<PAGE>   1
                                                                   EXHIBIT 10.38


                                     [LOGO]

                                DRILLING CONTRACT

                                     BETWEEN

                   AZERBAIJAN INTERNATIONAL OPERATING COMPANY

                                       AND

                       SANTA FE INTERNATIONAL CORPORATION





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                                                               DRILLING CONTRACT
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                                TABLE OF CONTENTS


<TABLE>
<S>         <C>                                                                                           <C>
CLAUSE 1    DEFINITIONS AND INTERPRETATION.................................................................1
CLAUSE 2    CARRY OUT DRILLING SERVICES....................................................................5
CLAUSE 3    RATES AND CHARGES..............................................................................5
CLAUSE 4    TERM OF CONTRACT...............................................................................5
CLAUSE 5    TERMINATION....................................................................................5
CLAUSE 6    ACCESS TO LOCATIONS............................................................................6
CLAUSE 7    DEFAULT........................................................................................7
CLAUSE 8    LIABILITIES AND INDEMNITIES...................................................................11
CLAUSE 9    CONTRACTOR'S INSURANCES.......................................................................18
CLAUSE 10   TAX INFORMATION AND INDEMNITY.................................................................21
CLAUSE 11   BANKRUPTCY OR LIQUIDATION.....................................................................22
CLAUSE 12   FORCE MAJEURE.................................................................................22
CLAUSE 13   FREEDOM FROM LIENS............................................................................23
CLAUSE 14   CONTRACTOR TO MAINTAIN REPRESENTATION.........................................................23
CLAUSE 15   GIVING OF NOTICES AND PAYMENT OF FEES.........................................................23
CLAUSE 16   CONFIDENTIAL INFORMATION......................................................................24
CLAUSE 17   PUBLICITY.....................................................................................25
CLAUSE 18   ASSIGNMENT AND SUBCONTRACTING.................................................................25
CLAUSE 19   APPLICATION OF LAWS AND REGULATIONS...........................................................27
CLAUSE 20   SERVING OF NOTICES............................................................................27
CLAUSE 21   VARIATION AND WAIVER..........................................................................28
CLAUSE 22   INDEPENDENT CONTRACTOR RELATIONSHIP...........................................................28
CLAUSE 23   INFRINGEMENT OF PATENTS.......................................................................29
CLAUSE 24   APPLICABLE LAW................................................................................29
CLAUSE 25   ARBITRATION...................................................................................30
CLAUSE 26   EXCLUSION OF PREVIOUS CORRESPONDENCE..........................................................31
CLAUSE 27   AUDIT.........................................................................................31
CLAUSE 28   GENERAL PROVISIONS............................................................................31
</TABLE>


EXHIBITS



EXHIBIT "1"      FORM OF ASSIGNMENT AGREEMENT

EXHIBIT "2"      FORM OF PARENT COMPANY GUARANTEE

EXHIBIT "3"      CONTRACTOR's INSURANCE

EXHIBIT "4"      STATEMENT OF REQUIREMENTS

EXHIBIT "5"      RATES AND CHARGES

EXHIBIT "6"      CONTRACTOR's PERSONNEL

EXHIBIT "7"      CONTRACTOR's EQUIPMENT


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C-2000-AIOC-21467

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                                                               DRILLING CONTRACT
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THIS CONTRACT shall be effective on 7th July 1999 ("EFFECTIVE DATE") and is made
BY AND BETWEEN:


AZERBAIJAN INTERNATIONAL OPERATING COMPANY ("AIOC"), a Company incorporated and
subsisting under the laws of the Cayman Islands; and


SANTA FE INTERNATIONAL CORPORATION ("SANTA FE"), a company established under the
laws of the Cayman Islands.

AIOC may sometimes be referred to individually as "OPERATOR". SANTA FE may
sometimes be referred to as "CONTRACTOR". The OPERATOR and CONTRACTOR may
sometimes be referred to individually as a "Party" or collectively as the
"Parties".

WHEREAS, the Parties agree that a floating drilling unit of modern international
standard is needed to meet the OPERATOR'S drilling commitments under its PSA;

WHEREAS, OPERATOR and CONTRACTOR wish to enter into this CONTRACT for the
provision of DRILLING SERVICES with respect to the DRILLING UNIT made the
subject of this CONTRACT.

NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:

                     CLAUSE 1 DEFINITIONS AND INTERPRETATION


1.1      Definitions

         In the CONTRACT the following words and expressions shall have the
         meanings assigned to them, except where the context otherwise requires.

         1.1.1      "AFFILIATE" of a company means a person or entity directly
                    or indirectly controlling, controlled by, or under common
                    control with such company. "Control" for this purpose shall,
                    in the case of a corporation with outstanding voting stock,
                    require the direct or indirect ownership of, or power to
                    vote with respect to, outstanding shares of a corporation's
                    capital stock constituting fifty percent (50%) or more of
                    the votes of any class of such corporation's outstanding
                    voting stock.

         1.1.2      "CERTIFICATION" shall mean the class of certification as
                    referenced in Exhibit "7".

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C-2000-AIOC-21467                                                   PAGE 1 OF 33

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         1.1.3      "COMMENCEMENT DATE" shall mean, as to each WELL, the date
                    after the EFFECTIVE DATE when the DRILLING UNIT is under
                    tight tow to the OPERATOR's first or next LOCATION
                    (whichever is applicable).

         1.1.4      "COMPLETION DATE" means the date and time the DRILLING UNIT
                    is under tight tow from the last LOCATION, should the
                    DRILLING UNIT be proceeding directly to fill another
                    operator's contract, or alternatively, when the DRILLING
                    UNIT is safely moored following removal of all of OPERATOR's
                    MATERIALS and equipment, material and supplies of the
                    OPERATOR's contractors and their subcontractors at Baku or
                    other mutually agreed equidistant port.

         1.1.5      "CONTRACT" shall mean this instrument and all its Exhibits,
                    together with any written extension, renewals, replacement
                    or modification hereto which may be mutually agreed and
                    executed by the Parties.

         1.1.6      "CONTRACT AREA" shall mean the Azerbaijan Sector of the
                    Caspian Sea and any onshore area used in association
                    therewith, or other areas agreed between the Parties.

         1.1.7      "CONTRACT DEPTH" shall mean the DEPTH as specified in
                    Exhibit "4" to which the CONTRACTOR may be required to carry
                    out the DRILLING SERVICES.

         1.1.8      "CONTRACTOR" shall mean Santa Fe International Corporation.

         1.1.9      "CONTRACTOR's EQUIPMENT" shall mean the DRILLING UNIT (as
                    hereinafter defined) together with all the drilling and
                    associated equipment listed in Exhibit "7" (hereinafter
                    referred to as the "DRILLING EQUIPMENT") together with the
                    CONTRACTOR's stock of spare parts.

         1.1.10     "CONTRACTOR GROUP" shall mean:

                    (a)  CONTRACTOR;
                    (b)  any parent company or shareholders of CONTRACTOR;
                    (c)  subsidiaries and AFFILIATES of (a) and (b);
                    (d)  all contractors and subcontractors of (a), (b) and (c)
                         including but not limited to SUBCONTRACTOR's; and
                    (e)  the agents, directors, officers and employees of (a),
                         (b), (c) and (d).


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C-2000-AIOC-21467                                                   PAGE 2 OF 33

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         1.1.11     "CONTRACTOR's PERSONNEL" or "its PERSONNEL" shall mean the
                    CONTRACTOR's labour and supervisory personnel listed in
                    Exhibit "6".

         1.1.12     "CO-VENTURERS" as applied to OPERATOR shall mean any parties
                    to a joint venture agreement whereby the OPERATOR undertakes
                    to act as operator for such participants of any Offshore
                    Block in which the CONTRACTOR may be required to perform the
                    DRILLING SERVICES in the CONTRACT AREA.

         1.1.13     "DEPTH" shall mean the depth of the hole as obtained by
                    measuring the drilling string with a steel tape, using as
                    datum the top of the Rotary Table.

         1.1.14     "DRILLING SERVICES" shall mean the operations as defined in
                    Clause 2.

         1.1.15     "DRILLING UNIT" shall mean the semisubmersible vessel "Dada
                    Gorgud" as specified in Exhibit "7".

         1.1.16     "EFFECTIVE DATE" shall mean 7 July 1999.

         1.1.17     "FORCE MAJEURE" shall have the meaning ascribed to it in
                    Clause 12.

         1.1.18     "LOCATION" shall mean the location of any WELL.

         1.1.19     "MONTH" shall mean a Gregorian calendar month.

         1.1.20     "OPERATOR" shall mean AIOC or any of OPERATOR's assignees.

         1.1.21     "OPERATOR GROUP" shall mean:

                                 (a) the OPERATOR;
                                 (b) any parent company or shareholders of
                                     OPERATOR;
                                 (c) subsidiaries and AFFILIATES of (a) and (b);
                                 (d) the working interest owners, co-lessees,
                                     co-owners (including CO-VENTURERS) of (a),
                                     (b) and (c); and (e) the agents, directors,
                                     officers and employees of (a), (b), (c) and
                                     (d).
         1.1.22     "OPERATOR's MATERIALS" shall mean the equipment, materials,
                    and supplies owned and provided directly by the OPERATOR.

         1.1.23     "OPERATOR's REPRESENTATIVE" and "CONTRACTOR's
                    REPRESENTATIVE" shall mean those persons who are appointed
                    as such from time to time by the OPERATOR and the CONTRACTOR
                    respectively and whose names have been notified in writing
                    by the appointing Party to the other Party.


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C-2000-AIOC-21467                                                   PAGE 3 OF 33

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         1.1.24     "OPERATOR's PSA" shall mean, as to OPERATOR, the
                    Exploration, Development and/or Production Sharing Agreement
                    signed with the State Oil Company of Azerbaijan for an
                    offshore block in the Azerbaijan sector of the Caspian Sea.

         1.1.25     "RIG STAFF" shall mean the Rig Superintendent, Assistant Rig
                    Superintendent (if any), Toolpushers, Tour Pushers (if any),
                    Drillers and Assistant Drillers of the CONTRACTOR's
                    PERSONNEL.

         1.1.26     "SUBCONTRACTORs" shall mean the contractors hired by the
                    CONTRACTOR for any services in conjunction with the DRILLING
                    SERVICES.

         1.1.27     "WELL" shall mean any OPERATOR's well or drilling location
                    (as hereinafter defined) whether already drilled, or yet to
                    be drilled by OPERATOR in the CONTRACT AREA under the terms
                    and conditions of the CONTRACT.

         1.1.28     "THIRD PARTY" shall for the avoidance of doubt, mean those
                    parties excluding CONTRACTOR, CONTRACTOR GROUP, OPERATOR,
                    OPERATOR GROUP or SUBCONTRACTORs.

1.2      Interpretation

         In this CONTRACT:

         1.2.1    Unless the context otherwise requires, reference to the
                  singular shall include a reference to the plural and
                  vice-versa; and reference to any gender shall include a
                  reference to all other genders.

         1.2.2    Unless the context otherwise requires, reference to any Clause
                  shall be to a Clause of this CONTRACT.

         1.2.3    Reference to any law or regulation having the force of law
                  includes a reference to that law or regulation as from time to
                  time amended, extended or re-enacted.

         1.2.4    The headings of the Clauses in this CONTRACT are inserted for
                  convenience of reference only and shall not affect the meaning
                  or construction of this CONTRACT.


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C-2000-AIOC-21467                                                   PAGE 4 OF 33

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         1.2.5    Where reference is made to work or acts being performed to
                  OPERATOR's satisfaction or dissatisfaction or reference is
                  made to OPERATOR's judgment or opinion, it shall be deemed in
                  such cases that it will be to OPERATOR's reasonable
                  satisfaction or dissatisfaction, reasonable judgment or
                  reasonable opinion.

                      CLAUSE 2 CARRY OUT DRILLING SERVICES


The scope of the services shall be the provision of a DRILLING UNIT and DRILLING
EQUIPMENT as more fully described in Exhibit "7" hereto, the provision of
PERSONNEL as more fully described in Exhibit "6" hereto and the provision of
services as more fully described in Exhibit "4". The CONTRACTOR shall carry out
the DRILLING SERVICES according to the specifications and instructions issued
from time to time by the OPERATOR. CONTRACTOR hereby warrants and represents
that it shall provide the DRILLING UNIT to OPERATOR on the first WELL
COMMENCEMENT DATE and that all necessary rights, authorizations and clearances
to make the DRILLING UNIT available to OPERATOR have been secured and shall be
maintained throughout the term hereof.


                           CLAUSE 3 RATES AND CHARGES

In full consideration of the satisfactory performance of the services set out in
Clause 2 herein the CONTRACTOR shall be paid as set forth in Exhibit "5" herein.

                            CLAUSE 4 TERM OF CONTRACT


This CONTRACT shall be deemed to have had effect as of the EFFECTIVE DATE,
subject to the provisions for termination set forth in Clause 5 herein, and
shall continue in effect for 2,100 (two thousand and one hundred) operating days
from the first WELL COMMENCEMENT DATE plus any DRILLING UNIT upgrade time.
Further, the term of this CONTRACT shall continue in effect for such period of
time as is necessary to complete the WELL then in progress.

                              CLAUSE 5 TERMINATION


5.1      Termination Without Cause

         Without prejudice to the OPERATOR's other rights under the CONTRACT,
         the OPERATOR shall have the right to terminate the CONTRACT by giving
         90 days advance written notice to the CONTRACTOR at any time, provided
         that such notice shall not terminate the CONTRACT prior to the
         OPERATOR's paying the OPERATING RATE for a minimum of 365 days and
         shall be subject to payment to


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C-2000-AIOC-21467                                                   PAGE 5 OF 33

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         CONTRACTOR of the appropriate Early Termination Fee. In the event of
         such termination, CONTRACTOR shall be paid for all work performed up to
         the effective date of termination together with the appropriate Early
         Termination Fee. Further, in the event of such termination, the
         DRILLING UNIT shall be demobilised in accordance with the provisions of
         this CONTRACT.

