Exhibit 10.1
                                                                    ------------


                           BP Trinidad and Tobago LLC

                                    Contract




                                    SECTION 1

                                FORM OF AGREEMENT


<PAGE>

                                FORM OF AGREEMENT

HIRE OF A DRILLING UNIT

This Contract (CONTRACT) between BP TRINIDAD AND TOBAGO LLC, a company
incorporated in the State of Delaware and registered under the Companies Act,
1995 of the Laws of the Republic of Trinidad and Tobago (hereinafter referred to
as "OPERATOR"), and CHILES OFFSHORE INC. a company incorporated in the State of
Delaware (hereinafter referred to as "CONTRACTOR") is to engage the CONTRACTOR
to carry out drilling services (DRILLING SERVICES) in accordance with the
following terms and conditions.

OPERATOR enters into this Contract on behalf of itself and all participants in
the concession area (CO-VENTURERS) but notwithstanding this fact or anything
else in the CONTRACT to the contrary:

(a)      The CONTRACTOR agrees to look only to OPERATOR for the due performance
         of the CONTRACT and nothing herein contained shall impose any liability
         upon or entitle the CONTRACTOR to commence any proceedings against any
         of OPERATOR'S CO-VENTURERS.

(b)      OPERATOR shall be entitled to enforce the CONTRACT on behalf of its
         CO-VENTURERS as well as for OPERATOR and for this purpose OPERATOR and
         only OPERATOR may commence proceedings in its own name to enforce all
         obligations and liabilities of the CONTRACTOR under this CONTRACT and
         to make any claim which OPERATOR, its CO-VENTURERS may have against the
         CONTRACTOR.

1.       DOCUMENTS

         The CONTRACT shall comprise the following documents:

         1.1      This Contract Agreement
         1.2      Conditions of Contract (section 2 hereto)
         1.3      Contractor's Insurance (section 3 hereto)
         1.4      Statement of Requirements (section 4 hereto)
         1.5      Rates and Charges (section 5 hereto)
         1.6      Contractor's Personnel (section 6 hereto)
         1.7      Specification of Contractor's Equipment (section 7 hereto)

2.       DEFINITIONS

         In this Agreement words and expressions shall have the same meanings as
         are respectively assigned to them in the Conditions of Contract.

3.       THE SERVICES

         The Scope of the SERVICES shall be the provision of the DRILLING UNIT
         and DRILLING EQUIPMENT as more fully described in SECTION 7 hereto and
         PERSONNEL as more fully described in SECTION 6 hereto and providing
         services as more fully described in SECTION 4 hereto for the drilling
         of WELLS as more fully described in the documents hereto.


<PAGE>

                                                                       SECTION 1
                                                               FORM OF AGREEMENT
                                                                     PAGE 2 OF 5
================================================================================

4.       OPERATOR'S REPRESENTATIVE

         The OPERATOR'S REPRESENTATIVE shall be Jim Liebnitz, Manager, Well
         Operations

         BP Trinidad and Tobago LLC
         5 & 5A Queen's Park West
         Port of Spain
         Trinidad

         Tel No.         868 623-2862
         Fax No.         868 627-7878

5.       CONTRACTOR'S REPRESENTATIVE

         The CONTRACTOR'S REPRESENTATIVE shall be

                                    Mr. Chris Pinkard, Vice President
                                    Chiles Offshore Inc.
                                    11200 Richmond Avenue, Suite 490
                                    Houston, Texas 77082-2618
                                    Phone:           (713) 339-3777
                                    Fax:             (713) 339-3888

6.       DURATION OF THE CONTRACT

         6.1      Duration

                  Notwithstanding the date hereof the CONTRACT shall be deemed
                  to have come into effect on the date that the DRILLING UNIT is
                  under tight tow to Pascagoula, Mississippi to begin the Make
                  Ready Period as further described below and shall, subject to
                  OPERATOR'S rights of termination hereunder, continue until the
                  third anniversary of the Commencement Date subject to any
                  extensions pursuant to Clause 6.2 of this Section 1, and
                  subject to extension for any period necessary to complete any
                  WELL being drilled upon such anniversary.

         6.2      Options to Extend

                  The OPERATOR may, at its option, extend the term of the
                  CONTRACT by exercising up to two (2) one-year extensions, such
                  extensions to run consecutively with the preceding CONTRACT
                  term, subject to OPERATOR's rights of termination hereunder.
                  If OPERATOR elects to exercise the option for the first
                  one-year extension of the term of the CONTRACT, OPERATOR shall
                  give CONTRACTOR written notice of the exercise of such
                  extension option at least six (6) months prior to the third
                  anniversary of the Commencement Date. Upon CONTRACTOR's
                  receipt of such written notification, OPERATOR and CONTRACTOR
                  shall negotiate in good faith to determine the mutually
                  agreeable rates for the DRILLING UNIT that shall apply during
                  such one-year extension period. If OPERATOR and CONTRACTOR
                  reach a mutually acceptable agreement on such rates by the
                  date three (3) months after the date of such written notice by
                  OPERATOR of its exercise of the extension option, the term of
                  the CONTRACT shall be extended by one (1) year, and such
                  agreed rates shall apply in lieu of the rates previously
                  applicable to the CONTRACT. If OPERATOR and CONTRACTOR do not
                  reach a mutually acceptable agreement on such rates by the
                  date three (3) months after the date of such written notice by
                  OPERATOR of its exercise of the extension option, then there
                  shall be no extension of the term of this CONTRACT based on


                                       2
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                                                                       SECTION 1
                                                               FORM OF AGREEMENT
                                                                     PAGE 3 OF 5
================================================================================

                  the extension options granted to OPERATOR hereunder, and
                  CONTRACTOR shall be free to enter into agreements for the
                  utilization of the DRILLING UNIT for periods after the
                  expiration of the term of the CONTRACT.

                  If the CONTRACT term is extended by one (1) year pursuant to
                  the foregoing provision, then OPERATOR shall retain the option
                  to extend the term of the CONTRACT for the second one-year
                  option period. If OPERATOR elects to exercise such option for
                  the second one-year extension of the term of the CONTRACT,
                  OPERATOR shall give CONTRACTOR written notice of the exercise
                  of such extension option at least six (6) months prior to the
                  fourth anniversary of the Commencement Date. Upon CONTRACTOR's
                  receipt of such written notification, OPERATOR and CONTRACTOR
                  shall negotiate in good faith to determine the mutually
                  agreeable rates for the DRILLING UNIT that shall apply during
                  such one-year extension period. If OPERATOR and CONTRACTOR
                  reach a mutually acceptable agreement on such rates by the
                  date three (3) months after the date of such written notice by
                  OPERATOR of its exercise of the extension option, the term of
                  the CONTRACT shall be extended by one (1) year, and such
                  agreed rates shall apply in lieu of the rates previously
                  applicable to the CONTRACT. If OPERATOR and CONTRACTOR do not
                  reach a mutually acceptable agreement on such rates by the
                  date three (3) months after the date of such written notice by
                  OPERATOR of its exercise of the extension option, then there
                  shall be no extension of the term of this CONTRACT based on
                  the second one-year extension option granted to OPERATOR
                  hereunder, and CONTRACTOR shall be free to enter into
                  agreements for the utilization of the DRILLING UNIT for
                  periods after the expiration of the term of the CONTRACT.

         6.3      Make Ready Period

                  Upon completion of the tow of the DRILLING UNIT from the last
                  location in the U.S. Gulf of Mexico in Main Pass Block 300 to
                  Pascagoula, Mississippi, the DRILLING UNIT will undergo
                  certain modifications and equipment additions and changes as
                  set forth on the attached Schedule 6.3, at the expense of
                  CONTRACTOR. All cost for modifications and equipment additions
                  and changes as set forth on the attached Schedule 6.3 is
                  included in the Day Rates.

                   Any additions and changes requested by OPERATOR other than
                  those listed on the attached Schedule 6.3 shall be at
                  OPERATOR's expense, including the payment of the PROVISIONING
                  RATE for any delay in the departure of the DRILLING UNIT from
                  Pascagoula, Mississippi caused by such requested additions and
                  changes, beyond fourteen (14) days from the time the DRILLING
                  UNIT is jacked up dockside in Pascagoula, Mississippi.
                  OPERATOR and CONTRACTOR acknowledge and agree that the drill
                  pipe listed on the attached Schedule 6.3 is not scheduled to
                  arrive while the DRILLING UNIT is in Pascagoula, Mississippi,
                  and will be delivered to the DRILLING UNIT after it arrives in
                  the CONTRACT AREA. Due to the timing of the required start of
                  operations in CONTRACT AREA, the DRILLING UNIT must be removed
                  from service in the U.S. Gulf of Mexico at the end of the
                  current program in Main Pass Block 300, and CONTRACTOR must
                  make certain equipment purchase commitments.

                   Such Make Ready Period is anticipated to last fourteen (14)
                  days from the time that the DRILLING UNIT is jacked up
                  dockside in Pascagoula, Mississippi. If the departure of the
                  DRILLING UNIT is delayed beyond fourteen (14) days from the
                  start of such period due to the request of the OPERATOR for
                  additional modifications or additional changes requested by
                  OPERATOR, OPERATOR shall pay CONTRACTOR the PROVISIONING RATE
                  as stated in Section 5 of the CONTRACT for such period of
                  delay.



                                       3
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                                                                       SECTION 1
                                                               FORM OF AGREEMENT
                                                                     PAGE 4 OF 5
================================================================================

6.               RIG AUDIT

                 OPERATOR shall carry out an audit of the DRILLING UNIT in
                 Pascagoula, Mississippi. CONTRACTOR shall be required to
                 correct any deficiencies identified during the audit, at its
                 own costs and expenses, prior to the COMMENCEMENT DATE or as
                 otherwise agreed between CONTRACTOR and OPERATOR. All DRILLING
                 UNIT audit recommendations which would affect safe and
                 efficient operations must have been carried out or the
                 OPERATOR's REPRESENTATIVE and CONTRACTOR'S REPRESENTATIVE must
                 have mutually agreed in writing to a schedule for completion of
                 outstanding DRILLING UNIT audit recommendations.

7.               RIG ACCEPTANCE

                 OPERATOR shall conduct RIG ACCEPTANCE of the DRILLING UNIT
                 pursuant to OPERATOR's rig acceptance procedure, as soon as the
                 DRILLING UNIT has been pinned at the LOCATION. The period
                 commencing on the pinning of the DRILLING UNIT to the
                 completion of the RIG ACCEPTANCE exercise shall be charged at
                 the STANDBY RATE.

                 In the event that OPERATOR shall not accept the DRILLING UNIT
                 after the completion of the RIG ACCEPTANCE exercise, the
                 DRILLING UNIT will go on NIL Rate until the deficiencies
                 identified during the RIG ACCEPTANCE exercise have been
                 rectified to the satisfaction of OPERATOR.

8.       REMUNERATION

         In full consideration of the satisfactory performance of the Services
         set out in Clause 3 hereof the CONTRACTOR shall be paid as set out in
         SECTION 5 hereto. Such rates will be subject only to adjustments for
         documented changes, pursuant to Section 5, clause 5.7, in CONTRACTOR'S
         costs of operations in the CONTRACT AREA.

         Rates of payment for any extended term, which OPERATOR elects to
         exercise shall be mutually agreed upon as stated in sub-clause 6.2
         above.



                                       4
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                                                                       SECTION 1
                                                               FORM OF AGREEMENT
                                                                     PAGE 5 OF 5
================================================================================

9.       ACKNOWLEDGEMENT

         Kindly confirm acceptance of the terms of this Contract by signing and
returning the attached duplicate.

<TABLE>
<S>                                                        <C>
For BP TRINIDAD AND TOBAGO LLC


Signed:   /s/ ROBERT RILEY                                 Name            ROBERT RILEY
          ---------------------------------------                 --------------------------------------------
                                                                            (Block Capitals)

Position:  ASSOCIATE PRESIDENT & CHAIRMAN                  Date             7/24/01
          ---------------------------------------                 --------------------------------------------


Signed:   /s/ JIM LIEBNITZ                                 Name            JIM LIEBNITZ
          ---------------------------------------                 --------------------------------------------
                                                                            (Block Capitals)

Position:  WELL OPERATIONS MANAGER                         Date             7/24/01
           --------------------------------------                 ---------------------------------------------


Signed:   /s/ KATHLEEN CHARLES                             Name            KATHLEEN CHARLES
          ---------------------------------------                 --------------------------------------------
                                                                            (Block Capitals)

Position:  MANAGER, CONTRACTS                              Date             7/24/01
           --------------------------------------                 ---------------------------------------------



We confirm our acceptance of this CONTRACT.

For CHILES OFFSHORE INC.

Signed:   /s/ WILLIAM E. CHILES                            Name            WILLIAM E. CHILES
          ---------------------------------------                 --------------------------------------------
                                                                            (Block Capitals)

Position:  CHIEF EXECUTIVE OFFICER                         Date             7/24/01
           --------------------------------------                 ---------------------------------------------

</TABLE>


                                       5
<PAGE>

                                    SECTION 2

                             CONDITIONS OF CONTRACT



<PAGE>

                             CONDITIONS OF CONTRACT

                                    CONTENTS

CLAUSE 1.          DEFINITIONS                                              2
CLAUSE 2.          CARRY OUT DRILLING SERVICES                              3
CLAUSE 3.          TERMINATION                                              3
CLAUSE4.           ACCESS TO LOCATIONS                                      5
CLAUSE 5.          OPTIONAL RIGHTS OF THE OPERATOR IN THE EVENT OF
                   DEFAULT BY THE CONTRACTOR                                5
CLAUSE 6.          LIABILITIES AND INDEMNITIES                              8
CLAUSE.7.          CONTRACTOR'S INSURANCES                                 12
CLAUSE.8.          TAX INFORMATION AND INDEMNITY                           13
CLAUSE 9.          BANKRUPTCY OR LIQUIDATION                               15
CLAUSE 10.         FORCE MAJEURE                                           15
CLAUSE 11.         FREEDOM FROM LIENS                                      16
CLAUSE 12.         CONTRACTOR TO MAINTAIN REPRESENTATION                   16
CLAUSE 13.         GIVING OF NOTICES AND PAYMENT OF FEES                   17
CLAUSE 14.         CONFIDENTIAL INFORMATION                                17
CLAUSE 15.         PUBLICITY                                               17
CLAUSE 16.         ASSIGNMENT AND SUB-CONTRACTING                          17
CLAUSE 17.         APPLICATION OF LAWS AND REGULATIONS                     18
CLAUSE 18.         SERVING OF NOTICES                                      18
CLAUSE 19.         VARIATION AND WAIVER                                    18
CLAUSE 20.         INDEPENDENT CONTRACTOR RELATIONSHIP                     19
CLAUSE 21.         INFRINGEMENT OF PATENTS                                 19
CLAUSE 22.         PERMITS AND LICENCES                                    19
CLAUSE 23.         APPLICABLE LAW                                          19
CLAUSE 24.         ARBITRATION                                             20
CLAUSE 25.         EXCLUSION OF PREVIOUS CORRESPONDENCE                    20
CLAUSE 26.         AUDIT                                                   20
CLAUSE 27.        SEVERABILITY



<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 2 OF 22
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                             CONDITIONS OF CONTRACT

CLAUSE 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    "AFFILIATE" as applied to OPERATOR shall mean and include
                      BP Trinidad and Tobago LLC and any company which is
                      directly or indirectly controlled by BP Trinidad and
                      Tobago LLC. "Affiliate" as applied to CONTRACTOR shall
                      include Chiles Offshore Inc. and any company, which is
                      directly or indirectly controlled by Chiles Offshore Inc.
                      Control means the ownership directly or indirectly of more
                      than fifty (50) percent of the voting rights in a company,
                      partnership or legal entity.

               1.2    "AGENCY" means any agency, authority, department, court,
                      government, legislature, minister, ministry, official, or
                      public person (whether autonomous or not) of the Republic
                      of Trinidad and Tobago, the United States of America and
                      any other nation, state, jurisdiction, supernational
                      organisation or any political subdivision of the
                      foregoing;

               1.3    "CERTIFICATION" shall mean the ABS Maltese Cross A-1 Self
                      Elevating Drilling Unit.

               1.4    The "COMMENCEMENT DATE" shall mean the date on which the
                      DRILLING UNIT is pinned on the first LOCATION in the
                      CONTRACT AREA and the OPERATOR provided RIG ACCEPTANCE.

               1.5    "COMPLETION DATE" shall mean the date when the DRILLING
                      UNIT has completed the last WELL and all OPERATOR'S
                      MATERIAL'S and SERVICE COMPANY EQUIPMENT has been
                      offloaded and the DRILLING UNIT has been towed to the
                      mutually agreed on port in Trinidad.

               1.6    "CONTRACT" shall mean all those documents forming the
                      Contract as stated in Clause 1 of the Contract Agreement.

               1.7    The "CONTRACT AREA" shall mean the OPERATOR'S concession
                      areas offshore the east coast of the Republic of Trinidad
                      and Tobago (Block 27) and any onshore area used in
                      association therewith, or other areas agreed between the
                      parties.

               1.8    The "CONTRACT  DEPTH" shall mean the DEPTH to which the
                      CONTRACTOR  may be required to carry out the DRILLING
                      SERVICES.

               1.9    The "CONTRACTOR'S EQUIPMENT" shall mean the Drilling Unit
                      (as hereinafter defined) together with all the drilling
                      and associated equipment listed in SECTION 7 Group 2
                      (hereinafter referred to as the "DRILLING EQUIPMENT")
                      together with the CONTRACTOR'S stock of spare parts.

               1.10   The "CONTRACTOR'S PERSONNEL" or "its PERSONNEL" shall mean
                      the CONTRACTOR'S labour and supervisory personnel listed
                      in SECTION 6.

               1.11   "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
                      Licence Block in which the CONTRACTOR may be required to
                      perform the DRILLING SERVICES.



                                       2
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 3 OF 22
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               1.12   "DEMOBILISATION" shall mean the period of time after the
                      DRILLING UNIT has been moved to a mutually agreed port in
                      Trinidad and all of OPERATOR'S and SERVICE COMPANY's
                      materials have been offloaded.

               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.

               1.14   The "DRILLING SERVICES" shall mean the operations as
                      defined in SECTION 4.

               1.15   The "DRILLING UNIT" shall mean the vessel as specified in
                      SECTION 7 - Group 1.

               1.16   "EFFECTIVE DATE" shall mean the point in time that the
                      DRILLING UNIT is under tight tow to Pascagoula,
                      Mississippi to begin the Make Ready Period.

               1.17   LAW" means any treaty, statute, law, directive, by-law,
                      rule, order, decree, regulation, injunction, license,
                      permit, approval, agreement or delegated legislation in
                      each case of any Agency;

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

               1.19   "MOBILISATION" shall mean the period of time from when the
                      DRILLING UNIT is under tight tow to Pascagoula,
                      Mississippi, until the Make Ready Period has been
                      completed, and until the COMMENCEMENT DATE.

               1.20   "MONTH" shall mean a calendar month.

               1.21   "OPERATOR" shall mean BP TRINIDAD AND TOBAGO LLC or any
                      subsidiary thereof and also any reference to "OPERATOR" in
                      this CONTRACT shall also include OPERATOR'S AFFILIATES and
                      CO-VENTURERS.

               1.22   "OPERATOR'S MATERIALS" shall mean the equipment,
                      materials, services and supplies to be provided by the
                      OPERATOR.

               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.

               1.24   "RIG ACCEPTANCE" shall mean that the OPERATOR'S
                      REPRESENTATIVE certifies in writing on the IADC-API
                      Official Daily Drilling Report Form that the CONTRACTOR'S
                      EQUIPMENT is acceptable to commence the DRILLING SERVICES

               1.25   "RIG STAFF" shall mean the Rig Manager, Assistant Rig
                      Manager (if any), Toolpushers, Tour Pushers (if any),
                      Drillers and Assistant Drillers of the CONTRACTOR'S
                      PERSONNEL.

               1.26   The "SERVICE COMPANIES" shall mean the contractors
                      (including their servants and agents) hired by the
                      OPERATOR and providing miscellaneous services in
                      conjunction with the DRILLING SERVICES.

               1.27   The "SUB-CONTRACTORS" shall mean the contractors approved
                      by the OPERATOR and hired by the CONTRACTOR for any
                      services in conjunction with the DRILLING SERVICES.



                                       3
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 4 OF 22
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               1.28   "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.

               1.29   "THIRD PARTY" shall for the avoidance of doubt, mean those
                      parties excluding CONTRACTOR, SERVICE COMPANIES, OPERATOR,
                      or SUB-CONTRACTORS.

               1.30   "TRINIDAD" means the Republic of Trinidad and Tobago.

                      Words importing the singular only also include the plural
                      and vice versa where the context requires.

                      The headings in these CONDITIONS OF CONTRACT shall not be
                      deemed to be part thereof or be taken into consideration
                      of construction thereof or of the CONTRACT.

                      In the event of any conflict between this Section 2 and
                      any of the other Sections of this CONTRACT, the provisions
                      of this Section 2 shall prevail.

         CLAUSE 2.    CARRY OUT DRILLING SERVICES

                      The CONTRACTOR shall carry out the DRILLING SERVICES
                      according to the specifications and instructions issued
                      from time to time by the OPERATOR consistent with the
                      terms of the CONTRACT.

         CLAUSE 3.    TERMINATION

               3.1    Termination upon Loss of or Damage to the DRILLING UNIT

                      i.   The CONTRACT shall be terminated upon the total loss
                           (as hereinafter defined) of the DRILLING UNIT, as
                           certified by a mutually acceptable independent marine
                           surveyor of the calibre of Noble Denton or Matthew
                           Daniel. The surveyor shall be retained by and at the
                           expense of the CONTRACTOR. Termination of the
                           CONTRACT shall be at the date and time of such
                           determination by such marine surveyor or the date of
                           such compromised or arranged total loss.

                           In the context of this sub-clause 3.1(i) "total loss"
                           shall mean an actual, constructive, compromised or
                           arranged total loss of the DRILLING UNIT.

                      ii.  The CONTRACT shall be terminated if the DRILLING UNIT
                           shall suffer damage that renders it incapable of
                           continuing operations within one (1) month of
                           suffering such damage, as certified by a mutually
                           acceptable independent marine surveyor of the calibre
                           of Noble Denton or Matthew Daniel. The surveyor shall
                           be retained by and at the expense of the CONTRACTOR.
                           Termination of the CONTRACT shall be at the date and
                           time of such determination by such marine surveyor.

               3.2    Failure to keep CONTRACTOR'S EQUIPMENT in CERTIFICATION

                      OPERATOR shall have the right to terminate the CONTRACT:

                      (i)    forthwith if the CONTRACTOR fails to comply with
                             the requirements of sub-clause 4.2 of SECTION 4.



                                       4
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 5 OF 22
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                      (ii)   by giving the CONTRACTOR seven days written notice
                             after 10 days of expiry of CERTIFICATION if the
                             CONTRACTOR has not commenced action to restore
                             same.

                      (iii)  by giving the CONTRACTOR seven days written notice
                             after 30 days of expiry of CERTIFICATION if the
                             DRILLING UNIT has not been re-certified.

            3.3      Termination upon expiry of the Term

                     Subject to the termination rights of OPERATOR, this
                     CONTRACT shall terminate on the COMPLETION DATE, subject to
                     the DEMOBILISATION obligations of OPERATOR. OPERATOR shall
                     furnish towing vessels and related services, and pay the
                     MOVING RATE to move the DRILLING UNIT to the mutually
                     agreed port and to pay the lump-sum DEMOBILISATION CHARGE
                     as described herein.

                     The OPERATOR shall be relieved from its obligation to pay
                     the DEMOBILISATION CHARGE if the DRILLING UNIT is under
                     contract to a third party to commence work for such third
                     party in the waters of Trinidad and Tobago, or if a third
                     party is paying for mobilization of the DRILLING UNIT from
                     the waters of Trinidad and Tobago. In such event, the
                     CONTRACT shall terminate when the OPERATOR's and SERVICE
                     COMPANY's materials are offloaded and the DRILLING UNIT is
                     under tight tow to the third party location. In such event,
                     CONTRACTOR shall furnish towing vessels and related
                     services to take the DRILLING UNIT to its new location.

