UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

In re:

In Proceedings Under Chapter 11

MARINE RIG 200, INC.

Case No. 92-46093-H1-11

Debtor.

DEBTOR'S DISCLOSURE STATEMENT

The Debtor, MARINE RIG 200, INC. (hereinafter, "Debtor"), provides this Disclosure statement pursuant to Section 1125 of the Bankruptcy Code to all known creditors and interest holder(s) of Debtor, in order to disclose that information deemed by Debtor to be material, important and necessary for its creditors and interest holder(s) to arrive at a reasonably informed decision before exercising their rights to vote on Debtor's Plan of Reorganization (the "Plan") presently on file with the United States Bankruptcy Court for the Southern District of Texas (the "Court"). A copy of the Plan has been attached hereto as Exhibit A.

Debtor has proposed the Plan and favors its approval.

The Plan sets forth Debtor's proposed treatment of the claims and interest(s) of its creditors and interest holder(s) and provides for Debtor's financial reorganization. In order for the treatment of claims and interest(s) proposed under the Plan to become binding upon Debtor's creditors and interest holder(s), the Plan must be confirmed by the Court. When this Disclosure statement is mailed to creditors and interest holder(s) f it will be accompanied by an Order of the Court setting forth the date and time for the hearing at which the Court will consider the confirmation of Debtor's Plan.

As is more fully described below, the Plan divides the claims and interest(s) of Debtor's creditors and interest holder(s) into separate classes. Only the votes of those creditors and interest holder(s) whose claims or .interest(s) are in classes that are !t impaired" (as that term is used in Bankruptcy Code Section 1124) will be counted in connection with the confirmation of the Plan.

Creditors may vote on the Plan by filling out and returning the Ballot accompanying this Disclosure statement to the Court. As a creditor or interest holder, your vote is important. specifically, the Court may confirm the Plan if all impaired classes of claims and interest(s) vote to accept the

Plan. Pursuant to the provisions of Bankruptcy Code Section 1126(c), a class of claims is regarded as having accepted the Plan if the creditors voting to accept the Plan represent more than half in number and at least two-thirds in amount of the claims in that class held by those creditors who vote on the Plan.

The Court has also set forth in th~ Order that will accompany this Disclosure statement when it is mailed to creditors and interest holder(s), the last date by which ballots must be filed with the Court. No vote received by the Court after such date will be counted. Whether or not a creditor or interest holder votes on the Plan, it will be bound by the terms and treatment set forth in the Plan if the Plan is accepted by the requisite majorities of classes of creditors and interest holder(s) and is confirmed by the ·Court. Absent some affirmative act constituting a vote, a creditor or interest holder will not be counted in connection with the confirmation of this Plan. Allowance of a claim or interest for voting purposes or disallowance of any claim or interest for voting purposes does not necessarily mean that all or any portion of the claim or interest will be allowed or disallowed for distribution purposes.

NO REPRESENTATIONS CONCERNING DEBTOR (PARTICULARLY AS TO ITS FUTURE BUSINESS OPERATIONS OR THE VALUE OF PI'S PROPERTY) ARE AUTHORIZED BY DEBTOR OTHER THAN AS SET FORTH IN THIS STATEMENT. ANY REPRESENTATIONS OR INDUCEMENTS MADE TO SECURE YOUR ACCEPTANCE WHICH ARE OTHER THAN AS CONTAINED IN THIS STATEMENT SHOULD NOT BE RELIED UPON BY YOU IN ARRIVING AT YOUR DECISION, AND SUCH ADDITIONAL REPRESENTATIONS AND INDUCEMENTS SHOULD BE REPORTED TO COUNSEL FOR DEBTOR, IYRO IN TURN SHALL DELIVER SUCH INFORMATION TO THE BANKRUPTCY COURT FOR SUCH ACTION AS MAY BE DEEMED APPROPRIATE.

