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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-K
     (Mark One)
      [ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1997
                                      OR
      [   ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

    For the transition period from . . . . . . . . . . to . . . . . . . . . .

                         Commission File Number 0-22078

                              Dual Holding Company
             (Exact name of registrant as specified in its charter)

           DELAWARE                                        51-0327704
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                        Identification No.)

                               2700 Fountain Place
                                1445 Ross Avenue
                            Dallas, Texas 75202-2792
                    (Address of principal executive offices)
       Registrant's telephone number, including area code: (214) 922-1500

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) and is therefore filing this Form with the reduced disclosure format.

Aggregate  market  value  of  voting  stock  held  by  non-affiliates  of  the
registrant:     None

Number of shares outstanding at March 23, 1998:   Common Stock:  1,000
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<PAGE>






                              TABLE OF CONTENTS

                                                                     PAGE
                                                                     ----


PART  ITEMS 1-2. BUSINESS AND PROPERTIES.............................. 1
I                General.............................................. 1
                 Contract Drilling Operations......................... 1
                 Jackup Rigs.......................................... 1
                 Platform Rigs........................................ 2
                 Contracts............................................ 2
                 Major Customers...................................... 2
                 Industry Conditions and Competition.................. 2
                 Governmental Regulation.............................. 3
                 Environmental Matters................................ 3
                 Operational Risks and Insurance...................... 4
                 International Operations............................. 4
                 Other Properties..................................... 5
                 Employees............................................ 5
      ITEM 3.    LEGAL PROCEEDINGS.................................... 5
      ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                 HOLDERS.............................................. 5
------------------------------------------------------------------------

PART  ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND
II               RELATED STOCKHOLDER MATTERS.......................... 6
      ITEM 6.    SELECTED HISTORICAL CONSOLIDATED FINANCIAL
                 AND OPERATIONS DATA.................................. 6
      ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS.................. 6
                 General.............................................. 6
                 Merger............................................... 6
                 Results of Operations................................ 7
                 Liquidity and Capital Resources...................... 9
                 Year 2000 Issue......................................10
                 Forward-Looking Statements...........................11
      ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........11
      ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                 ACCOUNTING AND FINANCIAL DISCLOSURE..................29
------------------------------------------------------------------------

PART  ITEMS 10-13.
III              DIRECTORS AND EXECUTIVE OFFICERS, EXECUTIVE
                 COMPENSATION, SECURITY OWNERSHIP OF CERTAIN
                 BENEFICIAL OWNERS AND MANAGEMENT, AND CERTAIN
                 RELATIONSHIPS AND RELATED TRANSACTIONS...............30
------------------------------------------------------------------------

PART  ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
IV               REPORTS ON FORM 8-K..................................31

      SIGNATURES .....................................................33        


                                     - i -
<PAGE>

                                     


                                    PART I


ITEMS 1. AND 2. BUSINESS AND PROPERTIES

General

Dual Holding Company  ("Dual" or the "Company") is a domestic and  international
offshore drilling contractor.  The Company currently owns or operates a fleet of
16 offshore  drilling  rigs,  consisting of eight jackup rigs and eight platform
rigs.  The  Company's  strategy  is to market  and  operate  quality  jackup and
platform drilling rigs in geographically diverse markets.

On June 12, 1996, the Company was acquired by ENSCO  International  Incorporated
("ENSCO") in a purchase  acquisition  (the "Merger"),  and became a wholly-owned
subsidiary  of ENSCO on that  date.  See  Note 2 to the  Consolidated  Financial
Statements.

The Company was formerly  known as DUAL  DRILLING  COMPANY  prior to the Merger.
From  1990 to 1993,  the  Company  was  wholly-owned  by Dual  Invest  AS ("Dual
Invest"),  a Norwegian  corporation.  In August 1993,  the Company  completed an
initial  public  offering  of shares of its common  stock,  which  reduced  Dual
Invest's  ownership  interest  in the  Company  to  approximately  59.6%  of the
Company's outstanding common stock.

In June 1997,  the Company  sold its 49%  interest in a  jointly-owned  jackup
rig to ENSCO  and in  December  1997 sold  another  jackup  rig to ENSCO.  See
Note 3 to the Consolidated Financial Statements.

Contract Drilling Operations

The  Company's  fleet of 16 offshore  drilling rigs are located in North America
and the Asia Pacific  region.  At December 31, 1997, the Company's North America
drilling  rigs consist of three jackup rigs and seven  platform  rigs located in
the Gulf of Mexico. The Company's Asia Pacific jackup rigs consist of two jackup
rigs located  offshore  Qatar,  one  offshore  Malaysia and two in a shipyard in
Singapore  undergoing  modifications and enhancements.  The Company operates one
platform  rig off the coast of China,  which is not  owned  but  managed  by the
Company.

Financial information regarding the Company's geographic operations is presented
in  Note 9 to  the  Consolidated  Financial  Statements  included  in  "Item  8.
Financial Statements and Supplementary  Data." Additional financial  information
regarding  the  Company's  operations  is  presented  in "Item  7.  Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Jackup Rigs

Jackup rigs are mobile self-elevating drilling platforms equipped with legs that
can be  lowered to the ocean  floor to provide a  foundation  for  supporting  a
drilling  platform and to allow the drilling  platform to be elevated  above the
water.  The  entire  drilling  platform  is  self-contained  with  the rig  hull
<PAGE>


incorporating  the drilling  equipment and derrick,  the jacking  system for the
legs, crew quarters, storage and loading facilities,  helicopter landing pad and
related  equipment.  All of the Company's jackup rigs are of the independent leg
design which are the most versatile and can  accommodate  most drilling sites on
which a jackup rig can be used.

Platform Rigs

A platform rig consists of drilling  equipment and machinery arranged in modular
packages  which are  transported  to,  assembled,  and then  installed  on fixed
offshore  platforms  owned by the customer.  Fixed offshore  platforms are steel
tower-like  structures which stand on the ocean floor, with the top portion,  or
platform,  being above the water level and providing the  foundation  upon which
the  platform rig is placed.  A  self-contained  platform  rig  contains  living
quarters  for the crew,  power  generating  units,  and  facilities  for storing
drilling fluid and well tubular supplies to sustain drilling  operations between
resupplyings.

Contracts

The drilling services provided by the Company are conducted on a contract basis.
The Company  generally  provides  services on a "daywork"  basis.  Under daywork
contracts, the Company receives a fixed amount per day for drilling the well and
the customer bears a major portion of the out-of-pocket  costs of drilling.  The
customer  may pay the cost of moving the  equipment to and from the job site and
assembling and dismantling the equipment.

Effective  June 13, 1996,  the Company's  domestic  drilling rigs in the Gulf of
Mexico were bareboat chartered to a wholly-owned  subsidiary of ENSCO to achieve
operating  and  marketing  efficiencies.  The  terms  of  the  bareboat  charter
agreements  provide for fixed daily rates to be paid to the  Company,  which the
Company believes are reasonable and  representative  of the environment in which
the rigs operate.  Each  respective  bareboat  charter rate is increased for any
capital  expenditures  made by the Company  for a chartered  rig and the rate is
reduced to 50% of the normal rate if a rig is idle for more than 30  consecutive
days. The bareboat charter  agreements  provide for automatic yearly  extensions
but may be terminated  with one month's prior notice.  At December 31, 1997, the
Company had three jackup rigs and seven platform rigs under bareboat  charter to
ENSCO.

Major Customers

The Company's customer base consists of ENSCO,  major  international oil and gas
companies,  independent oil and gas companies and  government-owned  oil and gas
companies. In 1997, the Company's customers which individually accounted for 10%
or more of the Company's  consolidated  revenues consisted of ENSCO (32%), Oil &
Natural Gas Corporation  (20%),  Maersk Oil Qatar AS (20%) and Petronas Carigali
Sdn. Bhd. (11%).

Industry Conditions and Competition

The market for offshore drilling services is largely determined by the supply of
and demand for  equipment.  From the  mid-1980s to the early  1990s,  demand for
offshore  drilling  equipment  was  generally  flat,  while  the over  supply of
offshore drilling rigs gradually decreased, primarily due to attrition.
<PAGE>


Between 1994 and the end of 1997, demand has steadily improved and, as a result,
day  rates  and   utilization   for  offshore   drilling  rigs  have  increased.
Technological  advancements,  such as three dimensional seismic,  extended reach
drilling,  and multilateral drilling techniques,  have improved the economics of
finding and  developing  oil and gas reserves.  As a result,  oil companies have
increased their exploration and production  budgets,  which has led to increased
demand for offshore  drilling  services.  Nearly all actively  marketed offshore
drilling rigs in the world are currently under contract, and the demand for high
quality rigs exceeds supply in many markets.

The contract  drilling  business is highly  competitive  and Dual  competes with
other drilling contractors on the basis of quality of service,  price, equipment
suitability and availability, reputation and technical expertise. Competition is
usually on a regional basis,  but drilling rigs are mobile and may be moved from
one region to another in response to demand.  Drilling  operations are generally
conducted throughout the year with some seasonal declines in winter months.

Governmental Regulation

The  Company's  business is affected by political  developments  and by federal,
state,  foreign and local laws and  regulations  that relate directly to the oil
and gas  industry.  The industry is also  affected by changing  tax laws,  price
controls and other laws affecting the energy business.  The adoption of laws and
regulations  curtailing exploration and development drilling for oil and gas for
economic,  environmental or other policy reasons adversely affects the Company's
operations by limiting available drilling and other  opportunities in the energy
service industry, as well as increasing the costs of operations.

The Company and its rigs are subject to federal,  state,  local and foreign laws
and  regulations  relating  to  engineering,   design,  structural,  safety  and
operational and inspection standards.

