Exhibit 10.42


                          MASTER ASSUMPTION AGREEMENT,
                        SUPPLEMENTAL INDENTURE NO. 1 and
                    AMENDMENT TO TITLE XI FINANCE AGREEMENTS


         This MASTER ASSUMPTION AGREEMENT, SUPPLEMENTAL INDENTURE NO. 1 AND
AMENDMENT TO TITLE XI FINANCE AGREEMENTS, by and among

PERFORADORA CENTRAL, S.A. De C.V., a Mexican Corporation (hereinafter referred
to as "Original Shipowner"), PC 2 SA DE CV ( "PC 2"), the United States of
America, represented by the Secretary of Transportation, acting by and through
the Maritime Administrator (hereinafter referred to as the "Secretary") and
Bank One Trust Company, N.A., a national banking association, successor to
First National Bank of Commerce (said bank, its successor or assign, herein
called the "Indenture Trustee"), is dated as of March 15, 2001.

                                  WITNESSETH:

         WHEREAS, the Original Shipowner issued bonds designated "United States
Government Guaranteed Export Ships Financing Bonds, 1998 series" (the
"Obligations" or the "Bonds") pursuant to a Trust Indenture dated November 5,
1998 (the "Trust Indenture") by and between the Original Shipowner and the
Indenture Trustee for the purpose of financing a LeTourneau design Super 116 C
Jackup Drilling Unit named TONALA, Patente No. 26807-00 (the "Vessel");

         WHEREAS, the Secretary executed and the Original Shipowner accepted a
Commitment to Guarantee Obligations dated November 5, 1998, Contract No.
MA-13448 (the "Commitment"), pursuant to Title XI of the Merchant Marine Act,
1936, as amended, under which the United States of America agreed to guarantee
(the "Guarantee Transaction") the payment of the unpaid interest on, and the
unpaid balance of the principal of the Obligations (the "Guarantees");

         WHEREAS, on November 5, 1998, the Indenture Trustee and the Secretary
entered into an Authorization Agreement, Contract No. MA-13449 (the
"Authorization Agreement"), which established procedures for, among other
thing, the delivery of the Guarantees and the Obligations;

         WHEREAS, in consideration of the execution and delivery of the
Guarantees by the Secretary and pursuant to the terms of a Security Agreement
dated November 5, 1998 by and between the original Shipowner and Secretary,
Contract No. MA-13450 as amended by Amendment No. 1 to Security Agreement dated
January 21, 2000 (collectively referred to herein as the "Security Agreement"),
the Original Shipowner made and delivered to the Secretary its promissory note
dated November 5, 1998 in the aggregate principal amount of $70,528,000.00 (the
"Secretary's Note");

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<PAGE>

         WHEREAS, as security for payment of the Secretary's Note, the Original
Shipowner, among other things, executed and delivered to the Secretary a First
Preferred Ship Mortgage dated January 21, 2000 (the "Mortgage") upon the
Vessel, pursuant to the then effective and applicable ship mortgage laws of the
United States of America and the Republic of Panama;

         WHEREAS, the Original Shipowner and the Secretary entered into a
depository agreement, Contract No. 13453, dated November 5, 1998 (the
"Depository Agreement");

         WHEREAS, the Original Shipowner and the Secretary have entered into a
Title XI Reserve Fund and Financial Agreement dated November 5, 1998, Contract
No. MA-13452 as amended by Amendment No. 1 to the Title XI Reserve Fund and
Financial Agreement dated January 21, 2000 (the "Reserve Fund Agreement") and
together with the Obligations, Mortgage, the Secretary's Note, the Trust
Indenture, the Depository Agreement, the Security Agreement, the Authorization
Agreement and documents related to the Guarantee Transaction, hereinafter
referred to as (the "Title XI Documents");

         WHEREAS, the Mortgage was duly recorded on January 21, 2000, in the
New York, New York office of the Consulate of the Republic of Panama at FICHA:
22,400, DOCUMENTO: 67,653 at 2:24 p.m.;

         WHEREAS, the Original Shipowner entered into a bareboat charter
agreement with Chiles Offshore L.L.C. ("Chiles") dated November 30, 1999 as
amended on January 21, 2000 (hereinafter the "Charter") wherein the Original
Shipowner chartered the Vessel to Chiles;