             3.4      Termination Without Cause

                      Commencing six (6) months from the COMMENCEMENT DATE,
                      OPERATOR may terminate the CONTRACT without cause after
                      six (6) month's written notice to CONTRACTOR. Should
                      OPERATOR terminate the CONTRACT without cause, and not
                      pursuant to Clause 3.1 or 3.2 of hereof or the default of
                      the CONTRACTOR with regard to unsatisfactory performance,
                      failure to provide equipment, breach of CONTRACT,
                      requisition, liquidation or insolvency, all as described
                      in clause 5 hereof, or force majeure as described in
                      clause 10 hereof, the OPERATOR will reimburse the
                      CONTRACTOR as follows:

                      The DEMOBILIZATION CHARGE (if applicable), plus 60% of the
                      OPERATING RATE for the remaining balance of the term of
                      the CONTRACT that has not been utilised, and the
                      unamortized portion of the Make Ready additions and
                      changes described on Schedule 6.3, based on the "BP
                      Amortized Amount" set forth on Schedule 6.3. The CONTRACT
                      shall terminate upon CONTRACTOR's receipt of payment of
                      such amounts from OPERATOR.



                      For example, if OPERATOR gives written notice to
                      CONTRACTOR eighteen (18) months after the COMMENCEMENT
                      DATE that the CONTRACT will terminate twenty-four (24)
                      months after the COMMENCEMENT DATE, then the OPERATOR
                      would pay to CONTRACTOR (i) $2,800,000 for the
                      DEMOBILIZATION CHARGE, (ii) $15,987,000 (60% of the
                      OPERATING RATE of $73,000 for the then remaining 365 days
                      of the term of the CONTRACT), and (iii) $551,008 for
                      OPERATOR's share of the unamortized amount of the Make
                      Ready additions pursuant to Schedule 6.3 (such amounts are
                      exclusive of any applicable VAT payable by OPERATOR).




                                       5
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 6 OF 22
================================================================================


         CLAUSE 4.    ACCESS TO LOCATIONS

                      The OPERATOR shall secure for the CONTRACTOR and its
                      SUB-CONTRACTORS rights of access to and from LOCATIONS.
                      The OPERATOR shall use its best endeavours to advise the
                      CONTRACTOR of any limitations, restriction or conditions,
                      which may affect such access, and the CONTRACTOR shall
                      abide by such limitations, restrictions and conditions as
                      aforesaid.

                      OPERATOR shall be responsible for selecting, marking and
                      clearing drilling LOCATIONS, for providing proper and
                      sufficient certificates, permits or permission necessary
                      to enter upon and operate on the LOCATIONS, and for
                      notifying CONTRACTOR of any impediments or hazards to
                      operations at each LOCATION or within the anchor pattern,
                      including, without limitation, any pipelines, cables,
                      boulders, mud filled depressions or faulty bottom
                      conditions in the area. OPERATOR also shall provide
                      CONTRACTOR with soil and sea bottom condition surveys at
                      each LOCATION adequate to satisfy CONTRACTOR's marine
                      surveyor. In the event the DRILLING UNIT is used over a
                      platform, all surveys to determine the structural
                      integrity of the platform will be the responsibility of
                      OPERATOR.

                      Should seabed conditions be unsatisfactory to properly
                      support or moor the DRILLING UNIT upon arrival at the
                      LOCATION, OPERATOR shall continue to pay CONTRACTOR the
                      STANDBY RATE set forth in Schedule 5.1 to Section 5 of
                      this CONTRACT, until seabed conditions are ultimately
                      remedied. All expenses associated with improvements to the
                      seabed and repositioning of the DRILLING UNIT at the
                      LOCATION shall be for OPERATOR's account.

                      Notwithstanding any other provision of this CONTRACT,
                      except in the event of CONTRACTOR'S negligence, should
                      there be obstructions at or within the area of the
                      LOCATION, including the anchor pattern, or faulty bottom
                      conditions, which have not been identified by OPERATOR and
                      these obstructions or faulty bottom conditions damage
                      CONTRACTOR'S EQUIPMENT, or CONTRACTOR'S EQUIPMENT damages
                      these obstructions, or if seabed conditions prove
                      unsatisfactory to properly support or moor the DRILLING
                      UNIT during operations hereunder, OPERATOR will be
                      responsible for and indemnify and hold harmless CONTRACTOR
                      for all resulting damages, including, without limitation,
                      payment of the STANDBY RATE during required repairs, but
                      OPERATOR will receive credit for any physical damage
                      insurance proceeds received by CONTRACTOR as a result of
                      any damage to the DRILLING UNIT


         CLAUSE 5.    OPTIONAL RIGHTS OF THE OPERATOR IN THE EVENT OF DEFAULT BY
                      THE CONTRACTOR

               5.1    Unsatisfactory performance by the CONTRACTOR

                      In the event that the OPERATOR is dissatisfied with the
                      performance of the CONTRACTOR hereunder on account of
                      sustained, unreasonably slow progress or for demonstrated
                      incompetency as a result of causes reasonably within the
                      CONTRACTOR'S control, including, without limitation, time
                      lost from lack of crews, stores, or poorly maintained
                      equipment, or failure to observe safe operating practices,
                      the OPERATOR shall notify the CONTRACTOR in writing with
                      specificity as to the cause of its dissatisfaction. Should
                      the CONTRACTOR fail to demonstrate to the OPERATOR'S
                      satisfaction that it has taken measures to remedy the
                      matters so specified within a period of not more than
                      seven (7) days, the OPERATOR shall have the right to
                      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 the
                      case of events requiring replacement of parts or
                      equipment, CONTRACTOR shall be allowed a reasonable time


                                       6
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 7 OF 22
================================================================================


                      for transit of materials and clearances through customs,
                      subject to OPERATOR's payment obligations pursuant to
                      Clause 5.3 of Section 5. No further payments shall be due
                      to the CONTRACTOR other than those outstanding for work
                      done prior to the said termination and the DEMOBILISATION
                      CHARGE.

            5.2       CONTRACTOR'S failure to perform its obligations or to
                      provide the CONTRACTOR'S EQUIPMENT

                      In the event of the CONTRACTOR'S continuous failure to
                      perform any of its obligations or to provide any of the
                      CONTRACTOR'S EQUIPMENT or in the event that the CONTRACTOR
                      fails to demonstrate that the CONTRACTOR'S EQUIPMENT is
                      capable of meeting the manufacturer's rating for such
                      equipment for sustained operations, in each case so as to
                      jeopardize the integrity of the well bore or which results
                      in unreasonably slow progress, the OPERATOR shall notify
                      the CONTRACTOR in writing specifying the deficiencies of
                      CONTRACTOR's performance or such CONTRACTOR'S EQUIPMENT
                      which the CONTRACTOR has so failed to provide or for which
                      CONTRACTOR has failed to demonstrate that such
                      CONTRACTOR'S EQUIPMENT is capable of meeting the
                      manufacturer's rating for such equipment for sustained
                      operations, and immediately thereafter the OPERATOR shall
                      have the right to exercise one of the following options:-

                      (a)    To 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:

                             (i)    at the REPAIR RATE in accordance with
                                    SECTION 5 hereof provided the shutdown is
                                    due to an abnormal failure of a component of
                                    CONTRACTOR'S EQUIPMENT. An abnormal failure
                                    is defined as being a failure, which is not
                                    due to a lack of proper maintenance, by the
                                    CONTRACTOR.

                             (ii)   at NIL rate if the shutdown is due to lack
                                    of proper maintenance by the CONTRACTOR.

                             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 twenty-one (21) days.

                             In such event the OPERATOR shall not be liable for
                             any further payments to the CONTRACTOR, other than
                             those outstanding for work done prior to the said
                             termination and the DEMOBILISATION CHARGE.

                       (b)   To hire from the nearest available source
                             satisfactory to the OPERATOR all such equipment as
                             may be required to complete essential operations:

                             (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 any sustained failure of the
                                    DRILLING EQUIPMENT or any part thereof that
                                    CONTRACTOR cannot demonstrate that it can
                                    meet manufacturer's specifications for
                                    sustained operations, until the CONTRACTOR


                                       7
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 8 OF 22
================================================================================


                                    can demonstrate to the OPERATOR that the
                                    said equipment or part thereof can meet the
                                    said manufacturer's specifications for
                                    sustained operations.

                                    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.

               5.3    Breach of the CONTRACT by the CONTRACTOR

                      Subject to other provisions in the CONTRACT, in the event
                      of a material breach by the CONTRACTOR of any of the terms
                      and conditions of the CONTRACT, the OPERATOR shall have
                      the right to give written notice to the CONTRACTOR
                      specifying such breach and calling upon the CONTRACTOR to
                      remedy the breach forthwith and the CONTRACTOR shall not
                      be entitled to payment for work performed in making good
                      the breach. If after receipt of such notice the CONTRACTOR
                      does not remedy such breach within a reasonable period
                      (which period the OPERATOR shall advise in the aforesaid
                      written notice and which shall take into account the
                      nature of the breach), but in no event less than ten (10)
                      days, then the OPERATOR may at its own option adopt one of
                      the following provisions:

                      (i)      terminate the CONTRACT as soon as is practicable
                               on expiry of the said period. After such
                               termination the OPERATOR shall not be liable for
                               any payments to the CONTRACTOR other than those
                               outstanding for work done prior to the said
                               termination and the DEMOBILISATION CHARGE.

                      (ii)     in the event the OPERATOR does not wish to
                               terminate pursuant to (i) above, OPERATOR may
                               instruct the CONTRACTOR to shut down the
                               CONTRACTOR'S EQUIPMENT and the OPERATOR shall pay
                               the CONTRACTOR at SHUTDOWN WITH CREW RATE for
                               such period as OPERATOR requires from the date of
                               such shutdown and thereafter apply the provisions
                               of (i) of this sub-clause.

         CLAUSE 6.    LIABILITIES AND INDEMNITIES

               6.1    The CONTRACTOR'S EQUIPMENT

                      (a)    The CONTRACTOR shall indemnify the OPERATOR and the
                             SERVICE COMPANIES and hold the OPERATOR and the
                             SERVICE COMPANIES harmless from and against any and
                             all liability for loss, damage or destruction of
                             the CONTRACTOR'S EQUIPMENT whether arising out of
                             the CONTRACT or in tort, and against all claims,
                             demands, proceedings and causes of action resulting
                             therefrom, regardless of how such loss, damage or
                             destruction occurs, notwithstanding that such loss
                             or damage as aforesaid may have been due to the
                             negligence of the OPERATOR or its SERVICE COMPANIES
                             and its or their personnel or agents excepting only
                             CONTRACTOR's EQUIPMENT below the rotary table as
                             stated in sub-clause 6.1(b) below.

                      (b)    The OPERATOR shall assume liability at all times
                             during the DRILLING SERVICES for loss of or damage
                             to the CONTRACTOR'S equipment below the rotary
                             table except fair wear and tear. Notwithstanding
                             anything in the CONTRACT to the contrary, 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


                                       8
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 9 OF 22
================================================================================


                             replacement on-site cost less depreciation or the
                             repair cost, provided that such equipment and the
                             operation during which or as a result of which the
                             said equipment has been lost or damaged as
                             aforesaid has been approved by the OPERATOR'S
                             REPRESENTATIVE prior to such operation and unless
                             such loss or damage is due to the negligence and/or
                             default of the CONTRACTOR, its SUB-CONTRACTORS or
                             the PERSONNEL or agents of the CONTRACTOR in
                             conducting the operation at that time.

                             Depreciation shall be calculated monthly from the
                             original purchase date and price at one (1) percent
                             per month, but not to exceed 50% of the current
                             replacement cost. Reimbursement shall be reduced by
                             any amount recovered by CONTRACTOR through
                             insurance, which CONTRACTOR shall diligently seek
                             to recover.

               6.2    The OPERATOR'S MATERIALS

                      (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 the SERVICE COMPANIES
                             while in the custody of the CONTRACTOR. Subject to
                             sub clause 6.2(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 properly consumed, in
                             the same condition as when handed to the CONTRACTOR
                             fair wear and tear excepted.

                      (b)    The CONTRACTOR shall not be liable to the OPERATOR
                             for any loss of or damage to items of the
                             OPERATOR'S MATERIALS except that caused by the
                             negligence or default of the CONTRACTOR its
                             personnel or agents or the SUB-CONTRACTORS or their
                             personnel or agents, while in the custody of the
                             CONTRACTOR.

               6.3    Personnel and Property

                      (a)    Subject always to subclauses 6.5(a), 6.5(b)(ii) and
                             (iii), and 6.5(c), the CONTRACTOR shall indemnify
                             the OPERATOR and hold the OPERATOR harmless from
                             and against any and all liability for sickness,
                             injury or death of any THIRD PARTY person or the
                             loss of or damage to any THIRD PARTY property and
                             against all claims, demands, proceedings and causes
                             of action resulting therefrom due to any negligent
                             act or default on the part of the CONTRACTOR, its
                             SUB-CONTRACTORS or its or their personnel or agents
                             in the performance of any of its obligations
                             hereunder or otherwise arising in connection with
                             the CONTRACT.

                      (b)    The CONTRACTOR shall indemnify the OPERATOR and the
                             SERVICE COMPANIES and hold the OPERATOR and the
                             SERVICE COMPANIES harmless from and against any and
                             all liability for loss of or damage to property of
                             or in the possession and control of the
                             CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S
                             personnel and against any and all liability for
                             sickness, injury or death to any of the
                             CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S
                             personnel arising out of the CONTRACT or in tort
                             and against all claims, demands, proceedings and
                             causes of action resulting therefrom
                             notwithstanding that such loss or damage to such
                             property or sickness, injury or death to the
                             personnel as aforesaid may have been due to the
                             negligence or default of the OPERATOR or its
                             personnel or agents or the SERVICE COMPANIES or
                             their personnel or agents.



                                       9
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                    PAGE 3 OF 22
================================================================================


                      (c)    The OPERATOR shall indemnify the CONTRACTOR and
                             hold the CONTRACTOR harmless from and against any
                             and all liability for loss of or damage to property
                             of or in the possession and control of the
                             OPERATOR'S personnel or SERVICE COMPANY personnel
                             and against any and all liability for sickness,
                             injury, or death to any of the OPERATOR'S personnel
                             or SERVICE COMPANY personnel arising out of the
                             CONTRACT or in tort and against all claims,
                             demands, proceedings and causes of action resulting
                             therefrom notwithstanding that such loss or damage
                             to such property or sickness, injury or death to
                             the personnel as aforesaid may have been due to the
                             negligence or default of the CONTRACTOR or its
                             PERSONNEL or agents or the SUB-CONTRACTORS or their
                             personnel or agents or the SERVICE COMPANIES or
                             their personnel or agents..

                      (d)    The OPERATOR shall indemnify the CONTRACTOR and
                             hold the CONTRACTOR harmless from and against any
                             and all liability for sickness, injury or death of
                             any THIRD PARTY person or the loss of or damage to
                             any THIRD PARTY property and against all claims,
                             demands, proceedings and causes of action resulting
                             therefrom due to any negligent act or default on
                             the part of the OPERATOR, its SERVICE COMPANIES, or
                             its or their personnel or agents in the performance
                             of any of its obligations hereunder or otherwise
                             arising in connection with the CONTRACT.

               6.4    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 negligence
                      of the CONTRACTOR, its personnel or agents 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 in accordance
                      with the terms of the CONTRACT. Except for the foregoing
                      obligation of CONTRACTOR, and notwithstanding anything
                      else in this CONTRACT to the contrary, CONTRACTOR shall
                      not be liable for damage to or loss of the WELL.

               6.5    Underground Damage and Control of Blowout and Pollution

                      (a)    Reservoir Damage

                             Notwithstanding anything in the CONTRACT to the
                             contrary, the OPERATOR shall indemnify and hold the
                             CONTRACTOR harmless 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
                             sea-bed, and for any loss or damage to any
                             formation strata or reservoir beneath the seabed
                             resulting from operations under the CONTRACT. The
                             CONTRACTOR shall not make any payment due hereunder
                             without prior approval from the OPERATOR.

                      (b)    Pollution

                             (i)    Notwithstanding anything in the CONTRACT to
                                    the contrary, the CONTRACTOR shall assume
                                    all responsibility for, including control
                                    and removal of, and hold the OPERATOR
                                    harmless from, loss or damage originating
                                    from the DRILLING UNIT arising from
                                    pollution or contamination from, by way of
                                    example, spills of fuels, drilling fluids


                                       10
<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 11 OF 22
================================================================================


                                    (except as provide for under Clause 6.5
                                    (b)(iii), lubricants, motor oils, pipe dope,
                                    paints, solvents, ballast, bilge and garbage
                                    wholly in the CONTRACTOR'S or its
                                    SUB-CONTRACTOR'S possession and control.

                             (ii)   Except as provided in (i) of this
                                    sub-clause, and notwithstanding anything in
                                    the CONTRACT to the contrary, the OPERATOR
                                    shall assume all responsibility for
                                    pollution, including control and removal of
                                    pollution or contamination, which may result
                                    from fire, blowout, cratering, seepage, or
                                    any other uncontrolled flow of oil, gas,
                                    wastes or other substance from any WELL
                                    arising out of the CONTRACT, or which may
                                    emanate from any platform, pipeline or other
                                    equipment or facility owned or operated by
                                    the OPERATOR, and the OPERATOR shall
                                    indemnify and hold harmless the CONTRACTOR
                                    from and against any and all claims,
                                    demands, proceedings and causes of action
                                    from any party under this CONTRACT or any
                                    THIRD PARTY (including, without limitation,
                                    any AGENCY) resulting from or connected with
                                    the above.

                             (iii)  The OPERATOR shall further assume all
                                    responsibility for any pollution or
                                    contamination arising from the use or
                                    disposal of oil emulsion, oil based or
                                    chemically treated drilling fluids,
                                    contaminated cuttings and cavings, lost
                                    circulation materials and fluids as well as
                                    the furnishing, transportation and disposal
                                    or containerisation of any materials when
                                    such are required unless caused by the
                                    negligence of the CONTRACTOR, or its
                                    SUB-CONTRACTORS or its or their personnel or
                                    agents.

                             (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
                                    e-mail to the OPERATOR within twelve (12)
                                    hours of the event.

                      (c)    Notwithstanding anything in this CONTRACT to the
                             contrary, OPERATOR shall be solely responsible for,
                             and indemnify and hold harmless CONTRACTOR from and
                             against, all costs of regaining control of any wild
                             well.

               6.6    Sunken Property

                      When required by law or governmental authority or when
                      CONTRACTOR'S sunken property interferes with present or
                      future operations of the OPERATOR, the CONTRACTOR shall at
                      its own expense raise and remove the DRILLING UNIT and any
                      property of the CONTRACTOR or its SUB- CONTRACTORS 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 and OPERATOR notwithstanding the
                      termination of the CONTRACT for any reason.

               6.7    Consequential Damages

                      Notwithstanding any other provision in the CONTRACT in no
                      event shall the CONTRACTOR, SERVICE COMPANIES or OPERATOR
                      or its CO-VENTURERS in the CONTRACT AREA be liable one to
                      the other for any consequential damages which may be
                      suffered by any or all parties in connection with the


                                       11
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 12 OF 22
================================================================================


                      performance of or otherwise arising under the CONTRACT
                      notwithstanding that such consequential damages may have
                      been due to the negligence of any of the parties
                      aforesaid. Consequential damages shall mean, but not by
                      way of limitation, loss of profits, loss of production or
                      business interruption.

                6.8   Notwithstanding anything to the contrary contained in sub
                      clauses 6.1 to 6.7 inclusive, it is clearly understood
                      between all parties that the CONTRACTOR only provides the
                      above indemnities in respect of SERVICE COMPANIES and
                      likewise OPERATOR only provides indemnities in respect of
                      SERVICE COMPANIES on the express understanding that
                      SERVICE COMPANIES provide reciprocal indemnities to
                      CONTRACTOR as contained in the SERVICE COMPANIES contracts
                      with OPERATOR.

                6.9   The rights of CONTRACTOR and of OPERATOR under this Clause
                      6 shall extend to their respective Affiliates and
                      employees and employees of their respective Affiliates.

                6.10  The rights and obligations under this Clause 6 shall
                      continue notwithstanding the completion or termination of
                      the work under this CONTRACT.

         CLAUSE.7.    CONTRACTOR'S INSURANCES

               7.1    The CONTRACTOR shall take out and maintain appropriate
                      first class insurance with respect to its liabilities
                      assumed and indemnities given under the CONTRACT and as
                      specifically required in SECTION 3 hereof. All such
                      policies shall contain waivers of rights of subrogation
                      against the OPERATOR, its CO-VENTURERS, AFFILIATES and the
                      SERVICE COMPANIES.

                      The CONTRACTOR shall give the OPERATOR thirty days written
                      notice of any proposed material change in any policy.

               7.2    The CONTRACTOR shall extend to the OPERATOR, its
                      CO-VENTURERS and the SERVICE COMPANIES the benefit of any
                      Hull and Machinery insurance cover, which may exist under
                      the CONTRACTOR'S insurance provisions.

               7.3    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.

              7.4     CONTRACTOR shall require its SUB-CONTRACTORS to
                      obtain, maintain and keep in force during the time in
                      which they are engaged in performing any work hereunder,
                      insurance coverage acceptable to CONTRACTOR and furnish
                      CONTRACTOR acceptable evidence of such insurance.
                      CONTRACTOR shall require all insurance policies carried by
                      the SUB-CONTRACTOR to contained endorsements waiving
                      insurer's rights of subrogation against the OPERATOR, its
                      CO-VENTURERS, AFFILIATES and the SERVICE COMPANIES.

         CLAUSE.8.    TAX INFORMATION AND INDEMNITY

              8.1     CONTRACTOR shall be responsible for, and shall hold
                      OPERATOR harmless from the reporting, filing and payment
                      of any taxes (wherever and whenever arising), duties,
                      charges or fees (and any related fines, penalties, or
                      interest) imposed (except as provided in Section 8.2


                                       12
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 13 OF 22
================================================================================


                      herein) directly or indirectly on CONTRACTOR or its
                      SUB-CONTRACTORS, shareholder(s), employees, agents or
                      servants as a result of CONTRACTOR's performance under
                      this CONTRACT in all jurisdictions. OPERATOR may withhold
                      from sums otherwise due CONTRACTOR under this Contract any
                      taxes or amounts required by applicable law to be withheld
                      and paid to the appropriate taxing authorities and,
                      OPERATOR shall provide CONTRACTOR with all receipts
                      evidencing the payment to such authorities of the taxes or
                      amounts so withheld.

              8.2     The payments provided for pursuant to Section 5 are
                      exclusive of any value added taxes or sales/service taxes
                      which may be imposed on such payments by the taxing
                      authorities having jurisdiction. Subject to OPERATOR's
                      right to verify that CONTRACTOR and its SUB-CONTRACTORS
                      are registered in accordance with the appropriate section
                      of the Trinidad and Tobago Value Added Tax Act; and the
                      right to verify that such taxes apply to the payments made
                      hereunder, and subject to OPERATOR's right to verify
                      CONTRACTOR's payment of such taxes to the appropriate
                      taxing authorities, OPERATOR shall pay CONTRACTOR the
                      amount of such taxes upon receipt of invoice, including
                      the amount of such taxes, which invoice is issued in
                      compliance with the applicable tax laws. CONTRACTOR shall
                      use its best efforts to avail itself of any and all
                      exemptions from and/or reductions of such taxes.

              8.3     CONTRACTOR shall comply and shall use reasonable efforts
                      to ensure that all SUB-CONTRACTORS comply, with all legal
                      contractual and administrative requirements in relation to
                      their status and presence in Trinidad, including, without
                      limitation, registration for corporation tax and value
                      added tax purposes. For the avoidance of doubt, CONTRACTOR
                      will be registered for corporation tax and value added tax
                      under the appropriate sections of the Government of the
                      Republic of Trinidad and Tobago Income Tax Act and/or
                      Corporation Tax Act and Value Added Tax Act for the
                      duration of this CONTRACT and will provide OPERATOR
                      satisfactory evidence to that effect. CONTRACTOR shall
                      indemnify and hold harmless OPERATOR for any failure by it
                      or its SUB-CONTRACTORS to comply with the requirements of
                      this clause.