THE INFORMATION CONTAINED HEREIN HAS NOT BEEN SUBJECT TO A CERTIFIED AUDIT. ACCORDINGLY, ALTHOUGH GREAT EFFORT HAS BEEN MADE TO INSURE ITS ACCURACY, DEBTOR IS UNABLE TO WARRANT OR REPRESENT THAT 'rHE INFORMATION CONTAINED HEREIN IS CORRECT.

I. Source of Information fo~ the Disclosure Statement

The information contained in this Disclosure statement was provided by Debtor's management.

II. Incidents that Led to the Filing of Chapter 11

Debtor, a corporation organized and existing under the laws of the State of Texas with its principal offices in Sugar Land, Texas, is a wholly-owned subsidia.ry of the Marine Drilling Management Company (the IIManagement-Company"), which in turn is a wholly-owned SUbsidiary of Marine Drilling Companies, Inc. fjkja Marine Holding Company (the "Company"). The Company is engaged

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in the business of providing affshare well drilling services to major and independent oil and gas companies. It wa's formed in March, 1990 in conjunction with the merger of Mar-Dril, Inc. f/k/a Marine Drilling Company- ("Mar-Dril") with certain contract drilling enterprises owned and/or co.ntrolled by Mr. William O . .Keyes (the "Keye sEnt it i.e s ") .

The Company serves as a holding company for both MarDril and the Keyes Entities, as well as certain other related enterpr i ses . Through its var Lous subs Ld La r i es r th e Campa ny currently owns and/or operates 11 mabile offsho.re jackup drilling rigs used in the affshore exploration and excavation of oil and natural gas.

. .

Debtor was f or-mad on May 18, 1991 for the purpose of

-acquiring, owning, operating and chartering the MARINE 20'0 mobile jackup offshore drilling rig (the "RigH), Debtor acquired the Rig on August 2, 1991 from Keyes Offshore Limited Partnership, one of the Keyes Entities controlled by the co.mpany.

Because of deteriorating contract drilling demand, particularly in the Gulf af Mexico regian, the Company and its various subsidiaries (the "companies") i including Debtor, have had increasing difficulty servicing their outstanding debts.

When this bankruptcy case was filed, in addition to. the United states Maritime Administration (lIMARAOn)'; the companies' principal creditors included the Chase Manhattan Bank ("Chase") and Chemical Bank (successor by merger with M'anufacturers Hanover Trust Company) ("Chemicaln). Chase was the principal lender to Mar-Dril prior to. the Merger while Chemical acted as the principal lender to the Keyes Entities.

On or about June 19, 1992, the company, Mar-Dril and several of their key creditors (including Chase) entered into a Reorganization Agreement (the "Agreement") pursuant to which certain creditars (including Chase) agreed to release approximately fifty-six (56) million dollars of debt owed by Mar~ Dril in exchange for sizable equity holdings in the company. In conjunction with this eXChange of debt for equity, the Agreement pravided for a one for twenty-five reverse stock split and the exchange of all outstanding common and preferred stock for a new class of common stock. The Agre.ement was approved by the Company1s shareholders on october 29, 1992 and has since been fully consummated.

While Debtor was not a party to. the Agreement, the Agreement specifically contemplated the restructuring of Debtor's indebtedne s s to MARAD. By ut. iIi zing ·the prov is ions a f cha pt.e r 11 I Debtor hopes to accomplish this latter end and thereby, further promote the successful reorganization of the Company.

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III. Present Co_ndition of Debtor While in Chapter 11

since filing for bankruptcy, Debtor has continued to operate in the s.ame manner it -did pr i.cr to filing. Thus, Debtor continues to have no employees but instead, relies upon a Rig ~anagement Agreement entered into with the Management Company on or about August 2, 1991 (the "Rig Management Agreement"),

pursuant to which the Management Company conducts, directs and exercises full control over all operations of the Rig. Debtor expects to continue operating the Rig in this manner during the course of its Chapter 11 proc~eding.

