EXHIBIT 10.22




                           BP TRINIDAD AND TOBAGO LLC

                                    CONTRACT




                                    SECTION 1

                                FORM OF AGREEMENT





<PAGE>

                                FORM OF AGREEMENT

HIRE OF A DRILLING UNIT

This Contract (CONTRACT) between BP TRINIDAD AND TOBAGO LLC, a company
incorporated in the State of Delaware and registered under the Companies Act,
1995 of the Laws of the Republic of Trinidad and Tobago (hereinafter referred to
as "OPERATOR"), and CHILES OFFSHORE INC. a company incorporated in the State of
Delaware (hereinafter referred to as "CONTRACTOR") is to engage the CONTRACTOR
to carry out drilling services (DRILLING SERVICES) in accordance with the
following terms and conditions.

OPERATOR enters into this Contract on behalf of itself and all participants in
the concession area (CO-VENTURERS) but notwithstanding this fact or anything
else in the CONTRACT to the contrary:

(a)        The CONTRACTOR agrees to look only to OPERATOR for the due
           performance of the CONTRACT and nothing herein contained shall impose
           any liability upon or entitle the CONTRACTOR to commence any
           proceedings against any of OPERATOR'S CO-VENTURERS.

(b)        OPERATOR shall be entitled to enforce the CONTRACT on behalf of its
           CO-VENTURERS as well as for OPERATOR and for this purpose OPERATOR
           and only OPERATOR may commence proceedings in its own name to enforce
           all obligations and liabilities of the CONTRACTOR under this CONTRACT
           and to make any claim which OPERATOR, its CO-VENTURERS may have
           against the CONTRACTOR.

1.         DOCUMENTS

           The CONTRACT shall comprise the following documents:

           1.1       This Contract Agreement
           1.2       Conditions of Contract (section 2 hereto)
           1.3       Contractor's Insurance (section 3 hereto)
           1.4       Statement of Requirements (section 4 hereto)
           1.5       Rates and Charges (section 5 hereto)
           1.6       Contractor's Personnel (section 6 hereto)
           1.7       Specification of Contractor's Equipment (section 7 hereto)

2.         DEFINITIONS

           In this Agreement words and expressions shall have the same meanings
           as are respectively assigned to them in the Conditions of Contract.

3.         THE SERVICES

           The Scope of the SERVICES shall be the provision of the DRILLING UNIT
           and DRILLING EQUIPMENT as more fully described in SECTION 7 hereto
           and PERSONNEL as more fully described in SECTION 6 hereto and
           providing services as more fully described in SECTION 4 hereto for
           the drilling of WELLS as more fully described in the documents
           hereto.

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                                                                      SECTION 1
                                                              FORM OF AGREEMENT
                                                                    PAGE 2 OF 5
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4.        OPERATOR'S REPRESENTATIVE

          The OPERATOR'S REPRESENTATIVE shall be Jim Liebnitz, Manager, Well
          Operations

          BP Trinidad and Tobago LLC
          5 & 5A Queen's Park West
          Port of Spain
          Trinidad

           Tel No.           868 623-2862
           Fax No.           868 627-7878

5.         CONTRACTOR'S REPRESENTATIVE

           The CONTRACTOR'S REPRESENTATIVE shall be

                      Mr. Chris Pinkard, Vice President
                      Chiles Offshore Inc.
                      11200 Richmond Avenue, Suite 490
                      Houston, Texas 77082-2618
                      Phone:              (713) 339-3777
                      Fax:                (713) 339-3888

6.         DURATION OF THE CONTRACT

           6.1       Duration

                     Notwithstanding the date hereof the CONTRACT shall be
                     deemed to have come into effect on the date that the
                     DRILLING UNIT is under tight tow to Pascagoula, Mississippi
                     to begin the Make Ready Period as further described below
                     and shall, subject to OPERATOR'S rights of termination
                     hereunder, continue until the third anniversary of the
                     Commencement Date subject to any extensions pursuant to
                     Clause 6.2 of this Section 1, and subject to extension for
                     any period necessary to complete any WELL being drilled
                     upon such anniversary.

           6.2       Options to Extend

                     The OPERATOR may, at its option, extend the term of the
                     CONTRACT by exercising up to two (2) one-year extensions,
                     such extensions to run consecutively with the preceding
                     CONTRACT term, subject to OPERATOR's rights of termination
                     hereunder. If OPERATOR elects to exercise the option for
                     the first one-year extension of the term of the CONTRACT,
                     OPERATOR shall give CONTRACTOR written notice of the
                     exercise of such extension option at least six (6) months
                     prior to the third anniversary of the Commencement Date.
                     Upon CONTRACTOR's receipt of such written notification,
                     OPERATOR and CONTRACTOR shall negotiate in good faith to
                     determine the mutually agreeable rates for the DRILLING
                     UNIT that shall apply during such one-year extension
                     period. If OPERATOR and CONTRACTOR reach a mutually
                     acceptable agreement on such rates by the date three (3)
                     months after the date of such written notice by OPERATOR of

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                                                                      SECTION 1
                                                              FORM OF AGREEMENT
                                                                    PAGE 3 OF 5
================================================================================

                     its exercise of the extension option, the term of the
                     CONTRACT shall be extended by one (1) year, and such agreed
                     rates shall apply in lieu of the rates previously
                     applicable to the CONTRACT. If OPERATOR and CONTRACTOR do
                     not reach a mutually acceptable agreement on such rates by
                     the date three (3) months after the date of such written
                     notice by OPERATOR of its exercise of the extension option,
                     then there shall be no extension of the term of this
                     CONTRACT based on the extension options granted to OPERATOR
                     hereunder, and CONTRACTOR shall be free to enter into
                     agreements for the utilization of the DRILLING UNIT for
                     periods after the expiration of the term of the CONTRACT.

                     If the CONTRACT term is extended by one (1) year pursuant
                     to the foregoing provision, then OPERATOR shall retain the
                     option to extend the term of the CONTRACT for the second
                     one-year option period. If OPERATOR elects to exercise such
                     option for the second one-year extension of the term of the
                     CONTRACT, OPERATOR shall give CONTRACTOR written notice of
                     the exercise of such extension option at least six (6)
                     months prior to the fourth anniversary of the Commencement
                     Date. Upon CONTRACTOR's receipt of such written
                     notification, OPERATOR and CONTRACTOR shall negotiate in
                     good faith to determine the mutually agreeable rates for
                     the DRILLING UNIT that shall apply during such one-year
                     extension period. If OPERATOR and CONTRACTOR reach a
                     mutually acceptable agreement on such rates by the date
                     three (3) months after the date of such written notice by
                     OPERATOR of its exercise of the extension option, the term
                     of the CONTRACT shall be extended by one (1) year, and such
                     agreed rates shall apply in lieu of the rates previously
                     applicable to the CONTRACT. If OPERATOR and CONTRACTOR do
                     not reach a mutually acceptable agreement on such rates by
                     the date three (3) months after the date of such written
                     notice by OPERATOR of its exercise of the extension option,
                     then there shall be no extension of the term of this
                     CONTRACT based on the second one-year extension option
                     granted to OPERATOR hereunder, and CONTRACTOR shall be free
                     to enter into agreements for the utilization of the
                     DRILLING UNIT for periods after the expiration of the term
                     of the CONTRACT.

          6.3        Make Ready Period

                     Upon completion of the tow of the DRILLING UNIT from the
                     last location in the U.S. Gulf of Mexico in Main Pass Block
                     300 to Pascagoula, Mississippi, the DRILLING UNIT will
                     undergo certain modifications and equipment additions and
                     changes as set forth on the attached Schedule 6.3, at the
                     expense of CONTRACTOR. All cost for modifications and
                     equipment additions and changes as set forth on the
                     attached Schedule 6.3 is included in the Day Rates.

                      Any additions and changes requested by OPERATOR other than
                     those listed on the attached Schedule 6.3 shall be at
                     OPERATOR's expense, including the payment of the
                     PROVISIONING RATE for any delay in the departure of the
                     DRILLING UNIT from Pascagoula, Mississippi caused by such
                     requested additions and changes, beyond fourteen (14) days
                     from the time the DRILLING UNIT is jacked up dockside in
                     Pascagoula, Mississippi. OPERATOR and CONTRACTOR
                     acknowledge and agree that the drill pipe listed on the
                     attached Schedule 6.3 is not scheduled to arrive while the
                     DRILLING UNIT is in Pascagoula, Mississippi, and will be
                     delivered to the DRILLING UNIT after it arrives in the
                     CONTRACT AREA. Due to the timing of the required start of

<PAGE>
                                                                      SECTION 1
                                                              FORM OF AGREEMENT
                                                                    PAGE 4 OF 5
================================================================================

                    operations in CONTRACT AREA, the DRILLING UNIT must be
                    removed from service in the U.S. Gulf of Mexico at the end
                    of the current program in Main Pass Block 300, and
                    CONTRACTOR must make certain equipment purchase commitments.

                    Such Make Ready Period is anticipated to last fourteen (14)
                    days from the time that the DRILLING UNIT is jacked up
                    dockside in Pascagoula, Mississippi. If the departure of the
                    DRILLING UNIT is delayed beyond fourteen (14) days from the
                    start of such period due to the request of the OPERATOR for
                    additional modifications or additional changes requested by
                    OPERATOR, OPERATOR shall pay CONTRACTOR the PROVISIONING
                    RATE as stated in Section 5 of the CONTRACT for such period
                    of delay.

          6.        RIG AUDIT

                    OPERATOR shall carry out an audit of the DRILLING UNIT in
                    Pascagoula, Mississippi. CONTRACTOR shall be required to
                    correct any deficiencies identified during the audit, at its
                    own costs and expenses, prior to the COMMENCEMENT DATE or as
                    otherwise agreed between CONTRACTOR and OPERATOR. All
                    DRILLING UNIT audit recommendations which would affect safe
                    and efficient operations must have been carried out or the
                    OPERATOR's REPRESENTATIVE and CONTRACTOR'S REPRESENTATIVE
                    must have mutually agreed in writing to a schedule for
                    completion of outstanding DRILLING UNIT audit
                    recommendations.

          7.        RIG ACCEPTANCE

                    OPERATOR shall conduct RIG ACCEPTANCE of the DRILLING UNIT
                    pursuant to OPERATOR's rig acceptance procedure, as soon as
                    the DRILLING UNIT has been pinned at the LOCATION. The
                    period commencing on the pinning of the DRILLING UNIT to the
                    completion of the RIG ACCEPTANCE exercise shall be charged
                    at the STANDBY RATE.

                    In the event that OPERATOR shall not accept the DRILLING
                    UNIT after the completion of the RIG ACCEPTANCE exercise,
                    the DRILLING UNIT will go on NIL Rate until the deficiencies
                    identified during the RIG ACCEPTANCE exercise have been
                    rectified to the satisfaction of OPERATOR.

8.         REMUNERATION

           In full consideration of the satisfactory performance of the Services
           set out in Clause 3 hereof the CONTRACTOR shall be paid as set out in
           SECTION 5 hereto. Such rates will be subject only to adjustments for
           documented changes, pursuant to Section 5, clause 5.7, in
           CONTRACTOR'S costs of operations in the CONTRACT AREA.

           Rates of payment for any extended term, which OPERATOR elects to
           exercise shall be mutually agreed upon as stated in sub-clause 6.2
           above.

<PAGE>
                                                                      SECTION 1
                                                              FORM OF AGREEMENT
                                                                    PAGE 5 OF 5
================================================================================

9.        ACKNOWLEDGEMENT

          Kindly confirm acceptance of the terms of this Contract by signing and
          returning the attached duplicate.


<TABLE>
<CAPTION>
FOR BP TRINIDAD AND TOBAGO LLC

<S>                                                      <C>
Signed:     /s/ ROBERT RILEY                             Name               ROBERT RILEY
            ---------------------------------------               ------------------------------------------
                                                                              (Block Capitals)

Position:  ASSOCIATE PRESIDENT & CHAIRMAN                Date               8/6/01
           ----------------------------------------               ------------------------------------------


Signed:     /s/ JIM LIEBNITZ                             Name               JIM LIEBNITZ
            ---------------------------------------               ------------------------------------------
                                                                              (Block Capitals)

Position:  WELL OPERATIONS MANAGER                       Date               8/6/01
           ----------------------------------------               ------------------------------------------


Signed:     /s/ KATHLEEN CHARLES                         Name               KATHLEEN CHARLES
            ---------------------------------------               ------------------------------------------
                                                                              (Block Capitals)

Position:  MANAGER, CONTRACTS                            Date               8/6/01
           ----------------------------------------               ------------------------------------------



We confirm our acceptance of this CONTRACT.

FOR CHILES OFFSHORE INC.

Signed:     /s/ WILLIAM E. CHILES                        Name               WILLIAM E. CHILES
            ---------------------------------------               ------------------------------------------
                                                                              (Block Capitals)

Position:  CHIEF EXECUTIVE OFFICER                       Date               8/6/01
           ----------------------------------------               ------------------------------------------

</TABLE>

<PAGE>
                                    SECTION 2

                             CONDITIONS OF CONTRACT







<PAGE>
                             CONDITIONS OF CONTRACT

                                    CONTENTS

CLAUSE 1.             DEFINITIONS                                          2
CLAUSE 2.             CARRY OUT DRILLING SERVICES                          3
CLAUSE 3.             TERMINATION                                          3
CLAUSE4.              ACCESS TO LOCATIONS                                  5
CLAUSE 5.             OPTIONAL RIGHTS OF THE OPERATOR IN THE EVENT OF
                      DEFAULT BY THE CONTRACTOR                            5
CLAUSE 6.             LIABILITIES AND INDEMNITIES                          8
CLAUSE.7.             CONTRACTOR'S INSURANCES                             12
CLAUSE.8.             TAX INFORMATION AND INDEMNITY                       13
CLAUSE 9.             BANKRUPTCY OR LIQUIDATION                           15
CLAUSE 10.            FORCE MAJEURE                                       15
CLAUSE 11.            FREEDOM FROM LIENS                                  16
CLAUSE 12.            CONTRACTOR TO MAINTAIN REPRESENTATION               16
CLAUSE 13.            GIVING OF NOTICES AND PAYMENT OF FEES               17
CLAUSE 14.            CONFIDENTIAL INFORMATION                            17
CLAUSE 15.            PUBLICITY                                           17
CLAUSE 16.            ASSIGNMENT AND SUB-CONTRACTING                      17
CLAUSE 17.            APPLICATION OF LAWS AND REGULATIONS                 18
CLAUSE 18.            SERVING OF NOTICES                                  18
CLAUSE 19.            VARIATION AND WAIVER                                18
CLAUSE 20.            INDEPENDENT CONTRACTOR RELATIONSHIP                 19
CLAUSE 21.            INFRINGEMENT OF PATENTS                             19
CLAUSE 22.            PERMITS AND LICENCES                                19
CLAUSE 23.            APPLICABLE LAW                                      19
CLAUSE 24.            ARBITRATION                                         20
CLAUSE 25.            EXCLUSION OF PREVIOUS CORRESPONDENCE                20
CLAUSE 26.            AUDIT                                               20
CLAUSE 27.            SEVERABILITY

1.   Personnel                                                             1
2.   Equipment                                                             1
3.   Third Party                                                           2
4.   Automobiles                                                           2
5.   Certificates of Insurance                                             2
A.   GENERAL DESCRIPTION                                                   1



                                       1
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 2 OF 22
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                             CONDITIONS OF CONTRACT

          CLAUSE 1.       DEFINITIONS

                          In the CONTRACT the following words and expressions
                          shall have the meanings assigned to them, except where
                          the context otherwise requires.

                 1.1      "AFFILIATE" as applied to OPERATOR shall mean and
                          include BP Trinidad and Tobago LLC and any company
                          which is directly or indirectly controlled by BP
                          Trinidad and Tobago LLC. "Affiliate" as applied to
                          CONTRACTOR shall include Chiles Offshore Inc. and any
                          company, which is directly or indirectly controlled by
                          Chiles Offshore Inc. Control means the ownership
                          directly or indirectly of more than fifty (50) percent
                          of the voting rights in a company, partnership or
                          legal entity.

                 1.2      "AGENCY" means any agency, authority, department,
                          court, government, legislature, minister, ministry,
                          official, or public person (whether autonomous or not)
                          of the Republic of Trinidad and Tobago, the United
                          States of America and any other nation, state,
                          jurisdiction, supernational organisation or any
                          political subdivision of the foregoing;

                 1.3      "CERTIFICATION" shall mean the ABS Maltese Cross A-1
                          Self Elevating Drilling Unit.

                 1.4      The "COMMENCEMENT DATE" shall mean the date on which
                          the DRILLING UNIT is pinned on the first LOCATION in
                          the CONTRACT AREA and the OPERATOR provided RIG
                          ACCEPTANCE.

                 1.5      "COMPLETION DATE" shall mean the date when the
                          DRILLING UNIT has completed the last WELL and all
                          OPERATOR'S MATERIAL'S and SERVICE COMPANY EQUIPMENT
                          has been offloaded and the DRILLING UNIT has been
                          towed to the mutually agreed on port in Trinidad.

                 1.6      "CONTRACT" shall mean all those documents forming the
                          Contract as stated in Clause 1 of the Contract
                          Agreement.

                 1.7      The "CONTRACT AREA" shall mean the OPERATOR'S
                          concession areas offshore the east coast of the
                          Republic of Trinidad and Tobago (Block 27) and any
                          onshore area used in association therewith, or other
                          areas agreed between the parties.

                 1.8      The "CONTRACT DEPTH" shall mean the DEPTH to which
                          the CONTRACTOR may be required to carry out the
                          DRILLING SERVICES.

                 1.9      The "CONTRACTOR'S EQUIPMENT" shall mean the Drilling
                          Unit (as hereinafter defined) together with all the
                          drilling and associated equipment listed in SECTION 7
                          Group 2 (hereinafter referred to as the "DRILLING
                          EQUIPMENT") together with the CONTRACTOR'S stock of
                          spare parts.

                 1.10     The "CONTRACTOR'S PERSONNEL" or "its PERSONNEL" shall
                          mean the CONTRACTOR'S labour and supervisory personnel
                          listed in SECTION 6.


                                       2
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                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 3 OF 22
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                  1.11     "CO-VENTURERS" as applied to OPERATOR shall mean any
                           parties to a joint venture agreement whereby the
                           OPERATOR undertakes to act as operator for such
                           participants of any Licence Block in which the
                           CONTRACTOR may be required to perform the DRILLING
                           SERVICES.

                  1.12     "DEMOBILISATION" shall mean the period of time after
                           the DRILLING UNIT has been moved to a mutually agreed
                           port in Trinidad and all of OPERATOR'S and SERVICE
                           COMPANY's materials have been offloaded.

                  1.13     "DEPTH" shall mean the depth of the hole as obtained
                           by measuring the drilling string with a steel tape,
                           using as datum the top of the Rotary Table.

                  1.14     The "DRILLING SERVICES" shall mean the operations as
                           defined in SECTION 4.

                  1.15     The "DRILLING UNIT" shall mean the vessel as
                           specified in SECTION 7 - Group 1.

                  1.16     "EFFECTIVE DATE" shall mean the point in time that
                           the DRILLING UNIT is under tight tow to Pascagoula,
                           Mississippi to begin the Make Ready Period.

                  1.17     LAW" means any treaty, statute, law, directive,
                           by-law, rule, order, decree, regulation, injunction,
                           license, permit, approval, agreement or delegated
                           legislation in each case of any Agency;

                  1.18     "LOCATION" shall mean the location of any WELL.

                  1.19     "MOBILISATION" shall mean the period of time from
                           when the DRILLING UNIT is under tight tow to
                           Pascagoula, Mississippi, until the Make Ready Period
                           has been completed, and until the COMMENCEMENT DATE.

                  1.20     "MONTH" shall mean a calendar month.

                  1.21     "OPERATOR" shall mean BP TRINIDAD AND TOBAGO LLC or
                           any subsidiary thereof and also any reference to
                           "OPERATOR" in this CONTRACT shall also include
                           OPERATOR'S AFFILIATES and CO-VENTURERS.

                  1.22     "OPERATOR'S MATERIALS" shall mean the equipment,
                           materials, services and supplies to be provided by
                           the OPERATOR.

                  1.23     "OPERATOR'S REPRESENTATIVE" and "CONTRACTOR'S
                           REPRESENTATIVE" shall mean those persons who are
                           appointed as such from time to time by the OPERATOR
                           and the CONTRACTOR respectively and whose names have
                           been notified in writing by the appointing party to
                           the other party.

                  1.24     "RIG ACCEPTANCE" shall mean that the OPERATOR'S
                           REPRESENTATIVE certifies in writing on the IADC-API
                           Official Daily Drilling Report Form that the
                           CONTRACTOR'S EQUIPMENT is acceptable to commence the
                           DRILLING SERVICES


                                       3
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                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 4 OF 22
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                 1.25     "RIG STAFF" shall mean the Rig Manager, Assistant Rig
                          Manager (if any), Toolpushers, Tour Pushers (if any),
                          Drillers and Assistant Drillers of the CONTRACTOR'S
                          PERSONNEL.

                 1.26     The "SERVICE COMPANIES" shall mean the contractors
                          (including their servants and agents) hired by the
                          OPERATOR and providing miscellaneous services in
                          conjunction with the DRILLING SERVICES.

                 1.27     The "SUB-CONTRACTORS" shall mean the contractors
                          approved by the OPERATOR and hired by the CONTRACTOR
                          for any services in conjunction with the DRILLING
                          SERVICES.

                 1.28     "WELL" shall mean any OPERATOR'S well or drilling
                          location (as hereinafter defined) whether already
                          drilled, or yet to be drilled by OPERATOR in the
                          CONTRACT AREA under the terms and conditions of the
                          CONTRACT.

                 1.29     "THIRD PARTY" shall for the avoidance of doubt, mean
                          those parties excluding CONTRACTOR, SERVICE COMPANIES,
                          OPERATOR, or SUB-CONTRACTORS.

                 1.30     "TRINIDAD" means the Republic of Trinidad and Tobago.

                          Words importing the singular only also include the
                          plural and vice versa where the context requires.

                          The headings in these CONDITIONS OF CONTRACT shall not
                          be deemed to be part thereof or be taken into
                          consideration of construction thereof or of the
                          CONTRACT.

                          In the event of any conflict between this Section 2
                          and any of the other Sections of this CONTRACT, the
                          provisions of this Section 2 shall prevail.

CLAUSE 2.                 CARRY OUT DRILLING SERVICES

                          The CONTRACTOR shall carry out the DRILLING SERVICES
                          according to the specifications and instructions
                          issued from time to time by the OPERATOR consistent
                          with the terms of the CONTRACT.

CLAUSE 3.                 TERMINATION

                 3.1      Termination upon Loss of or Damage to the DRILLING
                          UNIT

                           i.       The CONTRACT shall be terminated upon the
                                    total loss (as hereinafter defined) of the
                                    DRILLING UNIT, as certified by a mutually
                                    acceptable independent marine surveyor of
                                    the calibre of Noble Denton or Matthew
                                    Daniel. The surveyor shall be retained by
                                    and at the expense of the CONTRACTOR.
                                    Termination of the CONTRACT shall be at the
                                    date and time of such determination by such
                                    marine surveyor or the date of such
                                    compromised or arranged total loss.

                                    In the context of this sub-clause 3.1(i)
                                    "total loss" shall mean an actual,
                                    constructive, compromised or arranged total
                                    loss of the DRILLING UNIT.


                                       4
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                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 5 OF 22
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                           ii.      The CONTRACT shall be terminated if the
                                    DRILLING UNIT shall suffer damage that
                                    renders it incapable of continuing
                                    operations within one (1) month of suffering
                                    such damage, as certified by a mutually
                                    acceptable independent marine surveyor of
                                    the calibre of Noble Denton or Matthew
                                    Daniel. The surveyor shall be retained by
                                    and at the expense of the CONTRACTOR.
                                    Termination of the CONTRACT shall be at the
                                    date and time of such determination by such
                                    marine surveyor.

                  3.2      Failure to keep CONTRACTOR'S EQUIPMENT in
                           CERTIFICATION

                           OPERATOR shall have the right to terminate the
                           CONTRACT:

                           (i)      forthwith if the CONTRACTOR fails to comply
                                    with the requirements of sub-clause 4.2 of
                                    SECTION 4.

                           (ii)     by giving the CONTRACTOR seven days written
                                    notice after 10 days of expiry of
                                    CERTIFICATION if the CONTRACTOR has not
                                    commenced action to restore same.

                           (iii)    by giving the CONTRACTOR seven days written
                                    notice after 30 days of expiry of
                                    CERTIFICATION if the DRILLING UNIT has not
                                    been re-certified.

              3.3        Termination upon expiry of the Term

                         Subject to the termination rights of OPERATOR, this
                         CONTRACT shall terminate on the COMPLETION DATE,
                         subject to the DEMOBILISATION obligations of OPERATOR.
                         OPERATOR shall furnish towing vessels and related
                         services, and pay the MOVING RATE to move the DRILLING
                         UNIT to the mutually agreed port and to pay the
                         lump-sum DEMOBILISATION CHARGE as described herein.

                         The OPERATOR shall be relieved from its obligation to
                         pay the DEMOBILISATION CHARGE if the DRILLING UNIT is
                         under contract to a third party to commence work for
                         such third party in the waters of Trinidad and Tobago,
                         or if a third party is paying for mobilization of the
                         DRILLING UNIT from the waters of Trinidad and Tobago.
                         In such event, the CONTRACT shall terminate when the
                         OPERATOR's and SERVICE COMPANY's materials are
                         offloaded and the DRILLING UNIT is under tight tow to
                         the third party location. In such event, CONTRACTOR
                         shall furnish towing vessels and related services to
                         take the DRILLING UNIT to its new location.

              3.4        Termination Without Cause

                         Commencing six (6) months from the COMMENCEMENT DATE,
                         OPERATOR may terminate the CONTRACT without cause
                         after six (6) month's written notice to CONTRACTOR.
                         Should OPERATOR terminate the CONTRACT without cause,
                         and not pursuant to Clause 3.1 or 3.2 of hereof or
                         the default of the CONTRACTOR with regard to
                         unsatisfactory performance, failure to provide
                         equipment, breach of CONTRACT, requisition,
                         liquidation or insolvency, all as described in clause
                         5 hereof, or force majeure as described in clause 10
                         hereof, the OPERATOR will reimburse the CONTRACTOR as
                         follows:


                                       5
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 6 OF 22
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                          The DEMOBILIZATION CHARGE (if applicable), plus 60% of
                          the OPERATING RATE for the remaining balance of the
                          term of the CONTRACT that has not been utilised, and
                          the unamortized portion of the Make Ready additions
                          and changes described on Schedule 6.3, based on the
                          "BP Amortized Amount" set forth on Schedule 6.3. The
                          CONTRACT shall terminate upon CONTRACTOR's receipt of
                          payment of such amounts from OPERATOR.


