London Market Mobile Unit Form

Original LSDBF produced in 1972. 1972 wording used as skeleton

Revised wording published by Rig Committee in 1997.

New wording intended to reflect changes in underwriting practice produced after close liaison with brokers

More ordered format with clearly set out Declarations, Insuring Agreements, Limits, Definitions, Exclusions and General Conditions.

I. DECLARATIONS:1. INSURED

The First Named Insured shall be {Response} and the parent or subsidiary companies of such First Named Insured or as may have been subsequently agreed in writing by insurers. The term Insured shall also include any principal(s), or contractor(s), subcontractor(s), person(s), organisation(s), trustee(s) or estate(s) to whom the First Named Insured is obliged to provide insurance under a written contract or agreement executed prior to any loss which may be recoverable under this Policy, and provided that coverage hereunder in respect of parties other than the First Named Insured shall be limited to the minimum requirements of such written contract or agreement, subject to the Declarations, Insuring Agreements, Limits of Liability, Exclusions and General Conditions of this Policy.

2. LOSS PAYABLELoss, if any, payable to the order of: {Response}

3. PERIOD OF INSURANCE{Response} Months at {Response}.However, if Property Insured which is named in the policy schedule is at the date of attachment of this Policy undergoing a Shift in excess of the mileage stated in item 1. a), b), and c) of the General Conditions, this Policy will attach in respect of such Property Insured only when such Shift has been completed. The insurers will deduct the daily pro-rata of the annual premium for such Property Insured for the period during which such Property Insured is not covered by this Policy as a result of the application of this clause.Where this Policy expires while the Property Insured is undergoing a Shift in excess of the mileage(s) allowed in items 1. a), b), and c) of the General Conditions, with respect to such Property Insured, this Policy will remain in effect during and up to the completion of such Shift.If this Policy expires while an occurrence giving rise to a loss or damage is in progress, insurers shall be liable as if all of such loss or damage has occurred during the period of this Policy.

INSURED CLAUSE:

The 72 form clause consisted of one word and one word only “The Assured” Now have a more precise definition Includes obligations of the assured

to name others incurred under “written contract or agreement”.

Does not include naming and waiving under oral contracts or agreements.

PERIOD OF INSURANCE :

Modified to take account of the fact that the shift warranty incorporated later in the wording requires surveys on shifts over a specified number of miles.

Protects underwriters against the acceptance of tows in progress at the inception date of the policy which have not been the subject of a survey.

Provides cover after the normal expiry date of the policy until the completion of a shift under the terms of the Shift Warranty if the policy period expires whilst a shift is still in progress.

4. PROPERTY INSUREDThe Property Insured shall consist of:

a) the hull and machinery of each mobile unit named in the attached schedule and accepted by insurers including all of its equipment, tools, logging outfits, mooring devices, caissons, lifting jacks, materials, supplies, spares, survival capsules, appurtenances, drilling equipment, derricks, drill stem, casing and tubing whilst on board the said mobile unit, or being used in connection therewith, or on barges or vessels moored alongside the said mobile unit, including drill stem in the well being drilled and equipment in the Insured's care, custody and control. Each mobile unit in the attached schedule shall be deemed to be separately insured; and

b) equipment which is Property Insured under item 4.a) above when separated from the mobile unit, or whilst it is in transit to or from the mobile unit or whilst it is ashore for the purposes of storage, maintenance and repair.

5. DEDUCTIBLEFor the Property Insured described in item 4.a). of the Declarations:{Response} per claim.For the Property Insured described in item 4.b). of the Declarations:{Response} per claim.

6. DESIGNATED PARTY FOR NOTICE OF LOSSNotice required by item 4. of the General Conditions to be given to:{Response}

7. PREMIUM: {Response}

PROPERTY INSURED:

Includes logging outfits, mooring devices, spares and survival capsules and

Spares separated from the mobile unit or whilst in transit to or from the unit for the purposes of storage, maintenance or repair.

II. INSURING AGREEMENTS:1. COVERAGE

In consideration of the payment of the premium by the First Named Insured and subject to the Insuring Agreements, Declarations, Definitions, General Conditions and Exclusions this Policy :

A) insures against all risks of direct physical loss of or direct physical damage to the Property Insured which occur(s) during the period of this insurance.

B) will reimburse the Insured for general average, salvage and salvage charges, other than as specified below, adjusted or determined according to the governing law and practice. Subject to the Limits of Liability clause of this Policy and for the purpose of general average contribution and salvage charges, the Property Insured shall be deemed to be insured for its full contributory and/or salved value. However, with respect to any claim under this clause for in-hole salvage expenses incurred for drill stem physically lost or physically damaged as a result of a peril insured against, this Policy:

a) will only reimburse the Insured for that proportion of such expense that the value of the drill stem below the earth's surface bears to the aggregate cost of the hole at the attained depth plus the value of the drill stem below the earth's surface, at the time of the loss;

b) will not cover salvage expenses contractually assumed by or made the responsibility of the well owner or the lease operator, or any amount in excess of the value of the drill stem below the earth's surface, at the time of the loss, as respects salvage expenses or loss or damage to the drill stem or both combined.

