TODCO Provides Update on Mexico Operations

HOUSTON, Dec. 28 /PRNewswire-FirstCall/ -- TODCO (NYSE: THE - News; the "Company") today announced the signing of a two-year drilling contract for its drilling rig, THE 206 with PEMEX in Mexico. The two-year contract will commence in late June 2007, following completion of THE 206's current drilling contract with PEMEX in Mexico. Total revenues from the two-year contract are anticipated to be approximately $82 million. This contract contains a customary termination provision, which allows PEMEX cancellation rights on five days notice, subject to certain conditions.

Additionally, the drilling rig THE 205 had completed its three-year drilling contract with PEMEX and was jacked up at a safe harbor location offshore Veracruz, Mexico while preparing to mobilize back to the U.S. Gulf of Mexico when it was struck by a cargo vessel owned by an unrelated party. The Company has not yet determined the full extent of the damage, the necessary cost and time to repair the rig or recoveries against the cargo vessel owner. The rig is insured for $33 million with a deductible for rig damage of approximately $4 million. The Company is self-insured for 30% of all losses above the deductible.

Statements regarding anticipated revenues, as well as any other statements that are not historical facts in this release are forward-looking statements within the meaning of U.S. securities laws and involve certain risks, uncertainties and assumptions. These include, but are not limited to, general market conditions, estimated reactivation and mobilization costs, estimated reactivation and mobilization times, contract performance, governmental actions and other factors detailed in TODCO's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.

TODCO is a leading provider of contract oil and gas drilling services with the largest rig fleet in the shallow water of the U.S. Gulf of Mexico and along the U.S. Gulf Coast. TODCO's common stock is traded on the New York Stock Exchange under the symbol "THE".

Source: TODCO