Environmental Matters

The  Company's  operations  are  subject  to  federal,  state and local laws and
regulations  controlling  the  discharge of materials  into the  environment  or
otherwise  relating to the protection of the  environment.  Laws and regulations
specifically  applicable  to the  Company's  business  activities  could  impose
significant  liability on the Company for damages,  clean-up costs and penalties
in the event of the occurrence of oil spills or similar discharges of pollutants
into the  environment in the course of the Company's  operations,  although,  to
date,  such laws and regulations  have not had a material  adverse effect on the
Company's  results of  operations,  nor has the Company  experienced an accident
that has exposed it to material  liability for discharges of pollutants into the
environment.  In addition,  events in recent years have heightened environmental
concerns  about  the  oil  and gas  industry  in  general.  From  time to  time,
legislative  proposals  have been  introduced  which would  materially  limit or
prohibit  offshore  drilling in certain areas. To date, no proposals which would
materially limit or prohibit offshore drilling in the Company's  principal areas
of  operation  have  been  enacted  into  law.  If laws  are  enacted  or  other
governmental  action is taken that restrict or prohibit offshore drilling in the
Company's  areas of operation or impose  environmental  protection  requirements
that  materially  increase  the cost of  offshore  exploration,  development  or
production of oil and gas, the Company could be materially adversely affected.
<PAGE>

The United States Oil  Pollution Act of 1990 ("OPA 90") and similar  legislation
in Texas,  Louisiana and other coastal states  address oil spill  prevention and
control and significantly  expand liability  exposure across all segments of the
oil and gas industry.  OPA 90, such similar  legislation and related regulations
impose a variety of obligations on the Company  related to the prevention of oil
spills and the liability for resulting damages.  OPA 90 imposes strict and, with
limited exceptions,  joint and several liability upon each responsible party for
oil removal  costs and a variety of damages.  OPA 90 imposes  ongoing  financial
responsibility requirements. A failure to comply with OPA 90 may subject a party
to civil or criminal enforcement action.

Operational Risks and Insurance

Contract  drilling  and oil and gas  operations  are  subject to  various  risks
including blowouts, craterings, fires and explosions, each of which could result
in damage to or  destruction  of drilling  rigs and oil and gas wells,  personal
injury and property  damage,  suspension of operations or  environmental  damage
through oil spillage or extensive,  uncontrolled  fires.  The Company  generally
insures its drilling  rigs for amounts not less than the  estimated  fair market
value  thereof.  The Company  also  maintains  liability  insurance  coverage in
amounts and scope which the Company  believes  are  comparable  to the levels of
coverage carried by other energy service companies. To date, the Company has not
experienced  difficulty  in  obtaining  insurance  coverage.  While the  Company
believes its insurance  coverages are customary for the energy service industry,
the  occurrence  of a significant  event not fully insured  against could have a
material adverse effect on the Company. Also, there can be no assurance that any
particular  insurance  claim  will be paid or that the  Company  will be able to
procure  adequate  insurance  coverage at commercially  reasonable  rates in the
future.

International Operations

A  significant  portion of the  Company's  operations  are  conducted in foreign
countries.  Revenues  from  international  operations  were 67% of the Company's
total  revenues in 1997. The Company's  international  operations are subject to
political, economic, and other uncertainties, such as the risks of expropriation
of its equipment,  expropriation  of a customer's  property or drilling  rights,
repudiation of contracts,  adverse tax policies, general hazards associated with
international  sovereignty  over certain areas in which the Company operates and
fluctuations in international economies.

The  Company's  international  operations  also  face  the  risk of  fluctuating
currency values and exchange  controls.  Occasionally the countries in which the
Company operates have enacted exchange controls.  Historically,  the Company has
been able to limit  these risks by  obtaining  compensation  in U.S.  dollars or
freely  convertible  international  currency,  and to the  extent  possible,  by
limiting  acceptance of foreign  currency to amounts which match its expenditure
requirements in such currencies.

The Company  currently has operations in Asian  countries that have  experienced
substantial  devaluations of their currency compared to the U.S. dollar over the
last several months.  However,  as the Company's  drilling  contracts  stipulate
payment in U.S. dollars,  the Company has experienced no significant  losses due
to the devaluation of such currencies.

<PAGE>

Other Properties

Prior  to  the  Merger  the  Company  leased  office  space  for  its  corporate
headquarters in Dallas,  Texas.  This space is no longer occupied by the Company
and has been sublet under the lease  agreement  which extends  through  February
1999. The Company  leases  minimal office and materials  storage space in India,
Malaysia and Saudi Arabia.

Employees

As of December 31, 1997,  the Company had no employees.  In connection  with the
Merger,  all of the Company's  employees who were retained  became  employees of
ENSCO. The Company has a Master Services  Agreement with ENSCO for shorebase and
corporate  support  services under which the Company pays ENSCO a monthly fee of
$400,000 for  accounting,  treasury,  human  resources,  engineering,  insurance
administration,  management  information systems,  purchasing,  safety and legal
services.  Either  party may  cancel  this  agreement  upon 30 days  notice.  In
addition,  ENSCO provides contract labor for all of the Company's  international
drilling rigs at cost.


ITEM 3.  LEGAL PROCEEDINGS

The Company is currently not involved in any litigation which, in the opinion of
management,  would have a material adverse effect on its financial  condition or
results of operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not required under the reduced disclosure format.


<PAGE>


                                    PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

All of the  common  stock of the  Company  is owned by ENSCO.  The  shares  were
acquired  by ENSCO on June 12,  1996 as a result of the Merger in a  transaction
exempt from the  registration  requirements  of the  Securities  Act of 1933, as
amended,  pursuant to section 4(2)  thereof.  As such,  there is no  established
public trading market for the Company's common stock.

The Company has never  declared any cash  dividends on its common stock and does
not anticipate  paying dividends on the common stock in the foreseeable  future.
The  Company's  ability to pay  dividends is  restricted  by certain  provisions
contained in the indenture to which its publicly  traded notes were issued.  See
Note 4 to the Consolidated Financial Statements.

ITEM 6.  SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATIONS DATA

Not required under the reduced disclosure format.


ITEM 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS

The  information  presented  herein is only  intended  to  present  a  narrative
analysis of material changes in operating results and financial position between
fiscal years 1997 and 1996.  This  reduced  analysis is in  accordance  with the
reduced disclosure format set forth in General Instruction I(1)(a) and (b).

GENERAL

The Company owns offshore drilling rigs which are contracted for use in the Gulf
of Mexico and the Asia Pacific region.  Worldwide  drilling  activity  increased
significantly  in 1997  as  compared  to  1996  with  current  demand  absorbing
substantially  all of the rigs that are in working  condition and being actively
marketed in the major offshore drilling markets throughout the world.

MERGER

On June 12, 1996, the Company was acquired by ENSCO.  The Merger was approved on
that date by the  stockholders of the Company who received 0.625 shares of ENSCO
common stock (1.25 shares adjusted for the  two-for-one  split of ENSCO's common
stock  effective  September  15,  1997) for each share of the  Company's  common
stock. The Company's stockholders of record as of June 12, 1996 received, in the
aggregate, approximately 10.1 million shares of ENSCO common stock (20.1 million
shares post split) valued at approximately $218.4 million.

In  conjunction  with the Merger,  the Company  charged  $22.0  million  against
operating results for certain items.  These items included  compensation paid in
the ordinary  course of business as well as other costs directly  related to the
Merger.  These  expenses  are  included  as Change in  Control  expenses  in the
<PAGE>

consolidated  statement of operations for the period January 1, 1996 to June 12,
1996. See Note 2 to the Company's Consolidated Financial Statements.

Effective  June 13, 1996,  each of the  Company's  domestic  rigs in the Gulf of
Mexico were bareboat  chartered to a wholly-owned subsidiary of ENSCO to achieve
operating  and  marketing  efficiencies.  At December 31, 1997,  the Company had
three jackup rigs and seven platform rigs under bareboat  charter to ENSCO.  The
terms of the  bareboat  charter  agreements  provide for fixed daily rates to be
paid  to  the  Company,   which  the  Company   believes  are   reasonable   and
representative  of the  environment in which the rigs operate.  Each  respective
bareboat  charter rate is  increased  for any capital  expenditures  made by the
Company on a chartered  rig and the rate is reduced to 50% of the normal rate if
a rig is idle for more than 30 consecutive days. The bareboat charter agreements
provide for automatic  yearly  extensions but may be terminated with one month's
prior notice.

RESULTS OF OPERATIONS

For purposes of  comparative  analysis  between  fiscal years 1997 and 1996, the
1996 results  presented below include the combined results of the Company during
the period (January 1, 1996 to June 12, 1996) prior to the Merger ("Predecessor"
entity) as well as the period (June 13, 1996 to December 31, 1996) subsequent to
the Merger ("Successor" entity). The financial statements of the Predecessor and
Successor entities are not comparable in certain respects because of differences
between  the cost bases of the assets and  liabilities  held by the  Predecessor
entity  compared to that of the Successor  entity,  as well as the effect on the
Successor's   operations  for  adjustments  to  depreciation  and  amortization,
interest income, interest expense, and income taxes.

The schedule below provides a summary of the Company's operating results for the
years indicated (in thousands, except utilization data).


                                               1997       1996
                                            ---------  ----------
                                                       (Combined)
    Revenues
      Jackup Rigs - North America            $24,444     $35,201
      Jackup Rigs - Asia Pacific              58,946      44,549
      Platform Rigs                            7,464      17,417
                                             -------     -------
        Total                                $90,854     $97,167
                                             =======     =======

    Operating Margin*
      Jackup Rigs - North America            $22,629     $20,267
      Jackup Rigs - Asia Pacific              25,585      16,121
      Platform Rigs                            7,229       4,868
                                             -------     -------
        Total                                $55,443     $41,256
                                             =======     =======

    Utilization                                  72%         89%
   
    *  Defined as  operating  revenues  less  operating  expenses,  exclusive of
       depreciation  and  amortization,  change  in  control,  and  general  and
       administrative expenses.


<PAGE>


1997 Compared to 1996
---------------------
In 1997,  revenues  decreased $6.3 million,  or 6%, due primarily to the charter
contracts  the  Company  has with ENSCO for the jackup  rigs and  platform  rigs
located  in the Gulf of  Mexico.  Under the  charter  contracts,  ENSCO pays the
Company  a day rate for the use of the rigs  and  ENSCO is  responsible  for all
operating costs associated with those rigs. As a result,  the day rates received
by the Company under the charter contracts are lower to reflect the cost savings
as no operating  expenses  are incurred by the Company for those rigs.  In 1996,
the rigs in the Gulf of Mexico were under charter  contracts with ENSCO for only
the  period  subsequent  to the  Merger,  whereas  in 1997 such rigs were  under
charter for the entire year.