General average, salvage and salvage charges

(Old form only included Sue and Labour expenses).

C) insures against direct physical loss of or direct physical damage to the Property Insured which is caused by any governmental authority or any organisation instructed by such governmental authority acting under the powers vested in it to prevent or mitigate a pollution, navigational or operational hazard, or threat thereof, provided that such hazards or threats result directly from loss or damage to the Property Insured caused by a risk covered by this Policy, and provided that such act of governmental authority has not resulted from want of due diligence by the Insured, owners or managers to prevent or mitigate such hazards or threats. The master, officers, crew or pilots are not to be considered owners of the Property Insured within the meaning of this clause C) should they hold shares in the Property Insured.

D) will reimburse the Insured for any sum or sums paid by the Insured to any other person or persons by reason of the Insured becoming legally liable by way of damages for :

a) loss of or damage to any other vessel or mobile unit, or property on any other such vessel or mobile unit, or any other fixed or floating object;

b) delay to or loss of use of any such other vessel or mobile unit or property thereon, or any other fixed or floating object;

c) general average of, salvage of, or salvage under contract of, any such other vessel or mobile unit or property thereon or any other fixed or floating object;

d) where such payment by the Insured is in consequence of the Property Insured coming into contact or colliding with any other such

“pollution hazard clause” Added

The IXTOC I exploratory well blew out on June 3, 1979 in the Bay of Campeche off Ciudad del Carmen, Mexico. By the time the well was brought under control in 1980, an estimated 140 million gallons of oil had spilled into the bay. The IXTOC I is currently #2 on the all-time list of largest oil spills of all-time, eclipsed only by the deliberate release of oil, from many different sources, during the 1991 Gulf War.

The indemnity provided by this clause D) shall be subject to the following provisions:

i) where the Property Insured is in contact or collision with another vessel, mobile unit or object and both mobile units/vessels/objects are to blame then, unless the liability of one or both of the mobile units/vessels/objects becomes limited by law, the indemnity under this clause D) shall be calculated on the principle of cross-liabilities as if the respective owners had been compelled to pay to each other such proportion of each other's damages as may have been properly allowed in ascertaining the balance or sum payable by or to the insured in consequence of the contact or collision.

ii) insurers will pay the legal costs incurred by the Insured or awarded against the Insured in contesting liability or taking proceedings to limit liability, provided such costs were incurred with the prior written consent of insurers.

iii) should the Property Insured come into contact or collision with or receive salvage services from another vessel or mobile unit owned wholly or in part by the Insured, the Insured shall have the same rights under this insurance as they would have if the other vessel or mobile unit were entirely the property of owners not interested in the vessel or mobile unit; but in such cases the liability for the collision or the amount payable for the services rendered shall be referred to a sole arbitrator to be agreed upon between the insurers and the Insured.

No changes to the provisions of the Collision clause

E) will reimburse the Insured for sue and labour expenses incurred by the Insured, their factors, servants and assigns in the defence, safeguard and recovery of Property Insured which is under imminent threat of or has suffered loss or damage insured under this Policy. It is especially declared and agreed that no acts of the insurers or the Insured in recovering, saving or preserving the Property Insured shall be considered as a waiver or acceptance of abandonment.

F) will reimburse the Insured for the costs or expenses of, or incidental to the actual or attempted raising, removal or destruction of the wreckage or debris of the Property Insured including the provision of markings and warnings and other necessary costs incurred in recovering or safeguarding the wreck provided that:

a) the wreckage or debris is a result of loss or damage insured under this Policy; and

b) the removal of the wreckage or debris is compulsory by law or ordinance, or is a contractual obligation or when the Insured may not or cannot, for reasons of practicability of the Insured's operations at the site in question, abandon the wreckage or debris.

Removal of Wreck cover is now given but sublimited to 25% of Hull value

2. VALUATION AND BASIS OF RECOVERYIn respect of the costs of repair or replacement for which insurers may be liable under this Policy, this Policy will reimburse the Insured for the reasonable costs of repairing or replacing the Property Insured on a basis of "new for old" with no deduction for depreciation, up to the insured values set out in the attached schedule, being the agreed values between the Insured and the insurers.In the event of a total loss, which term shall include an actual or a constructive total loss, the Insured will be entitled to recover the insured value of the lost or damaged property less any sum obtained by the Insured by way of salvage.