                          For example, if OPERATOR gives written notice to
                          CONTRACTOR eighteen (18) months after the COMMENCEMENT
                          DATE that the CONTRACT will terminate twenty-four (24)
                          months after the COMMENCEMENT DATE, then the OPERATOR
                          would pay to CONTRACTOR (i) $2,800,000 for the
                          DEMOBILIZATION CHARGE, (ii) $15,987,000 (60% of the
                          OPERATING RATE of $73,000 for the then remaining 365
                          days of the term of the CONTRACT), and (iii) $551,008
                          for OPERATOR's share of the unamortized amount of the
                          Make Ready additions pursuant to Schedule 6.3 (such
                          amounts are exclusive of any applicable VAT payable by
                          OPERATOR).


CLAUSE 4.                 ACCESS TO LOCATIONS

                          The OPERATOR shall secure for the CONTRACTOR and its
                          SUB-CONTRACTORS rights of access to and from
                          LOCATIONS. The OPERATOR shall use its best endeavours
                          to advise the CONTRACTOR of any limitations,
                          restriction or conditions, which may affect such
                          access, and the CONTRACTOR shall abide by such
                          limitations, restrictions and conditions as aforesaid.

                          OPERATOR shall be responsible for selecting, marking
                          and clearing drilling LOCATIONS, for providing proper
                          and sufficient certificates, permits or permission
                          necessary to enter upon and operate on the LOCATIONS,
                          and for notifying CONTRACTOR of any impediments or
                          hazards to operations at each LOCATION or within the
                          anchor pattern, including, without limitation, any
                          pipelines, cables, boulders, mud filled depressions or
                          faulty bottom conditions in the area. OPERATOR also
                          shall provide CONTRACTOR with soil and sea bottom
                          condition surveys at each LOCATION adequate to satisfy
                          CONTRACTOR's marine surveyor. In the event the
                          DRILLING UNIT is used over a platform, all surveys to
                          determine the structural integrity of the platform
                          will be the responsibility of OPERATOR.

                          Should seabed conditions be unsatisfactory to properly
                          support or moor the DRILLING UNIT upon arrival at the
                          LOCATION, OPERATOR shall continue to pay CONTRACTOR
                          the STANDBY RATE set forth in Schedule 5.1 to Section
                          5 of this CONTRACT, until seabed conditions are
                          ultimately remedied. All expenses associated with
                          improvements to the seabed and repositioning of the
                          DRILLING UNIT at the LOCATION shall be for OPERATOR's
                          account.

                          Notwithstanding any other provision of this CONTRACT,
                          except in the event of CONTRACTOR'S negligence, should
                          there be obstructions at or within the area of the
                          LOCATION, including the anchor pattern, or faulty
                          bottom conditions, which have not been identified by
                          OPERATOR and these obstructions or faulty bottom
                          conditions damage CONTRACTOR'S EQUIPMENT, or
                          CONTRACTOR'S EQUIPMENT damages these obstructions, or


                                       6
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 7 OF 22
================================================================================

                          if seabed conditions prove unsatisfactory to properly
                          support or moor the DRILLING UNIT during operations
                          hereunder, OPERATOR will be responsible for and
                          indemnify and hold harmless CONTRACTOR for all
                          resulting damages, including, without limitation,
                          payment of the STANDBY RATE during required repairs,
                          but OPERATOR will receive credit for any physical
                          damage insurance proceeds received by CONTRACTOR as a
                          result of any damage to the DRILLING UNIT


CLAUSE 5.                 OPTIONAL RIGHTS OF THE OPERATOR IN THE EVENT OF
                          DEFAULT BY THE CONTRACTOR

                 5.1      Unsatisfactory performance by the CONTRACTOR

                          In the event that the OPERATOR is dissatisfied with
                          the performance of the CONTRACTOR hereunder on account
                          of sustained, unreasonably slow progress or for
                          demonstrated incompetency as a result of causes
                          reasonably within the CONTRACTOR'S control, including,
                          without limitation, time lost from lack of crews,
                          stores, or poorly maintained equipment, or failure to
                          observe safe operating practices, the OPERATOR shall
                          notify the CONTRACTOR in writing with specificity as
                          to the cause of its dissatisfaction. Should the
                          CONTRACTOR fail to demonstrate to the OPERATOR'S
                          satisfaction that it has taken measures to remedy the
                          matters so specified within a period of not more than
                          seven (7) days, the OPERATOR shall have the right to
                          terminate the CONTRACT upon completion of the current
                          operation then being performed at the time of receipt
                          of the notification of dissatisfaction as aforesaid.
                          In the case of events requiring replacement of parts
                          or equipment, CONTRACTOR shall be allowed a reasonable
                          time for transit of materials and clearances through
                          customs, subject to OPERATOR's payment obligations
                          pursuant to Clause 5.3 of Section 5. No further
                          payments shall be due to the CONTRACTOR other than
                          those outstanding for work done prior to the said
                          termination and the DEMOBILISATION CHARGE.

                 5.2      CONTRACTOR'S failure to perform its obligations or to
                          provide the CONTRACTOR'S EQUIPMENT

                          In the event of the CONTRACTOR'S continuous failure to
                          perform any of its obligations or to provide any of
                          the CONTRACTOR'S EQUIPMENT or in the event that the
                          CONTRACTOR fails to demonstrate that the CONTRACTOR'S
                          EQUIPMENT is capable of meeting the manufacturer's
                          rating for such equipment for sustained operations, in
                          each case so as to jeopardize the integrity of the
                          well bore or which results in unreasonably slow
                          progress, the OPERATOR shall notify the CONTRACTOR in
                          writing specifying the deficiencies of CONTRACTOR's
                          performance or such CONTRACTOR'S EQUIPMENT which the
                          CONTRACTOR has so failed to provide or for which
                          CONTRACTOR has failed to demonstrate that such
                          CONTRACTOR'S EQUIPMENT is capable of meeting the
                          manufacturer's rating for such equipment for sustained
                          operations, and immediately thereafter the OPERATOR
                          shall have the right to exercise one of the following
                          options:-


                                       7
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                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 8 OF 22
================================================================================

                           (a)      To shutdown such operations until such time
                                    as the CONTRACTOR shall have made good the
                                    deficiencies in the said equipment whether
                                    as to provision or to performance.

                                    For any such period of shutdown the OPERATOR
                                    shall pay the CONTRACTOR:

                                    (i)      at the REPAIR RATE in accordance
                                             with SECTION 5 hereof provided the
                                             shutdown is due to an abnormal
                                             failure of a component of
                                             CONTRACTOR'S EQUIPMENT. An abnormal
                                             failure is defined as being a
                                             failure, which is not due to a lack
                                             of proper maintenance, by the
                                             CONTRACTOR.

                                    (ii)     at NIL rate if the shutdown is due
                                             to lack of proper maintenance by
                                             the CONTRACTOR.

                                    In all such instances referred to in (i) and
                                    (ii) above the OPERATOR shall have the
                                    exclusive right to terminate the CONTRACT
                                    any time after a shutdown period has
                                    exceeded twenty-one (21) days.

                                    In such event the OPERATOR shall not be
                                    liable for any further payments to the
                                    CONTRACTOR, other than those outstanding for
                                    work done prior to the said termination and
                                    the DEMOBILISATION CHARGE.

                           (b)      To hire from the nearest available source
                                    satisfactory to the OPERATOR all such
                                    equipment as may be required to complete
                                    essential operations:

                                    (i)      arising out of the CONTRACTOR'S
                                             failure so to provide the DRILLING
                                             EQUIPMENT or any part thereof,
                                             until the CONTRACTOR shall have
                                             provided as aforesaid, or

                                    (ii)     arising out of any sustained
                                             failure of the DRILLING EQUIPMENT
                                             or any part thereof that CONTRACTOR
                                             cannot demonstrate that it can meet
                                             manufacturer's specifications for
                                             sustained operations, until the
                                             CONTRACTOR can demonstrate to the
                                             OPERATOR that the said equipment or
                                             part thereof can meet the said
                                             manufacturer's specifications for
                                             sustained operations.

                                    All costs incurred by the OPERATOR in hiring
                                    and transporting such equipment shall be a
                                    debt due to the OPERATOR from the CONTRACTOR
                                    and shall be deducted from any monies due to
                                    the CONTRACTOR from the OPERATOR.

                 5.3      Breach of the CONTRACT by the CONTRACTOR

                          Subject to other provisions in the CONTRACT, in the
                          event of a material breach by the CONTRACTOR of any of
                          the terms and conditions of the CONTRACT, the OPERATOR
                          shall have the right to give written notice to the
                          CONTRACTOR specifying such breach and calling upon the
                          CONTRACTOR to remedy the breach forthwith and the
                          CONTRACTOR shall not be entitled to payment for work


                                       8
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                   PAGE 9 OF 22
================================================================================

                          performed in making good the breach. If after receipt
                          of such notice the CONTRACTOR does not remedy such
                          breach within a reasonable period (which period the
                          OPERATOR shall advise in the aforesaid written notice
                          and which shall take into account the nature of the
                          breach), but in no event less than ten (10) days, then
                          the OPERATOR may at its own option adopt one of the
                          following provisions:

                           (i)      terminate the CONTRACT as soon as is
                                    practicable on expiry of the said period.
                                    After such termination the OPERATOR shall
                                    not be liable for any payments to the
                                    CONTRACTOR other than those outstanding for
                                    work done prior to the said termination and
                                    the DEMOBILISATION CHARGE.

                           (ii)     in the event the OPERATOR does not wish to
                                    terminate pursuant to (i) above, OPERATOR
                                    may instruct the CONTRACTOR to shut down the
                                    CONTRACTOR'S EQUIPMENT and the OPERATOR
                                    shall pay the CONTRACTOR at SHUTDOWN WITH
                                    CREW RATE for such period as OPERATOR
                                    requires from the date of such shutdown and
                                    thereafter apply the provisions of (i) of
                                    this sub-clause.

CLAUSE 6.                 LIABILITIES AND INDEMNITIES

                 6.1      The CONTRACTOR'S EQUIPMENT

                           (a)      The CONTRACTOR shall indemnify the OPERATOR
                                    and the SERVICE COMPANIES and hold the
                                    OPERATOR and the SERVICE COMPANIES harmless
                                    from and against any and all liability for
                                    loss, damage or destruction of the
                                    CONTRACTOR'S EQUIPMENT whether arising out
                                    of the CONTRACT or in tort, and against all
                                    claims, demands, proceedings and causes of
                                    action resulting therefrom, regardless of
                                    how such loss, damage or destruction occurs,
                                    notwithstanding that such loss or damage as
                                    aforesaid may have been due to the
                                    negligence of the OPERATOR or its SERVICE
                                    COMPANIES and its or their personnel or
                                    agents excepting only CONTRACTOR's EQUIPMENT
                                    below the rotary table as stated in
                                    sub-clause 6.1(b) below.

                           (b)      The OPERATOR shall assume liability at all
                                    times during the DRILLING SERVICES for loss
                                    of or damage to the CONTRACTOR'S equipment
                                    below the rotary table except fair wear and
                                    tear. Notwithstanding anything in the
                                    CONTRACT to the contrary, the OPERATOR shall
                                    reimburse the CONTRACTOR for the replacement
                                    cost less depreciation of any such equipment
                                    so lost, and in respect of equipment so
                                    damaged whichever shall be the lesser of the
                                    replacement on-site cost less depreciation
                                    or the repair cost, provided that such
                                    equipment and the operation during which or
                                    as a result of which the said equipment has
                                    been lost or damaged as aforesaid has been
                                    approved by the OPERATOR'S REPRESENTATIVE
                                    prior to such operation and unless such loss
                                    or damage is due to the negligence and/or
                                    default of the CONTRACTOR, its
                                    SUB-CONTRACTORS or the PERSONNEL or agents
                                    of the CONTRACTOR in conducting the
                                    operation at that time.

                                    Depreciation shall be calculated monthly
                                    from the original purchase date and price at
                                    one (1) percent per month, but not to exceed
                                    50% of the current replacement cost.
                                    Reimbursement


                                       9
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 10 OF 22
================================================================================

                                    shall be reduced by any amount recovered by
                                    CONTRACTOR through insurance, which
                                    CONTRACTOR shall diligently seek to recover.

                 6.2      The OPERATOR'S MATERIALS

                          (a)     The CONTRACTOR shall take all reasonable
                                  precautions (including but not limited to the
                                  making out of loading notes) to protect and
                                  save from loss or damage items of the
                                  OPERATOR'S MATERIALS and materials of the
                                  SERVICE COMPANIES while in the custody of the
                                  CONTRACTOR. Subject to sub clause 6.2(b) below
                                  when no longer required for operations
                                  hereunder the CONTRACTOR shall return to the
                                  OPERATOR after use such of the said OPERATOR'S
                                  MATERIALS as have not been properly consumed,
                                  in the same condition as when handed to the
                                  CONTRACTOR fair wear and tear excepted.

                          (b)     The CONTRACTOR shall not be liable to the
                                  OPERATOR for any loss of or damage to items of
                                  the OPERATOR'S MATERIALS except that caused by
                                  the negligence or default of the CONTRACTOR
                                  its personnel or agents or the SUB-CONTRACTORS
                                  or their personnel or agents, while in the
                                  custody of the CONTRACTOR.

                 6.3      Personnel and Property

                          (a)     Subject always to subclauses 6.5(a),
                                  6.5(b)(ii) and (iii), and 6.5(c), the
                                  CONTRACTOR shall indemnify the OPERATOR and
                                  hold the OPERATOR harmless from and against
                                  any and all liability for sickness, injury or
                                  death of any THIRD PARTY person or the loss of
                                  or damage to any THIRD PARTY property and
                                  against all claims, demands, proceedings and
                                  causes of action resulting therefrom due to
                                  any negligent act or default on the part of
                                  the CONTRACTOR, its SUB-CONTRACTORS or its or
                                  their personnel or agents in the performance
                                  of any of its obligations hereunder or
                                  otherwise arising in connection with the
                                  CONTRACT.

                         (b)      The CONTRACTOR shall indemnify the OPERATOR
                                  and the SERVICE COMPANIES and hold the
                                  OPERATOR and the SERVICE COMPANIES harmless
                                  from and against any and all liability for
                                  loss of or damage to property of or in the
                                  possession and control of the CONTRACTOR'S
                                  PERSONNEL and SUB-CONTRACTOR'S personnel and
                                  against any and all liability for sickness,
                                  injury or death to any of the CONTRACTOR'S
                                  PERSONNEL and SUB-CONTRACTOR'S personnel
                                  arising out of the CONTRACT or in tort and
                                  against all claims, demands, proceedings and
                                  causes of action resulting therefrom
                                  notwithstanding that such loss or damage to
                                  such property or sickness, injury or death
                                  to the personnel as aforesaid may have been
                                  due to the negligence or default of the
                                  OPERATOR or its personnel or agents or the
                                  SERVICE COMPANIES or their personnel or
                                  agents.

                         (c)      The OPERATOR shall indemnify the CONTRACTOR
                                  and hold the CONTRACTOR harmless from and
                                  against any and all liability for loss of or
                                  damage to property of or in the possession
                                  and control of the OPERATOR'S personnel or
                                  SERVICE COMPANY personnel and against any
                                  and all liability for sickness, injury, or
                                  death to any of the OPERATOR'S personnel or
                                  SERVICE COMPANY personnel arising out of the
                                  CONTRACT or in tort and against all claims,
                                  demands, proceedings and causes of action
                                  resulting


                                       10
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 11 OF 22
================================================================================

                                  therefrom notwithstanding that such loss or
                                  damage to such property or sickness, injury
                                  or death to the personnel as aforesaid may
                                  have been due to the negligence or default
                                  of the CONTRACTOR or its PERSONNEL or agents
                                  or the SUB-CONTRACTORS or their personnel or
                                  agents or the SERVICE COMPANIES or their
                                  personnel or agents..

                          (d)     The OPERATOR shall indemnify the CONTRACTOR
                                  and hold the CONTRACTOR harmless from and
                                  against any and all liability for sickness,
                                  injury or death of any THIRD PARTY person or
                                  the loss of or damage to any THIRD PARTY
                                  property and against all claims, demands,
                                  proceedings and causes of action resulting
                                  therefrom due to any negligent act or default
                                  on the part of the OPERATOR, its SERVICE
                                  COMPANIES, or its or their personnel or agents
                                  in the performance of any of its obligations
                                  hereunder or otherwise arising in connection
                                  with the CONTRACT.

                 6.4      Loss of or Damage to the Hole

                          In the event that the hole should be lost or damaged
                          arising out of operations hereunder due to the
                          negligence of the CONTRACTOR, its personnel or agents
                          then the OPERATOR may instruct the CONTRACTOR either
                          to drill a new hole to the depth at which the said
                          loss or damage occurred or to re-drill such section of
                          the damaged hole in both instances at the REDRILLING
                          RATE and in accordance with the terms of the CONTRACT.
                          Except for the foregoing obligation of CONTRACTOR, and
                          notwithstanding anything else in this CONTRACT to the
                          contrary, CONTRACTOR shall not be liable for damage to
                          or loss of the WELL.

                 6.5      Underground Damage and Control of Blowout and
                          Pollution

                          (a)     Reservoir Damage

                                  Notwithstanding anything in the CONTRACT to
                                  the contrary, the OPERATOR shall indemnify and
                                  hold the CONTRACTOR harmless against any
                                  damage to or destruction of or loss or
                                  impairment of any property right in or to oil,
                                  gas or other mineral substance or water if at
                                  the time of the act or omission causing such
                                  damage, destruction, loss or impairment the
                                  said substance had not been reduced to
                                  physical possession above the surface of the
                                  sea-bed, and for any loss or damage to any
                                  formation strata or reservoir beneath the
                                  seabed resulting from operations under the
                                  CONTRACT. The CONTRACTOR shall not make any
                                  payment due hereunder without prior approval
                                  from the OPERATOR.

                          (b)     Pollution

                                  (i)     Notwithstanding anything in the
                                          CONTRACT to the contrary, the
                                          CONTRACTOR shall assume all
                                          responsibility for, including control
                                          and removal of, and hold the OPERATOR
                                          harmless from, loss or damage
                                          originating from the DRILLING UNIT
                                          arising from pollution or
                                          contamination from, by way of example,


                                       11
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 12 OF 22
================================================================================

                                    spills of fuels, drilling fluids (except as
                                    provide for under Clause 6.5 (b)(iii),
                                    lubricants, motor oils, pipe dope, paints,
                                    solvents, ballast, bilge and garbage wholly
                                    in the CONTRACTOR'S or its SUB-CONTRACTOR'S
                                    possession and control.

                           (ii)     Except as provided in (i) of this
                                    sub-clause, and notwithstanding anything in
                                    the CONTRACT to the contrary, the OPERATOR
                                    shall assume all responsibility for
                                    pollution, including control and removal of
                                    pollution or contamination, which may result
                                    from fire, blowout, cratering, seepage, or
                                    any other uncontrolled flow of oil, gas,
                                    wastes or other substance from any WELL
                                    arising out of the CONTRACT, or which may
                                    emanate from any platform, pipeline or other
                                    equipment or facility owned or operated by
                                    the OPERATOR, and the OPERATOR shall
                                    indemnify and hold harmless the CONTRACTOR
                                    from and against any and all claims,
                                    demands, proceedings and causes of action
                                    from any party under this CONTRACT or any
                                    THIRD PARTY (including, without limitation,
                                    any AGENCY) resulting from or connected with
                                    the above.

                           (iii)    The OPERATOR shall further assume all
                                    responsibility for any pollution or
                                    contamination arising from the use or
                                    disposal of oil emulsion, oil based or
                                    chemically treated drilling fluids,
                                    contaminated cuttings and cavings, lost
                                    circulation materials and fluids as well as
                                    the furnishing, transportation and disposal
                                    or containerisation of any materials when
                                    such are required unless caused by the
                                    negligence of the CONTRACTOR, or its
                                    SUB-CONTRACTORS or its or their personnel or
                                    agents.

                           (iv)     The CONTRACTOR shall immediately notify the
                                    OPERATOR of all instances of pollution
                                    arising out of operations hereunder and
                                    confirm such notification in writing or by
                                    e-mail to the OPERATOR within twelve (12)
                                    hours of the event.

                  (c)      Notwithstanding anything in this CONTRACT to the
                           contrary, OPERATOR shall be solely responsible for,
                           and indemnify and hold harmless CONTRACTOR from and
                           against, all costs of regaining control of any wild
                           well.

                 6.6      Sunken Property

                          When required by law or governmental authority or when
                          CONTRACTOR'S sunken property interferes with present
                          or future operations of the OPERATOR, the CONTRACTOR
                          shall at its own expense raise and remove the DRILLING
                          UNIT and any property of the CONTRACTOR or its SUB-
                          CONTRACTORS which may sink in the course of operations
                          hereunder or otherwise deal with it in accordance with
                          the OPERATOR'S direction. In the event that the
                          CONTRACTOR does not carry out these obligations the
                          OPERATOR may buoy and light the sunken DRILLING UNIT
                          or property and may remove it (without prejudice to
                          the OPERATOR'S rights) and in such event CONTRACTOR
                          shall refund to the OPERATOR all costs so incurred.
                          The fact that the sunken DRILLING UNIT or property is
                          insured or has been declared a total loss shall not
                          absolve the CONTRACTOR from its obligations to raise
                          and/or remove same. This CLAUSE shall remain binding
                          on the CONTRACTOR and OPERATOR notwithstanding the
                          termination of the CONTRACT for any reason.


                                       12
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 13 OF 22
================================================================================

                 6.7      Consequential Damages

                          Notwithstanding any other provision in the CONTRACT in
                          no event shall the CONTRACTOR, SERVICE COMPANIES or
                          OPERATOR or its CO-VENTURERS in the CONTRACT AREA be
                          liable one to the other for any consequential damages
                          which may be suffered by any or all parties in
                          connection with the performance of or otherwise
                          arising under the CONTRACT notwithstanding that such
                          consequential damages may have been due to the
                          negligence of any of the parties aforesaid.
                          Consequential damages shall mean, but not by way of
                          limitation, loss of profits, loss of production or
                          business interruption.

                  6.8     Notwithstanding anything to the contrary contained in
                          sub clauses 6.1 to 6.7 inclusive, it is clearly
                          understood between all parties that the CONTRACTOR
                          only provides the above indemnities in respect of
                          SERVICE COMPANIES and likewise OPERATOR only provides
                          indemnities in respect of SERVICE COMPANIES on the
                          express understanding that SERVICE COMPANIES provide
                          reciprocal indemnities to CONTRACTOR as contained in
                          the SERVICE COMPANIES contracts with OPERATOR.

                 6.9      The rights of CONTRACTOR and of OPERATOR under this
                          Clause 6 shall extend to their respective Affiliates
                          and employees and employees of their respective
                          Affiliates.

                 6.10     The rights and obligations under this Clause 6 shall
                          continue notwithstanding the completion or
                          termination of the work under this CONTRACT.

CLAUSE.7.                 CONTRACTOR'S INSURANCES

                 7.1      The CONTRACTOR shall take out and maintain appropriate
                          first class insurance with respect to its liabilities
                          assumed and indemnities given under the CONTRACT and
                          as specifically required in SECTION 3 hereof. All such
                          policies shall contain waivers of rights of
                          subrogation against the OPERATOR, its CO-VENTURERS,
                          AFFILIATES and the SERVICE COMPANIES.

                          The CONTRACTOR shall give the OPERATOR thirty days
                          written notice of any proposed material change in any
                          policy.

                 7.2      The CONTRACTOR shall extend to the OPERATOR, its
                          CO-VENTURERS and the SERVICE COMPANIES the benefit of
                          any Hull and Machinery insurance cover, which may
                          exist under the CONTRACTOR'S insurance provisions.

                 7.3      If the CONTRACTOR shall fail to effect and keep in
                          force any of the Insurances referred to herein, then
                          the OPERATOR may effect and keep the same in force and
                          pay such premium as may be necessary for that purpose
                          and from time to time deduct the amount so paid by the
                          OPERATOR as aforesaid from any monies due or which may
                          become due to the CONTRACTOR or recover the same as a
                          debt due from the CONTRACTOR.

                 7.4      CONTRACTOR shall require its SUB-CONTRACTORS to
                          obtain, maintain and keep in force during the time in
                          which they are engaged in performing any work


                                       13
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 14 OF 22
================================================================================

                          hereunder, insurance coverage acceptable to CONTRACTOR
                          and furnish CONTRACTOR acceptable evidence of such
                          insurance. CONTRACTOR shall require all insurance
                          policies carried by the SUB-CONTRACTOR to contained
                          endorsements waiving insurer's rights of subrogation
                          against the OPERATOR, its CO-VENTURERS, AFFILIATES and
                          the SERVICE COMPANIES.

CLAUSE.8.                 TAX INFORMATION AND INDEMNITY

                8.1       CONTRACTOR shall be responsible for, and shall hold
                          OPERATOR harmless from the reporting, filing and
                          payment of any taxes (wherever and whenever arising),
                          duties, charges or fees (and any related fines,
                          penalties, or interest) imposed (except as provided in
                          Section 8.2 herein) directly or indirectly on
                          CONTRACTOR or its SUB-CONTRACTORS, shareholder(s),
                          employees, agents or servants as a result of
                          CONTRACTOR's performance under this CONTRACT in all
                          jurisdictions. OPERATOR may withhold from sums
                          otherwise due CONTRACTOR under this Contract any taxes
                          or amounts required by applicable law to be withheld
                          and paid to the appropriate taxing authorities and,
                          OPERATOR shall provide CONTRACTOR with all receipts
                          evidencing the payment to such authorities of the
                          taxes or amounts so withheld.

                8.2       The payments provided for pursuant to Section 5 are
                          exclusive of any value added taxes or sales/service
                          taxes which may be imposed on such payments by the
                          taxing authorities having jurisdiction. Subject to
                          OPERATOR's right to verify that CONTRACTOR and its
                          SUB-CONTRACTORS are registered in accordance with the
                          appropriate section of the Trinidad and Tobago Value
                          Added Tax Act; and the right to verify that such taxes
                          apply to the payments made hereunder, and subject to
                          OPERATOR's right to verify CONTRACTOR's payment of
                          such taxes to the appropriate taxing authorities,
                          OPERATOR shall pay CONTRACTOR the amount of such taxes
                          upon receipt of invoice, including the amount of such
                          taxes, which invoice is issued in compliance with the
                          applicable tax laws. CONTRACTOR shall use its best
                          efforts to avail itself of any and all exemptions from
                          and/or reductions of such taxes.