The Rig is currently being chartered to the Management Company pursuant to a Charter Agreement dated February 29, 1992. The Management Company is; in turn, using the Rig to fulfill a 'Qrilling contract it has entered into with Shell Offshore, Inc. -(the "Drilling contractrr).

Under the terms of the Charter Agreement, the Management Company is responsible for remitting to Debtor on a weekly basis the payments it receives under the Drilling contract after deducting the costs and expenses incurred in fulfilling that Contract and an amount corresponding to the Management Company's rig management fee under the Rig Management Agreement.

As is reflected in the Income and Expense statement attached hereto as Exhibit B, since filing for bankruptcy, Debtor has continued to earn, on average, approximately $45,000 in monthly net revenue~ under the Charter Agreement. This amount is consistent with prepetition figures and has allowed Debtor to accumUlate approximately $173,000 in additional accounts receivable since the petition date.

A balance sheet reflecting Debtor's assets and liabilities as of November 30, 1992 has been attached hereto as Exhibit C.

IV. Description of the Available Assets and Their Value

Debtor's principal asset consists of the Rig, a Bethlehem 200 Mat Cantilever jackup drilling rig capable of drilling to depths of 20,000 feet in water depths of 200 feet. It was first put into operation in 1981 and is currently being deployed' in federal waters in the Gulf 'of Mexico. Due to extremely soft demand for drilling rigs of this type, it is difficult to establish a fair market value for the Rig. The estimated fair market.value of the Rig is $2,300,000.

In addition to the Rig, Debtor has approximately $2,900,000 in outstanding accounts receivable. This figure includes a note receivable owed by storm Drilling company, an affiliate of Debtor ("Storm"), which (together with accrued interest) totals $1,990,000. As Storm is insolvent, however, the

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account is considered uncollectible and has been written off. Accordingly, Debtor believes that the fair market value of its accounts receivable is approximately $910,000.

Debtor also has $17,000 in prepaid expenses.

Finally, as of November 30, 1992, Debtor holds approximately $25,000 in cash or bank deposits.

V. Estimated Return to the Creditors if the Estate wer~ to be Liquidated

The claims against the' Estate include a secured claim in the amount of $2,300,000 held by MARAD, an unsecured claim in ,the amount of $8,504,000 held by MARAD, an unsecured trade claim

. in the amount of $3,671 held by Drilling Services Supply Company, an entity affiliated with Debtor, and an unsecured trade claim in the amount of $13,430 held by Marine 300 Series, Inc., another entity that is affiliated with Debtor. In addition, the Management company holds a contingent, unsecured claim for reimbursement and/or contribution against the estate in the amount of $459,859 pursuant to the limited guaranty agreement it executed in favor of Debtor. This latter claim, however, is subject to disallowance in accordance with the provisions of Bankruptcy Code section 502(e) (1).

Debtor's schedules also reflect certain unsecured trade claim in the amount of $69.00 and an unsecured personal injury claim in the amount of $67,841.74. These claims, however, have been or shall be fully paid and discharged by certain entities affiliated with the Debtor prior to the hearing on the approval of this Disclosure statement.

Debtor does not anticipate there will be any significant administrative expenses to the Estate. specifically, it appears that the prepetition retainer provided to Debtor's counsel will be sufficient to cover most, if not all, of the fees and expenses said counsel have and will incur on behalf of the Estate. Moreover, Debtor does not expect to seek the employment of an independent accounting agency in support of its efforts to obtain confirmation of the Plan.

In the event of a liquidation, it is .be.Li.e ved that approximately $775 I 000 (generated f r'orn the collection of Debtor's outstanding accounts receivable net of co Ll.ec+Lon and liquidation expenses) would be ava i.Lab l e for distribution t.o the holders of administrative expens.es and unae cur.ed claims, including the unsecured claim of MJI.RAD. In contrast, the Plan proposes to make payments totalling in excess of $815,000 to MARAD on its unsecured claim.