3. NAVIGATION LIMITSSubject always to the provisions and limitations and requirements of items 1. A to F of the General Conditions of this Policy privilege is granted for the Property Insured to be moved, towed or transported within the following Navigation Limits:

{Response}

VALUATION AND BASIS OF RECOVERY:

No BOV clause in the old form.

New for old

MARLIN NO. 3

Design:MOPU(Mobile Offshore Production Unit) Converted from MODU Lost in Hurricane Andrew when legs severed from mat which was piled into seafloor

Correct assessment of replacement value essential for rating purposes

4. DEDUCTIBLEIt is understood and agreed that each claim shall be reported

and adjusted separately and from the amount of each claim the amount specified in the Declarations as the Deductible shall be deducted from the amount payable under this Policy. The Deductible shall not apply to claims for:

a) general average, salvage and salvage charges, collision liability and sue and labour expense, as described in Insuring Agreements 1. B), D), and E);

b) a total loss of the Property Insured.For the purposes of this Deductible clause each claim shall be treated separately subject always to the provisions of item 5 of the General Conditions.

5. UNREPAIRED DAMAGEa) In the event that the Property Insured has suffered damage

covered under this Policy which is not being repaired, the measure of indemnity for such unrepaired damage shall be the reasonable depreciation in the market value of the mobile unit and its equipment at the time this Policy terminates arising from such unrepaired damage. Such depreciation shall be deemed to be the reasonable cost of repairs calculated in accordance with item 2 of the Insuring Agreements.

b) In no case shall the insurers be liable for unrepaired damage in the event of a subsequent total loss, whether or not covered under this Policy, sustained during the Policy period or any extension thereof.

c) The insurers shall not be liable in respect of unrepaired damage for more than the insured value of the damaged Property Insured at the time this Policy terminates.

Deductible no longer applies to apply to salvage charges and Sue and Labour expenses.

DEEPWATER NAUTILUS•Design: IHI-RBF Exploration

•Water Depth: 8,000’ +•Station Keeping: Moorings, Preset•Variable Load: 8,500 tons•Drilling Depth: 30,000’•Cost: Approx US$335 million•Holds record for deepest water well drilled by a moored MODU – 8,007’ in GOM using polyester anchor legs

III. LIMITS OF LIABILITY:Subject always to the Combined Loss Limit referred to herein, the insurers' maximum limits of liability for any one claim are as follows:

1. a) for the Property Insured described under item 4.a) of the Declarations:The limit is the insured value of that lost or damaged Property Insured and its equipment as specified in the attached schedule.

b) for the Property Insured described under item 4.b) of the Declarations: The limit is 25% of the combined insured value of the hull and machinery of the mobile unit and its associated equipment as described in item 4.a) of the Declarations. This amount shall be included within the insured value of the Property Insured and shall not increase the total amount insured under item III.1. a) above.

2. for general average, salvage and salvage charges:as provided within the Insuring Agreements item 1.B, the limit is the insured value of the Property Insured which incurs the general average, salvage or salvage charges.

3. for Pollution Hazard:as provided within the Insuring Agreements item 1.C, the limit is the insured value of the Property Insured so lost or damaged.

4. for collision liability:as provided within the Insuring Agreements item 1.D, the limit is the insured value of the Property Insured involved in the collision inclusive, where applicable, of all defence costs incurred by the insurers on behalf of the Insured.

Limits of Liability Restated to apply to Property Damage, General average, salvage and salvage charges, pollution hazard, collision liability, sue and labour, removal of debris separately. Overall CSL of 250% of hull value to apply.

West Vanguard Blow out

5. for sue and labour expenses:as provided within the Insuring Agreements item 1.E, the limit is 25% of the insured value of the Property Insured in respect of which such expense is incurred.

6. for removal of wreckage and debris:as provided within the Insuring Agreements item 1.F, the limit is 25% of the insured value of the Property Insured in respect of which such expense is incurred.

7. Combined Loss Limit:Notwithstanding all of the Limits stated in items 1. to 6. above, in the event of loss or damage, liability or expense involving any combination of or all of items 1. A to F of the Insuring Agreements the insurer's maximum limit of liability will be 250% of the insured value of the Property Insured which is the subject of the claim.Where there is more than one Insured the provisions of these Limits of Liability Clauses shall apply to all insureds collectively so that insurers' total liability to the insureds shall not exceed the amounts which would have been payable if this Policy had covered one insured only.

Patterson Gulf Coast Drilling owned the Big Foot II which following preloading was picking up drill pipe from a boat

and suffered a terrible punch thru resulting in the constructive total loss of the units

IV. DEFINITIONS:This Policy shall be subject to the following definitions:a) Blowout:

The term "Blowout" shall be defined as a sudden, accidental, uncontrolled and continuous expulsion from a well of oil, gas, water, fluids or substances, above or below the surface of the ground or water bottom.

b) Cratering:The term "Cratering" shall be defined as the formation of a basin-like depression in the earth's surface surrounding a well as a result of erosion and the eruptive action of oil, gas, water, fluids or substances flowing without restriction.