                8.3       CONTRACTOR shall comply and shall use reasonable
                          efforts to ensure that all SUB-CONTRACTORS comply,
                          with all legal contractual and administrative
                          requirements in relation to their status and presence
                          in Trinidad, including, without limitation,
                          registration for corporation tax and value added tax
                          purposes. For the avoidance of doubt, CONTRACTOR will
                          be registered for corporation tax and value added tax
                          under the appropriate sections of the Government of
                          the Republic of Trinidad and Tobago Income Tax Act
                          and/or Corporation Tax Act and Value Added Tax Act for
                          the duration of this CONTRACT and will provide
                          OPERATOR satisfactory evidence to that effect.
                          CONTRACTOR shall indemnify and hold harmless OPERATOR
                          for any failure by it or its SUB-CONTRACTORS to comply
                          with the requirements of this clause.

                8.4       For all personnel of CONTRACTOR and its
                          SUB-CONTRACTORS, and all local personnel directly
                          employed by CONTRACTOR and its SUB-CONTRACTORS in
                          Trinidad in connection with CONTRACTOR's performance
                          under this Contract, personal income tax obligations,
                          including withholding tax, shall be the responsibility
                          of CONTRACTOR. CONTRACTOR shall indemnify and hold
                          OPERATOR harmless from any failure by it or its
                          SUB-CONTRACTORS to calculate and collect this income
                          tax and pay it directly to the applicable authorities.
                          In no instance shall such personnel be considered to
                          be employees of OPERATOR.


                                       14
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 15 OF 22
================================================================================

                8.5       Any fines, interest, penalties or other costs incurred
                          by CONTRACTOR or its agents, employees or
                          SUB-CONTRACTORS for non-compliance by CONTRACTOR, its
                          agents, employees or SUB-CONTRACTORS with the
                          requirement of any LAWS shall be the sole
                          responsibility of CONTRACTOR.

                8.6       CONTRACTOR shall indemnify OPERATOR against any and
                          all costs including fines, interest, penalties and
                          reasonable legal costs suffered or incurred by
                          OPERATOR and resulting from CONTRACTOR's failure to
                          comply with relevant taxation and import or custom
                          duty requirements.

                8.7       CONTRACTOR shall be liable for and shall indemnify and
                          hold harmless OPERATOR against any taxes, duties,
                          levies, charges, and/or fees assessed in connection
                          with the importation, sale or disposition of assets of
                          CONTRACTOR, or assets of any SUB-CONTRACTOR and for
                          the failure to export such previously imported assets
                          or the assets of any SUB-CONTRACTOR following the
                          conclusion of the work to be performed under this
                          Contract. OPERATOR shall not be liable and OPERATOR
                          shall not reimburse CONTRACTOR for any third party
                          fees or charges in connection with such importation or
                          exportation.

                8.8       CONTRACTOR acknowledges that it is aware that OPERATOR
                          is anticipated to obtain a Minister's License under
                          the Customs Act of the laws of the Republic of
                          Trinidad and Tobago, which will provide for exemption
                          from import duties in Trinidad in relation to imports
                          associated with OPERATOR's offshore petroleum and
                          exploration operations. CONTRACTOR undertakes to
                          comply fully and to procure the compliance of all
                          SUB-CONTRACTORS with all legal, contractual and
                          administrative requirements of OPERATOR and any AGENCY
                          and to provide accurate and timely information to
                          enable OPERATOR to fully benefit from such exemption
                          in connection with any imports associated with or
                          linked to CONTRACTOR's performance under this
                          Contract. CONTRACTOR shall indemnify and hold harmless
                          OPERATOR for any failure by CONTRACTOR or its
                          SUB-CONTRACTORS to comply with such requirements,
                          which results in any imposition of import duties,
                          penalties, interest or fines in respect of such
                          imports.

CLAUSE 9.                 BANKRUPTCY OR LIQUIDATION

                          If the CONTRACTOR shall become bankrupt or insolvent,
                          or have a receiving order made against it, or present
                          a petition in bankruptcy or make an arrangement with
                          or an assignment in favour of its creditors, or shall
                          agree to carry out the CONTRACT under a Committee of
                          Inspection of its creditors, or commence to be wound
                          up (not being a member's voluntary winding up for the
                          sake of reconstruction), or shall carry on its
                          business under a receiver for the benefit of its
                          creditors or any of them then the OPERATOR shall be at
                          liberty either

                           (a)      to suspend immediately all or any of the
                                    operations then in progress and to remove
                                    its property and the property of its SERVICE
                                    COMPANIES located on the DRILLING UNIT or in
                                    the possession of the CONTRACTOR, or

                           (b)      to give such receiver liquidator or any
                                    other person in whom the CONTRACT may become
                                    vested the option of carrying out the
                                    CONTRACT


                                       15
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 16 OF 22
================================================================================

                                    subject to his providing a guarantee in an
                                    amount to be agreed for the due and faithful
                                    performance of the CONTRACT without
                                    prejudice in either event to any right of
                                    action or remedy which shall have accrued or
                                    shall accrue thereafter to the OPERATOR, or

                           (c)      to terminate the CONTRACT upon the
                                    completion of the current operations then
                                    being performed. No further payments shall
                                    be due to the CONTRACTOR or its receiver
                                    other than those for work done prior to the
                                    said termination

CLAUSE 10.                FORCE MAJEURE

                          No failure or omission by either party to carry out or
                          observe any of the stipulations, conditions or
                          obligations to be performed hereunder shall, except as
                          herein expressly agreed to the contrary, give rise to
                          any claim against such party or be deemed to be a
                          breach of the CONTRACT if such failure or omission
                          arises from an event of force majeure.

                          An event of force majeure shall mean expropriation or
                          confiscation, orders of governmental authority, acts
                          of war (declared or undeclared), insurrection,
                          rebellion or sabotage, civil disturbances, strikes
                          (except of the CONTRACTOR'S or SUB-CONTRACTOR'S own
                          workforce), actions of the elements (except waiting on
                          weather in the field) or other causes beyond the
                          reasonable control of the parties affected thereby but
                          specifically excluding financial distress.

                          If by any reason of force majeure either party shall
                          be prevented from executing or continuing to execute
                          the CONTRACT, the party so prevented shall forthwith
                          give notice in writing to the other party of such
                          prevention and the reasons therefor. Except for the
                          obligation to pay monies due under the CONTRACT, the
                          obligations of the parties as have been thus affected
                          shall be suspended for the duration of such
                          prevention.

                          In the event that the CONTRACTOR is unable to carry
                          out the DRILLING SERVICES by reason of force majeure
                          the OPERATOR shall have the right to instruct the
                          CONTRACTOR to remain on LOCATION or to move to a new
                          LOCATION and the appropriate rate as set out in
                          SECTION 5 shall be payable.

                          In the event the OPERATOR does not exercise this right
                          and the execution of the CONTRACT has been prevented
                          for a period of not less than 28 days (during which
                          period the Schedule 5.1 - FORCE MAJEURE a) Rate shall
                          be payable by OPERATOR) then either party shall have
                          the right to terminate the CONTRACT by giving
                          twenty-one (21) days written notice to the other
                          (during which period the Schedule 5.1 - FORCE MAJEURE
                          b) Rate shall be payable by OPERATOR). Upon such
                          notice being given the CONTRACT shall forthwith be
                          terminated in respect of that operation or the whole
                          of the CONTRACT according to the subject matter of the
                          notice, but without prejudice to the claim of any
                          party in respect of any antecedent breach thereof. In
                          such event, OPERATOR shall pay the DEMOBILISATION FEE
                          in accordance with the other provisions of this
                          CONTRACT.


                                       16
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 17 OF 22
================================================================================

CLAUSE 11.                FREEDOM FROM LIENS

                          Without prejudice to any other provision of the
                          CONTRACT the CONTRACTOR shall hold harmless and
                          indemnify the OPERATOR from and against all liens,
                          attachments or claims by or on behalf of any of the
                          CONTRACTOR'S suppliers, CONTRACTOR'S PERSONNEL or
                          SUB-CONTRACTORS (or persons alleging to be suppliers,
                          CONTRACTORS PERSONNEL or SUB-CONTRACTORS) in
                          connection with or arising out of the CONTRACT.

CLAUSE 12.                CONTRACTOR TO MAINTAIN REPRESENTATION

                          For a period of not less than 2 years after the
                          termination or completion of the CONTRACT howsoever
                          arising the CONTRACTOR shall maintain representation
                          in the Republic of Trinidad and Tobago through the
                          services of a person, firm or corporation resident in
                          the CONTRACT AREA. Such person, firm or corporation
                          shall be empowered to act and shall have the right to
                          receive summonses on behalf of the CONTRACTOR in any
                          matter having reference to the business or affairs of
                          the CONTRACTOR and arising out of or connected with
                          the CONTRACT. Before appointing any such person, firm
                          or corporation the CONTRACTOR shall obtain the prior
                          approval of the OPERATOR thereto.

CLAUSE 13.                GIVING OF NOTICES AND PAYMENT OF FEES

                          The CONTRACTOR shall in connection with the CONTRACT
                          give all notices and pay all fees and any other monies
                          required to be given or paid under any Statute,
                          Ordinance, Decree, Proclamation or any other Order or
                          any other enactment or any regulations or By-law of
                          any Local or other duly constituted authority having
                          the force of law in the CONTRACT AREA and under the
                          rules and regulations of all public bodies and public
                          companies whose property or rights are affected or may
                          be affected, provided always that the OPERATOR will
                          repay or allow to the CONTRACTOR all such sums as
                          OPERATOR'S REPRESENTATIVE shall certify to have been
                          properly and necessarily payable and paid by the
                          CONTRACTOR in respect of any such fees or monies the
                          obligation for which does not exist at the date
                          hereof, provided further that in respect of any such
                          fees or monies the obligation for payment of which
                          does exist at the date hereof but which ceases after
                          the date hereof the CONTRACTOR shall repay or allow to
                          the OPERATOR all such sums as OPERATOR'S
                          REPRESENTATIVE shall certify are not properly payable
                          by it or which if paid are refundable to it.

CLAUSE 14.                CONFIDENTIAL INFORMATION

                          All information obtained by the CONTRACTOR in the
                          course or conduct of its services hereunder shall be
                          considered confidential and shall not be divulged by
                          the CONTRACTOR, its personnel or agents to any person,
                          firm or corporation other than the OPERATOR'S
                          designated representatives. CONTRACTOR'S report shall
                          contain only such information as is authorised for
                          release by the OPERATOR's representative. The
                          obligations under this clause shall continue
                          notwithstanding the completion or termination of the
                          work under this CONTRACT.


                                       17
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 18 OF 22
================================================================================

CLAUSE 15.                PUBLICITY

                          The CONTRACTOR shall not publish or permit to be
                          published either alone or in conjunction with any
                          other person any articles, photographs or other
                          illustrations relating to the OPERATOR'S business
                          generally or to the work hereunder, without prior
                          reference to and approval in writing from OPERATOR.
                          Such consent shall only apply to each specific
                          application and relate only to that application. The
                          accuracy of any information, which was not supplied
                          directly by OPERATOR, shall be the absolute
                          responsibility of the CONTRACTOR. As an exception to
                          the requirement for reference to and approval of
                          OPERATOR in respect to publications or the permitting
                          of publications of any articles, photographs or other
                          illustrations relating to the work hereunder,
                          CONTRACTOR shall not be obligated to make such
                          reference and obtain such consent if such publication
                          is required, in CONTRACTOR's reasonable opinion, to be
                          disclosed by applicable LAWS or stock exchange rules.
                          In such event, CONTRACTOR shall inform OPERATOR prior
                          to making such disclosure. The obligations of this
                          clause shall continue notwithstanding the completion
                          or termination of the work under this CONTRACT.

CLAUSE 16.                ASSIGNMENT AND SUB-CONTRACTING

                 16.1     Assignment

                          Except to wholly-owned subsidiary of CONTRACTOR
                          capable of performing CONTRACTOR'S obligations
                          hereunder the CONTRACTOR shall not without the prior
                          written consent of the OPERATOR assign the CONTRACT or
                          any part thereof or any benefit or interest therein or
                          thereunder. Such consent shall not be unreasonably
                          withheld. In the event of assignment to a wholly-owned
                          subsidiary of CONTRACTOR, CONTRACTOR shall give prior
                          written notice of the intended assignment and
                          CONTRACTOR shall remain primarily responsible to
                          OPERATOR for the obligations of the assignee which
                          pertain to this CONTRACT and shall be liable for any
                          and all obligations set forth herein in the event that
                          such assignee fails to fulfil any obligation imposed
                          on the CONTRACTOR herein.

                          OPERATOR may assign or sub-let the whole or part of
                          its rights, liabilities and obligations to a wholly
                          owned subsidiary of the BP Amoco plc upon the terms
                          and conditions as those agreed between the parties
                          hereto without the consent of the CONTRACTOR, and to
                          any other party with the consent of the CONTRACTOR and
                          such consent shall not be unreasonably withheld.

                 16.2     Sub-Contracting

                          The CONTRACTOR shall not enter into any sub-contract
                          for the whole or any part of its obligations under the
                          CONTRACT without the prior written consent of the
                          OPERATOR and such consent if given shall not relieve
                          the CONTRACTOR from any liability or obligation under
                          the CONTRACT and the CONTRACTOR shall be responsible
                          for the acts, defaults and negligence of any
                          SUB-CONTRACTOR, its personnel or agents as fully as if
                          they were the acts, defaults or neglects of the
                          CONTRACTOR, its personnel or agents.


                                       18
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 19 OF 22
================================================================================

                          The CONTRACTOR shall ensure that all its sub-contracts
                          shall include provisions to the like effect as the
                          provisions hereof. In addition the CONTRACTOR shall
                          ensure that the SUB-CONTRACTOR'S personnel (where
                          applicable) are made aware of, and follow the
                          provisions for Fire and Safety Precautions and
                          Emergency Procedures as set out in SECTION 4.

CLAUSE 17.                APPLICATION OF LAWS AND REGULATIONS

                          The CONTRACTOR shall comply with all laws, rules and
                          regulations of Government or local or other authority
                          which are effective at the date hereof or may in the
                          future become applicable to the CONTRACTOR'S business,
                          CONTRACTOR'S EQUIPMENT and CONTRACTOR'S PERSONNEL
                          engaged in the operations hereunder. The CONTRACTOR
                          shall promptly advise the OPERATOR of any such laws,
                          rules or regulations with which it believes it is
                          unable to comply.

                          The CONTRACTOR shall ensure that its PERSONNEL,
                          SUB-CONTRACTORS and agents observe all such laws,
                          rules and regulations and shall at the CONTRACTOR'S
                          expense replace any CONTRACTOR'S PERSONNEL or
                          SUB-CONTRACTOR'S personnel or agents whose conduct or
                          behaviour may reasonably be considered by the OPERATOR
                          to be in breach or conflict with such laws, rules or
                          regulations.

CLAUSE 18.                SERVING OF NOTICES

                 18.1     Any notice in writing to be given hereunder to the
                          OPERATOR shall be sent by hand, telex, facsimile or
                          registered post to the OPERATOR to the at the
                          following address:

                          BP TRINIDAD AND TOBAGO LLC

                          P.O. Box 714             or by handQueen's Park Plaza
                          Port of Spain            5 & 5A Queen's Park West
                          Trinidad, West Indies    Port of Spain, Trinidad

                          Attention:      THE CONTRACTS MANAGER

                          Telephone:      (868) 623-2862

                          Fax: (868) 627-7878

                 18.2     Any notice in writing to be given hereunder to the
                          CONTRACTOR shall be sent to it by hand, telex,
                          facsimile or registered post at its address stated in
                          the CONTRACT or some address in the CONTRACT AREA
                          stated by it to be in lieu thereof for the purpose of
                          this sub-clause.

                          Chiles Offshore Inc.
                          11200 Richmond Avenue, Suite 490
                          Houston, Texas 77082-2618
                          Attention:      Mr. Chris Pinkard, Vice President

                          Telephone:      (713) 339-3777
                          Fax: (713) 339-3888


                                       19
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 20 OF 22
================================================================================

                 18.3     Any such notice given by facsimile shall be deemed to
                          have been received and shall take effect at the
                          expiration of 24 (twenty-four) hours after the
                          sending.

CLAUSE 19.                VARIATION AND WAIVER

                          No variation or waiver of any obligation hereunder
                          shall be valid or effective unless confirmed in
                          writing in the case of a variation by all parties and
                          in the case of a waiver then by the party towards whom
                          the obligation shall have been undertaken.

CLAUSE 20.                INDEPENDENT CONTRACTOR RELATIONSHIP

                 20.1     In the performance of the DRILLING SERVICES the
                          CONTRACTOR shall be an independent Contractor with the
                          authority to control and direct the performance
                          thereof, but the DRILLING SERVICES shall be subject to
                          the approval of the OPERATOR and be subject to a
                          general right of inspection and any necessary
                          supervision thereof which the OPERATOR may choose to
                          exercise if necessary to secure the satisfactory
                          completion thereof.

                 20.2     The actual performance and superintendence of the
                          DRILLING SERVICES hereunder shall be by the CONTRACTOR
                          but the OPERATOR REPRESENTATIVE shall at all times
                          have access to all parts of the DRILLING UNIT for the
                          purpose of inspecting the CONTRACTOR'S EQUIPMENT or
                          observing tests or inspecting the DRILLING SERVICES in
                          order to judge whether in the OPERATOR'S opinion the
                          CONTRACTOR'S EQUIPMENT is complete and in an efficient
                          operating condition and whether the DRILLING SERVICES
                          are being performed by the CONTRACTOR in accordance
                          with the provisions of this CONTRACT. In addition,
                          operations shall be carried out at the request and in
                          accordance with the instructions of the OPERATOR'S
                          REPRESENTATIVE who shall inform the CONTRACTOR'S
                          REPRESENTATIVE of the end result desired from any
                          operation, but the CONTRACTOR shall have the entire
                          responsibility for the proper and timely execution
                          thereof.

                 20.3     The CONTRACTOR shall give all reasonable assistance to
                          the OPERATOR'S REPRESENTATIVE in the performance of
                          his duties. However, the presence of and/or inspection
                          and/or supervision by the OPERATOR'S REPRESENTATIVE
                          hereunder shall not relieve the CONTRACTOR of any of
                          its obligations or responsibilities hereunder.

CLAUSE 21.                INFRINGEMENT OF PATENTS

                          The CONTRACTOR shall save harmless and indemnify the
                          OPERATOR from and against all claims proceedings and
                          liabilities for or on account of infringement or
                          alleged infringement of any patent rights design trade
                          mark or name or other protected right of any THIRD
                          PARTY arising in connection with the use of any
                          CONTRACTOR furnished equipment machinery materials or
                          process and shall defend at its sole expense any and
                          all such proceedings to which both parties are
                          defendants. Both the CONTRACTOR and the OPERATOR shall
                          at all times have the right to be represented
                          respectively by their own counsel and to participate
                          in the defence of any such proceedings if both shall
                          be made parties defendant thereto. The CONTRACTOR


                                       20
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 21 OF 22
================================================================================

                          shall give notice in writing forthwith to the OPERATOR
                          of any such claims and proceedings as aforesaid and
                          shall supply the OPERATOR with all information and
                          documents in connection therewith as the OPERATOR may
                          reasonably require.

                          The OPERATOR shall save harmless and indemnify the
                          CONTRACTOR from and against all claims, proceedings
                          and liabilities for or on account of infringement or
                          alleged infringement of any patent rights, design,
                          trade mark or name or other protected right of any
                          THIRD PARTY arising in connection with the use of any
                          OPERATOR or SERVICE COMPANY furnished equipment,
                          machinery, materials or process and shall defend at
                          its sole expense any and all such proceedings to which
                          both parties are defendants. Both the OPERATOR and the
                          CONTRACTOR shall at all times have the right to be
                          represented respectively by their own counsel and to
                          participate in the defence of any such proceedings if
                          both shall be made parties defendant thereto. The
                          OPERATOR shall give notice in writing forthwith to the
                          CONTRACTOR of any such claims and proceedings as
                          aforesaid and shall supply the CONTRACTOR with all
                          information and documents in connection therewith as
                          the CONTRACTOR may reasonably require.

CLAUSE 22.                PERMITS AND LICENCES

                22.1      CONTRACTOR shall be responsible for obtaining and
                          maintaining all authorisations, permits and licenses
                          necessary for the Work, which may be obtained in the
                          name of CONTRACTOR, its SUB-CONTRACTORS, its vendors,
                          and their respective employees. OPERATOR shall provide
                          reasonable assistance to CONTRACTOR in that endeavour,
                          if asked by CONTRACTOR.

                22.2      CONTRACTOR shall be responsible for obtaining all the
                          necessary visas, customs clearances or other
                          government authorisations required for moving
                          CONTRACTOR's PERSONNEL or its SUB-CONTRACTORS'
                          personnel into and out of the country having
                          jurisdiction over the CONTRACT AREA, including without
                          limitation work permits and tax exit certificates for
                          such personnel. OPERATOR shall, if asked by
                          CONTRACTOR, assist CONTRACTOR in obtaining such work
                          permits. OPERATOR does not warrant that the authority
                          having jurisdiction over work permits will issue any
                          work permit.

CLAUSE 23.                APPLICABLE LAW

                          The CONTRACT shall be governed by and construed in
                          accordance with the laws of the Republic of Trinidad
                          and Tobago .

CLAUSE 24.                ARBITRATION

                          If any dispute or difference of any kind whatsoever
                          shall arise between the parties hereto in connection
                          with or arising out of the CONTRACT or any
                          interpretation thereof which cannot be resolved by
                          agreement between the parties hereto the same shall be
                          determined in accordance with the Arbitration Act
                          Chap. 5:01 of the laws of the Republic of Trinidad and
                          Tobago. Arbitration proceedings shall take place in
                          Trinidad unless otherwise agreed by the parties.


                                       21
<PAGE>
                                                                      SECTION 2
                                                         CONDITIONS OF CONTRACT
                                                                  PAGE 22 OF 22
================================================================================

CLAUSE 25.                EXCLUSION OF PREVIOUS CORRESPONDENCE

                          All previous correspondence, negotiations,
                          representations, explanations, statements, promises or
                          guarantees whether oral or written are hereby excluded
                          from the CONTRACT.

CLAUSE 26.                AUDIT

                          The OPERATOR shall have the right to audit during
                          normal business hours the relevant books and accounts
                          of the CONTRACTOR at its address herein in relation to
                          reimbursable items paid for by OPERATOR under the
                          CONTRACT at any time until the expiry of twenty-four
                          months following the settlement of the final account.
                          Any incorrect payments made by OPERATOR shall be
                          adjusted in accordance with the findings of the said
                          audit. The CONTRACTOR shall make all relevant books
                          and accounts available and give the auditors all
                          reasonable assistance and ensure that its
                          SUB-CONTRACTORS comply with such provisions.

CLAUSE 27.                SEVERABILITY

                          If any provision of this CONTRACT or any application
                          thereof shall be determined to be invalid or
                          unenforceable such invalidity or unenforceability
                          shall not affect remaining provision of this CONTRACT
                          and remaining provisions shall continue in full force
                          and effect.

CLAUSE 28.                MORTGAGE OF THE RIG

                          THIS CONTRACT IS SUBJECT TO EACH OF THE RIGHTS AND
                          REMEDIES OF THE SECRETARY OF TRANSPORTATION OF THE
                          UNITED STATES OF AMERICA, AND HAS BEEN ASSIGNED TO THE
                          SECRETARY UNDER A SECURITY AGREEMENT AND MORTGAGE,
                          EACH EXECUTED BY THE CONTRACTOR AS SHIPOWNER IN FAVOR
                          OF THE SECRETARY WITH RESPECT TO THE DRILLING UNIT.
                          OPERATOR ACKNOWLEDGES THAT CONTRACTOR IS REQUIRED TO
                          PROVIDE MARAD WITH A COPY OF THIS CONTRACT WITHIN TEN
                          (10) DAYS OF ITS EXECUTION.







                                       22
<PAGE>
                                    SECTION 3


                             CONTRACTOR'S INSURANCE



<PAGE>

It is the intention that the OPERATOR and all Contractors working together to
undertake the drilling operations should carry out their work in accordance with
good oilfield and/or industry practice. It is recognised, however, that
accidents and damage may from time to time occur. Such risks are to be covered
in the following manner:-

1.                        PERSONNEL

                1.1.      Employers' Liability or similar, including the local
                          legal coverage in the CONTRACT AREA or any other
                          jurisdiction, for which CONTRACTOR is obliged to pay
                          benefits and including, but not limited to for
                          example, Maritime Employer's Liability to provide
                          transportation, maintenance and cure. Employer's
                          Liability limit shall be in accordance with any
                          applicable legislation but not less than US$2,000,000
                          each incident per person.

                          The underwriter shall, in addition, waive all rights
                          of Subrogation against the other parties involved in
                          the drilling operations.

2.                        EQUIPMENT


                2.1.      For equipment other than vessels:
                          All risks insurance with policy limits equal to the
                          market value of the CONTRACTOR'S equipment.

                2.2.      For Vessels:

                          (a)     Hull and Machinery Insurance (extended to
                                  cover all risks including Collision Liability)
                                  with policy limits equal to the replacement
                                  value of the vessels having a deductible not
                                  greater than US$250,000 each or 10% of the
                                  replacement value which ever is the lesser
                                  each and every loss.

                          (b)     Protection and Indemnity Insurance with
                                  policy limits equal to the replacement value
                                  of the vessels.

                2.3.      For Fixed and Rotary Wing Aircraft

                          Hull insurance for the current or replacement value of
                          each aircraft and covering any accident or damage
                          thereto, howsoever caused.

                2.4.      Wreck and Debris:

                          Wreck and debris removal insurance coverage on the
                          CONTRACTOR'S EQUIPMENT, vessels or aircraft as
                          appropriate as per terms of sub clause 6.6 of SECTION
                          2 (Conditions of Contract).

                 2.5.     War risk insurance coverage on the CONTRACTOR'S
                          EQUIPMENT, vessels or aircraft as appropriate covered
                          by the CONTRACT, if necessary.


<PAGE>
                                                                      SECTION 3
                                                         CONTRACTOR'S INSURANCE
                                                                    PAGE 2 OF 2
================================================================================

                          CONTRACTOR'S EQUIPMENT, vessels or aircraft as
                          appropriate covered by the CONTRACT, if necessary.

                          The underwriters shall, in addition, waive all rights
                          of Subrogation against the other parties involved in
                          the drilling operations and name OPERATOR and its
                          SERVICE COMPANIES as Additional Assureds.

3.                        THIRD PARTY

                          Each Contractor shall carry:-

                          Comprehensive General Liability Insurance, including
                          premises, operations, independent contractors,
                          contractual and collision liability for any written
                          agreement and coverage for the operation of the
                          CONTRACTOR'S EQUIPMENT, vessels or aircraft as
                          appropriate covered by the CONTRACT.

