board of Seadrill Partners.The fair values of the four ownership interests described above have been determined using a discounted cash-flow (“DCF”) methodology, using discounted cash-flow forecasts.

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Commitments and contingencies (Details)																																12 Months Ended
	Dec. 31, 2014 USD ($) drillship rig contract	Dec. 31, 2013 USD ($)	Dec. 31, 2014 Guarantees to customers of the Company's own performance USD ($)	Dec. 31, 2013 Guarantees to customers of the Company's own performance USD ($)	Dec. 31, 2014 Guarantee in favor of banks USD ($)		Dec. 31, 2013 Guarantee in favor of banks USD ($)		Dec. 31, 2014 Guarantee in favor of banks Archer Limited USD ($)	Dec. 31, 2014 Guarantee in favor of banks Archer Limited EUR (€)	Dec. 31, 2013 Guarantee in favor of banks Archer Limited USD ($)	Dec. 31, 2013 Guarantee in favor of banks Archer Limited EUR (€)	Dec. 31, 2014 Guarantee in favor of suppliers USD ($)		Dec. 31, 2013 Guarantee in favor of suppliers USD ($)		Dec. 31, 2014 Guarantee in favor of suppliers Archer Limited USD ($)		Dec. 31, 2014 Guarantee in favor of suppliers Archer Limited GBP (£)		Dec. 31, 2013 Guarantee in favor of suppliers Archer Limited GBP (£)	Dec. 31, 2014 Guarantee in favor of suppliers Seabras Sapura Participacoes USD ($)	Dec. 31, 2014 Guarantee in favor of suppliers Seabras Sapura Participacoes EUR (€)	Dec. 31, 2013 Guarantee in favor of suppliers Seabras Sapura Participacoes USD ($)	Dec. 31, 2013 Guarantee in favor of suppliers Seabras Sapura Participacoes EUR (€)	Dec. 31, 2014 Guarantee in favor of suppliers Seabras Sapura Holding USD ($)	Dec. 31, 2013 Guarantee in favor of suppliers Seabras Sapura Holding USD ($)	Dec. 31, 2014 Guarantee in favor of Variable Interest Entities USD ($)	Dec. 31, 2013 Guarantee in favor of Variable Interest Entities USD ($)	Dec. 31, 2014 Euro Member Countries, Euro Guarantee in favor of banks Archer Limited USD ($)	Dec. 31, 2013 Euro Member Countries, Euro Guarantee in favor of banks Archer Limited USD ($)	Dec. 31, 2014 Sevan Drilling ASA USD ($)
Commitments and Contingencies Disclosure [Abstract]
Assets pledged under mortgages and overdraft facilities	$ 17,772,000,000	$ 18,301,580,000
Marketable securities pledged as collateral	325,000,000	666,000,000
Number of newbuilding contracts	16
Number of new building contracts for semi submersible rigs	3
Number of new building contracts for jack up rigs	8
Number of newbuilding contracts for drillships	5
Maturity schedule for contractual commitments [Abstract]
2015	4,722,000,000
2016	667,000,000
2017	0
2018	0
2019	0
2020 and thereafter	0
Purchase commitments	5,389,000,000	7,683,000,000																														424,000,000
Purchase Obligation, minimum deferred delivery period																																12 months
Purchase Obligation, exercisable interval period																																6 months
Purchase Obligation, maximum deferred delivery period																																36 months
Guarantor Obligations [Line Items]
Maximum potential future payment	$ 8,404,000,000	$ 10,506,000,000	$ 1,824,000,000	$ 1,541,000,000	$ 1,254,000,000	[1]	$ 970,000,000	[1]	$ 370,000,000	€ 72,000,000	$ 200,000,000	€ 56,000,000	$ 3,898,000,000	[1],[2]	$ 6,321,000,000	[1],[2]	$ 40,000,000	[2]	£ 26,000,000	[2]	£ 0	$ 60,000,000	€ 47,000,000	$ 64,000,000	€ 47,000,000	$ 375,000,000	$ 625,000,000	$ 1,428,000,000	$ 1,674,000,000	$ 92,000,000	$ 77,000,000

[1] Within guarantees in favor of banks are guarantees provided on behalf of Archer of $370 million and EUR72 million ($92 million) (2013 200 million and EUR56 million ($77 million)). Guarantees in favor of suppliers includes guarantees on behalf of Archer of GBP 26 million ($40 million) (2013 nil). See Note 31 to the consolidated financial statements included herein.

[2] Within guarantees in favor of suppliers are guarantees provided in relation to our joint ventures Seabras Sapura Participacoes and Seabras Sapura Holdco of EUR 47 million ($60 million) and $375 million respectively (2013 EUR 47 million ($64 million) and $625 million respectively). See Note 17 to the consolidated financial statements included herein.

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Investment in associated companies

12 Months Ended

Dec. 31, 2014

Equity Method Investments and Joint Ventures [Abstract]

Investment in associated companies

Investment in associated companies

The Company has the following investments that are or have been recorded using the equity method for the periods presented in these financial statements:

	December 31, 2014		December 31, 2013		December 31, 2012
Varia Perdana Sdn Bhd ("Varia Perdana")	—	%	—	%	49.0	%
Tioman Drilling Company Sdn Bhd ("Tioman Drilling")	—	%	—	%	49.0	%
Archer	39.9	%	39.9	%	39.9	%
Asia Offshore Drilling Ltd ("AOD")	(1)		(1)		66.2	%
Sevan Drilling ASA ("Sevan Drilling")	(1)		(1)		28.5	%
Seabras Sapura Participacoes SA ("Seabras Sapura Participacoes")	50.0	%	50.0	%	50.0	%
Seabras Sapura Holding GmbH ("Seabras Sapura Holdco")	50.0	%	50.0	%	50.0	%
Itaunas Drilling B.V. ("Itaunas Drilling")	30.0	%	30.0	%	30.0	%
Camburi Drilling B.V. ("Camburi Drilling")	30.0	%	30.0	%	30.0	%
Sahy Drilling B.V. ("Sahy Drilling")	30.0	%	30.0	%	30.0	%
Seadrill Partners ("SDLP")	(2)		(1)		(1)

(1) During these periods the relevant investment was not accounted for under the equity method

(2) As of the deconsolidation date of Seadrill Partners on January 2, 2014, we have recognized our ownership interests in Seadrill Partners and direct ownership interests in Seadrill Partners subsidiaries, at fair value at the date of deconsolidation. Refer to Seadrill Partners paragraph below for additional information.

Varia Perdana and Tioman Drilling

Varia Perdana is a company incorporated in Malaysia, which operates a fleet of tender rigs. It was 51% owned by SapuraKencana and 49% owned by the Company. The Company sold its share to SapuraKencana in April 2013 as part of the disposal of majority of the tender rigs to SapuraKencana, refer to Note 11 of the consolidated financial statements.

Tioman Drilling is a company incorporated in Malaysia, which provides well services. It was 51% owned by SapuraKencana and 49% owned by the Company. The Company sold its share to SapuraKencana in April 2013 as part of the disposal of majority of the tender rigs to SapuraKencana, see Note 11 to the consolidated financial statements included herein.

In the 12 months ended December 31, 2013, prior to disposal the Company received dividends of $15 million relating to Varia Perdana and Tioman Drilling. (2012: $18 million).

Archer

Archer is a company listed on the Oslo Stock Exchange and provides drilling and well services. Prior to February 2011, Archer was a consolidated subsidiary. In February 2011, we deconsolidated Archer and as a result, Archer is accounted for as an associated company. Refer to Note 11 of the consolidated financial statements for further information.

On February 8, 2013, we were allocated 82,003,000 shares in the private placement of Archer, amounting to a value of $98 million. In addition, as consideration for acting as an underwriter to the placement, the Company received another 2,811,793 shares, amounting to a value of $3 million. The consideration for the shares was settled against the existing $55 million loan to Archer, with the remainder of the consideration funded by a $43 million loan from Archer, which was repaid on February 27, 2013. Refer to Note 31 of the consolidated financial statements. As of December 31, 2014 we held 39.9% of the outstanding shares of Archer.

In conjunction with the private placement of Archer on February 8, 2013 the Company also provided a guarantee to Archer on its payment obligations on a certain financing arrangements. The maximum liability to the Company is limited to $100 million with a guarantee fee of 1.25%.On July 31, 2013, the Company provided Archer with an additional guarantee of $100 million, which was provided as part of Archer’s divestiture of a division, to support Archer's existing bank facilities. During 2014, the guarantees above were increased to a total of $250 million. The guarantee fee is 1.25% per annum.

On December 31, 2013, the Company provided Archer Topaz Limited, a wholly owned subsidiary of Archer, with a guarantee of a maximum of €56 million, to support Archer's credit facilities. The guarantee fee is 1.25% per annum.

On February 5, 2014, the Company provided Archer with a guarantee of a maximum of GBP 25.9 million, to support Archer's leasing obligations of a warehouse.

On February 12, 2014, the Company provided Archer with a guarantee of $120 million enabling Archer to finance the purchase of land rigs in Argentina.

On July 14, 2014, we provided Archer Norge AS, a wholly owned subsidiary of Archer, with a guarantee of a maximum of $20 million, to support Archer's guarantee facility. The guarantee fee is 1.25% per annum.

These guarantee fees are included in other financial items in our consolidated statement of operations.

AOD

AOD is a company incorporated in Bermuda that owns and operates three high specification jack up drilling rigs. In addition to the Company's investment, the Company was responsible for the construction supervision, project and commercial management of AOD's drilling rigs.

During 2012 after a series of share acquisitions, the Company acquired additional shares in AOD, and the Company's ownership in AOD increased from 33.8% to 66.2%. Although the Company owned a 66.2% interest in AOD, the Company did not have majority control over AOD, and therefore, AOD continued to be an equity method investment of the Company as of December 31, 2012.

On March 12, 2013 we participated in Asia Offshore Drilling’s private placement and were allocated 13.2 million shares worth $67 million. This was settled by converting debt into shares.

In March 2013 a shareholder resolution changed the board of directors composition of AOD in which the Company gained control of a majority of the board of directors, and as a result, AOD became a consolidated subsidiary of the Company from March 25, 2013, and AOD was derecognized as an associated company. Refer to Note 12 of the consolidated financial statements.

Sevan Drilling

Sevan Drilling is a Norwegian public limited liability company (ASA), and is listed on the Oslo Stock Exchange specializing in the ultra deepwater drilling segment.

On February 7, 2013, the Company was allocated and subscribed for 81,828,500 additional shares in Sevan Drilling at a subscription price of NOK $3.95 as part of a private placement. This increased our ownership to approximately 29.9%

On June 26 and 27, 2013 the Company entered into agreements with a commercial bank to acquire a total of 120,065,464 additional shares in Sevan Drilling at an average price of NOK 3.9311. These agreements were settled on July 2, 2013. After settlement on July 2, 2013 of these additional share purchases, the Company had direct ownership in shares or ownership interests through existing share forward purchase agreements in 50.1% of the total outstanding shares in Sevan Drilling. As a result of the increased ownership, the Company obtained a controlling financial interest and Sevan Drilling became a consolidated subsidiary from July 2, 2013 and Sevan Drilling was derecognized as an associated company. Refer to Note 12 of the consolidated financial statements.

Seabras Sapura Participacoes and Seabras Sapura Holdco

Seabras Sapura Participacoes SA is a company incorporated in Brazil, which is currently constructing one pipe-laying vessel. It is 50% owned by TL Offshore Sdn. Bhd., a subsidiary of SapuraKencana, and 50% owned by the Company.

The Company has provided yard guarantees in relation to the Seabras Sapura Participacoes pipe-laying vessel of EUR47 million, which have been provided on a 50:50 basis with TL Offshore. The guarantee continues to be in place until the yard obligations have been fulfilled, which is expected to be in 2015.

Seabras Sapura Holdco Ltd is a company incorporated in Bermuda, which is currently constructing five pipe-laying vessels. It is 50% owned by TL Offshore Sdn. Bhd. and 50% owned by the Company. During 2014 Seabras Sapura Holdco Ltd was transferred into a new company Seabras Sapura Holding GmbH (a company incorporated in Austria).

The Company has provided yard guarantees in relation to Seabras Sapura Holdco pipe-laying vessels totaling $375 million (2013: $625 million), which have been provided on a 50:50 basis with TL Offshore. The guarantees continue to be in place until the yard obligations have been fulfilled, which is expected to be during 2016 for the final three vessels.

Itaunas Drilling, Camburi Drilling, and Sahy Drilling

Itaunas Drilling BV is a company incorporated in Holland, which is currently constructing a drillship. It is 70% owned by Sete International GmbH and 30% owned by the Company.

Camburi Drilling BV is a company incorporated in Holland, which is currently constructing a drillship. It is 70% owned by Sete International GmbH and 30% owned by the Company.

Sahy Drilling BV is a company incorporated in Holland, which is currently constructing a drillship. It is 70% owned by Sete International GmbH and 30% owned by the Company.

Seadrill Partners

As a result of the deconsolidation of Seadrill Partners on January 2, 2014, the Company has derecognized the assets and liabilities of Seadrill Partners and its subsidiaries, and has recognized its ownership interests in Seadrill Partners and its direct ownership interests in Seadrill Partners subsidiaries, Seadrill Capricorn Holdings LLC, Seadrill Operating LP, Seadrill Deepwater Drillship Ltd and its indirect ownership of Seadrill Mobile Units through another wholly owned subsidiary, at fair value at the date of deconsolidation. For further discussion please refer to Note 11 of the consolidated financial statements.

Seadrill’s investment in Seadrill Partners accounted for under the equity method is comprised of the following:

Subordinated units - the Company's holding in the subordinated units of Seadrill Partners are accounted for under the equity method on the basis that the subordinated units are considered to be ‘in-substance common stock’. The subordination period will end on the satisfaction of various tests as prescribed in the Operating Agreement of Seadrill Partners, but will not end before September 30, 2017 except upon removal of the Seadrill Member. Upon the expiration of the subordination period, the subordinated units will convert into common units.

Direct Ownership interests - Seadrill holds ownership interests in the following entities controlled by Seadrill Partners as at December 31, 2014:

i. 42% in Seadrill Operating LP: Seadrill Operating LP is a limited partnership and is controlled by its General Partner, Seadrill Operating GP LLC, which is wholly owned by Seadrill Partners.

ii. 49% Seadrill Capricorn Holdings LLC: Seadrill Capricorn Holdings LLC is a limited liability company. There is only one class of member interest which is deemed to represent voting common stock.

iii. 39% in Seadrill Deepwater Drillship Ltd and 29% indirect interest in Seadrill Mobile Units (Nigeria) Ltd.: Both entities are limited companies and only have one class of stock, which is deemed to represent voting common stock.

All of the Company's direct ownership interests are accounted for under the equity method as the Company is deemed to have significant influence over these entities through its voting rights and by virtue of Seadrill’s representation on the board of Seadrill Partners.

Sale of 28% limited partner interest in Seadrill Operating LP

On July 21, 2014, the Company sold a 28% limited partner interest in Seadrill Operating LP, a subsidiary of Seadrill Partners, to Seadrill Partners for cash consideration of $373 million. This resulted in a loss on sale of investment of $88 million, which has been recognized within "share in results from associated companies" in the Company’s consolidated statement of operations. The Company will continue to account for its remaining 42% limited partner interest in Seadrill Operating LP under the equity method.

Sale of investment in Seadrill Mobile Units (Nigeria) Limited

On December 30, 2014 the Company sold a 10% equity interest in Seadrill Mobile Units (Nigeria) Limited, for cash consideration of $7.2 million. This resulted in a gain on sale of investment of $0.4 million, which has been recognized within "share in results from associated companies" in the Company’s consolidated statement of operations. The Company will continue to account for its remaining 29% equity interest in Seadrill Mobile Units (Nigeria) Limited under the equity method.

Summarized balance sheet information of the Company's equity method investees is as follows:

	As of December 31, 2014
(In US$ millions)	Current assets	Non-current assets	Current liabilities	Non-current liabilities
Archer	633	1,171	441	817
Seabras Sapura Participacoes	17	194	14	149
Seabras Sapura Holding	104	690	52	730
Itaunas Drilling	—	187	137	42
Camburi Drilling	1	336	133	183
Sahy Drilling	—	173	109	53
Seadrill Partners	762	5,585	686	3,617
Total	1,517	8,336	1,572	5,591

	December 31, 2013
(In US$ millions)	Current assets	Non-current assets	Current liabilities	Non-current liabilities
Archer	594	1,201	476	684
Seabras Sapura Participacoes	12	129	3	112
Seabras Sapura Holding	—	219	—	219
Itaunas Drilling	1	161	44	108
Camburi Drilling	1	199	95	91
Sahy Drilling	1	155	40	103
Total	609	2,064	658	1,317

Summarized statement of operations information for the Company's equity method investees is as follows:

	Year ended December 31, 2014
(In US$ millions)	Operating revenues	Net operating income		Net income
Archer	2,254	26		(96	)
Seabras Sapura Participacoes	29	(6	)	(6	)
Seabras Sapura Holding	39	24		13
Itaunas Drilling	—	—		—
Camburi Drilling	—	—		—
Sahy Drilling	—	—		—
Seadrill Partners	1,343	615		315
Total	3,665	659		226

	Year ended December 31, 2013
(In US$ millions)	Operating revenues	Net operating income		Net income
Archer	2,041	(438	)	(519	)
Seabras Sapura Participacoes	—	(2	)	(1	)
Seabras Sapura Holding	—	—		(1	)
Itaunas Drilling	—	—		—
Camburi Drilling	—	—		—
Sahy Drilling	—	—		—
Total	2,041	(440	)	(521	)

	Year ended December 31, 2012
(In US$ millions)	Operating revenues	Net operating income		Net income
Varia Perdana	106	85		83
Tioman	157	12		6
Archer	2,191	(322	)	(375	)
AOD	—	(2	)	(2	)
Sevan Drilling	173	11		(12	)
Seabras Sapura Participacoes	—	—		(1	)
Sahy Drilling	—	(1	)	(1	)
Total	2,627	(217	)	(302	)

At the year-end the book values of the Company's investment in associated companies are as follows:

(In US$ millions)	December 31, 2014	December 31, 2013
Archer	—	8
Seabras Sapura Participacoes	21	12
Seabras Sapura Holding	117	109
Itaunas Drilling	3	3
Camburi Drilling	6	4
Sahy Drilling	4	4
Seadrill Partners - Total direct ownership interests	2,091	—
Seadrill Partners - Subordinated Units	412	—
Seadrill Partners - Seadrill Member Interest and IDRs *	244	—
Total	2,898	140

* The Seadrill Partners - Seadrill Member Interest and IDR's are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured. For more details on the deconsolidation of Seadrill Partners see Note 11.

The quoted market value as at December 31, 2014 for Archer was $125 million. Quoted market prices for all our other equity investments are not available because, other than Seadrill Partners, these companies are not publicly traded. Seadrill Partners subordinated units are not tradable and hence have no quoted market price.

At the year end the share of recorded equity in the statutory accounts of the Company's associated companies were as follows:

(In US$ millions)	December 31, 2014	December 31, 2013	December 31, 2012
Tioman	—	—	10
Varia Perdana	—	—	105
Archer	218	253	370
AOD	—	—	110
Sevan Drilling	—	—	189
Seabras Sapura Participacoes	24	13	22
Seabras Sapura Holding	6	—	—
Itaunas Drilling	3	3	3
Camburi Drilling	6	4	4
Sahy Drilling	4	4	3
Seadrill Partners *	N/A	—	—
Total	261	277	816

* The Company's share of recorded equity for which it accounts under the equity method in the statutory accounts of Seadrill Partners consists of the non-controlling interest as well as a proportionate amount of equity before non-controlling interests based on the subordinated units which the company owns in Seadrill Partners. The equity attributable to non-controlling interest in Seadrill Partners as at December 31, 2014 of $1,116 million is all attributable to Seadrill's direct ownership interests in controlled subsidiaries of Seadrill Partners. Seadrill's holding in the subordinated units represents 18.0% of the limited partner interests in Seadrill Partners. Total equity before non-controlling interests within Seadrill Partners as at December 31, 2014 was $928 million.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash Flows from Operating Activities
Net income	$ 4,087	$ 2,786	$ 1,205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	693	711	615
Amortization of deferred loan charges	54	43	30
Amortization of unfavorable and favorable contracts	(131)	(65)	12
Amortization of mobilization revenue	(177)	(136)	(162)
Share of results from associated companies	(121)	223	220
Share-based compensation expense	10	7	8
Gain on disposals and deconsolidations	(2,971)	(1,367)	(169)
Unrealized loss/(gain) related to derivative financial instruments	197	(249)	6
Impairment of goodwill	232	0	0
Gain on realization of marketable securities	(138)	0	(86)
Dividends received from associated company	526	15	18
Deferred income tax	(6)	(47)	25
Unrealized foreign exchange (gain)/loss on long-term debt	(165)	(47)	6
Payments for long-term maintenance	(295)	(190)	(133)
Loss on sale of investments	89	0	0
Net gain on debt extinguishment	(12)	0	0
Changes in operating assets and liabilities, net of effect of acquisitions
Unrecognized mobilization fees received from customers	348	226	238
Trade accounts receivable	(295)	(206)	(198)
Trade accounts payable	21	(29)	34
Net related party balances	(248)	(114)	60
Prepaid expenses/accrued revenue	13	(45)	(64)
Interest bearing note receivable with customers	0	0	(76)
Other, net	(137)	179	1
Net cash provided by operating activities	1,574	1,695	1,590
Cash Flows from Investing Activities
Additions to newbuildings	(2,508)	(3,884)	(1,343)
Additions to drilling units and equipment	(365)	(389)	(214)
Sale of rigs and equipment	0	48	0
Settlement of disputes with ship yard	0	0	38
Business combinations and step acquisitions, net of cash acquired	0	(554)	0
Sale of business, net of cash disposed	1,138	1,958	0
Cash in deconsolidated subsidiary	(90)	0	0
Change in restricted cash	(131)	123	102
Investment in associated companies	(586)	(151)	(153)
Proceeds from disposal of investments in associated companies	373	0	65
Short-term loan granted to related parties	0	0	(55)
Purchase of marketable securities	(150)	0	(19)
Long term loan granted to related parties	(18)	(125)	(20)
Repayment from long-term loan granted to related parties	2,096	10	20
Proceeds from disposal of marketable securities	307	0	219
Net cash provided by/(used in) investing activities	66	(2,964)	(1,360)
Cash Flows from Financing Activities
Proceeds from debt	5,072	7,703	3,477
Repayments of debt	(4,344)	(4,919)	(2,752)
Debt fees paid	(65)	(93)	(37)
Proceeds from debt to related party	90	756	1,013
Repayments of debt to related party	(910)	(1,181)	(487)
Dividends paid to non-controlling interests	(51)	(69)	(50)
Contribution from non-controlling interests, net of issuance cost	115	365	350
Proceeds relating to share forward contracts and other derivatives	0	453	0
Purchase of treasury shares	(18)	(39)	0
Proceeds from sale of treasury shares	0	6	16
Dividends paid	(1,415)	(1,287)	(1,925)
Employee stock options exercised	5	0	0
Net cash (used in)/provided by financing activities	(1,521)	1,695	(395)
Cash reclassified as held for sale	(26)	0	0
Effect of exchange rate changes on cash and cash equivalents	(6)	0	0
Net increase/(decrease) in cash and cash equivalents	87	426	(165)
Cash and cash equivalents at beginning of the year	744	318	483
Cash and cash equivalents at the end of year	831	744	318
Supplementary disclosure of cash flow information
Interest paid, net of capitalized interest	(493)	336	260
Taxes paid	$ (227)	$ 109	$ 179

XML

Marketable securities (Narrative) (Details) In Millions, except Share data, unless otherwise specified	12 Months Ended			1 Months Ended		12 Months Ended	0 Months Ended	1 Months Ended	12 Months Ended			0 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Jun. 30, 2014 Seadrill Partners LLC USD ($)	Mar. 31, 2014 Seadrill Partners LLC USD ($)	Dec. 31, 2014 Seadrill Partners LLC USD ($)	Apr. 30, 2013 Sapura Kencana	Apr. 30, 2014 Sapura Kencana USD ($)	Dec. 31, 2014 Sapura Kencana USD ($)	Dec. 31, 2013 Sapura Kencana USD ($)	Dec. 31, 2012 Sapura Kencana USD ($)	May 17, 2012 SapuraCrest Bhd USD ($)	Dec. 31, 2012 SapuraCrest Bhd USD ($)	Feb. 28, 2014 Petromena USD ($)	Dec. 31, 2014 Petromena USD ($)	Dec. 31, 2013 Petromena USD ($)	Feb. 28, 2014 Petromena NOK	May 17, 2012 Minimum Sapura Kencana	Dec. 31, 2014 Equity Securities Petromena USD ($)	Dec. 31, 2013 Equity Securities Petromena USD ($)
Marketable Securities, Investee [Line Items]
Ownership interest, percentage													23.60%					11.80%
Recognized gain												$ 169	$ 84
Investment owned, ownership percentage						28.60%	12.00%	8.18%			6.40%
Sale of Stock, Number of Shares Issued in Transaction							400,800,000
Proceeds from available-for-sale securities								297						10
Gain/(loss) reclassified into income						0		131	131	0	(84)				0	0
Unrealized gain (loss) on marketable securities	(443)	539							(48)
Recognition of investment in Seadrill Partners - Common units						671
Cumulative number of shares issued				3,183,700	1,633,987
Investment Owned, Balance, Price Per Unit				$ 31.41	$ 30.60
Purchase of common units in Seadrill Partners	150	0	19			150
Gross Unrealized losses						395			456	0	0				0	0
Percentage of marketable securities held (in hundredths)																	81.10%
Face amount of bond securities held																	2,000
Gain on realization of marketable securities	131	0	85											6
Carrying value	751	1,082				426			325	1,078									0	4
Cumulative unrealized fair value gains/(losses)	$ (443)	$ 539				$ (395)			$ (48)	$ 539									$ 0	$ 0

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Stockholders' Equity [Abstract]
Declared dividends (USD per share)	$ 2.00	$ 3.72	$ 3.51
Declared extraordinary dividend per share (U.S. dollar)	$ 0	$ 0	$ 0.97

XML

Long-term debt (Credit Facilities) (Details) (USD $)	12 Months Ended			1 Months Ended	0 Months Ended	1 Months Ended											0 Months Ended	1 Months Ended	0 Months Ended
	Dec. 31, 2014 rig	Dec. 31, 2013	Dec. 31, 2012	Aug. 31, 2014	Dec. 20, 2013	Dec. 31, 2012 rig	Apr. 30, 2011 drilling_unit	Oct. 31, 2010 drilling_unit	Jan. 31, 2011 rig	Jun. 30, 2010	Jun. 30, 2009	Mar. 31, 2013	Jul. 31, 2013	Oct. 31, 2013	Apr. 30, 2013 tranche	Dec. 31, 2013	Feb. 28, 2014	Jul. 31, 2014 drilling_unit	Aug. 26, 2014	Mar. 06, 2015	Jan. 31, 2015	Sep. 30, 2013	Sep. 27, 2013	Dec. 31, 2006	Mar. 20, 2013	Oct. 23, 2013	Jul. 16, 2013	May 31, 2014	Dec. 10, 2013
Debt Instrument [Line Items]
Net loss on debt extinguishment	$ (54,000,000)	$ 0	$ 0
Long-term Debt	12,620,000,000	13,466,000,000														13,466,000,000
Cash and restricted cash	449,000,000	318,000,000														318,000,000
Number of newbuild jack-ups under finance lease arrangements	1
Credit facility US$1,121
Debt Instrument [Line Items]
Debt Instrument, Face Amount									1,121,000,000
Net loss on debt extinguishment				16,000,000
$1,750 facility (Sevan Drilling)
Debt Instrument [Line Items]
Debt Instrument, Face Amount																						1,750,000,000	1,750,000,000
US$800 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount																								800,000,000
Long-term Debt					194,000,000
$150 facility
Debt Instrument [Line Items]
Long-term Debt	150,000,000	150,000,000												150,000,000		150,000,000
US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Long-term Debt	309,000,000	345,000,000														345,000,000
US$1,450 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount																									1,450,000,000
Long-term Debt	433,000,000	1,390,000,000														1,390,000,000
Secured Debt | $1,750 facility (Sevan Drilling)
Debt Instrument [Line Items]
Long-term Line of Credit	1,225,000,000	1,400,000,000														1,400,000,000
Credit facility US$450 -Eclipse [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			450,000,000			450,000,000
Maturity of debt	1 year				1 year
Long-term Debt	416,000,000	450,000,000														450,000,000
Debt collateral amount	657,000,000
US$440 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount			440,000,000			440,000,000
Number of tender rigs in an acquisition						2
Maturity of debt	5 years
Long-term Debt	258,000,000	293,000,000														293,000,000
Number of jack up drilling rigs in an acquisition						2
Amount drawn from the facility	320,000,000
Payment due at maturity of debt	166,000,000
$420 facility
Debt Instrument [Line Items]
Long-term Debt	351,000,000	0														0
US$400 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount			400,000,000			400,000,000
Maturity of debt	5 years
Long-term Debt	280,000,000	320,000,000														320,000,000
Assets pledged	694,000,000
Payment due at maturity of debt	200,000,000
US$2,000 facility (North Atlantic Drilling)
Debt Instrument [Line Items]
Debt Instrument, Face Amount							2,000,000,000
Number of drilling rigs in an acquisition							6
Maturity of debt	6 years
Long-term Debt	1,367,000,000	1,503,000,000														1,503,000,000
Assets pledged	2,343,000,000
Payment due at maturity of debt	950,000,000
Credit facility US$700 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount								700,000,000
Maturity of debt	5 years
Long-term Debt	420,000,000	490,000,000														490,000,000
Number of jack up drilling rigs in an acquisition								7
Assets pledged	1,074,000,000
Payment due at maturity of debt	350,000,000
Credit facility US$1,121
Debt Instrument [Line Items]
Number of ultra deepwater semi submersible rigs in an acquisition									2
Maturity of debt									7 years
Long-term Debt		912,000,000														912,000,000
US$1,200 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount										1,200,000,000
Maturity of debt										5 years
Long-term Debt	0	733,000,000														733,000,000
US$1,500 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount											1,500,000,000
Maturity of debt											5 years
Long-term Debt	0	706,000,000														706,000,000
Credit facility, Ship Finance International Loans, $420 facility
Debt Instrument [Line Items]
Long-term Debt	0	387,000,000														387,000,000
US$550 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount		550,000,000														550,000,000
Maturity of debt	5 years
Long-term Debt	0	440,000,000														440,000,000
Payment due at maturity of debt	275,000,000
Credit facility US$450 -Eminence [Member]
Debt Instrument [Line Items]
Long-term Debt	397,000,000	450,000,000														450,000,000
Assets pledged	589,000,000
Term Loan Facility | Credit Facility $1,350
Debt Instrument [Line Items]
Long-term Debt				675,000,000
Tranche 1 | US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Amount drawn from the facility															120,000,000
Tranche 1 | US$1,450 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount																									203,000,000
Debt instrument term												5 years
Balloon payment to be paid																									86,000,000
Debt Instrument, Balloon Payment Refinancing Period												5 years
Tranche 1 | Credit Facility $1,500 - 2014
Debt Instrument [Line Items]
Debt instrument term												5 years
Debt instrument, interest rate	2.38%
Long-term Debt	300,000,000
Balloon payment to be paid	175,000,000
Tranche 1 | $1,750 facility (Sevan Drilling)
Debt Instrument [Line Items]
Debt Instrument, Face Amount																						1,400,000,000
Long-term Line of Credit																										1,400,000,000
Tranche 1 | US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Assets pledged	225,000,000
Secured Debt | US$101 Million and US$98 Million Senior Secured Credit Facility
Debt Instrument [Line Items]
Debt collateral amount	470,000,000
Pledged Assets, Not Owned by Reporting Entity	261,000,000
Secured Debt | Credit Facility $1,350
Debt Instrument [Line Items]
Debt Instrument, Face Amount				1,350,000,000
Debt instrument term	5 years
Long-term Line of Credit	1,317,000,000	0														0
Debt collateral amount	1,767,000,000
Secured Debt | Credit Facility $1,350 | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis	LIBOR
Basis spread on variable rate	2.00%
Secured Debt | Credit facility US$300 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount																											300,000,000
Long-term Line of Credit	210,000,000	234,000,000														234,000,000
Secured Debt | Credit facility US$300 [Member] | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis													LIBOR
Basis spread on variable rate	1.00%												3.00%
Secured Debt | $150 facility
Debt Instrument [Line Items]
Long-term Line of Credit	150,000,000	150,000,000														150,000,000
Secured Debt | $150 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis														LIBOR
Basis spread on variable rate														0.75%
Secured Debt | US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Debt Instrument, Face Amount															360,000,000
Number of Tranches															3
Debt instrument term															5 years
Long-term Line of Credit	309,000,000	345,000,000														345,000,000
Secured Debt | US$360 facility (Asia Offshore Drilling) | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis															LIBOR
Basis spread on variable rate															2.75%
Secured Debt | Credit facility US$450 -Eminence [Member]
Debt Instrument [Line Items]
Long-term Line of Credit	397,000,000	450,000,000														450,000,000
Maximum borrowing capacity		450,000,000														450,000,000
Secured Debt | Credit facility US$450 -Eminence [Member] | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis					LIBOR											LIBOR
Basis spread on variable rate					2.00%											1.75%
Secured Debt | Credit facility US$450 -Eclipse [Member] | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis	LIBOR
Basis spread on variable rate	3.00%
Secured Debt | US$440 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis	LIBOR
Basis spread on variable rate	3.25%
Secured Debt | US$101 Million Secured Credit Facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount	101,000,000
Secured Debt | US$550 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis	LIBOR
Secured Debt | Ship Finance International Loans, $700 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis						LIBOR
Basis spread on variable rate						3.00%											2.25%
Secured Debt | US$400 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis	LIBOR
Basis spread on variable rate	2.50%
Secured Debt | US$2,000 facility (North Atlantic Drilling)
Debt Instrument [Line Items]
Debt Instrument, Face Amount	2,000,000,000						2,000,000,000
Remaining borrowing capacity	50,000,000
Commitment fee (percentage)	40.00%
Secured Debt | US$2,000 facility (North Atlantic Drilling) | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis	LIBOR
Basis spread on variable rate	2.00%
Secured Debt | Credit facility US$700 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	700,000,000
Secured Debt | Credit facility US$700 [Member] | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.50%
Secured Debt | US$1,200 facility
Debt Instrument [Line Items]
Maximum borrowing capacity																												1,200,000,000
Secured Debt | US$1,200 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis										LIBOR
Basis spread on variable rate										2.25%
Secured Debt | US$1,500 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis											LIBOR
Basis spread on variable rate											3.31%
Secured Debt | US$98 Million Secured Credit Facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount	98,000,000
Secured Debt | US$1,450 facility
Debt Instrument [Line Items]
Debt collateral amount	622,000,000
Secured Debt | US$1,450 facility | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis					LIBOR
Secured Debt | Credit Facility $1,500 - 2014
Debt Instrument [Line Items]
Debt Instrument, Face Amount																		1,500,000,000
Debt instrument term																		12 years
Description of variable rate basis																		LIBOR
Long-term Line of Credit	1,469,000,000	0														0
Debt collateral amount																		1,840,000,000
Number of newbuild jack-ups under finance lease arrangements																		3
Secured Debt | $1,750 facility (Sevan Drilling) | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.90%
Tranche 2 | US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Amount drawn from the facility															120,000,000
Tranche 2 | Credit Facility $1,500 - 2014
Debt Instrument [Line Items]
Debt instrument term												5 years
Tranche 2 | $1,750 facility (Sevan Drilling)
Debt Instrument [Line Items]
Debt Instrument, Face Amount																						350,000,000
Tranche 2 | US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Assets pledged	222,000,000
Tranche 3 | US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Amount drawn from the facility															120,000,000
Tranche 3 | US$360 facility (Asia Offshore Drilling)
Debt Instrument [Line Items]
Assets pledged	230,000,000
Revolving Credit Facility | Credit Facility $1,350
Debt Instrument [Line Items]
Long-term Debt				675,000,000
Minimum | Secured Debt | US$550 facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.50%
Minimum | Secured Debt | Credit facility US$1,121 | LIBOR
Debt Instrument [Line Items]
Description of variable rate basis									LIBOR
Basis spread on variable rate									2.25%
Minimum | Secured Debt | US$1,450 facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.20%
Minimum | Secured Debt | Credit Facility $1,500 - 2014
Debt Instrument [Line Items]
Basis spread on variable rate																		1.40%
Maximum | Secured Debt | US$550 facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.25%
Maximum | Secured Debt | Credit facility US$1,121 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate									3.00%
Maximum | Secured Debt | US$1,450 facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	3.00%
Maximum | Secured Debt | Credit Facility $1,500 - 2014
Debt Instrument [Line Items]
Basis spread on variable rate																		2.50%
Affiliated Entity | Metrogas
Debt Instrument [Line Items]
Due to Related Parties		840,000,000														840,000,000													840,000,000
Affiliated Entity | Metrogas | Credit facility US$1,121
Debt Instrument [Line Items]
Debt Instrument, Face Amount																													1,121,000,000
Net loss on debt extinguishment																			16,000,000
Affiliated Entity | Metrogas | Credit facility US$1,121
Debt Instrument [Line Items]
Long-term Debt		72,000,000														72,000,000
Subsequent Event | Credit facility US $950
Debt Instrument [Line Items]
Maximum borrowing capacity																					950,000,000
Subsequent Event | Secured Debt | Credit facility US $950
Debt Instrument [Line Items]
Debt Instrument, Face Amount																					950,000,000
Subsequent Event | Secured Debt | Credit facility US$700 [Member]
Debt Instrument [Line Items]
Repayment of long-term debt																				170,000,000
Subsequent Event | Revolving Credit Facility | Credit facility US $950
Debt Instrument [Line Items]
Debt instrument term																					5 years
Description of variable rate basis																					LIBOR
Basis spread on variable rate																					2.00%
Maximum borrowing capacity																					475,000,000
SFL West Polaris Limited | Ship Finance International Loans, $700 facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount			420,000,000			420,000,000		700,000,000
Debt instrument term						5 years
SFL West Polaris Limited | Secured Debt | Ship Finance International Loans, $700 facility
Debt Instrument [Line Items]
Assets pledged	564,000,000
Seadrill Limited and Seadrill Partners LLC | US$1,450 facility
Debt Instrument [Line Items]
Long-term Debt	856,000,000	1,390,000,000														1,390,000,000
Seadrill Tucana Ltd. | Credit facility US$300 [Member]
Debt Instrument [Line Items]
Assets pledged	204,000,000
Seadrill Castor Ltd. | Credit facility US$300 [Member]
Debt Instrument [Line Items]
Assets pledged	213,000,000
West Oberon | Secured Debt | $150 facility
Debt Instrument [Line Items]
Assets pledged	226,000,000
West Prospero | Secured Debt | $150 facility
Debt Instrument [Line Items]
Assets pledged	165,000,000
Sevan Drilling Pte Ltd. | $1,750 facility (Sevan Drilling)
Debt Instrument [Line Items]
Debt collateral amount	589,000,000
Sevan Drilling Rig II Pte Ltd. | $1,750 facility (Sevan Drilling)
Debt Instrument [Line Items]
Debt collateral amount	601,000,000
Sevan Drilling Rig V Pte Ltd. | $1,750 facility (Sevan Drilling)
Debt Instrument [Line Items]
Debt collateral amount	719,000,000
Cash pledged as collateral under credit facilities
Debt Instrument [Line Items]
Cash and restricted cash		0														0
Cash pledged as collateral under credit facilities | Secured Debt | US$1,450 facility
Debt Instrument [Line Items]
Cash and restricted cash	$ 50,000,000