Blowout Offshore GOM

c) Shift: The term "Shift" shall be defined as the acts of lowering the hull of the Property Insured into the water or on to the carrying vessel or barge or the act of deballasting the Property Insured, unmooring it or releasing it from the dynamic positioning system (if applicable) or connection of the towing vessel(s), whichever shall first occur, with the intention of moving the Property Insured off location, the actual move, and the subsequent unloading from the carrying vessel or barge or ballasting down at the new location and (if applicable) or the subsequent raising of the hull on the new location, whichever shall last occur.

d) Wet Tow:The term "Wet Tow" shall be defined as the towage of the Property Insured where the hull of the Property Insured remains immersed in the water during such towage.

e) Dry Tow: The term "Dry Tow" shall be defined as the transportation of the Property Insured on board a carrying vessel as cargo where such carrying vessel is being towed during the voyage.

f) Dry Transportation:The term "Dry Transportation" shall be defined as the transportation of the Property Insured as cargo on board a vessel which is travelling under its own power and is at no stage under tow other than when the carrying vessel is docking or undocking, or is otherwise manoevering in port or in harbour, or is in distress.

Definitions of different types of shift to fit in with the provisions of the shift warranty.

V. EXCLUSIONS:Notwithstanding anything to the contrary which may be contained in this Policy there shall be no coverage hereunder for:

a) loss, damage, liability or expense caused whilst or resulting from drilling a well for the purpose of monitoring or controlling or attempting to control a fire, Blowout, underground flow or Cratering associated with another mobile unit or platform unless notice is given as soon as is reasonably possible to insurers and their agreement is then obtained for said use and the Insured has agreed to pay an additional premium for such use if required by insurers.

b) loss, damage, liability or expense caused by or resulting from delay, detention or loss of use of the Property Insured.

c) the cost of repairing or correcting wear and tear, gradual deterioration, metal fatigue, machinery breakdown, expansion or contraction due to change in temperature, corrosion, rusting, oxidation and discoloration, electrolytic action, error in design, and also the cost of repairing or replacing any part which may be lost or damaged or condemned by reason of any latent defect therein or the cost of repairing, modifying, replacing or renewing faulty or defective parts or materials. The foregoing shall not be deemed to exclude any other physical loss or physical damage caused by or resulting from any of the aforementioned conditions to those parts of the Property Insured which are not affected by any of the aforementioned conditions.

d) loss of or damage to dynamos, exciters, lamps, motors, generators, switches and other electrical appliances and devices, caused by electrical or mechanical derangement, unless such loss or damage is the direct result of fire or a peril which originates outside the damaged electrical or mechanical equipment.

e) loss of or damage to drill stem whilst it is located underground or in hole unless such loss or damage is the direct result of fire, lightning, flood, tidal wave, windstorm, earthquake, collapse of derrick, explosion above the surface of the ground or waterbottom, collision of aircraft or a vessel or a mobile unit with the Property Insured, Blowout, Cratering or the total loss of the mobile unit caused by a risk insured under this Policy.

f) loss of or damage to drilling mud, cement, chemicals and fuel actually in use, and casing and tubing in the well.

Latent defect now excluded.Stuck drill stem now covered where caused by tidal wave, windstorm, earthquake, collapse of derrick,collision with an aircraft, or another vessel or mobile unit.

Ocean King: Fire on board

g) liabilities to third parties except as specifically covered under the Insuring Agreements of this Policy.

h) loss of or damage to any well, hole or any underground resource except as provided for in Insuring Agreement 1. D.

i) blueprints, plans, specifications or records, personal effects of employees or others.

j) loss, damage, liability or expense caused by:i) asbestos material removal; unless the asbestos itself is

damaged by fire, lightning, aircraft impact, explosion, windstorm, vandalism, malicious mischief, leakage or accidental discharge from automatic fire protective systems and then only if the removal of the damaged asbestos is covered by this Policy;

ii)demolition or increased cost of reconstruction, repair, debris removal or loss of use necessitated by the enforcement of any law or ordinance regulating asbestos material. This exclusion j) ii) will not apply to the cost of removal of damaged asbestos which would otherwise form part of a claim recoverable under this Policy; or

iii) any governmental directive or request which declares that on account of the presence of asbestos material in or on any undamaged portion of the Property Insured, that such Property Insured can no longer be used for the purpose for which it was intended.

