Ian Macpherson +44 (0) 20 7053 1001

imacpherson@simmonsco-intl.com

*Important Disclosures Appear in Appendix D This research report has been prepared in whole or part by research analysts of Simmons & Company International Capital Markets Limited, a wholly owned foreign affiliate of Simmons & Company International. These research analysts are not registered/qualified as research analysts with FINRA, but instead have satisfied the registration/qualification requirements or other research-related standards of a foreign jurisdiction that has been recognized for these purposes by FINRA. Please see “Foreign Affiliate Disclosure” in Appendix D for additional information.

©2012 Simmons & Company International. All rights reserved. No part of this electronic communication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying or by any information storage and retrieval system, without permission in writing from Simmons & Company International.

Energy Industry ResearchFebruary 28, 2012

Ocean Rig (ORIG – $17.00 – Overweight): Initiation Report

We are initiating coverage of Ocean Rig UDW (ORIG) at Overweight with a 12 month target price of $23.00 (35% target upside). At the

current $17.00 price, the stock is discounting an implied per rig value of approximately $665M, and our $23.00 target price corresponds with a

$750M per rig valuation. ORIG is a pure play ultradeepwater (UDW) driller with a projected fleet of 9 rigs, including two harsh environment

fifth generation (5g) semis and seven broadly identical latest generation Samsung drillships. As such, ORIG represents one of the most

modern deepwater fleets in the industry with undiluted exposure to a rising day rate environment for top-end UDW rigs. To illustrate this

leverage, our DCF analysis (at a 10% discount rate) yields an equity valuation of $22/sh with a post-backlog day rate assumption of $575k/d

and a $27/sh valuation with a $600k/d assumption ($50k rate increment = +9% day rate increment = 22% equity upside).

Despite its enviable fleet and savory industry fundamentals, and also despite a recent flurry of strong price performance (+41% ytd), ORIG’s

stock carries a pronounced risk premium, with the stock screening notably cheap across the spectrum of asset value, earnings / cash flow /

EBITDA multiples, and DCF valuation perspectives. We attribute this discount primarily to two factors: (A) the Company’s ownership structure

– i.e. the 74% controlling stake held by DryShips Inc (DRYS) which is subject to extremely depressed fundamentals for dry bulk shipping as

well as a weak balance sheet; and (B) perceived project risk associated with ORIG’s recently disclosed participation in the Petrobras (PBR)

newbuild program (PBR has accepted ORIG’s bid to deliver 5 new drillships against 15-year $548k/d term contracts). We are not dismissive

of these concerns, however: (A) DRYS has openly communicated its intention to sell down its stake in ORIG, which we expect should

eventually have a beneficial impact, both in terms of reducing ORIG’s liquidity handicap as well as establishing more separation between

ORIG and DRYS which we suspect the market would like to see; and (B) with respect to the Brazilian newbuilds, we consider investor unease

to be overdone, if not misplaced entirely, as ORIG is not actually taking on any construction risk in the proposed newbuilds. Greater

transparency into the specifics of ORIG’s participation in this process may be required in order to fully assuage investor concerns on this front.

Ultimately, due to its asset makeup and valuation, we consider ORIG to be one of the most attractive and plausible consolidation targets in the

industry. That said, the Company is also positioned to thrive independently, with a healthy blend of blue chip customer backlog and open day

rate exposure underpinning what is potentially the steepest 3 to 4 year growth trajectory in the peer group. Finally, ORIG is poised to develop

into high dividend payout vehicle (a la SDRL) over the next two years, as FCF visibility ramps substantially from 2014 onward.

Figure 1: Valuation Snapshot

Source: Simmons & Company Estimates, Bloomberg

General FY Ending DecemberPrice $17.00 2011a 2012e 2013e 2014e 2015eShares Out 132 EPS 0.72 0.43 1.60 2.40 3.46Market Cap ($M) 2,239 P/E 23.5x 39.3x 10.6x 7.1x 4.9xNet Debt ($M) 2,428Enterprise Value ($M) 4,667Remaining Capex ($M) 1,300 CFPS 1.96 2.06 3.23 4.51 5.72Fully Delivered EV ($M) 5,967 P/CF 8.7x 8.2x 5.3x 3.8x 3.0xCurrent Implied Value Per Rig ($M) 663

52 Week Range $11.75-$17.22 EBITDA 380 491 648 870 998Avg Daily Volume 190k EV/EBITDA 12.3x 9.5x 6.8x 6.1x 4.8x

2

Table of Contents Investment Thesis .............................................................................................. 3 

Company Background ........................................................................................ 5 

Deepwater Update .............................................................................................. 7 

Fleet Summary .................................................................................................... 9 

Valuation .......................................................................................................... 10 

Management & Ownership ............................................................................... 15 

Model ................................................................................................................ 16 

Appendix D ....................................................................................................... 18 

3

Investment Thesis • Absolute Pure-Play on elite caliber UDW drillships –

unique vs. public peers in terms of asset quality & homogeneity and thus conducive to a transparent valuation approach. Considerably better insulated against downcycle risks than hybrid fleet competitors without necessarily yielding less upcycle opportunity as day rate and utilization separation between the higher and lower end floater classes appears to be increasingly entrenched and secular.

• Balanced Mix of Backlog and Open Day Rate

Exposure. The UDW rig market is nearly sold out for 2012 and increasingly tightening for 2013 (nearly 70% sold). ORIG is enviably positioned with two of its existing rigs (Olympia and Eirik Raude) available in 2012 and three spec drillships being delivered in 2013 which should enable these units to capitalize on what is shaping up to be a sweet spot of the day rate cycle before longer term supply/demand uncertainty increases. At the same time, ORIG has a good quantity (~$2.3B) and quality of backlog on its six delivered rigs, averaging approximately two years and ~$525k/d. Nearly 60% of this backlog pertains to PBR contracts on three drillships.

• Credible Take-out Candidate. ORIG embodies an

enviable fleet of consumable size which poses an attractive consolidation opportunity for its larger cap peers with older fleets. Most recent transactions involving Aker Drilling and Pride, and prior cycle

M&A involving targets such as the prior incarnation of Ocean Rig itself by Dryships, Awilco and Frigstad support substantial valuation upside in ORIG.