5.2      Early Termination Upon Total Loss of DRILLING UNIT or Damage to
         DRILLING UNIT


         Unless otherwise agreed between the Parties, the CONTRACT will
         automatically be terminated upon the actual, constructive, compromised
         or arranged total loss (as hereinafter defined) of the DRILLING UNIT or
         if the DRILLING UNIT is damaged so as to prevent it from carrying out
         the DRILLING SERVICES. Such termination shall be at the date and time
         of such actual, constructive, compromised or arranged total loss or at
         such time as the DRILLING UNIT is no longer able to perform the
         DRILLING SERVICES as aforesaid.

         In the context of this sub-clause 5.2 the constructive, compromised or
         arranged total loss of the DRILLING UNIT shall mean the constructive,
         compromised or arranged total loss of the DRILLING UNIT under
         applicable insurance policies or arrangements as otherwise agreed to by
         the Parties.

                          CLAUSE 6 ACCESS TO LOCATIONS

The OPERATOR shall secure for the CONTRACTOR and its SUB-CONTRACTORS rights of
access to and from LOCATIONS. All LOCATIONS shall be surveyed by OPERATOR at its
own cost, such survey being subject to any approval by surveyors which may be
required under applicable marine insurance. The OPERATOR shall use its best
endeavors to advise the CONTRACTOR in writing of the presence of any obstacles
and obstructions and any limitations, restrictions or conditions associated
therewith which may affect such access and the CONTRACTOR shall abide by such
written limitations, restrictions and conditions. OPERATOR and CONTRACTOR shall
meet and agree whether such limitations, restrictions or conditions prevent the
DRILLING UNIT from safely moving or operating on the LOCATION. In the event it
is agreed by the Parties that the DRILLING UNIT cannot be safely moved to or
operated on the LOCATION, CONTRACTOR shall be paid the OPERATING RATE until such
time as the DRILLING UNIT can be safely moved to or operated on the LOCATION.
While CONTRACTOR is unable to safely move to or operate on the LOCATION the
OPERATOR may instruct the CONTRACTOR to remain on standby near the LOCATION or
move to a new location and the appropriate rate as set out in Exhibit "5" shall
be payable.

Notwithstanding any other provision of the CONTRACT, or the results of any
survey or the approval of such survey by marine insurance surveyors, OPERATOR
shall indemnify, defend and hold the CONTRACTOR GROUP harmless from and against
any and all liability, claims,


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C-2000-AIOC-21467                                                   PAGE 6 OF 33

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demands, suits, expenses and causes of action arising in any manner for damage
to or destruction of any such obstacles or obstructions, provided that the
defense, indemnity and hold harmless obligation contained in this clause 6 shall
not apply if the damage to or destruction of any such obstacle or obstruction is
caused by CONTRACTOR's failure to abide by such written limitations,
restrictions and conditions associated with such obstacles and obstructions.

As used herein, obstacles and obstructions shall mean and include, by way of
illustration, flowlines, pipelines wellheads, platforms, subsea installations,
wreckage and debris at, or in proximity to, drilling locations or routes of
access thereto or therefrom.

                                CLAUSE 7 DEFAULT

7.1      Unsatisfactory Performance by the CONTRACTOR

         In the event that the OPERATOR is dissatisfied with the performance of
         the CONTRACTOR based upon any one of the following reasons:

         (i)    unreasonably slow progress of CONTRACTOR;

         (ii)   incompetence of CONTRACTOR;

         (iii)  default by CONTRACTOR in the performance of its obligations
                under the CONTRACT; or

         (iv)   any other reason as a result of causes reasonably within the
                CONTRACTOR's control, the OPERATOR shall notify the CONTRACTOR
                in writing as to the cause of its dissatisfaction.

         Should the CONTRACTOR fail to remedy the matters so specified within a
         period of not more than seven (7) days (or if it is not possible to
         remedy such matters within seven (7) days and CONTRACTOR has failed to
         initiate and diligently pursue corrective action within such seven (7)
         day period to the reasonable satisfaction of OPERATOR), the OPERATOR
         may exercise one of the following rights:

         (a)      immediately terminate the CONTRACT in which case no further
                  payments shall be due to the CONTRACTOR other than those
                  outstanding for work done prior to termination together with
                  the appropriate Early Termination Fee. In such event,
                  CONTRACTOR shall not be entitled to have the DRILLING UNIT
                  demobilised at OPERATOR's expense;

         (b)      continue the current operation and such other operations as
                  set forth in Clause 7.2 herein; or


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C-2000-AIOC-21467                                                   PAGE 7 OF 33

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         (c)      terminate the CONTRACT upon completion of the current
                  operation then being performed at the time of receipt of the
                  notification of dissatisfaction as aforesaid in which case no
                  further payments shall be due to the CONTRACTOR other than
                  those outstanding for work done prior to termination together
                  with the appropriate Early Termination Fee. In such event,
                  CONTRACTOR shall not be entitled to have the DRILLING UNIT
                  demobilised at OPERATOR's expense.

         The OPERATOR's remedies under subclauses 7.1(a) (b) and (c) shall be
         OPERATOR's exclusive remedies against CONTRACTOR with respect to the
         matters set forth in this clause 7.1 herein; provided, however, that if
         CONTRACTOR willfully and materially or otherwise materially defaults in
         the performance of its obligations under the CONTRACT the OPERATOR's
         remedies under subclauses 7.1(a) (b) and (c) shall not be OPERATOR's
         exclusive remedies against CONTRACTOR with respect to the matters set
         forth in this clause 7.1.

7.2      Continuation of Operations by OPERATOR

         If OPERATOR so elects to continue operations in accordance with Clause
         7.1 herein, the OPERATOR may continue operations hereunder either by
         taking possession of and using the CONTRACTOR's EQUIPMENT and that of
         the SUBCONTRACTORs and all things connected therewith and using the
         CONTRACTOR's PERSONNEL and SUBCONTRACTOR's personnel and repossessing
         any OPERATOR's MATERIALS then unconsumed and if it so elects by either
         of the following:

         (i)      completing the current operation and such other operation or
                  operations contemplated by the OPERATOR hereunder by the
                  aforesaid means; or

         (ii)     completing the current operation and such other operations as
                  aforesaid by the use of another contractor to operate the
                  CONTRACTOR's EQUIPMENT. During the conduct of all such
                  operations by or on behalf of the OPERATOR incurring the use
                  of the CONTRACTOR's PERSONNEL and SUBCONTRACTOR's personnel
                  aforesaid the CONTRACTOR shall be responsible for the payment
                  of all its PERSONNEL, for any replacement therefor and for
                  procuring their obedience to the OPERATOR's instructions. The
                  CONTRACTOR shall continue to make payments due to its
                  SUBCONTRACTORs and suppliers as well as for insurance
                  premiums. Except for CONTRACTOR's payment obligations set
                  forth in this sub-clause 7.2(ii) all such operations shall be
                  at the sole risk of the OPERATOR and the CONTRACTOR GROUP
                  shall be under no liability during such operations for


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C-2000-AIOC-21467                                                   PAGE 8 OF 33

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                  the OPERATOR's defaults or those of its agents or those of the
                  SUBCONTRACTOR's personnel.

         For all such operations carried out by the OPERATOR under this
         sub-clause 7.2 the CONTRACTOR shall be entitled to be paid for work in
         accordance with the terms of the CONTRACT less expenditure necessarily
         incurred by the OPERATOR in carrying out the aforesaid operations in
         respect of the CONTRACTOR's EQUIPMENT, the CONTRACTOR's PERSONNEL or
         the use of staff and labour provided by another contractor and less
         sums due from the CONTRACTOR to any THIRD PARTY, the non-payment or
         non-expenditure of which jeopardises the continuance of the said
         operations (but excluding any payment due to the CONTRACTOR for the use
         of tools, machinery and appliances hired by it at the request of the
         OPERATOR), provided, however, the expenditures necessarily incurred by
         OPERATOR, for which CONTRACTOR shall hereunder be liable, shall not in
         any event be greater than the then current REDRILLING Rate under the
         CONTRACT. Upon completion of the aforesaid operations the OPERATOR
         shall return to the CONTRACTOR the CONTRACTOR's EQUIPMENT and the
         equipment of the SUBCONTRACTORs and any tools, machinery and appliances
         hired by it as aforesaid in as good condition as when taken over by the
         OPERATOR, fair wear and tear excepted.

7.3      CONTRACTOR's Failure to Provide the CONTRACTOR's EQUIPMENT

         In the event of the CONTRACTOR's failure to provide any of the
         CONTRACTOR's EQUIPMENT or in the event that the CONTRACTOR's EQUIPMENT
         fails to meet the applicable manufacturer's rating for such equipment
         (or such other rating that may otherwise be specified in Exhibit "7")
         so as to make operations unsafe or to reduce the efficiency thereof the
         OPERATOR shall notify the CONTRACTOR in writing specifying such
         CONTRACTOR's EQUIPMENT which the CONTRACTOR has so failed to provide or
         which fails to meet the said rating, and immediately thereafter the
         OPERATOR shall have the right to exercise one of the following options:

         (a)      shutdown such operations until such time as the CONTRACTOR
                  shall have made good the deficiencies in the said equipment
                  whether as to provision or to performance.

                  For any such period of shutdown the OPERATOR shall pay the
                  CONTRACTOR:


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C-2000-AIOC-21467                                                   PAGE 9 OF 33

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                  (i)      at the REPAIR RATE in accordance with Exhibit "5"
                           hereof provided the shutdown is due to an equipment
                           failure.

                  (ii)     REDUCED REPAIR RATE if the shutdown is due to unsafe
                           operations.

                  In all such instances referred to in (i) and (ii) above the
                  OPERATOR shall have the exclusive right to terminate the
                  CONTRACT any time after a shutdown period has exceeded seven
                  (7) days (or if it is not possible to remedy the deficiencies
                  in the equipment in such seven (7) day period and CONTRACTOR
                  has failed to initiate and diligently pursue corrective action
                  within such seven (7) day period to the reasonable
                  satisfaction of OPERATOR).

                  In the event of such termination, no further payments shall be
                  due to CONTRACTOR other than those outstanding for the work
                  done prior to termination together with the appropriate Early
                  Termination Fee. In such event, CONTRACTOR shall not be
                  entitled to have the DRILLING UNIT demobilised at OPERATOR's
                  expense. The remedies set forth herein shall be the exclusive
                  remedies of OPERATOR against CONTRACTOR only with respect to
                  the matters set forth in this clause 7.3 (a).

         (b)      to continue with operations at reduced efficiency as aforesaid
                  and in such event the OPERATOR shall have the right to reduce
                  the Rates and Charges in Exhibit "5" by an amount in direct
                  relation to the percentage that operations have in OPERATOR's
                  opinion been so reduced in efficiency or slowed down, provided
                  that if operations are so continued then the OPERATOR shall
                  assume liability for any loss of or damage to the hole arising
                  directly out of the continuing of operations with such reduced
                  efficiency and provided further that during such operations so
                  continued the CONTRACTOR shall continue to make good the
                  aforesaid failure.

         (c)      to hire from the nearest available source satisfactory to the
                  OPERATOR all such equipment as may be required:

                  (i)      arising out of the CONTRACTOR's failure so to provide
                           the DRILLING EQUIPMENT or any part thereof, until the
                           CONTRACTOR shall have provided as aforesaid, or

                  (ii)     arising out of failure of the DRILLING EQUIPMENT or
                           any part thereof to meet manufacturer's
                           specifications, or such other


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                           specification as may otherwise be specified in
                           Exhibit "7", until the CONTRACTOR can demonstrate to
                           the OPERATOR that the said equipment or part thereof
                           does meet such specifications.

                  All costs incurred by the OPERATOR in hiring and transporting
                  such equipment shall be a debt due to the OPERATOR from the
                  CONTRACTOR and shall be deducted from any monies due to the
                  CONTRACTOR from the OPERATOR.

         (d)      to elect not to hire pursuant to (c) above but deduct from
                  monies due to the CONTRACTOR the cost of hire (from the
                  nearest available source) of equipment listed in the
                  CONTRACTOR's EQUIPMENT but not provided by it.

                      CLAUSE 8 LIABILITIES AND INDEMNITIES


8.1      CONTRACTOR's EQUIPMENT and Property

         (a)      Except as may be provided for in Clauses 7.2, 8.1(b) and
                  8.1(c) herein, the CONTRACTOR shall release, defend, indemnify
                  and hold harmless the OPERATOR GROUP from and against any and
                  all liability, claims, demands, suits, expenses and causes of
                  action for any loss, damage, injury or destruction of the
                  CONTRACTOR GROUP's equipment and property, including
                  CONTRACTOR's EQUIPMENT whether arising in contract or in tort,
                  or any other theory of law, including but not limited to
                  strict liability, regardless of how such loss, damage or
                  destruction occurs, notwithstanding that such loss or damage
                  as aforesaid may have been due to the sole, concurrent, active
                  or passive negligence, or fault of OPERATOR GROUP or a defect
                  in the property or equipment of either Party, including but
                  not limited to those defects pre-existing the EFFECTIVE DATE
                  of this CONTRACT.

         (b)      Except as to fair wear and tear, the OPERATOR shall assume
                  liability at all times during the DRILLING SERVICES for loss
                  of or damage to the CONTRACTOR GROUP's in-hole equipment when
                  in the hole and Sub-sea Equipment while it is being operated
                  sub-sea (whether owned or rented) including loss or damage
                  resulting from exposure to H2S. The OPERATOR shall reimburse
                  the CONTRACTOR for the replacement cost less depreciation of
                  any such equipment so lost, and in respect of equipment so
                  damaged whichever shall be the lesser of the replacement
                  on-site cost less depreciation or the repair cost, provided,
                  however, that OPERATOR shall not reimburse the


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C-2000-AIOC-21467                                                  PAGE 11 OF 33

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                  CONTRACTOR for the loss of such equipment if such loss or
                  damage is due to the sole negligence and/or sole default of
                  the CONTRACTOR GROUP.