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VI. Anticipated Future of the Debtor

Debtor expects to continue operating in the future in the same manner as it has in ~he past. The reduced debt to MARAD, as well as the other de.bts of the Estate, will be serviced by revenues from Debtor's operations.

As is more fully discussed in Section IX of this disclosure statement, under the terms of the proposed Plan, Debtor , .. ill be obligated to pay $230,000 to MARAD on the EffectiVe Date. This payment will be funded primarily through the collection of an account receivable in the amount of approximately $910,000 owed to Debtor by the Management Company.

During the course of the Plan, Debtor shall also make the following monthly payments to MARAD in consideration of both .-its secured and unsecured claims against the estate:

For months 1 through 12 of the Plan $32,375.00

For month 13 of the Plan $28/234.00

For months 14 through 24 of the Plan $44,375.00

For month 25 of the Plan $61,933.00

For months 26 through 120 of the Plan $31t93i.oo

As reflected in the 1993 and extended cash-flow projections (attached hereto as Exhibits D and E respectively) and the corresponding 1993 and extended statements of operation (attached hereto as Exhibits F and G respectively), the level of Debtor's projected net revenues is SUfficient to insure that Debtor will have adequate funds available to make the above payments.

VII.

Identity and Experience of the Proposed Management of the Debtor's Busines~

Debtor proposes to retain its current management, with each officer continuing to hold the same position and the same responsibilities that he or she held immediately prior to the commencement of the case. As was the case prior to the commencement of this case, the officers shall receive no direct compensation for their services on behalf of the Debtor.

Debtor's mapagement consists of the following individuals:

William o. Keyes, who serves as President and is the sole director of Debtor. In addition to these positions, Mr. Keyes is also President, Chief Executive Officer and Chairman of the Board of the Company. He

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assumed these latter positions in December 1991, having previously served as Vice Chairman of the Board and Senior vice-President-Operations of the company. In 1971 f he founded Keyes Offshore, Inc. (IIKOl") f which is now a subsidiary of the Company, and has been its President and sole director since its inception. From 1969 to 1977, he was employed by Western Oceanic, Inc., serving as President from 1975 to 1977. Western Oceanic, Inc. is the offshore drilling sUbsidiary of the Western Company of North America, an oil field service company. He has a Bachelor of Science degree from the university of Missouri.

William H. Flores, who serves as Vice President and Assistant Secretary. In addition to these positions, Mr. Flores serves as Chief Financial Officer and Senior Vice President of the Company and has done so since the Company's formation in March, 1990. Prior to that time, he held various positions with KOI.

Specifically, he was Controller of KOI from September, 1980 to March 1984. In March, 1984, he become Treasurer and Secretary of KOI and in December 1986, Vice-President-Finance of KOI. Prior to 1980, he was employed by the American Broadcasting Companies and KPMG Peat Marwick. He is a Certified Public Accountant with a Bachelor of Business Administration degree from Texas A&M University and a Master of Business Administration from Houston Baptist university.

Joan R. Smith, who also serves as Assistant Secretary. In addition to this position, Ms. Smith is also Controller and Assistant Secretary of the company, having assumed these latter positions in February, 1991 She wa s previously employed by the Securities and Exchange Commission--Division of Corporate Finance as an accountant from May 1990 to February 1991, and she served as Controller, Secretary and Treasurer of Enercap corporation from July 1985 to May 1990. From September 1980 to July 1985, she was an Accounting Manager for Baker International. She is a Certified Public Accountant with a Bachelor of Business Administration degree from the University of Houston.

Kipling F. Layton, who serves as Secretary. In addition to this position, Mr. Layton also serves as the secretary and General Counsel to both the Company and the Management Company. He was a Director of MarDril and then, the company from 1968 to 1991. He obtained his Bachelor of Business degree from The Citadel in 1953 and his LLD from the university of Texas in 1960.