                          Bodily Injury       US $10,000,000 any one occurrence
                          Property Damage     US $10,000,000 any one occurrence

                          In addition for aircraft, aircraft Third Party Legal
                          Liability including passenger, baggage and cargo (in
                          the names of CONTRACTOR and OPERATOR) up to a combined
                          single limit of US$80,000,000 (eighty million US
                          Dollars) any one accident or occurrence, each
                          aircraft.

                          The underwriters shall, in addition, waive all rights
                          of Subrogation against the other parties involved in
                          the drilling operations.

4.                        AUTOMOBILES

                          Comprehensive Automobile Liability Insurance covering
                          all owned, hired and non-owned automotive equipment,
                          including compliance with all local legislation on
                          automobile insurance in the state or country in which
                          the automotive equipment is being used.

                          The underwriters shall, in addition, waive all rights
                          of Subrogation against the other parties involved in
                          the drilling operations.

5.                        CERTIFICATES OF INSURANCE

                          Before commencing performance of this CONTRACT,
                          CONTRACTOR shall furnish OPERATOR with Certificates of
                          Insurance indicating:

                          5.1.    kinds and amounts of insurance as required.

                          5.2.    insurance company and companies carrying
                                  the aforesaid coverage.

                          5.3.    effective and expiry dates of policies.


                                       2
<PAGE>

                                    SECTION 4


                            STATEMENT OF REQUIREMENTS




                                    CONTENTS


             1.        OBLIGATIONS OF THE CONTRACTOR

             2.        WORK TO BE PERFORMED BY THE CONTRACTOR

             3.        FACILITIES TO BE PROVIDED BY CONTRACTOR

             4.        THE CONTRACTOR'S EQUIPMENT

             5.        SAFETY

             6.        CONTRACTOR'S OTHER OBLIGATIONS

             7.        RESPONSIBILITIES OF THE OPERATOR

                       ATTACHMENT 1 - CHECK LIST OF RESPONSIBILITIES

                       ATTACHMENT 2 - REPORTING


<PAGE>

                            STATEMENT OF REQUIREMENTS


CLAUSE            1       OBLIGATIONS OF THE CONTRACTOR

                          The CONTRACTOR shall carry out the DRILLING SERVICES
                          and perform all its obligations under the CONTRACT
                          with due diligence and care, in a good and workmanlike
                          manner, in accordance with good drilling practices,
                          without undue delays and in conformity in all respects
                          with the terms and conditions of the CONTRACT.

                          CONTRACTOR shall be solely responsible for the
                          operation of the DRILLING UNIT including, without
                          limitation, supervising moving operations and the
                          positioning of the DRILLING UNIT on LOCATIONS as
                          required by OPERATOR, subject to Clause 4 of SECTION 2
                          of this CONTRACT, as well as such operations on board
                          the DRILLING UNIT as may be necessary for the safety
                          of the DRILLING UNIT.

CLAUSE            2       WORK TO BE PERFORMED BY THE CONTRACTOR

                          Consistent with the provisions of this CONTRACT, the
                          CONTRACTOR shall:

                          2.1       Drilling

                                    Drill vertically or directionally, complete,
                                    suspend, plug and abandon or workover WELLS
                                    and carry out such other drilling operations
                                    on WELLS in accordance with the drilling and
                                    other programmes issued by or instructions
                                    given by the OPERATOR from time to time. The
                                    DEPTHS specified in such programmes are
                                    predictions and may be subject to change by
                                    the OPERATOR.

                                    The maximum depth shall not exceed 24,607
                                    ft.

                          2.2       Casing and Tubing

                                    Run strings of casing, liner and tubing
                                    (hereinafter referred to as "Tubulars") as
                                    specified in the WELL programmes issued by
                                    the OPERATOR from time to time. The
                                    CONTRACTOR shall store, handle, run and land
                                    with such Tubulars in accordance with the
                                    OPERATOR'S procedures.

                          2.3       Recovery of Tubulars

                                    Whenever so requested by the OPERATOR
                                    endeavour to recover strings of Tubulars
                                    from a WELL.

                          2.4       Depth Measurement

                                    Keep an accurate measurement of the DEPTH in
                                    feet and record such DEPTHS on OPERATOR'S
                                    daily drilling report and on IADC-API Daily
                                    Drilling Report Forms. OPERATOR shall have
                                    the right at any time to require CONTRACTOR


<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 2 OF 16
================================================================================

                                    to make check measurements of the DEPTH in
                                    such manner as OPERATOR may specify.

                                    Measure and make diagram sketch of all
                                    tubulars going into the hole with Inner
                                    Diameter and Outer Diameter and the fishing
                                    neck. Check to be made if fishing tools
                                    available to suit all sizes run in hole.

                          2.5       Specialised Operations

                                    Whenever so instructed by OPERATOR permit
                                    and assist SERVICE COMPANIES to carry out
                                    cementation, formation testing, stimulation,
                                    logging, diamond drilling, turbine drilling,
                                    coring, directional drilling, inspection and
                                    making up and/or pressure testing of
                                    tubulars or any other specialised operation.

                          2.6       Pressure Testing

                                    Carry out pressure testing of wellheads,
                                    casing strings, blow-out prevention
                                    equipment, casing cement jobs and other
                                    equipment specified by the OPERATOR in
                                    accordance with the procedures prescribed
                                    from time to time by the OPERATOR. The
                                    results of all such tests shall be noted on
                                    said OPERATOR'S Daily Drilling Report and on
                                    IADC-API Daily Drilling Report Forms.
                                    Provide charted recordings.

                          2.7       Drilling Fluid

                                    Make, condition and control drilling fluid
                                    in accordance with mud programmes issued
                                    from time to time by the OPERATOR, under the
                                    supervision of or in accordance with
                                    instructions given by the OPERATOR.

                          2.8       Cores

                                    Whenever required to do so by the OPERATOR'S
                                    REPRESENTATIVE to provide assistance in
                                    carrying out coring operations as required
                                    by the OPERATOR.

                          2.9       WELL Deviation Surveys

                                    Make deviation surveys with instruments
                                    listed in SECTION 7 whenever the OPERATOR
                                    may so require.

                          2.10      Care and Use of Tubulars

                                    (a)      properly handle, store and tally
                                             all Tubulars while in the
                                             CONTRACTOR'S possession.

                                    (b)      retain thread protectors on all
                                             Tubulars until instructed by
                                             OPERATOR to remove for cleaning and
                                             lubricating with API approved
                                             thread cleaning and thread
                                             lubricating compounds provided
                                             prior to running in the hole.


                                       2
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 3 OF 16
================================================================================

                                    (c)        check Tubular drift diameters
                                               with mandrels provided by
                                               OPERATOR or CONTRACTOR whenever
                                               so instructed by the OPERATOR and
                                               report any rejected joints in the
                                               IADC report.

                                    (d)        employ "Klampon" or equivalent
                                               Tubular thread protector provided
                                               by OPERATOR when handling
                                               Tubulars between the rack and the
                                               rig floor.

                          2.11      On LOCATION Inspection of OPERATOR'S
                                    MATERIALS

                                    Inspect visually for defects all OPERATOR'S
                                    MATERIALS before using them and notify the
                                    OPERATOR of any such defects apparent
                                    therein.

                                    Also verify the quantities and shortfall, if
                                    any, and pay attention to certification and
                                    inspection records (e.g. MSDS sheets for
                                    chemicals).

                          2.12      Work Period

                                    Operate the DRILLING UNIT on the basis of a
                                    24 (twenty-four) hour day and a 7 (seven)
                                    day week without shutdown for holidays
                                    unless otherwise instructed by OPERATOR or
                                    unless required so to do in order to comply
                                    with the laws and regulations of the
                                    government or properly authorised local
                                    authority having jurisdiction over the
                                    CONTRACT AREA.

                                    Crew change periods shall be in accordance
                                    with Schedule 6.1 of SECTION 6 hereto.

                           2.13     Handling and Storage of OPERATOR'S MATERIALS
                                    and SERVICE COMPANY materials

                                    Whenever required by the OPERATOR (who shall
                                    not so require unreasonably, taking account
                                    of constraints of weather, availability of
                                    CONTRACTOR'S PERSONNEL, capacity of
                                    CONTRACTOR'S EQUIPMENT and space or weight
                                    limitations on the DRILLING UNIT) take on
                                    board in Trinidad or such other location
                                    designated by OPERATOR or unload OPERATOR'S
                                    MATERIALS and SERVICE COMPANY materials from
                                    OPERATOR'S work boats onto the DRILLING UNIT
                                    and store and handle OPERATOR'S MATERIALS
                                    and SERVICE COMPANY materials thereon.
                                    Whenever so required by OPERATOR (who shall
                                    not so require unreasonably as aforesaid)
                                    unload OPERATOR'S MATERIALS and SERVICE
                                    COMPANY materials from the DRILLING UNIT
                                    onto OPERATOR'S work boats or in Trinidad or
                                    such other location designated by OPERATOR.

                                    It is the responsibility of the CONTRACTOR
                                    to store and maintain records of such
                                    storage of all items of equipment and
                                    material loaded onto the DRILLING UNIT.


                                       3
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 4 OF 16
================================================================================

                           2.14     Documentation for OPERATOR'S MATERIALS and
                                    SERVICE COMPANY materials

                                    Acknowledge receipt and despatch of
                                    OPERATOR'S MATERIALS and SERVICE COMPANY
                                    materials in accordance with instructions
                                    laid down by OPERATOR from time to time. The
                                    CONTRACTOR shall exercise appropriate care
                                    towards all such materials and equipment,
                                    which have been left in its possession for
                                    safe storage by OPERATOR and SERVICE
                                    COMPANIES.

                          2.15      Materials and Logistics Support

                                    CONTRACTOR shall employ a fully qualified
                                    and experienced Materials/Logistics
                                    Supervisor who shall be approved by OPERATOR
                                    and shall be permanently based in Trinidad
                                    and shall be available at all times to
                                    arrange and supervise all CONTRACTOR'S
                                    EQUIPMENT and PERSONNEL movements. The
                                    Materials/Logistics Supervisor shall
                                    maintain day to day liaison with OPERATOR'S
                                    Base Manager in Trinidad in order that
                                    efficient and timely scheduling, loading and
                                    unloading of supply vessels and helicopter
                                    operations is maximised.

                                    CONTRACTOR shall at all times comply with
                                    OPERATOR'S instructions and requirements
                                    with regard to all materials and logistics
                                    operations including the import and export
                                    of EQUIPMENT, materials and supplies
                                    together with the movement of PERSONNEL.
                                    Such instructions, as aforesaid, shall be
                                    supplied to CONTRACTOR in writing and may be
                                    modified from time to time at OPERATOR'S
                                    discretion.

CLAUSE            3       FACILITIES AND SERVICES TO BE PROVIDED BY CONTRACTOR

                          Unless otherwise stated the CONTRACTOR shall at its
                          cost and expense furnish all facilities and services
                          necessary for the proper performance of its
                          contractual obligations including but not by way of
                          limitation:

                          3.1       Accommodation and messing for its PERSONNEL
                                    on the DRILLING UNIT to standard reasonably
                                    acceptable to OPERATOR.

                          3.2       Accommodation and messing for OPERATOR'S
                                    personnel, its trainees, its SERVICE
                                    COMPANIES' personnel on the DRILLING UNIT to
                                    the same standard provided by the CONTRACTOR
                                    for its PERSONNEL.

                          3.3       One room on the DRILLING UNIT shall be used
                                    exclusively as an infirmary and shall be
                                    designed and equipped to standards
                                    reasonably acceptable to OPERATOR together
                                    with adequate medical supplies. OPERATOR
                                    shall evacuate any casualties among the
                                    CONTRACTOR'S PERSONNEL on the DRILLING UNIT
                                    and the CONTRACTOR shall reimburse the
                                    OPERATOR there for up to the limit of the
                                    CONTRACTOR'S insurance. CONTRACTOR shall be
                                    entirely liable at its cost for any
                                    subsequent medical treatment.

                          3.4       CONTRACTOR shall provide paramedics to work
                                    a 28/28 rotation on board the DRILLING UNIT.
                                    Such paramedics shall be hired by CONTRACTOR


                                       4
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 5 OF 16
================================================================================

                                    and paid for by the OPERATOR. During the
                                    term of this CONTRACT, CONTRACTOR shall use
                                    its best efforts to train a national to
                                    assume the role of paramedic, with the
                                    intent to build local capability and replace
                                    the expatriate paramedic with a national
                                    paramedic.

                          3.5       OPERATOR shall have the right to inspect
                                    such accommodation, messing and medical
                                    facilities at any time. The CONTRACTOR shall
                                    comply with OPERATOR's standard procedures
                                    in respect of safety and hygiene as the
                                    OPERATOR may issue from time to time.

                          3.6       CONTRACTOR shall provide two (2) Safety and
                                    Training Coordinators (STC) to work a 28/28
                                    rotation on board the DRILLING UNIT. Such
                                    STC shall be hired by and paid for by the
                                    CONTRACTOR.

                          3.7       OPERATOR requires and CONTRACTOR shall
                                    provide free of charge suitable space and
                                    general support services, including but not
                                    limited to, communication equipment
                                    (telephone) and DRILLING UNIT Alarm system,
                                    air, water and electricity for the SERVICE
                                    CONTRACTOR'S equipment and installations as
                                    listed above.


CLAUSE            4       THE CONTRACTOR'S EQUIPMENT

                          The CONTRACTOR shall:

                           4.1      at the COMMENCEMENT DATE make the
                                    CONTRACTOR'S EQUIPMENT available to OPERATOR
                                    at the first LOCATION in the CONTRACT AREA.

                          4.2       prior to the COMMENCEMENT DATE give written
                                    evidence to the OPERATOR that the DRILLING
                                    UNIT has proper CERTIFICATION.

                          4.3       ensure that Classification and the said
                                    CERTIFICATION is maintained at CONTRACTOR'S
                                    cost and expense throughout the duration of
                                    the CONTRACT and any extensions thereto.

                                    In the event that during the continuance of
                                    the CONTRACT the said CERTIFICATION lapses
                                    then the CONTRACTOR shall use its best
                                    endeavours to have the DRILLING UNIT
                                    re-certified by the said Authorities for the
                                    remainder of the period of CONTRACT by means
                                    of on-site inspection, tests and trials (by
                                    the said Authorities) at a time or times
                                    agreed with the OPERATOR.

                          4.4       use its best endeavours to implement without
                                    delay, but after consultation with the
                                    OPERATOR, any alteration, replacement or
                                    other change to the DRILLING UNIT that may
                                    be required by any statute, ordinance,
                                    decree, proclamation or any other order or
                                    enactment or regulation or by-law of any
                                    local or duly constituted authority having
                                    the force of law in the CONTRACT AREA. All
                                    costs incurred by the CONTRACTOR in
                                    implementing such alterations as aforesaid
                                    shall be to its account.


                                       5
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 6 OF 16
================================================================================

                          4.5       give the OPERATOR an undertaking that at the
                                    COMMENCEMENT DATE, CONTRACTOR does not have
                                    knowledge of any damage or defects of the
                                    DRILLING UNIT and associated equipment,
                                    which would necessitate repairs to the
                                    DRILLING UNIT during the continuance of the
                                    CONTRACT.

                           4.6      upon request of OPERATOR, make available to
                                    OPERATOR all or any of the following:

                                    (a)      the environmental design criteria
                                             of the DRILLING UNIT.

                                    (b)      all records of surveys, repairs and
                                             modifications of a structural
                                             nature that have been made to the
                                             DRILLING UNIT since it was first
                                             launched.

                                    (c)      of the current and past official
                                             Marine Log Books pertaining to the
                                             DRILLING UNIT, records of Inclining
                                             Test Results of the DRILLING UNIT
                                             and any other records which have
                                             been made which report on the
                                             structural integrity and stability
                                             history of the DRILLING UNIT.

                                    (d)      authorisation from the CONTRACTOR
                                             to the Classification Society by
                                             whom the DRILLING UNIT is
                                             classified to enable the said
                                             Society to release to OPERATOR such
                                             details or information concerning
                                             the DRILLING UNIT as OPERATOR may
                                             request and which is available in
                                             the records of the said Society.

                          4.7       during the continuance of the CONTRACT
                                    maintain and repair the DRILLING EQUIPMENT
                                    to ensure that its performance meets the
                                    specifications quoted by the manufacturers
                                    and that the quantities of the said
                                    EQUIPMENT are maintained.

                          4.8       whenever so requested by the OPERATOR permit
                                    and give every assistance for an inspection
                                    of the CONTRACTOR'S EQUIPMENT to be carried
                                    out by the OPERATOR or its SERVICE COMPANY.
                                    The OPERATOR shall have the right to reject
                                    all or any of the CONTRACTOR'S EQUIPMENT so
                                    inspected and take such action, as it deems
                                    fit, pursuant to its rights and remedies
                                    described in clause 5.2 of Section 2 in
                                    regard to CONTRACTOR'S EQUIPMENT. The cost
                                    of inspection (if any) of the CONTRACTOR's
                                    EQUIPMENT rejected shall be a debt due to
                                    the OPERATOR from the CONTRACTOR.

                          4.9       prior to the COMMENCEMENT DATE arrange at
                                    its cost and expense for the CONTRACTOR'S
                                    in-hole equipment to be inspected by an
                                    independent tubular inspection service
                                    company approved by OPERATOR and make the
                                    certificates of inspection available to the
                                    OPERATOR. The OPERATOR shall have the right
                                    to reject any defective in-hole equipment so
                                    inspected and the CONTRACTOR shall at its
                                    cost and expense repair or replace such
                                    rejected items to the DS-1 appropriate
                                    standard, (DS 1 Level 4 for drill pipe and
                                    DS 1 Level 3 - 5 for drill collars and heavy
                                    weight drill pipe).

                          4.10      Arrange thereafter at the cost and expense
                                    of the parties as provided in Attachment 1
                                    to Section 4, for all items of the
                                    CONTRACTOR'S in-hole equipment to be
                                    inspected by an independent tubular


                                       6
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 7 OF 16
================================================================================

                                    inspection company, approved by the
                                    OPERATOR, at times to be agreed with the
                                    OPERATOR'S REPRESENTATIVE and at intervals
                                    as follows:

                                    (a)      Top Drive, saver subs and Bottom
                                             Hole Assembly, comprising drill
                                             collars, Hevi-Wate drill pipe and
                                             substitutes, at intervals of one
                                             WELL or more frequently as found to
                                             be necessary by the parties;

                                    (b)      Drill pipe and pup joints prior to
                                             each WELL.

                                    In the event of drill string failure during
                                    the aforesaid intervals the CONTRACTOR shall
                                    arrange at its cost and expense for an
                                    inspection to be made, as aforesaid, as soon
                                    as possible thereafter, at a time to be
                                    agreed with the OPERATOR'S REPRESENTATIVE.
                                    As a consequence of the inspection, the
                                    CONTRACTOR shall:

                                    EITHER

                                    (i)     repair or replace, at its cost and
                                            expense, items rejected as
                                            consequence of such inspection. If
                                            in the opinion of the OPERATOR'S
                                            REPRESENTATIVE the rejection of any
                                            item of the CONTRACTOR'S in-hole
                                            equipment jeopardizes the integrity
                                            of the well bore or results in
                                            unreasonably slow progress, then the
                                            provisions of clause 5.2 of SECTION
                                            2 (the Conditions of Contract) shall
                                            apply.

                                    OR

                                    (ii)     in the event that the CONTRACTOR
                                             can demonstrate, by reference to
                                             records or to the report of an
                                             OPERATOR approved independent
                                             company, that the rejection of any
                                             item of the drill string was caused
                                             by either the published performance
                                             limits of the drill string having
                                             been exceeded or by having been
                                             exposed to the deleterious effects
                                             of H2S and/or gases or liquids,
                                             during the performance of
                                             operations under this CONTRACT,
                                             then the CONTRACTOR shall repair or
                                             replace items rejected and the
                                             OPERATOR shall reimburse the
                                             CONTRACTOR for the cost of any
                                             additional inspection carried out
                                             in accordance with the foregoing
                                             and for the costs of repair or
                                             replacement of any item rejected in
                                             accordance with this sub-clause.

                                          For the purpose of this sub-clause,
                                          "inspection" shall include full
                                          inspection to T H Hill DS-1 Level 4
                                          for drill pipe and DS-1 Level 3 - 5
                                          for drill collars and heavy weight
                                          drill pipe. Drill collar connections
                                          (over 5" and including tools and subs)
                                          to incorporate stress relief features
                                          either stress relief grooves to API 7
                                          and API RP 7G or the "Drilco bore back
                                          box".

                                    The CONTRACTOR shall make the certificates
                                    and reports of all such inspections
                                    available to the OPERATOR.


                                       7
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 8 OF 16
================================================================================

                          4.11      At intervals of not longer than 6 (six)
                                    MONTHS arrange for magnetic particle
                                    inspection of its tongs, elevators, bails,
                                    upper string connections and other lifting
                                    equipment to be carried out at its cost and
                                    expense by an independent inspection company
                                    approved by the OPERATOR. The CONTRACTOR
                                    shall make all such inspection reports
                                    available to the OPERATOR and shall replace
                                    or repair at its cost and expense any item
                                    so rejected.

                          4.12      Whenever so requested by the OPERATOR'S
                                    REPRESENTATIVE in writing after the
                                    COMMENCEMENT DATE, and subject to the
                                    allocation between OPERATOR and CONTRACTOR
                                    of the costs and expenses being agreed to by
                                    the parties, supply and deliver to and
                                    operate all such further equipment,
                                    materials or modifications to the
                                    CONTRACTOR'S EQUIPMENT as the OPERATOR'S
                                    REPRESENTATIVE may require, which shall then
                                    be listed in SECTION 7 hereof and thereafter
                                    be deemed to be part of the CONTRACTOR'S
                                    EQUIPMENT.

                           4.13     Maintain on board the DRILLING UNIT at all
                                    times the following quantities and sizes of
                                    shale shaker screens:

                        SCALPER SHAKERS:                   MIN.         MAX.
                        ----------------                   ----         ----
                        12 mesh square single layer         15           30
                        20 mesh oblong single layer         20           40
                        40 mesh oblong single layer         20           40
                        60 mesh oblong single layer         20           40
                        80 mesh oblong single layer         20           40

                        LINEAR SHAKERS:
                        38 mesh Diamondback Plus            20           40
                        50 mesh Diamondback Plus            20           40
                        84 mesh Diamondback Plus            20           40
                        110 mesh Diamondback Plus           20           40
                        140 mesh Diamondback Plus           20           40
                        175 mesh Diamondback Plus           20           40
                        210 mesh Diamondback Plus           20           40

                           4.14     Importation and Exportation of CONTRACTOR'S
                                    EQUIPMENT and materials

                                    CONTRACTOR shall comply with OPERATOR's
                                    policy on the importation of machinery,
                                    equipment and materials to be used in
                                    OPERATOR's operations under this CONTRACT as
                                    stated in Schedule 4.1.hereto.

CLAUSE            5       SAFETY

                          5.1       Safety Precautions and Emergency Procedures

                                    (a)      The CONTRACTOR shall ensure that an
                                             organisation with defined authority
                                             and responsibility for all matters
                                             associated with the safety of the
                                             DRILLING UNIT and the DRILLING
                                             EQUIPMENT and the safety, health
                                             and welfare of the CONTRACTOR'S


                                       8
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                   PAGE 9 OF 16
================================================================================

                                    PERSONNEL is maintained throughout the
                                    duration of the CONTRACT within the CONTRACT
                                    AREA. The CONTRACTOR shall appoint and
                                    clearly display on board the DRILLING UNIT
                                    the name of the person who is in overall
                                    charge of the DRILLING UNIT and who shall
                                    also be responsible for all matters related
                                    to the safety, health, welfare and
                                    environment associated with the CONTRACTOR'S
                                    PERSONNEL, the DRILLING UNIT and its
                                    activities.

                                    The procedures for making any change in the
                                    person in overall charge as aforesaid shall
                                    be clearly set out in the CONTRACTOR'S
                                    Operating Procedures and any change so made
                                    shall be recorded in the logbook of the
                                    DRILLING UNIT and the name of the person in
                                    overall charge so replaced shall immediately
                                    be removed from the place where it was
                                    clearly displayed as aforesaid and the name
                                    of the new person so appointed shall be
                                    substituted.

                           (b)      To the extent that they are neither
                                    inconsistent with nor less stringent than
                                    the CONTRACTOR'S rules, policies and
                                    procedures pertaining to the safety of
                                    CONTRACTOR'S PERSONNEL and the CONTRACTOR'S
                                    EQUIPMENT, the CONTRACTOR shall observe
                                    OPERATOR'S Safety regulations and comply
                                    with rules, regulations, and codes relating
                                    to equipment, personnel, communications,
                                    supply, transportation and safety practices
                                    as specified by the government bodies and
                                    institutions exercising jurisdiction in the
                                    CONTRACT AREA. The CONTRACTOR shall use its
                                    best efforts to obtain, if not provided by
                                    OPERATOR, and read and understand such rules
                                    and regulations as aforesaid.

                  5.2      Blowout and Fire Hazards

                           (a)      The CONTRACTOR shall maintain certification
                                    of well control equipment and shall maintain
                                    said equipment in good operating condition
                                    during operations hereunder, and shall use
                                    all reasonable means to prevent fire or
                                    blowout and to protect the WELL. The
                                    CONTRACTOR shall deploy the blowout
                                    prevention equipment as instructed by the
                                    OPERATOR on all strings of casing during the
                                    DRILLING SERVICES and shall keep and
                                    maintain such equipment in good operating
                                    condition. The CONTRACTOR shall examine and
                                    test all blowout prevention devices in
                                    accordance with OPERATOR'S instructions and
                                    OPERATOR'S approved test procedures.

                                    Test results shall be noted on the relevant
                                    test report sheets in addition to the
                                    IADC-API Daily Drilling Report Form.

                                    The BOP stack and rubbers shall be inspected
                                    by an independent third party or supplier
                                    prior to the COMMENCEMENT DATE. In the event
                                    that the inspection is satisfactory the BOP
                                    shall be tested to close on a 3 1/2" drill
                                    pipe effectively. If the test is
                                    satisfactory the BOP shall be deemed to be
                                    accepted. If it fails the test then the
                                    replacement parts are to CONTRACTOR'S
                                    account.


                                       9
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                  PAGE 10 OF 16
================================================================================

                                    In the event that BOP is used for
                                    non-routine work during the CONTRACT, i.e.
                                    well control, stripping through, then
                                    OPERATOR shall pay for replacement
                                    consumable parts as necessary.