• Best-in-Class Organic Growth Profile. With a 50%

fleet expansion occurring next year, ORIG is in a class alone amongst the offshore drillers in terms of its organic earnings growth profile. Our estimates indicate a three year annualized EBITDA growth rate of 28% for ORIG from 2012 to 2015, which compares with 20% for PACD and an 8% average growth rate for the more mature deepwater peers SDRL, ESV RIG and DO. ORIG achieves this growth with significantly positive free cash generation in each of these years excluding 2013, with an average annual free cash flow between 2012 and 2015 of ~$150M (7% FCF yield), including 2015 run rate annual free cash flow of approximately $700M (33% yield).

Figure 2: Summary Projections

Source: Simmons & Company International

2011 2012 2013 2014 2015Revenues 700 865 1,067 1,452 1,633EBITDA 380 491 648 870 998 EBITDA margin 54% 57% 61% 60% 61%

EPS $0.72 $0.43 $1.60 $2.40 $3.46

Net Debt (ending) 2,428 2,154 3,044 2,542 1,813Equity (ending) 2,881 2,938 3,149 3,465 3,921Net D/C % 46% 42% 49% 42% 32%

FCF 274 -890 502 729(projections before dividend distribtions, which we consider likely)

4

Investment Thesis (continued) Risk Factors: • Macro. The foremost risk factors which pose the

greatest absolute downside potential are of the systemic macro variety and are principally derived from the global recession risk that could meaningfully reduce demand and price for crude oil.

• Rig Capacity. Additionally, the deepwater industry has become increasingly subject to speculative investment due to the compelling economics associated with historically low newbuild prices and improving day rates – the risk of industry overcapitalization has seemingly shifted to the periphery for the time being, but this remains an omnipresent consideration.

• Execution. In more company specific terms, key risk factors for ORIG revolve around the Company’s ability to (1) continue to deliver its remaining newbuilds in an efficient manner (this perceived risk factor has risen with recent headlines surrounding the new Brazil newbuilds) and (2) convert a high level of revenue efficiency out of its backlog – although new generation assets are relatively better insulated from the downtime headwinds that have impacted the industry during the post Macondo adjustment phase, they have not been completely immune to the phenomenon of higher downtime.

• Scale. Additionally, a relative lack of scale could amplify any operational hiccups for ORIG.

• DryShips Affiliation. The key risk factors that we identify with DRYS controlling stake in the company are threefold: (A) governance related, (B) balance sheet related, and (C) stock liquidity related (the latter might be categorized less as a risk than as a current investment handicap which stands to be remediated over due course). With respect to governance, ORIGs recent offering prospectus identified among its listed risk factors the potential for conflicts of interest among ORIG directors who are also DRYS directors (principally, chairman George Economou). With ORIG today comprising the principal asset of DRYS (e.g., ORIG market cap = $2.2B, DRYS 74% stake in ORIG = $1.6B, DRYS market cap = $1.5B), we believe the Board’s interests are actually better aligned than some may care to appreciate. Nonetheless, the history of interdealings between Mr. Economou’s public and private companies (although, to be fair, there have been no such transactions involving ORIG), as well as DRYS’s spotted track record with timing investment cycles (e.g., overreaching on the prior drybulk shipping cycle and, with 20/20 hindsight, also overpaying for ORIG in 2008) have created a need for DRYS/ORIG to prove itself up in the category of capital stewardship.

5

Company Background This is actually the second time that we have launched research coverage of Ocean Rig, as we also covered its predecessor company (Ocean RIG ASA: OCR NO) in 2007 to 2008, prior to it being acquired by DRYS for an enterprise value equivalent of approximately $1.0 to $1.1B per rig. At the time of that acquisition, Cardiff Marine, a private company controlled by DRYS chairman George Economou, had already placed orders with Samsung for two speculative drillships (now the Corcovado and Olympia), and the plan was set in motion to combine the legacy OCR company (Leiv Eiriksson and Eirik Raude) with a fleet of newbuilds for an eventual re-IPO of a larger deepwater pure-play. The Company’s third and fourth drillship orders followed in 2008, and these four rigs have now each been successfully delivered and commenced their maiden contracts during the course of 2011. Additionally, in 2011 ORIG acquired (via DRYS) options to purchase six additional drillships and converted the first three of these six options into firm orders for drillships with staggered deliveries in 2013. The remaining three options were due to expire at January 31, 2012, although we believe that ORIG has likely either rolled these options to a later expiry or otherwise maintains comparable price (<$650M, all-in) and delivery (2H ’14) quotations from Samsung irrespective of the options status. DRYS initiated the partial spin-off of Ocean Rig in September 2011 with a private placement of 29M shares (22% of total shares) that were initially quoted on the Oslo OTC market under the ticker OCRG NS and subsequently commenced trading in October 2011 on the Nasdaq Global Select Market under the ticker ORIG.

ORIG’s six existing rigs possess a total backlog of $2.3B equating to an average of two years at $525k/d per rig. Approximately 60% of this backlog relates to PBR contracts on three of ORIG’s four drillships, and these PBR contracts are priced at below average rates within the overall backlog – i.e. the weighted average on the three PBR drillships is approximately 2.5 years per rig at $485k/d, compared with the average backlog on the three non-PBR rigs of approximately 1.5 years at $600k/d. See backlog summary on page 9. ORIG’s three yet to be delivered newbuilds are favorably positioned toward the front end of the pack of uncommitted deepwater newbuilds. The total deepwater order book currently stands at around 90 units if one includes all of the most recently announced PBR newbuilds – nearly half (43) of these newbuilds are assigned to PBR. The remaining pool of non-PBR newbuilds includes 30 units which do not yet have contracts, and ORIG’s are among the first 15 in line for delivery. Based on abundantly compelling newbuild economics (low $600Ms capex and $600k/d leading edge day rates = 5 year payback) and growing skepticism in the industry about the ultimate timing and quantity of Brazilian newbuilds, we expect another significant flurry of non-PBR newbuild orders to commence in 2012 – not likely a reprise of the 32 non-PBR newbuilds ordered over the late 2010 to 2011 timeframe, but a range of 15 to 20 would not surprise us in the least. Thus, being earlier rather than later should carry a modest premium, all else equal.

