Exhibit 10.27

                         [LETTERHEAD OF CITIBANK, N.A.]

December 21, 2000

Dick H. Fagerstal
Chief Financial Officer
Chiles Offshore, Inc.
c/o Seacor Smit, Inc.
1370 6th Avenue, 25th Floor
New York, NY  10019

        Re:  U.S. $81,000,000 MARAD Guaranteed Floating Rate Term Loan Facility
             ------------------------------------------------------------------

Dear Dick:

You have advised us that Chiles Offshore, Inc. (the "Company" or the "Borrower")
desires to establish a floating rate term loan facility in the aggregate
principal amount of US$81,000,000 (the "Facility"). The Facility will be
guaranteed by the Maritime Administration of the United States ("MARAD"). The
proceeds of the Facility would be used to finance the construction and delivery
of one (1) ultra-premium jack-up drilling rig of the KFELS MOD V "B" design (the
"Rig"). You have advised us that the shipyard is AMFELS, Inc. and that it is
anticipated that the Rig is to be delivered to the Company by the third quarter
of 2002. We understand that on or prior to the maturity date for the Facility,
and as per the terms of the MARAD Commitment Letter, the related Proposed Term
Sheet of Understanding (and other documents listed in the MARAD Commitment
Letter), the Company may issue fixed rate bonds in the U.S. capital markets to
refinance the advances under the Facility (the "Fixed Rate Transaction"). You
have asked Citi/SSB (as defined below) to commit to provide you with financing
commitments for the entire Facility and to act as agent bank with respect to the
Facility. For the purposes of this letter, "Citi/SSB" or "we" shall mean
Citibank, N.A. ("Citibank") and/or any affiliate thereof, including Salomon
Smith Barney Inc. ("SSB") and/or Citicorp North America, Inc. ("CNAI") and/or
Citibank International plc, as we shall determine to be appropriate to provide
the services contemplated herein.

We are pleased to inform you (a) on behalf of CNAI, of Govco Incorporated's
("GOVCO") willingness to act as primary lender with respect to the Facility and
of CNAI's agreement to act as administrative agent with respect to the entire
Facility, (b) on behalf of Citibank, N.A., of Citibank's commitment, as
alternate lender (the "Alternate Lender"; together with GOVCO, the "Lenders"),
to provide financing for the entire Facility, and (c) on behalf of Citi/SSB, of
its agreement to act as facility agent for the Facility, in each case subject to
the terms and conditions described in this letter and the attached Annex I
(collectively, the "Commitment Letter"). The Commitment Letter contemplates that
the maturity date for the floating rate interest period will be the earlier of
i) conversion to fixed rate and ii) 24 months after delivery of the Rig. Please
refer to the separate letter of SSB for indicative terms and conditions for the
Fixed Rate Transaction. The terms of Annex I are an integral part of Citi/SSB's
commitment hereunder, and constitute part of this Commitment Letter for all
purposes hereof. Please note that those matters that are not covered or made
clear herein or in Annex I are subject to mutual agreement of the parties.

Conditions Precedent
--------------------

The commitment and undertaking of Citibank, and the participation of GOVCO,
hereunder are subject to: (i) the preparation, execution and delivery of loan
documentation acceptable to the Borrower, Citi/SSB and MARAD, including a credit



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<PAGE>
agreement and a comprehensive guaranty from MARAD incorporating substantially
the terms and conditions outlined in this Commitment Letter, and related
documentation; (ii) the absence of a material adverse change in the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Company and its subsidiaries, taken as a whole, since the date
of the last audited financial statements; (iii) the accuracy and completeness of
all material representations that you make to Citi/SSB and GOVCO, and all
information that you furnish to Citibank and GOVCO and your compliance with the
terms of this Commitment Letter; (iv) the payment in full when due of all fees,
expenses and other amounts payable under this Commitment Letter; (v) the receipt
of the final MARAD commitment and any and all required governmental and other
approvals and appropriate legal opinions, in form and substance satisfactory to
Citi/SSB; and (vi) a closing of the Facility on or prior to May 31, 2001.

Commitment Termination
----------------------

The commitment to Citibank and the participation of GOVCO set forth in this
Commitment Letter will terminate on May 31, 2001, unless the Facility
documentation is executed by all parties thereto on or before such date. Prior
to such date, this Commitment Letter may be terminated (i) by you at any time at
your option upon notice to Citi/SSB and payment to Citi/SSB of all fees,
expenses and other amounts then payable under this Commitment Letter, or (ii) by
Citi/SSB at any time at its option upon notice to the Company, if any event
occurs or information has become available that, in Citi/SSB's judgment, results
or is likely to result in the failure to satisfy any condition set forth in the
paragraph herein entitled "Conditions Precedent."

