Exhibit 10.129 



                       INDENTURE OF FIRST NAVAL MORTGAGE

                  READING AND BATES BORNEO DRILLING CO., LTD.

                                    - and -

                       CHRISTIANIA BANK OG KREDITKASSE,
                               NEW YORK BRANCH,
             administrative agent, arranger and security trustee,

                                 as Mortgagee

                                CHARLEY GRAVES

                            Dated November 13, 1996

==============================================================================
                                     INDEX


CLAUSE      SUBJECT MATTER                                                PAGE

  1         REPRESENTATIONS AND COVENANTS . . . . . . . . . . . . . . . . . 2 
  2         DEFINITIONS AND INTERPRETATION  . . . . . . . . . . . . . . . . 4 
  3         MORTGAGE  . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 
  4         PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . . . .  10 
  5         PRESERVATION OF SECURITY  . . . . . . . . . . . . . . . . . .  10 
  6         INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . .  12 
  7         RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .  14 
  8         PROTECTION OF SECURITY  . . . . . . . . . . . . . . . . . . .  18 
  9         ENFORCEABILITY AND MORTGAGEE'S POWERS . . . . . . . . . . . .  19 
  10        APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . . . .  21 
  11        FURTHER ASSURANCES  . . . . . . . . . . . . . . . . . . . . .  22 
  12        POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . .  22 
  13        INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . .  23 
  14        EXPENSES  . . . . . . . . . . . . . . . . . . . . . . . . . .  24 
  15        COMMUNICATIONS  . . . . . . . . . . . . . . . . . . . . . . .  24 
  16        ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . .  25 
  17        TOTAL AMOUNT, ETC.  . . . . . . . . . . . . . . . . . . . . .  25 
  18        WAIVER; AMENDMENT . . . . . . . . . . . . . . . . . . . . . .  25 
  19        MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .  25 
  20        JURISDICTION  . . . . . . . . . . . . . . . . . . . . . . . .  26 

EXHIBIT 1   FORM OF CREDIT AGREEMENT
EXHIBIT 2   FORM OF SUBSIDIARY GUARANTY

==============================================================================

       THIS INDENTURE OF FIRST NAVAL MORTGAGE made and  entered into this 13th
day of November, 1996, between READING AND BATES BORNEO DRILLING CO., LTD., an
Oklahoma  company duly constituted and existing in conformity with the laws of
the  State of  Oklahoma with its  principal office at  901 Threadneedle, Suite
200,  Houston, Texas  77079  (hereinafter called the  "Owner") and CHRISTIANIA
BANK OG KREDITKASSE, NEW YORK BRANCH having its office at 11 West 42nd Street,
New  York,  NY  10036,  as  agent  for  the  Banks  (as  hereinafter  defined)
(hereinafter called the "Mortgagee"), on  the Panamanian offshore drilling rig
CHARLEY GRAVES  of 5,829  gross  tons, 1,748  net tons  and with  a length  of
87.78m, a  breadth of  21.34m and  a depth  of 6.55m and  Permanent Patent  of
Navigation  No. 6618-76-CH  (hereinafter  called the  "Rig"), duly  registered
under the laws and flag of the Republic of Panama, the detailed description of
which is hereinafter more particularly set forth.

                             W I T N E S S E T H :

WHEREAS

(A)    The Owner is the sole owner  of the whole of the offshore drilling  rig
       CHARLEY  GRAVES documented under the  laws and flag  of the Republic of
       Panama.

(B)    By  a  Credit Agreement  dated as  of November  13, 1996  (as modified,
       amended  or supplemented  from time  to  time, the  "Credit Agreement")
       among  (i)  Reading &  Bates  Corporation, a  Delaware  corporation, as
       guarantor ("Holdings"), (ii) Reading & Bates  Drilling Co., an Oklahoma
       corporation  (the  "Borrower"),  (iii) the  banks  party  thereto  (the
       "Banks"), (iv) Credit  Lyonnais New York Branch and Banque Indosuez, as
       documentation  agents   (the  "Documentation   Agents")  and  (v)   the
       Mortgagee, as administrative  agent, arranger and security  trustee (in
       such  capacity, the  "Administrative Agent") (the  form of which Credit
       Agreement together with  the form of  promissory note  of the  Borrower
       attached as Exhibit  B thereto but  without the  remaining exhibits  is
       attached hereto as Exhibit 1), it was agreed  amongst other things that
       the Banks would  make available to  the Borrower  a reducing  revolving
       credit facility  (the "Facility")  in the  maximum aggregate  principal
       amount at  any one  time outstanding  of Three  Hundred Million  United
       States Dollars  (U.S.$300,000,000), providing for  the making of  Loans
       and the  issuance  of  and  participations  in  Letters  of  Credit  as
       contemplated therein.   As  required by Article  1515 Section 3  of the
       Commercial Code of Panama, the dates on which payments of principal  in
       respect of the Loans are due  may be determined from the provisions  of
       the Credit Agreement including Section 4.

(C)    The obligations  of  the Borrower  with  respect  to the  Facility  are
       evidenced  by the  Credit  Agreement and  the  other Credit  Documents,
       including the promissory notes of  the Borrower payable to the order of
       the  respective Banks  (each a  "Note" and,  collectively, the "Notes")
       (the form of which is attached as Exhibit B to the Credit Agreement).

(D)    The  Owner,  for  good  and   valuable  consideration  has  authorized,
       executed and delivered  a Subsidiary Guaranty (as modified,  amended or
       supplemented from  time to  time, the "Subsidiary  Guaranty"), the form
       of which Subsidiary Guaranty is attached hereto as  Exhibit 2, in favor
       of the  Agent  guaranteeing the  performance  by  the Borrower  of  its
       obligations under the Credit Agreement and the other Credit Documents.

(E)    This Mortgage is  made for the benefit  of the Mortgagee to  secure the
       guaranty  by the Owner of  (i) the full and  prompt payment when due of
       (x) the  principal of  interest on  the Notes  issued, and Loans  made,
       under  the Credit  Agreement,  and  all reimbursement  obligations  and
       Unpaid Drawings  with respect to the Letters of Credit issued under the
       Credit  Agreement  and  (y)  all  other  obligations  and  indebtedness
       (including,  without   limitation,  indemnities,   Fees  and   interest
       thereon)  of the  Borrower  to the  Secured  Creditors (as  hereinafter
       defined), whether  now existing  or hereafter  incurred under,  arising
       out of or in connection with the Credit  Agreement and the other Credit
       Documents  including, without  limitation, this  Mortgage  and the  due
       performance  and compliance  by  the Borrower  with  all of  the terms,
       conditions and  agreements contained  in the  Credit Agreement and  the
       other Credit  Documents including, without  limitation, this  Mortgage;
       (ii) any and  all sums advanced by  the Mortgagee in order  to preserve
       the  Collateral  (as  hereinafter defined)  or  preserve  its  security
       interest in the  Collateral; (iii) in the  event of any  proceeding for
       the  collection or  enforcement of  any  indebtedness, obligations,  or
       liabilities of the Borrower referred  to in clause (i) above, after  an
       Event of Default  shall have occurred and be continuing, the reasonable
       expenses of the  Mortgagee of re-taking, holding, preparing for sale or
       lease,  selling  or   otherwise  disposing  of  or  realizing   on  the
       Collateral,  or  of  any  exercise  by  the  Mortgagee  of  its  rights
       hereunder, together with  reasonable attorneys' fees of  counsel to the
       Mortgagee and court costs; and (iv) all amounts paid  by any Indemnitee
       as to  which  such Indemnitee  has  the  right to  reimbursement  under
       Clause  13 of  this Mortgage  (all such  obligations, liabilities, sums
       and expenses  referred  to in  clauses  (i)  through (iv)  above  being
       collectively referred  to as the  "Obligations").   It is  acknowledged
       and agreed that  the "Obligations" shall include  extensions of  credit
       of the  types described above, whether outstanding  on the date of this
       Mortgage  or  extended  from  time  to  time  after  the  date of  this
       Mortgage.

(F)    This Indenture  of First Naval Mortgage,  which is entered into  by the
       Owner  in consideration  of  the Banks  agreeing  to make  the Facility
       available to  the Borrower  and as  a condition  thereto and  for other
       good and  valuable consideration provided by the Banks (the sufficiency
       of which the Owner hereby acknowledges).

NOW,  THEREFORE, the appearing parties, each in  the name and on behalf of his
respective principal, state that  they hereby execute this Indenture  of First
Naval Mortgage pursuant to the following representations:

1.     REPRESENTATIONS AND COVENANTS

1.01   The Owner represents and covenants to the Mortgagee that:

       a.    The Rig  is permanently registered  in the name  of the Owner  in
             the Public Registry of the City of Panama,  Republic of Panama in
             the  Microfilm Section  (Mercantile),  Microjacket N-12808,  Roll
             34425, Frame 95;

       b.    The Owner, as  sole legal and  beneficial owner of  the Rig,  has
             received   and  presently   possesses  a   Permanent  Patent   of
             Navigation for the  Rig, duly issued  by the  Republic of  Panama
             under No. 6618-76-CH;

       c.    Neither  the whole nor  any share  in the  Rig is subject  to any
             Security Interest  (as  defined  herein)  (except  for  Permitted
             Liens (as defined herein) and the lien of this Mortgage);

       d.    the  Owner has  not sold  or  transferred, or  agreed to  sell or
             transfer, title to the Rig or any share therein;

       e.    the Owner  is a corporation  duly organized and validly  existing
             and in good standing under the laws of the State of Oklahoma;

       f.    the  Owner  has full  power  and  authority  (i)  to execute  and
             deliver this Mortgage, (ii) to  mortgage the Rig as  security for
             the Obligations and (iii) to  comply with the provisions  of, and
             perform all its obligations under, this Mortgage;

       g.    the  Owner has  complied with  all statutory  and  other material
             requirements  relative   to  the   ownership,  registration   and
             operation of the Rig;

       h.    the Owner  has  taken  all  necessary  action  to  authorize  the
             execution  and  delivery  of  this  Mortgage  and  this  Mortgage
             constitutes,  the legal,  valid  and  binding obligation  of  the
             Owner enforceable against the Owner in accordance with its  terms
             (except  to   the  extent   limited  by   applicable  bankruptcy,
             reorganization, insolvency,  moratorium or other laws  of general
             application  relating  to   or  affecting   the  enforcement   of
             creditors' rights  as from  time to  time in  effect and  general
             equitable  principles) and when  preliminarily recorded  with the
             Public Registry  in Panama  through the  Panamanian Consulate  in
             New York, New  York will create  a legal,  valid and  enforceable
             first  priority mortgage  lien  on the  Rig  subject only  to the
             permanent  filing of  this  Mortgage in  the  Public Registry  in
             Panama within six  months of the date of the preliminary recorded
             filing;