                  For purposes of this clause, sub-sea equipment shall include
                  CONTRACTOR's sub-sea equipment and mooring equipment including
                  but not limited to riser, slip joints, control hoses, blowout
                  preventers, anchors, anchor wires and chains, tripping lines
                  and buoys, (herein collectively called Sub-sea Equipment).

                  As to new equipment, depreciation shall be calculated monthly
                  from the COMMENCEMENT DATE or the date such equipment was
                  first placed in service (whichever is later) at two percent
                  (2%) per month for in-hole tools and one percent (1%) per
                  month for Sub-sea equipment. As to used equipment,
                  depreciation shall be calculated monthly from 1 June 1997 or
                  the date such equipment was first placed in service (whichever
                  is later) at two percent (2%) per month for in-hole tools and
                  one percent (1%) per month for Sub-sea equipment.

         (c)      Notwithstanding any other provision of the CONTRACT or any of
                  the Exhibits hereto: (i) nothing contained herein shall be
                  construed as in any way restricting CONTRACTOR's or its
                  underwriters' rights to recover against any vessel owner or
                  operator for damage to or loss of the DRILLING UNIT; and (ii)
                  OPERATOR GROUP shall not be entitled to any release, defence,
                  indemnity or hold harmless undertaking from CONTRACTOR under
                  clause 8.1 (a) for any claims which may be made against
                  OPERATOR by any vessel owner or operator (or their
                  underwriters) for damage or loss caused by such vessel owner
                  or operator to the DRILLING UNIT.

8.2      OPERATOR's MATERIALS and Property

         (a)      The CONTRACTOR shall take all reasonable precautions
                  (including but not limited to the making out of loading notes)
                  to protect and save from loss or damage items of the
                  OPERATOR's MATERIALS and materials of OPERATOR's contractors
                  and subcontractors while in the custody of the CONTRACTOR.
                  Subject to the provisions of clause 8.2(b) below, when no
                  longer required for operations hereunder the CONTRACTOR shall
                  return to the OPERATOR after use such of the said OPERATOR's
                  MATERIALS as have not been consumed, in the same condition as
                  when handed to the CONTRACTOR fair wear and tear excepted.


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C-2000-AIOC-21467                                                  PAGE 12 OF 33

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                                                               DRILLING CONTRACT
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         (b)      The OPERATOR shall release, defend, indemnify and hold
                  harmless CONTRACTOR GROUP from and against any and all
                  liability, claims, demands, suits, expenses and causes of
                  action for any loss, damage, injury or destruction of the
                  OPERATOR's MATERIALS whether arising in contract or in tort,
                  or any other theory of law, including but not limited to
                  strict liability, regardless of how such loss, damage or
                  destruction occurs, notwithstanding that such loss or damage
                  as aforesaid may have been due to the sole, concurrent, active
                  or passive negligence, or fault of CONTRACTOR GROUP or a
                  defect in the property or equipment of either party, including
                  but not limited to those defects pre-existing the COMMENCEMENT
                  DATE of this CONTRACT, provided, however, that the CONTRACTOR
                  shall be liable for any loss of or damage to OPERATOR's
                  MATERIALS to the extent such loss or damage is caused by the
                  negligence of the CONTRACTOR GROUP, such liability to be
                  limited to Two Hundred Thousand United States Dollars (U.S.
                  $200,000) each and every such occurrence.

         (c)      The OPERATOR shall release, defend, indemnify and hold
                  harmless CONTRACTOR GROUP from and against any and all
                  liability, claims, demands, suits, expenses and causes of
                  action for any loss, damage, injury or destruction of the
                  in-hole equipment of OPERATOR's contractors (when such
                  equipment is in-hole) whether arising in contract or in tort,
                  or any other theory of law, including but not limited to
                  strict liability, regardless of how such loss, damage or
                  destruction occurs, notwithstanding that such loss or damage
                  as aforesaid may have been due to the sole, concurrent, active
                  or passive negligence, or fault of CONTRACTOR GROUP or a
                  defect in the property or equipment of either party, including
                  but not limited to those defects pre-existing the COMMENCEMENT
                  DATE of this CONTRACT.

                  As used in this clause 8.2 (c) herein, the term "OPERATOR's
                  contractors" shall not include CONTRACTOR or the
                  subcontractors of CONTRACTOR.

8.3      Employees

         (a)      The CONTRACTOR shall release, defend, indemnify and hold
                  harmless the OPERATOR GROUP from and against any and all
                  claims, liabilities, demands, damages, actions, costs and
                  expenses (including reasonable attorneys fees) for loss of or
                  damage to personal property of or in the possession of the
                  employees of CONTRACTOR GROUP and from and against any and all
                  claims, liabilities, demands, damages, actions, costs and


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C-2000-AIOC-21467                                                  PAGE 13 OF 33

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                  expenses (including attorneys fees) for sickness, injury or
                  death to any of the employees of CONTRACTOR GROUP arising in
                  contract or in tort or pursuant to any other theory of law,
                  including but not limited to strict liability, regardless of
                  how such loss, damage to such property or sickness, injury or
                  death as aforesaid may have occurred and notwithstanding that
                  such sickness, injury, death, loss or damage as aforesaid may
                  have been due to the sole, concurrent, active or passive
                  negligence, or fault of OPERATOR GROUP or a defect in the
                  property or equipment of either Party, including but not
                  limited to those defects pre-existing the EFFECTIVE DATE of
                  this CONTRACT.

         (b)      The OPERATOR shall release, defend, indemnify and hold
                  harmless the CONTRACTOR GROUP from and against any and all
                  claims, liabilities, demands, damages, actions, costs and
                  expenses (including reasonable attorneys fees) for loss of or
                  damage to personal property of or in the possession of the
                  employees of the OPERATOR and from and against any and all
                  claims, liabilities, demands, damages, actions, costs and
                  expenses (including attorneys fees) for sickness, injury, or
                  death to any of the employees of OPERATOR arising in contract
                  or in tort or pursuant to any other theory of law, including
                  but not limited to strict liability, regardless of how such
                  loss, damage to such property or sickness, injury or death as
                  aforesaid may have occurred and notwithstanding that such
                  sickness, injury, death, loss or damage as aforesaid may have
                  been due to the sole, concurrent, active or passive
                  negligence, or fault of CONTRACTOR GROUP or a defect in the
                  property or equipment of either Party, including but not
                  limited to those defects pre-existing the EFFECTIVE DATE of
                  this CONTRACT.

8.4      Loss of or Damage to the Hole

         In the event that the hole should be lost or damaged arising out of
         operations hereunder due to the sole, concurrent, active or passive
         negligence of the CONTRACTOR GROUP, then the OPERATOR may instruct the
         CONTRACTOR either to drill a new hole to the DEPTH at which the said
         loss or damage occurred or to re-drill such section of the damaged hole
         in both instances at the REDRILLING RATE and otherwise in accordance
         with the terms of the CONTRACT. Except for CONTRACTOR's obligation to
         redrill at the REDRILLING RATE as provided in the preceding sentence,
         OPERATOR shall release, defend and indemnify the CONTRACTOR GROUP from
         and against any and all claims, demands, proceedings, causes of action,
         losses or damages arising out of or in connection with loss or damage
         to the hole.


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C-2000-AIOC-21467                                                  PAGE 14 OF 33

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                                                               DRILLING CONTRACT
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8.5      Underground Damage and Control of Blowout and Pollution

         (a)      Reservoir Damage

                  Notwithstanding any other provision in the CONTRACT, the
                  OPERATOR shall release, defend, indemnify and hold harmless
                  the CONTRACTOR GROUP from and against any damage to or
                  destruction of or loss or impairment of any property right in
                  or to oil, gas or other mineral substance or water if at the
                  time of the act or omission causing such damage, destruction,
                  loss or impairment the said substance had not been reduced to
                  physical possession above the surface of the seabed, and for
                  any loss or damage to any formation strata or reservoir
                  beneath the seabed resulting from operations under the
                  CONTRACT.

         (b)      Pollution and Blowout

                  (i)      The CONTRACTOR shall release, defend, indemnify and
                           hold harmless the OPERATOR GROUP from and against any
                           and all claims, demands, proceedings, causes of
                           action, loss or damages (including but not limited to
                           THIRD PARTY claims or liability) arising out of or in
                           connection with pollution, contamination, spills or
                           discharges originating from the DRILLING UNIT
                           including the hull (excluding the riser and the
                           subsea equipment) including but not limited to spills
                           or discharges of fuels, lubricants, motor oils, pipe
                           dope, paints, solvents, ballast, bilge and garbage in
                           the possession or control of CONTRACTOR GROUP and
                           regardless of the sole, concurrent, active or passive
                           negligence of OPERATOR GROUP.

                  (ii)     Except as provided in sub-clause 8.5(b)(i), the
                           OPERATOR shall release, defend, indemnify and hold
                           harmless the CONTRACTOR GROUP from and against any
                           and all claims, demands, proceedings, causes of
                           action, losses or damages (including but not limited
                           to costs of control and THIRD PARTY claims or
                           liability) arising out of or resulting from any
                           pollution or contamination from fire, blowout,
                           cratering, seepage, or any other uncontrolled flow of
                           oil, gas, wastes or other substance from any WELL,
                           provided, however, that the CONTRACTOR shall be
                           liable for any loss or damages arising out of


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C-2000-AIOC-21467                                                  PAGE 15 OF 33

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                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


                           or resulting from any such pollution or contamination
                           to the extent such pollution or contamination is
                           caused by the negligence of the CONTRACTOR GROUP,
                           such liability to be limited to One Hundred Thousand
                           United States Dollars (U.S. $ 100,000) each and every
                           occurrence and otherwise OPERATOR shall release,
                           indemnify, defend and hold harmless CONTRACTOR GROUP
                           from and against any and all such claims, demands,
                           proceedings, causes of action, losses or damages in
                           excess of said sum, regardless of the sole,
                           concurrent, active or passive negligence of
                           CONTRACTOR GROUP.

                  (iii)    The OPERATOR shall release, defend, indemnify and
                           hold harmless CONTRACTOR GROUP from and against any
                           loss or damage arising out of or resulting from any
                           pollution or contamination arising from the use or
                           disposal of oil emulsion, oil based or chemically
                           treated drilling fluids, contaminated cuttings and
                           cavings, radioactive substances, lost circulation
                           materials and fluids as well as the furnishing,
                           transportation and disposal or containerisation of
                           any materials when such are required, provided,
                           however, that the CONTRACTOR shall be liable for any
                           loss or damages arising out of or resulting from any
                           such pollution or contamination to the extent such
                           pollution or contamination is caused by the
                           negligence of the CONTRACTOR GROUP, such liability to
                           be limited to One Hundred Thousand United States
                           Dollars (U.S. $ 100,000) each and every occurrence
                           and otherwise OPERATOR shall release, indemnify,
                           defend and hold harmless CONTRACTOR GROUP from and
                           against any and all such claims, demands,
                           proceedings, causes of action, losses or damages in
                           excess of said sum, regardless of the sole,
                           concurrent, active or passive negligence of
                           CONTRACTOR GROUP.

                  (iv)     The CONTRACTOR shall immediately notify the OPERATOR
                           of all instances of pollution arising out of
                           operations hereunder and confirm such notification in
                           writing or by telex or facsimile to the OPERATOR
                           within twenty-four (24) hours of the event.

8.6      Sunken Property

         When required by law or governmental authority or when OPERATOR is of
         the opinion that CONTRACTOR's sunken property interferes with present
         or future


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C-2000-AIOC-21467                                                  PAGE 16 OF 33

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                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


         operations of the OPERATOR or is required by the law or governmental
         authority the CONTRACTOR shall at its own expense raise and remove the
         DRILLING UNIT and any property of the CONTRACTOR or its SUBCONTRACTORs
         which may sink in the course of operations hereunder or otherwise deal
         with it in accordance with the OPERATOR's direction. In the event that
         the CONTRACTOR does not carry out these obligations the OPERATOR may
         buoy and light the sunken DRILLING UNIT or property and may remove it
         (without prejudice to the OPERATOR's rights) and in such event
         CONTRACTOR shall refund to the OPERATOR all costs so incurred. The fact
         that the sunken DRILLING UNIT or property is insured or has been
         declared a total loss shall not absolve the CONTRACTOR from its
         obligations to raise and/or remove same. This clause shall remain
         binding on the CONTRACTOR notwithstanding the termination of the
         CONTRACT for any reason.

8.7      Consequential Damages

         Notwithstanding any other provision in the CONTRACT, OPERATOR hereby
         releases its claims against CONTRACTOR GROUP for indirect, incidental
         or consequential damages resulting from or arising out of this
         CONTRACT, including, without limitation, loss of profits, loss of
         production or business interruption howsoever same may be caused,
         including that caused by the sole, joint and/or concurrent negligence,
         fault or strict liability of CONTRACTOR GROUP. Notwithstanding any
         other provision in the CONTRACT, CONTRACTOR hereby releases its claims
         against OPERATOR GROUP (which for purposes of this Clause 8.7 shall
         include OPERATOR's contractors and sub-contractors) for indirect,
         incidental or consequential damages resulting from or arising out of
         this CONTRACT, including, without limitation, loss of profits, loss of
         production or business interruption howsoever same may be caused,
         including that caused by the sole, joint and/or concurrent negligence,
         fault or strict liability of OPERATOR GROUP. CONTRACTOR shall be
         responsible for ensuring that its subcontractors agree to release,
         defend, indemnify and hold harmless OPERATOR GROUP for such claims and
         damages.

