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                                                                     EXHIBIT 4.6


                       THIRD AMENDMENT TO LOAN AGREEMENT


         THIS THIRD AMENDMENT TO LOAN AGREEMENT ("Third Amendment") dated as of
July 1, 1995 but effective as of February 28, 1994 (the "Third Amendment
Effective Date") is made and entered into by and among SMITH INTERNATIONAL,
INC. (the "Borrower"), a Delaware corporation, the banking institutions (each,
together with its successors and assigns, a "Bank" and collectively, the
"Banks") from time to time a party to the Loan Agreement (as hereinafter
defined), as amended by this Third Amendment, and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION ("TCB"), a national banking association, as agent for the Banks (in
such capacity, together with its successors in such capacity, the "Agent").


RECITALS:

         WHEREAS, the Borrower, the Banks, and the Agent are parties to a Loan
Agreement dated as of March 17, 1994, as amended pursuant to that certain First
Amendment to Loan Agreement dated as of June 30, 1994, and as further amended
pursuant to that certain Second Amendment dated as of February 15, 1995 (the
"Loan Agreement"); and

         WHEREAS, the Borrower, the Banks, and the Agent have agreed, on the
terms and conditions herein set forth, that the Loan Agreement be amended in
certain respects;

         NOW, THEREFORE, IT IS AGREED:

         Section 1.       Definitions.  Terms used herein which are defined in
the Loan Agreement shall have the same meanings when used herein unless
otherwise provided herein.

         Section 2.       Amendment to the Loan Agreement. On and after the
Third Amendment Effective Date, the Loan Agreement shall be amended as follows:

         (a)     Section 8.13 of the Loan Agreement shall be amended to read in
its entirety as follows:

                 8.13     Operating Leases.  Become obligated, as lessee, under
         any Long-Term lease if; at the time of entering into such Long-Term
         Lease and after giving effect thereto, the aggregate present value of
         all Rentals determined by discounting all such Rentals on an annual
         basis at a rate equal to 8% per annum payable by the Borrower and its
         Subsidiaries on a consolidated basis under all Long-Term Learn would
         exceed 6.25% of the Tangible Net Worth of the Borrower and its
         Subsidiaries; provided, however, that beginning February 28, 1994,
         with respect to each Long-Term Lease, (i) the Rentals due during each
         of the three years immediately following the date of determination
         shall be deemed to be equal to the Rentals due during the fourth such
         following year, and (ii) for purposes of this Section only,
         calculation of Tangible Net Worth shall include any direct or indirect
         minority interest in M-I.
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         (b)     Section 2.2 of Schedule l the Loan Agreement shall be amended
to read in its entirety as follows:

                 (b)      No more than seven (7) Eurodollar Rate Borrowings
         shall be in effect at any time.

         Section 3.       Limitations.  The amendments set forth herein are
limited precisely as written and shall not be deemed to (a) be a consent to, or
waiver or modification of, any other term or condition of the Loan Agreement or
any of the other Loan Documents, or (b) except as expressly set forth herein,
prejudice any right or rights which the Banks may now have or may have in the
future under or in connection with the Loan Agreement, the Loan Documents or
any of the other documents referred to therein.  Except as expressly modified
hereby or by express written amendments thereof, the terms and provisions of
the Loan Agreement, the Notes, and any other Loan Documents or any other
documents or instruments executed in connection with any of the foregoing are
and shall remain in full force and effect.  In the event of a conflict between
this Third Amendment and any of the foregoing documents, the terms of this
Third Amendment shall be controlling.

         Section 4.       Payment of Expenses.  The Borrower agrees, whether or
not the transactions hereby contemplated shall be consummated, to reimburse and
save the Agent and the Bank(s) harmless from and against liability for the
payment of all reasonable substantiated out-of-pocket costs and expenses
arising in connection with the preparation, execution, delivery and enforcement
of, or the preservation of any rights under this Third Amendment, including,
without limitation, the reasonable fees and expenses of any local or other
counsel for the Agent, and all stamp taxes (including interest and penalties,
if any), recording taxes and fees, filing taxes and fees, and other similar
charges which may be payable in respect of, or in respect of any modification
of, the Loan Agreement and the other Loan Documents. The provisions of this
Section shall survive the termination of the Loan Agreement and the repayment
of the Loans.

         Section 5.       Governing Law.  This Third Amendment and the rights
and obligations of the parties hereunder and under the Loan Agreement shall be
construed in accordance with and be governed by the laws of the State of Texas
and the United States of America.

         Section 6.       Descriptive Headings. etc.        The descriptive
headings of the several Sections of this Third Amendment are inserted for
convenience only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.

         Section 7.       Entire Agreement.  This Third Amendment and the
documents referred to herein represent the entire understanding of the parties
hereto regarding the subject matter hereof and supersede all prior and
contemporaneous oral and written agreements of the parties hereto with respect
to the subject matter hereof, including, without limitation, any commitment
letters regarding the transactions contemplated by this Third Amendment.

         Section 8.       Counterparts.  This Third Amendment may be executed
in any number of counterparts and by different parties on separate counterparts
and all of such counterparts shall together constitute one and the same
instrument.  Complete sets of counterparts shall be lodged with the Borrower
and the Agent.





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         Section 9.       Amended Definitions.  As used in the Loan Agreement
(including all Exhibits thereto) and all other instruments and documents
executed in connection therewith, on and subsequent to the Third Amendment
Effective Date the term (i) "Agreement" shall mean the Loan Agreement as
amended by this Third Amendment, and (ii) references to any and all other Loan
Documents shall mean such documents as amended as contemplated hereby.

         IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be duly executed and delivered by their respective duly authorized
offices as of the date first above written.

            NOTICE PURSUANT TO TEX. BUS. & COMM. CODE Section 26.02


         THIS THIRD AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF
THE PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


                                SMITH INTERNATIONAL, INC.


                                Title:    /s/ TRACY M. WELCH
                                      ------------------------------------------
                                By:       Tracy M. Welch
                                      ------------------------------------------
                                Title:    Assistant Treasurer          
                                      ------------------------------------------





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