       i.    the entry  into and  performance by  the Owner  of this  Mortgage
             does  not and  will  not during  the  Credit Facility  Period (as
             defined herein) violate  in any respect (i) any law or regulation
             of any  governmental or official  authority or body,  or (ii) any
             of  the  constitutive  documents  of   the  Owner  including  the
             Certificate of  Incorporation or By-laws, as amended from time to
             time,  or  (iii)  any  material   agreement,  contract  or  other
             undertaking to  which the Owner  is a party  or which  is binding
             upon the Owner or any of its assets;

       j.    all consents,  licenses, approvals and authorizations required in
             connection  with  the  entry  into,  performance,   validity  and
             enforceability   of    this   Mortgage   and   the   transactions
             contemplated hereby and  thereby have  been obtained  and are  in
             full force  and  effect and  will  be  so maintained  during  the
             Credit Facility Period;

       k.    save for such  registrations and filings  as are  referred to  in
             this Mortgage, it is  not necessary  for the legality,  validity,
             enforceability  or  admissibility in  evidence  of  this Mortgage
             that it  or any document  relating thereto be registered,  filed,
             recorded or enrolled  with any court or authority in any relevant
             jurisdiction or that any stamp, registration or similar taxes  be
             paid on or in relation to this Mortgage;

       l.    the  Owner is  in compliance  with  all applicable  Environmental
             Laws  (as defined  herein) and  all  Environmental Approvals  (as
             defined  herein)   relating  to  the   Rig,  its  operation   and
             management and  the business of  the Owner (as  now conducted and
             as reasonably  anticipated to  be conducted  in the future)  have
             been obtained or complied with;

       m.    no Environmental  Claim  (as defined  herein)  has been  made  or
             threatened against the Owner  or otherwise in connection with the
             Rig;

       n.    no  Environmental  Incident   (as  defined   herein)  which   has
             resulted, or which  could reasonably be expected to result, in an
             Environmental Claim in excess of US$200,000 has occurred; and

       o.    The Owner  hereby  affirms  as  its representations  all  of  the
             statements contained in the "WHEREAS" clauses of this Mortgage.

1.02   The representations and  warranties of the Owner set out in Clause 1.01
       shall survive the execution  of this Mortgage and shall be deemed to be
       repeated at the time  of the  making of each  Loan (as defined  herein)
       and at  the time of the issuance of each Letter of Credit, with respect
       to the facts and circumstances existing  at each such time, as if  made
       at each such time.

1.03   The  Mortgagee  represents  that  the  Banks  have  made  the  Facility
       available to  the Borrower,  as evidenced  by, inter  alia, the  Credit
       Agreement, the Notes and  the Security  Documents (as defined  herein),
       and accepts  the Mortgage constituted  by this instrument  upon the Rig
       as  security for  the due  and prompt  payment and  performance  of the
       obligations of the Owner under the Subsidiary Guaranty.

1.04   Each of the contracting parties declares that it is satisfied with  the
       representations and covenants  made by the  other and  accepts them  as
       true;  and the  parties  mutually  acknowledge their  respective  legal
       status as  well  as the  authority  of  the persons  representing  them
       respectively  in this  instrument to sign  the same on  behalf of their
       respective principals.

2.     DEFINITIONS AND INTERPRETATION

2.01   In this Mortgage unless  the context otherwise requires,  the following
       expressions shall have the following meanings:

       "Administrative Agent" shall  have the same  meaning for  such term  as
       set forth in the Credit Agreement;

       "Bank" means any  lender listed from  time to  time on Annex  I to  the
       Credit Agreement (collectively, the "Banks");

       "Collateral" shall have the  same meaning for such term as set forth in
       the Credit Agreement; 

       "Commitment" shall have the  same meaning for such term as set forth in
       the Credit Agreement;

       "Credit Agreement"  means the  Credit Agreement,  dated as of  November
       13,  1996, among  Holdings, the Borrower,  the Banks, the Documentation
       Agents, and the Administrative Agent  first referred to in  Recital (B)
       hereto as modified, amended or supplemented from time to time;

       "Credit Documents"  shall have the meaning  for such term  as set forth
       in the Credit Agreement;

       "Credit Facility Period" shall mean  the period commencing on  the date
       hereof and  ending on the  date the Total  Commitments have terminated,
       no  Letters  of  Credit  remain outstanding  and  the  Unpaid  Drawings
       together with  interest, fees  and all  other obligations  are paid  in
       full;

       "Default  Rate"  shall   mean  the  rate  of  interest   calculated  in
       accordance with Section 1.08(c) of the Credit Agreement;

       "Environmental  Approvals"  means  all  approvals,  licenses,  permits,
       exemptions or  authorization  required under  applicable  Environmental
       Laws;

       "Environmental Claims" means any and  all administrative, regulatory or
       judicial  actions,  suits,  demands,  demand  letters,  claims,  liens,
       notices  of  noncompliance or  violation,  investigations  (other  than
       internal  reports  prepared  by Holdings  or  any  of  its Subsidiaries
       solely in  the ordinary  course of such  Person's business  and not  in
       response  to  any  third  party action  or  request  of  any  kind)  or
       proceedings relating in any way to any Environmental Law  or any permit
       issued,  or  any  approval  given,  under  any  such  Environmental Law
       (hereafter, "Claims"), including,  without limitation, (a) any  and all
       Claims  by  governmental or  regulatory  authorities  for  enforcement,
       cleanup,  removal,  response,  remedial or  other  actions  or  damages
       pursuant  to any  applicable  Environmental Law,  and  (b) any  and all
       Claims   by    any   third   party   seeking   damages,   contribution,
       indemnification,  cost  recovery,  compensation  or  injunctive  relief
       resulting  from Hazardous  Materials  arising  from alleged  injury  or
       threat of injury to health, safety or the environment;

       "Environmental  Incident"  means  (i)  any  release of  Environmentally
       Sensitive  Material   from  the  Rig,   (ii)  any  incident  in   which
       Environmentally  Sensitive Material  is released  from  a vessel  other
       than  the Rig  and which involves  collision between  the Rig  and such
       other vessel  or some  other incident  of navigation  or operation,  in
       either case, where  the Rig or the  Owner are actually or  allegedly at
       fault or  otherwise liable (in whole or in  part) or (iii) any incident
       in which  Environmentally Sensitive Material is  released from a vessel
       other than the Rig  and where the Rig is actually or potentially liable
       to be  arrested as  a  result and/or  where the  Owner is  actually  or
       allegedly  at  fault or  otherwise  liable  (and,  in  each such  case,
       "release"  shall  mean  disposing,  discharging,  injecting,  spilling,
       leaking, leaching,  dumping,  emitting,  escaping,  emptying,  seeping,
       placing and  the like,  into  or upon  any  land or  water or  air,  or
       otherwise entering into the environment);

       "Environmental Law"  means any  applicable Federal,  state, foreign  or
       local statute,  law, rule, regulation,  ordinance, code, guide,  policy
       and rule  of common law now or hereafter in effect  and in each case as
       amended, and  any  judicial or  administrative interpretation  thereof,
       including  any judicial  or  administrative  order, consent  decree  or
       judgment,  relating to  the environment,  health,  safety or  Hazardous
       Materials,  including, without  limitation, CERCLA;  RCRA; the  Federal
       Water Pollution Control Act,  as amended, 33 U.S.C.  1251 et seq.; the
       Toxic Substances  Control Act, 15 U.S.C.  7401  et seq.; the Clean Air
       Act, 42 U.S.C.  7401 et  seq.; the Safe Drinking Water Act, 42  U.S.C.
        3808  et seq.;  the Oil Pollution  Act of 1990,  33 U.S.C.   2701 et
       seq. and  any applicable  state and  local or  foreign counterparts  or
       equivalents;

       "Fees" shall have the  same meaning for such  term as set forth in  the
       Credit Agreement;

       "Hazardous Materials"  means (a) any  petroleum or petroleum  products,
       radioactive materials, asbestos  in any form  that is  or could  become
       friable,  urea  formaldehyde  foam  insulation,  transformers or  other
       equipment  that   contained,  electric   fluid  containing  levels   of
       polychlorinated biphenyls, and radon gas;  (b) any chemicals, materials
       or substances  defined as or  included in the  definition of "hazardous
       substances,"  "hazardous  waste,"  "hazardous  materials,"   "extremely
       hazardous  waste,"  "restricted hazardous  waste,"  "toxic substances,"
       "toxic  pollutants,"  "contaminants,"  or  "pollutants,"  or  words  of
       similar import,  under any applicable  Environmental Law;  and (c)  any
       other  chemical,   material  or   substance,  exposure   to  which   is
       prohibited, limited or regulated by any governmental authority;

       "Indemnitee" shall have the meaning set forth in Section 13.01;

       "Insurances" includes  all policies and  contracts of insurance  (which
       expression includes  all  entries  of  the  Rig  in  a  protection  and
       indemnity  association)  which are  from  time  to  time  taken out  or
       entered into in respect of the  Rig or otherwise by the Owner  (whether
       in the sole name  of the Owner or in the  joint names of the Owner  and
       the Administrative  Agent) and all  benefits thereof (including  claims
       of whatsoever nature and return of premiums);

       "Interest Period"  shall have  the same  meaning for such  term as  set
       forth in Section 1.09 of the Credit Agreement;

       "Letter of  Credit" shall have  the same meaning  for such term as  set
       forth in Section 2.01(a) of the Credit Agreement;

       "Loan(s)" shall  have the same  meaning for such  term as set forth  in
       the Credit Agreement;

       "Major Casualty" means any casualty  to the Rig in respect  whereof the
       claim  or the  aggregate  of the  claims  against all  insurers, before
       adjustment  for any  relevant  franchise  or deductible,  exceeds  Five
       Hundred Thousand United  States Dollars (US$500,000) or  the equivalent
       in any other currency;

       "Note" means  each  promissory note  of  the  Borrower referred  to  in
       Recital (C) hereto and in Section 1.05(a) of the Credit Agreement;

       "Obligations" shall have the meaning provided in Recital (E) hereto;

       "Oil Pollution Act 1990" means the Oil Pollution Act 1990 (33 U.S.C.  
       2701 et seq.), as amended;