8.8      Except as otherwise expressly provided for in the CONTRACT, whenever
         under any provision in Clauses 7.2, 7.3, 8, 9.5 or 23 of the CONTRACT
         it is provided that one of the Parties hereto shall be liable or
         responsible in respect of any loss or damage to property or injury to
         or death of personnel, or where it is provided that either Party shall
         indemnify the other Party against any liability, claim, demand, or
         cause of action, the Party assuming such liability or responsibility or
         furnishing such indemnity (hereinafter called the "Indemnitor") shall
         hold harmless, indemnify and defend the


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C-2000-AIOC-21467                                                  PAGE 17 OF 33

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                                                               DRILLING CONTRACT
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         other Party, its shareholders, its and their parent, holding and
         affiliated companies, directors, officers, employees and agents and
         CO-VENTURERS, from and against any and all claims and rights of action
         asserted directly or indirectly against any or all of the Parties to be
         so indemnified.

         Any indemnities expressed to be in favour of CONTRACTOR shall be deemed
         to extend also to the DRILLING UNIT and its legal owner (with respect
         to actions IN REM).

         It is the intent that where in this CONTRACT responsibility or
         liability is assumed by either of the Parties hereto or where either of
         the Parties agrees to indemnify the other Party in respect of any
         claim, demand or cause of action, unless it is otherwise expressly
         stated herein, such assumption of liability and/or indemnification
         shall apply notwithstanding the sole, passive, active or concurrent
         negligence of, or unseaworthiness of any vessel owned or under CONTRACT
         or chartered by, any Party hereto or of or by any person, firm or
         corporation for which such Party is responsible (whether or not such
         negligence or unseaworthiness related to a pre-existing condition or
         defect), breach of representation, warranty, duty (contractual,
         statutory or otherwise) or other theory of liability, including strict
         liability, which may be applicable.

         If any contractor of OPERATOR, (other than any vessel owner and/or
         operator), as part of its indemnity obligation to OPERATOR, agrees to
         release, defend, indemnify and hold harmless CONTRACTOR, then
         CONTRACTOR shall, to the same extent, agree to release, defend,
         indemnify and hold harmless said contractor (other than any vessel
         owner and/or operator) whereby the indemnity obligations of CONTRACTOR
         set forth in this clause 8 shall extend to said contractor.

         The CONTRACTOR releases and indemnifies the OPERATOR against any and
         all costs, claims, demands, proceedings, causes of action, losses or
         damage (including but not limited to THIRD PARTY claims or liability)
         arising out of the CONTRACT howsoever caused during the period from the
         EFFECTIVE DATE until the actual FIRST WELL COMMENCEMENT DATE.


                        CLAUSE 9 CONTRACTOR'S INSURANCES

9.1      The Parties recognize that in connection with the operations and the
         provision of goods, equipment and facilities contemplated by this
         CONTRACT, there is some risk that accidents and events may occur in
         which property is lost, damaged, or destroyed,


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C-2000-AIOC-21467                                                  PAGE 18 OF 33

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                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


         and/or in which persons may be killed or injured. The Parties desire to
         allocate these risks between them and to require that these risks be
         adequately insured so as to minimize the possibility of disputes and to
         engage in effective risk management. For these reasons, the Parties
         agree to the insurance requirements, mutual indemnities and defense
         obligations set forth in this CONTRACT.

9.2      The Parties agree that the indemnity and insurance obligations
         contained in this CONTRACT are separate and apart from each other, such
         that failure to fulfill the indemnity obligation does not alter or
         eliminate the insurance obligation or vice versa. The Parties further
         agree that the insurance obligations shall support but will not in any
         way limit the defense and indemnity obligations set forth herein.

9.3      CONTRACTOR shall maintain at its own expense such insurance necessary
         to protect against all claims for damages, risks of losses, and
         contractual indemnities expressly assumed by CONTRACTOR under this
         CONTRACT, specifically including without limitation any and all risks
         and/or claims assumed by CONTRACTOR set forth in Clause 8, and shall
         secure and maintain policies with the minimum limits and other
         requirements stated in Exhibit "3" attached to and incorporated into
         this CONTRACT. All such policies shall be issued by insurance companies
         satisfactory to OPERATOR, with an AM Best rating of B or higher or
         alternatively shall be issued by Underwriters at Lloyds of London or
         the Member Companies of the Institute of London Underwriters or other
         such underwriters of equally sound financial condition. All such
         policies (except workers' compensation coverage) shall with respect to
         the indemnity obligations expressly assumed by CONTRACTOR under this
         CONTRACT:

         (1)      name OPERATOR GROUP as additional insured, and

         (2)      be primary in relation to any policies in which any member of
                  OPERATOR GROUP is a named or additional insured.

         CONTRACTOR waives all rights of subrogation (whether by loan receipt,
         equitable assignment, or otherwise) against OPERATOR GROUP and any of
         their insurers. CONTRACTOR warrants that its insurers similarly waive
         any such rights of subrogation which CONTRACTOR's insurers may have
         against OPERATOR GROUP or its insurers.

         The Parties agree that CONTRACTOR is not required to obtain coverage
         protecting OPERATOR GROUP for those risks specifically allocated to
         OPERATOR in Clauses 7.2, 7.3, 8, 9.5 or 23 of this CONTRACT.


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C-2000-AIOC-21467                                                  PAGE 19 OF 33

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                                                               DRILLING CONTRACT
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         Prior to performing the DRILLING SERVICES for OPERATOR, CONTRACTOR
         shall furnish OPERATOR certificates of insurance reflecting insurance
         coverage in accordance with the requirements of Exhibit "3". Failure of
         OPERATOR to object to CONTRACTOR's failure to furnish such certificates
         or to object to any defect in such certificates shall not be deemed a
         waiver of CONTRACTOR's obligation to furnish such a certificate and to
         provide insurance coverages as prescribed in Exhibit "3".

         In the event that CONTRACTOR fails to perform any of its obligations
         hereunder with respect to insurance, with or without the knowledge or
         consent of OPERATOR, then CONTRACTOR shall itself be an insurer to the
         extent it has failed to perform such obligations.

9.4      If the CONTRACTOR shall fail to effect and keep in force any of the
         insurances referred to herein, then the OPERATOR may effect and keep
         the same in force and pay such premium as may be necessary for that
         purpose and from time to time deduct the amount so paid by the OPERATOR
         as aforesaid from any monies due or which may become due to the
         CONTRACTOR or recover the same as a debt due from the CONTRACTOR.

9.5      In the event the OPERATOR takes over the CONTRACTOR's EQUIPMENT as
         provided in Clause 7.2 hereof, then the OPERATOR shall have the right
         at its cost and expense to take over the CONTRACTOR's insurance,
         provided that CONTRACTOR's underwriters approve continuation of such
         insurance and provided further that OPERATOR reimburses CONTRACTOR for
         any premium increases or surcharges imposed by CONTRACTOR's insurance
         underwriters in the event of a takeover.

         If CONTRACTOR'S underwriters do not approve the continuation of such
         insurance, OPERATOR shall assume all risks of loss, damage, injury or
         death which would have been covered by CONTRACTOR'S insurance had such
         insurances been in effect. In such event all of CONTRACTOR's
         indemnities, except for patent infringement, shall be inapplicable.

9.6      Nothing contained in this Article 9 shall be construed as restricting
         or prohibiting CONTRACTOR from arranging with its subcontractor,
         Caspian Drilling Company (CDC), for CDC to provide any or all of the
         insurance coverages contemplated to be provided by the CONTRACTOR under
         this CONTRACT, provided that such insurance coverages are at least
         equivalent to the insurance described in this Article 9.


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C-2000-AIOC-21467                                                  PAGE 20 OF 33

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                                                               DRILLING CONTRACT
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                     CLAUSE 10 TAX INFORMATION AND INDEMNITY

10.1     It is understood and agreed that CONTRACTOR's rates and charges are
         inclusive of all Taxes imposed, directly or indirectly, on CONTRACTOR
         or its subcontractors, employees, agents or servants as a result of
         this CONTRACT. Upon prior notice to CONTRACTOR, OPERATOR shall deduct
         or withhold from any payment made by it under this CONTRACT any Taxes
         required to be so deducted or withheld under any applicable laws or
         regulations. OPERATOR shall use its best efforts to provide the notice
         required in the preceding sentence not less than ten (10) business days
         prior to such withholding. The Petroleum Operations carried out by
         CONTRACTOR and its subcontractors under this CONTRACT shall be subject
         to the tax provisions of the OPERATOR's PSA and its related protocols
         with respect to Taxes to the extent such provisions are applicable.
         OPERATOR shall not reimburse CONTRACTOR for any Taxes imposed, directly
         or indirectly, on CONTRACTOR or its subcontractors, employees, agents
         or servants as a result of this CONTRACT.

10.2     The CONTRACTOR shall pay any and all Taxes, and shall ensure the due
         payment by any of its subcontractors, employees, agents or servants of
         all Taxes, imposed, directly or indirectly, on the CONTRACTOR, or any
         of its subcontractors, employees, agents or servants as a result of
         this CONTRACT. CONTRACTOR shall be responsible for the reporting,
         filing and payment of any Taxes and any related fines, penalties or
         interest imposed directly or indirectly on CONTRACTOR GROUP as a result
         of CONTRACTOR's performance under this CONTRACT.

10.3     The CONTRACTOR shall release, defend, indemnify and hold harmless
         OPERATOR GROUP from and against any and all payments required to be
         made or liabilities, losses, costs or expenses of whatsoever nature
         incurred by the OPERATOR GROUP as a result of or in connection with any
         failure by the CONTRACTOR or any of its subcontractors, employees,
         agents or servants to comply with the provisions of Clause 10 hereof.

10.4     "Taxes" shall be defined as all levies, duties, payments, fees, taxes
         or contributions payable to or imposed by any governmental authority.

10.5     Except as provided in Exhibit 5, Clause 5.7, the Rates and Charges set
         forth in Exhibit "5" shall not be revised to reflect any changes in the
         Taxes imposed, directly or indirectly, on CONTRACTOR or its
         subcontractors, employees, agents or servants as a result of this
         CONTRACT.


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C-2000-AIOC-21467                                                  PAGE 21 OF 33

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                                                               DRILLING CONTRACT
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                       CLAUSE 11 BANKRUPTCY OR LIQUIDATION


If the CONTRACTOR shall become bankrupt or insolvent, or have a receiving order
made against it, or present a petition in bankruptcy or make an arrangement with
or an assignment in favour of its creditors, or shall agree to carry out the
CONTRACT under a Committee of Inspection of its creditors, or commence to be
wound up (not being a member's voluntary winding up for the sake of
reconstruction), or shall carry on its business under a receiver for the benefit
of its creditors or any of them then the OPERATOR shall be at liberty either:

(a)      to suspend immediately all or any of the operations then in progress
         and apply the provisions of sub-clause 7.1 hereof, or

(b)      to give such receiver, liquidator or any other person in whom the
         CONTRACT may become vested the option of carrying out the CONTRACT
         subject to his providing a guarantee in an amount to be agreed for the
         due and faithful performance of the CONTRACT without prejudice in
         either event to any right of action or remedy which shall have accrued
         or shall accrue thereafter to the OPERATOR.

                             CLAUSE 12 FORCE MAJEURE

No failure or omission by either Party to carry out or observe any of the
stipulations, conditions or obligations to be performed hereunder shall, except
as herein expressly agreed to the contrary, give rise to any claim against such
Party or be deemed to be a breach of the CONTRACT if such failure or omission
arises from an event of FORCE MAJEURE.

In this CONTRACT, FORCE MAJEURE shall mean occurrences such as expropriation,
confiscation, orders of governmental authority, acts of war (declared or
undeclared), insurrection, rebellion, sabotage, civil disturbances, strikes
(except of the CONTRACTOR's or SUBCONTRACTOR's own workforce), actions of the
elements (except waiting on weather in the field) or other events beyond the
reasonable control of the Parties affected thereby but specifically excluding
financial distress and obligations to make payment by one Party to the other
under this CONTRACT.

If by any reason of FORCE MAJEURE either Party shall be prevented from executing
or continuing to execute the CONTRACT, the Party so prevented shall forthwith
give notice in writing to the other Party of such prevention and the reasons
therefor. The obligations of the Parties as have been thus affected shall be
suspended for the duration of such prevention.

In the event that the CONTRACTOR is unable to carry out the DRILLING SERVICES by
reason of FORCE MAJEURE the OPERATOR shall have the right to instruct the


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C-2000-AIOC-21467                                                  PAGE 22 OF 33

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                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


CONTRACTOR to remain on LOCATION or to move to a new location and the
appropriate rate as set out in Exhibit "5" shall be payable.

In the event the OPERATOR does not exercise the above right and the execution of
the CONTRACT has been prevented for not less than ninety (90) days then either
Party shall have the right to terminate the CONTRACT by giving written notice to
the other. Upon such notice being given, the CONTRACT shall forthwith be
terminated in respect of that operation or the whole of the CONTRACT according
to the subject matter of the notice, but without prejudice to the claim under
the CONTRACT of any Party in respect of any antecedent breach thereof. In the
event of such termination, CONTRACTOR shall be paid for all work performed up to
the effective date of termination together with the appropriate Early
Termination Fee and, if it is practical to demobilise the DRILLING UNIT, it
shall be demobilised in accordance with the provisions of this CONTRACT.

                          CLAUSE 13 FREEDOM FROM LIENS

Without prejudice to any other provision of the CONTRACT the CONTRACTOR shall
release, defend, indemnify and hold harmless OPERATOR from and against all
liens, attachments or claims by or on behalf of any of the CONTRACTOR's
suppliers, subcontractors, CONTRACTOR's PERSONNEL or SUBCONTRACTORs in
connection with or arising out of the CONTRACT. In such an instance, OPERATOR
shall have the right to withhold payment until CONTRACTOR has provided proof to
OPERATOR that all such liens have been released, provided that CONTRACTOR has
not posted a bond or other security satisfactory to OPERATOR within five (5)
days of OPERATOR's notice of such liens.