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VIII. Account,ing Process Used and the Identity of the Person Who Furnished the Information

Debtor's financial Btatements are audited by KPMG Peat Marwick, in accordance with Generally Accepted Accounting _Principles. Joan R. Smith is responsible for the Debtor'S financial records and furnished the information contained herein.

IX. The Plan of Reorganization

This summary of the proposed Plan should not be relied upon for voting purposes. Reference should be made to the Plan of Reorganization as the basis for voting. The following analysis of the Plan is intended to provide a context for understanding the remainder of this Disclosure statement.

A. Overview of the Plan

The Plan provides for Debtor's continued ownership, possession, operation and charter of the Rig. Debtor will use the revenue generated from the operation and/or charter of the Rig, as well as cash that has accumUlated or been collected either prior or subseque.nt to the commencement of this case, to fund the distributions to creditors provided for under the Plan.

B. Classification and Treatment of Claims and Interests Under the Plan

The Plan provides for the division of claims and interests into four separate classes. The composition and proposed treatment of each class is set forth below:

(1) Class 1 contains the allowed secured claim of MA.RAD in the am6unt of $2,300,000, secured by a first priority lien on the Rig and certain related property (as more fully described in the Plan) (hereinafter, the nMARAD Collateral!!), which, in accordance with the terms of a promissory note that will be

de livered from Debtor to MARAD I sha 11 be rep_aid i)) fu 11 .Jti th_ in~t_in_Q_onsecu t i,L9_Iil..Q.Utbly'_fns.tallJ[)..e.ot-s commenc ing on the :La-st day of the month in which the Effective Date of the Plan occurs. For the first twenty-four (24) months, there will be no repayment of the principal balance of the claim. Instead, MARAD will receive consecutive monthly inte~est payments in the amount of $14,375.00. Commencing on the 25th month after the Effective Date, and continuing thereafter up to and including the one hundred and twentieth (120th) month after the Effective Date, MARAD shall receive monthly principal and interest payments of $31,933.00 calculated according to an eight (8) year amortization schedl11e at an interest rate of 7.5 percent per annum.

(2) Class 2 contains the alloi"ed unsecured c l.a im of MARAD in the amount of $8,504,.000 I said amount representing the undersecure.d portion of Debtor; s debt to MARAD under a promissory note dated October 9, 1~80 executed by Keyes Offshore Ltd. III in

t'

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favor of the U.S. of America (as amended by way of endorsement and assumed by Debtor) and a certain Post Default Agreement dated August 2, 1991 between Debtor, storm Drilling Company and the

U. S. of America. ~.fu~l and. comElete sa'tisfag.t..i.Qn._Qi_:_$_a.i.d_

"s:_2-aim, ~he ~Plan_prov1des that MA.Rl;),_o._r._ec_e..UL~ (a) a lump sum ~payment 1n ~amount of $230,000.00 on or before the Effective /)rlV-bab:;-i ~b) twenty-five' (25) consecutive ~onth~y installment~ k~" e-: eq i.nn i.nq on the last day of the month .i.n Wh1Ch the EffectlVe ~- Da~e o~ the Plan occurs, with the fir~t_ twelve (12) i~st~llments_ be.i nq .i.n the amount of $18,000.00 -('~cfi), the f"ff1""r't"een'EFl'lT31:.n) 2/&> installment being in the amount of $13,859.00 and the remaining twelve installments being in the amount of $30,000. OO __ (~) i and' ~c) a lien on the MARAD Collateral to secure the above paYl~J' '0

(3) Class 3 contains ~ll allowed general unsecured claims of the Debtor except for the unsecured claim of MARADtf ~ 1'7 g 0

. placed in Class 2. These claims are believed to total . \

$17,101.00. The holders of Class 3 claims shall not receive any distribution under the Plan.

(4) Class 4 contains all equity interests in Debtor currently held by ,Marine Drilling Management Company (the "Management Company"). These interests shall survive the Confirmation of the Plan unimpaired.