6

Company Background (continued)

Figure 3: Uncommitted Newbuilds Queue

Source: ODS-Petrodata, company releases

Update on Brazil Newbuilds. PBR announced on February 9th that it had “approved the contracts” for 21 additional newbuilds with Sete (bringing Sete’s total to 28, including the first 7 awarded last year) and 5 dual activity drillships with Ocean Rig (in fact, as ORIG has clarified, it is a consortium member party to this contract, along with a partner shipyard which has not yet been identified). The Sete rigs (not dual activity) were negotiated at an average day rate of $530k/d while the ORIG rigs were at $548k/d – all against 15-year

terms. All units have local content requirements ranging from 55% and 65%, with first deliveries required to commence in 4 years, with staggered deliveries for the series. Day rates are also qualified to be subject to downward adjustments if certain tax exemptions can be established, which could then reduce the average day rates to $500k/d for the Sete rigs and $535k/d for the ORIG rigs. Various media outlets have reported that ORIG’s bid is based on the Huisman multi-purpose tower derrick design (similar to what RDS and NE have pioneered on NE’s Globetrotter and Bully class drillships) It is important to note, however, that ORIG’s strategy in this endeavor is to remain uninvested in these rigs and contractually obligated only in a fee-based management capacity (i.e., with limited/no recourse in the event of delivery delays and/or cost overruns) until the assets are delivered, with a buy-in option on the assets upon delivery. However, given the fact that all of this is in fact considerably less finalized from an ORIG perspective than what the PBR press release might imply, we are sympathetic to ORIG’s reticence on the matter up until now. That said, we do believe that the stock could ultimately stand to benefit from improved clarity on ORIG’s strategy in Brazil as we do not believe the market is giving the Company a fair benefit of the doubt with respect to its sensibility for assessing and pricing its risk exposure on this initiative.

Rig Name Contractor Delivery1 Dalian Developer Vantage Drilling 1-Dec-20122 West Auriga Seadrill 15-Feb-20133 Pacific Khamsin Pacific Drilling 17-Apr-20134 West Vela Seadrill 15-May-20135 Tungsten Explorer Vantage Drilling 31-May-20136 ENSCO DS-7 Ensco 1-Jul-20137 OCR Drillship Tbn1 Ocean Rig 31-Jul-20138 Maersk Drsh Tbn1 Maersk Drilling 15-Aug-20139 West Tellus Seadrill 15-Aug-201310 Atwood Advantage Atwood 30-Sep-201311 Pacific Sharav Pacific Drilling 17-Oct-201312 OCR Drillship Tbn2 Ocean Rig 31-Oct-201313 Transocean Drsh Tbn1 Transocean 31-Oct-201314 Maersk Drsh Tbn2 Maersk Drilling 15-Nov-201315 OCR Drillship Tbn3 Ocean Rig 15-Nov-201316 Noble Drsh Tbn6 Noble 1-Dec-201317 Rowan Renaissance Rowan 15-Dec-201318 Sevan UDW3 Sevan Drilling 30-Dec-201319 Transocean Drsh Tbn2 Transocean 31-Dec-201320 Maersk Drsh Tbn3 Maersk Drilling 15-May-201421 Noble Drsh Tbn7 Noble 15-May-201422 Rowan Resolute Rowan 1-Jun-201423 Atwood Achiever Atwood 30-Jun-201424 Ocean BlackRhino Diamond Offshore 30-Jun-201425 Sevan UDW4 Sevan Drilling 30-Jun-201426 Opus Drsh Tbn1 Opus Offshore 1-Jul-201427 COSLProspector COSL 15-Aug-201428 Maersk Drsh Tbn4 Maersk Drilling 15-Aug-201429 Noble Drsh Tbn8 Noble 1-Sep-201430 Rowan Reliance Rowan 30-Sep-2014

7

Deepwater Update The offshore drillers entered 2012 with a day rate tailwind at their back and rising cost and downtime challenges (the latter more specific to deepwater rigs) serving as militating headwinds – and ample debate on the Street as to which will ultimately prevail with respect to earnings revisions over the course of next year. The good news for ORIG is that all of these recently emerging positive demand signals play to its benefit, and simultaneously many of the emerging headwinds in terms of stricter BOP testing and tolerance regimes and rising maintenance costs are also contributing to a more bifurcated market. This is not to suggest that brand new drillships have been immune to lost revenue due to unscheduled downtime – they have in several instances; but at the end of the day the 6th gen assets are proving overall to be more reliable and efficient drilling tools for the customers. Deepwater exploration success continues to be an increasingly crucial driver of rising rig demand, as 2011 witnessed an impressive tally of 23 announced UDW discoveries – this marked the 6th consecutive year of 20 or more discoveries in UDW. Whether it has been STL et al with Skrugard and Aldous/Avaldsnes, TLW in French Guiana, NBL’s continued successes with Med gas, XOM’s first deepwater discovery in the Black Sea, APC in Mozambique or most recently CIE’s intriguing results on Block 21 Angola, the hits have just kept coming, and the pull-through for rig demand could be materially needle-moving sooner than later. While all offshore rig categories are benefitting presently from tightening fundamentals, recent contracting activity has continued to reflect a bifurcated trend as 6th gen rates have moved into the mid/upper $500s k/d (up from a recent trough of $425 to $440k/d), and higher in certain cases such as ORIG’s own recent fixtures for the Leiv Eiriksson and Eirik Raude at $600 to $700k/d rates. And while those two fixtures can be partially rationalized due

to their limited term (Eirik Raude = high $600s k/d for 60 days in WAfr) or higher opex (Leiv Eiriksson = $610k/d for ~3 years in Norway), the mainstream rate/term bid is creeping up faster than recently expected as well, as evidenced by ESV’s pending contract for its DS-6 drillship for 5 years at $550k/d. Several industry participants have indicated to us in January-February discussions that $550 to $600k/d multi year term contracts will be realized within the next few months, with each of the three corners of the golden triangle (US GOM, WAfr –and now EAfr as well, and Brazil) poised to witness significant contracting upticks near term even as available capacity is close to being effectively sold out until 2013. As always, a crucial factor in the S/D equation will be the outcome of PBR’s pending tender awards. If PBR were to pick up 4-7 incremental deepwater rigs for 3 to 5 year terms with 2012 to 2013 start dates as has long been speculated, this will likely stimulate accelerated contracting activity elsewhere. Longer term, the viability of PBR’s local newbuild program also looms large over the industry (and ORIG. . .), and skepticism continues to mount that the 33 proposed Brazilian built rigs will be delivered anytime within the next five years. If this skepticism proves prescient, it is likely that PBR will be in the market for significantly more “bridge” rigs from the existing market, which would likely provide upward pressure on day rates globally. Whether or not the overall floater market ultimately tightens, recedes or treads sideways over the next few years with ~100 more newbuilds and counting on the way is a question that frankly impacts other drilling contractors more than it does ORIG as the Darwinian forces of attrition will cull the fleet as required from the bottom end, while the newest assets will likely play to historical through-cycle form and maintain maximum utilization and below average day rate sensitivity.