         WHEREAS, Grupo Industrial Atlantida S.A. de C.V. ("GIA"), the sole
shareholder of the Original Shipowner, prior to or on the date hereof, adopted
a resolution authorizing the partition of specific assets and liabilities,
namely the Vessel and the Obligations, and will have formed PC 2 SA DE CV ("PC
2"), a Mexican corporation, and on the date hereof transferred the Vessel from
the Original Shipowner to PC 2, subject to the obligations under the Title XI
Documents;

         WHEREAS, after the date hereof, PC 2 will merge into GIA and will
thereby contemporaneously transfer the Vessel from PC 2 to GIA, subject to the
obligations under the Title XI Documents;

         WHEREAS, after the date hereof, GIA will have formed GIA 2 SA DE CV
(GIA 2), a Mexican corporation and GIA will adopt a resolution authorizing the
partition of specific assets and liabilities, namely the Vessel and the
Obligations and the attendant transfer of the Vessel and the Obligations to GIA
2, subject to the obligations under the Title XI Documents;

         WHEREAS, the stockholders of GIA 2 will adopt resolutions authorizing
the change of nationality of GIA 2 from Mexico to Delaware, and will have
formed a wholly owned Delaware subsidiary named Tonala Delaware, Inc. ("TD"),
and will execute and deliver a bill of sale transferring the Vessel from GIA 2
to TD, subject to the obligations under the Title XI Documents;


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         WHEREAS, Chiles has been converted into Chiles Offshore, Inc., a
Delaware corporation ("Chiles, Inc.") and Chiles, Inc. will merge with GIA 2 ,
resulting in TD being a wholly owned subsidiary of Chiles, Inc.;

         WHEREAS, amounts remain payable with respect to the Obligations;

         WHEREAS, Section 8.01 of the Trust Indenture, Article VIII of Exhibit
1 to the Security Agreement and Section 8 (c)(7) of the Reserve Fund Agreement
require the prior written consent of the Secretary to the transfer of the
Vessel and further require the parties to enter into to certain supplemental or
amended agreements;

         WHEREAS, (i) the Secretary desires to consent to the transfer and
confirm the continuing validity of the Guarantees, (ii) PC 2 desires to assume
the Obligations of the Original Shipowner under the Obligations, Trust
Indenture, Commitment, Security Agreement, Mortgage, Secretary's Note, Reserve
Fund Agreement, the Depository Agreement and Charter, each as amended, and
(iii) the parties hereto wish to amend and confirm certain of the
aforementioned agreements and instruments in the manner set forth below; and

         WHEREAS, simultaneously with the execution of this Agreement, PC 2
executed a First Supplemental Endorsement to the Secretary's Note (the
"Supplemental Endorsement") and an Assumption Agreement and Supplement No. 1 to
the First Preferred Ship Mortgage (the "Mortgage Supplement");

         NOW, THEREFORE, in consideration of the premises, the mutual
agreements hereinafter set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Original Shipowner,
Secretary, Indenture Trustee and PC 2 (and each subsequent assuming shipowner,
upon the execution of an Intervention and related documents in the form of
Exhibits "A-D" attached hereto) agree as follows:

         ARTICLE I

         ASSIGNMENT, ASSUMPTION AND CONSENT

         SECTION 1.01. Assumption By PC 2. The Original Shipowner hereby
assigns all of its right, title, interest in and obligations under the Title XI
Documents to PC 2 and PC 2 hereby assumes all of the Original Shipowner's
right, title, interest in and obligations under the Title XI Documents and
further hereby expressly assumes the performance of the Title XI Documents and
the Trust Indenture and expressly assumes the payment of the principal of and
interest on the Obligations in accordance with the terms of the Obligations and
of the Trust Indenture, as amended through the date hereof, and hereby
expressly assumes all rights and privileges of the Original Shipowner arising
under, and all obligations duties and liabilities of the Original Shipowner to
make all payments and to perform, observe and abide by all singular covenants
and provisions of, or

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<PAGE>

arising under, the Obligations, the Trust Indenture, the Security Agreement,
the Reserve Fund Agreement, the Depository Agreement and the Charter in each
case as amended through the date hereof and as if PC 2 were the signatory
thereto. PC 2 hereby expressly confirms and agrees to the Secretary's
continuing security (as set forth in the Security Agreement) and agrees to take
all actions necessary to preserve the Secretary's current priority status
therein. PC 2 is hereby substituted for and shall be fully liable for each and
every representation and covenant of the Original Shipowner to the same extent,
and with the same effect, as if PC 2 was a signatory to the Title XI Documents
and any instruments delivered by the Original Shipowner thereunder, provided
that PC 2 shall not be liable for any representation or covenants contained
therein that has lapsed by its own terms.