C. Amendment and Restatement of Security Documents Covering Debts Owed to MARAD

In conjunction with the restructuring of K~RAD'S debt under the terms of the Plan, the First Preferred Ship Mortgage and the security Agreement pro'vided for MARAD's li'i=n on the MARAD Collateral shall be amended and restated by the parties and shall encompass all obligations owing to MARAD by Debtor under the terms of the Plan.

D. Leases and Executory Contracts

Pursuant to the provisions of Bankruptcy Code section 365(a), Debtor shall assume both its Rig Management Agreement and its Rig Charter Agreement with the Management company as of the date the order confirming the Plan is entered (the "Confirmation Date") .

In addition, Debtor shall assume as of the Confirmation Date, any and all insurance contracts or policies in effect at the time Debtor filed for bankruptcy.

Debtor shall be deemed to have rejected all other un~xpired leases and executory contracts not expressly assumed within thirty (30) days following the date the order confirming the Plan is entered, or such later date as may be authorized by the Court. Any claimants with rights in the rejected executory contracts and leases shall have an additional 30 days from the

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date the contract or lease is rejected to file claims in these proceedings.

E. Release of Guarantor

In the event MARAD votes to accept the Plan and the Plan is confirmed by the Court, the Management Company shall be released and forever discharged of any and all liability to MARAD under the limited guaranty agreement dated August 2, 1991, pursuant to which the Management Company guaranteed Debtor~s indebtedness to MARAD to the extent of $459,859.

F. Voidable Transfer Analysis

Debtor and its counsel have undertaken an analysis of Debtor's books and records and have concluded that Debtor has not made any transfer of money or property that could be avoided under the provisions of 11 U.S.C. §§ 544, 545, 547, 548, 549 or 553.

XI. Description of All Pending Litigation Involving the Debtor

There is no pending litigation in which Debtor is currently involved.

XII. Tax conseguences

Pursuant to 26 U.S.C. § 108(a) (1), Debtor will not recognize any taxable income for purposes of federal income taxation as a result of the restructuring of debt under this Plan. In accordance with 26 U.S.C. § l08(b) I however, any amount that would otherwise have to be included in Debtor's gross income under 26 U.S.C. § 61(a) (12) as result of the debt restructuring must be applied to reduce certain tax attributes of Debtor and/or Debtor's basis in depreciable property. As of December 31, 1991, there were not sufficient Net Operating Loss carryovers (NOLs) to absorb the full amount of debt relief excluded under 26 U.S.C. § 108(a). Accordingly, it will probably be necessary to reduce Debtor's basis in the Rig once the NOLS are exhausted.

Debtor's federal income taxes are reported as part of a consolidated return prepared by KPMG Peat Marwick on behalf of Debtor, the Company, and several related entities.

XIII. Considerations in voting on the Chapter 11 Plaq

Chapter 11 of the Bankruptcy Code allows a debtor to propose a Plan that provides for the adjustment of secured debts, unsecured debts and equity interests. So long as no impaired class of claims or interest votes against the Chapter 11 Plan, the Plan may provide for the payment of junior indebtedness even

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though there is less than full satisfaction of senior indebtedness and may provide for equity holders to retain their interests in the debtor absent full satisfaction of the claims of the debtor's creditors.

Generally, and subject to the specific provisions of Bankruptcy Code section 1124, a class of claims will be considered impaired under a Plan if the Plan does not provide for the full repayment of those claims in cash on the Effective Date of the Plan. If a class of claims or interests is unimpaired under the Plan, it is automatically deemed to have accepted the Plan.

In the event that an impaired class of claims or interests votes against a Plan, the plan may still be confirmed provided that at least one impaired class of claims (excluding claims held by il .i n s i de r s " of the debtor) votes to accept the plan and the Court determines that the Plan does not discriminate unfairly against non-accepting classes and is fair and equitable in its treatment of those classes.