8

Deepwater Update (continued)

Figure 4: Historical Utilization

Source: ODS-Petrodata

Figure 5: Recent UDW Fixtures

Source: Company releases, ODS-Petrodata, Simmons & Company International

  

60

70

80

90

100

110

Jan 2005 Jan 2007 Jan 2009 Jan 2011

UDW

All Other Floaters

Rig Name Contractor Rig Type Region Start Date Dayrate Term Operator AnnouncedLeiv Eiriksson ORIG 7,500 semi Norway Q4 '12/Q1 '13 $610k/d 15 wells (3 yrs) Norway Rig Mgmt Feb-12ENSCO 8506 ESV 8,500' semi GOM Jan '13 $530k/d 2.5 yrs APC Jan-12Jim Day NE 12,000' semi GOM April '12 $550k/d 75 days Deep Gulf Jan-12Eirik Raude ORIG 10,000 semi Equatorial Guinea May '12 $690k/d 60 days Ophir Jan-12West Navigator SDRL 8,200 ship Norway Dec '12 $590k/d 18 mos RDS Jan-12Jim Day NE 12,000' semi GOM Jan '13 $530k/d +15% 3 yrs RDS Jan-12Deepsea Aberdeen Odfjell 7,500' semi West of Shetland Q4 '14 $470k/d 5 yrs BP Jan-12Clyde Boudreaux NE 10,000' semi Australia Q3 '12 $417k/d +15% 2 yrs RDS Dec-11Belford Dolphin FOE 10,000' ship Mozambique Q1 '12 $480k/d 4 yrs APC Nov-11Belette Dolphin FOE 10,000' ship Mozambique Q4 '13 $488k/d 4 yrs APC Nov-11West Aquarius SDRL 10,000' semi Canada Q2 '13 $530k/d 2 yrs XOM Nov-11Sedco Express RIG 7,500' semi Israel Q3 '12 $500k/d 6 mos NBL Nov-11Ocean Monarch DO 10,000' semi Indonesia Q3 '12 $385k/d 4 yrs Niko Nov-11Atwood Condor ATW 10,000' semi GOM Q3 '12 $515k/d 2 yrs HES Oct-11ENSCO 8505 ESV 8,500' semi GOM Q2 '12 $475k/d 2 yrs APC-NBL-APA Oct-11Eirik Raude ORIG 10,000' semi Ghana Oct '11 $550k/d 6 mos APC-TLW Oct-11West Leo SDRL 10,000' semi W. Africa April '12 $510k/d 1 yrs TLW Oct-11West Capricorn SDRL 7,500' semi GOM May '12 $487k/d 5 yrs BP Oct-11West Hercules SDRL 10,000' semi Norway May '12 $505k/d 4 yrs STL 8/13/11Discoverer Enterprise RIG 10,000' ship GOM Jul '11 $492k/d 18 mos BP Aug-11Discoverer Seven Seas RIG 7,000' ship India Jul '11 $295k/d 6 mos ONGC Aug-11Ocean Monarch DO 7,500' semi Vietnam Jul '11 $285k/d 2 wells BP Jun-11Sedco Energy RIG 7,500' semi Ghana Aug '11 $440k/d 2 yrs TLW Jun-11West Hercules SDRL 7,500' semi Far East May '12 $490k/d 1 yr HSE May-11Ocean BlackHawk DO 12,000' ship tbd Oct '13 $493k/d 5 yrs APC May-11Ocean BlackHornet DO 12,000' ship tbd Apr '14 $493k/d 5 yrs APC May-11Sedco Express RIG 7,500' semi Israel Dec '11 $470k/d 3 mos NBL May-11Deepsea Metro II Odfjell 10,000' ship Brazil Dec '11 $440k/d 3 yrs PBR May-11Pacific Scirocco PACD 10,000' ship Nigeria Jul '11 $470k/d 1 yr TOT May-11ENSCO 8504 ESV 8,500' semi Brunei Aug '11 $425k/d 3 wells TOT Apr-11

9

Fleet Summary Focus on Standardization All seven ORIG drillships are of the Samsung 10,000/12,000 design which is the most widely proven and accepted drillship design on the market. Of the 45 new floaters ordered in the late 2010 to late 2011 order cycle, 38 were drillships and 22 of these 38 were placed with Samsung. Similar to the concept successfully employed by Scorpion Offshore (acquired by SDRL) with a nearly identical fleet of Super-116 jackups, ORIG is

going after standardization synergies across all dimensions of construction, commissioning, operations (training and crewing flexibility), and maintenance (spares, supply chain, etc). The Eirik Raude and Leiv Eiriksson are broadly similar fifth generation semis of the Trosvik Bingo 9000 design and, as such, have their own benefits of transferability with respect to crews and spares, etc., as well. All 9 of ORIG’s rigs are fully equipped equipped with dual activity.

Figure 6: Summarized Fleet Specifications

Source: Ocean Rig

Figure 7: Contract Status

Source: Ocean Rig

Delivery TypeHarsh

EnvironmentDual

ActivityWater

Depth (ft)Drilling

Depth (ft)

Leiv Eiriksson 2001 semi Yes No 7,500 30,000

Eirik Raude 2002 semi Yes No 10,000 30,000

Corcovado 2011 drillship Partial Yes 10,000 40,000

Olympia 2011 drillship No Yes 10,000 40,000

Poseidon 2011 drillship No Yes 10,000 40,000

Mykonos 2011 drillship No Yes 10,000 40,000

Drillship TBN 1 Jul '13 drillship No Yes 12,000 40,000

Drillship TBN 2 Sep '13 drillship No Yes 12,000 40,000

Drillship TBN 3 Nov '13 drillship No Yes 12,000 40,000

2012 2013 2014 2015Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Leiv Eiriksson Borders & Southern, Falklands, $540 k/d mobilization & prep Consortium, Norway, $610k/d