         SECTION 1.02. Consents of Secretary. The Secretary hereby (i) consents
to this Agreement including this Supplemental Indenture No. 1, (ii) consents to
the acquisition of the Vessel and the assumption of all liabilities associated
therewith by PC 2, (iii) agrees to execute all documents, if any, necessary to
redocument the Vessel and record the Supplement No. 1 to the Mortgage in
Panama; provided that:

         (a)      At the time of the transfer of the Vessel, PC 2 shall have
                  executed and delivered to the Secretary the Supplemental
                  Endorsement and shall have delivered to the Secretary a copy
                  of the Mortgage Supplement and the appropriate form filed for
                  recordation with the Republic of Panama;

         (b)      On or prior to the date hereof, the Original Shipowner shall
                  have delivered to the Secretary a certificate of its Chief
                  Financial Officer stating that there are no claims, liens,
                  mortgages or other encumbrances ("Encumbrances") bearing upon
                  the Vessel, except the Mortgage, as amended through the date
                  hereof, or those permitted by Section 2.02 of the General
                  Provisions of the Security Agreement;

         (c)      The Secretary shall have received an opinion of counsel of PC
                  2, in form and substance satisfactory to the Secretary dated
                  as of the date hereof, to the effect that, inter alia, (i) PC
                  2 is duly incorporated and in good standing in its respective
                  state of incorporation as a corporation authorized to engage
                  in the business in which it is currently engaged and (ii) PC
                  2 shall assume and be bound by all obligations and
                  liabilities of the Original Shipowner by operation of law at
                  the effective time of the transfer, in the form attached;

         (d)      Prior to the date hereof, PC 2 shall have delivered to the
                  Secretary certificates issued by the Republic of Mexico to
                  the effect that PC 2 is in good standing under the laws of
                  Mexico.

         SECTION 1.03.  Delivery of Documents by the Secretary.

         (a)      PC 2 and the Indenture Trustee hereby acknowledge receipt of
                  an opinion of counsel of the Secretary dated as of the date
                  hereof to the effect that the Guarantees shall


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<PAGE>

                  remain in full force and effect following the consummation
                  of the transfer.

         (b)      The form of the fundamental documents necessary to effect the
                  transfer of the obligations set forth in the Title XI
                  Documents to GIA, GIA 2 and TD are attached hereto as
                  Exhibits A, B, C and D are hereby approved by the Secretary.

         ARTICLE II

         AMENDMENT OF AGREEMENTS

         SECTION 2.0. General Amendments. All references to the Original
Shipowner or to Perforadora Central S.A. de C.V. in the Obligations, Trust
Indenture, Authorization Agreement, Security Agreement, Mortgage, Secretary's
Note, Reserve Fund Agreement, and any attachment or exhibit thereto, shall be
deemed to refer to and to bind PC 2; provided however that Perforadora Central
S.A. de C.V. shall remain liable for payment of all sums set forth in the
Secretary's Note until final transfer of the Vessel to Tonala Delaware, Inc.

         SECTION 2.01. Specific Amendment. (a) The Security Agreement, as
amended by Amendment No. 1 to the Security Agreement and by Section 2.00
hereof, is hereby further amended by adding the following:

                  (p)      Each party hereto (other than the Indenture Trustee)
                           acknowledges that the Mortgage and the Secretary's
                           Note are amended by the Mortgage Supplement and the
                           Supplemental Endorsement, respectively, each of
                           which is a separate instrument defined elsewhere
                           herein and each of which is hereby incorporated
                           herein and made a part hereof by reference.

         SECTION 2.02. Effect of Amendments. This Agreement shall be deemed to
constitute the following instruments:

                  (a)      Assumption Agreement and Supplemental Indenture No.
                           1 to Trust Indenture;

                  (b)      Supplement No. 1 to Authorization Agreement;

                  (c)      Assumption Agreement and Amendment No. 2 to Security
                           Agreement; and

                  (d)      Assumption Agreement and Amendment No. 2 to Title XI
                           Reserve Fund and Financial Agreement.

                  (e)      Amendment No. 1 to Depository Agreement.