Underground resources excludedAsbestos excluded

k) loss, damage, liability or expense where the Insured is, irrespective of this Policy, entitled to indemnity, in whole or in part, by any other insurance in respect of costs, expenses or liability for which the Insured would otherwise have been entitled to indemnity from the insurers under this Policy and there shall be no contribution or participation as respects such costs or expenses or liability by the insurers hereunder on the basis of contributing, deficiency, concurrent, or double insurance or otherwise.

l) loss, damage, liability or expense directly or indirectly caused by or contributed to, by or arising from:

i) ionising radiation from or contamination by radioactivity from any nuclear fuel or from any nuclear waste or from the combustion of nuclear fuel;

ii) the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof;

iii) any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter; or

iv) radioactive contamination however caused whenever or wherever happening, except where resulting from the use of radioactive isotopes for the purposes of well logging.

m) loss, damage, liability expense directly or indirectly caused by or arising out of seepage, pollution or contamination however caused, whenever or wherever happening except where covered under Insuring Agreements 1. A, B, C, and E.

n) loss, damage, liability or expense caused by:i) war, civil war, revolution, rebellion, insurrection, or civil strife arising

therefrom, or any hostile act by or against a belligerent power;ii) capture, seizure, arrest, restraint or detainment, (barratry and piracy

excepted), and the consequences thereof or any attempt thereat;iii) derelict mines, torpedoes, bombs or other derelict weapons of war;iv) strikers, locked out workmen, or persons taking part in labour

disturbances, riots or civil commotions;v) the detonation of an explosive, or any weapon of war by any person

acting maliciously or from a political motive;vi) Confiscation, nationalisation and expropriation.

Other Insurance exclusion The radioactive exclusion buys back cover

for damage resulting from the use of radioactive isotopes whilst well logging.

Seepage and pollution excluded except where covered under the basic insuring agreements.

Galaxy 1 under tow

VI. GENERAL CONDITIONS:1. SHIFTS OF MOBILE UNITS

Notwithstanding any provisions (whether written, typed or printed in this Policy) inconsistent therewith and subject to the provisions of item 1. F of these General Conditions, it is a condition precedent to the recovery of indemnity under this Policy that for each and every Shift of:

a) Property Insured which consists of a jack-up unit, lift-barge, or self-elevating unit or any mobile unit of similar type or description in excess of {Response} nautical miles;

b) Property Insured which consists of a barge, a submersible or a semi-submersible barge or any mobile unit of similar type or description in excess of {Response} nautical miles;

c) Property Insured which consists of a drill ship or any mobile unit of similar type or description, when not made under its own power, in excess of {Response} nautical miles;

New provision for different mileage limitations depending on the type of mobile unit being moved

Damaged during a punch through incident offshore Egypt

Diamond Offshore Ocean Baroness 2000 Freeport, Texas to Singapore On board Mighty Servant 1

A) a survey will be required by insurers prior to the commencement of any such Shift and the surveyor(s) from {Response} being the surveyor(s) appointed by insurers must review the items specified in the applicable paragraph i) or ii) or iii) or iv) below:

i) in respect of any Wet Tow, all arrangements, including the tug(s), tow, towage, stowage, motion response analysis, stress calculations, weather forecast and routing arrangements and, when applicable, the jacking operations;

ii) in respect of any Dry Tow, all arrangements, including the tug(s), tow, towage, stowage, motion response analysis, stress calculations, weather forecast and routing arrangements, loading, unloading, seafastening and, when applicable, the jacking operations;

iii) in respect of any Dry Transportation, all arrangements, including the stowage, motion response analysis, stress calculations, weather forecast and routing arrangements and, loading, unloading, seafastening and, when applicable, the jacking operations; or

iv) in respect of any Shift of a barge, submersible or semi-submersible barge, jack-up unit or lift-barge or a mobile unit of similar type or description, under its own power, all arrangements, including the motion response analysis, stress calculations, weather forecast and routing arrangements, manning and marine crewing requirements, and when applicable, the jacking operations.Furthermore, for each and every Shift in excess of the mileages stipulated in this item 1. of the General Conditions, the appointed Surveyor shall also review and approve the location of the destination site, the seabed conditions thereat and all of the mooring arrangements to be used including the procedures for adjustment of moorings in the event of heavy weather and, when applicable, the preloading and elevation at the destination site.All of the recommendations of the surveyor(s) which arise from the application of this item 1. of the General Conditions must be complied with by the Insured.

Similar to current market Shift Warranty but also includes motion response analysis and stress calculations.

Punch through

B) the surveyor(s) required by the insurers shall be instructed to review the plans for an intended Shift not less than 15 days prior to its commencement.

C) for a jack-up unit, lift-barge or a self-elevating mobile unit of similar type or description the appointed surveyor(s) must attend at the point of departure and the destination of the Shift(s) unless it has been agreed previously by insurers that attendance by such surveyor at these locations is not required.

D) where required by insurers an additional premium of an amount to be agreed between the Insured and insurers is paid to insurers to cover such Shift(s).