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Segment information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment information

Segment information

Operating segments

The Company provides drilling and related services to the offshore oil and gas industry. Our business has been organized into three operating segments: (1) Floaters, which includes drillships and semi-submersible rigs, (2) jack-up rigs and (3) other, which consists primarily of rig management services. The Company presents the following two reportable segments:

• Floaters: Services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to semi-submersible rigs and drillships for harsh and benign environments in mid-, deep- and ultra-deep waters.

• Jack-up rigs: Services encompassing drilling, completion and maintenance of offshore exploration and production wells. The drilling contracts relate to jack-up rigs for operations in harsh and benign environment.

Segment results are evaluated on the basis of operating income, and the information given below is based on information used for internal management reporting.

In prior periods, the company reported a tender rigs segment, which related to services encompassing drilling, completion and maintenance of offshore production wells in Southeast Asia, West Africa and the Americas. In these periods, the Company had drilling contracts related to self-erecting tender rigs and semi-submersible tender rigs. Following the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners LLC ("Seadrill Partners") as of January 2, 2014, the Company no longer has any drilling contracts in the tender rig segment. Accordingly, the Company did not report this segment for the year ended December 31, 2014. The Company however provides rig management services to Seadrill Partners which are recognized within Other.

To more closely align the segment results with the information presented for internal management reporting, the company has separately disclosed rig management related revenues within Other. The Company has also amended its presentation of total assets and only allocates Drilling units and newbuildings to its reportable segments. Prior periods have been conformed to the current period presentation.

Revenues

(In US$ millions)	2014	2013	2012
Floaters	3,360	3,698	2,859
Jack-up rigs	1,478	1,175	861
Tender Rigs	—	382	758
Other	159	27	—
Total	4,997	5,282	4,478

Depreciation and amortization

(In US$ millions)	2014	2013	2012
Floaters	508	531	412
Jack-up rigs	185	163	146
Tender Rigs	—	17	57
Other	—	—	—
Total	693	711	615

Operating income – net income

(In US$ millions)	2014		2013		2012
Floaters	1,992		1,472		1,250
Jack-up Rigs	275		450		225
Tender Rigs	—		176		316
Other	12		—		—
Operating income	2,279		2,098		1,791
Unallocated items:
Total financial items and other	1,827		842		(354	)
Income tax expense	(19	)	(154	)	(232	)
Net income	4,087		2,786		1,205

Drilling Units and Newbuildings - Total assets

(In US$ millions)	2014	2013
Floaters	12,849	15,459
Jack-up Rigs	4,326	4,699
Tender Rigs	—	454
Total Drilling Units and Newbuildings	17,175	20,612
Assets held for sale	1,239	—
Investments in Associated companies	2,898	140
Marketable securities	751	1,082
Goodwill	604	1,200
Cash and restricted cash	1,280	1,062
Other assets	2,559	2,204
Total	26,506	26,300

Goodwill

(In US$ millions)	2014	2013
Floaters	604	890
Jack-up Rigs	—	281
Tender Rigs	—	29
Total	604	1,200

Capital expenditures – fixed assets

(In US$ millions)	2014	2013	2012
Floaters	2,327	3,178	1,342
Jack-up Rigs	776	1,371	150
Tender Rigs	—	150	198
Total	3,103	4,699	1,690

Geographic segment data

Revenues are attributed to geographical segments based on the country of operations for drilling activities, i.e. the country where the revenues are generated. The following presents the Company's revenues and fixed assets by geographic area:

Revenues

(In US$ millions)	2014	2013	2012
Norway	1,071	1,198	815
Brazil	991	825	629
Angola	707	734	358
Others *	2,228	2,525	2,676
Total Revenue	4,997	5,282	4,478

* Other countries represents countries in which we operate that individually had revenues representing less than 10 percent of total revenues earned for any of the periods presented.

Major customers

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

Fixed assets – operating drilling units (1)

(In US$ millions)	2014	2013
Brazil	2,798	2,881
Norway	2,252	2,298
Angola	1,852	2,090
USA	1,382	2,718
Others *	6,861	7,206
Total	15,145	17,193

(1) The fixed assets referred to in the table are the Company's operating drilling units. Asset locations at the end of a period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.

* Other countries represents countries in which we operate that individually had fixed assets representing less than 10 percent of total fixed assets for any of the periods presented.

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Pension benefits (Tables)

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Effect of formerly SFAS No. 158 on the consolidated balance sheet

Consolidated balance sheet position

(In US$ millions)	2014		2013
Non-current liabilities	82		58
Deferred tax	(22	)	(16	)
Shareholders equity	60		42

Annual pension cost

Annual pension cost

(In US$ millions)	2014		2013		2012
Service cost	13		14		12
Interest cost on prior years' benefit obligation	7		7		5
Gross pension cost for the year	20		21		17
Expected return on plan assets	(6	)	(4	)	(5	)
Administration charges	1		—		—
Net pension cost for the year	15		17		12
Social security cost	2		2		2
Amortization of actuarial gains/losses	2		2		—
Impact of settlement/curtailment funded status	—		(2	)	(4	)
Total net pension cost	19		19		10

Funded status of the defined benefit plan

The funded status of the defined benefit plan

(In US$ millions)	December 31, 2014		December 31, 2013
Projected benefit obligations at end of period	186		180
Plan assets at market value	(114	)	(129	)
Accrued pension liability exclusive social security	72		51
Social security related to pension obligations	10		7
Accrued pension liabilities	82		58

Change in benefit obligations

Change in benefit obligations

(In US$ millions)	2014		2013
Projected benefit obligations at beginning of period	180		171
Interest cost	7		7
Service cost	13		14
Benefits paid	(2	)	(2	)
Change in unrecognized actuarial gain	23		13
Foreign currency translations	(35	)	(15	)
Acquisition/transfer members	—		(8	)
Projected benefit obligations at end of period	186		180

Change in pension plan assets

Change in pension plan assets

(In US$ millions)	2014		2013
Fair value of plan assets at beginning of year	129		122
Estimated return	2		5
Contribution by employer	17		19
Administration charges	(1	)	—
Benefits paid	(2	)	(2	)
Change in unrecognized actuarial loss	(9	)	—
Foreign currency translations	(22	)	(10	)
Acquisition/transfer members	—		(5	)
Fair value of plan assets at end of year	114		129

Assumptions used in calculation of pension obligations

Assumptions used in calculation of pension obligations

(In %)	2014		2013		2012
Rate of compensation increase at the end of year	2.75	%	3.75	%	3.50	%
Discount rate at the end of year	2.30	%	4.00	%	4.20	%
Prescribed pension index factor	1.20	%	1.40	%	1.40	%
Expected return on plan assets for the year	3.20	%	4.40	%	4.00	%
Employee turnover	4.00	%	4.00	%	3.50	%
Expected increases in Social Security Base	2.50	%	3.50	%	3.25	%

Weighted-average asset allocation of funds related to defined benefit plan

The weighted-average asset allocation of funds related to the Company's defined benefit plan at December 31, was as follows:

Pension benefit plan assets

(In %)	2014		2013
Equity securities	7.2	%	4.2	%
Debt securities	51.9	%	55.7	%
Real estate	14.2	%	13.9	%
Money market	23.5	%	24.7	%
Other	3.2	%	1.50	%
Total	100.0	%	100.0	%

Expected annual pension plan contributions under defined benefit plans

The table below shows the Company's expected annual pension plans contributions under defined benefit plans for the years 2015-2024. The expected payments are based on the assumptions used to measure the Company's obligations at December 31, 2014 and include estimated future employee services.

(In US$ millions)	December 31, 2014
2015	11
2016	12
2017	12
2018	12
2019	13
2020-2024	69
Total payments expected during the next 10 years	129

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Related party transactions (Rig Financing Agreements) (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	May 31, 2014
Related Party Transaction [Line Items]
Repayment from long-term loan granted to related parties	$ 2,096,000,000	$ 10,000,000	$ 20,000,000
Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties	159,000,000
Repayment from long-term loan granted to related parties	1,500,000,000
Interest income, related party	20,000,000
West Capricorn | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties				523,000,000
West Vencedor | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties		78,000,000		115,000,000
West Aquarius | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties				305,000,000
West Capella | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties				295,000,000
T-15 | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties		101,000,000
T-16 | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties		93,000,000
West Leo | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties		486,000,000
West Sirius | Affiliated Entity | Rig Financing Agreements
Related Party Transaction [Line Items]
Due from related parties		220,000,000
Secured Debt | US$1,200 facility
Related Party Transaction [Line Items]
Maximum borrowing capacity					$ 1,200,000,000

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General information

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General information

General information

Seadrill Limited is incorporated in Bermuda and is a publicly listed company on the New York Stock Exchange and the Oslo Stock Exchange. We provide offshore drilling services to the oil and gas industry. As of December 31, 2014 the Company owned and operated 43 offshore drilling units and had 16 offshore drilling units under construction. Our fleet consists of drillships, jack-up rigs and semi-submersible rigs for operations in shallow and deepwater areas, as well as benign and harsh environments. Following the sale of the majority of the tender rig business to SapuraKencana, which closed on April 30, 2013, and further the deconsolidation of Seadrill Partners on January 2, 2014 we no longer operate in the tender rig segment.

As used herein, and unless otherwise required by the context, the term "Seadrill" refers to Seadrill Limited and the terms "Company", "we", "Group", "our" and words of similar import refer to Seadrill and its consolidated companies. The use herein of such terms as group, organization, we, us, our and its, or references to specific entities, is not intended to be a precise description of corporate relationships.

Basis of presentation

The financial statements are presented in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The amounts are presented in United States dollar (U.S. dollar) rounded to the nearest million, unless otherwise stated.

The accompanying consolidated financial statements present the financial position of Seadrill Limited, the consolidated subsidiaries and the group's interest in associated entities. Investments in companies in which the Company controls, or directly or indirectly holds more than 50% of the voting control are consolidated in the financial statements, as well as certain variable interest entities of which the Company is deemed to be the primary beneficiary.

The accounting policies set out below have been applied consistently to all periods in these consolidated financial statements, unless otherwise noted.

Basis of consolidation

The consolidated financial statements include the assets and liabilities of the Company, its majority owned and controlled subsidiaries and certain variable interest entities, ("VIE"s) in which the Company is deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated on consolidation.

A VIE is defined as a legal entity where either (a) the total equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated support; (b) equity interest holders as a group lack either i) the power to direct the activities of the entity that most significantly impact on its economic success, ii) the obligation to absorb the expected losses of the entity, or iii) the right to receive the expected residual returns of the entity; or (c) the voting rights of some investors in the entity are not proportional to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. U.S. GAAP requires a VIE to be consolidated by its primary beneficiary, being the interest holder, if any, which has both (1) the power to direct the activities of the entity which most significantly impact on the entity's economic performance, and (2) the right to receive benefits or the obligation to absorb losses from the entity which could potentially be significant to the entity. We evaluate our subsidiaries, and any other entities in which we hold a variable interest, in order to determine whether we are the primary beneficiary of the entity, and where it is determined that we are the primary beneficiary we fully consolidate the entity.

Investment in companies in which we hold an ownership interest of between 20% and 50%, and over which we exercise significant influence, but do not consolidate, are accounted for using the equity method. The Company records its investments in associated companies and its share of earnings or losses in the consolidated statements of operations as "Share in results from associated companies." The excess, if any, of purchase price over book value of the Company's investments in equity method investees is included in the accompanying consolidated balance sheets in "Investment in associated companies."

Investments in companies in which our ownership is less than 20% are valued at fair value unless it is not possible to estimate fair value, then the cost method is used.

Intercompany transactions and internal sales have been eliminated on consolidation. Unrealized gains and losses arising from transactions with associates are eliminated to the extent of the Company's interest in the entity.

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Commitments and contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and contingencies

Legal Proceedings:

The Company is a party, as plaintiff or defendant, to some lawsuits in various jurisdictions for demurrage, damages, off-hire and other claims and commercial disputes arising from the construction or operation of its drilling units, in the ordinary course of business or in connection with its acquisition activities.  The Company believes that the resolution of such claims will not have a material adverse effect on the Company's operations or financial condition either individually or in the aggregate. The Company's best estimate of the outcome of the various disputes has been reflected in the financial statements of the Company as of December 31, 2014 which is not material.

In December 2014, a purported shareholder class action lawsuit, Fuchs et al. v. Seadrill Limited et al., No. 14-cv-9642 (LGS)(KNF), was filed in US Federal District Court in the Southern District of New York, alleging, among other things, that Seadrill and certain of its executives made materially false and misleading statements in connection with the payment of dividends.  In January 2015, a second purported shareholder class action lawsuit,  Heron v. Seadrill Limited et al., No. 15-cv-0429 (LGS)(KNF), was filed in the same court on similar grounds.  The judge has entered an order consolidating these cases. We cannot predict the outcome of these cases, nor can we estimate the amount of any possible loss. Accordingly, no loss contingency has been recognized within the financial statements.

Pledged assets

The book value of assets pledged under mortgages and overdraft facilities at December 31, 2014 was $17,772 million (2013: $18,301.58 million). In addition we have $325 million of marketable securities pledged as security for certain derivative arrangements.

Purchase Commitments

At December 31, 2014, the Company had contractual commitments under sixteen newbuilding contracts totaling $5,389 million (2013: $7,683 million). The contract commitments are mainly yard installments and are for the construction of three semi-submersible rigs, eight jack-up rigs and five drillships.

Note that the newbuilding commitments include $424 million related to the Sevan Developer that are presented as a contractual obligation in the balance sheet in the line item "Other short term liabilities". Sevan Drilling and Cosco Shipyard have agreed to amend the termination rights of the construction contract and defer the delivery date for the Sevan Developer. Delivery is deferred for 12 months with mutually agreed options, exercisable at 6 month intervals, to extend the delivery date for up to a total of 36 months from October 15, 2014. The agreement will terminate at the end of each deferral period, unless the option to extend is mutually agreed by both parties. If termination should occur, Sevan is entitled to a refund of its installments less any agreed costs. Cosco will complete construction and maintain the rig at the shipyard in Qidong. Sevan will continue to market the rig as part of its fleet. Payment of the construction liability and other related costs will be deferred until delivery.

The maturity schedule for the contractual commitments as of December 31, 2014 is as follows:

(In US$ millions)	2015	2016	2017	2018	2019	2020 and thereafter	Total
Newbuildings	4,722	667	—	—	—	—	5,389

Guarantees

The Company has issued guarantees in favor of third parties as follows, which is the maximum potential future payment for each type of guarantee:

(In US$ millions)	December 31, 2014	December 31, 2013
Guarantees to customers of the Company's own performance	1,824	1,541
Guarantee in favor of banks(1)	1,254	970
Guarantee in favor of suppliers (1) (2)	3,898	6,321
Guarantee in favor of Variable Interest Entities	1,428	1,674
Total	8,404	10,506

(1) Within guarantees in favor of banks are guarantees provided on behalf of Archer of $370 million and EUR72 million ($92 million) (2013200 million and EUR56 million ($77 million)). Guarantees in favor of suppliers includes guarantees on behalf of Archer of GBP 26 million ($40 million) (2013nil). See Note 31 to the consolidated financial statements included herein.

(2) Within guarantees in favor of suppliers are guarantees provided in relation to our joint ventures Seabras Sapura Participacoes and Seabras Sapura Holdco of EUR47 million ($60 million) and $375 million respectively (2013 EUR 47 million ($64 million) and $625 million respectively). See Note 17 to the consolidated financial statements included herein.

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Equipment

12 Months Ended

Dec. 31, 2014

Equipment [Abstract]

Equipment

Equipment

Equipment consists of office equipment, furniture and fittings.

(In US$ millions)	December 31, 2014		December 31, 2013
Cost	73		79
Accumulated depreciation	(27	)	(30	)
Net book value	46		49

Depreciation and amortization expense was $9 million, $8 million and $7 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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Other current liabilities

12 Months Ended

Dec. 31, 2014

Payables and Accruals [Abstract]

Other current liabilities

Other current liabilities

Other current liabilities are comprised of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Taxes payable	160	332
Employee withheld taxes, social security and vacation payment	122	105
Intangible liabilities - unfavorable contracts (1)	116	109
Accrued interest expense	77	70
Liabilities relating to investment in shares (2)	167	198
Deferred mobilization revenue	178	192
Derivative financial instruments (3)	372	145
Accrued expenses	292	458
Construction obligation (4)	428	483
Other current liabilities	22	22
Total other current liabilities	1,934	2,114

(1) Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Notes 12 and 21 to the consolidated financial statements included herein.

(2) Liabilities relating to investment in shares primarily represents amounts owed in respect of the Company's share forward purchase contracts for Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

(3) Derivative financial instruments consist of unrealized losses on various types of derivatives.

(4) The construction obligation has been recognized upon the acquisition of Sevan Drilling. See Note 12 to the consolidated financial statements included herein.

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Variable Interest Entities (Summary of Bareboat Charter Rates per Day) (Details)	Dec. 31, 2014
West Taurus
Sale Leaseback Transaction [Line Items]
2014	340,000
2015	186,000
2016	166,000
2017	158,000
2018	158,000
West Hercules
Sale Leaseback Transaction [Line Items]
2014	239,000
2015	180,000
2016	179,000
2017	170,000
2018	166,000
West Linus
Sale Leaseback Transaction [Line Items]
2014	222,000
2015	222,000
2016	223,000
2017	222,000
2018	222,000

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Accumulated other comprehensive income (Tables)

12 Months Ended

Dec. 31, 2014

Accumulated other comprehensive income [Abstract]

Accumulated other comprehensive income

Accumulated other comprehensive income for the years December 31, 2014 and December 31, 2013:

(In US$ millions)	December 31, 2014		December 31, 2013
Unrealized (loss)/gain on marketable securities	(443	)	539
Unrealized gain on foreign exchange	51		73
Actuarial loss relating to pension	(57	)	(35	)
Share in unrealized gains from associated companies	1		—
Unrealized loss on interest rate swaps in VIEs	—		(49	)
Accumulated other comprehensive (loss)/income	(448	)	528

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Business Acquisitions (Details) (2) (Asia Offshore Drilling, USD $) In Millions, unless otherwise specified	0 Months Ended
	Mar. 25, 2013
Asia Offshore Drilling
Business Acquisition [Line Items]
Cash and cash equivalents	$ 1
Current assets	1
Drilling units	633
Non-current assets	633
Construction obligation	(316)
Other current liabilities	(8)
Current liabilities	(324)
Non-current liabilities	0
Net assets acquired	310
Net book value of equity investment	185
Fair value of previously held equity investment	195
Gain on re-measurement of previously held equity investment	10
Fair value of establishment of non-controlling interest	100
Bargain purchase
Fair value of establishment of non-controlling interest	100
Fair value of previously held equity investment	195
Fair value of the consideration received	295
Gain on bargain purchase	$ 15

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Long-term debt (Commercial Interest Reference Rate (CIRR) Credit Facilities) (Details)			1 Months Ended				1 Months Ended				1 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Apr. 30, 2008 Commercial Interest Reference Rate Term Loan 1 NOK	Dec. 31, 2014 Commercial Interest Reference Rate Term Loan 1 USD ($)	Dec. 31, 2014 Commercial Interest Reference Rate Term Loan 1 NOK	Dec. 31, 2013 Commercial Interest Reference Rate Term Loan 1 USD ($)	Jun. 30, 2008 Commercial Interest Reference Rate Term Loan 2 NOK	Dec. 31, 2014 Commercial Interest Reference Rate Term Loan 2 USD ($)	Dec. 31, 2013 Commercial Interest Reference Rate Term Loan 2 USD ($)	Dec. 31, 2013 Commercial Interest Reference Rate Term Loan 2 NOK	Jul. 31, 2008 Commercial Interest Reference Rate Term Loan 3 USD ($)	Dec. 31, 2014 Commercial Interest Reference Rate Term Loan 3 USD ($)	Dec. 31, 2014 Commercial Interest Reference Rate Term Loan 3 NOK	Dec. 31, 2013 Commercial Interest Reference Rate Term Loan 3 USD ($)	Dec. 31, 2014 Other credit facilities with corresponding restricted cash deposit [Member] USD ($)	Dec. 31, 2014 Other credit facilities with corresponding restricted cash deposit [Member] NOK	Dec. 31, 2013 Other credit facilities with corresponding restricted cash deposit [Member] USD ($)
Debt Instrument [Line Items]
Debt Instrument, Face Amount			850,000,000				904,000,000				$ 1,011,000,000
Fixed interest rate			4.56%				4.15%				4.15%
Maturity of debt			8 years				8 years				12 years
Long-term Debt	$ 12,620,000,000	$ 13,466,000,000		$ 27,000,000	200,000,000	$ 49,000,000		$ 29,000,000	$ 52,000,000	213,000,000		$ 68,000,000	506,000,000	$ 96,000,000	$ 124,000,000	919,000,000	$ 197,000,000

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Risk management and financial instruments - Narrative (Details)	12 Months Ended												0 Months Ended			12 Months Ended														1 Months Ended	3 Months Ended	12 Months Ended			12 Months Ended			12 Months Ended					12 Months Ended					0 Months Ended		0 Months Ended
	Dec. 31, 2014 USD ($)		Dec. 31, 2013 USD ($)		Dec. 31, 2012 USD ($)	Dec. 31, 2014 Total Return Swap USD ($)	Dec. 31, 2014 Total Return Swap NOK	Dec. 31, 2013 Total Return Swap USD ($)	Dec. 31, 2013 Total Return Swap NOK	Dec. 31, 2012 Total Return Swap USD ($)	Dec. 31, 2014 Other Contract USD ($)	Dec. 31, 2013 Other Contract USD ($)	Sep. 18, 2013 SapuraKencana Share Agreements USD ($) contract	Dec. 31, 2014 SapuraKencana Share Agreements USD ($)	Dec. 31, 2013 SapuraKencana Share Agreements USD ($)	Dec. 31, 2014 Interest Rate Swap USD ($)	Dec. 31, 2013 Interest Rate Swap USD ($)	Dec. 31, 2012 Interest Rate Swap USD ($)	Dec. 31, 2014 Cross Currency Interest Rate Contract USD ($)	Dec. 31, 2013 Cross Currency Interest Rate Contract USD ($)	Dec. 31, 2012 Cross Currency Interest Rate Contract USD ($)	Dec. 31, 2014 Forward Contracts USD ($)	Dec. 31, 2013 Forward Contracts USD ($)	Dec. 31, 2012 Forward Contracts USD ($)	Dec. 31, 2014 Forward Contracts USD ($)	Dec. 31, 2013 Forward Contracts USD ($)	Dec. 31, 2014 Forward Contract 2 USD ($)	Dec. 31, 2014 Forward Contract 2 GBP (£)	Dec. 31, 2013 Forward Contract 2 USD ($)	Oct. 31, 2013 Sevan Drilling Interest Rate Swap USD ($) swap	Dec. 31, 2013 Sevan Drilling Interest Rate Swap USD ($)	Dec. 31, 2014 Minimum Cross Currency Interest Rate Contract	Dec. 31, 2014 Minimum Forward Contracts NOK	Dec. 31, 2014 Minimum Forward Contract 2 GBP (£)	Dec. 31, 2014 Maximum Cross Currency Interest Rate Contract	Dec. 31, 2014 Maximum Forward Contracts NOK	Dec. 31, 2014 Maximum Forward Contract 2 GBP (£)	Dec. 31, 2014 Variable Interest Entity, Primary Beneficiary Interest Rate Swap USD ($)	Dec. 31, 2013 Variable Interest Entity, Primary Beneficiary Interest Rate Swap USD ($)	Aug. 31, 2013 Variable Interest Entity, Primary Beneficiary Interest Rate Swap USD ($)	Dec. 31, 2014 Variable Interest Entity, Primary Beneficiary Ship Finance Variable Interest Entities Interest Rate Swap USD ($)	Dec. 31, 2013 Variable Interest Entity, Primary Beneficiary Ship Finance Variable Interest Entities Interest Rate Swap USD ($)	Dec. 31, 2014 Strike Price 1 Sevan Drilling NOK	Dec. 31, 2014 Strike Price 2 Sevan Drilling NOK	Dec. 31, 2014 Other Current Liabilities Sevan Share Repurchase Agreement USD ($)	Dec. 31, 2013 Other Current Liabilities Sevan Share Repurchase Agreement USD ($)	Sep. 18, 2013 Other Noncurrent Liabilities SapuraKencana Share Agreements USD ($)	Feb. 09, 2015 Subsequent Event Strike Price 1 Sevan Drilling NOK	Feb. 09, 2015 Subsequent Event Strike Price 1 Sevan Drilling	Feb. 09, 2015 Subsequent Event Strike Price 2 Sevan Drilling NOK	Feb. 09, 2015 Subsequent Event Strike Price 2 Sevan Drilling	Sep. 30, 2013 $1,750 facility (Sevan Drilling) USD ($)	Sep. 27, 2013 $1,750 facility (Sevan Drilling) USD ($)
Derivative [Line Items]
Outstanding principal amount																$ 7,918,000,000	$ 9,776,000,000		$ 807,000,000	$ 786,000,000					$ 260,000,000		$ 49,000,000	£ 30,000,000		$ 606,000,000										$ 450,000,000
Gross liability						(5,000,000)		(2,000,000)						(103,000,000)	(83,600,000)	(191,000,000)	(244,000,000)		(201,000,000)	(46,000,000)					(24,000,000)	(3,000,000)	(3,000,000)														(3,000,000)	(2,000,000)
Net Liability																134,000,000	89,000,000
Gain (Loss) on interest rate derivative instruments, not designated as hedging instruments																(176,100,000)	143,000,000	(129,000,000)	(171,200,000)	(10,000,000)	36,000,000	(58,000,000)	(49,000,000)	12,000,000
Number of instruments held													2																	5
Debt, face amount																																																				1,750,000,000	1,750,000,000
Contract termination cost																														19,000,000
Gain (Loss) on financial instruments	(497,000,000)		133,000,000		3,000,000																										(4,000,000)
Derivative maturity date																																Mar. 01, 2018			Mar. 01, 2019
Derivative, fixed interest rate																																4.94%			6.1825%
Other comprehensive income, unrealized gain (loss) on interest rate swaps in VIEs																																						0	3,000,000
Interest paid	493,000,000		(336,000,000)		(260,000,000)																																	(4,000,000)	(5,000,000)
Derivative, forward exchange rates																																	6,370,000.00			6,890,000.00
Derivative average forward exchange rate																																		1.59			1.68
Gross Asset														103,000,000	83,600,000														1,000,000
Derivative instruments not designated as hedging instruments, gain (loss), net						(72,600,000)		19,000,000		7,000,000	(19,000,000)	30,000,000
Option agreement, shares						4,000,000	4,000,000	1,400,000	1,400,000																																		216,065,464	81,828,500					216,065,464		81,828,500
Option agreement, strike price							96.02		255.38																																		4.1701	4.1966				0.7249		0.7246
Associated liabilities																																													167,000,000	198,000,000
Proceeds from derivative instrument, financing activities													250,000,000
Derivative, term of contract (in years)													3 years
Description of variable rate basis													LIBOR
Derivative, basis spread on variable rate													1.90%
Marketable securities pledged as collateral	325,000,000		666,000,000
Derivative financial instruments	$ 257,000,000	[1]	$ 250,000,000	[1]																																											$ 250,000,000

[1] Derivative financial instruments represent liabilities associated with other derivative arrangements. See Note 32 to the consolidated financial statements included herein.

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Share based compensation

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share based compensation

Share based compensation

The fair value of share based compensation is recognized as personnel compensation expense, and in the year ended December 31, 2014, $10 million (2013: $7 million, 2012: $8 million) was included in the consolidated statement of operations.