Indemnification
---------------

You agree to indemnify and hold harmless Citi/SSB, each Lender and each of their
affiliates and each of their respective officers, directors, employees, agents,
advisors and representatives (each, an "Indemnified Party") from and against any
and all claims, damages, losses, liabilities and expenses (including, without
limitation, fees and disbursements of counsel), joint or several, that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with (or relating to any investigation,
litigation or proceeding or the preparation of any defense with respect thereto,
arising out of or in connection with) this Commitment Letter or the loan
documentation or the transactions contemplated hereby or thereby or any use made
or proposed to be made with the proceeds of the Facility, whether or not such
investigation, litigation or proceeding is brought by the Company, any of its
shareholders or creditors, an Indemnified Party or any other person, or an
Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted directly and
primarily from such Indemnified Party's gross negligence or willful misconduct.

You agree that no Indemnified Party shall have any liability (whether direct or
indirect, in contract, tort or otherwise) to the Company, any of its
shareholders or creditors or any other person for or in connection with the
transactions contemplated hereby, except for direct as opposed to indirect or
consequential, damages to the extent such liability is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
directly and primarily from such Indemnified Party's gross negligence or willful
misconduct.

Fees
----

You agree to pay the fees set forth in this Commitment Letter. Each of such fees
shall be non-refundable when paid and shall be due and payable in U.S. dollars
in New York.

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Costs and Expenses
------------------

In further consideration of the commitment and undertaking of Citi/SSB and the
participation of GOVCO hereunder, and recognizing that in connection herewith
Citi/SSB and GOVCO are incurring substantial costs and expenses (including,
without limitation, fees and disbursements of counsel, filing and recording
fees, transportation, computer, duplication and messenger costs and expenses),
you hereby agree to pay, or reimburse Citi/SSB on demand for, all such costs and
expenses (whether incurred before or after the date hereof), in U.S. Dollars in
New York regardless of whether any of the transactions contemplated hereby are
consummated. You also agree to pay all costs and expenses of Citi/SSB and GOVCO
(including, without limitation, fees and disbursements of counsel) incurred in
connection with the enforcement of any of their rights and remedies hereunder.
In the event that out-of-the-pocket expenses are to be incurred which
individually exceed US$500, Citibank shall seek consent from the Company prior
to incurring such expense. We hereby confirm that we have not incurred any
expenses to date for which we will seek reimbursement.

Taxes
-----

All payments by you under this Commitment Letter shall be made free and clear of
any set-off, claims or withholding or other applicable taxes (other than net
income taxes imposed by the respective jurisdictions of the lenders' lending
offices) and shall be made in U.S. Dollars in New York.

Confidentiality
---------------

By accepting delivery of this Commitment Letter, you agree that this Commitment
Letter is for your confidential use only and that neither its existence nor the
terms hereof will be disclosed by you to any person other than MARAD, and your
officers, directors, shareholders, employees, accountants, attorneys and other
advisors, and then only on a "need to know" basis in connection with the
transactions contemplated hereby and on a confidential basis. Notwithstanding
the foregoing, following your acceptance of the provisions hereof and your
return of an executed counterpart of this Commitment Letter to us as provided
below, (i) you may make public disclosure of the existence and amount of
Citi/SSB's commitment hereunder and its identity as agent bank, and (ii) you may
make such other public disclosure of the terms and conditions hereof as you are
required by law, in the opinion of your counsel, to make.

Representations and Warranties
------------------------------

You represent and warrant that (i) all information that has been or will
hereafter be made available to Citi/SSB, any Lender or any potential Lender by
you or any of your representatives in connection with the transactions
contemplated hereby is and will be, to the best of your knowledge, complete and
correct in all material respects and does not and will not contain, to the best
of your knowledge, any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances under which such statements were or are
made. You agree to supplement such information and projections from time to time
so that the representations and warranties contained in this paragraph remain
correct.

In issuing this commitment and undertaking, Citi/SSB is relying on the accuracy
of the information furnished to it by or on behalf of the Company and its
affiliates without independent verification thereof.


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No Third Party Reliance, Etc.
-----------------------------

The agreement of Citi/SSB hereunder and the participation of GOVCO in the
Facility are provided solely for the benefit of the Company and may not be
relied upon or enforced by any other person.

You should be aware that Citibank or GOVCO or one of more of their respective
affiliates may be providing financing or other services to parties whose
interests may conflict with yours. Be assured, however, that consistent with
Citibank's longstanding policy to hold in confidence the affairs of its
customers, except as otherwise authorized by you, neither Citibank nor any of
its affiliates will furnish confidential information obtained from you to any of
its other customers. By the same token, neither Citibank nor any of its
affiliates will make available to you confidential information that it obtained
or may obtain from any other customer.