Also  contributing  to  the  1997  decrease  in  revenues  was  a  reduction  in
utilization,  primarily related to the Company's  platform rigs. The decrease in
utilization  for the platform rigs was  primarily a result of shipyard  downtime
for modifications  and  enhancements.  Although the platform rigs were generally
not under  contract with third parties while in the shipyard,  they continued to
receive a reduced charter rate as provided for under the charter  agreement with
ENSCO.

Offsetting  the decrease in revenues in 1997 from the North America  jackup rigs
and platform rigs is increased revenues from the Asia Pacific jackup rigs due to
higher day rates resulting from improved  market  conditions.  Also,  during the
first  quarter of 1997 the Company  transferred  one jackup rig from the Gulf of
Mexico to the Asia Pacific region and received a significant increase in its day
rate.  The  improved  Asia  Pacific  revenues  were  somewhat  offset  by  lower
utilization  in 1997 due to shipyard  downtime and the sale of the Company's 49%
interest  in a  jointly-owned  jackup  rig to  ENSCO  in June  1997.  The  lower
utilization  in 1997 is the result of shipyard  downtime for  modifications  and
enhancements.  Two  jackup  rigs  formerly  working  off the  coast of India are
currently in a shipyard in Singapore for  modifications and enhancements and are
expected to remain there until mid-1998.

The  Company's  operating  margin  improved  $14.2  million,  or 34%, in 1997 as
compared to 1996 due primarily to the  significantly  improved market conditions
for the Asia  Pacific  rigs in 1997.  In  addition,  the  increase in  operating
margins for the North America  jackup rigs and platform  rigs are  reflective of
the improved market conditions.

Depreciation and amortization expense in 1997 increased by $5.8 million, or 26%,
as compared to 1996 due primarily to a full year's depreciation and amortization
associated with the increase in drilling rig values and goodwill recorded in the
Merger.

Change in Control expenses of $22.0 million recorded in the Predecessor entity's
consolidated statement of operations for the period from January 1, 1996 to June
12, 1996 relates to compensation paid in the ordinary course of business as well
as other costs incurred by the Company directly related to the Merger.  See Note
2 to the Company's Consolidated Financial Statements.

General  and  administrative  expenses  (inclusive  of the ENSCO  administrative
charge)decreased  $1.6 million,  or 25%, in 1997 as compared to 1996 as a result
of the Merger.  In  connection  with the  Merger,  the  Company  entered  into a
Management  Services  Agreement  with ENSCO for shorebase and corporate  support
services  under  which the  Company  pays ENSCO a monthly  fee of  $400,000  for

<PAGE>

accounting,  treasury, human resources,  engineering,  insurance administration,
management information systems, purchasing,  safety and legal services. The 1996
results reflect only a partial year under this arrangement.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow and Capital Expenditures
----------------------------------
The Company's cash provided by operations and used by capital  expenditures  for
the years ended December 31, 1997 and 1996 were as follows (in thousands):

                                                        1997        1996
                                                     ---------   ----------
                                                                 (Combined)

     Cash provided by operations                      $34,975     $13,942
     Capital expenditures                              76,345      31,758


Cash flow from  operations  increased  by $21.0  million in 1997 as  compared to
1996.  The increase in cash flow from  operations  is primarily  due to improved
operating results.

Capital expenditures in 1997 were primarily for enhancements and ongoing capital
improvements  to the  Company's  drilling  rigs.  Capital  expenditures  in 1996
primarily  related to the purchase of a jackup rig located in the Gulf of Mexico
for $21.3  million.  The remaining  1996 capital  expenditures  were for ongoing
capital improvements to the Company's drilling rigs.

Net cash used by investing  activities  was $40.5 million in 1997 as compared to
$31.6 million in 1996,  primarily  representing  capital expenditures offset, in
part,  by proceeds  from asset  sales.  In June 1997,  the Company  sold its 49%
interest  in a  jointly-owned  jackup  rig to ENSCO  and in  December  1997 sold
another  jackup  rig to ENSCO.  The  proceeds  from these  asset  sales that are
included in investing  activity  cash flows  reflect only the net book values of
the assets  sold.  The  proceeds  received  in excess of the net book values are
reflected  as a  contribution  of capital  and are  included  as cash flows from
financing activities.

Net cash provided by financing  activities was $6.2 million in 1997, as compared
to net cash used by financing activities of $15.8 million in 1996. The 1997 cash
provided by financing  activities  includes  approximately  $40.4 million of the
proceeds  received from the sale of two jackup rigs to ENSCO,  representing  the
proceeds  received in excess of the net book value of those  rigs.  The 1997 and
1996 financing cash flows include approximately $35.3 million and $14.7 million,
respectively, of cash used for the net reduction of long-term borrowings.


<PAGE>

Financing and Capital Resources
-------------------------------
The  Company's  long-term  debt,  total  capital and debt to capital  ratios are
summarized below (in thousands, except percentages):

                                              1997         1996
                                           ----------   ----------

     Long-term debt                         $ 98,762     $134,387
     Total capital                           377,659      356,882
     Long-term debt to total capital             26%          38%

The  Company's  long-term  debt at December 31, 1997  consists of the  Company's
9.875% Senior Subordinated Notes (the "Notes") due January 2004. At December 31,
1996, the Company also had  outstanding  $35.0 million under a revolving  credit
facility (the "Sub-Facility") established under ENSCO's $150.0 million revolving
credit  facility  with a group of  international  banks  (the  "Facility").  The
Facility and  Sub-Facility  were retired in November  1997 in  conjunction  with
ENSCO's  sale  of  $300.0  million  in  public  debt.   ENSCO  is  currently  in
negotiations to secure a new revolving line of credit for  approximately  $150.0
million,  a portion of which would be allocated to the Company  under a separate
sub-facility.

The Company's  liquidity  position is  summarized  below (in  thousands,  except
ratios):

                                              1997         1996
                                           ----------   ----------
     Cash and cash equivalents              $10,071      $ 9,397
     Working capital                          2,423       14,219
     Current ratio                              1.1          1.8

Management  believes that the Company may need to supplement  its cash flow from
operations  in 1998  with  additional  borrowings  in order to meet its  planned
capital expenditures.  The Company anticipates that capital expenditures for rig
upgrades  and  sustaining  operations  could  exceed  $100.0  million in 1998 as
several  modification  and enhancement  projects are currently in progress,  and
others are anticipated.  As mentioned above,  ENSCO is currently in negotiations
to secure a new $150.0 million  revolving  credit  facility,  a portion of which
would be allocated to the Company under a separate sub-facility. The Company may
also  borrow  funds  from  ENSCO  if  necessary.  Management  believes  that the
Company's  cash flow from  operations  and the  additional  resources  mentioned
above,  if  necessary,  will be adequate to fund the  Company's  short-term  and
long-term liquidity needs.

YEAR 2000 ISSUE

The Company's Year 2000 issues are being  evaluated in conjunction  with ENSCO's
worldwide  evaluation of its Year 2000 issues.  ENSCO has developed a task force
that is  currently  working to  ascertain  and  resolve the  potential  problems
associated  with the Year 2000 and the processing of date sensitive  information
by the Company's and ENSCO's computer systems. Based on preliminary information,
the Company  believes  that the systems and  programming  changes  necessary  to
address  the Year 2000  issues  will be  implemented  successfully  and does not
expect  the cost of such  changes  to have a  material  impact on the  Company's
financial position, results of operations or cash flows in future periods.
<PAGE>

FORWARD-LOOKING STATEMENTS

This report contains  forward-looking  statements based on current  expectations
that  involve a number of risks and  uncertainties.  Generally,  forward-looking
statements  include  words or phrases  such as  "management  anticipates,"  "the
Company  believes," "the Company  anticipates"  and words and phrases of similar
impact,  and  include  but  are  not  limited  to  statements  regarding  future
operations and business  environment.  The  forward-looking  statements are made
pursuant to safe harbor provisions of the Private  Securities  Litigation Reform
Act of 1995.  The factors that could cause actual  results to differ  materially
from  the  forward  looking  statements  include  the  following:  (i)  industry
conditions  and  competition,  (ii)  cyclical  nature  of  the  industry,  (iii)
worldwide  expenditures  for oil and gas drilling,  (iv)  operational  risks and
insurance,  (v) risks associated with operating in foreign  jurisdictions,  (vi)
environmental liabilities which may arise in the future which are not covered by
insurance  or  indemnity,  (vii)  the  impact of  current  and  future  laws and
government regulation,  as well as repeal or modification of same, affecting the
oil and gas industry and the Company's operations in particular,  and (viii) the
risks described elsewhere, herein and from time to time in the Company's reports
to the Securities and Exchange Commission.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements
-----------------------------

Financial Statements:                                                   Page
---------------------                                                   ----

   Reports of Independent Accountants .................................  12
   Consolidated Balance Sheet at December 31, 1997 and 1996 ...........  13
   Consolidated Statement of Operations for the year ended December
      31, 1997, the  periods June 13, 1996 to December 31, 1996 and
      January 1, 1996 to June 12, 1996 and the year ended
      December 31, 1995................................................  14
   Consolidated  Statement  of Cash Flows for the year ended  December
      31, 1997, the periods June 13, 1996 to December 31, 1996 and
      January 1, 1996 to June 12, 1996 and the year ended  December 31,
      1995.............................................................  15
   Notes to Consolidated Financial Statements..........................  16


<PAGE>



                      REPORT OF INDEPENDENT ACCOUNTANTS
                      ---------------------------------

To the Shareholder and Board of Directors of Dual Holding Company

In our opinion,  the  accompanying  consolidated  balance  sheet and the related
consolidated  statements of operations  and of cash flows listed under Item 8 of
this Form 10-K present fairly, in all material respects,  the financial position
of Dual Holding Company and its subsidiaries  (Successor entity) at December 31,
1997 and 1996, and the results of their  operations and their cash flows for the
year ended  December 31, 1997 and the period June 13, 1996 to December 31, 1996,
in conformity with generally  accepted  accounting  principles.  These financial
statements are the  responsibility  of the Successor  entity's  management;  our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable  assurance about whether the financial statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.