Share Options

At a general meeting of shareholders held in May 2005, our shareholders authorized the Board to establish and maintain the Option Scheme in order to encourage our directors, officers and other employees to hold shares in the Company. The Option Scheme will expire in May 2016. The Option Scheme permits the Board, at its discretion, to grant options to acquire shares in the Company to employees and directors of the Company or its subsidiaries.  The options are not transferable. The subscription price is at the discretion of the Board, provided the subscription price is never reduced below the par value of the share. The subscription price for certain options granted under the Option Scheme will be reduced by the amount of all dividends declared by the Company in the period from the date of grant until the date the option is exercised. Options granted under the Option Scheme will vest at a date determined by the board at the date of the grant.  The options granted under the plan to date vest over a period of one to five years.  There is no maximum number of shares authorized for awards of equity share options and authorized, unissued or treasury shares of the Company may be used to satisfy exercised options.

During 2014, no share options were granted. The assumptions used in estimating fair value are as follows: 2.4% risk-free interest rate, volatility of 26.1%, 0% dividend yield and an expected option term of four years. The risk-free interest rates were estimated using the US Treasury yield curve in effect at the time of grant for instruments with a similar life. The dividend yield has been estimated at 0% as the exercise price is reduced by all dividends declared by the Company from the date of grant to the exercise date. It is also assumed that 100% of options granted will vest.

The following summarizes share option transactions related to the Seadrill Scheme in 2014, 2013 and 2012:

	2014			2013			2012
	Options		Weighted average exercise price $	Options		Weighted average exercise price $	Options		Weighted average exercise price $
Outstanding at beginning of year	2,838,758		28.53	3,875,891		29.88	5,420,438		26.16
Granted	—		—	270,000		45.66	181,012		37.41
Exercised	(461,477	)	20.19	(700,418	)	22.60	(1,415,000	)	16.39
Forfeited	(136,165	)	34.57	(606,715	)	32.30	(312,559	)	30.84
Outstanding at end of year	2,241,116		35.10	2,838,758		28.53	3,875,891		29.88
Exercisable at end of year	1,169,584		27.38	1,080,306		27.38	1,164,214		21.19

Options granted in 2008 had been re-priced with exercise prices now being NOK90.83 ($14.09) and NOK104.64 ($16.24) per share; they may be exercised one third each year beginning 12 months after they were granted, and expire in May 2014. These same prices and dates apply to the options granted in 2009. Options granted in April 2010 had exercise price of NOK137.40 ($23.13), may be exercised one third after 12 or 15 months and expire in March/June 2015. Options granted in November 2010 had exercise prices of NOK192.90 ($31.4) for American citizens or residents and NOK185.20 ($31.06) for non-Americans. They may be exercised one fifth each year beginning 12 months after they were granted and expire in December 2015. Options granted in November 2011 had exercise prices of NOK202.10 ($34.68) and can be exercised one fourth at a time, after the first 18, 36, 48 and 60 months from the grant date. They expire in December 2016. Options granted during 2012 had exercise prices, ranging from NOK202.10 to NOK224.53. They have the same exercise schedule as the 2011's grant and expire between December 2016 and December 2017. Options granted in October 2013 had an exercise price of NOK273 and can be exercised one fourth at time after 13, 25, 37 and 49 months from the grant date.

The weighted average grant-date fair value of options granted during 2014 is nil (2013: $10.23 per share, 2012: $7.06 per share).

As of December 31, 2014 there was $3 million in unrecognized compensation costs relating to non-vested options granted under the Options Schemes (2013: $7 million, 2012: $11 million). This amount will be recognized as expense of $2 million in 2015, $1 million in 2016 and less than a million in 2017.

There were 2,241,116 options outstanding at December 31, 2014 (2013: 2,838,758). Their weighted average remaining contractual life was 21 months (2013: 43 months) and their weighted average fair value was $7.97 per option (2013: $8.27 per option). The weighted average parameters used in calculating these weighted average fair values are as follows: risk-free interest rate 2.03% (2013: 2.03%), volatility 26% (2013: 26.1%), dividend yield 0% (2013: 0%), option holder retirement rate 0% (2013: 0%) and expected term 4 years (2013: 4 years).

During 2014 the total intrinsic value of options exercised was $9 million (2013: $17 million, 2012: $32 million) on the day of exercise. The intrinsic value of options fully vested but not exercised at December 31, 2014 was zero since the weighted average exercise price per share exceeded the market price of our shares as at that date. The average remaining term of the options was 34 months.

Restricted Stock Units

On October 1, 2013, the Board of the Company approved 373,700 awards under the Company`s Restricted Stock Units, or RSU, plan. On November 7, 2013, the Board of our consolidated subsidiary, NADL, approved 278,778 awards under NADL`s RSU plan.

In December 2014, the Board of the Company approved 162,560 awards under the Company's RSU plan.

Under the terms of both plans, the holder of an award is entitled to receive a share in the respective company if still employed at the end of the three year vesting period. There is no requirement for the holder to pay for the share on grant date or upon vesting of the award. In addition the holder is entitled to receive an amount equal to the ordinary dividends declared and paid on the Company and NADL shares during the vesting period.

The fair value of the awards are calculated based on the market share price on grant date which for 2013 awards was $46.1 and NOK58 for the Company and NADL shares respectively. The fair value for the 2014 awards for the Company shares was $11.0.

The fair value of the awards expected to vest is recognized as compensation cost straight-line over the vesting period. All awards are currently expected to vest. Compensation cost related to the RSU plans of $5 million has been recognized in 2014 (2013: $2 million). As of December 31, 2014 there was $15 million in unrecognized compensation costs related to non-vested awards.

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Non-controlling interest (Tables)

12 Months Ended

Dec. 31, 2014

Noncontrolling Interest [Abstract]

Changes in non-controlling interest

Changes in non-controlling interest in 2014, 2013 and 2012 are as follows:

(In US$ millions)	Ship Finance International Ltd VIEs		North Atlantic Drilling Ltd		Seadrill Partners LLC		Asia Offshore Drilling Ltd	Sevan Drilling ASA	Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited	Total
December 31, 2011	215		110		—		—	—		325
Changes in 2012	20		10		69		—	—		99
Net income attributable to non-controlling interest in 2012	39		48		10		—	—		97
December 31, 2012	274		168		79		—	—	—	521
Changes in 2013	(220	)	(56	)	15		100	197	—	36
Net income attributable to non-controlling interest in 2013	24		61		21		11	16	—	133
December 31, 2013	78		173		115		111	213	—	690
Changes in 2014	(57	)	(4	)	(115	)	—	—	4	(172	)
Net income attributable to non-controlling interest in 2014	11		36		—		23	38	—	108
December 31, 2014	32		205		—		134	251	4	626

The following table summarizes the sale of the Company's drilling units to Seadrill Partners between its IPO until the deconsolidation of Seadrill Partners on January 2, 2014:

(In US$millions)	T-15	T-16	West Sirius		West Leo		Total
Adjusted sales price *	74	68	922		729		1,793
Less net assets transferred	5	—	(375	)	(116	)	(486	)
Excess of sales price over net assets transferred	79	68	547		613		1,307
Deemed contribution to Seadrill shareholders from non-controlling interest	19	16	105		69		209

* The Adjusted sales price above includes debt assumed and working capital adjustments.

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Variable Interest Entities (Summary of Sale and Leaseback Arrangements) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
West Taurus
Variable Interest Entity [Line Items]
Effective from	Nov 2008
Sale value (In $ millions)	$ 850
First repurchase option (In $ millions)	418
Month of first repurchase option	February 2015
Last repurchase option	149	[1]
Month of last repurchase Option	November 2023	[1]
Repurchase obligation	149
West Hercules
Variable Interest Entity [Line Items]
Effective from	Oct  2008
Sale value (In $ millions)	850
First repurchase option (In $ millions)	580
Month of first repurchase option	August 2011
Last repurchase option	135	[1]
Month of last repurchase Option	August 2023	[1]
Repurchase obligation	135
West Linus
Variable Interest Entity [Line Items]
Effective from	Jul 2013
Sale value (In $ millions)	600
First repurchase option (In $ millions)	370
Month of first repurchase option	June 2018
Last repurchase option	170	[1]
Month of last repurchase Option	June 2028	[1]
Repurchase obligation	$ 100

[1] For West Taurus and West Hercules repurchase obligations at the end of the lease terms have been agreed, at $149 million and $135 million, respectively. For West Linus the put option is $100 million.

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Related party transactions (Archer Transactions) (Details)	12 Months Ended														0 Months Ended							0 Months Ended		1 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2014 Archer Equity Method Investee USD ($)	Dec. 31, 2013 Archer Equity Method Investee USD ($)	Dec. 31, 2012 Archer Equity Method Investee USD ($)	Mar. 27, 2013 Archer Equity Method Investee USD ($)	Mar. 07, 2013 Archer Equity Method Investee USD ($)	Nov. 12, 2012 Archer Equity Method Investee USD ($)	Jun. 27, 2012 Archer Equity Method Investee USD ($)	Sep. 20, 2013 Loans Payable Metrogas Affiliated Entity USD ($)	Jul. 19, 2013 Loans Payable Metrogas Affiliated Entity USD ($)	Feb. 20, 2013 Loans Payable Archer Equity Method Investee USD ($)	Mar. 27, 2013 LIBOR Archer Equity Method Investee	Sep. 20, 2013 LIBOR Loans Payable Metrogas Affiliated Entity	Mar. 27, 2013 LIBOR Loans Payable Archer Equity Method Investee	Feb. 20, 2013 LIBOR Loans Payable Archer Equity Method Investee	Jul. 14, 2014 Financial Guarantee Archer Equity Method Investee USD ($)	Feb. 12, 2014 Financial Guarantee Archer Equity Method Investee USD ($)	Dec. 09, 2013 Financial Guarantee Archer Equity Method Investee USD ($)	Jul. 31, 2013 Financial Guarantee Archer Equity Method Investee USD ($)	Feb. 05, 2014 Property Lease Guarantee Archer Equity Method Investee	Feb. 05, 2014 Property Lease Guarantee Archer Equity Method Investee GBP (£)	Mar. 31, 2015 Subsequent Event Metrogas Affiliated Entity USD ($)
Related Party Transaction [Line Items]
Loan to related party							$ 10,000,000		$ 55,000,000	$ 20,000,000
Debt, face amount											99,000,000	1,500,000,000	43,000,000
Description of variable rate basis															LIBOR	LIBOR	LIBOR
Basis spread on variable rate															3.00%		5.00%
Maximum potential future payment	8,404,000,000	10,506,000,000		250,000,000				100,000,000										20,000,000	120,000,000	56,000,000			25,900,000
Guarantor Obligation, Period																						10 years
Maximum additional potential future payment																					100,000,000
Guarantee fee percentage				1.25%														1.25%		1.25%	1.25%
Basis spread on variable rate														5.00%
SG&A expenses from transactions with related party				4,000,000	0	0
Related party expense	25,800,000			3,700,000	0	0
Investment income, net	63,000,000	24,000,000	25,000,000	0	700,000	0
Loans and leases receivable, gross																								50,000,000
Interest receivable																								1,000,000
Payments to acquire loans receivable																								$ 51,000,000

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Disposals of businesses and deconsolidation of subsidiary (Gain on Deconsolidation) (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended					0 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012	Jan. 02, 2014		Dec. 13, 2013	Oct. 31, 2013	Oct. 18, 2013	Oct. 24, 2012
Schedule of Investments [Line Items]
Goodwill	$ 604		$ 1,200		$ 1,320
Gain on deconsolidation of Seadrill Partners	2,339		0		0
Investment in associated companies	2,898		140
Seadrill Operating LP
Schedule of Investments [Line Items]
Ownership interest, percentage	42.00%
Seadrill Partners LLC
Schedule of Investments [Line Items]
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures						1,260
Goodwill						240
Gain on deconsolidation of Seadrill Partners						2,339
Ownership percentage			62.35%					62.35%	77.47%	77.47%	75.67%
Seadrill Capricorn Holdings LLC
Schedule of Investments [Line Items]
Ownership interest, percentage	49.00%
SFL Deepwater Ltd
Schedule of Investments [Line Items]
Ownership interest, percentage	39.00%					39.00%
Seadrill Mobile Units (Nigeria) Ltd
Schedule of Investments [Line Items]
Ownership interest, percentage	29.00%					39.00%
Seadrill UK Ltd
Schedule of Investments [Line Items]
Ownership percentage						100.00%
Seadrill Partners LLC
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners						3,724	[1]
Carrying amount of non controlling interest						115
Investment owned, including noncontrolling interest						3,839
Investment owned, ownership percentage	28.60%
Investment in associated companies	2,809
Common Unit | Seadrill Partners LLC
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners						671	[2]
Common units issued to the Company						21,500,000
Investment owned, ownership percentage						48.30%
Subordinated Units | Seadrill Partners LLC
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners						427	[3]
Common units issued to the Company						16,500,000
Ownership interest, percentage	18.00%					100.00%
Investment in associated companies	412		0
Incentive Distribution Rights | Seadrill Partners LLC
Schedule of Investments [Line Items]
Fair value of investment in Seadrill Partners						244	[4]
Investment owned, ownership percentage						100.00%
Non-economic ownership interest, percentage						0.00%
Investment in associated companies	$ 244	[5]	$ 0	[5]

[1] Fair value of investments and continuing involvement with investees

[2] Common units (marketable securities)As of the deconsolidation date, the Company held 21.5 million common units representing 48.3% of the common units in issue as a class. The Company's holding in the voting common units of Seadrill Partners are accounted for as marketable securities on the basis that during the subordination period the common units have preferential dividend and liquidation rights, and therefore do not represent ‘in-substance common stock’ as defined by US GAAP. These securities have been recognized on January 2, 2014 at the quoted market price and are re-measured at fair value each reporting period. Any unrealized gains and losses on these securities are recognized directly in equity as a component of other comprehensive income unless an unrealized loss is considered "other-than-temporary", in which case it is transferred to the statement of operations and realized. Dividend income from the common units is recognized in the consolidated statement of operations.

[3] Subordinated unitsAs of the deconsolidation date the Company held 16.5 million units representing 100% of the subordinated units. The Company's holding in the subordinated units of Seadrill Partners are accounted for under the equity method on the basis that the subordinated units are considered to be ‘in-substance common stock’. The subordination period will end on the satisfaction of various tests as prescribed in the Operating Agreement of Seadrill Partners, but will not end before September 30, 2017 except upon removal of the Seadrill Member. Upon the expiration of the subordination period, the subordinated units will convert into common units. The fair value of the subordinated units on January 2, 2014, was determined based on the quoted market price of the listed common units as of the deconsolidation date, but discounted for their non-tradability and subordinated dividend and liquidation rights during the subordination period. Under the equity method the Company recognizes its share of Seadrill Partners’ earnings allocable to the subordinated units, less amortization of the basis difference (see (c) below), through the ‘share in results of associated companies’ line in the consolidated statement of operations. Dividends are recognized as a reduction in investment carrying value.

[4] Seadrill Member Interest and IDRsThe Seadrill Member Interest (which is a 0% non-economic interest) holds the rights to 100% of the IDRs and is unable to trade these until the end of the subordination period without the approval of a majority of unaffiliated common unitholders. The Seadrill Member Interest and the IDRs in Seadrill Partners are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured. The fair value of the Company's interest in the Seadrill Member and the attached IDRs as of January 2, 2014 was determined using a Monte Carlo simulation method. The method takes into account the cash distribution waterfall, historical volatility, dividend yield and share price of the common units as of the deconsolidation date. Distributions to the IDRs are recognized in the consolidated statement of operations.

[5] The Seadrill Partners - Seadrill Member Interest and IDR's are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured. For more details on the deconsolidation of Seadrill Partners see Note 11.

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Disposals of businesses and deconsolidation of subsidiary (Tables)

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Investment Holdings, Schedule of Investments

The gain recognized on deconsolidation, which all relates to the remeasurement of the Company's retained interests in Seadrill Partners and its subsidiaries is as follows:

(In US$ millions)	As at January 2, 2014
Fair value of investment in Seadrill Partners (a)	3,724
Carrying value of the non-controlling interest in Seadrill Partners	115
Subtotal	3,839
Less:
Carrying value of Seadrill Partners’ net assets	1,260
Goodwill allocated to Seadrill Partners	240
Gain on deconsolidation of Seadrill Partners	2,339

(a)Fair value of investments and continuing involvement with investees

The estimated fair value of the Company's residual interest in Seadrill Partners comprised of the following:

(In US$ millions)	As of January 2, 2014
Common units (i)	671
Subordinated units (ii)	427
Seadrill Member Interest and Incentive Distribution Rights ("IDRs") (iii)	244
Direct ownership interests (iv)	2,382
Total	3,724

(i) Common units (marketable securities)

As of the deconsolidation date, the Company held 21.5 million common units representing 48.3% of the common units in issue as a class. The Company's holding in the voting common units of Seadrill Partners are accounted for as marketable securities on the basis that during the subordination period the common units have preferential dividend and liquidation rights, and therefore do not represent ‘in-substance common stock’ as defined by US GAAP.

These securities have been recognized on January 2, 2014 at the quoted market price and are re-measured at fair value each reporting period. Any unrealized gains and losses on these securities are recognized directly in equity as a component of other comprehensive income unless an unrealized loss is considered "other-than-temporary", in which case it is transferred to the statement of operations and realized. Dividend income from the common units is recognized in the consolidated statement of operations.

(ii) Subordinated units

As of the deconsolidation date the Company held 16.5 million units representing 100% of the subordinated units. The Company's holding in the subordinated units of Seadrill Partners are accounted for under the equity method on the basis that the subordinated units are considered to be ‘in-substance common stock’. The subordination period will end on the satisfaction of various tests as prescribed in the Operating Agreement of Seadrill Partners, but will not end before September 30, 2017 except upon removal of the Seadrill Member. Upon the expiration of the subordination period, the subordinated units will convert into common units.

The fair value of the subordinated units on January 2, 2014, was determined based on the quoted market price of the listed common units as of the deconsolidation date, but discounted for their non-tradability and subordinated dividend and liquidation rights during the subordination period. Under the equity method the Company recognizes its share of Seadrill Partners’ earnings allocable to the subordinated units, less amortization of the basis difference (see (c) below), through the ‘share in results of associated companies’ line in the consolidated statement of operations. Dividends are recognized as a reduction in investment carrying value.

(iii) Seadrill Member Interest and IDRs

The Seadrill Member Interest (which is a 0% non-economic interest) holds the rights to 100% of the IDRs and is unable to trade these until the end of the subordination period without the approval of a majority of unaffiliated common unitholders. The Seadrill Member Interest and the IDRs in Seadrill Partners are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured.

The fair value of the Company's interest in the Seadrill Member and the attached IDRs as of January 2, 2014 was determined using a Monte Carlo simulation method. The method takes into account the cash distribution waterfall, historical volatility, dividend yield and share price of the common units as of the deconsolidation date. Distributions to the IDRs are recognized in the consolidated statement of operations.

iv) Direct Ownership interests

The Company held the following ownership interests in entities controlled by Seadrill Partners as of the date of deconsolidation:

• 70% ownership in Seadrill Operating LP

Seadrill Operating LP is a limited partnership and is controlled by its General Partner, Seadrill Operating GP LLC, which is wholly owned by Seadrill Partners.

• 49% ownership in Seadrill Capricorn Holdings LLC

Seadrill Capricorn Holdings LLC is a limited liability company. There is only one class of member interest which is deemed to represent voting common stock.

• 39% ownership of Seadrill Deepwater Drillship Ltd. and 39% (indirect) ownership of Seadrill Mobile Units (Nigeria) Ltd.

The Company held a 39% direct ownership interest in Seadrill Deepwater Drillship Ltd. and a 39% indirect ownership of Seadrill Mobile Units Ltd., through its 100% subsidiary, Seadrill UK Ltd. Both entities are limited companies and only have one class of stock, which is deemed to represent voting common stock.

All of the Company's direct ownership interests are accounted for under the equity method as the Company is deemed to have significant influence over these entities through its voting rights and by virtue of Seadrill’s representation on the board of Seadrill Partners.

The fair values of the four ownership interests described above have been determined using a discounted cash-flow (“DCF”) methodology, using discounted cash-flow forecasts.

Percentages of ownership and book value of investments recorded using equity method

The total investments in Seadrill Partners recorded under the equity method of $2,809 million included the Company's share of the basis difference between the total fair value and the total underlying book value of Seadrill Partners' assets at the deconsolidation date are as follows:

(In US$ millions)	Book value	Fair value	Basis Difference	Seadrill's share of basis difference (1)
Drilling units	3,444	5,245	1,801	1,295
Drilling contracts	—	170	170	142
Goodwill	—	1,214	1,214	352
Total	3,444	6,629	3,185	1,789

(1) Seadrill's share of the basis difference relates to both its investment in the subordinated units of Seadrill Partners, and its direct ownership interests in various subsidiaries of Seadrill Partners, all of which investments are accounted for under the equity method. The total basis difference has been assigned based on Seadrill's proportional ownership interest in each investee. In the case of Seadrill's investment in the subordinated units of Seadrill Partners, the proportional allocation to the subordinated units was based on the relative fair values of the various equity interests in Seadrill Partners.

The Company has the following investments that are or have been recorded using the equity method for the periods presented in these financial statements:

	December 31, 2014		December 31, 2013		December 31, 2012
Varia Perdana Sdn Bhd ("Varia Perdana")	—	%	—	%	49.0	%
Tioman Drilling Company Sdn Bhd ("Tioman Drilling")	—	%	—	%	49.0	%
Archer	39.9	%	39.9	%	39.9	%
Asia Offshore Drilling Ltd ("AOD")	(1)		(1)		66.2	%
Sevan Drilling ASA ("Sevan Drilling")	(1)		(1)		28.5	%
Seabras Sapura Participacoes SA ("Seabras Sapura Participacoes")	50.0	%	50.0	%	50.0	%
Seabras Sapura Holding GmbH ("Seabras Sapura Holdco")	50.0	%	50.0	%	50.0	%
Itaunas Drilling B.V. ("Itaunas Drilling")	30.0	%	30.0	%	30.0	%
Camburi Drilling B.V. ("Camburi Drilling")	30.0	%	30.0	%	30.0	%
Sahy Drilling B.V. ("Sahy Drilling")	30.0	%	30.0	%	30.0	%
Seadrill Partners ("SDLP")	(2)		(1)		(1)

(1) During these periods the relevant investment was not accounted for under the equity method

(2) As of the deconsolidation date of Seadrill Partners on January 2, 2014, we have recognized our ownership interests in Seadrill Partners and direct ownership interests in Seadrill Partners subsidiaries, at fair value at the date of deconsolidation. Refer to Seadrill Partners paragraph below for additional information.

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

(In US$ millions)	November 4, 2014
Enterprise value	900
Deferred consideration receivable	74
Less: Debt assumed	(433	)
Purchase price	541
Less: Working capital adjustment	(6	)
Adjusted purchase price	535
Cash	467
Deferred consideration receivable	74
Less: Working capital payable	(6	)
Fair value of purchase consideration	535
Less: net carrying value of assets and liabilities	(303	)
Less: allocated goodwill to subsidiaries	(41	)
Gain on sale	191

The gain is calculated as follows:

(In US$ millions)	December 31, 2013
Fair value of consideration received	2,600
Carry value of assets and liabilities	1,324
Other related costs to sale	20
Total gain on sale	1,256

(In US$ millions)	March 21, 2014
Enterprise value	1,240
Less: Debt assumed	(443	)
Purchase price	797
Less: Working capital adjustment	(331	)
Adjusted purchase price	466
Cash	697
Discount note issued	100
Less: Working capital payable	(331	)
Fair value of purchase consideration	466
Less: net carrying value of assets and liabilities	7
Less: allocated goodwill to subsidiaries	(33	)
Gain on sale	440

Assets and liabilities held in the Company's consolidated balance sheet included as held for sale are shown below:

(In US$ millions)	As at December 31, 2014
ASSETS
Current assets
Cash and cash equivalents	27
Accounts receivables, net	78
Deferred tax assets	9
Other current assets	20
Total current assets	134
Non-current assets
Drilling units	965
Deferred tax assets LT	5
Goodwill	49
Other non-current assets	86
Total non-current assets	1,105
Total assets	1,239
LIABILITIES
Current liabilities
Trade accounts payable	(2	)
Other current liabilities	(56	)
Total current liabilities	(58	)
Non-current liabilities
Other non-current liabilities	(50	)
Total non-current liabilities	(50	)
Total liabilities	(108	)

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Other revenues (Tables)

12 Months Ended

Dec. 31, 2014

Revenues [Abstract]

Other revenues

Other revenues consist of the following:

	Year ended December 31
(In US$ millions)	2014	2013		2012
Amortization of unfavorable contracts	130	67		—
Amortization of favorable contracts	—	(2	)	(12	)
Revenues related party	97	2		15
External management fees with third parties	62	45		—
Total	289	112		3

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Assets Held For Sale

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Assets held for sale

Assets held for sale

During the year ended December 31, 2014, the Company entered into a joint venture agreement with an investment fund controlled by Fintech Advisory Inc. (Fintech), for the purpose of owning and managing certain jack-up drilling units located in Mexico under contract with Pemex. The West Oberon, West Intrepid, West Defender, West Courageous and West Titania jack-up drilling rigs were included within the joint venture. The transaction was completed on March 10, 2015, when Fintech subscribed for a 50% ownership interest in SeaMex Limited, which was previously 100% owned by the Company.

As a result of the transaction the Company no longer controls the entities that own and operate these jack-up drilling units, and accordingly the Company will deconsolidate these entities as of March 10, 2015, and subsequently recognize its 50% investment in the joint venture at fair value. The assets and liabilities held within the Company’s consolidated balance sheet as at December 31, 2014 that are related to the disposal group have been reclassified as held for sale and depreciation has ceased for the related assets. The Company has not presented this disposal group as discontinued operations in our statement of operations it will continue to hold significant influence over the joint venture.

Assets and liabilities held in the Company's consolidated balance sheet included as held for sale are shown below:

(In US$ millions)	As at December 31, 2014
ASSETS
Current assets
Cash and cash equivalents	27
Accounts receivables, net	78
Deferred tax assets	9
Other current assets	20
Total current assets	134
Non-current assets
Drilling units	965
Deferred tax assets LT	5
Goodwill	49
Other non-current assets	86
Total non-current assets	1,105
Total assets	1,239
LIABILITIES
Current liabilities
Trade accounts payable	(2	)
Other current liabilities	(56	)
Total current liabilities	(58	)
Non-current liabilities
Other non-current liabilities	(50	)
Total non-current liabilities	(50	)
Total liabilities	(108	)

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
Net income	$ 4,087	$ 2,786	$ 1,205
Other comprehensive income/(loss), net of tax:
Change in unrealized (loss)/gain on marketable securities, net	(982)	333	205
Change in unrealized foreign exchange differences	(22)	6	13
Change in actuarial (loss)/gain relating to pension	(28)	(7)	(25)
Change in unrealized gain/(loss) on interest rate swaps in VIEs and subsidiaries	1	3	20
Other comprehensive (loss)/income:	(1,031)	335	213
Total comprehensive income for the period	3,056	3,121	1,418
Comprehensive income attributable to the non-controlling interest	53	134	111
Comprehensive income attributable to the parent	$ 3,003	$ 2,987	$ 1,307

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Interest expense (Notes)

12 Months Ended

Dec. 31, 2014

Interest Expense [Abstract]

Interest Expense

Interest expense

	Year ended December 31
(In US$ millions)	2014		2013		2012
Gross interest expense	548		540		416
Capitalized interest	(70	)	(95	)	(76	)
Net interest expense	478		445		340

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	May 10, 2005
Equity
Common shares, par value (in dollars per share)	$ 2.00	$ 2.00	$ 2.00	$ 2.00
Common shares, shares authorized (in shares)	800,000,000	800,000,000	800,000,000
Common shares, shares outstanding (in shares)	492,759,938	468,978,492	469,178,074

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Related party transactions (Frontline, Sapura and Other Transactions) (Details)	12 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2014 Frontline Affiliated Entity USD ($)	Dec. 31, 2013 Frontline Affiliated Entity USD ($)	Dec. 31, 2012 Frontline Affiliated Entity USD ($)	Dec. 31, 2014 Sapura Equity Method Investee USD ($)	Dec. 31, 2013 Sapura Equity Method Investee USD ($)	Dec. 31, 2012 Sapura Equity Method Investee USD ($)	May 31, 2014 Sapura Equity Method Investee USD ($)	May 31, 2014 Sapura Equity Method Investee EUR (€)	Dec. 31, 2014 Seabras Sapura Participacoes	Dec. 31, 2013 Seabras Sapura Participacoes	Dec. 31, 2012 Seabras Sapura Participacoes
Related Party Transaction [Line Items]
Related party expense	$ 25,800,000			$ 4,000,000	$ 2,000,000	$ 2,000,000
Ownership interest, percentage												50.00%	50.00%	50.00%
Notes receivable										11,000,000	4,000,000
Basis spread on variable rate										3.40%	3.40%
Interest income, related party							0	0	0
Revenues related party	$ 97,000,000	$ 2,000,000	$ 15,000,000

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Marketable securities (Tables)

12 Months Ended

Dec. 31, 2014

Marketable Securities [Abstract]

Marketable securities held

Marketable securities held by the Company are equity securities considered to be available-for-sale securities. The following tables summarize the carrying values of the marketable securities in the balance sheet:

	As at December 31, 2014
(In US$ millions)	Original cost	Cumulative unrealized fair value gains/(losses)	Cumulative other than temporary impairments	Carrying value
Petromena	—	—	—	—
Sapura Kencana	373	(48)	—	325
Seadrill Partners - Common Units	821	(395)	—	426
Total	1,194	(443)	—	751

	As at December 31, 2013
(In US$ millions)	Original cost	Cumulative unrealized fair value gains/(losses)	Cumulative other than temporary impairments	Carrying value
Petromena	20	—	(16)	4
Sapura Kencana	539	539	—	1,078
Total	559	539	(16)	1,082

Marketable securities and changes in carrying value

The following table summarizes the gross realized gains and losses from purchases and sales of marketable securities during the years presented:

	Year ended December 31, 2014
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Petromena	6	—	—	—	10	—	—
Sapura Kencana	—	—	—	(456)	297	—	131
Seadrill Partners - Common Units	—	—	—	(395)	—	821	—

	Year ended December 31, 2013
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Petromena	—	—	—	—	—	—	—
Sapura Kencana	—	—	333	—	—	416	—

	Year ended December 31, 2012
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Other	—	(19)	—	—	—	—	(1)
Sapura Kencana	—	—	205	—	197	237	(84)

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating revenues
Contract revenues	$ 4,518	$ 4,892	$ 4,295
Reimbursable revenues	190	278	180
Other revenues	289	112	3
Total operating revenues	4,997	5,282	4,478
Gain on disposals	632	61	0
Operating expenses
Vessel and rig operating expenses	1,938	1,977	1,656
Reimbursable expenses	172	257	166
Depreciation and amortization	693	711	615
Loss on impairment	232	0	0
General and administrative expenses	315	300	250
Total operating expenses	3,350	3,245	2,687
Operating income	2,279	2,098	1,791
Financial items
Interest income	63	24	25
Interest expense	(478)	(445)	(340)
Share in results from associated companies (net of tax)	89	(223)	(220)
(Loss)/gain on derivative financial instruments	(497)	133	3
Net loss on debt extinguishment	(54)	0	0
Foreign exchange gain/(loss)	164	52	(70)
Gain on realization of marketable securities	131	0	85
Gain on deconsolidation of Seadrill Partners	2,339	0	0
Gain on sale of tender rig business	0	1,256	0
Other financial items	70	45	163
Total financial items and other income and expense	1,827	842	(354)
Income before income taxes	4,106	2,940	1,437
Income tax expense	(19)	(154)	(232)
Net income	4,087	2,786	1,205
Net income attributable to the non-controlling interest	108	133	97
Net income attributable to the parent	$ 3,979	$ 2,653	$ 1,108
Basic earnings per share (U.S. dollar)	$ 8.32	$ 5.66	$ 2.37
Diluted earnings per share (U.S. dollar)	$ 8.30	$ 5.47	$ 2.34
Declared regular dividend per share (U.S. dollar)	$ 2	$ 3.72	$ 2.54
Declared extraordinary dividend per share (U.S. dollar)	$ 0	$ 0	$ 0.97

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Gain on disposals (Tables)

12 Months Ended

Dec. 31, 2014

Proceeds from Sale of Productive Assets [Abstract]

Gain on sale of assets

The Company has recognized the following gains on disposals:

(In US$ millions)	Net proceeds	Book value on disposal	Gain
Year ended December 31, 2014:
Sale of West Auriga business	466	26	440
Sale of West Vela business	536	344	192
Total for year ended December 31, 2014	1,002	370	632
Year ended December 31, 2013:
Sale of Jack-up rig West Janus	73	12	61
Total for year ended December 31, 2013	73	12	61
Year ended December 31, 2012:
None	—	—	—
Total for year ended December 31, 2012	—	—	—

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Equity offerings and drilling unit sale transactions with Seadrill Partners (Tables)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Issuances of common units since IPO

The following table summarizes the issuances of common units for Seadrill Partners between their IPO in October 2012 until the deconsolidation of Seadrill Partners on January 2, 2014:

Date	Number of Common Units Issued to the Public	Number of Common Units Issued to Seadrill	Offering Price ($)	Gross proceeds from public ($'millions)	Net proceeds from public ($'millions)	Seadrill's ownership after the offering
October 24, 2012 (IPO)	10,062,500	14,752,525	22.00	221	203	75.67	%
October 18, 2013	—	3,310,622	32.29	—	—	77.47	%
December 13, 2013	12,880,000	3,394,916	29.50	380	365	62.35	%

Drilling units

Changes in non-controlling interest in 2014, 2013 and 2012 are as follows:

(In US$ millions)	Ship Finance International Ltd VIEs		North Atlantic Drilling Ltd		Seadrill Partners LLC		Asia Offshore Drilling Ltd	Sevan Drilling ASA	Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited	Total
December 31, 2011	215		110		—		—	—		325
Changes in 2012	20		10		69		—	—		99
Net income attributable to non-controlling interest in 2012	39		48		10		—	—		97
December 31, 2012	274		168		79		—	—	—	521
Changes in 2013	(220	)	(56	)	15		100	197	—	36
Net income attributable to non-controlling interest in 2013	24		61		21		11	16	—	133
December 31, 2013	78		173		115		111	213	—	690
Changes in 2014	(57	)	(4	)	(115	)	—	—	4	(172	)
Net income attributable to non-controlling interest in 2014	11		36		—		23	38	—	108
December 31, 2014	32		205		—		134	251	4	626

The following table summarizes the sale of the Company's drilling units to Seadrill Partners between its IPO until the deconsolidation of Seadrill Partners on January 2, 2014:

(In US$millions)	T-15	T-16	West Sirius		West Leo		Total
Adjusted sales price *	74	68	922		729		1,793
Less net assets transferred	5	—	(375	)	(116	)	(486	)
Excess of sales price over net assets transferred	79	68	547		613		1,307
Deemed contribution to Seadrill shareholders from non-controlling interest	19	16	105		69		209

* The Adjusted sales price above includes debt assumed and working capital adjustments.