       "Other  Rigs"  means, individually  or  collectively, each  of  (i) the
       semi-submersible  drilling  rig  JACK  BATES   owned  by  the  Borrower
       documented under the  laws and  flag of  the United  States of  America
       with  Official Number 906283 of 19,928 gross registered tons and 14,948
       net registered tons; (ii) the  jack-up drilling rig D. R. STEWART owned
       by  Reading &  Bates  Exploration  Co. ("R&B  Exploration")  documented
       under the  laws  and flag  of the  United States  with Official  Number
       626904 of  6,494 gross registered  tons and 5,834  net registered tons;
       (iii) the  offshore drilling rig  W. D. KENT owned  by R&B  Exploration
       documented under the laws and  flag of the United States  with Official
       Number 583169 of 5,383 gross  registered tons and 4,185  net registered
       tons; (iv)  the jack-up drilling rig  RON TAPPMEYER owned  by Reading &
       Bates (A)  Pty Ltd.  documented under the  laws and  flag of  Australia
       with Official Number 855213 of  11,455 gross registered tons and  3,436
       net registered tons;  (v) the  semi-submersible drilling  J. W.  McLEAN
       owned  by the  Borrower  documented  under the  laws  and  flag of  the
       Republic  of  Panama with  Patente  Number 25384-PEXT  of  15,453 gross
       registered  tons  and  4,636  net  registered   tons;  (vi)  the  semi-
       submersible drilling rig  RIG 41 owned by the Borrower documented under
       the laws and flag of the Republic of Panama with the Patente  Number to
       be  assigned on  the date  hereof of  10,078 gross  registered tons and
       3,024 net registered  tons; (vii) the  jack-up drilling  rig HARVEY  H.
       WARD owned  by HRB Rig Corporation  documented under the  laws and flag
       of the United States  of America with Official  Number 642693 of  4,121
       gross registered tons and 3,079  net registered tons; (viii)  the jack-
       up drilling  rig F.  G. McCLINTOCK owned  by Reading &  Bates Offshore,
       Limited documented  under the  laws and  flag of  the United  States of
       America with Official  Number 562059 of 5,525 gross registered tons and
       1,657 net registered  tons; (ix) the jack-up drilling rig RANDOLPH YOST
       owned by the Borrower documented under the laws  and flag of the United
       States  of  America   with  Official  Number  601699  of   4,701  gross
       registered  tons  and  4,701  net  registered  tons;  (x)  the  jack-up
       drilling rig  J. T. ANGEL  owned by  the Borrower documented  under the
       laws and  flag of the  United States  of America  with Official  Number
       651645 of  4,186 gross registered  tons and 3,090  net registered tons;
       (xi) the  jack-up drilling rig  ROGER W. MOWELL  owned by the  Borrower
       documented under  the laws  and flag  of the  United States of  America
       with Official  Number 645360 of  4,121 gross registered  tons and 3,079
       net registered tons;  (xii) the jack-up drilling rig GEORGE H. GALLOWAY
       owned by  Reading & Bates  Offshore, Limited documented  under the laws
       and flag  of the United States  of America with Official  Number 651646
       of  3,729 gross  registered  tons and  2,496  net registered  tons; and
       (xiii) the jack-up drilling rig  C. E. THORNTON to be owned by  HRB Rig
       Corporation  documented under the laws and flag of the United States of
       America with Official  Number 673210 of 6,096 gross registered tons and
       6,096 net registered tons;

       "Permitted Liens"  means: (1)  liens incident  to  expenses of  current
       operations, other than for master's  and crew's wages, incurred  in the
       ordinary course of  business of the Owner  and due and payable  for not
       more than thirty (30)  days (or being contested in good faith, provided
       such liens  are not in  excess of U.S.$5,000,000.00,  and if in  excess
       thereof, then  the  Owner  shall,  upon  the  written  request  of  the
       Administrative Agent, provide a bond or  other security satisfactory to
       the Administrative Agent);  (2) liens for master's and crew's wages not
       yet  due and payable;  (3) liens  for taxes,  assessments, governmental
       charges, fines and penalties not  at the time delinquent  (unless being
       contested  in good  faith, provided  such liens  are not  in excess  of
       U.S.$5,000,000.00,  and  if in  excess thereof,  then the  Owner shall,
       upon the  written request of  the Administrative Agent,  provide a bond
       or other  security satisfactory to the Administrative Agent); (4) liens
       for  general average  and  salvage  (including contract  salvage);  (5)
       liens for claims  covered by valid  policies of  insurance meeting  the
       requirements of  Clause 6 hereof (except  that no lien  shall be deemed
       not covered  by insurance to the extent insurance  in force would cover
       the amount  secured  by the  lien  but  for any  applicable  deductible
       amount  approved  by  the  Administrative  Agent);  (6)  liens  arising
       pursuant  to any judgment  or to  an order of  attachment, distraint or
       similar legal  process arising  in connection  with legal  proceedings,
       but only if and  so long as the execution or  other enforcement thereof
       is  not unstayed for  more than 30 consecutive  days; (7)  any lien for
       the  payment or  discharge  of  which  provisions satisfactory  to  the
       Administrative Agent have  been made as evidenced by the Administrative
       Agent's written consent  to such  lien; (8) any  lien in  favor of  the
       Banks; and  provided that Permitted  Liens shall not  include any liens
       described in  subclauses (1)  through (7)  above unless  they: (i)  are
       subordinate to the lien of this Mortgage  or (ii) constitute a maritime
       lien which would  in any event be entitled as such to priority over the
       Mortgage  under the  United States  shipping laws  or other  applicable
       laws  relating to the Rig's  trading pattern.   Nothing herein shall be
       deemed  a  waiver  of  the  priority  preferred  lien  status  of  this
       Mortgage;

       "Protection  and  indemnity risks"  means  the usual  risks  covered by
       protection   and  indemnity   associations   of  international   repute
       including the  proportion not recoverable  in case  of collision  under
       the ordinary running-down clause  (unless such is recoverable under the
       relevant hull and machinery coverage);

       "Required Banks"  shall have the meaning for such  term as set forth in
       the Credit Agreement;

       "Requisition  Compensation"  means all  moneys  or  other  compensation
       payable during the  Credit Facility Period by reason of requisition for
       title or  other compulsory  acquisition of  the Rig  otherwise than  by
       requisition for hire;

       "Rig" means the  vessel described in  Recital (A)  hereto and  includes
       any  share or  interest  therein  and  her engines,  machinery,  boats,
       tackle,  outfit,  spare   gear,  fuel,  consumable  or   other  stores,
       belongings and  appurtenances whether  on board  or ashore and  whether
       now  owned or  hereafter acquired  (but excluding  therefrom any leased
       equipment owned by third parties);

       "Secured Creditors" shall mean the  Banks, the Letter of  Credit Issuer
       and  the  Administrative Agent  under  and  as  defined  in the  Credit
       Agreement;

       "Security Documents"  shall have the same meaning for  such term as set
       forth in the Credit Agreement;

       "Security  Interest"  means  a  mortgage,   charge  (whether  fixed  or
       floating), pledge, lien, hypothecation, assignment, trust  arrangement,
       title retention or other security interest  or arrangement of any  kind
       whatsoever;

       "Subsidiary Guaranty"  means  the agreement  dated as  of November  13,
       1996 made by the  Owner in favor of  the Administrative Agent as  first
       referred to in Recital (D) hereto;

       "Taxes" shall have the same  meaning for such term as set  forth in the
       Credit Agreement;

       "Total  Commitment" shall have  the same  meaning for such  term as set
       forth in the Credit Agreement;

       "Total Loss" means  (a) the actual, constructive,  arranged, agreed, or
       compromised  total loss  of the Rig;  (b) the requisition  for title or
       other compulsory  acquisition or forfeiture  of the Rig otherwise  than
       by  requisition for  hire; (c) the  capture, seizure, arrest, detention
       or confiscation of the  Rig by any government  or by persons acting  or
       purporting  to  act  on behalf  of  any government  unless  the  Rig be
       released from such capture,  seizure, arrest or detention within ninety
       (90) days after the occurrence thereof;

       "United  States Dollars"  and "US$"  means the  lawful currency  of the
       United States of America;

       "Unpaid  Drawing"  shall have  the same  meaning for  such term  as set
       forth in the Credit Agreement;

       "War Risks" includes the risk of mines and all  risks excluded from the
       standard  form of  English marine  policy by  the free  of  capture and
       seizure clause.

2.02   Except  where  otherwise  expressly  provided  or  unless  the  context
       otherwise  requires,  words  and  expressions  defined  in  the  Credit
       Agreement shall bear the same meanings when used in this Mortgage.

2.03   In this Mortgage:

       (a)   Clause headings are  inserted for convenience only and  shall not
             affect  the construction  of this Mortgage  and, unless otherwise
             specified,  all  references to  Clauses  are to  clauses  of this
             Mortgage;

       (b)   unless  the   context  otherwise  requires,  words  denoting  the
             singular number shall include the plural and vice versa;

       (c)   references    to   persons    include   bodies    corporate   and
             unincorporated;

       (d)   references  to  assets include  property,  rights  and assets  of
             every description;

       (e)   references to any document are to  be construed as references  to
             such document as amended or supplemented from time to time; and

       (f)   references  to any  enactment  include re-enactments,  amendments
             and extensions thereof.

3.     MORTGAGE

3.01   In order to secure the Obligations the  Owner has granted, conveyed and
       mortgaged and does  by these presents  grant, convey and  mortgage unto
       the  Mortgagee,  its successors  and  assigns, in  accordance  with the
       provisions  of Chapter  V,  Title IV  of  Book Second  of  the Code  of
       Commerce  and  pertinent  provisions  of  the  Civil  Code   and  other
       legislation  of the  Republic of  Panama,  the whole  of  the Rig,  the
       detailed description of which is as follows:

             offshore   drilling   rig    CHARLEY   GRAVES;   gross    tonnage
             approximately  5,829;  net  tonnage  approximately  1,748; length
             overall  87.78 meters,  breadth 21.34 meters;  depth 6.55 meters;
             built in  1975 by  Far East Livingston  Shipbuilding Ltd.;  radio
             call letters HP-3275;

       TO  HAVE AND  TO HOLD the  same unto the  Mortgagee, its successors and
       assigns forever, upon  the terms herein  set forth for  the enforcement
       of the Obligations.

       PROVIDED  ONLY and the condition of these  presents is such that if the
       Owner or its successors and assigns shall pay or cause to be  repaid to
       the Secured Creditors  and their respective successors  or assigns  the
       Obligations  as and  when  the same  shall  become due  and  payable in
       accordance with the terms  of the Subsidiary Guaranty and this Mortgage
       and shall observe  and comply with  the covenants terms  and conditions
       contained in  the Subsidiary Guaranty and  this Mortgage,  expressed or
       implied to be  performed, observed or complied with by  and on the part
       of the Owner  and its successors and  assigns, then these  presents and
       the rights  hereunder shall cease, determine  and be void and,  in such
       event,  the Mortgagee  agrees to  furnish, execute  and record,  at the
       expense of the Owner, all  such documents as the Owner may   reasonably
       require  to discharge this Mortgage, otherwise to be and remain in full
       force and effect.

       Notwithstanding anything  to the  contrary herein  it  is not  intended
       that any provision  of this Mortgage  shall waive the  preferred status
       of this  Mortgage and  that  if any  provision or  part thereof  herein
       shall  be construed as  waiving the preferred  status of  this Mortgage
       then such provision shall to such extent be void and of no effect.

3.02   The Owner shall  remain liable to  perform all the  obligations assumed
       by it in  relation to the Rig  and none of the  Secured Creditors shall
       be under any obligation  of any kind  whatsoever in respect thereof  or
       be  under any liability whatsoever in event of any failure by the Owner
       to perform its obligations in respect thereof.

3.03   This  Mortgage, when  it shall  have been  duly executed and  signed on
       behalf of  the parties,  shall  be provisionally  recorded through  the
       Panamanian Consulate at New  York, New York and thereafter within three
       months permanently recorded in the Public Registry in Panama.

