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                                                                    EXHIBIT 10.7

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
entered into and effective this 1st day of July, 2002, by and between CHILES
OFFSHORE INC., a Delaware corporation, (the "Company"), and WILLIAM E. CHILES
(the "Executive").

                                    RECITALS

         The Executive and Chiles Offshore LLC, the predecessor-in-interest to
the Company, entered into that certain Employment Agreement dated November 1,
1997, as extended by that certain letter agreement executed on June 13, 2000
between the Company and the Executive (the "Original Agreement"), setting out
the terms and conditions for the Company's employment of the Executive.

         ENSCO International Incorporated, a Delaware corporation ("ENSCO"), and
the Company have entered into that certain Merger Agreement dated May 14, 2002
(the "Merger Agreement") by and among ENSCO, Chore Acquisition, Inc. (the
"Merger Sub"), a wholly-owned subsidiary of ENSCO, and the Company.

         If the merger of the Company with and into the Merger Sub pursuant to
the Merger Agreement becomes effective (the "Merger"), the Company and the
Executive desire to amend and restate the Original Agreement and provide for the
employment of the Executive by the Company, on the terms and conditions of this
Agreement, and from and after the effective date of the Merger (the "Effective
Date") all references in this Agreement to "the Company" shall mean ENSCO.

                                    AGREEMENT

Accordingly, the parties agree as follows:

         1. Employment, Duties and Acceptance.

            1.1 Employment by the Company and Duties. The Company hereby agrees
to employ the Executive for a term commencing on the Effective Date and expiring
at the end of the day on the second anniversary of the Effective Date (such
date, or later date to which this Agreement is extended in accordance with the
terms hereof, the "Termination Date"), unless earlier terminated as provided in
Section 4 or unless extended as provided herein (the "Term"). Notwithstanding
the foregoing, this Agreement shall be effective upon execution by the Executive
and the Company. During the Term, the Executive initially shall serve in the
capacity of a Vice President of the Company responsible for worldwide marketing
and sales and new business development, and shall assist the Company in the
integration of Chiles Offshore Inc. into ENSCO after the Merger, and thereafter
shall serve in such capacities of equal or greater ranking, level, dignity,
responsibility, importance and scope as requested from time to time by the
Company. The Executive also shall serve in those offices and directorships of
subsidiaries of the Company, or their subsidiaries, to which he may from time to
time be appointed or elected.

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During the Term, the Executive shall devote all reasonable efforts and
substantially all of his business time and services to the Company, subject to
the direction of the executive to whom he has reporting responsibilities as
determined by the Chief Executive Officer of the Company. The Executive shall
not engage in any other business activities except for passive investments in
corporations or partnerships not engaged in the Company Business (as hereinafter
defined) to the extent permitted by Section 3.1.1.

            1.2 Acceptance of Employment by the Executive. The Executive hereby
accepts such employment and shall render the services and perform the duties
described above.

         2. Compensation and Other Benefits.

            2.1 Annual Salary. The Company shall pay to the Executive an annual
salary at a rate of not less than Two Hundred Eighty Thousand Dollars ($280,000)
per year (the "Annual Salary"), subject to review and adjustment by the Board
annually in accordance with industry standards, taking into account the
Executive's performance, the Company's scope of operations, industry conditions
and the overall performance of the Company within the industry. In no event
shall the Executive's Annual Salary be reduced to less than $280,000 per year
without his prior written consent. The Executive hereby expressly acknowledges
that the preceding two sentences shall not be construed as requiring the Company
or the Board to make any annual increases in the Annual Salary. The Annual
Salary shall be payable in accordance with the payroll policies of the Company
as from time to time in effect, but in no event less frequently than once each
month, less such deductions as shall be required to be withheld by applicable
law and regulations.

            2.2 Performance and Stay Bonuses. On the Effective Date, the Company
shall pay to the Executive a performance bonus in the amount of Eight Hundred
Thousand Dollars ($800,000) (the "Performance Bonus"). In addition, the Company
recognizes that the Executive, as the CEO, President and founder of Chiles
Offshore Inc., is in a unique position to assist the Company in, and is critical
to, the successful integration of Chiles Offshore Inc. into ENSCO after the
Merger, and in recognition of the services the Executive will be providing in
assisting with such successful integration, the Company shall pay to the
Executive a stay bonus in the amount of Six Hundred Thousand Dollars ($600,000)
for each of the first two years following the Effective Date (such $1,200,000 in
stay bonuses is hereinafter collectively referred to as the "Stay Bonus") to the
extent the Executive remains employed by the Company or any of its subsidiaries.
The Stay Bonus shall vest pro rata on a monthly basis ($50,000 per month) and
the vested portion shall be payable on the first and second anniversary of the
Effective Date. Notwithstanding the foregoing, the balance of any unpaid Stay
Bonus (whether or not vested) shall be payable by the Company to the Executive
pursuant to Section 4.3 hereof if the Executive is terminated without Cause (as
defined in Section 4.2 hereof), including any termination which is deemed to be
a constructive termination without Cause under Section 4.6 hereof.