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Risk management and financial instruments - Rollforward of Level 3 Activity (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 4
Realization	6
Proceeds on disposal	(10)
Ending balance	$ 0

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Long-term debt (Debt Covenants) (Details)							12 Months Ended			12 Months Ended
	Sep. 20, 2013 Senior Unsecured Bond US $500 Million Fixed Interest Bond USD ($)	Oct. 31, 2013 Senior Unsecured Bond NOK1,500 Million Floating Interest Rate Bond NOK	Dec. 31, 2014 Credit facility, International Loans, 1 USD ($)	Oct. 17, 2013 Credit facility, International Loans, 1 USD ($)	Sep. 30, 2012 $1,000 million fixed interest bond USD ($)	Oct. 31, 2010 $350 million fixed interest rate bond USD ($)	Dec. 31, 2014 Bonds	Mar. 20, 2013 US$1,450 facility USD ($)	Dec. 31, 2012 US$440 facility USD ($)	Dec. 31, 2014 Bank Loans USD ($)	Jan. 31, 2014 North Atlantic Drilling Senior Notes US$600 Million Senior Unsecured Bond USD ($)	Dec. 31, 2014 Ship Finance Variable Interest Entities USD ($)	Feb. 28, 2015 Subsequent Event Senior Unsecured Bond NOK1,500 Million Floating Interest Rate Bond NOK	Dec. 31, 2014 Secured Debt US$2,000 facility (North Atlantic Drilling) USD ($)	Apr. 30, 2011 Secured Debt US$2,000 facility (North Atlantic Drilling) USD ($)
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 500,000,000	1,500,000,000	$ 475,000,000	$ 475,000,000	$ 1,000,000,000	$ 350,000,000		$ 1,450,000,000	$ 440,000,000		$ 600,000,000		1,500,000,000.0	$ 2,000,000,000	$ 2,000,000,000
Debt covenant, cash and cash equivalents										$ 150,000,000		$ 25,000,000
Debt covenant, total liabilities to total assets												0.8
Debt covenant, EBITDA to interest expense ratio										2.5
Debt covenant, current assets to current liabilities ratio										1
Debt covenant, percentage of shares in listed companies owned										20.00%
Equity ratio (in hundredths)							30.00%			30.00%
Debt covenant, net debt to EBITDA										4.5

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Risk management and financial instruments (Tables)

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest rate swap and cross currency interest rate swap agreements

The Company's interest rate swap agreements as at December 31, 2014, were as follows:

Maturity date	Total outstanding principal as at December 31, 2014	Receive rate	Pay rate range
	(In US$ millions)
Expiring in 2015	50	3 month LIBOR	4.63%	4.63%
Expiring in 2016	1,350	3 month LIBOR	2.14%	3.36%
Expiring in 2016	35	6 month LIBOR	3.83%	3.83%
Expiring in 2017	1,428	3 month LIBOR	0.74%	3.8%
Expiring in 2018	1,000	3 month LIBOR	2.83%	3.34%
Expiring in 2019	707	3 month LIBOR	1.11%	1.36%
Expiring in 2020	3,141	3 month LIBOR	1.36%	2.19%
Expiring in 2022	207	3 month LIBOR	1.38%	1.38%
Total	7,918

Schedule of Derivatives, by Variable Interest Entities

Below is a summary of the notional amount, fixed interest rate payable and duration of the outstanding principal as of December 31, 2014.

Variable interest entity	Outstanding principal as at December 31, 2014	Receive rate	Pay rate	Length of contract
	(In US$ millions)
SFL Linus Limited (West Linus)	4.0	1 month LIBOR	2.01%	Mar 2014 - Oct 2018
SFL Linus Limited (West Linus)	4.0	2 month LIBOR	2.01%	Mar 2014 - Nov 2018
SFL Linus Limited (West Linus)	215.7	3 month LIBOR	1.77%	Dec 2013 - Dec 2018

Carrying value and estimated fair value of financial instruments

The carrying value and estimated fair value of the Company's financial instruments at December 31, 2014 and December 31, 2013 are as follows:

	December 31, 2014		December 31, 2013
(In US$ millions)	Fair value	Carrying value	Fair value	Carrying value
Cash and cash equivalents	831	831	744	744
Restricted cash	449	449	318	318
Current portion of floating rate debt	1,928	1,928	1,315	1,315
Long-term portion of floating rate debt	7,713	7,713	8,793	8,793
Current portion of fixed rate CIRR loans	39	39	47	47
Long term portion of fixed rate CIRR loans	84	84	150	150
Fixed interest convertible bonds	—	—	704	577
Fixed interest bonds - short term	323	342	—	—
Fixed interest bonds - long term	2,015	1,892	1,837	1,842
Floating interest bonds - short term	—	—	204	204
Floating interest bonds - long term	483	622	541	538

Financial instruments measured at fair value on a recurring basis

Financial instruments that are measured at fair value on a recurring basis:

	Fair value	Fair value measurements at reporting date using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(In US$ millions)	December 31, 2014	(Level 1)	(Level 2)	(Level 3)
Assets:
Marketable securities	751	751	—	—
Interest rate swap contracts – short term receivable	5	—	5	—
Total assets	756	751	5	—
Liabilities:
Interest rate swap contracts – short term payable	139	—	139	—
Interest rate swap contracts – long term payable	3	—	3	—
Cross currency interest rate swap contracts – short term payable	201	—	201	—
Foreign exchange forwards – short term payable	27	—	27	—
Other derivative instruments – short term payable	5	—	5	—
Total liabilities	375	—	375	—

	Fair value	Fair value measurements at reporting date using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(In US$ millions)	December 31, 2013	(Level 1)	(Level 2)	(Level 3)
Assets:
Marketable securities	1,082	1,078	—	4
Interest rate swap contracts – short term receivable	5	—	5	—
Foreign exchange forwards – short term receivable	2	—	2	—
Other derivative instruments – short term receivable	2	—	2	—
Total assets	1,091	1,078	9	4
Liabilities:
Interest rate swap contracts – short term payable	94	—	94	—
Interest rate swap contracts – long term payable	2	—	2	—
Cross currency swap contracts – short term payable	46	—	46	—
Foreign exchange forwards – short term payable	3	—	3	—
Other derivative instruments – short term payable	2	—	2	—
Total liabilities	147	—	147	—

Roll forward of fair value measurements using unobservable inputs (Level 3)

Roll forward of fair value measurements using unobservable inputs (Level 3) relating to the Petromena Bond. Please refer to Note 14 for additional information:

(In US$ millions)
Beginning balance January 1, 2014	4
Realization	6
Proceeds on disposal	(10	)
Closing balance December 31, 2014	—

Schedules of Concentration of Risk, by Risk Factor

Major customers

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

In the years ended December 31, 2014, 2013 and 2012, the Company had the following customers with contract revenues greater than 10% in any of the years presented:

(US$ millions)	2014		2013		2012
Petroleo Brasileiro S.A ("Petrobras")	20	%	16	%	15	%
Total S.A Group ("Total")	13	%	14	%	14	%
Statoil ASA ("Statoil")	13	%	14	%	9	%
Exxon Mobil Corp ("Exxon")	10	%	12	%	11	%
Royal Dutch Shell Group ("Shell")	2	%	7	%	10	%

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Related party transactions (Debt Arrangements and Other Revenue and Expenses) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended	1 Months Ended
	Dec. 31, 2014	Mar. 31, 2014	Oct. 31, 2012	May 31, 2013	Dec. 13, 2013	Dec. 31, 2013
Related Party Transaction [Line Items]
Other Revenues	$ 43.2
Related party expense	25.8
Seadrill Partners LLC | Equity Method Investee
Related Party Transaction [Line Items]
Related party expense	82.1
Seadrill Partners LLC | Equity Method Investee | Vendor Financing Loan
Related Party Transaction [Line Items]
Loans receivable, related parties	109.5			109.5
Seadrill Partners LLC | Revolving Credit Facility | Equity Method Investee
Related Party Transaction [Line Items]
Remaining borrowing capacity		100	300
Debt instrument term			5 years
Commitment fee (as a percent)			2.00%
Repayments of long-term lines of credit		125.9
Long-term Line of Credit	0
Seadrill Partners LLC | LIBOR | Equity Method Investee | Vendor Financing Loan
Related Party Transaction [Line Items]
Basis spread on variable rate				5.00%
Seadrill Partners LLC | LIBOR | Revolving Credit Facility | Equity Method Investee
Related Party Transaction [Line Items]
Description of variable rate basis			LIBOR
Basis spread on variable rate			5.00%
US$229.9 Million Notes Receivable | Seadrill Partners LLC | Equity Method Investee
Related Party Transaction [Line Items]
Receivable with imputed interest, net amount					229.9
Receivable with Imputed Interest, face amount					238.5
US$70 Million Notes Receivable | Seadrill Partners LLC | Equity Method Investee
Related Party Transaction [Line Items]
Receivable with imputed interest, net amount						70.0
Receivable with Imputed Interest, face amount						73.0
US$100 Million Notes Receivable | Seadrill Partners LLC | Equity Method Investee
Related Party Transaction [Line Items]
Receivable with imputed interest, net amount		100.0
Receivable with Imputed Interest, face amount		$ 103.7

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Equity offerings and drilling unit sale transactions with Seadrill Partners (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended			1 Months Ended	12 Months Ended		0 Months Ended	1 Months Ended
	Dec. 13, 2013	Oct. 18, 2013	Oct. 24, 2012	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	May 17, 2013	Oct. 31, 2013
Seadrill Partners LLC
Drilling units [Line Items]
Offering Price	$ 29.5	$ 32.29	$ 22.00
Gross proceeds from public	$ 380	$ 0	$ 221
Net proceeds from public	365	0	203
Non-controlling Interest
Drilling units [Line Items]
Proceeds from Issuance of Common Limited Partners Units And Impact on Non-Controlling Interest		19		83		102
Issuance of common units by Seadrill Partners LLC to public					137
West Leo
Drilling units [Line Items]
Ownership percentage disposed	30.00%
Sale price	1,250
Debt assumed	486
Working capital adjustments	35
West Sirius
Drilling units [Line Items]
Ownership percentage disposed	51.00%
Sale price	1,035
Debt assumed	220
Working capital adjustments	(107)
T-16
Drilling units [Line Items]
Ownership percentage disposed		100.00%
Sale price		200
Debt assumed		93
Working capital adjustments		39
T-15
Drilling units [Line Items]
Ownership percentage disposed							100.00%
Sale price							210
Debt assumed							101
Working capital adjustments							35
T-15 | Seadrill Partners LLC
Drilling units [Line Items]
Loans receivable, related parties							$ 110.0
Stock Issued to Reporting Entity | Seadrill Partners LLC
Drilling units [Line Items]
Number of common units issued	3,394,916	3,310,622	14,752,525	3,394,916				3,310,622
Underwrite Placement | Seadrill Partners LLC
Drilling units [Line Items]
Number of common units issued	1,680,000
Stock Issued to Public | Seadrill Partners LLC
Drilling units [Line Items]
Number of common units issued	12,880,000	0	10,062,500	12,880,000

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Risk management and financial instruments - Concentration Risk (Details) (Contract Revenues, Customer Concentration Risk)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Petrobras
Concentration Risk [Line Items]
Concentration risk percentage	20.00%	16.00%	15.00%
Total
Concentration Risk [Line Items]
Concentration risk percentage	13.00%	14.00%	14.00%
Statoil
Concentration Risk [Line Items]
Concentration risk percentage	13.00%	14.00%	9.00%
Exxon
Concentration Risk [Line Items]
Concentration risk percentage	10.00%	12.00%	11.00%
Shell
Concentration Risk [Line Items]
Concentration risk percentage	2.00%	7.00%	10.00%

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Goodwill and other intangible assets

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and other intangible assets

Goodwill and other intangible assets and liabilities

Goodwill

The goodwill balance and changes in the carrying amount is as follows:

(In US$ millions)	December 31, 2014		December 31, 2013
Net book balance at January 1	1,200		1,320
Disposals and deconsolidations	(315	)	(120	)
Impairment of goodwill	(232	)	—
Re-classified as assets held for sale	(49	)	—
Net book balance of December 31	604		1,200

Of the $315 million derecognized through disposals and deconsolidations, $286 million related to the Floater segment and $29 million related to the tender rig segment (2013: $120 million related to the tender rig segment). The $49 million reclassified as assets held for sale relates to the Jack-up segment.

For more details on the deconsolidation of Seadrill Partners and the disposal of subsidiaries see Note 11, and details on Assets held for sale see Note 37.

Period ended December 31, 2014

The Company performed its annual goodwill impairment test as of December 31, 2014 for both its reporting units; Floaters and Jack-ups. The Company elected to bypass the qualitative assessment given the recent decline in market conditions in the offshore drilling industry. The annual impairment test resulted in the Company recognizing an impairment loss of $232 million relating to its Jack-up reporting unit. The impairment loss relating to the Jack-up reporting unit is primarily due to declining day rates and future market expectations for day rates in the sector. These have been trending lower as a result of the recent decline in the price of oil, which has impacted the spending plans of our customers. No impairment was recognized relating to the Floater reporting unit as the fair value estimate substantially exceeded carrying value.

The impairment charge relating to the Jack-up reporting unit was allocated between the parent and non-controlling interests based upon the non-controlling interests share in each drilling unit within the Jack-up segment. The overall charge to the reporting unit was first allocated to each drilling unit based upon the relative fair values of those drilling units. The non-controlling interest in each drilling unit was then applied to the allocated charge in order to determine the portion attributable to non-controlling interests. The total impairment allocated to the non-controlling interest was $39 million.

The estimated fair values of the Floater and Jack-up reporting units were derived using an income approach which estimated discounted future cash flows for each reporting unit. Our estimated future free cash flows are primarily based on our expectations around day rates, drilling unit utilization, operating costs, capital and long term maintenance expenditures and applicable tax rates. The cash flows are estimated over the remaining useful economic lives of the assets but no longer than 30 years in total, and discounted using an estimated market participant weighted average cost of capital of 9.5%.

The assumptions used in the Company’s estimated cash flows were derived from unobservable inputs and are based on management’s judgments and assumptions available at the time of performing the impairment test.

As of December 31, 2014 the aggregated estimated fair value of the Company’s reporting units exceeded its market capitalization. The Company evaluated the difference by reviewing the implied control premium as compared to other market transactions within our industry and considering other benchmark data and analysis prepared by offshore drilling industry analysts. The Company deems the implied control premium to be reasonable in the context of the data considered.

For the periods ended 2013 and 2012

For the years ended December 31, 2013 and 2012 the Company performed a qualitative assessment of its reporting units which determined that it was more likely than not that the fair value of its Floaters and Jack-up reporting units were not less than their carrying amount. As a result it was not considered necessary to perform the two step goodwill impairment test and no impairment losses were recognized.

Intangibles

Intangible assets/liabilities relate to favorable/unfavorable contracts which are recorded at fair value at the date of acquisition. The amounts recognized represent the net present value of the existing contracts at the time of acquisition compared to the current market rates at the time of acquisition, discounted at the weighted average cost of capital. The estimated unfavorable contract values have been recognized and amortized over the terms of the contracts, ranging from two to five years. The gross carrying amounts and accumulated amortization were as follows:

	December 31, 2014					December 31, 2013
	Gross carrying amount	Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Favorable contracts - intangible assets
Balance at beginning of period	—	—		—		51		(49	)	2
Amortization of favorable contracts	—	—		—		—		(2	)	(2	)
Derecognition of fully amortized contracts	—	—		—		(51	)	51		—
Balance at end of period	—	—		—		—		—		—
Unfavorable contracts - intangible liabilities
Balance at beginning of period	444	(67	)	377		—		—		—
Additions	—	—		—		444		—		444
Amortization of unfavorable contracts	—	(130	)	(130	)	—		(67	)	(67	)
Balance at end of period	444	(197	)	247		444		(67	)	377

We amortize the favorable and unfavorable contracts as revenue or reduction to revenue over the contract term. This is recognized within other revenues in the consolidated statement of operations. The table below shows the amounts relating to favorable and unfavorable contracts that is expected to be amortized over the next five years:

	Year ended December 31
(In US$ millions)	2015	2016	2017	2018	2019	Total
Amortization of unfavorable contracts	116	65	43	23	—	247

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Accounts receivable

12 Months Ended

Dec. 31, 2014

Accounts Receivable, Net, Current [Abstract]

Accounts receivable

Accounts receivable

Accounts receivable are presented net of allowances for doubtful accounts. The allowance for doubtful accounts receivables at December 31, 2014 was $16 million (2013: $27 million).

Accounts receivable is also presented net of customer receivables associated with Assets held for sale. The balance of accounts receivable classified as assets held for sale at December 31, 2014 is $78 million (2013: $0 million). Please refer to Note 37 – Assets held for sale.

The Company did not recognize any bad debt expense in 2014, 2013, or 2012, but has instead reduced contract revenue for the disputed amounts.

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Business Acquisition (Narrative) (Details) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended	0 Months Ended	12 Months Ended			0 Months Ended				12 Months Ended
	Nov. 15, 2012 Songa Eclipse Ltd USD ($) option	Dec. 31, 2013 West Eclipse USD ($)	Mar. 25, 2013 Asia Offshore Drilling USD ($)	Dec. 31, 2013 Asia Offshore Drilling USD ($)	Dec. 31, 2014 Sevan Driller and Sevan Brasil USD ($)	Dec. 31, 2014 Sevan Louisiana USD ($)	Aug. 23, 2013 Sevan Drilling ASA NOK	Jul. 02, 2013 Sevan Drilling ASA USD ($)	Jun. 27, 2013 Sevan Drilling ASA USD ($)	Feb. 08, 2013 Sevan Drilling ASA	Dec. 31, 2014 Sevan Drilling ASA USD ($)	Dec. 31, 2013 Sevan Drilling ASA USD ($)	Jun. 27, 2013 Sevan Drilling ASA NOK	Jul. 02, 2013 Trade Accounts Receivable Sevan Drilling ASA USD ($)
Business Acquisition [Line Items]
Fair value of consideration transferred	$ 590							$ 78
Number of one year option to extend the contract	3
Option Period	1 year
Prepayment before the acquisition	59
Operating Revenue		194		75								169
Net Income		42		37								31
Business Acquisition, Number of Shares Acquired							47,394		120,065,464
Per share price of shares issued (in NOK per share)							3.95						3.9311
Consideration received from shares issued									78
Ownership percentage			66.18%				50.11%	50.10%
Below market contracts, accumulated amortization					20	1
Remeasurement gain											8
Percentage of equity method investment ownership (in hundredths)										29.90%
Trade and other receivables								49
Acquired receivables, fair value														24
Gain on bargain purchase			$ 15					$ 17
Cumulative number of shares issued							297,941,358

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Equity offerings and drilling unit sale transactions with Seadrill Partners (Notes)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Equity offerings and drilling unit sale transactions with Seadrill Partners

Common shares

	2014				2013				2012
All shares are common shares of $2.00 par value each	Shares		$millions		Shares		$millions		Shares		$millions
Authorized share capital	800,000,000		1,600		800,000,000		1,600		800,000,000		1,600
Issued and fully paid share capital	493,078,678		986		469,250,933		939		469,250,933		938
Treasury shares held by Company	(318,740	)	(1	)	(272,441	)	(1	)	(72,859	)	—
Outstanding shares in issue	492,759,938		985		468,978,492		938		469,178,074		938

As of December 31, 2014, the Company's shares were listed on the Oslo Stock Exchange and the New York Stock Exchange.

The Company was incorporated on May 10, 2005 and 6,000 ordinary shares of par value $2.00 each were issued. Since incorporation the number of issued shares has increased from 6,000 to 493,078,678 of par value $2.00 each as of December 31, 2014. There were no new shares issued in 2014 or 2013 other than the conversion of convertible bonds in 2014, which resulted in 23.8 million shares issued, as discussed in Note 23.

A share repurchase program was approved by the Board in 2007 giving the Company the authorization to buy back shares. Shares bought back under the authorization may be cancelled or held as treasury shares. Treasury shares may be held to meet the Company's obligations relating to the share option plans. As at December 31, 2014 the Company held 318,740 treasury shares and net shares outstanding at December 31, 2014 was 492,759,938.

In November 2014 the Board authorized a share buyback program under which the Company may repurchase up to approximately 10% of shares outstanding. The Company may repurchase shares from time to time in open market transactions or private transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by Management of the Company based on its evaluation of market conditions, capital allocation opportunities, and other factors. The program does not require the Company to repurchase any specific number of shares and may be modified, suspended, extended or terminated by the Company at any time without prior notice.

Equity offerings and drilling unit sale transactions with Seadrill Partners

The following table summarizes the issuances of common units for Seadrill Partners between their IPO in October 2012 until the deconsolidation of Seadrill Partners on January 2, 2014:

Date	Number of Common Units Issued to the Public	Number of Common Units Issued to Seadrill	Offering Price ($)	Gross proceeds from public ($'millions)	Net proceeds from public ($'millions)	Seadrill's ownership after the offering
October 24, 2012 (IPO)	10,062,500	14,752,525	22.00	221	203	75.67	%
October 18, 2013	—	3,310,622	32.29	—	—	77.47	%
December 13, 2013	12,880,000	3,394,916	29.50	380	365	62.35	%

The following table summarizes the sale of the Company's drilling units to Seadrill Partners between its IPO until the deconsolidation of Seadrill Partners on January 2, 2014:

(In US$millions)	T-15	T-16	West Sirius		West Leo		Total
Adjusted sales price *	74	68	922		729		1,793
Less net assets transferred	5	—	(375	)	(116	)	(486	)
Excess of sales price over net assets transferred	79	68	547		613		1,307
Deemed contribution to Seadrill shareholders from non-controlling interest	19	16	105		69		209

* The Adjusted sales price above includes debt assumed and working capital adjustments.

These transactions were deemed to be reorganizations of entities under common control and accordingly no gains or losses were recognized by the Company.

On May 17, 2013, the Company sold its 100% interest in the entities that own and operate the tender rig T-15 to Seadrill Partners a total purchase price of $210 million, less approximately $101 million of debt outstanding, less $35 million of working capital adjustments. The acquisition was funded by issuance of vendor financing loan to Seadrill Partners of $110 million.

On October 18, 2013, the Company sold its 100% interest in the entity that owns the tender rig T-16, and the beneficial interest in the T-16 drilling contract (collectively, the “T-16 Business”), to Seadrill Partners for a total purchase price of $200 million, less approximately $93 million of debt outstanding, less $39 million of working capital adjustments. As part of the consideration, Seadrill Partners issued 3,310,622 common units to Seadrill as consideration for the purchase in a private placement transaction at a price of $32.29 per unit. This resulted in an increase in net assets attributable to the non-controlling interest of $19 million.

On December 13, 2013, the Company sold to Seadrill Partners: (i) 51% of its interest in each of the entities that own, operate and manage the semi-submersible drilling rig, West Sirius (the “Sirius Business”); and (ii) 30% of its interest interests in each of the entities that own and operate the semi-submersible drilling rig, West Leo (the “Leo Business”). The implied purchase prices of the Sirius Business was $1,035 million, less debt assumed of $220 million , plus working capital adjustments of $107 million. The implied purchase prices of the Leo Business was $1,250 million, less debt assumed of $486 million, less working capital adjustments of $35 million. In relation to these acquisitions, Seadrill Partners issued 12,880,000 common units to the public (including 1,680,000 common units issued to underwriters) and 3,394,916 common units to Seadrill, at a price of $29.50 per unit. The gross proceeds raised from the public was $380 million, and the net proceeds raised after issuance fees was $365 million, of which $137 million was attributable to the non-controlling interest. This resulted in an increase in net assets attributable to the non-controlling interest of $83 million.

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Variable Interest Entities (Assets and Liabilities in Statutory Accounts of VIEs) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Variable Interest Entity [Line Items]
Book value of units in the Company's consolidated accounts	$ 15,145	[1]	$ 17,193	[1]
SFL West Polaris Limited
Variable Interest Entity [Line Items]
Investment in finance lease			488
Amount due from related parties			45	[2]
Other assets			5
Total assets			538
Short-term interest bearing debt			36
Long-term interest bearing debt			351
Other liabilities			2
Long-term debt due to related parties			145	[2]
Total liabilities			534
Equity			4
Book value of units in the Company's consolidated accounts			577
SFL Deepwater Ltd
Variable Interest Entity [Line Items]
Investment in finance lease	429		515
Amount due from related parties	45	[2]	30	[2]
Other assets	13		13
Total assets	487		558
Short-term interest bearing debt	32		80
Long-term interest bearing debt	271		303
Other liabilities	6		6
Long-term debt due to related parties	145	[2]	145	[2]
Total liabilities	454		534
Equity	33		24
Book value of units in the Company's consolidated accounts	450		458
West Hercules
Variable Interest Entity [Line Items]
Investment in finance lease	426		477
Amount due from related parties	5	[2]	25	[2]
Other assets	10		10
Total assets	441		512
Short-term interest bearing debt	28		28
Long-term interest bearing debt	256		333
Other liabilities	1		2
Long-term debt due to related parties	145	[2]	145	[2]
Total liabilities	430		508
Equity	11		4
Book value of units in the Company's consolidated accounts	603		617
West Linus
Variable Interest Entity [Line Items]
Investment in finance lease	574		195
Amount due from related parties	14	[2]	0	[2]
Other assets	0		0
Total assets	588		195
Short-term interest bearing debt	51		0
Long-term interest bearing debt	400		0
Other liabilities	3		2
Long-term debt due to related parties	125	[2]	195	[2]
Total liabilities	579		197
Equity	9		(2)
Book value of units in the Company's consolidated accounts	$ 581		$ 162

[1] The fixed assets referred to in the table are the Company's operating drilling units. Asset locations at the end of a period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.

[2] In the VIEs separate financial statements the related party balances are presented on a net basis.

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Operating leases (Tables)

12 Months Ended

Dec. 31, 2014

Leases, Operating [Abstract]

Future minimum rental payments for operating leases

Future minimum rental payments are as follows:

Year	(In US$ millions)
2015	15
2016	12
2017	10
2018	7
2019	7
2020 and thereafter	21
Total	72

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Risk management and financial instruments - Fair Value Measurements of Recurring Assets and Liabilities (Details) (Fair value, recurring basis, USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 751	$ 1,082
Total assets	756	1,091
Total liabilities	375	147
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	751	1,078
Total assets	751	1,078
Total liabilities	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Total assets	5	9
Total liabilities	375	147
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	4
Total assets	0	4
Total liabilities	0	0
Interest Rate Swap | Short-term payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	139	94
Interest Rate Swap | Short-term payable | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	0	0
Interest Rate Swap | Short-term payable | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	139	94
Interest Rate Swap | Short-term payable | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	0	0
Interest Rate Swap | Long-term payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	3	2
Interest Rate Swap | Long-term payable | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	0	0
Interest Rate Swap | Long-term payable | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	3	2
Interest Rate Swap | Long-term payable | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	0	0
Cross Currency Interest Rate Contract | Short-term payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	201	46
Cross Currency Interest Rate Contract | Short-term payable | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	0	0
Cross Currency Interest Rate Contract | Short-term payable | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	201	46
Cross Currency Interest Rate Contract | Short-term payable | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts, payable	0	0
Forward Contracts | Short-term payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange forwards – short term payable	27	3
Forward Contracts | Short-term payable | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange forwards – short term payable	0	0
Forward Contracts | Short-term payable | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange forwards – short term payable	27	3
Forward Contracts | Short-term payable | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange forwards – short term payable	0	0
Other Contract | Short-term payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other derivative instruments – short term payable	5	2
Other Contract | Short-term payable | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other derivative instruments – short term payable	0	0
Other Contract | Short-term payable | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other derivative instruments – short term payable	5	2
Other Contract | Short-term payable | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other derivative instruments – short term payable	0	0
Short-term receivable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable	5	5
Other derivative instruments – short term receivable		2
Short-term receivable | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable	0	0
Other derivative instruments – short term receivable		0
Short-term receivable | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable	5	5
Other derivative instruments – short term receivable		2
Short-term receivable | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable	0	0
Other derivative instruments – short term receivable		0
Short-term receivable | Cross Currency Interest Rate Contract
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable		2
Short-term receivable | Cross Currency Interest Rate Contract | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable		0
Short-term receivable | Cross Currency Interest Rate Contract | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable		2
Short-term receivable | Cross Currency Interest Rate Contract | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap contracts – short term receivable		$ 0

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Long-term debt (Debt Maturity) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Debt Disclosure [Abstract]
2015	$ 2,309
2016	1,458
2017	2,869
2018	2,269
2019	2,725
2020 and thereafter	990
Long-term Debt	$ 12,620	$ 13,466

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Earnings per share (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The components of the numerator for the calculation of basic and diluted EPS are as follows:

(In US$ millions)	2014		2013	2012
Net income attributable to the parent	3,979		2,653	1,108
Less: Allocation to participating securities	(6	)	—	—
Net income available to stockholders	3,973		2,653	1,108
Effect of dilution	117		38	37
Diluted net income available to stockholders	4,090		2,691	1,145

The components of the denominator for the calculation of basic and diluted EPS are as follows:

(In US$ millions)	2014	2013	2012
Basic earnings per share:
Weighted average number of common shares outstanding	478	469	469
Diluted earnings per share:
Effect of dilutive convertible bonds	14	22	20
Effect of dilutive share options	1	1	1
Weighted average number of common shares outstanding adjusted for the effects of dilution	493	492	490

(In US$)	2014	2013	2012
Basic Earnings per share	8.32	5.66	2.37
Diluted earnings per share	8.30	5.47	2.34

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Other non-current assets (Tables)

12 Months Ended

Dec. 31, 2014

Other Assets, Noncurrent Disclosure [Abstract]

Other non-current assets

Other non-current assets consist of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Deferred charges	103	114
Deferred tax effect of internal transfer of assets	102	131
Deferred mobilization costs	47	65
Deferred consideration (1)	154	142
Accrued revenue	—	155
Other	8	5
Total other non-current assets	414	612

(1) The Deferred consideration is related to the sale of the tender rig business. See Note 11 to the consolidated financial statements included herein.

Deferred charges

Deferred charges represent debt arrangement fees that are capitalized and amortized into interest expense over the life of the debt instrument.

(In US$ millions)	December 31, 2014		December 31, 2013
Debt arrangement fees	385		338
Accumulated amortization	(240	)	(186	)
Total book value	145		152
Less: Short-term amount	(42	)	(38	)
Long-term amount	103		114
Amortization for the period	54		43

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Related party transactions (Ship Finance Transactions) (Details) (USD $)	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jul. 02, 2010	Jun. 28, 2013	Dec. 30, 2014
Related Party Transaction [Line Items]
Payments of ordinary dividends, noncontrolling Interest	$ 51,000,000	$ 69,000,000	$ 50,000,000
Long-term debt due to related parties	415,000,000	1,415,000,000
Interest expense	(478,000,000)	(445,000,000)	(340,000,000)
Dividend paid to non controlling interest in VIE		223,000,000
Ship Finance
Related Party Transaction [Line Items]
Lease costs on leased units	300,000,000	259,000,000	303,000,000
SFL Deepwater Ltd | Ship Finance
Related Party Transaction [Line Items]
Payments of ordinary dividends, noncontrolling Interest				290,000,000
SFL West Polaris Limited | Ship Finance
Related Party Transaction [Line Items]
Payments of ordinary dividends, noncontrolling Interest				145,000,000
Variable Interest Entity, Primary Beneficiary | Ship Finance
Related Party Transaction [Line Items]
Interest rate on related party debt				4.50%
North Atlantic Drilling | Ship Finance
Related Party Transaction [Line Items]
Contingent consideration arrangements, maximum					600,000,000
Sale Leaseback Transaction, Lease Term					15 years
SFL West Polaris Limited
Related Party Transaction [Line Items]
Percentage of voting interests acquired						100.00%
Loans assumed						97,000,000
Total acquisition price						111,000,000
Noncontrolling Interest [Member]
Related Party Transaction [Line Items]
Dividend paid to non controlling interest in VIE		223,000,000
Ship Finance | Affiliated Entity
Related Party Transaction [Line Items]
Interest rate on related party debt					4.50%
Long-term debt due to related parties	125,000,000				195,000,000
Interest expense	(24,000,000)	(20,000,000)	(20,000,000)
West Polaris | Ship Finance
Related Party Transaction [Line Items]
Lease costs on leased units	55,000,000	70,000,000	114,000,000
West Hercules [Member] | Ship Finance
Related Party Transaction [Line Items]
Lease costs on leased units	75,000,000	77,000,000	75,000,000
West Taurus | Ship Finance
Related Party Transaction [Line Items]
Lease costs on leased units	111,000,000	112,000,000	114,000,000
West Linus | Ship Finance
Related Party Transaction [Line Items]
Lease costs on leased units	$ 59,000,000	$ 0	$ 0

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Related party transactions

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related party transactions

Related party transactions

Seadrill Partners

As of January 2, 2014, the date of deconsolidation, Seadrill Partners is considered to be a related party and not a controlled subsidiary of the Company. The following is a summary of the related party agreements with Seadrill Partners:

Management and administrative service agreements– In connection with the IPO, subsidiaries of Seadrill Partners, entered into a management and administrative services agreement with Seadrill Management, a wholly owned subsidiary of the Company, pursuant to which Seadrill Management provides the Seadrill Partners certain management and administrative services. The services provided by Seadrill Management are charged at cost plus management fee equal to 5% of Seadrill Management’s costs and expenses incurred in connection with providing these services. The agreement has an initial term for 5 years and can be terminated by providing 90 days written notice.