E) the survey costs incurred will be borne by insurers subject to a limitation of {Response}% of the annual gross premium paid by the Insured to insurers. Any amounts in excess of this percentage shall be borne by the Insured. Insurers shall be entitled to receive a copy of any of the survey reports or recommendations.

F) in the event that an emergency Shift is necessary to avoid a significant hazard to the Property Insured this condition precedent shall not apply. However any such emergency Shift must be reported to insurers within 14 days of its commencement and insurers may elect to instruct a surveyor to perform a survey and the Insured must comply as soon as is reasonably possible with any recommendations which arise from such survey.

Instruction at least 15 days prior to commencement .

Survey cost borne by insurers.

Hak 8 Under tow and after arrival:

2. BLOWOUT PREVENTER/WELL PRESSURE CONTROL EQUIPMENTIt is a condition precedent to the recovery of indemnity under this Policy that:

a) where the Property Insured is performing drilling, deepening, completion, workover, servicing or reconditioning, an operable Blowout preventer(s) or other operable pressure control equipment of standard make will, when required in accordance with all applicable regulations, requirements and prudent and accepted practices in the industry, be set, installed, tested and maintained in accordance with such regulations, requirements and prudent and accepted practices; and

b) the Insured will use every reasonable endeavour to comply with all regulations and requirements in respect of fitting of equipment to minimise damage and that all such equipment will be manned by properly certified personnel where required by regulatory authorities.

Global Santa Fe Adriatic IV Aug 10 2004 Offshore Egypt.

3. CLASSIFICATION AND OPERATIONS MANUALa) It is the duty of the Insured at the inception date and throughout

the period of this Policy to ensure that:i) the Property Insured is classed with a classification society

agreed by the insurers and that class within that society is maintained; and

ii) any recommendations, requirements or restrictions imposed by the Property Insured's classification society which relate to the Property Insured's seaworthiness or to its maintenance in a seaworthy condition are complied with by the dates required by that society.In the event of any breach of the duties set out in items 3 a) i), and ii), above, unless the insurers agree to the contrary in writing, insurers will be discharged from liability under this insurance as from the date of the breach provided that if the Property Insured is still at sea at such date the Insurer's discharge from liability is deferred for a period of 45 days.Any incident, condition or damage in respect of which the Property Insured's classification society might make recommendations as to repairs or other action to be taken by the Insured must be promptly reported to the classification society.Should the insurers wish to approach the classification society directly for information or documents, the Insured will provide the necessary authorisation.

b) It is also the duty of the Insured at the inception date and throughout the period of this Policy to ensure that the Property Insured is operated by the Insured in accordance with its current classification society approved operations manual, which manual must be in date and applicable to the current configuration of the Property Insured. In the event of any breach of the duty set out in this clause 3.b) insurers will be discharged from any liability directly caused by such breach.

Classification Clause Unit must be operated in accordance with the

current classification society approved operations manual.

Rowan Gorilla VII Legging Up

4. NOTICE OF LOSSThe Insured undertakes to provide notice to the party named in item 6 of the Declarations of any loss of or damage to the Property Insured or liability or expense which could become the subject of a claim under this Policy as soon as practicable after it becomes known to the Insured.

5. ONE EVENT CLAUSEFor the purposes of the application of the Limits of Liability and Deductible clauses of this Policy:

a) where a series of or several losses occur which are attributable directly or indirectly to one "accident, event, or cause," all such losses shall be added together irrespective of the period or area over which those losses have occurred and shall be treated as one claim;

b) insofar as loss or damage involves in whole or in part the perils of nature, including but not limited to a tornado, a windstorm, a cyclone, a hurricane or hail, the words "one accident, event, or cause" shall mean one single atmospheric disturbance and the total amount of the loss or damage which occurs within any period of 72 consecutive hours shall be treated as one claim;

c) insofar as loss or damage involves in whole or in part the peril of earthquake or volcanic eruption, the words "one accident, event, or cause" shall mean one or more earthquake shock(s) or volcanic eruption(s) occurring within any period of 72 hours.

6. DUE DILIGENCEThe Insured shall exercise due care and diligence in the conduct of all operations which are the subject of this Policy and shall utilize all safety practices and maintenance procedures that are generally considered prudent for such operations. In the event that any hazardous condition develops, the Insured shall at its sole expense, except as provided for under Insuring Agreement 1.E., make all reasonable efforts to prevent the occurrence of loss or damage which may be recoverable under this Policy.

7. CONDITIONS PRECEDENTIn the event of non-compliance by the Insured with a condition precedent insurers shall have the right:

a) to decline any claim for loss, damage, liability or expense which was caused by such non-compliance; and

b) to decline to indemnify the Insured for any increase in the amount of any other claim when such increase has arisen as a result of such non-compliance.However, except as stated above, non-compliance with any condition precedent shall not otherwise affect the Insured's rights of recovery under this Policy.