4.     PAYMENT COVENANTS

4.01   The Owner hereby covenants with the Secured Creditors:

       (a)   to  pay  and  indemnify  the  Secured  Creditors  for   all  such
             expenses,  claims,  liabilities,  losses,  costs,  duties,  fees,
             charges  or other  moneys as  are stated  in this Mortgage  to be
             payable  by the  Owner to  or recoverable  from the  Owner by the
             Secured  Creditors (or in  respect of which  the Owner  agrees in
             this Mortgage to indemnify any of  the Secured Creditors) at  the
             times and in the manner specified in this Mortgage;

       (b)   to  pay  interest  on  any such  expenses,  claims,  liabilities,
             losses, costs, duties, fees, charges or other moneys  referred to
             in Clause 4.01(a) from the  date on  which the relevant  expense,
             claim, liability,  loss, cost, duty, fee,  charge or  other money
             is  paid by  any  Secured Creditor  (both  before  and after  any
             relevant judgment) at the Default Rate; and

       (c)   to  pay and perform its obligations which may be or become due or
             owing  to any Secured  Creditor, as the  case may  be, under this
             Mortgage  and the  Subsidiary Guaranty  at the  times and  in the
             manner specified herein or therein.

5.     PRESERVATION OF SECURITY

5.01   It is declared and agreed that:

       (a)   the  security created  by  this Mortgage  shall  be  held by  the
             Mortgagee as  a continuing  security for the  performance of  the
             Obligations  and  that  the security  so  created  shall  not  be
             satisfied  by  any intermediate  payment or  satisfaction  of any
             part of the Obligations;

       (b)   the  security so created shall be in addition to and shall not in
             any way be  prejudiced or affected  by any of the  other Security
             Documents;

       (c)   the  Mortgagee  shall not  have  to wait  for  the Administrative
             Agent  to enforce  any  of the  other  Security Documents  before
             enforcing the security created by this Mortgage;

       (d)   no  failure or delay on  the part of  the Mortgagee in exercising
             any right, power, privilege  or remedy hereunder and no course of
             dealing between Owner and  Mortgagee or the Administrative  Agent
             shall  operate as  a  waiver thereof;  nor  shall  any single  or
             partial  exercise  of  any  right,  power,  privilege  or  remedy
             hereunder preclude any other or  further exercise thereof or  the
             exercise of any other right, power  or privilege hereunder.   The
             rights and remedies herein expressly provided  are cumulative and
             not exclusive of  any rights or  remedies which the  Mortgagee or
             the Administrative Agent would otherwise have.   No notice to  or
             demand on the Owner  in any case shall  entitle the Owner to  any
             other  or   further  notice  or   demand  in  similar  or   other
             circumstances  or  constitute  a  waiver  of the  rights  of  the
             Mortgagee  or the Administrative  Agent to  any other  or further
             action in any circumstances without notice or demand; and

       (e)   any waiver by the Mortgagee of any terms of  this Mortgage or any
             consent given by the  Mortgagee under this Mortgage shall only be
             effective if  given in writing and then only  for the purpose and
             upon the terms for which it is given.

5.02   Any  settlement or discharge under  this Mortgage between the Mortgagee
       and the Owner shall be  conditional upon no security or payment  to the
       Secured  Parties or  any of  them by  the Credit  Parties or  any other
       person being avoided or set-aside or ordered  to be refunded or reduced
       by  virtue  of  any  provision or  enactment  relating  to  bankruptcy,
       insolvency, administration  or liquidation for the  time being in force
       and,  if  such  condition is  not  satisfied,  the  Mortgagee  shall be
       entitled  to  recover  from the  Owner  on  demand  the  value of  such
       security or  the amount of  any such payment as  if such  settlement or
       discharge had not occurred.

5.03   The  rights  of  the Secured  Creditors  under  this  Mortgage  and the
       security  hereby  constituted  shall  not  be   affected  by  any  act,
       omission, matter or thing  which, but for this provision, might operate
       to impair,  affect or discharge such  rights and security, in  whole or
       in part, including without limitation,  and whether or not known to  or
       discoverable by the Credit  Parties, the Secured Creditors or any other
       person:

       (a)   any waiver granted to or composition  with the Credit Parties  or
             any other person; or

       (b)   the  taking,  variation, compromise,  renewal  or  release of  or
             refusal or neglect to  perfect or enforce any rights, remedies or
             securities  against  any  of  the  Credit  Parties  or  any other
             persons; or

       (c)   any   legal   limitation,   disability,   incapacity   or   other
             circumstances  relating  to  the  Credit  Parties  or  any  other
             person; or

       (d)   any amendment or supplement to the  Credit Agreement, any of  the
             other Credit Documents or any other document or security; or

       (e)   the  dissolution,  liquidation,  amalgamation,  reconstruction or
             reorganization of any of  the Credit Parties or any other person;
             or

       (f)   the   unenforceability,   invalidity   or  frustration   of   any
             obligations  of the Credit  Party or any  other person  under the
             Credit Agreement, any of  the other Credit Documents or any other
             document or security.

6.     INSURANCE

6.01   The Owner covenants with the  Mortgagee throughout the Credit  Facility
       Period that:

       (a)   The  Owner shall, at  its own  expense, when and  so long  as any
             Obligation  remains  outstanding, insure  the  Rig  and keep  her
             insured, or cause the Rig  to be insured, in lawful money  of the
             United  States,  in  such  amounts,  for  such  risks  (including
             without   limitation,   hull   and   machinery/increased   value,
             Protection  and Indemnity  Risks,  pollution  liability, and  War
             Risks), in such form (including  without limitation, the form  of
             the loss  payable clause and  the designation of named  assureds)
             and  with  such  first class  insurance  companies, underwriters,
             funds,  mutual  insurance  associations  or clubs,  as  shall  be
             reasonably  satisfactory  to  the  Administrative  Agent.    With
             respect   to  hull   and  machinery/increased   value  insurance,
             including war  risk, the Owner shall insure the  Rig and keep her
             insured, or cause  the Rig to be insured, for  an amount which is
             at  least the  agreed value of  the Rig, and  when such amount is
             aggregated with  the total amount of  such insurance  coverage on
             the Other Rigs, such aggregate  amount shall be at least  110% of
             the  aggregate amount  of the  Total Commitment.   Such insurance
             shall cover marine  and war risk  perils, on hull  and machinery,
             with  per  occurrence deductibles  not  in  excess of  US$500,000
             (such deductibles not to apply  in the case of Total Loss  of the
             Rig), and shall be  maintained in the broadest forms available in
             the  American, British  and Scandinavian insurance  markets or in
             such  other   major  international  markets  acceptable   to  the
             Mortgagee.   The  Owner shall  maintain protection  and indemnity
             insurance, including  war risk protection and  indemnity coverage
             and coverage against pollution  liability, in an amount not  less
             than  US$100,000,000  (or, with  respect  to pollution  liability
             coverage, such greater amount  as may be at least equal from time
             to time to the limitation of  liability amount applicable to  the
             Rig  under the  Oil  Pollution Act  1990  or other  Environmental
             Laws),  through underwriters  or  associations acceptable  to the
             Mortgagee.   In addition,  the Owner shall,  at its  own expense,
             furnish  to  the   Administrative  Agent  a   mortgagee's  single
             interest policy  providing coverage  which, when aggregated  with
             the   mortgagee's   interest    insurance   furnished   to    the
             Administrative Agent in  respect of the  Other Rigs, shall  be in
             an amount equal  to at least 110% of the  Total Commitment (or in
             lieu  of such  mortgagee's interest  insurance Owner  shall cause
             the hull and machinery/increased  value insurance to be  endorsed
             to  afford breach  of warranty  coverage for  the benefit  of the
             Administrative Agent).   Such mortgagee's interest  insurance and
             any  additional  insurance  policies  for  the   benefit  of  the
             Administrative  Agent shall  be maintained  in the  broadest form
             available  in the  American, British and  Scandinavian markets or
             other   major    international   markets   acceptable    to   the
             Administrative  Agent  through  underwriters  acceptable  to  the
             Administrative Agent.   The Rig shall  not operate in  or proceed
             into  any area  then  excluded by  trading  warranties under  its
             marine or war risk policies (including  protection and indemnity)
             without  satisfying  the  conditions  of  the  relevant  policies
             evidence of which shall be furnished to the Mortgagee.

       (b)   The   policy  or  policies  of  insurance   shall  be  issued  by
             responsible   underwriters    reasonably   acceptable    to   the
             Administrative    Agent,   shall   contain   conditions,   terms,
             stipulations   and   insuring  covenants   satisfactory   to  the
             Administrative Agent, and shall  be kept in full force and effect
             by the  Owner so long as  the Security Documents and  the Secured
             Indebtedness  shall be  outstanding.  All  such policies, binders
             and  other  interim insurance  contracts  shall  be executed  and
             issued  in the  name  of  the  Owner  and shall,  to  the  extent
             required herein,  provide that  the Mortgagee shall  be the  loss
             payee for  distribution by it to itself, the  Banks and the Owner
             as  their interests may  appear, and shall  provide for  at least
             ten days'  prior  notice to  be given  to  the Mortgagee  by  the
             underwriters or association in the  event of cancellation or  the
             failure of  the Owner  to pay  any  premium or  call which  would
             suspend coverage  under the  policy  or the  payment  of a  claim
             thereunder.   The Mortgagee and the  Banks shall be named  as co-
             assureds  on  all  such  policies and  insurance  contracts,  but
             without liability of the  Mortgagee, or the Banks for premiums or
             calls.  Complete  certified copies of all such  policies, binders
             and  other interim insurance contracts  shall be delivered to the
             Mortgagee.  Originals shall  also be provided upon the request of
             the  Mortgagee.    The  Owner  shall  furnish  to  the  Mortgagee
             annually a detailed report signed by  a firm of marine  insurance
             brokers  satisfactory  to  the  Mortgagee  as  to  the  insurance
             maintained  in respect of the Rig, as  to their opinion as to the
             adequacy  thereof and  as to  compliance  with the  provisions of
             this Clause 6.01.

             Unless otherwise  required  by the  Mortgagee, by  notice to  the
             underwriters, although the following insurance is  payable to the
             Mortgagee, (i)  any loss  under  any insurance  on  the Rig  with
             respect  to Protection and Indemnity  Risks may  be paid directly
             to  the Owner  to reimburse it  for any  loss, damage  or expense
             incurred by it and covered  by such insurance or to the person to
             whom any  liability covered  by such insurance  has been incurred
             and (ii) in the  case of any loss  (other than a loss  covered by
             (i) above  or by  the  next following  paragraph  of this  Clause
             6.01(b)) under  any insurance with  respect to the Rig  involving
             any damage to the Rig,  the underwriters may pay directly for the
             repair, salvage or other  charges involved or, if the Owner shall
             have first  fully repaired  the  damage or  paid  the salvage  or
             other  charges,  may pay  the  Owner  as reimbursement  therefor;
             provided,  however,  that  if  such  damage   involves  a  before
             deductible  loss in  excess of US$1,000,000.00  (One Million U.S.
             Dollars),  the underwriters  shall not make  such payment without
             first  obtaining  the written  consent thereto  of  the Mortgagee
             (which consent  shall not  be unreasonably  withheld).  Any  loss
             covered  by this  paragraph which  is paid  to the  Mortgagee but
             which might have been  paid, in accordance with the provisions of
             this paragraph, directly  to the Owner  or others, shall  be paid
             by the Mortgagee to, or  as directed by, the Owner and  all other
             payments to  the Mortgagee  of losses  covered by this  paragraph
             shall be  applied  by the  Mortgagee  in accordance  with  Clause
             10.01.