              8.4     For all personnel of CONTRACTOR and its SUB-CONTRACTORS,
                      and all local personnel directly employed by CONTRACTOR
                      and its SUB-CONTRACTORS in Trinidad in connection with
                      CONTRACTOR's performance under this Contract, personal
                      income tax obligations, including withholding tax, shall
                      be the responsibility of CONTRACTOR. CONTRACTOR shall
                      indemnify and hold OPERATOR harmless from any failure by
                      it or its SUB-CONTRACTORS to calculate and collect this
                      income tax and pay it directly to the applicable
                      authorities. In no instance shall such personnel be
                      considered to be employees of OPERATOR.

              8.5     Any fines, interest, penalties or other costs incurred by
                      CONTRACTOR or its agents, employees or SUB-CONTRACTORS for
                      non-compliance by CONTRACTOR, its agents, employees or
                      SUB-CONTRACTORS with the requirement of any LAWS shall be
                      the sole responsibility of CONTRACTOR.

              8.6     CONTRACTOR shall indemnify OPERATOR against any and all
                      costs including fines, interest, penalties and reasonable
                      legal costs suffered or incurred by OPERATOR and resulting
                      from CONTRACTOR's failure to comply with relevant taxation
                      and import or custom duty requirements.

              8.7     CONTRACTOR shall be liable for and shall indemnify and
                      hold harmless OPERATOR against any taxes, duties, levies,
                      charges, and/or fees assessed in connection with the
                      importation, sale or disposition of assets of CONTRACTOR,
                      or assets of any SUB-CONTRACTOR and for the failure to
                      export such previously imported assets or the assets of
                      any SUB-CONTRACTOR following the conclusion of the work to
                      be performed under this Contract. OPERATOR shall not be


                                       13
<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 12 OF 22
================================================================================


                      liable and OPERATOR shall not reimburse CONTRACTOR for any
                      third party fees or charges in connection with such
                      importation or exportation.

              8.8     CONTRACTOR acknowledges that it is aware that OPERATOR is
                      anticipated to obtain a Minister's License under the
                      Customs Act of the laws of the Republic of Trinidad and
                      Tobago, which will provide for exemption from import
                      duties in Trinidad in relation to imports associated with
                      OPERATOR's offshore petroleum and exploration operations.
                      CONTRACTOR undertakes to comply fully and to procure the
                      compliance of all SUB-CONTRACTORS with all legal,
                      contractual and administrative requirements of OPERATOR
                      and any AGENCY and to provide accurate and timely
                      information to enable OPERATOR to fully benefit from such
                      exemption in connection with any imports associated with
                      or linked to CONTRACTOR's performance under this Contract.
                      CONTRACTOR shall indemnify and hold harmless OPERATOR for
                      any failure by CONTRACTOR or its SUB-CONTRACTORS to comply
                      with such requirements, which results in any imposition of
                      import duties, penalties, interest or fines in respect of
                      such imports.

         CLAUSE 9.    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 to remove its property and the
                             property of its SERVICE COMPANIES located on the
                             DRILLING UNIT or in the possession of the
                             CONTRACTOR, 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, or

                      (c)    to terminate the CONTRACT upon the completion of
                             the current operations then being performed. No
                             further payments shall be due to the CONTRACTOR or
                             its receiver other than those for work done prior
                             to the said termination

         CLAUSE 10.   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.

                      An event of force majeure shall mean expropriation or
                      confiscation, orders of governmental authority, acts of
                      war (declared or undeclared), insurrection, rebellion or
                      sabotage, civil disturbances, strikes (except of the
                      CONTRACTOR'S or SUB-CONTRACTOR'S own workforce), actions
                      of the elements (except waiting on weather in the field)


                                       14
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                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 15 OF 22
================================================================================


                      or other causes beyond the reasonable control of the
                      parties affected thereby but specifically excluding
                      financial distress.

                      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. Except for the obligation to pay
                      monies due under the CONTRACT, 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 CONTRACTOR
                      to remain on LOCATION or to move to a new LOCATION and the
                      appropriate rate as set out in SECTION 5 shall be payable.

                      In the event the OPERATOR does not exercise this right and
                      the execution of the CONTRACT has been prevented for a
                      period of not less than 28 days (during which period the
                      Schedule 5.1 - FORCE MAJEURE a) Rate shall be payable by
                      OPERATOR) then either party shall have the right to
                      terminate the CONTRACT by giving twenty-one (21) days
                      written notice to the other (during which period the
                      Schedule 5.1 - FORCE MAJEURE b) Rate shall be payable by
                      OPERATOR). 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 of any
                      party in respect of any antecedent breach thereof. In such
                      event, OPERATOR shall pay the DEMOBILISATION FEE in
                      accordance with the other provisions of this CONTRACT.


         CLAUSE 11.   FREEDOM FROM LIENS

                      Without prejudice to any other provision of the CONTRACT
                      the CONTRACTOR shall hold harmless and indemnify the
                      OPERATOR from and against all liens, attachments or claims
                      by or on behalf of any of the CONTRACTOR'S suppliers,
                      CONTRACTOR'S PERSONNEL or SUB-CONTRACTORS (or persons
                      alleging to be suppliers, CONTRACTORS PERSONNEL or
                      SUB-CONTRACTORS) in connection with or arising out of the
                      CONTRACT.

         CLAUSE 12.   CONTRACTOR TO MAINTAIN REPRESENTATION

                      For a period of not less than 2 years after the
                      termination or completion of the CONTRACT howsoever
                      arising the CONTRACTOR shall maintain representation in
                      the Republic of Trinidad and Tobago 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 13.   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 Statute, 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


                                       15
<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 16 OF 22
================================================================================


                      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 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 14.   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.
                      CONTRACTOR'S report shall contain only such information as
                      is authorised for release by the OPERATOR's
                      representative. The obligations under this clause shall
                      continue notwithstanding the completion or termination of
                      the work under this CONTRACT.


         CLAUSE 15.   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 OPERATOR'S business generally or to the work
                      hereunder, 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. As an exception to the
                      requirement for reference to and approval of OPERATOR in
                      respect to publications or the permitting of publications
                      of any articles, photographs or other illustrations
                      relating to the work hereunder, CONTRACTOR shall not be
                      obligated to make such reference and obtain such consent
                      if such publication is required, in CONTRACTOR's
                      reasonable opinion, to be disclosed by applicable LAWS or
                      stock exchange rules. In such event, CONTRACTOR shall
                      inform OPERATOR prior to making such disclosure. The
                      obligations of this clause shall continue notwithstanding
                      the completion or termination of the work under this
                      CONTRACT.

         CLAUSE 16.   ASSIGNMENT AND SUB-CONTRACTING

               16.1   Assignment

                      Except to wholly-owned subsidiary of CONTRACTOR capable of
                      performing CONTRACTOR'S obligations hereunder 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. Such
                      consent shall not be unreasonably withheld. In the event
                      of assignment to a wholly-owned subsidiary of CONTRACTOR,
                      CONTRACTOR shall give prior written notice of the intended
                      assignment and CONTRACTOR shall remain primarily
                      responsible to OPERATOR for the obligations of the
                      assignee which pertain to this CONTRACT and shall be
                      liable for any and all obligations set forth herein in the
                      event that such assignee fails to fulfil any obligation
                      imposed on the CONTRACTOR herein.



                                       16
<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 17 OF 22
================================================================================


                      OPERATOR may assign or sub-let the whole or part of its
                      rights, liabilities and obligations to a wholly owned
                      subsidiary of the BP Amoco plc upon the terms and
                      conditions as those agreed between the parties hereto
                      without the consent of the CONTRACTOR, and to any other
                      party with the consent of the CONTRACTOR and such consent
                      shall not be unreasonably withheld.

               16.2   Sub-Contracting

                      The CONTRACTOR shall not enter into any sub-contract for
                      the whole or any part of its obligations under the
                      CONTRACT 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, defaults
                      and negligence of any SUB-CONTRACTOR, its personnel or
                      agents as fully as if they were the acts, defaults or
                      neglects of the CONTRACTOR, its personnel or agents.

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

         CLAUSE 17.   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,
                      SUB-CONTRACTORS and agents observe all such laws, rules
                      and regulations and shall at the CONTRACTOR'S expense
                      replace any CONTRACTOR'S PERSONNEL or SUB-CONTRACTOR'S
                      personnel or agents whose conduct or behaviour may
                      reasonably be considered by the OPERATOR to be in breach
                      or conflict with such laws, rules or regulations.

         CLAUSE 18.   SERVING OF NOTICES

               18.1   Any notice in writing to be given hereunder to the
                      OPERATOR shall be sent by hand, telex, facsimile or
                      registered post to the OPERATOR to the at the following
                      address:

                      BP TRINIDAD AND TOBAGO LLC

                      P.O. Box 714         or by hand  Queen's Park Plaza
                      Port of Spain                    5 & 5A Queen's Park West
                      Trinidad, West Indies            Port of Spain, Trinidad

                      Attention:    THE CONTRACTS MANAGER

                      Telephone:    (868) 623-2862

                      Fax: (868) 627-7878



                                       17
<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 18 OF 22
================================================================================


               18.2   Any notice in writing to be given hereunder to the
                      CONTRACTOR shall be sent to it by hand, telex, facsimile
                      or registered post at its address stated in the CONTRACT
                      or some address in the CONTRACT AREA stated by it to be in
                      lieu thereof for the purpose of this sub-clause.

                      Chiles Offshore Inc.
                      11200 Richmond Avenue, Suite 490
                      Houston, Texas 77082-2618
                      Attention: Mr. Chris Pinkard, Vice President

                      Telephone: (713) 339-3777
                      Fax:       (713) 339-3888

               18.3   Any such notice given by facsimile shall be deemed to have
                      been received and shall take effect at the expiration of
                      24 (twenty-four) hours after the sending.

         CLAUSE 19.   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 20.   INDEPENDENT CONTRACTOR RELATIONSHIP

               20.1   In the performance of the DRILLING SERVICES the CONTRACTOR
                      shall be an independent Contractor with the authority to
                      control and direct the performance thereof, 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 which the OPERATOR
                      may choose to exercise if necessary to secure the
                      satisfactory completion thereof.

               20.2   The actual performance and superintendence of the DRILLING
                      SERVICES hereunder shall be by the CONTRACTOR but the
                      OPERATOR REPRESENTATIVE 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 order to judge
                      whether in the OPERATOR'S opinion the CONTRACTOR'S
                      EQUIPMENT is complete and in an efficient operating
                      condition and whether the DRILLING SERVICES are being
                      performed by the CONTRACTOR in accordance with the
                      provisions of this CONTRACT. 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.

               20.3   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 21.   INFRINGEMENT OF PATENTS

                      The CONTRACTOR shall save harmless and indemnify 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


                                       18
<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 19 OF 22
================================================================================


                      in connection with the use of any CONTRACTOR furnished
                      equipment machinery materials or process and shall defend
                      at its sole expense any and all such proceedings to which
                      both parties are defendants. 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 defence of any such proceedings if both
                      shall be made parties defendant thereto. The CONTRACTOR
                      shall give notice in writing forthwith to the OPERATOR of
                      any such claims and proceedings as aforesaid and shall
                      supply the OPERATOR with all information and documents in
                      connection therewith as the OPERATOR may reasonably
                      require.

                      The OPERATOR shall save harmless and indemnify the
                      CONTRACTOR 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 of any OPERATOR or SERVICE
                      COMPANY furnished equipment, machinery, materials or
                      process and shall defend at its sole expense any and all
                      such proceedings to which both parties are defendants.
                      Both the OPERATOR and the CONTRACTOR shall at all times
                      have the right to be represented respectively by their own
                      counsel and to participate in the defence of any such
                      proceedings if both shall be made parties defendant
                      thereto. The OPERATOR shall give notice in writing
                      forthwith to the CONTRACTOR of any such claims and
                      proceedings as aforesaid and shall supply the CONTRACTOR
                      with all information and documents in connection therewith
                      as the CONTRACTOR may reasonably require.

         CLAUSE 22.   PERMITS AND LICENCES

              22.1    CONTRACTOR shall be responsible for obtaining and
                      maintaining all authorisations, permits and licenses
                      necessary for the Work, which may be obtained in the name
                      of CONTRACTOR, its SUB-CONTRACTORS, its vendors, and their
                      respective employees. OPERATOR shall provide reasonable
                      assistance to CONTRACTOR in that endeavour, if asked by
                      CONTRACTOR.

              22.2    CONTRACTOR shall be responsible for obtaining all the
                      necessary visas, customs clearances or other government
                      authorisations required for moving CONTRACTOR's PERSONNEL
                      or its SUB-CONTRACTORS' personnel into and out of the
                      country having jurisdiction over the CONTRACT AREA,
                      including without limitation work permits and tax exit
                      certificates for such personnel. OPERATOR shall, if asked
                      by CONTRACTOR, assist CONTRACTOR in obtaining such work
                      permits. OPERATOR does not warrant that the authority
                      having jurisdiction over work permits will issue any work
                      permit.

         CLAUSE 23.   APPLICABLE LAW

                      The CONTRACT shall be governed by and construed in
                      accordance with the laws of the Republic of Trinidad and
                      Tobago .

         CLAUSE 24.   ARBITRATION

                      If any dispute or difference of any kind whatsoever shall
                      arise between the parties hereto in connection with or
                      arising out of the CONTRACT or any interpretation thereof
                      which cannot be resolved by agreement between the parties
                      hereto the same shall be determined in accordance with the
                      Arbitration Act Chap. 5:01 of the laws of the Republic of
                      Trinidad and Tobago. Arbitration proceedings shall take
                      place in Trinidad unless otherwise agreed by the parties.



                                       19
<PAGE>

                                                                       SECTION 2
                                                          CONDITIONS OF CONTRACT
                                                                   PAGE 20 OF 22
================================================================================


         CLAUSE 25.   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 26.   AUDIT

                      The OPERATOR shall have the right to audit during normal
                      business hours the relevant books and accounts of the
                      CONTRACTOR at its address herein in relation to
                      reimbursable items paid for by OPERATOR under the CONTRACT
                      at any time until the expiry of twenty-four months
                      following the settlement of the final account. Any
                      incorrect payments made by OPERATOR shall be adjusted in
                      accordance with the findings of the said audit. The
                      CONTRACTOR shall make all relevant books and accounts
                      available and give the auditors all reasonable assistance
                      and ensure that its SUB-CONTRACTORS comply with such
                      provisions.

         CLAUSE 27.   SEVERABILITY

                      If any provision of this CONTRACT or any application
                      thereof shall be determined to be invalid or unenforceable
                      such invalidity or unenforceability shall not affect
                      remaining provision of this CONTRACT and remaining
                      provisions shall continue in full force and effect.

         CLAUSE 28.   MORTGAGE OF THE RIG

                      THIS CONTRACT IS SUBJECT TO EACH OF THE RIGHTS AND
                      REMEDIES OF THE SECRETARY OF TRANSPORTATION OF THE UNITED
                      STATES OF AMERICA, AND HAS BEEN ASSIGNED TO THE SECRETARY
                      UNDER A SECURITY AGREEMENT AND MORTGAGE, EACH EXECUTED BY
                      THE CONTRACTOR AS SHIPOWNER IN FAVOR OF THE SECRETARY WITH
                      RESPECT TO THE DRILLING UNIT. OPERATOR ACKNOWLEDGES THAT
                      CONTRACTOR IS REQUIRED TO PROVIDE MARAD WITH A COPY OF
                      THIS CONTRACT WITHIN TEN (10) DAYS OF ITS EXECUTION.




                                       20
<PAGE>

                                    SECTION 3


                             CONTRACTOR'S INSURANCE



<PAGE>

It is the intention that the OPERATOR and all Contractors working together to
undertake the drilling operations should carry out their work in accordance with
good oilfield and/or industry practice. It is recognised, however, that
accidents and damage may from time to time occur. Such risks are to be covered
in the following manner:-

1.                    Personnel

              1.1.    Employers' Liability or similar, including the local legal
                      coverage in the CONTRACT AREA or any other jurisdiction,
                      for which CONTRACTOR is obliged to pay benefits and
                      including, but not limited to for example, Maritime
                      Employer's Liability to provide transportation,
                      maintenance and cure. Employer's Liability limit shall be
                      in accordance with any applicable legislation but not less
                      than US$2,000,000 each incident per person.

                      The underwriter shall, in addition, waive all rights of
                      Subrogation against the other parties involved in the
                      drilling operations.

2.                    Equipment


              2.1.    For equipment other than vessels:
                      All risks insurance with policy limits equal to the market
                      value of the CONTRACTOR'S equipment.

              2.2.    For Vessels:

                      (a)    Hull and Machinery Insurance (extended to cover all
                             risks including Collision Liability) with policy
                             limits equal to the replacement value of the
                             vessels having a deductible not greater than
                             US$250,000 each or 10% of the replacement value
                             which ever is the lesser each and every loss.

                      (b)    Protection and Indemnity Insurance with policy
                             limits equal to the replacement value of the
                             vessels.

              2.3.    For Fixed and Rotary Wing Aircraft

                      Hull insurance for the current or replacement value of
                      each aircraft and covering any accident or damage thereto,
                      howsoever caused.

              2.4.    Wreck and Debris:

                      Wreck and debris removal insurance coverage on the
                      CONTRACTOR'S EQUIPMENT, vessels or aircraft as appropriate
                      as per terms of sub clause 6.6 of SECTION 2 (Conditions of
                      Contract).

              2.5.    War risk insurance coverage on the CONTRACTOR'S EQUIPMENT,
                      vessels or aircraft as appropriate covered by the
                      CONTRACT, if necessary.

                       CONTRACTOR'S EQUIPMENT, vessels or aircraft as
                      appropriate covered by the CONTRACT, if necessary.


<PAGE>

                                                                       SECTION 3
                                                          CONTRACTOR'S INSURANCE
                                                                     PAGE 2 OF 2
================================================================================


                      The underwriters shall, in addition, waive all rights of
                      Subrogation against the other parties involved in the
                      drilling operations and name OPERATOR and its SERVICE
                      COMPANIES as Additional Assureds.

3.                    Third Party

                      Each Contractor shall carry:-

                      Comprehensive General Liability Insurance, including
                      premises, operations, independent contractors, contractual
                      and collision liability for any written agreement and
                      coverage for the operation of the CONTRACTOR'S EQUIPMENT,
                      vessels or aircraft as appropriate covered by the
                      CONTRACT.

                      Bodily Injury         US $10,000,000 any one occurrence
                      Property Damage       US $10,000,000 any one occurrence

                      In addition for aircraft, aircraft Third Party Legal
                      Liability including passenger, baggage and cargo (in the
                      names of CONTRACTOR and OPERATOR) up to a combined single
                      limit of US$80,000,000 (eighty million US Dollars) any one
                      accident or occurrence, each aircraft.

                      The underwriters shall, in addition, waive all rights of
                      Subrogation against the other parties involved in the
                      drilling operations.

4.                    Automobiles

                      Comprehensive Automobile Liability Insurance covering all
                      owned, hired and non-owned automotive equipment, including
                      compliance with all local legislation on automobile
                      insurance in the state or country in which the automotive
                      equipment is being used.

                      The underwriters shall, in addition, waive all rights of
                      Subrogation against the other parties involved in the
                      drilling operations.

5.                    Certificates of Insurance

                      Before commencing performance of this CONTRACT, CONTRACTOR
                      shall furnish OPERATOR with Certificates of Insurance
                      indicating:

                      5.1.   kinds and amounts of insurance as required.

                      5.2.   insurance company and companies carrying the
                             aforesaid coverage.

                      5.3.   effective and expiry dates of policies.




                                       2
<PAGE>

                                    SECTION 4


                            STATEMENT OF REQUIREMENTS




                                    CONTENTS


                      1.       OBLIGATIONS OF THE CONTRACTOR

                      2.       WORK TO BE PERFORMED BY THE CONTRACTOR

                      3.       FACILITIES TO BE PROVIDED BY CONTRACTOR

                      4.       THE CONTRACTOR'S EQUIPMENT

                      5.       SAFETY

                      6.       CONTRACTOR'S OTHER OBLIGATIONS

                      7.       RESPONSIBILITIES OF THE OPERATOR

                               ATTACHMENT 1 - CHECK LIST OF RESPONSIBILITIES

                               ATTACHMENT 2 - REPORTING


<PAGE>

                            STATEMENT OF REQUIREMENTS


CLAUSE       l        OBLIGATIONS OF THE CONTRACTOR

                      The CONTRACTOR shall carry out the DRILLING SERVICES and
                      perform all its obligations under the CONTRACT with due
                      diligence and care, in a good and workmanlike manner, in
                      accordance with good drilling practices, without undue
                      delays and in conformity in all respects with the terms
                      and conditions of the CONTRACT.

                      CONTRACTOR shall be solely responsible for the operation
                      of the DRILLING UNIT including, without limitation,
                      supervising moving operations and the positioning of the
                      DRILLING UNIT on LOCATIONS as required by OPERATOR,
                      subject to Clause 4 of SECTION 2 of this CONTRACT, as well
                      as such operations on board the DRILLING UNIT as may be
                      necessary for the safety of the DRILLING UNIT.

CLAUSE       2        WORK TO BE PERFORMED BY THE CONTRACTOR

                      Consistent with the provisions of this CONTRACT, the
                      CONTRACTOR shall:

                      2.1      Drilling

                               Drill vertically or directionally, complete,
                               suspend, plug and abandon or workover WELLS and
                               carry out such other drilling operations on WELLS
                               in accordance with the drilling and other
                               programmes issued by or instructions given by the
                               OPERATOR from time to time. The DEPTHS specified
                               in such programmes are predictions and may be
                               subject to change by the OPERATOR.

                               The maximum depth shall not exceed 24,607 ft.

                      2.2      Casing and Tubing

                               Run strings of casing, liner and tubing
                               (hereinafter referred to as "Tubulars") as
                               specified in the WELL programmes issued by the
                               OPERATOR from time to time. The CONTRACTOR shall
                               store, handle, run and land with such Tubulars in
                               accordance with the OPERATOR'S procedures.

                      2.3      Recovery of Tubulars

                               Whenever so requested by the OPERATOR endeavour
                               to recover strings of Tubulars from a WELL.

                      2.4      Depth Measurement

                               Keep an accurate measurement of the DEPTH in feet
                               and record such DEPTHS on OPERATOR'S daily
                               drilling report and on IADC-API Daily Drilling
                               Report Forms. OPERATOR shall have the right at
                               any time to require CONTRACTOR to make check
                               measurements of the DEPTH in such manner as
                               OPERATOR may specify.


<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 2 OF 16
================================================================================

                               Measure and make diagram sketch of all tubulars
                               going into the hole with Inner Diameter and Outer
                               Diameter and the fishing neck. Check to be made
                               if fishing tools available to suit all sizes run
                               in hole.

                      2.5      Specialised Operations

                               Whenever so instructed by OPERATOR permit and
                               assist SERVICE COMPANIES to carry out
                               cementation, formation testing, stimulation,
                               logging, diamond drilling, turbine drilling,
                               coring, directional drilling, inspection and
                               making up and/or pressure testing of tubulars or
                               any other specialised operation.

                      2.6      Pressure Testing

                               Carry out pressure testing of wellheads, casing
                               strings, blow-out prevention equipment, casing
                               cement jobs and other equipment specified by the
                               OPERATOR in accordance with the procedures
                               prescribed from time to time by the OPERATOR. The
                               results of all such tests shall be noted on said
                               OPERATOR'S Daily Drilling Report and on IADC-API
                               Daily Drilling Report Forms. Provide charted
                               recordings.

                      2.7      Drilling Fluid

                               Make, condition and control drilling fluid in
                               accordance with mud programmes issued from time
                               to time by the OPERATOR, under the supervision of
                               or in accordance with instructions given by the
                               OPERATOR.

                      2.8      Cores

                               Whenever required to do so by the OPERATOR'S
                               REPRESENTATIVE to provide assistance in carrying
                               out coring operations as required by the
                               OPERATOR.

                      2.9      WELL Deviation Surveys

                               Make deviation surveys with instruments listed in
                               SECTION 7 whenever the OPERATOR may so require.

                      2.10     Care and Use of Tubulars

                               (a)      properly handle, store and tally all
                                        Tubulars while in the CONTRACTOR'S
                                        possession.

                               (b)      retain thread protectors on all Tubulars
                                        until instructed by OPERATOR to remove
                                        for cleaning and lubricating with API
                                        approved thread cleaning and thread
                                        lubricating compounds provided prior to
                                        running in the hole.

                               (c)      check Tubular drift diameters with
                                        mandrels provided by OPERATOR or
                                        CONTRACTOR whenever so instructed by the
                                        OPERATOR and report any rejected joints
                                        in the IADC report.