Technical and administrative service agreement– In connection with the IPO, subsidiaries of Seadrill Partners entered into certain advisory, technical and/or administrative services agreements with subsidiaries of the Company. The services provided by the Company’s subsidiaries are charged at cost plus service fee equal to approximately 5% of costs and expenses incurred in connection with providing these services.

Income recognized under the above agreements (a) & (b) for the period ended December 31, 2014 were $59 million.

Rig Financing Agreements– In September 2012 prior to the IPO of Seadrill Partners, each of Seadrill Partners controlled subsidiaries that owns the West Capricorn, the West Vencedor, the West Aquarius, and the West Capella, or the rig owning subsidiaries, entered into intercompany loan agreements with the Company in the amount of approximately $523 million, $115 million, $305 million and $295 million respectively, corresponding to the aggregate principal amount outstanding under the external facilities allocable to the West Capricorn, the West Vencedor, the West Aquarius, and the West Capella respectively. During 2013, the rig owning companies of the T-15, T-16, West Leo and West Sirius entered into intercompany loan agreements with Company in the amount of approximately $101 million, $93 million, $486 million and $220 million respectively, corresponding to the aggregate principal amount outstanding under the facilities allocable to the T-15, T-16, West Leo and West Sirius respectively. The Company refers to these arrangements collectively as "Rig Financing Agreements". Pursuant to these intercompany loan agreements, each rig owning subsidiary can make payments of principal and interest to Seadrill or directly to the third party lenders under each facility, corresponding to payments of principal and interest due under each Rig Financing Agreement that are allocable to each rig.

During the year ended December 31, 2014 subsidiaries of Seadrill Partners entered into a new term loan in which the proceeds were used to repay the amounts owed to the Company related to the drilling units West Capella, West Aquarius, West Sirius, West Leo and West Capricorn.

In June 2014 the Company repaid the underlying $1,200 million senior secured loan relating to the West Vencedor, and as a result the West Vencedor Loan Agreement between the Company and Seadrill Partners was amended to carry on the existing loan on the same terms. The total amount owed by Seadrill Partners to the Company under the remaining West Vencedor Loan agreement as of December 31, 2014, was $78 million.

Total amounts owed under the remaining Rig Financing Agreement as of December 31, 2014, relating to the T-15 and T-16, totaled $159 million. Certain subsidiaries of Seadrill Partners are guarantors under the external facilities in which these rigs are pledged as security. Under the terms of the facilities, the guarantors are jointly and severally liable for other guarantors and the borrower who are party to this facility. The Company has provided an indemnification to Seadrill Partners for any payments or obligations related to these facilities for any losses incurred which do not relate to the T-15 and T-16.

The Rig Financing Agreements related to the West Aquarius, West Capella, West Leo, West Sirius and West Capricorn were repaid during the year ended December 31, 2014 in conjunction with Seadrill Partners obtaining independent third party financing. The total outstanding principal repaid was $1.5 billion.

Interest income for the period ending December 31, 2014 for these arrangements was $20 million.

Revolving credit facility– In October 2012 Seadrill Partners entered into a $300 million revolving credit facility with the Company. The facility is for a term of five years and bears interest at a rate of LIBOR plus 5% per annum, with an annual 2% commitment fee on the undrawn balance. In March 2014 the facility was reduced to a maximum of $100 million. The outstanding balance of $125.9 million was repaid in full in March 2014. The outstanding balance as at December 31, 2014 was nil.

$109.5 million Vendor financing loan - In May, 2013, Seadrill Partners borrowed from the Company $109.5 million as vendor financing to fund the acquisition of the T-15. The loan bears interest at a rate of LIBOR plus a margin of 5.00% and matures in May 2016. The outstanding balance as at December 31, 2014 was $109.5 million.

$229.9 million discount note - On December 13, 2013, as part of the acquisition of the West Sirius, a subsidiary of Seadrill Partners issued a zero coupon discount note to the Company for $229.9 million. The note was repayable in June 2015 and upon maturity, the Company was due to receive $238.5 million. In February 2014, Seadrill Partners repaid this note in full.

$70 million discount note - In December 2013, as part of the acquisition of the West Sirius, Seadrill Partners issued a zero coupon discount note to the Company for $70 million. The note was repayable in June 2015 and upon maturity, the Company was due to receive $73 million. In February 2014, Seadrill Partners repaid this note in full.

$100 million discount note - In March 2014, as part of the acquisition of the West Auriga, Seadrill Partners issued a zero coupon discount note to the Company for $100 million. The note is repayable in September 2015 and upon maturity, the Company will receive $103.7 million. This note was repaid in full in June 2014.

Other revenues and expenses - Other revenues and expenses include operating revenues and costs earned and incurred for certain drilling units on behalf of subsidiaries of Seadrill Partners, insurance premiums and bareboat charter arrangements. Other revenues and expenses earned and incurred for the period ending December 31, 2014 were $43.2 million and $25.8 million respectively. Derivatives and other interest expenses charged to Seadrill Partners totaled $82.1 million for the period ending December 31, 2014.

Receivables and Payables – Receivables and payables with Seadrill Partners and its subsidiaries are comprised of management fees, advisory and administrative services, and other items including accrued interest. In addition, certain receivables and payables arise when the Company pays an invoice on behalf of Seadrill Partners or its subsidiaries and vice versa. Receivables and payables are generally settled quarterly in arrears. Trading balances to Seadrill Partners and its subsidiaries are unsecured, bear interest at a rate equal to LIBOR plus approximately 4% per annum, and are intended to be settled in the ordinary course of business.

Receivables (payables) with Seadrill Partners and its subsidiaries as of December 31, 2014 consisted of the following:

(In US$ millions)	December 31, 2014
Rig financing agreements and Loan Agreements	237
$109.5 million Vendor financing loan	110
Deferred consideration receivable	74
Other receivables	264
Other payables	(77	)

West Auriga Acquisition

On March 21, 2014, the Company sold the entities that own and operate the West Auriga (the “Auriga business”)to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners that is 49% owned by the Company. The entities continue to be related parties subsequent to the sale. The purchase price consisted of an enterprise value of $1.24 billion, less debt assumed of $443 million. The total consideration of $797 million was comprised of cash of $697 million and a discount note receivable of $100 million. The purchase price was subsequently adjusted by a working capital adjustment of $331 million arising from related party balances which remained with the disposed entities for the construction, equipping and mobilization of the West Auriga. The total recognized gain on sale of the Auriga business was $440 million, after taking into account a goodwill allocation of $33 million, which has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. Refer to Note 11 - Disposals of businesses for more information.

Purchase of additional limited partner interest in Seadrill Operating LP

On July 21, 2014, the Company sold a 28% limited partner interest in Seadrill Operating LP, a subsidiary of Seadrill Partners, to Seadrill Partners for cash consideration of $373 million. This resulted in a loss on sale of investment of $88 million, which has been recognized within "share in results from associated companies" in the Company’s consolidated statement of operations. Refer to Note 17 - Investments in Associated Companies for more information

West Vela Acquisition

On November 4, 2014, the Company sold the entities that own and operate the West Vela (the “Vela business”) to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners and 49% owned by the Company. The entities continue to be related parties subsequent to the sale. The purchase price consisted of an enterprise value of $900 million, less debt assumed of $433 million that was outstanding under the existing facility related to West Vela. The Company is also to receive deferred consideration of $44 thousand per day for the remainder of the West Vela's current contract with BP which runs to November 2020. In addition, the Company will receive a contingent amount of up to $40 thousand per day for the remainder of the BP contract, depending on the actual amount of contract revenue received from BP. The Company's accounting policy is not to recognize contingent consideration before it is considered realizable. The total consideration recognized on disposal of $535 million was comprised of cash of $467 million, and deferred consideration receivable of $74 million. The purchase price was also adjusted by a working capital adjustment of $6 million. The gain recognized at the time of disposal of the Vela business was $191 million, after taking into account a goodwill allocation of $41 million. The gain has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. During the quarter ended December 31, 2014, the Company also recognized $1 million related to the contingent consideration realized during the period. Refer to Note 11 - Disposals of businesses for more information.

Hemen and other related parties

Since our formation, our largest shareholder has been Hemen, which currently holds approximately 24.17% of our shares.  The Company transacts business with the following related parties, being companies in which Hemen has a significant interest:

• Ship Finance International Limited ("Ship Finance")

• Metrogas

• Archer

• Frontline Management (Bermuda) Limited ("Frontline")

Ship Finance Transactions

The Company has entered into sale and lease back contracts for several drilling units with subsidiaries of Ship Finance. The Company has determined that the Ship Finance subsidiaries, which own the units, are variable interest entities (VIEs), and that the Company is the primary beneficiary of the risks and rewards connected with the ownership of the units and the charter contracts. Accordingly, these VIEs are fully consolidated in the Company's consolidated accounts. The equity attributable to Ship Finance in the VIEs is included in non-controlling interests in the Company's consolidated accounts (See Note 35 to the consolidated financial statements included herein).

In the 12 months ended December 31, 2014, the Company incurred the following lease costs on units leased from the Ship Finance subsidiaries.

(US$ millions)	2014	2013	2012
West Polaris	55	70	114
West Hercules	75	77	75
West Taurus	111	112	114
West Linus	59	—	—
Total	300	259	303

These lease costs are eliminated on consolidation.

On July 1, 2010 our consolidated VIEs, SFL Deepwater Ltd and SFL Polaris Ltd, paid a dividend of $290 million and $145 million respectively to Ship Finance. Ship Finance simultaneously granted loans to SFL Deepwater Ltd and SFL Polaris Ltd for the same amounts. The loans bear interest at 4.5% per annum and are reported as long-term debt due to related parties in our balance sheet as the loans mature in 2023. On December 30, 2014 we entered into a share sale and purchase agreement with Ship Finance, where we acquired 100% of the equity interests in SFL West Polaris Limited, which was the owner of West Polaris. In addition the Company purchased an outstanding loan of SFL West Polaris Limited of $97 million from Ship Finance. The acquisition price for the shares and the loan amounted to $111 million. As at December 31, 2014, the consideration for the shares and loan was unpaid, and was settled on January 5, 2015. See Note 35 for more details.

On June 28, 2013, our subsidiary NADL sold the entity that owns the newbuild jack-up, West Linus, to the Ship Finance subsidiary SFL Linus Ltd. The purchase consideration for this reflected the market value of the rig as of the delivery date which was $600 million. This rig was simultaneously chartered back over a period of 15 years to NADL. Upon closing, SFL Linus Ltd received a $195 million loan from Ship Finance which bears an interest of 4.5% per annum and matures in 2029. During 2014 the loan was reduced to $125 million, and is reported as long-term debt due to related parties in our balance sheet as of December 31, 2014.

The total interest expense of the above loans relating to Ship Finance for 2014 was $24 million (2013: $20 million, 2012: $20 million).

During 2013 the VIEs declared dividends totaling $223 million, which were settled against existing intercompany balances with Ship Finance.

Metrogas transactions

From time to time, we may enter into agreements with Metrogas primarily to manage short-term working capital requirements. We had the following transactions with Metrogas:

On March 22, 2012, we obtained a short-term unsecured credit facility of $84 million from Metrogas. The principal plus interest was repaid in full in May 2012.

On May 15, 2012 we obtained a short term unsecured credit facility of $50 million from Metrogas. The principal plus interest was repaid in July 2012.

On June 7, 2012 we obtained a long term unsecured credit facility of NOK1,200 million from Metrogas. This loan agreement was amended on June 14 and June 27 increasing the loan amount to a total of NOK2,100 million. The principal plus interest was repaid in full in September 2012.

On December 20, 2012, we sold the Company's holding in a NADL unsecured bond of $500 million to Metrogas plus accrued interest of $9 million with a call option to repurchase the bond in full for a price equal to par plus unpaid accrued interest on the date of repurchase with a maturity date in June 2013. The obligation was recorded as a long term related party liability. In conjunction with this arrangement we also entered into an agreement to settle dividends payable to Metrogas in return for a short term unsecured loan of $93 million (see below). The North Atlantic bond bears a coupon of 7.75% per annum payable semi-annually in arrears. The net proceeds from these arrangements were $415 million. On May 31, 2013, the Company exercised its option to repurchase the bond from Metrogas, and as a result the bond is eliminated in the consolidated financial statements at December 31, 2014.

On December 21, 2012, we obtained a short term loan of $93 million from Metrogas. The loan bears interest of LIBOR plus a margin and was repaid in full on May 2, 2013.

On December 31, 2012, we obtained a short term loan from Metrogas of NOK140 million. The loan bears interest of NIBOR plus a margin and was repaid in full on January 2, 2013.

On February 27, 2013, we obtained a short-term loan from Metrogas of NOK300 million. The loan had an interest of NIBOR plus a margin and was repaid in full on March 12, 2013.

On March 27, 2013, we obtained a short-term loan from Metrogas of NOK700 million. The loan had an interest of NIBOR plus a margin, and was repaid in full on April 3, 2013.

On July 19, 2013, we entered into a loan agreement with Metrogas of NOK1,500 million. The loan had an interest of NIBOR plus a margin of 3.5% and was repaid in full on October 9, 2013.

On September 20, 2013, we obtained a short-term loan from Metrogas of $99 million. The loan had an interest of LIBOR plus a margin of 3.0%, and was repaid in full on September 30, 2013.

On December 10, 2013, the $1,121 million facility with Lloyds Bank TSB as agent was transferred to DNB Bank ASA as new agent and to Metrogas, as the lender. There have been no other changes to the facility. As Metrogas is a related party of the Company, the proportion of the facility related to Metrogas of $840 million was accordingly reclassified as debt due to related parties on the consolidated balance sheet as at December 31, 2014. On February 21, 2014, the Company entered into a term loan B agreement for $1.8 billion due in February 2021 in which some of the proceeds have been used to repay the portion of this facility that is related to the West Leo, which totaled $472.6 million as at December 31, 2013. The amount that was paid to Metrogas was $436 million.

On August 26, 2014, the $1,121 million facility was repaid in full, and replaced by a new $1,350 million senior secured credit facility with a syndicate of banks and DNB Bank ASA as agent. The Company recognized a $16 million gain on debt extinguishment within other financial items in the Company's consolidated statement of operations - see Note 23 – Long-term debt.

The total interest expense of the above loans relating to Metrogas for 2014 was $1 million (2013: $10 million; 2012: $7 million).

Archer transactions

From time to time, we may enter into transactions with Archer our former consolidated subsidiary and current associate investment related to Archer's working capital requirements and debt restructuring. We had the following transactions with Archer:

On June 27, 2012, the Company granted Archer a long term unsecured credit facility of $20 million. The principal plus interest was repaid in August 2012.

On November 12, 2012, the Company granted Archer a short term unsecured loan of $55 million. The loan bears interest of LIBOR plus a margin and was settled in February 2013.

On February 20, 2013, the Company obtained a short-term unsecured loan of $43 million from Archer. The loan had an interest of LIBOR plus a margin of 5% and was repaid on February 27, 2013.

On March 27, 2013 the Company granted Archer a short term unsecured loan of $10 million. The loan had an interest of LIBOR plus a margin of 5%, and was repaid on April 2, 2013.

On March 7, 2013, the Company provided a guarantee to Archer on its payment obligations on a certain financing arrangements. The maximum liability to the Company is limited to $100 million. The guarantee fee is 1.25% per annum. On July 31, 2013, the Company provided Archer with an additional guarantee of $100 million, which was provided as part of Archer’s divestiture of a division, to support Archer's existing bank facilities. During 2014, the guarantees above were increased to a total of $250 million. The guarantee fee is 1.25% per annum.

On December 9, 2013, the Company provided Archer Topaz Limited, a wholly owned subsidiary of Archer, with a guarantee of a maximum of EUR56 million, to support Archer's credit facilities. The guarantee fee is 1.25% per annum.

On February 5, 2014, the Company provided Archer with a guarantee of a maximum of GBP 25.9 million, to support Archer's leasing obligations of a warehouse for a period of 10 years.

On February 12, 2014, the Company provided Archer with a guarantee of $120 million enabling Archer to finance the purchase of land rigs in Argentina.

On July 14, 2014, we provided Archer Norge AS, a wholly owned subsidiary of Archer, with a guarantee of a maximum of $20 million, to support Archer's guarantee facility. The guarantee fee is 1.25% per annum.

These guarantee fees are included in other financial items in our consolidated statement of operations.

Archer provides certain management support and administrative services for the Company, and charged the Company fees of $4.0 million for the twelve months ended December 31, 2014 (2013: nil; 2012: nil) respectively. These amounts are included in general and administrative expenses. Also included in other financial items are guarantee fees charged to Archer of $3.7 million for the twelve months ended December 31, 2014 (2013: nil; 2012: nil) respectively.

The total net interest income of the above loans relating to Archer for 2014 was nil (2013: $0.7 million; 2012: $0.1 million).

On March 6, 2015, the Company purchased a $50 million subordinated loan made by Metrogas, a related party, to Archer, a related party. The aggregate consideration paid for the loan by the Company to Metrogas was $51 million which is equal to the sum of the outstanding principal amount of $50 million and $1 million accrued commitment fee and interest on the loan.

Frontline transactions

Frontline provides management support and administrative services for the Company, and charged the Company fees of $4 million, $2 million and $2 million for these services in the years 2014, 2013 and 2012, respectively. These amounts are included in "general and administrative expenses".

Other related parties

Seabras Sapura transactions

Seabras Sapura Participacoes SA and Seabras Sapura Holdco Ltd, together referred to as Seabras Sapura, are joint ventures each owned 50% by the Company.

In May 2014, we entered into a loan agreement with Seabras Sapura of $11 million. The loan has an interest of 3.4% and is repayable by May 31, 2015.

In May 2014, we entered into a loan agreement with Seabras Sapura of €4 million. The loan has an interest of 3.4% and is repayable by May 31, 2015.

The total net interest income of the above loans relating to Seabras Sapura for 2014 was $0.3 million (2013: nil; 2012: nil).

Other related party transactions

In the year ended December 31, 2014, the Company recognized related party revenues of $97 million (2013: $2 million, 2012: $15 million). In 2014 the revenue related to Seadrill Partners under the management agreements as described above. The related party revenues in 2013 and 2012 related to a previous joint venture and related party Varia Perdana and its subsidiary Crest Tender Rigs Pte Ltd (together "Varia Group"), and Asia Offshore Drilling Ltd (AOD). During 2013 we provided management support, administrative and construction management services to AOD and received bare boat fees from the Varia Group. AOD became a consolidated subsidiary of the Company during 2013 and therefore these revenues are now eliminated on consolidation, see Note 12 to the consolidated financial statements included herein. The amounts related to the Varia Group during 2013 included the period up until the sale of our tender rig business, see Note 11 to the consolidated financial statements included herein.

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Non-controlling interest

12 Months Ended

Dec. 31, 2014

Noncontrolling Interest [Abstract]

Non-controlling interest

Non-controlling interest

The Company's consolidated statement of operations, balance sheet and statement of cash flows include the results of NADL, Asia Offshore Drilling Ltd, and Sevan Drilling ASA for the year ended, and as at December 31, 2014. As at December 31, 2014, the Company has the following ownership interests in these companies: 70.36% of NADL, 66.24% of Asia Offshore Drilling Ltd, and 50.11% of Sevan Drilling ASA. The amount of shareholders' equity not attributable to the Company is included in non-controlling interests.

NADL

In January 2014, NADL completed its IPO in the United States of 13,513,514 common shares at $9.25 per share. The non-controlling interest recognized on the IPO was $52 million.

Seadrill Partners

On October 24, 2012, Seadrill Partners completed its IPO of 10,062,500 common units representing limited liability company interests in Seadrill Partners at a price of $22.00 per unit, for gross proceeds of $221 million and net proceeds after issuance costs of $203 million (including 1,312,500 common units issued in connection with the exercise of the over-allotment option). Seadrill Partners is listed on the New York stock exchange under the symbol "SDLP". Upon completion of the offering, the Company owned 14,752,525 common units and 16,543,350 subordinated units which represents 75.67% of the limited liability company interests in Seadrill Partners. Subsequent to the IPO, in October 2013, Seadrill Partners issued 3,310,622 common units to the Company, which increased the Company's total ownership interest to 77.47%. In December 2013, Seadrill Partners issued a further 3,394,916 common units to the Company and 12,880,000 common units to the public, which had the effect of reducing the Company's ownership total ownership to 62.35% as of December 31, 2013. The effect of these transactions was to increase the non-controlling interest by $239 million.

During the period from Seadrill Partners' IPO in October 2012 until the time of its first effective Annual General Meeting ("AGM") on January 2, 2014, the Company retained the sole power to appoint, remove and replace all members of Seadrill Partner's board of directors. From the first AGM, the majority of the board members became electable by the common unitholders and accordingly, from this date the Company no longer retained the power to control the board of directors as a result of certain provisions in the Operating Agreement which limits the Company's ability to vote its full holding of common units in an election of directors to the board of Seadrill Partners. As of January 2, 2014, Seadrill Partners is considered to be an associated company and not a controlled subsidiary of the Company, and as such Seadrill Partners was deconsolidated by the Company. The non-controlling interest derecognized was $115 million. See Note 11 of the consolidated financial statements.

AOD

On March 25, 2013, we obtained control of the Board of Asia Offshore Drilling Ltd and owned 66.18% of the outstanding shares. As a result of obtaining control we have consolidated the results and financial position of Asia Offshore Drilling Ltd from this date. The fair value of the non-controlling interest established upon obtaining a controlling financial interest was $100 million. See Note 12 to the consolidated financial statements included herein. Subsequent to the date of consolidation, the Company's percentage ownership increased to 66.21%, and then increased again to 66.24% as at December 31, 2014.

Sevan

On July 2, 2013 we obtained a controlling financial interest in Sevan Drilling and had ownership interests in 50.1% of the outstanding shares. As a result of obtaining control we consolidated the results and financial position of Sevan Drilling from this date. The fair value non-controlling interest established upon obtaining a controlling financial interest was $197 million. See Note 12 to the consolidated financial statements included herein.

Ship Finance VIEs

In 2007 and 2008 the Company entered into sale and leaseback arrangements for drilling units with Ship Finance International Ltd, who incorporated subsidiary companies for the sole purpose of owning and leasing the drilling units. The Company has recognized these subsidiary companies as VIEs and concluded that the Company is their primary beneficiary. Accordingly, these subsidiary companies are included in the Company's consolidated financial statements, with the Ship Finance International Ltd equity in these companies included in non-controlling interest. In 2012, the Company acquired all the shares in one of these Ship Finance International Ltd companies, Rig Finance II Ltd for $47 million. As a consequence of this, Rig Finance II Ltd is no longer treated as a VIE but a wholly owned subsidiary. In 2013 these VIEs declared dividends of $223 million to Ship Finance International Limited. In December 2014, the Company acquired all the shares of the Ship Finance International Ltd company, SFL Polaris Ltd, for a consideration of $111 million. The non-controlling interest derecognized was $7 million. As a consequence of this, SFL Polaris Ltd is no longer treated as a VIE but a wholly owned subsidiary. See Note 35 to the consolidated financial statements included herein.

Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited

On December 30, 2014 the Company entered into share sale and purchase agreements with Heirs Holding Limited, where we sold a 10% of equity stake in each of the Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited for consideration of $1.8 million each. Seadrill Offshore Nigeria Limited is a Nigerian holding company which has a 10% equity interest in the West Saturn, and Seadrill Nigeria Operations Limited is a Nigerian holding company which has a 10% equity interest in the West Jupiter. There was no net income attributable to non-controlling interest recognized with Heirs Holding Limited as the transaction occurred on December 30, 2014.

Changes in non-controlling interest in 2014, 2013 and 2012 are as follows:

(In US$ millions)	Ship Finance International Ltd VIEs		North Atlantic Drilling Ltd		Seadrill Partners LLC		Asia Offshore Drilling Ltd	Sevan Drilling ASA	Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited	Total
December 31, 2011	215		110		—		—	—		325
Changes in 2012	20		10		69		—	—		99
Net income attributable to non-controlling interest in 2012	39		48		10		—	—		97
December 31, 2012	274		168		79		—	—	—	521
Changes in 2013	(220	)	(56	)	15		100	197	—	36
Net income attributable to non-controlling interest in 2013	24		61		21		11	16	—	133
December 31, 2013	78		173		115		111	213	—	690
Changes in 2014	(57	)	(4	)	(115	)	—	—	4	(172	)
Net income attributable to non-controlling interest in 2014	11		36		—		23	38	—	108
December 31, 2014	32		205		—		134	251	4	626

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Accumulated other comprehensive income

12 Months Ended

Dec. 31, 2014

Accumulated other comprehensive income [Abstract]

Other comprehensive income

Accumulated other comprehensive income

Accumulated other comprehensive income for the years December 31, 2014 and December 31, 2013:

(In US$ millions)	December 31, 2014		December 31, 2013
Unrealized (loss)/gain on marketable securities	(443	)	539
Unrealized gain on foreign exchange	51		73
Actuarial loss relating to pension	(57	)	(35	)
Share in unrealized gains from associated companies	1		—
Unrealized loss on interest rate swaps in VIEs	—		(49	)
Accumulated other comprehensive (loss)/income	(448	)	528

The unrealized loss on marketable securities relates to the accumulated losses on the investments in SapuraKencana and Seadrill Partners Common units. Refer to Note 14 - Marketable securities for further information.

The applicable amount of income taxes associated with each component of other comprehensive income is nil, other than noted below, due to the fact that the items relate to companies domiciled in non-taxable jurisdictions. However, for actuarial loss related to pension, the accumulated applicable amount of income taxes is $22 million ($16 million in 2013) as this item is related to companies domiciled in Norway where the tax rate is 28%.

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Gain on disposals

12 Months Ended

Dec. 31, 2014

Proceeds from Sale of Productive Assets [Abstract]

Gain on disposals

Gain on disposals

The Company has recognized the following gains on disposals:

(In US$ millions)	Net proceeds	Book value on disposal	Gain
Year ended December 31, 2014:
Sale of West Auriga business	466	26	440
Sale of West Vela business	536	344	192
Total for year ended December 31, 2014	1,002	370	632
Year ended December 31, 2013:
Sale of Jack-up rig West Janus	73	12	61
Total for year ended December 31, 2013	73	12	61
Year ended December 31, 2012:
None	—	—	—
Total for year ended December 31, 2012	—	—	—

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Risk management and financial instruments - By Maturity (Details) (Interest Rate Swap, USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Derivative [Line Items]
Outstanding principal amount	$ 7,918	$ 9,776
2015
Derivative [Line Items]
Outstanding principal amount	50
Pay rate, lower limit	4.63%
Pay rate, upper limit	4.63%
2016
Derivative [Line Items]
Outstanding principal amount	1,350
Pay rate, lower limit	2.14%
Pay rate, upper limit	3.36%
2017
Derivative [Line Items]
Outstanding principal amount	35
Pay rate, lower limit	3.83%
Pay rate, upper limit	3.83%
2018
Derivative [Line Items]
Outstanding principal amount	1,428
Pay rate, lower limit	0.74%
Pay rate, upper limit	3.80%
2019
Derivative [Line Items]
Outstanding principal amount	1,000
Pay rate, lower limit	2.83%
Pay rate, upper limit	3.34%
2020
Derivative [Line Items]
Outstanding principal amount	707
Pay rate, lower limit	1.11%
Pay rate, upper limit	1.36%
2021
Derivative [Line Items]
Outstanding principal amount	3,141
Pay rate, lower limit	1.36%
Pay rate, upper limit	2.19%
2022
Derivative [Line Items]
Outstanding principal amount	$ 207
Pay rate, lower limit	1.38%
Pay rate, upper limit	1.38%

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Pension benefits (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Defined Contribution Plan [Line Items]
Pension Contributions	$ 0.9	$ 1.6	$ 1.8
Defined Benefit Plan Disclosure [Line Items]
Accumulated benefit obligation	146	132
Contributions expected to be paid [Abstract]
2015	11
2016	12
2017	12
2018	12
2019	13
2020-2024	69
Total payments expected during the next 10 years	129
Defined Benefit Pension Plan
Effect of formerly SFAS No. 158 on the consolidated balance sheet [Abstract]
Non-current liabilities	82	58
Deferred tax	(22)	(16)
Shareholders equity	60	42
Annual pension cost [Abstract]
Service cost	13	14	12
Interest cost on prior years' benefit obligation	7	7	5
Gross pension cost for the year	20	21	17
Expected return on plan assets	(6)	(4)	(5)
Administration charges	(1)	0	0
Net pension cost for the year	15	17	12
Social security cost	2	2	2
Amortization of actuarial gains/losses	2	2	0
Impact of settlement/curtailment funded status	0	(2)	(4)
Total net pension cost	19	19	10
The funded status of the defined benefit plan [Abstract]
Projected benefit obligations at end of period	186	180	171
Plan assets at market value	(114)	(129)	(122)
Accrued pension liability exclusive social security	72	51
Social security related to pension obligations	10	7
Accrued pension liabilities	82	58
Change in benefit obligations [Roll Forward]
Benefit obligations at beginning of year	180	171
Interest cost	7	7	5
Service cost	13	14	12
Benefits paid	(2)	(2)
Change in unrecognized actuarial gain	23	13
Foreign currency translations	(35)	(15)
Acquisition/transfer members	0	(8)
Benefit obligations at end of year	186	180	171
Change in pension plan assets [Roll Forward]
Fair value of plan assets at beginning of year	129	122
Estimated return	2	5
Contribution by employer	17	19
Administration charges	(1)	0	0
Benefits paid	(2)	(2)
Change in unrecognized actuarial loss	(9)	0
Foreign currency translations	(22)	(10)
Acquisition/transfer members	0	(5)
Fair value of plan assets at end of year	$ 114	$ 129	$ 122
Assumptions used in calculation of pension obligations [Abstract]
Rate of compensation increase at the end of year (in hundredths)	2.75%	3.75%	3.50%
Discount rate at the end of year (in hundredths)	2.30%	4.00%	4.20%
Prescribed pension index factor (in hundredths)	1.20%	1.40%	1.40%
Expected return on plan assets for the year (in hundredths)	3.20%	4.40%	4.00%
Employee turnover (in hundredths)	4.00%	4.00%	3.50%
Expected increases in Social Security Base (in hundredths)	2.50%	3.50%	3.25%
Pension benefit plan assets [Abstract]
Weighted-average asset allocation of funds related to defined benefit plan (in hundredths)	100.00%	100.00%
Defined Benefit Pension Plan | Equity Securities
Pension benefit plan assets [Abstract]
Weighted-average asset allocation of funds related to defined benefit plan (in hundredths)	7.20%	4.20%
Defined Benefit Pension Plan | Debt Securities
Pension benefit plan assets [Abstract]
Weighted-average asset allocation of funds related to defined benefit plan (in hundredths)	51.90%	55.70%
Defined Benefit Pension Plan | Real Estate
Pension benefit plan assets [Abstract]
Weighted-average asset allocation of funds related to defined benefit plan (in hundredths)	14.20%	13.90%
Defined Benefit Pension Plan | Money Market
Pension benefit plan assets [Abstract]
Weighted-average asset allocation of funds related to defined benefit plan (in hundredths)	23.50%	24.70%
Defined Benefit Pension Plan | Other
Pension benefit plan assets [Abstract]
Weighted-average asset allocation of funds related to defined benefit plan (in hundredths)	3.20%	1.50%
Defined Benefit Pension Plan | Onshore Employees
Defined Benefit Plan Disclosure [Line Items]
Retirement pension as a percent of salary (in hundredths)	66.00%
Retirement age	67 years
Retirement pension cap (in hundredths)	66.00%
Multiple of base	12
Retirement age to receive pre-retirement pension	62 years
Defined Benefit Pension Plan | Offshore Employees
Defined Benefit Plan Disclosure [Line Items]
Retirement pension as a percent of salary (in hundredths)	60.00%
Retirement age	67 years
Defined Benefit Pension Plan | Offshore Employees, Mobile Units
Defined Benefit Plan Disclosure [Line Items]
Retirement age to receive pre-retirement pension	60 years
Defined Contribution Plan | Minimum
Defined Contribution Plan [Line Items]
Employee contribution (in hundredths)	5.00%
Defined Contribution Plan | Maximum
Defined Contribution Plan [Line Items]
Employee contribution (in hundredths)	8.00%

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Drilling units (Tables)

12 Months Ended

Dec. 31, 2014

Drilling units [Abstract]

Drilling units

(In US$ millions)	December 31, 2014		December 31, 2013
Cost	19,101		19,967
Accumulated depreciation	(2,991	)	(2,774	)
Re-classified as assets held for sale	(965	)	—
Net book value	15,145		17,193

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Interest expense (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Interest Expense [Abstract]
Gross interest expense	$ 548	$ 540	$ 416
Capitalized interest	(70)	(95)	(76)
Net interest expense	$ 478	$ 445	$ 340

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Other non-current assets

12 Months Ended

Dec. 31, 2014

Other Assets, Noncurrent Disclosure [Abstract]

Other non-current assets

Other non-current assets

Other non-current assets consist of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Deferred charges	103	114
Deferred tax effect of internal transfer of assets	102	131
Deferred mobilization costs	47	65
Deferred consideration (1)	154	142
Accrued revenue	—	155
Other	8	5
Total other non-current assets	414	612

(1) The Deferred consideration is related to the sale of the tender rig business. See Note 11 to the consolidated financial statements included herein.