             In  the event of  a Total Loss,  all insurance  payments therefor
             shall be paid to the  Mortgagee.  The Owner shall not  declare or
             agree with the underwriters that the Rig is a Total  Loss without
             the prior written consent of the Mortgagee.

       (c)   In  the event of  a Total  Loss of the  Rig, the  Mortgagee shall
             retain out of the  insurance payments received on account of such
             loss  any  sum or  sums  that shall  be  or become  owing  to the
             Secured  Creditors under  the Security Documents,  whether or not
             the  same shall be  then due and  payable, together  with accrued
             interest and the cost, if any,  of collecting the insurance,  and
             pay the balance as provided in Clause 10.

       (d)   The Owner shall comply with and satisfy all of the  provisions of
             any applicable law,  regulation, proclamation or order concerning
             financial responsibility for liabilities imposed on  the Owner or
             the Rig with respect  to the carriage of passengers or pollution,
             and will  maintain, or cause to  be maintained,  all certificates
             or other evidence of financial responsibility  as may be required
             by any such law,  regulation, proclamation or order with  respect
             to the trade in which the Rig from time to time is engaged.

       (e)   The Owner shall renew  all such insurances as they expire  and so
             as  to  insure  that  there  is no  gap  in  coverage,  keep  the
             Mortgagee advised  of the  progress of  such renewals,  and shall
             provide evidence of such renewal in  writing to the Mortgagee  as
             and when each such renewal is effected.

       (f)   The   Owner   shall   punctually   pay   all   premiums,   calls,
             contributions or  other  sums  payable in  respect  of  all  such
             insurances and produce all relevant receipts  when so required by
             the Mortgagee.

       (g)   The Owner shall arrange for the  execution of such guarantees  as
             may  from  time  to  time  be  required  by  any  protection  and
             indemnity or war risks association.

       (h)   The  Owner shall  not employ  the  Rig or  suffer the  Rig to  be
             employed  otherwise  than in  conformity  with the  terms  of the
             instruments  of   insurance   aforesaid  relative   to  the   Rig
             (including any  warranties, express or implied,  therein) without
             first obtaining the consent  to such  employment of the  insurers
             and  complying with  such  requirements as  to  extra premium  or
             otherwise as the insurers may prescribe.

7.     RIG COVENANTS

7.01   The  Owner  covenants with  the  Mortgagee that  throughout  the Credit
       Facility Period the Owner will:

       (a)   keep the Rig documented in  its name as a Panamanian  flag vessel
             and  do or allow  to be done  nothing whereby  such documentation
             may be forfeited or imperilled;

       (b)   not  without the  previous  consent in  writing of  the Mortgagee
             except as otherwise contemplated by the  Credit Agreement, change
             the  name of  the Rig or  make any modification  to the Rig which
             would  materially   alter  the  structure,  type  or  performance
             characteristics of the Rig and which would materially  reduce the
             value of the Rig;

       (c)   keep the Rig in a  good and efficient state of  repair consistent
             with first-class ship-ownership and management  practice employed
             by owners of drilling rigs of similar size and type and so as  to
             maintain her  present class (namely +A1 Barge) at American Bureau
             of  Shipping  free  of  recommendations  and  qualifications  and
             change of class, save  those approved in writing by the Mortgagee
             and  so as  to  comply with  all  applicable  laws, treaties  and
             conventions  of  the  Republic  of Panama  and  other  applicable
             jurisdictions, and  rules and regulations  issued thereunder, and
             have on  board as  and when  required thereby valid  certificates
             showing compliance therewith;

       (d)   procure that all repairs to or  replacement of any damaged,  worn
             or  lost parts  or  equipment in  such  manner  (both as  regards
             workmanship  and  quality  of  materials) as  to  not  materially
             diminish  the value  of the  Rig and  not to  remove any material
             part of, or item  of equipment owned  by the Owner installed  on,
             the  Rig unless  (i) the  part or  item  so removed  is forthwith
             replaced  by  a suitable  part  or  item  which  is in  the  same
             condition as or better condition than  the part or item  removed,
             is free from  any Security Interest (other than  Permitted Liens)
             in favor of  any person other than  the Mortgagee and becomes  on
             installation on the Rig the property of the Owner and  subject to
             the  security constituted  by this Mortgage  or (ii)  the removal
             will not materially diminish the value of the Rig;

       (e)   submit the  Rig to  such periodical  or other surveys  as may  be
             required  for  classification  purposes  and if  so  required  to
             supply to the  Mortgagee copies of  all survey reports  issued in
             respect thereof;

       (f)   permit the Mortgagee by  independent surveyors  to board the  Rig
             at  all  reasonable  times and  upon  reasonable  notice  for the
             purpose  of  inspecting  her condition  or  for  the  purpose  of
             satisfying themselves in regard  to proposed or executed  repairs
             and  to  afford  all  proper  facilities  for  such  inspections,
             provided that unless an  Event of Default shall have occurred and
             be continuing, the cost  of any such inspection shall be  for the
             account of the Mortgagee;

       (g)   promptly  pay and  discharge all  debts, damages  and liabilities
             whatsoever which  have given  or  may give  rise  to maritime  or
             possessory  liens  (other  than  Permitted Liens)  on  or  claims
             enforceable  against  the  Rig   and  all  tolls,  dues,   taxes,
             assessments, governmental  charges, fines and  penalties lawfully
             charged  on or  in respect  of  the Rig  and all  other outgoings
             whatsoever in respect of  the Rig and in  the event of arrest  of
             the  Rig  pursuant  to legal  process,  or in  the  event  of her
             detention in exercise or purported exercise  of any such lien  or
             claim  as aforesaid,  procure the  release of  the Rig  from such
             arrest  or detention  forthwith upon receiving  notice thereof by
             providing bail or otherwise as the circumstances may require;

       (h)   not  employ the  Rig or  allow  her employment  in  any trade  or
             business  which  is  unlawful  under  the  laws  of  any relevant
             jurisdiction or  in carrying  illicit or prohibited  goods or  in
             any manner whatsoever which can reasonably  be expected to render
             her liable  to destruction,  seizure or  confiscation and  in the
             event of hostilities  in any part  of the world  (whether war  be
             declared or not) not  employ the Rig or suffer her  employment in
             carrying  any contraband goods  or to enter or  trade to any zone
             which  is declared  a war  zone by any  government or  by the War
             Risks insurers of the Rig unless  there shall have been  effected
             by  the  Owner  (at  its  expense)  such  special,  additional or
             modified   insurance  cover  as   the  Mortgagee  may  reasonably
             require;

       (i)   promptly furnish to the  Mortgagee all such information as it may
             from time  to time  require regarding  the  Rig, her  employment,
             position  and   engagements,  particulars  of  all   towages  and
             salvages  and,  upon the  request  of the  Mortgagee  in writing,
             copies of all charters  and other contracts for her employment or
             otherwise howsoever concerning her;

       (j)   notify the  Mortgagee forthwith by telecopy  thereafter confirmed
             by letter of:

             (i)   any  casualty to  the Rig  which is  or is  likely to  be a
                   Major Casualty; and

             (ii)  any  occurrence in  consequence whereof the  Rig has become
                   or is,  by the  passing of  time  or  otherwise, likely  to
                   become a Total Loss; and

             (iii) any  requirement or  recommendation made by  any insurer or
                   classification  society or by any competent authority which
                   is not complied with; and

             (iv)  any  arrest  of  the  Rig  or  the  exercise  or  purported
                   exercise of  any lien on the  Rig or any requisition of the
                   Rig for hire; and

             (v)   any intended dry docking of the Rig, as  to which the Owner
                   shall  give the  Mortgagee 30 days  prior notice, provided,
                   that  in the event of any emergency dry docking of the Rig,
                   the Owner shall immediately notify the Mortgagee; and

             (vi)   any intended deactivation or lay-up of the  Rig (other than
                    for  normal periods of inactivity between contracts for the
                    Rig  during  which  periods the  Rig  remains  manned)  and
                    obtain the prior written consent of the Mortgagee;

       (k)   keep  proper books of account  in respect  of the Rig  and as and
             when  the  Mortgagee may  so reasonably  require make  such books
             available for  inspection on behalf of  the Mortgagee and furnish
             satisfactory  evidence  that the  wages  and  allotments and  the
             insurance  of the master  and crew are  being regularly  paid and
             that all deductions  from crew's wages  in respect of  tax and/or
             social  security liability  are being properly  accounted for and
             that the master has no claim  for disbursements other than  those
             incurred by him in  the ordinary course of trading on  the voyage
             then in progress;

       (l)   observe  the obligations  contained in  Sections 7  and 8  of the
             Credit Agreement  which apply to  the Rig and  the Owner,  and in
             pursuance thereof such obligations  shall be incorporated in  and
             deemed to form part of this Mortgage mutatis mutandis;

       (m)   not without  the previous  consent  in writing  of the  Mortgagee
             (such consent not to  be unreasonably withheld), put the Rig into
             the possession of any person  for the purpose of work  being done
             upon  her in an amount exceeding or  likely to exceed Two Million
             Five  Hundred  United States  Dollars  (US$2,500,000.00) (or  the
             equivalent in  any other  currency) unless (i)  such person shall
             first have given  to the Mortgagee  and in terms  satisfactory to
             it a written undertaking not  to exercise any lien on the Rig for
             the cost of such work or otherwise or (ii) the cost  of such work
             shall be fully covered by applicable insurance;

       (n)   comply with  and satisfy all  the provisions  of applicable  laws
             and  regulations  of  the Republic  of  Panama,  as  at  any time
             amended, in order  to establish and  maintain this Mortgage  as a
             first priority  naval mortgage  thereunder upon the  Rig and upon
             all  renewals, improvements and  replacements made  in or  to the
             same, and promptly to furnish to the Mortgagee  from time to time
             such proofs  as the  Mortgagee may  request for its  satisfaction
             with respect to the compliance by  the Owner with the  provisions
             of this  sub-clause, including, appropriate  certificates of  the
             Public  Registry  showing  that  this  Mortgage   has  been  duly
             registered and  filed and  is a  first and absolute  lien on  the
             Rig;

       (o)   place, and  use due  diligence  to retain,  a properly  certified
             copy of this Mortgage on  board the Rig with her papers and cause
             such certified copy of  this Mortgage to be exhibited to  any and
             all persons having  business with the  Rig which might  give rise
             to  any lien  thereon  other than  a lien  for  crew's wages  and
             salvage and to any  representative of the Mortgagee on demand and
             to place and  keep prominently displayed in the chart room and in
             the master's cabin of  the Rig a framed  printed notice in  plain
             type  in English  of  such size  that  the  paragraph of  reading
             matter  shall cover  a space  not less than  6 inches  wide and 9
             inches high reading as follows:

                                               "NOTICE OF MORTGAGE

                    This  Rig  is  subject  to  an  Indenture  of  First  Naval
             Mortgage in favor  of CHRISTIANIA BANK OG  KREDITKASSE, NEW  YORK
             BRANCH, as  Administrative Agent  for the  Banks defined in  said
             Mortgage,  in conformity with the  provisions of Chapter V, Title
             IV of  Book Second  of the Code  of Commerce,  and the  pertinent
             provisions of  the  Civil  Code  and  other  legislation  of  the
             Republic  of Panama.   Under the terms  of said  Mortgage neither
             the  owner, any charterer,  the Master  of the Rig  nor any other
             person shall have the  right, power or authority to create, incur
             or permit  to be placed  upon the Rig  any other  lien whatsoever
             other than  for current  crew's wages and  salvage and  Permitted
             Liens (as that term is defined in said Mortgage)."