/s/ Price Waterhouse LLP

Dallas, Texas
January 28, 1998

                       REPORT OF INDEPENDENT ACCOUNTANTS
                       ---------------------------------

To the Shareholder and Board of Directors of Dual Holding Company

In our opinion,  the accompanying  consolidated  statements of operations and of
cash flows listed under Item 8 of this Form 10-K present fairly, in all material
respects,  the results of operations and cash flows of Dual Holding  Company and
its subsidiaries (Predecessor entity) for the period January 1, 1996 to June 12,
1996 and the year ended December 31, 1995, in conformity with generally accepted
accounting principles.  These financial statements are the responsibility of the
Predecessor entity's management;  our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements  in accordance  with  generally  accepted  auditing  standards  which
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for the opinion expressed above.

/s/ Price Waterhouse LLP

Dallas, Texas
January 28, 1997


<PAGE>


                     DUAL HOLDING COMPANY AND SUBSIDIARIES
        (A WHOLLY-OWNED SUBSIDARIARY OF ENSCO INTERNATIONAL INCORPORATED)
                           CONSOLIDATED BALANCE SHEET
                    (in thousands, except for share amounts)



                                                              DECEMBER 31,
                                                          -------------------
                                                            1997       1996
                                                          --------   --------
                         ASSETS

CURRENT ASSETS
    Cash and cash equivalents...........................  $ 10,071   $  9,397
    Accounts receivable, net............................    12,108     11,713
    Other current assets................................     9,009     10,009
                                                          --------   --------
       Total current assets.............................    31,188     31,119
                                                          --------   --------

PROPERTY AND EQUIPMENT, AT COST ........................   326,670    285,536
    Less accumulated depreciation.......................   (32,923)   (12,053)
                                                          --------   --------
       Property and equipment, net......................   293,747    273,483
                                                          --------   --------

OTHER ASSETS, NET.......................................   110,524     99,655
                                                          --------   --------
                                                          $435,459   $404,257
                                                          ========   ========
          LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES
    Payable to ENSCO....................................  $  5,633   $    859
    Accounts payable....................................       661        408
    Accrued liabilities and other.......................    22,471     15,633
                                                          --------   --------
       Total current liabilities........................    28,765     16,900
                                                          --------   --------

LONG-TERM DEBT..........................................    98,762    134,387

DEFERRED INCOME TAXES...................................    14,545     19,485

OTHER LIABILITIES.......................................    14,490     10,990


COMMITMENTS AND CONTINGENCIES...........................

STOCKHOLDER'S EQUITY
    Common stock ($.10 par value, 10,000 shares
       authorized, 1,000 shares issued and
       outstanding).....................................         -          -
    Additional paid in capital..........................   264,824    218,431
    Retained earnings...................................    14,073      4,064
                                                          --------   --------
       Total stockholder's equity.......................   278,897    222,495
                                                          --------   --------
                                                          $435,459   $404,257
                                                          ========   ========



  The accompanying notes are an integral part of these financial statements.


<PAGE>

<TABLE>
<CAPTION>

                     DUAL HOLDING COMPANY AND SUBSIDIARIES
        (A WHOLLY-OWNED SUBSIDARIARY OF ENSCO INTERNATIONAL INCORPORATED)
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                 (in thousands)




                                                                  JUNE 13,        JANUARY 1,   
                                                 YEAR ENDED       1996 TO          1996 TO      YEAR ENDED
                                                 DECEMBER 31,    DECEMBER 31,      JUNE 12,     DECEMBER 31,
                                                    1997            1996            1996           1995
                                                -------------   -------------   -------------  -------------
                                                  SUCCESSOR       SUCCESSOR      PREDECESSOR    PREDECESSOR

OPERATING REVENUES
<S>                                               <C>            <C>              <C>           <C>     
  Drilling services.......................        $ 61,362       $ 33,085         $ 53,542        $ 85,889
  ENSCO charter fees......................          29,492         10,540                -               -
                                                  --------       --------         --------        --------                          
                                                    90,854         43,625           53,542          85,889 
                                                  --------       --------         --------        -------- 
                                                    
OPERATING EXPENSES
  Operating costs.........................          35,411         18,565           37,346          60,229
  Depreciation and amortization...........          27,882         13,351            8,768          19,608
  Change in control.......................               -              -           22,005               -
  General and administrative..............               -              -            3,757           7,563
  ENSCO administrative charge.............           4,800          2,640                -               -
                                                  --------       --------         --------        --------             
                                                    68,093         34,556           71,876          87,400
                                                  --------       --------         --------        --------     

OPERATING INCOME (LOSS)...................          22,761          9,069          (18,334)         (1,511)
                                                  --------       --------         --------        --------     

OTHER INCOME (EXPENSE)
  Interest income.........................           1,152            757              846           2,400
  Interest expense, net...................         (11,911)        (6,864)          (6,484)        (14,705)
  Gain on sale of assets, net.............               -              -                -           5,127
  Other, net..............................             (52)           (42)             268             336
                                                  --------       --------         --------        --------
                                                   (10,811)        (6,149)          (5,370)         (6,842)
                                                  --------       --------         --------        -------- 


INCOME (LOSS) BEFORE INCOME TAXES.........          11,950          2,920          (23,704)         (8,353)


PROVISION (BENEFIT) FOR INCOME TAXES......           1,941         (1,144)             628             885
                                                  --------       --------         --------        --------


NET INCOME (LOSS).........................        $ 10,009       $  4,064         $(24,332)       $ (9,238)
                                                  ========       ========         ========        ======== 

</TABLE>


The accompanying notes are an integral part of these financial statements.




<PAGE>
<TABLE>
<CAPTION>


                     DUAL HOLDING COMPANY AND SUBSIDIARIES
        (A WHOLLY-OWNED SUBSIDARIARY OF ENSCO INTERNATIONAL INCORPORATED)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in thousands)


                                                                  JUNE 13,       JANUARY 1,
                                                   YEAR ENDED     1996 TO         1996 TO      YEAR ENDED
                                                   DECEMBER 31,  DECEMBER 31,     JUNE 12,     DECEMBER 31,
                                                      1997          1996            1996          1995
                                                   -----------   -----------     -----------   -----------
                                                    SUCCESSOR     SUCCESSOR      PREDECESSOR   PREDECESSOR
                                                        

OPERATING ACTIVITIES
<S>                                                 <C>          <C>             <C>           <C>       
   Net income (loss).........................      $ 10,009      $  4,064        $(24,332)     $  (9,238)
   Adjustments to reconcile net income
    (loss) to net cash provided (used) by
     operating activities:
   Depreciation and amortization.............        27,882        13,351           8,768         19,608
   Deferred income tax provision (benefit)...        (2,910)       (2,725)           (645)          (892)
   Gain on disposition of assets.............             -             -            (167)        (5,127)
   Recognition of deferred income............             -             -          (2,941)        (4,191)
   Recognition of deferred expense...........             -            29           1,357          1,597
   Non-cash compensation expense.............             -             -           9,667              -
   Other.....................................          (453)         (352)             58              -
   Changes in operating assets and
     liabilities:
        (Increase) decrease in accounts
          receivable.........................          (400)        9,943          (3,985)        (3,067)
        (Increase) decrease in other
          current assets.....................           972          (654)          5,584           (424)
        Increase (decrease) in accounts
          payable............................         4,855          (699)         (4,777)           485
        Increase (decrease) in accrued
          liabilities........................        (4,980)       (9,372)         11,770         (1,192)
                                                   --------      --------        --------      --------- 
         Net cash provided (used) by
          operating activities...............        34,975        13,585             357         (2,441)
                                                   --------      --------        --------      --------- 


INVESTING ACTIVITIES
   Additions to property and equipment.......       (76,345)       (8,609)        (23,149)       (30,668)
   Cash segregated for rig purchases.........             -             -               -         22,000
   Proceeds from sale of assets..............        35,812         1,622             208         38,804
   Other.....................................             -             -          (1,688)          (288)
                                                   --------      --------        --------      --------- 
     Net cash provided (used) by
      investing activities...................       (40,533)       (6,987)        (24,629)        29,848
                                                   --------      --------        --------      ---------


FINANCING ACTIVITIES
   Proceeds from long-term borrowings........        15,000        45,000               -              -
   Reduction of long-term borrowings.........       (50,250)      (57,097)         (2,586)        (4,299)
   Proceeds in excess of net book value of
     assets sold to ENSCO....................        40,407             -               -              -
   Cash received (pledged) for letters
     of credit...............................         1,075         6,367          (7,443)             -
   Other.....................................             -             -               -           (203)
                                                   --------      --------        --------      --------- 
     Net cash provided (used) by financing
       activities............................         6,232        (5,730)        (10,029)        (4,502)
                                                   --------      --------        --------      --------- 


INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS..........................           674           868         (34,301)        22,905

CASH AND CASH EQUIVALENTS, BEGINNING OF
   PERIOD....................................         9,397         8,529          42,830         19,925
                                                   --------      --------        --------      ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD.....      $ 10,071      $  9,397        $  8,529      $  42,830
                                                   ========      ========        ========      =========

</TABLE>


  The accompanying notes are an integral part of these financial statements.


<PAGE>


                     DUAL HOLDING COMPANY AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES

Organization and Basis of Presentation
--------------------------------------

Dual Holding  Company was acquired by ENSCO on June 12, 1996,  at which time the
Company  became a  wholly-owned  subsidiary  of ENSCO.  See Note 2 "Merger." The
Company engages in the offshore contract drilling business and currently owns or
operates a fleet of 16 offshore drilling rigs.

The consolidated  financial  statements  include the accounts of the Company and
its subsidiaries.  All significant  intercompany  accounts and transactions have
been eliminated.  The consolidated  financial statements included herein present
the  results of the  Company  for  periods  prior to the  Merger  ("Predecessor"
entity) as well as for periods  subsequent to the Merger  ("Successor"  entity).
The financial  statements  of the  Predecessor  and  Successor  entities are not
comparable in certain respects because of differences  between the cost bases of
the assets  and  liabilities  held by the  Predecessor  compared  to that of the
Successor as well as the effect on the Successor's operations for adjustments to
depreciation and amortization,  interest income,  interest  expense,  and income
taxes.  The  following  significant   accounting  policies  apply  to  both  the
Predecessor entity and the Successor entity unless otherwise noted.