            2.3 Bonuses. All deferred bonuses and interest thereon payable by
the Company to the Executive, which are listed on the attached Schedule 2.3 (the
"Deferred Bonuses"), shall vest immediately and be paid by the Company to the
Executive on the Effective Date. The Executive also shall be entitled to
participate in the Company's Key Employee


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Incentive Plan, commensurate with his position as a Vice President of the
Company and as determined by the Compensation Committee of the Board of
Directors of the Company (the "Committee").

            2.4 Vacation Policy. The Executive shall be entitled to a paid
vacation of four weeks during each year of the Term.

            2.5 Participation in Employee Benefit Plans. The Company agrees to
permit the Executive during the Term, if and to the extent eligible, to
participate in the group life, hospitalization and disability insurance plans,
health program, pension plan, profit sharing programs, stock and option grants
as determined by the Board, and any similar benefit plan or other so called
"fringe benefits" of the Company (collectively, "Benefits") which may be
available to other Vice Presidents and employees of the Company, to the extent
such Benefits are offered by the Company. Provided the Executive is insurable at
standard rates (i) the Company agrees to use its best efforts to obtain
immediate coverage for the Executive upon the commencement of the Term under its
existing or newly adopted medical expense and hospitalization plan (to the
extent offered by the Company) for employees without premium surcharge and
without exclusions for disclosed preexisting conditions, and (ii) the Company
shall maintain the coverage under the Executive's existing life insurance policy
(or policies), insuring the life of the Executive and with beneficiaries
designated pursuant to the Executive's instructions, at the amount of one
million dollars, and shall pay all premiums under such policy (or policies)
during the Term. During the Term, the Company also shall provide disability
insurance for the Executive, which shall provide for payments based on 60% of
the Annual Salary paid to the Executive for the prior fiscal year upon his
disability; provided, however, that maximum amount the Company shall pay for
such disability insurance shall be five thousand dollars per year. If such
disability insurance premium exceeds five thousand dollars per year, the
Executive may elect to pay the amount in excess of five thousand dollars per
year in order to obtain such disability insurance. If the Executive does not
elect to pay any such excess, the Company's obligation shall be limited to
providing the maximum amount of disability insurance that may be obtained for
five thousand dollars per year in payments. The Executive shall cooperate with
the Company in applying for such coverage, including submitting to a physical
exam and providing all relevant health and personal data.

            2.6 General Business Expenses. The Company shall pay or reimburse
the Executive for all expenses reasonably and necessarily incurred by the
Executive during the Term in the performance of the Executive's services under
this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.

            2.7 Club Dues. During the Term, the Company shall pay the Executive
an allowance of eight hundred dollars ($800.00) per month, which the Executive
shall apply to the cost associated with country club dues and expenses at the
Houston Country Club and the Houstonian, or any comparable clubs or
organizations, so long as the Executive is a member of such club or clubs.


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         3. Non-Competition, Confidentiality and Company Property.

            3.1 Covenant Against Competition. The Executive acknowledges that
(i) the Company is currently engaged in the business of constructing, owning,
managing and operating offshore drilling rigs and hiring and managing crews to
operate such rigs, which equipment and crews are contracted or hired by third
parties for the purpose of drilling oil and gas wells offshore (the "Company
Business") and (ii) the agreements and covenants contained in this Section 3 are
essential to protect the business and goodwill of the Company. Accordingly, the
Executive covenants and agrees as follows:

                3.1.1 Non-Compete. As an independent covenant, and in order to
enforce the provision of Section 3.1.2 hereof and the other provisions of this
Agreement, the Executive agrees that he shall not during the Restricted Period
(as hereinafter defined), directly or indirectly (except in the Executive's
capacity as an officer of the Company or any of its subsidiaries), (i) engage or
participate in the Company Business; (ii) divert, take or solicit any offshore
drilling business of any customer of the Company or its subsidiaries; (iii)
enter the employ of, or render any other services to, any person engaged in the
Company Business except as permitted hereunder; or (iii) become interested in
any such person in any capacity, including, without limitation, as an
individual, partner, shareholder, lender, officer, member, manager, director,
principal, agent or trustee except as permitted hereunder; provided, however,
that the Executive may own, directly or indirectly, solely as an investment,
securities of any person traded on any national securities exchange or listed on
the National Association of Securities Dealers Automated Quotation System if the
Executive is not a controlling person of, or a member of a group which controls,
such person and the Executive does not, directly or indirectly, own 5% or more
of any class of equity securities, or securities convertible into or exercisable
or exchangeable for 5% or more of any class of equity securities, of such
person. As used in this Agreement, the "Restricted Period" shall mean a period
commencing on the date hereof and continuing until the end of the Term and
thereafter for the Severance Period (as hereinafter defined), if any, to the
extent the Company is making the Severance Payments (as hereinafter defined) to
the Executive as provided in this Agreement.

                3.1.2 Property of the Company. All memoranda, notes, lists,
records, engineering drawings, technical specifications and related documents
and other documents or papers (and all copies thereof) relating to the Company
or its subsidiaries, including such items stored in computer memories, computer
disks, microfiche or by any other means, made or compiled by or on behalf of the
Executive during the Restricted Period, or made available to the Executive
during the Restricted Period relating to the Company, its affiliates or its
subsidiaries or any entity which may hereafter become an affiliate or subsidiary
thereof, shall be the property of the Company, and shall be delivered, along
with any copies thereof, to the Company promptly upon the termination of the
Executive's employment with the Company for any reason whatsoever or at any
other time upon request; provided, however, that the Executive's address books,
diaries, chronological correspondence files, rolodex files and information
regarding the Executive's ownership interest in the Company shall be deemed to
be property of the Executive.


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                3.1.3 Employees of the Company. During the Restricted Period,
the Executive shall not induce or attempt to influence any employee of the
Company or any of its affiliates or subsidiaries to terminate such employee's
employment.

                3.1.4 Confidential Information. The Executive acknowledges that
the Company and its subsidiaries have a legitimate and continuing proprietary
interest in the protection of their confidential information. In exchange for
the Company and its subsidiaries providing the Executive access to such
confidential information, the Executive agrees not to make any unauthorized use,
publication, or disclosure, during or subsequent to his employment by the
Company, of any confidential information, generated or acquired by the Executive
during the course of his employment by the Company, except to the extent that
the disclosure of such confidential information is necessary to fulfill his
responsibilities as an employee of the Company. As used herein, "confidential
information" shall mean information that was not known by the Executive prior to
his employment by the Company and that is not generally known by or available to
persons engaged in the Company Business or to the public, which information
consists of financial information, financial figures, trade secrets, details of
client or consulting contracts, pricing policies, operational methods, marketing
plans or strategies, business acquisition plans, technical processes, designs
and design projects, inventions and research projects, ideas, discoveries,
inventions, improvements, trade secrets and other proprietary information of the
Company or its subsidiaries. This Section 3.1.4 shall survive indefinitely the
termination of this Agreement.

                3.1.5 Company's Interest. The Executive agrees that these
covenants are made to protect the legitimate business interests of the Company,
including interests in the Company's property described in and pursuant to
Section 3.1.2, and not to restrict his mobility or to prevent him from utilizing
his general technical skills. The Executive understands as a part of these
covenants that the Company intends to exercise whatever legal recourse against
him for any breach of this Agreement and, in particular, for any breach of these
covenants.

            3.2 Rights and Remedies Upon Breach. If the Executive breaches any
of the provisions contained in Section 3.1 of this Agreement (the "Restrictive
Covenants"), the Company shall have the following rights and remedies, each of
which rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity:

                3.2.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach of the Restrictive Covenants would
cause irreparable injury to the Company and that money damages would not provide
an adequate remedy to the Company.

                3.2.2 Accounting. The right and remedy to require the Executive
to account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by the Executive as
the result of any action constituting a breach of the Restrictive Covenants.


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            3.3 Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect without regard to the invalid portions.

            3.4 Court Review. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of, or scope of activities restrained by, such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.

            3.5 Enforceability in Jurisdictions. The Company and the Executive
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of such
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company that such determination
not bar or in any way affect the right of the Company to the relief provided
above in the courts of any other jurisdiction within the geographical scope of
such Restrictive Covenants, as to breaches of such Restrictive Covenants in such
other respective jurisdictions, such Restrictive Covenants as they relate to
each jurisdiction being, for this purpose, severable into diverse and
independent covenants.

