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Ad-hoc Report - Sale of off-shore mobile drilling units

In compliance with Law nr. 297/2004 and Regulation no. 13/2004 of CNVM

Date of report: December 22, 2005
Name of issuer: PETROM S.A.
Headquarters: Bucharest, 239 Calea Dorobantilor, district 1
Telephone/fax number: 021 4060101/021 4060436
Sole registration number at the Trade Register Office: 1590082
Fiscal attribute: R
Trade Register Number: J 40/8302/1997
Share capital: 5,600,050,607.8 RON
Regulated market on which the issued shares are traded: Bucharest Stock Exchange

Significant event to be reported:

Sale of off-shore mobile drilling units

On December 22, 2005, Petrom signed agreements for the sale of the off-shore mobile drilling units Atlas, Fortuna, Jupiter, Orizont, Prometeu and Saturn and of related equipment and on-shore facilities to Grup Servicii Petroliere S.A. (“GSP”). This transaction does not involve Petrom’s off-shore production assets (the fixed platforms in the Black Sea). The total consideration payable for these assets amounts to the RON equivalent of USD 100 million. Transfer of ownership is expected to occur in January 2006. In connection with the sale of the mobile off-shore drilling units Orizont and Fortuna, Oriental Oil Co. has agreed to release Petrom of its obligations under the existing contract for the lease of the drilling units Fortuna and Orizont, Petrom’s position as a contractor being assumed by GSP.
The transaction was approved by the Board of Directors of Petrom.
Petrom’s rationale for undertaking this transaction is to concentrate on its core business – the exploration and production of hydrocarbons, refining and distribution of petroleum and petrochemical products. The operation of mobile off-shore drilling units is a specialized area of oil-field related services which requires a specific focus and expertise. In line with other international oil companies, Petrom does not have sufficient in-house expertise in this business, as over the past several years the drilling units have been operated by other companies – including GSP – under service contracts with Petrom.
Petrom’s needs for such services is limited, and there is no other significant demand for such services in Romania – consequently Petrom had been seeking to utilize these assets internationally for a number of years, by offering off-shore drilling services to other oil companies. Two of the drilling units, namely Fortuna and Orizont, have been operating in the Persian Gulf since 2000, while others were also used outside Romania on various occasions.
GSP is a Romanian company which specializes in oil-field related services business. Since 2004, GSP is operating the drilling units Fortuna and Orizont under a services contract with Petrom.