                           (b)      In the event of kick, blowout or fire in any
                                    WELL, or if any WELL gets out of control in
                                    any manner, the OPERATOR'S REPRESENTATIVE
                                    shall have the right to assume complete
                                    control and supervise the work required to
                                    regain full control of the WELL. During such
                                    period the CONTRACTOR shall use its best
                                    endeavours to make its PERSONNEL and
                                    services available at the WELL; if the
                                    CONTRACTOR'S PERSONNEL are not available
                                    during any such period when the OPERATOR has
                                    assumed control the applicable Daily Rate
                                    specified herein shall be reduced by
                                    OPERATOR to reflect any savings made by the
                                    CONTRACTOR.

                                    In the event that a WELL being drilled
                                    hereunder shall blowout or crater, it is
                                    understood and agreed that the OPERATOR
                                    shall bear the entire cost and expense of
                                    killing the WELL or otherwise bringing it
                                    under control. Subject to the foregoing, all
                                    rights and indemnities otherwise granted
                                    herein shall remain unaffected.

                  5.3      Safety Management

                           (a)      The CONTRACTOR shall carry out the DRILLING
                                    SERVICES and all other activities hereunder
                                    in a workmanlike manner with due regard for
                                    safety and shall comply with CONTRACTOR's
                                    Safety Management Systems and OPERATOR's
                                    bridging document. CONTRACTOR shall make
                                    available to the OPERATOR whenever the
                                    OPERATOR may so request, full documentation
                                    to include, but not by way of limitation,
                                    the following standards, instructions,
                                    procedures and records:

                                    - CONTRACTOR'S Safety Regulations,

                                    - Operating Procedures Manuals (detailing
                                    the operating limits of the DRILLING UNIT)

                                    - Emergency Procedures Manual,

                                    - Accident Reporting Procedure,

                                    - Work Permit Procedures,

                                    - records of drills, exercises and safety
                                    meetings

                                    - JSAs, Risk Assessments, ASAs, pre-Tour and
                                    Toolbox meetings.

                           (b)      The CONTRACTOR shall designate persons who
                                    shall be responsible for the operation,
                                    maintenance and training of its PERSONNEL in
                                    the use of the fire control and safety
                                    equipment listed in Group l Section 'O' of
                                    Section 7 hereto and to this end shall
                                    arrange for exercises in DRILLING UNIT
                                    firefighting and evacuation to be carried
                                    out fortnightly by its PERSONNEL on


                                       10
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                  PAGE 11 OF 16
================================================================================

                                    board the DRILLING UNIT and lifeboat drills
                                    to be carried out by all persons on board
                                    the DRILLING UNIT at weekly intervals.

                                    Additionally the CONTRACTOR shall ensure
                                    that all its PERSONNEL are issued with the
                                    OPERATOR'S instructions on safety issued
                                    from time to time and shall use its best
                                    endeavours to ensure that its PERSONNEL
                                    comply with such instructions. CONTRACTOR'S
                                    PERSONNEL shall meet weekly on the DRILLING
                                    UNIT to discuss the matters relating to
                                    safety and at which meetings the OPERATOR'S
                                    REPRESENTATIVE and SERVICE COMPANY personnel
                                    will attend.

                                    The CONTRACTOR shall make available to the
                                    OPERATOR minutes of all such meetings.

                           (c)      In the event that the CONTRACTOR'S
                                    standards, instructions or procedures in
                                    matters of safety do not exist or are
                                    inadequate or are in any such way not
                                    reasonably acceptable to the OPERATOR, then
                                    the OPERATOR may from time to time issue
                                    such standards, instructions or procedures
                                    as aforesaid which the CONTRACTOR shall
                                    observe and follow.

                           (d)      The CONTRACTOR shall also provide OPERATOR
                                    with copies of documents concerning the
                                    operational safety of the DRILLING UNIT
                                    including but not by way of limitation
                                    accident reports, near-miss incidents and
                                    permits to work.

                           (e)      The CONTRACTOR shall maintain an accurate
                                    daily "persons-on-board" list and next of
                                    kin details for all its PERSONNEL and
                                    maintain the list both on the DRILLING UNIT
                                    and at a shore base agreed between the
                                    parties hereto.

                           (f)      The CONTRACTOR shall provide the OPERATOR
                                    with a copy of the CONTRACTORS Emergency
                                    Procedures Manual listing the
                                    responsibilities and procedures in case of
                                    emergency incidents.

                  5.4      Safety Policies and Reporting

                           CONTRACTOR agrees to keep open fires and stoves out
                           of the derrick and tool houses adjacent to derrick
                           floor and to prohibit and enforce its policy against
                           its employees smoking on the rig floor, under the
                           substructure, mud pit area, and other areas
                           designated by the OPERATOR'S REPRESENTATIVE as "No
                           Smoking" areas during the performance of any work
                           hereunder. Smoking is prohibited in all areas of the
                           DRILLING UNIT save the area on the DRILLING UNIT
                           designated as a Smoking area.

                           CONTRACTOR ALSO AGREES TO CONFORM TO RECOMMENDATION
                           ON ACCIDENT PREVENTION AND SAFE PRACTICES OF THE
                           INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS
                           (IADC) AND OPERATOR'S SAFETY REQUIREMENTS.


                                       11
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                  PAGE 12 OF 16
================================================================================

                           CONTRACTOR shall report all injuries, property and
                           equipment damage causedby accident immediately to
                           OPERATOR's REPRESENTATIVE on board. Within
                           twenty-four (24) hours of occurrence of the accident
                           CONTRACTOR shall provide a written report for the
                           OPERATOR's HSE Manager. A complete accident
                           investigation report will be submitted within
                           forty-eight (48) hours of the occurrence.

                           CONTRACTOR acknowledges it is the policy of the
                           OPERATOR to achieve and maintain a safe working
                           environment free from the influence of alcohol and
                           illicit drugs in order to assure the safety and
                           protection of its employees, non employees,
                           operations, assets and the localities in which it
                           functions. CONTRACTOR will enforce its Drug and
                           Alcohol Policy with respect to CONTRACTOR'S PERSONNEL
                           and the personnel of its SUB-CONTRACTORS, which shall
                           include provision that the possession, use,
                           distribution or sale of illicit drugs or controlled
                           substances in the work place is prohibited and that
                           such personnel are forbidden from being under the
                           influence of alcohol while on CONTRACTOR owned,
                           leased or operated premises. CONTRACTOR agrees to
                           conduct periodic searches and testing for such
                           substances. The personnel of the OPERATOR and the
                           SERVICE COMPANIES shall be subject to the OPERATOR's
                           Drug and Alcohol Policy.

                           CONTRACTOR shall submit the following information on
                           its safety performance each month:

                           1.   Total man hours worked (month/YTD)
                           2.   Total lost time accidents (month/YTD)
                           3.   Total lost time days (month/YTD)
                           4.   Total recordable accidents (month/YTD)
                           5.   Total first aid cases (month/YTD)

CLAUSE      6       CONTRACTOR'S OTHER OBLIGATIONS

                  6.1      CONTRACTOR not to start DRILLING SERVICES without
                           Permission

                           The CONTRACTOR shall not at any LOCATION commence any
                           DRILLING SERVICES until the OPERATOR'S REPRESENTATIVE
                           has certified in writing on the IADC Report Form that
                           the CONTRACTOR'S EQUIPMENT is acceptable and ready to
                           commence the said SERVICES.


                  6.2      Training & Secondment of Nominees of OPERATOR by
                           CONTRACTOR

                           The CONTRACTOR hereby undertakes to accept for
                           training on board the DRILLING UNIT such number of
                           nominees of OPERATOR as the OPERATOR may request from
                           time to time and the CONTRACTOR shall train such
                           nominees as aforesaid in accordance with such
                           conditions and in such categories as the OPERATOR may
                           prescribe.

                           The OPERATOR shall not so request more than five such
                           local personnel or nominees on board at any one time.


                                       12
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                  PAGE 13 OF 16
================================================================================

                  6.3      CONTRACTOR not to entice

                           The CONTRACTOR shall not at any time or in any manner
                           nor for any purpose whatsoever entice either directly
                           or indirectly any person employed by the OPERATOR or
                           in the employment of any SERVICE COMPANY.

                  6.4      Moving Operations

                           Before any moving operations are undertaken the
                           CONTRACTOR shall consult with the OPERATOR upon
                           weather and other information available at the time
                           but, notwithstanding Clause 4 of Section 2 of this
                           CONTRACT, the responsibility for the decision to
                           commence moving operations shall be the CONTRACTOR'S.
                           Towing vessels provided by the OPERATOR shall be
                           subject to approval of the CONTRACTOR. The OPERATOR
                           shall provide to the CONTRACTOR if so requested the
                           conditions of the charter party for such towing
                           operations.

                  6.5      Inspection of CONTRACT AREA

                           The CONTRACTOR shall be deemed to be satisfied as to
                           the nature of all existing harbours and means of
                           transport or communication on the mainland of the
                           CONTRACT AREA, and as to possible interruptions
                           thereto and as to access to and from the CONTRACT
                           AREA; to have made enquiries, examined and satisfied
                           itself as to workyard sites and such depots and
                           buildings as may be required for carrying out its
                           obligations under the CONTRACT; to have made local
                           and independent enquiries as to storms, prevailing
                           winds and climatic considerations generally and other
                           similar matters; to be satisfied as to the sources
                           and means of obtaining adequate supplies of skilled
                           and unskilled persons and all other things required
                           for carrying out the CONTRACT; to have considered the
                           possible effects on the carrying out of the CONTRACT
                           that may be caused by the break down of
                           communications or by reason of storms, prevailing
                           winds and adverse climatic weather conditions which
                           may arise at any time during the continuance of the
                           CONTRACT within the CONTRACT AREA; to have examined
                           the CONTRACT generally and to have obtained all
                           necessary information on all matters whatsoever which
                           may effect its performance thereof.

                           In the event that the CONTRACTOR does not satisfy
                           itself on any of such matters as aforesaid this shall
                           not relieve it from its obligations hereunder and
                           shall not entitle it to any increase in any rate or
                           charge under the CONTRACT nor to any compensation or
                           amount whatsoever additional to such charges, and in
                           the event of any claim under the CONTRACT or law
                           being made by any party the CONTRACTOR shall be
                           deemed to have so visited, examined and satisfied
                           itself as aforesaid prior to the date hereof.


                                       13
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                  PAGE 14 OF 16
================================================================================

CLAUSE    7       RESPONSIBILITIES OF THE OPERATOR

                  The OPERATOR shall provide the following equipment, materials,
                  supplies spare parts, services and personnel at its cost and
                  expense unless stated otherwise.

                  7.1.     PERSONNEL

                           1.       The OPERATOR'S REPRESENTATIVE and persons
                                    delegated by the OPERATOR to act on behalf
                                    of the OPERATOR'S REPRESENTATIVE from time
                                    to time.

                           2.       The OPERATOR'S technical specialists.

                  7.2.     SERVICES AND EQUIPMENT

                           1.       Specialist services.

                           2.       Emergency medical evacuation services as
                                    available (on cost recoverable basis within
                                    the scope of CONTRACTOR'S insurances at
                                    OPERATOR'S option).

                           3a.      Towing and positioning services in the
                                    CONTRACT AREA between LOCATIONs.

                           3b.      Towing Services to an acceptable port at the
                                    conclusion of the DRILLING SERVICES.

                           4.       Workboat supply service for all materials
                                    and a standby/workboat service.

                           5.       Transport for CONTRACTOR'S PERSONNEL and
                                    SUB-CONTRACTOR'S personnel between
                                    OPERATOR'S designated point of embarkation
                                    on the mainland of the CONTRACT AREA and the
                                    DRILLING UNIT and between the OPERATOR'S
                                    point of embarkation in the Republic of
                                    Trinidad and Tobago and the mainland of the
                                    CONTRACT AREA for the purposes of routine
                                    crew change.

                                    In the event that crew changes are delayed
                                    for reasons of weather or non-availability
                                    of helicopter or damage to DRILLING UNIT
                                    which prevents a helicopter from landing,
                                    CONTRACTOR will arrange and OPERATOR will
                                    pay reasonable overnight hotel accommodation
                                    and meal costs and substantiated overtime
                                    costs.

                           6.       Offshore drilling permit(s).

                           7.       Drilling site surveys, buoying and clearing
                                    of obstructions.

                           8.       All marine and air transport of CONTRACTOR'S
                                    and OPERATOR'S items between OPERATOR'S
                                    designated marine and air supply bases and
                                    the DRILLING UNIT. OPERATOR shall select
                                    type of transport.


                                       14
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                  PAGE 15 OF 16
================================================================================

                           9.       All cementing services.

                           10.      Mud engineer if required by OPERATOR (but
                                    CONTRACTOR will carry out routine mud
                                    testing and treatment).

                           11.      Mud logging service, if required by
                                    OPERATOR.

                           12.      Geological services.

                           13.      Directional drilling service engineer and
                                    directional drilling equipment if required
                                    by OPERATOR.

                           14.      Drilling water if required, except that
                                    CONTRACTOR'S water making unit can be used
                                    in cases of emergency.

                           15.      Bits and other downhole tools not supplied
                                    by CONTRACTOR and listed in SECTION 7.

                           16.      Conductor pipe, casing, tubing and
                                    attachments, drive hammer, and all related
                                    handling tools.

                           17.      Wellhead housings, casing hangers, seat
                                    protectors, pack-offs, wear bushings,
                                    corrosion cap and all associated running
                                    tools.

                           18.      Temporary and Permanent Guide Bases

                           19.      Cement and additives.

                           20.      Mud chemicals and mud additives, including
                                    pallets if required by OPERATOR.

                           21.      Diesel fuel for use on the DRILLING UNIT.

                           22.      Well test unit and associated equipment for
                                    production testing, including Separators and
                                    other test vessels.

                           23.      Drill pipe and drill collars, Kellys or subs
                                    other than those listed in SECTION 7.

                           24.      Stabilizers, hole openers, reamers and
                                    centralizers other than those listed in
                                    SECTION 7.

                           25.      Drill stem testing equipment.

                           26.      Radio equipment other than that listed in
                                    SECTION 7.


                                       15
<PAGE>
                                                                      SECTION 4
                                                      STATEMENT OF REQUIREMENTS
                                                                  PAGE 16 OF 16
================================================================================

                           27.      Loading and unloading services at supply/
                                    load out bases or heliport of all material
                                    and equipment of CONTRACTOR and OPERATOR.

                           28.      Containers for disposal of refuse as well as
                                    transport to shore and disposal of same,
                                    except for liquid waste generated by
                                    CONTRACTOR.

                           29.      Crude oil burner assemblies unless supplied
                                    by CONTRACTOR and listed under SECTION 7.

                           30.      Navigation and positioning systems for
                                    siting the DRILLING UNIT.

                           31.      Diving and ROV Services if required by
                                    OPERATOR.

                           32.      Potable Water in excess of water provided by
                                    the desalination unit on board the DRILLING
                                    UNIT.

                           33.      Fishing Tools.














                                       16
<PAGE>

                                  SCHEDULE 4.1.

      OPERATOR'S POLICY ON IMPORTATION OF MACHINERY, EQUIPMENT, & MATERIALS

CONTRACTOR shall comply with the provisions of OPERATOR's general policy on the
importation of machinery, equipment, and materials by CONTRACTOR for use in
OPERATOR's operations, specifically with respect to the procedure for Exemption
from Customs Duty on Bills of Entry as set forth below.

PROCEDURE

EXEMPTION FROM CUSTOMS DUTY ON BILLS OF ENTRY

1.      Introduction

        Goods imported into Trinidad and Tobago are generally subject to customs
        duty at rates prescribed by tariff, and to Value Added Tax (VAT). The
        Customs Act (Act) provides for a total (or partial exemption as the case
        may be) exemption from such duty in respect of: (a) goods imported for
        temporary use and which are to be subsequently re-exported, and (b) such
        goods specified in the Third Schedule of the Act, which in any
        particular case are exempted by Order of the Minister responsible for
        Industry.
        Included among the goods generally qualifying for exemption are those
        items of machinery, equipment, and materials for exploration and
        extraction of minerals, including natural gas.

2.      General

        In order to make use of the exemptions granted, the following procedure
        is to be used when machinery, equipment, or materials are being imported
        into Trinidad and Tobago by CONTRACTOR:

        a.   In the case of items being imported for a short time to perform a
             particular job and then be re-exported, these items should be
             imported under the exemption for goods imported for temporary use.

        b.   In the case of all other items being imported by CONTRACTOR
             (including any consumables which must be imported while operations
             are in progress and which are going to be used up in Trinidad and
             Tobago and, as far as legally possible, subsequent spare parts for
             equipment, machinery, etc., previously imported into Trinidad and
             Tobago), these items should be imported under a Minister's License.
             For the purpose of OPERATOR obtaining a Minister's License,
             CONTRACTOR must submit full details of the goods to be imported to
             OPERATOR well in advance of the date of importation, and the goods
             are not to be landed in Trinidad and Tobago unless previously
             authorised by OPERATOR.

             If after OPERATOR has cleared CONTRACTOR's equipment and supplies
             into Trinidad and Tobago, CONTRACTOR desires to import additional
             material, equipment, supplies, tools, and other items for use in
             the Work, OPERATOR will endeavour to assist CONTRACTOR in such
             importation subject to Section 2 Clause 22 of the CONTRACT.

        c.   In no circumstance whatsoever are any goods which have been
             imported under a Minister's License granted to OPERATOR be
             subchartered, loaned, sold, or otherwise disposed of to any other
             OPERATOR or person in Trinidad and Tobago without the prior written
             authorisation of the appropriate OPERATOR's Business Unit Leader.
             Each case will have to be discussed with Government of the Republic
             of Trinidad and Tobago ("GORTT") authorities to determine proper
             procedure.


<PAGE>



                                  ATTACHMENT 1

                                       TO

                                    SECTION 4

                          CHECKLIST OF RESPONSIBILITIES

                                     JACKUP


            CHECK LIST OF RESPONSIBILITIES FOR SERVICES AND MATERIALS

                 PROVIDED BY OPERATOR (O) AND THE CONTRACTOR (C)


<PAGE>

<TABLE>
<CAPTION>
A.         DRILLING LOCATION
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
<S>                                                                                          <C>             <C>
1.        Licences and consents to perform the
          operations, including suspension or abandonment.                                         O                O

2.        LOCATION survey to include marker buoys and side                                         O                O
          scan sonar, and soil borings.

3.        Rig positioning services including Satnav.                                               O                O

4.        Insurance underwriter representatives.                                                   C                C
                                                                                             --------------- ----------------


B.         TRANSPORTATION/HANDLING
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        Helicopter or Marine transportation including emergency transportation for all
          personnel between designated point of embarkation and the DRILLING UNIT.
                                                                                                   O                O

2.        Marine transportation for equipment and spare parts between the OPERATOR'S shore
          base and the DRILLING UNIT.                                                              O                O

3.        Transportation of CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S
          personnel to and from the point of embarkation designated by the
          OPERATOR and the CONTRACTOR'S base of operations or personnel's point
          of origin.
                                                                                                   C                C

4.        Immigration clearance for CONTRACTOR'S PERSONNEL and SUB-CONTRACTORS' PERSONNEL
                                                                                                   C                C

5.        In the event crew changes are delayed for reasons set out in sub-clause 7.2.5 of
          SECTION 4 for overnight hotel accommodation and meal costs including any
          overtime charges
                                                                                                   C                O

6.        Transportation of CONTRACTOR'S EQUIPMENT between the OPERATOR'S shore base or
          heliport and CONTRACTOR'S shore base
                                                                                                   C                C

7.        Dock and dockside facilities, labour and equipment for loading/unloading the
          OPERATOR'S MATERIALS or CONTRACTOR'S EQUIPMENT at the OPERATOR'S shore base (to
          include in storage).
                                                                                                   O                O
                                                                                             --------------- ----------------

<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 2 OF 9
================================================================================


B.         TRANSPORTATION/HANDLING (CONT'D)
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
8.          Offloading facilities to transfer personnel and cargo from the
            OPERATOR'S supply vessel onto the DRILLING UNIT. No CONTRACTOR'S
            PERSONNEL or SUB-CONTRACTOR'S personnel will be to go on board the
            supply vessel for the purpose of loading or offloading cargo.
                                                                                                   C                C

9.          Tie up lines for mooring supply vessel to the DRILLING UNIT
            4" medium lay, 120-150 ft.

            First set
            Replacement set(s)                                                                     C                C
                                                                                                   C                O

10a.        Floating Hoses and couplings for transfer of bulk and liquid materials between
            supply vessels and the DRILLING UNIT.

            First Set                                                                              C                C
            Replacement sets                                                                       C                O

10b.        Check valve on hoses at both ends                                                      C                O

11.         a.     Transportation and containers for disposing of waste, contaminated
                   cuttings and fluids required.                                                   O                O
            b.     Containers for disposal of CONTRACTOR's liquid hazardous waste                  C                C

12.       Qualified and competent offshore radio and computer operator for 24 hour duty
          (trained for MAPS)                                                                       C                C

13.       Communications equipment (including satellite communication equipment) required
          for use on the DRILLING UNIT for communication with OPERATOR'S shore base
          (OPERATOR to pay for satellite calls made by or on behalf of OPERATOR)

          6 handheld radios with handsfree headsets
          4 handheld radios with handsfree headsets
                                                                                                   C                C
                                                                                                   C                O

14.       Standby Vessel                                                                           O                O

15.       Fenders for DRILLING UNIT                                                                C                C
                                                                                             --------------- ----------------


                                       2
<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 3 OF 9
================================================================================

C.         SHORE BASE USED BY THE CONTRACTOR
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        Office, warehouse and storage facilities CONTRACTOR'S EQUIPMENT and CONTRACTOR'S
          PERSONNEL                                                                                C                C

          Note: CONTRACTOR'S shore base shall be as close as possible to the OPERATOR'S
          shore base
                                                                                             --------------- ----------------

D.         DRY DOCKING/CERTIFICATION
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        For time in dock for statutory testing inspections or trials (but excluding
          moving time)                                                                             C                C

2.        Port fees, taxes, licences, import tariffs, pilotage fees, wharfage fees canal
          fees and cost of similar charges including any brokerage fees in respect of
          CONTRACTOR'S EQUIPMENT                                                                   C                C

3.        Customs Duties, import tariffs in respect of Trinidad and Tobago Regulations             O                O
                                                                                             --------------- ----------------


E.         THIRD PARTY SERVICES
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        Diving equipment services and installation costs and R.O.V.                              O                O

2.        Drill stem testing tools and services                                                    O                O

3.        Electric well logging equipment and services                                             O                O

4.        Mud logging equipment and services                                                       O                O

5.        Mud engineering services and supervision                                                 O                O

6.        Geological/mud laboratory and test equipment                                             O                O

7.        Acidizing, fracturing and other specialist services                                      O                O

8.        Directional drilling equipment and services                                              O                O

9.        Cementing services using cementing unit provided on a "free placement" basis
                                                                                                   O                O

9a        Maintenance of cementing unit if provided by CONTRACTOR                                  C                C

9b        Maintenance of cementing unit if provided by OPERATOR                                    O                O
                                                                                             --------------- ----------------


                                       3
<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 4 OF 9
================================================================================

E.         THIRD PARTY SERVICES (CONT'D)
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------

10.       Coring Services and equipment                                                            O                O

11.       Tubing and casing running services                                                       O                O

12.       Extra welders and welding material used on welding and cutting the OPERATOR'S
          equipment as authorised by the OPERATOR                                                  C                O

13.       Well completion services                                                                 O                O

14.       Well test equipment and services                                                         O                O

15.       Weather forecasting and reporting services                                               O                O

16.       Specialist services and equipment not designated herein but required for the
          operations                                                                               O                O

17.       Inspection of Top Drive, drill pipe, drill collars, other in-hole equipment as
          per Clause 4.10 SECTION 4.

          - Initial                                                                                C                C
          - Other and Routine                                                                      C                O

18        Space, assistance and services for SERVICE COMPANY personnel and equipment
                                                                                                   C                C


                                                                                             --------------- ----------------


F.         MATERIALS AND SUPPLIES
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        Cement and cement additives                                                              O                O

2.        Mud chemicals and completion fluids                                                      O                O

3.        Fuel for DRILLING UNIT                                                                   O                O

4.        Lubes for DRILLING UNIT                                                                  C                C

5.        Casing and tubing dope (to be specified by OPERATOR)                                     O                O

                                                                                             --------------- ----------------

                                       4
<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 5 OF 9
================================================================================

F.         MATERIALS AND SUPPLIES (CONT'D)
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
6.        Grease, pipe dope (friction factor 1 pipe dope) and lubricants (other than 4.
          above) for equipment supplied by CONTRACTOR                                              C                C

7.        Hydraulic fluid for blow-out preventers and control unit                                 C                C

8.        Drilling Water                                                                           O                O

9.        Potable water in excess of rated production capacity of water distillation unit
          installed on board.                                                                      O                O

10.       Drilling bits, diamond bits, and core heads                                              O                O

11.       Shale shaker screens (Refer Section 4, Clause 4.13)                                      C                C

12.       Repair and replacement parts for safety joint fishing jars and fishing tools,
          resulting from" in-hole" damage                                                          O                O

13.       Casing protectors for drill pipe
          - initial set                                                                            C                C
          - replacement set(s)                                                                     C                O

14.       BOP and riser consumables                                                                C                O

15.       Repair kits for: float valves, kelly cocks (upper and lower) and inside BOP's
                                                                                                   C                C
                                                                                             --------------- ----------------


G.         DRILLING EQUIPMENT AND UNIT
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        CONTRACTOR'S EQUIPMENT                                                                   C                C

2.        Fishing tools for CONTRACTOR's In Hole Equipment                                         O                O

3.        Tubing                                                                                   O                O

4.        Tubing handling equipment                                                                O                O

5.        3.1/2" drill pipe including drill collars and handling tools. (If specified by
          OPERATOR).                                                                               O                O

6.        Cementing heads                                                                          O                O



                                       5
<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 6 OF 9
================================================================================

G.         DRILLING EQUIPMENT AND UNIT (CONT`D)
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------


7.        2 sets Elevators, tongs and handling tools for 30", 20"16", 113/4", 13 3/8", 9
          5/8" and 7" casing (As specified in Section 7 Part 2 only)                               O                O

8.        Drilling Jars                                                                            O                O

9.        36" and 26" Hole openers c/w spare cutters                                               O                O

9a.       Reamers and stabilisers                                                                  O                O

10.       Drill pipe wipers                                                                        C                C

11.       Fishing tools other than those described in 2 above                                      O                O

12.       Casing cutters & casing spears                                                           O                O

13.       Casing power tongs and hydraulic power unit                                              O                O

14.       Replacement and/or repair of any equipment when lost or damaged below the rotary
          table other than arising out of fair wear and tear.                                      C                O

15.       Mud pump fluid and power end parts and consumables
          Liner Sizes of 6" and 7" required                                                        C                C

          Mud pump fluid and power end parts and consumables                                       C                O
          Liner Sizes of 5 1/2" required

16.       Spares for choke manifold                                                                C                C

17.       Replacement of tubulars after inspection pursuant to SECTION 4 Clause 4.10 hereof
                                                                                                   C                C

20.       Maintenance and spare parts for all CONTRACTOR'S EQUIPMENT unless otherwise
          provided herein                                                                          C                C
                                                                                             --------------- ----------------



                                       6
<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 7 OF 9
================================================================================

H.         WELL EQUIPMENT
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        All tubular goods, including conductor pipe, casing and tubing                           O                O

2.        Casing shoes, collars, baskets, centralisers float equipment, baffles,
          scratchers and all other such in-hole consumables                                        O                O

3.        Wellhead housings including casing hangers wear bushings and all such associated
          wellhead equipment.                                                                      O                O

4.        Valves, Xmas Trees and necessary tools and equipment for installation
                                                                                                   O                O

5.        All running and pressure testing tools for wellhead equipment supplied by the
          OPERATOR                                                                                 O                O

6.        Replacement and repair and all consumables for items provided under 5 above
                                                                                                   O                O

7.        Wellhead ring joint gaskets, other than those required for installation between
          items of the CONTRACTOR'S EQUIPMENT                                                      C                O

8.        Permanent and Temporary Guide Bases                                                      O                O
                                                                                             --------------- ----------------


I.         SAFETY
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        Radio equipment for communication with tugs, supply vessels and helicopters
          including portable sets (See B. 13.)                                                     C                C

2.        Permits, licences required for operation of communication equipment.                     C                C

3.        First aid, infirmary, equipment and medical attention on board the DRILLING UNIT
          for all persons while on board                                                           C                C

3a        Paramedic on board the DRILLING UNIT (to be specified by OPERATOR, refer SECTION
          4, Clause 3.4)                                                                           C                O

3b        STC (EMT Basic) on board the DRILLING UNIT (refer SECTION 4, Clause 3.6)                 C                C

                                                                                             --------------- ----------------


                                       7
<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 8 OF 9
================================================================================

I.         SAFETY
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
4.        Safety hats, safety boots, safety glasses, hearing protection, fire resistant
          clothing (Nomex), HLO fire resistant suit and gloves for CONTRACTOR'S PERSONNEL          C                C
          and SUB-CONTRACTOR'S Personnel

4a        PPE for synthetic oil-based muds and brine                                               C                O

5.        Fire fighting equipment as required to comply with the OPERATOR'S and government
          regulations                                                                              C                C

6.        Onshore medical services for CONTRACTOR'S and SUB-CONTRACTOR'S personnel
                                                                                                   C                C

7.        Refuelling system on the DRILLING UNIT for helicopter fuel, when requested by            O                O
          OPERATOR.