         4. Termination.

            4.1 Termination Upon Death. If the Executive dies prior to or during
the Term, the Executive's employment pursuant to this Agreement shall terminate;
provided, however, that in any such event, but subject to the Merger becoming
effective, the Company shall pay to the Executive's estate within thirty (30)
days after such termination (i) the Performance Bonus and the Deferred Bonuses
to the extent not already paid to the Executive, any portion of the Annual
Salary and any incentive bonuses that shall have been earned by the Executive
prior to the termination but not yet paid, and thirty percent (30%) of the
entire Stay Bonus of $1,200,000 (less any amount of the Stay Bonus previously
paid to the Executive), (ii) any Benefits that have vested in the Executive at
the time of such termination as a result of his participation in any of the
Company's benefit plans (which shall be paid in accordance with the provisions
of such plan), and (iii) reimbursement for any expenses with respect to which
the Executive is entitled to reimbursement pursuant to Section 2.5 of this
Agreement. The Executive's right to indemnification, payment or reimbursement
pursuant to Section 6 of this Agreement shall not be affected by such
termination and shall continue in full force and effect, both with respect to
proceedings that are threatened, pending or completed at the date of such
termination and with respect to proceedings that are threatened, pending or
completed after that date.

            4.2 Termination With Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by serving
notice, effective on or after the date of service of such notice as specified
therein, to terminate the Executive's


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employment under this Agreement and discharge the Executive with Cause. If such
right is exercised, the Company's obligation to the Executive shall be limited
solely to the payment of the Performance Bonus and the Deferred Bonuses (if not
already paid to the Executive), all accrued but unpaid Annual Salary, all vested
but unpaid Stay Bonus, and any incentive bonuses and Benefits that shall have
been earned by the Executive prior to the termination date specified in the
Company's notice of termination but not yet paid. As used in this Agreement, the
term "Cause" shall mean and include (i) chronic alcoholism or controlled
substance abuse as determined by a doctor of medicine selected by the Company
that is authorized to practice medicine by the State of Texas and whose practice
is located in Houston, Texas, (ii) an act of proven fraud or dishonesty on the
part of the Executive, (iii) knowing and material failure by the Executive to
comply with material applicable laws and regulations relating to the business of
the Company or its subsidiaries; (iv) the Executive's material and continuing
failure to perform (as opposed to unsatisfactory performance) his duties
hereunder or a material breach by the Executive of this Agreement except, in
each case, where such failure or breach is caused by the illness or other
similar incapacity or disability of the Executive; or (v) conviction of a crime
involving moral turpitude or a felony. Prior to the effectiveness of termination
for Cause under subclause (i), (ii), (iii) or (iv) above, the Executive shall be
given 30 days' prior written notice from the Committee specifically identifying
the reasons which are alleged to constitute Cause for any termination hereunder
and an opportunity to be heard by the Committee in the event the Executive
disputes such allegations. This Agreement shall not be terminated for Cause
under subclause (i), (iii) or (iv) above if the reasons which are alleged to
constitute Cause under such subclauses shall no longer exist and shall not be
continuing within thirty (30) days of the receipt of such notice by the
Executive; provided, however, that the Executive shall not have such right to
cure pursuant to the foregoing sentence and prevent termination for Cause if (i)
substantially the same reasons constituting Cause previously occurred and were
the basis for a previous termination notice to the Executive from the Committee,
and (ii) this Agreement was not terminated based on such previous occurrence
because the reasons which were alleged to constitute Cause no longer existed and
were not continuing within thirty (30) days of the Executive's receipt of such
notice.

            4.3 Termination Without Cause. The Company has the right, at any
time during the Term, subject to all of the provisions hereof, exercisable by
serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this Agreement
and discharge the Executive without Cause. If the Executive is terminated during
the Term without Cause (including any termination which is deemed to be a
constructive termination without Cause under Section 4.6 hereof), the Company's
obligation to the Executive shall be limited solely to the payment, at the times
and upon the terms provided for herein, of (i) the Average Monthly Compensation
(as hereinafter defined) for the Severance Period (collectively, the "Severance
Payments") and (ii) the Performance Bonus and the Deferred Bonuses (if not
already paid to the Executive), the entire Stay Bonus of $1,200,000 (whether
vested or unvested) to the extent not already paid to the Executive, and any
incentive bonuses and Benefits that shall have been earned by the Executive
prior to the termination but not yet paid. Any amounts due to the Executive
pursuant to clause (ii) of the second sentence of this Section 4.3 shall be due
and payable within thirty (30) days after the date of termination. The Severance
Payments shall be due and payable for the Severance Period in monthly payments