The commitment and undertaking of Citi/SSB hereunder may be rendered through any
affiliates and subsidiaries of Citi/SSB. In connection therewith, you
acknowledge and agree that Citi/SSB may share information or matters relating to
the Company or the transactions contemplated hereby with such affiliates and
subsidiaries, and that such affiliates and subsidiaries may likewise share
information relating to the Company or the transactions with Citi/SSB.

Jurisdiction; Waivers
---------------------

You hereby irrevocably (i) submit to the non-exclusive jurisdiction of any New
York State or Federal court sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Commitment Letter, (ii) agree that all claims in respect of such action or
proceeding may be heard and determined in such New York State court or in such
Federal court, (iii) waive, to the fullest extent you may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding, (iv) consent to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to you at your
address specified above or in any other manner permitted by law, and (v) agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. To the extent that you have or hereafter may acquire any
immunity from jurisdiction of any court or from set-off or any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to yourself or your
property, you hereby irrevocably waive such immunity in respect of your
obligations under this Financing Offer.

Amendments; Assignments
-----------------------

This Commitment Letter may not be amended or modified except in writing signed
by both parties hereto. You may not assign or delegate any of your rights or
obligations hereunder without Citibank's prior written consent.

Governing Law, Etc.
-------------------

This Commitment Letter shall be governed by, and construed in accordance with,
the laws of the State of New York. This Commitment Letter sets forth the entire
agreement between the parties with respect to the matters addressed herein and
supersedes all prior communications, written or oral, with respect hereto. This
Commitment Letter may be executed in any number of counterparts, each of which,
when so executed, shall be deemed to be an original and all of which, taken
together, shall constitute one and the same Commitment Letter. Delivery of an
executed counterpart of a signature page to this Commitment Letter by telecopier
shall be as effective as delivery of a manually executed counterpart of this
Commitment Letter. Your obligations under the paragraphs captioned


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"Indemnification", "Costs and Expenses", "Fees", "Taxes", "Confidentiality" and
"Jurisdiction" shall survive the expiration or termination of this Commitment
Letter.

Waiver of Jury Trial
--------------------

Each party hereto irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Commitment Letter or the transactions
contemplated hereby or the actions of Citi/SSB or GOVCO in the negotiation,
performance or enforcement hereof.

Exclusivity
-----------

By accepting the terms of the Commitment Letter you agree that Citi/SSB shall be
the sole, exclusive arranger and agent for financing of the Facility on the
terms set forth herein.














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<PAGE>
Acceptance and Expiration
-------------------------

Please indicate your acceptance of the provisions hereof by signing under the
headings on the signature pages hereto and returning to the address specified
below the enclosed copy of this Commitment Letter, no later than 5 p.m., New
York City time, on December 22, 2000. Such signed copies should be returned to
Mr. Robert H. Malleck, Vice President, Citibank N.A., Inc., 399 Park Avenue, New
York, New York 10043 (phone: 212-559-5448), (telecopier: 212-793-2330). If you
elect to deliver this Commitment Letter by telecopier, please arrange for the
executed original to follow by next-day courier.





                                     Very truly yours,

                                     Citibank, N.A.

                                     By: /s/ Robert Mulleck
                                         -------------------------------
                                     Title:  Vice President



                                     Citicorp North America, Inc.

                                     By: /s/ Robert Mulleck
                                         -------------------------------
                                     Title:  Vice President




ACCEPTED AND AGREED this 22nd day of December, 2000:

CHILES OFFSHORE, INC.

By: /s/ Dick Fagerstal
    -----------------------------
Title: Senior Vice President and
       Chief Financial Officer







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<PAGE>
ANNEX I
                              CHILES OFFSHORE, INC.

                         SUMMARY OF TERMS AND CONDITIONS
                                U.S. $81,000,000
                            MARAD TITLE XI GUARANTEE

                             FLOATING RATE TERM LOAN


Those matters, which are not covered in detail below, are subject to the mutual
agreement of the parties.


Borrower:                  Chiles Offshore, Inc. or a Special Purpose Company
                           (to be determined), a private sector corporation
                           organized under the laws of Delaware or other
                           domestic jurisdiction.

Purpose:                   To finance the construction, delivery and operation
                           of one (1) ultra-premium jack up offshore drilling
                           rig (the "Rig").

Supplier:                  AMFELS, Brownsville, Texas

Facility Amount:           US$81,000,000 corresponding to up to 87.5% of the
                           actual cost of the Rig.

Type of Facility:          Floating Rate Term Loan (the "Facility").

Facility Agent:            Citibank International plc (the "Agent").

Arranger:                  Citicorp North America, Inc.

Lenders:                   Govco Incorporated, as primary lender ("Govco" or the
                           "Primary Lender"), and Citibank, N.A., as alternate
                           lender ("Citibank" or the "Alternate Lender").

Indenture Trustee:         To be determined.

Guarantor:                 Maritime Administration of the United States
                           ("MARAD").

