Pride International, Inc. announced that the board of directors of Petroleo Brasileiro S.A. (Petrobras) has approved the award of a five-year contract for the semisubmersible rig Pride Mexico for drilling operations offshore Brazil.

The contract, which is subject to final execution, is expected to commence during the second quarter of 2008, following an estimated 270-day shipyard program and subsequent mobilization from the U.S. Gulf of Mexico to Brazil. Revenues that could be generated over the five-year contract, inclusive of a performance bonus opportunity of up to 15 percent, total approximately $482 million. The estimate excludes revenues for mobilization, demobilization and customer reimbursables. The contract also provides for an operating cost escalation provision.

The Pride Mexico is a conventionally moored semisubmersible rig currently equipped to operate in water depths of up to 1,100 feet. The rig recently completed a three-year contract offshore Mexico and is currently mobilizing to a shipyard in Galveston, Texas. The shipyard program includes a previously planned regulatory survey and maintenance, upgrade of the rig's water depth capability to 2,300 feet and modifications to the rig's mooring system and crew quarters. The total expected capital expenditure associated with the shipyard project is approximately $120 million, inclusive of the previously planned expenditures.

"The five-year contract for the Pride Mexico further demonstrates the strong business fundamentals associated with the floating rig market segment," noted Louis A. Raspino, President and Chief Executive Officer of Pride International, Inc. "Following the relocation of this rig, the company will have an industry-leading seven semisubmersible rigs operating off the coast of Brazil, expected to be one of the industry's strongest regions for floating rigs for many years to come. The upgrade of the Pride Mexico demonstrates our willingness to opportunistically enhance the capabilities of our fleet at attractive terms."

The company also announced its 2007 capital expenditure budget has been revised to $470 million, up from the previously stated $400 million.