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equal to the Average Monthly Compensation beginning thirty (30) days after the
date of termination. Notwithstanding anything herein to the contrary, the
Restricted Period, and the Company's obligations to pay additional Severance
Payments to the Executive, shall be subject to early termination, and shall
terminate immediately, at any time after the Executive is terminated without
Cause upon the earlier to occur of (a) the Executive giving written notice to
the Company that he is terminating the Restricted Period effective upon receipt
of such notice by the Company, or effective at any designated time thereafter
(not to exceed thirty (30) days after the Company's receipt of such notice), (b)
the Executive's violation of any of the provisions of Section 3, or (c) the end
of the period for payment of the Severance Payments pursuant to the terms
hereof. Upon any termination pursuant to the preceding clauses (a) or (b) (in
either case, an "Early Termination"), no further Severance Payments shall be
payable for periods after the effective date of such Early Termination, except
for amounts payable by the Company to the Executive for periods prior to the
effective date of such Early Termination. The Executive and the Company agree
that the foregoing right of the Company to terminate the Severance Payments
shall be enforceable by the Company notwithstanding any ruling by any court or
any arbitrator that one or more of the provisions of Section 3 are unenforceable
for any reason whatsoever. For purposes of this Agreement, (x) "Average Monthly
Compensation" shall mean the average of the Annual Salary earned by the
Executive during the two years preceding the date of termination, divided by
twelve (12), and (y) subject to Section 4.4 hereof, "Severance Period" shall
mean (A) the thirty-six (36) month period beginning on the date of termination,
if the date of termination is on or before the first anniversary of the
Effective Date, and (B) the portion, if any, of the thirty-six (36) month period
beginning on the Effective Date remaining after the date of termination, if the
date of termination is after the first anniversary of the Effective Date.

            4.4 Termination by the Executive. Any termination of the Executive's
employment pursuant to this Agreement by the Executive during the Term, except
such termination as is deemed to be a constructive termination without Cause by
the Company under Section 4.6 of this Agreement, shall entitle the Company to
discontinue payment of all Annual Salary, unvested Stay Bonus, incentive bonuses
and Benefits not earned and payable prior to the date of such termination.
Notwithstanding the foregoing or anything herein to the contrary, upon any such
termination of the Executive's employment pursuant to this Agreement by the
Executive, the Company shall pay to the Executive the Performance Bonus and the
Deferred Bonuses (if not already paid to the Executive) and all Stay Bonus that
vests through the date of such termination, in each case within thirty (30) days
following such termination by the Executive. In addition, if such termination
occurs on or before the first anniversary of the Effective Date, the Company
shall pay to the Executive the Severance Payments for the Severance Period in
monthly payments equal to the Average Monthly Compensation beginning thirty (30)
days after the date of such termination by the Executive, and (notwithstanding
Section 4.3 hereof) for such purposes the "Severance Period" shall mean the
portion of the thirty-six (36) month period beginning on the Effective Date
remaining after the date of termination.

            4.5 Termination upon Disability. If prior to or during the Term the
Executive becomes physically or mentally disabled, whether totally or partially,
as evidenced by the written statement of a competent physician licensed to
practice medicine in the United States who is mutually acceptable to the Company
and the Executive or his closest relative if he is not then able to make such a
choice, so that the Executive is unable substantially to perform his services


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hereunder for (i) a period of four consecutive months, or (ii) for shorter
periods aggregating 120 days during any twelve-month period, the Company may at
any time after the last day of the four consecutive months of disability or the
day on which the shorter periods of disability equal an aggregate of 120 days,
by written notice to the Executive, terminate the Executive's employment
hereunder. Upon any such termination of the Executive's employment, the Company
shall pay to the Executive within thirty (30) days after such termination (i)
the Performance Bonus and the Deferred Bonuses to the extent not already paid to
the Executive, any portion of the Annual Salary and any incentive bonuses that
shall have been earned by the Executive prior to the termination but not yet
paid, and thirty percent (30%) of the entire Stay Bonus of $1,200,000 (less any
amount of the Stay Bonus previously paid to the Executive), (ii) any Benefits
that have vested in the Executive at the time of such termination as a result of
his participation in any of the Company's benefit plans (which shall be paid in
accordance with the provisions of such plan), and (iii) reimbursement for any
expenses with respect to which the Executive is entitled to reimbursement
pursuant to Section 2.5 of this Agreement. The Executive shall be entitled to
the full compensation payable to him hereunder for periods of disability shorter
than the periods specified in clauses (i) and (ii) of the previous sentence.