A Plan will not be regarded as unfairly discriminating against a particular class provided that the class is to receive value in manner that is consistent with the treatment afforded to other classes with similar legal claims against the debtor.

In order for a Plan to be "f a i r and equitable" w i t n respect to a class of unsecured creditors, it must comply with the so-called absolute priority rule. The absolute priority rule requires that, beginning with the most senior rank of claims of creditors against the debtor, each class in descending rank of priority must receive full and complete compensation before inferior or junior classes may participate in the distribution.

In order for a Plan to be "fair and equitable II w i t h respect to a class containing a secured creditor, it must provide that the secured creditor: (1) retains its lien and receives deferred cash payments which total at least the allowed amount of its secured claim and have a present value (as of the Effective Date of the Plan) equal to at least the value of the creditor's interest in the Estate's interest in the property subject to the lien; or (2) realizes the indubitable equivalent of its claim. Additionally, a Plan may, in compliance with the fair and equitable requirement, provide for the sale of the secured creditor's collateral free and clear of all liens, provided that the secured creditor is given a lien on the sale proceeds and said lien is treated in accordance with the two alternatives set forth above.

Notwithstanding the acceptance of a Plan by all impaired classes of claims and interests or the debtorts ability to demonstrate that any non-accepting class of impaired claims or interests will be treated fairly and equitably under the Plan and will not be unfairly discriminated against, the Court will not

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confirm a Plan unless it determines that it is in the best interests of creditors and interest holders and ~s feasible.

In simple terms, a Plan is considered to be in the best interests of creditors and interest holders if it provides a better return to creditors and interest holders than they would receive if the debtor were liquidated and the proceeds of the liquidation distributed in accordance with the priorities set forth in Chapter 7 of the Bankruptcy Code. Thus, if a Plan provides creditors and interest holders with money or other property of a value exceeding the probable dividend that would result if the debtor were liquidated in accordance with the provisions of Chapter 7 of the Bankruptcy Code, then the Plan is in the best interests of creditors and interest holders.

In deciding whether a Plan is feasible or not, the Court considers the debtor's ability to carry out the provisions of the Plan. Specifically, it must determine that confirmation of the Plan is not likely to be followed by liquidation or further reorganization. This entails a consideration of such factors as:

1. the ability of the debtor to generate cash flow sufficient to make payments called for under the Plan and to continue in business; and

2. the absence of any other components which would make it impossible for the debtor to accomplish that which it promised to accomplish in the Plan or continue its operations as contemplated in the Plan.

In addition to the best interests of creditors and interest holders and the Plan's feasibility, the court must determine that the Plan and its proponent are in compliance with the other provisions of the Bankruptcy Code and that the plan was proposed in good faith.

The determinations that must be reached by the Court prior to a Plan's confirmation are made in conjunction with the hearing on confirmation, and are considered only if the Plan has been accepted by the requisite number of creditors and/or interest holders. The Court's decision that a plan satisfies the standards necessary for confirmation does not constitute an expression of its opinion as to whether the Plan is a good one.

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XIV. Conclusion

The materials provided in this disclosure statement are intended to assist you in voting on the Plan of Reorganization in an informed fashion. As you will be bound by the terms of the Flan if it is confirmed, you are urged to review this material and make such further inquiries as you may deem appropriate and

,then cast an informed vote on the Plan.

Dated: ~6')'1 /7 Iff"3 i ...=

v

MARINE RIG 200, INC.

~/L--.-___

By~. __ ~ _

William H. Flores Vice President

14141 Southwest Freeway Suite 2500

Sugar Land, Texas 77478

THOMPSON & MITCHELL

By cJjew(

Gerald D. stol David R. Apli One Mercantile Suite 3400

st. Louis, Missouri 63101

(314) 231-7676

VINSON & ELKINS L.L.P.

By /'/ O'}/Iv'(;

K ran Thomas

3 11 First Tower

1001 Fannin street Houston, Texas 77002-6760

Attorneys for the Debtor Marine Rig 200, Inc.

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