Deferred charges represent debt arrangement fees that are capitalized and amortized into interest expense over the life of the debt instrument.

(In US$ millions)	December 31, 2014		December 31, 2013
Debt arrangement fees	385		338
Accumulated amortization	(240	)	(186	)
Total book value	145		152
Less: Short-term amount	(42	)	(38	)
Long-term amount	103		114
Amortization for the period	54		43

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Operating leases

12 Months Ended

Dec. 31, 2014

Leases, Operating [Abstract]

Operating leases

Operating leases

The Company has operating leases relating to premises, the most significant being its offices in Stavanger, London, Liverpool, Singapore, Houston, Rio de Janeiro and Dubai. In the years ended December 31, 2014, 2013 and 2012 rental expenses amounted to $24 million, $21 million and $25 million, respectively. Future minimum rental payments are as follows:

Year	(In US$ millions)
2015	15
2016	12
2017	10
2018	7
2019	7
2020 and thereafter	21
Total	72

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Business Acquisitions (Details) (3) (Sevan Drilling ASA, USD $) In Millions, unless otherwise specified	0 Months Ended
	Jul. 02, 2013
Business Acquisition [Line Items]
Cash and cash equivalents	$ 54
Restricted cash	63
Trade and other receivables	49
Current assets	166
Deferred income tax asset	76
Valuation allowance income tax asset	(76)
Other non-current assets	1
Non-current assets	2,474
Total assets	2,640
Current portion of long-term debt	(112)
Trade and other payables	(115)
Construction obligation	(923)
Unfavorable contracts	(79)
Other current liabilities	(26)
Current liabilities	1,255
Long-term interest bearing debt	(703)
Unfavorable contracts	(257)
Other non-current liabilities	(16)
Non-current liabilities	976
Total liabilities	2,231
Net assets acquired	409
Net book value of equity investment	109
Fair value of previously held equity investment	117
Gain on re-measurement of previously held equity investment	8
Fair value of establishment of non-controlling interest	197
Bargain purchase
Fair value of consideration transferred	78
Fair value of establishment of non-controlling interest	197
Fair value of previously held equity investment	117
Fair value of the consideration received	392
Gain on bargain purchase	17
Drilling units
Business Acquisition [Line Items]
Property, plant and equipment	1,246
Newbuildings
Business Acquisition [Line Items]
Property, plant and equipment	$ 1,227

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Impairment loss on marketable securities and investments in associated companies

12 Months Ended

Dec. 31, 2014

Impairment loss on marketable securities and investments in associated companies [Abstract]

Impairment loss on marketable securities and investments in associated companies

Impairment loss on marketable securities and investments in associated companies

In 2012, the Company determined that the decline in fair value of the Archer Limited ("Archer") investment was other than temporary based primarily upon its evaluation of the severity of the excess of its cost basis over the market price of the security and the prospects for recovery within 2013. As a result, an impairment loss was recognized reducing its cost basis of this associated company to the market price of the shares in question as of December 31, 2012, which was $121 million. The impairment loss amounted to $221 million and is presented as "Share of result from associated companies" in the consolidated statements of operations.

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Impairment loss on marketable securities and investments in associated companies (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Share in results from associated companies (loss)/gain	$ 89.0	$ (223.0)	$ (220.0)
Archer
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Current fair value of investment			121
Share in results from associated companies (loss)/gain			$ (221.0)

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Goodwill and other intangible assets (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Goodwill [Roll Forward]
Net book balance, beginning of period	$ 1,200	$ 1,320
Disposals and deconsolidations	(315)	(120)
Loss on impairment	(232)	0	0
Re-classified as assets held for sale	(49)	0
Net book balance, end of period	604	1,200	1,320
Amortization life of unfavorable contracts, lower range	2 years
Amortization life of unfavorable contracts, upper range	5 years
Gross Carrying Amount, Intangible Assets [Roll Forward]
Gross carrying value, balance at beginning of period	0	51
Derecognition of fully amortized contracts	0	(51)
Gross carrying value, balance at end of period	0	0	51
Accumulated Amortization, Intangible Assets [Roll Forward]
Accumulated amortization, balance at beginning of period	0	(49)
Amortization of favorable contracts	0	(2)
Derecognition of fully amortized contracts	0	51
Accumulated amortization, balance at end of period	0	0	(49)
Intangible Assets [Roll Forward]
Net book balance, beginning of period	0	2
Amortization of favorable contracts	0	(2)
Net book balance, end of period	0	0	2
Gross Carrying Amount, Intangible Liabilities [Roll Forward]
Balance at beginning of period	444	0
Additions	0	444
Balance at end of period	444	444	0
Accumulated Amortization, Intangible Liabilities [Roll Forward]
Accumulated amortization, balance at beginning of period	(67)	0
Amortization of unfavorable contracts	(130)	(67)
Accumulated amortization, balance at end of period	(197)	(67)	0
Intangible Liabilities [Roll Forward]
Net book balance, beginning of period	377	0
Additions	0	444
Amortization of unfavorable contracts	(130)	(67)
Net book balance, end of period	247	377	0
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2015	116
2016	65
2017	43
2018	23
2019	0
Total	247	377	0
Floaters
Goodwill [Roll Forward]
Net book balance, beginning of period	890
Disposals and deconsolidations	(286)
Net book balance, end of period	604
Tender Rigs
Goodwill [Roll Forward]
Net book balance, beginning of period	29
Disposals and deconsolidations	(29)	(120)
Net book balance, end of period	0	29
Drilling units
Goodwill [Roll Forward]
Estimated economic useful life	30 years
Discount rate	9.50%
Non-controlling Interest
Goodwill [Roll Forward]
Loss on impairment	$ (39)

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Related party transactions (Tables)

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

Receivables (payables) with Seadrill Partners and its subsidiaries as of December 31, 2014 consisted of the following:

(In US$ millions)	December 31, 2014
Rig financing agreements and Loan Agreements	237
$109.5 million Vendor financing loan	110
Deferred consideration receivable	74
Other receivables	264
Other payables	(77	)

In the 12 months ended December 31, 2014, the Company incurred the following lease costs on units leased from the Ship Finance subsidiaries.

(US$ millions)	2014	2013	2012
West Polaris	55	70	114
West Hercules	75	77	75
West Taurus	111	112	114
West Linus	59	—	—
Total	300	259	303

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Other revenues

12 Months Ended

Dec. 31, 2014

Revenues [Abstract]

Other revenues

Other revenues

Other revenues consist of the following:

	Year ended December 31
(In US$ millions)	2014	2013		2012
Amortization of unfavorable contracts	130	67		—
Amortization of favorable contracts	—	(2	)	(12	)
Revenues related party	97	2		15
External management fees with third parties	62	45		—
Total	289	112		3

The unfavorable contract values in 2014 and 2013 arose from our acquisitions of the Songa Eclipse and Sevan Drilling ASA, see Notes 12 and 21.

Related party revenues were related to management support and administrative services during the year provided to our associates in which we maintain an investment.

External management fees relate to the operational, administrative and support services we provide to SapuraKencana as part of the agreement we entered into when we sold majority of the tender rig business. See Note 11.

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) In Millions, except Share data, unless otherwise specified	Total USD ($)	Total equity before NCI USD ($)	Share Capital	Additional paid-in capital USD ($)	Contributed surplus USD ($)	Accumulated other comprehensive income USD ($)	Retained Earnings USD ($)	Non-controlling Interest USD ($)
Beginning Balance at Dec. 31, 2011	$ 6,302	$ 5,977		$ 2,097	$ 1,956	$ (5)	$ 994	$ 325
Beginning Balance, shares at Dec. 31, 2011			935,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Sale of treasury shares	15	15		12
Sale of treasury shares, shares			3,000,000
Share-based compensation	8	8		8
Establishment of non-controlling interest in Seadrill Partners	203	134		134				69
Costs related to capital increase in subsidiary	(3)	(3)		(3)
Dividends declared	(2,069)	(2,019)					(2,019)	(50)
Private placement in North Atlantic Drilling Ltd (NADL)	150	84		84				66
Other comprehensive income	213	199				199		14
Net income	1,205	1,108					1,108	97
Ending Balance at Dec. 31, 2012	6,024	5,503		2,332	1,956	194	83	521
Ending Balance, Shares at Dec. 31, 2012	469,178,074		938,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Sale of treasury shares	6	6		6
Purchase of treasury shares	(39)	(39)		(39)
Establishment of non-controlling interest in Seadrill Partners	297							297
Dividends declared	(1,356)	(1,287)					(1,287)	(69)
Dividend to Non-controlling interests in VIEs	(223)							(223)
Sale of drilling units to Seadrill Partners		209		209				(209)
Other comprehensive income	335	334				334		1
Share-based compensation	7	7		7
Issuance of common units by Seadrill Partners to public	365	228		228				137
Issuances of common units by Seadrill Partners and impact on non-controlling interest		(102)		(102)				102
Net income	2,786	2,653					2,653	133
Ending Balance at Dec. 31, 2013	8,202	7,512		2,641	1,956	528	1,449	690
Ending Balance, Shares at Dec. 31, 2013	468,978,492
Beginning Balance at Nov. 30, 2013
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances of common units by Seadrill Partners and impact on non-controlling interest								83
Ending Balance at Dec. 31, 2013	8,202	7,512		2,641	1,956	528	1,449	690
Beginning Balance, shares at Dec. 31, 2013	468,978,492		938,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Sale and purchase of treasury shares, net	(23)	(23)		(22)
Sale and purchase of treasury shares, net, shares			(1,000,000)
Share-based compensation	10	10		10
Employee stock options issued	5	5		4
Employee stock options issued, shares			1,000,000
Establishment of non-controlling interest in Seadrill Partners	4							4
Dividends declared	(1,466)	(1,415)					(1,415)	(51)
Sale of drilling units to Seadrill Partners	(13)	(6)		(6)				(7)
Conversion of convertible bond	615	615		568
Conversion of convertible bond, shares			47,000,000
Deconsolidation of Seadrill Partners	(115)							(115)
Initial public offering of NADL	115	63		63				52
Other comprehensive income	(1,031)	(976)				(976)		(55)
Net income	4,087	3,979					3,979	108
Ending Balance at Dec. 31, 2014	$ 10,390	$ 9,764		$ 3,258	$ 1,956	$ (448)	$ 4,013	$ 626
Ending Balance, Shares at Dec. 31, 2014	492,759,938		985,000,000

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Gain on realization of marketable securities (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended			0 Months Ended	1 Months Ended
	May 17, 2012	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	May 30, 2012	Apr. 30, 2014	Apr. 30, 2013
Business Acquisition [Line Items]
Number of shares received of merged entity (in shares)	589,000,000
Proceeds from disposal of associated companies	$ 65.0	$ 373.0	$ 0	$ 65.0
Sapura Kencana
Business Acquisition [Line Items]
Ownership interest, percentage	11.79%				6.40%
Shares sold (in shares)					300,000,000
Gain/(loss) reclassified into income					84
Cash proceeds					198
SapuraCrest
Business Acquisition [Line Items]
Ownership interest, percentage	23.59%
Gain on decline in ownership interest	169
Sapura Kencana
Business Acquisition [Line Items]
Gain/(loss) reclassified into income		131	0	(84)		131
Proceeds from available-for-sale securities						$ 297
Investment owned, ownership percentage				6.40%		8.18%	12.00%

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Risk management and financial instruments - Loss Contingencies (Details) (Uninsured Risk, USD $)	12 Months Ended
	Dec. 31, 2014 rig
Loss Contingencies [Line Items]
Loss contingency, range of possible loss, maximum	$ 5,000,000
Number of semi tenders insured	1
Self insured retention period	60 days
Minimum
Loss Contingencies [Line Items]
Compensation period	210 days
Maximum
Loss Contingencies [Line Items]
Compensation period	290 days

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Interest expense (Tables)

12 Months Ended

Dec. 31, 2014

Interest Expense [Abstract]

Schedule of Debt

	Year ended December 31
(In US$ millions)	2014		2013		2012
Gross interest expense	548		540		416
Capitalized interest	(70	)	(95	)	(76	)
Net interest expense	478		445		340

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Operating leases (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Leases, Operating [Abstract]
Rent expense	$ 24	$ 21	$ 25
Operating leases, future minimum payments due, fiscal year maturity [Abstract]
2015	15
2016	12
2017	10
2018	7
2019	7
2020 and thereafter	21
Total	$ 72

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Other non-current liabilities (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Other Liabilities Disclosure [Abstract]
Accrued pension liabilities	$ 84		$ 58
Deferred mobilization revenues	224		311
Intangible liabilities - unfavorable contracts	131	[1]	268	[1]
Derivative financial instruments	257	[2]	250	[2]
Other non-current liabilities	3		11
Total other non-current liabilities	$ 699		$ 898

[1] Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Note 12 and 21 to the consolidated financial statements included herein.

[2] Derivative financial instruments represent liabilities associated with other derivative arrangements. See Note 32 to the consolidated financial statements included herein.

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Equity offerings and drilling unit sale transactions with Seadrill Partners (Sale of Seadrill Partners Equity) (Details) (Seadrill Partners LLC, USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended			1 Months Ended
	Dec. 13, 2013	Oct. 18, 2013	Oct. 24, 2012	Dec. 31, 2013	Oct. 31, 2013
Subsidiary, Sale of Stock [Line Items]
Common unit price representing liability entity's interests	29.5	32.29	22.00
Gross proceeds from completion of IPO	380	0	221
Net proceeds from public	365	0	203
Ownership percentage	62.35%	77.47%	75.67%	62.35%	77.47%
Stock Issued to Public
Subsidiary, Sale of Stock [Line Items]
Number of common units issued	12,880,000	0	10,062,500	12,880,000
Stock Issued to Reporting Entity
Subsidiary, Sale of Stock [Line Items]
Number of common units issued	3,394,916	3,310,622	14,752,525	3,394,916	3,310,622

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Subsequent Events

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

$950 million senior secured credit facility

In January 2015 the Company entered into a $950 million senior secured credit facility with a syndicate of banks and export credit agencies to partly fund the delivery of the West Carina and to refinance the Company's indebtedness related to the West Eclipse. The facility comprised of a $285 million term loan, a $475 million revolving facility and a $190 million ECA facility. The commercial facilities have a five years term and bear interest at LIBOR plus 2.00% and the ECA facility has a twelve year term and has a CIRR interest rate of 2.12%.

NADL bond and credit facilities amendment

In February 2015, NADL received approval from its Norwegian Bondholders to amend the Bond Agreement for its NOK1.5 billion Norwegian Bond maturing in 2018. Under the terms of the amendment, Seadrill will provide a guarantee for the Bond Issue in exchange for amendments to the covenant package, principally replacing the current financial covenants with the financial covenants within Seadrill's NOK bonds. Additionally NADL received approval to amend its $2 billion credit facility and $475 million term loan and revolving credit facility. Under the terms of the agreements, Seadrill will provide a guarantee for the credit facility in exchange for amendments to the covenant package, principally replacing the existing financial covenants with financial covenants within Seadrill's secured credit facilities. This amendment to the covenants was applicable to the period ended December 31, 2014. As such there are no longer separate financial covenants contained within NADL's credit facilities or bond agreements.

Purchase of loan from Metrogas

In March 2015, the Company purchased a $50 million subordinated loan made by Metrogas, a related party, to Archer, a related party. The aggregate consideration paid for the loan by the Company to Metrogas was $51 million which is equal to the sum of the outstanding principal amount of $50 million and $1 million accrued commitment fee and interest on the loan.

Deconsolidation of SeaMex Limited

During the year ended December 31, 2014, the Company entered into a joint venture agreement with an investment fund controlled by Fintech Advisory Inc. (Fintech), for the purpose of owning and managing certain jack-up drilling units located in Mexico under contract with Pemex. The West Oberon, West Intrepid, West Defender, West Courageous and West Titania jack-up drilling rigs were included within the joint venture. The transaction was completed on March 10, 2015, when Fintech subscribed for a 50% ownership interest in SeaMex Limited, which was previously 100% owned by the Company.

As a result of the transaction the Company no longer controls the entities that own and operate these jack-up drilling units, and accordingly the Company will deconsolidate these entities as of March 10, 2015, and subsequently recognize its 50% investment in the joint venture at fair value. The assets and liabilities held within the Company’s consolidated balance sheet as at December 31, 2014 that are related to the disposal group have been reclassified as held for sale and depreciation has ceased for the related assets. The Company has not presented this disposal group as discontinued operations in our statement of operations it will continue to hold significant influence over the joint venture. The Company is still finalizing the accounting for the transaction.

Subsequent to the period end, on March 6, 2015, the tranches of the $700 million senior secured loan facility relating to the West Courageous, West Defender, and the West Intrepid were repaid, totaling $170 million. On March 26, 2015, the $150 million secured credit facility relating to the West Oberon, was repaid in full.

Rosneft Framework Agreement extension

On May 26, 2014, we entered into an Investment and Co-Operation Agreement with NADL and Rosneft to pursue onshore and offshore growth opportunities in the Russian market. In connection with the Investment and Co-Operation Agreement, on August 20, 2014, we entered into a Framework Agreement with NADL and Rosneft, pursuant to which Rosneft agreed to sell, and NADL agreed to purchase, 100% of the capital of Rosneft’s Russian land drilling subsidiary, RN Burenie LLC, together with its subsidiaries, in exchange for such number of newly issued common shares of NADL, based on an agreed share price of $9.25 per share, as payment of the agreed purchase price, subject to certain cash adjustments. As part of this transaction, Rosneft has agreed to purchase additional shares in NADL at closing, at the same price, to increase its aggregate ownership interest in NADL to at least 30%. In addition, the Framework Agreement provides that Rosneft is entitled to receive additional shares of NADL following the commencement of certain offshore drilling contracts awarded by Rosneft to NADL. The Framework Agreement also provides that we and Rosneft will enter into a Shareholder Agreement to reflect certain agreements relating to NADL and the shares owned by us and Rosneft in NADL, including, among other things, certain restrictions on such stockholders’ rights to vote, standstill restrictions and rights of first refusal. The Framework Agreement also contains customary closing conditions, including the necessary corporate approvals from Rosneft, and certain termination rights.

The Framework Agreement provided for a closing date of no earlier than November 10, 2014, and that the agreement would terminate if the transaction had not closed by December 31, 2014. On November 7, 2014 the parties mutually agreed to extend the date of termination of the Framework Agreement until May 31, 2015 and on April 16, 2015, the parties mutually agreed to further extend the date of termination of the Framework Agreement until May 31, 2017, whereby both parties can effectively terminate the Framework Agreement and / or any offshore drilling contracts at any time prior to May 31, 2017 at no cost. The parties have agreed to use their reasonable endeavors to renegotiate, by no later than May 31, 2017, the terms of the transactions contemplated in the Framework Agreement, the characteristics of the transactions contemplated in the Framework Agreement, and the terms of the related offshore drilling contracts. During this time, NADL is permitted to market its offshore drilling rigs subject to existing drilling contracts with Rosneft, enter into binding contracts with third parties in respect of those rigs, delay the mobilization of those rigs under the Rosneft contracts in order to comply with the terms of any contracts with third parties, delay the construction or delivery of any of those rigs, and extend the construction period or shipyard stay of any of those rigs.

We can provide no assurances that we will be able to reach an agreement with Rosneft by May 31, 2017. Even if an agreement is reached, the terms of such agreement may differ materially from the terms contemplated in the original Framework Agreement as described herein.

Contract developments

In February 2015, we announced that we no longer believed that the previously announced contract extensions of our ultra-deepwater semi-submersibles the West Taurus and the West Eminence with Petrobras will be concluded in the timeframe or on the previously approved commercial terms. As a result, we removed $1.1 billion from our expected contract backlog.

In March 2015, NADL announced it had received a notice of termination from Rosneft of the service order for the West Navigator. The drillship was indicatively scheduled to commence operations under its five-year contract with Rosneft during the summer of 2015, which would have required earlier mobilization. NADL believes that it will be very challenging to close the transactions with Rosneft on the same terms or in the timeframe contemplated in the executed agreements. There are significant risks attached to remaining drilling contracts with Rosneft. NADL will be marketing the West Navigator for alternative future opportunities, however remains in discussions with Rosneft to explore various alternatives for future co-operation.

Guarantee provided to Seabras Sapura JV

In February 2012 the Company entered into a joint venture agreement with SapuraKencana for the purpose of owning and managing certain pipelaying support vessels to be located in Brazil under contract with Petrobras. In April 2015 the relevant subsidiaries under the joint venture, 50% of the shares of such subsidiaries being indirectly owned by the Company, entered into a $780 million senior secured credit facility agreement in order to part fund the acquisition of the Sapura Onix, Sapura Jade and Sapura Rubi pipe-laying support vessels. As a condition to the lenders making the loan available to each of the borrowers, the Company has guaranteed, on a 50/50 basis with SapuraKencana, the obligations of the borrowers during certain defined time periods, the release of such guarantees being subject to the satisfaction of certain defined conditions.

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Restricted cash (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Restricted Cash [Line Items]
Total restricted cash	$ 449		$ 318
Long-term restricted cash (related to CIRR deposits and margin calls)	181		150
Short-term restricted cash	268		168
CIRR Deposits
Restricted Cash [Line Items]
Total restricted cash	124	[1]	197	[1]
Margin Calls Related to Share Forward Agreements
Restricted Cash [Line Items]
Total restricted cash	264		72
Cash pledged as collateral under credit facilities
Restricted Cash [Line Items]
Total restricted cash			0
Tax Withholding Deposits
Restricted Cash [Line Items]
Total restricted cash	$ 11		$ 49

[1] CIRR deposits are cash deposited with commercial banks, which match Commercial Interest Reference Rate ("CIRR") loans from Eksportfinans ASA, the Norwegian export credit agency (See Note 23 to the consolidated financial statements included herein). The deposits are used to make repayments of the CIRR loans.

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Assets Held For Sale (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Mar. 10, 2015
Current assets
Accounts receivables, net	$ 78	$ 0
Total current assets	134	0
Non-current assets
Total non-current assets	1,105	0
Total assets	1,239	0
Current liabilities
Total current liabilities	(58)	0
Non-current liabilities
Total non-current liabilities	(50)	0
SeaMex Limited
Current assets
Cash and cash equivalents	27
Accounts receivables, net	78
Deferred tax assets	9
Other current assets	20
Total current assets	134
Non-current assets
Drilling units	965
Deferred tax assets LT	5
Goodwill	49
Other non-current assets	86
Total non-current assets	1,105
Total assets	1,239
Current liabilities
Trade accounts payable	(2)
Other current liabilities	(56)
Total current liabilities	(58)
Non-current liabilities
Other non-current liabilities	(50)
Total non-current liabilities	(50)
Total liabilities	$ (108)
SeaMex Limited | Subsequent Event
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Third party ownership interest			50.00%
Ownership interest, percentage			50.00%
SeaMex Limited
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Ownership interest prior to disposal	100.00%

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General information (Details)	12 Months Ended
	Dec. 31, 2014 drilling_unit
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of offshore drilling units owned by the Company	43
Number of offshore drilling units under construction	16
Percentage of voting control for certain variable interest entities (in hundredths)	50.00%

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Newbuildings (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Movement in Newbuildings [Roll Forward]
Closing balance	$ 17,175	$ 20,612
Newbuildings
Movement in Newbuildings [Roll Forward]
Opening balance	3,419	1,882
Additions	2,433	4,930
Capitalized interest and loan related costs	70	95
Re-classified as Drilling Units	(3,892)	(3,335)
Disposal of tender rigs	0	(153)
Closing balance	$ 2,030	$ 3,419

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Related party transactions (Acquisitions) (Details) (USD $)	0 Months Ended	12 Months Ended			0 Months Ended			3 Months Ended
	May 17, 2012	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jul. 21, 2014	Mar. 21, 2014	Nov. 04, 2014	Dec. 31, 2014	May 10, 2005	Jan. 02, 2014
Related Party Transaction [Line Items]
Shareholders' Ownership Percentage to Trigger Mandatory Offer Rules, Minimum		33.33%						33.33%
Gain on disposals		$ 632,000,000	$ 61,000,000	$ 0
Proceeds from disposal of investments in associated companies	65,000,000	373,000,000	0	65,000,000
Share in results from associated companies (net of tax)		89,000,000	(223,000,000)	(220,000,000)
Shareholders' ownership percentage									24.17%
Seadrill Capricorn Holdings LLC
Related Party Transaction [Line Items]
Ownership interest, percentage						49.00%	49.00%			49.00%
Seadrill Operating LP
Related Party Transaction [Line Items]
Ownership interest, percentage					42.00%					70.00%
Equity method investment, percentage of investment sold					28.00%
Proceeds from disposal of investments in associated companies					373,000,000
Share in results from associated companies (net of tax)					(88,000,000)
West Auriga
Related Party Transaction [Line Items]
Enterprise value						1,240,000,000
Debt assumed						443,000,000
Purchase price						797,000,000
Cash						697,000,000
Discount note issued						100,000,000
Gain on disposals						440,000,000
Disposal group, goodwill						33,000,000
Consideration						466,000,000
West Vela
Related Party Transaction [Line Items]
Enterprise value							900,000,000
Debt assumed							433,000,000
Purchase price							541,000,000
Cash							467,000,000
Deferred consideration							74,000,000
Gain on disposals							191,000,000
Disposal group, goodwill							41,000,000
Deferred contingent consideration per day, remainder of contract							44,000
Deferred contingent consideration per day							40,000
Consideration							535,000,000
Gain (loss) on contingent consideration related to disposals								$ 1,000,000

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Other non-current liabilities

12 Months Ended

Dec. 31, 2014

Other Liabilities Disclosure [Abstract]

Other non-current liabilities

Other non-current liabilities

Other non-current liabilities are comprised of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Accrued pension liabilities	84	58
Deferred mobilization revenues	224	311
Intangible liabilities - unfavorable contracts (1)	131	268
Derivative financial instruments (2)	257	250
Other non-current liabilities	3	11
Total other non-current liabilities	699	898

(1) Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Note 12 and 21 to the consolidated financial statements included herein.

(2) Derivative financial instruments represent liabilities associated with other derivative arrangements. See Note 32 to the consolidated financial statements included herein.

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Supplementary cash flow information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Schedule of Supplemental Cash Flow Elements [Line Items]
Original amount of debt converted	$ 584	[1]	$ 0	[1]	$ 0	[1]
Conversion of convertible bond into shares, net increase in equity (4)	615	[1]	0	[1]	0	[1]
Purchase of SFL Polaris, net increase in related party payables and net decrease in equity	13	[2]	0	[2]	0	[2]
Sale of non-controlling interest, increase in receivables	4	[3]	0	[3]	0	[3]
Dividend to non-controlling interests in VIEs	0	[4]	223	[4]	0	[4]
Dividend payable to related party	0	[5]	0	[5]	93	[5]
West Auriga
Schedule of Supplemental Cash Flow Elements [Line Items]
Disposal of West Auriga - consideration received as a loan note	100	[6]	0	[6]	0	[6]
West Vela
Schedule of Supplemental Cash Flow Elements [Line Items]
Deferred consideration receivable	74	[6]	0	[6]	0	[6]
Tender Rig Business
Schedule of Supplemental Cash Flow Elements [Line Items]
Deferred consideration receivable	0	[6]	145	[6]	0	[6]
Disposal of tender rig business - deferred consideration received in shares	0	[6]	416	[6]	0	[6]
Archer
Schedule of Supplemental Cash Flow Elements [Line Items]
Settled against existing related party loan	0	[7]	55	[7]	0	[7]
Asia Offshore Drilling
Schedule of Supplemental Cash Flow Elements [Line Items]
Settled against existing related party loan	$ 0	[8]	$ 67	[8]	$ 0	[8]

[1] Conversion of convertible bonds in July 2014 - refer to Note 23 - Long term debt

[2] Purchase of SFL Polaris from Ship Finance - refer to Note 35 - VIEs

[3] Sale of interests in Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited to Hiers Holding Limited - refer to Note 27 - Non-Controlling interests

[4] Dividends declared by VIEs in 2013 to Ship Finance was settled against related party balances with Ship Finance - refer to Note 27 - Non-Controlling interests

[5] Loan issued to Metrogas in 2012 - refer to Note 31 - Related party transactions

[6] Disposals of the West Auriga, West Vela, in 2014 and the disposal of the tender rig business in 2013 - refer to Note 11 - Disposals of businesses

[7] Private placement of Archer shares in February 2013 was settled against related party loan receivable - refer to Note 17 - Investments in associated companies

[8] Private placement of AOD shares in March 2013 was settled against elated party loan receivable - refer to Note 17 - Investments in associated companies

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Business Acquisitions (Details) (Songa Eclipse Ltd, USD $) In Millions, unless otherwise specified	Jan. 03, 2013
Songa Eclipse Ltd
Fair value of net assets acquired:
Drilling units	$ 698
Unfavorable contract – Other current liabilities	(27)
Unfavorable contract – Other non-current liabilities	(81)
Net assets acquired	590
Fair value of consideration	$ 590

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Disposals of businesses and deconsolidation of subsidiary (Seadrill's share of basis difference) (Details) (Seadrill Partners LLC, USD $) In Millions, unless otherwise specified	Jan. 02, 2014
Schedule of Equity Method Investments [Line Items]
Book value	$ 3,444
Fair value	6,629
Basis Difference	3,185
Seadrill's share of basis difference	1,789	[1]
Drilling Units
Schedule of Equity Method Investments [Line Items]
Book value	3,444
Fair value	5,245
Basis Difference	1,801
Seadrill's share of basis difference	1,295	[1]
Drilling Contracts
Schedule of Equity Method Investments [Line Items]
Book value	0
Fair value	170
Basis Difference	170
Seadrill's share of basis difference	142	[1]
Goodwill
Schedule of Equity Method Investments [Line Items]
Book value	0
Fair value	1,214
Basis Difference	1,214
Seadrill's share of basis difference	$ 352	[1]

[1] Seadrill's share of the basis difference relates to both its investment in the subordinated units of Seadrill Partners, and its direct ownership interests in various subsidiaries of Seadrill Partners, all of which investments are accounted for under the equity method. The total basis difference has been assigned based on Seadrill's proportional ownership interest in each investee. In the case of Seadrill's investment in the subordinated units of Seadrill Partners, the proportional allocation to the subordinated units was based on the relative fair values of the various equity interests in Seadrill Partners.

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Supplementary cash flow information (Tables)

12 Months Ended

Dec. 31, 2014

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

The table below summarizes the non-cash investing and financing activities relating to the periods presented:

(In US$ millions)	December 31, 2014	December 31, 2013	December 31, 2012
Non-cash investing activities
Disposal of West Auriga - consideration received as a loan note (1)	100	—	—
Disposal of West Vela - deferred consideration receivable (1)	74	—	—
Disposal of tender rig business - deferred consideration received in shares (1)	—	416	—
Disposal of tender rig business - deferred consideration in receivables (1)	—	145	—
Acquisition of Archer shares, settled against existing related party loan (2)	—	55	—
Acquisition of AOD shares, settled against existing related party loan (3)	—	67	—
Non-cash financing activities
Conversion of convertible bond into shares, decrease in long term debt (4)	584	—	—
Conversion of convertible bond into shares, net increase in equity (4)	615	—	—
Purchase of SFL Polaris, net increase in related party payables and net decrease in equity (5)	13	—	—
Sale of non-controlling interest, increase in receivables (6)	4	—	—
Dividend to non-controlling interests in VIEs (7)	—	223	—
Dividend payable to related party (8)	—	—	93

1. Disposals of the West Auriga, West Vela, in 2014 and the disposal of the tender rig business in 2013 - refer to Note 11 - Disposals of businesses

2. Private placement of Archer shares in February 2013 was settled against related party loan receivable - refer to Note 17 - Investments in associated companies

3. Private placement of AOD shares in March 2013 was settled against elated party loan receivable - refer to Note 17 - Investments in associated companies

4. Conversion of convertible bonds in July 2014 - refer to Note 23 - Long term debt

5. Purchase of SFL Polaris from Ship Finance - refer to Note 35 - VIEs

6. Sale of interests in Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited to Hiers Holding Limited - refer to Note 27 - Non-Controlling interests

7. Dividends declared by VIEs in 2013 to Ship Finance was settled against related party balances with Ship Finance - refer to Note 27 - Non-Controlling interests

8. Loan issued to Metrogas in 2012 - refer to Note 31 - Related party transactions

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Gain on disposals (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Mar. 21, 2014	Nov. 04, 2014
Significant Acquisitions and Disposals [Line Items]
Book value on disposal	$ 17,175	$ 20,612
Gain	632	61	0
Drilling units
Significant Acquisitions and Disposals [Line Items]
Net proceeds			0
Book value on disposal	15,145	17,193	0
Gain			0
West Auriga
Significant Acquisitions and Disposals [Line Items]
Gain				440
West Auriga | Drilling units
Significant Acquisitions and Disposals [Line Items]
Net proceeds	466
Book value on disposal	26
Gain	440
West Vela
Significant Acquisitions and Disposals [Line Items]
Gain					191
West Vela | Drilling units
Significant Acquisitions and Disposals [Line Items]
Net proceeds	536
Book value on disposal	344
Gain	192
West Janus | Jack-up rigs
Significant Acquisitions and Disposals [Line Items]
Net proceeds		73
Book value on disposal		12
Gain		61
Total | Drilling units
Significant Acquisitions and Disposals [Line Items]
Net proceeds	1,002	73	0
Book value on disposal	370	12	0
Gain	$ 632	$ 61	$ 0

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Long-term debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Debt facilities

As of December 31, 2014 and 2013, the Company had the following debt:

(In US$ millions)	December 31, 2014		December 31, 2013
Credit facilities:
$1,500 facility	—		706
$1,200 facility	—		733
$700 facility	420		490
$1,121 facility	—		72
$2,000 facility (NADL)	1,367		1,503
$400 facility	280		320
$550 facility	—		440
$420 facility	351		—
$440 facility	258		293
$450 facility	416		450
$1,450 facility	433		1,390
$360 facility (Asia Offshore Drilling)	309		345
$300 facility	210		234
$1,750 facility (Sevan Drilling)	1,225		1,400
$150 facility	150		150
$450 facility (2013)	397		450
$1,500 facility (2014)	1,469		—
$1,350 facility	1,317		—
Total credit facilities	8,602		8,976
Ship Finance Loans
$420 facility (SFL Polaris)	—		387
$375 facility (SFL Hercules)	284		362
$390 facility (SFL Deepwater)	303		383
$475 facility (SFL Linus)	451		—
Total Ship Finance Loans	1,038		1,132
Unsecured bonds and convertible bonds
Total unsecured bonds	2,856		2,584
Convertible bonds	—		577
Total unsecured bonds and convertible bonds	2,856		3,161
Other credit facilities with corresponding restricted cash deposits	124		197
Total debt	12,620		13,466
Less: current portion	(2,309	)	(1,566	)
Long-term portion	10,311		11,900

Maturities of outstanding debt

The outstanding debt as of December 31, 2014 is repayable as follows:

(In US$ millions)	December 31, 2014
2015	2,309
2016	1,458
2017	2,869
2018	2,269
2019	2,725
2020 and thereafter	990
Total debt	12,620

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Other non-current assets (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Other Assets, Noncurrent Disclosure [Abstract]
Deferred charges	$ 103		$ 114
Deferred tax effect of internal transfer of assets	102		131
Deferred mobilization costs	47		65
Deferred consideration	154	[1]	142	[1]
Accrued revenue	0		155
Other	8		5
Total other non-current assets	414		612
Deferred Finance Costs [Abstract]
Debt arrangement fees	385		338
Accumulated amortization	(240)		(186)
Total book value	145		152
Less: Short-term amount	(42)		(38)
Long-term amount	103		114
Amortization for the period	$ 54		$ 43		$ 30

[1] The Deferred consideration is related to the sale of the tender rig business. See Note 11 to the consolidated financial statements included herein.