8.        Helicopter refuelling inspection kits and filters                                        C                C

9.        All necessary life saving and safety equipment to conform with regulations and
          requirements of the LAW and OPERATOR                                                     C                C

10        Fluorescent vest for HLO and banks men                                                   C                C
                                                                                             --------------- ----------------


J.         MISCELLANEOUS
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        Helicopter deck as required by government regulations and to accommodate Super
          Puma helicopter or similar                                                               C                C

2.        All hand and power tools required for normal maintenance of the DRILLING UNIT
                                                                                                   C                C

3.        Office on the DRILLING UNIT for the OPERATOR'S Drilling Supervisors
                                                                                                   C                C

4.        Catering on board for all CONTRACTOR'S and SUB-CONTRACTOR'S personnel, plus 16
          OPERATOR'S personnel or SERVICE COMPANY PERSONNEL
                                                                                                   C                C
5.        Catering for all OPERATOR and SERVICE COMPANY PERSONNEL in excess of above at
          cost                                                                                     C                O

6.        Subsea T.V. System                                                                       O                O

7.        Replacement parts to Subsea T.V. System                                                  O                O
                                                                                             --------------- ----------------


                                       8
<PAGE>
                                                      ATTACHMENT 1 TO SECTION 4
                                                  CHECKLIST OF RESPONSIBILITIES
                                                                    PAGE 9 OF 9
================================================================================

J.         MISCELLANEOUS (CONT'D)
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------

8.        On board entertainment, video, films, satellite TV.                                      C                C

9.        CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S PERSONNEL
                                                                                                   C                C

10.       Additional personnel as requested by the OPERATOR employed by CONTRACTOR
                                                                                                   C                O

11.       Overtime for CONTRACTOR'S PERSONNEL authorised by the OPERATOR in writing
                                                                                                   C                O

12.       Survival Suits for use during helicopter flights for CONTRACTOR'S personnel and
          CONTRACTORS Service personnel                                                            O                O

13.       Waste disposal onshore                                                                   O                O

14.       Cargo baskets and containers for equipment supplied by OPERATOR                          O                O

15.       Mud laboratory test equipment for routine and testing and treatment. (See
          sub-clause 4.8.2 para 10).                                                               O                O

16.       Replacement of additional anchors, buoys and pennant wire                                C                C

17.       Burners                                                                                  O                O
                                                                                             --------------- ----------------

K.         THE VESSEL
                                                                                             --------------- ----------------
                                                                                              PROVIDED BY      TO ACCOUNT
                                                                                             --------------- ----------------
1.        Damage to or loss of DRILLING UNIT:                                                      C                C
          Inspection                                                                               C                C
          Repairs                                                                                  C                C
          Replacement                                                                              C                C
                                                                                             --------------- ----------------

</TABLE>

                                       9
<PAGE>

                                  ATTACHMENT 2

                                       TO

                                    SECTION 4


                  REPORTING RESPONSIBILITIES OF THE CONTRACTOR


<PAGE>

The following forms and reports shall be completed by the CONTRACTOR and handed
over to the OPERATOR.

1.         The Daily IADC Tour Sheet
2.         Morning drilling report
3.         Drilling Parameters Record Charts (Drilling Recorder)
4.         Pit Level Indicator Chart
5.         Loading Notes and/or cargo manifests
6.         Drilling Unit & Drilling Equipment Inspection   (a) Safety
                                                           (b) General
7.         Testing of B.O.P. Equipment and Charted
8.         Accident/Near Miss Report
9.         Time Breakdown Report
10.        Bed/Meal Tickets
11.        Minutes of Safety Meetings
12.        Barge Engineer's Report
13.        Trip Sheet
14.        Trend indication while drilling - Torque and Drag and Pump Pressure
15.        Bottom Hole Assembly and Diagrams
16.        Circulating time on jars and thrusters
17.        Environment Emission Report

G.1        THE DAILY TOUR SHEET

           The Daily IADC Tour Sheet will be comprehensively filled in by the
           Drillers, checked on the DRILLING UNIT by the CONTRACTOR'S Toolpusher
           and by the OPERATOR'S REPRESENTATIVE or, by the latter's delegation,
           another OPERATOR'S Supervisor on board. Both the said Toolpusher and
           the OPERATOR'S REPRESENTATIVE on the DRILLING UNIT will sign the
           Daily Tour Sheet.

G.2        THE MORNING DRILLING REPORT

           This report shall be filled in every morning on the DRILLING UNIT by
           the OPERATOR'S Drilling Supervisor assisted by the CONTRACTOR'S
           Toolpusher. It shall contain a summary of the previous day's
           operations and shall be transmitted each morning at an agreed time to
           the OPERATOR'S onshore office.

G.3        DRILLING PARAMETERS RECORD CHARTS (DRILLING RECORDER)

           The main drilling parameters i.e. weight on bit, pump pressure, pump
           strokes per minute, R.O.P., rotary torque, R.P.M., will be recorded
           on a single chart. In the event of any failure of the Drilling
           Parameters Recorder the CONTRACTOR will give immediate notice to the
           OPERATOR'S REPRESENTATIVE of such failure. The OPERATOR'S Drilling
           Supervisor will be responsible for collecting the charts and sending
           them to the OPERATOR'S Office (Drilling Department).

G.4        PIT LEVEL INDICATOR

           This recorder shall always be connected during all operations from
           spud to release.

<PAGE>
                                                      ATTACHMENT 2 TO SECTION 4
                                   REPORTING RESPONSIBILITIES OF THE CONTRACTOR
                                                                    PAGE 2 OF 3
================================================================================

           The CONTRACTOR will give immediate notice to the OPERATOR'S Drilling
           Supervisor of any failure of the Pit Level Indicator. The OPERATOR'S
           Drilling Supervisor will be responsible for collecting the charts and
           sending them to the OPERATOR'S Office (Drilling Department).

           MUD REPORT (Prepared by OPERATOR)

           The OPERATOR'S mud engineer will prepare a complete mud report for
           every WELL; this mud report will consist of:

           1   Daily Mud Report
           2   End of Phase Mud Report
           3   Mud Material used and transferred
           4   Usage and Cost per Interval

G.5        LOADING NOTES

           The CONTRACTOR shall prepare Loading Notes in respect of such of
           OPERATOR'S MATERIALS as are consigned to the OPERATOR from the
           DRILLING UNIT, and shall check receipts of such MATERIALS at the
           DRILLING UNIT against the Loading Note prepared by the OPERATOR or
           its SERVICE COMPANY and advise the OPERATOR'S REPRESENTATIVE
           forthwith of any discrepancies therein.

G.6        BED/MEAL TICKETS

           Any invoice sent to the OPERATOR in respect of beds or meals taken by
           the OPERATOR'S PERSONNEL or the SERVICE COMPANY PERSONNEL on the
           DRILLING UNIT shall be substantiated by daily vouchers clearly and
           properly completed by the CONTRACTOR and countersigned by OPERATOR'S
           Drilling Supervisor.

G.7         DRILLING UNIT AND DRILLING EQUIPMENT INSPECTION
           (A) SAFETY
           (B) GENERAL

           Inspection shall be carried out as directed by the CONTRACTOR's Rig
           Manager. After the OPERATOR'S Drilling Supervisor and the
           CONTRACTOR'S Rig Manager have conducted such inspections, the
           inspection forms shall be completed by the said Rig Manager in the
           presence of the said OPERATOR's Drilling Supervisor and signed by
           both parties.

G.8        PERIODIC TESTING OF B.O.P. EQUIPMENT

           Testing of the Blowout Preventers and associated equipment shall take
           place as directed by the OPERATOR'S Drilling Supervisor. The
           CONTRACTOR'S Toolpusher and OPERATOR's Drilling Supervisor shall sign
           the form after it has been completed by the CONTRACTOR's Engineer.

G.9        ACCIDENT/NEAR MISS REPORTS

           Whenever an accident or near miss occurs (as defined below) the
           CONTRACTOR shall immediately notify the OPERATOR'S REPRESENTATIVE and


                                       2
<PAGE>
                                                      ATTACHMENT 2 TO SECTION 4
                                   REPORTING RESPONSIBILITIES OF THE CONTRACTOR
                                                                    PAGE 3 OF 3
================================================================================

           as soon as possible thereafter deliver to the said REPRESENTATIVE an
           Incident Report on a form to be provided by the OPERATOR and
           completed by the CONTRACTOR.

           An accident is defined as an undesired event that results in harm to
           people, damage to property or loss to process. This includes all
           security accidents.

           A near miss is defined as an undesired event, which, although not
           actually resulting in loss, could have resulted, under slightly
           different circumstances, in harm to people, damage to property or
           loss to process.

G.10       TIME BREAKDOWN REPORT

           This form shall be filled in by the OPERATOR'S Drilling Supervisor on
           the DRILLING UNIT. There will be one such form per month per WELL.

           The Time Breakdown Report shall be signed by the CONTRACTOR'S
           REPRESENTATIVE and the OPERATOR'S Drilling Supervisor at a convenient
           time following the end of each WELL and/or each month. The time
           breakdown will be agreed by both parties before any invoice is
           presented to OPERATOR.

G.11       MINUTES OF SAFETY MEETINGS

           Minutes of Safety Meetings shall be supplied by CONTRACTOR to the
           OPERATOR for all Safety Meetings carried out on board the DRILLING
           UNIT. The CONTRACTOR shall sign the minutes as being correct and
           accurate.

G.12       BARGE ENGINEER'S REPORT

           Daily report on usage of bulk, fuel, water, liquid muds, helicopter
           fuel, anchor tension, environmental conditions and variable deckload.

G.13       TRIP SHEET REPORT

G.17       EMISSION REPORT

           To be completed monthly and sent to the OPERATOR's HSE Department.






                                       3
<PAGE>

                                    SECTION 5


                                RATES AND CHARGES


<PAGE>

                                    PREAMBLES

5.1      GENERAL

         The Rates and Charges shall be fully inclusive of all costs, expenses,
         overheads and profit arising out of the provision of the DRILLING
         SERVICES, PERSONNEL and EQUIPMENT set out in Sections 1,2,3,4,6 and 7
         hereof.

5.2      MOBILISATION AND DEMOBILISATION

         (a)      MOBILISATION CHARGE shall be the amount payable for the
                  MOBILISATION of the CONTRACTOR'S EQUIPMENT and CONTRACTOR'S
                  PERSONNEL to the first drilling LOCATION in the CONTRACT AREA
                  including

                  -       setting up a base in the CONTRACT AREA
                  -       towage,
                  -       air passages,
                  -       sea freight,
                  -       lighterage,
                  -       port dues,
                  -       pilotage,
                  -       wharfage,
                  -       cranage,
                  -       cargo handling,

                  until the agreed time and date that the legs are pinned at the
                  first LOCATION.

                  Any time in excess of twenty-four (24) hours waiting on
                  weather in the CONTRACT AREA shall be paid to CONTRACTOR at
                  the Standby Rate.

         (b)      DEMOBILISATION CHARGE shall be the amount payable for the
                  DEMOBILISATION of the CONTRACTOR'S EQUIPMENT and CONTRACTOR'S
                  PERSONNEL from a mutually agreed port in the CONTRACT AREA
                  including

                  -       closing down a base in the CONTRACT AREA,
                  -       towage,
                  -       air passages,
                  -       sea freight,
                  -       lighterage,
                  -       port dues,
                  -       pilotage,
                  -       wharfage,
                  -       cranage,
                  -       cargo handling,

                  from the time the DRILLING UNIT is under tight tow from the
                  mutually agreed port. Unloading of OPERATOR'S MATERIALS and
                  SERVICE COMPANY equipment and materials at the Republic of
                  Trinidad and Tobago or such other designated location shall
                  be reimbursed at the DEPROVISIONING RATE.


                                       1
<PAGE>
                                                                      SECTION 5
                                                              RATES AND CHARGES
                                                                    PAGE 2 OF 7
================================================================================

                  Should the CONTRACTOR have continuing work for another
                  operator in the waters of Trinidad and Tobago, or if another
                  operator is paying for mobilization of the DRILLING UNIT from
                  the waters of Trinidad and Tobago the DRILLING UNIT may, with
                  the OPERATOR'S agreement, be left on the last LOCATION and the
                  OPERATOR shall pay NIL rate. In such case the DEMOBILISATION
                  CHARGE shall not apply. NIL rate shall apply if the move is
                  delayed by the other operator.

         (c)      Standing Down/Re-mobilisation Charge

                  The CONTRACTOR will be paid a reimbursement for all actual
                  costs reasonably and properly incurred by the CONTRACTOR in
                  standing down at a port on the mainland of the CONTRACT AREA
                  nominated by the OPERATOR, or, at the OPERATOR'S option, at
                  the individual home bases of the CONTRACTOR'S PERSONNEL, and
                  (as the case may be) in demobilising from said port or home
                  bases the CONTRACTOR'S PERSONNEL as a direct consequence of
                  the DRILLING UNIT being shutdown by reason of Force Majeure.
                  Full supporting documents must accompany any invoice for this
                  charge.

5.3      DAILY RATES

         All rates per day described hereunder refer to a day of 24 hours. For
         parts of a day all such daily rates shall be prorated to the nearest
         one-quarter hour.

         (a)      The OPERATING RATE shall be the amount per day payable for the
                  normal performance of the DRILLING SERVICES. The OPERATING
                  RATE shall apply for normal operations from the COMMENCEMENT
                  DATE until the DRILLING UNIT arrives at the mutually agreed
                  port at the end of the term of the CONTRACT and all OPERATOR'S
                  and SERVICE COMPANY equipment has been offloaded.

                  The OPERATING RATE shall not apply during provisioning,
                  deprovisioning, stand-by, moving, or during any periods of
                  shut down however caused.

                  In particular shutdown for revalidation of CERTIFICATION,
                  compliance with regulations, or rejection of equipment shall
                  be payable at nil rate.

                  Cessation of operations in order to slip, cut or change the
                  drilling line, or routine lubrication for routine maintenance
                  purposes as further described in clause 5.3(e) of this Section
                  5,up to 1/2 hour per shift per day, which cannot be safely and
                  properly carried out without suspending the DRILLING SERVICES
                  shall not be deemed to be shut down for the purposes of this
                  sub-clause.

                  The OPERATING RATE shall apply in a similar manner at each
                  subsequent LOCATION.

         (b)      The PROVISIONING RATE/ DEPROVISIONING RATE shall be the amount
                  per day applicable when the DRILLING UNIT is moored at
                  anchorage or alongside a suitable quay in Pascagoula,
                  Mississippi and the Republic of Trinidad and Tobago or such
                  other designated location and the OPERATOR'S MATERIALS and
                  SERVICE COMPANY EQUIPMENT are being loaded/ unloaded. The
                  PROVISIONING RATE/ DEPROVISIONING RATE shall apply for such
                  period in excess of fourteen (14) days for the Make Ready
                  period described in Section 1, Clause 6.3.


                                       2
<PAGE>
                                                                      SECTION 5
                                                              RATES AND CHARGES
                                                                    PAGE 3 OF 7
================================================================================

         (c)      The STANDBY RATE shall be the amount per day applicable when
                  the DRILLING UNIT is fully manned and in a state of readiness
                  to start or resume operations, during any period of delay or
                  suspension of operations on account of

                  -    adverse sea or weather conditions
                  -    waiting on OPERATOR'S orders or on OPERATOR'S MATERIALS
                       or on SERVICE COMPANIES
                  -    during wireline logging operations from the time
                       the first logging tool passes through the rotary
                       table until the last tool of the logging suite is
                       retrieved through the rotary table
                  -    failure of equipment provided by the OPERATOR or the
                       SERVICE COMPANIES
                  -    any act or omission of OPERATOR or its SERVICE COMPANIES,

                  until such time as operations are resumed.

                  During such Standby the CONTRACTOR may, subject to the
                  agreement of the OPERATOR, carry out maintenance or repairs to
                  the CONTRACTOR'S EQUIPMENT.

                  In the event the CONTRACTOR is unable to jack up at the first
                  LOCATION on account of weather conditions only, then the
                  STANDBY RATE shall apply after twenty-four (24) hours from
                  arrival of the DRILLING UNIT in the CONTRACT AREA. .

         (d)      The MOVING RATE shall be the amount per day which shall apply
                  from the time the DRILLING UNIT is under tight tow on
                  completion of the WELL at the first LOCATION until the legs
                  are pinned at the next LOCATION and similarly at subsequent
                  LOCATIONS thereafter.

         (e)      The REPAIR RATE shall be applicable during such times as there
                  is a shutdown in operations for repairs to the DRILLING
                  EQUIPMENT in the manner set out below:

         -        REPAIR RATE applies for a cumulative ten (10) hours per MONTH
                  shut down, unless such shutdown is for repairs not reasonably
                  within the control of CONTRACTOR, in which case the REPAIR
                  RATE shall be applicable for a cumulative thirty-six (36)
                  hours per month, and
         -        thereafter at NIL Rate.

                  In the event that any such shutdown which is caused by or
                  arises from the same incident shall continue from one month
                  into the next, then for the purposes of this sub-clause the
                  incident shall be treated as though it occurred in the same
                  month.

                  For cumulative downtime less than ten (10) hours per calendar
                  month, CONTRACTOR shall earn the incentive payment specified
                  in Schedule 5.1.

                  Downtime for the following instances shall be considered
                  normal drilling operations and shall not be considered as
                  repair time:


                                       3
<PAGE>
                                                                      SECTION 5
                                                              RATES AND CHARGES
                                                                    PAGE 4 OF 7
================================================================================

                  Industry standard thirty minutes rig service per tour
                  including, but not limited to, inspection of equipment,
                  lubrication, repacking swivel or top drive, slipping and/or
                  cutting drilling line, changing pump liners or swabs and
                  routine top drive service.

         (f)      The REDRILLING RATE being 75 percent of the OPERATING RATE
                  shall apply during all time spent in redrilling the hole or
                  during remedial work on the hole due to circumstances set out
                  in Clause 6.4 of the Conditions of Contract.

         (g)      The FISHING RATE being the amount per day applicable during
                  all times when fishing operations (or sidetracking operations
                  arising out of fish in the hole) are being carried out,
                  starting from the time that normal drilling operations are
                  interrupted on account of the need to begin fishing operations
                  and continuing until such time as normal drilling operations
                  are resumed. The Rate for all such fishing or sidetracking
                  operations shall be either the OPERATING RATE or, in the event
                  such operations are due to or arise out of the negligence of
                  the CONTRACTOR or its PERSONNEL then the rate shall be 75% of
                  the OPERATING RATE. In the event that sidetracking operations
                  are being carried out at 75% of the OPERATING RATE then normal
                  drilling operations shall be deemed to have been resumed when
                  the depth is reached at which the said fishing operations
                  occurred in the first place. 'Fishing operations' shall be
                  deemed to include all operations incurred in attempting to
                  remove a fish from the WELL or to push a fish to one side or
                  to pick up a fish.

         (h)      The SHUTDOWN WITH CREW RATE being the amount per day quoted in
                  Schedule 5.1 which shall apply during all such time as the
                  DRILLING UNIT has been shutdown and the DRILLING SERVICES have
                  been suspended for any reason by the OPERATOR. The Rate shall
                  include the CONTRACTOR'S costs in maintaining its PERSONNEL
                  and of protective maintenance at the DRILLING UNIT.

         (i)      The SHUTDOWN WITHOUT CREW RATE being the amount per day of the
                  SHUTDOWN WITH CREW RATE less any savings effected by the
                  CONTRACTOR in reducing the numbers of CONTRACTOR'S PERSONNEL
                  to skeleton strength for caretaker purposes only. The OPERATOR
                  shall give the CONTRACTOR 30 (thirty) days prior written
                  notice of the application of this Rate, which shall be
                  applicable for a period of not less than 30 (thirty) days.

                  In addition, the OPERATOR shall reimburse the CONTRACTOR the
                  Standing Down/ Remobilisation Charge.

         (j)      The FORCE MAJEURE a) Rate and the FORCE MAJEURE b) Rate shall
                  be payable by the OPERATOR as provided in Section 2, Clause
                  10.

5.4      CHARGE FOR MEALS AND ACCOMMODATION PROVIDED BY CONTRACTOR

         This charge shall be the amount per man-day applicable for meals and
         accommodation provided by CONTRACTOR to OPERATOR'S and SERVICE
         COMPANIES' Personnel eating and/or staying overnight on the DRILLING
         UNIT in excess of 16 (sixteen) such Personnel per day. Where Personnel
         stay overnight on the DRILLING UNIT, the said Charge shall apply
         irrespective of whether the said Personnel are in fact each provided
         with no meals per day or one or two or three meals per day, and the
         substantiation for the application of this Charge shall be the daily
         "people on board" telex.


                                       4
<PAGE>
                                                                      SECTION 5
                                                              RATES AND CHARGES
                                                                    PAGE 5 OF 7
================================================================================

         Where Personnel are not staying overnight on the DRILLING UNIT, but
         have meals on board, the Casual Meal Rate shall apply.

5.5      PERSONNEL

         (a)      Additional Personnel

                  The CONTRACTOR shall be paid at the rates set out in Schedule
                  2 hereto for personnel additional to those listed in Section 6
                  Schedule 6.1 requested by the OPERATOR. CONTRACTOR shall
                  provide additional supervisory personnel for familiarization
                  of the crew and safety and supervision on the DRILLING UNIT,
                  during the transition period through ninety (90) days after
                  the COMMENCEMENT DATE. OPERATOR shall pay CONTRACTOR fifty
                  percent (50%) of the rates, costs, and expenses for such
                  additional personnel during such transition period, up to a
                  maximum payment by OPERATOR of $150,000.

         (b)      Courses

                  The OPERATOR shall reimburse the CONTRACTOR for all costs and
                  expenses in respect of travel, accommodation and subsistence
                  reasonably and properly incurred by CONTRACTOR'S RIG STAFF who
                  attend the OPERATOR'S or OPERATOR'S approved in-house required
                  courses. Invoices for such reimbursement shall be supported by
                  the requisite bills, tickets and other such substantiation as
                  the OPERATOR may reasonably require.

         (c)      Replacement

                  Pending replacement of personnel the OPERATOR shall deduct
                  from any monies due to the CONTRACTOR at the appropriate rate
                  per day quoted in Schedule 5.2 for all days in excess of 7
                  (seven) days that such person shall not have been so replaced.

5.6      ADDITIONAL EQUIPMENT

         The OPERATOR shall reimburse the CONTRACTOR as follows for additional
         equipment provided after the COMMENCEMENT DATE:

         (a)      The capital costs of modifications to the DRILLING UNIT or
                  additional equipment purchased on the instructions of the
                  OPERATOR shall be reimbursed to the CONTRACTOR in accordance
                  with the provisions of sub-clause (b) hereunder.

         (b)      The agreed rental costs of listed equipment under the Schedule
                  5.3 hereto or if not listed the costs of materials or charges
                  for hire of additional equipment or services required by the
                  OPERATOR'S REPRESENTATIVE at net invoice cost, after deduction
                  of all discounts plus an addition of 10% for all items not
                  exceeding US$3,000 (three thousand dollars) and 6% on all
                  items exceeding US$3,000 (three thousand dollars) to cover the
                  CONTRACTOR'S additional costs, overhead charges and profit.

         (c)      The costs of transport and shipping the further equipment and
                  materials to the CONTRACT AREA.


                                       5
<PAGE>
                                                                      SECTION 5
                                                              RATES AND CHARGES
                                                                    PAGE 6 OF 7
================================================================================

         (d)      An agreed rental rate to be incorporated in the Schedule 5.3
                  hereto covering CONTRACTOR'S operating and maintenance costs
                  for each item on such additional equipment included in Section
                  7 hereof.

         The OPERATOR shall not reimburse the CONTRACTOR for any further
         equipment or materials supplied and delivered by it which the
         OPERATOR'S REPRESENTATIVE has not first requested in writing as
         aforesaid.

5.7      FIXED RATES

         The rates and charges specified in Schedule 5.1, 5.2 and 5.3 shall be
         fixed for the duration of the CONTRACT subject only to adjustments for
         documented normal and customary changes in CONTRACTOR'S operating
         costs, including but not limited to, all personnel related costs,
         catering, insurance, repair and maintenance, travel expenses, and third
         party towing charges in the fixed price demobilisation fees. CONTRACTOR
         shall use reasonable efforts to keep the operating costs in line with
         industry practice.

