833081--6/30/2006--PRIDE_INTERNATIONAL

related topics

{cost, contract, operation}

{gas, price, oil}

{operation, natural, condition}

{debt, indebtedness, cash}

{cost, operation, labor}

{customer, product, revenue}

{cost, regulation, environmental}

{financial, litigation, operation}

{regulation, change, law}

{product, liability, claim}

{competitive, industry, competition}

{operation, international, foreign}

An oversupply of comparable or higher specification rigs in the markets in which we compete could depress the demand and contract prices for our rigs and materially reduce our revenues and profitability. Our industry is highly competitive and cyclical, with intense price competition. Our international operations involve additional risks not generally associated with domestic operations, which may hurt our operations materially. We are conducting an investigation into allegations of improper payments to foreign government officials, as well as corresponding accounting entries and internal control issues. The outcome and impact of this investigation are unknown at this time. If we are unable to obtain new or favorable contracts for rigs whose contracts are expiring, our revenues and profitability could be materially reduced. Our customers may seek to cancel or renegotiate some of our drilling contracts during periods of depressed market conditions or if we experience downtime or operational difficulties. Our jackup rigs and some of our lower specification semisubmersible rigs are at a relative disadvantage to higher specification jackup and semisubmersible rigs. These higher specification rigs may be more likely to obtain contracts than our lower specification rigs, particularly during market downturns. Our ability to move some of our rigs to other regions is limited. We rely heavily on a small number of customers and the loss of a significant customer could have a material adverse impact on our financial results. Our debt levels and debt agreement restrictions may limit our liquidity and flexibility in obtaining additional financing and in pursuing other business opportunities. We are subject to a number of operating hazards, including those specific to marine operations. We may not have insurance to cover all these hazards. Rig upgrade, refurbishment, repair and construction projects are subject to risks, including delays and cost overruns, which could have an adverse impact on our available cash resources and results of operations. We are subject to numerous governmental laws and regulations, including those that may impose significant liability on us for environmental and natural resource damages. Our ability to operate our rigs in the U.S. Gulf of Mexico could be restricted or made more costly by government regulation. A change in tax laws of any country in which we operate could result in a higher tax expense or a higher effective tax rate on our worldwide earnings. Many of our contracts with our customers for our offshore rigs are long-term fixed dayrate contracts. Increases in our costs, which are unpredictable and fluctuate based on events outside our control, could adversely impact our profitability on those contracts. Unionization efforts could increase our costs or limit our flexibility. We may incur substantial costs associated with workforce reductions. Our ownership interest in two of our high-specification semisubmersible rigs is through a joint venture, which could limit our control over those assets. Public health threats could have a material adverse effect on our operations and our financial results.

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833081--6/30/2006--PRIDE_INTERNATIONAL_INC