            4.6 Constructive Termination Without Cause. Notwithstanding any
other provision of this Agreement, the Executive's employment under this
Agreement may be terminated during the Term by the Executive, which shall be
deemed to be constructive termination by the Company without Cause, if one of
the following events shall occur without the consent of the Executive: (i) a
failure to elect or reelect or to appoint or reappoint the Executive to the
office of Vice President of the Company or other material change by the Company
of the Executive's functions, duties or responsibilities which change would
reduce the ranking or level, dignity, responsibility, importance or scope of the
Executive's position with the Company from the position and attributes thereof
described in Section 1 above; (ii) the assignment or reassignment by the Company
of the Executive to a location not within 30 miles of downtown Houston; (iii)
the liquidation, dissolution, consolidation or merger of the Company, or
transfer of all or substantially all of its assets, other than (a) a
consolidation or merger in which the Company is the sole surviving entity or (b)
a transaction in which a successor corporation with a net worth substantially
the same as or greater than that of the Company assumes this Agreement and all
obligations and undertakings of the Company hereunder; (iv) a reduction in the
Executive's fixed salary below $280,000 per year or change by the Company
without the consent of the Executive in the method of determining the
Executive's annual bonus that results in a reduction of such annual bonus; (v)
the failure of the Company to continue to provide the Executive with office
space, related facilities, staff and secretarial assistance that are
commensurate with the Executive's responsibilities to and position with the
Company; (vi) the notification by the Company of the Company's intention not to
observe or perform one or more of the material obligations of the Company under
this Agreement; (vii) the failure by the Company to indemnify, pay or reimburse
the Executive at the time and under the circumstances required by Section 6 of
this Agreement; (viii) failure of the Company to pay the Performance Bonus, the
Deferred Bonuses, the Annual Salary, the Stay Bonus, the incentive bonus or any
other compensation or amounts payable hereunder when due; or (ix) the occurrence
of any other material breach of this Agreement by the Company or any of its
subsidiaries. Any such termination shall be made by written notice to the
Committee, specifying the event relied upon


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for such termination and given within 90 days after such event. Any constructive
termination shall be effective 30 days after the date the Committee has been
given such written notice setting forth the grounds for such termination with
specificity; provided, however, that the Executive shall not be entitled to
terminate this Agreement in respect of any of the grounds set forth above if
within 30 days after such notice the action constituting such ground for
termination has been cured and is no longer continuing.

            4.7 Conversion and Exercise of Stock Options; Restricted Stock. Upon
the Effective Date, all stock options of the Executive granted under the Company
Stock Option Plan (as defined in the Merger Agreement) (the "Chiles Options")
shall be treated in the manner provided in Section 1.8 of the Merger Agreement
except as provided in this Section 4.7. If the Executive is terminated without
Cause (including any termination which is deemed to be a constructive
termination without Cause under Section 4.6 hereof), then the Executive shall
have the lesser of (i) two years from the date of termination or (ii) the
remaining term of the Chiles Options, in which to exercise the Chiles Options.
If the Executive's employment under this Agreement is terminated during the Term
for any other reason, then the Executive shall have a period of one year from
the Effective Date if such termination occurs within nine (9) months after the
Effective Date, and a period of three (3) months after such termination if such
termination occurs more than nine (9) months after the Effective Date, in which
to exercise the Chiles Options; provided, however, that if such termination
occurs due to the death or disability of the Executive, the exercise period for
his Chiles Options shall be the applicable period specified in the Company Stock
Option Plan.

            4.8 No Tax Gross-Up. Under no circumstances will the Company have
any obligation or liability to the Executive for the reimbursement of gross-up
of income, excise or other taxes resulting from any payments, stock options or
other benefits under this Agreement.

         5. Insurance. The Company may, from time to time, apply for and take
out, in its own name and at its own expense, naming itself or one or more of its
affiliates as the designated beneficiary (which it may change from time to
time), policies for life, health, accident, disability or other insurance upon
the Executive in any amount or amounts that it may deem necessary or appropriate
to protect its interest. The Executive agrees to aid the Company in procuring
such insurance by submitting to medical examinations and by filling out,
executing and delivering such applications and other instruments in writing as
may reasonably be required by an insurance company or companies to which any
application or applications for insurance may be made by or for the Company.