5.8      PAYMENT PROVISIONS

         5.8.1    Monthly Account and Invoicing

                  (a)      Within the first fifteen (15) days of each MONTH the
                           CONTRACTOR shall submit to the OPERATOR in triplicate
                           a monthly account in respect of DRILLING SERVICES
                           performed by it during the previous MONTH for which
                           payment is due, and also in respect of services given
                           and/or materials supplied (if any) for which payment
                           is due.

                  (b)      Such account shall be accompanied by one copy of the
                           Time Breakdown Report and such other invoice support
                           documents or information as the OPERATOR may
                           reasonably require from time to time.

                  (c)      Such account shall comprise one invoice for each WELL
                           on which the DRILLING UNIT has operated during the
                           previous MONTH.

                  (d)      CONTRACTOR shall be responsible for ensuring timely
                           receipt of invoices by the OPERATOR. OPERATOR will
                           only pay CONTRACTOR's invoices submitted within two
                           (2) months of completion of the DRILLING SERVICES for
                           a particular well under this CONTRACT, except for
                           third party invoices which must be submitted within
                           four (4) months of completion of the DRILLING
                           SERVICES for a particular well. Invoices submitted
                           more than two (2) months or four (4) months as the
                           case may be, after completion of the DRILLING
                           SERVICES for a particular well under this CONTRACT
                           will be settled at the OPERATOR's discretion and may
                           result in non-payment.

                  (e)      Invoices shall be numbered serially and submitted to
                           the OPERATOR at the following address, bearing the
                           CONTRACT reference number and well description:


                                       6
<PAGE>
                                                                      SECTION 5
                                                              RATES AND CHARGES
                                                                    PAGE 7 OF 7
================================================================================

                           BP TRINIDAD AND TOBAGO LLC
                           CONTRACT:  C- 2600
                           WELL DESCRIPTION: (Well being drilled)

                           Marked for the attention of: THE INVOICE PROCESSING
                           SUPERVISOR (Well Operations)

                           or other address as may be advised to the CONTRACTOR
                           from time to time.

         5.8.2    Payments by the OPERATOR

                  (a)      To the extent it is not disputed by the OPERATOR, the
                           OPERATOR shall pay all invoices within 30 (thirty)
                           days after receipt thereof to bank accounts nominated
                           by the CONTRACTOR. In the event any undisputed
                           invoices are not so paid by the OPERATOR within the
                           said 30 (thirty) days, then the OPERATOR shall pay
                           interest on such unpaid amounts at the rate of 10%
                           per annum or pro rata thereof from the due date until
                           paid. The bank account to which OPERATOR shall make
                           payments under the CONTRACT shall be as follows:

                           BANK:

                           ACCOUNT:

                           Any change to the above details shall be the subject
                           of a formal amendment to CONTRACT.

                  (b)      In the event that the OPERATOR disputes an invoice or
                           part thereof, the OPERATOR shall within 20 (twenty)
                           days of receipt thereof notify the CONTRACTOR in
                           writing of the invoice or part thereof so disputed
                           and specifying the reason therefor. Payment of such
                           disputed invoice or part thereof shall be withheld
                           until settlement of the said dispute. Such payments
                           so withheld shall not be subject to interest charges
                           unless the original invoices as submitted by the
                           CONTRACTOR are subsequently agreed by OPERATOR to be
                           correct based solely on the original support
                           documents or information provided.

                  (c)      Payment by the OPERATOR of the CONTRACTOR'S invoices
                           shall be without prejudice to the OPERATOR's rights
                           subsequently to challenge the correctness thereof.

                  (d)      Any expenditure of whatsoever nature incurred by the
                           CONTRACTOR in connection with the CONTRACT for which
                           responsibility has not been assumed in the CONTRACT
                           by the OPERATOR shall be a cost to be borne by the
                           CONTRACTOR.

                  (e)      Payment by the OPERATOR of any account submitted by
                           the CONTRACTOR shall not discharge or release the
                           CONTRACTOR from any of its obligations under the
                           CONTRACT or be deemed approval or acceptance of work
                           covered by such account.

                  (f)      All invoices shall be submitted in and payment made
                           in US Dollars.


                                       7
<PAGE>

                                  SCHEDULE 5.1


                                RATES AND CHARGES


NAME OF DRILLING UNIT:...............................CHILES CORONADO

<TABLE>
<CAPTION>
REF. NO.                DESCRIPTION OF RATE OR CHARGE                                                     AMOUNT US$

                        MOBILISATION - DEMOBILISATION

OFFSHORE EAST COST OF TRINIDAD
<S>                                                                                            <C>
 1.        MOBILISATION                - direct to LOCATION                                        $3,600,000       Lump Sum

                                       - Via the Republic of Trinidad and Tobago                    $3,600,000      Lump Sum


 2.        DEMOBILISATION   - from the REPUBLIC of Trinidad and Tobago                             $2,800,000       Lump Sum


 3.        STANDING DOWN/ REMOBILISATION CHARGE                                                    NA

           DAILY RATES

 4.        OPERATING                                                                             $73,000 per day

 5.        PROVISIONING/ DEPROVISIONING                                                          $68,000 per day

 6.        STANDBY                                                                               $71,000 per day

 7.        MOVING                                                                                $71,000 per day

8.         REPAIR                                                                                85% of OPERATING RATE

9.         REDRILLING                                                                            75% of OPERATING RATE

10.        FISHING                                                                               75% of OPERATING RATE

11.        SHUTDOWN WITH CREW                                                                    $71,000 per day

12.        SHUTDOWN WITHOUT CREW                                                                 $71,000 per day

13.        FORCE MAJEURE                              a)                                         $71,000 per day
                                                      b)                                         $60,000 per day
14         REPAIR RATE INCENTIVE                                                                 $1000 per hour
           (Payable for each hour of repair time less
           than 10 hours per month)

<PAGE>
                                                      SCHEDULE 5.1 TO SECTION 5
                                                              RATES AND CHARGES
                                                                    PAGE 2 OF 2
================================================================================


MISCELLANEOUS SERVICES FOR OPERATOR'S PERSONNEL

15.                     Meals and accommodation provided by
                        CONTRACTOR (in excess of 16 (sixteen)                                $60.00 per man per day per day
                        OPERATOR'S personnel)

                        Casual Meal Rate                                                     $15.00 per meal

</TABLE>

16.                     The Rate per day for CONTRACTOR'S PERSONNEL who have
                        been removed and who have not been replaced by the
                        CONTRACTOR shall be a deduction of the amount of the
                        rate in schedule 5.2 hereto for the person so removed
                        for all days in excess of seven (7) days that such
                        person shall not have been so replaced until such time
                        as the said person so removed has been replaced.















                                       2
<PAGE>

                                  SCHEDULE 5.2
                                    RATES FOR
                             CONTRACTOR'S PERSONNEL

                                 (SEE NEXT PAGE)




<PAGE>

<TABLE>
<CAPTION>
TRINIDADIAN OPERATIONS
======================
               TITLE            TOTAL NUMBER *  ON BOARD  EXPATRIATE OR    WORK SCHEDULE    ANNUAL BASE
               =====            ==============  ========  ==============   =============    ============
                                                             NATIONAL                          SALARY
                                                             ========                          ======


<S>                             <C>             <C>        <C>              <C>              <C>
EXPATRIATE
==========
Rig Manager                         2               1      Expatriate       28 On/28 Off     $  81,600

Assistant Rig Manager               2               1      Expatriate       28 On/28 Off         72,000

Rig Engineer (Barge Engineer)       2               1      Expatriate       28 On/28 Off         66,326

Safety & Training Coordinator       2               1      Expatriate       28 On/28 Off         46,290

Mechanic                            2               1      Expatriate       28 On/28 Off         58,035

Electrician                         2               1      Expatriate       28 On/28 Off         58,035

Crane Operator                      4               2      Expatriate       28 On/28 Off         48,363

Driller                             4               2      Expatriate       28 On/28 Off         59,417

             SUB-TOTAL              20             10
             =========              ==             ==
NATIONAL
========
Assistant Driller                   4               2      National         14 On/14 Off      $  35,000

Derrickman                          4               2      National         14 On/14 Off         28,000

Shaker Hand                         4               2      National         14 On/14 Off         26,500

Floorman                            12              6      National         14 On/14 Off         26,000

Assistant Electrician               2               1      National         14 On/14 Off         28,000

Motorman                            4               2      National         14 On/14 Off         28,000

Clerk/Radio Operator                2               1      National         14 On/14 Off         28,000

Storeman                            2               1      National         14 On/14 Off         25,000

Welder                              2               1      National         14 On/14 Off         30,000

Lead Roustabout                     4               2      National         14 On/14 Off         28,000

Roustabout                          12              6      National         14 On/14 Off         26,000

Steward                             2               1      National         14 On/14 Off         28,000

Night Cook                          4               2      National         14 On/14 Off         26,000

Utility Hand                        8               4      National         14 On/14 Off         24,000

             SUB-TOTAL              66             33
             =========              ==             ==
          TOTAL PERSONNEL           86             43
          ===============           ==             ==

</TABLE>

** Rates are per position. This rate includes two persons, one for crew A, one
for crew B. Does not include additional travel cost, if any and /or additional
catering costs
==============================================================================


TABLE CONTINUED......
<PAGE>

<TABLE>
<CAPTION>
TRINIDADIAN OPERATIONS                  25%           37.2%
======================                  ===           =====
               TITLE             FOREIGN SERVICE   OVERHEAD &   TOTAL ANNUAL    DAY RATE WITH              CREW
               =====             ================  ===========  =============   ==============             ====
                                      PREMIUM       INSURANCE     COST PER     BURDEN PER PERSON  ADDITIONS/DAY/POSITION**
                                      =======       ==========    =========    =================  ========================
                                                      BURDEN       PERSON
                                                      ======       ======
<S>                              <C>               <C>          <C>            <C>                <C>
EXPATRIATE
==========
Rig Manager                       $     20,400     $ 30,355      $  132,355       $  362.62            $  725.23

Assistant Rig Manager                   18,000       26,784         116,784          319.96               639.91

Rig Engineer (Barge Engineer)           16,582       24,673         107,581          294.74               589.48

Safety & Training Coordinator           11,573       17,220          75,082          205.71               411.41

Mechanic                                14,509       21,589          94,133          257.90               515.80

Electrician                             14,509       21,589          94,133          257.90               515.80

Crane Operator                          12,091       17,991          78,445          214.92               429.83

Driller                                 14,854       22,103          96,374          264.04               528.08

             SUB-TOTAL
             =========
NATIONAL
========
Assistant Driller                            -       13,020          48,020         131.56               263.12

Derrickman                                   -       10,416          38,416         105.25               210.50

Shaker Hand                                  -        9,858          36,358          99.61               199.22

Floorman                                     -        9,672          35,672          97.73               195.46

Assistant Electrician                        -       10,416          38,416         105.25               210.50

Motorman                                     -       10,416          38,416         105.25               210.50

Clerk/Radio Operator                         -       10,416          38,416         105.25               210.50

Storeman                                     -        9,300          34,300          93.97               187.95

Welder                                       -       11,160          41,160         112.77               225.53

Lead Roustabout                              -       10,416          38,416         105.25               210.50

Roustabout                                   -        9,672          35,672          97.73               195.46

Steward                                      -       10,416          38,416         105.25               210.50

Night Cook                                   -        9,672          35,672          97.73               195.46

Utility Hand                                 -        8,928          32,928          90.21               180.43

             SUB-TOTAL
             =========
          TOTAL PERSONNEL
          ===============
</TABLE>

** Rates are per position. This rate includes two persons, one for crew A, one
for crew B. Does not include additional travel cost, if any and /or additional
catering costs
==============================================================================

<PAGE>

                                    SECTION 6


                             CONTRACTOR'S PERSONNEL





<PAGE>


6.1        PROVISION OF CONTRACTOR'S PERSONNEL

           The CONTRACTOR shall provide all CONTRACTOR'S PERSONNEL listed in
           Schedule 6.1 hereof in the numbers and categories referred to
           therein. Such numbers and categories shall not be exceeded or reduced
           without prior written approval of the OPERATOR and any change in the
           numbers and/or categories so approved shall be recorded by amendment
           to Schedule 6.1. Should the OPERATOR require the CONTRACTOR to
           provide additional PERSONNEL in excess of the full complement of
           CONTRACTOR'S PERSONNEL or SUB-CONTRACTOR'S personnel listed in
           Schedules 6.1 and 6.2 then the CONTRACTOR shall be reimbursed at the
           day rates included under SECTION 5. The CONTRACTOR shall give the
           OPERATOR'S REPRESENTATIVE the name and work history, education and
           training history including courses attended of such CONTRACTORS
           PERSONNEL including any person proposed as a replacement therefor.
           The OPERATOR may at its discretion approve or veto the provision of
           any such CONTRACTOR'S PERSONNEL by stating the reason therefor and
           may within fourteen (14) days of receipt of such histories notify the
           CONTRACTOR in writing of its approval or veto. Absence of such
           notification by the OPERATOR within fourteen (14) days shall
           constitute approval.

           The selection, replacement, hours of labour and remuneration of
           CONTRACTOR's PERSONNEL shall be determined by CONTRACTOR.

6.2        CONTRACTORS REPRESENTATIVE

           The CONTRACTOR shall provide a competent and authorised
           Representative who shall be nominated in writing and be acceptable to
           the OPERATOR. The CONTRACTOR'S REPRESENTATIVE shall be available at
           all times and shall be authorised to receive on behalf of the
           CONTRACTOR all directions and instructions in connection with the
           SERVICES from the OPERATOR'S REPRESENTATIVE.

           CONTRACTOR's REPRESENTATIVE shall be in charge of all CONTRACTOR's
           personnel and shall have authority to resolve all day to day matters
           which arise between OPERATOR and CONTRACTOR.

6.3        GENERAL

           The CONTRACTOR shall adhere to all labour standards and practices
           applicable to the CONTRACT AREA.

           All personnel provided by the CONTRACTOR in accordance with
           sub-clause 6.1 above, shall be deemed to be the employees of the
           CONTRACTOR and the CONTRACTOR shall be solely responsible for payment
           of salaries to such personnel.

           The CONTRACTOR shall meet all costs for its PERSONNEL, including but
           without limitation those associated with travel, accommodation,
           holiday and sickness throughout the duration of the SERVICES.

           The CONTRACTOR'S PERSONNEL shall be sufficiently conversant with the
           English language to enable the OPERATOR'S REPRESENTATIVE to issue
           instructions and to receive written and verbal reports in the English
           language and so that operations hereunder are not hampered or



<PAGE>
                                                                      SECTION 6
                                                         CONTRACTOR'S PERSONNEL
                                                                    PAGE 2 OF 4
================================================================================

           endangered on account of language barriers. The radio and computer
           operator must be English speaking.

           The CONTRACTOR shall be responsible for all matters relating to rest
           periods for its personnel including inter alia the provision of a
           relief operating crew where the performance of the SERVICES as
           required by the OPERATOR so dictates.

6.4        TRAINING

           The CONTRACTOR shall ensure that all personnel proposed in compliance
           with the foregoing shall have undertaken courses in accordance with
           the CONTRACTOR'S operations manual and good oilfield practice and all
           OPERATOR required HSE training requirements.

6.5        MEDICAL CERTIFICATES

           The CONTRACTOR shall make available to the OPERATOR'S REPRESENTATIVE
           valid medical certificates stating that each person travelling to the
           DRILLING UNIT on behalf of the CONTRACTOR is fit to do so.

6.6        PERSONNEL RECORDS

           The CONTRACTOR shall keep medical records, wages books and time
           sheets and full records of the CONTRACTOR'S PERSONNEL. The CONTRACTOR
           shall keep details of its PERSONNEL'S next of kin on the DRILLING
           UNIT and at its shore base.

6.7        QUALIFICATIONS AND TRAINING OF CONTRACTOR'S PERSONNEL

           (a)       General

                     All CONTRACTOR'S PERSONNEL and SUB-CONTRACTOR'S personnel
                     on board the DRILLING UNIT shall be required to have
                     attended an Offshore Basic Fire Course and an Offshore
                     Survival Course held at an OPERATOR approved training
                     centre prior to working on board the DRILLING UNIT with
                     refresher training every three years. Specialist training
                     for helicopter refuelling crews and fire teams is also
                     required. All costs incurred shall be to the account of the
                     CONTRACTOR.

           (b)       Drilling Personnel

                     The CONTRACTOR shall prior to the COMMENCEMENT DATE ensure
                     that the RIG STAFF shall have satisfactorily completed a
                     well control procedure training course and have obtained a
                     Well Pressure Control Certificate from a training
                     establishment approved by IWCF or the relevant authorities
                     in the CONTRACT AREA. The CONTRACTOR shall at its cost
                     further ensure that the RIG STAFF shall attend refresher
                     courses at such approved training establishments at
                     intervals of not more than twelve months and maintain
                     validity of certification for all RIG STAFF throughout the
                     term of the CONTRACT and any extension thereto.

                     Whenever so requested by the OPERATOR the CONTRACTOR shall
                     make available to the OPERATOR certificates evidencing such
                     validity. The CONTRACTOR shall arrange, at regular weekly
                     intervals, for on site training of its PERSONNEL engaged in
                     drilling operations on the DRILLING UNIT in matters
                     relating to health, safety, accident prevention and


                                       2
<PAGE>
                                                                      SECTION 6
                                                         CONTRACTOR'S PERSONNEL
                                                                    PAGE 3 OF 4
================================================================================

                     environmental protection and, in addition, prior to the
                     commencement of specialised operations such as drill stem
                     and production testing and radioactive logging. Minutes of
                     meetings held to fulfil such training requirements shall be
                     made available to the OPERATOR and shall be posted on
                     notice boards on the DRILLING UNIT.

                     Notwithstanding the foregoing provisions, the CONTRACTOR'S
                     RIG STAFF shall if required by OPERATOR attend the
                     OPERATOR'S Pressure Control and HP and HT course. Such
                     attendance if required shall take place at times and dates
                     to be arranged between the CONTRACTOR and OPERATOR but in
                     any case prior to the COMMENCEMENT DATE.

           (c)       Marine and Installation Personnel

                     The CONTRACTOR shall ensure that prior to the COMMENCEMENT
                     DATE and throughout the continuance of the CONTRACT the
                     Captain or the equivalent person but under a different
                     title are properly qualified for their respective positions
                     and experienced in carrying out their duties on the
                     DRILLING UNIT.

                     The CONTRACTOR shall ensure that, (otherwise than in the
                     event of total DRILLING UNIT evacuation on the instructions
                     of the OPERATOR) there is always one person on board who is
                     fully competent in respect of, and is designated
                     responsible for, marine operations and calculation of deck
                     loadings.

6.8        EMPLOYMENT OF LOCAL PERSONNEL AND RATES OF PAY

           The CONTRACTOR shall, if applicable to this CONTRACT, employ local
           labour subject to availability and suitability of qualifications and
           experience. The CONTRACTOR shall ensure early contact is made with
           the Trinidad authorities to ascertain its requirements in this
           regard.

           The CONTRACTOR shall comply with all relevant governmental rules,
           regulations and instructions with respect to the employment of local
           labour.

6.9        PASSPORTS AND VISAS

           The CONTRACTOR shall ensure that when appropriate all CONTRACTOR'S
           PERSONNEL are in possession of valid passports and shall obtain all
           visas and entry or other permits required to enable such CONTRACTOR'S
           PERSONNEL to proceed to and work in the CONTRACT AREA and shall
           assist such PERSONNEL in clearing immigration in Trinidad.

6.10       TRANSPORTATION

           The CONTRACTOR shall make its own arrangements and meet all expenses
           for the transport of all the CONTRACTOR'S PERSONNEL to and from and
           within the CONTRACT AREA other than between the DRILLING UNIT and the
           OPERATOR'S designated crew change location in the CONTRACT AREA.

6.11       REMOVAL OF PERSONS PROVIDED BY THE CONTRACTOR AND THE SUB-CONTRACTORS

           At the instruction of the OPERATOR in writing the CONTRACTOR shall
           remove from duties hereunder or lawfully secure such removal of any
           of the CONTRACTOR'S PERSONNEL who is unacceptable to the OPERATOR.


                                       3
<PAGE>
                                                                      SECTION 6
                                                         CONTRACTOR'S PERSONNEL
                                                                    PAGE 4 OF 4
================================================================================

           OPERATOR shall state the reason for such removal in the written
           instruction.

6.12       REPLACEMENT OF PERSONS REMOVED BY THE CONTRACTOR

           The CONTRACTOR shall forthwith at its cost and expense replace any
           such person removed under the provisions of sub clause 6.11 hereof
           such replacement being a person qualified and capable of performing
           in an efficient manner the duties of any such person being replaced.
           This sub-clause shall also apply to CONTRACTOR'S PERSONNEL leaving of
           their own volition.

6.13       RESTRICTION AS TO DRUGS AND ALCOHOLIC LIQUORS

           The CONTRACTOR shall not except for bona fide medical purposes, sell,
           barter, give, dispense or otherwise dispose of any drugs or alcoholic
           liquors to any person at the LOCATION, shall prohibit any such sale,
           barter, gift, dispensation or other disposal to be made by any of the
           CONTRACTOR'S PERSONNEL.

6.14       RECOGNISED FESTIVALS AND RELIGIOUS AND OTHER CUSTOMS

           The CONTRACTOR shall at all times and in all respects in all dealings
           with the CONTRACTOR'S PERSONNEL observe and pay full deference to all
           recognised festivals and religious or other customs.

6.15       DISORDERLY CONDUCT

           The CONTRACTOR shall take all requisite precautions and use his best
           endeavours to prevent any riotous or unlawful behaviour by or amongst
           any of the CONTRACTOR'S PERSONNEL.

6.16       BRIBERY

           The CONTRACTOR shall not make or offer any bribe or any gift,
           gratuity, reward, commission or other inducement in money or of any
           description whatsoever to any person in the employment of the
           OPERATOR or SERVICE COMPANIES.

6.17       REPATRIATION OF CONTRACTOR'S PERSONNEL

           The CONTRACTOR shall, pending the repatriation of any of the
           CONTRACTOR'S PERSONNEL maintain such CONTRACTOR'S PERSONNEL in a
           proper manner until such time as they shall have left the CONTRACT
           AREA and in default thereof the OPERATOR may maintain and repatriate
           such CONTRACTOR'S PERSONNEL and recover the cost thereof from the
           CONTRACTOR.

6.18       SAFETY

           The CONTRACTOR shall provide its personnel with protective clothing
           and safety equipment identifying them as the CONTRACTOR'S PERSONNEL
           to designs approved by the OPERATOR for offshore working conditions
           in the CONTRACT AREA.



                                       4
<PAGE>


                              SCHEDULE 6.1 AND 6.2


         INITIAL STAFFING OF CONTRACTOR'S AND SUB-CONTRACTOR'S PERSONNEL

<TABLE>
<CAPTION>
     TRINIDADIAN OPERATIONS
     ----------------------
                  TITLE                   TOTAL NUMBER*      ON BOARD    EXPATRIATE OR       WORK SCHEDULE
                  -----                   ------------       --------    -------------       -------------
                                                                            NATIONAL
                                                                            --------
<S>                                       <C>                <C>         <C>                 <C>
     EXPATRIATE
     ==========
     Rig Manager                                2               1          Expatriate         28 On/28 Off
     Assistant Rig Manager                      2               1          Expatriate         28 On/28 Off
     Rig Engineer (Barge Engineer)              2               1          Expatriate         28 On/28 Off
     Safety & Training Coordinator              2               1          Expatriate         28 On/28 Off
     Mechanic                                   2               1          Expatriate         28 On/28 Off
     Electrician                                2               1          Expatriate         28 On/28 Off
     Crane Operator                             4               2          Expatriate         28 On/28 Off
     Driller                                    4               2          Expatriate         28 On/28 Off
     Paramedic                                  2               1          Expatriate         28 On/28 Off
     =========                                  =               =
                SUB-TOTAL                      22               11
                =========                      ==               ==

     NATIONAL
     ========
     Assistant Driller                          4               2          National           14 On/14 Off
     Derrickman                                 4               2          National           14 On/14 Off
     Shaker Hand                                4               2          National           14 On/14 Off
     Floorman                                  12               6          National           14 On/14 Off
     Assistant Electrician                      2               1          National           14 On/14 Off
     Motorman                                   4               2          National           14 On/14 Off
     Clerk/Radio Operator                       2               1          National           14 On/14 Off
     Storeman                                   2               1          National           14 On/14 Off
     Welder                                     2               1          National           14 On/14 Off
     Lead Roustabout                            4               2          National           14 On/14 Off
     Roustabout                                12               6          National           14 On/14 Off
     Steward                                    2               1          National           14 On/14 Off
     Night Cook                                 4               2          National           14 On/14 Off
     Utility Hand                               8               4          National           14 On/14 Off
                SUB-TOTAL                      66               33
                =========                      ==               ==
             TOTAL PERSONNEL                   88               44
             ===============                   ==               ==

</TABLE>


<PAGE>

                                  SCHEDULE 6.3
                LIST OF MODIFICATION TO BE PROVIDED BY CONTRACTOR

      AMORTIZATION PERIOD:           3 years
      --------------------
      AMORTIZATION RATE:             15%
      ------------------

<TABLE>
<CAPTION>
                                                                                    RESIDUAL                          BP        BP
                                                                                       VALUE       RESIDUAL    AMORTIZED     DAILY
NO.                                   ITEM                                    COST      RATE          VALUE       AMOUNT      RATE
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>           <C>          <C>        <C>           <C>
A.   EXPLORATORY WELLS
--   -----------------
1    25,000' 5-1/2" S-135 drill pipe with HT 55 connections, 7" OD x
     3-3/4" ID                                                          $1,447,635       50%        723,818    $ 723,818    ($821)
1A   Credit for 5" DP on Rig Now (18,000' X $20/ft.)                     (360,000)        0%              -   $(360,000)       408

2    30 joints of 5-1/2" Spiral-wate drill pipe with HT 55 conn.         $ 128,220       50%         64,110     $ 64,110      (73)

2A   Credit for 5" HW on Rig Now (30 jts. X $1,500 each)                  (45,000)        0%              -   $ (45,000)        51

3    All subs and accessories for above, including inspections              91,100       50%         45,550       45,550      (52)

4    Miscellaneous handling tools, rams, etc. for above                    167,650       50%         83,825       83,825      (95)

5    Freight, 18 loads tubulars @ 1,800.                                    32,400       50%         16,200       16,200      (18)

6    Relocate Schlumberger logging unit to port leg
                                                                           200,000      100%        200,000            -         -
7    Relocate cement unit to centerline under elevated piperack            100,000      100%        100,000            -         -

8    Reroute exhausts to aft of port leg                                   150,000      100%        150,000            -         -

9    Extra high pressure washdown equipment                                 10,000      100%         10,000            -         -

10   Trash Compactor                                                        18,000      100%         18,000            -         -

11   Additional man rider air hoist under floor                             25,000      100%         25,000            -         -

12   International spare parts inventory                                   500,000      100%        500,000            -         -

13   21-1/4" 5M double ram with 21-1/4" 5M Bag (option rental)             850,000       50%        425,000      425,000     (482)

14   Maximum quarters capacity (100 preferred)                             200,000       50%        100,000      100,000     (113)

15   UV Purifier                                                            15,000      100%         15,000            -         -

16   Crane Rests (Reinstall)                                                 5,000      100%          5,000            -         -

17   Rig LAN and CORIS and Satellite                                       125,000       50%         62,500       62,500      (71)

18   Flare Boom Stanchions                                                  25,000      100%         25,000            -         -

19   Thru hull dump                                                         10,000      100%         10,000            -         -

20   Change Name of rig to Chiles Coronado                                  20,000      100%         20,000            -         -

21   Site specific survey and analysis                                      25,000      100%         25,000            -         -
                                                                      ------------------------------------------------------------
                                   SUB-TOTAL                            $3,740,005        NA     $2,579,003   $1,116,003  $(1,266)
                                                                      ------------------------------------------------------------

B.   KAPOK DEVELOPMENT PROGRAM
--   -------------------------
22   Increase base oil storage to 1,000 bbls.                              100,000       75%         75,000       25,000      (28)

23   Increase mud capacity by 800 bbls.                                    175,000       75%        131,250       43,750      (50)

24   Add 2 each 700 bbl. Brine storage tanks - 1,400 bbls. Total           150,000       75%        112,500       37,500      (43)

25   P-Quip Super Mud Bucket                                                45,000       75%         33,750       11,250      (13)

26   2 anchor winches, fairleads, buoys, anchors, racks, etc.              400,000       50%        200,000      200,000     (227)

27   Relocate welding shop                                                  20,000      100%         20,000            -         -
                                                                      ------------------------------------------------------------
                                   SUB-TOTAL                             $ 890,000        NA      $ 572,500    $ 317,500   $ (360)
                                                                      ------------------------------------------------------------
                                     TOTAL                              $4,630,005        NA     $3,151,503   $1,433,503  $(1,626)
                                                                      ============================================================
</TABLE>

NOTES:
------

1        If contract terminates earlier than three (3) years for any reason, BP
         will owe the Unamortized principal balance

2        Above included in contract rates

<PAGE>


                                    SECTION 7

                                     PART I


                     DRILLING UNIT, EQUIPMENT, SUPPLIES AND

                    SERVICES TO BE PROVIDED BY THE CONTRACTOR

                                 (SEE NEXT PAGE)



<PAGE>


                      CHILES CORONADO JACKUP DRILLING UNIT

--------------------------------------------------------------------------------

      The CHILES CORONADO is a LeTourneau Super 116 jackup mobile offshore
      drilling unit, designed by LeTourneau, Inc., Longview, Texas. The unit is
      classed by the American Bureau of Shipping (ABS) and complies with the IMO
      MODU Code. A cantilevered drilling structure and substructure allows the
      unit to drill or workover wells on existing fixed production platforms.
      The CHILES CORONADO is designed to work in water depths as shallow as 16
      feet and up to 360 feet. Fully air-conditioned quarters can accommodate a
      crew of 94.