                 CLAUSE 14 CONTRACTOR TO MAINTAIN REPRESENTATION

For a period of not less than two (2) years after the termination or completion
of the CONTRACT howsoever arising the CONTRACTOR shall maintain representation
in Azerbaijan through the services of a person, firm or corporation resident in
the CONTRACT AREA. Such person, firm or corporation shall be empowered to act
and shall have the right to receive summonses on behalf of the CONTRACTOR in any
matter having reference to the business or affairs of the CONTRACTOR and arising
out of or connected with the CONTRACT. Before appointing any such person, firm
or corporation the CONTRACTOR shall obtain the prior approval of the OPERATOR
thereto.

                 CLAUSE 15 GIVING OF NOTICES AND PAYMENT OF FEES

The CONTRACTOR shall in connection with the CONTRACT give all notices and pay
all fees and any other monies required to be given or paid under any National or
State Statute,


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C-2000-AIOC-21467                                                  PAGE 23 OF 33

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                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


Ordinance, Decree, Proclamation or any other Order or any other enactment or any
Regulations or By-Law of any Local or other duly constituted authority having
the force of Law in the CONTRACT AREA and under the rules and regulations of all
public bodies and public companies whose property or rights are affected or may
be affected, provided always that the OPERATOR will, subject always to Clause 10
herein, repay or allow to the CONTRACTOR all such sums as OPERATOR's
REPRESENTATIVE shall certify to have been properly and necessarily payable and
paid by the CONTRACTOR in respect of any such fees or monies the obligation for
which does not exist at the date hereof, provided further that in respect of any
such fees or monies the obligation for payment of which does exist at the date
hereof but which ceases after the date hereof the CONTRACTOR shall repay or
allow to the OPERATOR all such sums as OPERATOR's REPRESENTATIVE shall certify
are not properly payable by it or which if paid are refundable to it.

                       CLAUSE 16 CONFIDENTIAL INFORMATION

All information obtained by the CONTRACTOR in the course or conduct of its
services hereunder shall be considered confidential and shall not be divulged by
the CONTRACTOR, its personnel or agents to any person, firm or corporation other
than the OPERATOR's designated representatives. The foregoing restrictions
regarding confidentiality shall not apply to any of the following:

(i)    information in the public domain or generally available to the public
       other than as a result of disclosure by CONTRACTOR;

(ii)   disclosure of information in the CONTRACTOR's possession prior to being
       furnished by or on behalf of OPERATOR;

(iii)  information received by CONTRACTOR from another source when such source
       is not restricted in its use or disclosure of such information;

(iv)   information required to be disclosed by operation of applicable law;

(v)    information describing the specification of the DRILLING UNIT given to a
       bona fide prospective customer of CONTRACTOR provided such disclosure
       does not violate sub-clause 28.7 herein;

(vi)   information describing the availability of the DRILLING UNIT given to a
       bona fide prospective customer of CONTRACTOR provided such disclosure
       does not violate sub-clause 28.7 herein; or

(vii)  information requested by SOCAR.


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C-2000-AIOC-21467                                                  PAGE 24 OF 33

<PAGE>   27

                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


Permission should first be obtained from SOCAR prior to disclosing any
information under (v) above to third parties. The confidentiality obligations
under this clause shall survive for a period of five (5) years following
termination of the OPERATOR's PSA.

                               CLAUSE 17 PUBLICITY

The CONTRACTOR shall not publish or permit to be published either alone or in
conjunction with any other person any articles, photographs or other
illustrations relating to the work hereunder, or OPERATOR's business generally,
without prior reference to and approval in writing from OPERATOR. Such consent
shall only apply to each specific application and relate only to that
application. The accuracy of any information which was not supplied directly by
OPERATOR shall be the absolute responsibility of the CONTRACTOR. The obligations
of this clause shall continue notwithstanding the completion or termination of
the work under this CONTRACT.

                     CLAUSE 18 ASSIGNMENT AND SUBCONTRACTING

18.1     Assignment

         The CONTRACTOR shall not without the prior written consent of the
         OPERATOR assign the CONTRACT or any part thereof or any benefit or
         interest therein or thereunder to any party other than a wholly-owned
         subsidiary of the Santa Fe International Corporation. Such consent
         shall not be unreasonably withheld. If CONTRACTOR assigns the CONTRACT
         or any part thereof or any benefit or interest therein or thereunder to
         a wholly-owned subsidiary of Santa Fe International Corporation, then
         prior to such assignment CONTRACTOR shall provide to COMPANY a Parent
         Company Guarantee in the form of Exhibit 2 hereto.

         OPERATOR may assign or sub-let the whole or part of this CONTRACT, its
         rights, liabilities and obligations to an AFFILIATE of the BP Amoco plc
         and to Agip Azerbaijan BV or its AFFILIATE operating the Kurdashi PSA
         upon the same terms and conditions as those agreed between the parties
         hereto without consent of the CONTRACTOR, and to any other party with
         the prior written consent of the CONTRACTOR. Such consent shall not be
         unreasonably withheld.

         When this CONTRACT is assigned it shall be assigned on the terms and
         conditions of the Assignment Agreement in the form which is attached
         hereto as Exhibit "1".

         When the CONTRACT is assigned, the Rates and Charges set forth in
         Exhibit "5" of the CONTRACT shall be revised to reflect variations in
         CONTRACTOR's operating costs in carrying out the DRILLING SERVICES only
         if caused solely as a result of such assignment and only as
         specifically provided for herein. Except as otherwise provided for
         herein or elsewhere in this CONTRACT, cost variations in


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  PAGE 25 OF 33

<PAGE>   28

                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


         CONTRACTOR's operating costs in carrying out the DRILLING SERVICES will
         be subject to adjustment, if solely the result of the assignment of the
         CONTRACT, and shall be the following cost variations: (i) compliance
         with the assignee's safety, hygiene and import/export procedures, and
         (ii) compliance with the assignee's fire and safety regulations.
         Provided, further, that matters set forth elsewhere in the CONTRACT or
         its Exhibits which expressly call for CONTRACTOR to assume the
         obligation for compliance and/or expressly address adjustments of costs
         by and between the Parties (by way of example this includes but is not
         limited to Clause 10 herein and Section 5.7 of Exhibit "5" herein )
         shall not be subject to adjustment under this Clause 18. In all other
         cases, when the CONTRACT is assigned, the Rates and Charges set forth
         in Exhibit "5" of the CONTRACT shall be revised to reflect variations
         in CONTRACTOR's operating costs in carrying out the DRILLING SERVICES
         only if, solely as a result of such assignment, there is an increase or
         decrease in the operating requirements imposed on CONTRACTOR by the
         assignee that results in an increase or decrease of the CONTRACTOR's
         operating costs in a manner not originally contemplated by the Parties
         with respect to the work to be performed by CONTRACTOR under the
         CONTRACT. Such variations in cost shall be supported by auditable
         evidence of the actual cost changes properly documented and supported
         by CONTRACTOR to OPERATOR's reasonable satisfaction: provided further
         that with respect to cost increases no such cost variations shall be
         allowed unless the assignee is advised in advance of such changes and
         has been given the opportunity to modify its operating requirements to
         avoid the cost increase.

18.2     Subcontracting

         The CONTRACTOR shall not enter into any subcontract for the whole or
         any part of its obligations under the CONTRACT other than with Caspian
         Drilling Company Limited without the prior written consent of the
         OPERATOR and such consent if given shall not relieve the CONTRACTOR
         from any liability or obligation under the CONTRACT and the CONTRACTOR
         shall be responsible for the acts, breaches of contract, defaults and
         negligence of any SUBCONTRACTOR, its personnel or agents as fully as if
         they were the acts, defaults, breaches of contract or negligence of the
         CONTRACTOR, its personnel or agents.

         The CONTRACTOR shall ensure that all its subcontracts shall include
         provisions to the like effect as the provisions hereof. In addition the
         CONTRACTOR shall ensure that the SUBCONTRACTOR's personnel (where
         applicable) are made aware of, and follow the provisions for Fire and
         Safety Precautions and Emergency Procedures as set out in Exhibit 4.


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  PAGE 26 OF 33

<PAGE>   29

                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


18.3     Under no circumstances shall any subcontractor of CONTRACTOR or its
         agents, servants or employees be considered employees of OPERATOR.

18.4     If CONTRACTOR shall cause any part of the DRILLING SERVICES hereunder
         to be performed by a subcontractor, CONTRACTOR shall provide on behalf
         of such subcontractor or require such subcontractor to procure and
         maintain in effect for the duration of the subcontract such insurance
         coverages as are set forth elsewhere in this CONTRACT as applicable to
         such subcontractor which coverages shall, with respect to the risks
         expressly assumed by such subcontractor under its subcontract, name
         OPERATOR GROUP as additional insured, be primary, and contain the
         waiver of subrogation specified herein.

                  CLAUSE 19 APPLICATION OF LAWS AND REGULATIONS

The CONTRACTOR shall comply with all Laws, Rules and Regulations of Government
or local or other authority which are effective at the date hereof or may in the
future become applicable to the CONTRACTOR's business, CONTRACTOR's EQUIPMENT
and CONTRACTOR's PERSONNEL engaged in the operations hereunder. The CONTRACTOR
shall promptly advise the OPERATOR of any such laws, rules or regulations with
which it believes it is unable to comply.

The CONTRACTOR shall ensure that its PERSONNEL, SUBCONTRACTORs and agents
observe all such laws, rules and regulations and shall at the CONTRACTOR's
expense replace any CONTRACTOR's PERSONNEL or SUBCONTRACTOR's personnel or
agents whose conduct or behavior may reasonably be considered by the OPERATOR to
be in breach or conflict with such laws, rules or regulations. CONTRACTOR,
subject always to the provisions of Clause 8 herein, shall defend indemnify and
hold harmless OPERATOR from and against any and all claims, liabilities,
demands, damages, actions, costs and expenses (including attorneys fees) arising
out of or in connection with the failure of CONTRACTOR, its personnel and/or its
subcontractors to observe all such laws, rules and regulations.

                          CLAUSE 20 SERVING OF NOTICES

Except as otherwise expressly and specifically set forth in this CONTRACT or in
any Exhibits or attachment hereto, all notices and other communications required
to be in writing hereunder shall be deemed sufficient for all purposes if sent
by registered or certified letter, courier service, facsimile or telex to the
recipients' addresses stated below (provided that each Party may change its
address by notice in writing) or if delivered by hand to the recipient Party's
designated representative. Each notice in any of the foregoing manners shall be


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C-2000-AIOC-21467                                                  PAGE 27 OF 33

<PAGE>   30

                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


effective upon receipt, or seventy-two (72) hours following confirmed date of
dispatch, whichever is earlier.

          OPERATOR:

          AZERBAIJAN INTERNATIONAL OPERATING COMPANY
          VILLA PETROLEA
          2 NEFTCHILAR PROSPEKTI, BAIL
          BAKU, AZERBAIJAN
          ATTENTION:  JAMES REESE, DRILLING MANAGER
          FACSIMILE:  (+994-12) 97-96-02

          CONTRACTOR:

          SANTA FE INTERNATIONAL CORPORATION
          52 KHANLAR STREET (APARTMENT 15)
          BAELOVA, BAKU, AZERBAIJAN
          ATTENTION:  JOHN BOONE, GENERAL MANAGER
          FACSIMILE:  (011) (994-12) 97-45-01

          COPY TO:

          SANTA FE INTERNATIONAL CORPORATION
          TWO LINCOLN CENTRE, SUITE 1100
          5420 LBJ FREEWAY, DALLAS, TX 75240, USA
          ATTENTION:  GENERAL COUNSEL
          FACSIMILE:  (+1) 972-701-7737


                         CLAUSE 21 VARIATION AND WAIVER

No variation or waiver of any obligation hereunder shall be valid or effective
unless confirmed in writing in the case of a variation by all Parties and in the
case of a waiver then by the Party towards whom the obligation shall have been
undertaken.

                  CLAUSE 22 INDEPENDENT CONTRACTOR RELATIONSHIP

22.1     In the performance of the DRILLING SERVICES the CONTRACTOR shall be an
         independent contractor with the authority to control and direct the
         performance thereof. OPERATOR is interested only in the results
         obtained and shall not have the right to control or direct the details
         of the services performed by CONTRACTOR, but the DRILLING SERVICES
         shall be subject to the approval of the OPERATOR and be subject to a
         general right of inspection and any necessary supervision thereof


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C-2000-AIOC-21467                                                  PAGE 28 OF 33

<PAGE>   31

                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


         which the OPERATOR may choose to exercise if necessary to secure the
         satisfactory completion thereof.

22.2     The actual performance and superintendence of the DRILLING SERVICES
         hereunder shall be by the CONTRACTOR but the OPERATOR shall at all
         times have access to all parts of the DRILLING UNIT for the purpose of
         inspecting the CONTRACTOR's EQUIPMENT or observing tests or inspecting
         the DRILLING SERVICES. In addition, operations shall be carried out at
         the request and in accordance with the instructions of the OPERATOR's
         REPRESENTATIVE who shall inform the CONTRACTOR's REPRESENTATIVE of the
         end result desired from any operation, but the CONTRACTOR shall have
         the entire responsibility for the proper and timely execution thereof.

22.3     The CONTRACTOR shall give all reasonable assistance to the OPERATOR's
         REPRESENTATIVE in the performance of his duties. However, the presence
         of and/or inspection and/or supervision by the OPERATOR's
         REPRESENTATIVE hereunder shall not relieve the CONTRACTOR of any of its
         obligations or responsibilities hereunder.

                        CLAUSE 23 INFRINGEMENT OF PATENTS

The CONTRACTOR shall release, defend, indemnify and hold harmless the OPERATOR
from and against all claims proceedings and liabilities for or on account of
infringement or alleged infringement of any patent rights design trade mark or
name or other protected right of any THIRD PARTY arising in connection with the
use by the CONTRACTOR of any such equipment, machinery, materials or process and
shall defend at its sole expense any and all such proceedings to which both
Parties are defendants, provided, however, that such indemnity shall not apply
and OPERATOR shall release, defend, indemnify and hold harmless CONTRACTOR
therefor if the equipment, machinery, materials or process which infringes on
the patent, design, trademark or name or other protected right was specified or
provided by OPERATOR. Both the CONTRACTOR and the OPERATOR shall at all times
have the right to be represented respectively by their own counsel and to
participate in the defense of any such proceedings if both shall be made Parties
defendant thereto. Each Party shall give notice in writing forthwith to the
other party of any such claims and proceedings as aforesaid and shall supply the
other party with all information and documents in connection therewith as the
other Party may reasonably require.