8. CONSTRUCTIVE TOTAL LOSSThere shall be no recovery for a Constructive Total Loss hereunder unless the expense of recovering and repairing the Property Insured shall exceed the insured value. The damaged or break up value shall not be taken into account when arriving at the cost of repair.

9. LAY UP AND LAY UP RETURNS OF PREMIUMa) Lay-up returns are subject to approval of the lay-up arrangements,

including maintenance arrangements and fire-fighting facilities, by a surveyor appointed by the insurers. The costs of such lay-up surveys shall be for the account of the Insured. The insurers will determine the return of premium, if any, and the lay-up period. A lay-up period will only include that time period in which the Property Insured is in a lay-up location which has been approved by the insurers' surveyor. A watchman must be on board at all times unless prior agreement has been given by the insurers.

b) Returns of premium may be adjusted quarterly and are subject to the laid-up Property Insured not having become an actual or constructive total loss during the period of this insurance.

c) Where approved, a return of premium will be granted for each lay-up period of 30 consecutive days or more. No Shifts or movement of legs or variation in buoyancy are allowed during the lay-up period unless approved or agreed by the surveyor appointed by the insurers.

d) Returns of premium are subject to a retention by insurers of a minimum of 50% of the annual operating premium where the Property Insured is not under repair, and 75% where the Property Insured is under repair or where work is being carried out on the Property Insured.

e) It is a condition precedent to the recovery of indemnity under this Policy that any Property Insured shall not commence operations following a lay-up, stacking or mothballing period of more than 180 consecutive days unless the Insured has arranged for a surveyor approved by insurers to approve the recommissioning of the Property Insured and the Insured has carried out any repairs or requirements recommended by the surveyor(s).

Recommissioning Surveys now required

Sante Fe Britannia under tow

10. CANCELLATIONThis Policy may be cancelled:

a) by the Insured at any time by written notice subject to a short rate return of premium on the basis of the attached Short Rate Scale;

b) i) by insurers subject to 30 days written notice to the First Named Insured, in which event a pro rata daily return of premium shall be payable;

ii) where insurers have given notice of cancellation to the First Named Insured such notice shall also apply to all other Insureds and for the purpose of this clause the First Named Insured shall be the irrevocable agent of all additional Insureds.

11. RELEASE AGREEMENTS AND WAIVERS OF SUBROGATIONSubject always to the Declarations, Insuring Agreements, Terms, General Conditions, Definitions and Exclusions of this Policy, where required under a specific written contract or agreement the Insured may grant release from liability with respect to loss, damage, liability or expense in connection with the Property Insured to any person, firm or corporation for whom or with whom the Insured is operating or who is working for the Insured provided that:-

a) any such release is granted in writing prior to any loss or damage, liability or expense which is the subject of such release;

b) any loss or damage, liability or expense which is the subject of said release arises out of or in connection with such operations;whereupon insurers agree to waive their rights of subrogation against such person(s), firm(s), or corporation(s) having been so released from such liability.

SDC in the Beaufort Sea, Alaska

Marine Drilling Company Mat Supported Drilling Rig Marine 201.US Gulf to Singapore onboard Teal in 1999

12. DISCLOSURE, INSPECTION, AUDIT OF RECORDS AND REVIEW OF OPERATIONAL PROCEDURESThe insurers shall be permitted but not obliged to inspect, and review at any reasonable time during normal business hours the Insured's records pertaining to all matters of operational procedures, costs, repairs, incomes, and expenditures of whatsoever nature relating to the Property Insured during the Policy period and extensions thereof and within 36 months after the final termination of this Policy. Upon request of the insurers, the Insured will provide the requested information and allow the insurers or their representatives reasonable access during normal working hours to the Insured's facilities. Insurers will bear any reasonable expenses incurred by the Insured as a consequence of insurers requiring such an inspection, but expenses so borne shall not include any expenses incurred by the Insured in demonstrating a claim under this Policy.Neither the insurers' right to make inspections nor the making or forbearance thereof nor any report thereon shall constitute a waiver of any of the insurers' rights under this Policy, nor shall it constitute an undertaking on behalf of or for the benefit of the Insured or others to determine or warrant that such property or operations are safe.

13. RECOVERY AND SALVAGEAny salvage or other recovery after expenses incurred are deducted, except recovery through subrogation proceedings, shall accrue entirely to the benefit of insurers until the sum paid by insurers has been recovered. Any recovery as a result of subrogation proceedings, shall accrue to the Insured in the proportion that the amount of the Policy Deductible bears to the amount of the loss which is the subject of such subrogation action.

