Exhibit 10.31


Exhibit 8 to Form of Security Agreement                            Document 20


                          SUBORDINATED LOAN COMMITMENT

         This Subordinated Loan Commitment dated October 31, 2001 by and between
Chiles Offshore Inc., a Delaware corporation (the "Subordinated Lender") and
Chiles Galileo LLC, a Delaware limited liability company (the "Shipowner").

                                    RECITALS

         A.       The United States of America, represented by the Secretary of
                  Transportation, acting by and through the Maritime
                  Administrator (the "Secretary") has on the date hereof entered
                  into a Commitment to Guarantee Obligations under Title XI of
                  the Merchant Marine Act, 1936, as amended, (the "Commitment")
                  pursuant to which the Secretary has agreed, subject to
                  conditions set forth in the Commitment, to guarantee
                  Obligations issued by the Shipowner in a principal amount not
                  to exceed $81,000,000;

         B.       In order to provide security to the Secretary for his
                  Guarantees, the Shipowner has entered into a Security
                  Agreement, Contract No. MA-13674, dated the date hereof, with
                  the Secretary (the "Security Agreement") and a Title XI
                  Reserve Fund and Financial Agreement, Contract No. MA-13676,
                  dated the date hereof, with the Secretary (the "Financial
                  Agreement");

         C.       The Subordinated Lender is the sole member of the Shipowner;

         D.       The  Secretary has required, as a condition to the Commitment,
                  that the Subordinated  Lender
                  provide financial assistance to the Shipowner;

         E.       The Subordinated Lender is willing to provide such assistance
                  on the terms agreed and set forth herein.

         NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Shipowner and the Subordinated Lender agree, and confirm that
their agreement is for the benefit of and enforceable by the Secretary, as
follows:

         1.       Capitalized terms used herein which are not defined herein and
                  are defined in Schedule X to the Security Agreement shall have
                  the meanings ascribed to them in Schedule X.

         2.       The  Subordinated Lender shall lend the Shipowner amounts, as
                  required, to pay for the difference between the capitalizable
                  cost of the Vessel and the proceeds of the Obligations.


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Exhibit 8 to Form of Security Agreement                            Document 20


         3. The Subordinated Lender shall lend the Shipowner at delivery of the
            Vessel an amount which will cause: (1) the Shipowners to have
            positive Working Capital including Cash or Cash Equivalents at least
            equal to the next year's mandatory principal payments due on the
            Obligations; and (2) the Shipowner's Long-Term Debt not to exceed
            two times its Net Worth.

         4. The Shipowner may at its election (and, if the provisions of Section
            5 or 6 hereof are in effect, shall) borrow from the Subordinated
            Lender at any time when the Guarantees on any Obligations are in
            effect an amount not to exceed in the aggregate (a) the sum of (i)
            the amount of mandatory principal payments due on the Obligations in
            the next one-year period and (ii) the amount of interest on the
            Obligations to be paid during the next two-year period after giving
            effect to all mandatory payments of principal scheduled to occur
            during said two-year period, less (b) the sum of all amounts
            previously borrowed under Sections 4, 5 and 6 of this Subordinated
            Loan Commitment.

         5. In the event that the Shipowner does not timely deposit with the
            Indenture Trustee in accordance with Section 3.09 of the General
            Provisions to the Indenture funds sufficient to make any mandatory
            principal payments of Obligations and to pay interest on the
            Obligations due on that Interest Payment Date, the Shipowner shall,
            subject to the aggregate limitation on the obligation of the
            Subordinated Lender in Section 4, borrow from the Subordinated
            Lender funds which, together with funds on deposit with the
            Indenture Trustee, are sufficient to redeem said Obligations and pay
            said interest on said Interest Payment Date. These funds will be
            paid directly by the Subordinated Lender to the Indenture Trustee.
            If at any time the Shipowner does not immediately borrow said funds,
            the Secretary shall, subject to the aggregate limitation on the
            obligation of the Subordinated Lender in Section 4, have the right
            to compel the Subordinated Lender to lend said funds to the
            Shipowner as aforesaid. There is no limit to the number of times
            this right can be exercised by the Secretary. This right shall be
            exercised by giving notice to the Subordinated Lender in the form
            attached as Exhibit A hereto.