                               (d)      employ "Klampon" or equivalent Tubular
                                        thread protector provided by OPERATOR
                                        when handling Tubulars between the rack
                                        and the rig floor.



                                       2
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 3 OF 16
================================================================================

                      2.11     On LOCATION Inspection of OPERATOR'S MATERIALS

                               Inspect visually for defects all OPERATOR'S
                               MATERIALS before using them and notify the
                               OPERATOR of any such defects apparent therein.

                               Also verify the quantities and shortfall, if any,
                               and pay attention to certification and inspection
                               records (e.g. MSDS sheets for chemicals).

                      2.12     Work Period

                               Operate the DRILLING UNIT on the basis of a 24
                               (twenty-four) hour day and a 7 (seven) day week
                               without shutdown for holidays unless otherwise
                               instructed by OPERATOR or unless required so to
                               do in order to comply with the laws and
                               regulations of the government or properly
                               authorised local authority having jurisdiction
                               over the CONTRACT AREA.

                               Crew change periods shall be in accordance with
                               Schedule 6.1 of SECTION 6 hereto.

                      2.13     Handling and Storage of OPERATOR'S MATERIALS and
                               SERVICE COMPANY materials

                               Whenever required by the OPERATOR (who shall not
                               so require unreasonably, taking account of
                               constraints of weather, availability of
                               CONTRACTOR'S PERSONNEL, capacity of CONTRACTOR'S
                               EQUIPMENT and space or weight limitations on the
                               DRILLING UNIT) take on board in Trinidad or such
                               other location designated by OPERATOR or unload
                               OPERATOR'S MATERIALS and SERVICE COMPANY
                               materials from OPERATOR'S work boats onto the
                               DRILLING UNIT and store and handle OPERATOR'S
                               MATERIALS and SERVICE COMPANY materials thereon.
                               Whenever so required by OPERATOR (who shall not
                               so require unreasonably as aforesaid) unload
                               OPERATOR'S MATERIALS and SERVICE COMPANY
                               materials from the DRILLING UNIT onto OPERATOR'S
                               work boats or in Trinidad or such other location
                               designated by OPERATOR.

                               It is the responsibility of the CONTRACTOR to
                               store and maintain records of such storage of all
                               items of equipment and material loaded onto the
                               DRILLING UNIT.

                      2.14     Documentation for OPERATOR'S MATERIALS and
                               SERVICE COMPANY materials

                               Acknowledge receipt and despatch of OPERATOR'S
                               MATERIALS and SERVICE COMPANY materials in
                               accordance with instructions laid down by
                               OPERATOR from time to time. The CONTRACTOR shall
                               exercise appropriate care towards all such
                               materials and equipment, which have been left in
                               its possession for safe storage by OPERATOR and
                               SERVICE COMPANIES.

                      2.15     Materials and Logistics Support

                               CONTRACTOR shall employ a fully qualified and
                               experienced Materials/Logistics Supervisor who
                               shall be approved by OPERATOR and shall be
                               permanently based in Trinidad and shall be
                               available at all times to arrange and supervise


                                       3
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 4 OF 16
================================================================================


                               all CONTRACTOR'S EQUIPMENT and PERSONNEL
                               movements. The Materials/Logistics Supervisor
                               shall maintain day to day liaison with OPERATOR'S
                               Base Manager in Trinidad in order that efficient
                               and timely scheduling, loading and unloading of
                               supply vessels and helicopter operations is
                               maximised.

                               CONTRACTOR shall at all times comply with
                               OPERATOR'S instructions and requirements with
                               regard to all materials and logistics operations
                               including the import and export of EQUIPMENT,
                               materials and supplies together with the movement
                               of PERSONNEL. Such instructions, as aforesaid,
                               shall be supplied to CONTRACTOR in writing and
                               may be modified from time to time at OPERATOR'S
                               discretion.
CLAUSE       3        FACILITIES AND SERVICES TO BE PROVIDED BY CONTRACTOR

                      Unless otherwise stated the CONTRACTOR shall at its cost
                      and expense furnish all facilities and services necessary
                      for the proper performance of its contractual obligations
                      including but not by way of limitation:

                      3.1      Accommodation   and  messing  for  its  PERSONNEL
                               on  the  DRILLING  UNIT  to  standard reasonably
                               acceptable to OPERATOR.

                      3.2      Accommodation and messing for OPERATOR'S
                               personnel, its trainees, its SERVICE COMPANIES'
                               personnel on the DRILLING UNIT to the same
                               standard provided by the CONTRACTOR for its
                               PERSONNEL.

                      3.3      One room on the DRILLING UNIT shall be used
                               exclusively as an infirmary and shall be designed
                               and equipped to standards reasonably acceptable
                               to OPERATOR together with adequate medical
                               supplies. OPERATOR shall evacuate any casualties
                               among the CONTRACTOR'S PERSONNEL on the DRILLING
                               UNIT and the CONTRACTOR shall reimburse the
                               OPERATOR there for up to the limit of the
                               CONTRACTOR'S insurance. CONTRACTOR shall be
                               entirely liable at its cost for any subsequent
                               medical treatment.

                      3.4      CONTRACTOR shall provide paramedics to work a
                               28/28 rotation on board the DRILLING UNIT. Such
                               paramedics shall be hired by CONTRACTOR and paid
                               for by the OPERATOR. During the term of this
                               CONTRACT, CONTRACTOR shall use its best efforts
                               to train a national to assume the role of
                               paramedic, with the intent to build local
                               capability and replace the expatriate paramedic
                               with a national paramedic.

                      3.5      OPERATOR shall have the right to inspect such
                               accommodation, messing and medical facilities at
                               any time. The CONTRACTOR shall comply with
                               OPERATOR's standard procedures in respect of
                               safety and hygiene as the OPERATOR may issue from
                               time to time.

                      3.6      CONTRACTOR shall provide two (2) Safety and
                               Training Coordinators (STC) to work a 28/28
                               rotation on board the DRILLING UNIT. Such STC
                               shall be hired by and paid for by the CONTRACTOR.

                      3.7      OPERATOR requires and CONTRACTOR shall provide
                               free of charge suitable space and general support
                               services, including but not limited to,
                               communication equipment (telephone) and DRILLING
                               UNIT Alarm system, air, water and electricity for
                               the SERVICE CONTRACTOR'S equipment and
                               installations as listed above.




                                       4
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 5 OF 16
================================================================================


CLAUSE       4        THE CONTRACTOR'S EQUIPMENT

                      The CONTRACTOR shall:

                      4.1      at the COMMENCEMENT  DATE make the CONTRACTOR'S
                               EQUIPMENT  available to OPERATOR at the first
                               LOCATION in the CONTRACT AREA.

                      4.2      prior to the COMMENCEMENT DATE give written
                               evidence to the OPERATOR that the DRILLING UNIT
                               has proper CERTIFICATION.

                      4.3      ensure that Classification and the said
                               CERTIFICATION is maintained at CONTRACTOR'S cost
                               and expense throughout the duration of the
                               CONTRACT and any extensions thereto.

                               In the event that during the continuance of the
                               CONTRACT the said CERTIFICATION lapses then the
                               CONTRACTOR shall use its best endeavours to have
                               the DRILLING UNIT re-certified by the said
                               Authorities for the remainder of the period of
                               CONTRACT by means of on-site inspection, tests
                               and trials (by the said Authorities) at a time or
                               times agreed with the OPERATOR.

                      4.4      use its best endeavours to implement without
                               delay, but after consultation with the OPERATOR,
                               any alteration, replacement or other change to
                               the DRILLING UNIT that may be required by any
                               statute, ordinance, decree, proclamation or any
                               other order or enactment or regulation or by-law
                               of any local or duly constituted authority having
                               the force of law in the CONTRACT AREA. All costs
                               incurred by the CONTRACTOR in implementing such
                               alterations as aforesaid shall be to its account.

                      4.5      give the OPERATOR an undertaking that at the
                               COMMENCEMENT DATE, CONTRACTOR does not have
                               knowledge of any damage or defects of the
                               DRILLING UNIT and associated equipment, which
                               would necessitate repairs to the DRILLING UNIT
                               during the continuance of the CONTRACT.

                      4.6      upon request of OPERATOR, make available to
                               OPERATOR all or any of the following:
                               (a)      the environmental design criteria of the
                                        DRILLING UNIT.
                               (b)      all records of surveys, repairs and
                                        modifications of a structural nature
                                        that have been made to the DRILLING UNIT
                                        since it was first launched.
                               (c)      of the current and past official Marine
                                        Log Books pertaining to the DRILLING
                                        UNIT, records of Inclining Test Results
                                        of the DRILLING UNIT and any other
                                        records which have been made which
                                        report on the structural integrity and
                                        stability history of the DRILLING UNIT.
                               (d)      authorisation from the CONTRACTOR to the
                                        Classification Society by whom the
                                        DRILLING UNIT is classified to enable
                                        the said Society to release to OPERATOR
                                        such details or information concerning
                                        the DRILLING UNIT as OPERATOR may
                                        request and which is available in the
                                        records of the said Society.

                      4.7      during the continuance of the CONTRACT maintain
                               and repair the DRILLING EQUIPMENT to ensure that
                               its performance meets the specifications quoted
                               by the manufacturers and that the quantities of
                               the said EQUIPMENT are maintained.



                                       5
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 6 OF 16
================================================================================


                      4.8      whenever so requested by the OPERATOR permit and
                               give every assistance for an inspection of the
                               CONTRACTOR'S EQUIPMENT to be carried out by the
                               OPERATOR or its SERVICE COMPANY. The OPERATOR
                               shall have the right to reject all or any of the
                               CONTRACTOR'S EQUIPMENT so inspected and take such
                               action, as it deems fit, pursuant to its rights
                               and remedies described in clause 5.2 of Section 2
                               in regard to CONTRACTOR'S EQUIPMENT. The cost of
                               inspection (if any) of the CONTRACTOR's EQUIPMENT
                               rejected shall be a debt due to the OPERATOR from
                               the CONTRACTOR.

                      4.9      prior to the COMMENCEMENT DATE arrange at its
                               cost and expense for the CONTRACTOR'S in-hole
                               equipment to be inspected by an independent
                               tubular inspection service company approved by
                               OPERATOR and make the certificates of inspection
                               available to the OPERATOR. The OPERATOR shall
                               have the right to reject any defective in-hole
                               equipment so inspected and the CONTRACTOR shall
                               at its cost and expense repair or replace such
                               rejected items to the DS-1 appropriate standard,
                               (DS 1 Level 4 for drill pipe and DS 1 Level 3 - 5
                               for drill collars and heavy weight drill pipe).

                      4.10     Arrange thereafter at the cost and expense of the
                               parties as provided in Attachment 1 to Section 4,
                               for all items of the CONTRACTOR'S in-hole
                               equipment to be inspected by an independent
                               tubular inspection company, approved by the
                               OPERATOR, at times to be agreed with the
                               OPERATOR'S REPRESENTATIVE and at intervals as
                               follows:

                               (a)    Top Drive, saver subs and Bottom Hole
                                      Assembly, comprising drill collars,
                                      Hevi-Wate drill pipe and substitutes, at
                                      intervals of one WELL or more frequently
                                      as found to be necessary by the parties;

                               (b)    Drill pipe and pup joints prior to each
                                      WELL.

                               In the event of drill string failure during the
                               aforesaid intervals the CONTRACTOR shall arrange
                               at its cost and expense for an inspection to be
                               made, as aforesaid, as soon as possible
                               thereafter, at a time to be agreed with the
                               OPERATOR'S REPRESENTATIVE. As a consequence of
                               the inspection, the CONTRACTOR shall:

                               EITHER

                               (i)    repair or replace, at its cost and
                                      expense, items rejected as consequence of
                                      such inspection. If in the opinion of the
                                      OPERATOR'S REPRESENTATIVE the rejection of
                                      any item of the CONTRACTOR'S in-hole
                                      equipment jeopardizes the integrity of the
                                      well bore or results in unreasonably slow
                                      progress, then the provisions of clause
                                      5.2 of SECTION 2 (the Conditions of
                                      Contract) shall apply.

                               OR

                               (ii)   in the event that the CONTRACTOR can
                                      demonstrate, by reference to records or to
                                      the report of an OPERATOR approved
                                      independent company, that the rejection of
                                      any item of the drill string was caused by


                                       6
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 7 OF 16
================================================================================


                                      either the published performance limits of
                                      the drill string having been exceeded or
                                      by having been exposed to the deleterious
                                      effects of H2S and/or gases or liquids,
                                      during the performance of operations under
                                      this CONTRACT, then the CONTRACTOR shall
                                      repair or replace items rejected and the
                                      OPERATOR shall reimburse the CONTRACTOR
                                      for the cost of any additional inspection
                                      carried out in accordance with the
                                      foregoing and for the costs of repair or
                                      replacement of any item rejected in
                                      accordance with this sub-clause.

                                    For the purpose of this sub-clause,
                                    "inspection" shall include full inspection
                                    to T H Hill DS-1 Level 4 for drill pipe and
                                    DS-1 Level 3 - 5 for drill collars and heavy
                                    weight drill pipe. Drill collar connections
                                    (over 5" and including tools and subs) to
                                    incorporate stress relief features either
                                    stress relief grooves to API 7 and API RP 7G
                                    or the "Drilco bore back box".

                               The CONTRACTOR shall make the certificates and
                               reports of all such inspections available to the
                               OPERATOR.

                      4.11     At intervals of not longer than 6 (six) MONTHS
                               arrange for magnetic particle inspection of its
                               tongs, elevators, bails, upper string connections
                               and other lifting equipment to be carried out at
                               its cost and expense by an independent inspection
                               company approved by the OPERATOR. The CONTRACTOR
                               shall make all such inspection reports available
                               to the OPERATOR and shall replace or repair at
                               its cost and expense any item so rejected.

                      4.12     Whenever so requested by the OPERATOR'S
                               REPRESENTATIVE in writing after the COMMENCEMENT
                               DATE, and subject to the allocation between
                               OPERATOR and CONTRACTOR of the costs and expenses
                               being agreed to by the parties, supply and
                               deliver to and operate all such further
                               equipment, materials or modifications to the
                               CONTRACTOR'S EQUIPMENT as the OPERATOR'S
                               REPRESENTATIVE may require, which shall then be
                               listed in SECTION 7 hereof and thereafter be
                               deemed to be part of the CONTRACTOR'S EQUIPMENT.

                      4.13     Maintain on board the DRILLING UNIT at all times
                               the following quantities and sizes of shale
                               shaker screens:
<TABLE>
                               Scalper Shakers:                        Min.             Max.
                               ----------------                        ----             ----
<S>                                                                    <C>              <C>
                               12 mesh square single layer             15               30
                               20 mesh oblong single layer             20               40
                               40 mesh oblong single layer             20               40
                               60 mesh oblong single layer             20               40
                               80 mesh oblong single layer             20               40

                               Linear Shakers:
                               ---------------
                               38 mesh Diamondback Plus                20               40
                               50 mesh Diamondback Plus                20               40
                               84 mesh Diamondback Plus                20               40
                               110 mesh Diamondback Plus               20               40
                               140 mesh Diamondback Plus               20               40
                               175 mesh Diamondback Plus               20               40
                               210 mesh Diamondback Plus               20               40

</TABLE>


                                       7
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 8 OF 16
================================================================================


                      4.14     Importation and Exportation of CONTRACTOR'S
                               EQUIPMENT and materials

                               CONTRACTOR shall comply with OPERATOR's policy on
                               the importation of machinery, equipment and
                               materials to be used in OPERATOR's operations
                               under this CONTRACT as stated in Schedule
                               4.1.hereto.

CLAUSE        5       SAFETY

                      5.1      Safety Precautions and Emergency Procedures

                               (a)      The CONTRACTOR shall ensure that an
                                        organisation with defined authority and
                                        responsibility for all matters
                                        associated with the safety of the
                                        DRILLING UNIT and the DRILLING EQUIPMENT
                                        and the safety, health and welfare of
                                        the CONTRACTOR'S PERSONNEL is maintained
                                        throughout the duration of the CONTRACT
                                        within the CONTRACT AREA. The CONTRACTOR
                                        shall appoint and clearly display on
                                        board the DRILLING UNIT the name of the
                                        person who is in overall charge of the
                                        DRILLING UNIT and who shall also be
                                        responsible for all matters related to
                                        the safety, health, welfare and
                                        environment associated with the
                                        CONTRACTOR'S PERSONNEL, the DRILLING
                                        UNIT and its activities.

                                        The procedures for making any change in
                                        the person in overall charge as
                                        aforesaid shall be clearly set out in
                                        the CONTRACTOR'S Operating Procedures
                                        and any change so made shall be recorded
                                        in the logbook of the DRILLING UNIT and
                                        the name of the person in overall charge
                                        so replaced shall immediately be removed
                                        from the place where it was clearly
                                        displayed as aforesaid and the name of
                                        the new person so appointed shall be
                                        substituted.

                               (b)      To the extent that they are neither
                                        inconsistent with nor less stringent
                                        than the CONTRACTOR'S rules, policies
                                        and procedures pertaining to the safety
                                        of CONTRACTOR'S PERSONNEL and the
                                        CONTRACTOR'S EQUIPMENT, the CONTRACTOR
                                        shall observe OPERATOR'S Safety
                                        regulations and comply with rules,
                                        regulations, and codes relating to
                                        equipment, personnel, communications,
                                        supply, transportation and safety
                                        practices as specified by the government
                                        bodies and institutions exercising
                                        jurisdiction in the CONTRACT AREA. The
                                        CONTRACTOR shall use its best efforts to
                                        obtain, if not provided by OPERATOR, and
                                        read and understand such rules and
                                        regulations as aforesaid.

                      5.2      Blowout and Fire Hazards

                                (a)     The CONTRACTOR shall maintain
                                        certification of well control equipment
                                        and shall maintain said equipment in
                                        good operating condition during
                                        operations hereunder, and shall use all
                                        reasonable means to prevent fire or
                                        blowout and to protect the WELL. The
                                        CONTRACTOR shall deploy the blowout
                                        prevention equipment as instructed by
                                        the OPERATOR on all strings of casing
                                        during the DRILLING SERVICES and shall
                                        keep and maintain such equipment in good
                                        operating condition. The CONTRACTOR
                                        shall examine and test all blowout
                                        prevention devices in accordance with
                                        OPERATOR'S instructions and OPERATOR'S
                                        approved test procedures.



                                       8
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                    PAGE 9 OF 16
================================================================================


                                        Test results shall be noted on the
                                        relevant test report sheets in addition
                                        to the IADC-API Daily Drilling Report
                                        Form.

                                        The BOP stack and rubbers shall be
                                        inspected by an independent third party
                                        or supplier prior to the COMMENCEMENT
                                        DATE. In the event that the inspection
                                        is satisfactory the BOP shall be tested
                                        to close on a 3 1/2" drill pipe
                                        effectively. If the test is satisfactory
                                        the BOP shall be deemed to be accepted.
                                        If it fails the test then the
                                        replacement parts are to CONTRACTOR'S
                                        account.

                                        In the event that BOP is used for
                                        non-routine work during the CONTRACT,
                                        i.e. well control, stripping through,
                                        then OPERATOR shall pay for replacement
                                        consumable parts as necessary.

                                (b)     In the event of kick, blowout or fire in
                                        any WELL, or if any WELL gets out of
                                        control in any manner, the OPERATOR'S
                                        REPRESENTATIVE shall have the right to
                                        assume complete control and supervise
                                        the work required to regain full control
                                        of the WELL. During such period the
                                        CONTRACTOR shall use its best endeavours
                                        to make its PERSONNEL and services
                                        available at the WELL; if the
                                        CONTRACTOR'S PERSONNEL are not available
                                        during any such period when the OPERATOR
                                        has assumed control the applicable Daily
                                        Rate specified herein shall be reduced
                                        by OPERATOR to reflect any savings made
                                        by the CONTRACTOR.

                                         In the event that a WELL being drilled
                                         hereunder shall blowout or crater, it
                                         is understood and agreed that the
                                         OPERATOR shall bear the entire cost and
                                         expense of killing the WELL or
                                         otherwise bringing it under control.
                                         Subject to the foregoing, all rights
                                         and indemnities otherwise granted
                                         herein shall remain unaffected.

                      5.3      Safety Management

                                (a)      The CONTRACTOR shall carry out the
                                         DRILLING SERVICES and all other
                                         activities hereunder in a workmanlike
                                         manner with due regard for safety and
                                         shall comply with CONTRACTOR's Safety
                                         Management Systems and OPERATOR's
                                         bridging document. CONTRACTOR shall
                                         make available to the OPERATOR whenever
                                         the OPERATOR may so request, full
                                         documentation to include, but not by
                                         way of limitation, the following
                                         standards, instructions, procedures and
                                         records:

                                        - CONTRACTOR'S Safety Regulations,
                                        - Operating  Procedures  Manuals
                                          (detailing  the operating  limits of
                                          the DRILLING UNIT)
                                        - Emergency Procedures Manual,
                                        - Accident Reporting Procedure,
                                        - Work Permit Procedures,
                                        - records of drills, exercises and
                                          safety meetings
                                        - JSAs, Risk Assessments, ASAs, pre-Tour
                                          and Toolbox meetings.

                                (b)      The CONTRACTOR shall designate persons
                                         who shall be responsible for the
                                         operation, maintenance and training of
                                         its PERSONNEL in the use of the fire


                                       9
<PAGE>
                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                   PAGE 10 OF 16
================================================================================

                                         control and safety equipment listed in
                                         Group l Section 'O' of Section 7 hereto
                                         and to this end shall arrange for
                                         exercises in DRILLING UNIT firefighting
                                         and evacuation to be carried out
                                         fortnightly by its PERSONNEL on board
                                         the DRILLING UNIT and lifeboat drills
                                         to be carried out by all persons on
                                         board the DRILLING UNIT at weekly
                                         intervals.

                                         Additionally the CONTRACTOR shall
                                         ensure that all its PERSONNEL are
                                         issued with the OPERATOR'S instructions
                                         on safety issued from time to time and
                                         shall use its best endeavours to ensure
                                         that its PERSONNEL comply with such
                                         instructions. CONTRACTOR'S PERSONNEL
                                         shall meet weekly on the DRILLING UNIT
                                         to discuss the matters relating to
                                         safety and at which meetings the
                                         OPERATOR'S REPRESENTATIVE and SERVICE
                                         COMPANY personnel will attend.

                                         The CONTRACTOR shall make available to
                                         the OPERATOR minutes of all such
                                         meetings.

                                (c)      In the event that the CONTRACTOR'S
                                         standards, instructions or procedures
                                         in matters of safety do not exist or
                                         are inadequate or are in any such way
                                         not reasonably acceptable to the
                                         OPERATOR, then the OPERATOR may from
                                         time to time issue such standards,
                                         instructions or procedures as aforesaid
                                         which the CONTRACTOR shall observe and
                                         follow.

                                (d)      The CONTRACTOR shall also provide
                                         OPERATOR with copies of documents
                                         concerning the operational safety of
                                         the DRILLING UNIT including but not by
                                         way of limitation accident reports,
                                         near-miss incidents and permits to
                                         work.

                                (e)      The CONTRACTOR shall maintain an
                                         accurate daily "persons-on-board" list
                                         and next of kin details for all its
                                         PERSONNEL and maintain the list both on
                                         the DRILLING UNIT and at a shore base
                                         agreed between the parties hereto.

                                (f)      The CONTRACTOR shall provide the
                                         OPERATOR with a copy of the CONTRACTORS
                                         Emergency Procedures Manual listing the
                                         responsibilities and procedures in case
                                         of emergency incidents.

                      5.4      Safety Policies and Reporting

                               CONTRACTOR agrees to keep open fires and stoves
                               out of the derrick and tool houses adjacent to
                               derrick floor and to prohibit and enforce its
                               policy against its employees smoking on the rig
                               floor, under the substructure, mud pit area, and
                               other areas designated by the OPERATOR'S
                               REPRESENTATIVE as "No Smoking" areas during the
                               performance of any work hereunder. Smoking is
                               prohibited in all areas of the DRILLING UNIT save
                               the area on the DRILLING UNIT designated as a
                               Smoking area.

                               CONTRACTOR also agrees to conform to
                               recommendation on accident prevention and safe
                               practices of the International Association of
                               Drilling Contractors (IADC) and OPERATOR's safety
                               requirements.