         6. Indemnification.

            6.1 The Company shall indemnify and hold harmless the Executive from
and against any and all losses, claims, demands, costs, damages, liabilities,
expenses of any nature (including, without limitation, reasonable attorneys'
fees and disbursements), judgments, fines, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which the Executive may be
involved, or threatened to be involved, as a party or otherwise, arising out of
or incidental to the business of the Company or its affiliates or subsidiaries,
including, without limitation,


                                       10
<PAGE>
liabilities under the federal and state securities laws, regardless of whether
the Executive continues to be employed by the Company or such affiliate or
subsidiary at the time any such liability or expense is paid or incurred, if (i)
the Executive acted in good faith and in a manner he reasonable believed to be
in, or not opposed to, the interests of the Company and, with respect to any
criminal proceeding, had no reason to believe his conduct was unlawful, and (ii)
the Executive's conduct did not constitute actual fraud, gross negligence or
willful or wanton misconduct. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere,
or its equivalent, shall not, in and of itself, create a presumption or
otherwise constitute evidence that the Executive acted in a manner contrary to
that specified in (i) or (ii) above.

            6.2 Expenses (including, without limitation, reasonable legal fees
and expenses) incurred in defending any proceeding subject to Section 6.1 shall
be paid by the Company in advance of the final disposition of such proceeding
upon receipt of a written affirmation by the Executive of his good faith belief
that he has met the standard of conduct necessary for indemnification under this
Section 6 and a written undertaking (which need not be secured) by or on behalf
of the Executive to repay such amount if it shall be ultimately determined, by a
court of competent jurisdiction or otherwise, that the Executive is not entitled
to be indemnified by the Company as authorized hereunder.

            6.3 The indemnification provided by this Section 6 shall be in
addition to any other rights to which the Executive may be entitled under any
agreement or vote of the Board by the vote of directors that are disinterested
and unaffiliated with the Executive, as a matter of law or otherwise, both as to
action in the Executive's capacity as an officer and employee of the Company or
as a person serving at the request of the Company and shall continue after the
Executive has ceased to serve in such capacity and shall inure to the benefit of
the heirs, administrators and personal representatives of the Executive.

            6.4 The Company may purchase and maintain directors and officers
insurance or similar coverage for its directors and officers, including the
Executive, in such amounts and with such deductibles or self-insured retentions
as are customary for persons engaged in businesses similar in size and type to
those engaged in by the Company.

            6.5 The Executive shall not be denied indemnification in whole or in
part under this Section 6 because the Executive had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement and all material facts
relating to the executive's interest were adequately disclosed to the Board at
the time the transaction was consummated.

            6.6 The provisions of this Section 6 are for the benefit of the
Executive and his heirs, administrators and personal representatives and shall
not be deemed to create any rights for the benefit of any other persons. The
provisions of this Section 6 shall survive termination of this Agreement for any
reason or cause.


                                       11
<PAGE>

         7. Other Provisions.

            7.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:

                  (i) "affiliate" with respect to the Company means any other
            person controlled by or under common control with the Company but
            shall not include any stockholder or director of the Company, as
            such.

                  (ii) "person" means any individual, corporation, limited
            liability company, partnership, firm, association, joint-stock
            company, trust, unincorporated organization, governmental or
            regulatory body or other entity.

                  (iii) "subsidiary" means any corporation or other entity 50%
            or more of the voting securities of which are owned directly or
            indirectly by the Company.

            7.2 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, on the date of actual receipt thereof, as follows:

                  (i)  if to the Company, to:

                              Chiles Offshore Inc.
                              11200 Richmond Avenue, Suite 490
                              Houston, Texas 77082-2618
                              Attn: Dick Fagerstal
                              Fax No. (713) 339-3888

                       With a copy to:

                              Baker & McKenzie
                              2001 Ross Avenue, Suite 2400
                              Dallas, Texas 75201
                              Attn: Daniel W. Rabun
                              Fax No. (214) 978-3099

                  (ii) if to the Executive, to:

                              William E. Chiles
                              5096 Fieldwood Drive
                              Houston, Texas 77056
                              Fax No. (713) 850-1207


                                       12
<PAGE>

                       With a copy to:

                              Gardere Wynne Sewell LLP
                              1000 Louisiana, Suite 3400
                              Houston, Texas 77002
                              Attn:    Mr. N. L. Stevens III
                              Fax No. (713) 276-5807

Any party may change its address for notice hereunder by notice to the other
party hereto.