                            CLAUSE 24 APPLICABLE LAW

This CONTRACT shall be governed by, construed, interpreted and applied in
accordance


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C-2000-AIOC-21467                                                  PAGE 29 OF 33

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                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


with English Law, excluding any choice of law rules which would refer the matter
to the laws of another jurisdiction.

                              CLAUSE 25 ARBITRATION

25.1     Any dispute, controversy or claim arising out of or in relation to or
         in connection with this CONTRACT or the operations carried out under
         this CONTRACT, including without limitation any dispute as to the
         validity, interpretation, enforceability or breach of this CONTRACT,
         shall be exclusively and finally settled by arbitration, and any Party
         may submit such a dispute, controversy or claim to arbitration.

25.2     Unless otherwise expressly agreed by the Parties of the arbitration,
         the arbitration proceedings shall be conducted by three (3) arbitrators
         in accordance with the Arbitration Rules of the United Nations
         Commission on International Trade Law (UNCITRAL), as in existence on
         the EFFECTIVE DATE.

25.3     Unless otherwise expressly agreed by the Parties to the arbitration,
         the arbitrators shall be appointed in accordance with the procedure set
         forth in the arbitration rules specified in Clause 25.2; provided,
         however, that if the appointing authority specified in such rules
         refuses or fails to act as the appointing authority within ninety (90)
         days after being requested to do so, then the appointing authority
         shall be the President for the time being of the Law Society of England
         and Wales.

25.4     Unless otherwise expressly agreed in writing by the Parties to the
         arbitration proceedings:

         25.4.1   the arbitration proceedings shall be held in London;

         25.4.2   the arbitration proceedings shall be conducted in the English
                  language and the arbitrator(s) shall be fluent in the English
                  language;

         25.4.3   the arbitrator(s) shall be and remain at all times wholly
                  independent and impartial;

         25.4.4   the costs of the arbitration proceedings (including attorney's
                  fees and costs) shall be borne in the manner determined by the
                  arbitrator(s).

         25.4.5   the decision of a majority of the arbitrators shall be final
                  and binding, and the Parties to the arbitration proceedings
                  hereby agree to exclude, to the extent that they may validly
                  do so, any right of application or appeal to any court in
                  connection with any question of law arising in the course of
                  the arbitration proceedings or out of the award.


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C-2000-AIOC-21467                                                  PAGE 30 OF 33

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                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


         25.4.6   judgment upon award may be entered in any court having
                  jurisdiction or application may be made to such court for a
                  judicial acceptance of the award and an order of enforcement,
                  as the case may be; and

         25.4.7   each Party hereto, for the purposes of allowing such
                  arbitration and the enforcement and execution of any
                  arbitration decision, award, issuance of any attachment,
                  provisional remedy or other pre-award remedy, hereby waives
                  any and all claims to immunity, including, but not limited to,
                  claims of sovereign immunity.

                 CLAUSE 26 EXCLUSION OF PREVIOUS CORRESPONDENCE

All previous correspondence, negotiations, representations, explanations,
statements, promises or guarantees whether oral or written are hereby excluded
from the CONTRACT.

                                 CLAUSE 27 AUDIT

CONTRACTOR shall maintain a complete and correct set of records pertaining to
all aspects of this CONTRACT. OPERATOR shall have the right to inspect and audit
any and all relevant records relating to the performance of the DRILLING
SERVICES and to audit all relevant records relating to payment for reimbursable
services (including provision of equipment) within a period of twenty-four (24)
months after the settlement of the final invoice for DRILLING SERVICES hereunder
provided that CONTRACTOR shall have the right to exclude any proprietary
matters, trade secrets, formulas or processes from such inspection and audit.
Should the results reveal that payments have been made incorrectly, appropriate
adjustments shall be made. Neither the completion of such audit by OPERATOR nor
the decision not to conduct an audit shall waive, forfeit or prejudice any right
or remedy that OPERATOR may have under this CONTRACT or at law.

                          CLAUSE 28 GENERAL PROVISIONS

28.1     Successors and Assigns

         This CONTRACT shall inure to the benefit of and be binding upon the
         successors and permitted assigns of the Parties.

28.2     Reservation

         No Party shall be required to act or refrain from acting if to do so
         would make such Party, its shareholders or their parents, subsidiaries
         or AFFILIATES (including, in the case of the CONTRACTOR, its
         sub-contractor Caspian Drilling Company Limited) liable to penalisation
         under the laws of any jurisdiction applicable to such Party, its


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C-2000-AIOC-21467                                                  PAGE 31 OF 33

<PAGE>   34

                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


         shareholders or their parents, subsidiaries or AFFILIATES (including,
         in the case of the CONTRACTOR its sub-contractor Caspian Drilling
         Company Limited) notwithstanding anything to the contrary in this
         CONTRACT.

28.3     Severance of Invalid Provisions

         If and for so long as any provision of this CONTRACT shall be deemed to
         be judged invalid for any reason whatsoever, such invalidity shall not
         affect the validity or operation of any other provision of this
         CONTRACT and any such invalid provision shall be deemed severed from
         this CONTRACT without affecting the validity of the balance of this
         CONTRACT.

28.4     No waiver by any Party of any provision of this CONTRACT shall be
         binding unless made expressly and expressly confirmed in writing.
         Further, any such waiver shall relate only to such matter,
         non-compliance or breach as it expressly relates to and shall not apply
         to any subsequent or other matter, non-compliance or breach.

28.5     If this CONTRACT is executed in multiple languages, the English version
         will prevail as to any conflicts between the executed documents.

28.6     Conflicts

         Except as specifically provided in Clause 11.2 of Exhibit "1" attached
         hereto, in the event of any conflicts between the provisions in the
         Exhibits of this CONTRACT and the body of this CONTRACT, the latter
         shall prevail.

28.7     Conflicts of Interest

         CONTRACTOR undertakes that it shall not use any information received as
         a result of its status as a Party under the CONTRACT to gain an
         advantage for other operations which it may be or it anticipates it may
         be conducting or participating in, to the material disadvantage of the
         operations contemplated under this CONTRACT.

28.8     Survival

         Clauses 6, 7, 8, 9, 10, 13, 14, 15, 16, 17, 19, 20, 23, 24, 25, 27, 28
         of this CONTRACT, and Section 4.13 of Exhibit 4, shall survive the
         termination of this CONTRACT. In addition, the rights of the Parties
         under the insurance policies procured pursuant to Clause 9 herein shall
         survive termination of this CONTRACT.

28.9     As of the EFFECTIVE DATE, the OPERATOR and CONTRACTOR shall be subject
         to clause 11.2 of Exhibit "1" attached hereto, applying such provisions
         mutatis mutandis to this CONTRACT.


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C-2000-AIOC-21467                                                  PAGE 32 OF 33

<PAGE>   35

                                                               DRILLING CONTRACT
--------------------------------------------------------------------------------


IN WITNESS WHEREOF, the duly authorised representatives of the Parties execute
this CONTRACT.



For and on behalf of

AZERBAIJAN INTERNATIONAL OPERATING COMPANY


By:      /s/ Graham Howard

Name:    Graham Howard

Title:   Manager, Contracts and Procurement



Date:    14th March 2000



For and on behalf of

SANTA FE INTERNATIONAL CORPORATION


By:      /s/ John Bergeland
Name:    John Bergeland

Title:   Vice President, Santa Fe International Corporation

Date:    14th March 2000



--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  PAGE 33 OF 33

<PAGE>   36




                                   EXHIBIT "5"


                                RATES AND CHARGES



<PAGE>   37



                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------


PREAMBLES

5.1      GENERAL

         The Rates and Charges shall be fully inclusive of all costs, expenses,
         overheads and profit arising out of the provision of the DRILLING
         SERVICES, PERSONNEL and EQUIPMENT by the CONTRACTOR under the CONTRACT
         and its Exhibits hereof.

5.2      MOBILISATION AND DEMOBILISATION

                    (a)    MOBILISATION CHARGE shall be the amount payable, as
                           set out in Exhibit "5.1", for the mobilisation of the
                           CONTRACTOR's EQUIPMENT and CONTRACTOR's PERSONNEL to
                           the CONTRACT AREA to cover all costs incurred by
                           CONTRACTOR as a result of such mobilisation including
                           but not by way of limitation all costs incurred by
                           the CONTRACTOR in:

                  -    setting up a base in the CONTRACT AREA,

                  -    air passages,

                  -    sea freight,

                  -    lighterage,

                  -    port dues,

                  -    pilotage,

                  -    wharfage,

                  -    cranage,

                  -    cargo handling,

                  -    all and any other costs

                  until the agreed time and date that the DRILLING UNIT is under
                  tight tow to the first LOCATION under this CONTRACT.

                    (b)    DEMOBILISATION CHARGE shall be the amount payable, as
                           set out in Exhibit "5.1", for the demobilisation of
                           the CONTRACTOR's EQUIPMENT and CONTRACTOR's PERSONNEL
                           from the CONTRACT AREA to cover all costs incurred by
                           CONTRACTOR as a result of such demobilisation
                           including but not by way of limitation all costs
                           incurred by the CONTRACTOR in:

                  -    closing down a base in the CONTRACT AREA,

                  -    air passages,

                  -    sea freight,

                  -    lighterage,

                  -    port dues,


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                   PAGE 1 OF 14
<PAGE>   38

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------


                  -    pilotage,

                  -    wharfage,

                  -    cranage,

                  -    cargo handling,

                  -    all and any other costs

                  after the COMPLETION DATE.

                    (c)    Standing Down/Remobilisation Charge

                  The CONTRACTOR will be paid a reimbursement for all actual
                  costs reasonably and properly incurred by the CONTRACTOR in
                  standing down at a port on the mainland of the CONTRACT AREA
                  nominated by the OPERATOR, or, at the OPERATOR's option, at
                  the individual home bases of the CONTRACTOR's PERSONNEL, and
                  (as the case may be) in remobilising from said port or home
                  bases the CONTRACTOR's PERSONNEL as a direct consequence of
                  the DRILLING UNIT being shutdown under the direction of the
                  OPERATOR. Full supporting documents must accompany any invoice
                  for this charge.

5.3      DAILY RATES

         All rates per day described hereunder refer to a day of twenty-four
         (24) hours. For parts of a day all such daily rates shall be prorated
         to the nearest one quarter hour.

                    (a)    The OPERATING RATE shall be the amount per day
                           payable for all operations from the COMMENCEMENT DATE
                           (including DRILLING UNIT movements to and from port
                           for upgrading the DRILLING UNIT) to the COMPLETION
                           DATE except when the REPAIR, REDRILL, SHUTDOWN
                           WITHOUT CREW, RATE DURING REPAIRS REQUIRED BY NEW
                           RULES AND REGULATIONS AFTER INITIAL COMMENCEMENT
                           DATE, REDUCED REPAIR RATE (as provided for in Section
                           D.1 of Attachment "1" of Exhibit "4") applies, or
                           other special rates (as may be agreed by the Parties)
                           are in effect. During the upgrade of the DRILLING
                           UNIT between the first WELL and second WELL as
                           envisaged under the CONTRACT, a nil RATE shall apply.

                    (b)    The REPAIR RATE shall be equal to the OPERATING RATE
                           for forty eight (48) cumulative repair hours per
                           month or pro rata for part of a month. Thereafter the
                           REDUCED REPAIR RATE shall apply. In no event shall
                           any single occurrence of REPAIR RATE exceed forty
                           eight (48) hours. The REPAIR RATE shall be applicable
                           during such times as there is a shutdown in
                           operations for repairs to the DRILLING EQUIPMENT or
                           due to CONTRACTOR's failure to keep its


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C-2000-AIOC-21467                                                   PAGE 2 OF 14
<PAGE>   39

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------


                           EQUIPMENT in certification in accordance with
                           requirements in effect at the first WELL COMMENCEMENT
                           DATE.

                           In respect of repairs to subsea equipment the REPAIR
                           RATE shall commence from the time that normal
                           operations cease on account of defective subsea
                           equipment until the time when normal operations are
                           resumed. Normal operations shall be deemed to have
                           been resumed when the same depth is reached as was
                           reached prior to the instigation of such repairs as
                           aforesaid. Waiting on weather to raise or run damaged
                           or defective or repaired subsea equipment shall be at
                           OPERATING RATE and not at REPAIR RATE.

                           Cessation of operations in order to slip, cut or
                           change the drilling line, or routine lubrication for
                           routine maintenance and routine top drive maintenance
                           purposes which cannot be safely and properly carried
                           out without suspending the DRILLING SERVICES shall
                           not be deemed to be shutdown for the purposes of this
                           sub-clause.

                    (c)    The REDRILLING RATE shall apply during all time spent
                           in redrilling the hole or during remedial work on the
                           hole due to circumstances set out in Clause 8.4 of
                           the CONTRACT.

                    (d)    The SHUTDOWN WITHOUT CREW RATE shall be at a rate as
                           set forth in Exhibit "5.1". The OPERATOR shall give
                           the CONTRACTOR thirty (30) days written notice of the
                           application of this Rate, which shall be applicable
                           for a period of not less than thirty (30) days.

                           In addition, the OPERATOR shall reimburse the
                           CONTRACTOR the Standing Down/Remobilisation Charge.

         (e)      The RATE DURING REPAIRS REQUIRED BY NEW RULES AND REGULATIONS
                  AFTER INITIAL COMMENCEMENT DATE shall apply as provided in
                  Sections 4.3 and 4.4 of Exhibit "4".