                                   Page 5 of 13
<PAGE>
         SECTION 2.03. Confirmation of Agreements and Obligations. The
Obligations, the Trust Indenture, the Authorization Agreement, the Security
Agreement, the Mortgage, the Secretary's Note as amended and supplemented by
the Supplemental Endorsement, the Reserve Fund Agreement, the Mortgage
Supplement, the Depository Agreement and this Agreement (collectively, the
"Title XI Finance Agreements") are each in all respects confirmed by their
respective parties thereto and shall, as so amended and supplemented, remain in
full force and effect. On behalf of the United States of America, the Secretary
hereby confirms the validity and enforceability of the Guarantees of the
Obligations, each of which shall remain in full force and effect following
consummation of the merger, and shall inure to the benefit of the holders of
the Obligations, the Assuming Shipowner and the Indenture Trustee.

         ARTICLE III

         REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ORIGINAL
         SHIPOWNER AND ASSUMING SHIPOWNER

         SECTION 3.01. Representations and Warranties of the Original
Shipowner. The Original Shipowner hereby represents and warrants that:

         (a)      The Original Shipowner has been duly organized and is validly
                  existing under the laws of the Republic of Mexico;

         (b)      The Original Shipowner has taken all actions necessary to
                  obtain authorization from its Board of Directors or otherwise
                  to enter into, deliver and bind itself to the terms of the
                  transfer of the Vessel to PC 2 and this Agreement and has
                  duly executed and delivered to the respective parties hereto
                  the documentation transferring the Vessel and this Agreement,
                  which are binding upon the Original Shipowner in accordance
                  with the respective terms of each;

         (c)      The Original Shipowner's execution and delivery of the
                  documentation transferring the Vessel and this Agreement are
                  not contrary to any provisions of its Certificate of
                  Incorporation, by-laws, any agreements to which it is a
                  party, or any rule, regulation, judgment or statute to which
                  it is subject;

         (d)      There is no existing Indenture Default, as defined in the
                  Trust Indenture, or any existing Default, as defined in the
                  Security Agreement; and

         (e)      There are no encumbrances bearing upon the Vessel, except the
                  Mortgage as amended through the date hereof, or those
                  permitted by section 2.04(a) of the General Provisions of the
                  Security Agreement, as amended through the date hereof.

         SECTION 3.02. Representations and Warranties of PC 2. PC 2 hereby
represents and warrants that:

                                   Page 6 of 13

<PAGE>
         (a)      PC 2 has been duly organized and is validly existing under
                  the laws of Mexico and is authorized to own and operate the
                  Vessel;

         (b)      PC 2 has taken all actions necessary to obtain authorization
                  from its Board of Directors or otherwise to enter into,
                  deliver and bind itself to the terms of the bill of sale,
                  this Agreement, the Mortgage Supplement, and the Supplemental
                  Endorsement and has duly executed and delivered each such
                  agreement or instrument to the respective parties hereto
                  which are binding upon PC 2 in accordance with the respective
                  terms of each;

         (c)      The execution, delivery and performance by PC 2 of this
                  Agreement is not in contravention of the Articles of
                  Incorporation or By-Laws of PC 2 or any indenture, agreement
                  or undertaking to which PC 2 is a party or by which it is
                  bound, or any rule, regulation, statute or judgment to which
                  it is subject;

         (d)      There is no existing Indenture Default, as defined in the
                  Trust Indenture, or any existing Default, as defined in the
                  Security Agreement; and

         (e)      There are no encumbrances bearing upon the Vessel except the
                  Mortgage, as amended through the date hereof, or those
                  permitted by Section 2.04 (a) of the General Provisions of
                  the Security Agreement, as amended through the date hereof.

         SECTION 3.03. Covenants of PC 2. PC 2 hereby covenants and agrees that
it will take all actions necessary to record in the Public Registry for the
Republic of Panama the Mortgage Supplement and any and all forms as may be
required to re-document the Vessel under the laws of the Republic of Panama to
show its ownership by PC 2, and it is subject to the preferred status of the
Mortgage, as amended by the Mortgage Supplement.


         ARTICLE IV

         SECTION 4.01 Release. Upon the execution and delivery by the Secretary
and TD of the Intervention, Supplement No. 4 to the First Preferred Mortgage,
and the Fourth Supplemental Endorsement to the Secretary's Note and related
documents in the forms attached hereto as Exhibit D, the Original Shipowner, PC
2, GIA and GIA 2 will be released from any and all responsibility or liability
for the Obligations.