Pervasiveness of Estimates
--------------------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities,  and related revenues and
expenses,  and  disclosure  of gain  and loss  contingencies  at the date of the
financial statements. Actual results could differ from those estimates.

Cash Equivalents
----------------

The Company  considers all highly liquid  investments to be cash  equivalents if
they have maturities of three months or less at the date of purchase.

Foreign Currency Translation
----------------------------

The U.S.  dollar is the functional  currency for all of the Company's  foreign
operations.  Exchange  gains and  losses  were not  significant  in any period
presented.

Property and Equipment
----------------------

Under the Successor entity,  depreciation on drilling rigs and related equipment
is computed using the straight line method over  estimated  useful lives ranging
from 4 to 12  years.  Depreciation  of other  equipment  is  computed  using the
straight line method over estimated useful lives ranging from 2 to 6 years.
<PAGE>

Maintenance and repair costs are charged to expense as incurred.  Major renewals
and improvements are capitalized.  Upon retirement or replacement of assets, the
related cost and accumulated  depreciation are removed from the accounts and the
resulting gain or loss is included in income.

Goodwill
--------

Goodwill arising from the acquisition by ENSCO is amortized on the straight-line
basis over a period of 40 years.  See Note 2 "Merger." Prior to the Merger,  the
Company had goodwill  resulting from the acquisition by Dual Invest in June 1990
that was written-off in 1996 as a result of purchase accounting. Amortization of
goodwill was $2.7 million for the year ended December 31, 1997, $1.2 million for
the period June 13, 1996 to December 31, 1996,  $770,000 for the period  January
1, 1996 to June 12, 1996, and $1.7 million for the year ended December 31, 1995.
Goodwill, net of accumulated amortization,  was $110.4 million and $99.4 million
at December 31, 1997 and 1996,  respectively,  and is included in Other  Assets,
Net. Accumulated amortization of goodwill at December 31, 1997 and 1996 was $3.9
million  and  $1.2  million,  respectively.  On a  periodic  basis  the  Company
estimates  the  undiscounted  future cash flows to be generated by the Company's
operations to ensure the carrying value of goodwill has not been impaired.

Impairment of Assets
--------------------

The Company  evaluates the carrying  value of its long-lived  assets,  including
property and  equipment and  goodwill,  when events or changes in  circumstances
indicate  that  the  carrying  value  of  such  assets  may  be  impaired.   The
determination  of impairment is based upon  expectations  of  undiscounted  cash
flows, before interest, of the related asset.

Revenue Recognition
-------------------

The Company's  drilling  contracts  generally  provide for payment on a day rate
basis, and revenues are recognized as the work is performed.

Income Taxes
------------

Deferred tax assets and liabilities  are recognized for the  anticipated  future
tax effects of temporary  differences  between the financial statement basis and
the tax basis of the  Company's  assets and  liabilities  using the  enacted tax
rates in effect at year end. A valuation  allowance  for  deferred tax assets is
recorded  when it is more likely than not that the benefit from the deferred tax
asset  will  not  be  realized.  The  Company  is  included  in the  ENSCO  U.S.
consolidated  tax return.  Current and deferred  taxes are  calculated as if the
Company was a separate taxpayer.

Reclassifications
-----------------

Certain  previously  reported  amounts have been  reclassified to conform to the
1997 presentation.



<PAGE>


2.  MERGER

On June 12, 1996,  the Company was acquired by ENSCO in a purchase  acquisition.
The Merger was  approved  on that date by the  stockholders  of the  Company who
received  0.625  shares of ENSCO  common  stock (1.25  shares  adjusted  for the
two-for-one split of ENSCO's common stock effective September 15, 1997) for each
share of the Company's common stock. The Company's  stockholders of record as of
June 12, 1996 received,  in the aggregate,  approximately 10.1 million shares of
ENSCO  common stock (20.1  million  shares post split)  valued at  approximately
$218.4 million.

In  conjunction  with the Merger,  the Company  charged  $22.0  million  against
operating  results for certain items.  These items include  compensation paid in
the ordinary  course of business as well as other costs directly  related to the
Merger  process.  The primary  items  comprising  the $22.0 million of operating
charges were as follows (in thousands):

        Cashless exercise of stock options      $ 9,667
        Compensation and severance payments
          to employees                            8,773
        Fee paid to investment advisor            3,000
        Other                                       565
                                                -------
            Total                               $22,005
                                                =======

The Company used the purchase  method of  accounting  to record the Merger.  The
excess  of  the  purchase  price  over  the  net  assets   acquired   (goodwill)
approximated  $114.3 million and is being  amortized over 40 years.  The Company
completed its final purchase price  allocation  and  determination  of goodwill,
deferred  taxes and other  accounts in the second quarter of 1997. In connection
with the Merger,  the name of the Company was changed from DUAL DRILLING COMPANY
to Dual  Holding  Company and the capital  structure of the Company was changed.
Prior to the Merger,  the Company was authorized to issue 50.0 million shares of
its $.01 par value common stock,  of which 16.1 million shares were  outstanding
as of June 12, 1996,  and 10.0 million shares of its preferred  stock,  of which
none were  outstanding  as of June 12,  1996.  Under the terms of the  Company's
restated  certificate  of  incorporation  filed June 12,  1996,  the  Company is
authorized  to issue  10,000  shares  of its $.10 par  value  common  stock.  At
December 31, 1997 and 1996,  the Company had issued 1,000 shares of its $.10 par
value common stock, all of which were held by ENSCO.

The following unaudited pro forma information shows the consolidated  results of
operations for the years ended December 31, 1996 and 1995 based upon adjustments
to the  historical  financial  statements  of the  Company to give effect to the
Merger as if such Merger had occurred on January 1, 1995 (in thousands):

                                              1996       1995
                                           ---------   ---------

         Operating revenues                 $97,167     $91,016
         Operating income (loss)              9,966      (1,958)
         Net income (loss)                      145     (12,363)

<PAGE>


The pro forma consolidated results of operations are not necessarily  indicative
of the actual results that would have occurred had the  acquisition  occurred on
January 1, 1995, or of results that may occur in the future.

3.  PROPERTY AND EQUIPMENT

Property  and  equipment  at  December  31,  1997  and  1996  consists  of the
following (in thousands):
                                              1997         1996
                                            --------     --------

        Drilling rigs and equipment         $298,893     $282,130
        Other                                    200           65
        Work in progress                      27,577        3,341
                                            --------     --------
                                            $326,670     $285,536
                                            ========     ========

In June 1997, the Company sold its 49% interest in a jointly-owned jackup rig to
ENSCO for $20.8  million.  The sales price of the rig was based on a fair market
appraisal  by a third  party and  representative  of the 51% of the  jackup  rig
purchased by ENSCO from an unrelated  party in May 1997.  The proceeds  from the
sale to ENSCO exceeded the Company's net book value of the rig by  approximately
$9.2 million which has been recorded to paid in capital.

In December 1997, the Company sold a jackup rig to ENSCO for $55.0 million.  The
sales  price of the rig was based on an  independent  appraisal  of fair  market
value.  The proceeds  from the sale exceeded the Company's net book value of the
rig by approximately $31.2 million which has been recorded to paid in capital.

In September  1996, the Company  retired two platform rigs located off the coast
of California.  The rigs were dismantled and their major components were sold to
ENSCO  at fair  market  value  as  spare  capital  assets.  No gain or loss  was
recognized on this transaction.

In May 1996,  the Company  purchased a jackup rig located in the Gulf of Mexico,
which the  Company  previously  operated  under a charter  agreement,  for $21.3
million.  Proceeds  from  certain  asset  sales  in 1995  that  were  previously
disclosed as  restricted  for purchase of  replacement  assets or  repurchase of
indebtedness were used to purchase the rig.

4.  LONG-TERM DEBT

Long-term  debt at December 31, 1997 and 1996  consists of the  following  (in
thousands):
                                              1997         1996
                                            --------     --------

    Senior Subordinated Notes due 2004      $ 98,762     $ 99,387
    Revolving credit facility                      -       35,000
                                            --------     --------
                                            $ 98,762     $134,387
                                            ========     ========

In January 1994, the Company completed an offering of 9.875% Senior Subordinated
Notes (the "Notes") with an aggregate  principal  amount of $100.0 million.  The
Notes are due January 2004 and interest is payable  semiannually.  The Notes are
unsecured obligations of the Company, and are guaranteed by substantially all of
the Company's  principal  subsidiaries.  The Notes'  indenture  contains certain
covenants,   including   limitation   on  restricted   payments,   indebtedness,
<PAGE>


disposition of proceeds of asset sales,  transactions with affiliates,  payments
of dividends and other payment  restrictions,  sale/leaseback  transactions  and
restrictions on mergers,  consolidations  and transfer of assets.  The Notes are
redeemable at the option of the Company,  in whole or in part, at any time on or
after January 15, 1999.

In July 1996,  the Company  redeemed  $5.0  million  (face  amount) of the Notes
pursuant to an offer required to be made under the terms of the Notes  following
the Merger.  Additionally,  as of December 31, 1996,  ENSCO had purchased  $23.2
million  (face  amount) of the Notes on the open market.  The full $95.0 million
(face  amount)  of  the  Company's  Notes  and  related  premium  are  shown  as
outstanding in the Company's  consolidated balance sheet as of December 31, 1997
and 1996.

At  December  31,  1996,  the  Company  had $35.0  million  outstanding  under a
revolving credit facility (the "Sub-Facility")  established under ENSCO's $150.0
million  revolving  credit  facility  with a group of  international  banks (the
"Facility").  The Facility  and  Sub-Facility  were retired in November  1997 in
conjunction  with  ENSCO's sale of $300.0  million in public debt.  The interest
rate on the  Sub-Facility  was tied to  London  Interbank  Offered  Rates and at
December 31, 1996 was 6.785% on the $35.0 million outstanding.  The Sub-Facility
was collateralized by certain of the Company's jackup rigs, which had a combined
net book value of $100.2 million at December 31, 1996.