Eirik Raude APC, WAFr, $665 k/d Ophir, WAfr, $700 k/d survey

Corcovado Petrobras, Brazil, $455 k/d

Olympia Vanco, WAFr, $415 k/d

Poseidon Petrobras, Tanzania, $586 - $632 k/d

Mykonos Petrobras, Brazil, $455 k/d

Drillship TBN 1 delivery Jul '13

Drillship TBN 2 delivery Sep '13

Drillship TBN 3 delivery Nov '13

10

Valuation ORIG can be assessed under a composite view of EPS/CFPS/EBITDA multiples as well as asset valuation (implicit price per rig). However, the latter carries greater weight for a company such as this (i.e., a small, homogenous fleet with transparent and straightforward asset valuation but, conversely, less scale and limited operating history). ORIG is also more conducive to DCF valuation than most of its peers for similar reasons. Asset Valuation Implicit price per rig takes fully delivered EV (EV plus remaining capex for newbuilds) as the numerator and the fully delivered fleet count as the denominator. At the current stock price of $16.50/sh ORIG is valued at approximately $640M per rig. This is a close approximation of sticker price replacement cost, although it is a significant discount to real replacement value when considering the cash flow advantage of ORIG’s fleet versus a theoretical replacement fleet that ould be ordered, funded, and delivered 3 years from now. Our analysis presented below in Figure 8 indicates that the real replacement value equivalency for ORIG’s fleet when benchmarked against a nominal newbuild prices and taking into consideration its advantaged cash flow profile should be in excess of $725M per rig ($22.50/sh implied equity). We have strived for conservatism in deriving these cash flow estimates, and would highlight that a reduction in our discount factor applied to these cash flows from 18% to 12% would augment the valuation to $740M per rig ($23.50/sh).

Figure 8: Replacement Cost Parity

Source: Simmons & Company

Figure 9 illustrates a spectrum of implied rig values across a range of stock prices ($10/sh = $560M per rig, $28/sh = $825-$910M per rig). The purpose of splitting out the blue and red bar ranges is simply to differentiate between valuing all 9 of ORIG’s assets equally vs. locking down the three speculative 2013 drillships at a ceiling of $650M per rig (thus, the red bars express the implied valuation of the other 6 rigs through that lens), due to the fact that spec drillships have less intrinsic value than delivered and cash flowing assets.

Figure 9: Rig Values & Equity Price Scale

Source: Simmons & Company

Steel Discounted 2012-14 CF Combined

Leiv Eiriksson 500 180 680Eirik Raude 500 205 705Corcovado 625 165 790Olympia 625 180 805Poseidon 625 245 870Mykonos 625 150 775NB1 640 0 640NB2 640 0 640NB3 640 0 640Average 602 125 727

Implied Equity Price at Full RV $22.50/sh

200

300

400

500

600

700

800

900

1,000

Uniform Value Alllocation

Striated Value Allocation

11

Valuation (continued) Peer Asset Comps Unlike ORIG, most of its public peer comparables (with the exception of PACD) are not conducive to high precision asset valuation exercises due to varying degrees of fleet and NAV complexity, and in particular the distortion that arises from migrating from the empirical to the subjective/arbitrary when ascribing asset values to older fleets. For instance, there is an accepted consensus view on the Street that RIG currently trades at the lowest implied asset valuation because the company is significantly under-earning against the supposed “normal” profitability of its assets. Our analysis arrives at this conclusion as well, as our assumptions render an implied valuation of approximately $525M per UDW asset for RIG against an estimated average replacement cost of $585M per rig for its hybrid fifth to sixth generation fleet. However, the exercise with RIG is built on a surfeit of assumptions that are difficult to corroborate, absent better

volume and visibility with secondhand market transactions (not to mention RIG’s other external angles, including the Macondo settlement overhang). PACD embodies the closest asset comp to ORIG, and in fact is such a close analog in terms of its composition that would one expect to see very similar asset valuations between the two peers. However, this is not quite the case as ORIG ($645M per rig) in fact trades at a meaningfully lower asset valuation than PACD ($760M per rig), although both are considerably cheaper than their next closest asset comp, SDRL ($1.2 to 1.3B per rig). On the surface it is slightly difficult to rationalize a disparity of this magnitude between PACD and ORIG, however we would again refer back to the aforementioned perceived risk factors associated with the DRYS overhang and the Brazil newbuilds overhang.

Figure 10: Asset Value Comp Sheet

Source: Simmons & Company International

ORIG PACD SDRL ESV RIG DO

Stock Price: $17.00 $10.95 $41.06 $58.70 $53.43 $67.44

Shares 132 217 489 229 350 139

Market Cap 2,239 $2,375 $20,078 13,419 18,701 9,378

Net Debt 2,428 $586 $9,155 4,597 9,265 346

Enterprise Value 4,667 $2,961 $28,583 18,016 27,966 9,724

Remaining Capex 1,300 1,605 3,800 1,900 1,325 1,350

Fully Delivered EV 5,967 4,566 32,383 19,916 29,291 11,074

Delivered UDW Fleet Count (2012) 6 4 14 13 28 8

UDW Newbuilds (2013-14) 3 2 3 2 2 3

Implied Market Value of Delivered UDW Fleet 663 761 1,307 831 579 576

SCI Assumed RV of Delivered UDW Fleet 602 650 585 575 585 516

Premium (Discount) to SCI Assumed Sticker Price RV 10% 17% 129% 45% -1% 12%

12

Valuation (continued) Recent M&A Markers Support Potential Valuation Upside to ORIG

I. Aker Drilling. RIG acquired Aker Drilling in August 2011 for a fully delivered Enterprise Value of $3.2B. Aker Drilling was a fleet of four 6g rigs (two arctic class semis currently in operation plus two 2013 to 2014 drillships). This takeout valuation equated to $800M per rig or, alternatively, $950M per rig for the two semis if ascribing only $650M to the spec drillships. . .) and an EBITDA multiple of 8x. Comparable asset pricing for ORIG would yield an equity valuation of $30.00/sh.

II. Pride (February 2011). Subject to more than a modicum of subjectivity and debate around the valuation of Pride’s older assets, but ESV likely paid in the region of $800M to $850M per 6g drillship approximately one year ago when the visibility for the market was less robust than it is today.

III. Ocean Rig (April 2008). ORIG’s stock appears relatively cheap today, but recall that Dryships paid $1.1B per rig for the Eiriksson and Raude when it acquired the former incarnation of Ocean Rig back in April 2008.

IV. Awilco (July 2008). Who knows what COSL ultimately paid for Awilco after all of the capex overruns for the semis are taken into account, but it must assuredly have been at least a 20% premium to the prevailing replacement costs of the day, which were precisely at the peak in July 2008.

V. Frigstad (October 2007). Once again underscoring “up front” price versus the real price that a buyer ultimately pays when deviating from the path of proven, best-in-class shipyard products, Saipem negotiated at the time to pay about $750M for the Frigstad D90 (now Scarabeo 8) when that acquisition was announced in October 2007, but massive delays and untold budget overruns have made this a painful acquisition for SPM.