            7.3 Entire Agreement; Original Agreement. Subject to the Merger
becoming effective, on the Effective Date this Agreement shall constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto,
including, without limitation, the Original Agreement. Notwithstanding the
foregoing, the Executive shall remain a third party beneficiary of the
applicable provisions of the Merger Agreement. In the event of a conflict
between the terms of this Agreement and the Merger Agreement, the terms of this
Agreement shall control. On the Effective Date, the Original Agreement shall
terminate, and the Executive acknowledges and agrees that his acceptance of
employment with the Company pursuant to this Agreement shall not be considered a
constructive termination under the Original Agreement. If the Merger does not
become effective, the Original Agreement shall remain in effect and this
Agreement shall be of no force or effect.

            7.4 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof Nor shall any waiver on the part of any party of any such right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.

            7.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas (without giving effect to the
choice of law provisions thereof) where the employment of the Executive shall be
deemed, in part, to be performed and, subject to Section 7.11 hereof,
enforcement of this Agreement or any action taken or held with respect to this
Agreement shall be taken in the courts of appropriate jurisdiction in Houston,
Texas.

            7.6 Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned by the Executive and may be assigned by the
Company (subject to Section 4.6 (iii) hereof) only to a successor by merger or
purchaser of substantially all of the assets of the Company.


                                       13
<PAGE>
            7.7 Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

            7.8 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.

            7.9 No Presumption Against Interest. This Agreement has been
negotiated, drafted, edited and reviewed by the respective parties, and
therefore, no provision arising directly or indirectly herefrom shall be
construed against any party as being drafted by said party.

            7.10 Validity Contest. The Company shall promptly pay any and all
legal fees and expenses incurred by the Executive from time to time as a direct
result of the Company's contesting the due execution, authorization, validity or
enforceability of this Agreement.

            7.11 Dispute Resolution. If any dispute arises out of or relates to
this Agreement, or the breach thereof, Executive and the Company agree to
promptly negotiate in good faith to resolve such dispute. If the dispute cannot
be settled by the parties through negotiation, Executive and the Company agree
to try in good faith to settle the dispute by mediation under the Commercial
Mediation Rules of the American Arbitration Association before resorting to
arbitration, litigation or any other dispute resolution procedure. If the
parties are unable to settle the dispute by mediation as provided in the
preceding sentence, any claim, controversy or dispute arising out of or relating
to this Agreement, or the breach thereof, shall be settled by binding
arbitration before a panel of three arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in Houston, Harris County, Texas, or such other
location to which the parties mutually agree. The decision of the arbitrator(s)
shall be final and binding and judgment upon the award rendered may be entered
in any court having jurisdiction thereof. The costs of mediation and arbitration
may be awarded to either party by the mediator or the arbitrators and absent
such award shall be borne equally by the parties.

            7.12 Binding Agreement. This Agreement shall inure to the benefit of
and be binding upon the Company and its respective successors and assigns and
the Executive and his legal representatives.

            7.13 No Third Party Beneficiaries. Notwithstanding anything in this
Agreement to the contrary, express or implied, any right, benefit, or agreement
contained, expressed or implied in this Agreement shall be only for the benefit
of the parties hereto and their respective legal representatives, successors,
heirs, and assigns, and such rights, benefits and other agreements shall not
enure to the benefit of any other person or entitle any such person to any
claim, cause of action, remedy or other rights of any kind, it being the
intention of the parties hereto that no person shall be deemed a third party
beneficiary of this Agreement.


                                       14
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.


                                    EXECUTIVE


                                    /s/ William E. Chiles
                                    -------------------------------------------
                                    William E. Chiles


                                    COMPANY

                                    CHILES OFFSHORE INC.



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



ENSCO hereby adopts this Agreement for purposes of acknowledging and agreeing to
assume the obligations of the Company pursuant to the terms of this Agreement on
the Effective Date if the Merger becomes effective.


                                    ENSCO INTERNATIONAL INCORPORATED



                                    By:      /s/ C. Christopher Gaut
                                       ----------------------------------------
                                    Name:    C. Christopher Gaut
                                         --------------------------------------
                                    Title: Senior Vice President
                                           ------------------------------------


                                       15
<PAGE>


                                  Schedule 2.3

                                DEFERRED BONUSES


1.       $20,000 plus interest at 10% from and after January 15, 2001.

2.       $80,000 plus interest at 5.375% from and after February 15, 2002.


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