         (f)      In the event that the first WELL COMMENCEMENT DATE is delayed
                  beyond 15 March 2000 for reasons beyond the control of the
                  CONTRACTOR then the STANDBY RATE FOR DELAYED COMMENCEMENT
                  shall apply from 0000 hours on 15 March 2000 until the actual
                  first WELL COMMENCEMENT DATE.

5.4      CHARGE FOR MEALS AND ACCOMMODATION PROVIDED BY CONTRACTOR

         This charge shall be the amount per man-day applicable for meals and
         accommodation provided by CONTRACTOR to OPERATOR's and service
         companies' personnel


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                   PAGE 3 OF 14
<PAGE>   40

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

         staying over night on the DRILLING UNIT in excess of eight (8) such
         personnel per day.

         The said Charge shall apply irrespective of whether the said Personnel
         are in fact each provided with no meals per day or one or two or three
         meals per day, and the substantiation for the application of this
         Charge shall be the daily "people on board" report.

5.5      PERSONNEL

                    (a)    Additional Personnel

                  The CONTRACTOR shall be paid at the rates set out in Exhibit
                  "5.2" hereto for personnel additional to those listed in
                  Exhibit "6" requested by the OPERATOR.

                    (b)    Courses

                  The OPERATOR shall reimburse the CONTRACTOR for all costs and
                  expenses in respect of travel, accommodation and subsistence
                  reasonably and properly incurred by CONTRACTOR's PERSONNEL
                  when in attendance at courses, other than those for the
                  account of CONTRACTOR as set forth in Exhibit "6", at the
                  request of OPERATOR. Invoices for such reimbursement shall be
                  supported by the requisite bills, tickets and other such
                  substantiation as the OPERATOR may reasonably require.

                    (c)    Replacement

                  Pending replacement of personnel the OPERATOR shall deduct
                  from any monies due to the CONTRACTOR at the appropriate rate
                  per day quoted in Exhibit "5.2" for all days in excess of
                  seven (7) that such person shall not have been so replaced.

5.6      ADDITIONAL EQUIPMENT

         The OPERATOR shall reimburse the CONTRACTOR as follows for additional
         equipment provided:

                    (a)    The capital costs of modifications to the DRILLING
                           UNIT or additional equipment purchased on the
                           instructions of the OPERATOR shall be reimbursed to
                           the CONTRACTOR in accordance with the provisions of
                           sub-clause (b) hereunder.

                    (b)    The agreed rental costs of listed equipment under
                           Exhibit "5.3" hereto or if not listed the costs of
                           materials or charges for hire of additional equipment
                           or services required by the OPERATOR's REPRESENTATIVE
                           at net invoice cost, after deduction of all


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C-2000-AIOC-21467                                                   PAGE 4 OF 14
<PAGE>   41

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

                           discounts plus an addition of ten percent (10%) for
                           all items not exceeding three thousand dollars
                           (US$3,000) and six percent (6%) on all items
                           exceeding three thousand dollars (US$3,000) to cover
                           the CONTRACTOR's additional costs, overhead charges
                           and profit. provided, however, except and to the
                           extent otherwise agreed, the foregoing shall not
                           apply to the modification, enhancement, upgrade and
                           replacement of certain equipment items on the
                           DRILLING UNIT to be undertaken between the first and
                           second WELL under the CONTRACT, as summarised in
                           Exhibit "7" hereto.

                    (c)    The costs of transport and shipping the further
                           equipment and materials to the CONTRACT AREA.

                    (d)    An agreed rental rate to be incorporated in Exhibit
                           "5.3" hereto covering CONTRACTOR's operating and
                           maintenance costs for each item on such additional
                           equipment included in Exhibit "7" hereof; provided,
                           however, the foregoing shall not apply to the
                           modification, enhancement, upgrade and replacement of
                           certain equipment items on the DRILLING UNIT to be
                           undertaken between the first and second WELL under
                           the CONTRACT, except as stated in Exhibit "7" hereto.

                  The OPERATOR shall not reimburse the CONTRACTOR for any
                  further equipment or materials supplied and delivered by it
                  which the OPERATOR's REPRESENTATIVE has not first requested in
                  writing as aforesaid.

5.7      ESCALATION

         5.7.1             At one-year intervals, with the first revision being
                           due 1 January 2001, the Rates and Charges herein set
                           forth shall be revised to reflect variations in
                           CONTRACTOR's costs after 1 January 2000 (the "Base
                           date") for or due to:

                    (a)    Increases or decreases in the salaries, wages
                           benefits and burden for CONTRACTOR's PERSONNEL. Base
                           Cost for Non Azeri Personnel is U.S. $13,043 per day.
                           Base Cost for Azeri Personnel is U.S.$4,033 per day.
                           CONTRACTOR shall properly document and support to the
                           OPERATOR's reasonable satisfaction any such
                           variations in cost.

                    (b)    Increases or decreases in CONTRACTOR's cost arising
                           from a change in the number, or the location of any
                           operating base, or work schedule of CONTRACTOR's
                           PERSONNEL only if made at the request of OPERATOR.
                           Otherwise, no adjustments shall be made for any
                           change in the number, operating base


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                   PAGE 5 OF 14
<PAGE>   42

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

                           location or work schedule of PERSONNEL made by
                           CONTRACTOR.

         5.7.2    At one year intervals, with the first revision being due 1
                  January 2001, the Rates and Charges set forth herein shall be
                  revised to reflect variations in CONTRACTOR's costs after 1
                  January 2000 (the "Base Date") for or due to:

                    (a)    Decreases or unavoidable increases in CONTRACTOR's
                           insurance and catering costs. Base Cost for insurance
                           is U.S. $957 per day and Base Cost for catering is
                           U.S. $1,934 per day. Decreases or unavoidable
                           increases in CONTRACTOR's insurance costs or catering
                           costs shall be supported by auditable evidence of the
                           actual cost changes properly documented and supported
                           by CONTRACTOR to OPERATOR's reasonable satisfaction.

                    (b)    Increases or decreases in CONTRACTOR's maintenance
                           and capital equipment replacement costs. Base Cost is
                           U.S. $8,584 per day. Such cost increases or decreases
                           shall be calculated in accordance with increases or
                           decreases reported in the Bureau of Labour Statistics
                           Oilfield Drilling Machinery and Equipment Price Index
                           (Code No. 1191.02) as published by the U.S.
                           Department of Labour after the Base Date. Each
                           revision shall be determined by multiplying the
                           percentage change between the then current Index and
                           that which was in effect on the Base Date times the
                           Base Cost.

         5.7.3    Rates and Charges herein set forth shall be adjusted when the
                  combined amount of the revision is greater than United States
                  Dollars Two Hundred and Fifty per day (U.S. $250/day) on 1
                  January 2001 and once every twelve (12) months thereafter.

         5.7.4    CONTRACTOR shall maintain a complete and correct set of
                  records pertaining to all aspects of the matters set forth in
                  this Section 5.7. OPERATOR shall have the right to audit any
                  and all relevant records relating to the increases or
                  decreases in the Rates and Charges as provided for in this
                  Section 5.7 within a period of twenty-four (24) months after
                  the settlement of the final invoice for DRILLING SERVICES
                  hereunder provided that CONTRACTOR shall have the right to
                  exclude any proprietary matters, trade secrets, formulas or
                  processes from such inspection and audit. Should the results
                  reveal that payments have been made incorrectly, appropriate
                  adjustments shall be made. Neither the completion of such
                  audit by OPERATOR nor the decision not to conduct an audit
                  shall waive, forfeit or prejudice any


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                   PAGE 6 OF 14
<PAGE>   43

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

                  right or remedy that OPERATOR may have under this CONTRACT or
                  at law.

         "5.7.5   The Rates and Charges herein set forth shall be revised to
                  reflect variations of CONTRACTOR's costs after January 1, 2000
                  ("Base Date") for or due to an increase or decrease in
                  CONTRACTOR's costs due to a change in the laws, rules or
                  regulations of the Azerbaijan Republic, or the interpretation
                  or enforcement thereof, which becomes effective after the Base
                  Date. Each time that CONTRACTOR's out-of-pocket costs of such
                  items (one or more) increase or decrease by more than U.S.
                  $250 per 24-hour day, the Rates and Charges will be revised by
                  the corresponding amount with retroactive effect to the date
                  such increase or decrease was incurred. CONTRACTOR shall
                  properly document and support such variation in costs."


5.8      PAYMENT PROVISIONS

         5.8.1    Monthly Account and Invoicing

                    (a)    Within the first ten (l0) days of each MONTH the
                           CONTRACTOR shall submit to the OPERATOR in triplicate
                           a monthly account in respect of DRILLING SERVICES
                           performed by CONTRACTOR during the previous MONTH for
                           which payment is due, and also in respect of services
                           given and/or materials supplied (if any) for which
                           payment is due.

                    (b)    Such account shall be accompanied by one copy of the
                           Time Breakdown Report and such other invoice
                           documents or information as the OPERATOR may
                           reasonably require from time to time.

                    (c)    Such account shall comprise one invoice for each WELL
                           on which the DRILLING UNIT has operated during the
                           previous MONTH.

                    (d)    Invoices shall be numbered serially and submitted to
                           the OPERATOR bearing the CONTRACT reference number.

         5.8.2    Payments by the OPERATOR

                    (a)    Insofar as it is approved by the OPERATOR, the
                           OPERATOR shall pay all invoices within thirty (30)
                           days after receipt thereof to bank accounts nominated
                           by the CONTRACTOR. In the event any undisputed
                           invoices are not so paid by the OPERATOR within the
                           said thirty (30) days, then the OPERATOR shall pay
                           interest on such unpaid amounts at LIBOR plus one
                           percent (1%). The bank account to which


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                   PAGE 7 OF 14
<PAGE>   44

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

                           OPERATOR shall make payments under the CONTRACT shall
                           be as follows:

                           SANTA FE INTERNATIONAL CORPORATION

                           Bank of America, NT and SA
                           333 S. Beaudry Avenue
                           19th Floor, Account Admin. 5583
                           Los Angeles, CA 90017, USA

                           Wire Instructions:

                           Bank of America NT and SA, SF
                           Account No. 12357-01847
                           ABA: 121000358


                           Any change to the above details shall be the subject
                           of a formal amendment to CONTRACT.

                    (b)    In the event that the OPERATOR disputes an invoice or
                           part thereof, the OPERATOR shall within twenty (20)
                           days of receipt thereof notify the CONTRACTOR in
                           writing of the invoice or part thereof so disputed
                           and specifying the reason therefore. Payment of such
                           disputed invoice or part thereof shall be withheld
                           until settlement of the said dispute. Such payments
                           so withheld shall not be subject to interest charges
                           unless the original invoices as submitted by the
                           CONTRACTOR are subsequently agreed by OPERATOR to be
                           correct.

                    (c)    Payment by the OPERATOR of the CONTRACTOR's invoices
                           shall be without prejudice to the OPERATOR's rights
                           subsequently to challenge the correctness thereof.

                    (d)    Any expenditure of whatsoever nature incurred by the
                           CONTRACTOR in connection with the CONTRACT for which
                           responsibility has not been assumed in the CONTRACT
                           by the OPERATOR shall be a cost to be borne by the
                           CONTRACTOR.

                    (e)    Payment by the OPERATOR of any account submitted by
                           the CONTRACTOR shall not discharge or release the
                           CONTRACTOR from any of its obligations under the
                           CONTRACT or be deemed approval or acceptance of work
                           covered by such account.

                    (f)    All invoices shall be submitted in and payment made
                           in the currency or currencies set forth in Exhibit
                           5.1. Such currencies or amounts thereof may be
                           adjusted by mutual agreement of the Parties, from
                           time to time.


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                   PAGE 8 OF 14
<PAGE>   45

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

         5.8.3    Payment During Upgrade.

                  CONTRACTOR shall upgrade the DRILLING UNIT in accordance with
                  Attachment 2 to Exhibit 7. Such DRILLING UNIT upgrade is to be
                  performed upon completion of the GCA 6 WELL which is to be the
                  first WELL under this CONTRACT. OPERATOR shall provide tow
                  vessels and other necessary services for moving the DRILLING
                  UNIT from the GCA 6 well location and pay the OPERATING RATE
                  until the DRILLING UNIT is safely moored following removal of
                  all of OPERATOR's MATERIALS and equipment, materials and
                  supplies of the OPERATOR's contractors and their
                  subcontractors at Baku or other mutually agreed equidistant
                  port. During the upgrade, a Nil Rate shall be payable and
                  OPERATOR shall not provide and/or bear the cost of services
                  and materials which are for its account under Attachment 1 to
                  Exhibit 4. Upon completion of the upgrade, which for purposes
                  hereof shall mean when the DRILLING UNIT has met the
                  acceptance criteria as stated in Attachment 3 to Exhibit "7"
                  and the DRILLING UNIT is ready to move to OPERATOR's next
                  location, or such other time and date as agreed between the
                  Parties, OPERATOR shall provide tow vessels and other
                  necessary services for moving the DRILLING UNIT to OPERATOR's
                  next location and pay the OPERATING RATE and provide and/or
                  bear the cost of services and materials which are for the
                  OPERATOR's account under Attachment 1 to Exhibit 4

5.9      EARLY TERMINATION FEE

         5.9.1    Notwithstanding any other provision of the CONTRACT, in the
                  event the CONTRACT is terminated prior to the second WELL
                  COMMENCEMENT DATE for any reason whatsoever, (excepting only
                  the constructive, compromised or arranged total loss of the
                  DRILLING UNIT under applicable insurance policies or
                  arrangements), then OPERATOR shall pay the CONTRACTOR an Early
                  Termination Fee equivalent to 365 Days at the GCA-6 OPERATING
                  RATE plus CONTRACTOR's audited costs of complying with
                  OPERATOR's instruction to terminate the CONTRACT (including
                  all costs of terminating or cancelling any current or planned
                  work or orders for materials and equipment associated with the
                  Upgrade envisaged under this CONTRACT).