         SECTION 4.02. Construction. This Agreement shall be construed in
connection with and as a part of Schedule X to the Security Agreement and,
where applicable, shall be governed by the Federal Law of the United States of
America, and in the absence of such laws, by the laws of the State of
Louisiana.


                                   Page 7 of 13

<PAGE>
         SECTION 4.03. Recitals. The Recitals and Statements contained in this
Agreement shall be taken as Recitals and Statements of the Original Shipowner
and each assuming shipowner, and neither the Secretary nor the Indenture
Trustee assumes any responsibility for the correctness thereof.

         SECTION 4.04. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which shall together constitute one and the same instrument.

         SECTION 4.05. Amendments and Assignments. This Master Assumption
Agreement may be amended only with the Secretary's prior written consent, and
only by means of a written amendment or an Intervention in the forms attached
hereto as Exhibits B-D, executed by the Secretary, the applicable assuming
shipowner and the Indenture Trustee. This Master Assumption Agreement shall not
be assigned without the Secretary's prior written consent, and any attempt to
do so shall be null and void ab initio.

         SECTION 4.06. Definitions. Capitalized terms not defined hereto shall
have the meaning set forth in Schedule X to the Security Agreement.

                  IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties as of the day and year first above written.

ATTEST:                                  PERFORADORA CENTRAL, S.A. De C.V.
                                         (A Mexican Corporation)

/s/ JAVIER ALVAREZ MORPHY                BY: /s/ PATRICIO ALVAREZ MORPHY
-------------------------------             ---------------------------------
JAVIER ALVAREZ MORPHY,                           PATRICIO ALVAREZ MORPHY
SECRETARY                                        PRESIDENT





                                   Page 8 of 13

<PAGE>


ATTEST:                                   UNITED STATES OF AMERICA
                                          (Secretary of Transportation)

/s/ PATRICIA E. BYRNE                     BY: /s/ JOEL C. RICHARD
-------------------------------             ------------------------------
PATRICIA E. BYRNE,                              JOEL C. RICHARD, SECRETARY
ASSISTANT SECRETARY                             MARITIME ADMINISTRATION


ATTEST:                                   BANK ONE TRUST COMPANY, N.A.

/s/ BENJAMIN SCHUPP                       BY: /s/ TIMOTHY C. BRENNAN
-------------------------------              -----------------------------
NAME: BENJAMIN SCHUPP                     NAME: TIMOTHY C. BRENNAN
TITLE: ATTORNEY                           TITLE:  REGIONAL ACCOUNT
                                                   EXECUTIVE AND AUTHORIZED
                                                   OFFICER


ATTEST:                                   PC 2 SA DE CV

/s/ JAUIER ALVAREZ MORPHY                 BY: /s/ PATRICIO ALVAREZ MORPHY
------------------------------               --------------------------------
NAME:  JAUIER ALVAREZ MORPHY                    PATRICIO ALVAREZ MORPHY
TITLE:                                          PRESIDENT


                                   Page 9 of 13

<PAGE>

                                 ACKNOWLEDGMENT


DISTRICT OF COLUMBIA

CITY OF WASHINGTON

         I, the undersigned, a Notary Public in and for the District of
Columbia, do hereby certify that Joel Richard, Secretary, Maritime
Administrator, personally appeared before me in said District, executed the
foregoing instrument in his official capacity and acknowledges this act as said
officer of the Maritime Administration.

         Given under my hand and seal this 15th day of February, 2001.


                                          /s/ MELINDA M. ALLEN
                                          ------------------------------------
                                          NOTARY PUBLIC





                                   Page 12 of 13

<PAGE>
                                 ACKNOWLEDGMENT


STATE OF LOUISIANA

PARISH OF ORLEANS

         On this 9th day of March, 2001, before me appeared:


                               TIMOTHY C. BRENNAN

to me personally known, who, being by me duly sworn, did say that he is a
Regional Account Executive and Authorized Officer of Bank One Trust Company,
N.A., one of the corporations described in and which executed the foregoing
instrument, and that the seal affixed to such instrument is the corporate seal
of such corporation and that such instrument was signed and sealed on behalf of
such corporation by authority of the Board of Directors and he acknowledged
such instrument to be the free act and deed of such corporation.

                                                /s/ TIMOTHY C. BRENNAN
                                                ------------------------------



SWORN TO AND SUBSCRIBED BEFORE
ME THIS 9TH DAY OF MARCH, 2001.

/s/ BENJAMIN O. SCHUPP
------------------------------------
         NOTARY PUBLIC




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