DCF Analysis We do not typically rely heavily on DCF analysis for the offshore drillers because the 20 to 30 year old assets that figure prominently in most company’s fleets don’t have particularly clear free cash flow visibility for more than a few years. ORIG is obviously more conducive to DCF because of its youthful fleet and comparatively superior revenue and free cash flow visibility, particularly over the next ten years (years 1 to 10 drive >55% of the DCF value of a 30 year modeled cash flow stream. And while it is not our intention to be overly prescriptive about deriving our target price from the DCF because, even when the cash flow stream is reasonably visible such is in the case of ORIG, the applicable discount rate is also a highly sensitive variable. The purpose of our DCF analysis presented here is simply to highlight the valuation leverage to scales of day rate and discount rate assumptions – the takeaway is that low/mid $20s valuations are not difficult to support on a DCF basis.

13

Valuation (continued)

Figure 11: DCF Sensitivities

Source: Simmons & Company International

Multiple Comps: P/E, P/CF, EV/EBITDA Similar caveats apply to ORIG’s peer multiple comps –applicability is inversely correlated with fleet age because to evaluate ORIG fairly one needs to look out to fully delivered earnings power in 2014 to 2015, and while 3 to 4 year earnings and cash flow visibility is quite high for PACD, it is significantly more open-ended for companies with older and more diversified fleets. In the comp sheet below, we have thus assigned descending weighting down the ladder from most akin (PACD=40%) to least RIG and DO, both 10%). We could have included NE and RDC in the comp group as well, but this would introduce increasingly more jackup content which we opt to avoid with the objective of looking toward 2014 to 2015).

The EV/EBITDA progression incorporates free cash into the rolling EVs, such that EBITDA for 2013 is the divisor under estimated YE’12 adjusted EV, etc. Dividends and net residual free cash flow are accumulated in these projected net debt adjustments. ORIG’s multiples screen extremely attractive vs. the weighted peer group average across the composite sketch of all metrics, and this grows increasingly evident in the out years due to ORIG’s most-in-class growth. On our estimates, ORIG’s 3-year (2012 to 2015) CAGR on EBITDA is 28% vs. a peer group average of 10%, and its 3-yr CAGR (2012 to 2015) on CFPS is 43% vs. a group average of 12%.

480 500 520 540 560 580 600 620 640

11% $9.65 $11.73 $13.81 $15.89 $17.96 $20.04 $22.12 $24.19 $26.27

10% $11.86 $14.06 $16.26 $18.46 $20.66 $22.86 $25.06 $27.26 $29.46

9% $14.39 $16.72 $19.05 $21.39 $23.72 $26.05 $28.39 $30.72 $33.05Dis

coun

t Rat

e

Day Rates to 2022

14

Valuation (continued)

Figure 12: Multiples Comparison

Source: Simmons & Company International

ORIGWtd Peer Grp Avg PACD SDRL ESV RIG DO

peer weightings 100% 40% 25% 15% 10% 10%

Stock Price: $17.00 $10.95 $41.06 $58.70 $53.43 $67.44Shares 132 217 487 229 350 139Market Cap 2,239 2,375 19,996 13,419 18,701 9,376Net Debt 2,428 586 9,155 4,597 9,115 260Net D/C Ratio% 43% 37% 57% 30% 29% 8%Enterprise Value 4,667 2,961 28,501 18,016 27,816 9,636EV -1 4,381 3,785 27,101 17,366 26,966 9,171EV -2 5,280 4,229 27,701 16,516 24,966 9,451EV -3 4,785 3,869 25,451 15,026 22,766 9,201Dividend Yield 0.0% 0.0% 7.4% 2.4% 5.3% 5.2%

EBITDA2012 $483 $394 $2,580 $2,201 $3,389 $1,2932013 $640 $438 $2,831 $2,530 $4,442 $1,3672014 $864 $594 $3,365 $2,668 $4,608 $1,4652015 $994 $684 $3,436 $2,652 $4,666 $1,576

EV/EBITDA2012 9.7x 9.2x 9.1x 11.0x 8.2x 8.2x 7.5x2013 6.8x 8.2x 8.6x 9.6x 6.9x 6.1x 6.7x2014 6.1x 7.0x 7.1x 8.2x 6.2x 5.4x 6.4x2015 4.8x 6.0x 5.7x 7.4x 5.7x 4.9x 5.8x

EPS2012 $0.37 $0.71 $2.96 $5.65 $2.40 $4.722013 $1.53 $0.86 $3.15 $6.50 $4.52 $4.462014 $2.35 $1.31 $3.77 $6.96 $4.93 $4.262015 $3.42 $1.77 $3.97 $7.01 $5.16 $4.33

P/E2012 45.9x 14.9x 15.4x 13.9x 10.4x 22.3x 14.3x2013 11.1x 12.4x 12.7x 13.0x 9.0x 11.8x 15.1x2014 7.2x 10.0x 8.4x 10.9x 8.4x 10.8x 15.8x2015 5.0x 8.9x 6.2x 10.3x 8.4x 10.3x 15.6x

CFPS2012 $2.00 $1.19 $4.15 $8.26 $6.62 $7.312013 $3.16 $1.39 $4.46 $9.37 $8.93 $7.632014 $4.45 $1.98 $5.20 $10.01 $9.44 $8.062015 $5.68 $2.46 $5.40 $10.09 $9.75 $8.72

P/CF2012 8.5x 9.0x 9.2x 9.9x 7.1x 8.1x 9.2x2013 5.4x 7.9x 7.9x 9.2x 6.3x 6.0x 8.8x2014 3.8x 6.5x 5.5x 7.9x 5.9x 5.7x 8.4x2015 3.0x 5.9x 4.5x 7.6x 5.8x 5.5x 7.7x

15

Management & Ownership George Economou, Chairman and CEO: Mr. Economou has served as Chairman and CEO of Ocean Rig since 2010 and has served as Chairman, President and Chief Executive Officer of its parent company DryShips since January 2005. Mr. Economou began his career in shipping in1976 and has managed and invested in numerous shipping concerns over this timeframe. Mr. Economou is a graduate of MIT and a member of ABS Council, Intertanko Hellenic Shipping Forum, and Lloyds Register Hellenic Advisory Committee Frank Tollefsen, COO: Mr. Tollefsen has been with Ocean Rig since 2004 and previously served as SVP of Operations for Ocean Rig AS prior to promotion to his current position in early 2011. Mr. Tollefsen has 26 years of experience from various positions in the drilling contracting business, including 13 years with Transocean immediately prior to joining Ocean Rig. Jan Rune Steinsland, CFO Ocean Rig: Mr. Steinsland joined Ocean Rig as CFO in May 2006. He previously served as CFO of Acta Holding ASA from 2000 and also previously worked in various financial management capacities at Exxon.