                                       10
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                   PAGE 11 OF 16
================================================================================

                               CONTRACTOR shall report all injuries, property
                               and equipment damage causedby accident
                               immediately to OPERATOR's REPRESENTATIVE on
                               board. Within twenty-four (24) hours of
                               occurrence of the accident CONTRACTOR shall
                               provide a written report for the OPERATOR's HSE
                               Manager. A complete accident investigation report
                               will be submitted within forty-eight (48) hours
                               of the occurrence.

                               CONTRACTOR acknowledges it is the policy of the
                               OPERATOR to achieve and maintain a safe working
                               environment free from the influence of alcohol
                               and illicit drugs in order to assure the safety
                               and protection of its employees, non employees,
                               operations, assets and the localities in which it
                               functions. CONTRACTOR will enforce its Drug and
                               Alcohol Policy with respect to CONTRACTOR'S
                               PERSONNEL and the personnel of its
                               SUB-CONTRACTORS, which shall include provision
                               that the possession, use, distribution or sale of
                               illicit drugs or controlled substances in the
                               work place is prohibited and that such personnel
                               are forbidden from being under the influence of
                               alcohol while on CONTRACTOR owned, leased or
                               operated premises. CONTRACTOR agrees to conduct
                               periodic searches and testing for such
                               substances. The personnel of the OPERATOR and the
                               SERVICE COMPANIES shall be subject to the
                               OPERATOR's Drug and Alcohol Policy.

                               CONTRACTOR shall submit the following information
                               on its safety performance each month:

                               1.       Total man hours worked (month/YTD)
                               2.       Total lost time accidents (month/YTD)
                               3.       Total lost time days (month/YTD)
                               4.       Total recordable accidents (month/YTD)
                               5.       Total first aid cases (month/YTD)

CLAUSE       6        CONTRACTOR'S OTHER OBLIGATIONS

                      6.1      CONTRACTOR not to start DRILLING SERVICES without
                               Permission

                               The CONTRACTOR shall not at any LOCATION commence
                               any DRILLING SERVICES until the OPERATOR'S
                               REPRESENTATIVE has certified in writing on the
                               IADC Report Form that the CONTRACTOR'S EQUIPMENT
                               is acceptable and ready to commence the said
                               SERVICES.


                      6.2      Training & Secondment of Nominees of OPERATOR by
                               CONTRACTOR

                               The CONTRACTOR hereby undertakes to accept for
                               training on board the DRILLING UNIT such number
                               of nominees of OPERATOR as the OPERATOR may
                               request from time to time and the CONTRACTOR
                               shall train such nominees as aforesaid in
                               accordance with such conditions and in such
                               categories as the OPERATOR may prescribe.

                               The OPERATOR shall not so request more than five
                               such local personnel or nominees on board at any
                               one time.

                      6.3      CONTRACTOR not to entice



                                       11
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                   PAGE 12 OF 16
================================================================================


                               The CONTRACTOR shall not at any time or in any
                               manner nor for any purpose whatsoever entice
                               either directly or indirectly any person employed
                               by the OPERATOR or in the employment of any
                               SERVICE COMPANY.

                      6.4      Moving Operations

                               Before any moving operations are undertaken the
                               CONTRACTOR shall consult with the OPERATOR upon
                               weather and other information available at the
                               time but, notwithstanding Clause 4 of Section 2
                               of this CONTRACT, the responsibility for the
                               decision to commence moving operations shall be
                               the CONTRACTOR'S. Towing vessels provided by the
                               OPERATOR shall be subject to approval of the
                               CONTRACTOR. The OPERATOR shall provide to the
                               CONTRACTOR if so requested the conditions of the
                               charter party for such towing operations.

                      6.5      Inspection of CONTRACT AREA

                               The CONTRACTOR shall be deemed to be satisfied as
                               to the nature of all existing harbours and means
                               of transport or communication on the mainland of
                               the CONTRACT AREA, and as to possible
                               interruptions thereto and as to access to and
                               from the CONTRACT AREA; to have made enquiries,
                               examined and satisfied itself as to workyard
                               sites and such depots and buildings as may be
                               required for carrying out its obligations under
                               the CONTRACT; to have made local and independent
                               enquiries as to storms, prevailing winds and
                               climatic considerations generally and other
                               similar matters; to be satisfied as to the
                               sources and means of obtaining adequate supplies
                               of skilled and unskilled persons and all other
                               things required for carrying out the CONTRACT; to
                               have considered the possible effects on the
                               carrying out of the CONTRACT that may be caused
                               by the break down of communications or by reason
                               of storms, prevailing winds and adverse climatic
                               weather conditions which may arise at any time
                               during the continuance of the CONTRACT within the
                               CONTRACT AREA; to have examined the CONTRACT
                               generally and to have obtained all necessary
                               information on all matters whatsoever which may
                               effect its performance thereof.

                               In the event that the CONTRACTOR does not satisfy
                               itself on any of such matters as aforesaid this
                               shall not relieve it from its obligations
                               hereunder and shall not entitle it to any
                               increase in any rate or charge under the CONTRACT
                               nor to any compensation or amount whatsoever
                               additional to such charges, and in the event of
                               any claim under the CONTRACT or law being made by
                               any party the CONTRACTOR shall be deemed to have
                               so visited, examined and satisfied itself as
                               aforesaid prior to the date hereof.




CLAUSE       7        RESPONSIBILITIES OF THE OPERATOR

                      The OPERATOR shall provide the following equipment,
                      materials, supplies spare parts, services and personnel at
                      its cost and expense unless stated otherwise.

                      7.1.     PERSONNEL



                                       12
<PAGE>
                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                   PAGE 13 OF 16
================================================================================

                               1.       The OPERATOR'S REPRESENTATIVE and
                                        persons delegated by the OPERATOR to act
                                        on behalf of the OPERATOR'S
                                        REPRESENTATIVE from time to time.

                               2.       The OPERATOR'S technical specialists.

                      7.2.     SERVICES AND EQUIPMENT

                               1.       Specialist services.

                               2.       Emergency medical evacuation services as
                                        available (on cost recoverable basis
                                        within the scope of CONTRACTOR'S
                                        insurances at OPERATOR'S option).

                               3a.      Towing and positioning services in the
                                        CONTRACT AREA between LOCATIONs.

                               3b.      Towing Services to an acceptable port at
                                        the conclusion of the DRILLING SERVICES.

                               4.       Workboat supply service for all
                                        materials and a standby/workboat
                                        service.

                               5.       Transport for CONTRACTOR'S PERSONNEL and
                                        SUB-CONTRACTOR'S personnel between
                                        OPERATOR'S designated point of
                                        embarkation on the mainland of the
                                        CONTRACT AREA and the DRILLING UNIT and
                                        between the OPERATOR'S point of
                                        embarkation in the Republic of Trinidad
                                        and Tobago and the mainland of the
                                        CONTRACT AREA for the purposes of
                                        routine crew change.

                                        In the event that crew changes are
                                        delayed for reasons of weather or
                                        non-availability of helicopter or damage
                                        to DRILLING UNIT which prevents a
                                        helicopter from landing, CONTRACTOR will
                                        arrange and OPERATOR will pay reasonable
                                        overnight hotel accommodation and meal
                                        costs and substantiated overtime costs.

                               6.       Offshore drilling permit(s).

                               7.       Drilling site surveys, buoying and
                                        clearing of obstructions.

                               8.       All marine and air transport of
                                        CONTRACTOR'S and OPERATOR'S items
                                        between OPERATOR'S designated marine and
                                        air supply bases and the DRILLING UNIT.
                                        OPERATOR shall select type of transport.

                               9.       All cementing services.

                               10.      Mud engineer if required by OPERATOR
                                        (but CONTRACTOR will carry out routine
                                        mud testing and treatment).

                               11.      Mud logging service, if required by
                                        OPERATOR.

                               12.      Geological services.



                                       13
<PAGE>

                                                                       SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                   PAGE 14 OF 16
================================================================================


                               13.      Directional drilling service engineer
                                        and directional drilling equipment if
                                        required by OPERATOR.

                               14.      Drilling water if required, except that
                                        CONTRACTOR'S water making unit can be
                                        used in cases of emergency.

                               15.      Bits and other downhole tools not
                                        supplied by CONTRACTOR and listed in
                                        SECTION 7.

                               16.      Conductor pipe, casing, tubing and
                                        attachments, drive hammer, and all
                                        related handling tools.

                               17.      Wellhead housings, casing hangers, seat
                                        protectors, pack-offs, wear bushings,
                                        corrosion cap and all associated running
                                        tools.

                               18.      Temporary and Permanent Guide Bases

                               19.      Cement and additives.

                               20.      Mud chemicals and mud additives,
                                        including pallets if required by
                                        OPERATOR.

                               21.      Diesel fuel for use on the DRILLING
                                        UNIT.

                               22.      Well test unit and associated equipment
                                        for production testing, including
                                        Separators and other test vessels.

                               23.      Drill pipe and drill collars, Kellys or
                                        subs other than those listed in SECTION
                                        7.

                               24.      Stabilizers, hole openers, reamers and
                                        centralizers other than those listed in
                                        SECTION 7.

                               25.      Drill stem testing equipment.

                               26.      Radio equipment other than that listed
                                        in SECTION 7.

                               27.      Loading and unloading services at
                                        supply/ load out bases or heliport of
                                        all material and equipment of CONTRACTOR
                                        and OPERATOR.

                               28.      Containers for disposal of refuse as
                                        well as transport to shore and disposal
                                        of same, except for liquid waste
                                        generated by CONTRACTOR.

                               29.      Crude oil burner assemblies unless
                                        supplied by CONTRACTOR and listed under
                                        SECTION 7.

                               30.      Navigation and positioning systems for
                                        siting the DRILLING UNIT.

                              31.       Diving and ROV Services if required
                                        by OPERATOR.

                              32.       Potable Water in excess of water
                                        provided by the desalination unit on
                                        board the DRILLING UNIT.

                              33.       Fishing Tools.


                                       14
<PAGE>

                                                       SCHEDULE 4.1 TO SECTION 4
                                                       STATEMENT OF REQUIREMENTS
                                                                     PAGE 1 OF 2
================================================================================
                                  SCHEDULE 4.1.

      OPERATOR'S POLICY ON IMPORTATION OF MACHINERY, EQUIPMENT, & MATERIALS
      ---------------------------------------------------------------------

CONTRACTOR shall comply with the provisions of OPERATOR's general policy on the
importation of machinery, equipment, and materials by CONTRACTOR for use in
OPERATOR's operations, specifically with respect to the procedure for Exemption
from Customs Duty on Bills of Entry as set forth below.

PROCEDURE
---------

EXEMPTION FROM CUSTOMS DUTY ON BILLS OF ENTRY
---------------------------------------------

1.     Introduction
       ------------

       Goods imported into Trinidad and Tobago are generally subject to customs
       duty at rates prescribed by tariff, and to Value Added Tax (VAT). The
       Customs Act (Act) provides for a total (or partial exemption as the case
       may be) exemption from such duty in respect of: (a) goods imported for
       temporary use and which are to be subsequently re-exported, and (b) such
       goods specified in the Third Schedule of the Act, which in any particular
       case are exempted by Order of the Minister responsible for Industry.
       Included among the goods generally qualifying for exemption are those
       items of machinery, equipment, and materials for exploration and
       extraction of minerals, including natural gas.

2.     General
       -------

       In order to make use of the exemptions granted, the following procedure
       is to be used when machinery, equipment, or materials are being imported
       into Trinidad and Tobago by CONTRACTOR:

       a.  In the case of items being imported for a short time to perform a
           particular job and then be re-exported, these items should be
           imported under the exemption for goods imported for temporary use.

       b.  In the case of all other items being imported by CONTRACTOR
           (including any consumables which must be imported while operations
           are in progress and which are going to be used up in Trinidad and
           Tobago and, as far as legally possible, subsequent spare parts for
           equipment, machinery, etc., previously imported into Trinidad and
           Tobago), these items should be imported under a Minister's License.
           For the purpose of OPERATOR obtaining a Minister's License,
           CONTRACTOR must submit full details of the goods to be imported to
           OPERATOR well in advance of the date of importation, and the goods
           are not to be landed in Trinidad and Tobago unless previously
           authorised by OPERATOR.

           If after OPERATOR has cleared CONTRACTOR's equipment and supplies
           into Trinidad and Tobago, CONTRACTOR desires to import additional
           material, equipment, supplies, tools, and other items for use in the
           Work, OPERATOR will endeavour to assist CONTRACTOR in such
           importation subject to Section 2 Clause 22 of the CONTRACT.

       c.  In no circumstance whatsoever are any goods which have been imported
           under a Minister's License granted to OPERATOR be subchartered,
           loaned, sold, or otherwise disposed of to any other OPERATOR or
           person in Trinidad and Tobago without the prior written authorisation
           of the appropriate OPERATOR's Business Unit Leader. Each case will
           have to be discussed with Government of the Republic of Trinidad and
           Tobago ("GORTT") authorities to determine proper procedure.


<PAGE>

                                  ATTACHMENT 1

                                       TO

                                    SECTION 4

                          CHECKLIST OF RESPONSIBILITIES

                                     JACKUP


            CHECK LIST OF RESPONSIBILITIES FOR SERVICES AND MATERIALS

                 PROVIDED BY OPERATOR (O) AND THE CONTRACTOR (C)


<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 1 OF 9
================================================================================
<TABLE>
<CAPTION>
A.       DRILLING LOCATION
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
<S>                                                                                  <C>           <C>
1.       Licences and consents to perform the
         operations, including suspension or abandonment.                            O             O

2.       LOCATION survey to include marker buoys and side                            O             O
         scan sonar, and soil borings.

3.       Rig positioning services including Satnav.                                  O             O

4.       Insurance underwriter representatives.                                      C             C
                                                                                ------------- -------------


B.       TRANSPORTATION/HANDLING
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       Helicopter or Marine transportation including emergency
         transportation for all personnel between designated point of
         embarkation and the DRILLING UNIT.                                          O             O

2.       Marine transportation for equipment and spare parts between the
         OPERATOR'S shore base and the DRILLING UNIT.                                O             O

3.       Transportation of CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S
         personnel to and from the point of embarkation designated by the
         OPERATOR and the CONTRACTOR'S base of operations or personnel's
         point of origin.                                                            C             C

4.       Immigration clearance for CONTRACTOR'S PERSONNEL and
         SUB-CONTRACTORS' PERSONNEL                                                  C             C

5.       In the event crew changes are delayed for reasons set out in
         sub-clause 7.2.5 of SECTION 4 for overnight hotel accommodation and
         meal costs including any overtime charges
                                                                                     C             O

6.       Transportation of CONTRACTOR'S EQUIPMENT between the OPERATOR'S
         shore base or heliport and CONTRACTOR'S shore base
                                                                                     C             C

7.       Dock and dockside facilities, labour and equipment for
         loading/unloading the OPERATOR'S MATERIALS or CONTRACTOR'S EQUIPMENT
         at the OPERATOR'S shore base (to include in storage).
                                                                                     O             O
                                                                                ------------- -------------



<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 2 OF 9
================================================================================

B.       TRANSPORTATION/HANDLING (CONT'D)
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
8.        Offloading facilities to transfer personnel and cargo from the
          OPERATOR'S supply vessel onto the DRILLING UNIT. No CONTRACTOR'S
          PERSONNEL or SUB-CONTRACTOR'S personnel will be to go on board the
          supply vessel for the purpose of loading or offloading cargo.              C             C

9.        Tie up lines for mooring supply vessel to the DRILLING UNIT
          4" medium lay, 120-150 ft.

          First set
          Replacement set(s)                                                         C             C
                                                                                     C             O

10a.      Floating Hoses and couplings for transfer of bulk and liquid
          materials between supply vessels and the DRILLING UNIT.

          First Set                                                                  C             C
          Replacement sets                                                           C             O

10b.      Check valve on hoses at both ends                                          C             O

11.       a.    Transportation and containers for disposing of waste,
                contaminated cuttings and fluids required.                           O             O
          b.    Containers for disposal of CONTRACTOR's liquid hazardous
                waste                                                                C             C

12.      Qualified and competent offshore radio and computer operator for 24
         hour duty (trained for MAPS)                                                C             C

13.      Communications equipment (including satellite communication
         equipment) required for use on the DRILLING UNIT for communication
         with OPERATOR'S shore base (OPERATOR to pay for satellite calls made
         by or on behalf of OPERATOR)

         6 handheld radios with handsfree headsets
         4 handheld radios with handsfree headsets                                   C             C
                                                                                     C             O

14.      Standby Vessel                                                              O             O

15.      Fenders for DRILLING UNIT                                                   C             C
                                                                                ------------- -------------



                                       2
<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 3 OF 9
================================================================================


C.       SHORE BASE USED BY THE CONTRACTOR
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       Office, warehouse and storage facilities CONTRACTOR'S EQUIPMENT and
         CONTRACTOR'S PERSONNEL                                                      C             C

         Note: CONTRACTOR'S shore base shall be as close as possible to the
         OPERATOR'S shore base
                                                                                ------------- -------------

D.       DRY DOCKING/CERTIFICATION
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       For time in dock for statutory testing inspections or trials (but
         excluding moving time)                                                      C             C

2.       Port fees, taxes, licences, import tariffs, pilotage fees, wharfage
         fees canal fees and cost of similar charges including any brokerage
         fees in respect of CONTRACTOR'S EQUIPMENT                                   C             C

3.       Customs Duties, import tariffs in respect of Trinidad and Tobago            O             O
         Regulations
                                                                                ------------- -------------


E.       THIRD PARTY SERVICES
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       Diving equipment services and installation costs and R.O.V.                 O             O

2.       Drill stem testing tools and services                                       O             O

3.       Electric well logging equipment and services                                O             O

4.       Mud logging equipment and services                                          O             O

5.       Mud engineering services and supervision                                    O             O

6.       Geological/mud laboratory and test equipment                                O             O

7.       Acidizing, fracturing and other specialist services                         O             O

8.       Directional drilling equipment and services                                 O             O

9.       Cementing services using cementing unit provided on a "free
         placement" basis                                                            O             O

9a       Maintenance of cementing unit if provided by CONTRACTOR                     C             C

9b       Maintenance of cementing unit if provided by OPERATOR                       O             O
                                                                                ------------- -------------




                                       3
<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 4 OF 9
================================================================================


E.       THIRD PARTY SERVICES (CONT'D)
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------

10.      Coring Services and equipment                                               O             O

11.      Tubing and casing running services                                          O             O

12.      Extra welders and welding material used on welding and cutting the
         OPERATOR'S equipment as authorised by the OPERATOR                          C             O

13.      Well completion services                                                    O             O

14.      Well test equipment and services                                            O             O

15.      Weather forecasting and reporting services                                  O             O

16.      Specialist services and equipment not designated herein but required
         for the operations                                                          O             O

17.      Inspection of Top Drive, drill pipe, drill collars, other in-hole
         equipment as per Clause 4.10 SECTION 4.

         - Initial                                                                   C             C
         - Other and Routine                                                         C             O

18       Space, assistance and services for SERVICE COMPANY personnel and
         equipment                                                                   C             C


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


F.       MATERIALS AND SUPPLIES
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       Cement and cement additives                                                 O             O

2.       Mud chemicals and completion fluids                                         O             O

3.       Fuel for DRILLING UNIT                                                      O             O

4.       Lubes for DRILLING UNIT                                                     C             C

5.       Casing and tubing dope (to be specified by OPERATOR)                        O             O

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



                                       4
<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 5 OF 9
================================================================================


F.       MATERIALS AND SUPPLIES (CONT'D)
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
6.       Grease, pipe dope (friction factor 1 pipe dope) and lubricants
         (other than 4. above) for equipment supplied by CONTRACTOR                  C             C

7.       Hydraulic fluid for blow-out preventers and control unit                    C             C

8.       Drilling Water                                                              O             O

9.       Potable water in excess of rated production capacity of water
         distillation unit installed on board.                                       O             O

10.      Drilling bits, diamond bits, and core heads                                 O             O

11.      Shale shaker screens (Refer Section 4, Clause 4.13)                         C             C

12.      Repair and replacement parts for safety joint fishing jars and
         fishing tools, resulting from" in-hole" damage                              O             O

13.      Casing protectors for drill pipe
         - initial set                                                               C             C
         - replacement set(s)                                                        C             O

14.      BOP and riser consumables                                                   C             O

15.      Repair kits for: float valves, kelly cocks (upper and lower) and
         inside BOP's                                                                C             C
                                                                                ------------- -------------


G.       DRILLING EQUIPMENT AND UNIT
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       CONTRACTOR'S EQUIPMENT                                                      C             C

2.       Fishing tools for CONTRACTOR's In Hole Equipment                            O             O

3.       Tubing                                                                      O             O

4.       Tubing handling equipment                                                   O             O

5.       3.1/2" drill pipe including drill collars and handling tools. (If
         specified by OPERATOR).                                                     O             O

6.       Cementing heads                                                             O             O



                                       5
<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 6 OF 9
================================================================================
G.       DRILLING EQUIPMENT AND UNIT (CONT`D)
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------


7.       2 sets Elevators, tongs and handling tools for 30", 20"16", 113/4",
         13 3/8", 9 5/8" and 7" casing (As specified in Section 7 Part 2 only)       O             O

8.       Drilling Jars                                                               O             O

9.       36" and 26" Hole openers c/w spare cutters                                  O             O

9a.      Reamers and stabilisers                                                     O             O

10.      Drill pipe wipers                                                           C             C

11.      Fishing tools other than those described in 2 above                         O             O

12.      Casing cutters & casing spears                                              O             O

13.      Casing power tongs and hydraulic power unit                                 O             O

14.      Replacement and/or repair of any equipment when lost or damaged
         below the rotary table other than arising out of fair wear and tear.        C             O

15.      Mud pump fluid and power end parts and consumables
         Liner Sizes of 6" and 7" required                                           C             C

         Mud pump fluid and power end parts and consumables                          C             O
         Liner Sizes of 5 1/2" required

16.      Spares for choke manifold                                                   C             C

17.      Replacement of tubulars after inspection pursuant to SECTION 4
         Clause 4.10 hereof                                                          C             C

20.      Maintenance and spare parts for all CONTRACTOR'S EQUIPMENT unless
         otherwise provided herein                                                   C             C
                                                                                ------------- -------------



                                       6
<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 7 OF 9
================================================================================


H.       WELL EQUIPMENT
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       All tubular goods, including conductor pipe, casing and tubing              O             O

2.       Casing shoes, collars, baskets, centralisers float equipment,
         baffles, scratchers and all other such in-hole consumables                  O             O

3.       Wellhead housings including casing hangers wear bushings and all
         such associated wellhead equipment.                                         O             O

4.       Valves, Xmas Trees and necessary tools and equipment for installation
                                                                                     O             O

5.       All running and pressure testing tools for wellhead equipment
         supplied by the OPERATOR                                                    O             O

6.       Replacement and repair and all consumables for items provided under
         5 above                                                                     O             O

7.       Wellhead ring joint gaskets, other than those required for
         installation between items of the CONTRACTOR'S EQUIPMENT                    C             O

8.       Permanent and Temporary Guide Bases                                         O             O
                                                                                ------------- -------------


I.       SAFETY
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       Radio equipment for communication with tugs, supply vessels and
         helicopters including portable sets (See B. 13.)                            C             C

2.       Permits, licences required for operation of communication equipment.        C             C

3.       First aid, infirmary, equipment and medical attention on board the
         DRILLING UNIT for all persons while on board                                C             C

3a       Paramedic on board the DRILLING UNIT (to be specified by OPERATOR,
         refer SECTION 4, Clause 3.4)                                                C             O

3b       STC (EMT Basic) on board the DRILLING UNIT (refer SECTION 4, Clause         C             C
         3.6)

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



                                       7
<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 8 OF 9
================================================================================


I.       SAFETY
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
4.       Safety hats, safety boots, safety glasses, hearing protection, fire
         resistant clothing (Nomex), HLO fire resistant suit and gloves for          C             C
         CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S Personnel

4a       PPE for synthetic oil-based muds and brine                                  C             O

5.       Fire fighting equipment as required to comply with the OPERATOR'S
         and government regulations                                                  C             C

6.       Onshore medical services for CONTRACTOR'S and SUB-CONTRACTOR'S
         personnel                                                                   C             C

7.       Refuelling system on the DRILLING UNIT for helicopter fuel, when            O             O
         requested by OPERATOR.