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Other current assets (Tables)

12 Months Ended

Dec. 31, 2014

Other Assets [Abstract]

Other current assets

Other current assets include:

(In US$ millions)	December 31, 2014	December 31, 2013
Prepaid expenses	30	43
Deferred charges	42	38
Accrued revenue	—	43
Unrealized gains on derivative contracts	5	9
Reimbursable amounts due from customers	79	59
Deferred mobilization cost	7	57
Deferred tax asset	9	—
Taxes receivable	29	28
Other current assets	72	86
Total other current assets	273	363

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Accounting policies (Details)	12 Months Ended
	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Threshold percentage for recognizing actuarial gains and losses (in hundredths)	10.00%
Overhauls of drilling units
Property, Plant and Equipment [Line Items]
Estimated economic useful life	5 years
Drilling units
Property, Plant and Equipment [Line Items]
Estimated economic useful life	30 years
Period within which management is actively committed to a probable sale of assets classified as held for sale	1 year
Equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated economic useful life	3 years
Equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated economic useful life	5 years

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Disposals of businesses and deconsolidation of subsidiary

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Deconsolidation of subsidiary

Disposals of businesses and deconsolidation of subsidiary

Disposals in 2014

Deconsolidation of Seadrill Partners

Under the terms of the Operating Agreement of Seadrill Partners, the board of directors of Seadrill Partners has the power to oversee and direct the operations of, and manage and determine the strategies and policies of Seadrill Partners. During the period from Seadrill Partners' IPO in October 2012 until the time of its first effective Annual General Meeting ("AGM") on January 2, 2014, the Company retained the sole power to appoint, remove and replace all members of Seadrill Partner's board of directors. From the first AGM, the majority of the board members became electable by the common unitholders and accordingly, from this date the Company no longer retained the power to control the board of directors as a result of certain provisions in the Operating Agreement which limits the Company's ability to vote its full holding of common units in an election of directors to the board of Seadrill Partners. As of January 2, 2014, Seadrill Partners is considered to be an associated company, and a related party, and not a controlled subsidiary of the Company. As such Seadrill Partners was deconsolidated by the Company.

Under the terms of various agreements between Seadrill and Seadrill Partners entered into in connection with the IPO of Seadrill Partners, Seadrill will continue to provide management, technical and administrative services to Seadrill Partners and its subsidiaries. See further discussion in Note 31 for these services and agreements.

As a result of the deconsolidation the Company has derecognized the assets and liabilities of Seadrill Partners and its subsidiaries, and has recognized its ownership interests in Seadrill Partners and its direct ownership interests in Seadrill Partners subsidiaries, Seadrill Capricorn Holdings LLC, Seadrill Operating LP, Seadrill Deepwater Drillship Ltd and its indirect ownership of Seadrill Mobile Units through another wholly owned subsidiary, at fair value at the date of deconsolidation. Additionally, the external third party debt associated with the drilling units in Seadrill Partners is not derecognized from the Company on the deconsolidation date, as the external debt was not transferred to Seadrill Partners or its subsidiaries. However, the Company had entered into back to back loan agreements at the time of the IPO and upon each sale of a drilling unit to Seadrill Partners which mirror the same terms and conditions. Therefore, the Company has recognized a related party loan receivable for similar amounts. The excess of the fair value of the investments over the carrying value of Seadrill’s share of Seadrill Partners' net assets has been recognized as a gain in the Company’s consolidated statement of operations.

The gain recognized on deconsolidation, which all relates to the remeasurement of the Company's retained interests in Seadrill Partners and its subsidiaries is as follows:

(In US$ millions)	As at January 2, 2014
Fair value of investment in Seadrill Partners (a)	3,724
Carrying value of the non-controlling interest in Seadrill Partners	115
Subtotal	3,839
Less:
Carrying value of Seadrill Partners’ net assets	1,260
Goodwill allocated to Seadrill Partners	240
Gain on deconsolidation of Seadrill Partners	2,339

(a)Fair value of investments and continuing involvement with investees

The estimated fair value of the Company's residual interest in Seadrill Partners comprised of the following:

(In US$ millions)	As of January 2, 2014
Common units (i)	671
Subordinated units (ii)	427
Seadrill Member Interest and Incentive Distribution Rights ("IDRs") (iii)	244
Direct ownership interests (iv)	2,382
Total	3,724

(i) Common units (marketable securities)

As of the deconsolidation date, the Company held 21.5 million common units representing 48.3% of the common units in issue as a class. The Company's holding in the voting common units of Seadrill Partners are accounted for as marketable securities on the basis that during the subordination period the common units have preferential dividend and liquidation rights, and therefore do not represent ‘in-substance common stock’ as defined by US GAAP.

These securities have been recognized on January 2, 2014 at the quoted market price and are re-measured at fair value each reporting period. Any unrealized gains and losses on these securities are recognized directly in equity as a component of other comprehensive income unless an unrealized loss is considered "other-than-temporary", in which case it is transferred to the statement of operations and realized. Dividend income from the common units is recognized in the consolidated statement of operations.

(ii) Subordinated units

As of the deconsolidation date the Company held 16.5 million units representing 100% of the subordinated units. The Company's holding in the subordinated units of Seadrill Partners are accounted for under the equity method on the basis that the subordinated units are considered to be ‘in-substance common stock’. The subordination period will end on the satisfaction of various tests as prescribed in the Operating Agreement of Seadrill Partners, but will not end before September 30, 2017 except upon removal of the Seadrill Member. Upon the expiration of the subordination period, the subordinated units will convert into common units.

The fair value of the subordinated units on January 2, 2014, was determined based on the quoted market price of the listed common units as of the deconsolidation date, but discounted for their non-tradability and subordinated dividend and liquidation rights during the subordination period. Under the equity method the Company recognizes its share of Seadrill Partners’ earnings allocable to the subordinated units, less amortization of the basis difference (see (c) below), through the ‘share in results of associated companies’ line in the consolidated statement of operations. Dividends are recognized as a reduction in investment carrying value.

(iii) Seadrill Member Interest and IDRs

The Seadrill Member Interest (which is a 0% non-economic interest) holds the rights to 100% of the IDRs and is unable to trade these until the end of the subordination period without the approval of a majority of unaffiliated common unitholders. The Seadrill Member Interest and the IDRs in Seadrill Partners are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured.

The fair value of the Company's interest in the Seadrill Member and the attached IDRs as of January 2, 2014 was determined using a Monte Carlo simulation method. The method takes into account the cash distribution waterfall, historical volatility, dividend yield and share price of the common units as of the deconsolidation date. Distributions to the IDRs are recognized in the consolidated statement of operations.

iv) Direct Ownership interests

The Company held the following ownership interests in entities controlled by Seadrill Partners as of the date of deconsolidation:

• 70% ownership in Seadrill Operating LP

Seadrill Operating LP is a limited partnership and is controlled by its General Partner, Seadrill Operating GP LLC, which is wholly owned by Seadrill Partners.

• 49% ownership in Seadrill Capricorn Holdings LLC

Seadrill Capricorn Holdings LLC is a limited liability company. There is only one class of member interest which is deemed to represent voting common stock.

• 39% ownership of Seadrill Deepwater Drillship Ltd. and 39% (indirect) ownership of Seadrill Mobile Units (Nigeria) Ltd.

The Company held a 39% direct ownership interest in Seadrill Deepwater Drillship Ltd. and a 39% indirect ownership of Seadrill Mobile Units Ltd., through its 100% subsidiary, Seadrill UK Ltd. Both entities are limited companies and only have one class of stock, which is deemed to represent voting common stock.

All of the Company's direct ownership interests are accounted for under the equity method as the Company is deemed to have significant influence over these entities through its voting rights and by virtue of Seadrill’s representation on the board of Seadrill Partners.

The fair values of the four ownership interests described above have been determined using a discounted cash-flow (“DCF”) methodology, using discounted cash-flow forecasts.

(b)Gain on retained investment

The entire gain on deconsolidation relates to the re-measurement of the various retained investments described above.

(c)Accounting for basis differences

The Company’s investments that are accounted for under the equity method (subordinated units and direct ownership interests) were recognized at fair value upon deconsolidation. Basis differences therefore exist between the fair value of the investments and the underlying carrying values of the investees’ net assets at the date of deconsolidation. A valuation exercise has been performed for each separate investment accounted for under the equity method, in order to allocate these basis differences to identifiable assets and liabilities, with any residual amount recognized as goodwill. Differences have been allocated to depreciable or amortizable assets or liabilities and will be amortized over the estimated useful economic life of the underlying assets and liabilities. This amortization is recognized in the consolidated statement of operations in the ‘share in results from associated companies’ line.

The total investments in Seadrill Partners recorded under the equity method of $2,809 million included the Company's share of the basis difference between the total fair value and the total underlying book value of Seadrill Partners' assets at the deconsolidation date are as follows:

(In US$ millions)	Book value	Fair value	Basis Difference	Seadrill's share of basis difference (1)
Drilling units	3,444	5,245	1,801	1,295
Drilling contracts	—	170	170	142
Goodwill	—	1,214	1,214	352
Total	3,444	6,629	3,185	1,789

(1) Seadrill's share of the basis difference relates to both its investment in the subordinated units of Seadrill Partners, and its direct ownership interests in various subsidiaries of Seadrill Partners, all of which investments are accounted for under the equity method. The total basis difference has been assigned based on Seadrill's proportional ownership interest in each investee. In the case of Seadrill's investment in the subordinated units of Seadrill Partners, the proportional allocation to the subordinated units was based on the relative fair values of the various equity interests in Seadrill Partners.

The basis difference has been accounted for as follows:

(i) The basis difference assigned to drilling units is being depreciated over the remaining estimated useful lives of the units.

(ii) The basis difference relating to the drilling contracts is being amortized over the remaining term of the contract.

(iii) The Company will not amortize the difference assigned to goodwill, but will consider any indicators of impairment.

Disposal of the West Auriga

On March 21, 2014, the Company sold the entities that own and operate the West Auriga (the “Auriga business”)to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners that is 49% owned by the Company. The entities continue to be related parties subsequent to the sale.

The purchase price consisted of an enterprise value of $1.24 billion, less debt assumed of $443 million. The total consideration of $797 million was comprised of cash of $697 million and a discount note receivable of $100 million. The purchase price was subsequently adjusted by a working capital adjustment of $331 million arising from related party balances which remained with the disposed entities for the construction, equipping and mobilization of the West Auriga. The total recognized gain on sale of the Auriga business was $440 million, after taking into account a goodwill allocation of $33 million, which has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income.

(In US$ millions)	March 21, 2014
Enterprise value	1,240
Less: Debt assumed	(443	)
Purchase price	797
Less: Working capital adjustment	(331	)
Adjusted purchase price	466
Cash	697
Discount note issued	100
Less: Working capital payable	(331	)
Fair value of purchase consideration	466
Less: net carrying value of assets and liabilities	7
Less: allocated goodwill to subsidiaries	(33	)
Gain on sale	440

Under the terms of various agreements between Seadrill and Seadrill Partners entered into in connection with the IPO of Seadrill Partners, Seadrill will continue provide management, technical and administrative services to Seadrill Partners and its subsidiaries. See further discussion in Note 31 for these services and agreements.

Disposal of the West Vela

On November 4, 2014, the Company sold the entities that own and operate the West Vela (the “Vela business”) to Seadrill Capricorn Holdings LLC, a consolidated subsidiary of Seadrill Partners and 49% owned by the Company. The entities continue to be related parties subsequent to the sale.

The purchase price consisted of an enterprise value of $900 million, less debt assumed of $433 million that was outstanding under the existing facility related to West Vela. The Company is also to receive deferred consideration of $44 thousand per day for the remainder of the West Vela's current contract with BP which runs to November 2020. In addition, the Company will receive a contingent amount of up to $40 thousand per day for the remainder of the BP contract, depending on the actual amount of contract revenue received from BP. The Company's accounting policy is not to recognize contingent consideration before it is considered realizable. The total consideration recognized on disposal of $535 million was comprised of cash of $467 million, and deferred consideration receivable of $74 million. The purchase price was also adjusted by a working capital adjustment of $6 million.

The gain recognized at the time of disposal of the Vela business was $191 million, after taking into account a goodwill allocation of $41 million. The gain has been presented in our consolidated statement of operations, under "gain on disposals" included within operating income. During the quarter ended December 31, 2014, the Company also recognized $1 million related to the contingent consideration realized during the period.

(In US$ millions)	November 4, 2014
Enterprise value	900
Deferred consideration receivable	74
Less: Debt assumed	(433	)
Purchase price	541
Less: Working capital adjustment	(6	)
Adjusted purchase price	535
Cash	467
Deferred consideration receivable	74
Less: Working capital payable	(6	)
Fair value of purchase consideration	535
Less: net carrying value of assets and liabilities	(303	)
Less: allocated goodwill to subsidiaries	(41	)
Gain on sale	191

Under the terms of various agreements between Seadrill and Seadrill Partners entered into in connection with the IPO of Seadrill Partners, Seadrill will continue provide management, technical and administrative services to Seadrill Partners and its subsidiaries. See further discussion in Note 31 for these services and agreements.

Disposals in 2013

Sale of majority of tender rig business

On April 30, 2013 we completed the sale of the entities which owned and operated the following tender rigs: T-4, T-7, T-11, T-12, West Alliance, West Berani, West Jaya, West Menang, West Pelaut, West Setia, and the newbuilds T-17, T-18, and West Esperanza. In addition our 49% ownership in Varia Perdana and Tioman Drilling was sold as part of this transaction, which included the following rigs: T-3, T-6, T-9, T-10, and the Teknik Berkat. This is collectively referred to as the “tender rig businesses”.

The agreed upon price was for an enterprise value of $2.9 billion. The enterprise value price is comprised of $1.2 billion in cash, $416 million in new shares in SapuraKencana (at MYR3.18per share), $760 million related to all the debt in the tender rigs business, future estimated non recognized capital commitments of $320 million and deferred consideration of $187 million. The deferred consideration consists of non-contingent consideration of $145 million payable in three years and contingent consideration of $42 million depending on certain specified future performance conditions. Fair value of consideration received of $2.6 billion is the estimated enterprise value reduced by the future non recognized estimated capital commitments, an EBITDA contribution of approximately $75 million and an adjustment for working capital balances and other miscellaneous items and deferred consideration. The fair values recognized for the deferred consideration are $135 million and $nil for the non-contingent and contingent consideration respectively. The total recognized gain on this transaction was $1.3 billion, which has been presented in our consolidated statement of operations, under “Gain on sale of tender rig business”. The gain is calculated as follows:

(In US$ millions)	December 31, 2013
Fair value of consideration received	2,600
Carry value of assets and liabilities	1,324
Other related costs to sale	20
Total gain on sale	1,256

In conjunction with the sale agreement, the Company entered into an arrangement to continue to manage and supervise at the Company's risk, the construction of three tender rig newbuilds; T-17, T-18, and West Esperanza. Under this arrangement the Company will incur and be reimbursed for all associated costs in accordance within an agreed upon budget to complete the construction of these rigs, except for the yard installment payments, which are paid by SapuraKencana. These rigs will be delivered in 2013 and 2014. The Company will also provide operational management, administration and support services for the three tender rigs: West Jaya, West Setia, and West Esperanza which are located outside of Asia until the client contract expiry date. The Company will be reimbursed for all costs and expenses incurred and earn an agreed upon margin for these rig management services. Additionally, the Company will provide transition and separation services for certain administrative and IT functions for the tender rig business for a period of one year following the sale in which costs and expenses are reimbursed in addition to earning an agreed upon margin. While we have retained the ownership of the tender rigs T-15 and T-16, also as part of the sale agreement, SapuraKencana have been responsible for the operational management, administration and support services for the tender rig T-15 and T-16 effective from November 1, 2013 subject to similar terms for the rigs we will continue to manage as noted above.

After this transaction, the Company has ownership of 720,329,691 shares in SapuraKencana, a holding of 12.02%, representing a gross value of $1,078 million based on the closing share price of RM4.90 on December 31, 2013. This is currently held as a marketable security on the consolidated balance sheet, see Note 14 to the consolidated financial statements included herein. Additionally as a result of the sale transaction, the Company obtained board representation for SapuraKencana.

We have determined that we have significant continuing involvement in the ongoing tender rig business with SapuraKencana and therefore, we have concluded that the results of the tender rig business sold should not be presented as a discontinued operation in our consolidated statement of operations.

Disposals in 2012

There were no disposals of businesses in the year ended December 31, 2012.

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Gain on realization of marketable securities

12 Months Ended

Dec. 31, 2014

Gain on realization of marketable securities [Abstract]

Gain on realization of marketable securities

Gain on realization of marketable securities

On May 17, 2012, SapuraCrest (BURSA: SCRES) and Kencana (BURSA: KEPB) jointly announced that they entered into a merger agreement forming a new company, SapuraKencana Petroleum BHD (SapuraKencana). Consequently the Company received 589 million shares in the new company and a cash payment of $65 million. This merger resulted in the dilution of our equity share from 23.59% to 11.79% and we recognized a gain on the decline in our ownership of $169 million in our consolidated statement of operations. In addition, on May 30, 2012, the Company announced the sale of 300 million shares in SapuraKencana which resulted in a gain of $84 million in our consolidated statement of operations. The Company's holding of shares in SapuraKencana following this transaction represented 6.4% ownership of the outstanding shares at that time. The net proceed from the sale of these shares was $198 million.

In April 2014, the Company sold a portion of its investment in SapuraKencana and received proceeds of $297 million, net of transaction costs. As a result of the sale, a gain of $131 million was recognized in the consolidated statement of operations within "Gain on realization of marketable securities", including amounts which had been previously recognized in other comprehensive income. As a result of this transaction, as of December 31, 2014, our ownership interest in SapuraKencana’s outstanding common shares was 8.18%.

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Long-term debt (Unsecured Bonds) (Details) Share data in Millions, except Per Share data, unless otherwise specified	12 Months Ended						1 Months Ended				1 Months Ended					1 Months Ended				1 Months Ended		12 Months Ended	1 Months Ended			1 Months Ended		12 Months Ended	1 Months Ended	4 Months Ended	12 Months Ended			1 Months Ended
	Dec. 31, 2014 USD ($)		Dec. 31, 2013 USD ($)		Dec. 31, 2012 USD ($)		Dec. 31, 2014 Senior Unsecured Bond US $500 Million Fixed Interest Bond USD ($)	Mar. 31, 2014 Senior Unsecured Bond US $500 Million Fixed Interest Bond	Sep. 20, 2013 Senior Unsecured Bond US $500 Million Fixed Interest Bond USD ($)	Dec. 31, 2014 Senior Unsecured Bond Floating interest rate bonds	Mar. 31, 2013 Senior Unsecured Bond Floating interest rate bonds Norwegian Interbank Offered Rate (NIBOR) [Member]	Jan. 31, 2012 Senior Unsecured Bond Floating interest rate bonds Norwegian Interbank Offered Rate (NIBOR) [Member]	Dec. 31, 2014 Senior Unsecured Bond NOK1,500 Million Floating Interest Rate Bond USD ($)	Dec. 31, 2014 Senior Unsecured Bond NOK1,500 Million Floating Interest Rate Bond NOK	Oct. 31, 2013 Senior Unsecured Bond NOK1,500 Million Floating Interest Rate Bond NOK	Oct. 31, 2013 Senior Unsecured Bond NOK1,500 Million Floating Interest Rate Bond Norwegian Interbank Offered Rate (NIBOR) [Member]	Oct. 31, 2010 $350 million fixed interest rate bond USD ($)	Dec. 31, 2014 $350 million fixed interest rate bond USD ($)	May 31, 2012 $350 million fixed interest rate bond USD ($)	Jul. 31, 2014 Convertible bonds due 2017 USD ($)	Oct. 31, 2010 Convertible bonds due 2017 USD ($)	Dec. 31, 2014 Convertible bonds due 2017 USD ($)	Jan. 31, 2012 Floating interest rate bonds USD ($)	Jan. 31, 2012 Floating interest rate bonds NOK	Mar. 31, 2013 Floating interest rate bonds NOK	Sep. 30, 2012 $1,000 million fixed interest bond USD ($)	Mar. 31, 2014 $1,000 million fixed interest bond	Dec. 31, 2014 Senior Notes USD ($)	Jun. 30, 2014 Senior Notes US$600 Million Senior Unsecured Bond USD ($)	May 31, 2014 Senior Notes US$600 Million Senior Unsecured Bond USD ($)	Dec. 31, 2014 Senior Notes US$600 Million Senior Unsecured Bond USD ($)	Dec. 31, 2014 Senior Notes US$600 Million Senior Unsecured Bond NOK	Mar. 31, 2014 Senior Notes SEK1,500 Million Senior Unsecured Bond SEK	Mar. 31, 2014 Senior Notes SEK1,500 Million Senior Unsecured Bond STIBOR	Dec. 31, 2014 Senior Notes SEK1,500 Million Senior Unsecured Bond STIBOR	Jan. 31, 2014 North Atlantic Drilling Senior Notes US$600 Million Senior Unsecured Bond USD ($)
Debt Instrument [Line Items]
Debt Instrument, Face Amount									$ 500,000,000						1,500,000,000		$ 350,000,000				$ 650,000,000		$ 225,000,000	1,250,000,000	1,800,000,000	$ 1,000,000,000							1,500,000,000			$ 600,000,000
Maturity of debt																	5 years						2 years	2 years		5 years
Maturity date of debt																	October 2015				October 2017					September 2017
Fixed interest rate																					3.375%					5.625%	6.125%
Original amount of debt converted	584,000,000	[1]	0	[1]	0	[1]														649,000,000
Description of variable rate basis											NIBOR	NIBOR				NIBOR																		STIBOR
Basis spread on variable rate											3.75%	3.25%				4.40%	6.50%																	3.25%
Debt instrument, interest rate								6.625%	6.125%	4.94%			6.18%	6.18%																					5.20%	6.25%
Percent of principal amount of debt purchased																														27.50%
Extinguishment of debt, amount														82,000,000
Debt repurchased							21,000,000												8,000,000													47,000,000
Long-term Debt	12,620,000,000		13,466,000,000															342,000,000		1,000,000										165,000,000	187,000,000
Repayment of long-term debt																													25,000,000
Number of banking days																					10 days
Conversion price (in dollars per share)																				$ 27.69	$ 38.92
Percentage of common shares premium																					30.00%
Convertible bonds allocated to bond equity																					121,000,000
Convertible bonds allocated to bond liability																					529,000,000
Debt Instrument, Convertible, Incentive Payment Per $100,000 Principal																				12,102.95
Number of shares issued due to conversion of convertible debt instruments (in shares)																				23.8
Conversion of convertible bond	615,000,000																			893,000,000
Gains (Losses) on incentive payment offer																						79,000,000
Net loss on debt extinguishment	(54,000,000)		0		0		3,000,000						4,000,000									(16,000,000)						23,000,000			16,000,000
Debt Instrument, Percent of Principal Amount of Debt Owned																															31.10%
Loss on conversion of debt in APIC																						278,000,000
Payments for incentive payment offer																						$ 69,000,000

[1] Conversion of convertible bonds in July 2014 - refer to Note 23 - Long term debt

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Other non-current liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Other Liabilities Disclosure [Abstract]

Other non-current liabilities

Other non-current liabilities are comprised of the following:

(In US$ millions)	December 31, 2014	December 31, 2013
Accrued pension liabilities	84	58
Deferred mobilization revenues	224	311
Intangible liabilities - unfavorable contracts (1)	131	268
Derivative financial instruments (2)	257	250
Other non-current liabilities	3	11
Total other non-current liabilities	699	898

(1) Intangible liabilities represent the estimated fair values of acquired unfavorable drilling contracts. See Note 12 and 21 to the consolidated financial statements included herein.

(2) Derivative financial instruments represent liabilities associated with other derivative arrangements. See Note 32 to the consolidated financial statements included herein.

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Marketable securities

12 Months Ended

Dec. 31, 2014

Marketable Securities [Abstract]

Marketable securities

Marketable securities

Marketable securities held by the Company are equity securities considered to be available-for-sale securities. The following tables summarize the carrying values of the marketable securities in the balance sheet:

	As at December 31, 2014
(In US$ millions)	Original cost	Cumulative unrealized fair value gains/(losses)	Cumulative other than temporary impairments	Carrying value
Petromena	—	—	—	—
Sapura Kencana	373	(48)	—	325
Seadrill Partners - Common Units	821	(395)	—	426
Total	1,194	(443)	—	751

	As at December 31, 2013
(In US$ millions)	Original cost	Cumulative unrealized fair value gains/(losses)	Cumulative other than temporary impairments	Carrying value
Petromena	20	—	(16)	4
Sapura Kencana	539	539	—	1,078
Total	559	539	(16)	1,082

SapuraKencana

During 2012 we owned a 23.6% share in SapuraCrest Petroleum Bhd, which was accounted for using the equity method. On May 17, 2012 SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd merged resulting in dilution of our shareholdings from 23.6% to 11.8% and therefore we recognized a gain of $169 million which is included in our consolidated statement of operations. The investment was consequently transferred from investment in associated companies to an investment accounted for at fair value as an available-for-sale security. Additionally during 2012 we further reduced our ownership share to 6.4% through a sale of shares and therefore we recognized a gain of $84 million which was included in the consolidated statement of operations.

On April 30, 2013, as part of the consideration for the sale of certain tender rigs to SapuraKencana, we received 400.8 million shares in SapuraKencana, increasing our shareholding from 6.4% to 12.0%.

On September 18, 2013, we entered into a financing arrangement whereby a proportion of our holding of SapuraKencana shares have been pledged as security for the contractual period which extends beyond the next 12 months. Accordingly, these pledged shares have been reclassified as long term marketable securities in the balance sheet. See Note 32 to the Consolidated Financial Statements included herein.

During the twelve months ended December 31, 2014, the Company sold a portion of its investment in SapuraKencana and received proceeds of $297 million, net of transaction costs. As a result of the sale, a gain of $131 million was recognized, including amounts which had been previously recognized in other comprehensive income, which was recognized on an average cost basis. The gain is included in the consolidated statement of operations within "Gain on realization of marketable securities". As a result of this transaction, our ownership interest in SapuraKencana’s outstanding common shares is 8.18%.

As of December 31, 2014 accumulated unrealized loss recognized in other comprehensive income totaled $48 million had been recognized in accumulated other comprehensive income. We have evaluated the near term prospects of SapuraKencana in relation to the severity and duration of the decline in fair value. Based on that evaluation and our ability and intent to hold the investment for a reasonable period of time sufficient for a forecasted recovery of fair value, we do not consider the investment to be other-than-temporarily impaired at December 31, 2014.

Seadrill Partners Common Units

Our holding of the voting common units of Seadrill Partners are accounted for as marketable securities on the basis that during the subordination period the common units have preferential dividend and liquidation rights, and therefore do not represent a ‘in-substance common stock’ interest as defined by US GAAP. These securities were recognized on January 2, 2014 at the quoted market price and are re-measured at fair value each reporting period at a total value of $671 million. For more details on the deconsolidation of Seadrill Partners see Note 11.

In March 2014 and June 2014, the Company purchased additional common units in Seadrill Partners of 1,633,987 at $30.60 per unit and 3,183,700 at $31.41 per unit respectively, totaling $150 million. Our ownership interest in Seadrill Partners' common units is 28.6% as of December 31, 2014.

As of December 31, 2014 an unrealized loss of $395 million had been recognized in accumulated other comprehensive income. We have evaluated the near term prospects of the Seadrill Partners in relation to the severity and duration of the decline in fair value. Seadrill Partners continues to make significant distributions to its common unitholders. Its drilling units are largely on long term contracts and so it has little exposure to short term movements in market conditions or dayrates. Based on that evaluation and our ability and intent to hold the investment for a reasonable period of time sufficient for a forecasted recovery of fair value, we do not consider the investment to be other-than-temporarily impaired at December 31, 2014.

Petromena

In February 2014 we received the final payment related to our investment in the 81.1%of the partially redeemed Petromena NOK 2,000 million bond (“Petromena”) of $10 million. The residual $6 millionafter the investment was reduced has been recorded as a gain in "other financial items" in the consolidated statement of operations.

The following table summarizes the gross realized gains and losses from purchases and sales of marketable securities during the years presented:

	Year ended December 31, 2014
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Petromena	6	—	—	—	10	—	—
Sapura Kencana	—	—	—	(456)	297	—	131
Seadrill Partners - Common Units	—	—	—	(395)	—	821	—

	Year ended December 31, 2013
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Petromena	—	—	—	—	—	—	—
Sapura Kencana	—	—	333	—	—	416	—

	Year ended December 31, 2012
(In US$ millions)	Gross realized gains	Gross realized losses	Gross Unrealized gains	Gross Unrealized losses	Gross proceeds from sales	Recognition and purchases	Gain/(loss) reclassified into income
Other	—	(19)	—	—	—	—	(1)
Sapura Kencana	—	—	205	—	197	237	(84)

Marketable securities in SapuraKencana and Seadrill Partners with an aggregate fair value of $751 million are in an unrealized loss position.

The total cumulative unrealized holding losses as of December 31, 2014 amounted to $443 million (December 31, 2013: $539 million accumulated gains). The loss in 2014 represents the unrealized losses on our Seadrill Partners common units and SapuraKencana investment recorded in accumulated other comprehensive income in the balance sheet. These securities have all been in an unrealized loss position for less than 12 months.

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Common Shares (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended		1 Months Ended
	May 10, 2005	Dec. 31, 2014	Dec. 31, 2013	Jul. 31, 2014	Nov. 30, 2014	Dec. 31, 2012
Class of Stock [Line Items]
Authorized share capital, shares (in shares)		800,000,000	800,000,000			800,000,000
Authorized share capital		$ 1,600	$ 1,600			$ 1,600
Issued and fully paid share capital, shares (in shares)		493,078,678	469,250,933			469,250,933
Issued and fully paid share capital		986	939			938
Treasury shares held by Company, shares (in shares)		(318,740)	(272,441)			(72,859)
Treasury shares held by Company		(1)	(1)			0
Outstanding shares in issue, shares (in shares)		492,759,938	468,978,492			469,178,074
Outstanding shares in issue		$ 985	$ 938			$ 938
Number of shares issued (in shares)	6,000	0	0
Common shares, par value (in dollars per share)	$ 2.00	$ 2.00	$ 2.00			$ 2.00
Percent of outstanding shares authorized to be repurchased					10.00%
Convertible bonds due 2017
Class of Stock [Line Items]
Number of shares issued due to conversion of convertible debt instruments (in shares)				23,800,000

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Business Acquisitions

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

Acquisitions in 2014

There were no business acquisitions in the year ended December 31, 2014.

Acquisitions in 2013

Acquisition of Songa Eclipse

On November 15, 2012 a subsidiary of the Company entered into an agreement with Songa Eclipse Ltd to acquire the ultra-deepwater semi-submersible drilling rig, "Songa Eclipse" for cash consideration of $590 million. The cash consideration also included the acquisition of the drilling contract with Total Offshore Angola that is fixed and ended December 2013 with threeone year options to extend the contract. This acquisition is in line with our strategy of building a modern fleet through selective acquisitions and organic growth giving us an increased exposure to the ultra-deepwater market. A prepayment of $59 million was made before the end of 2012 and the physical delivery and final payment took place on January 3, 2013, which was considered to be the acquisition date. This purchase was considered to constitute a business combination for accounting purposes.

The drilling unit has been valued at fair value separately from the attached drilling contract. Drilling unit valuations are derived from the assessment of a variety of valuation techniques and inputs.  These include assessing comparable market transactions and considering implied earnings multiples, replacement values and current construction costs to arrive an estimated fair value.