         5.9.2    Notwithstanding any other provision of the CONTRACT, in the
                  event the CONTRACT is terminated after the second WELL
                  COMMENCEMENT DATE for any reason whatsoever, (excepting only
                  the constructive, compromised or arranged total loss of the
                  DRILLING UNIT under applicable insurance policies or
                  arrangements), then OPERATOR shall pay CONTRACTOR the
                  following Early Termination Fee based upon the actual date of
                  termination. FOR PURPOSES OF IMPLEMENTING SUB-CLAUSE 5.9.2 THE
                  FIRST


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                   PAGE 9 OF 14
<PAGE>   46

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

                  YEAR OF THE CONTRACT SHALL BE CONSIDERED TO COMMENCE ON THE
                  SECOND WELL COMMENCEMENT DATE.

                  The applicable Early Termination Fee shall be calculated by
                  considering the actual date of termination against the
                  following fixed reference points.

                  a)       If the Contract is terminated at any time during the
                           first year of the CONTRACT:

                           -        U.S. $23,100,000 plus the non-GCA-6 WELL
                                    OPERATING RATE for each Day the actual
                                    duration of the CONTRACT is less than 365
                                    Days.

                  b)       If the CONTRACT is terminated at any time during the
                           second year of CONTRACT:

                           -        U.S. $19,400,000 plus U.S. $10,137 for each
                                    Day the actual duration of the CONTRACT is
                                    less than 730 Days.

                  c)       If the CONTRACT is terminated at any time during the
                           third year of the CONTRACT:

                           -        U.S. $14,900,000 plus U.S. $12,329 for each
                                    Day the actual duration of the CONTRACT is
                                    less than 1,095 Days.

                  d)       If the CONTRACT is terminated at any time during the
                           fourth year of the CONTRACT:

                           -        U.S. $9,500,000 plus U.S. $14,795 for each
                                    Day the actual duration of the CONTRACT is
                                    less than 1,460 Days.

                  e)       If the Contract is terminated at any time after the
                           1,460th Day of the CONTRACT:

                           -        U.S. $17,336 for each Day the actual
                                    duration of the CONTRACT is less than 2,008
                                    Days.

                  The above-applicable Early Termination Fee excludes any
                  element of withholding Tax payment. If CONTRACTOR is subject
                  to Azerbaijan withholding Tax on such Early Termination Fee,
                  then the applicable Fee shall be adjusted as necessary to
                  include the applicable withholding tax in order that the net
                  Early Termination Fee to be received by CONTRACTOR after such
                  tax has been withheld remains as stated above.


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  PAGE 10 OF 14
<PAGE>   47

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

                  For the purpose of sub-clause 5.9.2 "Day" or "Days" mean a day
                  for which a non-GCA-6 Well OPERATING RATE has been paid to
                  CONTRACTOR.


         5.9.3    In addition to the Early Termination Fee, if the period of the
                  DRILLING SERVICES from the second WELL COMMENCEMENT DATE to
                  the actual date of Termination shall be less than 2,008 Days
                  then OPERATOR shall pay CONTRACTOR the unrecovered portion of
                  the cost to CONTRACTOR of providing supply boats and fuel
                  during the period when the DRILLING UNIT is undergoing Upgrade
                  following completion of the first WELL. For the avoidance of
                  doubt, the Non-GCA-6 WELL OPERATING RATE includes an element
                  of $525 per Day (inclusive of withholding tax at 5%) to cover
                  these costs and such rate is payable under the CONTRACT for
                  the equivalent of 2,008 Days.



--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  PAGE 11 OF 14
<PAGE>   48

                                                 EXHIBIT "5" - RATES AND CHARGES
--------------------------------------------------------------------------------

                         EXHIBIT "5.1" RATES AND CHARGES
                        (NOTE ALL VALUES IN U.S. DOLLARS)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
     1.    MOBILISATION                                           0
-------------------------------------------------------------------------------------------------------------------------------
     2.    DEMOBILISATION                                         0
-------------------------------------------------------------------------------------------------------------------------------
     3.    STANDING DOWN/ REMOBILISATION CHARGE                   At cost
-------------------------------------------------------------------------------------------------------------------------------
                                                             Base Rate Without Azeri W/H Tax (For     With 5% Azeri W/H Tax
                                                                  information purposes only)
-------------------------------------------------------------------------------------------------------------------------------
                                                                   GCA-6               Other        GCA-6 Well     Other Wells
-------------------------------------------------------------------------------------------------------------------------------
<S>        <C>                                                <C>                 <C>               <C>            <C>
-------------------------------------------------------------------------------------------------------------------------------
     4.    OPERATING RATE                                          57,242              77,026         60,255         81,080
-------------------------------------------------------------------------------------------------------------------------------
     5.    REDUCED REPAIR RATE                                     13,043              13,043         13,730         13,730
-------------------------------------------------------------------------------------------------------------------------------
     6.    REDRILLING RATE                                         42,931              57,769         45,191         60,810
-------------------------------------------------------------------------------------------------------------------------------
     7.    SHUTDOWN W/O CREW RATE                                              N/A                  OPERATING RATE Less Agreed
                                                                                                          Cost Savings
-------------------------------------------------------------------------------------------------------------------------------
     8.    RATE DURING REPAIRS REQUIRED BY NEW RULES AND           57,242              77,026         60,255         81,080
           REGULATIONS AFTER INITIAL COMMENCEMENT DATE
-------------------------------------------------------------------------------------------------------------------------------
     9.    STANDBY RATE FOR DELAYED COMMENCEMENT                   38,422               N/A           40,444
-------------------------------------------------------------------------------------------------------------------------------
     10.   MEALS AND ACCOMMODATION IN EXCESS OF EIGHT (8)                  38/man/day               40/man/day     40/man/day
           MEN PER DAY OF OPERATOR'S PERSONNEL
-------------------------------------------------------------------------------------------------------------------------------
           OPERATING COSTS SUBJECT TO WITHHOLDING TAX                         1,837                    1,934          1,934
           (BEFORE TAX)
-------------------------------------------------------------------------------------------------------------------------------
     11.   MISCELLANEOUS CHARGES                               The rate per day for CONTRACTOR's personnel who have been removed and
                                                               who have not been replaced by the CONTRACTOR shall be a deduction of
                                                               the amount of the rate in Exhibit "5.2" hereto for the person so
                                                               removed until such time as the said person so removed has been
                                                               replaced
-------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
     1.    MOBILISATION
-------------------------------------------------------------------------------------------------------------------------------
     2.    DEMOBILISATION
-------------------------------------------------------------------------------------------------------------------------------
     3.    STANDING DOWN/ REMOBILISATION CHARGE
-------------------------------------------------------------------------------------------------------------------------------
                                                                With 6.25% Azeri    With 8.0% Azeri
                                                                    W/H Tax             W/H Tax
-------------------------------------------------------------------------------------------------------------------------------
                                                                  (All Wells)        (All Wells)
-------------------------------------------------------------------------------------------------------------------------------
<S>        <C>                                                   <C>                <C>
-------------------------------------------------------------------------------------------------------------------------------
     4.    OPERATING RATE                                           82,186(1)          83,787
-------------------------------------------------------------------------------------------------------------------------------
     5.    REDUCED REPAIR RATE                                      13,913             14,177
-------------------------------------------------------------------------------------------------------------------------------
     6.    REDRILLING RATE                                          61,639             62,840
-------------------------------------------------------------------------------------------------------------------------------
     7.    SHUTDOWN W/O CREW RATE                             OPERATING RATE Less Agreed Cost Savings
-------------------------------------------------------------------------------------------------------------------------------
     8.    RATE DURING REPAIRS REQUIRED BY NEW RULES AND            82,186             83,787
           REGULATIONS AFTER INITIAL COMMENCEMENT DATE
-------------------------------------------------------------------------------------------------------------------------------
     9.    STANDBY RATE FOR DELAYED COMMENCEMENT                     N/A
-------------------------------------------------------------------------------------------------------------------------------
     10.   MEALS AND ACCOMMODATION IN EXCESS OF EIGHT (8)         41/man/day         41/man/day
           MEN PER DAY OF OPERATOR'S PERSONNEL
-------------------------------------------------------------------------------------------------------------------------------
           OPERATING COSTS SUBJECT TO WITHHOLDING TAX                1,959              1,997
           (BEFORE TAX)
-------------------------------------------------------------------------------------------------------------------------------
     11.   MISCELLANEOUS CHARGES                               The rate per day for CONTRACTOR's personnel who have been removed and
                                                               who have not been replaced by the CONTRACTOR shall be a deduction of
                                                               the amount of the rate in Exhibit "5.2" hereto for the person so
                                                               removed until such time as the said person so removed has been
                                                               replaced
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)      (77,026 / 0.9375) + (1,959 - 1,934) = 82,186

(2)      Without prejudice to the provisions of Exhibit 5, Clause 5.7, should
         CONTRACTOR and its subcontractors be subject to Azerbaijan withholding
         tax at a rate other than 5%, 6.25% or 8%, then CONTRACTOR's rates of
         payment shall be adjusted so that CONTRACTOR's rates before Azerbaijan
         withholding tax remain unchanged.


--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  Page 12 of 14
<PAGE>   49

                                  EXHIBIT "5.2"
                         RATES FOR CONTRACTORS PERSONNEL

<TABLE>
<CAPTION>
ONSHORE
------------------------------------------------------------------------------------------------------------
                                                                               RATE/MAN/DAY*
                                                                 -------------------------------------------
            POSITION                NATIONALITY      ROTATION/          NUMBER
                                                     RESIDENT          PROVIDED           US DOLLARS/DAY
------------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>         <C>                      <C>
Drilling Superintendent                  NA          Resident              1                   1021
------------------------------------------------------------------------------------------------------------
Maintenance Superintendent               NA          Resident              1                   838
------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
OFFSHORE
------------------------------------------------------------------------------------------------------------
                                                                               RATE/MAN/DAY*
                                                                 -------------------------------------------
            POSITION                NATIONALITY      ROTATION/          NUMBER
                                                     RESIDENT          PROVIDED           US DOLLARS/DAY
------------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>         <C>                      <C>
Sr. Drilling Foreman                     NA            28/28               1                   585
------------------------------------------------------------------------------------------------------------
Drilling Foreman                         NA            28/28               1                   571
------------------------------------------------------------------------------------------------------------
Tourpusher                               NA            28/28               2                   480
------------------------------------------------------------------------------------------------------------
Barge Engineer                           NA            28/28               1                   489
------------------------------------------------------------------------------------------------------------
Asst. Barge Engineer                     NA            28/28               1                   419
------------------------------------------------------------------------------------------------------------
Electrician                              NA            28/28               1                   467
------------------------------------------------------------------------------------------------------------
Mechanic                                 NA            28/28               1                   462
------------------------------------------------------------------------------------------------------------
Subsea Engineer                          NA            28/28               1                   517
------------------------------------------------------------------------------------------------------------
Safety Training Co-ordinator             NA            28/28               1                   448
------------------------------------------------------------------------------------------------------------
Clerk/Medic/HLO                          NA            28/28               1                   380
------------------------------------------------------------------------------------------------------------
Tourpusher                               A             14/14               1                    75
------------------------------------------------------------------------------------------------------------
Driller                                  A             14/14               1                    46
------------------------------------------------------------------------------------------------------------
Asst. Driller                            A             14/14               1                    34
------------------------------------------------------------------------------------------------------------
Derrickman                               A             14/14               1                    32
------------------------------------------------------------------------------------------------------------
Pumpman                                  A             14/14               1                    29
------------------------------------------------------------------------------------------------------------
Roughneck                                A             14/14               1                    27
------------------------------------------------------------------------------------------------------------
Materialsman                             A             14/14               1                    30
------------------------------------------------------------------------------------------------------------
Storeman                                 A             14/14               1                    30
------------------------------------------------------------------------------------------------------------
Motorman                                 A             14/14               1                    26
------------------------------------------------------------------------------------------------------------
Welder                                   A             14/14               1                    29
------------------------------------------------------------------------------------------------------------
Electrician                              A             14/14               1                    55
------------------------------------------------------------------------------------------------------------
Mechanic                                 A             14/14               1                    55
------------------------------------------------------------------------------------------------------------
Subsea Engineer                          A             14/14               1                    46
------------------------------------------------------------------------------------------------------------
Crane Operator                           A             14/14               1                    34
------------------------------------------------------------------------------------------------------------
Asst. Crane Operator                     A             14/14               1                    27
------------------------------------------------------------------------------------------------------------
Roustabout                               A             14/14               1                    23
------------------------------------------------------------------------------------------------------------
Asst. Barge Engineer                     A             14/14               1                    51
------------------------------------------------------------------------------------------------------------
Ballast Control Opt.                     A             14/14               1                    34
------------------------------------------------------------------------------------------------------------
Asst. Ballast Control Opt.               A             14/14               1                    32
------------------------------------------------------------------------------------------------------------
Paint Foreman                            A             14/14               1                    28
------------------------------------------------------------------------------------------------------------
Painter                                  A             14/14               1                    23
------------------------------------------------------------------------------------------------------------
Radio Operator                           A             14/14               1                    28
------------------------------------------------------------------------------------------------------------
Safety Training Officer                  A             14/14               1                    57
------------------------------------------------------------------------------------------------------------
</TABLE>

Notes:

A - Azeri

NA - Non Azeri

*Payable for days worked and earned days off



--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  Page 13 of 14
<PAGE>   50

                                  EXHIBIT "5.3"
                                    RATES FOR

                   ADDITIONAL EQUIPMENT/MISCELLANEOUS CHARGES


<TABLE>
<CAPTION>
ITEM       DESCRIPTION                                               RATE CHARGE
----       -----------                                               -----------
<S>        <C>                                                       <C>
                                                                         US$/day

NONE
</TABLE>



--------------------------------------------------------------------------------
C-2000-AIOC-21467                                                  Page 14 of 14
<PAGE>   51

Santa Fe International Corporation undertakes, upon the request of the
Securities and Exchange Commission, to file the appendices to the foregoing
agreement that are not included in the filing.




--------------------------------------------------------------------------------