14. DEFENCEThe insurers shall not be called upon to assume the handling or control of the defence or settlement of any claim made against the Insured but the insurers shall have the right, but not the duty, to control the defence of the Insured in relation to any claim for which a payment may be due in whole or in part under this Policy.The insurers shall not be liable for any defence expenses unless the consent of the insurers was obtained before those defence expenses were incurred.

Insurers now have right but not duty to defend

Duty of assured to disclose all operational procedures when required during audit.

Sedco Energy & Sedco Express

15. CHANGE OF OWNERSHIPIn the event of any change, voluntary or otherwise, in the ownership of the Property Insured, then, unless insurers agree thereto in writing, this Policy shall automatically terminate at the time of such change in ownership, provided, however that:

a) if the Property Insured is in the process of drilling a well and provided previous notice has been given to insurers of such activity then the automatic termination may be deferred until the expiry of the Policy period or when the Property Insured is removed from the drilling location, whichever is the sooner;

b) should the Property Insured be in distress or at a port of refuge, and provided that previous notice has been given to insurers, then such automatic termination may be deferred until its arrival in the first safe port;

c) in the event of an involuntary temporary transfer by requisition or otherwise, without the prior execution of a written agreement by the Insured, such automatic termination shall occur fifteen (15) days after such transfer;

d) the exercise of a provision contained in a drilling contract under which an operator has the right to or obligation to take over operational control of the Property Insured shall not be deemed a change in ownership or management, or a requisition for the purposes of this clause.Should the Policy period be altered by the application of any section(s) of this clause, then, subject always to an additional premium specifically charged, extensions will be held covered at pro rata monthly additional premium, or alternatively, for short period, premium is returnable on the basis of the attached Short Rate Scale.This insurance shall not inure to the benefit of any transferee or charterer of the Property Insured and, if a loss payable hereunder should occur between the time of change or transfer and any deferred automatic termination, the Insurers shall be subrogated to all the rights of the Insured against the transferee or charterer in respect of all or part of such loss as is recoverable from the transferee or charterer, and in the proportion which the amount insured bears to the agreed value.The term "new management" as used above refers only to the transfer of the management of the Property Insured from one firm or corporation to another, and it shall not apply to any internal changes within the offices of the Insured.

Change of ownership provisions (entirely new)

Ocean Princess under tow by the Torm Heron

16. SEVERAL LIABILITYThe subscribing insurers' obligations under this Policy are several and not joint and are limited solely to the extent of their individual subscriptions. The subscribing insurers are not responsible for the subscriptions of any co-subscribing insurer who for any reason does not satisfy all or part of its obligations.

17. INSOLVENCYThe insolvency, bankruptcy, receivership, or refusal or inability to pay of the Insured or any insurer shall not operate to increase the amount of the insurers' liability under this Policy.

18. APPEALSIn the event that the Insured elects not to appeal against any judgement or appraisal which may, in whole or in part, involve indemnity under this Policy, the insurers, following discussion with the Insured, may elect to make such appeal at their own cost and expense and shall be liable for the taxable costs and disbursements and any additional interest incidental to such appeal.

Glomar Baltic I Trinidad to West Africa onboard

Transshelf in 2001

2 Marine Drilling Company Mat Supported Drilling Rigs Marine 210 and 201Singapore to Sharjah on board Blue Marlin in 2000

19. PROOF AND PAYMENT OF LOSSA detailed sworn proof of loss shall be filed with these insurers as soon as practicable following the final and agreed adjustment of a claim under this Policy and all adjusted claims shall be paid no later than 30 days after receipt of such proof of loss by the insurers or their appointed representatives.

20. APPRAISALIn case the Insured and insurers fail to agree as to the amount recoverable under this Policy, the same may, if mutually agreed by both parties, be ascertained by two competent and disinterested appraisers, the Insured and Insurers each selecting one, and the two so chosen shall first select a competent and disinterested umpire; the appraisers together shall then estimate and appraise the loss, stating separately the cost of replacement or repair, and, failing to agree, shall submit their differences to the umpire, and the award of any two shall determine the amount of the loss; the parties thereto shall pay the appraisers respectively selected by them, and shall bear equally the expenses of the appraisal and the umpire.

21. LAW AND PRACTICEThis Policy is subject to English law and practice and it is hereby agreed that this Policy constitutes a marine Policy and the Marine Insurance Act 1906 shall apply.

22. SERVICE OF SUIT/JURISDICTIONIf and as attached to this Policy. If no service of suit clause is attached this Policy shall be subject to the exclusive jurisdiction of the English Courts, except as may be expressly provided herein to the contrary.

SUMMARY: Clearer definitions.

What is meant by a shift. Valuation and basis of recovery.

Increased coverage. Pollution hazard clause. Unrepaired damage. Removal of wreck.

Combined single limit. Asbestos and pollution exclusions. Shift Warranty. Classed and class maintained. Units operated in compliance with the class approved

operations manual.