A.                        GENERAL DESCRIPTION

--------------------------------------------------------------------------------

<TABLE>
<S>                            <C>
      Type:                    LeTourneau Super 116 Class Independent Leg Cantilever Jackup
      Builder:                 TDI Halter Marine   -   Pascagoula, MS
      Year Built:              1999
      Class:                   ABS Maltese Cross A1 Self-Elevating Mobile Drilling Unit, 1996 Rules.
                               IMO MODU Code for the Construction & Equipping of Mobile Offshore
                               Drilling Units, 1989
      Flag:                    Panama
      Elevating System:        LeTourneau Electric Rack and Pinion Jacking System

</TABLE>

           1.        Principal Dimensions
                     Length Overall                               243'-0"
                     Breadth                                      206-'0"
                     Depth of Hull                                 26'-0"
                     Length of Legs                               477'-0"
                     Spud Tank Diameter                           46 "-0"


           2.        Hull Draft and Displacement
                     Lightship Draft - Minimum                     14'-0"
                     Loadline Draft - Maximum                      16'-0"
                     Lightship Displacement (Kips)                  22933
                     Loadline Displacement (Kips)                   25935

           3.        Quarters
                     Complete air-conditioned accommodations for a ninety-four
                     (94) person crew. In addition to accommodations, the
                     four-story quarter's structure contains a galley/mess room,
                     six (6) man treatment room, fitness room, crew change room,
                     offices, recreation rooms, control room, and radio room.

           4.        Heliport
                     73' octagonal steel cantilevered heliport designed to
                     withstand loads imposed by a Sikorsky S-61N helicopter or
                     equal. Heliport is lighted and equipped with tie downs,
                     perimeter safety nets, and access stairs.


<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 2 OF 9
================================================================================

           5.        Storage Capacities
                     Diesel fuel                                 4,611 bbls.
                     Drill water                                14,592 bbls.
                     Potable water                               1,220 bbls.
                     Liquid mud (in main mud pits)               3,300 bbls.
                     Base oil                                    1,000 bbls.
                     Brine (Completion Fluid)                    1,400 bbls.
                     Bulk Mud                                  5,440 cu. ft.
                     Bulk Cement                               5,440 cu. ft.
                     Sack Storage                                5,000 sacks
                     Hook Load                                     1500 kips
                     Rotary Load                                   1500 kips
                     Setback Load                                   600 kips



      B.   LOADING AND ENVIRONMENTAL CONDITIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
           1.        On Bottom Conditions
                                                               Severe Storm          Operating
                                                               ------------          ---------
<S>                                                            <C>                   <C>
                     Water Depth (feet)(1)                          328                  350
                     Wind Velocity (knots)                          100                   70
                     Current (knots)                                1.0                  1.0
                     Wave Height (feet)                              47                   35
                     Wave Period (sec)                               15                   15
                     Min. Air Gap (feet)                             50                   35
                     Max. Leg Can Penetration (feet)                 25                   25
                     Maximum Variable Load (kips)
                     in above conditions (2)                      3,300                4,800
                     Comb.Rig.Flr.Loads (kips)(3)                   750                1,500
                     Well Position (feet)
                             Aft of Hull Transom (feet)            00.0                 65.0
                             P/S off CL Vessel (feet)              00.0                 15.0

           2.        Transit Condition:
                     -----------------
                     Minimum Draft (Lightship)                                         14'-0"
                     ABS Load Line (Hull Draft)                                        16'-0"
                     Total Variable Load (Kips) (4)                                    3,300
                     Total Variable Load While Jacking (Kips)                          3,300

</TABLE>

                     Notes:
                     -----

                  (1)      Maximum water depth must include consideration for
                           high tides and storm surge.

                  (2)      Does not include combined rig floor loads listed
                           below.

                  (3)      Maximum individual rig floor loads are:

                           Hook Load............................1,500 kips
                           Rotary Load..........................1,500 kips
                           Setback Load...........................600 kips

                           Above loads valid up to 70 knot wind speed, however
                           no setback load allowed above 50 knots. Hook load
                           varies according to well center location. Max.
                           combined drill floor load is 1,500 kips. Pipe rack
                           load during skidding is 1,000 kips.


                                       2
<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 3 OF 9
================================================================================

                  (4)      Displacement of vessel at the load line minus
                           displacement of vessel at lightship.


C.    PLATFORM EQUIPMENT
--------------------------------------------------------------------------------

           1.        Primary Generators
                     Four (4) Caterpillar Model 3606 diesel engines rated at
                     2,514 HP each driving 3000 KVA continuous, 60 Hz, 600 volt
                     AC Kato generators.

           2.        Standby/Emergency Generator
                     One (1) Caterpillar Model 3508 diesel engine driving a 893
                     KVA continuous, 60 Hz, 480 volt generator complete with
                     switch gear, automatic start, breakers and DC battery bank.

           3.        SCR System
                     Five (5) Ross Hill Controls 600V, 2200 amps each.
                     Universal Switch Gear Inc. leg elevator contactors, AC
                     breaker panels and two (2) ground detector panels: SCR
                     room cooled by two (2) 15 Ton Carrier central air
                     conditioner units.

           4.        Watermaker
                     One (1) Specific Equipment - Model SE 132 ROM-1, reverse
                     osmosis watermaker, rated at 13,200 gallons per day.

           5.        Water Purifier
                     One (1) Specific Equipment Ultra Violet Purifier for
                     Purification of rig potable water - Model I-H-16-L,
                     capacity 330 GPM.

           6.        Pressure Washer
                     One (1) Sioux - Model EN270-H4-300, steam/pressure washer,
                     rated at 4.5 GPM at 3,000 psi.

           7.        Waste Treatment Unit
                     One (1) Exceltec 12MX, 120 Person Marine Sanitation Device.

           8.        Trash Compactor
                     One (1) Dolphin - Model 4000, 40 cu./ft. capacity

           9.        Air Compressors

                      a.         One (1) Airdyne cold start air compressor rated
                                 at 46 CFM powered by 2-cylinder Lister Diesel
                                 engine with electric start.

                      b.         Two (2) Airdyne 500 HOSS-JS rotary air
                                 compressors, each rated at 500 CFM at 125 psi
                                 powered by 125 HP AC electric motors.

                      c.         One (1) Airdyne 500 HOSS-JS bulk dual air
                                 compressor, rated at 500 cfm, 40 psi.


                                       3
<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 4 OF 9
================================================================================

                      d.         One (1) Refrigerated Air Dryer - Hankinson
                                 Model 80600, 750 cfm @ 38 degrees F.

           10.        Welding Equipment

                      Two (2) Miller SRH-444, 400 amp welding machines.

           11.        System Pumps

                      a.         Two (2) Bilge Pumps, Gorman Rupp 25 HP
                                 self-priming pumps.

                      b.         Two (2) Salt Water/Fire Pumps, 75 HP, Mission 4
                                 x 3 x 13 centrifugal pumps.

                      c.         Two (2) Drill Water Pumps, 30 HP, Mission 4 x 3
                                 x 13 centrifugal pumps.

                      d.         One (1) Waste Oil Pump, gear type.

                      e.         Two (2) Fuel Oil Transfer Pumps, 5 HP, gear
                                 type.

                      f.         Three (3) Peerless Model 14-MB/4 stage,
                                 submersible salt-water service pumps. 75 HP
                                 rated @ 1,000 gpm @ 65 psi.

                      g.         Two (2) Each Potable and Salt Water Pressure
                                 Sets with Specific Brand 150 2" centrifugal
                                 vertical type pumps powered by AC electric
                                 motors with approximately 200-gallon pressure
                                 tanks.

                      h.         Two (2) Brake Cooling Water Pumps, 20 HP, 3 x 2
                                 x 13 Mission centrifugal pumps.

           12.        Cranes
                      Three (3) LeTourneau pedestal cranes, two (2) with 100'
                      booms, port midship crane with 120' boom, 50 ton capacity
                      at 20' radius with 4-part line. Complete with operator
                      cabs.

           13.        Mooring System
                      Two (2) each LeTourneau W-1500 anchor winches, 800 feet of
                      1-5/8" wire rope, fairleads, two (2) 10,000 lb. stockless
                      anchors, buoys, and pendant wire.

           14.        Flare Boom Base
                      Basic flare boom bases with stanchions


      D.   SAFETY AND LIFESAVING EQUIPMENT
--------------------------------------------------------------------------------

           1.        Lifeboats/Liferafts
                     Three (3) Survival Systems International, self-propelled,
                     enclosed lifeboats with launch davits approved for
                     50-person capacity each. Four (4) 25-man inflatable life
                     rafts with hydrostatic release.

           2.        Miscellaneous
                     Life preservers, life rings, litters and first aid
                     equipment in compliance with U.S. Coast Guard and IMO
                     regulations.

           3.        Fire Stations
                     Approximately twenty-five (25) salt-water fire stations
                     with 50' hose each. Fixed CO2 fire extinguishing systems
                     complete with cylinders, piping, nozzles, sensors and
                     controls for engine room, paint locker, and galley.
                     Complete fire and gas detection system.

           4.        Treatment Room
                     Fully equipped with Paramedic capability


                                       4
<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 5 OF 9
================================================================================

           5.        Fog Horn
                     One (1) AB-560 Audiobeam 2-mile Fog Signal with automatic
                     signal device.


      E.   DRILLING EQUIPMENT
--------------------------------------------------------------------------------

           1.        Derrick
                     Dreco 170' clear height x 40' x 32' base, with a 1,500,000
lb. hook load capacity.

           2.        Crown Block
                     Dreco crown block, 680 ton rated with six (6) 60" diameter
                     forged steel sheaves grooved for 1-5/8" drill line with
                     dual fast line sheaves and dual dead line sheaves.

           3.        Drawworks
                     National 1625-UDBE with disc brakes, nominal depth rating
                     30,000 feet

                     a.        Three (3) each GE-752 DC electric motors rated
                               1085 HP each
                     b.        Elmagco Model 7838 Eddy Current Auxiliary Brake
                     c.        Lebus grooved drum for 1-5/8" drilling line
                     d.        Two (2) breakout and makeup spinning catheads

           4.        Travelling Block
                     National, 650 ton, Hook/Block Combination with seven (7)
                     60" diameter sheaves grooved for 1-5/8" drill line.


           5.        Power Swivel (Top Drive)
                     National-Oilwell PS2 650/650 Power Swivel rated at 650
                     tons. Two speed with maximum continuous torque rating of
                     47,859 foot pounds @ 109 RPM. Driven by one (1) GE 752 DC
                     Hi-Torque electric motor. 4" bore, 7,500 psi WP. Maximum
                     RPM in low gear - 113, in high gear - 231.

           6.        Rotary Table
                     National Model D-495, 49 1/2" rotary independently driven
                     by a GE 752 DC Hi-Torque electric motor, 1130 HP, with
                     standard two speed transmission. Varco MPCH hinged master
                     bushing, with insert bowls for 2 3/8" - 8 5/8" tubulars.

           7.        Rotating Mouse Hole Assembly for Stand Building

                      a.         International Model 1994 rotating mouse hole
                                 for right or left hand rotation.

                      b.         International Model TT-1998 torque tool
                                 assembly. Operating range 3-1/2" drill pipe to
                                 8-1/2" drill collars. Torque range 0 to 108,000
                                 ft. Lbs.

           8.        Mud Pumps
                     Three (3) National 14-P-220 triplex pumps, rated at 2,200
                     HP each, with 7,500 psi fluid ends, each driven by two (2)
                     GE 752 DC Hi-Torque electric motors. Each mud pump is
                     equipped with a PPDR-130-7500C5 discharge dampener and
                     PPSC-80-025C5 flow through cellular suction stabilizer, and
                     a reset type relief valve. Maximum speed - 95 spm. Maximum
                     discharge pressure - 90% of liner rating.


                                       5
<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 6 OF 9
================================================================================

           9.         Iron Roughneck
                      National "Iron Roughneck" Model IR-170.


           10.        Mud System

                      a.  Mixing Pumps:     Two (2) Mission Magnum 6 x 8
                                            centrifugal pumps powered by 100 HP
                                            AC electric motors.

                      b.  Charging Pumps:   Three (3) Mission Magnum 6 x 8
                                            centrifugal pump powered by 100 HP
                                            AC electric motor.

                      c.  Agitators:        Ten (10) each 25 HP, 1,200 rpm for
                                            main & brine pits.
                                            Four (4) each 10 HP, 1,200 rpm for
                                            auxiliary pits.
                                            Four (4) each 5 HP, 1,200 rpm for
                                            solids control pits.

                      d.  Mud Cleaner/
                          Desilter:         One (1) Brandt LCM-2D-CMC Linear
                                            Motion Mud Conditioner with
                                            thirty-two (32) 4" cones, 1,920 gpm,
                                            discharging over a LCM-2D linear
                                            motion shaker deck. Supplied by two
                                            (2) Mission Magnum 6 x 8 pumps with
                                            100 HP AC motors.

                     e.   Desander:         Brandt LCM-2D-CMC Linear Motion Mud
                                            Conditioner with four (4) 12" cones,
                                            2,000 gpm, discharging over a LCM-2D
                                            linear motion shaker deck. Supplied
                                            by (1) 6 x 8 pump with 100 HP AC
                                            motor.

                     f.   Shale Shakers:    Five (5) Brandt LCM-2D Linear Motion
                                            Cascade Screen Separators, each
                                            rated at 400-600 gpm. One (1) Brandt
                                            Nutec Gumbo Chain System.

                     g.   Degasser:         Two (2) Brandt DG-10 Degassers,
                                            supplied by (2) Mission Magnum
                                            6 x 8 pumps with 100 HP AC motors.

                     h.   Trip Tank:        Two (2) x 34-barrel capacity with
                                            two (2) Halco 3 x 4 x 10 pumps with
                                            40 HP AC electric motors.

           11.       Stand Pipe and Manifold
                     Dual standpipes rated at 7,500 psi W.P.
                     Demco standpipe manifold rated at 11,250-psi test pressure
                     and 7,500 psi W.P.
                     Dual cement manifold with stand pipes rated at 15,000 psi.

           12.       Rotary Hose     Two (2) -4" ID  Copperstate rotary hoses
                                     rated at 7,500 psi W.P.

           13.       Bulk Storage Tanks
                     a.  Bulk Mud:               Four (4) each, 1,360 cu. ft.
                     b.  Bulk Cement:            Three (3) each, 1,360 cu. ft.
                     c.  Bulk Gel:               One (1) each, 1,360 cu. Ft.
                     c.  Bulk Mud Surge Tank:    One (1) each, 45 cu. ft.

           14.       Cementing Unit
                     Halliburton (On Main Deck)


                                       6
<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 7 OF 9
================================================================================

           15.        Blow-Out Preventers
                      a. 13-5/8" X 10,000 Blow-Out Preventers

                      (1) Annular:          One (1) Cameron type DL spherical
                                            preventer, 10,000 WP with 10,000# WP
                                            studded top and 15,000# WP flanged
                                            bottom connection, H2S trim.

                      (2) Rams:             One (1) Cameron Type U 15,000-psi
                                            W.P. double ram preventer and One
                                            (1) Cameron Type U 15,000-psi W.P.
                                            single ram preventer with three (2)
                                            sets of 5" pipe rams and one set of
                                            blind rams. Four (4) 3-1/16"
                                            15,000-psi WP flanged outlets,
                                            flanged top and bottom, H2S trim.

                      (3) Additional Rams:  One (1) set of Shearing Blind Rams,
                                            One (1) set of 31/2" Pipe Rams, One
                                            (1) set of 9 5/8" casing rams, One
                                            (1) set of 7 5/8" casing rams, One
                                            (1) set of 7" casing rams, One (1)
                                            set of 3 1/2" x 5" VBR rams.


                      b. 13 5/8" X 15,000 Blow-Out Preventers

                      (1) Annular:          One (1) Cameron type DL spherical
                                            preventer, 10,000 WP with 10,000# WP
                                            studded top and 15,000# WP flanged
                                            bottom connection, H2S trim.

                      (2) Rams:             One (1) Cameron Type U 15,000-psi
                                            W.P. double ram preventer and One
                                            (1) Cameron Type U 15,000-psi W.P.
                                            single ram preventer with three (2)
                                            sets of 5" pipe rams and one set of
                                            blind rams. Four (4) 3-1/16"
                                            15,000-psi WP flanged outlets,
                                            flanged top and bottom, H2S trim.

                      c. 21 1/4" 10,000 Blow-Out Preventers

                      (1) One (1) Shaffer wedge top spherical preventer, 5,000
                      with 5,000 WP studded top and 10,000 WP flanged bottom
                      connection, H2S trim.

                      (2) Two (2) Cameron Type U 10,000 # WP single ram
                      preventers, flanged top and bottom, with 41/16 10,000 WP
                      side outlets. Complete with one (1) set of 5" straight
                      bore pipe rams, one (1) set of conventional blind rams and
                      one (1) set of blind shear rams.


                      d. Choke and Kill Valves

                      Choke Line Valves:    Two (2) 3-1/16" - 10,000 psi gate
                                            valves. One hydraulic, one manual.
                                            H2S trim.

                      Kill Line Valves:     Two (2) 3-1/16" x 10,000-psi gate
                                            valves, one manual, one hydraulic.
                                            H2S trim.

                      e. Diverter System

                      One (1) ABB Vetco Gray KFDJ-J-2000 permanent diverter
                      system, with ABB Offshore Systems Diverter panel with
                      auto open feature.

                      f. Choke Manifold

                      Cameron 3-1/16" - 15,000 psi WP with two (2) Cameron
                      hydraulically adjustable choke, two (2) manual chokes.



                                       7
<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 8 OF 9
================================================================================

                      g. Mud Gas Separator
                      Brandt 48" diameter X 18' long mud gas separator, with
                      dual 6" inlets, 10" mud discharge and 8" gas discharge
                      vent line piped to crown. Pressure rating 125 psig.

                      h. BOP Control System
                      3,000 psi, Massco/Stewart & Stevenson, Model SSB2403S11
                      Control Unit.

                                 (1) Twenty-four (24) -11 gal. bladder type
                                 accumulators

                                 (2) One (1) 25 HP triplex pump and three (3)
                                 60:1 -- 8-1/2" air pumps

                                 (3) Nine (9) station control manifold with two
                                 (3) remote electric operated stations.

                                 i. Instrumentation
                                 One (1) HITEC/National Driller's Control
                                 Station with HITEC SDI 120 Instrumentation
                                 Package equipped with CCTV system for
                                 monitoring racking and stabbing boards.

                                 ii. Air Hoists
                                 Two (2) Ram Winch K6UL air hoists on rig floor,
                                 15,000 lb. pull @ 51 fpm. Two (2) Airdyne model
                                 ML 336-38 dedicated man rider winches. One
                                 mounted on the drill floor and one mounted
                                 below the drill floor. Four (4) Ram Winch K6UL
                                 air hoist under substructure for BOP
                                 manoeuvres.

                                 iii. Drilling Line
                                 7,500' of 1-5/8" 6 x 19 EIPS IWRC regular right
                                 lay.

           16.        Wireline Unit
                      One (1) Mathey "Surveyor" Wireline Unit with 30,000 ft. of
                      .108" wire.

           17.        Drive Pipe Support System
                      One (1) Drive Pipe Support System with tensioning
                      capability to tension drive pipe to 300 kips vertical
                      force and provide lateral restraint at wellhead.

           18.        Tubulars
                      25,000' (approximately 800 joints) 51/2" O.D., 21.90
                      lb/ft, S-135 drill pipe with HTSJ connections 7" O.D. X
                      33/4" I.D. Grant Prideco x-metal 7000 hard banding on box
                      and pin tool joints 3/32" raised. Thirty (30) joints 51/2"
                      O.D. conventional Hevi-Wate drill pipe with HT55
                      connections 7" O.D. X 3 15/16" I.D. Weight 1,800 lb/per
                      joint

                      Six (6) 9 1/2" OD drill collars with 7 5/8" Regular
                      connections.

                      Nine (9) 8" OD drill collars with 6-5/8" Regular
                      connections. Twenty One (21) 6 1/2" OD drill collars with
                      4 1/2" X-Hole connections. Necessary X-Over Subs, Kelly
                      Subs, and Bit Subs for Contractor's drill string.


                                       8
<PAGE>
                                                                      SECTION 7
                                             DRILLING UNIT, EQUIPMENT, SUPPLIES
                                                                    PAGE 9 OF 9
================================================================================

           19.        Mud Buckets
                      One (1) P-Quip Hydraulic Mud Bucket complete with air
                      hoses, connections, side seals and end seals for 5" & 5
                      1/2" drill pipe.


F.         COMMUNICATIONS EQUIPMENT
--------------------------------------------------------------------------------

           1.         Radio Equipment

                      a.         Two (2) fixed marine VHF transceivers, four (4)
                                 survival craft transceivers, six (6) hand held
                                 marine VHF transceivers.

                      b.         One (1) VHF-AM aeronautical base station
                                 transceiver capable of 6-channel operation,
                                 with crystals for 3 channels installed, unity
                                 gain ground plane antenna, and manual, 115 VAC.

                      c.         One (1) Global Maritime Distress & Safety
                                 System (GMDSS) as per SOLAS Regulations 5, 6,
                                 Part C.

                      d.         Satellite communications and data transfer.


           2.         Internal Telephone Communications and Public Address
                      System
                      One (1) Multi-station Gaitronics System for platform
                      intercommunication.

           3.         File Server, Computer, and External Communications System
                      Rig LAN digital computer and telecommunications system.
                      Microwave or Satellite voice and data links from offices,
                      drill floor, conference room, and the rig LAN. Additional
                      capabilities of the computer and link system (CORIS)
                      include:

                      a.         Customer and contractor offices on board rig
                                 have access to drilling and performance data in
                                 "real-time" personnel information, liquid and
                                 bulk variable inventories, and weather.

                      b.         Internet access provided to certain computers
                                 for E-mail and file transfer.

                      c.         Above data available via CORIS system.





                                       9
<PAGE>


                                CONTRACT SUMMARY

<TABLE>
<S>                           <C>
----------------------------- ----------------------------------------------------------------------------------
Contract No.                  C-2600
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Nature of Contract:           Hire of Drilling Unit
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Parties:                      BP Trinidad and Tobago LLC and Chiles Offshore Inc.
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Effective Date:               The date that the DRILLING UNIT is under tight tow to Pascagoula, Mississippi to
                              begin the Make Ready Period (July 10, 2001)
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Commencement Date:            The date on which  the  DRILLING  UNIT is pinned  on the  first  LOCATION  in the
                              CONTRACT AREA and the OPERATOR provided RIG ACCEPTANCE.
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Term:                         Three Years from Commencement Date
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Description of Services/
Scope of Work:                To carry out drilling services in support BP Trinidad and Tobago LLC's Drilling
                              Program
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Compensation:                 Mobilisation: US $3,600,000
                              Day Rate: US $73,000
                              Demobilisation:  US $2,800,000
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Payment Terms:                Thirty Days from Receipt of Invoice
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Termination:                  Without Cause - three months notice - 60% of Day Rate for the remainder of the
                              term  ($43,800)
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Estimated Value of Contract   $79,935,000
----------------------------- ----------------------------------------------------------------------------------

----------------------------- ----------------------------------------------------------------------------------
Distribution:
----------------------------- ----------------------------------------------------------------------------------

</TABLE>