Pankaj Khanna, COO DryShips: Mr. Khanna has served as COO of DryShips since 2009. He has 22 years of experience in the shipping industry, including recent prior roles as Chief Strategy Officer for Excel Maritime Carriers Ltd, COO of Alba Maritime Services S.A and VP of Strategic Development at Teekay Corporation where he headed vessel sales and purchase activities, newbuilding ordering activities, and other strategic development projects from 2001 through 2007. Ziad Nakhleh, CFO DryShips: Mr. Nakhleh has served as Dryships CFO since 2010. He was previously CFO of Aegean Marine Petroleum Network Inc, throughout and following that Company’s IPO in December 2006. Prior to Aegean, Mr. Nakhleh was employed at Ernst & Young and Arthur Andersen in Athens. Mr. Nakhleh is a graduate of the University of Richmond in Virginia and is a member of the American Institute of Certified Public Accountants.

16

Model

FY FY 2011 FY FY 2012 FY FY FY FYINCOME STATEMENT 2010 Q1A Q2A Q3A Q4A 2011A Q1 Q2 Q3 Q4 2012 2013 2014 2015

Total Revenues 406 109 127 226 238 700 179 264 202 221 865 1,067 1,452 1,633

Operating Expense 119 42 62 85 93 282 62 93 94 94 342 383 543 591

Gross Profit 286 67 64 141 145 418 117 171 108 127 523 684 910 1,042 Gross Margin % 71% 62% 51% 63% 61% 60% 65% 65% 54% 57% 60% 64% 63% 64%

G&A 19 6 10 7 16 38 8 8 8 8 32 36 40 44

EBITDA 267 61 55 135 129 380 109 163 100 119 491 648 870 998 EBITDA margin % 66% 56% 43% 60%

D&A 75 28 37 43 55 163 53 54 54 54 215 215 278 298

Operating Income (recurring) 192 33 18 91 74 217 56 110 46 65 276 433 592 700 Operating Margin % 47% 30% 14% 40% 31% 31% 31% 42% 23% 29% 32% 41% 41% 43%

Gain (loss) on Sales -1 -

Operating Income (reported) 190 33 18 91 74 217 56 110 46 65 276 433 592 700

Interest Income 12 6 -6Interest Expense 8 3 9 18 29 58 47 46 42 41 176 169 203 162 Gain (loss) on rate swaps -40 -2 -17 -16 1 (33) - - - - Other, net 1 0 -1 -1 0 (2) - - - -

Pre Tax Income 155 35 -15 57 46 123 9 64 4 24 100 264 389 537

Income Taxes 20 6 4 8 10 27 9 13 10 11 43 53 73 82 Tax Rate % 13% 17% -25% 14% 21% 22% 103% 21% 239% 46% 43% 20% 19% 15%

Net Income 135 29 -19 49 37 95 0 50 -6 13 57 211 316 456

Share Count 104 132 132 132 132 132 132 132 132 132 132 132 132 132

EPS 1.30 0.22 -0.15 0.37 0.28 0.72 0.00 0.38 -0.04 0.10 0.43 1.60 2.40 3.46

FY FY 2011 FY FY 2012 FY FY FY FYCASH FLOW SUMMARY 2010 Q1A Q2A Q3A Q4A 2011A Q1 Q2 Q3 Q4 2012 2013 2014 2015

Net Income 135 29 (19) 49 37 95 (0) 50 (6) 13 57 211 316 456 D&A 75 28 37 43 55 163 53 54 54 54 215 215 278 298 Other Non-cash AdjustmentsAfter Tax Cash Flow 210 57 18 92 91 258 52 104 48 67 272 426 594 754

CFPS 2.02 0.43$ 0.13$ 0.70$ 0.69$ 1.96$ 0.40$ 0.79$ 0.37$ 0.51$ 2.06$ 3.23$ 4.51$ 5.72$

Base Capex 7 3 4 4 4 15 20 20 25 Newbuild Capex 1,099 - - - - - 1,250 - - Total Capex 1,105 10 3 4 4 4 15 1,270 20 25

∆ NWC 61 6 (33) 50 (41) (17) 46 72 6

FCF pre Dividend (896) 20 43 133 (6) 103 274 (890) 502 729

Dividend - - - - - - - - - - (per share) -$ -$ -$ -$ -$ -$

FCF post Dividend (896) 20 43 133 (6) 103 274 (890) 502 729

248.88 735.87- 377.26 728.89 614

FY FY 2011 FY FY 2012 FY FY FY FYBALANCE SHEET SUMMARY 2010 Q1A Q2A Q3A Q4A 2011A Q1 Q2 Q3 Q4 2012 2013 2014 2015

Debt, beginning 1,200 1,258 1,138 2,764 2,767 1,258 2,736 2,693 2,559 2,565 2,736 2,462 3,352 2,850Debt, ending 1,258 1,138 2,764 2,767 2,736 2,736 2,693 2,559 2,565 2,462 2,462 3,352 2,850 2,121Average Debt 1,229 1,198 1,951 2,765 2,751 1,997 2,714 2,626 2,562 2,514 2,599 2,907 3,101 2,486 Average Interest Rate 6.9% 6.8% 8.5% 7.0% 7.0% 7.3% 7.0% 7.0% 6.5% 6.5% 6.8% 6.5% 6.5% 6.5%Interest Expense 85 20 41 49 48 158 47 46 42 41 176 169 203 162Capitalized Interest 36 16 15 15 15 61 15 15 15 15 60 45 0 0Net Interest Expense 49 4 26 34 33 97 32 31 27 26 116 124 203 162

Cash, beginning 455 659 270 438 496 659 308 308 308 308 308 308 308 308Cash, ending 659 270 438 496 308 308 308 308 308 308 308 308 308 308Average Cash 557 464 354 467 402 483 308 308 308 308 308 308 308 308 Average Interest Rate 2.2% 4.9% 3.0% 3.0% 2.0% 3.2% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%Interest Income 12 6 3 4 2 14 2 2 2 2 6 6 6 6

Net Debt 599 868 2,326 2,271 2,428 2,428 2,385 2,251 2,258 2,154 2,154 3,044 2,542 1,813