5.  STOCKHOLDER'S EQUITY (in thousands)
<TABLE>
<CAPTION>

                                    $.10 par $.10 par   $.01 par    $.01 par
                                      Common   Common     Common      Common    Additional   Retained
                                      Stock    Stock      Stock       Stock      Paid-In     Earnings   Treasury
                                      Shares   Amount     Shares      Amount     Capital    (Deficit)    Stock
                                      ------   ------     ------      ------     -------    ---------   --------

<S>                                   <C>       <C>        <C>         <C>        <C>        <C>         <C>     
BALANCE AT DECEMBER 31,1994.......        -    $    -     15,766      $ 158      $173,793   $(24,148)   $  (419)
  Net Loss........................        -         -          -          -             -     (9,238)         -
                                     ------    ------     ------      -----      --------   --------    -------
BALANCE AT DECEMBER 31, 1995......        -         -     15,766        158       173,793    (33,386)      (419)
                                      
  Cashless exercise of stock
    options.......................        -         -      1,048         10        20,166          -          -
  Purchase of treasury stock......        -         -       (710)         -             -          -    (13,583)
  Net loss through June 12, 1996..        -         -          -          -                  (24,332)         -
  Change of control...............    1,000         -    (16,104)      (168)       24,472     57,718     14,002
  Net income June 13, 1996 to
    December 31, 1996.............        -         -          -          -             -      4,064          -
                                      -----    ------     ------      -----      --------   --------    -------
BALANCE AT DECEMBER 31, 1996......    1,000         -          -          -       218,431      4,064          -
  Net income......................        -         -          -          -             -     10,009          -
  Proceeds in excess of net book
    value of assets sold to ENSCO,
    including tax effects.........        -         -          -          -        46,393          -          -
                                      -----    ------     ------      -----      --------   --------    -------                  
BALANCE AT DECEMBER 31, 1997......    1,000    $    -          -      $   -      $264,824   $ 14,073    $     -
                                      =====    ======     ======      =====      ========   ========    ======= 

</TABLE>

6.  EMPLOYEE BENEFIT PLANS

Incentive Stock Plans
---------------------

Prior to the Merger,  the Company's  1993  Long-Term  Incentive  Plan (the "1993
Plan") provided for the granting of any or all of the following types of awards:
(i) stock options,  including  incentive stock options and  non-qualified  stock
options,  (ii) stock appreciation rights ("SARs"),  in tandem with stock options
or freestanding,  (iii) restricted stock, (iv) performance share awards, and (v)
stock value equivalent awards. In conjunction with the Merger, the 1993 Plan was
terminated and all  outstanding  shares  granted  pursuant to the 1993 Plan were
exchanged for ENSCO common stock.


<PAGE>


Stock  Options - The table  below  summarizes  the  transactions  relating  to
stock options. (shares in thousands)
<TABLE>
<CAPTION>

                                                              1996                      1995
                                                     ----------------------     --------------------
                                     
                                                                   WEIGHTED                 WEIGHTED
                                                                   AVERAGE                  AVERAGE
                                                                   EXERCISE                 EXERCISE
                                                     SHARES         PRICE       SHARES       PRICE
                                                     ------        ------       ------       ------

<S>                                                   <C>          <C>             <C>       <C>   
Outstanding, beginning of year..................      1,059        $10.04          830       $12.75
Granted.........................................          -             -        1,059        10.04
Exercised.......................................     (1,048)        10.04            -            -
Exchanged for ENSCO common stock in Merger......        (11)         9.83            -            -
Canceled or forfeited...........................          -             -         (830)       12.75
                                                      -----        ------       ------       ------
Outstanding, end of year........................          -        $    -        1,059       $10.04
                                                      =====        ======       ======       ======
</TABLE>

In August 1995, the  Compensation  Committee of the Company's Board of Directors
(the  "Committee")   approved  the  cancellation  of  806,000  then  outstanding
management  options and the issuance of 951,000 options.  The options  cancelled
had been granted by the Committee in August 1993  (270,000  options) and October
1994 (536,000 options) at exercise prices of $14.000 and $12.125,  respectively.
The options  granted in August 1995 were issued at $10,  the market price of the
common stock on the date of the grant.

In  connection  with the  Merger,  the 1993  Plan was  amended  to allow for the
cashless  exercise of outstanding  stock options prior to the Merger date or the
exchange of options for shares of ENSCO common  stock on the Merger  date.  As a
result of this  change,  the  Company  recorded a charge of  approximately  $9.7
million  which is  included  in Change in Control  expense  in the  consolidated
statement of operations.

Under Statement of Financial  Accounting Standards ("SFAS") No. 123, the Company
is required to disclose information related to net income and earnings per share
as if it had  accounted  for its  employee  stock  options  under the fair value
provisions of that  statement.  For the options  granted by the Company in 1995,
the Company  determined  that such grants  accounted for under the provisions of
the SFAS No. 123 did not have a material  impact on net income or  earnings  per
share  in 1995.  As  discussed  above,  the  Company  amended  the 1993  Plan in
connection with the Merger which resulted in a charge recorded by the Company in
accordance  with  the  provisions  of  Opinion  25  and  related   authoritative
interpretations.  The Company  determined that the expense recognized under SFAS
No. 123 in 1996 would not have been  materially  different than that  recognized
under Opinion 25.

Defined Contribution Plan
-------------------------

Effective June 30, 1996, the DUAL DRILLING COMPANY Thrift and 401(k)  Retirement
and Savings  Plan (the  "Retirement  Plan") was  frozen.  All  participants  who
remained  employees  of the  Company  after the  Merger  were  allowed to become
participants  in the ENSCO Savings  Plan.  As soon as  regulatory  approvals are
obtained,  the Retirement Plan will be merged into the ENSCO Savings Plan. Costs
incurred by the Company for matching  contributions  under the  Retirement  Plan
were  approximately  $300,000 and $600,000 for the years ended December 31, 1996
and 1995, respectively.



<PAGE>


Supplemental Executive Retirement Plan
--------------------------------------

In June 1993, the Company implemented the Supplemental Executive Retirement Plan
(the "Plan"),  a defined benefit pension plan covering  certain of its executive
officers.  In  conjunction  with the  Merger,  the  Company,  ENSCO and the Plan
participants  agreed to terminate  the Plan and  distribute  an  aggregate  $2.3
million to the participants.  As such, the Company recorded pension cost related
to the Plan of  approximately  $1.7  million in 1996,  of which $1.2  million is
recorded  in  Change  in  Control  expenses  in the  consolidated  statement  of
operations.  The $2.3 million termination liability was paid to the participants
in January 1997.

7.  INCOME TAXES

The  Company  had income  (loss) of $(3.7)  million,  $(13.8)  million,  $(33.6)
million and $(6.7) million from its operations before income taxes in the United
States and income  (loss) of $15.7  million,  $16.7  million,  $9.9  million and
$(1.7) million from its operations  before income taxes in foreign countries for
the year ended  December 31,  1997,  periods June 13, 1996 to December 31, 1996,
January  1, 1996 to June 12,  1996 and for the year  ended  December  31,  1995,
respectively.

The provisions for income taxes for the years ended December 31, 1997,  1996 and
1995 are summarized as follows (in thousands):


                                1997              1996                 1995
                            ------------ -------------------------  -----------
                                         Successor     Predecessor
                                         ---------     -----------

Current:
   Federal...........         $     -      $     -       $    -       $    -
   State.............               -            -            -           24
   Foreign...........           4,851        1,581        1,273        1,753
                              -------      -------       ------       ------
     Total current...           4,851        1,581        1,273        1,777
                              -------      -------       ------       ------

Deferred:
   Federal...........          (3,066)      (4,113)        (645)           -
   Foreign...........             156        1,388            -         (892)
                              -------      -------       ------       ------
     Total deferred..          (2,910)      (2,725)        (645)        (892)
                              -------      -------       ------       ------ 

Total................         $ 1,941      $(1,144)      $  628       $  885
                              =======      =======       ======       ======



<PAGE>


    Deferred  income tax assets and liabilities as of December 31, 1997 and 1996
are summarized as follows (in thousands):

                                                          1997       1996
                                                        -------    -------

    Deferred tax assets:
       Domestic:
          Foreign tax credit carryforward.........      $ 5,108    $     -
          Deferred compensation...................            -      4,045
          Net operating loss carryforward.........       22,407     17,153
          Liabilities not deductible for tax
             purposes.............................        3,217      3,225
          Other...................................        2,614      2,829
       Foreign:
          Net operating loss carryforward.........            -         90
                                                        -------    -------
       Gross deferred tax assets..................       33,346     27,342
       Valuation allowance........................            -         -
                                                        -------    -------
       Net deferred tax assets....................      $33,346    $27,342
                                                        =======    =======
    Deferred tax liabilities:
       Domestic:
          Excess of net book basis over tax basis.      $31,492    $33,429
          Deferred installment gain...............        3,186      3,186
          Undistributed foreign earnings..........          771        771
       Foreign:
          Excess of net book basis over tax basis.        5,353      5,288
                                                        -------    -------
       Total deferred tax liability...............       40,802     42,674
       Less:  Net deferred tax assets.............      (33,346)   (27,342)
                                                        -------    -------
       Net deferred tax liability.................        7,456     15,332
       Add:  Current deferred tax asset...........        7,089      4,153
                                                        -------    -------
       Long term deferred tax liability...........      $14,545    $19,485
                                                        =======    =======

The following is a  reconciliation  of the provision for income taxes calculated
at the  U.S.  federal  income  tax rate to the  income  taxes  reflected  in the
consolidated statement of operations:

                                      1997             1996              1995
                                   ---------- -----------------------  --------
                                              Successor   Predecessor
                                              ---------   -----------

Current:
Income tax expense (benefit)
  at U.S. federal tax rate....      $ 4,182    $ 1,022      $(8,296)    $(2,924)
Increase (decrease) in tax
  resulting from:
    Effects of foreign taxes..        1,190     (2,804)       1,845       1,868
    Goodwill amortization.....          942        434          272         604
    Change in valuation
      allowance...............            -          -        6,807       2,082
    Utilization of NOLs.......       (3,078)         -            -           -
    Items not related to
      current year operations.         (670)         -            -        (946)
    Other.....................         (625)       204            -         201
                                    -------    -------      -------      ------
    Income tax expense
     (benefit)................      $ 1,941    $(1,144)     $   628      $  885
                                    =======    =======      =======      ======
<PAGE>



At December 31, 1997,  the Company had regular and  alternative  minimum tax net
operating loss  carryforwards of approximately  $64.0 million and $37.2 million,
respectively,  and  foreign tax credit  carryforwards  of $5.1  million.  If not
utilized,   the  regular  and   alternative   minimum  tax  net  operating  loss
carryforwards  expire in 2009 and 2010.  The  foreign  tax  credit  carryforward
expires in 2001 and 2002.