The fair value of the attached drilling contract has been assessed separately.  The contract was valued using an 'excess earnings' technique where the terms of the contract are assessed relative to current market conditions. The value of the contract related intangible was determined by means of calculating the incremental or decremental cash flows arising over the life of the contract compared with a contract with terms at prevailing market rates.  An estimate of prevailing market rates was obtained from independent brokers and cross checked against the Company’s own view on prevailing market rates. 

The unfavorable contract acquired is amortized over the estimated length of the contract, including extension periods, and is presented in the Statement of Operations within other revenues. Subsequent to the acquisition, the drilling rig has been renamed the West Eclipse.

The fair values of net assets acquired were as follows:

(In US$ millions)	January 3, 2013
Fair value of net assets acquired:
Drilling units	698
Unfavorable contract – Other current liabilities	(27	)
Unfavorable contract – Other non-current liabilities	(81	)
Net assets acquired	590
Fair value of consideration	590

In the Consolidated Statement of Operations $194 million of West Eclipse revenue and a net income of $42 million have been included since the acquisition date up until December 31, 2013.

Consolidation of Asia Offshore Drilling Ltd (AOD)

On March 25, 2013, we and the other major shareholder in AOD, Mermaid Maritime Plc, signed a shareholder resolution that changed the board of directors composition in favor of the Company. Based on this change as of March 25, 2013 we obtained control of the board of directors and also own 66.18% of the outstanding shares. As a result of obtaining control, we have consolidated the results and financial position of AOD from this date. This event is considered to constitute a business combination achieved in stages in accordance with US GAAP. This acquisition is in line with our strategy of building a modern fleet through selective acquisitions and organic growth giving us an increased exposure to the high specification jack-up market.

The drilling unit has been valued at fair value separately from the attached drilling contract. Drilling unit valuations are derived from the assessment of a variety of valuation techniques and inputs.  These include assessing comparable market transactions and considering implied earnings multiples, replacement values and current construction costs to arrive at an estimated fair value. For newbuilds we have made an estimation of the remaining contractual payments for newbuilds under construction.

The fair value of the attached drilling contract has been assessed separately.  The contract was valued using an 'excess earnings' technique where the terms of the contract are assessed relative to current market conditions. The value of the contract related intangible was determined by means of calculating the incremental or decremental cash flows arising over the life of the contract compared with a contract with terms at prevailing market rates. The contract was deemed to be at prevailing market rates and as such no intangible asset or liability was recognized.

The estimated fair value of the non-controlling interest and the previously held equity investment have been determined based on the quoted share price for AOD at the time of the acquisition.

The fair values of net assets acquired, the remeasurement of our previously held equity interest, measurement of the non-controlling interest and associated bargain purchase gain are as follows:

(In US$ millions)	March 25, 2013
Cash and cash equivalents	1
Current assets	1
Drilling units	633
Non-current assets	633
Construction obligation	(316	)
Other current liabilities	(8	)
Current liabilities	(324	)
Non-current liabilities	—
Net assets acquired	310
Net book value of equity investment	185
Fair value of previously held equity investment	195
Gain on re-measurement of previously held equity  investment	10
Fair value of establishment of non-controlling interest	100
Bargain purchase
Fair value of establishment of non-controlling interest	100
Fair value of previously held equity investment	195
Total	295
Net assets acquired	310
Gain on bargain purchase	15

The Company recognized a bargain purchase gain on this acquisition as a result of the market capitalization of AOD being lower than the net assets at the time of acquisition.

In the consolidated statement of operations $75 million of AOD revenue and a net income of $37 million have been included since the acquisition date up until December 31, 2013.

Consolidation of Sevan Drilling ASA

On June 26 and 27, 2013 we entered into arrangements to purchase an additional 120,065,464 shares in Sevan Drilling ASA ("Sevan") at an average price of NOK 3.9311, for a total of $78 million. This transaction was settled on July 2, 2013. The increased interest in Sevan allows us to expand our fleet of deepwater drilling units. Following these additional share acquisitions we obtained control of 50.1% of the total outstanding shares of Sevan through direct ownership and our existing interest in forward share purchase agreements which result in a controlling financial interest under US GAAP. As a result of obtaining a controlling financial interest, we have consolidated the results and financial position of Sevan from July 2, 2013 which has been determined to be the acquisition date. The acquisition is considered to constitute a business combination achieved in stages. 

The drilling unit has been valued at fair value separately from the attached drilling contract. Drilling unit valuations are derived from the assessment of a variety of valuation techniques and inputs.  These include assessing comparable market transactions and considering implied earnings multiples, replacement values and current construction costs to arrive at an estimated fair value.

The fair value of any attached drilling contracts has been assessed separately.  The contracts were valued using an 'excess earnings' technique where the terms of the contract are assessed relative to current market conditions. The values of the contract related intangibles were determined by means of calculating the incremental or decremental cash flows arising over the life of the contracts compared with contracts with terms at prevailing market rates.  An estimate of prevailing market rates was obtained from independent brokers and cross checked against the Company’s own view on prevailing market rates. 

The unfavorable contracts for Sevan Driller and Sevan Brasil are amortized over the remaining contract periods resulting in approximately $20 million per quarter in total. The unfavorable contract for Sevan Louisiana will start amortizing when the contract commences with approximately $1 million per quarter for the fixed contract period.

The fair value of the non-controlling interest and the previously held equity investment have been determined based on the quoted share price for Sevan at the time of the acquisition. Additionally the Company recognized a gain of $8 million as a result of measuring at fair value its 29.9% equity interest in Sevan Drilling held before obtaining a controlling financial interest. The gain is reported as a separate line "Gain on re-measurement of previously held equity interest" in the consolidated statement of operations.

The fair value of trade and other receivables is $49 million and includes trade receivables with a fair value of $24 million. This amount is also the gross contractual amount for trade receivables. All other assets and liabilities book values have been estimated to equal fair values at the date of acquisition.

The Company recognized a bargain purchase gain of $17 million as a result of this acquisition. The gain is reported as a separate line "Gain on bargain purchase" in the consolidated statement of operations. The bargain purchase gain is a result of the market capitalization of Sevan Drilling being lower than the net assets at the time of the acquisition.

In the consolidated statement of operations $169 million of Sevan revenue and a net income of $31 million have been included since the acquisition date up until December 31, 2013.

The fair values of net assets acquired including the remeasurement of our previously held equity interest, measurement of the non-controlling interest and associated bargain purchase gain are as follows:

(In US$ millions)	July 2, 2013
Cash and cash equivalents	54
Restricted cash	63
Trade and other receivables	49
Current assets	166
Drilling units	1,246
Newbuildings	1,227
Deferred income tax asset	76
Valuation allowance income tax asset	(76	)
Other non-current assets	1
Non-current assets	2,474
Total assets	2,640
Current portion of long-term debt	(112	)
Trade and other payables	(115	)
Construction obligation	(923	)
Unfavorable contracts	(79	)
Other current liabilities	(26	)
Current liabilities	(1,255	)
Long-term interest bearing debt	(703	)
Unfavorable contracts	(257	)
Other non-current liabilities	(16	)
Non-current liabilities	(976	)
Total liabilities	(2,231	)
Net assets acquired	409
Net book value of equity investment	109
Fair value of previously held equity investment	117
Gain on re-measurement of previously held equity  investment	8
Fair value of establishment of non-controlling interest	197
Bargain purchase
Fair value of consideration transferred	78
Fair value of establishment of non-controlling interest	197
Fair value of previously held equity investment	117
Total	392
Net assets acquired	409
Gain on bargain purchase	17

As a result of our increased ownership interests in Sevan during the quarter, we were required to make a mandatory offer in accordance with the Oslo Stock Exchange rules for the remaining outstanding shares in Sevan for NOK 3.95. This mandatory offer period expired on August 23, 2013. As a result of the offer, we obtained an additional 47,394 shares, bringing our total interest in Sevan to 297,941,358 shares, or 50.11% of the total outstanding shares.

Acquisitions in 2012

There were no business acquisitions in the year ended December 31, 2012.

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Non-controlling interest (Changes in Noncontrolling Interest) (Details) (USD $)	0 Months Ended	12 Months Ended
	Dec. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Changes in non-controlling interest [Roll Forward]
Balance, beginning of period		$ 690,000,000	$ 521,000,000	$ 325,000,000
Changes during period		(172,000,000)	36,000,000	99,000,000
Net income attributable to non-controlling interest		108,000,000	133,000,000	97,000,000
Balance, end of period		626,000,000	690,000,000	521,000,000
Ship Finance
Changes in non-controlling interest [Roll Forward]
Balance, beginning of period		78,000,000	274,000,000	215,000,000
Changes during period		(57,000,000)	(220,000,000)	20,000,000
Net income attributable to non-controlling interest		11,000,000	24,000,000	39,000,000
Balance, end of period		32,000,000	78,000,000	274,000,000
North Atlantic Drilling
Changes in non-controlling interest [Roll Forward]
Balance, beginning of period		173,000,000	168,000,000	110,000,000
Changes during period		(4,000,000)	(56,000,000)	10,000,000
Net income attributable to non-controlling interest		36,000,000	61,000,000	48,000,000
Balance, end of period		205,000,000	173,000,000	168,000,000
Seadrill Partners LLC
Changes in non-controlling interest [Roll Forward]
Balance, beginning of period		115,000,000	79,000,000	0
Changes during period		(115,000,000)	15,000,000	69,000,000
Net income attributable to non-controlling interest		0	21,000,000	10,000,000
Balance, end of period		0	115,000,000	79,000,000
Asia Offshore Drilling
Changes in non-controlling interest [Roll Forward]
Balance, beginning of period		111,000,000	0	0
Changes during period		0	100,000,000	0
Net income attributable to non-controlling interest		23,000,000	11,000,000	0
Balance, end of period		134,000,000	111,000,000	0
Sevan Drilling ASA
Changes in non-controlling interest [Roll Forward]
Balance, beginning of period		213,000,000	0	0
Changes during period		0	197,000,000	0
Net income attributable to non-controlling interest		38,000,000	16,000,000	0
Balance, end of period		251,000,000	213,000,000	0
Seadrill Offshore Nigeria Limited and Seadrill Nigeria Operations Limited
Changes in non-controlling interest [Roll Forward]
Balance, beginning of period		0	0
Changes during period		4,000,000	0
Net income attributable to non-controlling interest	0	0	0
Balance, end of period		$ 4,000,000	$ 0	$ 0

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Marketable securities (Carrying Value) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Original cost	$ 1,194	$ 559
Cumulative unrealized fair value gains/(losses)	(443)	539
Cumulative other than temporary impairments	0	(16)
Carrying value	751	1,082
Sapura Kencana
Schedule of Available-for-sale Securities [Line Items]
Original cost	373	539
Cumulative unrealized fair value gains/(losses)	(48)	539
Cumulative other than temporary impairments	0	0
Carrying value	325	1,078
Seadrill Partners LLC
Schedule of Available-for-sale Securities [Line Items]
Original cost	821
Cumulative unrealized fair value gains/(losses)	(395)
Cumulative other than temporary impairments	0
Carrying value	426
Equity Securities | Petromena
Schedule of Available-for-sale Securities [Line Items]
Original cost	0	20
Cumulative unrealized fair value gains/(losses)	0	0
Cumulative other than temporary impairments	0	(16)
Carrying value	$ 0	$ 4

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Document and Entity Information	12 Months Ended
	Dec. 31, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	SEADRILL LTD
Entity Central Index Key	0001351413
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	492,759,938
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Document Type	20-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2014

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Segment information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 segment	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Number of operating segments	3
Number of reportable segments	2
Revenues (excluding gain on sale of drilling units)	$ 4,997	$ 5,282	$ 4,478
Depreciation and amortization	693	711	615
Operating Income - net income [Abstract]
Operating income	2,279	2,098	1,791
Unallocated items [Abstract]
Total financial items and other	1,827	842	(354)
Income tax expense	(19)	(154)	(232)
Net income	4,087	2,786	1,205
Total Drilling Units and Newbuildings	17,175	20,612
Assets held for sale	1,239	0
Investment in associated companies	2,898	140
Marketable securities	751	1,082
Goodwill	604	1,200	1,320
Cash and restricted cash	1,280	1,062
Other assets	2,559	2,204
Total assets	26,506	26,300
Capital expenditures - fixed assets	3,103	4,699	1,690
Floaters
Segment Reporting Information [Line Items]
Revenues (excluding gain on sale of drilling units)	3,360	3,698	2,859
Depreciation and amortization	508	531	412
Operating Income - net income [Abstract]
Operating income	1,992	1,472	1,250
Unallocated items [Abstract]
Total Drilling Units and Newbuildings	12,849	15,459
Goodwill	604	890
Capital expenditures - fixed assets	2,327	3,178	1,342
Jack up Rigs
Segment Reporting Information [Line Items]
Revenues (excluding gain on sale of drilling units)	1,478	1,175	861
Depreciation and amortization	185	163	146
Operating Income - net income [Abstract]
Operating income	275	450	225
Unallocated items [Abstract]
Total Drilling Units and Newbuildings	4,326	4,699
Goodwill	0	281
Capital expenditures - fixed assets	776	1,371	150
Tender Rigs
Segment Reporting Information [Line Items]
Revenues (excluding gain on sale of drilling units)	0	382	758
Depreciation and amortization	0	17	57
Operating Income - net income [Abstract]
Operating income	0	176	316
Unallocated items [Abstract]
Total Drilling Units and Newbuildings	0	454
Goodwill	0	29
Capital expenditures - fixed assets	0	150	198
Other Rigs
Segment Reporting Information [Line Items]
Revenues (excluding gain on sale of drilling units)	159	27	0
Depreciation and amortization	0	0	0
Operating Income - net income [Abstract]
Operating income	$ 12	$ 0	$ 0

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Share based compensation (Details)	12 Months Ended			1 Months Ended							12 Months Ended										3 Months Ended	12 Months Ended			12 Months Ended						3 Months Ended	12 Months Ended		1 Months Ended						12 Months Ended			1 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Oct. 31, 2013 Stock Options NOK	Nov. 30, 2011 Stock Options USD ($)	Nov. 30, 2011 Stock Options NOK	Nov. 30, 2010 Stock Options USD ($)	Nov. 30, 2010 Stock Options NOK	Apr. 30, 2010 Stock Options USD ($)	Apr. 30, 2010 Stock Options NOK	Dec. 31, 2014 Stock Options USD ($)	Dec. 31, 2013 Stock Options USD ($)	Dec. 31, 2012 Stock Options USD ($)	Dec. 31, 2012 Stock Options NOK	Dec. 31, 2009 Stock Options USD ($)	Dec. 31, 2009 Stock Options NOK	Dec. 31, 2008 Stock Options USD ($)	Dec. 31, 2008 Stock Options NOK	Dec. 31, 2007 Stock Options	Dec. 31, 2006 Stock Options	Dec. 31, 2013 Restricted Stock Units (RSUs) NOK	Dec. 31, 2014 Restricted Stock Units (RSUs) USD ($)	Dec. 31, 2013 Restricted Stock Units (RSUs) USD ($)	Oct. 01, 2013 Restricted Stock Units (RSUs)	Dec. 31, 2014 2011 Program Stock Options	Dec. 31, 2014 Seadrill Scheme Stock Options USD ($)	Dec. 31, 2013 Seadrill Scheme Stock Options USD ($)	Dec. 31, 2012 Seadrill Scheme Stock Options USD ($)	Dec. 31, 2014 Seadrill Scheme Stock Options Minimum	Dec. 31, 2014 Seadrill Scheme Stock Options Maximum	Dec. 31, 2013 North Atlantic Drilling Restricted Stock Units (RSUs) NOK	Dec. 31, 2014 North Atlantic Drilling Restricted Stock Units (RSUs) NOK	Nov. 07, 2013 North Atlantic Drilling Restricted Stock Units (RSUs)	Nov. 30, 2011 Vesting in 18 months Stock Options	Nov. 30, 2011 Vesting in 36 months Stock Options	Nov. 30, 2011 Vesting in 48 months Stock Options	Nov. 30, 2011 Vesting in 60 months Stock Options	Nov. 30, 2010 Vesting in 12 months Stock Options	Apr. 30, 2010 Vesting in 12 months Stock Options	Dec. 31, 2009 Vesting in 12 months Stock Options	Dec. 31, 2008 Vesting in 12 months Stock Options	Dec. 31, 2006 Vesting in 12 months Stock Options	Apr. 30, 2010 Vesting in 15 months Stock Options	Oct. 31, 2013 Vesting in 13 months	Oct. 31, 2013 Vesting in 13 months Stock Options	Oct. 31, 2013 Vesting in 25 months	Oct. 31, 2013 Vesting in 25 months Stock Options	Oct. 31, 2013 Vesting in 37 months	Oct. 31, 2013 Vesting in 37 months Stock Options	Oct. 31, 2013 Vesting in 49 months	Oct. 31, 2013 Vesting in 49 months Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share options granted recognized as personnel expenses	$ 10,000,000	$ 7,000,000	$ 8,000,000
Vesting period																													1 year	5 years														13 months		25 months		37 months		49 months
Fair value assumptions used to determine the value of options [Abstract]
Risk-free interest rate (in hundredths)											2.03%	2.03%													2.40%
Volatility (in hundredths)											26.00%	26.10%													26.10%
Dividend yield (in hundredths)											0.00%	0.00%													0.00%
Expected option term											4 years	4 years													4 years
Vesting of options granted (in hundredths)																										100.00%
Option holder retirement rate (in hundredths)											0.00%	0.00%
Options [Roll Forward]
Outstanding at beginning of year (in shares)																										2,838,758	3,875,891	5,420,438
Granted (in shares)											0																270,000	181,012
Exercised (in shares)																										(461,477)	(700,418)	(1,415,000)
Forfeited (in shares)																										(136,165)	(606,715)	(312,559)
Outstanding at end of year (in shares)																										2,241,116	2,838,758	3,875,891
Exercisable at end of year (in shares)																										1,169,584	1,080,306	1,164,214
Weighted average exercise price [Roll Forward]
Outstanding at beginning of year (in US dollars per share)																										$ 28.53	$ 29.88	$ 26.16
Granted (in US dollars per share)																										$ 0.00	$ 45.66	$ 37.41
Exercised (in US dollars per share)																										$ 20.19	$ 22.60	$ 16.39
Forfeited (in US dollars per share)																										$ 34.57	$ 32.30	$ 30.84
Outstanding at end of year (in US dollars per share)																										$ 35.10	$ 28.53	$ 29.88
Exercisable at end of year (in US dollars per share)																										$ 27.38	$ 27.38	$ 21.19
Options, exercise price range, lower range limit														202.10	$ 14.09	90.83	$ 14.09	90.83
Options, exercise price range, upper range limit													$ 224.53		$ 16.24	104.64	$ 16.24	104.64
Options, exercise price				273	$ 34.68	202.10			$ 23.13	137.40
Options granted to Americans, exercise price							$ 31.4	192.90
Options granted to non-Americans, exercise price							$ 31.06	185.20
Award vesting rights					can be exercised one fourth at a time, after the first 18, 36, 48 and 60 months from the grant date	can be exercised one fourth at a time, after the first 18, 36, 48 and 60 months from the grant date	may be exercised one fifth each year beginning 12 months after they were granted	may be exercised one fifth each year beginning 12 months after they were granted	may be exercised one third after 12 or 15 months	may be exercised one third after 12 or 15 months					may be exercised one third each year beginning 12 months after they were granted	may be exercised one third each year beginning 12 months after they were granted	may be exercised one third each year beginning 12 months after they were granted	may be exercised one third each year beginning 12 months after they were granted	could be exercised one third each year beginning 12 months after they were granted	could be exercised one third each year beginning 12 months after they were granted
Award vesting rights (percentage)												25.00%																						25.00%	25.00%	25.00%	25.00%	20.00%	33.33%	33.33%	33.33%	33.33%	33.33%		25.00%		25.00%		25.00%		25.00%
Weighted average grant-date fair value of options granted (in US dollars per share)											$ 0	$ 10.23	$ 7.06
Unrecognized compensation costs relating to non-vested options granted under the Options Schemes											3,000,000	7,000,000	11,000,000
Future amortization of unrecognized compensation costs relating to non-vested options [Abstract]
2015											2,000,000
2016											1,000,000
2017 (less than $1 million)											1,000,000
Options, weighted average remaining contractual life (in months)											21 months	43 months
Options, weighted average fair value (in US dollars per share)											$ 7.97	$ 8.27
Total intrinsic value of options exercised											9,000,000	17,000,000	32,000,000
Intrinsic value of options fully vested but not exercised											0
Average remaining term of options fully vested but not exercised											34 months
Number of shares authorized																						162,560		373,700									278,778
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value																					46.1										58	11.0
Compensation cost, RSU plans																						5,000,000	1,500,000.0
Unrecognized compensation costs																						$ 15,000,000

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Restricted cash

12 Months Ended

Dec. 31, 2014

Restricted Cash and Investments [Abstract]

Restricted cash

Restricted cash

Restricted cash includes:

(In US$ millions)	December 31, 2014	December 31, 2013
CIRR deposits (1)	124	197
Margin calls related to share forward agreements	264	72
Cash pledged as collateral under credit facilities	50	—
Tax withholding deposits	11	49
Total restricted cash	449	318
Long-term restricted cash (related to CIRR deposits and margin calls)	181	150
Short-term restricted cash	268	168

(1) CIRR deposits are cash deposited with commercial banks, which match Commercial Interest Reference Rate ("CIRR") loans from Eksportfinans ASA, the Norwegian export credit agency (See Note 23 to the consolidated financial statements included herein). The deposits are used to make repayments of the CIRR loans.

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Newbuildings (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Newbuildings

(In US$ millions)	December 31, 2014		December 31, 2013
Opening balance	3,419		1,882
Additions	2,433		4,930
Capitalized interest and loan related costs	70		95
Re-classified as Drilling Units	(3,892	)	(3,335	)
Disposal of tender rigs	—		(153	)
Closing balance	2,030		3,419

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Subsequent Events (Details)											0 Months Ended		0 Months Ended							0 Months Ended	1 Months Ended						1 Months Ended
	Dec. 31, 2014 North Atlantic Drilling	Dec. 31, 2014 SeaMex Limited	Dec. 31, 2014 Credit facility, International Loans, 1 USD ($)	Dec. 31, 2013 Credit facility, International Loans, 1 USD ($)	Oct. 17, 2013 Credit facility, International Loans, 1 USD ($)	Dec. 31, 2014 NOK1,500 Million Floating Interest Rate Bond Senior Unsecured Bond	Oct. 31, 2013 NOK1,500 Million Floating Interest Rate Bond Senior Unsecured Bond NOK	Jan. 31, 2015 Subsequent Event Credit facility US $950 USD ($)	Feb. 28, 2015 Subsequent Event NOK1,500 Million Floating Interest Rate Bond Senior Unsecured Bond NOK	Jan. 31, 2015 Medium-term Notes Subsequent Event Credit facility US $950 USD ($)	Jan. 31, 2015 Revolving Credit Facility Subsequent Event Credit facility US $950	Jan. 31, 2015 Revolving Credit Facility Subsequent Event Credit facility US $950 USD ($)	Jan. 31, 2015 Export Credit Agency Facility Subsequent Event Credit facility US $950	Jan. 31, 2015 Export Credit Agency Facility Subsequent Event Credit facility US $950 USD ($)	Dec. 31, 2014 Secured Debt US$2,000 facility (North Atlantic Drilling) USD ($)	Apr. 30, 2011 Secured Debt US$2,000 facility (North Atlantic Drilling) USD ($)	Dec. 31, 2014 Secured Debt $700 facility USD ($)	Dec. 31, 2014 Secured Debt $150 facility USD ($)	Dec. 31, 2013 Secured Debt $150 facility USD ($)	Mar. 06, 2015 Secured Debt Subsequent Event $700 facility USD ($)	Mar. 31, 2015 Metrogas Subsequent Event Affiliated Entity USD ($)	Mar. 31, 2015 Rosneft Subsequent Event	Apr. 20, 2015 Seabras Sapura JV Subsequent Event	Apr. 20, 2015 Seabras Sapura JV Secured Debt Subsequent Event USD ($)	Mar. 10, 2015 SeaMex Limited Subsequent Event	Aug. 20, 2014 RN Burenie LLC North Atlantic Drilling USD ($)	Feb. 28, 2015 Petrobras Subsequent Event USD ($)
Subsequent Event [Line Items]
Maximum borrowing capacity								$ 950,000,000		$ 285,000,000		$ 475,000,000		$ 190,000,000										$ 780,000,000
Debt instrument term											5 years		12 years
Description of variable rate basis											LIBOR
Basis spread on variable rate											2.00%
Debt instrument, interest rate						6.18%								2.12%
Debt, face amount			475,000,000		475,000,000		1,500,000,000		1,500,000,000.0						2,000,000,000	2,000,000,000	700,000,000
Loans and leases receivable, gross																					50,000,000
Payments to acquire loans receivable																					51,000,000
Interest receivable																					1,000,000
Third party ownership interest																									50.00%
Ownership interest prior to disposal	70.36%	100.00%
Ownership interest, percentage																							50.00%		50.00%
Long-term debt			451,000,000	0														150,000,000	150,000,000
Repayment of long-term debt																				170,000,000
NADL expected ownership in investment																										100.00%
Expected share price																										$ 9.25
Rosneft ownership in NADL																										30.00%
Loss on contracts																											$ 1,100,000,000
Service contract term																						5 years

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Other current assets (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Other Assets [Abstract]
Prepaid expenses	$ 30	$ 43
Deferred charges	42	38
Accrued revenue	0	43
Unrealized gains on derivative contracts	5	9
Reimbursable amounts due from customers	79	59
Deferred mobilization cost	7	57
Deferred tax asset	9	0
Taxes receivable	29	28
Other current assets	72	86
Total other current assets	$ 273	$ 363

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Investment in associated companies (Tables)

12 Months Ended

Dec. 31, 2014

Equity Method Investments and Joint Ventures [Abstract]

Percentages of ownership and book value of investments recorded using equity method

The total investments in Seadrill Partners recorded under the equity method of $2,809 million included the Company's share of the basis difference between the total fair value and the total underlying book value of Seadrill Partners' assets at the deconsolidation date are as follows:

(In US$ millions)	Book value	Fair value	Basis Difference	Seadrill's share of basis difference (1)
Drilling units	3,444	5,245	1,801	1,295
Drilling contracts	—	170	170	142
Goodwill	—	1,214	1,214	352
Total	3,444	6,629	3,185	1,789

(1) Seadrill's share of the basis difference relates to both its investment in the subordinated units of Seadrill Partners, and its direct ownership interests in various subsidiaries of Seadrill Partners, all of which investments are accounted for under the equity method. The total basis difference has been assigned based on Seadrill's proportional ownership interest in each investee. In the case of Seadrill's investment in the subordinated units of Seadrill Partners, the proportional allocation to the subordinated units was based on the relative fair values of the various equity interests in Seadrill Partners.

The Company has the following investments that are or have been recorded using the equity method for the periods presented in these financial statements:

	December 31, 2014		December 31, 2013		December 31, 2012
Varia Perdana Sdn Bhd ("Varia Perdana")	—	%	—	%	49.0	%
Tioman Drilling Company Sdn Bhd ("Tioman Drilling")	—	%	—	%	49.0	%
Archer	39.9	%	39.9	%	39.9	%
Asia Offshore Drilling Ltd ("AOD")	(1)		(1)		66.2	%
Sevan Drilling ASA ("Sevan Drilling")	(1)		(1)		28.5	%
Seabras Sapura Participacoes SA ("Seabras Sapura Participacoes")	50.0	%	50.0	%	50.0	%
Seabras Sapura Holding GmbH ("Seabras Sapura Holdco")	50.0	%	50.0	%	50.0	%
Itaunas Drilling B.V. ("Itaunas Drilling")	30.0	%	30.0	%	30.0	%
Camburi Drilling B.V. ("Camburi Drilling")	30.0	%	30.0	%	30.0	%
Sahy Drilling B.V. ("Sahy Drilling")	30.0	%	30.0	%	30.0	%
Seadrill Partners ("SDLP")	(2)		(1)		(1)

(1) During these periods the relevant investment was not accounted for under the equity method

(2) As of the deconsolidation date of Seadrill Partners on January 2, 2014, we have recognized our ownership interests in Seadrill Partners and direct ownership interests in Seadrill Partners subsidiaries, at fair value at the date of deconsolidation. Refer to Seadrill Partners paragraph below for additional information.

Summarized balance sheet information of equity method investees

Summarized balance sheet information of the Company's equity method investees is as follows:

	As of December 31, 2014
(In US$ millions)	Current assets	Non-current assets	Current liabilities	Non-current liabilities
Archer	633	1,171	441	817
Seabras Sapura Participacoes	17	194	14	149
Seabras Sapura Holding	104	690	52	730
Itaunas Drilling	—	187	137	42
Camburi Drilling	1	336	133	183
Sahy Drilling	—	173	109	53
Seadrill Partners	762	5,585	686	3,617
Total	1,517	8,336	1,572	5,591

	December 31, 2013
(In US$ millions)	Current assets	Non-current assets	Current liabilities	Non-current liabilities
Archer	594	1,201	476	684
Seabras Sapura Participacoes	12	129	3	112
Seabras Sapura Holding	—	219	—	219
Itaunas Drilling	1	161	44	108
Camburi Drilling	1	199	95	91
Sahy Drilling	1	155	40	103
Total	609	2,064	658	1,317

Summarized statement of operations information of equity method investees

Summarized statement of operations information for the Company's equity method investees is as follows:

	Year ended December 31, 2014
(In US$ millions)	Operating revenues	Net operating income		Net income
Archer	2,254	26		(96	)
Seabras Sapura Participacoes	29	(6	)	(6	)
Seabras Sapura Holding	39	24		13
Itaunas Drilling	—	—		—
Camburi Drilling	—	—		—
Sahy Drilling	—	—		—
Seadrill Partners	1,343	615		315
Total	3,665	659		226

	Year ended December 31, 2013
(In US$ millions)	Operating revenues	Net operating income		Net income
Archer	2,041	(438	)	(519	)
Seabras Sapura Participacoes	—	(2	)	(1	)
Seabras Sapura Holding	—	—		(1	)
Itaunas Drilling	—	—		—
Camburi Drilling	—	—		—
Sahy Drilling	—	—		—
Total	2,041	(440	)	(521	)

	Year ended December 31, 2012
(In US$ millions)	Operating revenues	Net operating income		Net income
Varia Perdana	106	85		83
Tioman	157	12		6
Archer	2,191	(322	)	(375	)
AOD	—	(2	)	(2	)
Sevan Drilling	173	11		(12	)
Seabras Sapura Participacoes	—	—		(1	)
Sahy Drilling	—	(1	)	(1	)
Total	2,627	(217	)	(302	)

Recorded equity in the statutory accounts of equity method investees

At the year-end the book values of the Company's investment in associated companies are as follows:

(In US$ millions)	December 31, 2014	December 31, 2013
Archer	—	8
Seabras Sapura Participacoes	21	12
Seabras Sapura Holding	117	109
Itaunas Drilling	3	3
Camburi Drilling	6	4
Sahy Drilling	4	4
Seadrill Partners - Total direct ownership interests	2,091	—
Seadrill Partners - Subordinated Units	412	—
Seadrill Partners - Seadrill Member Interest and IDRs *	244	—
Total	2,898	140

* The Seadrill Partners - Seadrill Member Interest and IDR's are accounted for as cost-method investments on the basis that they do not represent common stock interests and their fair value is not readily determinable. The investments are held at cost and not subsequently re-measured. For more details on the deconsolidation of Seadrill Partners see Note 11.

At the year end the share of recorded equity in the statutory accounts of the Company's associated companies were as follows:

(In US$ millions)	December 31, 2014	December 31, 2013	December 31, 2012
Tioman	—	—	10
Varia Perdana	—	—	105
Archer	218	253	370
AOD	—	—	110
Sevan Drilling	—	—	189
Seabras Sapura Participacoes	24	13	22
Seabras Sapura Holding	6	—	—
Itaunas Drilling	3	3	3
Camburi Drilling	6	4	4
Sahy Drilling	4	4	3
Seadrill Partners *	N/A	—	—
Total	261	277	816

* The Company's share of recorded equity for which it accounts under the equity method in the statutory accounts of Seadrill Partners consists of the non-controlling interest as well as a proportionate amount of equity before non-controlling interests based on the subordinated units which the company owns in Seadrill Partners. The equity attributable to non-controlling interest in Seadrill Partners as at December 31, 2014 of $1,116 million is all attributable to Seadrill's direct ownership interests in controlled subsidiaries of Seadrill Partners. Seadrill's holding in the subordinated units represents 18.0% of the limited partner interests in Seadrill Partners. Total equity before non-controlling interests within Seadrill Partners as at December 31, 2014 was $928 million.

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Segment Information - Geographic (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue, Net	$ 4,997		$ 5,282		$ 4,478
Machinery and Equipment, Gross	15,145	[1]	17,193	[1]
NORWAY
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue, Net	1,071		1,198		815
Machinery and Equipment, Gross	2,252	[1]	2,298	[1]
BRAZIL
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue, Net	991		825		629
Machinery and Equipment, Gross	2,798	[1]	2,881	[1]
ANGOLA
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue, Net	707		734		358
Machinery and Equipment, Gross	1,852	[1]	2,090	[1]
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Machinery and Equipment, Gross	1,382	[1]	2,718	[1]
OTHER
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue, Net	2,228	[2]	2,525	[2]	2,676	[2]
Machinery and Equipment, Gross	$ 6,861	[1],[3]	$ 7,206	[1],[3]

[1] The fixed assets referred to in the table are the Company's operating drilling units. Asset locations at the end of a period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.

[2] Other countries represents countries in which we operate that individually had revenues representing less than 10 percent of total revenues earned for any of the periods presented.

[3] Other countries represents countries in which we operate that individually had fixed assets representing less than 10 percent of total fixed assets for any of the periods presented.