Shareholders Equity 2,881 2,911 2,905 2,959 2,881 2,881 2,881 2,931 2,925 2,938 2,938 3,149 3,465 3,921

Gross Debt/Cap 30% 28% 49% 48% 49% 49% 48% 47% 47% 46% 46% 52% 45% 35%Net Debt/Cap 17% 23% 44% 43% 46% 46% 45% 43% 44% 42% 42% 49% 42% 32%RONCE

17

Model (continued)

FY FY 2011 FY FY 2012 FY FY FY FYDRIVERS 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 2013 2014 2015

Day RatesLeiv Eiriksson 540 540 540 540 540 540 540 540 600 555 600 600 600Eirik Raude 665 665 665 566 640 548 656 700 550 613 550 550 550Corcovado 455 455 455 455 455 455 455 455 455 455 455 526Olympia 415 415 415 415 415 415 415 415 415 483 550 550Poseidon 585 585 585 585 585 585 585 585 568 550 550Mykonos 455 455 455 455 455 455 455 455 455 550NB-1 550 550NB-2 550 550NB-3 550 550

UtilizationLeiv Eiriksson 94% 94% 95% 43% 82% 94% 94% 35% 50% 68% 94% 93% 93%Eirik Raude 94% 94% 95% 95% 95% 94% 94% 30% 55% 68% 94% 93% 93%Corcovado 30% 95% 43% 56% 0% 94% 94% 94% 71% 94% 93% 79%Olympia 42% 95% 95% 77% 94% 94% 94% 94% 94% 94% 93% 79%Poseidon 35% 95% 65% 94% 94% 94% 94% 94% 94% 93% 93%Mykonos 0% 90% 94% 94% 70% 94% 93% 93%NB-1 86% 93%NB-2 84% 93%NB-3 79% 93%

Daily OpexLeiv Eiriksson 175 175 170 170 173 170 170 170 170 170 175 180 180Eirik Raude 175 175 170 170 173 170 170 170 170 170 175 180 180Corcovado 175 170 170 172 0 170 170 170 128 175 180 180Olympia 175 170 170 172 170 170 170 170 170 175 180 180Poseidon 175 170 170 172 170 170 170 170 170 175 180 180Mykonos 170 170 170 0 170 170 170 128 175 180 180NB-1 180 180NB-2 180 180NB-3 180 180

RevenueLeiv Eiriksson 46 46 47 21 160 46 46 17 28 137 206 204 204Eirik Raude 56 57 58 49 221 47 56 19 28 150 189 187 187Corcovado 12 40 18 70 0 39 39 39 118 156 154 150Olympia 16 36 36 88 35 35 36 36 143 166 187 159Poseidon 19 51 70 50 50 51 51 201 195 187 187Mykonos 0 0 37 39 39 116 156 154 187NB-1 173 187NB-2 127 187NB-3 80 187Total 102 131 200 176 610 179 264 202 221 865 1,067 1,452 1,633

OpexLeiv Eiriksson 16 16 16 7 54 15 15 16 16 62 64 66 66Eirik Raude 16 16 16 15 62 15 15 16 16 62 64 66 66Corcovado 16 16 7 38 0 15 16 16 47 64 66 66Olympia 16 16 16 47 15 15 16 16 62 64 66 66Poseidon 9 16 16 40 15 15 16 16 62 64 66 66Mykonos 5 5 0 15 16 16 47 64 66 66NB-1 66 66NB-2 50 66NB-3 33 66Total 32 72 78 65 247 62 93 94 94 342 383 543 591

Gross ProfitLeiv Eiriksson 30 30 32 15 106 31 31 2 12 75 142 138 138Eirik Raude 41 41 42 35 159 31 41 4 12 88 125 121 121Corcovado 0 -4 24 11 32 0 23 24 24 71 92 89 85Olympia 0 0 21 21 41 20 20 20 20 81 102 121 93Poseidon 0 -9 3 35 30 35 35 35 35 139 131 121 121Mykonos 0 0 0 -5 -5 0 22 24 24 69 92 89 121NB-1 107 121NB-2 77 121NB-3 47 121Total 70 59 122 112 363 117 171 108 127 523 684 910 1042

18

Appendix D Analyst Certification: I, Ian Macpherson, hereby certify that the views expressed in this research report to the best of my knowledge, accurately reflect my personal views about the subject compan(ies) and its (their) securities; and that, I have not been, am not, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) or views in this research report. Important Disclosures: For detailed rating information, go to http://publicdisclosure.simmonsco-intl.com. Additional information is available upon request. Simmons & Company's ratings system categorizes individual stock performance as Underweight, Neutral or Overweight relative to the performance of the S&P 500 Index and its discrete energy sub-sector over a 12 month period. Research analysts compensation is based upon (among other things) the firm's general investment banking revenues. Simmons & Company International may seek compensation for investment banking services from Ocean Rig UDW Inc. and other companies for which research coverage is provided. The firm would expect to receive compensation for any such services. Foreign Affiliate Disclosure: This report may be made available in the United Kingdom through distribution by Simmons & Company International Capital Markets Limited, a firm authorized and regulated by the Financial Services Authority to undertake designated investment business in the United Kingdom. Simmons & Company International Capital Markets Limited's policy on managing investment research conflicts is available by request. The research report is directed only at persons who have professional experience in matters relating to investments who fall within the definition of investment professionals in Article 19(5) Financial Services and Markets Act (Financial Promotion) Order 2001 (as amended) ("FPO"); persons who fall within Article 49(2)(a) to (d) FPO (high net worth companies, unincorporated associations etc.) or persons who are otherwise market counterparties or intermediate customers in accordance with the FSA Handbook of Rules and Guidance ("relevant persons"). The research report must not be acted on or relied upon by any persons who receive it within the EEA who are not relevant persons. Simmons & Company International Capital Markets Limited is located at 6 Arlington Street, London, United Kingdom. Disclaimer: This e-mail is based on information obtained from sources which Simmons & Company International believes to be reliable, but Simmons & Company does not represent or warrant its accuracy. The opinions and estimates contained in the e-mail represent the views of Simmons & Company as of the date of the e-mail, and may be subject to change without prior notice. Simmons & Company International will not be responsible for the consequence of reliance upon any opinion or statement contained in this e-mail. ©2012 Simmons & Company International. All rights reserved. No part of this electronic communication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying or by any information storage and retrieval system, without permission in writing from Simmons & Company International.

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Rating Date Rating Comment 02/28/2012 OVERWEIGHT Initiating Coverage01/27/2012 N/A

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