As a result of the  Merger,  the  Company  is now  included  in the  ENSCO  U.S.
consolidated  tax return.  The Merger  also  results in the  utilization  of the
Company's net operating loss carryforwards  being subject to limitations imposed
by the Internal Revenue Code of 1986. However,  the Company does not expect such
limitations to have an effect upon its ability to utilize its net operating loss
carryforwards.

It is the policy of the Company to consider  that  income  generated  in foreign
subsidiaries  is permanently  invested.  A significant  portion of the Company's
undistributed foreign earnings at December 31, 1997 were generated by controlled
foreign  corporations.  A portion of the  undistributed  foreign  earnings  were
taxed,  for U.S.  tax  purposes,  in the year that  such  earnings  arose.  Upon
distribution  of foreign  earnings in the form of  dividends or  otherwise,  the
Company may be subject to additional U.S. income taxes. However,  deferred taxes
related  to the  future  remittance  of  these  funds  are  not  expected  to be
significant to the financial statements of the Company.

8.  COMMITMENTS AND CONTINGENCIES

Leases and Contracts
--------------------

The Company is obligated  under leases for certain of its offices and equipment.
Rental  expense  relating to  operating  leases was  $865,000 for the year ended
December  31, 1997,  $532,000 for the period June 13 through  December 31, 1996,
$407,000 for the period  January 1 through  June 12, 1996,  and $1.1 million for
the year ended  December 31, 1995.  Future  minimum  rental  payments  under the
Company's noncancellable operating lease obligations having initial or remaining
lease terms in excess of one year are as  follows:  $470,500 in 1998 and $52,900
in 1999.

The Company  makes  payments to ENSCO under a Master  Services  Agreement  for
support  services for the  Company's  operations.  See Note 10 "Related  Party
Transactions."

Insurance
---------

Prior to the Merger,  the  Company  was  self-insured  for its  maritime  claims
exposure that provided for self-insured limits of up to $500,000 for each claim.
Effective  June 12, 1996,  the  Company's  insurance  coverage was  increased to
levels  consistent with ENSCO's policies which,  among other things,  limits the
exposure  to  maritime  claims  to  $25,000  for each  claim.  Based on  current
information, the Company has provided adequate reserves for such claims.

Letters of Credit
-----------------

The Company,  from time to time,  maintains legally  restricted cash balances as
collateral  for letters of credit  issued by banks for  providing  bid bonds and

<PAGE>

performance bonds required on drilling contracts in which the Company may bid or
be awarded.  These restricted cash balances  aggregated $1.1 million at December
31, 1996 and are  included  in Other  Current  Assets.  There were no letters of
credit outstanding at December 31, 1997.

At December 31, 1997,  there were no other  contingencies,  claims,  or lawsuits
against the Company, which, in the opinion of management,  would have a material
effect on its financial condition or results of operations.

9.  GEOGRAPHIC REGION INFORMATION AND MAJOR CUSTOMERS

The Company's  eight jackup rigs and eight platform rigs (including one which is
managed but not owned) are located in the Gulf of Mexico and throughout the Asia
Pacific region.  Business  levels for the Company and for the offshore  contract
drilling  industry,   in  general,  are  significantly   affected  by  worldwide
expenditures  for oil and gas  drilling.  Expenditures  for oil and gas drilling
activity fluctuate based upon many factors, including world economic conditions,
the legislative  environment in the U.S. and other major  countries,  production
levels and other  activities  of OPEC and other oil and gas  producers,  and the
impact  that these and other  events have on the  current  and  expected  future
pricing of oil and natural gas.

The following shows geographic information for the year ended December 31, 1997,
the Successor period June 13, 1996 to December 31, 1996, the Predecessor  period
January  1, 1996 to June 12,  1996,  and the year  ended  December  31,  1995(in
thousands):
<TABLE>
<CAPTION>

                                                                       GEOGRAPHIC REGION

                                                           North        Asia         Corporate
                                                          America      Pacific       & Other       Total
                                                         ---------    ---------     ----------   ---------

       1997
       ----
<S>                                                       <C>          <C>           <C>          <C>     
       Revenues.................................          $ 30,277     $ 60,577     $      -     $ 90,854
       Operating income (loss)..................            14,662       12,899       (4,800)      22,761
       Identifiable assets......................           269,784      165,595           80      435,459

       June 13, 1996 - December 31, 1996 (Successor)
       ---------------------------------------------
       Revenues.................................          $ 19,093     $ 24,532     $      -     $ 43,625
       Operating income (loss)..................             8,314        3,395       (2,640)       9,069
       Identifiable assets......................           280,968      123,289            -      404,257

       January 1, 1996 - June 12, 1996 (Predecessor)
       ---------------------------------------------
       Revenues.................................          $ 32,424     $ 21,118     $      -     $ 53,542
       Operating income (loss)..................             2,189        5,239      (25,762)     (18,334)

       1995
       ----
       Revenues.................................          $ 47,106     $ 38,783     $      -     $ 85,889
       Operating income (loss)..................               358        5,694       (7,563)      (1,511)
       Identifiable assets......................           180,069      123,500          193      303,762
</TABLE>

For the year  ended  December  31,  1997,  revenues  from  ENSCO were 32% of the
Company's  total  revenues,  revenues from two customers  were each 20% of total
revenues and revenues from one customer was 11% of total revenues.

For the period June 13, to December 31, 1996,  revenues from ENSCO were 24%, and
revenues from the other  customers were 23%, 15% and 13% of the Company's  total
revenues.

<PAGE>

For the period  January 1, to June 12, 1996,  revenues from one customer was 15%
of the Company's total revenues and revenues from two customers were each 13% of
the Company's total revenues.

For the year ended  December 31, 1995,  revenues from three  customers were 17%,
14% and 11% of total revenues.

10.  RELATED PARTY TRANSACTIONS

Effective  June  13,  1996,  each  of the  Company's  domestic  rigs,  currently
consisting of three jackup rigs and seven platform rigs, were bareboat chartered
to ENSCO  Offshore  Company  ("ENSCO  Offshore"),  a wholly owned  subsidiary of
ENSCO, to achieve certain operating and marketing efficiencies. The terms of the
bareboat charter agreements with ENSCO Offshore provide for fixed daily rates to
be  paid  to  the  Company,  which  the  Company  believes  are  reasonable  and
representative  of the  environment in which the rigs operate.  Each  respective
bareboat  charter rate is  increased  for any capital  expenditures  made by the
Company on a chartered  rig and the rate is reduced to 50% of the normal rate if
a rig is idle  for  more  than 30  consecutive  days.  The  initial  term of the
bareboat  charter  agreements is one year,  with automatic one year  extensions,
unless  either  party gives at least one month's  prior  notice of  termination.
Revenues relating to the bareboat charter  agreements were $29.5 million for the
year ended  December 31, 1997 and $10.5  million for the period June 13, 1996 to
December 31, 1996.

On June 13, 1996,  the Company  entered into a Master  Services  Agreement  with
ENSCO. Under the terms of the Master Services Agreement,  ENSCO provides certain
shorebase and corporate support services for the Company's  domestic and foreign
operations.  The Company pays ENSCO a monthly fee for these  services  under the
Master  Services  Agreement,  which the Company  believes is reasonable  for the
services  provided.  The  administrative  expense related to the Master Services
Agreement was $4.8 million for the year ended December 31, 1997 and $2.6 million
for the period from June 13, 1996 to December 31, 1996.

ENSCO holds a portion of the Company's Notes as of December 31, 1996. See Note 4
"Long-Term  Debt." Interest expense relating to the Notes held by ENSCO was $2.3
million  and $1.2  million  for the  years  ended  December  31,  1997 and 1996,
respectively.

11.  SUPPLEMENTAL FINANCIAL INFORMATION

Consolidated   Balance  Sheet  Information.   Accounts   receivable,   net  at
-------------------------------------------
December 31, 1997 and 1996 consists of the following (in thousands):

                                                         1997       1996
                                                       -------    -------

      Trade.....................................       $12,406    $11,518
      Other.....................................           109        343
                                                       -------    -------
                                                        12,515     11,861
      Allowance for doubtful accounts...........          (407)      (148)
                                                       -------    -------
                                                       $12,108    $11,713
                                                       =======    =======




<PAGE>


Other current assets at December 31, 1997 and 1996 consists of the following (in
thousands):

                                                         1997        1996
                                                       -------     -------

      Current deferred tax asset................       $ 7,089     $ 4,153
      Prepaid taxes ............................         1,146       1,416
      Prepaid expenses..........................           114         774
      Inventory.................................           440           -
      Supplemental executive retirement plan....             -       2,292
      Deposits..................................           109       1,224
      Other.....................................           111         150
                                                       -------     -------
                                                       $ 9,009     $10,009
                                                       =======     =======


 Accrued liabilities at December 31, 1997 and 1996 consists of the following (in
thousands):

                                                         1997        1996
                                                       -------     -------

      Operating expenses........................       $ 1,671     $ 3,305
      Taxes.....................................         8,201       2,378
      Insurance.................................         2,500       2,500
      Accrued interest..........................         4,326       4,825
      Accrued work in progress..................         4,952           -
      Supplemental executive retirement plan....             -       2,264
      Deferred revenue..........................           755           -
      Other.....................................            66         361
                                                       -------     -------
                                                       $22,471     $15,633
                                                       =======     =======


Consolidated  Statement  of  Operations  Information.  Maintenance  and  repairs
-----------------------------------------------------
expense for the years ended December 31, 1997,  1996 and 1995 are as follows (in
thousands):

                                  1997            1996              1995
                                -------- -----------------------  ---------
                                         Successor   Predecessor   
                                         ---------   -----------   

     Maintenance and repairs..   $3,497   $3,029       $5,911      $10,295



Consolidated  Statement  of Cash  Flows  Information.  The  1996  consolidated
-----------------------------------------------------
statement  of cash flows  excludes  the non cash  issuance of common  stock in
the merger of the Company with ENSCO as described in Note 2 "Merger."