8.       Helicopter refuelling inspection kits and filters                           C             C

9.       All necessary life saving and safety equipment to conform with
         regulations and requirements of the LAW and OPERATOR                        C             C

10       Fluorescent vest for HLO and banks men                                      C             C
                                                                                ------------- -------------


J.       MISCELLANEOUS
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       Helicopter deck as required by government regulations and to
         accommodate Super Puma helicopter or similar                                C             C

2.       All hand and power tools required for normal maintenance of the
         DRILLING UNIT                                                               C             C

3.       Office on the DRILLING UNIT for the OPERATOR'S Drilling Supervisors
                                                                                     C             C

4.       Catering on board for all CONTRACTOR'S and SUB-CONTRACTOR'S
         personnel, plus 16 OPERATOR'S personnel or SERVICE COMPANY PERSONNEL
                                                                                     C             C
5.       Catering for all OPERATOR and SERVICE COMPANY PERSONNEL in excess of
         above at cost                                                               C             O

6.       Subsea T.V. System                                                          O             O

7.       Replacement parts to Subsea T.V. System                                     O             O
                                                                                ------------- -------------



                                       8
<PAGE>

                                                       ATTACHMENT 1 TO SECTION 4
                                                   CHECKLIST OF RESPONSIBILITIES
                                                                     PAGE 9 OF 9
================================================================================


J.       MISCELLANEOUS (CONT'D)
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------

8.       On board entertainment, video, films, satellite TV.                         C             C

9.       CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S PERSONNEL
                                                                                     C             C

10.      Additional personnel as requested by the OPERATOR employed by
         CONTRACTOR                                                                  C             O

11.      Overtime for CONTRACTOR'S PERSONNEL authorised by the OPERATOR in
         writing                                                                     C             O

12.      Survival Suits for use during helicopter flights for CONTRACTOR'S
         personnel and CONTRACTORS Service personnel                                 O             O

13.      Waste disposal onshore                                                      O             O

14.      Cargo baskets and containers for equipment supplied by OPERATOR             O             O

15.      Mud laboratory test equipment for routine and testing and treatment.
         (See sub-clause 4.8.2 para 10).                                             O             O

16.      Replacement of additional anchors, buoys and pennant wire                   C             C

17.      Burners                                                                     O             O
                                                                                ------------- -------------

K.       THE VESSEL
                                                                                ------------- -------------
                                                                                Provided By    To Account
                                                                                ------------- -------------
1.       Damage to or loss of DRILLING UNIT:                                         C             C
         Inspection                                                                  C             C
         Repairs                                                                     C             C
         Replacement                                                                 C             C
                                                                                ------------- -------------

</TABLE>


                                       9
<PAGE>


                                  ATTACHMENT 2

                                       TO

                                    SECTION 4


                  REPORTING RESPONSIBILITIES OF THE CONTRACTOR



<PAGE>

The following forms and reports shall be completed by the CONTRACTOR and handed
over to the OPERATOR.

1.       The Daily IADC Tour Sheet
2.       Morning drilling report
3.       Drilling Parameters Record Charts (Drilling Recorder)
4.       Pit Level Indicator Chart
5.       Loading Notes and/or cargo manifests
6.       Drilling Unit & Drilling Equipment Inspection     (a) Safety
                                                           (b) General
7.       Testing of B.O.P. Equipment and Charted
8.       Accident/Near Miss Report
9.       Time Breakdown Report
10.      Bed/Meal Tickets
11.      Minutes of Safety Meetings
12.      Barge Engineer's Report
13.      Trip Sheet
14.      Trend indication while drilling - Torque and Drag and Pump Pressure
15.      Bottom Hole Assembly and Diagrams
16.      Circulating time on jars and thrusters
17.      Environment Emission Report

G.1      THE DAILY TOUR SHEET

         The Daily IADC Tour Sheet will be comprehensively filled in by the
         Drillers, checked on the DRILLING UNIT by the CONTRACTOR'S Toolpusher
         and by the OPERATOR'S REPRESENTATIVE or, by the latter's delegation,
         another OPERATOR'S Supervisor on board. Both the said Toolpusher and
         the OPERATOR'S REPRESENTATIVE on the DRILLING UNIT will sign the Daily
         Tour Sheet.

G.2      THE MORNING DRILLING REPORT

         This report shall be filled in every morning on the DRILLING UNIT by
         the OPERATOR'S Drilling Supervisor assisted by the CONTRACTOR'S
         Toolpusher. It shall contain a summary of the previous day's operations
         and shall be transmitted each morning at an agreed time to the
         OPERATOR'S onshore office.

G.3      DRILLING PARAMETERS RECORD CHARTS (DRILLING RECORDER)

         The main drilling parameters i.e. weight on bit, pump pressure, pump
         strokes per minute, R.O.P., rotary torque, R.P.M., will be recorded on
         a single chart. In the event of any failure of the Drilling Parameters
         Recorder the CONTRACTOR will give immediate notice to the OPERATOR'S
         REPRESENTATIVE of such failure. The OPERATOR'S Drilling Supervisor will
         be responsible for collecting the charts and sending them to the
         OPERATOR'S Office (Drilling Department).

G.4      PIT LEVEL INDICATOR

         This recorder shall always be connected during all operations from spud
to release.


<PAGE>

                                                        ATTACHMENT 2TO SECTION 4
                                    REPORTING RESPONSIBILITIES OF THE CONTRACTOR
                                                                     PAGE 2 OF 3
================================================================================


         The CONTRACTOR will give immediate notice to the OPERATOR'S Drilling
         Supervisor of any failure of the Pit Level Indicator. The OPERATOR'S
         Drilling Supervisor will be responsible for collecting the charts and
         sending them to the OPERATOR'S Office (Drilling Department).

         MUD REPORT (Prepared by OPERATOR)

         The OPERATOR'S mud engineer will prepare a complete mud report for
         every WELL; this mud report will consist of:

         1   Daily Mud Report
         2   End of Phase Mud Report
         3   Mud Material used and transferred
         4   Usage and Cost per Interval

G.5      LOADING NOTES

         The CONTRACTOR shall prepare Loading Notes in respect of such of
         OPERATOR'S MATERIALS as are consigned to the OPERATOR from the DRILLING
         UNIT, and shall check receipts of such MATERIALS at the DRILLING UNIT
         against the Loading Note prepared by the OPERATOR or its SERVICE
         COMPANY and advise the OPERATOR'S REPRESENTATIVE forthwith of any
         discrepancies therein.

G.6      BED/MEAL TICKETS

         Any invoice sent to the OPERATOR in respect of beds or meals taken by
         the OPERATOR'S PERSONNEL or the SERVICE COMPANY PERSONNEL on the
         DRILLING UNIT shall be substantiated by daily vouchers clearly and
         properly completed by the CONTRACTOR and countersigned by OPERATOR'S
         Drilling Supervisor.

G.7       DRILLING UNIT AND DRILLING EQUIPMENT INSPECTION
         (a) SAFETY
         (b) GENERAL

         Inspection shall be carried out as directed by the CONTRACTOR's Rig
         Manager. After the OPERATOR'S Drilling Supervisor and the CONTRACTOR'S
         Rig Manager have conducted such inspections, the inspection forms shall
         be completed by the said Rig Manager in the presence of the said
         OPERATOR's Drilling Supervisor and signed by both parties.

G.8      PERIODIC TESTING OF B.O.P. EQUIPMENT

         Testing of the Blowout Preventers and associated equipment shall take
         place as directed by the OPERATOR'S Drilling Supervisor. The
         CONTRACTOR'S Toolpusher and OPERATOR's Drilling Supervisor shall sign
         the form after it has been completed by the CONTRACTOR's Engineer.

G.9      ACCIDENT/NEAR MISS REPORTS

         Whenever an accident or near miss occurs (as defined below) the
         CONTRACTOR shall immediately notify the OPERATOR'S REPRESENTATIVE and
         as soon as possible thereafter deliver to the said REPRESENTATIVE an


                                       2
<PAGE>

                                                        ATTACHMENT 2TO SECTION 4
                                    REPORTING RESPONSIBILITIES OF THE CONTRACTOR
                                                                     PAGE 3 OF 3
================================================================================


         Incident Report on a form to be provided by the OPERATOR and completed
         by the CONTRACTOR.

         An accident is defined as an undesired event that results in harm to
         people, damage to property or loss to process. This includes all
         security accidents.

         A near miss is defined as an undesired event, which, although not
         actually resulting in loss, could have resulted, under slightly
         different circumstances, in harm to people, damage to property or loss
         to process.

G.10     TIME BREAKDOWN REPORT

         This form shall be filled in by the OPERATOR'S Drilling Supervisor on
         the DRILLING UNIT. There will be one such form per month per WELL.

         The Time Breakdown Report shall be signed by the CONTRACTOR'S
         REPRESENTATIVE and the OPERATOR'S Drilling Supervisor at a convenient
         time following the end of each WELL and/or each month. The time
         breakdown will be agreed by both parties before any invoice is
         presented to OPERATOR.

G.11     MINUTES OF SAFETY MEETINGS

         Minutes of Safety Meetings shall be supplied by CONTRACTOR to the
         OPERATOR for all Safety Meetings carried out on board the DRILLING
         UNIT. The CONTRACTOR shall sign the minutes as being correct and
         accurate.

G.12     BARGE ENGINEER'S REPORT

         Daily report on usage of bulk, fuel, water, liquid muds, helicopter
         fuel, anchor tension, environmental conditions and variable deckload.

G.13     TRIP SHEET REPORT

G.17     EMISSION REPORT

         To be completed monthly and sent to the OPERATOR's HSE Department.



                                       3
<PAGE>

                                    SECTION 5


                                RATES AND CHARGES


<PAGE>

                                    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 set out in Sections 1,2,3,4,6 and 7
         hereof.

5.2      MOBILISATION AND DEMOBILISATION

         (a)      MOBILISATION CHARGE shall be the amount payable for the
                  MOBILISATION of the CONTRACTOR'S EQUIPMENT and CONTRACTOR'S
                  PERSONNEL to the first drilling LOCATION in the CONTRACT AREA
                  including

                  -      setting up a base in the CONTRACT AREA
                  -      towage,
                  -      air passages,
                  -      sea freight,
                  -      lighterage,
                  -      port dues,
                  -      pilotage,
                  -      wharfage,
                  -      cranage,
                  -      cargo handling,

                  until the agreed time and date that the legs are pinned at the
                  first LOCATION.

                  Any time in excess of twenty-four (24) hours waiting on
                  weather in the CONTRACT AREA shall be paid to CONTRACTOR at
                  the Standby Rate.

         (b)      DEMOBILISATION CHARGE shall be the amount payable for the
                  DEMOBILISATION of the CONTRACTOR'S EQUIPMENT and CONTRACTOR'S
                  PERSONNEL from a mutually agreed port in the CONTRACT AREA
                  including

                  -      closing down a base in the CONTRACT AREA,
                  -      towage,
                  -      air passages,
                  -      sea freight,
                  -      lighterage,
                  -      port dues,
                  -      pilotage,
                  -      wharfage,
                  -      cranage,
                  -      cargo handling,

                  from the time the DRILLING UNIT is under tight tow from the
                  mutually agreed port. Unloading of OPERATOR'S MATERIALS and
                  SERVICE COMPANY equipment and materials at the Republic of
                  Trinidad and Tobago or such other designated location shall be
                  reimbursed at the DEPROVISIONING RATE.


<PAGE>

                                                                       SECTION 5
                                                               RATES AND CHARGES
                                                                     PAGE 2 OF 7
================================================================================


                  Should the CONTRACTOR have continuing work for another
                  operator in the waters of Trinidad and Tobago, or if another
                  operator is paying for mobilization of the DRILLING UNIT from
                  the waters of Trinidad and Tobago the DRILLING UNIT may, with
                  the OPERATOR'S agreement, be left on the last LOCATION and the
                  OPERATOR shall pay NIL rate. In such case the DEMOBILISATION
                  CHARGE shall not apply. NIL rate shall apply if the move is
                  delayed by the other operator.

         (c)      Standing Down/Re-mobilisation 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 demobilising from said port or home
                  bases the CONTRACTOR'S PERSONNEL as a direct consequence of
                  the DRILLING UNIT being shutdown by reason of Force Majeure.
                  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 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 the
                  normal performance of the DRILLING SERVICES. The OPERATING
                  RATE shall apply for normal operations from the COMMENCEMENT
                  DATE until the DRILLING UNIT arrives at the mutually agreed
                  port at the end of the term of the CONTRACT and all OPERATOR'S
                  and SERVICE COMPANY equipment has been offloaded.

                  The OPERATING RATE shall not apply during provisioning,
                  deprovisioning, stand-by, moving, or during any periods of
                  shut down however caused.

                  In particular shutdown for revalidation of CERTIFICATION,
                  compliance with regulations, or rejection of equipment shall
                  be payable at nil rate.

                  Cessation of operations in order to slip, cut or change the
                  drilling line, or routine lubrication for routine maintenance
                  purposes as further described in clause 5.3(e) of this Section
                  5,up to 1/2 hour per shift per day, which cannot be safely and
                  properly carried out without suspending the DRILLING SERVICES
                  shall not be deemed to be shut down for the purposes of this
                  sub-clause.

                  The OPERATING RATE shall apply in a similar manner at each
                  subsequent LOCATION.

         (b)      The PROVISIONING RATE/ DEPROVISIONING RATE shall be the amount
                  per day applicable when the DRILLING UNIT is moored at
                  anchorage or alongside a suitable quay in Pascagoula,
                  Mississippi and the Republic of Trinidad and Tobago or such
                  other designated location and the OPERATOR'S MATERIALS and
                  SERVICE COMPANY EQUIPMENT are being loaded/ unloaded. The
                  PROVISIONING RATE/ DEPROVISIONING RATE shall apply for such
                  period in excess of fourteen (14) days for the Make Ready
                  period described in Section 1, Clause 6.3.



                                       2
<PAGE>

                                                                       SECTION 5
                                                               RATES AND CHARGES
                                                                     PAGE 3 OF 7
================================================================================


         (c)      The STANDBY RATE shall be the amount per day applicable when
                  the DRILLING UNIT is fully manned and in a state of readiness
                  to start or resume operations, during any period of delay or
                  suspension of operations on account of

                  -        adverse sea or weather conditions
                  -        waiting on OPERATOR'S orders or on OPERATOR'S
                           MATERIALS or on SERVICE COMPANIES
                  -        during wireline logging operations from the time the
                           first logging tool passes through the rotary table
                           until the last tool of the logging suite is retrieved
                           through the rotary table
                  -        failure of equipment provided by the OPERATOR or the
                           SERVICE COMPANIES
                  -        any act or omission of OPERATOR or its SERVICE
                           COMPANIES,

                  until such time as operations are resumed.

                  During such Standby the CONTRACTOR may, subject to the
                  agreement of the OPERATOR, carry out maintenance or repairs to
                  the CONTRACTOR'S EQUIPMENT.


                  In the event the CONTRACTOR is unable to jack up at the first
                  LOCATION on account of weather conditions only, then the
                  STANDBY RATE shall apply after twenty-four (24) hours from
                  arrival of the DRILLING UNIT in the CONTRACT AREA. .

         (d)      The MOVING RATE shall be the amount per day which shall apply
                  from the time the DRILLING UNIT is under tight tow on
                  completion of the WELL at the first LOCATION until the legs
                  are pinned at the next LOCATION and similarly at subsequent
                  LOCATIONS thereafter.

         (e)      The REPAIR RATE shall be applicable during such times as there
                  is a shutdown in operations for repairs to the DRILLING
                  EQUIPMENT in the manner set out below:

         -        REPAIR RATE applies for a cumulative ten (10) hours per MONTH
                  shut down, unless such shutdown is for repairs not reasonably
                  within the control of CONTRACTOR, in which case the REPAIR
                  RATE shall be applicable for a cumulative thirty-six (36)
                  hours per month, and
         -        thereafter at NIL Rate.

                  In the event that any such shutdown which is caused by or
                  arises from the same incident shall continue from one month
                  into the next, then for the purposes of this sub-clause the
                  incident shall be treated as though it occurred in the same
                  month.

                  For cumulative downtime less than ten (10) hours per calendar
                  month, CONTRACTOR shall earn the incentive payment specified
                  in Schedule 5.1.

                  Downtime for the following instances shall be considered
                  normal drilling operations and shall not be considered as
                  repair time:



                                       3
<PAGE>

                                                                       SECTION 5
                                                               RATES AND CHARGES
                                                                     PAGE 4 OF 7
================================================================================


                  Industry standard thirty minutes rig service per tour
                  including, but not limited to, inspection of equipment,
                  lubrication, repacking swivel or top drive, slipping and/or
                  cutting drilling line, changing pump liners or swabs and
                  routine top drive service.

         (f)      The REDRILLING RATE being 75 percent of the OPERATING 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 6.4 of the Conditions of Contract.

         (g)      The FISHING RATE being the amount per day applicable during
                  all times when fishing operations (or sidetracking operations
                  arising out of fish in the hole) are being carried out,
                  starting from the time that normal drilling operations are
                  interrupted on account of the need to begin fishing operations
                  and continuing until such time as normal drilling operations
                  are resumed. The Rate for all such fishing or sidetracking
                  operations shall be either the OPERATING RATE or, in the event
                  such operations are due to or arise out of the negligence of
                  the CONTRACTOR or its PERSONNEL then the rate shall be 75% of
                  the OPERATING RATE. In the event that sidetracking operations
                  are being carried out at 75% of the OPERATING RATE then normal
                  drilling operations shall be deemed to have been resumed when
                  the depth is reached at which the said fishing operations
                  occurred in the first place. 'Fishing operations' shall be
                  deemed to include all operations incurred in attempting to
                  remove a fish from the WELL or to push a fish to one side or
                  to pick up a fish.

         (h)      The SHUTDOWN WITH CREW RATE being the amount per day quoted in
                  Schedule 5.1 which shall apply during all such time as the
                  DRILLING UNIT has been shutdown and the DRILLING SERVICES have
                  been suspended for any reason by the OPERATOR. The Rate shall
                  include the CONTRACTOR'S costs in maintaining its PERSONNEL
                  and of protective maintenance at the DRILLING UNIT.

         (i)      The SHUTDOWN WITHOUT CREW RATE being the amount per day of the
                  SHUTDOWN WITH CREW RATE less any savings effected by the
                  CONTRACTOR in reducing the numbers of CONTRACTOR'S PERSONNEL
                  to skeleton strength for caretaker purposes only. The OPERATOR
                  shall give the CONTRACTOR 30 (thirty) days prior written
                  notice of the application of this Rate, which shall be
                  applicable for a period of not less than 30 (thirty) days.

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

         (j)      The FORCE MAJEURE a) Rate and the FORCE MAJEURE b) Rate shall
                  be payable by the OPERATOR as provided in Section 2, Clause
                  10.

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 eating and/or staying overnight on the DRILLING
         UNIT in excess of 16 (sixteen) such Personnel per day.
         Where Personnel stay overnight on the DRILLING UNIT, 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" telex. Where Personnel are not staying


                                       4
<PAGE>

                                                                       SECTION 5
                                                               RATES AND CHARGES
                                                                     PAGE 5 OF 7
================================================================================


         overnight on the DRILLING UNIT, but have meals on board, the Casual
         Meal Rate shall apply.

5.5      PERSONNEL

         (a)      Additional Personnel

                  The CONTRACTOR shall be paid at the rates set out in Schedule
                  2 hereto for personnel additional to those listed in Section 6
                  Schedule 6.1 requested by the OPERATOR. CONTRACTOR shall
                  provide additional supervisory personnel for familiarization
                  of the crew and safety and supervision on the DRILLING UNIT,
                  during the transition period through ninety (90) days after
                  the COMMENCEMENT DATE. OPERATOR shall pay CONTRACTOR fifty
                  percent (50%) of the rates, costs, and expenses for such
                  additional personnel during such transition period, up to a
                  maximum payment by OPERATOR of $150,000.

         (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 RIG STAFF who
                  attend the OPERATOR'S or OPERATOR'S approved in-house required
                  courses. 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 Schedule 5.2 for all days in excess of 7
                  (seven) days 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 after the COMMENCEMENT DATE:

         (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 the Schedule
                  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 discounts plus an addition of 10% for all items not
                  exceeding US$3,000 (three thousand dollars) and 6% on all
                  items exceeding US$3,000 (three thousand dollars) to cover the
                  CONTRACTOR'S additional costs, overhead charges and profit.

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



                                       5
<PAGE>

                                                                       SECTION 5
                                                               RATES AND CHARGES
                                                                     PAGE 6 OF 7
================================================================================


         (d)      An agreed rental rate to be incorporated in the Schedule 5.3
                  hereto covering CONTRACTOR'S operating and maintenance costs
                  for each item on such additional equipment included in Section
                  7 hereof.

         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      FIXED RATES

         The rates and charges specified in Schedule 5.1, 5.2 and 5.3 shall be
         fixed for the duration of the CONTRACT subject only to adjustments for
         documented normal and customary changes in CONTRACTOR'S operating
         costs, including but not limited to, all personnel related costs,
         catering, insurance, repair and maintenance, travel expenses, and third
         party towing charges in the fixed price demobilisation fees. CONTRACTOR
         shall use reasonable efforts to keep the operating costs in line with
         industry practice.

5.8      PAYMENT PROVISIONS

         5.8.1    Monthly Account and Invoicing

                  (a)      Within the first fifteen (15) days of each MONTH the
                           CONTRACTOR shall submit to the OPERATOR in triplicate
                           a monthly account in respect of DRILLING SERVICES
                           performed by it 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 support
                           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)      CONTRACTOR shall be responsible for ensuring timely
                           receipt of invoices by the OPERATOR. OPERATOR will
                           only pay CONTRACTOR's invoices submitted within two
                           (2) months of completion of the DRILLING SERVICES for
                           a particular well under this CONTRACT, except for
                           third party invoices which must be submitted within
                           four (4) months of completion of the DRILLING
                           SERVICES for a particular well. Invoices submitted
                           more than two (2) months or four (4) months as the
                           case may be, after completion of the DRILLING
                           SERVICES for a particular well under this CONTRACT
                           will be settled at the OPERATOR's discretion and may
                           result in non-payment.

                  (e)      Invoices shall be numbered serially and submitted to
                           the OPERATOR at the following address, bearing the
                           CONTRACT reference number and well description:

                           BP TRINIDAD AND TOBAGO LLC
                           CONTRACT:  C- 2600


                                       6
<PAGE>

                                                                       SECTION 5
                                                               RATES AND CHARGES
                                                                     PAGE 7 OF 7
================================================================================


                           WELL DESCRIPTION: (Well being drilled)

                           Marked for the attention of: THE INVOICE PROCESSING
                           SUPERVISOR (Well Operations)

                           or other address as may be advised to the CONTRACTOR
                           from time to time.

         5.8.2    Payments by the OPERATOR

                  (a)      To the extent it is not disputed by the OPERATOR, the
                           OPERATOR shall pay all invoices within 30 (thirty)
                           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 30 (thirty) days, then the OPERATOR shall pay
                           interest on such unpaid amounts at the rate of 10%
                           per annum or pro rata thereof from the due date until
                           paid. The bank account to which OPERATOR shall make
                           payments under the CONTRACT shall be as follows:

                           BANK:

                           ACCOUNT:

                           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 20 (twenty)
                           days of receipt thereof notify the CONTRACTOR in
                           writing of the invoice or part thereof so disputed
                           and specifying the reason therefor. 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 based solely on the original support
                           documents or information provided.

                  (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 US Dollars.