         6. In the event that, as established by a financial statement filed in
            accordance with Section 7 below, the Subordinated Lender's (a)
            Long-Term Debt exceeds two times its Net Worth; (b) Working Capital
            is not equal to at least one dollar; or (c) Net Worth is not at
            least equal to $193,673,000, then the Secretary shall have the right
            to compel the Subordinated Lender to lend to the Shipowner an amount
            equal to (i) the maximum amount remaining available under the
            provisions of Section 4 hereof, less (ii) the amount, if any, as
            established by the Shipowner's most recent financial statement filed
            in accordance with the Financial Agreement, by which the Shipowner's
            Working Capital (adjusted to exclude receivables outstanding for
            more than 90, rather than 60, days) exceeds one dollar.

         7. The Subordinated Lender shall file with the Secretary audited and
            unaudited


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Exhibit 8 to Form of Security Agreement                            Document 20


            financial statements at the times provided in 46 C.F.R. 298.42, as
            now in effect. All financial statements shall be in accordance with
            generally accepted accounting principles.

         8. All obligations of the Subordinated Lender under this Subordinated
            Loan Commitment shall cease upon the earlier of: (a) the Secretary's
            exercise of his rights under Section 6 hereof and the Subordinated
            Lender's compliance with its obligations under Section 6; (b) the
            filing with the Secretary by the Shipowner of a quarterly financial
            statement certified by an independent certified public accountant
            showing that the Shipowner's Long-Term Debt does not exceed its Net
            Worth and that it has Working Capital of at least one dollar; or (c)
            the Guarantees on each of the Obligations of the Shipowner terminate
            pursuant to the provisions of Section 3.02(a), (b) or (d) of the
            Security Agreement.

         9. All obligations of the Shipowner to repay any amounts borrowed by
            the Shipowner under this Subordinated Loan Commitment shall be
            subordinate to the rights of the Secretary as set forth in the
            Subordination Agreement attached hereto and made a part hereof by
            this reference among the Subordinated Lender, the Shipowner, and the
            Secretary dated the date hereof and no moneys borrowed shall be
            repaid except in accordance with the terms of said Subordination
            Agreement.

        10. The Shipowner and the Subordinated Lender confirm that this
            Subordinated Loan Commitment is for the benefit of the Secretary and
            shall be enforceable against each of them by the Secretary.



                            [Signature page follows]


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          IN WITNESS WHEREOF, the Subordinated Lender and the Shipowner has
executed this Subordinated Loan Commitment this 31st day of October, 2001.


                                        CHILES OFFSHORE INC.



                                        BY: /s/ DICK FAGERSTAL
                                            ----------------------------------
                                            Senior Vice President


SHIPOWNER:                              CHILES GALILEO LLC




                                        BY: /s/ DICK FAGERSTAL
                                            ----------------------------------
                                            Senior Vice President

<PAGE>

                                    EXHIBIT A


         Reference is made to Section 5 of the Subordinated Loan Commitment by
Chiles Offshore Inc. to Chiles Galileo LLC dated _______________, 2001. Terms
defined in said Commitment shall have the same meaning when used herein.

         Notice is hereby given under Section 5 of said Commitment that Chiles
Offshore Inc. shall lend $ to the Indenture Trustee in immediately available
funds.





(SEAL)


                                        UNITED STATES OF AMERICA,
                                        SECRETARY OF TRANSPORTATION,
Attest:                                 MARITIME ADMINISTRATOR


                                        BY:
---------------------------------           ----------------------------------
Assistant Secretary
Maritime Administration