Cash paid for interest  and income taxes for the years ended  December 31, 1997,
1996 and 1995 is as follows (in thousands):

                                 1997            1996               1995
                             ----------- -----------------------  ---------
                                         Successor   Predecessor
                                         ---------   -----------

Interest, net of amount
 capitalized.................  $12,450     $6,326      $6,915      $14,147
Income taxes.................    2,884      1,317       1,696        2,011

<PAGE>

Fair  Value  of  Financial  Instruments.   The  following  disclosure  of  the
----------------------------------------
estimated fair value of financial  instruments is made in accordance  with the
requirements  of  Statement  of  Financial   Accounting   Standards  No.  107,
"Disclosures  about Fair Value of Financial  Instruments."  The estimated fair
value amounts have been  determined  by the Company,  using  available  market
information and appropriate  valuation  methodologies.  However,  considerable
judgement  is required in  interpreting  market data to develop the  estimates
of  fair  value.   Accordingly,   the  estimates   presented  herein  are  not
necessarily  indicative  of the amounts  that the Company  could  realize in a
current  market  exchange.  The use of  different  market  assumptions  and/or
estimation  methodologies  may have a material  effect on the  estimated  fair
value amounts.

The  carrying  amounts and  estimated  fair values of financial  instruments  at
December 31, 1997 and 1996 are as follows (in thousands):

                                       December 31, 1997    December 31, 1996
                                      ------------------   --------------------
                                                Estimated            Estimated
                                      Carrying    Fair     Carrying    Fair
                                       Amount     Value     Amount     Value
                                      -------- ----------  --------  ----------
Long-term debt, including current
  Maturities.......................   $98,762   $102,876   $134,387   $137,867

The estimated fair values were determined as follows:

Quoted  market  price  for the  Notes  and  interest  rates  that are  currently
available to the Company for issuance of debt with similar  terms and  remaining
maturities are used to estimate fair value for bank debt issues.

The estimated fair value of the Company's cash and cash equivalents,  short-term
investments,  receivables,  trade  payables and other  liabilities  approximated
their carrying values at December 31, 1997 and 1996.

Concentration of Credit Risk. Financial instruments which subject the Company to
-----------------------------
concentrations  of credit risk consist  principally of cash and cash equivalents
and trade  receivables.  The Company's trade receivables are predominantly  from
major  international  oil  companies and  government-owned  oil  companies.  The
Company's cash and cash equivalents are maintained in major banks and high grade
investments.  As a  result,  the  Company  believes  the  credit  risk  in  such
instruments is minimal.

12.    UNAUDITED QUARTERLY FINANCIAL INFORMATION

A summary of unaudited quarterly  consolidated financial information for 1997 is
as follows:
<TABLE>
<CAPTION>

                                             First        Second         Third        Fourth
                                            Quarter       Quarter       Quarter       Quarter         Year
                                           --------       -------       -------       -------        -------

<S>                                        <C>            <C>           <C>           <C>            <C>    
Revenues............................       $17,874        $21,877       $26,502       $24,601        $90,854
Operating expenses..................        11,573          8,041         8,084         7,713         35,411
                                           -------        -------       -------       -------        -------
Operating margin....................         6,301         13,836        18,418        16,888         55,443
Depreciation and amortization.......         6,358          6,989         7,256         7,279         27,882
General and administrative..........         1,200          1,200         1,200         1,200          4,800
                                           -------        -------       -------       -------        -------
Operating income....................        (1,257)         5,647         9,962         8,409         22,761
Interest income.....................           323            238           358           233          1,152
Interest expense, net...............         2,947          2,952         3,179         2,833         11,911
Other income (expense)..............           (11)            10           (18)          (33)           (52)
                                           -------        -------       -------       -------        ------- 
Income before taxes.................        (3,892)         2,943         7,123         5,776         11,950
Provision for income taxes..........           553            247           582           559          1,941
                                           -------        -------       -------       -------        -------
Net income..........................       $(4,445)       $ 2,696       $ 6,541       $ 5,217        $10,009
                                           =======        =======       =======       =======        =======

</TABLE>




<PAGE>

The 1997 second and third quarter  results have been restated to reclassify  the
gain and related income tax effects  recorded in connection with the sale of the
Company's 49% interest in a jackup rig to ENSCO in June 1997 to paid in capital.

ITEM 9.  CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.


<PAGE>


                                   PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

Not required under the reduced disclosure format.


ITEM 11.  EXECUTIVE COMPENSATION

Not required under the reduced disclosure format.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Not required under the reduced disclosure format.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not required under the reduced disclosure format.


<PAGE>


                                    PART IV


ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)   Financial statements,  financial statement schedules and exhibits filed as
      part of this report:
                                                              Page
                                                              ----
      (1)  Financial Statements of Dual Holding Company
               Reports of Independent Accountants              12
               Consolidated Balance Sheet                      13
               Consolidated Statement of Operations            14
               Consolidated Statement of Cash Flows            15
               Notes to the Consolidated Financial Statements  16

      (2)  Exhibits

           The  following  instruments  are included as exhibits to this report.
           Exhibits  incorporated by reference are so indicated by parenthetical
           information.


EXHIBIT NO.          DESCRIPTION

  2             -    Agreement  and Plan of Merger  among ENSCO  International
                     Incorporated,  DDC Acquisition  Company and DUAL DRILLING
                     COMPANY dated March 21, 1996  (incorporated  by reference
                     to  exhibit  (C)(1)  to the  Company's  Form 8-K as filed
                     with the Securities  and Exchange  Commission on April 1,
                     1996).
  2.1           -    Principal    Stockholders    Agreement    between   ENSCO
                     International  Incorporated  and  Dual  Invest  AS  dated
                     March 21, 1996  (incorporated  by reference to Appendix D
                     to the ENSCO  (File No.  1-8097)  Registration  Statement
                     on Form S-4, as amended,  filed with the  Securities  and
                     Exchange Commission on May 10, 1996).
  2.2           -    Amendment  No. 1 to  Agreement  and Plan of Merger  dated
                     May 7, 1996,  between ENSCO  International  Incorporated,
                     DDC  Acquisition   Company  and  DUAL  DRILLING   COMPANY
                     (incorporated  by  reference  to  exhibit  2.2 of  Amend-
                     ment  No.  1  to  the  ENSCO  International  Incorporated
                     Registration  Statement  on Form S-4 filed May 10,  1996,
                     Registration No. 333-3411).
  3             -    Certificate   of  Merger  of  DDC   Acquisition   Company
                     merging  into  DUAL  DRILLING  COMPANY  (incorporated  by
                     reference   to   exhibit   No.  3  to  the   Registrant's
                     Quarterly  Report on Form 10-Q for the  quarterly  period
                     ended June 30, 1996).
  3.1           -    Certificate   of   Incorporation   of   DDC   Acquisition
                     Company,   as  amended   (incorporated  by  reference  to
                     exhibit No. 3.1 to the  Registrant's  Quarterly Report on
                     Form 10-Q for the quarterly period ended June 30, 1996).


<PAGE>


EXHIBIT NO.          DESCRIPTION


  10            -    Form  of  Standard   Bareboat   Charter   between   ENSCO
                     Offshore   Company  and  the  Company   (incorporated  by
                     reference  to  exhibit  No.  10.2  to  the   Registrant's
                     Quarterly  Report on Form 10-Q for the  quarterly  period
                     ended June 30, 1996).
  10.1          -    Form  of  Standard   Platform   Charter   between   ENSCO
                     Offshore   Company  and  the  Company   (incorporated  by
                     reference  to  exhibit  No.  10.3  to  the   Registrant's
                     Quarterly  Report on Form 10-Q for the  quarterly  period
                     ended June 30, 1996).
  10.2          -    Master  Services  Agreement  between ENSCO  International
                     Incorporated  and the Company  (incorporated by reference
                     to  exhibit  No.  10.4  to  the  Registrant's   Quarterly
                     Report on Form 10-Q for the  quarterly  period ended June
                     30, 1996).
  10.3          -    DUAL  DRILLING  COMPANY  Employees  Tax   Deferred/Thrift
                     Savings  Plan and  Trust  (filed as  exhibit  10.2 to the
                     Company's   Registration   Statement  on  Form  S-1  (No.
                     33-64550) and incorporated herein by reference).
  10.4          -    Office  Lease,  dated as of  October  21,  1988,  between
                     Sherry Lane  Associates and DUAL DRILLING  COMPANY (filed
                     as   exhibit   10.14   to  the   Company's   Registration
                     Statement  on Form S-1 (No.  33-64550)  and  incorporated
                     herein by reference).
  10.5          -    Indenture  dated January 15, 1994,  between DUAL DRILLING
                     COMPANY  and  Merrill  Lynch & Co.,  with  respect to the
                     issuance of Senior Subordinated Notes due 2004.
 *27.1          -    Financial Data Schedule
---------------

*  Filed herewith


(b)     No  Current  Reports on Form 8-K were  filed by the  Company  during the
        fourth quarter of the year ended December 31, 1997.


<PAGE>


                                  SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 23, 1998.

                                    Dual Holding Company
                                    (Registrant)


                                    By:  /s/ C. CHRISTOPHER GAUT
                                         ---------------------------
                                             C. Christopher Gaut
                                             President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following  persons on behalf of the Registrant and in the
capacities and on the date indicated.

           Signatures                    Title                     Date
           ----------                    -----                     ----


  /s/  C. CHRISTOPHER GAUT          President and Director     March 23, 1998
  -----------------------------     (Principal Executive
       C. Christopher Gaut           Officer and Financial
                                     Officer) 

  /s/   WILLIAM S. CHADWICK, JR.    Vice President and         March 23, 1998
  -----------------------------      Director
        William S. Chadwick, Jr.


  /s/     H. E. MALONE              Secretary and Director     March 23, 1998
  -----------------------------     (Principal Accounting
          H. E. Malone               Officer)