                                       7
<PAGE>


                                  SCHEDULE 5.1


                                RATES AND CHARGES
<TABLE>
<S>                                                                                  <C>
NAME OF DRILLING UNIT:...............................CHILES CORONADO

Ref. No.             DESCRIPTION OF RATE OR CHARGE                                                  Amount US$

                     MOBILISATION - DEMOBILISATION

OFFSHORE EAST COST OF TRINIDAD

 1.      MOBILISATION            - direct to LOCATION                                $3,600,000    Lump Sum

                                 - Via the Republic of Trinidad and Tobago            $3,600,000   Lump Sum


 2.      DEMOBILISATION   - from the REPUBLIC of Trinidad and Tobago                 $2,800,000    Lump Sum


 3.      STANDING DOWN/ REMOBILISATION CHARGE                                                      NA

         DAILY RATES

 4.      OPERATING                                                                   $73,000 per day

 5.      PROVISIONING/ DEPROVISIONING                                                $68,000 per day

 6.      STANDBY                                                                     $71,000 per day

 7.      MOVING                                                                      $71,000 per day

8.       REPAIR                                                                      85% of OPERATING RATE

9.       REDRILLING                                                                  75% of OPERATING RATE

10.      FISHING                                                                     75% of OPERATING RATE

11.      SHUTDOWN WITH CREW                                                          $71,000 per day

12.      SHUTDOWN WITHOUT CREW                                                       $71,000 per day

13.      FORCE MAJEURE                        a)                                     $71,000 per day
                                              b)                                     $60,000 per day
14       REPAIR RATE INCENTIVE                                                       $1000   per hour
         (Payable for each hour of repair time less
         than 10 hours per month)


<PAGE>

                                                       SCHEDULE 5.1 TO SECTION 5
                                                               RATES AND CHARGES
                                                                     PAGE 2 OF 2
================================================================================


MISCELLANEOUS SERVICES FOR OPERATOR'S PERSONNEL

15.                  Meals and accommodation provided by
                     CONTRACTOR (in excess of 16 (sixteen)                      $60.00             per man per day per day
                     OPERATOR'S personnel)

                     Casual Meal Rate                                           $15.00             per meal

16.                  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 schedule
                     5.2 hereto for the person so removed for all days in excess
                     of seven (7) days that such person shall not have been so
                     replaced until such time as the said person so removed has
                     been replaced.

</TABLE>





                                       2
<PAGE>

                                  SCHEDULE 5.2
                                    RATES FOR
                             CONTRACTOR'S PERSONNEL

                                 (SEE NEXT PAGE)




<PAGE>
<TABLE>
<CAPTION>
Trinidadian Operations                                                                                   25%         37.2%
======================                                                                                   ===         =====

            Title              Total Number * On Board  Expatriate or  Work Schedule  Annual Base     Foreign     Overhead &
            =====              ============== ========  ============== =============  ============    ========    ===========
                                                           National                      Salary    Service Premium Insurance
                                                           ========                      ======    =============== ==========
                                                                                                                     Burden
<S>                                  <C>          <C>   <C>            <C>          <C>           <C>            <C>
Expatriate
----------
Rig Manager                          2            1     Expatriate     28 On/28 Off $81,600       $20,400        $30,355

Assistant Rig Manager                2            1     Expatriate     28 On/28 Off  72,000        18,000         26,784

Rig Engineer (Barge Engineer)        2            1     Expatriate     28 On/28 Off  66,326        16,582         24,673

Safety & Training Coordinator        2            1     Expatriate     28 On/28 Off  46,290        11,573         17,220

Mechanic                             2            1     Expatriate     28 On/28 Off  58,035        14,509         21,589

Electrician                          2            1     Expatriate     28 On/28 Off  58,035        14,509         21,589

Crane Operator                       4            2     Expatriate     28 On/28 Off  48,363        12,091         17,991

Driller                              4            2     Expatriate     28 On/28 Off  59,417        14,854         22,103

          Sub-Total                 20           10
          =========                 ==           ==
National
========
Assistant Driller                    4            2     National       14 On/14 Off       $  35,000       -       13,020

Derrickman                           4            2     National       14 On/14 Off          28,000       -       10,416

Shaker Hand                          4            2     National       14 On/14 Off          26,500       -       9,858

Floorman                            12            6     National       14 On/14 Off          26,000       -       9,672

Assistant Electrician                2            1     National       14 On/14 Off          28,000       -       10,416

Motorman                             4            2     National       14 On/14 Off          28,000       -       10,416

Clerk/Radio Operator                 2            1     National       14 On/14 Off          28,000       -       10,416

Storeman                             2            1     National       14 On/14 Off          25,000       -       9,300

Welder                               2            1     National       14 On/14 Off          30,000       -       11,160

Lead Roustabout                      4            2     National       14 On/14 Off          28,000       -       10,416

Roustabout                          12            6     National       14 On/14 Off          26,000       -       9,672

Steward                              2            1     National       14 On/14 Off          28,000       -       10,416

Night Cook                           4            2     National       14 On/14 Off          26,000       -       9,672

Utility Hand                         8            4     National       14 On/14 Off          24,000       -       8,928

          Sub-Total                 66           33
          =========                 ==           ==
       Total Personnel              86           43
       ===============              ==           ==

Table continued...
<PAGE>

Trinidadian Operations
======================
            Title                 Total     Day Rate with         Crew
            =====                 ======    ==============        ====
                               Annual Cost   Burden per    Additions/Day/Position**
                               ============  ===========   ========================
                                Per Person      Person
Expatriate
----------

Rig Manager                  $ 132,355        $ 362.62          $      725.23

Assistant Rig Manager          116,784          319.96                 639.91

Rig Engineer (Barge Engineer)  107,581          294.74                 589.48

Safety & Training Coordinator   75,082          205.71                 411.41

Mechanic                        94,133          257.90                 515.80

Electrician                     94,133          257.90                 515.80

Crane Operator                  78,445          214.92                 429.83

Driller                         96,374          264.04                 528.08

          Sub-Total
          =========

National
========

Assistant Driller
                                48,020         131.56                  263.12
Derrickman
                                38,416         105.25                  210.50
Shaker Hand
                                36,358          99.61                  199.22
Floorman
                                35,672          97.73                  195.46
Assistant Electrician
                                38,416         105.25                  210.50
Motorman
                                38,416         105.25                  210.50
Clerk/Radio Operator
                                38,416         105.25                  210.50
Storeman
                                34,300          93.97                  187.95
Welder
                                41,160         112.77                  225.53
Lead Roustabout
                                38,416         105.25                  210.50
Roustabout
                                35,672          97.73                  195.46
Steward
                                38,416         105.25                  210.50
Night Cook
                                35,672          97.73                  195.46
Utility Hand
                                32,928          90.21                  180.43
          Sub-Total
          =========
       Total Personnel
       ===============
</TABLE>

** Rates are per position. This rate includes two persons, one for crew A, one
================================================================================
for crew B. Does not include additional travel cost, if any and /or additional
================================================================================
catering costs
==============


<PAGE>


                                    SECTION 6


                             CONTRACTOR'S PERSONNEL



<PAGE>

6.1      PROVISION OF CONTRACTOR'S PERSONNEL

         The CONTRACTOR shall provide all CONTRACTOR'S PERSONNEL listed in
         Schedule 6.1 hereof in the numbers and categories referred to therein.
         Such numbers and categories shall not be exceeded or reduced without
         prior written approval of the OPERATOR and any change in the numbers
         and/or categories so approved shall be recorded by amendment to
         Schedule 6.1. Should the OPERATOR require the CONTRACTOR to provide
         additional PERSONNEL in excess of the full complement of CONTRACTOR'S
         PERSONNEL or SUB-CONTRACTOR'S personnel listed in Schedules 6.1 and 6.2
         then the CONTRACTOR shall be reimbursed at the day rates included under
         SECTION 5. The CONTRACTOR shall give the OPERATOR'S REPRESENTATIVE the
         name and work history, education and training history including courses
         attended of such CONTRACTORS PERSONNEL including any person proposed as
         a replacement therefor. The OPERATOR may at its discretion approve or
         veto the provision of any such CONTRACTOR'S PERSONNEL by stating the
         reason therefor and may within fourteen (14) days of receipt of such
         histories notify the CONTRACTOR in writing of its approval or veto.
         Absence of such notification by the OPERATOR within fourteen (14) days
         shall constitute approval.

         The selection, replacement, hours of labour and remuneration of
         CONTRACTOR's PERSONNEL shall be determined by CONTRACTOR.

6.2      CONTRACTORS REPRESENTATIVE

         The CONTRACTOR shall provide a competent and authorised Representative
         who shall be nominated in writing and be acceptable to the OPERATOR.
         The CONTRACTOR'S REPRESENTATIVE shall be available at all times and
         shall be authorised to receive on behalf of the CONTRACTOR all
         directions and instructions in connection with the SERVICES from the
         OPERATOR'S REPRESENTATIVE.

         CONTRACTOR's REPRESENTATIVE shall be in charge of all CONTRACTOR's
         personnel and shall have authority to resolve all day to day matters
         which arise between OPERATOR and CONTRACTOR.

6.3      GENERAL

         The CONTRACTOR shall adhere to all labour standards and practices
         applicable to the CONTRACT AREA.

         All personnel provided by the CONTRACTOR in accordance with sub-clause
         6.1 above, shall be deemed to be the employees of the CONTRACTOR and
         the CONTRACTOR shall be solely responsible for payment of salaries to
         such personnel.

         The CONTRACTOR shall meet all costs for its PERSONNEL, including but
         without limitation those associated with travel, accommodation, holiday
         and sickness throughout the duration of the SERVICES.

         The CONTRACTOR'S PERSONNEL shall be sufficiently conversant with the
         English language to enable the OPERATOR'S REPRESENTATIVE to issue
         instructions and to receive written and verbal reports in the English
         language and so that operations hereunder are not hampered or


<PAGE>

                                                                       SECTION 6
                                                          CONTRACTOR'S PERSONNEL
                                                                     PAGE 2 OF 4
================================================================================


         endangered on account of language barriers. The radio and computer
         operator must be English speaking.

         The CONTRACTOR shall be responsible for all matters relating to rest
         periods for its personnel including inter alia the provision of a
         relief operating crew where the performance of the SERVICES as required
         by the OPERATOR so dictates.

6.4      TRAINING

         The CONTRACTOR shall ensure that all personnel proposed in compliance
         with the foregoing shall have undertaken courses in accordance with the
         CONTRACTOR'S operations manual and good oilfield practice and all
         OPERATOR required HSE training requirements.

6.5      MEDICAL CERTIFICATES

         The CONTRACTOR shall make available to the OPERATOR'S REPRESENTATIVE
         valid medical certificates stating that each person travelling to the
         DRILLING UNIT on behalf of the CONTRACTOR is fit to do so.

6.6      PERSONNEL RECORDS

         The CONTRACTOR shall keep medical records, wages books and time sheets
         and full records of the CONTRACTOR'S PERSONNEL. The CONTRACTOR shall
         keep details of its PERSONNEL'S next of kin on the DRILLING UNIT and at
         its shore base.

6.7      QUALIFICATIONS AND TRAINING OF CONTRACTOR'S PERSONNEL

         (a)      General

                  All CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S personnel on
                  board the DRILLING UNIT shall be required to have attended an
                  Offshore Basic Fire Course and an Offshore Survival Course
                  held at an OPERATOR approved training centre prior to working
                  on board the DRILLING UNIT with refresher training every three
                  years. Specialist training for helicopter refuelling crews and
                  fire teams is also required. All costs incurred shall be to
                  the account of the CONTRACTOR.

         (b)      Drilling Personnel

                  The CONTRACTOR shall prior to the COMMENCEMENT DATE ensure
                  that the RIG STAFF shall have satisfactorily completed a well
                  control procedure training course and have obtained a Well
                  Pressure Control Certificate from a training establishment
                  approved by IWCF or the relevant authorities in the CONTRACT
                  AREA. The CONTRACTOR shall at its cost further ensure that the
                  RIG STAFF shall attend refresher courses at such approved
                  training establishments at intervals of not more than twelve
                  months and maintain validity of certification for all RIG
                  STAFF throughout the term of the CONTRACT and any extension
                  thereto.

                  Whenever so requested by the OPERATOR the CONTRACTOR shall
                  make available to the OPERATOR certificates evidencing such
                  validity. The CONTRACTOR shall arrange, at regular weekly
                  intervals, for on site training of its PERSONNEL engaged in
                  drilling operations on the DRILLING UNIT in matters relating
                  to health, safety, accident prevention and environmental


                                       2
<PAGE>

                                                                       SECTION 6
                                                          CONTRACTOR'S PERSONNEL
                                                                     PAGE 3 OF 4
================================================================================


                  protection and, in addition, prior to the commencement of
                  specialised operations such as drill stem and production
                  testing and radioactive logging. Minutes of meetings held to
                  fulfil such training requirements shall be made available to
                  the OPERATOR and shall be posted on notice boards on the
                  DRILLING UNIT.

                  Notwithstanding the foregoing provisions, the CONTRACTOR'S RIG
                  STAFF shall if required by OPERATOR attend the OPERATOR'S
                  Pressure Control and HP and HT course. Such attendance if
                  required shall take place at times and dates to be arranged
                  between the CONTRACTOR and OPERATOR but in any case prior to
                  the COMMENCEMENT DATE.

         (c)      Marine and Installation Personnel

                  The CONTRACTOR shall ensure that prior to the COMMENCEMENT
                  DATE and throughout the continuance of the CONTRACT the
                  Captain or the equivalent person but under a different title
                  are properly qualified for their respective positions and
                  experienced in carrying out their duties on the DRILLING UNIT.

                  The CONTRACTOR shall ensure that, (otherwise than in the event
                  of total DRILLING UNIT evacuation on the instructions of the
                  OPERATOR) there is always one person on board who is fully
                  competent in respect of, and is designated responsible for,
                  marine operations and calculation of deck loadings.

6.8      EMPLOYMENT OF LOCAL PERSONNEL AND RATES OF PAY

         The CONTRACTOR shall, if applicable to this CONTRACT, employ local
         labour subject to availability and suitability of qualifications and
         experience. The CONTRACTOR shall ensure early contact is made with the
         Trinidad authorities to ascertain its requirements in this regard.

         The CONTRACTOR shall comply with all relevant governmental rules,
         regulations and instructions with respect to the employment of local
         labour.

6.9      PASSPORTS AND VISAS

         The CONTRACTOR shall ensure that when appropriate all CONTRACTOR'S
         PERSONNEL are in possession of valid passports and shall obtain all
         visas and entry or other permits required to enable such CONTRACTOR'S
         PERSONNEL to proceed to and work in the CONTRACT AREA and shall assist
         such PERSONNEL in clearing immigration in Trinidad.

6.10     TRANSPORTATION

         The CONTRACTOR shall make its own arrangements and meet all expenses
         for the transport of all the CONTRACTOR'S PERSONNEL to and from and
         within the CONTRACT AREA other than between the DRILLING UNIT and the
         OPERATOR'S designated crew change location in the CONTRACT AREA.

6.11     REMOVAL OF PERSONS PROVIDED BY THE CONTRACTOR AND THE SUB-CONTRACTORS

         At the instruction of the OPERATOR in writing the CONTRACTOR shall
         remove from duties hereunder or lawfully secure such removal of any of
         the CONTRACTOR'S PERSONNEL who is unacceptable to the OPERATOR.


                                       3
<PAGE>

                                                                       SECTION 6
                                                          CONTRACTOR'S PERSONNEL
                                                                     PAGE 4 OF 4
================================================================================


         OPERATOR shall state the reason for such removal in the written
         instruction.

6.12     REPLACEMENT OF PERSONS REMOVED BY THE CONTRACTOR

         The CONTRACTOR shall forthwith at its cost and expense replace any such
         person removed under the provisions of sub clause 6.11 hereof such
         replacement being a person qualified and capable of performing in an
         efficient manner the duties of any such person being replaced. This
         sub-clause shall also apply to CONTRACTOR'S PERSONNEL leaving of their
         own volition.

6.13     RESTRICTION AS TO DRUGS AND ALCOHOLIC LIQUORS

         The CONTRACTOR shall not except for bona fide medical purposes, sell,
         barter, give, dispense or otherwise dispose of any drugs or alcoholic
         liquors to any person at the LOCATION, shall prohibit any such sale,
         barter, gift, dispensation or other disposal to be made by any of the
         CONTRACTOR'S PERSONNEL.

6.14     RECOGNISED FESTIVALS AND RELIGIOUS AND OTHER CUSTOMS

         The CONTRACTOR shall at all times and in all respects in all dealings
         with the CONTRACTOR'S PERSONNEL observe and pay full deference to all
         recognised festivals and religious or other customs.

6.15     DISORDERLY CONDUCT

         The CONTRACTOR shall take all requisite precautions and use his best
         endeavours to prevent any riotous or unlawful behaviour by or amongst
         any of the CONTRACTOR'S PERSONNEL.

6.16     BRIBERY

         The CONTRACTOR shall not make or offer any bribe or any gift, gratuity,
         reward, commission or other inducement in money or of any description
         whatsoever to any person in the employment of the OPERATOR or SERVICE
         COMPANIES.

6.17     REPATRIATION OF CONTRACTOR'S PERSONNEL

         The CONTRACTOR shall, pending the repatriation of any of the
         CONTRACTOR'S PERSONNEL maintain such CONTRACTOR'S PERSONNEL in a proper
         manner until such time as they shall have left the CONTRACT AREA and in
         default thereof the OPERATOR may maintain and repatriate such
         CONTRACTOR'S PERSONNEL and recover the cost thereof from the
         CONTRACTOR.

6.18     SAFETY

         The CONTRACTOR shall provide its personnel with protective clothing and
         safety equipment identifying them as the CONTRACTOR'S PERSONNEL to
         designs approved by the OPERATOR for offshore working conditions in the
         CONTRACT AREA.



                                       4
<PAGE>


                              SCHEDULE 6.1 AND 6.2


         INITIAL STAFFING OF CONTRACTOR'S AND SUB-CONTRACTOR'S PERSONNEL


     Trinidadian Operations
     ----------------------
<TABLE>
<CAPTION>
               Title                     Total       On          Expatriate or         Work Schedule
               -----                     -----       --          -------------         -------------
                                       Number *    Board           National
                                       --------    -----           --------
<S>                                      <C>           <C>       <C>                  <C>
     Expatriate
     Rig Manager                         2             1         Expatriate           28 On/28 Off
     Assistant Rig Manager               2             1         Expatriate           28 On/28 Off
     Rig Engineer (Barge                 2             1         Expatriate           28 On/28 Off
     Engineer)
     Safety & Training                   2             1         Expatriate           28 On/28 Off
     Coordinator
     Mechanic                            2             1         Expatriate           28 On/28 Off
     Electrician                         2             1         Expatriate           28 On/28 Off
     Crane Operator                      4             2         Expatriate           28 On/28 Off
     Driller                             4             2         Expatriate           28 On/28 Off
     Paramedic                           2             1         Expatriate           28 On/28 Off
     =========                           =             =
             Sub-Total                  22             11
             =========                  ==             ==

     National
     Assistant Driller                   4             2         National             14 On/14 Off
     Derrickman                          4             2         National             14 On/14 Off
     Shaker Hand                         4             2         National             14 On/14 Off
     Floorman                           12             6         National             14 On/14 Off
     Assistant Electrician               2             1         National             14 On/14 Off
     Motorman                            4             2         National             14 On/14 Off
     Clerk/Radio Operator                2             1         National             14 On/14 Off
     Storeman                            2             1         National             14 On/14 Off
     Welder                              2             1         National             14 On/14 Off
     Lead Roustabout                     4             2         National             14 On/14 Off
     Roustabout                         12             6         National             14 On/14 Off
     Steward                             2             1         National             14 On/14 Off
     Night Cook                          4             2         National             14 On/14 Off
     Utility Hand                        8             4         National             14 On/14 Off
             Sub-Total                  66             33
             =========                  ==             ==
          Total Personnel               88             44
          ===============               ==             ==

</TABLE>

<PAGE>

                                  SCHEDULE 6.3
                LIST OF MODIFICATION TO BE PROVIDED BY CONTRACTOR
<TABLE>
<CAPTION>
        Amortization Period:                                                  3       years
        --------------------
        Amortization Rate:                                                  15%
        ------------------

                                                                                   Residual                        BP         BP
                                                                                      Value     Residual    Amortized      Daily
 No.                               Item                                    Cost        Rate        Value       Amount       Rate
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                <C>      <C>        <C>           <C>
  A.    Exploratory Wells
        -----------------
  1     25,000' 5-1/2" S-135 drill pipe with HT 55 connections, 7"
        OD x 3-3/4" ID                                               $1,447,635         50%      723,818    $ 723,818     ($821)

  1A    Credit for 5" DP on Rig Now (18,000' X $20/ft.)               (360,000)          0%            -   $(360,000)        408

  2     30 joints of 5-1/2" Spiral-wate drill pipe with HT 55 conn.   $ 128,220         50%       64,110     $ 64,110       (73)

  2A    Credit for 5" HW on Rig Now (30 jts. X $1,500 each)            (45,000)          0%            -   $ (45,000)         51

  3     All subs and accessories for above, including inspections        91,100         50%       45,550       45,550       (52)

  4     Miscellaneous handling tools, rams, etc. for above              167,650         50%       83,825       83,825       (95)

  5     Freight, 18 loads tubulars @ 1,800.                              32,400         50%       16,200       16,200       (18)

  6     Relocate Schlumberger logging unit to port leg                  200,000        100%      200,000            -          -

  7     Relocate cement unit to centerline under elevated piperack      100,000        100%      100,000            -          -

  8     Reroute exhausts to aft of port leg                             150,000        100%      150,000            -          -

  9     Extra high pressure washdown equipment                           10,000        100%       10,000            -          -

  10    Trash Compactor                                                  18,000        100%       18,000            -          -

  11    Additional man rider air hoist under floor                       25,000        100%       25,000            -          -

  12    International spare parts inventory                             500,000        100%      500,000            -          -

  13    21-1/4" 5M double ram with 21-1/4" 5M Bag (option rental)       850,000         50%      425,000      425,000      (482)

  14    Maximum quarters capacity (100 preferred)                       200,000         50%      100,000      100,000      (113)

  15    UV Purifier                                                      15,000        100%       15,000            -          -

  16    Crane Rests (Reinstall)                                           5,000        100%        5,000            -          -

  17    Rig LAN and CORIS and Satellite                                 125,000         50%       62,500       62,500       (71)

  18    Flare Boom Stanchions                                            25,000        100%       25,000            -          -

  19    Thru hull dump                                                   10,000        100%       10,000            -          -

  20    Change Name of rig to Chiles Coronado                            20,000        100%       20,000            -          -

  21    Site specific survey and analysis                                25,000        100%       25,000            -          -
                                                                   ----------------------------------------------------------------
                                 Sub-Total                           $3,740,005          NA   $2,579,003   $1,116,003   $(1,266)
                                                                   ----------------------------------------------------------------

  B.    KAPOK Development Program
        -------------------------

  22    Increase base oil storage to 1,000 bbls.                        100,000         75%       75,000       25,000       (28)

  23    Increase mud capacity by 800 bbls.                              175,000         75%      131,250       43,750       (50)

  24    Add 2 each 700 bbl. Brine storage tanks - 1,400 bbls. Total     150,000         75%      112,500       37,500       (43)

  25    P-Quip Super Mud Bucket                                          45,000         75%       33,750       11,250       (13)

  26    2 anchor winches, fairleads, buoys, anchors, racks, etc.        400,000         50%      200,000      200,000      (227)

  27    Relocate welding shop                                            20,000        100%       20,000            -          -
                                                                   ----------------------------------------------------------------
                                 Sub-Total                            $ 890,000          NA    $ 572,500    $ 317,500    $ (360)
                                                                   ----------------------------------------------------------------

                                   Total                              $4,630,005         NA   $3,151,503   $1,433,503   $(1,626)
                                                                   ================================================================
</TABLE>

        Notes:
        ------

1.   If contract terminates earlier than three (3) years for any reason, BP will
     owe the Unamortized principal 1 balance
2    Above included in contract rates



<PAGE>

                                    SECTION 7

                                     PART I


                     DRILLING UNIT, EQUIPMENT, SUPPLIES AND

                    SERVICES TO BE PROVIDED BY THE CONTRACTOR

                                 (See Next Page)



<PAGE>


                      Chiles Coronado Jackup Drilling Unit

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

     The Chiles Coronado is a LeTourneau Super 116 jackup mobile offshore
     drilling unit, designed by LeTourneau, Inc., Longview, Texas. The unit is
     classed by the American Bureau of Shipping (ABS) and complies with the IMO
     MODU Code. A cantilevered drilling structure and substructure allows the
     unit to drill or workover wells on existing fixed production platforms. The
     Chiles Coronado is designed to work in water depths as shallow as 16 feet
     and up to 360 feet. Fully air-conditioned quarters can accommodate a crew
     of 94.