Guarantee:                 Comprehensive guarantee under Title XI of the
                           Merchant Marine Act, 1936, as amended for payment of
                           100% of principal and interest (the "MARAD
                           Guarantee").

Closing Date:              On or prior to May 31, 2001.

Final Maturity Date:       The earlier of i) the date that the floating rate
                           loan is converted to fixed rate ("Conversion Date")
                           or ii) 24 months after delivery of the Rig (i.e.,


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                           September 15, 2004, assuming a delivery date on or
                           around September 15, 2002).

                           Maturity date subject to final determination by
                           MARAD.

Commitment Fee:            0.125% per annum (360-day basis) on the unused
                           portion of the Facility, commencing on the Closing
                           Date of the Facility, payable on (i) quarterly in
                           arrears, and (ii) the date of termination of the
                           commitment.

Up-front Fee:              US$325,000, payable upon closing of the Facility.

MARAD Fees:                As determined by and payable to MARAD. This fee will
                           be for the account of the Borrower.

Interest Rates and
Interest Periods:          Primary Lender: Govco's cost of funds plus 0.30% per
                           annum, payable semi-annually in arrears.

                           Alternate Lender: Subject to the terms and conditions
                           herein, the Alternate Lender would provide the
                           necessary requirements to the Borrower in case Govco
                           is not able to fund in the commercial paper markets.
                           Any Advances funded by the Alternate Lender would
                           bear interest at an interest rate equal to 6-month,
                           reserve-adjusted, LIBOR plus 0.30% per annum.

Default Interest:          Upon the occurrence and during the continuance of any
                           payment default under the loan documentation, the
                           Interest Rate shall increase by 2% per annum and be
                           fixed for Interest Periods of such duration as shall
                           be selected by the Agent.

Interest Payments:         At the end of each Interest Period for each Advance,
                           but no less frequently than quarterly, computed on a
                           360-day basis.

Advances:                  Advances shall be drawn down during the construction
                           period in whole, or in part, but in any event no less
                           than $1,000,000.

Repayment:                 The Borrower shall repay each Advance in full
                           according to such amortization schedule as may be
                           determined by MARAD.

Optional Prepayment:       Advances may be prepaid in whole, but not in part,
                           without penalty on the last day of the Interest
                           Period therefor. Amounts prepaid may not be
                           reborrowed. The Borrower will bear all costs related
                           to the prepayment of an Advance prior to the last day
                           of its Interest Period. MARAD and the Lenders may
                           impose a penalty for prepayments made on dates that
                           are not interest payment date.

Mandatory Prepayment:      The Borrower may prepay the Advances made under the
                           Facility with the proceeds from the issuance of
                           securities in the capital markets. The Borrower shall
                           also prepay the Advances under the circumstances
                           described in the MARAD commitment letter with such
                           prepayment being applied in such manner as MARAD


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                           shall require. Amounts prepaid may not be reborrowed.
                           The Borrower will bear all costs related to the
                           prepayment of an Advance prior to the last day of its
                           Interest Period. MARAD and the Lenders may impose, if
                           applicable, a penalty for prepayments made on dates
                           that are not interest payment date.

Loan Documentation:        The Commitment will be subject to the preparation,
                           execution and delivery of loan documentation
                           acceptable to MARAD, the Agent, the Lenders, the
                           Indenture Trustee and the Borrower, which will
                           contain conditions precedent, representations and
                           warranties, affirmative and negative covenants,
                           events of default, and other provisions customarily
                           found in MARAD's and the Agent's loan documentation
                           for facilities of this nature and others appropriate
                           to the Facility.

Other:                     Loan documentation will include customary
                           indemnification, setoff, withholding tax gross-up and
                           yield protection, and agency provisions.

                           MARAD and the Borrower will agree not to institute
                           bankruptcy proceedings against the Primary Lender.

Assignments and
Participations:            Each Lender will have the right to assign or grant
                           participations in all or a portion of its rights and
                           obligations under the loan documents, with the
                           consent, not to be unreasonably withheld, of the
                           Agent and subject, in the case of participations, to
                           customary restrictions on participants' voting rights
                           at no cost for the Borrower.

Submission to
Jurisdiction, Etc.:        The Borrower will submit to the non-exclusive
                           jurisdiction of the New York State and Federal courts
                           sitting in New York City, waive any right to immunity
                           (sovereign or otherwise) from jurisdiction of any
                           court, any set-off or legal process and waive right
                           to trial by jury.

Governing Law:             State of New York.

Expenses:                  All out-of-pocket expenses incurred by the Arranger,
                           the Lenders and the Agent in connection with the
                           Facility and the enforcement thereof (including
                           reasonable fees and expenses of counsel to the
                           Arranger, the Indenture Trustee, the Lenders and the
                           Agent) are for the Borrower's account.





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