       (p)   comply,  or procure  compliance with, all  Environmental Laws and
             Environmental  Approvals relating  to the  Rig, its  operation or
             management and the business of the Owner from time to time;

       (q)   notify the Mortgagee forthwith upon:

             (i)   any Environmental Claim  which could reasonably be expected
                   to result in damages in excess of  US$200,000 being or made
                   against  the  Owner, or  otherwise in  connection with  the
                   Rig; or

             (ii)  any   Environmental  Incident   occurring,  and   keep  the
                   Mortgagee advised,  in writing on such regular basis and in
                   such detail as the  Mortgagee shall require, of the Owner's
                   response  to  such  Environmental  Claim  or  Environmental
                   Incident.

       (r)   not sell, mortgage or transfer the  Rig (other than as  permitted
             by the  Credit  Agreement) without  the  written consent  of  the
             Mortgagee  having  first  been  obtained, and  any  such  written
             consent  to any one such sale,  mortgage or transfer shall not be
             construed to be  a waiver of  this provision with respect  to any
             subsequent proposed sale,  mortgage or transfer.   Any such sale,
             mortgage or transfer shall be subject  to the provisions of  this
             Mortgage and  the lien it creates.   The Owner shall  not charter
             the Rig to, or permit  the Rig to serve under any  contract with,
             a person included  within the definition  of (i) "national"  of a
             "designated foreign country," or  "specially designated national"
             of a "designated foreign  country," in the Foreign Assets Control
             Regulations  or  the  Cuban  Assets Control  Regulations  of  the
             United  States Treasury Department, 31  C.F.R. Parts 500 and 515,
             in each case as amended, (ii)  "Government of Libya", "entity  of
             the Government  of  Libya"  or  "Libyan  entity"  in  the  Libyan
             Sanctions Regulations  of the United States  Treasury Department,
             31 C.F.R. Part  550, as amended,  or (iii) "Government  of Iraq",
             "entity of  the Government of Iraq"  or "Iraqi Government entity"
             in the Iraqi Sanctions Regulations, 56  Fed. Reg. 2112 (1991)  to
             be codified at  31 C.F.R.  Part 575, as  amended, all within  the
             meaning   of   said    Regulations   or   of   any   regulations,
             interpretations  or rulings  issued thereunder, or  sail in Cuban
             waters or enter any Cuban  port for any purpose or engage  in any
             transaction  that violates  any provision of  said Regulations or
             that  violates   any  provision   of  the  Iranian   Transactions
             Regulations,  31 C.F.R.  Part 560, as  amended, the Foreign Funds
             Control  Regulations,  31  C.F.R.  Part  520,   as  amended,  the
             Transaction Control Regulations, 31 C.F.R. Part  505, as amended,
             the  Haitian  Transaction Regulations,  31  C.F.R.  Part 580,  as
             amended, the Foreign Assets  Control Regulations, 31 C.F.R.  Part
             500,  as amended, or  Executive Orders 12810  and 12831;  if such
             transaction or violation would  (i) expose  the Mortgagee to  any
             penalty,  sanction or  investigation or (ii)  jeopardize the lien
             created by this Mortgage  or (iii) have a material adverse effect
             on the Owner or the operation of the Rig;

       (s)   shall not cause or  permit the Rig to  be operated in any  manner
             contrary   to  law  (except  where  the  failure  to  operate  in
             compliance with any law  would not have a material adverse effect
             on the Owner, the  Rig or the lien  of this Mortgage), shall  not
             abandon  the Rig  in a foreign  port and shall  not engage in any
             unlawful trade or violate  any law or carry any cargo  that shall
             expose the Rig to forfeiture or capture.

8.     PROTECTION OF SECURITY

8.01   The Mortgagee shall  without prejudice to  its other rights  and powers
       under  this Mortgage and  the other Credit  Documents be  entitled (but
       not bound) at any time and  as often as may be necessary (but unless an
       Event of  Default shall  have  occurred and  be  continuing with  prior
       written notice to  the Owner) to take any such  action as it may in the
       reasonable  exercise of  its discretion  think fit  for the  purpose of
       protecting or  maintaining the  security created by  this Mortgage  and
       the other Credit Documents (including, without  limitation, such action
       as  is  referred  to  in  Clause 8.02)  and  each  and  every  expense,
       liability, or  loss (including,  without  limitation, reasonable  legal
       fees)  so incurred by the Secured Creditors  in or about the protection
       or  maintenance of  the said  security together  with interest  payable
       thereon under Clause 4.01(b) shall  be repayable to it by the  Owner on
       demand.

8.02   Without prejudice to the generality of Clause 8.01:

       (a)   if the  Owner does not  comply in any  material respect with  the
             provisions  of Clause 6  or any  of them  the Mortgagee  shall be
             entitled (but not  bound) to effect  or to replace and  renew and
             thereafter to maintain the Insurances in  such manner it, in  its
             discretion,  may  think fit  and  to require  that  all policies,
             contracts   and  other   records  relating   to  the   Insurances
             (including details  of any correspondence  concerning outstanding
             claims)  be forthwith delivered to such  brokers as the Mortgagee
             may  nominate  and,  upon  the  direction  of  the  Mortgagee  to
             collect, recover,  compromise and  give a good  discharge for all
             claims  then   outstanding  or   thereafter  arising  under   the
             Insurances  or any  of them  and to  take over  or institute  (if
             necessary using the  name of the  Owner) all such  proceedings in
             connection   therewith  as   the   Mortgagee   in  its   absolute
             discretion, may think fit  and to permit the brokers through whom
             the  collection  or recovery  is  effected  to  charge the  usual
             brokerage therefor;

       (b)   if  the Owner  does  not comply  with  the  provisions of  Clause
             7.01(d)  and/or 7.01(f)  or any  of them  the Mortgagee  shall be
             entitled (but not  bound) to arrange for the carrying out of such
             repairs to and/or  surveys of the  Rig as  it deems expedient  or
             necessary; and

       (c)   if  the Owner  does  not comply  with  the  provisions of  Clause
             7.01(h) or any of them, the Mortgagee shall be entitled  (but not
             bound)  to  pay   and  discharge  all  such  debts,  damages  and
             liabilities   and  all  such  tolls,  dues,  taxes,  assessments,
             charges,  fines,  penalties and  other outgoings  as  are therein
             mentioned and/or to take  any such measures as it deems expedient
             or necessary for the purpose of securing the release of the Rig.

9.     ENFORCEABILITY AND MORTGAGEE'S POWERS

9.01   Upon  the happening  of any of  the Events of  Default specified in the
       Credit Agreement  but without  the  necessity for  any  court order  or
       declaration in any jurisdiction to the effect that an Event  of Default
       has occurred  (and  whether prior  to  or after  the Mortgagee  or  the
       Required  Banks having  served  on the  Owner  any  such notice  as  is
       referred  to in  Section  9  of  the  Credit  Agreement)  the  security
       constituted by this Mortgage  shall become immediately enforceable  and
       the Mortgagee shall  be entitled, as  and when it  may see fit, to  put
       into force  and exercise all or  any of the  powers possessed by  it as
       mortgagee of the Rig or otherwise and in particular:

       (a)   to  exercise  all the  rights  and  remedies in  foreclosure  and
             otherwise  given to  mortgagees by  the laws  of the  Republic of
             Panama or other applicable laws;

       (b)   to take possession of  the Rig whether actually or constructively
             and/or otherwise to take control  of the Rig wherever the Rig may
             be and cause  the Owner or any other person  in possession of the
             Rig forthwith upon demand  to surrender the same to the Mortgagee
             without legal process  and without liability of the Mortgagee for
             any  losses or  damages incurred  thereby and  without having  to
             render accounts to the Owner in connection therewith;

       (c)   to  require that  all policies, contracts,  certificates of entry
             and other records relating  to the Insurances (including  details
             of   and  correspondence   concerning   outstanding  claims)   be
             forthwith delivered to or to the order of the Mortgagee;

       (d)   to collect, recover, compromise  and give a good discharge for or
             procure that the Mortgagee collect, recover,  compromise and give
             good discharge for  any and all moneys or  claims for moneys then
             outstanding  or thereafter  arising under  the Insurances  or any
             Requisition Compensation and to  permit any brokers through  whom
             collection or recovery is  effected to charge the usual brokerage
             therefor;

       (e)   to take  over or institute  (if necessary  using the name  of the
             Owner)  all such  proceedings  in connection  with  the Rig,  the
             Insurances, or any Requisition  Compensation as the Mortgagee  in
             its  absolute discretion  thinks fit and  to discharge, compound,
             release or compromise claims  against the Owner in respect of the
             Rig which have  given or may give  rise to any charge or  lien on
             the  Rig  or  which are  or  may  be  enforceable  by proceedings
             against the Rig;

       (f)   to  sell the  Rig  or any  share  therein with  or  without prior
             notice to  the Owner free from  any claim of  or by the  Owner of
             any  nature whatsoever, and  with or without  the benefit  of any
             charterparty  or  other contract  for her  employment,  by public
             auction  or private contract  at such place  and upon  such terms
             (including,  without limitation,  on terms  such that  payment of
             some or all of  the purchase price be deferred) as  the Mortgagee
             in its absolute discretion may  determine with power to  postpone
             any such sale,  without being answerable for any  loss occasioned
             by  such  sale or  resulting  from  postponement thereof,  and/or
             itself to purchase the Rig  at any such public auction and to set
             off  the  purchase  price  against  all   or  any  part  of   the
             Obligations,  subject to  notice  of  sale  being  given  by  the
             Mortgagee to the  Owner and other  mortgagees of record,  if any,
             by  airmail,  postage  pre-paid  and  by publication  once  in  a
             newspaper  of general circulation in the City of Panama, Republic
             of Panama, not less  than twenty (20) calendar days in advance of
             the sale, to satisfy  the requirement of notice of sale contained
             in  Article 1527  of the  Panama Code  of Commerce.   Such notice
             shall be necessary only in respect of the initial date of sale;

       (g)   to manage, insure,  maintain and repair  the Rig and  to charter,
             employ, sail or lay  up the Rig in  such manner, upon such  terms
             and for such period as the  Mortgagee in its absolute  discretion
             deems  expedient  and for  the purposes  aforesaid  the Mortgagee
             shall  be  entitled  to do  all  acts  and  things  incidental or
             conducive   thereto  and   in  particular  to   enter  into  such
             arrangements respecting  the Rig, and  the insurance, management,
             maintenance, repair,  classification, chartering and   employment
             of the Rig, in  all respects as if  the Mortgagee were the  owner
             of  the Rig and  without being responsible  for any  loss thereby
             incurred;

       (h)   to recover from the  Owner on demand any expenses, liabilities or
             losses  as may  be incurred  by  the Mortgagee  in  or about  the
             exercise   of   the  power   vested   in   the  Mortgagee   under
             Clause 9.01(g);

       (i)   generally,  to recover from  the Owner on  demand each  and every
             expense, liability or loss  incurred by the Mortgagee in or about
             or  incidental  to  the exercise  by  it  of  any of  the  powers
             aforesaid.