A.                    GENERAL DESCRIPTION

--------------------------------------------------------------------------------
<TABLE>
<S>                                 <C>                                                             <C>
     Type:                          LeTourneau Super 116 Class Independent Leg Cantilever Jackup
     Builder:                       TDI Halter Marine-        Pascagoula, MS
     Year Built:                    1999
     Class: ABS Maltese Cross A1 Self-Elevating Mobile Drilling Unit, 1996 Rules. IMO MODU Code for the Construction
                                    & Equipping of Mobile Offshore Drilling Units, 1989
     Flag:                          Panama
     Elevating System:              LeTourneau Electric Rack and Pinion Jacking System

         1.       Principal Dimensions
                  --------------------
                  Length Overall                                                                   243'-0"
                  Breadth                                                                          206-'0"
                  Depth of Hull                                                                     26'-0"
                  Length of Legs                                                                   477'-0"
                  Spud Tank Diameter                                                               46 "-0"

         2.       Hull Draft and Displacement
                  ---------------------------
                  Lightship Draft - Minimum                                                         14'-0"
                  Loadline Draft - Maximum                                                          16'-0"
                  Lightship Displacement (Kips)                                                      22933
                  Loadline Displacement (Kips)                                                       25935

         3.       Quarters
                  --------
                  Complete air-conditioned accommodations for a ninety-four (94)
                  person crew. In addition to accommodations, the four-story
                  quarter's structure contains a galley/mess room, six (6) man
                  treatment room, fitness room, crew change room, offices,
                  recreation rooms, control room, and radio room.

         4.       Heliport
                  --------
                  73' octagonal steel cantilevered heliport designed to
                  withstand loads imposed by a Sikorsky S-61N helicopter or
                  equal. Heliport is lighted and equipped with tie downs,
                  perimeter safety nets, and access stairs.

         5.       Storage Capacities
                  ------------------
                  Diesel fuel                                                                  4,611 bbls.

</TABLE>

<PAGE>

                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 2 OF 9
================================================================================
<TABLE>
<S>                                                                                         <C>
                  Drill water                                                                 14,592 bbls.
                  Potable water                                                                1,220 bbls.
                  Liquid mud (in main mud pits)                                                3,300 bbls.
                  Base oil                                                                     1,000 bbls.
                  Brine (Completion Fluid)                                                     1,400 bbls.
                  Bulk Mud                                                                   5,440 cu. ft.
                  Bulk Cement                                                                5,440 cu. ft.
                  Sack Storage                                                                 5,000 sacks
                  Hook Load                                                                      1500 kips
                  Rotary Load                                                                    1500 kips
                  Setback Load                                                                    600 kips


     B.  LOADING AND ENVIRONMENTAL CONDITIONS

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

         1.       On Bottom Conditions
                  --------------------
                                                              Severe Storm                       Operating
                                                              ------------                       ---------
                  Water Depth (feet)(1)                               328                              350
                  Wind Velocity (knots)                               100                               70
                  Current (knots)                                     1.0                              1.0
                  Wave Height (feet)                                   47                               35
                  Wave Period (sec)                                    15                               15
                  Min. Air Gap (feet)                                  50                               35
                  Max. Leg Can Penetration (feet)                      25                               25
                  Maximum Variable Load (kips)
                  in above conditions (2)                           3,300                            4,800
                  Comb.Rig.Flr.Loads (kips)(3)                        750                            1,500
                  Well Position (feet)
                         Aft of Hull Transom (feet)                  00.0                             65.0
                         P/S off CL Vessel (feet)                    00.0                             15.0

         2.       Transit Condition:
                  -----------------
                  Minimum Draft (Lightship)                                                           14'-0"
                  ABS Load Line (Hull Draft)                                                          16'-0"
                  Total Variable Load (Kips) (4)                                                      3,300
                  Total Variable Load While Jacking (Kips)                                            3,300

                  Notes:
                  -----
                  (1)      Maximum water depth must include consideration for
                           high tides and storm surge.
                  (2)      Does not include combined rig floor loads listed
                           below.
                  (3)      Maximum individual rig floor loads are:
                                    Hook Load.......................1,500 kips
                                    Rotary Load.....................1,500 kips
                                    Setback Load......................600 kips
                           Above loads valid up to 70 knot wind speed, however
                           no setback load allowed above 50 knots. Hook load
                           varies according to well center location. Max.
                           combined drill floor load is 1,500 kips. Pipe rack
                           load during skidding is 1,000 kips.

</TABLE>

                                       2
<PAGE>

                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 3 OF 9
================================================================================


                  (4)      Displacement of vessel at the load line minus
                           displacement of vessel at lightship.


C.   PLATFORM EQUIPMENT

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

         1.       Primary Generators
                  ------------------
                  Four (4) Caterpillar Model 3606 diesel engines rated at 2,514
                  HP each driving 3000 KVA continuous, 60 Hz, 600 volt AC Kato
                  generators.

         2.       Standby/Emergency Generator
                  ---------------------------
                  One (1) Caterpillar Model 3508 diesel engine driving a 893 KVA
                  continuous, 60 Hz, 480 volt generator complete with switch
                  gear, automatic start, breakers and DC battery bank.

         3.       SCR System
                  ----------
                  Five (5) Ross Hill Controls 600V, 2200 amps each. Universal
                  Switch Gear Inc. leg elevator contactors, AC breaker panels
                  and two (2) ground detector panels: SCR room cooled by two (2)
                  15 Ton Carrier central air conditioner units.

         4.       Watermaker
                  ----------
                  One (1) Specific Equipment - Model SE 132 ROM-1, reverse
                  osmosis watermaker, rated at 13,200 gallons per day.

         5.       Water Purifier
                  --------------
                  One (1) Specific Equipment Ultra Violet Purifier for
                  Purification of rig potable water - Model I-H-16-L, capacity
                  330 GPM.

         6.       Pressure Washer
                  ---------------

                  One (1) Sioux - Model EN270-H4-300, steam/pressure washer,
                  rated at 4.5 GPM at 3,000 psi.

         7.       Waste Treatment Unit
                  --------------------
                  One (1) Exceltec 12MX, 120 Person Marine Sanitation Device.

         8.       Trash Compactor
                  ---------------
                  One (1) Dolphin - Model 4000, 40 cu./ft. capacity

         9.       Air Compressors
                  ---------------

                  a.       One (1) Airdyne cold start air compressor rated at 46
                           CFM powered by 2-cylinder Lister Diesel engine with
                           electric start.

                  b.       Two (2) Airdyne 500 HOSS-JS rotary air compressors,
                           each rated at 500 CFM at 125 psi powered by 125 HP AC
                           electric motors.

                  c.       One (1) Airdyne 500 HOSS-JS bulk dual air compressor,
                           rated at 500 cfm, 40 psi.

                                       3
<PAGE>

                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 4 OF 9
================================================================================

                  d.       One (1) Refrigerated Air Dryer - Hankinson Model
                           80600, 750 cfm @ 38 degrees F.

         10.      Welding Equipment
                  -----------------
                  Two (2) Miller SRH-444, 400 amp welding machines.

         11.      System Pumps
                  ------------
                  a.       Two (2) Bilge Pumps, Gorman Rupp 25 HP self-priming
                           pumps.
                  b.       Two (2) Salt Water/Fire Pumps, 75 HP, Mission 4 x 3 x
                           13 centrifugal pumps.
                  c.       Two (2) Drill Water Pumps, 30 HP, Mission 4 x 3 x 13
                           centrifugal pumps.
                  d.       One (1) Waste Oil Pump, gear type.
                  e.       Two (2) Fuel Oil Transfer Pumps, 5 HP, gear type.
                  f.       Three (3) Peerless Model 14-MB/4 stage, submersible
                           salt-water service pumps. 75 HP rated @ 1,000 gpm @
                           65 psi.
                  g.       Two (2) Each Potable and Salt Water Pressure Sets
                           with Specific Brand 150 2" centrifugal vertical type
                           pumps powered by AC electric motors with
                           approximately 200-gallon pressure tanks.
                  h.       Two (2) Brake Cooling Water Pumps, 20 HP, 3 x 2 x 13
                           Mission centrifugal pumps.

         12.      Cranes
                  ------
                  Three (3) LeTourneau pedestal cranes, two (2) with 100' booms,
                  port midship crane with 120' boom, 50 ton capacity at 20'
                  radius with 4-part line. Complete with operator cabs.

         13.      Mooring System
                  --------------
                  Two (2) each LeTourneau W-1500 anchor winches, 800 feet of
                  1-5/8" wire rope, fairleads, two (2) 10,000 lb. stockless
                  anchors, buoys, and pendant wire.

         14.      Flare Boom Base
                  ---------------
                  Basic flare boom bases with stanchions


     D.  SAFETY AND LIFESAVING EQUIPMENT

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

         1.       Lifeboats/Liferafts
                  -------------------
                  Three (3) Survival Systems International, self-propelled,
                  enclosed lifeboats with launch davits approved for 50-person
                  capacity each. Four (4) 25-man inflatable life rafts with
                  hydrostatic release.

         2.       Miscellaneous
                  -------------
                  Life preservers, life rings, litters and first aid equipment
                  in compliance with U.S. Coast Guard and IMO regulations.

         3.       Fire Stations
                  -------------
                  Approximately twenty-five (25) salt-water fire stations with
                  50' hose each. Fixed CO2 fire extinguishing systems complete
                  with cylinders, piping, nozzles, sensors and controls for
                  engine room, paint locker, and galley. Complete fire and gas
                  detection system.

         4.       Treatment Room
                  --------------
                  Fully equipped with Paramedic capability



                                       4
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                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 5 OF 9
================================================================================

         5.       Fog Horn
                  --------
                  One (1) AB-560 Audiobeam 2-mile Fog Signal with automatic
                  signal device.


     E.  DRILLING EQUIPMENT

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

         1.       Derrick
                  -------
                  Dreco 170' clear height x 40' x 32' base, with a 1,500,000 lb.
                  hook load capacity.

         2.       Crown Block
                  -----------
                  Dreco crown block, 680 ton rated with six (6) 60" diameter
                  forged steel sheaves grooved for 1-5/8" drill line with dual
                  fast line sheaves and dual dead line sheaves.

         3.       Drawworks
                  ---------
                  National 1625-UDBE with disc brakes, nominal depth rating
                  30,000 feet

                  a.       Three (3) each GE-752 DC electric motors rated 1085
                           HP each
                  b.       Elmagco Model 7838 Eddy Current Auxiliary Brake
                  c.       Lebus grooved drum for 1-5/8" drilling line
                  d.       Two (2) breakout and makeup spinning catheads

         4.       Travelling Block
                  ----------------
                  National, 650 ton, Hook/Block Combination with seven (7) 60"
                  diameter sheaves grooved for 1-5/8" drill line.

         5.       Power Swivel (Top Drive)
                  ------------------------
                  National-Oilwell PS2 650/650 Power Swivel rated at 650 tons.
                  Two speed with maximum continuous torque rating of 47,859 foot
                  pounds @ 109 RPM. Driven by one (1) GE 752 DC Hi-Torque
                  electric motor. 4" bore, 7,500 psi WP. Maximum RPM in low gear
                  - 113, in high gear - 231.

         6.       Rotary Table
                  ------------
                  National Model D-495, 49 1/2" rotary independently driven by a
                  GE 752 DC Hi-Torque electric motor, 1130 HP, with standard two
                  speed transmission. Varco MPCH hinged master bushing, with
                  insert bowls for 2 3/8" - 8 5/8" tubulars.

         7.       Rotating Mouse Hole Assembly for Stand Building
                  -----------------------------------------------
                  a.       International Model 1994 rotating mouse hole for
                           right or left hand rotation.
                  b.       International Model TT-1998 torque tool assembly.
                           Operating range 3-1/2" drill pipe to 8-1/2" drill
                           collars. Torque range 0 to 108,000 ft. Lbs.

         8.       Mud Pumps
                  ---------
                  Three (3) National 14-P-220 triplex pumps, rated at 2,200 HP
                  each, with 7,500 psi fluid ends, each driven by two (2) GE 752
                  DC Hi-Torque electric motors. Each mud pump is equipped with a
                  PPDR-130-7500C5 discharge dampener and PPSC-80-025C5 flow
                  through cellular suction stabilizer, and a reset type relief
                  valve. Maximum speed - 95 spm. Maximum discharge pressure -
                  90% of liner rating.



                                       5
<PAGE>

                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 6 OF 9
================================================================================
<TABLE>
<S>                                                          <C>
         9.       Iron Roughneck
                  --------------
                  National "Iron Roughneck" Model IR-170.

         10.      Mud System
                  ----------
                  a.       Mixing Pumps:                     Two (2) Mission Magnum 6 x 8 centrifugal  pumps powered by
                                                             100 HP AC electric motors.
                  b.       Charging Pumps:                   Three (3) Mission  Magnum 6 x 8  centrifugal  pump powered
                                                             by 100 HP AC electric motor.
                  c.       Agitators:                        Ten (10) each 25 HP, 1,200 rpm for main & brine pits.
                                                             Four (4) each 10 HP, 1,200 rpm for auxiliary pits.
                                                             Four (4) each 5 HP, 1,200 rpm for solids control pits.
                  d.       Mud Cleaner/Desilter:             One (1) Brandt LCM-2D-CMC Linear Motion Mud
                                                             Conditioner with thirty-two (32) 4" cones, 1,920 gpm,
                                                             discharging over a LCM-2D linear motion shaker deck.
                                                             Supplied by two (2) Mission Magnum 6 x 8 pumps with
                                                             100 HP AC motors.
                  e.       Desander:                         Brandt  LCM-2D-CMC  Linear  Motion  Mud  Conditioner  with
                                                             four  (4)  12"  cones,  2,000  gpm,   discharging  over  a
                                                             LCM-2D linear  motion  shaker deck.  Supplied by (1) 6 x 8
                                                             pump with 100 HP AC motor.
                  f.       Shale Shakers:                    Five  (5)  Brandt  LCM-2D  Linear  Motion  Cascade  Screen
                                                             Separators,  each  rated at  400-600  gpm.  One (1) Brandt
                                                             Nutec Gumbo Chain System.
                  g.       Degasser:                         Two (2) Brandt  DG-10  Degassers,  supplied by (2) Mission
                                                             Magnum 6 x 8 pumps with 100 HP AC motors.
                  h.       Trip Tank:                        Two (2) x  34-barrel  capacity  with two (2)  Halco 3 x 4 x
                                                             10 pumps with 40 HP AC electric motors.

         11.      Stand Pipe and Manifold
                  -----------------------
                  Dual standpipes rated at 7,500 psi W.P.
                  Demco standpipe manifold rated at 11,250-psi test pressure and
                  7,500 psi W.P. Dual cement manifold with stand pipes rated at
                  15,000 psi.

         12.      Rotary Hose                                Two (2) -4" ID  Copperstate  rotary  hoses  rated at 7,500
                  -----------                                psi W.P.

         13.      Bulk Storage Tanks
                  ------------------
                  a.       Bulk Mud:                         Four (4) each, 1,360 cu. ft.
                  b.       Bulk Cement:                      Three (3) each, 1,360 cu. ft.
                  c.       Bulk Gel:                         One (1) each, 1,360 cu. Ft.
                  c.       Bulk Mud Surge Tank:              One (1) each, 45 cu. ft.

         14.      Cementing Unit
                  --------------
                  Halliburton (On Main Deck)



                                        6
<PAGE>

                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 7 OF 9
================================================================================


         15.      Blow-Out Preventers
                  -------------------
                  a.       13-5/8" X 10,000 Blow-Out Preventers
                  ---------------------------------------------

                           (1)      Annular:                  One (1) Cameron  type DL spherical  preventer,  10,000 WP
                                    -------                   with  10,000#  WP  studded  top and  15,000#  WP  flanged
                                                              bottom connection, H2S trim.
                           (2)      Rams:                     One  (1)  Cameron  Type  U  15,000-psi  W.P.  double  ram
                                    ----                      preventer  and One (1)  Cameron  Type U  15,000-psi  W.P.
                                                              single ram preventer  with three (2) sets of 5" pipe rams
                                                              and one set of blind rams.  Four (4)  3-1/16"  15,000-psi
                                                              WP flanged outlets, flanged top and bottom, H2S trim.
                           (3)      Additional Rams:          One (1) set of Shearing  Blind Rams,  One (1) set of 31/2"
                                    ---------------           Pipe Rams,  One (1) set of 9 5/8"  casing  rams,  One (1)
                                                              set of 7 5/8"  casing  rams,  One  (1)  set of 7"  casing
                                                              rams, One (1) set of 31/2" x 5" VBR rams.

                  b.       13 5/8" X 15,000 Blow-Out Preventers
                  ---------------------------------------------

                           (1)      Annular:                  One (1) Cameron  type DL spherical  preventer,  10,000 WP
                                    -------
                                                              with  10,000#  WP  studded  top and  15,000#  WP  flanged
                                                              bottom connection, H2S trim.
                           (2)      Rams:                     One  (1)  Cameron  Type  U  15,000-psi  W.P.  double  ram
                                    ----
                                                              preventer  and One (1)  Cameron  Type U  15,000-psi  W.P.
                                                              single ram preventer  with three (2) sets of 5" pipe rams
                                                              and one set of blind rams.  Four (4)  3-1/16"  15,000-psi
                                                              WP flanged outlets, flanged top and bottom, H2S trim.

                  c.       21 1/4" 10,000 Blow-Out Preventers
                  -------------------------------------------

                                    (1) One (1) Shaffer wedge top spherical preventer, 5,000 with 5,000 WP studded
                                    top and 10,000 WP flanged bottom connection, H2S trim.
                                    (2) Two (2) Cameron Type U 10,000 # WP single ram preventers, flanged top and
                                    bottom, with 41/16 10,000 WP side outlets. Complete with one (1) set of 5"
                                    straight bore pipe rams, one (1) set of conventional blind rams and one (1) set
                                    of blind shear rams.

                  d.       Choke and Kill Valves
                  ------------------------------

                           Choke Line Valves:                 Two (2) 3-1/16" - 10,000 psi gate valves.  One hydraulic,
                                                              one manual. H2S trim.
                           Kill Line Valves:                  Two (2) 3-1/16" x  10,000-psi  gate  valves,  one manual,
                                                              one hydraulic. H2S trim.

                  e.       Diverter System
                  ------------------------

                           One (1) ABB Vetco Gray KFDJ-J-2000 permanent diverter
                           system, with ABB Offshore Systems Diverter panel with
                           auto open feature.



                                       7
<PAGE>

                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 8 OF 9
================================================================================


                  f.       Choke Manifold
                  -----------------------

                           Cameron 3-1/16" - 15,000 psi WP with two (2) Cameron
                           hydraulically adjustable choke, two (2) manual
                           chokes.

                  g.       Mud Gas Separator
                  --------------------------

                           Brandt 48" diameter X 18' long mud gas separator,
                           with dual 6" inlets, 10" mud discharge and 8" gas
                           discharge vent line piped to crown. Pressure rating
                           125 psig.

                  h.       BOP Control System
                  ---------------------------
                           3,000 psi, Massco/Stewart & Stevenson, Model SSB2403S11 Control Unit.
                           (1) Twenty-four (24) -11 gal. bladder type accumulators
                           (2) One (1) 25 HP triplex pump and three (3) 60:1 -- 8-1/2" air pumps
                           (3) Nine (9) station control manifold with two (3) remote electric operated stations.

                            i.       Instrumentation
                            ------------------------
                                    One (1) HITEC/National Driller's Control Station with HITEC SDI 120
                                    Instrumentation Package equipped with CCTV system for monitoring racking and
                                    stabbing boards.

                           ii.      Air Hoists
                           -------------------
                                    Two (2) Ram Winch K6UL air hoists on rig floor, 15,000 lb. pull @ 51 fpm.
                                    Two (2) Airdyne model ML 336-38 dedicated man rider winches. One mounted on the
                                    drill floor and one mounted below the drill floor.
                                    Four (4) Ram Winch K6UL air hoist under substructure for BOP manoeuvres.

                           iii.     Drilling Line
                           ----------------------
                                    7,500' of 1-5/8" 6 x 19 EIPS IWRC regular right lay.

         16.      Wireline Unit
         ----------------------
                  One (1) Mathey "Surveyor" Wireline Unit with 30,000 ft. of .108" wire.

         17.  Drive Pipe Support System
         ------------------------------
                  One (1) Drive Pipe Support System with tensioning capability
                  to tension drive pipe to 300 kips vertical force and provide
                  lateral restraint at wellhead.

         18.  Tubulars
         -------------

                  25,000' (approximately 800 joints) 51/2" O.D., 21.90 lb/ft,
                  S-135 drill pipe with HTSJ connections 7" O.D. X 33/4" I.D.
                  Grant Prideco x-metal 7000 hard banding on box and pin tool
                  joints 3/32" raised.
                  Thirty (30) joints 51/2" O.D. conventional Hevi-Wate drill
                  pipe with HT55 connections 7"
                  O.D. X 3 15/16" I.D.  Weight 1,800 lb/per joint
                  Six (6) 9 1/2" OD drill collars with 7 5/8" Regular
                  connections.
                  Nine (9) 8" OD drill collars with 6-5/8" Regular connections.
                  Twenty One (21) 6 1/2" OD drill collars with 4 1/2" X-Hole
                  connections. Necessary X-Over Subs, Kelly Subs, and Bit Subs
                  for Contractor's drill string.
</TABLE>

                                       8
<PAGE>

                                                                       SECTION 7
                                              DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                     PAGE 9 OF 9
================================================================================


         19.  Mud Buckets
         ----------------
                  One (1) P-Quip Hydraulic Mud Bucket complete with air hoses,
                  connections, side seals and end seals for 5" & 5 1/2" drill
                  pipe.


F.       COMMUNICATIONS EQUIPMENT

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

         1.       Radio Equipment
                  ---------------
                  a.       Two (2) fixed marine VHF transceivers, four (4)
                           survival craft transceivers, six (6) hand held marine
                           VHF transceivers.
                  b.       One (1) VHF-AM aeronautical base station transceiver
                           capable of 6-channel operation, with crystals for 3
                           channels installed, unity gain ground plane antenna,
                           and manual, 115 VAC.
                  c.       One (1) Global Maritime Distress & Safety System
                           (GMDSS) as per SOLAS Regulations 5, 6, Part C.
                  d.       Satellite communications and data transfer.

         2.       Internal Telephone Communications and Public Address System
                  -----------------------------------------------------------
                  One (1) Multi-station Gaitronics System for platform
                  intercommunication.

         3.       File Server, Computer, and External Communications System
                  ---------------------------------------------------------

                  Rig LAN digital computer and telecommunications system.
                  Microwave or Satellite voice and data links from offices,
                  drill floor, conference room, and the rig LAN. Additional
                  capabilities of the computer and link system (CORIS) include:
                  a.       Customer and contractor offices on board rig have
                           access to drilling and performance data in
                           "real-time" personnel information, liquid and bulk
                           variable inventories, and weather.
                  b.       Internet access provided to certain computers for
                           E-mail and file transfer.
                  c.       Above data available via CORIS system.




                                       9
<PAGE>

                                CONTRACT SUMMARY
<TABLE>
--------------------------------------- ---------------------------------------------------------------------
<S>                                       <C>
Contract No.                            C-2600
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Nature of Contract:                     Hire of Drilling Unit
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Parties:                                BP Trinidad and Tobago LLC and Chiles Offshore Inc.
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Effective Date:                         The date that the DRILLING UNIT is under tight tow to Pascagoula,
                                        Mississippi to begin the Make Ready Period (July 10, 2001)
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Commencement Date:                      The date on which the DRILLING UNIT is pinned on the first  LOCATION
                                        in the CONTRACT AREA and the OPERATOR provided RIG ACCEPTANCE.
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Term:                                   Three Years from Commencement Date
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Description of Services/                To carry out drilling services in support BP Trinidad
Scope of Work:                          and Tobago LLC's Drilling Program
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Compensation:                           Mobilisation: US $3,600,000
                                        Day Rate: US $73,000
                                        Demobilisation:  US $2,800,000
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Payment Terms:                          Thirty Days from Receipt of Invoice
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Termination:                            Without Cause - three months notice - 60% of Day Rate for the
                                        remainder of the term  ($43,800)
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Estimated Value of Contract             $79,935,000
--------------------------------------- ---------------------------------------------------------------------

--------------------------------------- ---------------------------------------------------------------------
Distribution:
--------------------------------------- ---------------------------------------------------------------------
</TABLE>