9.02   The  Mortgagee shall  not be  obliged  to make  any enquiry  as to  the
       nature  or sufficiency  of  any  payment  received  by  it  under  this
       Mortgage or to make  any claim, take any  action or enforce any  rights
       and  benefits assigned  to the Mortgagee  by this Mortgage  or to which
       the Mortgagee may at any time be entitled hereunder.

9.03   Neither  the Secured  Creditors nor  their agents,  managers, officers,
       employees,  delegates  and advisers  shall be  liable for  any expense,
       claim, liability, loss, cost,  damage or expense incurred or arising in
       connection with  the  exercise or  purported  exercise of  any  rights,
       powers  and discretions  under this  Mortgage in  the absence  of gross
       negligence or wilful misconduct.

9.04   The Mortgagee shall not by  reason of the taking possession of  the Rig
       be liable to  account as mortgagee-in-possession or for anything except
       actual receipts or  be liable for any loss upon  realization or for any
       default  or  omission  for  which a  mortgagee-in-possession  might  be
       liable.

9.05   Upon any  sale of  the Rig or  any share  therein by the  Mortgagee the
       purchaser shall  not be bound  to see or enquire  whether the  power of
       sale  of the  Mortgagee  has  arisen in  the  manner  provided in  this
       Mortgage and the  sale shall be  deemed to be within  the power of  the
       Mortgagee and  the receipt  of  the Mortgagee  for  the purchase  money
       shall effectively  discharge the purchaser  who shall not be  concerned
       with the  manner of application  of the proceeds  of sale or be  in any
       way answerable therefor.

10.    APPLICATION OF MONEYS

10.01  (a)   All  moneys  received  by  the  Mortgagee or  any  other  Secured
             Creditor,  including, without  limitation, in respect  of sale of
             the  Rig or any  part thereof,  in respect of  recovery under the
             Insurances, or in respect  of Requisition Compensation, shall  be
             applied in the following manner:

             (i)   first, to  the payment of  all amounts  owing the Mortgagee
                   of the type described in clauses (ii)  and (iii) of Recital
                   E;

             (ii)  second,  to the extent  moneys remain after the application
                   pursuant to the  preceding clause (i),  an amount  equal to
                   the  outstanding Obligations  shall be paid  to the Secured
                   Creditors  as  provided  in   Clause  10.01(c),  with  each
                   Secured   Creditor  receiving  an   amount  equal  to  such
                   Obligations   held   by  it   or,  if   the  proceeds   are
                   insufficient  to pay in full all such  Obligations, its Pro
                   Rata Share  (as defined below) of  the amount remaining  to
                   be distributed; and

             (iii) third,  to the  extent moneys remain  after the application
                   pursuant  to  the  preceding  clauses  (i)  and  (ii),  and
                   following  the  termination of  this  Mortgage pursuant  to
                   Clause 3.01,  any surplus  then remaining shall be  paid to
                   the  Owner, subject, however,  to the  rights of the holder
                   of  any  then existing  Lien  of  which  the Mortgagee  has
                   actual notice (without investigation).

       (b)   For purposes of this Mortgage "Pro  Rata Share" shall mean,  when
             calculating a Secured Creditor's  portion of any distribution  or
             amount in respect of  any Obligations, the amount (expressed as a
             percentage)  equal to a  fraction the numerator  of which  is the
             then  unpaid amount of such Obligations owing  to or held by such
             Secured  Creditor  and  the  denominator  of  which  is the  then
             outstanding amount  of all  such Obligations.    For purposes  of
             determining  the  amount payable  to each  Secured  Creditor, the
             Mortgagee shall be entitled  to request each Secured Creditor  to
             furnish it with written  notice of the amount of Obligations then
             owed  to it  and  shall be  entitled  to reply  upon  the amounts
             stated therein in making such distribution.

       (c)   All  payments required to be  made to Secured Creditors hereunder
             shall  be made  to  the  Administrative  Agent under  the  Credit
             Agreement for the account of the Secured Creditors.

       (d)   For  purposes of  applying payments  received in  accordance with
             this Clause 10.01, the  Mortgagee shall be entitled to reply upon
             (i) the  Administrative Agent under the Credit Agreement and (ii)
             the   Secured   Creditors  for   a   determination   (which   the
             Administrative  Agent  and   each  Secured  Creditor,   by  their
             acceptance of  the benefits  of this Mortgage  shall be obligated
             to provide  upon request  of  the Mortgagee)  of the  outstanding
             Obligations owed to the  Secured Creditors.  Unless it has actual
             knowledge  (including by  way of  written notice  from a  Secured
             Creditor)  to the  contrary, the  Administrative Agent  under the
             Credit  Agreement,  in furnishing  information  pursuant  to  the
             preceding  sentence,  and  the  Mortgagee,  in  acting hereunder,
             shall be  entitled  to  assume that  no  obligations  other  than
             principal, interest and regularly accruing fees  are owing to any
             Secured Creditor.

11.    FURTHER ASSURANCES

11.01  The Owner shall execute and do all such assurances,  acts and things as
       the Mortgagee in its absolute discretion may require for:

       (a)   perfecting or protecting the  security created (or intended to be
             created) by this Mortgage; or

       (b)   preserving or protecting any of the  rights of the Mortgagee  and
             the other Secured Creditors under this Mortgage; or

       (c)   ensuring that the security  constituted by this Mortgage  and the
             covenants and obligations of  the Owner under this Mortgage shall
             inure to the benefit  of any transferee, successor or assignee of
             the Mortgagee; or

       (d)   enforcing the security constituted  by this Mortgage on or at any
             time after the same shall have become enforceable; or

       (e)   the exercise of any  power, authority or discretion vested in the
             Mortgagee under this Mortgage,

       in any  such case, forthwith  upon demand by the  Mortgagee and  at the
       expense of the Owner.

12.    POWER OF ATTORNEY

12.01  The Owner,  by way of security  and in order  to more fully  secure the
       performance of the Obligations under this  Mortgage, hereby irrevocably
       appoints the  Mortgagee as its attorney for the  duration of the Credit
       Facility Period for the purposes of:

       (a)   doing  in  its  name all  acts  and  executing,  signing  and (if
             required) registering in  its name all documents  which the Owner
             itself  could do, execute,  sign or register  in relation  to the
             Rig (including without limitation, transferring title  to the Rig
             to a third party), provided, however,  that such power shall  not
             be  exercisable by  or  on behalf  of  the  Mortgagee until  this
             Mortgage shall have  become immediately  enforceable pursuant  to
             Clause 9.01; and

       (b)   executing,   signing,  perfecting,   doing   and  (if   required)
             registering every such further  assurance document, act or  thing
             as is referred to in Clause 11.

12.02  The exercise of such  power as is referred to in Clause  12.01(a) by or
       on behalf of the  Mortgagee shall not put  any person dealing with  the
       Mortgagee upon  any enquiry  as  to whether  this  Mortgage has  become
       enforceable  nor shall  such person  be in  any way  affected by notice
       that  this Mortgage has not become enforceable and, in relation to both
       Clauses 12.01(a) and  12.01(b), the  exercise by the  Mortgagee of such
       power  shall be  conclusive evidence  as against  third parties  of its
       right to exercise the same.

13.    INDEMNITIES

13.01  The  Owner will  indemnify  and  save  harmless  each  of  the  Secured
       Creditors  and each agent  or attorney appointed  under or  pursuant to
       this Mortgage  (each an  "Indemnitee")  from and  against  any and  all
       expenses, claims, liabilities, losses,  taxes, costs, duties, fees  and
       charges  suffered, incurred or  made by such  Secured Creditor  or such
       agent or attorney in good faith:

       (a)   in the exercise  or purported exercise  of any rights,  powers or
             discretions vested in them pursuant to this Mortgage; or

       (b)   in  the  preservation  or  enforcement  of  the  rights   of  the
             Mortgagee under this Mortgage; or

       (c)   on  the release  of the  Rig from  the  security created  by this
             Mortgage,

       and  the Secured Creditors  and each such agent  or attorney may retain
       and pay  all sums in  respect of the  same out of  money received under
       the powers conferred  by this Mortgage.   All such  amounts recoverable
       by  a Secured Creditors or such agent  or attorney shall be recoverable
       on a full indemnity basis.

13.02  Without limiting the  foregoing Clause 13.01, the Owner  hereby further
       indemnifies and holds harmless  each of the Secured Creditors and their
       respective officers,  directors, employees, attorneys  and agents  from
       and  against  any and  all  liabilities,  losses, obligations,  claims,
       damages,  penalties, causes  of action, costs  and expenses (including,
       without   limitation,   reasonable   attorneys'   fees   and  expenses,
       consultant  fees, investigation  and laboratory  fees) imposed  upon or
       incurred by or asserted against them, or any of them, by reason of  (a)
       an  actual,  alleged  or  threatened Environmental  Incident;  (b)  any
       personal injury (including wrongful death) or  property damage (real or
       personal)  or economic  damage  arising  out  of  or  related  to  such
       Environmental  Incident;   (c)  any  Environmental  Claim   brought  or
       threatened,  or  settlement reached;  or  (d)  any  violation of  laws,
       orders, regulations, requirements or demands  of government authorities
       relating to Hazardous Materials at, or discharged from the Rig.

13.03  If,  under any applicable law or  regulation, and whether pursuant to a
       judgment being made or  registered against the Owner or the liquidation
       of  the Owner  or  for  any  other  reason, any  payment  under  or  in
       connection  with the Subsidiary  Guaranty or this  Mortgage is  made or
       fails  to be  satisfied in  a currency  (the "payment  currency") other
       than the currency  in which such payment is due  under or in connection
       with this  Mortgage (the  "contractual currency"), then  to the  extent
       that  the amount of  such payment actually  received by  the Mortgagee,
       when converted into the contractual currency  at the rate of  exchange,
       falls short  of  the  amount  due under  or  in  connection  with  this
       Mortgage, the  Owner, as a separate  and independent  obligation, shall
       indemnify and hold  harmless the Mortgagee  against the amount  of such
       shortfall.  For the purposes of  this Clause 13.03, "rate of  exchange"
       means  the rate  at which  the Mortgagee is  able on  the date  of such
       payment (or,  if it is  not practicable for  the Mortgagee  to purchase
       the contractual currency with the payment currency  on the date of such
       payment, at the rate of  exchange as soon afterwards as is  practicable
       for the  Mortgagee to do so) to  purchase the contractual currency with
       the  payment currency and shall take into account any premium and other
       costs of exchange with respect thereto.

14.    EXPENSES

14.01  The Owner  shall pay to  any Secured Creditor  the Mortgagee on  demand
       all  costs, fees  and expenses,  including, but  not limited  to, legal
       fees and expenses and valuation fees and Taxes thereon incurred  by any
       Secured Creditor or  for which any  Secured Creditor may  become liable
       in connection with:

       (a)   the  negotiation,  preparation   and  execution  of   the  Credit
             Agreement,   the  Subsidiary   Guaranty  and   the  other  Credit
             Documents (or any of them); and/or

       (b)   the preserving  or  enforcing of,  or attempting  to preserve  or
             enforce,  any of  its  rights  under  the Credit  Agreement,  the
             Subsidiary Guaranty  or the  other Credit  Documents  (or any  of
             them).

14.02  The  Owner shall pay  to the  Mortgagee on demand  all costs,  fees and
       expenses (including, but not limited to,  legal fees and expenses)  and
       Taxes thereon incurred by any Secured Creditor in connection with:

       (a)   any variation  of, or  amendment  or supplement  to,  any of  the
             terms  of the Credit  Agreement, the  Subsidiary Guaranty  or the
             other Credit Documents (or any of  them) requested by the  Owner,
             necessary or  advisable under applicable  law or relating to  the
             syndication  of  the Credit  Facility,  or  initiated during  the
             occurrence and continuation of an Event of Default; and/or

       (b)   any consent or waiver  required from the Mortgagee in relation to
             the  Credit  Agreement, the  Subsidiary  Guaranty  and the  other
             Credit Documents (or any of them),

       and  in  each  case,   regardless  of  whether  the  same  is  actually
       implemented, completed or granted, as the case may be.

14.03  The  Owner shall  pay promptly  all stamp,  documentary and  other like
       duties  and  Taxes  to  which  the  Credit  Agreement,  the  Subsidiary
       Guaranty and  the  other  Credit Documents  (or  any  of them)  may  be
       subject  or give  rise  and shall  indemnify  the  Mortgagee on  demand
       against any and all liabilities with  respect to or resulting from  any
       delay or omission  on the part of the  Owner to pay any such  duties or
       Taxes.

15.    COMMUNICATIONS

15.01  All notices required to be given to the Mortgagee shall be  made to the
       following address:

           Christiania Bank  og  Kreditkasse,  New York Branch
           11 West 42nd Street
           7th Floor
           New York, New York  10036
           Attention:  Loan Administration
           Telephone:  (212) 827-4800
           Telefax:    (212) 827-4888

       All other  notices  shall be  made to  the  addresses provided  for  in
       Section 12.03 of the Credit Agreement and Annex II thereto.

16.    ASSIGNMENTS

16.01  This  Mortgage shall be binding upon and  shall inure to the benefit of
       the Secured Creditors and their respective  transferees, successors and
       permitted assigns,  and references  in  this Mortgage  to  any of  them
       shall be construed accordingly.

16.02  The Owner  may not  assign or transfer  all or  any part of  its rights
       and/or obligations under this Mortgage.

16.03  Pursuant  to Section 12.04 of  the Credit Agreement,  each Bank has the
       right to  assign or  transfer  all or  any part  of  its rights  and/or
       obligations under the  Credit Agreement on the terms  therein provided.
       The  Mortgagee  shall  notify the  Owner  promptly  following any  such
       assignment, transfer or change.

17.    TOTAL AMOUNT, ETC.

17.01  The total amount of  this Mortgage is Three Hundred Million  US Dollars
       (US$300,000,000)  of  principal plus  interest,  fees,  commissions and
       performance of mortgage  covenants.  The  discharge amount is  the same
       as the total amount.

18.    WAIVER; AMENDMENT

18.01  None  of the  terms  and conditions  of this  Mortgage may  be changed,
       waived, modified or varied in any  manner whatsoever unless in  writing
       duly  signed by the Owner and the Mortgagee (with the consent of either
       the Required Banks or, to  the extent required by Section 12.12  of the
       Credit Agreement,  all of the Banks).   No amendment to  the Subsidiary
       Guaranty  which affects  the rights  and obligations  of the  Mortgagee
       hereunder  shall  be effective  without  the consent  of  the Mortgagee
       thereto.

19.    MISCELLANEOUS

19.01  This Mortgage shall be governed by the laws of the Republic of Panama.

19.02  If  at any time any one  or more of the  provisions in this Mortgage is
       or becomes invalid, illegal or unenforceable  in any respect under  any
       law or  regulation, the  validity, legality  and enforceability of  the
       remaining provisions of this Mortgage shall not be  in any way affected
       or impaired thereby.

19.03  The  Mortgagee, at  any time  and from  time to  time, may  delegate by
       power of attorney or in  any other manner to any person  or persons all
       or any  of the powers,  authorities and discretions  which are for  the
       time  being  exercisable  by  the  Mortgagee  under  this  Mortgage  in
       relation to the Rig.  Any such  delegation may be made upon such  terms
       and subject to such  regulations as the Mortgagee  may think fit.   The
       Mortgagee shall not be  in any way liable  or responsible to the  Owner
       for  any loss  or damage  arising from  any act,  default, omission  or
       misconduct on the part of any such delegate.

19.04  The  appearing parties  hereby confer  a special  power of  attorney on
       Benedetti & Benedetti,  lawyers of  Panama, Republic  of Panama  and/or
       any partners in  the firm authorizing such firm or  any such partner to
       take  all necessary  steps  to record  this  Indenture  of First  Naval
       Mortgage  in the appropriate  registries of the City  of Panama, and to
       substitute this Power of Attorney herein granted.

19.05  A  certification or  determination by  the Mortgagee  as to  any matter
       provided for in this Mortgage shall, in  the absence of manifest error,
       be conclusive and binding on the Owner.

19.06  The  Mortgagee  declares that  it  accepts  the  naval mortgage  hereby
       created under the terms above set forth.

20.    JURISDICTION

20.01  The Owner agrees  that the Mortgagee  shall have the liberty  but shall
       not be obliged  to take any proceedings in the courts of any country to
       protect  or enforce  the security  constituted by  this Mortgage  or to
       enforce any provisions of this Mortgage  or to enforce the  Obligations
       and for the purpose of  any proceedings for such enforcement the  Owner
       hereby submits to the jurisdiction of the courts of  any country of the
       choice of the Mortgagee.

20.02  Without prejudice  to the  generality  of Clause  20.01, the  Mortgagee
       shall  have the  right to  arrest and  take action  against the  Rig at
       whatever place the Rig shall be found lying and  for the purpose of any
       action  which the  Mortgagee  may  bring  before  the  courts  of  such
       jurisdiction  or other judicial  authority and for  the purpose  of any
       action  which  the  Mortgagee may  bring  against  the  Rig,  any writ,
       notice,  judgment  or other  legal  process or  documents  may (without
       prejudice to  any other  method  of service  under  applicable law)  be
       served upon  the  master of  the  Rig (or  upon  anyone acting  as  the
       master) and such service shall be deemed good service  on the Owner for
       all purposes.

20.03  The  Owner agrees that  should the  Mortgagee bring  a legal  action or
       proceedings  against  it  or its  assets  in  relation  to  any matters
       arising out  of or in connection  with this Mortgage, no  immunity from
       such  legal action or  proceedings (which shall  be deemed  to include,
       without  limitation,   suit,  attachment   prior  to   judgment,  other
       attachment, the obtaining of judgment, execution  or other enforcement)
       shall be  claimed by or on  behalf of the Owner or  with respect of its
       assets, and  the Owner  hereby  irrevocably waives  any  such right  of
       immunity which it or  its assets now has  or may hereafter acquire  and
       the  Owner hereby consents generally in  respect of any legal action or
       proceedings arising out  of or in connection with  this Mortgage to the
       giving  out of any  relief or  the issue of  any process  in connection
       with  such  action or  proceedings including,  without  limitation, the
       making,  enforcement or  execution or  attachment against  any property
       whatsoever of any order or judgment which may be made or given  in such
       action or proceedings.

IN WITNESS   whereof  the Owner  and the  Mortgagee have  duly executed  these
presents the day and year first before written.

READING AND BATES BORNEO DRILLING CO., LTD.


By:  _____________________________________
      Name:  T.W. Nagle
      Title: Vice President and Treasurer


CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH


By:  _____________________________________
      Name:
      Title:


By:   ______________________________________
      Name:
      Title:


                          ACKNOWLEDGMENT OF MORTGAGE


STATE OF NEW YORK        )
                         )    ss:
COUNTY OF NEW YORK       )


                   On this  13th day  of November, 1996,  before me personally
appeared Timothy W.  Nagle, to me known  and who resides at 13307  Tosca Lane,
Houston, TX; and who  submitted evidence to me that he is a Vice President and
Treasurer  of  READING AND  BATES  BORNEO  DRILLING  CO.,  LTD.,  the  company
described in and which executed the foregoing mortgage; and that he signed his
name thereto pursuant to authority granted to him by the Board of Directors of
said corporation.




___________________________________
Notary Public




                          ACKNOWLEDGMENT OF MORTGAGE


STATE OF NEW YORK        )
                         )    ss:
COUNTY OF NEW YORK       )


                   On this 13th day  of November,  1996, before me  personally
appeared  Han Chr.  Kjelsrud to  me known  and who  resides  at 115  East 87th
Street, New York,  NY; and who  submitted evidence to me  that he/she is  Vice
President of CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, the corporation
described in and which executed the foregoing mortgage; and that he/she signed
his/her name thereto pursuant to authority granted to him/her by the  Board of
Directors of said corporation.



____________________________________
Notary Public




                          ACKNOWLEDGMENT OF MORTGAGE


STATE OF NEW YORK        )
                         )    ss:
COUNTY OF NEW YORK       )


                   On this 13th day  of November,  1996, before me  personally
appeared Justin  McCarty,  III to  me known  and who  resides  at 35  Pleasant
Street, Katonah,  NY; and  who submitted evidence  to me  that he/she  is Vice
President of CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, the corporation
described in and which executed the foregoing mortgage; and that he/she signed
his/her name thereto pursuant to authority granted to him/her by the  Board of
Directors of said corporation.


____________________________________
Notary Public